DRS

This is a draft registration statement that is being confidentially submitted to the Securities and Exchange Commission on April 6, 2021.

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Spark Education Limited

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Cayman Islands	8200	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Block A, No.101 Wangjing Lize

Zhongyuan, Chaoyang District, Beijing,

People’s Republic of China

+86 010-8414-8552

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

[COGENCY GLOBAL INC.

122 East 42nd Street, 18th Floor New York, NY

10168

+1 800-221-0102]

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Li He, Esq. James C. Lin, Esq. Davis Polk & Wardwell LLP c/o 18^th Floor, The Hong Kong Club Building 3A Chater Road, Central Hong Kong +852 2533-3300 Benjamin Su, Esq. Tingfei Fan, Esq. Latham & Watkins LLP 18th Floor, One Exchange Square 8 Connaught Place, Central Hong Kong +852 2912-2500

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐                     

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐                     

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐                     

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☒

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Proposed maximum aggregate offering price(2)(3)	Amount of registration fee
Class A Ordinary shares, par value US$0.0001 per share(1)(2)	US$	US$

(1) American depositary shares issuable upon deposit of Class A ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-                    ). Each American depositary share represents                     Class A ordinary shares.

(2) Includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and also includes Class A ordinary shares that are issuable upon the exercise of the underwriters’ over-allotment option. These Class A ordinary shares are not being registered for the purpose of sales outside the United States.

(3) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the United States Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus Dated                     , 2021

American Depositary Shares

Spark Education Limited

Representing                      Class A Ordinary Shares

This is an initial public offering of American depositary shares, or ADSs, representing Class A ordinary shares of Spark Education Limited. We are offering a total of                      ADSs, each representing                      of our Class A ordinary shares, par value US$0.0001 per share. The underwriters may also purchase up to an additional                      Class A ordinary shares within 30 days to cover over-allotments, if any.

Prior to this offering, there has been no public market for the ADSs. We expect the initial public offering price will be between US$            and US$            per ADS. We intend to apply to list the ADSs representing our Class A ordinary shares on the [New York Stock Exchange] / [Nasdaq Global Market] under the symbol “                    .”

[Following the completion of this offering, our issued and outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares.                      will collectively beneficially own all of our issued Class B ordinary shares and will collectively be able to exercise             % of the total voting power of our issued and outstanding share capital immediately following the completion of this offering, assuming the underwriters do not exercise their option to purchase additional ADSs. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to              votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of any Class B ordinary share by a holder thereof to any non-affiliate to such holder, each of such Class B ordinary share will be automatically and immediately converted into one Class A ordinary share.] See “Description of Share Capital.”

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We are an “emerging growth company” under the US federal securities laws and will be subject to reduced public company reporting requirements. Investing in our Class A ordinary shares and ADSs involves risks. See “Risk Factors” beginning on page 19 of this prospectus.

	Per ADS	Total
Public offering price	US$	US$
Underwriting discounts and commissions(1)	US$	US$
Proceeds, before expenses, to us	US$	US$

(1) For a description of the compensation payable to the underwriters, see “Underwriting.”

The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, New York on                     , 2021.

Goldman Sachs Credit Suisse

The date of this prospectus is                    , 2021.

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TABLE OF CONTENTS

	Page
Prospectus Summary		1
Implications of Being an Emerging Growth Company		9
Conventions Which Apply to This Prospectus		9
The Offering		12
Our Summary Consolidated Financial Data and Operating Data		15
Risk Factors		19
Cautionary Statement Regarding Forward-Looking Statements		68
Use of Proceeds		69
Dividend Policy		70
Capitalization		71
Dilution		73
Enforceability of Civil Liabilities		75
Our History and Corporate Structure		77
Selected Consolidated Financial Data		81
Management’s Discussion and Analysis of Financial Condition and Results of Operations		85
Industry Overview		107
Business		115
Regulation		139
Management		161
Principal Shareholders		169
Related Party Transactions		173
Description of Share Capital		174
Description of American Depositary Shares		191
Shares Eligible for Future Sale		199
Taxation		201
Underwriting		208
Expenses Relating to this Offering		218
Legal Matters		219
Experts		220
Where You Can Find Additional Information		221
Index to the Consolidated Financial Statements		F-1

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “Spark Education Limited” or the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Spark Education Limited, together with its subsidiaries and, in the context of describing its operations and consolidated financial information, its consolidated variable interest entity, or VIE.

We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters have not authorized any other person to provide you with different or additional information. Neither we nor the underwriters are making an offer to sell the Class A ordinary shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ADSs representing our Class A ordinary shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

i

Until                    , 2021 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade the ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

ii

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements and the related notes appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under “Risk Factors,” “Business,” and information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before deciding whether to buy the ADSs. This prospectus contains certain estimates and information from four industry reports commissioned by us and prepared respectively by China Insights Industry Consultancy Limited, or CIC, an independent market research firm, regarding our industries and our market positions in China. We refer to this report as the “CIC Report” and the survey as the “CIC Consumer Survey.”

Mission

Spark passion for learning, ignite lifelong growth.

Vision

To become a global pioneer and industry leader in foundational learning.

Overview

Who We Are

We are a pioneer and innovator in China’s K-12 after-school tutoring, or AST, market, offering foundational learning services to K-12 students. As a result of our unique approach to learning, we have become China’s largest online small-class education company in terms of gross billings in 2020, according to CIC.

We named our company “Huohua,” which means “Spark” in English, because we aspire to spark students’ passion for learning. Our foundational learning approach is designed to help students not only learn subject knowledge but also develop a comprehensive set of lifelong skills and capabilities, such as creativity, critical thinking and problem solving, in an engaging, interactive environment. This innovative approach is fundamentally different from the exam-oriented rote learning approach that is common in China. There is a large and rapidly increasing demand for foundational learning in China, as more families come to appreciate its benefits for students of all ages. We believe we are fulfilling an important market need that has not been effectively addressed by existing K-12 AST offerings.

We deliver our courses primarily through online small classes with four to eight students per class. According to CIC, online small-class is the most effective format for providing students with an engaging, interactive and personalized learning experience. We currently offer online small-class courses to students in three main subjects: mathematical thinking, which is our flagship course, Chinese, and English. We also offer AI-enhanced courses to supplement our offerings. Our business is powered by technology. We have invested extensively in research and development, which supports each and every aspect of our operation and enables us to build a strong brand with high satisfaction among students and parents while in the meantime achieving significant operational efficiency.

We have experienced rapid growth within a relatively short period of time. We had 321,282 students as of December 31, 2020, representing a significant increase from 87,578 as of December 31, 2019. Our net revenues increased by 501.0% from RMB195.4 million in 2019 to RMB1,174.4 million (US$180.0 million) in 2020. Our gross billings almost quadrupled from RMB513.5

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million in 2019 to RMB1,908.1 million (US$292.4 million) in 2020. We recorded a gross profit of RMB322.0 million (US$49.4 million) and a net loss of RMB951.7 million (US$145.9 million) in 2020, as compared to a gross loss of RMB166.5 million and a net loss of RMB771.1 million in 2019. For a reconciliation of gross billings to net revenues, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”

Challenges Facing China’s K-12 AST Market

We believe China’s K-12 AST market is faced with the following major challenges:

• Limitations of the rote learning approach. The exam-oriented rote learning approach that is common in China relies heavily on memorization and repetitive drills, and is generally one-size-fits-all as it uses test scores as the primary criteria to evaluate students. This approach may inhibit them from developing core skillsets, such as critical thinking, creativity and problem solving.

• Disparity of access to quality education resources. The distribution of quality education resources varies widely across different regions in China. Access to quality teachers and K-12 AST services remains limited, especially in less economically developed regions.

• Lack of effective online education products. While there has been a rapid increase in the adoption of online K-12 AST courses, many of the products currently on the market do not provide a high quality student experience or effective learning outcomes. In particular, many companies have simply ported an offline learning offering to an online format without considering the real needs of students and parents, and have not fully taken advantage of the power of technology to deliver a differentiated, enhanced learning experience. Furthermore, many online K-12 AST companies spend a significant amount of their capital on promotion and advertising activities, rather than investing in developing quality products.

Our Solutions

Dedication to Foundational Learning

We are dedicated to foundational learning as it provides students the foundation for future success. Unlike the one-size-fits-all exam-oriented rote learning model that simply focuses on standardized tests, foundational learning teaches students subject knowledge while also sparking students’ overall interest in learning and helping them develop fundamental capabilities, such as critical thinking, creativity and problem solving, and social competencies, such as self-confidence and teamwork, that they need to excel in school and become well-rounded human beings. In order to deliver the best foundational learning experiences for students, we have invested heavily in technology and pedagogical research. These investments enable us to provide our students with an engaging and effective learning experience that will have a significant impact on their academic and overall development.

An increasing number of parents, particularly those of a younger age demographic who have experienced the frustration of the exam-oriented rote learning approach themselves, are recognizing the power of foundational learning. These young parents want their children to develop a comprehensive set of skills that will benefit them throughout their lives, while also helping them succeed academically. They are also increasingly willing to invest in quality education. We believe this increased demand for foundational learning is just the beginning of a major long-term trend, and that,

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given our existing leadership and dedicated focus, we are well positioned to capture the tremendous and fast-growing market that it creates.

Focus on Online Small-class

We are China’s largest online small-class education company in terms of gross billings in 2020, according to CIC. According to the same source, online small-class is generally defined in China’s K-12 AST industry as an online course delivered live with a class size of anywhere between 2 and 25 students. We distinguish our small-class courses from competing offerings with technology-driven innovations, including animated interactive courseware, multi-dimensional in-class interactions and optimized learning experiences.

According to CIC, the online small-class format is the most effective format for providing students with an engaging, interactive and personalized learning experience. Compared to one-on-one tutoring, the small-class format offers students better opportunities to socialize with their peers and develop intrinsic motivation to learn. In contrast to the large-class format, the small-class format provides students with significantly higher level of personalization and interaction and therefore delivers better learning results. According to a March 2021 survey conducted by CIC, over 75% of the parents interviewed ranked online small-class format as their top choice when choosing online K-12 AST options for their children.

The online small-class format is known for certain inherent operational challenges, including course scheduling and the recruitment, empowerment and retention of a large number of qualified teachers. Through our focused research and development efforts, extensive operational know-how and deep insights from learning data, we have developed the operational sophistication and technologies needed to overcome these challenges and deliver quality online small-class courses at scale.

Commitment to “Back-End Driven” Operating Model

Unlike many of our peers who spend aggressively on student acquisition, we have instead invested extensively in pedagogical research, technology, product development and operational infrastructure—which we collectively refer to as our “back-end”—to drive our long-term success. This “back-end driven” operating model enables us to deliver a better learning experience while maintaining high operational efficiencies. Through our investments, we have developed a rich set of technology-enabled, interactive courseware and educational content and have greatly improved our teaching quality in an effort to provide the best possible experience for our students. As a result, we have built a strong brand with high satisfaction among students and parents, according to CIC, which enables us to boost sales through word-of-mouth referrals and organic traffic and achieve high renewal rates. In addition, our “back-end driven” model improves our operating efficiency and allows us to scale up our course offerings without compromising teaching quality. We support our teachers, tutors and course consultants with proprietary technology-driven operating systems to provide effective teaching, tutoring and services efficiently. We believe our early adoption and relentless focus on this “back-end driven” approach gives us a significant competitive advantage that is hard for our peers to replicate.

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Our Technology Platform

Our Competitive Strengths

We believe the following competitive strengths contribute to our success and differentiate us from our competitors:

• Pioneer and innovator of foundational learning;

• Industry-leading online small-class offerings;

• Innovative, state-of-the-art pedagogy, courseware and educational content;

• High-quality teaching at scale;

• Operational digitalization driven by cutting-edge technology;

• Strong brand recognition; and

• Visionary, entrepreneurial and seasoned management team with diverse expertise.

Our Growth Strategies

We intend to focus on the following key strategies to solidify our market leadership and achieve sustainable growth:

• Continue to invest in our pedagogy, courseware and educational content;

• Enrich our course offerings;

• Expand our student base;

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• Further invest in technology and data capabilities; and

• Enhance our brand recognition and awareness.

Market Opportunities

China’s K-12 AST market has experienced remarkable growth in recent years and has become the largest in the world in terms of gross billings in 2020, according to CIC. According to the same source, China’s K-12 AST market will reach RMB1,454.2 billion (US$222.9 billion) in 2025, representing a CAGR of 13.1% between 2020 and 2025. In recent years, China’s K-12 AST market has seen a large and rapidly growing demand for foundational learning. According to a March 2021 survey conducted by CIC, over 95% of parents interviewed believe that foundational learning can better prepare their children to become lifelong learners.

The small-class format is gaining popularity partly due to its advantages in terms of personalization, interaction and affordability. It is also particularly effective in delivering foundational learning for K-12 students. According to CIC, China’s online small-class K-12 AST market has reached RMB11.9 billion (US$1.8 billion) in terms of gross billings in 2020, and is expected to reach RMB101.2 billion (US$15.5 billion) by 2025, representing a CAGR of 53.3% between 2020 and 2025.

Despite the advantages of the format, there are a number of barriers to entry in providing small-class courses at scale, including operational complexity, content development, data and technology capabilities, teacher training and management, and brand recognition. We believe these factors make it very difficult for other companies to enter and successfully compete with the early movers in the online small-class course segment.

Our History and Corporate Structure

We launched our first online course through Beijing Xingengyuan Technology Ltd., or Xingengyuan, in March 2018. Our ultimate holding company, previously named Wan Duoduo Limited, was incorporated in July 2016 in the Cayman Islands to facilitate financing and offshore listing. In November 2019, Wan Duoduo Limited was renamed as Spark Education Limited.

In July 2016, Spark Education (Hongkong) Limited, or Spark Hong Kong, our wholly-owned subsidiary, was incorporated in Hong Kong. In December 2016, Beijing Spark Education and Technology Co., Ltd., or Beijing Spark Education, our wholly-owned subsidiary, was incorporated in the PRC. Between January 2017 and February 2021, Beijing Spark Education entered into a series of contractual arrangements with Xingengyuan and its shareholders, through which Beijing Spark Education, our wholly owned subsidiary, effectively controls Xingengyuan.

As part of our business expansion, in 2020, a number of wholly-owned subsidiaries, including Tianjin Spark Education and Technology Co., Ltd., or Tianjin Spark Education, Chengdu Spark Education and Technology Co., Ltd., or Chengdu Spark Education, and Chengdu Juli Education Consulting Co., Ltd., or Chengdu Juli, were incorporated in the PRC.

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Our Corporate Structure

The following chart illustrates our corporate structure, including our significant subsidiaries as that term is defined under Section 1-02 of Regulation S-X under the Securities Act, our VIE and certain other subsidiaries, as of the date of this prospectus:

	Equity interest
	Contractual arrangements, including the exclusive business cooperation agreement, the equity pledge agreement, the exclusive purchase option agreement, the powers of attorney and the spousal consent letters. See “Our History and Corporate Structure—Contractual Arrangements with Our VIE and Its Shareholders.”

Note:

(1) Shareholders of Xingengyuan are Mr. Luo, our founder, chairman of the board and chief executive officer, and Mr. Shan, our co-founder, director and chief technology officer, holding 86.9% and 13.1% of Xingengyuan’s equity interests, respectively.

Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services and certain other businesses. We are a company registered in the Cayman Islands. Beijing Spark Education, our PRC subsidiary, is considered a foreign-invested enterprise. To comply with PRC laws and regulations, we primarily conduct our business in China through Xingengyuan, our VIE in the PRC, based on a series of contractual arrangements. As a result of these contractual arrangements, we exert effective control over, and are considered the primary beneficiary of, Xingengyuan, our VIE and consolidate its and its subsidiaries’ operating results in our financial statements prepared under U.S. GAAP. For more details and risks related to our VIE structure, please see “Our History and Corporate Structure—Contractual Arrangements with Our VIE and Its Shareholders” and “Risk Factors—Risks Related to Our Corporate Structure.”

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Summary of Risk Factors

Investing in the ADSs involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in the ADSs. Below please find a summary of the principal risks and uncertainties we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk factors.”

Risks Related to Our Business and Industry

Risks and uncertainties relating to our business and industry include, but are not limited to, the following:

• We have a limited history in operating our foundational learning services. This may make it difficult to evaluate our future prospects and the risks and uncertainties associated with our services;

• The success and future growth of our business will be affected by the acceptance of foundational learning;

• If we are not able to continue to attract and retain students, our business and prospects will be materially and adversely affected;

• We may not be able to continue to successfully address the risks and challenges in running a small-class model;

• Our business depends on the continued success of our brand, and if we fail to maintain and enhance recognition of our brand, our reputation and operating results may be harmed;

• We face intense competition, which could lead to a loss of market share and materially and adversely affect our business, financial condition and results of operations;

• We may not be able to continue to recruit, train and retain a sufficient number of qualified faculty members and content development employees; and

• We are subject to the risks relating to the uncertainties in the interpretation and implementation of laws and regulations regarding the online education industry in general, and the K-12 AST market in particular. Additionally, certain aspects of our current business operations may be deemed not to be in full compliance with these laws and regulations.

Risks Related to Our Corporate Structure

Risks and uncertainties relating to our corporate structure include, but are not limited to, the following:

• If the PRC government finds that the agreements that establish the structure for operating certain of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations;

• We rely on contractual arrangements with Xingengyuan and its shareholders for our business operations, which may not be as effective as direct ownership in providing operational control; and

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• Any failure by Xingengyuan or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

Risks Related to Doing Business in China

We are also subject to risks and uncertainties relating to doing business in China in general, including, but not limited to, the following:

• Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations;

• Uncertainties with respect to the PRC legal system could adversely affect us;

• You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the prospectus based on foreign laws; and

• The ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.

Risks Related to the ADS and this Offering

In addition to the risks described above, we are subject to risks relating to the ADS and this offering, including, but not limited to, the following:

• An active trading market for our ordinary shares or the ADSs may not develop and the trading price for the ADSs may fluctuate significantly;

• The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors;

• If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline; and

• Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

See “Risk Factors” and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face.

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OUR CORPORATE INFORMATION

Our principal executive offices are located at Block A, No.101 Wangjing Lizezhongyuan, Chaoyang District, Beijing, the People’s Republic China. Our telephone number at this address is +86 010-8414-8552. Our registered office in the Cayman Islands is located at Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands. Our agent for service of process in the United States is [Cogency Global Inc.] located at [122 East 42nd Street, 18th Floor New York, NY, the United States].

Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.huohua.cn. The information contained on our website is not a part of this prospectus.

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

As a company with less than US$1.07 billion in revenue for the last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012 (as amended by the Fixing America’s Surface Transportation Act of 2015), or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

We will remain an emerging growth company until the earliest of (i) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the previous three-year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. See “Risk Factors—Risks Related to the ADSs and This Offering—We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.”

CONVENTIONS WHICH APPLY TO THIS PROSPECTUS

Unless we indicate otherwise, all information in this prospectus reflects the following:

• no exercise by the underwriters of their over-allotment option to purchase up to                     additional ADSs representing                     Class A ordinary shares from us; and

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Except where the context otherwise requires and for purposes of this prospectus only:

• ”ADSs” refers to the American depositary shares, each representing                    Class A ordinary shares;

• “AST” refers to after-school tutoring;

• “China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this prospectus only, Taiwan, Hong Kong and Macau;

• “Class A ordinary share” refers to our Class A ordinary shares, par value US$0.0001 per share;

• “Class B ordinary share” refers to our Class B ordinary shares, par value US$0.0001 per share;

• “course units” refers to the units in each course package, which are consumed when students take classes with us. The tuition fee we charge for our online courses is calculated on a per-course-package basis.

• “gross billings” for a specific period refers to the total amount of cash received in respect of sales of courses in such period, net of the total amount of refunds in such period;

• “Huohua,” “we,” “us,” “our company,” and “our” refer to Spark Education Limited, a Cayman Islands company and its subsidiaries and, in the context of describing our operations and consolidated financial information, its consolidated variable interest entity, or VIE;

• “K-12 education” generally refers to the education provided to students aged between 3 and 18;

• “K-12 AST” refers to tutoring covering academic subjects such as mathematics, Chinese and English, and other interest-based subjects;

• “RMB” or “Renminbi” refers to the legal currency of the People’s Republic of China;

• “average voluntary attrition rate” of employees for a specific period refers to the proportion of our employees who voluntarily terminated the employment during such period;

• “new tier-1 cities” refers to the relatively developed cities following the tier-1 cities, namely Chengdu, Hangzhou, Nanjing, Qingdao, Kunming, Shenyang, Tianjin, Wuhan, Xi’an, Changsha, Chongqing, Suzhou, Ningbo, Zhengzhou, and Dongguan;

• “number of students” at a given date refers to the total number of students who have valid course units as of that date; a student who takes multiple courses is counted as one student;

• “ordinary share” refers to our Class A ordinary shares and Class B ordinary shares;

• “Spark Coins” refers to digital points that can be redeemed for course units, merchandise and cash vouchers for third-party e-commerce platforms;

• “tier-1 cities” refers to the most developed cities in the PRC, namely Beijing, Shanghai, Guangzhou and Shenzhen;

• “US$,” “dollars” or “U.S. dollars” refers to the legal currency of the United States; and

• “variable interest entity” or “VIE” refers to the PRC entity of which we have power to control the management, and financial and operating policies and have the right to recognize and receive substantially all the economic benefits and in which we have an exclusive option to

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purchase all or part of the equity interests at the minimum price possible to the extent permitted by PRC law.

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this prospectus are made at RMB6.5250 to US1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2020. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all.

This prospectus contains information derived from various public sources and certain information from an industry report commissioned by us and prepared by China Insights Industry Consultancy Limited, or CIC, a third-party industry research firm, to provide information regarding our industry and market position. Such information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the “Risk Factors” section. These and other factors could cause results to differ materially from those expressed in these publications and reports.

Due to rounding, numbers presented throughout this prospectus may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

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THE OFFERING

Offering price range We currently estimate that the initial public offering price will be between US$             and US$             per ADS.

ADSs offered by us              ADSs (or                     ADSs if the underwriters exercise their over-allotment option in full).

The ADSs Each ADS represents                      Class A ordinary shares, par value US$0.0001 per share. The depositary will hold the Class A ordinary shares underlying the ADSs. You will have rights as provided in the deposit agreement.

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares, after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement.

You may turn in the ADSs to the depositary in exchange for our Class A ordinary shares. The depositary will charge you fees for any exchange.

We may amend or terminate the deposit agreement without your consent. If you continue to hold the ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended.

To better understand the terms of the ADSs, you should carefully read the “Description of American Depositary Shares” section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Ordinary shares We will issue                      Class A ordinary shares represented by the ADSs in this offering (assuming the underwriters do not exercise their option to purchase additional ADSs).

[Our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A ordinary share will be entitled to one vote, and each Class B ordinary share will be entitled to              votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale,

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transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any non-affiliate to such holder, each of such Class B ordinary shares will be automatically and immediately converted into one Class A ordinary share.]

All options, regardless of grant dates, will entitle holders to the equivalent number of Class A ordinary shares once the vesting and exercising conditions on such share-based compensation awards are met.

See “Description of Share Capital.”

Class A Ordinary shares outstanding immediately after this offering              Class A ordinary shares, par value US$0.0001 per share (or                      Class A ordinary shares if the underwriters exercise their option to purchase additional ADSs in full).

Over-allotment option We have granted the underwriters the right to purchase up to an additional                      Class A ordinary shares from us within 30 days of the date of this prospectus, to cover over-allotments, if any, in connection with the offering.

Listing We intend to apply to list the ADSs representing our Class A ordinary shares on the [New York Stock Exchange, or NYSE,] / [Nasdaq Global Market, or Nasdaq] under the symbol “                    “.

Use of proceeds We estimate that the net proceeds to us from the offering will be approximately US$             (or approximately US$             million if the underwriters exercise their over-allotment option to purchase additional ADSs in full), assuming an initial public offering price of US$             per ADS, which is the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

We plan to use the net proceeds from this offering to (i) improve our pedagogy, courseware and educational content and further broaden our course offerings; (ii) improve our technology and infrastructure; (iii) expand our marketing and brand efforts; and (iv) fund working capital and for other general corporate purposes. See “Use of Proceeds.”

Lock-up We[, our directors, executive officers and existing shareholders] have agreed with the underwriters, subject to certain exceptions, not to offer, sell, or dispose of any shares of our share capital or securities convertible into or exchangeable or

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exercisable for any shares of our share capital during the [180]-day period following the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.

Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of The Depository Trust Company on                    , 2021.

Depositary

[Directed share program At our request, the underwriters have reserved for sale, at the initial public offering price, up to an aggregate of                      ADSs offered in this offering to our directors, officers, employees, business associates and related persons.]

Taxation For Cayman, PRC and U.S. federal income tax considerations with respect to the ownership and disposition of the ADSs, see “Taxation.”

Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the option granted to the underwriters to purchase up to                      additional Class A ordinary shares to cover over-allotments, if any, in connection with the offering.

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OUR SUMMARY CONSOLIDATED FINANCIAL DATA AND OPERATING DATA

The following summary consolidated statements of operations and comprehensive loss for the years ended December 31, 2019 and 2020, summary consolidated balance sheet data as of December 31, 2019 and 2020 and summary consolidated statements of cash flows data for the years ended December 31, 2019 and 2020 have been derived from audited consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial Data and Operating Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	For the Year Ended December 31,
	2019						2020
	RMB			% of total net revenues			RMB			US$			% of total net revenues
	(in thousands, except for share, per share data and percentage)
Summary Consolidated Statements of Operations:
Net revenues		195,412			100.0			1,174,359			179,978			100.0
Cost of revenues(1)		(361,873	)		(185.2	)		(852,332	)		(130,626	)		(72.6	)
Gross (loss)/profit		(166,461	)		(85.2	)		322,027			49,352			27.4
Operating expenses
Sales and marketing expenses(1)		(235,769	)		(120.7	)		(798,356	)		(122,353	)		(68.0	)
Research and development expenses(1)		(239,941	)		(122.8	)		(327,349	)		(50,168	)		(27.9	)
General and administrative expenses(1)		(128,203	)		(65.6	)		(177,960	)		(27,274	)		(15.2	)
Total operating expenses		(603,913	)		(309.1	)		(1,303,665	)		(199,795	)		(111.1	)
Other income		2,163			1.1			21,866			3,351			1.9
Loss from operations		(768,211	)		(393.2	)		(959,772	)		(147,092	)		(81.8	)
Interest income		1,953			1.0			11,749			1,801			1.0
Interest expenses		(926	)		(0.5	)		(822	)		(126	)		(0.1	)
Others, net		(3,939	)		(2.0	)		(2,850	)		(437	)		(0.2	)
Loss before income tax expense		(771,123	)		(394.7	)		(951,695	)		(145,854	)		(81.1	)
Income tax expense		—			—			—			—			—
Net loss		(771,123	)		(394.7	)		(951,695	)		(145,854	)		(81.1	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(20.9	)		(100,895	)		(15,463	)		(8.6	)
Deemed dividends due to extinguishment of preferred shares		—			—			(13,415	)		(2,056	)		(1.1	)
Net loss attributable to ordinary shareholders of Spark Education Limited		(811,911	)		(415.6	)		(1,066,005	)		(163,373	)		(90.8	)
Weighted average number of ordinary shares used in computing net loss per share
Basic and diluted		24,770,658						29,605,885			29,605,885
Net loss per share attributable to ordinary shareholders
Basic and diluted		(32.78	)					(36.01	)		(5.52	)
Unaudited Pro Forma Data(2):
Pro forma weighted average number of shares used in computing net loss per share:
Basic and diluted								259,628,085			259,628,085
Pro forma net loss per share:
Basic and diluted								(3.67	)		(0.56	)

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Notes:

(1) Share-based compensation expenses included in:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB		US$
	(in thousands)
Cost of revenues		774		1,873		287
Sales and marketing expenses		1,150		3,338		512
Research and development expenses		3,318		10,761		1,649
General and administrative expenses		51,514		30,838		4,726

(2) Pro forma basic and diluted net loss per share gives effect to the assumption that all preferred shares have been converted into ordinary shares as of the beginning of the year or the original date of issuance, if later, at the conversion ratio of one for one, and that all of our founders’ unvested restricted shares have been vested as of the beginning of the year or the grant date, if later. See Note 11(b) to the Consolidated Financial Statements for more information regarding our founders’ restricted shares.

The following table presents our summary consolidated balance sheet data as of December 31, 2019 and 2020.

	As of December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Summary Consolidated Balance Sheet Data:
Cash and cash equivalents		506,145			1,926,289			295,217
Total current assets		567,422			2,086,550			319,776
Total assets		784,581			2,462,056			377,325
Deferred revenues		410,930			1,216,756			186,476
Total current liabilities		680,973			1,815,463			278,231
Total liabilities		749,345			1,860,430			285,122
Total mezzanine equity		992,021			2,722,314			417,213
Total shareholders’ deficit		(956,785	)		(2,120,688	)		(325,010	)
Total liabilities, mezzanine equity and shareholders’ deficit		784,581			2,462,056			377,325

The following table presents our summary consolidated statement of cash flows data for the year ended December 31, 2019 and 2020.

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Summary Consolidated Statement of Cash Flows Data:
Net cash (used in) / provided by operating activities		(228,999	)		204,359			31,319
Net cash used in investing activities		(79,564	)		(213,840	)		(32,772	)
Net cash provided by financing activities		475,800			1,542,945			236,467
Effect of exchange rate changes on cash and cash equivalents		26,726			(113,320	)		(17,367	)
Net increase in cash and cash equivalents		193,963			1,420,144			217,647
Cash and cash equivalents at beginning of the year		312,182			506,145			77,570
Cash and cash equivalents at end of the year		506,145			1,926,289			295,217

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Non-GAAP Financial Measures

Gross billings is a non-GAAP financial measure. We define gross billings for a specific period as the total amount of cash received in respect of sales of courses in such period, net of the total amount of refunds in such period. For a more detailed discussion of our refund policy, see “Business—Pricing and Refund Policy.”

We generally charge tuition fees for the online small-class courses we sell to students upfront. Upon payment of the tuition fees, students are given a specified number of course units that they can consume to attend our course sessions. The tuition fees for our online small-class courses are initially recorded as deferred revenues. Because our students generally attend online small-class courses on pre-determined schedules and deferred revenues are recognized proportionally as course units are consumed, we have better visibility into our future revenues. We collect the tuition fees upfront for our AI-enhanced courses which are initially recorded as deferred revenues and recognized proportionally as these courses are “unlocked,” i.e. become available for viewing by students, on pre-determined schedules. We believe gross billings provide valuable insights into the sales of our online courses and the performance of our business.

This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, its most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP financial measure. As gross billings have material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings as a substitute for, or superior to, net revenues prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

We compensate for these limitations by relying primarily on our GAAP results and using gross billings only as a supplemental measure. The table below sets forth a reconciliation of our gross billings to net revenues for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net revenues		195,412			1,174,359			179,978
Add: tax and surcharges		11,764			70,787			10,849
Add: ending deferred revenues		410,930			1,216,756			186,476
Less: beginning deferred revenues		(43,418	)		(410,930	)		(62,978	)
Less: Nonmonetary consideration awarded for promotion services(1)		(61,194	)		(142,859	)		(21,894	)
Gross billings (non-GAAP)		513,494			1,908,113			292,431

Note:

(1) Represent the Spark Coins and free course units awarded to parents of our students in return for the distinct promotion services they perform for us; for more information, see “Business—Branding, Sales and Marketing—Channels—Referrals and Organic Traffic.”

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Adjusted net loss represents net loss before share-based compensation expenses. This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, its most directly comparable financial measure prepared in accordance with GAAP. As adjusted net loss has limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net loss as a substitute for, or superior to, net loss prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The table below sets forth a reconciliation of our net loss and adjusted net loss for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net loss		(771,123	)		(951,695	)		(145,854	)
Add: Share-based compensation expenses		56,756			46,810			7,174
Adjusted net loss (non-GAAP)		(714,367	)		(904,885	)		(138,680	)

Key Performance Metrics

The following table presents certain operating metrics of our online small-class courses for the periods indicated. Our management continually reviews these metrics to evaluate the overall performance and growth trends of our business, since we have historically generated the vast majority of our net revenues through online small-class courses.

	For the Year Ended December 31,
	2019		2020
Number of course units consumed (in thousands)		2,844		15,168
Average net revenues per course unit consumed (in RMB)		68.2		74.1

See “—Conventions Which Apply to This Prospectus” for the definition of course units.

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RISK FACTORS

An investment in the ADSs involves significant risks. You should carefully consider all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in the ADSs. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ADSs could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We have a limited history in operating our foundational learning services. This may make it difficult to evaluate our future prospects and risks and uncertainties associated with our services.

We have a limited history of operating our foundational learning services. We introduced our mathematical thinking courses, which currently account for a significant majority of our gross billings, in early 2018. We introduced our Chinese and English courses in 2019 and 2020, respectively. Our AI-enhanced courses were launched as a standalone product in July 2020. Our limited history of operating these and potential new offerings may make it difficult for us to evaluate our future prospects and risks and uncertainties associated with our business. We have encountered, and may continue to encounter in the future, risks, challenges and uncertainties associated with operating our foundational learning services, as well as those typically encountered by companies in their early stage of development. These include, for example, the risks and difficulties relating to our ability to recruit, support and retain a sufficient number of qualified faculty members; continuously provide effective foundational learning products and service offerings; to build and manage reliable and secure IT systems and infrastructure; and to address regulatory and compliance uncertainties, among other things. Our experience in tackling these risks and uncertainties is limited. If we are unable to successfully address these risks and uncertainties, our business, financial condition and results of operations could be materially and adversely affected.

As a result of our limited operating history, our ability to forecast our future operating results, including our ability to plan for future growth, is limited and subject to a number of uncertainties. In particular, we may not be able to accurately predict demand for our offerings given the rapidly evolving market for online K-12 AST services and other factors. We operate a “back-end driven” operating model that we believe benefits us in the long run. However, our ability to achieve profits in the future may be lower than it would be if our strategy was to maximize short-term profitability. Significant expenditures on course and content development efforts, and expenditures on growing our technology and portfolio of course offerings, each of which we intend to continue to invest in, may not ultimately grow our business or contribute to long-term profitability. If we are not able to manage our growth or execute our strategies effectively, our expansion may not be successful and our business, financial condition and results of operations may be materially and adversely affected.

The success and future growth of our business will be affected by the acceptance of foundational learning.

We are dedicated to foundational learning. Unlike the exam-oriented one-size-fits-all educational model that relies heavily on memorization and repetitive drills and uses test scores as the primary measurement, foundational learning is designed to inspire students to develop an overall interest in learning and critical lifelong skills and capabilities, in addition to learning the subject knowledge, in an engaging and interactive environment. Foundational learning product offerings are relatively new to the market, and there are limited proven methods to project market demand or preference or available industry standards on which we can rely. Additionally, there is considerable uncertainty over the size

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and rate at which the market for foundational learning services will grow, as well as whether foundational learning as an emerging approach to education will be widely adopted. While we believe foundational learning delivers long-term benefits to students, some students and their parents may be inclined to choose the traditional, exam-oriented courses over foundational learning courses as they may find the former to be more effective in improving the students’ performance in standardized tests and for other reasons. In addition, while we intend to continue to expand our course offerings to cover more subjects and age groups, there is no guarantee that the foundational learning approach is suitable and is able to deliver effective outcomes for these courses. We cannot assure you that our offerings will continue to be attractive to our students and their parents in the future. If our foundational learning courses become less appealing to students and their parents, our business, financial condition and results of operations could be materially and adversely affected.

If we are not able to continue to attract and retain students, our business and prospects will be materially and adversely affected.

We generate revenues primarily from students paying for our online foundational learning courses. Our ability to continue to attract and retain students to purchase our online foundational learning courses is critical to the continued success and growth of our business. This in turn will depend on several factors, including our ability to recruit, train and retain high-quality faculty members; develop, adapt or enhance the quality of our course offerings; and effectively engage in branding, sales and marketing activities, among other things. Developing an enduring business model to serve this population is particularly challenging. Attracting new students depends not only on investment in our brand and our marketing efforts, but also on the perceived value of our offerings versus alternatives. If our efforts to satisfy our existing student base are not successful or become less effective, or if the cost of such efforts were to significantly increase, we may not be able to retain existing students as successfully or efficiently and, as a result, our business, results of operations, and financial condition could be adversely affected. The success of our business also depends on our ability to deliver tangible results to our students which, in turn, depends on a number of factors that are beyond our control, such as the time and resource commitments of the students themselves, as well as their parents. Our offerings may not be able to meet the expectation of all of our students and parents from time to time. For example, they may believe that our course offerings do not efficiently help students achieve their goals. If students or their parents feel that we are not providing them with the learning experience they expect, they may choose to drop out from or not to renew our courses. These factors may, in turn, contribute to reduced student satisfaction and increased challenges in attracting prospective students, all of which may materially and adversely affect our business, financial condition and results of operations. If we are unable to continue to attract and retain students, our gross billings and revenues may decline, which may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to continue to successfully address the risks and challenges in running a small-class model.

We deliver a significant majority of our courses in an online small-class format. While we believe that the online small-class format is the most effective format for delivering foundational learning and for providing students with a personalized, interactive and engaging learning experience, it also comes with a set of inherent operational challenges. To provide consistently high-quality courses to our growing student base, we need to manage a large number of teachers and tutors, assess and assign students into the most suitable class levels with a high degree of accuracy and timeliness, and closely track each student’s learning process. While we have developed robust operational workflows and technological capabilities needed to ensure smooth operation of our online small-class model, we may not be able to continue to operate these courses smoothly and efficiently as our student base and course offerings continue to grow. If we fail to address any of the inherent operational challenges

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discussed above, the quality of our courses and student satisfaction rate may drop, which may in turn cause our business, financial condition and results of operations to suffer.

Our business depends on the continued success of our brand, and if we fail to maintain and enhance recognition of our brand, our reputation and operating results may be materially and adversely affected.

We believe that market awareness of our “Huohua” brand has contributed significantly to our success. Maintaining and enhancing our brand are critical to our efforts to scale our business and attract and retain students. Failure to maintain and enhance our brand recognition could have a material and adverse effect on our business, financial condition and results of operations. We have devoted significant resources to maintaining and promoting our brand through quality foundational learning services, but we cannot assure you that our efforts will be successful. If we are unable to further enhance our brand recognition, or if our brand image is negatively impacted by any negative publicity relating to our company, products, courses or faculties, regardless of its veracity, we may not be able to maintain and enhance recognition of our brand or attract students and parents to our online foundational learning courses successfully or efficiently, and our business and results of operations may be materially and adversely affected.

We face intense competition, which could lead to a loss of market share and materially and adversely affect our business, financial condition and results of operations.

We operate in the competitive online education industry and are faced with intense competition in every aspect of our business, including competition for students, licenses, technology and talents. For example, we face competition from online and offline providers of K-12 AST services, especially those offering foundational learning services and courses in online small-class format. We compete with these companies across a range of factors, including, among others, teaching quality, the ability to deliver an interactive, engaging learning experience through technology, and the effectiveness of sales and marketing efforts. Our competitors may adopt similar teaching approaches and courses, with different pricing and packages that may have greater appeal than our offerings. In addition, some of our current and future competitors may have more resources than we do and may be able to devote greater resources than we do to the development and promotion of their product and services, and respond more quickly than we do to the changes in the rapidly evolving student preferences, market dynamics and the regulatory landscape. They may also have greater brand recognition and financial and other resources than we do, which may make it harder for us to maintain or gain market share. If we are not able to effectively compete against current or future competitors, our business, financial condition and results of operations could suffer. Increased competition may result in pricing pressure, reducing our ability to charge higher prices for our foundational learning services. The increasingly competitive landscape may also result in longer and more complex sales cycles and cause us to lose market share to our competitors, any of which could materially and negatively affect our business, financial condition and results of operations.

We may not be able to continue to recruit, train and retain a sufficient number of qualified faculty members and content development employees.

Our faculty members, including teachers and tutors, and our content development employees are key factors that affect the quality of the student-centric learning experience that we deliver for our students. If we lose any of our high-quality faculty members and content development employees to our competitors, the attractiveness of our offerings may be adversely affected, which could have a material adverse effect on our business, financial condition and results of operations.

Given the interactive nature of our online courses, we tend to attract teachers and tutors with strong education backgrounds and good communication skills. Our students’ learning experiences are

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also affected by the quality of our course content and design, which relies heavily on our ability to recruit, train and retain skilled content development employees. The market for qualified teachers, tutors and content development employees in China is competitive. In order to attract and retain qualified teachers, tutors and content development employees, we should provide candidates with competitive compensation packages and offer attractive career development opportunities. Although we have not experienced major difficulties in attracting and retaining qualified teachers, tutors and content development employees in the past, we cannot guarantee we will be able to continue to attract, train and retain a sufficient number of qualified teachers, tutors and content development employees in the future as our business grows, which may have a material adverse effect on our business, financial condition and results of operations.

We are subject to the risks relating to the uncertainties in the interpretation and implementation of laws and regulations regarding the online education industry in general, and the K-12 AST market in particular. Additionally, certain aspects of our current business operations may be deemed not to be in full compliance with these laws and regulations.

The online education industry in general, and the online K-12 AST market in particular, in the PRC are subject to various laws and regulations that are relatively new and rapidly evolving.

• Pursuant to the amended Law for Promoting Private Education, or the amended Private Education Law, a private school must obtain a private school operating permit. We are an online tutoring service provider, which is different from traditional offline education service providers, and it remains unclear in practice as to whether and how an online tutoring service provider like us needs to comply with the operating permit requirement under the amended Private Education Law. In August 2018, the Ministry of Justice, or MOJ, published the draft amendment to the Regulations on the Implementation of the Law for Promoting Private Education of the PRC, or MOJ Draft, for public comment. According to the MOJ Draft, an online non-diploma-awarding education service provider like us must file with the Department of Education at the provincial level. The MOJ Draft further stipulates that an internet technology service platform that provides training and educational activities must review and register the identity information of the entities or individuals applying for access to the platform. See “Regulations—Regulation Relating to Private Education”. As of the date of this prospectus, the MOJ Draft is still pending for final approval and has not come into effect. It remains uncertain when and how the MOJ Draft would come into effect, and whether and how local governments would promulgate rules related to the filing or licensing requirement applicable to online course providers like us. If we are not able to comply with the filing or licensing requirement in a timely manner or at all, we may be subject to fines, confiscation of the gains derived from our non-compliant operations, suspension of our non-compliant operations or claims for compensation of any economic loss suffered by our students or other relevant parties.

• Moreover, the Ministry of Education, or MOE, jointly with certain other PRC government authorities, promulgated the Implementation Opinions on Regulating Online After-School Tutoring, or the Online Academic AST Opinions, effective on July 12, 2019. The Online Academic AST Opinions are intended to regulate the provision of “academic” AST services through the internet to students in primary and secondary schools. Among other things, the Online Academic AST Opinions require that providers of online academic AST services shall make filings with the competent provincial education regulatory authorities with respect to such services. The Online Academic AST Opinions also impose a number of requirements and restrictions, including, among other things, that (i) each class shall not last longer than 40 minutes and the intervals between classes shall not be less than 10 minutes; (ii) tuition fees shall not be collected in a lump sum for more than 60 course sessions when charged based

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on the number of classes, or for a course length of more than three months when charged based on the length of the course; (iii) live streaming courses provided to students receiving compulsory education shall not end later than 9:00 p.m.; and (iv) teachers are required to obtain the necessary teacher qualification licenses. Additionally, on March 23, 2021, the State Council’s Office of Education Steering Committee released an article warning parents of K-12 students about AST service providers’ collection of tuition fees in ways that are in violation of the Online Academic AST Opinions.

The Online Academic AST Opinions do not explicitly define the term “academic after-school tutoring services.” Additionally, in October 2019, Beijing Municipal Education Commission, the competent education regulatory authority in Beijing, the city where our headquarter is located, published a Q&A on its official website in which it takes the position that “logical thinking tutoring” is not subject to the filing requirements under the Online Academic AST Opinions, without giving a clear definition of “logical thinking tutoring”. We have made anonymous inquiries with the competent education authorities and were informed that there are currently no specific, bright-line rules as to the definition of “academic after-school tutoring services” or “logical thinking tutoring” and the determination of whether an online course would fall within the scope of these terms is subject to the discretion of the competent education regulatory authorities. We believe our foundational learning courses which are focused on cultivating students’ thinking and other skills, differ from the “academic after-school tutoring services” designed to improve students’ academic performance that the Online Academic AST Opinions are intended to regulate. However, given the aforesaid regulatory uncertainties, we cannot assure you that the regulatory authorities would not take a view that our online courses fall within the scope of “academic after-school tutoring services” and thus subject us to the various requirements, such as the teacher qualification license requirement, under the Online Academic AST Opinions. There is also no assurance that the government authorities will not promulgate additional regulations, guidance or interpretations to bring our foundational learning courses under the jurisdiction of Online Academic AST Opinions. If the government authorities take the position that we will be required to comply with the Online Academic AST Opinions, we cannot assure you that we are in full compliance with the requirements thereunder, or that we will be able to timely complete or maintain all the filings required by the Online Academic AST Opinions. For example, currently some of our teachers have not obtained teacher qualification licenses, and we collect fees for some of our courses in a lump sum for more than 60 classes. If the Online Academic AST Opinions were determined to be applicable to us and we were not able to meet any of those requirements thereunder in time, or at all, we may be subject to fines, regulatory orders to suspend our operations or other regulatory and disciplinary sanctions. See “Regulation—Regulation Relating to the Online After-School Training and Educational Apps.” Despite the aforesaid regulatory uncertainties, as part of our efforts to meet the highest compliance standard, we have voluntarily applied for the filings with the competent education regulatory authorities in accordance with the Online Academic AST Opinions with respect to our Chinese courses, English courses and certain other courses, which account for a relatively small portion of our revenue. These filings have not yet been completed as of the date of this prospectus.

• Moreover, the MOE, jointly with certain other PRC government authorities, issued the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps on August 10, 2019, or the Opinions on Educational Apps, which require, among others, mobile apps that offer services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, be filed with the competent provincial regulatory authorities for education. As of the date of this prospectus, we have completed the filings for all of our online tutoring apps as required under the Opinions on

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Educational Apps. As the Opinions on Educational Apps are relatively new and evolving, we cannot assure you that we are in full compliance with all relevant rules and will be able to complete or maintain all necessary filings and comply with other regulatory requirements under the Opinions on Educational Apps and their related rules and regulations in a timely manner, or at all. If we fail to promptly complete or maintain any such filings and comply with other applicable regulatory requirements, we may be subject to fines, regulatory orders to suspend our apps or other regulatory and disciplinary sanctions.

In addition to the existing regulatory regime, it is uncertain whether and how the PRC government would promulgate additional laws and regulations regarding the online education industry, particularly the online K-12 AST industry, and there is no assurance that we can comply with any such newly promulgated laws and regulations in a timely manner. In recent years, the PRC regulatory authorities have taken steps to strengthen the regulation on K-12 AST services including by promulgating new rules, guidance and interpretations relating to licensing requirements, protection of children, payment of tuition fees and other aspects of online K-12 AST services. See “Regulation—Regulation Relating to After-school Tutoring” and “Regulation—Regulation Relating to the Online After-School Training and Educational Apps.” For example, there have been recent discussions suggesting that the MOE will further regulate tutoring activities offered by K-12 AST companies, including implementing measures to safeguard the rights and interests of parents and students, protect the safety of children and penalize non-compliance activities. As of the date of this prospectus, the MOE has not disclosed any concrete measures or any timeline for implementing these measures. Since the PRC regulatory authorities have significant discretion in interpreting and implementing laws and regulations, it may be difficult to evaluate with certainty whether our business operations will fully comply with existing and future applicable laws and regulations. Our failure to fully comply with these existing and future laws and regulations on K-12 AST services may materially and adversely affect our business, financial condition and results of operations.

If we fail to protect our intellectual property rights, our brand and business may suffer.

We rely on a combination of patent, copyright, trademark and trade secret laws and contractual restrictions on disclosure to protect our intellectual property rights. Although we seek to obtain copyright, patent or other appropriate protection for our intellectual property when applicable, it is possible that we may not be able to do so successfully or that the protections we have obtained may not be sufficient to protect all of our intellectual property rights. Currently, substantially all of the courses and other educational content, such as the courseware and textbooks, that we offer are developed in-house. Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy or duplicate our intellectual property or otherwise use our intellectual properties without obtaining our consent. Monitoring unauthorized use of our intellectual property is difficult and costly, and we cannot be certain that the steps we have taken will effectively prevent misappropriation of our intellectual properties. If we are not successful in protecting our intellectual property rights, our business and results of operations may be adversely affected.

We may from time to time be subject to infringement claims relating to intellectual properties of third parties.

We cannot assure you that our course and other educational content offerings, our technologies and other aspects of our operations do not or will not infringe upon copyrights or other intellectual property rights (including but not limited to trademarks, patents and know-how) held by third parties. We have encountered, and may encounter in the future, disputes over rights and obligations concerning intellectual properties, and we cannot guarantee that we will prevail in those disputes.

We have adopted policies and procedures to prohibit our students and faculty members and other employees from infringing upon third-party copyright or other intellectual property rights. However, we

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cannot assure you that they will not, against our policies, use third-party copyrighted materials or intellectual property without proper authorization in our online courses or via any medium through which we deliver our services. To the extent that our students and faculty members and other employees use intellectual property rights or copyrights owned by others, disputes may arise as to the rights in related know-how and inventions and other proprietary assets. In addition, we may incur liability for unauthorized duplication or distribution of materials used as part of the delivery of our online courses. Although we have in place rules and procedures designed to enable copyright owners to provide us with notice of alleged infringement, given the scale of our business operations and the volume of educational content that we offer, it is extremely challenging for us to identify and remove or disable all potentially infringing content that may exist, and we may encounter intellectual property claims. If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, or may be prohibited from using such intellectual property or relevant contents, and we may incur licensing or usage fees or be forced to develop alternatives of our own. As a result, our reputation may be harmed and our business and financial performance may be materially and adversely affected.

We may not be able to improve or expand our offerings in a timely and cost-effective manner.

We currently offer courses in mathematical thinking, Chinese and English. We regularly and constantly update our existing offerings and develop new courses in more subjects or delivery formats and for more age groups. New courses may not be accepted by our students and their parents as we expect, and we may not be able to introduce them as quickly as our competitors introduce competing offerings. The development of new courses could be costly and time-consuming and requires us to make significant investments in research and course development, developing new technologies, and attracting, training and retaining a sufficient number of faculty members and content development employees, all of which may not be successful. If we are unsuccessful in improving or expanding our offerings due to these reasons, our business, financial condition and results of operations could suffer.

We require a significant amount of capital to fund our operations and respond to business opportunities. If we cannot obtain sufficient capital on acceptable terms, or at all, our business, financial condition and results of operations may be materially and adversely affected.

We may make investments from time to time in content and product development, technologies, branding, sales and marketing to remain competitive. Our ability to obtain additional financing in the future is subject to a number of uncertainties, including those relating to, among other things, (i) our future business development, financial condition and results of operations; (ii) general market conditions for financing activities; and (iii) macro-economic and other conditions in China and elsewhere. Although we expect to rely increasingly on net cash provided by operating activities and financing through capital markets for our liquidity needs as our business continues to grow, we cannot assure you that we will be successful in our efforts to diversify our sources of capital. If we cannot obtain sufficient capital, we may not be able to implement our growth strategies, and our business, financial condition and results of operations may be materially and adversely affected.

We have significant working capital requirements and have historically experienced working capital deficits. If we continue to experience working capital deficits in the future, our business, liquidity, financial condition and results of operations may be materially and adversely affected.

We had negative working capital (which is the difference between current assets and current liabilities) of RMB113.6 million as of December 31, 2019. The major factor for our negative working

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capital position was attributable to net cash outflows from operating activities. There is no assurance that we will generate sufficient net income or operating cash flows to meet our working capital requirements and repay our liabilities as they become due, due to a variety of factors. We intend to take a number of actions in order to address our working capital deficit, including prudently managing our working capital or raising additional equity or debt financing on terms that are acceptable to us. However, there can be no assurance that we will be able to successfully take any of these actions in a timely manner, or at all. Our inability to take these actions as and when necessary could materially adversely affect our liquidity, results of operations, financial condition and ability to operate.

We have a history of net losses and we may not achieve profitability in the future.

We incurred net losses of RMB771.1 million and RMB951.7 million (US$145.9 million), respectively, in 2019 and 2020. We cannot assure you that we will be able to generate net profits in the future. We intend to continue to invest heavily in the foreseeable future in enhancing our course offerings, improving our technologies, and hiring qualified faculty and course and content development personnel. These efforts may be more costly than we expect and our net revenues may not increase sufficiently to offset the expenses. We may continue to take actions and make investments that do not generate optimal financial results and may even result in significantly increased operating and net losses in the short term with no assurance that we will eventually achieve our intended long-term benefits or profitability.

Any change, disruption, discontinuity in the features and functions of our major marketing channels could severely limit our ability to continue growing our student base, and our business may be materially and adversely affected.

Our success depends on our ability to attract new students and retain existing students. We leverage a variety of marketing channels, including social networks in China, as a tool to acquire leads and convert them into student enrollments. For example, we leverage Weixin/WeChat to enable students and their parents to browse our course offerings, share their experience with our courses, and communicate with our course consultants. To the extent that we fail to leverage such channels, our ability to attract or retain students may be severely harmed. If any of these channels makes changes to its functions or support unfavorable to us, or stops offering its functions or support to us, we may not be able to locate alternative platforms of similar scale to provide similar functions or support on commercially reasonable terms in a timely manner, or at all. Furthermore, we may fail to establish or maintain relationships with additional channels to support the growth of our business on economically viable terms, or at all. Any interruption to or discontinuation of our relationships with major channels may severely and negatively impact our ability to continue growing our student base, and any occurrence of the circumstances mentioned above may have a material adverse effect on our business, financial condition and results of operations.

We face uncertainties with respect to the development of regulatory requirements on our businesses. Our failure to obtain, maintain or renew other licenses, approvals, permits, registrations or filings necessary to conduct our operations in China could have a material adverse impact on our business, financial condition and results of operations.

Due to the uncertainties as to the interpretation of certain laws and regulations, we may be required to obtain and maintain necessary licenses, approvals, permits, registrations and filings that are applicable to our business operations in China, and we may be required to apply for and obtain additional licenses or permits for our current operations as the interpretation and implementation of current PRC laws and regulations are still evolving, and new laws and regulations may also be promulgated.

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We print physical teaching materials and hand-outs, and distribute them to our students as part of their course packages. If the government authorities deem our printing and provision to students of such physical education materials as “publication of books” under Administrative Regulations on Publishing, we may be required to entrust qualified publishers to publish such physical education materials, failure of which may subject us to penalties, including orders to cease illegal activities, discontinuation of operations, correction order, fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent government authorities to cease to distribute printed materials to our students, which could materially and adversely affect our business operations. See “Regulation—Regulation Relating to Publishing.”

We may be required to apply for and obtain additional licenses, permits or recordation, given the significant uncertainties of the interpretation and implementation of certain regulatory requirements applicable to the online education business. As of the date of this prospectus, online education institutions are not explicitly required to obtain the License for Online Transmission of Audio-Visual Programs or to complete filings as an internet live-streaming platform primarily because there are no implementation rules, explicit interpretation from government authorities or prevailing enforcement practice deeming online education services to be “internet audio-visual programs” and “internet live-streaming services” as defined in relevant rules and regulations promulgated by relevant government authorities. In addition, as of the date of this prospectus, there are no implementation rules, explicit interpretation from government authorities or prevailing enforcement practice deeming the provision of our educational content to students and teachers through our apps and online platforms as “online publishing” which requires an Online Publishing Service Permit. See “Regulation—Regulation Relating to Online Publishing.” However, there is no assurance that local government authorities will not adopt different enforcement practices, or that any government authorities will not issue more explicit interpretation and rules or promulgate new laws and regulations from time to time to further regulate the online education industry, which may subject us to additional licensing requirements to continue to operate our business. Failure to obtain or maintain such licenses may subject us to fines, confiscation of relevant gains, suspension of the operations of our apps and online platforms and other liabilities. As of the date of this prospectus, no material fines or other penalties have been imposed on us for failure to obtain such additional licenses, permits or filings.

In addition, there can be no assurance that we will be able to maintain our existing licenses, approvals, registrations or permits necessary to provide our current online services in China, renew any of them when their current term expires, or update existing licenses or obtain additional licenses, approvals, permits, registrations or filings necessary for our business expansion from time to time. If we fail to do so, our business, financial condition and operational results may be materially and adversely affected.

We may not be able to maintain or increase our tuition fee levels without adversely affecting the demand for our offerings.

Our results of operations are affected by the pricing of our online course offerings. We determine the tuition fees for our online courses primarily based on the market demand for our course offerings, the cost of our operations, the pricing charged by our competitors, and the general economic conditions, among other things. We cannot guarantee that we will be able to maintain or increase our tuition fee levels in the future without adversely affecting the demand for our online course offerings.

Refunds or potential refund disputes of our tuition fees may negatively affect our business, financial condition and results of operations.

For our online small-class courses and AI-enhanced courses, we offer students a full and unconditional refund within a certain number of course units. After the expiration of the full-refund

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period, students may still receive a pro-rata unconditional refund for the course units that have not been taken. For more information, see “Business—Pricing and Refund Policy.” The number of refund requests and the amount of refunds could be affected by a number of factors, many of which are beyond our control. These factors include without limitation, student dissatisfaction with the quality of our online course offerings, a perceived decline in our teaching quality, privacy concerns relating to our services, negative publicity regarding us or online course providers in general, and any change or development in PRC laws and regulations with respect to fees and tuitions charged by online courses providers like us. Any refund payments that we may be required to make to our students, as well as the expenses we could incur for processing refunds and resolving refund disputes, could be substantial and could materially and adversely affect our business, financial condition and results of operations. A high volume of refunds and refund disputes may also generate negative publicity that could harm our reputation.

If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected.

Our business has grown substantially in recent years. We had 321,282 students as of December 31, 2020, representing a significant increase from 87,578 as of December 31, 2019. Our net revenues increased by 501.0% from RMB195.4 million in 2019 to RMB1,174.4 million (US$180.0 million) in 2020. Our gross billings almost quadrupled from RMB513.5 million in 2019 to RMB1,908.1 million (US$292.4 million) in 2020. We recorded a gross profit of RMB322.0 million (US$49.4 million) in 2020, compared to a gross loss of RMB166.5 million 2019. For a reconciliation of gross billings to net revenues, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” However, our historical performance may not be indicative of our future growth or financial results. We cannot assure you that we will be able to manage our growth at the same rate as we did in the past, or avoid any decline in the future. Additionally, as a result of our limited operating history, our ability to forecast our future operating results is limited and subject to a number of uncertainties. If we are not able to manage our growth or execute our strategies effectively, our expansion may not be successful and our business, financial condition and results of operations may be materially and adversely affected. See “—We have a limited history in operating our foundational learning services. This may make it difficult to evaluate our future prospects and the risks and uncertainties associated with our services.”

Any significant disruption in our technology infrastructure or our failure to maintain the satisfactory performance, security and integrity of our technology infrastructure would hurt our students’ learning experiences and may materially and adversely affect our business, reputation, financial condition and results of operations.

The proper functioning of our technology infrastructure is essential to our business. We may encounter problems when upgrading our technology infrastructure including our online platform, mobile apps, systems and software. The development, upgrades and implementation of our technology infrastructure are complex processes. Issues not identified during pre-launch testing of new services may only become evident when such services are made available to our entire student base. Therefore, our technology infrastructure may not function properly if we fail to detect or solve technical errors in a timely manner. In addition, our systems are potentially vulnerable to damage or interruption as a result of natural disasters, power or telecommunications failures, environmental conditions, computer viruses or attempts to harm our systems, criminal acts and similar events. These and other events may lead to the interruption of our online course delivery and the unavailability of our mobile apps, or other events which would affect our operations. We have experienced system failure and downtime in the past, and there is no assurance that we will not experience similar events in the future to the extent they cause disruption to our business operations. If we experience frequent or persistent service disruptions, our reputation may be damaged and our students and their parents may switch to

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our competitors, which may have a material adverse effect on our business, financial condition and results of operations.

If we fail to develop and apply our technologies to support our business or if we fail to timely respond to the rapid changes in industry and technology trends, we may lose market share and our business may be materially and adversely affected.

We believe our technologies are critical to our business. The online education industry is subject to rapid technological changes and innovations and could be affected by unpredictable product lifecycles and user preferences. If we fail to develop new products that satisfy students and their parents and provide enhancements and new features for existing products that keep pace with rapid technological and industry change, our business, operating results and financial condition could be adversely affected. If new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely impact our ability to compete effectively. Our technologies may become obsolete or insufficient, and we may have difficulties in following and adapting to technological changes in a timely and cost-effective manner. New technologies and solutions developed and introduced by our competitors could render our offerings less attractive or obsolete thus materially affecting our business and prospects. In addition, our substantial investments in technology may not produce expected results. If we fail to continue to develop, innovate and utilize our technologies or if our competitors develop or apply more advanced technologies, our business, financial condition and results of operations could be materially and adversely affected.

If our data analytics algorithms, especially those relating to the use of student and learning data, are flawed or ineffective, our business and reputation could be harmed.

We rely on our proprietary algorithms to analyze massive amounts of students’ learning data to deliver a more personalized learning experience, and generate insights to inform our course development efforts. Although we have invested substantially in the development and continued improvement of our algorithms, we cannot assure you that our algorithms do not and will not carry any flaw or defect that could compromise our data analysis results. Particularly, some of these flaws or defects may not become evident until the algorithm is put to actual usage or after its continued failure to accurately generate insights with the anticipated level of relevance. Even if the algorithm is properly designed, its performance may be affected by the quality and volume of data we aggregated. We also expect to experience significant growth in the amount of data we need to process as we continue to develop our business and enlarge our student base. As the amount of data increases, the likelihood of any defect or error may increase accordingly. We may incur significant expenses to remediate any defects in our algorithms, or may not be able to correct them at all. Although we have not experienced any material defects to date, we cannot assure you that our algorithms are flawless. If any incidents of material defects took place, our students’ learning experiences would be significantly compromised, which, in turn, harms our brand and may have a negative impact on our business operations.

The COVID-19 pandemic has caused interruptions to our business and operations and it, or any future health epidemic or other adverse public health developments, may continue to do so.

During the COVID-19 pandemic, government authorities in China and around the world have ordered businesses to close and people to stay at home while imposing stringent restrictions on traveling and social gatherings. The COVID-19 pandemic has affected our business in both negative and positive ways. On one hand, COVID-19 has caused temporary interruptions to our business operations in the first quarter of 2020 as we implemented internal protocols to keep our faculty members and other employees safe by closing our offices in Beijing and several other cities in China.

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During the same period, COVID-19 has caused us to incur additional costs and expenses to modify our business practices (including employee travel, mandatory work-from-home policies and cancellation and rescheduling of physical interviews with teacher and tutor candidates). On the other hand, as K-12 students continued to learn from home, the market acceptance of virtual learning and online education has also rapidly increased, which is expected to drive demand for online AST services, including ours, in the long run. While we do not consider our business to have been materially and adversely affected by the COVID-19 pandemic to date, the COVID-19 pandemic may still have a material adverse impact on our business and result of operations in the near future. There continues to be significant uncertainties associated with the COVID-19 pandemic, including with respect to the ultimate spread of the virus, the severity of the disease, the duration of the outbreak, the possibility of successive waves of outbreaks, further actions that may be taken by governmental authorities around the world to contain the virus or to treat its impact, and the scope and length of the resulting economic downturn. Failure to contain the further spread of COVID-19 will prolong and exacerbate the general economic downturn. In addition, the continuing pandemic may further impact our ability to maintain and expand our network infrastructure, which could severely interrupt our business and operations and adversely affect our operating results and financial condition. Any future health epidemic or other adverse public health developments may have similar negative effects. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also heighten other risks described in this “Risk Factors” section, such as our ability to raise additional capital as needed on acceptable terms.

We may be adversely affected by any negative publicity concerning us and our shareholders, affiliates, directors, officers, faculty members and other employees and business partners, and the industry in which we operate, regardless of its accuracy, that could harm our reputation and business.

Negative publicity about us and our shareholders, affiliates, directors, officers, faculty members and other employees, business partners, as well as the industry in which we operate, can harm our brand and reputation. Negative publicity concerning these parties could be related to a wide variety of matters, including, but are not limited to:

• alleged misconduct or other improper activities committed by our directors, officers and faculty member and other employees, including misrepresentations made by our employees to prospective students during sales and marketing activities;

• false or malicious allegations or rumors about us or our directors, shareholders, affiliates, officers and faculty members and other employees;

• complaints by our students and their parents about our products and services;

• security breaches of data;

• employment-related claims relating to alleged employment discrimination, and wage and hour violations; and

• government and regulatory investigations or penalties resulting from our failure to comply with applicable laws and regulations.

In addition to traditional media, there has been an increasing use of social media platforms and similar devices in China, including instant messaging applications, social media websites and other forms of internet-based communications that provide individuals with access to a broad audience. The availability of information on instant messaging applications and social media platforms is virtually immediate as is its impact without affording us an opportunity for redress or correction. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning our company, shareholders, directors, officers, faculty members and other employees may be posted on such platforms at any time. The risks associated with any such

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negative publicity or false information cannot be completely eliminated or mitigated and may materially harm our reputation, business, financial condition and results of operations.

Our reputation and business may be adversely impacted by our students’, faculty members’ and other employees’ misconduct, improper activities and misuse of our content and services, many of which are beyond our control.

Our courses undergo multiple rounds of internal review before being broadly released. We regularly and actively monitor our live courses and other content and communications to ensure that we are able to identify content that may be deemed inappropriate or violation of laws, regulations and government policies. However, since we have limited control over the real-time and offline behavior of our students, faculty members and other employees, to the extent any improper behavior is associated with our content and services, our ability to protect our reputation may be limited. In addition, if any of our students and faculty members suffer or allege to have suffered financial or emotional harm following contact initiated through our offerings, we may face civil lawsuits or other liabilities. In response to allegations of illegal or inappropriate activities, PRC government authorities may intervene and hold us liable for non-compliance with PRC laws and regulations concerning the dissemination of information on the internet and subject us to administrative penalties or other sanctions, such as requiring us to restrict or discontinue our content, products or services. As a result, our business may suffer and our reputation, business, financial condition and results of operations may be materially and adversely affected.

We are also exposed to the risk of other types of fraud or other misconduct committed by our faculty members and other employees, and other third parties. Such misconduct includes intentionally failing to comply with government regulations; engaging in unauthorized activities and misrepresentation to our prospective students during sales and marketing activities; unauthorized use or misuse of our systems, mobile apps and websites to disseminate illegal or inappropriate information; or sharing their users’ data with us without such users’ authorization, among other things. It is not always possible to deter such misconduct, and the precautions we take to prevent and detect these activities may not be effective in controlling unknown or unmanaged risks or losses, which could harm our business, financial condition and results of operations.

We track, process, and store significant amounts of data, and the improper use, collection or disclosure of such data could subject us to significant reputational, financial, legal and operational consequences.

We track, process, and store significant amounts of data, including personal and learning data involving our students, and generate insights to inform our teaching and content development activities. To ensure the confidentiality and integrity of our data, we maintain a comprehensive and rigorous data security program and have implemented data encryption measures to ensure secured storage and transmission of data and prevent any unauthorized access or use of such data. Despite our continued efforts in confidentiality and data protection, techniques used to gain unauthorized access to data and systems, disable or degrade service, or sabotage systems, are constantly evolving, and we may be unable to anticipate, deter, or prevent such techniques or otherwise implement adequate preventative measures to avoid unauthorized access to such data or our systems. Like all internet services, our services are vulnerable to software bugs, computer viruses, internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service, and similar attacks and disruptions from the unauthorized use of our and third-party computer systems, any of which could lead to system interruptions, delays, or shutdowns and cause the loss of critical data or the unauthorized access to our data. Computer malware, viruses, and computer hacking and phishing attacks are becoming increasingly prevalent. Any functions that we use to facilitate interactivity with other internet platforms have the potential to increase the scope of access that hackers may have to

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our data systems. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, our failure to maintain performance, reliability, security and availability of our foundational learning services and technical infrastructure to the satisfaction of our students may harm our reputation and ability to retain existing students and attract new students. We may incur significant costs in protecting against cyber-attacks, and if an actual or perceived breach of security occurs to our systems or a third party’s systems, we could be required to expend significant resources to mitigate the breach of security and to address matters related to any such breach, including notifying students or regulators.

We are subject to a variety of laws and other obligations regarding data protection, any failure to comply with applicable laws and obligations or any compromise of our cybersecurity could have a material adverse effect on our business, financial condition and results of operations.

We are subject to various regulatory requirements relating to the security and privacy of data, including restrictions on the collection, storage and use of personal information and requirements to take steps to prevent personal data from being divulged, stolen, or tampered with. See “Regulation—Regulation Relating to Internet Information Security and Privacy Protection.” Regulatory requirements regarding the protection of data are constantly evolving and can be subject to differing interpretations or significant change, making the extent of our responsibilities in that regard uncertain. For example, the Cybersecurity Law of the PRC became effective in June 2017, but there are significant uncertainties as to the interpretation and application of the law. It is possible that those regulatory requirements may be interpreted and applied in a manner that is inconsistent with our practices. In addition, the Office of the Central Cyberspace Affairs Commission, the Ministry of Industry and Information Technology, or the MIIT, the Ministry of Public Security, and the State Administration for Market Regulation, or SAMR, jointly issued an announcement on January 23, 2019 regarding carrying out special campaigns against mobile internet application programs collecting and using personal information in violation of applicable laws and regulations, which prohibits business operators from collecting personal information irrelevant to their services, or forcing users to give authorization in disguised manner. Further, the Cyberspace Administration of China issued the Provisions on the Cyber Protection of Children’s Personal Information on August 22, 2019, which took effect on October 1, 2019. The Provisions on the Cyber Protection of Children’s Personal Information requires, among others, that network operators who collect, store, use, transfer and disclose personal information of children under the age of 14 shall establish special rules and user agreements for the protection of children’s personal information, inform the children’s guardians in a noticeable and clear manner, and shall obtain the consent of the children’s guardians. In addition, the PRC regulatory authorities have recently taken steps to strengthen the regulation on data protection and conducted several rounds of relevant inspections. We have been taking and will continue to take reasonable measures to comply with such announcements, provisions and inspection requirements. However, as these announcements and provisions are relatively new, and the related implementation rules have yet been promulgated, it remains uncertain how these announcements and provisions will be implemented. We cannot assure you we can adapt our operations to it in a timely manner.

Any failure, or perceived failure by us to maintain the security of our students’ data and other confidential information or to comply with applicable privacy, data security and personal information protection laws, regulations, policies, contractual provisions, industry standards, and other requirements, may result in civil or regulatory liability, including governmental or data protection authority enforcement actions and investigations, fines, penalties, enforcement orders requiring us to cease operating in a certain way, litigation, or adverse publicity, and may require us to expend significant resources in responding to and defending allegations and claims. Furthermore, PRC regulatory and enforcement regime with regard to privacy, data security and personal information protection is still evolving. PRC regulators have been increasingly focused on regulation in the areas of

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data security and data protection. We cannot assure you that relevant regulators will not interpret or implement these laws or regulations in ways that negatively affect us. It is possible that we may become subject to additional or new laws and regulations, which may result in additional expenses to us and subject us to potential liability and negative publicity. We expect that these areas will receive greater attention and focus from regulators, and attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, fines, suspension of business and revocation of required licenses, and our reputation business, financial condition and results of operations could be materially and adversely affected.

Our offerings involve the storage and analysis of data from our students, and security breaches or vulnerabilities affecting our or our vendors’ technology, services and systems could expose us to a risk of loss of the data, litigation and potential liability. We cannot assure you that we will not experience cyber-attacks in the future. We use third-party technologies and systems for a variety of reasons, such as data storage and transmission, cloud services and other functions. We cannot assure you that these technologies and systems will not experience security breaches in the future.

Our business may be subject to the risks of international operations.

We may expand our presence in overseas markets and regions. We may have to adapt our business models to the local market due to various legal requirements and market conditions. Our international operations and expansion efforts may result in increased costs and be subject to a variety of risks, including increased competition, uncertain enforcement of our intellectual property rights, changes and evolutions in overseas market conditions and user preferences, the complexity of compliance with foreign laws and regulations and political or social unrest or economic instability.

Our future international operations may also be negatively affected by any deterioration of the political and economic relations between China and other countries and sanctions and export controls administered by the government authorities in the foreign countries in which we operate, and other geopolitical challenges. In addition, compliance with applicable Chinese and foreign laws and regulations, such as import and export requirements, anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, cyber security, data privacy and protection, labor laws, restrictions on foreign investment, and anti-competition regulations, increases the costs and risk exposure of doing business in foreign jurisdictions. Although we intend to implement policies and procedures to comply with these laws and regulations, a violation of these laws and regulations by us or our employees, contractors or agents could nevertheless occur. In some cases, compliance with the laws and regulations of one country could result in violations of the laws and regulations of another country. Violations of these laws and regulations could materially and adversely affect our brand, international growth efforts and business.

We may not be successful in developing or maintaining relationships with key participants in the mobile industry or in developing or offering products and services that operate effectively with these operating systems, networks, devices and standards.

We make our mobile apps available on both iOS and Android systems across a variety of mobile devices. We depend on the interoperability of our mobile apps with popular devices and mobile operating systems that we do not control. Any changes in devices or their systems that degrade the functionality of our mobile apps or give preferential treatment to competitive mobile apps could adversely affect usage of our mobile apps. We may not be successful in developing relationships with key participants in the mobile industry or in developing products and services that operate effectively with their operating systems, networks, devices and standards. If we cannot maintain such

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relationships at reasonable costs or at all, we may not get sufficient exposure on their respective platforms, which will impair our ability to acquire traffic. Moreover, we are subject to the terms, policies and conditions of the app stores. If any of the key participants finds us to be in violation of the terms, policies and conditions of its app store, it may seek economic damages from us or remove our mobile apps from its app store. Such incident would also harm our relationship with the key participant. Further, if the number of systems, networks and devices for which we develop our mobile apps increases, it will result in an increase in our costs and expenses, and adversely affect our net margin and results of operations.

We use the streaming technology from a third-party provider to deliver courses to our students. Any interruption to or discontinuities of our cooperative relationship with the provider may severely and negatively impact our ability to deliver our course content to students.

We use the technology of a leading audio and video streaming service provider in China to deliver course to our students. Their technology is important to our ongoing ability to operate our online small-class courses. Licensed technology and intellectual property rights from third parties, including the streaming service provider with whom we are working, may not continue to be available on commercially reasonable terms, or at all. Our agreement with the streaming service provider is terminable and provide limited recourse for service interruptions. Any loss of the right to use any of this technology could result in delays in delivering our lessons until equivalent technology is identified and integrated, which could harm our business. Any interruption to or discontinuation of our cooperative relationship with our streaming service provider, despite our in-house technology development efforts, may severely and adversely impact our ability to deliver our courses to students. In this situation we would be required to either redesign our solutions to function with technology available from other parties or to develop these components ourselves more quickly, which would result in increased costs or interruption of our platform, which could harm our students’ learning experiences and our reputation. If we fail to maintain or renegotiate any of these technology or intellectual property licenses, we could face significant delays and the diversion of resources in attempting to develop similar or replacement technology, or to license and integrate a functional equivalent of the technology we use from our current streaming service provider.

The use of third-party manufacturers to manufacture products and the cooperation with other business partners present risks to our business. Failure to maintain product quality control or business relationships may adversely affect our business.

We use third-party manufacturers to manufacture the physical learning kits that we distribute to our students, and the loss or unavailability of these manufacturers, even temporarily, could have a negative impact on our business, financial condition and results of operations. We have implemented quality control over these manufacturers in relation to the raw materials and production process, and require them to be responsible for the manufacturing process to satisfy our selection criteria. However, we may not have effective control over whether our suppliers would strictly follow our specifications. Additionally, the use of third-party manufacturers may expose us to product liability claims, penalties, confiscation or destruction of certain products and their revenue, the revocation of business license, or the imposition of other administrative or the criminal liabilities. If defective products are manufactured and sold, it would result in damage to our reputation, product recall, consumer litigation and others that could materially and adversely affect our business. We also cooperate with various other business partners in the ordinary course of our business. For example, we partner with leading cloud service providers in China to host our servers. Maintaining strong relationships with these cloud service providers is critical to the results of operations and prospects of business. There can be no assurance that the business partners we currently cooperate with will continue to cooperate with us on commercially acceptable terms, or at all, after the terms of our current agreements with them expire. If

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we are unable to maintain our relationships with existing business partners or develop relationships with new business partners, our operations may be materially and adversely affected.

If we are unable to conduct sales and marketing activities cost-effectively, our business, financial condition and results of operations may be materially and adversely affected.

Our sales and marketing efforts help drive the growth of our student base. Our sales and marketing activities may not be well received by the market and may not result in the levels of sales that we anticipate. We also may not be able to retain or recruit a sufficient number of experienced sales and marketing personnel, or to train newly hired sales and marketing personnel, which we believe is critical to implementing our sales and marketing strategies cost-effectively. Further, sales and marketing approaches and tools in China’s online education industry are evolving rapidly. This requires us to continually enhance our sales and marketing approaches and experiment with new methods to keep pace with industry developments and student and parent preferences. Failure to engage in sales and marketing activities in a cost-effective manner may reduce our market share, cause our revenues to decline, negatively impact our profitability, and materially harm our business, financial condition and results of operations.

Our success depends on the continuing efforts of our senior management team and other key employees.

We depend on the continued contributions of our senior management and other key employees. The loss of the services of any of our senior management or other key employees could harm our business. Competition for qualified talents in China is intense. If one or more of our senior management or other key employees are unable or unwilling to continue in their present positions, we may not be able to find replacements in a timely manner, or at all, and our business may be disrupted. Moreover, if any member of our senior management team or any of our other key personnel joins a competitor or forms or invests in a competing business, we may lose know-how, key professionals and other valuable resources, which in turn may cause our customers to choose to use the products or services of that competitor instead of ours. Our future success is also dependent on our ability to attract a significant number of qualified employees and retain existing key employees. If we are unable to do so, our business and growth may be materially and adversely affected. Our need to significantly increase the number of our qualified employees and retain key employees may cause us to materially increase compensation-related costs, including share-based compensation.

We may be the subject of detrimental conduct by third parties such as our competitors, including complaints to regulatory agencies and the public dissemination of malicious assessments of our business, which could have a negative impact on our reputation.

We have been, and in the future may be, the target of anti-competitive, harassing or other detrimental conduct by third parties including our competitors. Such conduct may include complaints, anonymous or otherwise, to regulatory agencies regarding our operations, accounting, business relationships, business prospects and business ethics. Additionally, allegations, directly or indirectly against us, may be posted online by anyone, whether or not related to us, on an anonymous basis. We may be subject to government or regulatory investigation as a result of such third-party conduct and may be required to expend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Our reputation may also be materially negatively affected as a result of the public dissemination of anonymous allegations or malicious statements about our business.

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We may be subject to litigations, allegations, complains and investigations from time to time arising out of our operations, and our reputation and operations may be adversely affected.

We have been and may continue to be involved in legal and other disputes in the ordinary course of our business, including allegations against us for potential infringement of third party’s copyrights or other intellectual property rights, as well as customer complaints in relation to our refund policy, course content and data security and other dissatisfactions. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our management’s attention and resources or harm our brand equity. If a lawsuit or governmental proceeding against us is successful, we may be required to pay substantial damages or fines and/or enter into royalty or license agreements that may not be based upon commercially reasonable terms, or we may be unable to enter into such agreements at all. We may also lose, or be limited in, the rights to offer some of our content, products and services or be required to make changes to our course offerings or business model. As a result, the scope of our content, product and service offerings could be reduced, which could adversely affect our ability to attract new students and parents, harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

Our advertising content may subject us to penalties and other administrative actions.

Under PRC advertising laws and regulations, we are obligated to monitor our advertising content to ensure that such content is true and accurate and in full compliance with applicable laws and regulations. In addition, education or training advertisement are further prohibited from containing content such as guarantee for passing of examination or the effect of education or training, recommendation and/or endorsement by scientific research institutes, academic institutions, educational organizations, industry associations, professionals or beneficiaries using their name or image. Violation of these laws and regulations may subject us to penalties, including fines, orders to cease dissemination of the advertisements and orders to publish an announcement correcting the misleading information. In circumstances involving serious violations by us, PRC government authorities may force us to terminate our advertising operations or revoke our licenses.

While we have made significant efforts to ensure that our advertisements are in full compliance with applicable PRC laws and regulations, we cannot assure you that all the content contained in our advertisements is true and accurate as required by, and complies in all aspects with, the advertising laws and regulations, especially given the uncertainty in the interpretation of these PRC laws and regulations. If we are found to be in violation of applicable PRC advertising laws and regulations, we may be subject to penalties and our reputation may be harmed, which may negatively affect our business, financial condition, results of operations and prospects.

If we fail to implement and maintain an effective system of internal controls over financial reporting to remediate our material weakness, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.

Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of preparing and auditing our consolidated financial statements as of and for the years ended December 31, 2019 and 2020, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting. According to the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable

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possibility that a material misstatement of our company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weakness identified relates to the lack of sufficient financial reporting and accounting personnel with sufficient knowledge and experience to (i) address complex technical U.S. GAAP accounting issues, and (ii) establish and implement formal period end reporting policies and procedures for the purposes of U.S. GAAP and SEC reporting requirements. We have taken measures and plan to continue to take measures to remedy this material weakness. For details, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting.” The implementation of these measures may not fully address the material weakness in our internal control over financial reporting, and we cannot conclude that it has been fully remedied. Our failure to correct this material weakness or our failure to discover and address any other material weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.

Upon the completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include a report from management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2022. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of the ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

We have granted, and may continue to grant, share incentives, which may result in increased share-based compensation expenses.

We adopted an equity incentive plan in November 2019, or the 2019 Plan, for the purpose of granting share-based compensation awards to management executives, employees, officers, directors and consultants to incentivize their performance and promote the success of our business. We account for compensation costs for share-based awards granted under the 2019 Plan using a fair-value based method and recognize expenses in our consolidated statements of operations and comprehensive loss in

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accordance with U.S. GAAP. As of the date of this prospectus, options to purchase a total of 42,158,189 ordinary shares are outstanding under the 2019 Plan. In addition, we have recorded share-based compensation expenses of RMB6.6 million and RMB23.8 million (US$3.6 million), respectively, allocated to us based on equity awards granted to our employees under the 2019 Plan, in 2019 and 2020. We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant share-based awards in the future. As a result, our expenses associated with share-based compensation may increase. Any increase in our share-based compensation may have an adverse effect on our results of operations.

Enforcement of stricter labor laws and regulations and increases in labor costs in the PRC may materially and adversely affect our business and results of operations.

The PRC Labor Contract Law has reinforced the protection of employees who, under the PRC Labor Contract Law, have the right, among others, to have written employment contracts, to enter into employment contracts with no fixed term under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts. Furthermore, the PRC Labor Contract Law sets forth additional restrictions and increases the costs involved with dismissing employees. We expect that our labor costs, including wages and employee benefits, will continue to increase, and unless we are able to pass on these increased labor costs to our customers by increasing the prices of our products and services, our financial condition and results of operations would be materially and adversely affected. Additionally, to the extent that we need to significantly reduce our workforce, the PRC Labor Contract Law could adversely affect our ability to do so in a timely and cost-effective manner, and our results of operations could be adversely affected. In addition, for employees whose employment contracts include non-competition terms, the PRC Labor Contract Law requires us to pay economic compensation to the laborer on a monthly basis during the term of non-competition after such employment is terminated, which will increase our operating expenses.

In addition, we are required by PRC laws and regulations to make social insurance registration and open housing fund account with relevant governmental authorities and pay various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments of the requisite statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. Certain of our PRC subsidiaries have historically failed to make social insurance and housing fund contributions in full for their employees. Our VIE and certain of our PRC subsidiaries engage third-party service providers to make social insurance and housing fund contributions for some of their employees. They also engage third-party service providers to help us recruit, manage and settle service fees with teachers. There is no assurance that such third-party service providers make necessary contributions in full in a timely manner, or at all. If the relevant PRC authorities determine that we shall be responsible for making up for social insurance and housing fund contributions, or that we are subject to fines and legal sanctions in relation to our failure to make social insurance and housing fund contributions in full for our employees, our business, financial condition and results of operations may be adversely affected. The PRC authorities have not made such determination and have not imposed any penalty on us as of the date of the prospectus.

There remains uncertainty as to whether the relevant PRC authorities will promulgate new laws and regulations or change their interpretation of existing laws and regulations regarding the engagement of third-party service providers for making social insurance and housing fund contributions. If we cannot timely comply with new laws and regulations like this, our business, financial condition and results of operations could be materially and adversely affected.

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We cannot assure you that our employment practices will be deemed to be in compliance with labor-related laws and regulations in China due to interpretation and implementation uncertainties related to the evolving labor laws and regulations, which may subject us to labor disputes or government investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations could be materially and adversely affected.

We face certain risks relating to the real properties that we lease.

We lease real properties from third parties primarily for our office use in China, and the lease agreements for most of these leased properties have not been registered with the PRC government authorities as required by PRC law. Although the failure to do so does not in itself invalidate the leases, we may be ordered by the PRC government authorities to rectify such noncompliance and, if such noncompliance were not rectified within a given period of time, we may be subject to fines imposed by the PRC government authorities ranging from RMB1,000 and RMB10,000 for those of our lease agreements that have not been registered with the relevant PRC government authorities

As of the date of this prospectus, we are not aware of any regulatory or governmental actions, claims or investigations being contemplated or any challenges by third parties to our use of our leased properties the lease agreements of which have not been registered with the government authorities. However, we cannot assure you that the government authorities will not impose fines on us due to our failure to register any of our lease agreements, which may negatively impact our financial condition.

In addition, some of the ownership certificates or other similar proof of certain leased properties have not been provided to us by the relevant lessors. Therefore, we cannot assure you that such lessors are entitled to lease the relevant real properties to us. If the lessors are not entitled to lease the real properties to us and the owners of such real properties decline to ratify the lease agreements between us and the respective lessors, we may not be able to enforce our rights to lease such properties under the respective lease agreements against the owners. As of the date of this prospectus, we are not aware of any claim or challenge brought by any third parties concerning the use of our leased properties without obtaining proper ownership proof. If our lease agreements are claimed as null and void by third parties who are the real owners of such leased real properties, we could be required to vacate the properties, in the event of which we could only initiate the claim against the lessors under relevant lease agreements for indemnities for their breach of the relevant leasing agreements. We cannot assure you that suitable alternative locations are readily available on commercially reasonable terms, or at all, and if we are unable to relocate our operations in a timely manner, our operations may be interrupted.

Our operations depend on the performance of the internet infrastructure and telecommunications networks in China.

As we deliver courses online, the successful operation of our business depends on the performance of the internet infrastructure and telecommunications networks in China. Almost all access to the internet is maintained through state-owned telecommunications operators under the administrative control and regulatory supervision of the MIIT. We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the telecommunications networks provided by telecommunications service providers. Our platform regularly serves a large number of students, parents and teachers. With the expansion of our business, we may be required to upgrade our technology and infrastructure to keep up with the increasing traffic on our platform. However, we have no control over the costs of the services provided by telecommunications service providers. If the prices we pay for telecommunications and internet services rise significantly, our results of operations may be materially and adversely affected. If internet

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access fees or other charges to internet users increase, our user traffic may decline and our business may be harmed.

We are subject to third-party payment processing-related risks.

We accept payments through major third-party online payment channels in China, as well as bank transfers and credit cards. We may be susceptible to fraud, student data leakage and other illegal activities in connection with the various payment methods we offer. In addition, our business depends on the billing, payment and escrow systems of the third-party payment service providers to maintain accurate records of payments by customers and collect such payments. If the quality, utility, convenience or attractiveness of these payment processing and escrow services declines, or if we have to change the pattern of using these payment services for any reason, our business may be disrupted, and we may incur additional costs and expenses that could adversely affect our business operations. We are also subject to various rules, regulations and requirements, regulatory or otherwise, governing electronic funds transfers which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and become unable to accept the current online payments solutions from our students, and our business, financial condition and results of operations could be materially and adversely affected.

We currently do not have any business insurance coverage.

Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. Currently, we do not have any business liability or disruption insurance to cover our operations. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured business disruptions may result in our incurring substantial costs and the diversion of resources, which could have an adverse effect on our results of operations and financial condition.

We face risks related to natural disasters, extreme weather conditions, health epidemics, such as the outbreak of COVID-19, and other catastrophic incidents, which could significantly disrupt our operations.

China has in the past experienced significant natural disasters, including earthquakes, extreme weather conditions, as well as health scares related to epidemic diseases, and any similar event could materially impact our business in the future. If a disaster or other disruption were to occur in the future that affects the regions where we operate our business, our operations could be materially and adversely affected due to loss of personnel and damages to property. Even if we are not directly affected, such a disaster or disruption could affect our operations or financial condition. In addition, our business could be affected by public health epidemics, such as the outbreak of avian influenza, severe acute respiratory syndrome, or SARS, Zika virus, Ebola virus, coronavirus or other disease. If any of our employees is suspected of having contracted a contagious disease, we may be required to apply quarantines or suspend our operations. Furthermore, any future outbreak may restrict economic activities in affected regions, resulting in reduced business volume, temporary closure of our offices or otherwise disrupt our business operations and adversely affect our results of operations. Also see “—The COVID-19 pandemic has disrupted our business and operations and it, or any future health epidemic or other adverse public health developments, may continue to do so.”

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We rely on certain key operating metrics to evaluate the performance of our business, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

We continually review the number of students, number of course units consumed by our students for our online small-class courses and certain other metrics to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal data and are not independently verified by any third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring such key metrics, and the methodologies used to measure these metrics may be susceptible to technical errors. If investors do not perceive our operating metrics to accurately represent our operating performance, or if we discover material inaccuracies in our operating metrics, our business, financial condition and results of operations may be materially and adversely affected.

Our business and results of operations may be subject to seasonal fluctuations.

Our business and results of operations may be subject to seasonal fluctuations. Historically, we have not experienced significant seasonality as we have grown rapidly. However, in the future our business may be affected by factors such as public holidays and school schedules. Therefore, our historical performance may not be indicative of our future operating results. The trading price of our ADSs may fluctuate from time to time due to seasonality.

Risks Related to Our Corporate Structure

If the PRC government finds that the agreements that establish the structure for operating certain of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

Foreign ownership in entities that provide value-added telecommunication services (except for e-commerce, domestic multi-party communications, store-and-forward and call center), such as provision of online course content, is subject to restrictions under current PRC laws and regulations.

Specifically, foreign ownership of a value-added telecommunication service provider may not exceed 50%, and the major foreign investor is required to have a record of good performance and operating experience in managing value-added telecommunications business. We are a company registered in the Cayman Islands. Beijing Spark Education and Technology Co., Ltd., or Beijing Spark Education, is one of our PRC subsidiaries and a foreign-invested enterprises under the PRC laws. To comply with PRC laws and regulations, we conduct such business activities in China primarily through Beijing Xingengyuan Technology Ltd., or Xingengyuan. Beijing Spark Education has entered into a series of contractual arrangements with Xingengyuan and its shareholders. For a description of these contractual arrangements, see “Our History and Corporate Structure.” As a result of these contractual arrangements, we exert control over Xingengyuan and consolidate financial results of Xingengyuan and its subsidiaries in our financial statements under U.S. GAAP. Xingengyuan holds the licenses, approvals and key assets that are essential for our operations.

In the opinion of our PRC legal counsel, Tian Yuan Law Firm, (i) the ownership structure of Xingengyuan and Beijing Spark Education does not result in any violation of PRC laws and regulations currently in effect; and (ii) the contractual arrangements among Beijing Spark Education, Xingengyuan and its shareholders governed by PRC law will not result in any violation of PRC laws or regulations currently in effect. However, we have been further advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. Thus, the PRC government may ultimately take a view contrary to the opinion of our PRC

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legal counsel. If the PRC government otherwise finds that we are in violation of any existing or future PRC laws or regulations or lack the necessary permits or licenses to operate our business, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without limitation:

• revoking the business licenses and/or operating licenses of such entities;

• imposing fines on us;

• confiscating any of our income that they deem to be obtained through illegal operations;

• discontinuing or placing restrictions or onerous conditions on our operations;

• placing restrictions on our right to collect revenues; and

• shutting down our servers or blocking our application/software.

Any of these events could cause significant disruption to our business operations and severely damage our reputation, which would in turn materially and adversely affect our business, financial condition and results of operations. If occurrences of any of these events result in our inability to direct the activities of Xingengyuan in China that most significantly impact its economic performance, and/or our failure to receive the economic benefits from our consolidated variable interest entities, we may not be able to consolidate their financial results in our consolidated financial statements in accordance with U.S. GAAP.

We rely on contractual arrangements with Xingengyuan and its shareholders for our business operations, which may not be as effective as direct ownership in providing operational control.

We have relied and expect to continue to rely on contractual arrangements with Xingengyuan, and its shareholders to operate our business in China. These contractual arrangements may not be as effective as direct ownership in providing us with control over Xingengyuan. For example, Xingengyuan and their shareholders could breach their contractual arrangements with us by, among other things, failing to conduct the operations of Xingengyuan in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of Xingengyuan in China, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of Xingengyuan, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by Xingengyuan and its shareholders of their obligations under the contracts to exercise control over Xingengyuan. The shareholders of Xingengyuan may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portion of our business through the contractual arrangements with Xingengyuan. If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. See “—Any failure by Xingengyuan or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Therefore, our contractual arrangements with Xingengyuan may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

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Any failure by Xingengyuan or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

If Xingengyuan or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and contractual remedies, which we cannot assure you will be sufficient or effective under PRC law. For example, if the shareholders of Xingengyuan were to refuse to transfer their equity interests in Xingengyuan to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

Our contractual arrangements are governed by PRC law. Accordingly, these contracts would be interpreted in accordance with PRC law, and any disputes would be resolved in accordance with PRC legal procedures.

All the agreements under our contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a consolidated variable interest entity should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over Xingengyuan, and our ability to conduct our business may be negatively affected. See “—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.”

The shareholders of Xingengyuan may have actual or potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

The shareholders of Xingengyuan may have actual or potential conflicts of interest with us. These shareholders may breach, or cause Xingengyuan to breach, or refuse to renew, the existing contractual arrangements we have with them and Xingengyuan, which would have a material and adverse effect on our ability to effectively control Xingengyuan and receive economic benefits from them. For example, the shareholders may be able to cause our agreements with Xingengyuan to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the exclusive option agreements with these shareholders to request them to transfer all of their equity interests in the VIE to a PRC entity or individual designated by us, to the extent permitted by PRC law.

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For individuals who are also our directors and officers, we rely on them to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the best interests of the company and not to use their position for personal gains. The shareholders of Xingengyuan have executed powers of attorney to appoint Beijing Spark Education or a person designated by Beijing Spark Education to vote on their behalf and exercise voting rights as shareholders of Xingengyuan. If we cannot resolve any conflict of interest or dispute between us and the shareholders of Xingengyuan, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

Contractual arrangements in relation to Xingengyuan may be subject to scrutiny by the PRC tax authorities and they may determine that we or our PRC consolidated variable interest entities owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements in relation to Xingengyuan were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust income of Xingengyuan in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by Xingengyuan for PRC tax purposes, which could in turn increase their tax liabilities without reducing our PRC subsidiaries’ tax expenses. In addition, the PRC tax authorities may impose late payment fees and other penalties on Xingengyuan for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if Xingengyuan’ tax liabilities increase or if they are required to pay late payment fees and other penalties.

Our current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law.

On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which took effect on January 1, 2020. Since it is relatively new, uncertainties exist in relation to its interpretation and implementation. The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements as a form of foreign investment, and it remains uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in the PRC and if yes, how our contractual arrangements should be dealt with.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in the Special Administrative Measures (Negative List) for Foreign Investment Access jointly promulgated by Ministry of Commerce, or MOFCOM, and the National Development and Reform Commission, or NDRC, as amended from time to time. The Foreign Investment Law provides that foreign-invested entities are barred from operating in “prohibited” industries and will require market entry clearance and other approvals from relevant PRC government authorities if operating in “restricted” industries. On December 26, 2019, the Supreme People’s Court issued the Interpretations

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on Certain Issues Regarding the Application of Foreign Investment Law, or the FIL Interpretations, which came into effect on January 1, 2020. In accordance with the FIL Interpretations, any claim to invalidate an investment agreement will be supported by courts if such agreement is found to be entered into for purposes of making investments in the “prohibited industries” under the negative list or for purposes of investing in “restricted industries” while failing to satisfy the conditions set out in the Negative List. If our control over Xingengyuan through contractual arrangements are deemed as foreign investment in the future, and any business of Xingengyuan is “restricted” or “prohibited” from foreign investment under the “negative list” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over Xingengyuan may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on business, financial condition and our business operation.

Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations.

We may lose the ability to use and enjoy assets held by Xingengyuan that are material to the operation of a certain portion of our business if the entities go bankrupt or become subject to a dissolution or liquidation proceeding.

As part of our contractual arrangements with Xingengyuan, Xingengyuan holds certain assets that are material to the operation of certain portion of our business, including licenses, permits, domain names and most of our IP rights. If Xingengyuan goes bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. Under the contractual arrangements, Xingengyuan may not, in any manner, sell, transfer, mortgage or dispose of their assets or legal or beneficial interests in the business without our prior consent. If Xingengyuan undergoes a voluntary or involuntary liquidation proceeding, the independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Risks Related to Doing Business in China

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.

Substantially all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting

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monetary policy and providing preferential treatment to particular industries or companies. While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to a reduction in demand for our services and adversely affect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. While Chinese economy has experienced significant growth in the past decades, that growth may not continue, at least at the same rate. In addition, there are uncertainties around the COVID-19 pandemic, including the unknown duration and extent of negative impact on Chinese economy. Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations.

Uncertainties with respect to the PRC legal system could adversely affect us.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the prospectus based on foreign laws.

We are a company incorporated under the laws of the Cayman Islands, we conduct substantially all of our operations in China, and substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and all are PRC nationals. As a result, it may be difficult for our shareholders to effect service of process upon us or those persons inside China. In addition, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries

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and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the Unities States have not been efficient in the absence of mutual and practical cooperation mechanism. No organization or individual may provide the documents and materials relating to securities business activities to overseas parties arbitrarily without the consent of the competent securities regulatory authority in China according to the PRC Securities Law. See “—Risks Related to the ADSs and This Offering—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.”

We may rely on dividends and other distributions of equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiaries for our cash requirements, including for services of any debt we may incur. The ability of our PRC subsidiaries to pay dividends and other distributions on equity, in turn, depends on the payment they receive from Xingengyuan as service fees pursuant to certain contractual arrangements among our PRC subsidiaries, Xingengyuan and Xingengyuan’s shareholders entered into to comply with certain restriction under PRC law on foreign investment. For more information about such contractual arrangements, see “Our History and Corporate Structure—Contractual Arrangements with Our VIE and Its Shareholders.”

Our PRC subsidiaries’ ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries and Xingengyuan are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of their registered capital. These reserves are not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiaries to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

To address the persistent capital outflow and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or SAFE Circular 3, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic enterprise to its offshore shareholders of more

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than US$50,000, review the relevant board resolutions, original tax filing form and audited financial statements of such domestic enterprise based on the principal of genuine transaction. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends and other distributions may be subject to tightened scrutiny in the future. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are tax residents.

The custodians or authorized users of our controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these assets.

Under the PRC law, legal documents for corporate transactions, including agreements and contracts that are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the local branches of the SAMR.

In order to secure the use of our chops and seals, we have established internal control procedures and rules for using these chops and seals. In any event that the chops and seals are intended to be used, the responsible personnel will submit the application which will then be verified and approved by authorized employees in accordance with our internal control procedures and rules. In addition, in order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could abuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of our subsidiaries or VIE. If any employee obtains and misuses or misappropriates our chops and seals or other controlling non-tangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations.

PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from making loans or additional capital contributions to our PRC subsidiaries and to make loans to Xingengyuan, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, as well as any loans we provide to Xingengyuan, are subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises, or FIEs, in China, capital contributions to our PRC subsidiaries are subject to the reporting with the MOFCOM, or its local branches and registration with a local bank authorized by SAFE. In addition, (i) any foreign loan procured by our PRC subsidiaries is required to be registered with SAFE or its local branches and (ii) any of our PRC subsidiaries may not procure loans which exceed the difference between its total investment amount and registered capital or, as an alternative, only procure loans subject to the calculation approach and limitation as provided in the Notice of the People’s Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or PBOC Notice No. 9. Additionally, any medium or long-term loans

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to be provided by us to Xingengyuan must be registered with the NDRC and SAFE or its local branches. We may not be able to obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries or loans by us to Xingengyuan. If we fail to receive such approvals or complete such reporting, registration or filing, our ability to use the proceeds of our initial public offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. See “Our History and Corporate Structure—Our Corporate History.”

On March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect as of June 1, 2015. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capital of FIEs and allows FIEs to settle foreign exchange capital at their discretion, but continues to prohibit FIEs from using Renminbi funds converted from foreign exchange capital for expenditure beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, which became effective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debt) on a self-discretionary basis which applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities. On October 23, 2019, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-Border Trade and Investment, or SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment. However, since SAFE Circular 28 is relatively new, it is unclear how SAFE and competent banks will carry this out in practice. SAFE Circular 19, SAFE Circular 16 and SAFE Circular 28 may significantly limit our ability to use Renminbi converted from the net proceeds of our initial public offering to fund the establishment of new entities in China by Xingengyuan, to invest in or acquire any other PRC companies through our PRC subsidiaries, or to establish new VIEs in China, which may adversely affect our business, financial condition and results of operations.

A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.

The COVID-19 pandemic had a severe and negative impact on the Chinese and the global economy in 2020. Even before the outbreak of COVID-19, the global macroeconomic environment presented challenges, including the economic slowdown in the eurozone since 2014 and uncertainties over the impact of Brexit. The growth of the Chinese economy has slowed down since 2012 compared to the previous decade and the trend may continue or even deteriorate, with the added disruption caused by COVID-19. There is considerable uncertainty regarding the effectiveness or the long-term effects of the massive expansionary monetary and fiscal policies adopted in response to COVID-19 by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa. There have also been concerns about the relationship between China and the United States and other countries, particularly with respect to the increasingly tense political and economic relationship between the United States and China. Economic conditions in China are

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sensitive to global economic conditions as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any prolonged slowdown in the global or Chinese economy may have a negative impact on our business, results of operations and financial condition. Our students and users may reduce or delay spending with us, while we may have difficulty expanding our user base fast enough, or at all, to offset the impact of decreased spending by our existing users.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The value of the Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. In July 2005, the PRC government changed its decades-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation subsided and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. While appreciating approximately by 7% against the U.S. dollar in 2017, the Renminbi in 2018 and 2019 depreciated approximately by 5% and 1% against the U.S. dollar, respectively. Since October 1, 2016, the RMB has joined the International Monetary Fund’s basket of currencies that make up the Special Drawing Right, along with the U.S. dollar, the euro, the Japanese yen and the British pound. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and there is no guarantee that the RMB will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

Substantially all of our revenue and costs are denominated in Renminbi. We are a holding company and we rely on dividends paid by our operating subsidiaries in China for our cash needs. Any significant revaluation of Renminbi may materially and adversely affect our results of operations and financial position reported in Renminbi when translated into U.S. dollars, and the value of, and any dividends payable on, the ADSs in U.S. dollars.

Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company primarily relies on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and VIE to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency

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other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the ADSs.

Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.

Among other things, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008 and amended in 2018, are triggered. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress, which became effective in 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the relevant governmental authorities before they can be completed. On February 7, 2021, the Anti-monopoly Commission of the State Council published the Anti-Monopoly Guidelines for the Internet Platform Economy Sector, which aims at specifying some of the circumstances under which an activity of internet platforms may be identified as monopolistic act as well as setting out merger controlling filing procedures involving variable interest entities. In addition, PRC national security review rules which became effective in September 2011 require acquisitions by foreign investors of PRC companies engaged in military related or certain other industries that are crucial to national security be subject to security review before consummation of any such acquisition. The Measures for the Security Review of Foreign Investments promulgated by the NDRC and MOFCOM, which became effective from January 2021, further requires that security review by relevant governmental authorities shall be conducted in accordance with the provisions of such measures for foreign investments that affect or may affect national security. We may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

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SAFE Circular 37 requires registration with, and approval from, Chinese government authorities in connection with direct or indirect control of an offshore entity by PRC residents. The term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by PRC residents in the offshore special purpose vehicles by means of acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. In addition, any PRC resident who is a direct or indirect shareholder of a special purpose vehicle, or SPV, is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge its PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE. SAFE Notice 13 further provides that annual inspection of inbound foreign direct investments and outbound overseas direct investments is canceled. Instead, relevant entities or individuals, as the case may be, shall register data and information with respect to their inbound foreign direct investments and outbound overseas direct investment interests with SAFE.

These regulations may have a significant impact on our present and future structuring and investment. We have requested our shareholders who to our knowledge are PRC residents to make the necessary applications, filings and amendments as required under these regulations. We intend to take all necessary measures to ensure that all required applications and filings will be duly made and all other requirements will be met. We further intend to structure and execute our future offshore acquisitions in a manner consistent with these regulations and any other relevant legislation. However, because it is presently uncertain how SAFE regulations, and any future legislation concerning offshore or cross-border transactions, will be interpreted and implemented by the relevant government authorities in connection with restructuring by PRC beneficial owners of our company, our future offshore financings or acquisitions, we cannot provide any assurances that we will be able to comply with, qualify under, or obtain any approvals required by the regulations or other legislation. Furthermore, we cannot assure you that any PRC beneficial owners of our company or any PRC company into which we invest is or will in the future be able to comply with those requirements. Any failure or inability by such individuals to comply with SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiaries’ ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by

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the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, replacing earlier rules promulgated in 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options are subject to these regulations. Failure to complete SAFE registrations may subject them to fines and legal sanctions, there may be additional restrictions on the ability of them to exercise their stock options or remit proceeds gained from sale of their stock into the PRC. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. See “Regulation—Regulation on Stock Incentive Plans.”

If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

We believe our company is not a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties

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remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that our company is a PRC resident enterprise for enterprise income tax purposes, we will be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore, we will be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of the ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to PRC tax at a rate of 10% on gains realized on the sale or other disposition of ADSs or ordinary shares, if such gains are treated as derived from a PRC source. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders (including our ADS holders) and any gain realized on the transfer of ADSs or ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of our company would, in practice, be able to obtain the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ADSs or ordinary shares.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity securities through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure for withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or taxed if our company is transferor in such transactions, and may be subject to withholding obligations if our company is transferee in such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin 37. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or

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to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

The ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S.

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is currently not inspected by the PCAOB.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above.

The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the HFCA Act. For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022.

The SEC has announced that the SEC is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition the requirements of the HFCA Act are uncertain. Such uncertainty could cause the market price of the ADSs to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCA Act. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of the ADSs.

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The PCAOB’s inability to conduct inspections in China prevents it from fully evaluating the audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors in our ordinary shares are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB in the PRC or by the CSRC or the PRC Ministry of Finance in the United States. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.

Proceedings instituted by the SEC against Chinese affiliates of the “big four” accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act.

In December 2012, the SEC instituted administrative proceedings against the Big Four PRC-based accounting firms, including our independent registered public accounting firm, alleging that these firms had violated U.S. securities laws and the SEC’s rules and regulations thereunder by failing to provide to the SEC the firms’ audit work papers with respect to certain PRC-based companies that are publicly traded in the United States.

On January 22, 2014, the administrative law judge, or the ALJ, presiding over the matter rendered an initial decision that each of the firms had violated the SEC’s rules of practice by failing to produce audit papers and other documents to the SEC. The initial decision censured each of the firms and barred them from practicing before the SEC for a period of six months.

On February 6, 2015, the four China-based accounting firms each agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC and audit U.S.-listed companies. The settlement required the firms to follow detailed procedures and to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. Under the terms of the settlement, the underlying proceeding against the four China-based accounting firms was deemed dismissed with prejudice four years after entry of the settlement. The four-year mark occurred on February 6, 2019. While we cannot predict if the SEC will further challenge the four China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the SEC imposing penalties such as suspensions, if the accounting firms are subject to additional remedial measures, our ability to file our financial statements in compliance with SEC requirements could be impacted. A determination that we have not timely filed financial statements in compliance with the SEC requirements could ultimately lead to the delisting of our ADSs from the [NYSE/Nasdaq] or the termination of the registration of our ordinary shares under the Securities Exchange Act of 1934, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States.

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Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.

The PRC government has adopted regulations governing internet access and the distribution of news and other information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, violates PRC laws and regulations, impairs the national dignity of China, or is reactionary, obscene, superstitious, fraudulent or defamatory. Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses, and the closure of the concerned websites. The website operator may also be held liable for such censored information displayed on or linked to the websites. If our platform or content is found to be in violation of any such requirements, we may be penalized by relevant authorities, and our operations or reputation could be adversely affected.

It may be difficult for overseas regulators to conduct an investigation or collect evidence within China.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, Article 177, which became effective in March 2020, prohibits, without the approval of the securities regulatory authority in China, (i) foreign securities regulators from engaging in any inspection activities within China, and (ii) anyone from providing any documents or materials relating to capital markets activities to foreign parties. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

The current tension in international trade, particularly with regard to U.S. and China trade policies, may adversely impact our business, financial condition, and results of operations.

To the extent we plan to expand our business internationally in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impact our competitive position, or prevent us from being able to conduct business in certain countries. If any new tariffs, legislation, or regulations are implemented, or if existing trade agreements are renegotiated, such changes could adversely affect our business, financial condition, and results of operations. Recently, there have been heightened tensions in international economic relations, such as the one between the United States and China. The U.S. government has recently imposed, and has recently proposed to impose additional, new, or higher tariffs on certain products imported from China to penalize China for what it characterizes as unfair trade practices. China has responded by imposing, and proposing to impose additional, new, or higher tariffs on certain products imported from the United States. Following mutual retaliatory actions for months, on January 15, 2020, the United States and China entered into the Economic and Trade Agreement Between the United States of America and the People’s Republic of China as a phase one trade deal, effective on February 14, 2020. It remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade, tax policy related to international commerce, or other trade matters.

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The situation is further complicated by the political tensions between the United States and China that escalated during the COVID-19 pandemic and in the wake of the PRC National People’s Congress’ decision on Hong Kong national security legislation, sanctions imposed by the U.S. Department of Treasury on certain officials of the Hong Kong Special Administrative Region and the central government of the PRC and the executive orders issued by the U.S. president in August 2020 that prohibit certain transactions with certain China-based companies and their respective subsidiaries. Rising trade and political tensions could reduce levels of trade, investments, technological exchanges and other economic activities between China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets, and international trade policies.

Although the direct impact of the current international trade and political tension, and any escalation of such tension, on the online education industry in China is uncertain, the negative impact on general, economic, political and social conditions may adversely impact our business, financial condition and results of operations.

Risks Related to the ADSs and This Offering

An active trading market for our ordinary shares or the ADSs may not develop and the trading price for the ADSs may fluctuate significantly.

We will apply to list our ADSs on the [NYSE/Nasdaq]. We have no current intention to seek a listing for our ordinary shares on any stock exchange. Prior to the completion of this offering, there has been no public market for the ADSs or our ordinary shares, and we cannot assure you that a liquid public market for the ADSs will develop. If an active public market for the ADSs does not develop following the completion of this offering, the market price and liquidity of the ADSs may be materially and adversely affected. The initial public offering price for the ADSs was determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of the ADSs after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.

The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following:

• variations in our net revenues, earnings and cash flows;

• announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

• announcements of new offerings, solutions and expansions by us or our competitors;

• changes in financial estimates by securities analysts;

• detrimental adverse publicity about us, our services or our industry;

• announcements of new regulations, rules or policies relevant to our business;

• additions or departures of key personnel;

• our controlling shareholder’s business performance and reputation;

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• release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

• potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

Because our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

If you purchase ADSs in this offering, you will pay more for your ADSs than the amount paid by our existing shareholders for their ordinary shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately US$             per ADS, representing the difference between the initial public offering price of US$             per ADS, and our net tangible book value per ADS as of December 31, 2020, after giving effect to the net proceeds we receive from this offering. See “Dilution” for a more complete description of how the value of your investment in the ADSs will be diluted upon the completion of this offering.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.

The trading market for the ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade the ADSs, the market price for the ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for the ADSs to decline.

Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

[Our authorized and issued ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior the completion of this offering (with certain shares remaining undesignated, with power for our directors to designate and issue such classes of shares as they think fit). Holders of Class A ordinary shares will be entitled to one vote per share, while holders of Class B ordinary shares will be entitled to              votes per share. We will issue Class A ordinary shares represented by our ADSs in this offering. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.

Immediately prior to the completion of this offering,                      will beneficially own         % of our issued Class B ordinary shares. These Class B ordinary shares will constitute approximately         % of

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our total issued and outstanding share capital immediately after the completion of this offering and         % of the aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering due to the disparate voting powers associated with our dual-class share structure, assuming the underwriters do not exercise their over-allotment option. As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares will have considerable influence over matters such as decisions regarding mergers and consolidations, election of directors, and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay, or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of the ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover, or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.]

The sale or availability for sale of substantial amounts of ADSs could adversely affect their market price.

Sales of substantial amounts of ADSs in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. The ADSs sold in this offering will be freely tradable without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There will be                      ADSs (representing                      ordinary shares) issued and outstanding immediately after this offering, or                      ADSs (representing                      ordinary shares) if the underwriters exercise their option to purchase additional ADSs in full. In connection with this offering, we, our directors, executive officers, existing shareholders and holders of share-based awards have agreed, subject to certain exceptions, not to sell any ordinary shares or ADSs for 180 days. The underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. See “Underwriting” and “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.

Techniques employed by short sellers may drive down the market price of the ADSs.

Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.

Public companies that have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many

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cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations, and any investment in the ADSs could be greatly reduced or even rendered worthless.

Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on a price appreciation of the ADSs for a return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income.

Our Board of Directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our Board of Directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our Board of Directors. Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs. There is no guarantee that the ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in the ADSs.

The approval of the China Securities Regulatory Commission may be required in connection with this offering under PRC law.

The M&A Rules purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear. If CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval, and any failure to obtain or delay in obtaining CSRC approval for this offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies.

Tian Yuan Law Firm, our PRC legal counsel, has advised us that, based on its understanding of the current PRC laws and regulations, we will not be required to submit an application to the CSRC for

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the approval of this offering and the listing and trading of our ADSs on the [NYSE/Nasdaq] because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours under this prospectus are subject to this regulation, (ii) we established the WFOE by means of direct investment and not through a merger or acquisition of the equity interests or assets of a “PRC domestic company” as such term is defined under the M&A Rules; and (iii) no provision in the M&A Rules classifies the contractual arrangements under the VIE Agreements as a type of acquisition transaction falling under the M&A Rules.

However, our PRC legal counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC legal counsel, and hence we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from this offering and the concurrent private placements to Orbis into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of the ADSs. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on the trading price of the ADSs.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (as Revised) of the Cayman Islands, or the Companies Act, and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England and Wales, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. In addition, while under Delaware law, controlling shareholders owe fiduciary duties to the companies they control and their minority shareholders, under Cayman Islands law, our controlling shareholders do not owe any such fiduciary duties to our company or to our minority shareholders. Accordingly, our controlling shareholders may exercise their powers as shareholders, including the exercise of voting rights in respect of their shares, in such manner as they think fit, subject only to very limited equitable constraints, including that the exercise of voting rights to

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amend the memorandum or articles of association of a Cayman company must be exercised in good faith for the benefit of the company as a whole.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association, the register of mortgages and charges and any special resolutions passed by the shareholders) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association that will become effective immediately prior to completion of this offering to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. If we choose to follow home country practice, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Differences in Corporate Law.”

Certain judgments obtained against us by our shareholders may not be enforceable.

We are an exempted company limited by shares incorporated under the laws of the Cayman Islands and substantially all of our assets are located outside of the United States. Substantially all of our current operations are conducted in China. In addition, most of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and China, see “Enforceability of Civil Liabilities.” However, the deposit agreement gives you the right to submit claims against us to binding arbitration, and arbitration awards may be enforceable against us and our assets in China even when court judgments are not.

ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by law, ADS holders waive the right to a jury trial for any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.

If we or the depositary were to oppose a jury trial based on this waiver, the court would have to determine whether the waiver was enforceable based on the facts and circumstances of the case in

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accordance with applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement, or by a federal or state court in the City of New York, which has non-exclusive jurisdiction over matters arising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this would be the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the ADSs.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have, including outcomes that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if this jury trial waiver is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or the ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct the voting of the Class A ordinary shares underlying your ADSs.

As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our post-offering memorandum and articles of association provide that we may (but are not obliged to) each year hold a general meeting as our annual general meeting. As a holder of ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights which attach to the Class A ordinary shares underlying your ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions of the deposit agreement. Under the deposit agreement, you may vote only by giving voting instructions to the depositary, as holder of the Class A ordinary shares underlying your ADSs. If we ask for your instructions, then upon receipt of your voting instructions, the depositary will try to vote the underlying Class A ordinary shares in accordance with those instructions. If we do not instruct the depositary to ask for your instructions, the depositary may still vote in accordance with instructions you give, but it is not required to do so. You will not be able to directly exercise any right to vote with respect to the underlying Class A ordinary shares unless you withdraw the shares and become the registered holder of such shares prior to the record date for the general meeting. When a general meeting is convened, you may not receive sufficient advance notice of the meeting to enable you to withdraw the shares underlying your ADSs and become the registered holder of such shares prior to the record date for the general meeting to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our post-offering memorandum and articles of association that will become effective immediately prior to completion of this offering, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record

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date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the ordinary shares underlying your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. Where any matter is to be put to a vote at a general meeting, the depositary will notify you of the upcoming vote and to deliver our voting materials to you, if we ask it to. We cannot assure you that you will receive the voting material in time to ensure you can direct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to direct how the shares underlying your ADSs are voted and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

You may experience dilution of your holdings due to the inability to participate in rights offerings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. However, we cannot make such rights available to you in the United States unless we register both the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of the ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on the transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems it expedient in connection with the performance of its duties. The depositary may close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies, including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.

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We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

• the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

• the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

• the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

• the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the [NYSE/Nasdaq]. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

We are a “controlled company” within the meaning of the rules of the [NYSE/Nasdaq] and, as a result, can rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

We are a “controlled company” as defined under the rules of the [NYSE/Nasdaq] since Mr. Luo beneficially owns more than 50% of our total voting power. For so long as we remain a controlled company under this definition, we are permitted to elect to rely, and currently we intend to rely, on certain exemptions from corporate governance rules, including the exemption from the rule that a majority of our board of directors must be independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

As an exempted company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the [NYSE/Nasdaq] corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the [NYSE/Nasdaq] corporate governance listing standards.

As a Cayman Islands exempted company listed on the [NYSE/Nasdaq], we are subject to corporate governance listing standards of [NYSE/Nasdaq]. However, [NYSE/Nasdaq] rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the [NYSE/Nasdaq] corporate governance listing standards. We currently intend to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the [NYSE/Nasdaq] that listed companies must have a majority of independent

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directors and that the audit committee consist of at least three members. To the extent that we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would enjoy under [NYSE/Nasdaq] corporate governance listing standards applicable to U.S. domestic issuers.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for the current or any future taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in our ADSs or ordinary shares.

In general, a non-U.S. corporation is a PFIC for U.S. federal income tax purposes for any taxable year in which (i) 50% or more of the average value of its assets (generally determined on a quarterly basis) consists of assets that produce, or are held for the production of, passive income, or (ii) 75% or more of its gross income consists of passive income. For purposes of the above calculations, a non-U.S. corporation that owns, directly or indirectly, at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, investment gains and certain rents and royalties. Cash is generally a passive asset for these purposes. The goodwill value is generally treated as an active asset if it is associated with business activities that produce active income.

Based on the expected composition of our income and assets and the value of our assets, including goodwill, which is based on the expected price of the ADSs in this offering, we do not expect to be a PFIC for our current taxable year. However, our PFIC status for any taxable year is an annual determination that can be made only after the end of that year and will depend on the composition of our income and assets and the value of our assets from time to time. The value of our goodwill may be determined, in large part, by reference to the market price of the ADSs, which could be volatile. Therefore, because we hold, and will continue to hold after this offering, a substantial amount of cash, our risk of being or becoming a PFIC will increase if our market capitalization declines. Moreover, it is not entirely clear how the contractual arrangements among us and our VIE will be treated for purposes of the PFIC rules, and we may be or become a PFIC if our VIE is not treated as owned by us for these purposes. Accordingly, there can be no assurance that we will not be a PFIC for our current or any future taxable year. If we are a PFIC for any taxable year during which a U.S. taxpayer owns ADSs or ordinary shares, the U.S. taxpayer generally will be subject to adverse U.S. federal income tax consequences, including increased tax liability on disposition gains and “excess distributions” and additional reporting requirements. See “Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this prospectus can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others.

Forward-looking statements appear in a number of places in this prospectus and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including, but not limited to, those identified under the section entitled “Risk Factors” in this prospectus. These risks and uncertainties include factors relating to:

• general economic, political, demographic and business conditions in China and globally;

• our ability to implement our growth strategy;

• the success of operating initiatives, including advertising and promotional efforts and new product and service development by us and our competitors;

• our ability to develop and apply our technologies to support and expand our foundational learning offerings;

• the expected growth of the K-12 AST industry in China and globally;

• the availability of qualified personnel and the ability to retain such personnel;

• competition in the K-12 AST industry;

• changes in government policies and regulation;

• other factors that may affect our business development, financial condition, liquidity and results of operations; and

• other risk factors discussed under “Risk Factors.”

You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

This prospectus also contains statistical data and estimates that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Although we have not independently verified the data, we believe that the publications and reports are reliable. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

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USE OF PROCEEDS

We expect to receive total estimated net proceeds from this offering of approximately US$                million, or approximately US$                million if the underwriters exercise their option to purchase additional ADSs in full, based on the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

We intend to use the net proceeds from this offering for the following purposes:

• approximately 40% to improve our pedagogy, courseware and educational content, and further broaden our course offerings;

• approximately 30% to improve our technology infrastructure;

• approximately 15% to expand our marketing and branding efforts; and

• the balance to fund working capital and for other general corporate purposes.

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management will have significant flexibility in applying and discretion to apply the net proceeds of the offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. In utilizing the proceeds from this offering, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, and to our consolidated VIE only through loans, and only if we satisfy the applicable government registration and approval requirements. We cannot assure you that we will be able to meet these requirements on a timely basis, if at all. In addition to government registration and approval requirements, the amount of loans that we can provide to our PRC subsidiaries or our VIE is subject to certain limitations prescribed by PRC laws and regulations, which may restrict our ability to fund and expand our business in a timely manner. See “Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from making loans or additional capital contributions to our PRC subsidiaries and to make loans to Xingengyuan, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

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DIVIDEND POLICY

We have not previously declared or paid any cash dividend or dividend in kind and we have no plan to declare or pay any dividends in the near future on our shares or the ADSs representing our Class A ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

We are a holding company incorporated in the Cayman Islands. We rely principally on dividends from our PRC subsidiaries for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “Regulation—Regulation Relating to Foreign Exchange—Regulation on Dividend Distribution.”

Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends on our Class A ordinary shares, we will pay those dividends which are payable in respect of the Class A ordinary shares underlying the ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to the ADS holders in proportion to the Class A ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Description of American Depositary Shares.”

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CAPITALIZATION

The table below sets forth our capitalization as of December 31, 2020:

• on an actual basis;

• on a pro forma basis to give effect to (i) the automatic conversion or redesignation, as the case may be, of all of the issued and outstanding preferred shares, into Class A ordinary shares, on a one-for-one basis, immediately prior to the completion of this offering; and (ii) the immediate vesting of our founders’ unvested restricted shares as of December 31, 2020 upon the completion of this offering; and

• on a pro forma as adjusted basis to give effect to (i) the automatic conversion or re-designation, as the case may be, of issued and outstanding preferred shares, into Class A ordinary shares, on a one-for-one basis, immediately prior to the completion of this offering, (ii) the immediate vesting of our founders’ unvested restricted shares as of December 31, 2020 upon the completion of this offering; and (iii) the issuance and sale of                Class A ordinary shares in this offering, and the receipt of approximately US$                million in estimated net proceeds, considering an offering price of US$                per ADS (the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus), after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	As of December 31, 2020
	Actual				Pro forma				Pro forma as adjusted(1)
	RMB		US$		RMB		US$		RMB	US$
	(in thousands)
Mezzanine equity
Series A preferred shares (US$0.0001 par value; 22,973,381 shares authorized, 22,973,381 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		60,057		9,204		—		—
Series B preferred shares (US$0.0001 par value; 30,162,301 shares authorized, 30,162,301 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		76,662		11,749		—		—
Series B+ preferred shares (US$0.0001 par value; 33,367,574 shares authorized, 33,367,574 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		115,799		17,747		—		—
Series C preferred shares (US$0.0001 par value; 29,167,458 shares authorized, 29,167,458 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		231,108		35,419		—		—
Series D preferred shares (US$0.0001 par value; 45,613,502 shares authorized, 45,613,502 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		568,208		87,082		—		—

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	As of December 31, 2020
	Actual						Pro forma						Pro forma as adjusted(1)
	RMB			US$			RMB			US$			RMB	US$
	(in thousands)
Series D+ preferred shares (US$0.0001 par value; 8,411,895 shares authorized, 8,411,895 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		144,717			22,179			—			—
Series E-1 preferred shares (US$0.0001 par value; 43,868,754 shares authorized, 43,868,754 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		904,495			138,620			—			—
Series E-2 preferred shares (US$0.0001 par value; 30,845,218 shares authorized, 30,845,218 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		621,268			95,213			—			—
Total mezzanine equity		2,722,314			417,213			—			—
Class A ordinary shares (US$0.0001 par value; 505,181,536 shares authorized, 7,755,662 shares issued and outstanding on an actual basis, and 252,165,745 shares issued and outstanding on a pro forma or pro forma as adjusted basis)		5			1			164			25
Class B ordinary shares (US$0.0001 par value; 50,408,381 shares authorized, 50,408,381 shares issued, 24,130,672 shares outstanding on an actual basis, and 50,408,381 shares issued and outstanding on a pro forma or pro forma as adjusted basis)		33			5			33			5
Treasury stock		(19	)		(3	)		—			—
Additional paid-in capital(2)		—			—			2,758,503			422,760
Accumulated deficit		(2,037,451	)		(312,253	)		(2,073,818	)		(317,827	)
Accumulated other comprehensive loss		(83,256	)		(12,760	)		(83,256	)		(12,760	)
Total shareholders’ (deficit)/equity(2)		(2,120,688	)		(325,010	)		601,626			92,203
Total mezzanine equity and shareholders’ (deficit)/equity		601,626			92,203			601,626			92,203
Total capitalization(2)		601,626			92,203			601,626			92,203

Note:

(1) The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital, total shareholders’ (deficit)/equity and total capitalization following the completion of this offering are subject to adjustment based on the actual initial public offering price and other terms of this offering determined at pricing.

(2) Assuming the number of ADSs offered by us as set forth on the cover page of this prospectus remains the same, and after deduction of underwriting discounts and commissions and the estimated offering expenses payable by us, a US$1.00 change in the assumed initial public offering price of US$                per ADS (the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus) would, in the case of an increase, increase and, in the case of a decrease, decrease each of additional paid-in capital, total shareholders’ (deficit)/equity and total capitalization by US$                million.

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DILUTION

If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per Class A ordinary share is substantially in excess of the book value per Class A ordinary share attributable to the existing shareholders for our presently outstanding Class A ordinary shares on an as-converted basis.

Our net tangible book value as of December 31, 2020 was US$(325) million, or US$(10.21) per Class A ordinary share and US$                per ADS. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities and mezzanine equity. Dilution is determined by subtracting net tangible book value per Class A ordinary share, on an as-converted basis, as adjusted from the initial public offering price per Class A ordinary share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Without taking into account any other changes in such net tangible book value after December 31, 2020, other than to give effect to (i) the conversion of all of our preferred shares into Class A ordinary shares on a one-to-one basis which will occur automatically immediately prior to the completion of this offering; (ii) the immediate vesting of our founders’ unvested restricted shares as of December 31, 2020 up on the completion of this offering; and (iii) our issuance and sale of Class A ordinary shares represented by the                 ADSs offered in this offering at an assumed initial public offering price of US$                per ADS, the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2021 would have been US$                million, or US$                per Class A ordinary share and US$                per ADS, to existing shareholders and an immediate dilution in net tangible book value of US$                per Class A ordinary share, or US$                per ADS, to purchasers of ADSs in this offering. The following table illustrates such dilution:

	Per Class A Ordinary Share			Per ADS
Assumed initial public offering price	US$			US$
Net tangible book value as of December 31, 2020	US$	(10.21	)	US$
Pro forma net tangible book value after giving effect to the automatic conversion of all of our outstanding preferred shares and the immediate vesting of our founders’ restricted shares	US$	0.30		US$
Pro forma as adjusted net tangible book value as adjusted to give effect to the automatic conversion of all of our outstanding preferred shares, the immediate vesting of our founders’ restricted shares and this offering	US$			US$
Amount of dilution in net tangible book value to new investors in this offering	US$			US$

The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ADSs and other terms of this offering determined at pricing.

A US$1.00 increase (decrease) in the assumed initial public offering price of US$                 per ADS would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to this offering by US$                 , the pro forma as adjusted net tangible book value per Class A ordinary share and per ADS after giving effect to this offering by US$                 per Class A ordinary share and

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US$                 per ADS, and the dilution in pro forma as adjusted net tangible book value per Class A ordinary share and per ADS to new investors in this offering by US$                 per Class A ordinary share and US$                 per ADS, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on a pro forma basis as of December 31, 2020, the differences between the existing shareholders and the new investors with respect to the number of Class A ordinary shares purchased from us in this offering, the total consideration paid and the average price per Class A ordinary share paid at the initial public offering price of US$                 per ADS, the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses. The total number of Class A ordinary shares does not include the Class A ordinary shares underlying the ADSs issuable upon the exercise of the over-allotment option granted to the underwriters.

	Class A Ordinary Shares Purchased		Total Consideration		Average Price Per Class A Ordinary Share	Average Price Per ADS
			Amount (in thousands of US$)	Percent
	Number	Percent			US$	US$
Existing shareholders
New investors
Total

The discussion and tables above also assume no exercise of any stock options outstanding as of the date of this prospectus. As of the date of this prospectus, there are 42,158,189 Class A ordinary shares issuable upon exercise of outstanding stock options, and there are a total of 43,198,157 Class A ordinary shares available for future issuance upon the exercise of grants under our 2019 Incentive Compensation Plan. To the extent that any of these options are exercised, there will be further dilution to new investors.

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ENFORCEABILITY OF CIVIL LIABILITIES

Cayman Islands

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as:

• political and economic stability;

• an effective judicial system;

• a favorable tax system;

• the absence of exchange control or currency restrictions; and

• the availability of professional and support services.

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:

• the Cayman Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors as compared to the United States; and

• Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

Substantially all of our operations are conducted in China, and substantially all of our assets are located in China. All of our directors and executive officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

We have appointed [Cogency Global Inc.] as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.

Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law, and Tian Yuan Law Firm, our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts of the Cayman Islands and China, respectively, would:

• recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

• entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Maples and Calder (Hong Kong) LLP has informed us that it is uncertain whether the courts of the Cayman Islands will allow shareholders of our company to originate actions in the Cayman Islands

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based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. Maples and Calder (Hong Kong) LLP has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign monetary judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the liquidated sum for which such judgment has been given, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

PRC

We have been advised by Tian Yuan Law Firm, our PRC legal counsel, that there is uncertainty as to whether the courts of the PRC would enforce judgments of United States courts or Cayman courts obtained against us or these persons predicated upon the civil liability provisions of the United States federal and state securities laws. Tian Yuan Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against us in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit. However, it would be difficult for foreign shareholders to establish sufficient nexus to the PRC by virtue only of holding the ADSs or Class A ordinary shares.

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OUR HISTORY AND CORPORATE STRUCTURE

Our Corporate History

We launched our first online course through Xingengyuan, in March 2018. Our ultimate holding company, previously named Wan Duoduo Limited, was incorporated in July 2016 in the Cayman Islands to facilitate financing and offshore listing. In November 2019, Wan Duoduo Limited was renamed as Spark Education Limited.

In July 2016, Spark Hong Kong, our wholly-owned subsidiary, was incorporated in Hong Kong. In December 2016, Beijing Spark Education, our wholly-owned subsidiary, was incorporated in the PRC. Between January 2017 and February 2021, Beijing Spark Education entered into a series of contractual arrangements with Xingengyuan and its shareholders, through which Beijing Spark Education, our wholly owned subsidiary, effectively controls Xingengyuan.

As part of our business expansion, in 2020, a number of wholly-owned subsidiaries, including Tianjin Spark Education and Technology Co., Ltd., or Tianjin Spark Education, Chengdu Spark Education and Technology Co., Ltd., or Chengdu Spark Education, and Chengdu Juli Education Consulting Co., Ltd., or Chengdu Juli, were incorporated in the PRC.

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Our Corporate Structure

The following chart illustrates our corporate structure, including our significant subsidiaries as that term is defined under Section 1-02 of Regulation S-X under the Securities Act, our VIE and certain other subsidiaries, as of the date of this prospectus:

	Equity interest
	Contractual arrangements, including the exclusive business cooperation agreement, the equity pledge agreement, the exclusive purchase option agreement, the powers of attorney and the spousal consent letters. See “—Contractual Arrangements with Our VIE and Its Shareholders.”

Note:

(1) Shareholders of Xingengyuan are Mr. Luo, our founder, chairman of the board and chief executive officer, and Mr. Shan, our co-founder, director and chief technology officer, holding 86.9% and 13.1% of Xingengyuan’s equity interests, respectively.

Contractual Arrangements with Our VIE and Its Shareholders

Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services and certain other businesses. We are a company registered in the Cayman Islands. Beijing Spark Education, our PRC subsidiary, is considered foreign-invested enterprise. To comply with PRC laws and regulations, we primarily conduct our business in China through Xingengyuan, our VIE in the PRC, based on a series of contractual arrangements. These contractual arrangements allow us to exercise effective control over our VIE, receive substantially all of the economic benefits of our VIE and have an exclusive call option to purchase all or part of the equity interests in and/or assets of our VIE when and to the extent permitted by the relevant laws. As a result of these contractual arrangements, we exert effective control over, and are considered the primary beneficiary of Xingengyuan, our VIE and therefore consolidate the operating results of our VIE and its subsidiaries in our financial statements under the U.S. GAAP.

The following is a summary of the contractual arrangements by and among Beijing Spark Education, Xingengyuan and the shareholders of Xingengyuan. For the complete text of these contractual arrangements, please see the copies filed as exhibits to the registration statement filed with the SEC of which this prospectus forms a part.

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In the opinion of Tian Yuan Law Firm, our PRC legal counsel, the contractual arrangements described below among Beijing Spark Education, Xingengyuan and the shareholders of Xingengyuan governed by PRC law are valid, binding and enforceable under current PRC laws. However, these contractual arrangements may not be as effective in providing control as direct ownership. There are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or our VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. For a description of the risks related to these contractual arrangements and our corporate structure, please see “Risk Factors—Risks Related to Our Corporate Structure.”

Exclusive Business Cooperation Agreement

Beijing Spark Education and Xingengyuan entered into an exclusive business cooperation agreement on January 3, 2017.

Pursuant to the exclusive business cooperation agreement, Beijing Spark Education has the exclusive right to provide or designate any third-party to provide, among other things, management consultancy services, software licensing services, technological support and other services to Xingengyuan. In exchange, Xingengyuan pay monthly management fees and service fees to Beijing Spark Education in an amount determined by Beijing Spark Education and Xingengyuan based on certain factors as specified in the exclusive business cooperation agreement. Without the prior written consent of Beijing Spark Education, Xingengyuan cannot accept similar services provided by, or establish similar cooperation relationship with, any third-party. Beijing Spark Education has the exclusive ownership of all intellectual property rights created as a result of the performance of this agreement unless otherwise provided by PRC laws or regulations, which remain effective whether or not the agreement is amended or terminated.

The exclusive business cooperation agreement was effective from January 3, 2017 and will continue to be effective unless it is terminated. Beijing Spark Education may terminate the agreement unilaterally if Xingengyuan materially breaches any provisions under the agreement, whereas under no circumstances can Xingengyuan terminate the agreement unless otherwise provided by PRC laws or regulations.

Equity Pledge Agreement

Each of Xingengyuan’s shareholders entered into an equity pledge agreement with Beijing Spark Education and Xingengyuan on January 3, 2017, among which the equity pledge agreement among Mr. Luo, Beijing Spark Education and Xingengyuan was last amended and restated on February 24, 2021 and the equity pledge agreement among Mr. Shan, Beijing Spark Education and Xingengyuan was last amended and restated on November 12, 2018. Under such equity pledge agreements, each of Mr. Luo and Mr. Shan pledged his respective equity interest in Xingengyuan to Beijing Spark Education to secure his and Xingengyuan’s obligations under the exclusive business cooperation agreement, exclusive purchase option agreement, spousal consent letter, power of attorney and the equity pledge agreement. Each of Mr. Luo and Mr. Shan further agreed not to transfer or pledge his respective equity interest in Xingengyuan without the prior written consent of Beijing Spark Education. Each of the equity pledge agreements will remain binding until the respective pledger and Xingengyuan discharge all their obligations under the above-mentioned agreements.

We have completed the registration of the equity pledge relating to Xingengyuan with the competent branch of the SAMR in accordance with the Civil Code of the PRC.

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Exclusive Purchase Option Agreement

Each of Xingengyuan’s shareholders entered into an exclusive purchase option agreement with Beijing Spark Education and Xingengyuan on January 3, 2017, among which the exclusive purchase option agreement among Mr. Luo, Beijing Spark Education and Xingengyuan was last amended and restated on July 24, 2020 and the exclusive purchase option agreement among Mr. Shan, Beijing Spark Education and Xingengyuan was last amended and restated on November 12, 2018. Under the exclusive purchase option agreements, each of Mr. Luo and Mr. Shan granted Beijing Spark Education an exclusive and irrevocable option to purchase, or designate a third party to purchase, all or a portion of his respective equity interest in Xingengyuan at the higher price between RMB10 and the lowest price permissible by the then-applicable PRC laws. In addition, without Beijing Spark Education’s prior written consent, the shareholders of Xingengyuan shall not, individually or collectively, make or procure Xingengyuan to engage in any transaction or conduct that has a material adverse effect on the assets, liabilities, operations, equity and other legal rights of Xingengyuan. Without Beijing Spark Education’s prior written consent, Xingengyuan shall not enter into any contract with a price exceeding RMB500,000, except for contracts in the ordinary course of business. Xingengyuan shall not be dissolved or liquidated without prior written consent by Beijing Spark Education, unless otherwise provided by PRC laws or regulations. Each exclusive purchase option agreement shall remain in effect until all of the equity interests in Xingengyuan have been acquired by Beijing Spark Education or its designee.

Powers of Attorney

Pursuant to the powers of attorney executed by each of Mr. Luo and Mr. Shan, which was last amended and executed respectively on July 24, 2020 and November 12, 2018, each of Mr. Luo and Mr. Shan irrevocably authorized Beijing Spark Education to act on their respective behalf as exclusive agent and attorney, to the extent permitted by law, with respect to all rights of shareholders concerning all equity interests held by each of them in Xingengyuan, including but not limited to the right to attend shareholder meetings, exercise all the shareholder’s rights (including but not limited to voting rights and right to sell, transfer, pledge or dispose of all or part equity interests held in part or in whole) and designate and appoint on their respective behalf the legal representative, directors, supervisors, general managers and other senior management members of Xingengyuan.

Spousal Consent Letters

Pursuant to the spousal consent letters executed by the spouses of each of Mr. Luo and Mr. Shan which was last amended and executed respectively on July 24, 2020 and November 5, 2018, respectively, the signing spouses unconditionally and irrevocably agreed that the equity interest in Xingengyuan held by and registered in the name of Mr. Luo and Mr. Shan be disposed of in accordance with the equity pledge agreements, the exclusive purchase option agreements and the powers of attorney described above, and that Mr. Luo and Mr. Shan may perform, amend or terminate such agreements without their additional consent.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated statements of operations and comprehensive loss for the years ended December 31, 2019 and 2020, selected consolidated balance sheet data as of December 31, 2019 and 2020 and selected consolidated statements of cash flows data for the years ended December 31, 2019 and 2020 have been derived from audited consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Selected Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	For the Year Ended December 31,
	2019						2020
	RMB			% of total net revenues			RMB			US$			% of total net revenues
	(in thousands, except for share, per share data and percentage)
Selected Consolidated Statements of Operations and Comprehensive Loss:
Net revenues		195,412			100.0			1,174,359			179,978			100.0
Cost of revenues(1)		(361,873	)		(185.2	)		(852,332	)		(130,626	)		(72.6	)
Gross (loss)/profit		(166,461	)		(85.2	)		322,027			49,352			27.4
Operating expenses
Sales and marketing expenses(1)		(235,769	)		(120.7	)		(798,356	)		(122,353	)		(68.0	)
Research and development expenses(1)		(239,941	)		(122.8	)		(327,349	)		(50,168	)		(27.9	)
General and administrative expenses(1)		(128,203	)		(65.6	)		(177,960	)		(27,274	)		(15.2	)
Total operating expenses		(603,913	)		(309.1	)		(1,303,665	)		(199,795	)		(111.1	)
Other income		2,163			1.1			21,866			3,351			1.9
Loss from operations		(768,211	)		(393.2	)		(959,772	)		(147,092	)		(81.8	)
Interest income		1,953			1.0			11,749			1,801			1.0
Interest expenses		(926	)		(0.5	)		(822	)		(126	)		(0.1	)
Others, net		(3,939	)		(2.0	)		(2,850	)		(437	)		(0.2	)
Loss before income tax expense		(771,123	)		(394.7	)		(951,695	)		(145,854	)		(81.1	)
Income tax expense		—			—			—			—			—
Net loss		(771,123	)		(394.7	)		(951,695	)		(145,854	)		(81.1	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(20.9	)		(100,895	)		(15,463	)		(8.6	)
Deemed dividends due to extinguishment of preferred shares		—			—			(13,415	)		(2,056	)		(1.1	)
Net loss attributable to ordinary shareholders of Spark Education Limited		(811,911	)		(415.6	)		(1,066,005	)		(163,373	)		(90.8	)
Weighted average number of ordinary shares used in computing net loss per share
Basic and diluted		24,770,658						29,605,885			29,605,885
Net loss per share attributable to ordinary shareholders
Basic and diluted		(32.78	)					(36.01	)		(5.52	)
Unaudited Pro Forma Data(2):
Pro forma weighted average number of shares used in computing net loss per share:
Basic and diluted								259,628,085			259,628,085
Pro forma net loss per share:
Basic and diluted								(3.67	)		(0.56	)

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Notes:

(1) Share-based compensation expenses included in:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB		US$
	(in thousands)
Cost of revenues		774		1,873		287
Sales and marketing expenses		1,150		3,338		512
Research and development expenses		3,318		10,761		1,649
General and administrative expenses		51,514		30,838		4,726

(2) Pro forma basic and diluted net loss per share gives effect to the assumption that all preferred shares have been converted into ordinary shares as of the beginning of the year or the original date of issuance, if later, at the conversion ratio of one for one, and that all of our founders’ unvested restricted shares have been vested as of the beginning of the year or the grant date, if later. See Note 11(b) to the Consolidated Financial Statements for more information regarding our founders’ restricted shares.

The following table presents our selected consolidated balance sheet data as of December 31, 2019 and 2020.

	As of December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Selected Consolidated Balance Sheet Data:
Cash and cash equivalents		506,145			1,926,289			295,217
Total current assets		567,422			2,086,550			319,776
Total assets		784,581			2,462,056			377,325
Deferred revenues		410,930			1,216,756			186,476
Total current liabilities		680,973			1,815,463			278,231
Total liabilities		749,345			1,860,430			285,122
Total mezzanine equity		992,021			2,722,314			417,213
Total shareholders’ deficit		(956,785	)		(2,120,688	)		(325,010	)
Total liabilities, mezzanine equity and shareholders’ deficit		784,581			2,462,056			377,325

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The following table presents our selected consolidated statement of cash flows data for the year ended December 31, 2019 and 2020.

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Selected Consolidated Statement of Cash Flows Data:
Net cash (used in) / provided by operating activities		(228,999	)		204,359			31,319
Net cash used in investing activities		(79,564	)		(213,840	)		(32,772	)
Net cash provided by financing activities		475,800			1,542,945			236,467
Effect of exchange rate changes on cash and cash equivalents		26,726			(113,320	)		(17,367	)
Net increase in cash and cash equivalents		193,963			1,420,144			217,647
Cash and cash equivalents at beginning of the year		312,182			506,145			77,570
Cash and cash equivalents at end of the year		506,145			1,926,289			295,217

Non-GAAP Financial Measures

Gross billings is a non-GAAP financial measure. We define gross billings for a specific period as the total amount of cash received in respect of sales of courses in such period, net of the total amount of refunds in such period. For a more detailed discussion of our refund policy, see “Business—Pricing and Refund Policy.”

We generally charge tuition fees for the online small-class courses we sell to students upfront. Upon payment of the tuition fees, students are given a specified number of course units that they can consume to attend our course sessions. The tuition fees for our online small-class courses are initially recorded as deferred revenues. Because our students generally attend online small-class courses on pre-determined schedules and deferred revenues are recognized proportionally as course units are consumed, we have better visibility into our future revenues. We collect the tuition fees upfront for our AI-enhanced courses which are initially recorded as deferred revenues and recognized proportionally as these courses are “unlocked,” i.e. become available for viewing by students, on pre-determined schedules. We believe gross billings provide valuable insights into the sales of our online courses and the performance of our business.

This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, its most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP financial measure. As gross billings has material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings as a substitute for, or superior to, net revenues prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

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We compensate for these limitations by relying primarily on our GAAP results and using gross billings only as a supplemental measure. The table below sets forth a reconciliation of our gross billings to net revenues for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net revenues		195,412			1,174,359			179,978
Add: tax and surcharges		11,764			70,787			10,849
Add: ending deferred revenues		410,930			1,216,756			186,476
Less: beginning deferred revenues		(43,418	)		(410,930	)		(62,978	)
Less: Nonmonetary consideration awarded for promotion services(1)		(61,194	)		(142,859	)		(21,894	)
Gross billings (non-GAAP)		513,494			1,908,113			292,431

Note:

(1) Represent the Spark Coins and free course units awarded to parents of our students in return for the distinct promotion services they perform for us; for more information, see “Business—Branding, Sales and Marketing—Channels—Referrals and Organic Traffic.”

Adjusted net loss represents net loss before share-based compensation expenses. This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, its most directly comparable financial measure prepared in accordance with GAAP. As adjusted net loss has limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net loss as a substitute for, or superior to, net loss prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The table below sets forth a reconciliation of our net loss and adjusted net loss for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net loss		(771,123	)		(951,695	)		(145,854	)
Add: Share-based compensation expenses		56,756			46,810			7,174
Adjusted net loss (non-GAAP)		(714,367	)		(904,885	)		(138,680	)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Overview

We are a pioneer and innovator in China’s K-12 after-school tutoring, or AST, market, offering foundational learning services to K-12 students. As a result of our unique approach to learning, we have become China’s largest online small-class education company in terms of gross billings in 2020, according to CIC.

We deliver our courses primarily through online small classes with four to eight students per class. According to CIC, online small-class is the most effective format for providing students with an engaging, interactive and personalized learning experience. We currently offer online courses to students in three main subjects: mathematical thinking, which is our flagship course, Chinese, and English. We also offer AI-enhanced courses to supplement our offerings.

We have experienced rapid growth within a relatively short period of time. We had 321,282 students as of December 31, 2020, representing a significant increase from 87,578 as of December 31, 2019. Our net revenues increased by 501.0% from RMB195.4 million in 2019 to RMB1,174.4 million (US$180.0 million) in 2020. Our gross billings almost quadrupled from RMB513.5 million in 2019 to RMB1,908.1 million (US$292.4 million) in 2020. We recorded a gross profit of RMB322.0 million (US$49.4 million) and a net loss of RMB951.7 million (US$145.9 million) in 2020, as compared to a gross loss of RMB166.5 million and a net loss of RMB771.1 million in 2019. For a reconciliation of gross billings to net revenues, see “—Non-GAAP Financial Measures.”

Major Factors Affecting Our Results of Operations

We operate in China’s K-12 AST market. As a result, our business, results of operations and financial condition are affected by the general factors affecting this market, including China’s continued economic growth, increasing disposable income per capita, rapidly growing demand for quality education resources, and growing K-12 student population, among other things. Additionally, we benefit significantly from the large and rapidly growing demand for foundational learning, and a number of other key trends that are reshaping China’s K-12 AST market. These trends include the growing online penetration, as well as the emergence of online small-class format. We believe these trends will continue to drive our long-term growth. Our results of operations, financial condition and prospects will depend significantly on our ability to capitalize on the growth opportunities that these trends have presented. Our results of operations, financial condition and prospects are also affected by evolving competition and regulatory landscapes in China’s K-12 AST market.

The COVID-19 pandemic has affected us in both negative and positive ways. The pandemic has caused temporary interruptions to our business operations in the first quarter of 2020 as we implemented internal protocols to keep our faculty members and other employees safe by closing our offices in Beijing and several other cities in China. As K-12 students continued to learn from home, the market acceptance of virtual learning and online education has also rapidly increased, which is

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expected to drive demand for online AST services, including ours, in the long run. See “Risk Factors—Risks Related to Our Business and Industry—Risks Related to Our Business and Industry—The COVID-19 pandemic has caused interruptions to our business and operations and it, or any future health epidemic or other adverse public health developments, may continue to do so.”

Additionally, we believe that our results of operations and financial condition are also affected by company-specific factors, including the factors discussed below.

Our Ability to Increase Course Units Consumed by Students

We currently generate our net revenues primarily from the tuition fees paid by students to purchase online small-class course packages. Each of these course packages contains a certain number of course units that our students can consume to attend our course sessions. We typically receive the full amount of the tuition fees upfront and recognize net revenues proportionally as these course units are consumed. Because our students attend a given online small-class course generally on pre-determined schedules, the deferred revenues are recognized at a fixed rate over the duration of the course. As a result, the net revenues from our online small-class courses for a given period are directly affected by the number of course units consumed by our students during that period which, in turn, is mainly affected by the number of our students. In 2020, our students consumed a total of 15,168 thousand course units, which more than quadrupled from 2,844 thousand in 2019. We had a total of 321,282 students as of December 31, 2020, representing a significant increase from 87,578 as of December 31, 2019. Our ability to attract and retain students is driven by a variety of factors, including our ability to offer an engaging, interactive and personalized learning experience; our ability to deliver a satisfactory learning outcome; our ability to deliver consistent, high-quality teaching; the effectiveness of our sales and marketing efforts; and our brand recognition, among other things. Our course units consumed for a given period are also affected by our ability to expand our courses to cover more subjects and age groups to meet students’ diverse learning needs and preferences.

Our Ability to Increase Our Tuition Fees

Our results of operations and financial condition are affected by the level of tuition fees we charge for our online courses. We use average net revenues per course unit consumed as a proxy to measure our ability to price our online courses. Our average net revenues per course unit consumed of our online small-class courses increased from RMB68.2 in 2019 to RMB74.1 (US$11.3) in 2020. Our pricing depends on a variety of factors, including the acceptance of foundational learning; the market demand of online K-12 AST courses; our brand recognition; students’ and their families’ perception of the quality and effectiveness of our courses; our ability to deliver consistent, high-quality teaching and course offerings; and the prices and availability of competing offerings, among other things. We will continue to monitor developments associated with these factors with a view to optimize pricing for our courses while ensuring our competitiveness.

Our Ability to Effectively Manage Our Costs and Operating Expenses

Our results of operations and financial condition are affected by our ability to effectively manage our costs and operating expenses.

A substantial portion of our cost of revenues currently consist of faculty costs, as we continue to attract, train and retain a large number of full-time teachers and tutors to support our rapidly growing student base. Our ability to manage these costs depends significantly on whether we are able to cost-effectively attract qualified teachers and tutors. It also depends on our ability to leverage our operational sophistication and technologies to maximize our class attendance and increase teacher

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utilization. Additionally, we expect that we will be able to better manage our course material costs and other costs, as our economies of scale increase. Our improving cost efficiency and our ability to benefit from economies of scale are evidenced by our gross margin of 27.4% in 2020, as compared to a negative gross margin of 85.2% in 2019.

Since sales and marketing expenses have been a major component of our operating expenses, our results of operations and financial position are affected by our ability to cost-effectively sell and market our courses. We have historically benefited from our strong brand reputation and the resulting significant word-of-mouth referrals and organic traffic. Our ability to control our sales and marketing expenses depends in large part on our ability to continue to leverage brand recognition to generate organic growth in our student base. Currently, a substantial majority of our sales and marketing expenses consist of spending on promotion and referral programs and other marketing and branding activities and compensation paid to our sales and marketing personnel. As a result, the cost-effectiveness of our sales and marketing depends heavily on our ability to continue to generate significant word-of-mouth referrals and enhance returns from marketing and promotional channels, and enable our sales and marketing personnel to sell our courses more efficiently.

We have also incurred substantial research and development expenses as we invested heavily in developing and improving our proprietary pedagogy, courseware and other educational content and enhancing our technology systems and infrastructure. While we will continue to invest in these areas, we expect to benefit from our increased economies of scale as we leverage our existing experience and expertise to expand our course offerings more cost-effectively in the long term. We expect our continued investments in research and development efforts to affect our results of operations and financial condition.

Our Ability to Continue to Upgrade Our Content Development and Technology Capabilities

We have a proven capability to develop consistent, high-quality courses and educational content and deliver an engaging, interactive and personalized learning experience through technology. We believe this has been instrumental to our ability to attract and retain students and build our brand recognition. We have built robust technology systems and infrastructure, to drive our productivity and operational efficiencies. We believe our dedicated focus on content development and technology capabilities to optimize the learning experiences for students and drive operational efficiency will have a long-term positive impact on our business and results of operations.

Key Components of Results of Operations

Net Revenues

We derive substantially all of our net revenues from providing online small-class courses. In 2019 and 2020, the net revenues generated from online small-class courses accounted for 99.2% and 95.6%, respectively, of our total net revenues. Mathematical thinking courses accounted for a substantial majority of our online small-class course revenues in each of 2019 and 2020. We also generated 0.8% and 4.4% of our total net revenues from AI-enhanced courses and others in 2019 and 2020, respectively. The following table sets forth a breakdown of our net revenues for the years indicated:

	For the Year Ended December 31,
	2019				2020
	RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Online small-class courses		193,863		99.2		1,123,243		172,144		95.6
AI-enhanced courses and others		1,549		0.8		51,116		7,834		4.4
Total net revenues		195,412		100.0		1,174,359		179,978		100.0

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We generally charge tuition fees for the online small-class courses we sell to students upfront. Upon payment of the tuition fees, students are given a specified number of course units that they can consume to attend our course sessions. The tuition fees for our online small-class courses are initially recorded as deferred revenues. Because our students generally attend online small-class courses on pre-determined schedules and deferred revenues are recognized proportionally as course units are consumed, we have better visibility into our future revenues. We collect the tuition fees upfront for our AI-enhanced courses which are initially recorded as deferred revenues and recognized proportionally as these courses are “unlocked,” i.e. become available for viewing by students, on pre-determined schedules. We believe gross billings provide valuable insights into the sales of our online courses and the performance of our business.

Cost of Revenues

The following table sets forth a breakdown of our cost of revenues, in absolute amounts and as percentages of total net revenues, for the years indicated:

	For the Year Ended December 31,
	2019				2020
	RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Faculty costs(1)		243,997		124.9		623,540		95,562		53.1
Course material costs		23,912		12.2		75,159		11,518		6.4
Others		93,964		48.1		153,633		23,546		13.1
Total cost of revenues		361,873		185.2		852,332		130,626		72.6

Note:

(1) Includes share-based compensation of RMB774 thousand and RMB1,873 thousand (US$287 thousand), respectively, in 2019 and 2020.

Our cost of revenues primarily consists of faculty costs, mainly representing the compensation paid to our teachers, tutors and customer services personnel, and service fees for delivering course units. In 2019 and 2020, faculty costs classified as cost of revenues were RMB244.0 million and RMB623.5 million (US$95.6 million), respectively, accounting for 124.9% and 53.1%, respectively, of our net revenues for the same periods.

Our cost of revenues also includes (i) course material costs, mainly consisting of the cost of the physical learning kits that we offer students as part of the course packages; and (ii) others, including rental, facility and utilities costs associated with the office spaces used by our faculty members and the live-stream studios where our teachers broadcast courses live to students, transportation and warehousing costs and the costs for the bandwidth and streaming services for our online courses.

Operating Expenses

The following table sets forth our operating expenses, in absolute amounts and as percentages of our total net revenues, for the years indicated:

	For the Year Ended December 31,
	2019						2020
	RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Sales and marketing expenses(1)		235,769		120.7		798,356		122,353		68.0
Research and development expenses(2)		239,941		122.8		327,349		50,168		27.9
General and administrative expenses(3)		128,203		65.6		177,960		27,274		15.2
Total operating expenses		603,913		309.1		1,303,665		199,795		111.1

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Note:

(1) Includes share-based compensation of RMB1,150 thousand and RMB3,338 thousand (US$512 thousand), respectively, in 2019 and 2020.

(2) Includes share-based compensation of RMB3,318 thousand and RMB10,761 thousand (US$1,649 thousand), respectively, in 2019 and 2020.

(3) Includes share-based compensation of RMB51,514 thousand and RMB30,838 thousand (US$4,726 thousand), respectively, in 2019 and 2020.

Sales and marketing expenses. Our sales and marketing expenses primarily consist of (i) marketing expenses, which primarily consist of spending on marketing and branding activities and the promotion and referral programs; (ii) personnel expenses, which primarily consist of the compensation paid to our sales and marketing personnel; and (iii) others, including rental, facility and utilities costs associated with our sales and marketing activities. We expect our sales and marketing expenses to increase in the foreseeable future, driven by our continued investment in our sales, branding and marketing efforts to increase our student base and strengthen our brand recognition.

The following table sets forth a breakdown of our sales and marketing expenses, in absolute amounts and as percentages of total net revenues, for the years indicated:

	For the Year Ended December 31,
	2019				2020
	RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Marketing expenses		135,681		69.5		530,089		81,239		45.1
Personnel expenses		84,879		43.4		247,387		37,914		21.1
Others		15,209		7.8		20,880		3,200		1.8
Total sales and marketing expenses		235,769		120.7		798,356		122,353		68.0

Research and development expenses. Our research and development expenses primarily consist of (i) the salaries and other benefits paid to our pedagogical research, product development and technology personnel; and (ii) rental, facility and utilities costs associated with our pedagogical research, product development and technology activities. We expect our research and development expenses to increase in the foreseeable future, as we continue to invest substantially in pedagogical research, product development and technology efforts to optimize learning experiences for students and drive operational efficiency.

General and administrative expenses. Our general and administrative expenses primarily consist of (i) the salaries and other benefits paid to our management and administrative personnel; and (ii) rental, facility and utilities costs associated with our management and administrative personnel. We expect our general and administrative expenses to increase as we incur additional costs as a result of operating as a public company.

Other Income

Other income mainly consists of government concessions and subsidies. As part of the Chinese government’s efforts to ease the burden of businesses affected by the COVID-19 outbreak, the Ministry of Finance and the State Taxation Administration jointly announced on February 6, 2020, that paying output VAT related to specific consumer services could be waived, effective from January 2020 and valid until March 2021. In particular, income obtained by taxpayers from providing consumer services shall be exempted from value added tax. We recorded a tax relief of nil and RMB11.1 million (US$1.7 million), for the years ended December 31, 2019 and 2020, respectively. On September 30, 2019, the Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, taxpayers engaging in providing consumer services are allowed to deduct

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an extra 15% of the deductible input VAT for the then current period from the payable tax. For the years ended December 31, 2019 and 2020, we recorded a tax deduction of RMB0.8 million and RMB5.7 million (US$0.9 million) due to such additional value-added tax credit policy for income generated from providing consumer services.

Taxation

Cayman Islands

We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.

Hong Kong

Our wholly owned subsidiary in Hong Kong, Spark Hong Kong, was subject to Hong Kong profits tax on their activities conducted in Hong Kong at a uniform tax rate of 16.5% before April 1, 2018. Starting from the financial year commencing on April 1, 2018, the two-tiered profits tax regime took effect, under which the tax rate is 8.25% for assessable profits on the first HK$2 million and 16.5% for any assessable profits in excess of HK$2 million. Payments of dividends by our subsidiaries to us are not subject to withholding tax in Hong Kong.

PRC

Our subsidiaries and our consolidated VIE and its subsidiaries in China are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws. Pursuant to the PRC Enterprise Income Tax Law (the “EIT Law”), which became effective on January 1, 2008 and last amended on December 29, 2018, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies. For example, enterprises qualified as High and New Technology Enterprises, or HNTE, are entitled to a 15% enterprise income tax rate rather than the 25% uniform statutory tax rate. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. Xingengyuan obtained HNTE status to enjoy a preferential tax rate of 15% in 2018, to the extent they have taxable income under the PRC EIT Law, as long as they re-apply for HNTE status every three years and meet the HNTE criteria during this three-year period. If an HNTE fails to meet the criteria for qualification as an HNTE in any year, (i) the enterprise cannot enjoy the 15% preferential tax rate in that year and must instead use the uniform 25% enterprise income tax rate and (ii) they will need to re-apply for HNTE status in 2021.

Our educational services are subject to VAT at the rate of 3% for small-scale-VAT-payer entities or at the rate of 6% for general-VAT-payer entities in accordance with PRC tax rules.

As a holding company with no material operations of our own, we conduct our operations primarily through our PRC subsidiaries and our consolidated VIE in China. We are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries in China through capital contributions or loans, subject to the approval, filings or registration of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to our consolidated VIE only through entrusted loans. See “Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from making loans or additional capital contributions to our PRC subsidiaries and to make loans to Xingengyuan, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” The ability of our subsidiaries in China to make dividends or other cash payments to us is subject to various restrictions under PRC laws and regulations. See “Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions of equity paid by our PRC subsidiaries to

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fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” and “Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.”

If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC EIT Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.”

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

The selection of critical accounting policies, and the determination of critical accounting estimates affecting the application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.

For a detailed discussion of our significant accounting policies and related judgments, please refer to “Notes to Consolidated Financial Statements – Note 2 Summary of Significant Accounting Policies”. You should read the following description of critical accounting estimates in conjunction with our consolidated financial statements and other disclosures included in this prospectus.

Revenue Recognition

Standalone selling price of Spark Coins

Nature of estimate: We identify performance obligations associated with the online small-class courses and AI-enhanced courses that we sell to customers in order to allocate the transaction price across the separate obligations based on the estimated stand-alone selling price of each performance obligation. The performance obligations identified by us were the delivery of course sessions to students included in the package and the Spark Coins awarded to students upon the successful purchase of a package. Spark Coins can be redeemed for online course units, branded merchandise, or cash vouchers for third-party e-commerce platforms. The standalone selling price of Spark Coins is not directly observable, and so when estimating the standalone selling price of the Spark Coins we consider the standalone selling price of the services and goods that can be redeemed using the Spark Coins, and the likelihood that the Spark Coins will be redeemed.

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Assumptions: The key assumptions underpinning the estimate are the respective likelihood that the Spark Coins will be redeemed to online course units, branded merchandise, or cash vouchers for third-party e-commerce platforms, as well as the level of anticipated forfeiture of Spark Coins. We use historical redemption and forfeiture data in order to form the basis for our assumptions, before assessing their reasonableness against any known recent events. Based on this data, we update our estimates on a regular basis.

Should the standalone selling price of the services and goods that can be redeemed change significantly, and/or the redemption pattern of the Spark Coins change significantly, then the estimated standalone selling price of Spark Coins will also change. This would directly impact the pattern of future revenue recognition for online courses and redemption of Spark Coins.

The Group’s estimate of the standalone value of Spark Coins did not change significantly throughout the periods presented and there is no indication that this estimate will change significantly in the near future.

See Note 2 (p) of the Notes to the Consolidated Financial Statements for more information regarding revenue recognition.

Fair value of promotion services received in exchange for Spark Coins or free course units

Nature of estimate: In order to encourage parents to promote our course packages, customers can also earn Spark Coins by sharing posters that recommend our online courses on certain social media platforms (the “promotion program”) and can earn free online small-class course units by successfully referring new customers for online small-class courses (the “referral program”). Revenue from such exchange is measured based on the fair value of the promotion service provided by the customers.

Assumptions: Where applicable, we have estimated the fair value of the promotion service from the customer to be the amount that the customer could have received if they redeemed the Spark Coins for cash vouchers. This effective cash-out value is similar to the amount that we are willing to pay for the promotion service. If we had determined the fair value of the promotion service received from the customer to have a different basis, then our revenue and sales and marketing expenses could have been recorded at different values.

Our estimates with regards to the fair value of promotion services received from customers did not change throughout the periods presented and there is no indication that these estimates will change in the near future. Any change to the fair value associated with these promotion services would directly impact the value of the revenue and sales and marketing expenses recorded.

See Note 2 (p) of the Notes to the Consolidated Financial Statements for more information regarding revenue recognition.

Share-based Compensation

Fair value of options

Nature of estimate: For share options for the purchase of ordinary shares granted to employees classified as equity awards, the related share-based compensation expenses are recognized in the consolidated financial statements based on the fair value of the awards on the grant date, which is calculated using the binomial option pricing model.

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Assumptions: The determination of the fair value is affected by the share price as well as assumptions regarding several complex and subjective variables, including the expected share price volatility, actual and projected employee share option exercise behavior, risk-free interest rates and expected dividends. The fair value of the ordinary shares is 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.

We adopted an employee incentive compensation plan, or the 2019 Plan, in November 2019 and amended the plan in March 2021. For key terms of the 2019 Plan, see “Management—Equity Incentive Plan.” The fair value of the options granted under the 2019 Plan is estimated on the dates of grant using the binomial option pricing model with the following assumptions used.

	For the Year Ended December 31,
	2019			2020
Risk-free interest rate(1)		1.9%~2.1	%		0.6%~0.9	%
Expected volatility(2)		51.2%~53.0	%		53.6%~58.0	%
Expected dividend yield(3)		—			—
Fair value of underlying ordinary share(4)	US$	0.50~0.86		US$	1.15~2.47
Expected Term (in years)(5)		19.8~20.2			19.8~20.0

Notes:

(1) We estimate risk-free interest rate based on the daily treasury long-term rate of U.S. Department of the Treasury with a maturity period close to the contract term of the options.

(2) We estimate expected volatility based on the annualized standard deviation of the daily return embedded in historical share prices of comparable companies with a time horizon close to the expected expiry of the term.

(3) We have never declared or paid any cash dividends on our capital stock, and we do not anticipate any dividend payments on our ordinary shares in the foreseeable future.

(4) We determined fair value of underlying ordinary shares with the assistance of a third-party appraiser.

(5) The expected term is the contract life of the option.

Assumptions are updated at each grant date of new stock options.

See Note 11 (a) of the Notes to the Consolidated Financial Statements for more information regarding accounting for Share-based compensation.

Fair value of ordinary shares

Nature of estimate: In determining our equity value, we applied the discounted cash flow analysis based on our projected cash flows using our best estimate as of the valuation date. The determination of the fair value of our ordinary shares requires complex and subjective judgments to be made regarding our projected financial and operating results, our unique business risks, the liquidity of our shares and our operating history and prospects at the time of valuation.

The following table sets forth the fair value of our ordinary shares estimated at the grant dates of share options with the assistance from an independent valuation firm.

Date of Valuation	Fair Value Per Share (US$)		Discount for Lack Of Marketability			Discount Rate
May 31, 2019		0.499		20	%		27	%
July 30, 2019		0.813		20	%		26	%
December 31, 2019		0.862		20	%		25	%
April 14, 2020		1.151		20	%		23	%
July 21, 2020		1.807		20	%		21	%
September 22, 2020		1.967		20	%		20	%
December 31, 2020		2.472		15	%		19	%

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The income approach involves applying appropriate weighted average costs of capital (“WACCs”) to estimated cash flows that are based on earnings forecasts. Our revenues and earnings growth rates, as well as major milestones that we have achieved, contributed to the increase in the fair value of our ordinary shares from 2019 to 2020. The assumptions used in deriving the fair values are consistent with our business plan. These assumptions include: no material changes in the existing political, legal and economic conditions in China; our ability to retain competent management, key personnel and staff to support our ongoing operations; and no material deviation in market conditions from economic forecasts. These assumptions are inherently uncertain. The risk associated with achieving our forecasts were assessed in selecting the appropriate WACCs, which ranged from 27% to 19%.

The hybrid method, comprising of the probability-weighted expected return method and the option pricing method, was used to allocate equity value of our company to preferred and ordinary shares, considering the guidance prescribed by the AICPA Audit and Accounting Practice Aid. This method involves making estimates of the anticipated timing of a potential liquidity event, such as a sale of our company or an initial public offering and estimates of the volatility of our equity securities. The anticipated timing is based on the plans of our board of directors and management. The higher the volatility, the greater the potential change in the fair value of ordinary shares.

The major assumptions used in calculating the fair value of ordinary shares include:

• WACCs: The WACCs were determined based on a consideration of the factors including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors.

• Comparable companies. In deriving the weighted average cost of capital used as the discount rates under the income approach, certain publicly traded companies were selected for reference as our guideline companies. The guideline companies were selected based on the following criteria: (i) they operate in the online education service industry and (ii) their shares are publicly traded in the United States.

• Discount for lack of marketability, or DLOM: DLOM was quantified by the Finnerty’s Average-Strike put options mode. Under this option-pricing method, which assumed that the put option is struck at the average price of the stock before the privately held shares can be sold, the cost of the put option was considered as a basis to determine the DLOM.

Assumptions are updated at each valuation date if required.

The fair value of our ordinary shares was US$0.862 per share on December 31, 2019 and US$2.472 per share on December 31, 2020. This increase was primarily attributed to (i) the continuing rapid growth of our business; (ii) our successful completion of financing which provided us with the funding needed for our expansion, and (iii) our increasing estimated probability of a successful initial public offering. As our preferred shares would be automatically converted into ordinary shares upon the completion of a qualified offering, the increase in estimated probability of initial public offering success results in allocation of a higher portion of our business enterprise value to ordinary shares. The DLOM also decreased from 20% as of December 31, 2019 to 15% as of December 31, 2020, and as a result of progress events described above, the discount rate is decreased from 27% as of December 31, 2019 to 19% as of December 31, 2020.

Once a public trading market of the ADSs has been established in connection with the completion of this offering, it will no longer be necessary for us to estimate the fair value of our ordinary shares in connection with our accounting for granted share options.

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Results of Operations

The following table sets forth our consolidated results of operations for the years indicated, both in absolute amounts and as percentages of total net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	For the Year Ended December 31,
	2019						2020
	RMB			% of total net revenues			RMB			US$			% of total net revenues
	(in thousands, except for percentages)
Net revenues		195,412			100.0			1,174,359			179,978			100.0
Cost of revenues(1)		(361,873	)		(185.2	)		(852,332	)		(130,626	)		(72.6	)
Gross (loss)/profit		(166,461	)		(85.2	)		322,027			49,352			27.4
Operating expenses
Sales and marketing expenses(1)		(235,769	)		(120.7	)		(798,356	)		(122,353	)		(68.0	)
Research and development expenses(1)		(239,941	)		(122.8	)		(327,349	)		(50,168	)		(27.9	)
General and administrative expenses(1)		(128,203	)		(65.6	)		(177,960	)		(27,274	)		(15.2	)
Total operating expenses		(603,913	)		(309.1	)		(1,303,665	)		(199,795	)		(111.1	)
Other income		2,163			1.1			21,866			3,351			1.9
Loss from operations		(768,211	)		(393.2	)		(959,772	)		(147,092	)		(81.8	)
Interest income		1,953			1.0			11,749			1,801			1.0
Interest expenses		(926	)		(0.5	)		(822	)		(126	)		(0.1	)
Others, net		(3,939	)		(2.0	)		(2,850	)		(437	)		(0.2	)
Loss before income tax expense		(771,123	)		(394.7	)		(951,695	)		(145,854	)		(81.1	)
Income tax expense		—			—			—			—			—
Net loss		(771,123	)		(394.7	)		(951,695	)		(145,854	)		(81.1	)
Accretions of convertible redeemable preferred shares to redemption value		(40,788	)		(20.9	)		(100,895	)		(15,463	)		(8.6	)
Deemed dividends due to extinguishment of preferred shares		—			—			(13,415	)		(2,056	)		(1.1	)
Net loss attributable to ordinary shareholders of Spark Education Limited		(811,911	)		(415.6	)		(1,066,005	)		(163,373	)		(90.8	)

Notes:

(1) Share-based compensation expenses included in:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB		US$
	(in thousands)
Cost of revenues		774		1,873		287
Sales and marketing expenses		1,150		3,338		512
Research and development expenses		3,318		10,761		1,649
General and administrative expenses		51,514		30,838		4,726

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Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Net Revenues

Our net revenues increased by 501.0% from RMB195.4 million in 2019 to RMB1,174.4 million (US$180.0 million) in 2020, driven primarily by the increase in the number of course units of online small-class courses consumed by our students and, to a lesser extent, an increase in the average net revenues per course unit of online small-class courses consumed.

In 2020, our students consumed a total of 15,168 thousand course units of our online small-class courses, more than quadrupling from 2,844 thousand in 2019, which was primarily driven by the increase in the number of our students during the same period. We had a total of 321,282 students as of December 31, 2020, representing a significant increase from 87,578 as of December 31, 2019. The rapid increase in the number of our students was primarily driven by the popularity we gained among students and families based on the quality of our offerings and the expansion of our courses. We launched our AI-enhanced mathematical thinking and Chinese courses as standalone products in July 2020 and AI-enhanced English courses in August 2020. Our average net revenues per course unit consumed of our online small-class courses grew from RMB68.2 in 2019 to RMB74.1 (US$11.3) in 2020, driven by our ability to charge premium tuition fees which, in turn, was due to the improved quality of our course offerings and our enhanced brand recognition.

Cost of Revenues

Our cost of revenues increased by 135.5% from RMB361.9 million in 2019 to RMB852.3 million (US$130.6 million) in 2020. The increase was primarily due to the increase in faculty costs and, to a lesser extent, increases in other cost of revenues and course material costs.

• Faculty costs. Our faculty costs increased by 155.5% from RMB244.0 million in 2019 to RMB623.5 million (US$95.6 million) in 2020. The increase was primarily due to (i) an increase in the numbers of our teachers and tutors as we continued to attract and retain a large number of faculty members to meet the needs of our rapid growing student base; (ii) an increase in the level of their compensation as we offered more competitive compensation packages to attract and retain qualified candidates; and (iii) an increase in the service fees for delivering course units which, in turn, was due to an increase in online small-class course units consumed. As of December 31, 2020, we had 5,256 teachers, tutors and customer services personnel, compared to 2,242 teachers, tutors and customer services personnel, as of December 31, 2019. In 2020, our students consumed a total of 15,168 thousand course units of our online small-class courses, more than quadrupling from 2,844 thousand in 2019. Our faculty costs as a percentage of our total net revenues has decreased from 124.9% in 2019 to 53.1% in 2020, which was primarily due to our efforts to leverage our operational sophistication and technologies to maximize our class attendance and increase teacher utilization.

• Course material costs. Our course material costs increased by 214.3% from RMB23.9 million in the 2019 to RMB75.2 million (US$11.5 million) in 2020, primarily due to the increase in the total number of course units of online small-class courses consumed over the same period. The course material costs as a percentage of our net revenues has decreased from 12.2% in 2019 to 6.4% in 2020, which was mainly due to our enhancing supply chain efficiency and bargaining powers with suppliers of course materials as our economies of scale increased.

• Others. Other cost of revenues increased by 63.5% from RMB94.0 million in 2019 to RMB153.6 million (US$23.5 million) in 2020, primarily due to (i) an increase in bandwidth costs as a result of an increase in the total number of course units consumed; and (ii) an increase in rental and depreciation costs.

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Gross Profit

As a result of the foregoing, we recorded a gross profit of RMB322.0 million (US$49.4 million) in 2020, compared to a gross loss of RMB166.5 million in 2019. We recorded a gross margin of 27.4% in 2020, as compared to a negative gross margin of 85.2% in 2019, which was primarily due to our efforts in improving our teaching, course scheduling and course delivery efficiency through operational sophistication and technologies, as well as our increased economies of scale. We expect our gross margin to improve in the foreseeable future as we continue to invest in these efforts.

Operating Expenses

Our operating expenses increased by 115.9% from RMB603.9 million in 2019 to RMB1,303.7 million (US$199.8 million) in 2020, which was primarily driven by an increase in our sales and marketing expenses and, to a lesser extent, increases in our research and development expenses and general and administrative expenses.

Sales and marketing expenses. Our sales and marketing expenses increased by 238.6% from RMB235.8 million in 2019 to RMB798.4 million (US$122.4 million) in 2020, mainly driven by an increase in marketing expenses and an increase in personnel expenses.

• Marketing expenses. Our marketing expenses increased by 290.6% from RMB135.7 million in 2019 to RMB530.1 million (US$81.2 million) in 2020, primarily driven by our increased spending on marketing and branding activities as well as cost of our promotion and referral programs.

• Personnel expenses. Personnel expenses increased by 191.4% from RMB84.9 million in 2019 to RMB247.4 million (US$37.9 million) in 2020, primarily as a result of the increase in the number of sales and marketing personnel. As of December 31, 2020, we had 765 sales and marketing personnel, as compared to 375 sales and marketing personnel as of December 31, 2019.

Research and development expenses. Our research and development expenses increased by 36.4% from RMB239.9 million in 2019 to RMB327.3 million (US$50.2 million) in 2020, which was primarily attributable to a 41.0% increase in personnel expenses from RMB207.1 million in 2019 to RMB292.0 million (US$44.7 million) in 2020. The increase was mainly driven by the increased number of our pedagogical research, product development and technology personnel as we continued to focus on content and technology development efforts. The number of our pedagogical research, product development and technology personnel increased from 754 as of December 31, 2019 to 1,060 as of December 31, 2020.

General and administrative expenses. Our general and administrative expenses increased by 38.8% from RMB128.2 million in 2019 to RMB178.0 million (US$27.3 million) in 2020, which was mainly due to a 21.2% increase in personnel expenses as we hired additional management and administrative personnel in 2020. The number of our management and administrative personnel increased from 246 as of December 31, 2019 to 604 as of December 31, 2020.

Other Income

Our other income increased from RMB2.2 million in 2019 to RMB21.9 million (US$3.4 million) in 2020, primarily due to value-added tax concessions as part of COVID-19 relief and, to a lesser extent, government subsidies.

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Interest Income

Our interest income increased from RMB2.0 million in 2019 to RMB11.7 million (US$1.8 million) in 2020, primarily due to our increased average excess cash balance.

Net Loss

As a result of the foregoing, our net loss increased by 23.4% from RMB771.1 million in 2019 to RMB951.7 million (US$145.9 million) in 2020.

Non-GAAP Financial Measures

Gross billings is a non-GAAP financial measure. We define gross billings for a specific period as the total amount of cash received in respect of sales of courses in such period, net of the total amount of refunds in such period. For a more detailed discussion of our refund policy, see “Business—Pricing and Refund Policy.”

We generally charge tuition fees for online small-class courses we sell to students upfront. Upon payment of the tuition fees, students are given a specified number of course units that they can consume to attend our course sessions. The tuition fees for our online small-class courses are initially recorded as deferred revenues. Because our students generally attend online small-class courses on pre-determined schedules and deferred revenues are recognized proportionally as course units are consumed, we have better visibility into our future revenues. We collect the tuition fees upfront for our AI-enhanced courses which are initially recorded as deferred revenues and recognized proportionally as these courses are “unlocked,” i.e. become available for viewing by students, on pre-determined schedules. We believe gross billings provide valuable insights into the sales of our online courses and the performance of our business.

This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, its most directly comparable financial measure prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP measure has been provided in the tables included below. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP financial measure. As gross billings has material limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider gross billings as a substitute for, or superior to, net revenues prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

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We compensate for these limitations by relying primarily on our GAAP results and using gross billings only as a supplemental measure. The table below sets forth a reconciliation of our gross billings to net revenues for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net revenues		195,412			1,174,359			179,978
Add: tax and surcharges		11,764			70,787			10,849
Add: ending deferred revenues		410,930			1,216,756			186,476
Less: beginning deferred revenues		(43,418	)		(410,930	)		(62,978	)
Less: Nonmonetary consideration awarded for promotion services(1)		(61,194	)		(142,859	)		(21,894	)
Gross billings (non-GAAP)		513,494			1,908,113			292,431

Note:

(1) Represent the Spark Coins and free course units awarded to parents of our students in return for the distinct promotion services they perform for us; for more information, see “Business—Branding, Sales and Marketing—Channels—Referrals and Organic Traffic.”

Adjusted net loss represents net loss before share-based compensation expenses. This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, its most directly comparable financial measure prepared in accordance with GAAP. As adjusted net loss has limitations as an analytical metric and may not be calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net loss as a substitute for, or superior to, net loss prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The table below sets forth a reconciliation of our net loss and adjusted net loss for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net loss		(771,123	)		(951,695	)		(145,854	)
Add: Share-based compensation expenses		56,756			46,810			7,174
Adjusted net loss (non-GAAP)		(714,367	)		(904,885	)		(138,680	)

Liquidity and Capital Resources

Cash Flows and Working Capital

Our principal sources of liquidity have been cash generated from operating activities and proceeds from private placements of our equity securities to investors. As of December 31, 2020, 46.8% and 13.7% of our cash and cash equivalents were held in mainland China and Hong Kong, respectively, of which 35.7% were denominated in Renminbi and 64.3% were denominated in U.S. dollars. As of December 31, 2020, 6.7% of cash and cash equivalents were held by our VIE and its subsidiaries. We believe that our current cash and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for at least the next 12 months.

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We incurred net losses of RMB771.1 million and RMB951.7 million (US$145.9 million), respectively, in 2019 and 2020. We had a negative working capital (which is the difference between current assets and current liabilities) of RMB113.6 million as of December 31, 2019. The major factor for our negative working capital position was attributable to net cash outflows from operating activities. We had a positive working capital of RMB271.1 million (US$41.5 million) as of December 31, 2020.

We intend to finance our future working capital requirements and capital expenditures from cash generated from operating activities, funds raised from financing activities, including the net proceeds we will receive from this offering. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our existing cash is insufficient to meet our requirements, we may seek to issue debt or equity securities or obtain additional credit facilities. Financing may be unavailable in the amounts we need or on terms acceptable to us, if at all. Issuance of additional equity securities, including convertible debt securities, would dilute our earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.

As a holding company with no material operations of our own, we conduct our operations primarily through our PRC subsidiaries and our consolidated VIE in China. We are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to our consolidated VIE only through entrusted loans. See “Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from making loans or additional capital contributions to our PRC subsidiaries and to make loans to Xingengyuan, which could materially and adversely affect our liquidity and our ability to fund and expand our business” and “—Holding Company Structure.”

The following table sets forth a summary of our cash flows for the years indicated:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB			US$
	(in thousands)
Net cash (used in) / provided by operating activities		(228,999	)		204,359			31,319
Net cash used in investing activities		(79,564	)		(213,840	)		(32,772	)
Net cash provided by financing activities		475,800			1,542,945			236,467
Effect of exchange rate changes on cash and cash equivalents		26,726			(113,320	)		(17,367	)
Net increase in cash and cash equivalents		193,963			1,420,144			217,647
Cash and cash equivalents at beginning of year		312,182			506,145			77,570
Cash and cash equivalents at end of year		506,145			1,926,289			295,217

Operating Activities

Net cash provided by operating activities was RMB204.4 million (US$31.3 million) in 2020. The difference between our net loss of RMB951.7 million (US$145.9 million) and the net cash provided by

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operating activities was due to adjustments for non-cash items, including share-based compensation of RMB46.8 million (US$7.2 million) and depreciation and amortization of RMB52.1 million (US$8.0 million), and changes in working capital that mainly resulted from (i) an increase in deferred revenues of RMB805.8 million (US$123.5 million); and (ii) an increase in accrued expenses and other current liabilities of RMB292.6 million (US$44.8 million), partially offset by an increase in prepaid expenses and other current assets which was mainly attributable to our rapid business expansion. Our deferred revenues consist primarily of tuition fees paid upfront by our students at the time of purchase of course packages, and the aforementioned increase in deferred revenues was mainly driven by our increased number of our students.

Net cash used in operating activities was RMB229.0 million in 2019. The difference between our net loss of RMB771.1 million and the net cash used in operating activities was mainly due to adjustments for non-cash items, including share-based compensation of RMB56.8 million, and changes in working capital that mainly resulted from (i) an increase in deferred revenues of RMB367.5 million, and (ii) an increase in accrued expenses and other current liabilities of RMB112.8 million, partially offset by an increase of operating lease right-of-use assets of RMB85.7 million attributable to additional leased properties to support our business expansion. Our deferred revenues consist primarily of tuition paid upfront by our students at the time of purchase of course packages, and the aforementioned increase in deferred revenues was mainly driven by our increased number of our students.

Investing Activities

Net cash used in investing activities was RMB213.8 million (US$32.8 million) in 2020, which was primarily attributable to the purchase of time deposits of RMB320.0 million (US$49.0 million) and short-term investments of RMB152.1 million (US$23.3 million) as part of our liquidity management strategy and the purchase of property and equipment of RMB37.5 million (US$5.7 million), partially offset by proceeds from maturities of time deposits of RMB170.0 million (US$26.1 million) and short-term investments of RMB128.5 million (US$19.7 million).

Net cash used in investing activities was RMB79.6 million in 2019, which was primarily attributable to the purchase of property and equipment of RMB69.1 million to support our business expansion and short-term investments of RMB17.5 million, partially offset by the maturity of short-term investments of RMB7.0 million.

Financing Activities

Net cash provided by financing activities in 2020 was RMB1,542.9 million (US$236.5 million), which mainly resulted from the capital contribution from our Series E and E+ preferred shareholders of RMB1,506.2 million (US$230.8 million) and our Series D+ preferred shareholders of RMB140.8 million (US$21.6 million), partially offset by repurchase of ordinary shares of RMB54.4 million (US$8.3 million) from existing shareholders in exchange for preferred shares as part of the foregoing private placement. The foregoing Series E and E+ preferred shares were subsequently re-designated as E1 and E2 preferred shares, respectively.

Net cash provided by financing activities in 2019 was RMB475.8 million, which was primarily attributable to capital contributions from our Series D preferred shareholders of RMB529.6 million, partially offset by a repurchase of ordinary shares of RMB77.7 million from existing shareholders in exchange for preferred shares as part of the foregoing private placement.

Internal Control Over Financial Reporting

Prior to this offering, we have been a private company with limited accounting and financial reporting personnel and other resources to address our internal controls and procedures. In connection

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with the audit of our consolidated financial statements as of and for the years ended December 31, 2019 and 2020, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting. As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified is the lack of sufficient financial reporting and accounting personnel with sufficient knowledge and experience (i) to address complex technical U.S. GAAP accounting issues, and (ii) to establish and implement formal period-end reporting policies and procedures for the purposes of U.S. GAAP and SEC reporting requirements. To remedy our identified material weakness, we have started to undertake steps to strengthen our internal control over financial reporting, including:

• hiring additional resources to develop and implement a comprehensive set of period-end financial reporting policies and procedures, especially for non-recurring and complex transactions to ensure that consolidated financial statements and related disclosures are in compliance with U.S. GAAP and SEC reporting requirements;

• hiring additional qualified financial and accounting personnel with in-depth experience of U.S. GAAP and SEC accounting and reporting requirements to address complex issues on a timely basis;

• implementing regular U.S. GAAP and SEC financial reporting training programs for our accounting and financial personnel including attending external U.S. GAAP training; and

• subscribing to external reference sources for U.S. GAAP and SEC accounting and reporting requirements and updates.

The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation. See “Risk Factors—Risks Related to Our Business and Industry—If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.”

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. However, pursuant to Section 404 and the related rules adopted by the SEC, we, as a public company after being listed, are required to maintain adequate internal control over financial reporting and include our management’s assessment of the effectiveness of our company’s internal control over financial reporting in our annual report for the fiscal year ending December 31, 2022.

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Capital Expenditures

Our capital expenditures are incurred primarily in connection with purchases of IT infrastructure equipment necessary to support our business operations. Our capital expenditures were RMB69.1 million and RMB40.3 million (US$6.2 million), respectively, in 2019 and 2020.

Contractual Obligations

The following table sets forth our contractual obligations and commitments as of December 31, 2020.

	Payments Due by
	Less than One Year		One to Three Years		More than Five Years		Total
	(RMB in thousands)
Operating lease commitments(1)		34		—		—		34
Purchase commitments(2)		43,063		—		—		43,063
Total contractual obligations		43,097		—		—		43,097

(1) Operating lease commitments consist of future minimum payments under non-cancellable agreements for operating leases that have not commenced or with lease terms of 12 months or less.

(2) Purchase commitments mainly include minimum commitments for non-cancellable advertising service contracts and inventory purchase contracts.

Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2020.

Holding Company Structure

Spark Education Limited is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries and our consolidated VIE incorporated in the PRC. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries which, in turn, depends on the payment of the service fees to our PRC subsidiaries by our consolidated VIE in the PRC pursuant to certain contractual arrangements. See “Corporate History and Structure—Contractual Arrangements with Our VIE and Its Shareholders.” In 2019 and 2020, the amount of such services fees paid to our PRC subsidiaries from our VIE was RMB172.1 million and RMB888.4 million (US$136 million), respectively. If our subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.

In addition, our subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with the Accounting Standards for Business Enterprise as promulgated by the Ministry of Finance, or PRC GAAP. In accordance with PRC company laws, each of our PRC subsidiaries and our consolidated VIE in the PRC is required to set aside at least 10% of its after-tax profit each year, if any, to fund a statutory surplus fund until the statutory surplus fund has reached 50% of its registered capital and to further set aside a portion of its after-tax profit to fund the reserve fund at the discretion of its board of directors. Although the statutory funds can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserved funds are not distributable as cash dividends except in the event of liquidation.

As an offshore holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund raising activities to our PRC subsidiaries only through

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loans or capital contributions, and to our consolidated affiliated entity only through loans, in each case subject to the satisfaction of the applicable government registration, reporting, filing and approval requirements. See “Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from making loans or additional capital contributions to our PRC subsidiaries and to make loans to Xingengyuan, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiaries and consolidated VIE when needed. Notwithstanding the foregoing, our PRC subsidiaries may use their own retained earnings (rather than Renminbi converted from foreign currency denominated capital) to provide financial support to our consolidated affiliated entity either through entrustment loans from our PRC subsidiaries to our consolidated VIE or direct loans to such consolidated affiliated entity’s nominee shareholders, which would be contributed to the consolidated variable entity as capital injections. Such direct loans to the nominee shareholders would be eliminated in our consolidated financial statements against the consolidated affiliated entity’s share capital.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Quantitative and Qualitative Disclosure About Market Risk

Interest Rate Risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. We have not used any derivative financial instruments to manage our interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. However, our future interest income may be lower than expected due to changes in market interest rates.

Foreign Exchange Risk

Substantially all of our revenues, costs and expenses are denominated in Renminbi. The Renminbi is not freely convertible into foreign currencies for capital account transactions. The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk.

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We estimate that we will receive net proceeds of approximately US$                million from this offering, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, based on an assumed initial offering price of US$                per ADS, being the mid-point of the price range set forth on the cover page of this prospectus. Assuming that we convert the full amount of the net proceeds from this offering into RMB, a 10% appreciation of the U.S. dollar against RMB, from a rate of RMB6.5250 to US$1.00, the rate in effect as of December 31, 2020, to a rate of RMB7.1775 to US$1.00, will result in an increase of RMB                million in our net proceeds from this offering. Conversely, a 10% depreciation of the U.S. dollar against the RMB, from a rate of RMB6.5250 to US$1.00, the rate in effect as of December 31, 2020, to a rate of RMB5.8725 to US$1.00, will result in a decrease of RMB                million in our net proceeds from this offering.

Inflation Risk

Since our inception, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2019 and 2020 were increases of 4.5% and 0.2%, respectively. Although we have not in the past been materially affected by inflation since our inception, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments–Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The guidance replaced the incurred loss impairment methodology with an expected credit loss model for which an entity recognizes an allowance based on the estimate of expected credit losses. For public companies, the amendments were effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We early adopted this guidance on January 1, 2019, and the adoption did not have a material impact on our consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation–Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower cost and reduce volatility in the income statement. The guidance was effective for public business entities in annual periods beginning after December 15, 2018, and interim periods within those years. We adopted such pronouncement on January 1, 2019. The adoption did not have a material impact to our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-1, Fair Value Measurement (Topic 820): Disclosure Framework–to the Disclosure Requirements for Fair Value Measurement, which was effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted from the date of issuance. We elected to early adopt this guidance on January 1, 2019, and the adoption did not have a material impact on our consolidated financial statements.

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Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12–Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance eliminates certain exceptions related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. For public business entities, the amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The impact of this standard to our consolidated financial statements is immaterial.

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INDUSTRY OVERVIEW

Certain information, including statistics and estimates, set forth in this section and elsewhere in this prospectus has been derived from an industry report commissioned by us and independently prepared by CIC in connection with this offering. We believe that the sources of such information are appropriate, and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. However, neither we nor any other party involved in this offering has independently verified such information, and neither we nor any other party involved in this offering makes any representation as to the accuracy or completeness of such information. Therefore, investors are cautioned not to place any undue reliance on the information, including statistics and estimates, set forth in this section or similar information included elsewhere in this prospectus.

OVERVIEW OF CHINA’S K-12 AFTER-SCHOOL TUTORING MARKET

China has one of the largest K-12 education student bases in the world. As of December 31, 2020, China had approximately 229.5 million K-12 students. In contrast to the large number of students, high-quality education resources in China remain scarce. Students have to compete through standardized entrance exams to gain admission into the top high schools and universities. According to CIC, in 2019, less than 60% of the students who graduated from junior secondary school were admitted to high schools and approximately 30% of junior secondary school graduates were further admitted to universities; the rate drops to around 1% when it comes to admission to the top 40 Chinese universities. Such fierce competition has led to a strong demand for after-school tutoring, or AST, services for subjects taught in K-12 schools.

China’s K-12 AST market has witnessed remarkable growth and has become the largest in the world in terms of gross billings, reaching approximately RMB784.5 billion (US$120.2 billion) in 2020, according to CIC. This market expansion has been driven by various factors including the increasing demand for high-quality education resources, a large K-12 population, and increasing disposable income per capita. According to CIC, China’s K-12 AST market will reach RMB1,454.2 billion (US$222.9 billion) in 2025, representing a CAGR of 13.1% between 2020 and 2025.

In terms of subjects, mathematics, Chinese and English are the main focuses of China’s K-12 AST programs because they are considered the core subjects throughout K-12 education. In 2020, programs designed for these three subjects accounted for 68.7% of China’s K-12 AST market in terms of gross billings, according to CIC. As the single largest subject in China’s K-12 AST market in terms of gross billings, mathematics programs alone took up 33.7% of that market in 2020. This heavy focus on mathematics programs is due to the significant emphasis on the subject during the in-school teaching throughout K-12 education and mathematics programs help children develop a variety of logical thinking skills, which benefit children’s lifelong growth.

AREAS FOR IMPROVEMENT IN CHINA’S AFTER-SCHOOL TUTORING MARKET

Amid the rapid growth of China’s K-12 AST market, there have emerged some key areas for improvement in order to achieve better educational outcome and experiences for K-12 students.

Limitations of the rote learning approach. In an attempt to improve students’ exam performance within a relatively short period of time, many K-12 AST programs have traditionally used a rigid one-size-fits-all educational approach. These programs typically use test scores as the primary criteria to evaluate students, and heavily rely on memorization and repetitive drills. This rote learning

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approach inhibits students from developing lifelong fundamental skills, such as creativity, logical thinking and problem-solving, as well as the inter-personal and social communication skills that a student needs to grow as a well-rounded person.

Disparity of access to quality education resources. The distribution of quality education resources varies widely across different regions in China. Less economically developed regions tend to have fewer high-quality teachers and educational institutions. Furthering the imbalance, K-12 AST service providers, who could potentially offset the lack of access to high-quality education, are less attracted to these markets given the relatively lower household income and weaker spending power in these regions.

Lack of effective online education products. To develop a sophisticated online educational program requires continued, heavy investment in content development and technology over a relatively long period of time. However, many newcomers to the online K-12 AST industry sought to quickly boost market shares mainly through aggressive student acquisition strategies. Furthermore, such companies may not fully take advantage of the power of technology to deliver a differentiated, enhanced learning experience.

TRENDS IN CHINA’S K-12 AST MARKET

China’s K-12 AST market is fast growing not just in size but also in other ways. The following are a few key trends that we believe will fundamentally transform the market.

Expansion of Foundational Learning

As an alternative to the rigid one-size-fits-all rote learning approach, foundational learning has gained popularity among parents and students. Foundational learning teaches students subject knowledge while also sparking students’ overall interest in learning and helping them develop fundamental capabilities, such as critical thinking, creativity and problem solving, and social competencies, such as self-confidence and teamwork, that they need to excel in school and become well-rounded human beings. There have been more and more foundational learning programs targeting the key K-12 subjects taught at schools in China such as mathematics, Chinese and English. With these programs, students learn subject knowledge through a fun, interactive and engaging learning experience. Parents of today’s K-12 students in China were mainly born in the 1980s and the 1990s. They are generally better educated and are more open-minded than earlier generations and expect their children to grow as well-rounded human beings, instead of just succeeding in exams. According to a March 2021 survey conducted by CIC, over 95% of parents interviewed believe that foundational learning can better prepare their children to become lifelong learners. Over the past decade, the Chinese government has also voiced its support for and adopted policies that promote foundational learning.

Acceleration of Online Penetration

In recent years, the online education market has flourished due to increased usage of mobile devices, growing acceptance of online services, as well as increased accessibility and comprehensiveness of education products. The convenience of virtual learning was also highlighted during the COVID-19 pandemic which further contributed to the market acceptance of online education products. According to CIC, the penetration rate of online programs in the K-12 AST market has reached 14.9% in terms of gross billings in 2020 and is expected to reach 32.4% in 2025.

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Growing Popularity of Online Small-Class Format

Amid the increasing variety of online education programs, small-class courses have become more popular. The relatively small class size enables students to receive more personalized guidance and attention from teachers throughout the learning process. Meanwhile, the small-class format preserves the social elements of a typical classroom and allows students to interact with not just their teachers but also their peers.

The following chart sets forth the format evolution of China’s offline and online K-12 AST market.

Over the past 20 years, small-class has been the most popular course delivery format in the offline K-12 AST market, consistently accounted for a dominant market share in terms of gross billings, according to CIC. It is widely believed that the online K-12 AST market will follow a similar trend where the small-class format will become increasingly popular. According to CIC, the small-class format accounted for only 1% of China’s online K-12 AST market in terms of gross billings in 2015 and grew to 10% in 2020; the figure is expected to grow significantly to approximately 22% in 2025.

OVERVIEW OF CHINA’S ONLINE K-12 AST MARKET

According to CIC, the online K-12 AST market reached RMB117.1 billion (US$17.9 billion) in terms of gross billings in 2020 and is expected to reach RMB470.6 billion (US$72.1 billion) in 2025, representing a CAGR of 32.1% between 2020 and 2025.

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In terms of age groups, the segment for students aged 3 to 12 is the largest and the fastest growing segment within the online K-12 AST market. According to CIC, there were approximately 155.4 million students between the age of 3 and 12 in China as of December 31, 2020, accounting for 67.7% of China’s entire K-12 student base. In 2020, this segment reached a market size of RMB77.0 billion (US$11.8 billion), accounting for 65.8% of the total online K-12 AST market. It has grown at a CAGR of 122.9% from 2016 to 2020 and is expected to reach a market size of RMB325.9 billion (US$49.9 billion) in 2025 representing a CAGR of 33.4% between 2020 and 2025. The following chart sets forth the historical and expected size of China’s online K-12 AST market, by age groups.

Source: CIC

In terms of subjects, mathematics, Chinese, and English were the three largest segments within online K-12 AST market, representing 83.6% of the entire market in terms of gross billings in 2020. These three subjects are expected to continue to play an important role in the online K-12 AST market going forward. In particular, the mathematics segment of the online K-12 AST market has reached the size of RMB41.8 billion (US$6.4 billion) in 2020 and is expected to maintain a CAGR of 32.6% between 2020 and 2025. In addition, coding is also one of the fastest growing segments of the online K-12 AST market.

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The following chart sets forth the historical and expected size of China’s online K-12 AST market, by subjects.

Note: Others refer to arts and sciences classes other than mathematics, English, Chinese and coding

Source: CIC

OVERVIEW OF CHINA’S ONLINE K-12 SMALL CLASS AST MARKET

China’s online K-12 AST courses are generally offered through the formats including small-class, one-on-one, large-class and AI courses. Large-class courses generally have more than 25 students per class while small-class courses typically have between 2 to 25 students per class.

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According to CIC, China’s online small-class K-12 AST market has reached RMB11.9 billion (US$1.8 billion) in terms of gross billings in 2020, and is expected to reach RMB101.2 billion (US$15.5 billion) by 2025, representing a CAGR of 53.3% between 2020 and 2025. The following chart sets forth the historical and expected size of China’s online small-class K-12 AST market.

Source: CIC

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According to CIC, online small class is the most effective format for delivering foundational learning for K-12 students who generally need an engaging learning environment to stay focused. While the one-on-one class format technically allows a teacher to focus on the only student during each course session, it cannot offer students the opportunities to socialize, interact with their peers. The large number of teachers required for one-on-one classes makes it difficult to ensure the consistency of teaching quality. The lack of economy of scale also results in higher price of one-on-one courses compared to other formats. Online large class format, on the other hand, usually has relatively higher cost-efficiency but cannot provide a personalized learning experience. According to a March 2021 survey conducted by CIC, online small classes received the highest ratings from parents interviewed in terms of enhancement of children’s foundational learning ability, well developed proprietary curriculum, vivid animation, children’s interest and ongoing feedback from tutors. Over 75% of the parents participating in the survey ranked the small-class format as their top choice for online K-12 AST, which offers their children personalized and interactive learning experiences. The following chart compares the three online course delivery formats across different dimensions.

Source: CIC

ENTRY BARRIERS FOR ONLINE SMALL-CLASS EDUCATION COMPANIES

While there are significant advantages to the online-small class format, running a small-class model at scale presents a number of significant challenges, which include:

Operational Complexity. To effectively and sustainably operate online small-class programs at scale requires accurate and dynamic matching of teacher supply with specific demands from students and parents. This presents various operational challenges to providers of online small-class programs. Course scheduling is one example. Unlike the typical online large-class course providers, online small-class course providers generally accept new students on a daily basis and need to adjust schedules as students enroll in new subjects, change classes and move on to different levels. It is crucial to fill each class with a sufficient number of students and optimize teacher utilization while accommodating the personalized learning needs of each student. Besides course scheduling, effective teacher recruitment, training, and management are also required to ensure the capacity to offer a large number of live-streamed classes simultaneously and consistent quality of students’ learning experiences.

Content Development, Data and Technology Capabilities. The small-class format is designed to provide students with a personalized and interactive learning experience. To achieve this goal, an online small-class education service provider must develop rich educational content and sophisticated technologies to meet the varying needs of students and to deliver the most suitable content to each

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student. It is time consuming and requires substantial operational experience to achieve such capabilities. Significant investments in recruiting and managing teams of education and technology experts and in establishing the necessary technology infrastructure are crucial to the success of an online small-class education service provider. Frequent iterations based on student’s learning data and feedback also help to improve the quality of education content and technology capabilities. In light of the above, it will be challenging for a newcomer with limited education content, technology know-how and learning data insights to compete in the online small-class education market.

Teacher Training and Management. Offering small-class courses on a large scale requires a large number of full-time qualified teachers. Given the large number of teachers and classes involved, it is critical to have an effective systematic approach for recruiting, training, evaluating and retaining high-quality teachers to ensure a consistent learning experience for students. Such an approach also relies on advanced technology infrastructure and operational sophistication that enable standardization and digitalization of the teacher management process and the course delivery process.

Brand Recognition. Brand recognition is essential to the success of education companies, especially those focusing on small-class courses. In contrast to large-class course providers, which rely heavily on the reputation of star teachers, small-class course providers depend on the reputation of the overall brand of the education company. According to CIC, parents and students prefer well-recognized brands with high quality education products and service offerings that cater to their personalized needs with a track record of effective learning outcomes. Strong brand and reputation are crucial drivers for cost-effective student acquisition and retention for education companies. It will take new entrants tremendous time and capital to build an established brand and reputation among parents and students.

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BUSINESS

Mission

Spark passion for learning, ignite lifelong growth.

Vision

To become a global pioneer and industry leader in foundational learning.

Overview

Who We Are

We are a pioneer and innovator in China’s K-12 AST market, offering foundational learning services to K-12 students. As a result of our unique approach to learning, we have become China’s largest online small-class education company in terms of gross billings in 2020, according to CIC.

We named our company “Huohua,” which means “Spark” in English, because we aspire to spark students’ passion for learning. Our foundational learning approach is designed to help students not only learn subject knowledge but also develop a comprehensive set of lifelong skills and capabilities, such as creativity, critical thinking and problem solving, in an engaging, interactive environment. This innovative approach is fundamentally different from the exam-oriented rote learning approach that is common in China. There is a large and rapidly increasing demand for foundational learning in China, as more families come to appreciate its benefits for students of all ages. We believe we are fulfilling an important market need that has not been effectively addressed by existing K-12 AST offerings.

We deliver our courses primarily through online small classes with four to eight students per class. According to CIC, online small-class is the most effective format for providing students with an engaging, interactive and personalized learning experience. We currently offer online foundational learning small-class courses to students in three main subjects: mathematical thinking, which is our flagship course, Chinese, and English. We also offer AI-enhanced courses to supplement our offerings. Our business is powered by technology. We have invested extensively in research and development, which supports each and every aspect of our operation and enables us to build a strong brand with high satisfaction among students and parents while in the meantime achieving significant operational efficiency.

We have experienced rapid growth within a relatively short period of time. We had 321,282 students as of December 31, 2020, representing a significant increase from 87,578 as of December 31, 2019. Our net revenues increased by 501.0% from RMB195.4 million in 2019 to RMB1,174.4 million (US$180.0 million) in 2020. Our gross billings almost quadrupled from RMB513.5 million in 2019 to RMB1,908.1 million (US$292.4 million) in 2020. We recorded a gross profit of RMB322.0 million (US$49.4 million) and a net loss of RMB951.7 million (US$145.9 million) in 2020, as compared to a gross loss of RMB166.5 million and a net loss of RMB771.1 million in 2019. For a reconciliation of gross billings to net revenues, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”

Challenges Facing China’s K-12 AST Market

We believe China’s K-12 AST market is faced with the following major challenges:

• Limitations of the rote learning approach. The exam-oriented rote learning approach that is common in China relies heavily on memorization and repetitive drills, and is generally one-size-fits-all as it uses test scores as the primary criteria to evaluate students. This approach may inhibit them from developing core skillsets, such as critical thinking, creativity and problem solving.

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• Disparity of physical access to quality education resources. The distribution of quality education resources varies widely across different regions in China. Access to quality teachers and K-12 AST services remains limited, especially in less economically developed regions.

• Lack of effective online education products. While there has been a rapid increase in the adoption of online K-12 AST courses, many of the products currently on the market do not provide a high quality student experience or effective learning outcomes. In particular, many companies have simply ported an offline learning offering to an online format without considering the real needs of students and parents, and have not fully taken advantage of the power of technology to deliver a differentiated, enhanced learning experience. Furthermore, many online K-12 AST companies spend a significant amount of their capital on promotion and advertising activities, rather than investing in developing quality products.

Our Solutions

Dedication to Foundational Learning

We are dedicated to foundational learning as it provides students the foundation for future success. Unlike the one-size-fits-all exam-oriented rote learning model that simply focuses on standardized tests, foundational learning teaches students subject knowledge while also sparking students’ overall interest in learning and helping them develop fundamental capabilities, such as critical thinking, creativity and problem solving, and social competencies, such as self-confidence and teamwork, that they need to excel in school and become well-rounded human beings. In order to deliver the best foundational learning experiences for students, we have invested heavily in technology and pedagogical research. These investments enable us to provide our students with an engaging and effective learning experience that will have a significant impact on their academic and overall development.

An increasing number of parents, particularly those of a younger age demographic who have experienced the frustration of the exam-oriented rote learning approach themselves, are recognizing the power of foundational learning. These young parents want their children to develop a comprehensive set of skills that will benefit them throughout their lives, while also helping them succeed academically. They are also increasingly willing to invest in quality education. We believe this increased demand for foundational learning is just the beginning of a major long-term trend, and that, given our existing leadership and dedicated focus, we are well positioned to capture the tremendous and fast-growing market that it creates.

Focus on Online Small-class

We are China’s largest online small-class education company in terms of gross billings in 2020, according to CIC. According to the same source, online small-class is generally defined in China’s K-12 AST industry as an online course delivered live with a class size of anywhere between 2 and 25 students. We distinguish our small-class courses from competing offerings with technology-driven innovations, including animated interactive courseware, multi-dimensional in-class interactions and optimized learning experiences.

According to CIC, the online small-class format is the most effective format for providing students with an engaging, interactive and personalized learning experience. Compared to one-on-one tutoring, the small-class format offers students better opportunities to socialize with their peers and develop intrinsic motivations to learn. In contrast to the large-class format, the small-class format provides students with significantly higher level of personalization and interaction and therefore delivers better

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learning results. According to a March 2021 survey conducted by CIC, over 75% of the parents interviewed ranked online small-class format as their top choice when choosing online K-12 AST options for their children.

The online small-class format is known for certain inherent operational challenges, including course scheduling and the recruitment, empowerment and retention of a large number of qualified teachers. Through our focused research and development efforts, extensive operational know-how and deep insights from learning data, we have developed the operational sophistication and technologies needed to overcome these challenges and deliver quality online small-class courses at scale.

Commitment to “Back-End Driven” Operating Model

Unlike many of our peers who spend aggressively on student acquisition, we have instead invested extensively in pedagogical research, technology, product development and operational infrastructure—which we collectively refer to as our “back-end”—to drive our long-term success. This “back-end driven” operating model enables us to deliver a better learning experience while maintaining high operational efficiency. Through our investments, we have developed a rich set of technology-enabled, interactive courseware and educational content and have greatly improved our teaching quality in an effort to provide the best possible experiences for our students. As a result, we have built a strong brand with high satisfaction among students and parents, according to CIC, which enables us to boost sales through word-of-mouth referrals and organic traffic and achieve high renewal rates. In addition, our “back-end driven” model improves our operating efficiency and allows us to scale up our course offerings without compromising teaching quality. We support our teachers, tutors and course consultants with proprietary technology-driven operating systems to provide effective teaching, tutoring and services efficiently. We believe our early adoption and relentless focus on this “back-end driven” approach gives us a significant competitive advantage that is hard for our peers to replicate.

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Our Technology Platform

Strengths

Pioneer and Innovator of Foundational Learning

We are a pioneer in China’s K-12 AST market by focusing on foundational learning. In doing so, we believe that we are fulfilling a significant unmet demand in China’s K-12 AST market. According to CIC, we are the first online education company to develop and commercialize online small-class foundational learning courses on a large scale. Our offerings differ significantly from the prevalent exam-oriented rote learning approach. First and foremost, instead of simply centering on standardized tests, we focus on the cultivation of critical learning capabilities and habits as we aim to enable a student to pursue and understand the underlying logics and patterns behind each knowledge area and resolve complex problems creatively. In addition, we endeavor to deliver an engaging, interactive and personalized learning experience. As a result, our students not only gain concrete knowledge they need to succeed academically in schools, but also develop valuable skills and capabilities that will benefit them throughout their lives.

As an industry pioneer, we believe we have a significant first-mover advantage over our competitors. From our early decision to focus on the online small-class format, to our significant investment in our technology and pedagogical research, as well as our emphasis on our “back-end driven” operating model, we strive to design every facet of our operation and service offering to provide the highest-quality foundational learning experiences for our students. These innovations continue to fuel our rapid growth and market adoption and create an entry barrier for other players in the industry.

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Industry-Leading Online Small-Class Offerings

We are China’s largest online small-class education company in terms of gross billings in 2020, according to CIC. In 2020, we accounted for 15.1% of China’s online small-class market in terms of gross billings, according to the same source.

Since our inception, we have strategically decided to deliver our courses predominantly via the online small-class format. According to CIC, online small-class is the most effective format for providing students with an engaging, interactive and personalized learning experience as well as for delivering foundational learning.

Our focus on technology-driven innovations, pedagogical research and course development is at the core of our offerings. We have created immersive animation-based courseware to bring to life abstract concepts and stimulate students’ curiosity, and have developed sophisticated technologies that facilitate successful student-to-student interactions. We have also developed a smart adaptive learning model to place students into a class of fellow students of similar ability levels and offer them highly personalized education content.

To operate an online small-class model at scale, we have overcome numerous operational challenges and successfully addressed the key entry barriers to this unique model. We have proven capabilities to recruit, empower and retain a sufficient number of qualified teachers to deliver our small-class courses with consistent high teaching quality. We have developed sophisticated systems and algorithms to effectively schedule courses for a large number of students and teachers based on their individual demand and availability, as well as to maximize class attendance and optimize teacher utilization in order to increase our operational efficiency. We believe our focused research and development efforts, extensive operational know-how, and deep insights from learning data are critical components of our competitive strength.

Innovative, State-of-the-Art Pedagogy, Courseware and Educational Content

To optimize the full potential of foundational learning and the online small-class format, we have fielded an expert team consisting of superior pedagogical researchers, engineers, scriptwriters and child psychologists and developed a sophisticated process for turning innovative ideas into high quality courseware and content. Following this process, our experts have developed innovative and technology-driven pedagogy, courseware and digital content by collaborating seamlessly.

In terms of teaching approach, our innovations are demonstrated by the following key elements:

• Fun, engaging, immersive. Igniting students’ curiosity is one of our most important goals. To achieve it, we deliver a fun and immersive learning experience to our students through our engaging animation and storylines, innovative gamification features and rich collection of physical learning kits. Since our inception, we have designed and produced more than 16,000 minutes of animated course content, over 420,000 gamified and interactive puzzles and exercises, and more than 640 types of physical learning kits for our students and teachers. Through efficient in-class interactions, our teachers build emotional connections with students, which satisfy students’ psychological and social needs.

• Personalized. We employ technology and strong data analysis capabilities to provide our students with a high degree of personalization. We use carefully designed algorithms to match each student with peers who share a similar level of knowledge, skills and capabilities, then continue to track their progress in real time and adapt our teaching to

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meet their unique needs dynamically. Based on students’ learning data and feedback, we continuously track and analyze students’ learning progress, generate comprehensive reports for parents and teachers, and recommend personalized learning resources to students. This also enables us to give students a highly self-adaptive learning experience where they can learn at their own pace with content and learning objectives tailored specifically for their needs and preferences.

• Inspiring. Our intention is to inspire our students to be active thinkers and we deliberately structure our course sessions to achieve that goal. We emphasize the development of comprehensive thinking capabilities that enable students to approach problems through a variety of logical, well-thought-out frameworks that they can improve upon over time. In practice, we do so through a set of meticulous progressions. The physical learning kits, images, animations, and games we have created help further inspire active learning as they allow students to visualize complex concepts and better develop logical thinking capabilities.

In terms of education content, we endeavor to make it well structured, diverse, and in depth. We group course sessions that require similar thinking skills and methods into modules. By studying the modules, students can easily grasp the framework with a holistic understanding, instead of focusing on disparate bits of knowledge. To make the learning process fun and engaging, we provide a wide range of instructional content, ranging from graphics to development puzzles and games. Furthermore, to cultivate intellectual curiosity and complex problem solving skills, we develop content that not only covers concrete knowledge, but also the underlying logics and patterns behind them.

We continuously upgrade our offerings to make our students’ learning experiences more engaging and effective by leveraging our strong data capabilities. To this end, we meticulously track and analyze the massive volumes of learning and behavioral data generated from both in class student interactions and after class evaluations and feedback.

As a result of our student-centric approach, our students have outperformed their peers in a number of national and international contests. In the 2020-2021 U.S. Math League, the award rate among our students is 76%, compared to a national average award rate of 50% in PRC. In the 2020 Ying Chun Cup, one of the most well-known K-12 mathematics competitions in China, 64% of our participating students passed the preliminary round, compared to an average passing rate of 30% in the PRC.

High-Quality Teaching at Scale

The ability to provide high-quality teaching is especially critical in a scaled online small-class model. As a result, we must effectively manage our large number of teachers to ensure that all of our students receive consistently high teaching quality. We had 3,647 full-time teachers as of December 31, 2020. We have been able to achieve high quality teaching at scale, due to our focus on integrating technology-driven solutions across the following key aspects of our teaching activities:

• Live Class Delivery. Our advanced proprietary Spark Classroom system and standardized courseware enable our teachers to provide consistent high-quality and personalized learning experiences for our students, regardless of their backgrounds and teaching styles. Our pedagogy, courseware, and digital educational content offer teachers a straightforward roadmap for meeting instructional goals, allowing them to concentrate more on engaging students with a human touch and catering to their individual learning needs and preferences. Teachers can more effectively direct students in our classes as they work through the activities with our courseware, creating an active,

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engaging learning experience. Furthermore, we provide our teachers with a range of innovative classroom management tools to help them effectively facilitate in-depth in-class discussions and activities.

• Teacher Empowerment. We developed our proprietary SparkleMe teacher empowerment system to nurture the development of our teachers and optimize their effectiveness. It covers all key elements of teacher development, including onboarding, training, course preparation and practice, evaluation and certification. We emphasize practical professional skills, such as classroom management and student engagement, as well as theoretical knowledge, at every level. We’ve also created a proprietary teacher quality assessment system that works in tandem with our course assessment team to perform routine in-class assessments. Our efforts have yielded outstanding results.

• Recruitment and Retention. We built a comprehensive online system for teacher recruitment so that we can provide a sufficient number of qualified teachers for our growing student base. This system also helps us perform our recruitment processes remotely, allowing us access to a far wider pool of talent than our competitors. We also use data from SparkleMe to efficiently implement large-scale performance and compensation management, as well as provide career advancement opportunities to capable teachers. Our holistic approach for teacher development, as well as our student-centric values, contribute to a unique and cohesive culture that inspires and attracts teachers, improves teacher retention, and enhances the overall effectiveness of our faculty. This is evidenced by our full-time teachers’ monthly average voluntary attrition rate of 1.2% in 2020, which was significantly lower than the industry average of 6%, according to CIC.

We believe our abilities to recruit, empower and retain teachers and to consistently deliver high teaching quality and an engaging, interactive and personalized learning experience for our students are part of our key competitive advantages and position us well for future growth. As of March 31, 2021, more than 95% of the parents who rated the quality of our courses in the past six months gave us five star ratings, the highest in our rating system.

Operational Digitalization Driven by Cutting-Edge Technology

We have standardized and digitalized our entire operations through proprietary technology infrastructure and systems. This approach enables us to deliver superior experiences to key external and internal stakeholders, increase our overall effectiveness and performance, and constantly improve efficiency through system and process iteration. It also enables us to deliver optimal learning outcomes and high retention rates and overall user satisfaction. We have focused on the following operational priorities:

• Course Scheduling. Course scheduling is crucial to our operational efficiency and overall user experience for students and parents. Since our courses are usually structured with several course sessions each week and fixed schedule, course scheduling can be challenging. We can strike a delicate balance between handling teacher supply and meeting the needs of students and parents through our intelligent course scheduling system. We respond to individual requests from students and parents about class time and teaching style, and plan the course schedule so that teachers can work at full capacity and our classrooms are adequately populated. In this way, we are able to dynamically manage the course scheduling process and maximize our class attendance and increase teacher utilization to optimize our efficiency.

• Teachers. As discussed in the previous strength, our advanced proprietary Spark Classroom system, standardized courseware and robust teacher recruitment, empowerment and retention systems not only ensures high-quality teaching at scale but also optimizes teacher productivity and operational efficiency.

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• Tutor. We have created a student-oriented tutoring and service system that allows our tutors to provide personalized services to meet the specific needs of each student and his or her parents. This one-stop online system tracks each student’s entire learning cycle, data, and results. By creating and tracking key tasks for our tutors, the system helps us provide timely and seamless services to our students and parents. Furthermore, the system has a range of functionalities to automatically deliver services directly to students and their parents, which optimizes our service quality and user experience. As a result, we have highest NPS among China’s online K-12 AST companies, according to CIC.

• Course Consultant. We have custom-built an intelligent Sales CRM system to maximize the conversion of potential leads to enrollments. This system is supported by a set of advanced algorithms that help us allocate our internal resources to tackle these leads in a dynamic and efficient fashion. It also includes online course-related talking points and FAQs and a wide range of intelligent tools and analytics to improve conversion and enhance the customer experience. As a result, we have industry-leading sales productivity, evidenced by the average monthly per person gross billings from new student enrollments of our sales team in 2020, which were more than twice of other online K-12 AST companies, according to CIC.

We believe that our technological and operational sophistication set us apart from our peers and we will continue to scale our business rapidly.

Strong Brand Recognition

We have become a leading well-recognized brand in China’s K-12 AST industry, particularly with the new generation of Chinese parents who recognize the benefit of foundational learning, according to CIC. We have built trust and deep connection with our students and families, and we work relentlessly to deepen this bond by providing them with better and more engaging learning experiences as students continue their lifelong learning journeys. According to a March 2021 survey conducted by CIC of parents looking for foundational learning options for their children, these parents have associated our brand with fun, engaging and interactive learning experiences, consistent high teaching quality, and compelling learning results. In 2020, we achieved the highest NPS among China’s online K-12 AST companies, according to CIC. We have also received numerous industry awards and broad recognition, including the Most Influential Education Institution awarded by China Securities Daily in December 2020. In a report published by the Chinese Academy of Sciences in March 2021, we are ranked the first place in terms of parent satisfaction ratings among small-class AST companies.

We believe we have become the brand of choice among students and families seeking foundational learning services. Strong word-of-mouth referrals and organic traffic allow us to acquire new enrollments at a cost significantly lower than the industry average and achieve one of the industry’s highest student retention rates, according to CIC. In 2020, word-of-mouth referrals and organic traffic generated 77% of new student enrollments, which, according to CIC, is a level significantly higher than our peers.

Visionary, Entrepreneurial and Seasoned Management Team with Diverse Expertise

Our visionary management combines deep knowledge across technology and education with a shared commitment to creating highly engaging learning experiences with technology. Mr. Jian (Mark) Luo, our founder and chief executive officer, is a serial entrepreneur with over 20 years of experience in the technology industry. Prior to founding Huohua, Mr. Luo was the co-founder and chief technology officer at Ganji, a leading Chinese online classifieds and listing platform before it merged with 58.com in 2015. Other senior management team members have extensive experience in education, internet, technology and entrepreneurship, having held senior roles in leading education and technology

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companies such as Ganji, TAL, Rise Education, Tencent, GE and Lenovo. The management team’s diverse backgrounds, and shared enthusiasm for improving student education have attracted the best talents, experts, and professionals.

Our Strategies

The market for foundational learning services is fast-growing, and we believe we’re still in the early stages of capturing this tremendous opportunity. We plan on executing the following strategies to further our leading position in this market:

Continue to Invest in Our Pedagogy, Courseware and Educational Content

We plan to keep investing in our core competencies, such as content development, courseware design, and pedagogical research. Based on our analysis of the vast learning data generated by our daily operations, we also intend to upgrade and refine our educational content offerings, including interactive courseware and physical learning kits. We anticipate that these investments will allow us to stay ahead of the curve in terms of innovation, allowing us to deliver more engaging, interactive and personalized learning experiences with more compelling learning outcomes than competitors.

Enrich Our Course Offerings

We plan to enrich our course offerings to cover more subjects, age groups and course delivery formats while maintaining our student-centric educational philosophy as the guiding principle for all our offerings. We have successfully expanded from our initial mathematical thinking course to Chinese and English courses and will continue to introduce new subjects. We also plan on expanding our content development team and developing our proprietary pedagogies across new subjects. We intend to design our courses to suit the differentiated cognitive patterns and learning needs of various age groups to generate equally effective learning outcomes. Finally, we may explore other course delivery formats based on the changing needs of our students.

Expand Our Student Base

We will concentrate on expanding our student base by expanding our presence in tier-1 and new tier-1 cities in China. We will also grow into other deeper-tier cities where we believe there is a large and rapidly increasing demand for quality foundational learning services. We believe there is a universal need for foundational learning and a student-centric approach to education; as a result, we intend to extend our global reach and increase our presence and student base.

Further Invest in Technology and Data Capabilities

Technology is at the core of our growth. We endeavor to continuously attract talents. We also plan to further improve our platform with a relentless focus on harnessing the massive learning data and enhancing our AI and technology capabilities. With our unwavering commitment to technology, we aim to achieve better personalization, standardization, and efficiency throughout our operations and service offerings.

Enhance Our Brand Recognition and Awareness

Our brand and reputation are critical to our continued success. We plan to further enhance our brand recognition by continuing to improve our course offerings and deliver a unique, student-centric learning experience. We also plan to continue to reach a broader prospective student and parent population through word-of-mouth referrals and organic traffic.

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Courses We Offer

Our online courses currently target K-12 students and focus on three major subjects: mathematical thinking, Chinese and English. Each of our courses is guided by the same student-centric philosophy of empowering students to develop skills and characters that will bring them lifelong benefits through a fun and engaging learning experience.

Mathematical Thinking

Since we taught the first mathematical thinking course to our students in March 2018, it has grown into our flagship course offering. We offer mathematical thinking courses in both online small-class and AI-enhanced formats. We will continue to enrich our mathematical thinking course offering to cover more age groups.

Drawing upon our deep pedagogical insights, we have developed a unique and mature course system which ensures the quality of our students’ learning experiences and results. In terms of content, we go beyond passively imparting knowledge and focus on teaching our students the core thinking methods and skills. We distilled a massive number of mathematical problems into 20 core thinking methods, such as categorization, induction, graphical representation and substitution, and 12 core thinking skills, such as spatial imagination skills, logical skills and arithmetic skills. We then cultivate our students’ ability to use combinations of such methods and skills to solve different mathematical problems. In this way, we enable our students to become active thinkers and problem-solvers.

The learning model and course structure are another aspect of our current course system. We divide a student’s learning journey into multiple stages, each with a clear set of learning objectives and milestones. This enables us to tailor course content and services to each student’s current ability level and learning needs. Within each stage, we group together mathematical problems that use similar methods or skills into topics, each of which is divided into four course sessions with ascending levels of difficulty.

Chinese

We began to offer Chinese courses in July 2019 and currently offer Chinese courses in both online small-class and AI-enhanced formats. Our Chinese courses are designed to help students build a solid foundation in the humanities and a comprehensive set of Chinese language skills, including reading, writing and communication skills, through the study of a broad range of contents, including pinyin, Chinese characters, Chinese classics and a wide range of Chinese and foreign literature.

We believe Chinese learning is not about passive memorization but rather about active exploration of the rich meanings, culture and history that lie underneath. For example, when we teach students a Chinese poem, students first watch a nicely designed animated video illustrating the historical stories. This approach gives students a vivid understanding of the historical and cultural context behind every piece of literature. To further stimulate students’ interest in the subject, we have also developed original Chinese songs with various cultural themes.

Like the mathematical thinking courses, we help students not only to acquire specific knowledge but also to master the methods and skills that they can apply to new settings. For example, we group Chinese poems and essays that share similar rhetorical techniques into the same course sessions or modules so that students can find connections and patterns among different literature materials and develop essential learning abilities.

English

We began to offer English courses in August 2020 and currently offer these courses in AI-enhanced format. We also plan to launch online small-class English courses in 2021.

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Our English courses are designed from the ground up with our students in mind and are informed by multidisciplinary expertise such as cognitive psychology and linguistics. English words, unlike Chinese words, are basically visual representations of sound sequences. It is difficult for a non-English native speaker to begin learning English by memorizing the spelling of each new word without first being familiar with the sound of the word. With this in mind, we design our entry-level English courses to concentrate on listening and communicating rather than reading and writing, which will be covered in more advanced courses. In particular, we have developed English songs that help students learn the language in an effective and enjoyable way. These course designs familiarize students with the sounds of English words so that they can easily establish connections between the sounds and the spellings later on. In this way, our students’ initial interest in learning English will not be dampened by the tedious and repetitive memorization of word spelling.

Other Courses

We also offer other digital courses that are generally shorter in length compared to the mathematical thinking, Chinese and English courses. Besides, we also sell certain of the mathematical thinking and Chinese courses to authorized offline education institutions.

How We Deliver Our Courses and Services

As mentioned above, our courses are primarily delivered in two main formats: online small-class courses and AI-enhanced courses. We choose the most suitable delivery format based on the particular nature of the course subject, content and difficulty level. In order to deliver an effective, engaging and fun learning experience and intelligently track and analyze behavioral and learning data, we have developed a proprietary Spark Classroom system through which our teachers could teach our courses to our students. We also have a dedicated mobile app for parents to stay up-to-date about the learning status of their children.

Online Small-Class Courses

We are China’s largest online small-class education company in terms of gross billings in 2020, according to CIC. As a testament to the quality of our online small-class courses, we have an industry-leading course renewal rate, according to CIC.

As of the date of this prospectus, we offer online small-class courses in mathematical thinking and Chinese. These courses are typically around 30 to 40 minutes per course session. Students usually have two course sessions per week and 96 course sessions per year on fixed schedule with the same teacher and same group of classmates. These courses generally have between four and eight students per class. We also pair each student with a dedicated tutor who will provide learning support for students as well as parents. The stability in class schedule, faculty and classmates creates a learning environment that allows our faculty to nurture personal bonds and to better understand the unique needs of each student.

Our online small-class courses deliver a learning experience that is more interactive and engaging than traditional offline classroom learning experience. We have built interactive features into our courseware and student interface to enable real-time interaction and communication among teachers and students. Our courses are designed to give each student sufficient opportunities to speak up and participate in classroom exercises and activities. Teachers can also provide individualized guidance to any particular student through private streaming channels. Our courses also offer students opportunities to interact among themselves, which creates a sense of community and enhances

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students’ social skills. The pictures below illustrate the key functions and the student interface of our online small-class virtual classroom.

AI-Enhanced Courses

We offer AI-enhanced courses, which are pre-recorded courses with AI capabilities, to simulate live teaching to complement the online small-class courses, addressing students’ diverse learning needs and preferences, especially those who prefer more flexible course schedules. Our AI-enhanced courses are less expensive than online small-class courses and can be viewed on demand.

We offer AI-enhanced courses as standalone products. We currently offer AI-enhanced courses in English, mathematical thinking and Chinese.

Our AI-enhanced courses are pre-recorded by our experienced teachers. Each course is composed of a number of course sessions, each of which lasts around 15 to 35 minutes. We incorporate interactive games, storyline and rewards to stimulate a lively classroom environment. We also tailor the curriculum and courseware to cater to an AI-enhanced course setting.

Our Unique, Student-centric Learning Experiences

Our students’ learning journey consists of the following steps:

• Initial assessment. Our students’ learning journey starts with initial assessments, which help us understand students’ levels of capability and place them into a class of fellow students of similar ability levels.

• Course scheduling. We then coordinate with parents and students to pick a suitable time so that the students could attend our course sessions on fixed schedule.

• Course sessions. Our students begin to attend the course sessions on fixed schedule. Course sessions are generally composed of warm-up activities, main topics, practice questions and in-class discussions and conclusions.

• After-class exercises and activities. Our tutors follow up with parents and students to remind them to complete the exercises and activities. Students also participate in

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“Carnivals,” where they answer practice questions and compete for virtual awards in a gamified setting. Tutors also interact with parents after class to provide them with updates regarding their children’s learning status.

• Entry into a higher course level. As our students get close to the finish line of their current course level, our tutor will follow up with their parents to consider enrolling in a higher level course or courses in a different subject.

As our students go through this learning cycle, we deliver them a unique, student-centric learning experience that is defined by the following features:

Personalized Teaching

We believe that every child is different and requires a personalized learning strategy and resources to excel. Upon enrollment in one of our courses, each student will take placement evaluations. Within the same course level, we also assign the student to a class of fellow students of similar ability levels. During the course, we continue to offer our students with personalized learning experiences using a unique smart adaptive learning model, which accurately and continuously evaluates students’ grasp of knowledge and skills in a dynamic manner and provides them with the learning resources that suit their needs. We comprehensively analyze students’ learning data to assess students’ ability levels. The assessment process is monitored in a dynamic and continuous manner.

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Personalization features can also be found in every detail of our course experience. For instance, we offer practice questions on the same topic with different difficulty levels to students in the same class based on our analysis of their learning data. When students work on exercise questions, the teacher will be able to see each student’s screen laid out on the teacher’s screen. Teachers can use tools embedded in our Spark Classroom system to talk directly and privately with any individual student and provide one-on-one assistance and guidance as needed. Below are screenshots from our courses that illustrate some of the personalization features:

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Interactive Learning

Another element of our unique learning experience is the multi-dimensional interactions built into our course system.

• Interaction between students and courseware. We offer immersive, story-based courseware that turns learning into a fun, interactive venture full of animations, characters and games to cultivate interest, imagination and engagement. Each of our courses has a general narrative arc with three main characters: Abby, Benny and Casey. Our talented in-house screenwriters and graphic designers come up with interesting stories and vivid images for each course session so that the storyline develops organically to suit the learning content. When taking our courses, students actively participate in the development of the story by helping their friends, Abby, Benny and Casey, to solve difficult problems. Below are selected screenshots from our courseware:

In addition to the virtual content, we also offer each student comprehensive physical learning kits, which are used along with the courseware for each course session. The physical learning kits include well-designed textbooks, learning mats and flash cards to inspire hands-on learning, enhance understanding of the knowledge and facilitate in-class interactions.

• Interaction between students and teachers. Our system provides teachers with a variety of tools to fully interact with students. For instance, our “private microphone” function allows a teacher to talk privately to a student who needs direct personalized guidance while other students are working on in-class exercises. In addition, we track student-teacher interaction data to help our teachers maintain high quality interactions with each of their students.

• Interaction among students. We believe that learning can hardly be fun or effective without a social component, whose social abilities and needs are fast developing. To facilitate learning and communication among students, our system offers innovative functions such as group competitions and discussions. Through competition and collaboration, our students will have opportunities to learn from both their teammates and rivals. Interactions among students also create a sense of community, which provides

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further motivation for students’ learning process. Below are selected screenshots from our courses that illustrate the interaction among students:

Personal Bonding

We infuse our students’ learning experiences with personal attention. The fixed schedule, teacher and group of classmates create a stable learning environment that nurtures personal bonding among teachers and students.

Our well-designed courseware not only improves the quality of teaching, but also allows the teachers to focus more on paying personalized attention to each student. Our teachers are much more than supervisors and instructors. They also cultivate students’ interest in learning, inspire them to think and explore, nurture a sense of achievement and help them learn and discover at their own pace. During the selection and training of our new teachers, we evaluate and enhance candidates’ ability to relate to students personally and emphasize the importance of building connections with students.

Learning Results

As a testament to the popularity of the unique learning experiences that we have delivered, according to a March 2021 survey conducted by CIC, we have achieved the highest NPS among China’s online K-12 AST companies, a widely known survey methodology used to measure overall customer satisfaction, in 2020. According to the same survey, parents have associated our brand with fun, engaging and interactive learning experiences, consistent and high teaching quality, and compelling learning results.

Through our courses, students find genuine interest in learning, intrinsic motivation to explore and courage to express themselves. Instead of having to force their children to attend our course sessions, many of the parents noticed their children falling in love with our courses and some even asked for more courses. The background storylines in our courses also bring positive behavioral changes to our students. The relatable characters in these stories, like Abby, Benny and Casey, become role models for students and help them establish healthy habits.

Furthermore, our students have outperformed others in a number of national and international contests. In the 2020 Ying Chun Cup, one of the most well-known K-12 mathematics competitions in

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China, 64% of our participating students passed the preliminary, compared to a national average passage rate of 30% in PRC. In the 2020 – 2021 U.S. Math League, the award rate among our students is 76%, compared to a national average award rate of 50% in PRC.

Pricing and Refund Policy

The tuition fee we charge is calculated on a per-course-package basis. Each course package contains a fixed number of “course units” for a particular subject, which are consumed when the student takes classes with us.

As of the date of this prospectus, the official price for an online small-class course package ranges between RMB1,880 and RMB6,280 depending on the number of course units and subject of the course. As of the date of this prospectus, the official price for an AI-enhanced course package ranges between RMB699 and RMB2,399 depending on the number of course units and the subject of the course. To further attract prospective students, we offer trial courses for free or at a minimal charge. For details, see “—Sales, Marketing and Branding.”

For online small-class courses and AI-enhanced courses, we offer parents a full and unconditional refund for a certain number of course units. After the expiration of such full-refund period, parents can still receive a pro-rata unconditional refund for the course units that have not been used. In spite of our liberal refund policy, the historical refund rate has been rather low.

Course and Content Development

Our course and content development efforts are guided by our education philosophy of prioritizing the needs of our students and helping them develop lifelong skills and positive characteristics through a fun and engaging learning experience. We develop substantially all of our courseware and educational content in-house, which ensures the quality and originality of our courses. Since our inception, we have designed and produced more than 16,000 minutes of animated course content, over 420,000 gamified and interactive puzzles and exercises, and more than 640 types of physical learning kits for our students and teachers. Instead of focusing on marketing, we dedicate a considerable amount of resources into course and content development. Through experience and practice, we have built a deep understanding of cognitive science, developmental psychology and pedagogy, which serves as the foundation of our courses and all other educational content that we develop. The result of our sophisticated course and content development process is a multi-level interactive courseware, which is first of its kind for mathematics in the industry according to CIC and empowers interactions between students and courseware, students and teachers, and among students themselves. The interactive features we built into the courseware go well beyond simple multiple-choice questions and include various other innovative ways to create interactions.

The multidisciplinary nature of the course development process requires seamless collaboration among teams of education experts, scriptwriters, graphic designers and engineers and full integration of their expertise. Over time, we have established a tried and true course development process for turning innovative ideas into courses with standardized quality. In particular, we have developed the capability to turn well-curated collections of knowledge and skills that we want to teach our students into engaging stories with animated videos.

After a course product is launched, we are able to upgrade our offerings and make learning in our courses more relevant and engaging based on actionable insights from the massive volumes of learning and behavioral data. For example, as students interact with our story-based courseware, we analyze their interaction levels and identify the content and approaches that produce the best learning experiences, which helps inform a more effective organization of the curriculum. Iteration processes like this help us constantly improve our course content and our students’ learning experiences and results.

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Most of our courseware and course materials are developed in-house. We rely on a combination of copyright and trademark law, trade secret protection and confidentiality agreements with employees to protect our intellectual property rights. For details, see “—Intellectual Property.”

Our Faculty

We have a large full-time faculty dedicated to providing our students with a unique and student-centric learning experience. As of December 31, 2020, our faculty primarily consists of 3,647 full-time teachers and 1,418 full-time tutors operating out of our various regional centers, including Beijing, Wuhan, Xi’an, Chengdu and others, which are among the Chinese cities with the sufficient supply of quality education talents. This large full-time faculty is crucial to our ability to deliver quality small-class courses at scale. To ensure that we have enough qualified teachers and tutors to serve a large number of small classes, we have developed a robust and systematic approach to teacher and tutor recruitment and training. Our efforts not only help us deliver high teaching quality at scale but also create an enjoyable working environment and promising career paths to our teachers, allowing us to continue to attract and retain high-quality teaching talents.

At the beginning of each course, each student will be assigned one teacher and one tutor, who will provide students with seamless education service and support both in and out of classroom. Generally, the teacher is responsible for delivering the course, interacting with students in class and providing feedback on students’ homework, while the tutor is dedicated to offering academic and administrative support to and communicating with students and parents after class. We also help our teachers and tutors to deliver more customized learning services with analysis of the large amount of learning data that we collect for each student. See “—Technology.”

Our Teachers

Our teachers are much more than just supervisors and instructors. They ignite students’ curiosity and guide the students to take initiative in their own learning journey. Over time, we have built an efficient recruitment, training, empowerment and management system that enables us to produce and retain qualified teachers within a relatively short period of time. Our student-centric value, effective teacher training program and mature teacher management programs enable us to keep monthly average voluntary attrition rate as low as 1.2% in 2020, which is critical for ensuring the continuity of our students’ learning experiences. We also have the capability and flexibility to move a substantial portion of our recruitment and training process online. This ensures a stable supply of teachers to address the growing demand for our courses, even during the COVID-19 pandemic.

• Recruitment. In terms of teacher recruitment, we use a rigorous screening and interview process. During this process, we evaluate a variety of skills and qualities of candidates, including basic knowledge of the subject area, ability to express oneself and logical sense. As of December 31, 2020, 99.9% of our teachers have bachelor’s degrees or more advanced degrees.

• Training and Support. Each of our new teachers are required to go through a boot camp program, where they nurture their teaching skills by practicing in real online classroom scenarios. Before teaching each class, we require teachers to go through multiple rounds of preparation, practice and audition. In addition, we also offer virtual training sessions to teachers regarding teaching skills and capabilities regularly.

• Evaluation and Compensation. We have established a comprehensive management system that offers teachers constructive feedback to help them improve their core skills. We have developed a career track for our teachers with a set of career goals. We also have a quality assessment team that regularly sample check our teachers’ course

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recordings and rate their in-class performance. Our teachers receive base salaries and service fees calculated on a per-course-session basis, both of which are adjusted based on the professional level.

Our Tutors

Our tutors are responsible for providing personalized after-class tutoring service to students and addressing parents’ questions, as well as for course renewals. We have developed a mature recruitment, training and evaluation system to maintain a stable supply of well-trained tutors as we grow together.

• Recruitment. When recruiting for tutors, we evaluate the applicants’ willingness and ability to support our students and their parents. In particular, we look for a genuine passion for education in the applicant’s past academic and career history. As of December 31, 2020, 99.2% of our tutors have bachelor’s degrees or more advanced degrees.

• Training and Support. We offer our tutors an orientation program and regular on-the-job training to enhance their communication and instructional skills and support their personal and professional growth. To improve the quality and efficiency of our tutors’ service, we have developed a one-stop virtual tutoring and service system, which keeps track of students’ learning cycle, data and performance and centralize the various day-to-day tutoring tasks.

• Evaluation and Compensation. We have created a clear career track for our tutors to advance professionally. Our tutors’ compensation consists of base salary and performance-based bonuses.

Our Students

As a result of our well-established brand and dedication to a student-centric learning experience, we have built a large and fast-growing student base. As of December 31, 2019 and 2020, we had 87,578 and 321,282 students, respectively, with a year-over-year growth rate of 266.9%.

As of March 31, 2021, approximately 62% of our students in mainland China lived in tier-1 and new tier-1 cities. Their parents are generally open to new education philosophies and willing to spend on good educational content for their children. On one hand, their parents want their children to enjoy learning; on the other hand, they have to prepare their children for the test-oriented education environment in China. In addition, we have also attracted a growing base of users located in lower tier Chinese cities and various other regions. Students who live outside mainland China account for approximately 7% of our student base as of March 31, 2021.

Branding, Sales and Marketing

We have built a strong brand around our high-quality course offerings and the high satisfaction among our parents according to CIC. We generate sales leads through referrals and a combination of other channels. Currently, our sales, marketing and the short-term strategic focus of our branding efforts are on tier-1 and new tier-1 cities.

Branding

We have built a beloved and well-known brand driven by our constant dedication to improving the quality of the learning experiences for our students. Our back-end driven business model ensures that we dedicate sufficient resources to strengthening the core capabilities relating to our course

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development, faculty management and technology infrastructure. This model has proven to be effective in creating and maintaining a strong brand and reputation among our current and prospective users. Our ability to consistently deliver high-quality learning experiences for our students leads to a high satisfaction among our students and their parents, which in turn enhances our brand and reputation.

Channels

Referrals and Organic Traffic

Word-of-mouth referrals by our students and their parents have historically generated a large portion of our new enrollments. The high percentage of new enrollments generated by referrals benefited largely from our brand, reputation, course quality and proven learning experiences and results. We have achieved an industry-leading NPS, a widely known survey methodology used to measure overall customer satisfaction, in 2020, according to CIC. We offer parents who refer our courses to others rewards in the form of free course units or Spark Coins, which can be redeemed for course units, merchandise and cash vouchers for third-party e-commerce platforms. In 2020, word-of-mouth referrals and organic traffic generated 77% of new student enrollments, which, according to CIC, is significantly higher than our peers.

With our growing student base and increasing brand recognition, we expect to generate more sales leads and new enrollments through word-of-mouth referrals.

Other Channels

In addition to word-of-mouth referrals and organic traffic, we also generate traffic through various other means, such as advertisements on search engines, social media platforms and websites.

Sales Process

Parents of students provide us initially with contact information. Our course consultants promptly contact these parents to offer more information regarding our courses. They also arrange trial course sessions for prospective students and continue to follow up with them to answer questions and provide further information.

Besides new sales leads, we also generate sales through course renewal and cross-sale. Due to our high quality course products and dedicated educational services, we are able to maintain a high level of satisfaction among our students and their parents. With positive user experience and assistance and counseling from our tutors, many parents and students are willing to enter into the next level of the same course or enroll in other courses covering different subject matters.

Our reputation and well-designed sales process are the cornerstones critical to our highly effective sales efforts. According to CIC, the average monthly per person gross billings from new student enrollments of our sales team in 2020 were more than twice of that of other online K-12 AST companies.

Technology

Technology is another cornerstone of our business, driving our course and content development, faculty management, and operational optimization. As of December 31, 2020, we had a team of over 1,000 product development and technology professionals, whose expertise include algorithm engineering, big data analytics and infrastructure maintenance. A significant portion of our technology team has previously worked at leading internet and technology companies in China and around the world.

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Through innovation and iteration, our technology team has developed a comprehensive set of solutions to the operational challenges presented by our online small-class model. Our proprietary technology platforms drive the quality of our students’ learning experiences and optimize our operational efficiency:

• Spark Classroom. We have developed a Spark Classroom system for teachers to deliver our courses to students. This system offers teachers a variety of interactive functionalities and innovative classroom management tools, which enable effective interactions between students and courseware, students and teachers, and among students.

• Course Scheduling. We have developed a proprietary intelligent course scheduling system to strike a balance between handling teacher supply and meeting the needs of students and parents. The intelligent course scheduling system enables us to respond to individual requests from students and parents about class time, and plan the course schedule so that teachers can work at full capacity and our classrooms are adequately populated. In this way, we are able to dynamically manage the course scheduling process and maximize our class attendance and increase teacher utilization to optimize our efficiency.

• Teacher Empowerment. We developed our proprietary SparkleMe teacher empowerment system to nurture the development of our teachers and optimize their effectiveness. It covers all key elements of teacher development, including onboarding, training, course preparation and practice, evaluation and certification. We’ve also created a proprietary teacher quality assessment system that works in tandem with our course assessment team to perform routine in-class assessments.

• Tutor Management. We have created a student-oriented tutoring and service system that allows our tutors to provide personalized services to meet the specific needs of each student and his or her parents. This one-stop online system tracks each student’s entire learning cycle, data, and results. By creating and tracking key tasks for our tutors, the system helps us provide timely and seamless services to our students and parents. Furthermore, the system has a range of functionalities to automatically deliver services directly to students and their parents, which optimizes our service quality and user experience.

• Sales and Marketing. We have custom-built a marketing system to efficiently acquire leads and an intelligent Sales CRM system to maximize the conversion of potential leads to enrollments. These systems are supported by a set of advanced algorithms that help us allocate our internal resources to tackle these leads in a dynamic and efficient fashion.

Our technology team also powers the following services and functions:

• Big Data Analytics. We track, compile and analyze a large amount of learning data and operational data on a daily basis, enabling us to provide personalized educational services to our users and frequently upgrade our course products and technology.

• Artificial Intelligence. Through development and application of artificial intelligence technology, our systems have the capability to automatically analyze students’ facial expression, behaviors and sounds to enhance classroom management and learning evaluation. Our artificial intelligence algorithm also empowers our content development and recommendation efforts.

• Live Streaming. We partner with a leading audio and video streaming service provider in China to provide streaming service with low latency for our live courses.

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• IT Infrastructure. We partner with leading cloud service providers in China to host our servers. We back up our databases regularly and use an off-site storage mechanism to protect the security of our data. Our technology team monitors the performance of our network infrastructure to promptly respond to potential risks and accidents.

Intellectual Property

We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We own copyrights to the educational content that we have developed in-house. We enter into standard employment agreements with our faculty, course and content development staff and other employees which provide that the intellectual property created by them in connection with their employment with us is our intellectual property.

As of the date of this prospectus, we have registered 53 trademarks with the Trademark Office of the SAMR of the PRC, 49 software copyrights and 18 other copyrights with the PRC State Copyright Bureau, and 34 domain names, which include the registrations of our core trademarks (“火花思维”) and the domain names of our main operating websites.

Despite our efforts to protect ourselves from infringement or misappropriation of our intellectual property rights, unauthorized parties may attempt to copy or otherwise obtain and use our intellectual property. In the event of a successful claim of infringement and our failure or inability to develop non-infringing intellectual property or license the infringed or similar intellectual property on a timely basis, our business could be harmed. See “Risk Factors—Risks Related to Our Business—We may from time to time be subject to infringement claims relating to intellectual properties of third parties” and “—If we fail to protect our intellectual property rights, our brand and business may suffer.”

Our Team

We had 7,685 full-time employees as of December 31, 2020, most of whom were located in our headquarters in Beijing and our offices in Wuhan, Xi’an, Chengdu and Shanghai, China.

The following table sets forth the breakdowns of our employees by function as of December 31, 2020:

Function	Number of Employees		Percentages
Teachers, tutors and customer services		5,256		68.3
Sales and marketing		765		10.0
Research and development		1,060		13.8
General and administrative		604		7.9
Total		7,685		100.0

We enter into standard employment contracts with our employees. In addition to salaries and benefits, we provide performance-based bonuses for our employees and commission-based compensation for our sales and marketing force.

Under PRC law, we participate in various employee social security plans that are organized by municipal and provincial governments for our PRC based employees, including pension, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance and housing fund. We are required under PRC law to make contributions from time to time to employee benefit plans for our PRC employees at specified percentages of the salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the local governments in China.

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We believe that we maintain a good working relationship with our employees, and we have not experienced any material labor disputes in the past. None of our employees is represented by labor unions.

Legal Proceedings

From time to time, we may become a party to various legal or administrative proceedings arising from the ordinary course of our business, including actions with respect to intellectual property infringement, infringement of third-party licenses or other rights, breach of contract and labor and employment claims. We are currently not a party to any material legal or administrative proceedings. However, litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention.

Insurance

We do not maintain any liability insurance or property insurance policies covering students, equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster. Consistent with customary industry practice in China, we do not maintain business interruption insurance, nor do we maintain key-man life insurance.

Data Privacy and Security

We are committed to protecting the large amount of user data that we track, process, store and use on a daily basis. We limit the types of personal data that our employees and products are allowed to track to only those strictly necessary for our operation. We have implemented advanced two-way data encryption measures to ensure secured transmission of data. We have also established stringent internal authorization protocols to control access to our online database and prevent unauthorized access. All sensitive personal information and key data are encrypted before storage. When our employees download any data to offline storage, our system automatically removes sensitive personal information to protect against any leakage risks in an offline environment. We require additional authorization when any of our user information needs to be disclosed to an external party.

Competition

We operate in the highly competitive online education industry and face intense competition in every aspect of our business, including student enrollment, course and content development, talent recruitment and retention and technology development.

We believe that the principal competitive factors in China’s online education market include the following:

• brand awareness and reputation;

• quality of contents and service;

• student base;

• pricing of offerings;

• the development of new offerings;

• technology infrastructure and AI capabilities; and

• operational efficiency.

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We believe that we are well-positioned to effectively compete on the factors listed above. For a discussion of risks relating to competition, see “Risk Factors—Risks Relating to Our Business and Industry—We face intense competition, which could lead to pricing pressure and loss of market share and materially and adversely affect our business, financial condition and results of operations.”

Facilities

Our current principal executive offices are located at Block A, No.101 Wangjing Lizezhongyuan, Chaoyang District, Beijing, the People’s Republic of China. We maintain offices in Beijing, China with an aggregate of approximately 19,905 square meters. These facilities currently accommodate our management headquarters, as well as most of our sales and marketing, course and educational content development, technology, and general and administrative activities. We also maintain offices in Wuhan and Xi’an, China.

We lease all of the facilities that we currently occupy from independent third parties. We believe that the facilities that we currently lease are adequate to meet our needs for the foreseeable future.

Seasonality

Historically, we have not experienced significant seasonality as we have grown rapidly. However, in the future our business may be affected by factors such as public holidays and school schedules. Therefore, our historical performance may not be indicative of our future operating results. See “Risk Factors—Risk Related to Our Business and Industry—Our results of operations are subject to seasonal fluctuations.”

Corporate Social Responsibility

Inspired by love and technology, we regularly engage in corporate social responsibility initiatives to promote education equality and offer support to those children who have limited access to high-quality educational resources. In cooperation with local authorities, nonprofit organizations, schools and other community leaders, we have donated courses and related materials to students in underdeveloped rural areas. For instance, in October 2019, we collaborated with China Youth Daily to donate 10,000 mathematical thinking course sessions to students in 15 primary schools in underdeveloped rural areas. In October 2020, we also worked with Beijing Donghu Neighborhood Office and Inner Mongolia Zhuozi County Poverty Relief Office to donate more than 10,000 physical learning kits to students in Zhuozi County. In November 2020, we organized a charity initiative in our parent community and raised funds and clothes from more than 3,000 parents for children in Garzê Tibetan Autonomous Prefecture.

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REGULATION

We operate our business in China under a legal regime created and made by PRC lawmakers consisting of the National People’s Congress, or the NPC, the country’s highest legislative body, the State Council, the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority, including the Ministry of Education, or the MOE, the Ministry of Industry and Information Technology, or the MIIT, the State Administration for Market Regulation (formerly known as the State Administration for Industry and Commerce), or the SAMR, and the National Press and Publication Administration (formerly known as the State Administration of Press Publication Radio Film and Television). This section summarizes the principal PRC regulations related to our business.

Regulation Relating to Foreign Investment

On March 15, 2019, the NPC promulgated the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The foreign-invested enterprises established prior to the effective of the Foreign Investment Law may keep their corporate forms, among other things, within five years after January 1, 2020. Pursuant to the Foreign Investment Law, “foreign investors” means natural persons, enterprises, or other organizations of a foreign country, “foreign-invested enterprises”, or FIEs, means any enterprise established under PRC law that is wholly or partially invested by foreign investors and “foreign investment” means any foreign investor’s direct or indirect investment in China, including: (i) establishing FIEs in China either individually or jointly with other investors; (ii) obtaining stock shares, stock equity, property shares, other similar interests in Chinese domestic enterprises; (iii) investing in new projects in China either individually or jointly with other investors; and (iv) making investment through other means provided by laws, administrative regulations, or State Council provisions.

The Foreign Investment Law stipulates that China implements the management system of pre-establishment national treatment plus a negative list to foreign investment and the government generally will not expropriate foreign investment, except under special circumstances, in which case it will provide fair and reasonable compensation to foreign investors. Foreign investors are barred from investing in prohibited industries on the negative list and must comply with the specified requirements when investing in restricted industries on that list. When a license is required to enter a certain industry, the foreign investor must apply for one, and the government must treat the application the same as one by a domestic enterprise, except where laws or regulations provide otherwise. In addition, foreign investors or FIEs are required to file information reports and foreign investment shall be subject to the national security review. In addition, the Implementation Rules of the Foreign Investment Law, effective on January 1, 2020, clarifies that the Foreign Investment Law and its implementation rules also apply to investments by FIEs in China.

On December 26, 2019, the Supreme People’s Court of China promulgated the Interpretations on Certain Issues Regarding the Application of Foreign Investment Law, effective on January 1, 2020, pursuant to which “investment contracts” are defined as relevant agreements formed as a result of direct or indirect investments in China by foreign investors, namely, foreign individuals, foreign enterprises or other foreign organizations, including contracts for establishment of foreign investment enterprises, share transfer contracts, equity transfer contracts, contracts for transfer of property or other similar interests, contracts for newly-built projects and etc. Any claim to invalidate an investment contract will be supported by courts if such investment contract is decided to be entered into for purposes of making foreign investments in the “prohibited industries” under the negative list or for

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purposes of investing in the “restricted industries” without satisfaction of conditions set out in the negative list. On December 30, 2019, the Ministry of Commerce, or the MOFCOM, and the SAMR jointly promulgated the Measures on Reporting of Foreign Investment Information, which became effective on January 1, 2020. Pursuant to the Measures on Reporting of Foreign Investment Information, foreign investors carrying out investment activities in China directly or indirectly shall submit investment information to the commerce administrative authorities.

Regulation Relating to Foreign Investment Restrictions

According to the latest Special Administrative Measures for the Entry of Investment (Negative List), or the Negative List, promulgated by the MOFCOM and the National Development and Reform Commission, or the NDRC, effective on July 23, 2020, the provision of value-added telecommunications services falls in the restricted industries and the percentage of foreign ownership cannot exceed 50% (except for e-commerce, domestic multi-party communication, store-and-forward and call center).

The Regulations on Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, as last amended on February 6, 2016, are the key regulations for foreign direct investment in telecommunications companies in China. The FITE Regulations stipulates that the foreign investor of a telecommunications enterprise is prohibited from holding more than 50% of the equity interest in an FIE that provides value-added telecommunications services. In addition, the main foreign investor who invests in a value-added telecommunications enterprise in China must demonstrate a positive track record and experience in providing such services. Moreover, foreign investors that meet these qualification requirements that intend to invest in or establish a value-added telecommunications enterprise operating the value-added telecommunications business must obtain approvals from the MIIT and the MOFCOM, or their authorized local counterparts, which retain considerable discretion in granting approvals.

On July 13, 2006, the MIIT, issued the Circular on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services, which requires that (i) foreign investors can only operate a telecommunications business in China through establishing a telecommunications enterprise with a valid telecommunications business operation license; (ii) domestic license holders are prohibited from leasing, transferring or selling telecommunications business operation licenses to foreign investors in any form, or providing any resource, sites or facilities to foreign investors to facilitate the unlicensed operation of telecommunications business in China; (iii) value-added telecommunications services providers or their shareholders must directly own the domain names and registered trademarks they use in their daily operations; (iv) each value-added telecommunications services provider must have the necessary facilities for its approved business operations and maintain such facilities in the geographic regions covered by its license; and (v) all value-added telecommunications services providers should improve network and information security, enact relevant information safety administration regulations and set up emergency plans to ensure network and information safety. The provincial communications administration bureaus, as local authorities in charge of regulating telecommunications services, may revoke the value-added telecommunications business operation licenses of those who fail to comply with the above requirements or fail to rectify such noncompliance within specified time limits.

Regulation Relating to Value-added Telecommunications Services

On September 25, 2000, the State Council issued the PRC Regulations on Telecommunications, or the Telecommunications Regulations, as last amended on February 6, 2016, to regulate telecommunications activities in China. The Telecommunications Regulations divided the telecommunications services into two categories, namely “infrastructure telecommunications services”

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and “value-added telecommunications services.” Pursuant to the Telecommunications Regulations, operators of value-added telecommunications services, or VATS, must first obtain a Value-added Telecommunications Business Operating License, or VATS License, from the MIIT or its provincial level counterparts. On July 3, 2017, the MIIT promulgated the Administrative Measures on Telecommunications Business Operating Licenses, which set forth more specific provisions regarding the types of licenses required to operate VATS, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses.

The Classified Catalog of Telecommunications Services (2015 Version), or the 2015 MIIT Catalog, effective on March 1, 2016 and as amended on June 6, 2019, defines information services as “the information services provided for users through public communications networks or internet by means of information gathering, development, processing and the construction of the information platform.” Moreover, information services continue to be classified as a category of VATS and are clarified to include information release and delivery services, information search and query services, information community platform services, information real-time interactive services, and information protection and processing services under the 2015 MIIT Catalog.

The Administrative Measures on Internet Information Services, or the ICP Measures, promulgated by the PRC State Council and as last amended on January 8, 2011, sets forth more specific rules on the provision of internet information services. According to the ICP Measures, any company that engages in the provision of commercial internet information services must obtain a sub-category VATS License for Internet Information Services, or the ICP License, from the relevant government authorities before providing any commercial internet information services within the PRC. Pursuant to the above-mentioned regulations, “commercial internet information services” generally refer to provision of specific information content, online advertising, web page construction and other online application services through the internet for profit making purpose. According to the ICP Measures, internet information service providers cannot produce, duplicate, publish or disseminate information that (i) is against any fundamental principles set out in the Constitution Law of China; (ii) endangers the national security, leaks the national secrets, incites to overthrow the national power, or undermines the national unity; (iii) damages the national honor or interests; (iv) incites the ethnic hatred and ethnic discrimination or undermines the solidarity among all ethnic groups; (v) undermines the national policies on religions and advocates religious cults and feudal superstition; (vi) disseminates rumors to disrupt the social order and undermines the social stability; (vii) disseminates the obscene materials, advocates gambling, violence, killing and terrorism, or instigates others to commit crimes; (viii) humiliates or defames others or infringes the legitimate rights and interests of others; and (ix) is otherwise prohibited by laws and regulations.

In addition to the Telecommunications Regulations and the other regulations discussed above, the provision of commercial internet information services on mobile internet apps is regulated by the Administrative Provisions on Mobile Internet Applications Information Services, which was promulgated by the Cyberspace Administration of China, or the CAC, on June 28, 2016 and came into effect on August 1, 2016. The providers of mobile internet applications are subject to requirements under these provisions, including acquiring the qualifications and complying with other requirements provided by laws and regulations and being responsible for information security.

Regulation Relating to Private Education

The Education Law of PRC, or the Education Law, sets forth provisions relating to the fundamental education systems of China, including a school system of pre-school education, primary education, secondary education and higher education, a system of nine-year compulsory education and a system of education certificates. The Education Law stipulates that the government formulates plans for the development of education, establishes and operates schools and other types of educational

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institutions, and in principle, enterprises, institutions, social organizations and individuals are encouraged to operate schools and other types of educational organizations in accordance with PRC laws and regulations.

On December 28, 2002, the Standing Committee of the National People’s Congress, or the SCNPC, promulgated the Law for Promoting Private Education, or the Private Education Law, which was last amended on December 29, 2018. Pursuant to the Private Education Law, sponsors of private schools may choose to establish non-profit or for-profit private schools at their own discretion and the establishment of the private schools must be subject to approvals granted by relevant government authorities and registered with relevant registration authorities.

On August 10, 2018, the Ministry of Justice, or MOJ, published the draft amendment to the Regulations on the Implementation of the Law for Promoting Private Education of PRC, or MOJ Draft, for public comment. MOJ Draft stipulates that private schools using internet technology to provide online diploma-awarding educational courses shall obtain the private school operating permit of similar academic education at the same level, as well as the internet operating permit. The institutions that use internet technology to provide training and educational activities, vocational qualification and vocational skills training, or providing an internet technology service platform for the above activities, would need to obtain the corresponding internet operating permit and file with the administrative department for education or the department of human resources and social security at the provincial level where the institution is domiciled, and such institutions shall not provide educational and teaching activities which require the private school operating permit. The internet technology service platform that provides training and educational activities shall review and register the identity information of institutions or individuals applying for access to the platform.

Regulation Relating to After-school Tutoring

On February 13, 2018, the MOE, the Ministry of Civil Affairs, the Ministry of Human Resources and Social Security and the SAMR jointly promulgated the Circular on Alleviating After-school Burden on Primary and Secondary School Students and Implementing Inspections on After-school Training Institutions, pursuant to which the government authorities will carry out a series of inspections on after-school training institutions and order those with material potential safety risks to suspend business for self-inspection and rectification and those without proper establishment licenses or school operating permits to apply for relevant qualifications and certificates under the guidance of competent government authorities. Moreover, after-school training institutions must file with the local education authorities and publicly present the classes, courses, target students, class hours and other information relating to their academic training courses (primarily including courses on Chinese and mathematics). After-school training institutions are prohibited from providing academic training services beyond the scope or above the level of school textbooks, or organizing any academic competitions (such as Olympiad competitions) or level tests for students of primary and secondary schools. In addition, primary and secondary schools may not reference the student’s performance in the after-school training institutions as one of admission criteria.

On August 6, 2018, the General Office of the State Council issued the Opinion on the Regulation of the Development of After-school Training Institutions, or State Council Circular 80, which primarily regulates the after-school training institutions targeting students in primary and secondary schools. State Council Circular 80 reiterates prior guidance that after-school training institutions must obtain a private school operating permit, and further requires such institutions to meet certain minimum requirements. For example, after-school training institutions are required to avoid hiring any teachers who are working concurrently in primary or secondary schools, and ensure that teachers tutoring in academic subjects (such as Chinese, mathematics, English, physics, chemistry and biology) have the corresponding teacher qualification licenses. The training content of after-school training institutions

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cannot exceed the corresponding national curricular standards and training progress shall not be more accelerated than the corresponding progress of local schools. According to State Council Circular 80, after-school training institutions are also required to disclose and file relevant information regarding the institution, including their training content, schedule, targeted students and school timetable to the relevant education authority. Course fees can only be collected for courses in three months or shorter installments. Moreover, State Council Circular 80 requests that competent local authorities formulate relevant local standards for after-school training institutions within their administrative area. If an overseas listed after-school training institution publicizes overseas any periodical report, or any interim report on material adverse effect on its operation, it must concurrently publish the information in Chinese on its official website (or on the disclosure platform for securities exchange information in the absence of an official website). With respect to online education service providers, State Council Circular 80 provides a principle that regulatory authorities of networking, culture, information technology, radio and television industries should cooperate with regulatory authorities of education in supervising online education in their relevant industry.

On June 10, 2020, the General Office of MOE and the General Office of SAMR promulgated the Notice on Issuing the Form of Service Contract for After-school Training Provided to Primary and Secondary School Students, which requires the local competent regulatory authorities to guide the relevant parties to use the form of service contract for after-school training activities provided to primary and secondary school students. The form of service contract covers the obligations and rights of parties involved in the after-school training, including detailed provisions on training fees, refund arrangement and default liabilities.

On October 13, 2020, the General Office of the MOE and the General Office of the SAMR jointly promulgated the Notice on the Centralized Rectification of After-school Tutoring Institutions’ Illegal Acts of Infringing Consumers’ Rights by Using Unfair Standard Terms. The Notice stipulates that local education and market regulation authorities shall increase the efforts for the investigation of after-school tutoring institutions’ illegal acts which infringes consumers’ rights by using unfair standard terms to exempt themselves from liability, increase consumers’ liability and exclude consumers’ legal rights.

The Law for Protection of Minors issued by the SCNPC on September 4, 1991, was recently amended on October 17, 2020, which will take effect on June 1, 2021. According to the amended Law for Protection of Minors, online education products and services which are targeted at minors shall not include any links to online games or push any advertisements and other information that is irrelevant to teaching. In addition, schools shall not occupy the legal holidays, rest days, winter and summer vacations to organize the students in primary and secondary schools to take remedial lessons collectively to aggravate their burden of study and after-school tutoring service providers may not provide primary school curriculum education to the preschool-aged minors.

Regulation Relating to the Online After-School Training and Educational Apps

On November 20, 2018, the General Office of the MOE, the General Office of the SAMR and the General Office of the Ministry of Emergency Management jointly issued the Notice on Improving the Specific Governance and Rectification Mechanisms of After-school Education Institutions, which provides that provincial regulatory authorities of education should be responsible for being filed with the training institutions that use internet technology to provide online training and target primary and secondary school students. Provincial regulatory authorities of education should supervise the online after-school training institutions based on the policies regulating the offline after-school training institutions. In addition, online after-school training institutions are required to file the information of their courses, such as names, contents, target students, syllabi and schedules with the relevant provincial regulatory authorities of education and publish the name, photo, class schedule and certificate number of the teacher qualification license of each teacher on their websites.

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The MOE and certain other PRC government authorities jointly promulgated the Implementation Opinions on Regulating Online After-school Training, or the Online After-school Training Opinions, as effective on July 12, 2019. The Online After-school Training Opinions is to regulate academic after-school training involving internet technology provided to students in primary and secondary schools. The Online After-School Training Opinions requires, among others, that online after-school training institutions should file with the competent provincial regulatory authorities of education and such regulatory authorities of education, jointly with other provincial government authorities, should review the filings and qualifications of the online after-school training institutions.

With respect to the filing requirements, the Online After-school Training Opinions provides, among others, that (i) an online after-school training institution should file with the competent provincial regulatory authorities of education after it obtains the ICP License and the grade evaluation report for the graded protection of cybersecurity, and such filing should be completed prior to October 31, 2019 if such online after-school training institution has already conducted online after-school training; (ii) the materials need to be filed by the online after-school training institutions include, among others, the materials related to the institution (such as the information on their ICP Licenses and other relevant licenses), the management systems used for protection of personal information and cybersecurity, the training content and the training personnel; and (iii) the competent provincial regulatory authorities of education should promulgate local implementing rules on filing requirements, which should focus on training institutions, training content and training personnel.

The Online After-school Training Opinions further provides that the competent provincial regulatory authorities of education should, jointly with other provincial government authorities, review the filings and qualifications of the online after-school training institutions, focusing on the following matters: (i) the training content should not include online games or other content or links irrelevant with the training itself, and should not be beyond the scope of relevant national school syllabus. No illegal publications may be published, printed, reproduced or distributed, and no infringement or piracy activities may be conducted during the training. The training content and data should be stored for more than one year, among which the live streaming teaching videos should be stored for more than six months; (ii) each course should not be longer than 40 minutes and should be taken at intervals of not less than 10 minutes, and the training time should not conflict with the teaching time of primary and secondary schools. Each live-streaming course provided to students receiving compulsory education should not end later than 9:00 p.m., and no exercises should be left for primary school students in Grade 1 and Grade 2. The online after-school training platforms should have eye protection and parental supervision functions; (iii) the online after-school training institutions should not hire any teachers who are currently working at primary or secondary schools. Training personnel of academic subjects are required to obtain necessary teacher qualification licenses. The online after-school training institutions’ platforms and course interfaces should present the names, photos and teacher qualification licenses of training personnel, and the learning, working and teaching experiences of foreign training personnel; (iv) with the consent of students and their parents, the online after-school training institutions should verify the identification information of each student, and should not illegally sell or provide such information to third parties. User behavior log must be kept for more than one year; (v) the charge items and standard and refund policy should be specifically presented on the training platforms. The prepaid fees can only be used for education and training purposes, and cannot be used for other investment activities. If the prepaid fees are charged based on the number of classes, the prepaid fees are not allowed to be collected in a lump sum for more than 60 classes. If the prepaid fees are charged based on the length of the learning period, the prepaid fees are not allowed to be collected for a learning period of more than three months; and (vi) the online after-school training institutions with incompliance or issues identified by the competent provincial regulatory authorities of education must complete the rectification, and would be subject to fines, administrative order to suspend operations or other administrative sanctions if they fail to complete the rectification in time.

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On August 10, 2019, the MOE, jointly with certain other PRC government authorities, issued the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps, or the Opinions on Educational Apps, which requires, among others, mobile Apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculties, students or parents as the main users and with education or learning as the main application scenarios, are educational Apps, which should be filed with competent provincial regulatory authorities for education by the end of 2019. The Opinions on Educational Apps also requires, among others, that (i) each provider of educational Apps should obtain the ICP License or complete the ICP filing and obtain the certificate and the grade evaluation report for graded protection of cybersecurity before the completion of filing; (ii) the educational Apps with main users under the age of 18 should limit the use time of its App, specify the range of suitable ages, and strictly monitor the content in its App; (iii) if any educational App will be introduced as a mandatory App to students in any school, such educational App should be approved by the applicable school through its collective decision-making process and be filed with the competent regulatory authorities for education; and (iv) the educational Apps selected by regulatory authorities for education and schools as the teaching or management tools are not allowed to charge any fees to students or parents or offer any commercial advertisements or games. On November 11, 2019, the MOE issued the Administrative Measures on Filing of Educational Mobile Apps, which requires, among others, that filings of existing educational Apps should be completed prior to January 31, 2020.

On November 27, 2020, the MOE and the Office of the Central Cyberspace Affairs Commission jointly promulgated the Notice on Further Strengthening the Standardized Management of Online Course Platforms for Minors. The Notice emphasizes that local cyberspace authorities and education authorities shall regularly organize screening of the training platforms for minors and take measures such as suspending or removing training platforms or requiring training platforms to rectify within a given time limit. After such rectification is completed, the education authorities will re-review the filings.

On September 29, 2019, Beijing Municipal Education Commission, one of our competent regulatory bodies, issued the trial implementation rules with respect to the filing requirements in relation to the Online After-School Training Opinions, which requires, among others, that online after-school training institutions that (i) are registered or have its ICP filing in Beijing; and (ii) provide online after-school training to students in primary or secondary schools using internet technology on academic subjects such as Chinese, mathematics, English, physics, chemistry, politics, history, geography, biology, etc., to submit filing materials required under the Online After-School Training Opinions via an official filing platform nationwide. On June 1, 2020, Beijing Municipal Education Commission further issued the Notice on the Rectification Work of Online After-school Training, which requires: (i) online after-school training institutions that already submit filing applications to improve its filed materials according to rectification opinions from Beijing Municipal Education Commission; and (ii) online after-school training institutions that apply for filing publicize on their websites, Apps and learning platform a filing content commitment in the form provided by Beijing Municipal Education Commission.

On April 21, 2020, the Ministry of Human Resources and Social Welfare and other government authorities jointly promulgated the Notice of Implementing the Phased Measures of “Taking Certificate after Starting Career” for Certain Occupations under COVID-19, pursuant to which all college graduates who are eligible for the teacher qualification examination and meet the requirements of teacher qualification regarding ideological and political criteria, language skills and physical conditions are allowed to start to engage in the related work of education before obtaining the teacher qualification licenses. The teacher qualification licenses will not be a mandatory precondition for college graduates if they are hired prior to December 31, 2020.

To strengthen the prevention and control of myopia among children and teenagers, the MOE, SAMR and certain other government authorities issued the Comprehensive Implementation Plan for

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Myopia Control in Children and Teenagers in August 2018, which requires, among others, that the schools (i) shall use electronic products based on the principal of necessity, shall not rely on electronic products for teaching and homework assignment and shall rather assign paper-based homework in principle, and the teaching time using electronic products shall not account for more than 30% in general; (ii) shall strictly implement the learning and development guidelines for children aged three to six, pay attention to the importance of life and play and avoid “primary school” teaching.

Regulation Relating to Online Transmission of Audio-Visual Programs

To regulate the provision of audio-visual program services to the public via the internet, including through mobile networks, within the territory of the PRC, the State Administration of Press Publication Radio Film and Television, or the SAPPRFT (currently known as National Radio and Television Administration), and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program Service, or the Audio-Visual Program Provisions, on December 20, 2007, which was last amended on August 28, 2015. Under the Audio-Visual Program Provisions, “internet audio-visual program services” is defined as activities of producing, redacting and integrating audio-visual programs, providing them to the general public via the internet, and providing service for other people to upload and transmit audio-visual programs, and providers of internet audio-visual program services are required to obtain a License for Online Transmission of Audio-Visual Programs issued by the SAPPRFT, or complete certain registration procedures with the SAPPRFT. In general, providers of internet audio-visual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by the SAPPRFT.

On March 10, 2017, the SAPPRFT issued the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which revised the previous version issued on March 17, 2010. According to the Categories, there are four categories of internet audio and video programs services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-visual programs concerning, among other things, educational content, and broadcasting such content to the general public online.

Regulation Relating to Internet Live Streaming Services

On November 4, 2016, the CAC issued the Administrative Regulation on Internet Live Streaming Services, effective from December 1, 2016, according to which, “internet live streaming” is defined as the activities of continuously releasing real-time information to the public based on the internet in forms such as videos, audios, images and texts, and “internet live-streaming service providers” are defined as the operators that provide internet live-streaming platform service. In addition, the internet live-streaming service providers should take various measures during operation of their services, such as examining and verifying the authenticity of the identification information, and file such information for records.

On July 12, 2017, the CAC issued a Notice on Development of the Filing Work for Enterprises Providing Internet Live Streaming Services, which provides that all the companies providing internet live streaming services should file with the local authority since July 15, 2017, otherwise the CAC or its local counterparts may impose administrative sanctions on such companies.

Pursuant to the Circular on Tightening the Administration of Internet Live Streaming Services jointly issued by the MIIT, the Ministry of Culture and Tourism, or the MOCT, and several other government agencies on August 1, 2018, the live streaming services providers are required to file with the local public security authority within 30 days after they commence the service online.

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Regulation Relating to Production and Distribution of Radio and Television Programs

The Administrative Measures on the Production and Operation of Radio and Television Programs, or the Radio and TV Programs Measures, promulgated by the SAPPRFT are applicable for establishing institutions that produce and distribute radio and television programs or for the production of radio and television programs like programs with a special topic, column programs, variety shows, animated cartoons, radio plays and television dramas and for activities like transactions and agency transactions of program copyrights. Pursuant to the Radio and TV Programs Measures, any entity that intends to produce or operate radio or television programs must first obtain the Permit for Production and Operation of Radio and TV Programs from the SAPPRFT or its local branches.

Regulation Relating to Internet Culture Activities

The Interim Administrative Provisions on Internet Culture, or the Internet Culture Provisions, which was promulgated by the Ministry of Culture, or MOC (currently known as the MOCT), on February 17, 2011 and last amended on December 15, 2017, requires internet information services providers engaging in commercial “internet culture activities” to obtain an internet culture business operating license from the MOC. “Internet cultural activity” is defined under the Internet Culture Provisions as an act of provision of internet cultural products and related services, which includes (i) the production, duplication, importation, and broadcasting of the internet cultural products; (ii) the online dissemination whereby cultural products are posted on the internet or transmitted via the internet to end-users, such as computers, fixed-line telephones, mobile phones, television sets and games machines, for online users’ browsing, use or downloading; and (iii) the exhibition and competition of the internet cultural products. In addition, “internet cultural products” is defined under the Internet Culture Provisions as cultural products produced, broadcast and disseminated via the internet, which mainly include internet cultural products especially produced for the internet, such as online music entertainment, online games, online shows and plays (programs), online performances, online works of art and online cartoons, and internet cultural products produced from cultural products such as music entertainment, games, shows and plays (programs), performances, works of art, and cartoons through certain techniques and duplicating those to internet for dissemination.

On May 14, 2019, the General Office of MOC promulgated the Notice on Adjusting the Scope of Internet Culture Business Operating License and Further Standardize the Approval Work, which provides that online music, online shows and plays, online performances, online works of art, online cartoons, displays and games are the activities that fall in the scope of internet culture business operating license, and further clarifies that educational live streaming activities are not deemed as online performances.

Regulation Relating to Online Publishing

On February 4, 2016, the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently reformed into the State Administration of Press and Publication (National Copyright Bureau) under the Propaganda Department of the Central Committee of the Communist Party of China) and the MIIT jointly issued the Administrative Provisions on Online Publishing Services, or the Online Publishing Provisions, which came into effect on March 10, 2016. Under the Online Publishing Provisions, any entity providing online publishing services shall obtain an Online Publishing Services Permit. “Online publishing services” refer to the provision of online publications to the public through information networks; and “online publications” refer to digital works with publishing features such as having been edited, produced or processed and are available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book,

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newspaper, periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.

Regulation Relating to Internet Information Security and Privacy Protection

The PRC Constitution states that the PRC laws protect the freedom and privacy of communications of citizens and prohibit infringement of such rights. PRC governmental authorities have enacted laws and regulations on internet information security and protection of personal information from any abuse or unauthorized disclosure. The Decisions on Maintaining Internet Security which was enacted by the SCNPC on December 28, 2000 and amended on August 27, 2009, may subject violators to criminal punishment in the PRC for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights. The Ministry of Public Security, or MPS, has promulgated measures that prohibit use of the internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content. If an information service provider violates these measures, the MPS and the local security bureaus may revoke its operating license and shut down its websites.

Pursuant to the Decision on Strengthening the Protection of Online Information issued by the SCNPC on December 28, 2012, and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the MIIT on July 16, 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes. “Personal information” is defined as information that identifies a citizen, the time or location for his/her use of telecommunication and internet services or involves privacy of any citizen such as his/her birth date, ID card number, and address. An internet information service provider must also keep information collected strictly confidential, and is further prohibited from divulging, tampering or destroying of any such information, or selling or providing such information to other parties. Any violation of the above decision or order may subject the internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancelation of filings, closedown of websites or even criminal liabilities.

Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the MPS on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued on April 23, 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.

Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC on August 29, 2015, which became effective on November 1, 2015, any person or entity that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders is subject to criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation, and any individual or entity that (x) sells

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or provides personal information to others in a way violating the applicable law, or (y) steals or illegally obtain any personal information is subject to criminal penalty in severe situation.

Pursuant to the PRC Cyber Security Law issued by the SCNPC on November 7, 2016, effective as of June 1, 2017, “personal information” refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify individuals’ personal information, including but not limited to: individuals’ names, dates of birth, ID numbers, biologically identified personal information, addresses and telephone numbers, etc. The PRC Cyber Security Law also provides that: (i) to collect and use personal information, network operators shall follow the principles of legitimacy, rightfulness and necessity, disclose rules of data collection and use, clearly express the purposes, means and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators shall neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered; and shall dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; and (iii) network operators shall not divulge, tamper with or damage the personal information they have collected, and shall not provide the personal information to others without the consent of the persons whose data is collected. However, if the information has been processed and cannot be recovered and thus it is impossible to match such information with specific persons, such circumstance is an exception.

Pursuant to the Provisions on Internet Security Supervision and Inspection by Public Security Organs, which was promulgated by the MPS on September 15, 2018 and became effective on November 1, 2018, the public security departments are authorized to carry out internet security supervision and inspection of the internet service providers from the following aspects, among others: (i) whether the service providers have completed the recordation formalities for online entities, and filed the basic information on and the changes of the accessing entities and users; (ii) whether they have established and implemented the cybersecurity management system and protocols, and appointed the persons responsible for cybersecurity; (iii) whether the technical measures for recording and retaining users’ registration information and weblog data are in place according to the law; (iv) whether they have taken technical measures to prevent computer viruses, network attacks and network intrusion; (v) whether they have adopted preventive measures to tackle the information that is prohibited to be issued or transmitted by the laws and administrative regulations in the public information services; (vi) whether they provide technical support and assistance as required by laws to public security departments to safeguard national security and prevent and investigate on terrorist activities and criminal activities; and (vii) whether they have fulfilled the obligations of the grade-based cybersecurity protection and other obligations prescribed by the laws and administrative regulations. In particular, public security departments shall also carry out supervision and inspection on whether an internet service provider has taken required measures to manage information published by users, adopted proper measures to handle the published or transmitted information that is prohibited to be published or transmitted, and kept the relevant records.

In addition, the Office of the Central Cyberspace Affairs Commission, the MIIT, the MPS, and the SAMR jointly issued an Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Apps on January 23, 2019 to implement special rectification works against mobile Apps that collect and use personal information in violation of applicable laws and regulations, where business operators are prohibited from collecting personal information irrelevant to their services, or forcing users to give authorization in a disguised manner. On November 28, 2019, the National Internet Information Office, the MIIT, the MPS and the SAMR further jointly issued a notice to classify and identify illegal collection and use of personal information.

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On August 22, 2019, the Office of the Central Cyberspace Affairs Commission issued the Provisions on the Cyber Protection of Children’s Personal Information, which took effect on October 1, 2019. The Provisions on the Cyber Protection of Children’s Personal Information apply to the collection, storage, use, transfer and disclosure of the personal information of children under the age of 14 via the internet. The Provisions on the Cyber Protection of Children’s Personal Information require that network operators shall establish special rules and user agreements for protection of personal information for children under the age of 14, inform their guardians in a noticeable and clear manner, and shall obtain the consent of their guardians. When obtaining the consent of their guardians, network operators shall explicitly disclose several matters, including, without limitation, the purpose, method and scope of collection, storage, use, transfer and disclosure of such personal information, and methods for correcting and deleting such personal information. Provisions on the Cyber Protection of Children’s Personal Information also require that when collecting, storing, using, transferring and disclosing such personal information, network operators shall comply with certain regulatory requirements, including, without limitation, that network operators shall designate specific personnel to take charge of the protection of such personal information and shall strictly grant information access authorization for their staff to such personal information under the principle of minimal authorization.

According to the Civil Code of China, which became effective on January 1, 2021, a natural person has the right of privacy and the personal information of a natural person will be protected in accordance with law. Information processors may not divulge or tamper with the personal information collected or stored by them and may not illegally provide any natural person’s personal information to others without the consent of such natural person.

Pursuant to the Notice on Promulgation of the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications, which was promulgated by the CAC, the MIIT and certain other government authorities on March 12, 2021 and will become effective on May 1, 2021, “necessary personal information” refers to the personal information necessary for ensuring the normal operation of an App’s basic functional services, without which the App cannot achieve its basic functional services. For learning and education App, the basic functional services are “online tutoring, online classes, etc.” and the necessary personal information is mobile phone numbers of registered users.

Further, the SAMR promulgated the Measures for the Supervision and Administration of Online Transactions, which will take effect from May 1, 2021. The measures require that online transaction operators shall not force customers, whether or not in a disguised manner, to consent to the collection and use of information not directly related to their business activities by means of one-off general authorization, default authorization, bundling with other authorizations, or the suspension of installation and use. Otherwise, such online transaction operator may be subject to fines and consequences under related laws and regulations, including without limitation suspension of business for rectification and revocation of permits and licenses.

Regulation Relating to Publishing

Under the Administrative Provisions on the Publications Market, which was jointly promulgated by the SAPPRFT and the MOFCOM on May 31, 2016 and became effective on June 1, 2016, any enterprise or individual who engages in publishing activities shall obtain a publishing license from SAPPRFT or its local counterpart. Without licensing, such entity or individual may be ordered to cease illegal acts by the competent administrative department of publication and be concurrently subject to fines.

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Regulation Relating to Advertising and Promotion

The principal regulations governing advertising businesses in China are the PRC Advertising Law as last amended on October 26, 2018 and the Advertising Administrative Regulations issued on October 26, 1987. These laws, rules and regulations require companies that engage in advertising activities to obtain a business license that explicitly includes advertising in the business scope from the SAMR or its local branches.

Applicable PRC advertising laws, rules and regulations contain certain prohibitions on the content of advertisements in China (including prohibitions on misleading content, superlative wording, socially destabilizing content or content involving obscenities, superstition, violence, discrimination or infringement of the public interest). Education and/or training advertisements shall not contain the following contents: (i) explicit or implicit guarantee for successful enrolment to a higher grade, passing of examination, obtaining of degree qualification or passing certificate, or the effect of education or training; (ii) explicit or implicit expression of participation by the relevant examination body or its personnel, personnel setting examination questions in the education or training; and recommendation and/or endorsement by scientific research institutes, academic institutions, educational organizations, industry associations, professionals or beneficiaries using their name or image.

Advertisers, advertising operators and advertising distributors are required by applicable PRC advertising laws, rules and regulations to ensure that the content of the advertisements they prepare or distribute is true and in compliance with applicable laws, rules and regulations. Violation of these laws, rules and regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. In circumstances involving serious violations, the SAMR or its local branches may revoke the violator’s license or permit for advertising business operations. In addition, advertisers, advertising operators or advertising distributors may be subject to civil liability if they infringe the legal rights and interests of third parties, such as infringement of intellectual proprietary rights, unauthorized use of a name or portrait and defamation.

In addition, the Anti-Unfair Competition Law promulgated by the SCNPC, last amended on April 23, 2019 requires that business operators shall not make false or misleading commercial promotion for the performance, functions, quality, sales, user evaluation, accolades etc. as to defraud or mislead customers.

Regulation Relating to Intellectual Property Rights

Copyright and Software Registration

The SCNPC promulgated the PRC Copyright Law in 1990 and last revised it on November 11, 2020, which will become effective on June 1, 2021. The amended Copyright Law extends copyright protection to internet activities, products disseminated over the internet software products, audio-visual works and any other intellectual achievements which comply with the characteristics of the works. In addition, there is a voluntary registration system administered by the China Copyright Protection Center. To address the problem of copyright infringement related to the content posted or transmitted over the internet, the National Copyright Administration, or the NCAC, and the MIIT jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005, which became effective on May 30, 2005.

On December 20, 2001, the State Council promulgated the Computer Software Protection Regulations which came into effect on January 1, 2002 and was last amended on January 30, 2013. These regulations are formulated for protecting the rights and interests of computer software copyright owners, encouraging the development and application of computer software and promoting the

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development of software business. In order to further implement the Computer Software Protection Regulations, the NCAC issued the Computer Software Copyright Registration Procedures on February 20, 2002, as amended on May 19, 2004, which applies to software copyright registration, license contract registration and transfer contract registration.

Patents

The SCNPC adopted the Patent Law of the PRC in 1984 and last amended it on October 17, 2020, which will become effective on June 1, 2020. A patentable invention, utility model or design must meet three conditions, namely novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant varieties or methods of nuclear transformation and substances obtained by means of nuclear transformation. The Patent Office under the National Intellectual Property Administration is responsible for receiving, examining and approving patent applications. A patent is valid for a twenty-year term for an invention, a ten-year term for a utility model and a fifteen-year term for a design, all starting from the application date. Except under certain specific circumstances provided by law, any third-party user must obtain consent or a proper license from the patent owner to use the patent, otherwise the use will constitute an infringement of the rights of the patent holder.

Trademark

Trademarks are protected by the PRC Trademark Law, which was adopted in 1982, last revised in April 2019 and became effective in November 2019, as well as its implementation rules adopted in 2002 and revised in 2014. The Trademark Office of National Intellectual Property Administration under the SAMR handles trademark registrations and grants a protection term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. An application for registration of a malicious trademark not for use will be rejected and those who apply for trademark registration maliciously will be given administrative penalties of warnings or fines according to the circumstances; those who file trademark lawsuits maliciously will be punished by the people’s court according to applicable laws.

Domain Name

The Administrative Measures on Internet Domain Names, or the Domain Name Measures, were promulgated by the MIIT on August 24, 2017, and came into effect on November 1, 2017. According to the Domain Name Measures, any party that has domain name root servers, and the institution for operating domain name root servers, the domain name registry and the domain name registrar within the territory of China, shall obtain a permit for this purpose from the MIIT or the communications administration of the local province, autonomous region or municipality directly under the Central Government. The registration of domain names is generally on a “first-apply-first-registration” basis and a domain name applicant will become the domain name holder upon the completion of the application procedure.

On May 28, 2020, the NPC approved the Civil Code of PRC, which took effect on January 1, 2021. Under the Civil Code, if an offender intentionally infringes upon the intellectual property rights of others

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and the circumstance is severe, the infringed party shall have the right to request for the corresponding punitive compensation.

Regulation Relating to Employment, Social Insurance and Housing Fund

Employment

Pursuant to the PRC Labor Law effective from January 1, 1995 and last amended on December 29, 2018 and the PRC Labor Contract Law effective from January 1, 2008 and amended on December 28, 2012, a written labor contract shall be executed by an employer and an employee when the employment relationship is established, and an employer is under an obligation to sign an unlimited-term labor contract with any employee who has worked for the employer for ten consecutive years. Furthermore, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract must have an unlimited term, with certain exceptions. All employers must compensate their employees equal to at least the local minimum wage standards. All employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide employees with appropriate workplace safety training. In addition, the PRC government has continued to introduce various new labor-related regulations after the PRC Labor Contract Law. Amongst other things, new annual leave requirements mandate that annual leave ranging from 5 to 15 days is available to nearly all employees and further require that the employer compensate an employee for any annual leave days the employee is unable to take in the amount of three times his daily salary, subject to certain exceptions. Moreover, all PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.

Social Insurance

The Law on Social Insurance of the PRC, which was promulgated on October 28, 2010 and amended on December 29, 2018, has established social insurance systems of basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations on social insurance.

According to the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance. An enterprise must provide social insurance by going through social insurance registration with local social insurance authorities or agencies, and shall pay or withhold relevant social insurance premiums for or on behalf of employees. On July 20, 2018, the General Office of the State Council issued the Plan for Reforming the State and Local Tax Collection and Administration Systems, which stipulated that the State Administration of Taxation, or the SAT, will become solely responsible for collecting social insurance premiums.

Housing Fund

According to the Administrative Regulations on the Administration of Housing Fund, which was promulgated on April 3, 1999 and last amended on March 24, 2019, housing fund paid and deposited

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both by employee themselves and their unit employer shall be owned by the employees. An employer should undertake registration of payment and deposit of the housing fund in the housing fund management center and open a housing fund account on behalf of its employees in a commissioned bank. Employers should timely pay and deposit housing fund contributions in full amount and late or insufficient payments shall be prohibited.

Regulation Relating to Foreign Exchange

Regulation on Foreign Currency Exchange

The principal regulations governing foreign currency exchange in China are the PRC Foreign Exchange Administration Regulations, or the Foreign Exchange Administration Regulations, which were promulgated by the State Council on January 29, 1996 and last amended on August 5, 2008. Under the Foreign Exchange Administration Regulations, Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as direct investment, loan or investment in securities outside China, unless prior approval of SAFE or its local counterparts has been obtained.

On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.

On March 30, 2015, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, which became effective on June 1, 2015 and was amended on December 30, 2019. According to SAFE Circular 19, the foreign exchange capital of FIEs shall be subject to the Discretionary Foreign Exchange Settlement, which means that the foreign exchange capital in the capital account of an FIE for which the rights and interests of monetary contribution have been confirmed by the local foreign exchange bureau (or the book- entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operational needs of the FIE. The proportion of Discretionary Foreign Exchange Settlement of the foreign exchange capital of an FIE is temporarily set at 100%. The Renminbi converted from the foreign exchange capital will be kept in a designated account and if an FIE needs to make further payment from such account, it still needs to provide supporting documents and proceed with the review process with the banks. Furthermore, SAFE Circular 19 stipulates that the use of capital by FIEs shall follow the principles of authenticity and self-use within the business scope of enterprises. The capital of an FIE and capital in Renminbi obtained by the FIE from foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly used for payments beyond the business scope of the enterprises or payments as prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities unless otherwise provided by the relevant laws and regulations; (iii) directly or indirectly used for issuance of RMB entrusted loans, repayment of inter- enterprise loans (including advances by the third party) or repayment of bank loans that have been transferred to a third party; or (iv) directly or indirectly used for expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

The Circular on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, was promulgated by SAFE on June 9, 2016. Pursuant

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to SAFE Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis. SAFE Circular 16 provides a unified standard for the conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which applies to all enterprises registered in the PRC. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC Laws, while such converted Renminbi shall not be provided as loans to its non-associated enterprises.

On October 23, 2019, SAFE promulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment.

Regulation on Foreign Debt

A loan made by a foreign entity as direct or indirect shareholder in an FIE is considered to be foreign debt in China and is regulated by various laws and regulations, including the Regulation of the People’s Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed Rules for the Implementation of Provisional Regulations on Statistics and Supervision of Foreign Debt, and the Administrative Measures for Registration of Foreign Debts. Under these rules and regulations, a shareholder loan in the form of foreign debt made to a PRC entity does not require the prior approval of SAFE. However, such foreign debt must be registered with and recorded by SAFE or its local branches within 15 business days after entering into the foreign debt contract. Pursuant to these rules and regulations, the maximum amount of the aggregate of (i) the outstanding balance of foreign debts with a term not longer than one year, and (ii) the accumulated amount of foreign debts with a term longer than one year, of an FIE shall not exceed the difference between its registered total investment and its registered capital, or Total Investment and Registered Capital Balance.

On January 12, 2017, the People’s Bank of China, or PBOC, promulgated the Notice of the People’s Bank of China on Full-coverage Macro-prudent Management of Cross-border Financing, or PBOC Circular 9. PBOC established a cross-broader financing regulation system based on the capital or net assets of the micro main body under macro prudential rules, and the legal entities and financial institutions established in PRC including the branches of foreign banks registered in China but excluding government financing vehicles and real estate enterprise, may carry out cross-border financing of foreign currency in accordance with relevant regulations of such system. PBOC Circular 9 provides that, among other things, the outstanding amount of the foreign currency for the entities in cross-border financing shall be limited to the Upper Limit of the Risk Weighted Balance of such entity, which shall be calculated according to the formula provided in PBOC Circular 9. PBOC Circular 9 also provides that during the one-year period started from January 12, 2017, foreign-invested enterprises may choose one method to carry out cross-broader financing in foreign currency either according to PBOC Circular 9 or according to the Interim Provisions on the Management of Foreign Debts. After the end of such one-year period, the method of foreign-invested enterprises to carry out cross-broader financing in foreign currency will be determined by PBOC and SAFE.

Regulation on Dividend Distribution

The principal regulations governing distribution of dividends of FIEs is the PRC Company Law. Under these laws and regulations, FIEs in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with China accounting standards and regulations. In

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addition, a PRC company, including FIEs in China, is required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registered capital of the enterprises. A PRC company may, at their discretion, allocate a portion of their after-tax profits based on China accounting standards to staff welfare and bonus funds. These reserves are not distributable as cash dividends.

Regulation on Foreign Exchange Registration of Overseas Investment by PRC Residents

SAFE issued the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to regulate foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents (including individuals and entities) for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while “round trip investment” refers to direct investment in China by PRC residents through SPVs, namely, establishing FIEs to obtain the ownership, control rights and management rights. The term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by PRC residents in the offshore special purpose vehicles by means of acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents are required to complete foreign exchange registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, which provides that applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE.

An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or failure to disclose controllers of the FIE that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant FIE, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.

Regulation on Stock Incentive Plans

SAFE promulgated the Circular of the State Administration of Foreign Exchange on Issues concerning the Administration of Foreign Exchange Used for Domestic Individuals’ Participation in Equity Incentive Plans of Companies Listed Overseas, or the Stock Option Rules on February 15, 2012, replacing the previous rules issued by SAFE in March 2007. Under the Stock Option Rules and other relevant rules and regulations, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year and participate in any stock incentive plan of an overseas publicly listed company are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas-listed company, and complete certain other procedures, unless certain exceptions are available. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests.

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In addition, the SAT has issued certain circulars concerning employee share options or restricted shares. Under these circulars, the employees working in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If the employees fail to pay or the PRC subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC government authorities.

Regulation Relating to Taxation

Enterprise Income Tax

On March 16, 2007, the NPC enacted the Enterprise Income Tax Law, which was last amended on December 29, 2018, and on December 6, 2007, the State Council promulgated the Implementing Rules of the Enterprise Income Tax Law, which became effective on January 1, 2008 and was amended on April 23, 2019 (or collectively, the PRC EIT Law). The PRC EIT Law applies a uniform 25% enterprise income tax rate to both FIEs and domestic enterprises, except where tax incentives are granted to special industries and projects. Enterprises qualifying as “High and New Technology Enterprises” are entitled to a preferential 15% enterprise income tax rate rather than the 25% statutory tax rate. The preferential tax treatment continues as long as an enterprise can retain its “High and New Technology Enterprise” status.

Under the PRC EIT Law, an enterprise established outside China with its “de facto management body” located in China is considered a “resident enterprise”, which means it can be treated as a domestic enterprise for enterprise income tax purposes. A non-resident enterprise that does not have an establishment or place of business in China, or has an establishment or place of business in China but the income of which has no actual relationship with such establishment or place of business, shall pay enterprise income tax on its income deriving from inside China at the reduced rate of enterprise income tax of 10% and such income tax shall be subject to withholding at the source, where the payer shall act as the withholding agent. Dividends generated after January 1, 2008 and payable by an FIE in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential withholding arrangement.

The Notice on Issues Concerning the Determination of Chinese-Controlled Enterprises Registered Overseas as Resident Enterprises on the Basis of Their Bodies of Actual Management, or the SAT Circular 82, provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. According to the SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

Pursuant to the Arrangement between mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the withholding tax rate in respect to the payment of dividends by a mainland China

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enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the mainland China enterprise and certain other conditions are satisfied. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply the reduced withholding tax rate: (i) it must be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the mainland China resident enterprise; and (iii) it must have directly owned such required percentage in the mainland China resident enterprise throughout the 12 months prior to receiving the dividends.

On February 3, 2015, the SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers or Assets by Non-PRC Resident Enterprises, or SAT Bulletin 7, which extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise. To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT Bulletin 7 must be comprehensively analyzed in light of the actual circumstances. In addition, SAT Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity securities through a public securities market.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Value-Added Tax

Pursuant to the Provisional Regulations on PRC Value-added Tax and its implementation regulations, unless otherwise specified by relevant laws and regulations, any entity or individual engaged in the sales of goods, provision of processing, repairs and replacement services and importation of goods into China is generally required to pay a value-added tax, or VAT, for revenues generated from sales of products, while qualified input VAT paid on taxable purchase can be offset against such output VAT.

Regulation Relating to M&A and Overseas Listings

On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-owned Assets Supervision and Administration Commission, the SAT, the SAMR, the China Securities Regulatory Commission, or the CSRC, and SAFE jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009. The M&A Rules requires in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise where any of the following situations exist: (i) the transaction involves an important industry in China, (ii) the transaction may affect national economic security, or (iii) the PRC domestic enterprise has a well-known trademark or historical Chinese trade name in China. The M&A Rules, among other things, also require that (i) PRC entities or individuals obtain MOFCOM approval before they establish or control an SPV overseas, provided that they intend to use the SPV to acquire their equity interests in a PRC company at the consideration of newly issued share of the SPV, or Share Swap, and list their equity interests in the PRC company

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overseas by listing the SPV in an overseas market; (ii) the SPV obtains MOFCOM’s approval before it acquires the equity interests held by the PRC entities or PRC individual in the PRC company by Share Swap; and (iii) the SPV obtains CSRC approval before it lists overseas.

The M&A Rules further requires that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council, are triggered. Moreover, the Anti-Monopoly Law promulgated by the SCNPC requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds be cleared by the MOFCOM before they can be completed.

PRC Anti-Monopoly Law

The Anti-Monopoly Law promulgated by the SCNPC which became effective on August 1, 2008 and the Interim Provisions on the Review of Concentrations of Undertakings promulgated by the SAMR which became effective on December 1, 2020 require that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the SAMR before they can be completed. Where the participation in concentration of undertakings by way of foreign-funded merger and acquisition of domestic enterprises or any other method which involves national security, the examination of concentration of undertakings shall be carried out pursuant to the provisions of this Law and examination of national security shall be carried out pursuant to the relevant provisions of the State.

On February 7, 2021, the Anti-monopoly Commission of the State Council issued the Anti-monopoly Guidelines for the Internet Platform Economy Sector that aims at specifying some of the circumstances under which an activity of internet platforms may be identified as monopolistic act as well as classifying that concentrations involving variable interest entities shall also be subject to anti-monopoly review.

Regulations on Anti Long-Arm Jurisdiction

The MOFCOM issued the Provisions on the List of Unreliable Entities, or the MOFCOM Order No. 4 of 2020, on September 19, 2020. Pursuant to the MOFCOM Order No. 4 of 2020, the working mechanism shall, according to the investigation results and by taking the following factors into comprehensive consideration, decide whether or not to include a foreign entity concerned in the list of unreliable entities, and make an announcement on such inclusion: (i) the extent of damage caused to China’s sovereignty, security and development interests; (ii) the extent of the damage to the legitimate rights and interests of Chinese enterprises, other organizations or individuals; (iii) whether or not the international economic and trade rules are followed; (iv) other factors that shall be taken into consideration. If a foreign entity is included in the list of unreliable entities, the working mechanism may decide to take one or more of the following measures: (i) restricting or prohibiting the foreign entity from engaging in import or export activities related to China; (ii) restricting or prohibiting the foreign entity’s investment within the territory of China; (iii) restricting or prohibiting the entry of the foreign entity’s relevant personnel or transport vehicles into the territory of China; (iv) restricting or canceling the work permit, stay or residence qualification of the foreign entity’s relevant personnel in China; (v) imposing a fine corresponding to the seriousness of the case against the foreign entity; (vi) Other necessary measures.

On January 9, 2021, the MOFCOM promulgated the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures, or the MOFCOM Order No. 1 of 2021. Pursuant to the MOFCOM Order No. 1 of 2021, where a citizen, legal person or other

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organization of China is prohibited or restricted by foreign legislation and other measures from engaging in normal economic, trade and related activities with a third State (or region) or its citizens, legal persons or other organizations, he/she/it shall truthfully report such matters to the competent department of commerce of the State Council within 30 days. The working mechanism will take following factors into overall account when assessing whether there exists unjustified extra-territorial application of foreign legislation and other measures: (i) whether international law or the basic principles of international relations are violated; (ii) potential impact on China’s national sovereignty, security and development interests; (iii) potential impact on the legitimate rights and interests of the citizens, legal persons or other organizations of China; (iv) other factors that shall be taken into account. Upon the working mechanism, it is confirmed that there exists unjustified extra-territorial application of foreign legislation and other measures, and MOFCOM may issue an injunction that the relevant foreign legislation and other measures shall not be accepted, executed, or observed. A citizen, legal person or other organization in China may apply for exemption from compliance with an injunction.

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MANAGEMENT

Directors and Executive Officers

The following table sets forth information regarding our executive officers and directors as of the date of this prospectus.

Directors and Executive Officers	Age	Position/Title
Jian (Mark) Luo	41	Founder, Chairman of the Board, Chief Executive Officer
Wei (Wilson) Li	42	Director, Chief Financial Officer
Zebing Shan	39	Co-founder, Director, Chief Technology Officer
Zhai Jia	38	Director
Xin Wang	36	Director
Hong Wei Jenny Lee	48	Director
Zheng Sun	40	Director
Weiqian Xun	34	Director
Shuhong Ye	48	Director
Jing Li	40	Co-founder, Vice President
Qing Ge	37	Vice President
Rui Min	34	Vice President
Jian Zhang	37	Vice President

Jian (Mark) Luo founded Huohua in 2017 and currently serves as chairman of the board and our chief executive officer. Prior to founding Huohua, Mr. Luo was a co-founder and the chief technology officer at Ganji.com., responsible for overseeing the overall information technology and product operation system of Ganji.com. From 2006 to 2008, Mr. Luo served as the deputy general manager at Beijing Kangjian Afu Consulting Service Co., Ltd. From 2004 to 2006, he worked for Microsoft China as a consultant in the consulting department. Prior to that, Mr. Luo served as a research and development engineer at Avanade Asia Pte Ltd, an international business solutions and digital service provider. Mr. Luo received his master’s degree in computer science from National University of Singapore and his bachelor’s degree in computer science and communication engineering from Nanjing University of Science and Technology.

Wei (Wilson) Li has served as our chief financial officer since September 2020. Prior to joining Huohua, Mr. Li was the chief financial officer and partner of OYO Hotels. Between 2014 and 2018, Mr. Li was the chief operating officer and the chief financial officer of CAR Inc. (stock code: 0699). From July 2010 to April 2014, Mr. Li served as the chief financial officer and executive vice president of UniTrust Finance & Leasing Corporation. From January 2007 to July 2010, Mr. Li was the chief financial officer for Global Supply Chain Asia Group in GE Healthcare. From January 2004 to January 2007, Mr. Li was part of the General Electric corporate audit staff based in the United States. From August 2002 to January 2004, Mr. Li worked at GE Healthcare as the head of risk and credit management. From July 2000 to August 2002, Mr Li was the management trainee of Financial Management Program in GE. Mr. Li graduated from Fudan University with a bachelor’s degree in finance.

Zebing Shan co-founded Huohua in 2017 and has served as our chief technology officer since then, and is responsible for overseeing and building our technology and development team. Prior to co-founding Huohua, Mr. Shan worked as a technology director at Ganji.com from 2008 to 2015. He served as a technology director at Beijing Legendsoft International Technology Co., Ltd. from 2003 to 2008. Mr. Shan received his bachelor’s degree in computer science and technology from Beijing Jiaotong University.

Jia Zhai has served as our director since June 2018. Mr. Zhai is a managing director of Sequoia Capital China. Prior to joining Sequoia Capital China, Mr. Zhai worked at Google, focusing on product

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management and operations. Mr. Zhai received his M.B.A. degree from Marshall School of Business, University of Southern California and his bachelor’s degree in computer science from Beijing University of Posts and Telecommunications.

Xin Wang has served as our director since January 2017. Mr.Wang has served as a partner of Hexie Aiqi Investment Management (Beijing) Co., Ltd. since November 2020 and as a director from April 2016 to March 2019. He served as a partner, an executive director and the general manager at Tianjin Chenhui Investment Management Co., Ltd. from April to November 2020. Prior to that, Mr. Wang served as a partner at Harmony Tianming Investment Management (Beijing) Co., Ltd. from April 2019 to April 2020. Mr. Wang also serves as a director of various privately held companies. Mr. Wang received his bachelor’s degree in electrical science from Zhejiang University and his master’s degree in technical economics from Tsinghua University.

Hong Wei Jenny Lee has served as our director since July 2019. Ms. Lee has served as the managing partner of GGV Capital since 2005. Prior to that, she had operations and finance work experience at JAFCO Asia from 2002 to 2005, at Morgan Stanley from 2001 to 2002 and at Singapore Technologies Aerospace from 1995 to 1999. Ms. Lee also serves as an independent director of listed companies Agora, Inc, (Nasdaq: API) and SATS Ltd (SGX: S58) and on the boards of various privately held companies. Ms. Lee received her bachelor’s degree in electrical engineering from Cornell University, her master’s degree in engineering from Cornell University, and her M.B.A. degree from Kellogg School of Management at Northwestern University.

Zheng Sun has served as our director since July 2020. Mr. Sun has been working at KKR Asia Limited since 2007, and currently serves as a managing director of the private equity team. Prior to joining KKR, he worked as an analyst at Goldman Sachs from 2006 to 2007. Mr. Sun received his bachelor’s degree in International Economy and Trade and his master’s degree in English Literature from Peking University.

Weiqian Xun has served as our director since September 2020. Mr. Xun served as a director and the general manager at Tencent ABCmouse Education (Shenzhen) Co., Ltd., a company engaged in online English learning. Mr. Xun received his master’s degree from Shanghai Jiao Tong University and his bachelor’s degree in Business Administration from Shanghai Jiao Tong University.

Shuhong Ye has served as our director since January 2021. Mr. Ye has approximately twenty years of experience in the information technology and internet industries. He was the co-founder of Meituan Dianping (HKEX: 3690) and also served as the chief financial officer from 2016 to 2019. Since March 2020, he has served as a partner of Trustbridge Partners, a growth-oriented private equity firm, and the chief executive officer of Trustbridge Global Media. Mr. Ye received his M.B.A. degree from University of California, Berkeley, his master’s degree in Computer Engineering from State University of New York, Binghamton and his bachelor’s degree in Electrical Engineering from Shanghai University.

Jing Li co-founded Huohua in 2017 and has served as our vice president since then, and is responsible for product research and development. Prior to joining Huohua, Mr. Li served as a product director at Ganji.com between 2013 and 2016, as a senior product manager at Tencent Holdings Ltd. between 2010 and 2012, and as a senior engineer at Sogou, Inc. between 2005 and 2010. Mr. Li received his bachelor’s degree in computer science and technology from Northeastern University.

Qing Ge has served as our vice president since 2018, responsible for teacher management. Ms. Ge has over 13 years’ of experience in the education industry. Prior to joining us, she joined TAL in 2007 and held senior management role in teaching and pedagogical research at Mobby.cn, a business unit of TAL between 2011 and 2018. Ms. Ge holds a bachelor’s degree in chemistry from Weinan Normal University.

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Rui Min has served as our vice president since 2018, responsible for pedagogical research and development. Mr. Min has over 11 years’ experience in the education industry. Prior to joining us, he joined TAL Education Group (NYSE: TAL) in 2009 and served as the head of pedagogical research at Mobby.cn, a business unit of TAL between 2011 and 2018. Mr. Min received his bachelor’s degree in accounting from Nankai University.

Jian Zhang has served as our vice president and performed other management roles since 2018. He served as the general manager of business department at Lenovo Group Limited from 2005 to 2018. Mr. Zhang holds an EMBA degree from China Europe International Business School and a bachelor’s degree in computer science and technology from Beijing Institute of Technology.

Employment Agreements and Indemnification Agreements

[We have entered into employment agreements with each of our executive officers. Each of our executive officers is employed for a specified time period, which can be renewed upon both parties’ agreement before the end of the current employment term. We may terminate an executive officer’s employment for cause at any time without advance notice in certain events. We may terminate an executive officer’s employment by giving a prior written notice or by paying certain compensation. An executive officer may terminate his or her employment at any time by giving a prior written notice.

Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers. In addition, each executive officer has agreed to be bound by certain non-competition and non-solicitation restrictions during the term of his or her employment and for two years following the last date of employment.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.]

Board of Directors

Our board of directors will consist of                  directors, including                  independent directors, namely                 , upon the SEC’s declaration of effectiveness of our registration statement on Form F-1 to which this prospectus forms a part. A director is not required to hold any shares in our company to qualify to serve as a director. The Corporate Governance Rules of the [NYSE]/[NASDAQ] generally require that a majority of an issuer’s board of directors must consist of independent directors. However, the Corporate Governance Rules of the [NYSE]/[NASDAQ] permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters. We rely on this “home country practice” exception and do not have a majority of independent directors serving on our board of directors.

A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with our company is required to declare the nature of his or her interest at a meeting of our directors. A general notice given to the directors by any director to the effect that he or she is a member, shareholder, director, partner, officer or employee of any specified company or firm and is to be regarded as interested in any contract or transaction with that company or firm shall be deemed a sufficient declaration of interest for the purposes of voting on a resolution in respect to a contract or transaction in which he/she has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction. A director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he/she may be interested therein and if he/she does so, his/her vote shall be counted and he/she may be counted in the quorum at any meeting

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of the directors at which any such contract or proposed contract or arrangement is considered. Our board of directors may exercise all of the powers of our company to borrow money, to mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and to issue debentures, debenture stock or other securities whenever money is borrowed or as security for any debt, liability or obligation of our company or of any third party. None of our directors has a service contract with us that provides for benefits upon termination of service as a director.

Committees of the Board of Directors

We intend to establish an audit committee, a compensation committee and a nominating and corporate governance committee under our board of directors immediately and adopt a charter for each of the three committees upon the effectiveness of our registration statement on Form F-1, of which this prospectus is a part. We intend to prior to the completion of this offering. Each committee’s members and functions are described below.

Audit Committee. Our audit committee will consist of                 , and is chaired by                 . We have determined that                  satisfy the requirements of [Section 303A of the Corporate Governance Rules of the NYSE/Rule 5605(c)(2) of the Listing Rules of the NASDAQ] and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determined that                  qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

• [reviewing and recommending to our board for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor;

• approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually;

• obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures;

• reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response;

• discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices;

• reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

• reviewing and recommending the financial statements for inclusion within our quarterly earnings releases and to our board for inclusion in our annual reports;

• discussing the annual audited financial statements with management and the independent registered public accounting firm;

• reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures;

• at least annually, reviewing and reassessing the adequacy of the committee charter;

• approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function;

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• establishing and overseeing procedures for the handling of complaints and whistleblowing;

• meeting separately and periodically with management and the independent registered public accounting firm;

• monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and

• reporting regularly to the board.]

Compensation Committee. Our compensation committee will consist of                  and is chaired by                 . [We have determined that                  satisfy the “independence” requirements of [Section 303A of the Corporate Governance Rules of the NYSE/Rule 5605(a)(2) of the Listing Rules of the NASDAQ].] The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:

• [overseeing the development and implementation of compensation programs in consultation with our management;

• at least annually, reviewing and approving, or recommending to the board for its approval, the compensation for our executive officers;

• at least annually, reviewing and recommending to the board for determination with respect to the compensation of our non-executive directors;

• at least annually, reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements;

• reviewing executive officer and director indemnification and insurance matters;

• overseeing our regulatory compliance with respect to compensation matters, including our policies on restrictions on compensation plans and loans to directors and executive officers;

• at least annually, reviewing and reassessing the adequacy of the committee charter;

• selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and

• reporting regularly to the board.]

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee will consist of                 , and is chaired by                 . [We have determined that                  satisfy the “independence” requirements of [Section 303A of the Corporate Governance Rules of the NYSE/ Rule 5605(a)(2) of the Listing Rules of the NASDAQ].] The nominating and corporate governance committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

• [recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board;

• reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us;

• developing and recommending to our board such policies and procedures with respect to nomination or appointment of members of our board and chairs and members of its

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committees or other corporate governance matters as may be required pursuant to any SEC or [NYSE]/[NASDAQ] rules, or otherwise considered desirable and appropriate;

• selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself;

• at least annually, reviewing and reassessing the adequacy of the committee charter;

• developing and reviewing at least annually the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and

• evaluating the performance and effectiveness of the board as a whole.]

Duties and Functions of Directors

Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to exercise the skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time. Our company has the right to seek damages if a duty owed by our directors is breached. In limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. [In accordance with our post-offering amended and restated articles of association, the functions and powers of our board of directors include, among others, (i) convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings, (ii) declaring dividends, (iii) appointing officers and determining their terms of offices and responsibilities, (iv) exercising the borrowing powers of our company and mortgaging the property of our company, and (v) approving the transfer of shares of our company, including the registering of such shares in our share register. In addition, in the event of a tie vote, the chairman of our board of directors has, in addition to his personal vote, the right to cast a tie-breaking vote.]

Terms of Directors and Officers

Our officers are elected by and serve at the discretion of the board. Each director is not subject to a term of office and holds office until such time as his successor takes office or until the earlier of his death, resignation or removal from office by special resolution or the unanimous written resolution of all shareholders. A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) without special leave of absence from our board of directors, is absent from [three] consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law from being a director; or (vi) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association.

Interested Transactions

A director may, subject to any separate requirement for audit committee approval under applicable law or applicable [NYSE]/[NASDAQ] rules, vote in respect of any contract or transaction in which he or

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she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter.

Compensation of Directors and Executive Officers

For the fiscal year ended December 31, 2020, we paid an aggregate of RMB6.1 million (US$0.9 million) of compensation to our executive officers, and we did not pay any compensation to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our PRC subsidiaries and our VIE are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. For equity incentive grants to our directors and executive officers, see “—Equity Incentive Plan.”

Equity Incentive Plan

Amended and Restated 2019 Incentive Compensation Plan

We adopted an employee incentive compensation plan, or the 2019 Plan, in November 2019 and amended the plan in March 2021. The purpose of the 2019 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected employees, directors, and consultants and to promote the success of the Company’s business. Under the 2019 Plan, the maximum aggregate number of Class A ordinary shares we are authorized to issue pursuant to equity awards granted thereunder is 43,198,157 shares; provided that, upon the completion by us of a Qualified IPO (as defined in our currently effective ninth amended and restated shareholders agreement) prior to December 31, 2022, the maximum aggregate number of Class A ordinary shares that we are authorized to issue pursuant to equity awards granted thereunder shall be automatically and immediately increased from 43,198,157 Shares to 48,557,859 Shares. As of the date of this prospectus, options to purchase a total of 42,158,189 Class A ordinary shares are outstanding under the 2019 Plan, and none of such options had vested and become exercisable.

The following paragraphs summarize the terms of the 2019 Plan.

Types of Awards. The 2019 Plan permits the awards of options and restricted shares as the administrator may determine.

Plan Administration. The 2019 Plan shall be administrated by the chief executive officer of the Company.

Eligibility. Any employee or consultant of the Company or its affiliates shall be eligible to participate in the 2019 Plan.

Option Agreement. Each grant of an award under the 2019 Plan shall be evidenced by an option agreement between the participant and the Company. Each award shall be subject to all applicable terms and conditions of the 2019 Plan and may be subject to any other terms and conditions that are not inconsistent with the 2019 Plan and that the board of directors deems appropriate for inclusion in an option agreement.

Terms and Conditions of Award. The option agreement shall set forth the provisions, terms, and conditions of each award including, but not limited to, the types of awards, award vesting schedule, number of awards to be granted and the number of shares to be covered by the awards, exercise price, any restrictions or limitations on the award and term of each award.

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Amendment, Suspension or Termination of the 2019 Plan. Subject to the restrictions set out in the Company’s memorandum and articles of associations, as such may be amended from time to time, the board of directors may at any time amend or terminate the 2019 Plan, but no amendment or termination shall be made that would materially and adversely affect the rights of any participant under any outstanding award, without his or her consent. In addition, to the extent necessary and desirable to comply with the applicable laws, the Company shall obtain the approval of holders of capital shares with respect to any amendment of the 2019 Plan in such a manner and to such a degree as required.

The following table summarizes, as of the date of this prospectus, the number of Class A ordinary shares under outstanding options, restricted shares and other equity awards that we granted to our directors and executive officers:

	Ordinary Shares Underlying Equity Awards Granted		Exercise Price (US$/Share)		Date of Grant	Date of Expiration
Directors and Executive Officers
Jian (Mark) Luo		3,924,163		0.01	March 2021	March 2041
Wei (Wilson) Li		*		0.01	September 2020 to March 2021	September 2040 to March 2041
Zebing Shan		*		0.01 to 0.05	August 2019 to March 2021	August 2039 to March 2041
Jia Zhai		—		—	—	—
Xin Wang		—		—	—	—
Hong Wei Lee		—		—	—	—
Zheng Sun		—		—	—	—
Weiqian Xun		—		—	—	—
Shuhong Ye		—		—	—	—
Jing Li		3,524,017		0.01 to 0.05	June 2016 to March 2021	June 2036 to March 2041
Qing Ge		*		0.01 to 0.05	March 2018 to October 2020	March 2038 to October 2040
Rui Min		*		0.01 to 0.05	June 2018 to October 2020	June 2038 to October 2040
Jian Zhang		*		0.01 to 0.05	June 2018 to March 2021	June 2038 to March 2041
All directors and executive officers as a group		18,279,416		0.01 to 0.05	June 2016 to March 2021	June 2036 to March 2041

* The shares held by each of these directors and executive officers represent less than 1% of our total outstanding shares.

As of the date of this prospectus, our employees other than members of our senior management as a group held options to purchase 23,878,773 Class A ordinary shares, with exercise prices ranging from US$0.01 per share to US$1.50 per share.

For discussions of our accounting policies and estimates for awards granted pursuant to the 2019 Plan, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Share-based compensation.”

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PRINCIPAL SHAREHOLDERS

The following table sets forth information concerning the beneficial ownership of our ordinary shares as of the date of this prospectus, assuming conversion of all of our outstanding Series A, Series B, Series B+, Series C, Series D, Series D+, Series E-1, Series E-2 and Series E-3 preferred shares into Class A ordinary shares on a one-to-one basis, by:

• each of our directors and executive officers; and

• each person known to us to beneficially own more than 5% of our ordinary shares.

The calculations in the table below are based on 343,858,475 ordinary shares on an as-converted basis outstanding as of the date of this prospectus and                  ordinary shares outstanding immediately after the completion of this offering, including (i)                  Class A ordinary shares to be sold by us in this offering in the form of ADSs, and (ii)                  Class A ordinary shares re-designated and converted from our outstanding ordinary shares and preferred shares.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

	Ordinary Shares Beneficially Owned Prior to This Offering				Ordinary Shares Beneficially Owned After This Offering		Voting Power After This Offering***
	Number		%**		Number	%**	%
Directors and Executive Officers:†
Jian (Mark) Luo(1)		46,788,378		13.6
Zebing Shan(2)		4,730,857		1.4
Jia Zhai(3)		—		—
Xin Wang(4)		—		—
Hong Wei Lee(5)		—		—
Zheng Sun(6)		—		—
Weiqian Xun(7)		—		—
Shuhong Ye(8)		—		—
Wei (Wilson) Li		—		—
Jing Li		*		*
Qing Ge		*		*
Rui Min		*		*
Jian Zhang		*		*
All directors and executive officers as a group		56,833,419		16.3
Principal Shareholders:
Venus Mission Limited(1)		46,788,378		13.6
Investment funds affiliated with Sequoia Capital China(9)		36,172,059		10.5
GGV entities(10)		30,599,270		8.9
IDG entities(11)		29,919,618		8.7
ZETA ASIA HOLDINGS PTE. LTD.(12)		29,153,225		8.5
TBP Sparkling Holdings Limited(13)		25,802,718		7.5
HIKE entities(14)		21,744,322		6.3
Lightspeed China Partners III, L.P.(15)		19,428,440		5.7

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Notes:

* Less than 1% of our total outstanding shares on an as-converted basis.

** For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 343,858,475, being the number of ordinary shares on an as-converted basis outstanding as of the date of this prospectus, or                  , being the number of ordinary shares on an as-converted basis outstanding immediately after the completion of this offering, as the case may be, and (ii) the number of ordinary shares underlying share options held by such person or group that are exercisable within 60 days after the date of this prospectus.

*** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our ordinary shares as a single class.

† Except as indicated otherwise below, the business address of our directors and executive officers is Block A, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing, People’s Republic of China.

(1) Represents 46,135,857 Class B ordinary shares and 652,521 Series B preferred shares held of record by Venus Mission Limited, a company registered in British Virgin Islands wholly owned by Jian (Mark) Luo. The registered address of Venus Mission Limited is Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands.

(2) Includes (i) 4,272,524 Class B ordinary shares held of record by Fun Kingdom Limited, a company registered in British Virgin Islands wholly owned by Zebing Shan, and (ii) 458,333 Class A ordinary shares underlying 458,333 share options granted to Zebing Shan that are exercisable within 60 days after the date of this prospectus. The registered address of Fun Kingdom Limited is Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands.

(3) The business address of Jia Zhai is Room 3606, China Central Place Tower 3,77 Jianguo Road, Beijing, People’s Republic of China.

(4) The business address of Xin Wang is 6th Floor, Building A, COFCO Plaza, No. 8 Jianguomennei Street, Dongcheng District, Beijing, People’s Republic of China.

(5) The business address of Hong Wei Lee is Unit 3015, 2 IFC, 8 Century Avenue, Pudong district, Shanghai, People’s Republic of China.

(6) The business address of Zheng Sun is No. 1701, Unit 3, Building 6, No. 88, East Fourth Ring North Road, Chaoyang District, Beijing, People’s Republic of China.

(7) The business address of Weiqian Xun is Building A, Tengyun Plaza, No.397 Tianlin Road, Xuhui District, Shanghai, People’s Republic of China.

(8) The business address of Shuhong Ye is 2001, Agricultural Bank of China Tower, 50 Connaught Road Central, Central, Hong Kong.

(9) Represents (i) 11,122,525 Series B+ preferred shares and 3,402,870 Series C preferred shares held of record by SCC Venture VI Holdco, Ltd., an exempted company with limited liability incorporated under the laws of the Cayman Islands., (ii)11,122,524 Series B+ preferred shares and 3,402,870 Series C preferred shares held of record by Sequoia Capital CV IV Holdco, Ltd., an exempted company with limited liability incorporated under the laws of the Cayman Islands. and (iii) 5,407,647 Series D preferred shares and 1,713,623 Series E-1 preferred shares held of record by SCC Venture VII Holdco, Ltd., an exempted company with limited liability incorporated under the laws of the Cayman Islands. SCC Venture VI Holdco, Ltd. is wholly owned by Sequoia Capital China Venture Fund VI, L.P. The general partner of Sequoia Capital China Venture Fund VI, L.P. is SC China Venture VI Management, L.P., whose general partner is SC China Holding Limited. The sole shareholder of Sequoia Capital CV IV Holdco, Ltd. is Sequoia Capital CV IV Senior Holdco, Ltd. The sole shareholder of Sequoia Capital CV IV Senior Holdco, Ltd. is Sequoia Capital China Venture Fund IV, L.P., the general partner of which is SC China Venture IV Management, L.P., whose general partner is SC China Holding Limited. The sole shareholder of SCC Venture VII Holdco, Ltd. is Sequoia Capital China Venture Fund VII, L.P., whose general partner is SC

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China Venture VII Management, L.P. The general partner of SC China Venture VII Management, L.P. is SC China Holding Limited. SC China Holding Limited is wholly owned by SNP China Enterprises Limited, which in turn is wholly owned by Mr. Neil Nanpeng Shen. The registered address of SCC Venture VI Holdco, Ltd., Sequoia Capital CV IV Holdco, Ltd. and SCC Venture VII Holdco, Ltd. is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

(10) Represents (i) 2,861,189 Class A ordinary shares, 12,875,350 Series D preferred shares and 1,713,623 Series E-1 preferred shares held of record by GGV VII Investments, L.L.C., a company incorporated under the laws of the Cayman Islands and (ii) 1,144,475 Class A ordinary shares, 5,150,140 Series D preferred shares and 6,854,493 Series E-1 preferred shares held of record by GGV VII Plus Investments, L.L.C., a company incorporated under the laws of the Cayman Islands. The registered address of GGV VII Investments, L.L.C. and GGV VII Plus Investments, L.L.C. is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

(11) Represents (i) 11,636,411 Series A preferred shares, 7,888,094 Series B preferred shares, 1,774,821 Series B+ preferred shares, 2,714,980 Series C preferred shares, 1,597,960 Series D preferred shares and 911,476 Series E-1 preferred shares held of record by IDG China Venture Capital Fund IV L.P., a limited partnership organized under the laws of the Cayman Islands and (ii) 1,489,828 Series A preferred shares, 1,009,925 Series B preferred shares, 227,233 Series B+ preferred shares, 347,603 Series C preferred shares, 204,589 Series D preferred shares and 116,698 Series E-1 preferred shares held of record by IDG China IV Investors L.P., a limited partnership organized under the laws of the Cayman Islands. The general partner of IDG China Venture Capital Fund IV L.P. is IDG China Venture Capital Fund IV Associates L.P., a limited partnership organized under the laws of the Cayman Islands. The general partner of IDG China Venture Capital Fund IV Associates L.P. is IDG China Venture Capital Fund GP IV Associates Ltd., a company organized under the laws of the Cayman Islands. The general partner of IDG China IV Investors L.P. is also IDG China Venture Capital Fund GP IV Associates Ltd. The directors of IDG China Venture Capital Fund GP IV Associates Ltd. are Chi Sing Ho and Quan Zhou. The registered offices of IDG China Venture Capital Fund IV L.P. and IDG China IV Investors L.P. is Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9008, Cayman Islands.

(12) Represents 12,016,993 Series D preferred shares and 17,136,232 Series E-1 preferred shares held of record by ZETA ASIA HOLDINGS PTE. LTD., a private company limited by shares incorporated in Singapore. The registered office of ZETA ASIA HOLDINGS PTE. LTD. is 10 Changi Business Park, Central 2 #05-01, Hansapoint, Singapore (486030).

(13) Represents 25,802,718 Series E-3 preferred shares held of record by TBP Sparkling Holdings Limited, an exempted company with limited liability incorporated under the law of the Cayman Islands. Trustbridge Partners VII, L.P. holds 60% of TBP Sparkling Holdings Limited’s shares. Trustbridge Partners VII, L.P. is a limited partnership organized under the laws of the Cayman Islands. The registered office of TBP Sparkling Holdings Limited is Suite #4-210, Govenors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands.

(14) Represents (i) 2,580,582 Series B preferred shares, 756,332 Series B+ preferred shares, 1,555,598 Series C preferred shares and 600,850 Series D preferred shares held of record by Hike Capital L.P., an exempted limited partnership organized under the laws of the Cayman Islands, (ii) 3,607,628 Series B preferred shares held of record by Spruce Fund L.P., an exempted limited partnership organized under the laws of the Cayman Islands, (iii) 2,322,245 Series B preferred shares held of record by HIKE Helios L.P., an exempted limited partnership organized under the laws of the Cayman Islands, (iv) 5,173,148 Series E-3 preferred shares held of record by Hike Capital II L.P., an exempted limited partnership organized under the laws of the Cayman Islands, (v) 2,580,272 Series E-3 preferred shares held of record by HIKE Hera L.P., an exempted limited partnership organized under the laws of the Cayman Islands and (vi) 2,567,667 Series E-3 preferred shares held of record by Eternal Starship Holdings Limited, a company with limited liability incorporated under the law of British Virgin Islands. The registered office of Hike Capital

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L.P. and Hike Capital II L.P is Sertus Chambers, Governors Square, Suite #5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Islands. The registered office of Spruce Fund L.P., HIKE Helios L.P. and HIKE Hera L.P. is 4^th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands. The registered office of Eternal Starship Holdings Limited is Sertus Chambers, P.O.Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands.

(15) Represents 935,610 Class A ordinary shares, 9,847,142 Series A preferred shares, 2,966,006 Series B preferred shares, 1,356,948 Series B+ preferred shares, 2,916,746 Series C preferred shares and 1,405,988 Series D preferred shares held of record by Lightspeed China Partners III, L.P., an exempted limited partnership organized under the laws of the Cayman Islands. The general partner of Lightspeed China Partners III, L.P. is Lightspeed China Partners III GP, LLC, a limited partnership organized under the laws of the Cayman Islands. The directors of Light Speed China Partners III GP, LLC are James Qun Mi and Yan Han. The registered office of Lightspeed China Partners III, L.P. is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

As of the date of this prospectus, none of our ordinary shares or preferred shares are held by record holders in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See “Description of Share Capital—History of Securities Issuances” for a description of issuances of our ordinary shares and preferred shares that have resulted in significant changes in ownership held by our major shareholders.

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RELATED PARTY TRANSACTIONS

Contractual Arrangements

See “Corporate History and Structure” for a description of the contractual arrangements by and among our PRC subsidiary, our VIE and the shareholders of our VIE.

Employment Agreements and Indemnification Agreements

See “Management—Employment Agreements and Indemnification Agreements.”

Private Placements

See “Description of Share Capital—History of Securities Issuances.”

Share Incentives

See “Management—Equity Incentive Plan.”

Other Related Party Transactions

In 2018 Mr. Jian (Mark) Luo acted as an intermediary for intra-group transactions between the Company, Beijing Spark Education and Xingengyuan. The cash flows in and out offset each other, and there was no personal benefit for Mr. Jian (Mark) Luo. The outstanding balance of RMB17,350 thousand was settled in early 2019. There were no further transactions or balances with related parties after this date.

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
	(in thousands)
Repayment of amount owed by Mr. Jian (Mark) Luo(a)		17,350		—

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DESCRIPTION OF SHARE CAPITAL

We are a Cayman Islands company and our affairs are governed by our memorandum and articles of association, as amended and restated from time to time, and Companies Act (As Revised) of the Cayman Islands, which we refer to as the “Companies Act” below, and the common law of the Cayman Islands.

As of the date hereof, our authorized share capital consists of US$80,000 divided into 463,897,187 Class A ordinary shares of par value of US$0.0001 each, 50,408,381 Class B ordinary shares of par value of US$0.0001 each, 22,973,381 Series A preferred shares of par value of US$0.0001 each, 30,162,301 Series B preferred shares of par value of US$0.0001 each, 33,367,574 Series B+ preferred shares of par value of US$0.0001 each, 29,167,458 Series C preferred shares of par value of US$0.0001 each, 45,613,502 Series D preferred shares of par value of US$0.0001 each, 8,411,895 Series D+ preferred shares of par value of US$0.0001 each, 43,868,754 Series E-1 preferred shares of par value of US$0.0001 each, 30,845,218 Series E-2 preferred shares of par value of US$0.0001 each and 41,284,349 Series E-3 preferred shares of par value of US$0.0001 each . As of the date of this prospectus, there are 7,755,662 issued and outstanding Class A ordinary shares, 50,408,381 issued and outstanding Class B ordinary shares, 22,973,381 issued and outstanding Series A preferred shares, 30,162,301 issued and outstanding Series B preferred shares, 33,367,574 issued and outstanding Series B+ preferred shares, 29,167,458 issued and outstanding Series C preferred shares, 45,613,502 issued and outstanding Series D preferred shares, 8,411,895 issued and outstanding Series D+ preferred shares, 43,868,754 issued and outstanding Series E-1 preferred shares, 30,845,218 issued and outstanding Series E-2 preferred shares and 41,284,349 issued and outstanding Series E-3 preferred shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A ordinary share are entitled to one vote and each Class B ordinary share are entitled to eight votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. All of our issued and outstanding ordinary shares are fully paid. Immediately prior to the completion of this offering, all of our issued and outstanding preferred shares will be redesignated or converted into ordinary shares on a one-for-one basis.

Subject to the approval of our shareholders, we plan to adopt a twelfth amended and restated memorandum and articles of association, which will become effective and replace the current eleventh amended and restated memorandum and articles of association in its entirety immediately prior to the completion of this offering. Our authorized share capital upon completion of the offering will be US$                 divided into                  ordinary shares of a par value of US$0.0001 each. We will issue                  ordinary shares represented by ADSs in this offering. All incentive shares, including options, restricted shares and restricted share units, regardless of grant dates, will entitle holders to an equivalent number of ordinary shares once the vesting and exercising conditions are met.

The following are summaries of material provisions of our post-offering amended and restated memorandum and articles of association and the Companies Act insofar as they relate to the material terms of our ordinary shares that we expect will become effective upon the closing of this offering.

Objects of Our Company.

Under our post-offering amended and restated memorandum and articles of association, the objects of our company are unrestricted and we have the full power and authority to carry out any object not prohibited by the Cayman Islands law.

Ordinary Shares

General. Immediately prior to the completion of this offering, our authorized share capital is US$                 divided into                  ordinary shares, with a par value of US$                 each. Holders of ordinary shares will have the same rights except for voting and conversion rights. All of our issued and

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outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in registered form. We may not issue share to bearer. Our shareholders who are nonresidents of the Cayman Islands may freely hold and transfer their ordinary shares.

Conversion. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon [any direct or indirect sale, transfer, assignment, or disposition of such number of Class B Ordinary Shares by the holder thereof or the direct or indirect transfer or assignment of the voting power attached to such number of Class B Ordinary Shares through voting proxy or otherwise to any person that is not an affiliate of the Founder (as defined under the post-offering memorandum and articles of association)], such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares.

Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors subject to our post-offering amended and restated memorandum and articles of association and the Companies Act. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Our post-offering amended and restated articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits which our board of directors determine is no longer needed. Dividends may also be declared and paid out of share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Act. No dividend may be declared and paid unless our directors determine that, immediately after the payment, we will be able to pay our debts as they become due in the ordinary course of business and we have funds lawfully available for such purpose.

Voting Rights; Meeting of Shareholders. In respect of all matters subject to a shareholders’ vote, holders of ordinary shares shall, at all times, vote on all matters submitted to a vote by the members at any such general meeting. Each Class A ordinary share shall be entitled to one vote on all matters subject to the vote at general meetings of our company, and each Class B ordinary share shall be entitled to              votes on all matters subject to the vote at general meetings (including extraordinary general meetings) of our company. Voting at any meeting of shareholders is by show of hands unless a poll is demanded.

A quorum required for a meeting of shareholders consists of two or more shareholders holding not less than              of the votes attaching to the issued and outstanding shares entitled to vote at general meetings present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our post-offering memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we will specify the meeting as such in the notices calling it, and the annual general meeting will be held at such time and place as may be determined by our directors. We, however, will hold an annual shareholders’ meeting during each fiscal year, as required by the Listing Rules at the [NYSE]/[NASDAQ]. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Shareholders’ annual general meetings and any other general meetings of our shareholders may be called by a majority of our board of directors or our chairman or upon a requisition of shareholders holding at the date of deposit of the requisition not less than [one-third] of the votes attaching to the issued and outstanding shares entitled to vote at general meetings, in which case the directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our post-offering amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders. Advance notice of at least [fifteen (15)] days is required for the convening of our annual general meeting and other general meetings unless such notice is waived in accordance with our articles of association.

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An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes attaching to the ordinary shares cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting. A special resolution will be required for important matters such as a change of name or making changes to our post-offering amended and restated memorandum and articles of association. Our shareholders may, among other things, divide or combine their shares by ordinary resolution.

Transfer of Ordinary Shares. Subject to the restrictions in our post-offering amended and restated memorandum and articles of association as set out below, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.

Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:

• the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

• the instrument of transfer is in respect of only one class of shares;

• the instrument of transfer is properly stamped, if required;

• in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four;

• the shares are free from any lien in favor of the Company; and

• a fee of such maximum sum as the [NYSE]/[NASDAQ] may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, after compliance with any notice required of the [NYSE]/[NASDAQ], be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for 30 more than days in any year as our board may determine.

Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them.

Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice

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served to such shareholders at least 14 clear days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.

Redemption, Repurchase and Surrender of Ordinary Shares. We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders thereof, on such terms and in such manner as may be determined, before the issue of such shares, by our board of directors or by a [special] resolution of our shareholders. Our company may also repurchase any of our shares provided that the manner and terms of such purchase have been approved by our board of directors or by [ordinary resolution] of our shareholders, or are otherwise authorized by our post-offering memorandum and articles of association. Under the Companies Act, the redemption or repurchase of any share may be paid out of our company’s profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if the company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding, or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.

Variations of Rights of Shares. If at any time our share capital is divided into different classes or series of shares, the rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series), whether or not our company is being wound- up, may be varied with the consent in writing of [a majority of] the holders of the issued shares of that class or series or with the sanction of a [special resolution] at a separate meeting of the holders of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.

Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (other than copies of our memorandum and articles of association, our register of mortgage and charges and any special resolutions passed by our shareholders). However, we will provide our shareholders with annual audited financial statements. See “Where You Can Find Additional Information.”

Issuance of Additional Shares. Our post-offering amended and restated memorandum of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

Our post-offering amended and restated memorandum of association also authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:

• the designation of the series;

• the number of shares of the series;

• the dividend rights, dividend rates, conversion rights, voting rights; and

• the rights and terms of redemption and liquidation preferences.

Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.

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Anti-Takeover Provisions. Some provisions of our post-offering amended and restated memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:

• authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders; and

• limit the ability of shareholders to requisition and convene general meetings of shareholders.

Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

• does not have to file an annual return of its shareholders with the Registrar of Companies;

• is not required to open its register of members for inspection;

• does not have to hold an annual general meeting;

• may issue negotiable or bearer shares or shares with no par value;

• may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

• may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

• may register as a limited duration company; and

• may register as a segregated portfolio company.

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

Register of Members

Under the Companies Act, we must keep a register of members and there should be entered therein:

• the names and addresses of our members, together with a statement of the shares held by each member (including the amount paid, or agreed to be considered as paid, on the shares of each member, confirmation of the number and category of shares held by each member, and confirmation of whether each relevant category of shares held by each member carries voting rights under our articles of association, and if so, whether such voting rights are conditional);

• the date on which the name of any person was entered on the register as a member; and

• the date on which any person ceased to be a member.

Under the Companies Act, the register of members of our company is prima facie evidence of the matters set out therein (that is, the register of members will raise a presumption of fact on the matters

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referred to above unless rebutted) and a member registered in the register of members is deemed as a matter of the Companies Act to have legal title to the shares as set against its name in the register of members. Upon completion of this offering, we will perform the procedure necessary to immediately update the register of members to record and give effect to the issuance of shares by us to the Depositary (or its nominee) as the depositary. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name, and in particular, the depositary (or its nominee) will be deemed to be the registered legal holder of the number of shares set out against its name in our register of members, which shall be the shares represented by the ADSs being offered in this offering.

If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any member of our company or our company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.]

Differences in Corporate Law

The Companies Act is derived, to a large extent, from the older Companies Acts of England, but does not follow many recent English law statutory enactments, and accordingly there are significant differences between the Companies Law and the current Companies Act of England. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a declaration as to the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

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Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

• the statutory provisions as to the required majority vote have been met;

• the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;

• the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and

• the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.

The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of a dissenting minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedure, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which permit a minority shareholder to commence a class action against or derivative actions in the name of the company to challenge actions where:

• a company acts or proposes to act illegally or ultra vires;

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• the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and

• those who control the company are perpetrating a “fraud on the minority.”

Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. [Our post-offering memorandum and articles of association provide that that we shall indemnify our officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or officer, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere.] This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.

In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our post-offering amended and restated memorandum and articles of association.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company —a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party, and a duty to exercise powers for the purpose for which such powers were intended. A director

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of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.

Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. The Companies Act and our post-offering amended and restated articles of association provide that our shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.

Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

The Companies Act provide shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our post-offering amended and restated articles of association allow our shareholders holding in aggregate not less than [one-third] of all votes attaching to the issued and outstanding shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders’ meeting, our post-offering amended and restated articles of association do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings not called by such shareholders. As an exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings.

Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our post-offering amended and restated articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our post-offering amended and restated articles of association, directors may be removed with or without cause, by an [ordinary resolution] of our shareholders. A director shall hold office until the expiration of his or her term or his or her successor shall have been elected and qualified, or until his or her office is otherwise vacated. In addition, a director’s office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from three consecutive

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meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law from being a director; or (vi) is removed from office pursuant to any other provisions of our post-offering amended and restated memorandum and articles of association.

Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, the directors of the Company are required to comply with fiduciary duties which they owe to the Company under Cayman Islands laws, including the duty to ensure that, in their opinion, any such transactions must be entered into bona fide in the best interests of the company, and are entered into for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.

Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.

Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. Under the Companies Act and our post-offering amended and restated articles of association, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders.

Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our post-offering amended and restated articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class with the written consent of the holders of [a majority of] the issued shares of that class or with the sanction of a [special resolution] passed at a general meeting of the holders of the shares of that class.

Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding

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shares entitled to vote, unless the certificate of incorporation provides otherwise. Under the Companies Act and our post-offering amended and restated memorandum and articles of association, our memorandum and articles of association may only be amended by a special resolution of our shareholders.

Rights of Nonresident or Foreign Shareholders. There are no limitations imposed by our post-offering amended and restated memorandum and articles of association on the rights of nonresident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our post-offering amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

History of Securities Issuances

The following is a summary of our securities issuances in the past three years.

Ordinary Shares

On July 30, 2019, we issued 1,020,861 ordinary shares to Hike Capital L.P. for a consideration of US$1,274,271.78.

On July 30, 2019, we issued 2,861,189 ordinary shares to GGV VII Investments, L.L.C. for a consideration of US$3,571,428.57.

On July 30, 2019, we issued 1,144,475 ordinary shares to GGV VII Plus Investments, L.L.C. for a consideration of US$1,428,571.43.

On March 5, 2020, we issued 2,147,036 ordinary shares to Kun Yu Holding Limited for a consideration of US$2,680,000.

On, July 24, 2020, we issued 3,693,409 Class A ordinary shares to Venus Mission Limited following reclassification from the same number of ordinary shares held by Venus Mission Limited.

On July 24, 2020, we issued 935,610 Class A ordinary shares to Lightspeed China Partners III, L.P. following reclassification from the same number of ordinary shares held by Lightspeed China Partners III, L.P.

On July 24, 2020, we issued 667,352 Class A ordinary shares to GSR Ventures VI (Singapore) PTE. LTD. following reclassification from the same number of ordinary shares held by GSR Ventures VI (Singapore) PTE. LTD.

On July 24, 2020, we issued 2,861,189 Class A ordinary shares to GGV VII Investments, L.L.C. following reclassification from the same number of ordinary shares held by GGV VII Investments, L.L.C.

On July 24, 2020, we issued 1,144,475 Class A ordinary shares to GGV VII Plus Investments, L.L.C. following reclassification from the same number of ordinary shares held by GGV VII Plus Investments, L.L.C.

On July 24, 2020, we issued 2,147,036 Class A ordinary shares to Kun Yu Holding Limited following reclassification from the same number of ordinary shares held by Kun Yu Holding Limited.

On July 24, 2020, we issued 46,135,857 Class B ordinary shares to Venus Mission Limited following reclassification from the same number of ordinary shares held by Venus Mission Limited.

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On July 24, 2020, we issued 4,272,524 Class B ordinary shares to Fun Kingdom Limited following reclassification from the same number of ordinary shares held by Fun Kingdom Limited

Preferred Shares

On May 10, 2018, we issued 652,521 Series B preferred shares to Venus Mission Limited for a consideration of US$220,000.00.

On May 10, 2018, we issued 2,966,006 Series B preferred shares to Lightspeed China Partners III, L.P. for a consideration of US$1,000,000.00.

On May 10, 2018, we issued 1,334,703 Series B preferred shares to GSR Ventures VI (Singapore) PTE. LTD. for a consideration of US$450,000.00.

On May 10, 2018, we issued 9,342,920 Series B preferred shares to Hike Capital L.P. for a consideration of US$3,150,000.00.

On May 10, 2018, we issued 7,888,094 Series B preferred shares to IDG China Venture Capital Fund IV L.P. for a consideration of US$2,659,500.00.

On May 10, 2018, we issued 1,009,925 Series B preferred shares to IDG China IV Investors L.P. for a consideration of US$340,500.00.

On May 10, 2018, we issued 5,932,013 Series B preferred shares to ANG YUE GLOBAL LIMITED for a consideration of US$2,000,000.00.

On May 10, 2018, we issued 533,881 Series B preferred shares to Universe Sourcecode Technology Ltd. for a consideration of US$180,000.00.

On June 13, 2018, we issued 1,356,948 Series B+ preferred shares to Lightspeed China Partners III, L.P. for a consideration of US$610,000.00.

On June 13, 2018, we issued 333,676 Series B+ preferred shares to GSR Ventures VI (Singapore) PTE. LTD. for a consideration of US$150,000.00.

On June 13, 2018, we issued 756,332 Series B+ preferred shares to Hike Capital L.P. for a consideration of US$340,000.00.

On June 13, 2018, we issued 1,774,821 Series B+ preferred shares to IDG China Venture Capital Fund IV L.P. for a consideration of US$797,850.00.

On June 13, 2018, we issued 227,233 Series B+ preferred shares to IDG China IV Investors L.P. for a consideration of US$102,150.00.

On June 13, 2018, we issued 11,122,525 Series B+ preferred shares to SCC Venture VI Holdco, Ltd. for a consideration of US$5,000,000.00.

On June 13, 2018, we issued 11,122,524 Series B+ preferred shares to Sequoia Capital CV IV Holdco, Ltd. for a consideration of US$5,000,000.00.

On June 13, 2018, we issued 6,673,515 Series B+ preferred shares to Northern Light Venture Capital V, Ltd. for a consideration of US$3,000,000.00.

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On November 12, 2018, we issued 2,916,746 Series C preferred shares to Lightspeed China Partners III, L.P. for a consideration of US$3,000,000.00.

On November 12, 2018, we issued 388,899 Series C preferred shares to GSR Ventures VI (Singapore) PTE. LTD. for a consideration of US$400,000.00.

On November 12, 2018, we issued 1,555,598 Series C preferred shares to Hike Capital L.P. for a consideration of US$1,600,000.00.

On November 12, 2018, we issued 2,714,980 Series C preferred shares to IDG China Venture Capital Fund IV L.P. for a consideration of US$2,792,475.00.

On November 12, 2018, we issued 347,603 Series C preferred shares to IDG China IV Investors L.P. for a consideration of US$357,525.00.

On November 12, 2018, we issued 3,402,870 Series C preferred shares to SCC Venture VI Holdco, Ltd. for a consideration of US$3,500,000.00.

On November 12, 2018, we issued 3,402,870 Series C preferred shares to Sequoia Capital CV IV Holdco, Ltd. for a consideration of US$3,500,000.00.

On November 12, 2018, we issued 7,632,152 Series C preferred shares to Northern Light Venture Capital V, Ltd. for a consideration of US$7,850,000.00.

On November 12, 2018, we issued 6,805,740 Series C preferred shares to Everbay Investment Limited for a consideration of US$7,000,000.00.

On July 30, 2019, we issued 1,405,988 Series D preferred shares to Lightspeed China Partners III, L.P. for a consideration of US$2,340,000.50.

On July 30, 2019, we issued 600,850 Series D preferred shares to Hike Capital L.P. for a consideration of US$1,000,000.00.

On July 30, 2019, we issued 12,875,350 Series D preferred shares to GGV VII Investments, L.L.C. for a consideration of US$21,428,571.43.

On July 30, 2019, we issued 5,150,140 Series D preferred shares to GGV VII Plus Investments for a consideration of US$8,571,428.57.

On July 30, 2019, we issued 1,597,960 Series D preferred shares to IDG China Venture Capital Fund IV L.P. for a consideration of US$2,659,500.00.

On July 30, 2019, we issued 204,589 Series D preferred shares to IDG China IV Investors L.P. for a consideration of US$340,500.00.

On July 30, 2019, we issued 1,802,549 Series D preferred shares to Northern Light Venture Capital V, Ltd. for a consideration of US$3,000,000.00.

On July 30, 2019, we issued 1,502,124 Series D preferred shares to Everbay Investment Limited for a consideration of US$2,500,000.00.

On July 30, 2019, we issued 5,407,647 Series D preferred shares to SCC Venture VII Holdco, Ltd. for a consideration of US$9,000,000.00.

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On July 30, 2019, we issued 3,049,312 Series D preferred shares to GSR 2017 Opportunities (Singapore) Pte. Ltd. for a consideration of US$5,075,000.08.

On August 27, 2019, we issued 12,016,993 Series D preferred shares to ZETA ASIA HOLDINGS PTE. LTD. for a consideration of US$20,000,000.00.

On April 14, 2020, we issued 8,411,895 Series D+ preferred shares to COSMIC BLUE INVESTMENTS LIMITED for a consideration of US$20,000,000.00.

On July 24, 2020, we issued 5,140,870 Series E preferred shares to GSR Ventures VI (Singapore) PTE. LTD. for a consideration of US$15,000,000.00.

On July 24, 2020, we issued 1,713,623 Series E preferred shares to GGV VII Investments, L.L.C. for a consideration of US$4,999,999.44.

On July 24, 2020, we issued 6,854,493 Series E preferred shares to GGV VII Plus Investments, L.L.C. for a consideration of US$20,000,000.67.

On July 24, 2020, we issued 911,476 Series E preferred shares to IDG China Venture Capital Fund IV L.P. for a consideration of US$2,659,500.00.

On July 24, 2020, we issued 116,698 Series E preferred shares to IDG China IV Investors L.P. for a consideration of US$340,500.00.

On July 24, 2020, we issued 6,854,493 Series E preferred shares to LFC Investment Hong Kong Limited for a consideration of US$20,000,000.00.

On July 24, 2020, we issued 1,713,623 Series E preferred shares to SCC Venture VII Holdco, Ltd. for a consideration of US$5,000,000.00.

On July 24, 2020, we issued 3,427,246 Series E preferred shares to GSR 2017 Opportunities (Singapore) Pte. Ltd. for a consideration of US$10,000,000.00.

On July 24, 2020, we issued 17,136,232 Series E preferred shares to ZETA ASIA HOLDINGS PTE. LTD. for a consideration of US$50,000,000.00.

On September 22, 2020, we issued 13,708,986 Series E+ preferred shares to Tencent Mobility Limited for a consideration of US$40,000,000.00.

On September 22, 2020, we issued 6,854,493 Series E+ preferred shares to Yuan Inc for a consideration of US$20,000,000.00.

On September 22, 2020, we issued 10,281,739 Series E+ preferred shares to CGI VIII Investments for a consideration of US$30,000,000.00.

On January 20, 2021, we issued 5,140,870 Series E-1 preferred shares to GSR Ventures VI (Singapore) PTE. LTD. following reclassification from the same number of Series E preferred shares held by GSR Ventures VI (Singapore) PTE. LTD.

On January 20, 2021, we issued 1,713,623 Series E-1 preferred shares to GGV VII Investments, L.L.C. following reclassification from the same number of Series E preferred shares held by GGV VII Investments, L.L.C.

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On January 20, 2021, we issued 6,854,493 Series E-1 preferred shares to GGV VII Plus Investments, L.L.C. following reclassification from the same number of Series E preferred shares held by GGV VII Plus Investments, L.L.C.

On January 20, 2021, we issued 911,476 Series E-1 preferred shares to IDG China Venture Capital Fund IV L.P. following reclassification from the same number of Series E preferred shares held by IDG China Venture Capital Fund IV L.P.

On January 20, 2021, we issued 116,698 Series E-1 preferred shares to IDG China IV Investors L.P. following reclassification from the same number of Series E preferred shares held by IDG China IV Investors L.P.

On January 20, 2021, we issued 6,854,493 Series E-1 preferred shares to LFC Investment Hong Kong Limited following reclassification from the same number of Series E preferred shares held by LFC Investment Hong Kong Limited.

On January 20, 2021, we issued 1,713,623 Series E-1 preferred shares to SCC Venture VII Holdco, Ltd. following reclassification from the same number of Series E preferred shares held by SCC Venture VII Holdco, Ltd.

On January 20, 2021, we issued 3,427,246 Series E-1 preferred shares to GSR 2017 Opportunities (Singapore) Pte. Ltd. following reclassification from the same number of Series E preferred shares held by GSR 2017 Opportunities (Singapore) Pte. Ltd.

On January 20, 2021, we issued 17,136,232 Series E-1 preferred shares to ZETA ASIA HOLDINGS PTE. LTD. following reclassification from the same number of Series E preferred shares held by ZETA ASIA HOLDINGS PTE. LTD.

On January 20, 2021, we issued 13,708,986 Series E-2 preferred shares to Tencent Mobility Limited following reclassification from the same number of Series E preferred shares held by Tencent Mobility Limited.

On January 20, 2021, we issued 6,854,493 Series E-2 preferred shares to Yuan Inc following reclassification from the same number of Series E preferred shares held by Yuan Inc.

On January 20, 2021, we issued 10,281,739 Series E-2 preferred shares to CGI VIII Investments following reclassification from the same number of Series E preferred shares held by CGI VIII Investments.

On January 20, 2021, we issued 1,687,260 Series E-3 preferred shares to Tencent Mobility Limited for a consideration of US$6,539,079.00.

On January 20, 2021, we issued 25,802,718 Series E-3 preferred shares to TBP Sparkling Holdings Limited for a consideration of US$100,000,000.00.

On January 20, 2021, we issued 5,173,148 Series E-3 preferred shares to Hike Capital II L.P. for a consideration of US$20,048,850.00.

On January 20, 2021, we issued 2,580,272 Series E-3 preferred shares to HIKE Hera L.P. for a consideration of US$10,000,000.00.

On January 20, 2021, we issued 2,580,272 Series E-3 preferred shares to United Strength Delight Limited for a consideration of US$10,000,000.00.

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On January 20, 2021, we issued 77,408 Series E-3 preferred shares to Lighthousecap Fello L.P. for a consideration of US$300,000.00.

On January 20, 2021, we issued 815,604 Series E-3 preferred shares to Lighthouse International Growth Fund L.P. for a consideration of US$3,160,921.00.

As none of the holders of our Series A preferred shares, Series B preferred shares, Series B+ preferred shares, Series C preferred shares, Series D preferred shares, Series D+ preferred shares, Series E-1 preferred shares, Series E-2 preferred shares and Series E-3 preferred shares were related parties prior to such holders’ initial investment in our securities, the price of the shares of the foregoing classes was determined based on negotiations between us and the investors and were approved by our board of directors. Our Series A preferred shares, Series B preferred shares, Series B+ preferred shares, Series C preferred shares, Series D preferred shares, Series D+ preferred shares, Series E-1 preferred shares, Series E-2 preferred shares and Series E-3 preferred shares will automatically convert into Class A ordinary shares upon the completion of this offering at an initial conversion ratio of one-to-one, adjusted for share splits, share dividends, recapitalizations and similar transactions.

Option and Restricted Share Grants

We have granted options to purchase our Class A ordinary shares and restricted shares to certain of our executive officers and employees. See “Management—Equity Incentive Plan.”

Shareholders Agreement

Our currently effective ninth amended and restated shareholders agreement was entered into on January 20, 2021 by and among us, our shareholders, and certain other parties named therein.

The current shareholders agreement provides for certain special rights, including registration right, right of first refusal, right of co-sale, and drag-along right and contains provisions governing the board of directors and other corporate governance matters. Those special rights (except the registration right as described below), as well as the corporate governance provisions, will terminate upon the completion of this offering.

Registration Rights

Pursuant to the current shareholders agreement, we have granted certain registration rights to our shareholders, provided that no shareholder shall be entitled to exercise any such registration right after the earlier of (i) five years following the consummation of a qualified IPO; (ii) with respect to any holder, the date of the completion of a liquidation event in which such holder receives cash or publicly traded shares for all registrable securities; or (iii) with respect to any holder, when all registrable securities held by such holder could be sold without restriction under Rule 144 of the Securities Act within any ninety (90)-day period. Set forth below is a description of the registration rights granted under the current shareholders agreement.

Demand Registration Rights. At any time or from time to time after the earlier of (i) the fifth (5th) anniversary of the date of the consummation of the purchase and sale of the Series E-3 preferred shares or (ii) the date that is six (6) months after the closing of the IPO, upon a written request from the holders of at least 30% of the registrable securities then outstanding, we shall within 10 business days of the receipt of such written request give written notice of the proposed registration to all other holders and shall, use our best efforts to effect as soon as practicable, the registration under the Securities Act of all registrable securities which the holders request to be registered within 20 days after the receipt of such notice by us, provided, however, that the Company shall not be obligated (i) effect more than one such demand registration within any six month period or (ii) to effect more than two such demand registrations.

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If the underwriter advises the holders initiating the registration request pursuant to the demand registration rights in writing that marketing factors require a limitation on the number of shares to be underwritten, then the underwriter may reduce the number of registrable securities that may be included in the underwriting and allocate such number (i) first, to certain investors on a pro rata basis and (ii) then, to other holders of registrable securities on a pro rata basis, provided that (A) no registrable securities shall be excluded unless all other equity securities are excluded from the registration and underwriting and (B) the amount of registrable securities to be included in such registration shall not be reduced below twenty five percent (25%) of shares of registrable securities requested by the holders to be included in such registration.

Piggyback Registration Rights. If we propose to file a registration statement for a public offering of our securities, we must offer holders of our registrable securities an opportunity to include in the registration the registrable securities that the holders have requested to be registered. There shall be no limit on the number of times the holders may request registration of registrable securities pursuant to such piggyback registration rights. If the managing underwriters of any underwritten offering determine in good faith that marketing factors require a limitation on the number of shares to be underwritten, then such managing underwriters may exclude shares (including registrable securities) from the registration and the underwriting, subject to certain limitations.

Form F-3 Registration Rights. In case we receive from any holders of a majority of all registrable securities then outstanding written requests that we effect a registration on Form F-3, we shall, subject to certain limitations, file a registration statement on Form F-3 covering the registrable securities so requested to be registered as soon as practicable after receipt of the request or requests of the holders.

Expenses of Registration. We will bear all registration expenses, except for certain selling expenses, incurred in connection with any demand, piggyback or F-3 registration, subject to certain limitations.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

[American Depositary Shares

[●], as depositary, will register and deliver American Depositary Shares, also referred to as ADSs. Each ADS represents                  shares (or a right to receive                  shares) deposited with [●], as custodian for the depositary in Hong Kong. Each ADS will also represent any other securities, cash or other property which may be held by the depositary. The deposited shares together with any other securities, cash or other property held by the depositary are referred to as the deposited securities. The depositary’s office at which the ADSs will be administered is located at [●].[●]’s principal executive office is located at [●].

You may hold ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.

As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Cayman Islands law governs shareholder rights. The depositary will be the holder of the shares underlying the ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR. For directions on how to obtain copies of those documents, see “Where You Can Find Additional Information.”

Dividends and Other Distributions

How will you receive dividends and other distributions on the shares?

The depositary has agreed to pay or distribute to ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, upon payment or deduction of its fees and expenses. You will receive these distributions in proportion to the number of shares the ADSs represent.

Cash. The depositary will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

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Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be deducted. See “Taxation.” The depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some of the value of the distribution.

Shares. The depositary may distribute additional ADSs representing any shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADSs. It will sell shares which would require it to deliver a fraction of an ADS (or ADSs representing those shares) and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new shares. The depositary may sell a portion of the distributed shares (or ADSs representing those shares) sufficient to pay its fees and expenses in connection with that distribution.

Rights to purchase additional shares. If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the depositary may (i) exercise those rights on behalf of ADS holders, (ii) distribute those rights to ADS holders or (iii) sell those rights and distribute the net proceeds to ADS holders, in each case after deduction or upon payment of its fees and expenses. To the extent the depositary does not do any of those things, it will allow the rights to lapse. In that case, you will receive no value for them. The depositary will exercise or distribute rights only if we ask it to and provide satisfactory assurances to the depositary that it is legal to do so. If the depositary will exercise rights, it will purchase the securities to which the rights relate and distribute those securities or, in the case of shares, new ADSs representing the new shares, to subscribing ADS holders, but only if ADS holders have paid the exercise price to the depositary. U.S. securities laws may restrict the ability of the depositary to distribute rights or ADSs or other securities issued on exercise of rights to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.

Other Distributions. The depositary will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. U.S. securities laws may restrict the ability of the depositary to distribute securities to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.

Deposit, Withdrawal and Cancellation

How are ADSs issued?

The depositary will deliver ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian. Upon payment of its fees and expenses and of any taxes or

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charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the deposit.

How can ADS holders withdraw the deposited securities?

You may surrender the ADSs for the purpose of withdrawal at the depositary’s office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the shares and any other deposited securities underlying the ADSs to the ADS holder or a person the ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its office, if feasible. The depositary may charge you a fee and its expenses for instructing the custodian regarding delivery of deposited securities.

How do ADS holders interchange between certificated ADSs and uncertificated ADSs?

You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS holder a statement confirming that the ADS holder is the registered holder of uncertificated ADSs. Upon receipt by the depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.

Voting Rights

How do you vote?

ADS holders may instruct the depositary how to vote the number of deposited shares their ADSs represent. If we request the depositary to solicit your voting instructions (and we are not required to do so), the depositary will notify you of a shareholders’ meeting and send or make voting materials available to you. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the depositary how to vote. For instructions to be valid, they must reach the depositary by a date set by the depositary. The depositary will try, as far as practical, subject to the laws of the Cayman Islands and the provisions of our articles of association or similar documents, to vote or to have its agents vote the shares or other deposited securities as instructed by ADS holders. If we do not request the depositary to solicit your voting instructions, you can still send voting instructions, and, in that case, the depositary may try to vote as you instruct, but it is not required to do so.

Except by instructing the depositary as described above, you won’t be able to exercise voting rights unless you surrender the ADSs and withdraw the shares. However, you may not know about the meeting enough in advance to withdraw the shares. In any event, the depositary will not exercise any discretion in voting deposited securities and it will only vote or attempt to vote as instructed.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise voting rights and there may be nothing you can do if your shares are not voted as you requested.

In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to Deposited Securities, if we request the Depositary to act, we agree to give the depositary notice of any such meeting and details concerning the matters to be voted upon at least [45] days in advance of the meeting date.

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Fees and Expenses

Persons depositing or withdrawing shares or ADS holders must pay:	For:
•  US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	•  Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
	•  Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
•  US$0.05 (or less) per ADS	•  Any cash distribution to ADS holders
•  A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs	•  Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
•  US$0.05 (or less) per ADS per calendar year	•  Depositary services
•  Registration or transfer fees	•  Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
•  Expenses of the depositary	•  Cable and facsimile transmissions (when expressly provided in the deposit agreement)
	•  Converting foreign currency to U.S. dollars
•  Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes	•  As necessary
•  Any charges incurred by the depositary or its agents for servicing the deposited securities	•  As necessary

The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary may use brokers,

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dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.

The depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.

Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on the ADSs or on the deposited securities represented by any of the ADSs. The depositary may refuse to register any transfer of the ADSs or allow you to withdraw the deposited securities represented by the ADSs until those taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your American Depositary Shares to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes.

Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities

The depositary will not tender deposited securities in any voluntary tender or exchange offer unless instructed to do by an ADS holder surrendering ADSs and subject to any conditions or procedures the depositary may establish.

If deposited securities are redeemed for cash in a transaction that is mandatory for the depositary as a holder of deposited securities, the depositary will call for surrender of a corresponding number of ADSs and distribute the net redemption money to the holders of called ADSs upon surrender of those ADSs.

If there is any change in the deposited securities such as a sub-division, combination or other reclassification, or any merger, consolidation, recapitalization or reorganization affecting the issuer of deposited securities in which the depositary receives new securities in exchange for or in lieu of the old deposited securities, the depositary will hold those replacement securities as deposited securities under the deposit agreement. However, if the depositary decides it would not be lawful and to hold the replacement securities because those securities could not be distributed to ADS holders or for any other reason, the depositary may instead sell the replacement securities and distribute the net proceeds upon surrender of the ADSs.

If there is a replacement of the deposited securities and the depositary will continue to hold the replacement securities, the depositary may distribute new ADSs representing the new deposited securities or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities.

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If there are no deposited securities underlying ADSs, including if the deposited securities are canceled, or if the deposited securities underlying ADSs have become apparently worthless, the depositary may call for surrender or of those ADSs or cancel those ADSs upon notice to the ADS holders.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold the ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

How may the deposit agreement be terminated?

The depositary will initiate termination of the deposit agreement if we instruct it to do so. The depositary may initiate termination of the deposit agreement if

• 60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment;

• we delist our shares from an exchange on which they were listed and do not list the shares on another exchange;

• we appear to be insolvent or enter insolvency proceedings

• all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;

• there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or

• there has been a replacement of deposited securities.

If the deposit agreement will terminate, the depositary will notify ADS holders at least 90 days before the termination date. At any time after the termination date, the depositary may sell the deposited securities. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, unsegregated and without liability for interest, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. Normally, the depositary will sell as soon as practicable after the termination date.

After the termination date and before the depositary sells, ADS holders can still surrender their ADSs and receive delivery of deposited securities, except that the depositary may refuse to accept a surrender for the purpose of withdrawing deposited securities if it would interfere with the selling process. The depositary may refuse to accept a surrender for the purpose of withdrawing sale proceeds until all the deposited securities have been sold. The depositary will continue to collect distributions on deposited securities, but, after the termination date, the depositary is not required to register any transfer of ADSs or distribute any dividends or other distributions on deposited securities to the ADSs holder (until they surrender their ADSs) or give any notices or perform any other duties under the deposit agreement except as described in this paragraph.

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Limitations on Obligations and Liability

Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

• are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

• are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with reasonable care or effort from performing our or its obligations under the deposit agreement;

• are not liable if we or it exercises discretion permitted under the deposit agreement;

• are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;

• have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person;

• are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and

• may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person.

In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.

Requirements for Depositary Actions

Before the depositary will deliver or register a transfer of ADSs, make a distribution on ADSs, or permit withdrawal of shares, the depositary may require:

• payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities;

• satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

• compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADSs when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

Your Right to Receive the Shares Underlying the ADSs

ADS holders have the right to cancel their ADSs and withdraw the underlying shares at any time except:

• when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our shares;

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• when you owe money to pay fees, taxes and similar charges; or

• when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Pre-release of ADSs

The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying shares. This is called a pre-release of the ADSs. The depositary may also deliver shares upon cancellation of pre-released ADSs (even if the ADSs are canceled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying shares are delivered to the depositary. The depositary may receive ADSs instead of shares to close out a pre-release. The depositary may pre-release ADSs only under the following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its customer owns the shares or ADSs to be deposited; (2) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; and (3) the depositary must be able to close out the pre-release on not more than five business days’ notice. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of pre-release, although the depositary may disregard the limit from time to time if it thinks it is appropriate to do so.

Direct Registration System

In the deposit agreement, all parties to the deposit agreement acknowledge that the Direct Registration System, also referred to as DRS, and Profile Modification System, also referred to as Profile, will apply to the ADSs. DRS is a system administered by DTC that facilitates interchange between registered holding of uncertificated ADSs and holding of security entitlements in ADSs through DTC and a DTC participant. Profile is feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of uncertificated ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register that transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery as described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions received by the depositary through the DRS/Profile system and in accordance with the deposit agreement will not constitute negligence or bad faith on the part of the depositary.

Shareholder communications; inspection of register of holders of ADSs

The depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The depositary will send you copies of those communications or otherwise make those communications available to you if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.]

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have                  ADSs outstanding, representing                  Class A ordinary shares, or approximately         % of our outstanding ordinary shares, assuming the underwriters do not exercise their option to purchase additional ADSs. All of the ADSs sold in this offering will be freely transferable by persons other than our “affiliates” without restriction or further registration under the Securities Act. Sales of substantial amounts of the ADSs in the public market could adversely affect prevailing market prices of the ADSs. Prior to this offering, there has been no public market for our ordinary shares or the ADSs, and [while the ADSs have been approved for listing on the [NYSE]/[NASDAQ],] we cannot assure you that a regular trading market will develop in the ADSs.

Lock-up Agreements

We, [our directors, executive officers and existing shareholders] have agreed, subject to some exceptions, not to transfer or dispose of, directly or indirectly, any of our ordinary shares, in the form of ADSs or otherwise, or any securities convertible into or exchangeable or exercisable for our ordinary shares, in the form of ADSs or otherwise, for a period of [180] days after the date of this prospectus. After the expiration of the [180]-day period, the ordinary shares or ADSs held by our directors, executive officers and our existing shareholders may be sold subject to the restrictions under Rule 144 under the Securities Act or by means of registered public offerings.

Rule 144

All of our ordinary shares outstanding prior to this offering are “restricted shares” as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirements. Under Rule 144 as currently in effect, a person who has beneficially owned our restricted shares for at least six months is generally entitled to sell the restricted securities without registration under the Securities Act beginning 90 days after the date of this prospectus, subject to certain additional restrictions.

Our affiliates may sell within any three-month period a number of restricted shares that does not exceed the greater of the following:

• 1% of the then outstanding ordinary shares of the same class, in the form of ADSs or otherwise, which will equal approximately                 ordinary shares immediately after this offering, assuming the underwriters do not exercise their option to purchase additional ADSs; or

• the average weekly trading volume of our ordinary shares in the form of ADSs or otherwise on the [NYSE]/[NASDAQ] during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

Affiliates who sell restricted securities under Rule 144 may not solicit orders or arrange for the solicitation of orders, and they are also subject to notice requirements and the availability of current public information about us.

Persons who are not our affiliates are only subject to one of these additional restrictions, the requirement of the availability of current public information about us, and this additional restriction does not apply if they have beneficially owned our restricted shares for more than one year.

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Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants or advisors who purchases our ordinary shares from us in connection with a compensatory stock or option plan or other written agreement relating to compensation is eligible to resell such ordinary shares 90 days after we became a reporting company under the Exchange Act in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

Registration Rights

Upon completion of this offering, certain holders of our ordinary shares or their transferees will be entitled to request that we register their shares under the Securities Act, following the expiration of the lock-up agreements described above. See “Description of Share Capital—Registration Rights.”

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TAXATION

The following discussion of Cayman Islands, PRC and United States federal income tax consequences of an investment in the ADSs or ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in the ADSs or ordinary shares, such as the tax consequences under state, local and other tax laws. To the extent that the discussion relates to matters of Cayman Islands tax law, it represents the opinion of Maples and Calder (Hong Kong) LLP, our Cayman Islands counsel. To the extent that the discussion relates to matters of PRC tax law, it represents the opinion of Tian Yuan Law Firm, our PRC legal counsel.

Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation, and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us or holders of the ADSs or ordinary shares levied by the government of the Cayman Islands, except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of the ADSs or ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the ADSs or ordinary shares, nor will gains derived from the disposal of the ADSs or ordinary shares be subject to Cayman Islands income or corporation tax.

People’s Republic of China Taxation

Under the PRC EIT Law, which became effective on January 1, 2008 and amended on February 24, 2017, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation regulations to the PRC EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise.

In addition, the SAT Circular 82 issued by the SAT in April 2009 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: (a) senior management personnel and departments that are responsible for daily production, operation and management; (b) financial and personnel decision making bodies; (c) key properties, accounting books, company seal, minutes of board meetings and shareholders’ meetings; and (d) half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued the SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details of determination on resident status and administration on post-determination matters. Our company is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. As such, we do not believe that our company meets all of the conditions above or is a PRC resident enterprise for PRC tax purposes. For similar reasons, we believe our other entities outside of China are not PRC resident

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enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that is consistent with us. If the PRC tax authorities determine that our Cayman Islands holding company is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. For example, a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders (including the ADS holders). In addition, non-resident enterprise shareholders (including the ADS holders) may be subject to a 10% PRC tax on gains realized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders (including the ADS holders) would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are deemed to be a PRC resident enterprise. If any PRC tax were to apply to such dividend income or gains of non-PRC individuals, it would generally apply at a rate of 20% and we will be required to withhold it from dividend payments. These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of our company would be able to obtain the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise.

Provided that our Cayman Islands holding company is not deemed to be a PRC resident enterprise, holders of the ADSs and ordinary shares who are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our ordinary shares or ADSs. However, under SAT Bulletin 7 and SAT Bulletin 37, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Bulletin 7 and SAT Bulletin 37, and we may be required to expend valuable resources to comply with SAT Bulletin 7 and SAT Bulletin 37, or to establish that we should not be taxed under these bulletins. See “Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders” and “Risk Factors—Risks Related to Doing Business in China—We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.”

Material U.S. Federal Income Tax Considerations

In the opinion of Davis Polk & Wardwell LLP, the following are material U.S. federal income tax consequences to the U.S. Holders described below of the ownership and disposition of our ADSs or ordinary shares, but this discussion does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person’s decision to own the ADSs or ordinary shares.

This discussion applies only to a U.S. Holder that acquires our ADSs in this offering and holds the ADSs or underlying ordinary shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s

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particular circumstances, including the alternative minimum tax, the Medicare contribution tax on net investment income and tax consequences applicable to U.S. Holders subject to special rules, such as:

• certain financial institutions;

• insurance companies;

• regulated investment companies;

• dealers or traders in securities that use a mark-to-market method of tax accounting;

• persons that hold ADSs or ordinary shares as part of a straddle, integrated or similar transaction;

• persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

• entities classified as partnerships for U.S. federal income tax purposes and their partners or members;

• tax-exempt entities, “individual retirement accounts” or “Roth IRAs”;

• persons that own or are deemed to own ADSs or ordinary shares representing 10% or more of our stock by vote or value; or

• persons that hold ADSs or ordinary shares in connection with a trade or business outside the United States.

If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) owns ADSs or ordinary shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships owning ADSs or ordinary shares and their partners should consult their tax advisers as to their particular U.S. federal income tax consequences of owning and disposing of our ADSs or ordinary shares.

This discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, and the income tax treaty between the United States and the PRC, or the Treaty, all as of the date hereof, any of which is subject to change, possibly with retroactive effect. This discussion assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms.

As used herein, a “U.S. Holder” is a person that is for U.S. federal income tax purposes a beneficial owner of the ADSs or ordinary shares and:

• a citizen or individual resident of the United States;

• a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or

• an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

In general, a U.S. Holder that owns our ADSs will be treated as the owner of the underlying ordinary shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying ordinary shares represented by those ADSs.

This discussion does not address the effects of any state, local or non-U.S. tax laws, or any U.S. federal taxes other than income taxes (such as U.S. federal estate or gift tax consequences). U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of ADSs or ordinary shares in their particular circumstances.

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Except as described below under “—Passive Foreign Investment Company Rules,” this discussion assumes that we are not, and will not be, a passive foreign investment company, or PFIC, for any taxable year.

Taxation of Distributions

Distributions paid on the ADSs or ordinary shares (including any amounts withheld to reflect PRC withholding taxes, as discussed above under “—People’s Republic of China Taxation”), other than certain pro rata distributions of ADSs or ordinary shares, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Dividends will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be taxable at a favorable rate. Non-corporate U.S. Holders should consult their tax advisers regarding the availability of the reduced tax rate on dividends in their particular circumstances.

Dividends will be included in a U.S. Holder’s income, in the case of ordinary shares, on the date of the U.S. Holder’s, or in the case of ADSs, the depositary’s, receipt. The amount of any dividend income paid in foreign currency will be the U.S. dollar amount calculated by reference to the spot rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars on such date. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the amount received. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.

Dividends will be treated as foreign-source income for foreign tax credit purposes. As described in “—People’s Republic of China Taxation,” dividends paid by us may be subject to PRC withholding tax. For U.S. federal income tax purposes, the amount of the dividend income will include any amounts withheld in respect of PRC withholding tax. Subject to applicable limitations, which vary depending upon the U.S. Holder’s circumstances, PRC taxes withheld from dividend payments (at a rate not exceeding any rate applicable under the Treaty) generally will be creditable against a U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a credit, a U.S. Holder may elect to deduct such PRC taxes in computing its taxable income, subject to applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the relevant taxable year.

Sale or Other Taxable Disposition of ADSs or Ordinary Shares

A U.S. Holder will generally recognize capital gain or loss on a sale or other taxable disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized on the sale or disposition and the U.S. Holder’s tax basis in the ADSs or ordinary shares disposed of, in each case as determined in U.S. dollars. The gain or loss will be long-term capital gain or loss if, at the time of the sale or disposition, the U.S. Holder has owned the ADSs or ordinary shares for more than one year. Long-term capital gains recognized by non-corporate U.S. Holders are subject to tax rates that are lower than those applicable to ordinary income. The deductibility of capital losses is subject to limitations.

As described in “—People’s Republic of China Taxation,” gains on the sale of ADSs or ordinary shares may be subject to PRC taxes. A U.S. Holder is entitled to use foreign tax credits to offset only

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the portion of its U.S. federal income tax liability that is attributable to foreign-source income. Because under the Code capital gains of U.S. persons are generally treated as U.S.-source income, this limitation may preclude a U.S. Holder from claiming a credit for all or a portion of any PRC taxes imposed on any such gains. However, U.S. Holders that are eligible for the benefits of the Treaty may be able to elect to treat gains taxable under PRC law as PRC-source and therefore claim foreign tax credits in respect of PRC taxes on such gains. U.S. Holders should consult their tax advisers regarding their eligibility for the benefits of the Treaty and the creditability of any PRC tax on disposition gains in their particular circumstances.

Passive Foreign Investment Company Rules

In general, a non-U.S. corporation is a PFIC for U.S. federal income tax purposes for any taxable year in which (i) 50% or more of the average value of its assets (generally determined on a quarterly basis) consists of assets that produce, or are held for the production of, passive income, or (ii) 75% or more of its gross income consists of passive income. For purposes of the above calculations, a non-U.S. corporation that owns, directly or indirectly, at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, investment gains and certain rents and royalties. Cash is generally a passive asset for these purposes. The value goodwill is generally treated as an active asset if it is associated with business activities that produce active income.

Based on the expected composition of our income and assets and the value of our assets, including goodwill, which is based on the expected price of the ADSs in this offering, we do not expect to be a PFIC for our current taxable year. However, our PFIC status for any taxable year is an annual determination that can be made only after the end of that year and will depend on the composition of our income and assets and the value of our assets from time to time. In particular, the value of our goodwill may be determined, in large part, by reference to the market price of the ADSs, which could be volatile. Therefore, because we hold, and will continue to hold after this offering, a substantial amount of cash, our risk of being or becoming a PFIC will increase if our market capitalization declines. Moreover, it is not entirely clear how the contractual arrangements among us and our VIE will be treated for purposes of the PFIC rules, and we may be or become a PFIC if our VIE is not treated as owned by us for these purposes. Accordingly, there can be no assurance that we will not be a PFIC for our current or any future taxable year.

If we are a PFIC for any taxable year and any entity in which we own or are deemed to own equity interests (including our subsidiaries and VIE) is also a PFIC (any such entity, a “Lower-tier PFIC”), U.S. Holders will be deemed to own a proportionate amount (by value) of the shares of each Lower-tier PFIC and will be subject to U.S. federal income tax according to the rules described in the next paragraph on (i) certain distributions by a Lower-tier PFIC and (ii) dispositions of shares of Lower-tier PFICs, in each case as if the U.S. Holders held such shares directly, even though the U.S. Holder would not receive any proceeds of those distributions or dispositions.

In general, if we are a PFIC for any taxable year during which a U.S. Holder owns our ADSs or ordinary shares, gain recognized by such U.S. Holder on a sale or other disposition (including certain pledges) of its ADSs or ordinary shares will be allocated ratably over the U.S. Holder’s holding period. The amounts allocated to the taxable year of the sale or disposition and to any year before we became a PFIC will be taxed as ordinary income. The amount allocated to each other taxable year will be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge will be imposed on the resulting tax liability for each such year. Furthermore, to the extent that distributions received by a U.S. Holder in any year on its ADSs or ordinary shares exceeds 125% of the average of the annual distributions on the ADSs or ordinary

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shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, such distributions will be subject to taxation in the same manner. If we are a PFIC for any taxable year during which a U.S. Holder owns ADSs or ordinary shares, we will generally continue to be treated as a PFIC with respect to the U.S. Holder for all succeeding years during which the U.S. Holder owns the ADSs or ordinary shares, even if we cease to meet the threshold requirements for PFIC status, unless the U.S. Holder makes a timely “deemed sale” election, in which case any gain on the deemed sale will be taxed under the PFIC rules described above.

Alternatively, if we are a PFIC and if the ADSs are “regularly traded” on a “qualified exchange” (as defined in applicable U.S. Treasury regulations), a U.S. Holder could make a mark-to-market election that will result in tax treatment different from the general tax treatment for PFICs described in the preceding paragraph. The ADSs will be treated as regularly traded for any calendar year in which more than a de minimis quantity of the ADSs are traded on a qualified exchange on at least 15 days during each calendar quarter. The [NYSE / Nasdaq], where the ADSs are expected to be listed, is a qualified exchange for this purpose. If a U.S. Holder of ADSs makes the mark-to-market election, the U.S. Holder generally will recognize as ordinary income any excess of the fair market value of the ADSs at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ADSs over their fair market value at the end of the taxable year to the extent of the net amount of income previously included as a result of the mark-to-market election. If a U.S. Holder makes the election, the U.S. Holder’s tax basis in the ADSs will be adjusted to reflect the income or loss amounts recognized. Any gain recognized on the sale or other disposition of ADSs in a taxable year in which we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-to-market election, with any excess treated as capital loss). If a U.S. Holder makes the mark-to-market election, distributions paid on ADSs will be treated as discussed under “—Taxation of Distributions” above (but subject to the discussion in the immediately subsequent paragraph). Once made, the election will remain in effect for all taxable years in which we are a PFIC, unless it is revoked with the Internal Revenue Service’s consent, or the ADSs cease to be regularly traded on a qualified exchange. U.S. Holders should consult their tax advisers regarding the availability and advisability of making a mark-to-market election in their particular circumstances. In particular, U.S. Holders should consider carefully the impact of a mark-to-market election with respect to their ADSs given that we may have Lower-tier PFICs, and there is no provision of U.S. federal income tax law that permits to apply a mark-to-market treatment with respect to a Lower-tier PFIC the shares of which are not publicly traded.

If we are a PFIC for any taxable year in which we pay a dividend or the preceding taxable year, the favorable tax rate described above with respect to dividends paid to certain non-corporate U.S. Holders will not apply.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

If we are a PFIC for any taxable year during which a U.S. Holders owns ADSs or ordinary shares, the U.S. Holder will generally be required to file annual reports with the Internal Revenue Service. U.S. Holders should consult their tax advisers regarding our PFIC status for any taxable year and the potential application of the PFIC rules to their ownership of ADSs or ordinary shares.

Information Reporting and Backup Withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries may be subject to information reporting and backup

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withholding, unless (i) the U.S. Holder is a corporation or other “exempt recipient” and (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against its U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

Certain U.S. Holders who are individuals (or certain specified entities) may be required to report information relating to their ownership of ADSs or ordinary shares, or non-U.S. accounts through which ADSs or ordinary shares are held. U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to ADSs and ordinary shares.

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UNDERWRITING

We[, the selling shareholders] and the underwriters named below have entered into an underwriting agreement with respect to the ADSs being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of ADSs indicated in the following table. Goldman Sachs (Asia) L.L.C. and Credit Suisse Securities (USA) LLC are the representatives of the underwriters.

Underwriters	Number of ADSs
Goldman Sachs (Asia) L.L.C.
Credit Suisse Securities (USA) LLC
Total

The underwriters are committed to take and pay for all of the ADSs being offered, if any are taken, other than the ADSs covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional                ADSs from us [and selling shareholders] to cover sales by the underwriters of a greater number of ADSs than the total number set forth in the table above. They may exercise that option for 30 days. If any ADSs are purchased pursuant to this option, the underwriters will severally purchase ADSs in approximately the same proportion as set forth in the table above.

The following tables show the per ADS and total underwriting discounts and commissions to be paid to the underwriters by us[ and the selling shareholders]. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase                 additional ADSs.

Paid by Us	No Exercise	Full Exercise
Per ADS	US$	US$
Total	US$	US$

[Paid by the Selling Shareholders]	No Exercise	Full Exercise
Per ADS	US$	US$
Total	US$	US$

ADSs sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any ADSs sold by the underwriters to securities dealers may be sold at a discount of up to US$                per ADS from the initial public offering price. After the initial offering of the ADSs, the representatives may change the offering price and the other selling terms. The offering of the ADSs by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

Some of the underwriters are expected to make offers and sales both inside and outside the United States through their respective selling agents. Any offers or sales in the United States will be conducted by broker-dealers registered with the SEC.

Goldman Sachs (Asia) L.L.C. will offer ADSs in the United States through its SEC-registered broker-dealer affiliate in the United States, Goldman Sachs & Co. LLC. The address of Goldman Sachs (Asia) L.L.C. is 68th Floor, Cheung Kong Center, 2 Queens Road, Central, Hong Kong. The address of Credit Suisse Securities (USA) LLC is Eleven Madison Avenue, New York, NY 10010, United States.

[We and our officers, directors and all of our shareholders, including the selling shareholders], have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our ordinary shares or ADSs or securities convertible into or exchangeable for ordinary shares or ADSs

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during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any existing employee benefit plans. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.]

Prior to the offering, there has been no public market for the ADSs. The initial public offering price has been negotiated among the representatives and us. Among the factors to be considered in determining the initial public offering price of the ADSs, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

[An application has been made] to list the ADSs on the [New York Stock Exchange/Nasdaq Global Select Market] under the symbol “                 ”.

In connection with the offering, the underwriters may purchase and sell the ADSs in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of ADSs than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional ADSs for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional ADSs or purchasing ADSs in the open market. In determining the source of ADSs to cover the covered short position, the underwriters will consider, among other things, the price of ADSs available for purchase in the open market as compared to the price at which they may purchase additional ADSs pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional ADSs for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing ADSs in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ADSs in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of the ADSs made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased ADSs sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our ADSs, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the ADSs. As a result, the price of the ADSs may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on [New York Stock Exchange/Nasdaq Global Select Market], in the over-the-counter market or otherwise.

We[ and the selling shareholders] estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately US$                .

We[ and the selling shareholders] have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

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A prospectus in electronic format may be made available on the websites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of ADSs to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make internet distributions on the same basis as other allocations.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve

or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

[Directed Share Program

At our request, the underwriters have reserved for sale, at the initial public offering price, up to [●] % of the ADSs offered by this prospectus for sale to certain of our directors, officers, employees, business associates and other persons associated with us. Pursuant to the underwriting agreement, the sales will be made by [●] through the Directed Share Program. If these persons purchase reserved ADSs, it will reduce the number of ADSs available for sale to the general public. Any reserved ADSs that are not so purchased will be offered by the underwriters to the general public on the same terms as the other ADSs offered by this prospectus. Any ADSs sold in the Directed Share Program to a party who has entered into a lock-up agreement shall be subject to the provisions of such lock-up agreement.]

Selling Restrictions

No action may be taken in any jurisdiction other than the United States that would permit a public offering of the ADSs or the possession, circulation or distribution of this prospectus in any jurisdiction where action for that purpose is required. Accordingly, the ADSs may not be offered or sold, directly or indirectly, and neither the prospectus nor any other offering material or advertisements in connection with the ADSs may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable laws, rules and regulations of any such country or jurisdiction.

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Australia

This document has not been lodged with the Australian Securities & Investments Commission and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

(a) you confirm and warrant that you are either:

(i) a “sophisticated investor” under section 708(8)(a) or (b) of the Corporations Act 2001 (Cth) of Australia, or the Corporations Act;

(ii) a “sophisticated investor” under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s certificate to the company which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made;

(iii) a person associated with the company under section 708(12) of the Corporations Act; or

(iv) a “professional investor” within the meaning of section 708(11)(a) or (b) of the Corporations Act;

and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act, any offer made to you under this document is void and incapable of acceptance; and

(b) you warrant and agree that you will not offer any of the ADSs issued to you pursuant to this document for resale in Australia within 12 months of those ADSs being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

European Economic Area

In relation to each Member State of the European Economic Area (each a “Relevant State”), no ADSs have been offered or will be offered pursuant to this offering to the public in that Relevant State prior to the publication of a prospectus in relation to the ADSs which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation), except that offers of ADSs may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

(b) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(c) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or

(d) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of ADSs shall require the Issuer or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any ADSs in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe for any ADSs, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

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United Kingdom

In relation to the United Kingdom, no ADSs have been offered or will be offered pursuant to this offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the ADSs which has been approved by the Financial Conduct Authority in accordance with the UK Prospectus Regulation, except that it may make an offer to the public in the United Kingdom of any ADSs at any time under the following exemptions under the UK Prospectus Regulation:

(a) to any legal entity which is a qualified investor as defined under the UK Prospectus Regulation;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the UK Prospectus Regulation), subject to obtaining the prior consent of underwriters for any such offer; or

(c) in any other circumstances falling within Article 1(4) of the UK Prospectus Regulation,

provided that no such offer of the ADSs shall require the Issuer or any Manager to publish a prospectus pursuant to Article 3 of the UK Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.

In the United Kingdom, this offering is only addressed to, and is directed only at, “qualified investors” within the meaning of Article 2(e) of the UK Prospectus Regulation, who are also (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (ii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order; or (iii) persons to whom it may otherwise lawfully be communicated (all such persons being referred to as “relevant persons”). This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.

For the purposes of this provision, the expression an “offer to the public” in relation to the ADSs in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the this offering and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe for any ADSs, and the expression “UK Prospectus Regulation” means the UK version of Regulation (EU) No 2017/1129 as amended by The Prospectus (Amendment etc.) (EU Exit) Regulations 2019, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

Canada

The ADSs may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the ADSs must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

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Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Cayman Islands

This prospectus does not constitute an invitation or offer to the public in the Cayman Islands of the ADSs, whether by way of sale or subscription. The ADSs and ordinary shares have not been offered or sold, and will not be offered or sold, directly or indirectly, in the Cayman Islands.

Dubai International Finance Center

This document relates to an Exempt Offer, as defined in the Offered Securities Rules module of the DFSA Rulebook, or the OSR, in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This document is intended for distribution only to Persons, as defined in the OSR, of a type specified in those rules. It must not be delivered to, or relied on by, any other Person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The ADSs to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the ADSs offered should conduct their own due diligence on the ADSs. If you do not understand the contents of this document you should consult an authorized financial adviser.

Hong Kong

The ADSs may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the ADSs may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.

Israel

This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, and has not been filed with or approved by the Israel Securities Authority. In Israel, this prospectus may be distributed only to, and is directed only at, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds; provident funds; insurance companies; banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange Ltd., underwriters, each purchasing for their own account; venture capital funds; entities with equity in excess of NIS 50 million and “qualified individuals,” each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors. Qualified investors shall be required to submit written confirmation that they fall within the scope of the Addendum.

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Japan

The ADSs have not been and will not be registered under the Financial Instruments and Exchange Law of Japan, and ADSs will not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to any exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Korea

The ADSs may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for reoffering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the Korea Securities and Exchange Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The ADSs have not been registered with the Financial Services Commission of Korea for public offering in Korea. Furthermore, the ADSs may not be resold to Korean residents unless the purchaser of the ADSs complies with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with the purchase of the ADSs.

Kuwait

Unless all necessary approvals from the Kuwait Ministry of Commerce and Industry required by Law No. 31/1990 “Regulating the Negotiation of Securities and Establishment of Investment Funds,” its Executive Regulations and the various Ministerial Orders issued pursuant thereto or in connection therewith, have been given in relation to the marketing and sale of the ADSs, these may not be marketed, offered for sale, nor sold in the State of Kuwait. Neither this prospectus (including any related document), nor any of the information contained therein is intended to lead to the conclusion of any contract of whatsoever nature within Kuwait.

Malaysia

No prospectus or other offering material or document in connection with the offer and sale of the securities has been or will be registered with the Securities Commission of Malaysia, or Commission, for the Commission’s approval pursuant to the Capital Markets and Services Act 2007. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Malaysia other than (i) a closed end fund approved by the Commission; (ii) a holder of a Capital Markets Services License; (iii) a person who acquires the securities as principal, if the offer is on terms that the securities may only be acquired at a consideration of not less than RM250,000 (or its equivalent in foreign currencies) for each transaction; (iv) an individual whose total net personal assets or total net joint assets with his or her spouse exceeds RM3 million (or its equivalent in foreign currencies), excluding the value of the primary residence of the individual; (v) an individual who has a gross annual income exceeding RM300,000 (or its equivalent in foreign currencies) per annum in the preceding twelve months; (vi) an individual who, jointly with his or her spouse, has a gross annual income of RM400,000 (or its equivalent in foreign currencies), per annum in the preceding twelve months; (vii) a corporation with total net assets exceeding RM10 million (or its equivalent in a foreign currencies) based on the last audited accounts; (viii) a partnership with total net assets exceeding RM10 million (or its equivalent in foreign currencies); (ix) a bank licensee or

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insurance licensee as defined in the Labuan Financial Services and Securities Act 2010; (x) an Islamic bank licensee or takaful licensee as defined in the Labuan Financial Services and Securities Act 2010; and (xi) any other person as may be specified by the Commission; provided that, in the each of the preceding categories (i) to (xi), the distribution of the securities is made by a holder of a Capital Markets Services License who carries on the business of dealing in securities. The distribution in Malaysia of this prospectus is subject to Malaysian laws. This prospectus does not constitute and may not be used for the purpose of public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the registration of a prospectus with the Commission under the Capital Markets and Services Act 2007.

People’s Republic of China

This prospectus has not been and will not be circulated or distributed in the PRC, and ADSs may not be offered or sold, and will not be offered or sold to any person for re-offering or resale, directly or indirectly, to any resident of the PRC except pursuant to applicable laws and regulations of the PRC.

Qatar

In the State of Qatar, the offer contained herein is made on an exclusive basis to the specifically intended recipient thereof, upon that person’s request and initiative, for personal use only and shall in no way be construed as a general offer for the sale of securities to the public or an attempt to do business as a bank, an investment company or otherwise in the State of Qatar. This prospectus and the underlying securities have not been approved or licensed by the Qatar Central Bank or the Qatar Financial Center Regulatory Authority or any other regulator in the State of Qatar. The information contained in this prospectus shall only be shared with any third parties in Qatar on a need to know basis for the purpose of evaluating the contained offer. Any distribution of this prospectus by the recipient to third parties in Qatar beyond the terms hereof is not permitted and shall be at the liability of such recipient.

Saudi Arabia

This prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority. The

Capital Market Authority does not make any representation as to the accuracy or completeness of this prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this prospectus you should consult an authorized financial adviser.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our ADSs may not be circulated or distributed, nor may our ADSs be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

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Where our ADSs are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor; shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the ADSs under Section 275 of the SFA, except: (1) to an institutional investor (for corporations under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is or will be given for the transfer; or (3) where the transfer is by operation of law.

Switzerland

The ADSs will not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland.

Neither this prospectus nor any other offering or marketing material relating to our company or the ADSs have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of the ADSs will not be supervised by, the Swiss Financial Market Supervisory Authority, and the offer of the ADSs has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (the “CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the ADSs.

Taiwan

The ADSs have not been and will not be registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that require a registration, filing or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer or sell the ADSs in Taiwan.

United Arab Emirates

This prospectus is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the United Arab Emirates, or the UAE. The ADSs have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and the Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities Market or with any other UAE exchange.

The offering, the ADSs and interests therein have not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities in the UAE, and do not constitute a public offer

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of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise.

In relation to its use in the UAE, this prospectus is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the ADSs may not be offered or sold directly or indirectly to the public in the UAE.

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EXPENSES RELATING TO THIS OFFERING

Set forth below is an itemization of the total expenses, excluding underwriting discounts and commissions, that we expect to incur in connection with this offering. With the exception of the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee and the [NYSE]/[NASDAQ] listing fee, all amounts are estimates. The Company will pay all of the expenses of this offering.

Expenses	Amount
SEC registration fee	US$
[NYSE]/[Nasdaq] listing fee	US$
FINRA filing fee	US$
Printing and engraving expenses	US$
Legal fees and expenses	US$
Accounting fees and expenses	US$
Miscellaneous costs	US$
Total	US$

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LEGAL MATTERS

We are being represented by Davis Polk & Wardwell LLP with respect to certain legal matters of U.S. federal securities and New York state law. Certain legal matters with respect to U.S. federal and New York State law in connection with this offering will be passed upon for the underwriters by Latham & Watkins LLP. The validity of the ordinary shares represented by the ADSs offered in this offering and other certain legal matters as to Cayman Islands law will be passed upon for us by Maples and Calder (Hong Kong) LLP. Legal matters as to PRC law will be passed upon for us by Tian Yuan Law Firm and for the underwriters by Han Kun Law Offices. Davis Polk & Wardwell LLP may rely upon Maples and Calder (Hong Kong) LLP with respect to matters governed by Cayman Islands law and Tian Yuan Law Firm with respect to matters governed by PRC law. Latham & Watkins LLP may rely upon Han Kun Law Offices with respect to matters governed by PRC law.

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EXPERTS

The consolidated financial statements of Spark Education Limited as of December 31, 2020 and 2019, and for the years then ended included in this prospectus have been so included in reliance on the report of audited by PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The registered business address of PricewaterhouseCoopers Zhong Tian LLP is 6/F DBS Bank Tower, 1318, Lu Jia Zui Ring Road, Pudong New Area, Shanghai, People’s Republic of China.

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the U.S. Securities and Exchange Commission a registration statement (including amendments and exhibits to the registration statement) on Form F-1 under the Securities Act. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further information, we refer you to the registration statement and the exhibits and schedules filed as part of the registration statement. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed. Each statement in this prospectus relating to a document filed as an exhibit is qualified in all respects by the filed exhibit.

Upon completion of this offering, we will become subject to the informational requirements of the Exchange Act. Accordingly, we will be required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information we have filed electronically with the SEC.

As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

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INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2019 and 2020	F-3
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2019 and 2020	F-6
Consolidated Statements of Changes in Shareholders’ Deficit for the Years Ended December 31, 2019 and 2020	F-7
Consolidated Statements of Cash Flows for the Years Ended December  31, 2019 and 2020	F-8
Notes to the Consolidated Financial Statements	F-9

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Spark Education Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Spark Education Limited and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, of changes in shareholders’ deficit and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers Zhong Tian LLP

Beijing, the People’s Republic of China

April 6, 2021

We have served as the Company’s auditor since 2020.

F-2

SPARK EDUCATION LIMITED

CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)

	As of December 31,
	2019		2020		2020
	RMB		RMB		US$
					Note 2(e)
ASSETS
Current assets:
Cash and cash equivalents		506,145		1,926,289		295,217
Short-term investments		10,472		32,637		5,002
Inventories, net		2,405		11,633		1,783
Prepaid expenses and other current assets		48,400		115,991		17,774
Total current assets		567,422		2,086,550		319,776
Non-current assets:
Time deposits		—		150,000		22,989
Property and equipment, net		82,167		81,956		12,560
Operating lease right-of-use assets, net		121,440		116,826		17,904
Intangible assets, net		524		3,019		463
Other non-current assets		13,028		23,705		3,633
Total non-current assets		217,159		375,506		57,549
Total assets		784,581		2,462,056		377,325
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable (including amounts of the consolidated variable interest entity (“VIE”) without recourse to the primary beneficiary of RMB2,898 and RMB33,421 as of December 31, 2019 and 2020, respectively)		3,790		33,764		5,175
Deferred revenues (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB410,930 and RMB1,216,756 as of December 31, 2019 and 2020, respectively)		410,930		1,216,756		186,476
Operating lease liabilities due within one year (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB16,786 and RMB21,372 as of December 31, 2019 and 2020, respectively)		51,388		65,833		10,089
Finance lease liabilities due within one year		16,635		13,262		2,032
Accrued expenses and other current liabilities (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB51,422 and RMB180,602 as of December 31, 2019 and 2020, respectively)		180,848		452,812		69,396
Taxes payable (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB5,568 and RMB12,126 as of December 31, 2019 and 2020, respectively)		17,382		33,036		5,063
Total current liabilities		680,973		1,815,463		278,231
Non-current liabilities:
Operating lease liabilities (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB13,319 and RMB9,879 as of December 31, 2019 and 2020, respectively)		61,678		39,354		6,031
Finance lease liabilities		6,694		5,613		860
Total non-current liabilities		68,372		44,967		6,891
Total liabilities		749,345		1,860,430		285,122
Commitments and contingencies (Note 16)

F-3

SPARK EDUCATION LIMITED

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except for share and per share data)

	As of December 31,
	2019		2020		2020
	RMB		RMB		US$
					Note 2(e)
MEZZANINE EQUITY
Series A convertible redeemable preferred shares (US$0.0001 par value; 22,973,381 shares authorized, issued and outstanding with redemption value of US$10,884 and US$11,520 as of December 31, 2019 and 2020; aggregated liquidation value of US$8,400 and US$7,000 as December 31, 2019 and 2020)		56,599		60,057		9,204
Series B convertible redeemable preferred shares (US$0.0001 par value; 30,994,766 shares authorized, issued and outstanding as of December 31, 2019, 30,162,301 shares authorized, issued and outstanding with redemption value of US$15,017 and US$15,468 as of December 31, 2020; aggregated liquidation value of US$12,540 and US$10,169 as December 31, 2019 and 2020)		73,969		76,662		11,749
Series B+ convertible redeemable preferred shares (US$0.0001 par value; 33,367,574 shares authorized, issued and outstanding with redemption value of US$21,440 and US$22,694 as of December 31, 2019 and 2020; aggregated liquidation value of US$18,000 and US$15,000 as December 31, 2019 and 2020)		109,028		115,799		17,747
Series C convertible redeemable preferred shares (US$0.0001 par value; 29,167,458 shares authorized, issued and outstanding with redemption value of US$41,859 and US$44,306 as of December 31, 2019 and 2020; aggregated liquidation value of US$36,000 and US$30,000 as December 31, 2019 and 2020)		217,243		231,108		35,419
Series D convertible redeemable preferred shares (US$0.0001 par value; 45,613,502 shares authorized, issued and outstanding with redemption value of US$101,591 and US$107,530 as of December 31, 2019 and 2020; aggregated liquidation value of US$91,098 and US$75,915 as December 31, 2019 and 2020)		535,182		568,208		87,082
Series D+ convertible redeemable preferred shares (US$0.0001 par value; 8,411,895 shares authorized, issued and outstanding with redemption value of US$27,188 as of December 31, 2020; aggregated liquidation value of US$20,000 as of December 31, 2020)		—		144,717		22,179
Series E-1 convertible redeemable preferred shares (US$0.0001 par value; 43,868,754 shares authorized, issued and outstanding with redemption value of US$171,293 as of December 31, 2020; aggregated liquidation value of US$128,000 as of December 31, 2020)		—		904,495		138,620
Series E-2 convertible redeemable preferred shares (US$0.0001 par value; 30,845,218 shares authorized, issued and outstanding with redemption value of US$119,334 as of December 31, 2020; aggregated liquidation value of US$90,000 as of December 31, 2020)		—		621,268		95,213
Total mezzanine equity		992,021		2,722,314		417,213

F-4

SPARK EDUCATION LIMITED

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except for share and per share data)

	As of December 31,
	2019			2020			2020
	RMB			RMB			US$
							Note 2(e)
SHAREHOLDERS’ DEFICIT
Ordinary shares (US$0.0001 par value; 337,883,319 shares and nil shares authorized, 64,750,255 shares and nil shares issued, 21,640,283 shares and nil shares outstanding as of December 31, 2019 and 2020, respectively)		40			—			—
Class A ordinary shares (US$0.0001 par value; nil shares and 505,181,536 shares authorized, nil shares and 7,755,662 shares issued and outstanding as of December 31, 2019 and 2020, respectively)		—			5			1
Class B ordinary shares (US$0.0001 par value; nil shares and 50,408,381 shares authorized and issued, nil shares and 24,130,672 shares outstanding as of December 31, 2019 and 2020, respectively)		—			33			5
Treasury stock		(28	)		(19	)		(3	)
Additional paid-in capital		14,998			—			—
Accumulated deficit		(978,876	)		(2,037,451	)		(312,253	)
Accumulated other comprehensive income/(loss)		7,081			(83,256	)		(12,760	)
Total shareholders’ deficit		(956,785	)		(2,120,688	)		(325,010	)
Total liabilities, mezzanine equity and shareholders’ deficit		784,581			2,462,056			377,325

The accompanying notes are an integral part of the consolidated financial statements.

F-5

SPARK EDUCATION LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Amounts in thousands, except for share and per share data)

	For the Year Ended December 31,
	2019			2020			2020
	RMB			RMB			US$
							Note 2(e)
Net revenues		195,412			1,174,359			179,978
Cost of revenues		(361,873	)		(852,332	)		(130,626	)
Gross (loss)/profit		(166,461	)		322,027			49,352
Operating expenses:
Sales and marketing expenses		(235,769	)		(798,356	)		(122,353	)
Research and development expenses		(239,941	)		(327,349	)		(50,168	)
General and administrative expenses		(128,203	)		(177,960	)		(27,274	)
Total operating expenses		(603,913	)		(1,303,665	)		(199,795	)
Other income		2,163			21,866			3,351
Loss from operations		(768,211	)		(959,772	)		(147,092	)
Interest income		1,953			11,749			1,801
Interest expenses		(926	)		(822	)		(126	)
Others, net		(3,939	)		(2,850	)		(437	)
Loss before income tax expense		(771,123	)		(951,695	)		(145,854	)
Income tax expense		—			—			—
Net loss		(771,123	)		(951,695	)		(145,854	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(100,895	)		(15,463	)
Deemed dividends due to extinguishment of preferred shares		—			(13,415	)		(2,056	)
Net loss attributable to ordinary shareholders of Spark Education Limited		(811,911	)		(1,066,005	)		(163,373	)
Weighted average number of ordinary shares used in computing net loss per share
Basic and diluted		24,770,658			29,605,885			29,605,885
Net loss per share attributable to ordinary shareholders
Basic and diluted		(32.78	)		(36.01	)		(5.52	)
Net loss		(771,123	)		(951,695	)		(145,854	)
Other comprehensive income/(loss)
Foreign currency translation adjustments		1,583			(90,337	)		(13,845	)
Total other comprehensive income/(loss)		1,583			(90,337	)		(13,845	)
Total comprehensive loss		(769,540	)		(1,042,032	)		(159,699	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(100,895	)		(15,463	)
Deemed dividends due to extinguishment of preferred shares		—			(13,415	)		(2,056	)
Comprehensive loss attributable to ordinary shareholders of Spark Education Limited		(810,328	)		(1,156,342	)		(177,218	)

The accompanying notes are an integral part of the consolidated financial statements.

F-6

SPARK EDUCATION LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

(Amounts in thousands, except for share data)

	Ordinary shares (1)						Treasury stock						Additional paid-in capital			Accumulated other comprehensive income/(loss)			Accumulated deficit			Total shareholders’ deficit
	Shares			Amount			Shares			Amount
				RMB						RMB			RMB			RMB			RMB			RMB
Balance as of January 1, 2019		68,304,281			42			(47,805,463	)		(30	)		16,216			5,498			(184,275	)		(162,549	)
Net loss		—			—			—			—			—			—			(771,123	)		(771,123	)
Share-based compensation		—			—			—			—			24,542			—			—			24,542
Accretion of convertible redeemable preferred shares		—			—			—			—			(40,788	)		—			—			(40,788	)
Repurchase of common shares		—			—			(7,054,976	)		(47,984	)		—			—			(3,606	)		(51,590	)
Re-issuance of treasury stock		—			—			5,026,525			28,110			15,028			—			—			43,138
Retirement of treasury stock		(3,554,026	)		(2	)		3,554,026			19,874			—			—			(19,872	)		—
Foreign currency translation adjustments		—			—			—			—			—			1,583			—			1,583
Vesting of Founders’ (2) restricted shares		—			—			9,438,298			6			—			—			—			6
Modification of Founders’ restricted shares		—			—			(6,268,382	)		(4	)		—			—			—			(4	)
Balance as of December 31, 2019		64,750,255			40			(43,109,972	)		(28	)		14,998			7,081			(978,876	)		(956,785	)
Net loss		—			—			—			—			—			—			(951,695	)		(951,695	)
Share-based compensation		—			—			—			—			46,810			—			—			46,810
Accretion of convertible redeemable preferred shares		—			—			—			—			(61,808	)		—			(39,087	)		(100,895	)
Deemed dividend due to extinguishment of preferred shares		—			—			—			—			—			—			(13,415	)		(13,415	)
Repurchase of common shares		—			—			(2,892,803	)		(36,600	)		—			—			(17,780	)		(54,380	)
Retirement of treasury stock		(6,586,212	)		(2	)		6,586,212			36,600			—			—			(36,598	)		—
Foreign currency translation adjustments		—			—			—			—			—			(90,337	)		—			(90,337	)
Vesting of Founders’ restricted shares		—			—			13,138,854			9			—			—			—			9
Balance as of December 31, 2020		58,164,043			38			(26,277,709	)		(19	)		—			(83,256	)		(2,037,451	)		(2,120,688	)

(1) Ordinary shares include Class A ordinary shares and Class B ordinary shares. Please refer to Note 9 for more details.

(2) “Founders” refers to Mr. Jian Luo and Mr. Zebing Shan.

The accompanying notes are an integral part of the consolidated financial statements.

F-7

SPARK EDUCATION LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the Years Ended December 31,
	2019			2020			2020
	RMB			RMB			US$
							Note 2(e)
Cash flows from operating activities:
Net loss		(771,123	)		(951,695	)		(145,854	)
Adjustments to reconcile net loss to net cash (used in)/ provided by operating activities
Depreciation and amortization		30,887			52,124			7,988
Share-based compensation		56,756			46,810			7,174
Provision for expected credit losses		—			222			34
Gain on disposal of property and equipment		(39	)		(78	)		(12	)
Unrealized foreign exchange losses		1,430			3,920			601
Changes in operating assets and liabilities:
Inventories, net		(916	)		(9,228	)		(1,414	)
Prepaid expenses and other current assets		(22,818	)		(67,809	)		(10,392	)
Operating lease right-of-use assets, net		(85,656	)		4,614			707
Other non-current assets		(8,001	)		(10,677	)		(1,636	)
Deferred revenues		367,512			805,826			123,498
Accounts payable		3,351			29,974			4,594
Operating lease liabilities		80,243			(7,879	)		(1,208	)
Taxes payable		6,608			15,654			2,399
Accrued expenses and other current liabilities		112,767			292,581			44,840
Net cash (used in) /provided by operating activities		(228,999	)		204,359			31,319
Cash flows from investing activities:
Purchase of property and equipment		(69,076	)		(37,475	)		(5,743	)
Purchases of intangible assets		—			(2,838	)		(435	)
Purchases of short-term investments		(17,518	)		(152,076	)		(23,307	)
Proceeds from maturities of short-term investments		7,030			128,549			19,701
Purchases of time deposits		—			(320,000	)		(49,042	)
Proceeds from maturities of time deposits		—			170,000			26,054
Net cash used in investing activities		(79,564	)		(213,840	)		(32,772	)
Cash flows from financing activities:
Repurchase of ordinary shares		(77,658	)		(54,380	)		(8,334	)
Repurchase of Series B convertible redeemable preferred shares		—			(15,649	)		(2,398	)
Proceeds from issuance of Series D convertible redeemable preferred shares		529,609			—			—
Proceeds from issuance of Series D+ convertible redeemable preferred shares		—			140,804			21,579
Proceeds from issuance of Series E-1 convertible redeemable preferred shares		—			894,831			137,139
Proceeds from issuance of Series E-2 convertible redeemable preferred shares		—			611,346			93,693
Payment of convertible redeemable preferred shares issuance costs		(7,879	)		(15,533	)		(2,381	)
Proceeds from issuance of ordinary shares		43,316			—			—
Principal payments on finance leases		(11,588	)		(18,474	)		(2,831	)
Net cash provided by financing activities		475,800			1,542,945			236,467
Effect of exchange rate changes on cash and cash equivalents		26,726			(113,320	)		(17,367	)
Net increase in cash and cash equivalents		193,963			1,420,144			217,647
Cash and cash equivalents at beginning of year		312,182			506,145			77,570
Cash and cash equivalents at end of year		506,145			1,926,289			295,217
Supplemental disclosures of cash flow information:
Cash paid for interest expenses		806			900			138
Supplemental schedule of non-cash investing and financing activities:
Finance lease obligations		29,346			16,640			2,550

The accompanying notes are an integral part of the consolidated financial statements.

F-8

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

1. Principal activities and reorganization

(a) Principal activities

Spark Education Limited (the “Company”), was incorporated under the laws of the Cayman Islands on July 18, 2016 under its original name “Wan Duoduo Limited”. The Company, its subsidiaries, its consolidated variable interest entity (“VIE”) and the VIE’s subsidiaries (collectively the “Group”) are primarily engaged in providing education services in the People’s Republic of China (the “PRC”).

As of December 31, 2020, the Company’s major subsidiaries and consolidated VIE are as follows:

Name(1)	Place and year of incorporation	Percentage of direct or indirect economic ownership		Principal activities
Major Subsidiaries:
Spark Education (Hongkong) Limited	Hong Kong, PRC July 29, 2016		100%	Investment holding
Beijing Spark Education and Technology Co., Ltd. (“Beijing Spark Education”)	Beijing, PRC, December 12, 2016		100%	Technical support and consulting services
Chengdu Spark Education and Technology Co., Ltd.	Chengdu, PRC, June 30, 2020		100%	Education consulting and technical services
Chengdu Juli Education Consulting Co., Ltd.	Chengdu, PRC, October 12, 2020		100%	Education consulting services
Tianjin Spark Education and Technology Co., Ltd.	Tianjin, PRC, February 29, 2020		100%	Education consulting services
VIE:
Beijing Xingengyuan Technology Ltd. (“Xingengyuan”)	Beijing, PRC, June 28, 2016		100%	Education services

(1) The English names are for identification purposes only (except Spark Education (Hongkong) Limited).

(b) Reorganization

Starting from June 2016, the Group’s business was carried out under Xingengyuan. On January 3, 2017, the Company through its wholly owned subsidiary Beijing Spark Education located in the PRC entered into a series of contractual agreements with Xingengyuan and its shareholders (the “Reorganization”). Through the contractual agreements, the Company has (1) the power to direct the activities that most significantly affect the economic performance of Xingengyuan, and (2) the right to receive the economic benefits of the VIE that could potentially be significant to the VIE. Accordingly, the Company is considered as the primary beneficiary of Xingengyuan. As the shareholdings in the Company and Xingengyuan had the same ownership structure immediately before and after the Reorganization, the transaction was determined to be a recapitalization without economic substance, and was accounted for in a manner similar to a common control transaction. Therefore, the accompanying consolidated financial statements of the Company include the assets, liabilities, revenue, expenses and cash flows of Xingengyuan for all the periods presented and are prepared on a carryover basis as if the corporate structure of the Group after the Reorganization had been in existence throughout the periods presented.

F-9

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

1. Principal activities and reorganization (Continued)

(b) Reorganization (Continued)

Since that Reorganization, the Company has amended the agreements as the nominee shareholders were adjusted, but other terms have not been substantially changed. As of December 31, 2020, the nominee shareholders of Xingengyuan are Mr. Jian Luo and Mr. Zebing Shan, the Founders of the Company.

(c) VIE arrangements

(i) Summary of the VIE contractual arrangements

Powers of Attorney

Pursuant to the powers of attorney executed by the nominee shareholders of Xingengyuan, each of them irrevocably authorized the Company’s wholly owned subsidiary Beijing Spark Education to act on their respective behalf as exclusive agent and attorney, to the extent permitted by law, with respect to all rights of shareholders concerning all the equity interests held by each of them in Xingengyuan, including but not limited to the right to attend shareholder meetings, exercise all the shareholder’s rights (including but not limited to voting rights and the right to sell, transfer, pledge or dispose of their equity interests held in part or in whole) and to designate and appoint on their respective behalf the president, directors, supervisors, general managers and other senior management members of Xingengyuan.

Exclusive Purchase Option Agreements

Under the exclusive purchase option agreements entered into by Beijing Spark Education, Xingengyuan and each of the nominee shareholders, each of them granted Beijing Spark Education an exclusive and irrevocable option to purchase, or designate a third party to purchase, all or a portion of his respective equity interest in Xingengyuan at the higher amount of RMB0.01 and the lowest price permissible by the then-applicable PRC laws. In addition, without Beijing Spark Education’s prior written consent, the shareholders of Xingengyuan shall not, individually or collectively, make or procure Xingengyuan to engage in any transaction or conduct that has a material adverse effect on the assets, liabilities, operations, equity and other legal rights of Xingengyuan. Without Beijing Spark Education’s prior written consent, Xingengyuan shall not enter into any contract with a price exceeding RMB500, except for contracts in the ordinary course of business. Xingengyuan shall not be dissolved or liquidated without prior written consent by Beijing Spark Education, unless otherwise provided by PRC laws or regulations. Each exclusive purchase option agreement shall remain in effect until all the equity interests in Xingengyuan have been acquired by Beijing Spark Education or its designee.

Exclusive Business Cooperation Agreement

Beijing Spark Education and Xingengyuan entered into an exclusive business cooperation agreement on January 3, 2017.

Pursuant to the exclusive business cooperation agreement, Beijing Spark Education has the exclusive right to provide or designate any third-party to provide, among other things, management consultancy services, software licensing services, technological support and other services to Xingengyuan. In exchange, Xingengyuan pays monthly management fees and service fees to Beijing

F-10

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

1. Principal activities and reorganization (Continued)

(c) VIE arrangements (Continued)

(i) Summary of the VIE contractual arrangements (Continued)

Spark Education at an amount determined by Beijing Spark Education and Xingengyuan based on certain factors as specified in the exclusive business cooperation agreement. Without the prior written consent of Beijing Spark Education, Xingengyuan cannot accept similar services provided by, or establish a similar cooperation relationship with, any third-party. Beijing Spark Education has the exclusive ownership of all intellectual property rights created as a result of the performance of this agreement unless otherwise provided by PRC laws or regulations, which remain effective whether or not the agreement is amended or terminated.

The exclusive business cooperation agreement was effective from January 3, 2017 and will continue to be effective unless it is terminated. Beijing Spark Education may terminate the agreement unilaterally if Xingengyuan materially breaches any provisions under the agreement, whereas under no circumstances can Xingengyuan terminate the agreement unless otherwise provided by PRC laws or regulations.

Equity Pledge Agreements

Each of the nominee shareholders entered into an equity pledge agreement with Beijing Spark Education and Xingengyuan. Under such equity pledge agreements, each of them pledged his respective equity interest in Xingengyuan to Beijing Spark Education to secure his and Xingengyuan’s obligations under the exclusive business cooperation agreement, exclusive purchase option agreement, spousal consent letter and power of attorney. Each of the nominee shareholders further agreed to not transfer or pledge his respective equity interest in Xingengyuan without the prior written consent of Beijing Spark Education. Each of the equity pledge agreements will remain binding until the respective pledger and Xingengyuan discharge all their obligations under the above-mentioned agreements.

Spousal Consent Letters

Pursuant to the spousal consent letters executed by the spouses of each of the nominee shareholders, the signing spouses unconditionally and irrevocably agreed that the equity interest in Xingengyuan held by and registered in the name of their spouses be disposed of in accordance with the equity pledge agreements, the exclusive purchase option agreements and the powers of attorney described above, and that their spouses may perform, amend or terminate such agreements without their additional consent.

(ii) Risks in relation to the VIE structure

The Company believes that the contractual arrangements with the VIE and VIE’s shareholders are in compliance with existing PRC laws and regulations and are legally enforceable. However, the contractual arrangements are subject to risks and uncertainties, including:

The VIE and VIE’s shareholders may have or develop interests that conflict with the Group’s interests, which may lead them to pursue opportunities in violation of the aforementioned contractual

F-11

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

1. Principal activities and reorganization (Continued)

(c) VIE arrangements (Continued)

(ii) Risks in relation to the VIE structure (Continued)

agreements. If the Company cannot resolve any conflicts of interest or disputes between the Group and the shareholders of the VIE, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings.

The VIE and VIE’s shareholders could fail to obtain the proper operating licenses or fail to comply with other regulatory requirements. As a result, the PRC government could impose fines, new requirements or other penalties on the VIE or the Group, mandate a change in ownership structure or operations for the VIE or the Group, restrict the VIE or the Group’s use of financing sources or otherwise restrict the VIE or the Group’s ability to conduct business.

The PRC government may declare the aforementioned contractual arrangements invalid. They may modify the relevant regulations, have a different interpretation of such regulations, or otherwise determine that the Group or the VIE have failed to comply with the legal obligations required to effectuate such contractual arrangements.

If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government may restrict or prohibit the Group’s business and operations in China.

The Group’s ability to conduct its business may be negatively affected if the PRC government were to carry out any of the aforementioned actions. As a result, the Company may not be able to consolidate the VIE and its subsidiaries in the consolidated financial statements as the Company may lose the ability to exert effective control over the VIE and its shareholders, and the Company may lose the ability to receive economic benefits from the VIE.

The Group’s operations and businesses rely on the operations and businesses of its VIE and VIE subsidiaries, which hold certain recognized and unrecognized revenue-producing assets. The recognized revenue-producing assets include a domain name acquired, which is recognized as an intangible asset. Unrecognized revenue-producing assets held by the VIE and its subsidiaries include certain licenses for the provision of content over the Internet, patents, trademarks, copyrights and domain names. The VIE and its subsidiaries also have an assembled workforce, focused primarily on research and development, whose costs are expensed as incurred. The Group’s operations and businesses may be adversely impacted if the Group loses the ability to use assets held by its VIE and VIE subsidiaries.

In accordance with the VIE contractual agreements, the Company has the power to direct the activities of the VIE and can have assets transferred out of the VIE. Therefore, the Company considers that there are no assets in the VIE that can be used only to settle obligations of the VIE, except for the registered capital of the VIE amounting to approximately RMB7,309 and RMB8,309 as of December 31, 2019 and 2020, respectively. As the VIE is incorporated as a limited liability company under the PRC Company Law, creditors do not have recourse to the general credit of the Company for the liabilities of the VIE. There is currently no contractual arrangement that would require the Company

F-12

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

1. Principal activities and reorganization (Continued)

(c) VIE arrangements (Continued)

(ii) Risks in relation to the VIE structure (Continued)

to provide additional financial support to the VIE. As the Group is conducting certain businesses in the PRC through the VIE, the Company may provide additional financial support on a discretionary basis in the future, which could expose the Company to further losses.

The following financial information of Xingengyuan, the Company’s VIE, and its subsidiaries after the elimination of inter-company transactions and balances as of December 31, 2019 and 2020 and for the years ended December 31, 2019 and 2020 was included in the accompanying consolidated financial statements:

	As of December 31,
	2019		2020
	RMB		RMB
Assets
Cash and cash equivalents		99,272		129,875
Inventories, net		1,342		10,202
Prepaid expenses and other current assets		34,438		88,378
Amounts due from inter-company entities*		62,654		667,152
Total current assets		197,706		895,607
Time deposits		—		50,000
Property and equipment, net		8,077		9,643
Operating lease right-of-use assets, net		34,515		37,083
Intangible assets, net		524		1,974
Other non-current assets		3,151		6,557
Total non-current assets		46,267		105,257
Total assets		243,973		1,000,864
Liabilities
Accounts payable		2,898		33,421
Deferred revenues		410,930		1,216,756
Operating lease liabilities due within one year		16,786		21,372
Accrued expenses and other current liabilities		51,422		180,602
Taxes payable		5,568		12,126
Amounts due to inter-company entities*		8,067		80,327
Total current liabilities		495,671		1,544,604
Operating lease liabilities		13,319		9,879
Total non-current liabilities		13,319		9,879
Total liabilities		508,990		1,554,483

* All inter-company balances have been eliminated upon consolidation.

F-13

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

1. Principal activities and reorganization (Continued)

(c) VIE arrangements (Continued)

(ii) Risks in relation to the VIE structure (Continued)

	For the year ended December 31,
	2019			2020
	RMB			RMB
Net revenues*		201,144			1,208,413
Net loss**		(190,389	)		(302,595	)

* Net revenues of the VIE for the years ended December 31, 2019 and 2020 include RMB5,732 and RMB34,953 net revenues from inter-company entities, respectively, which have been eliminated upon consolidation.

** Net loss of the VIE for the years ended December 31, 2019 and 2020 include RMB162,405 and RMB829,509 net loss resulted from transactions with inter-company entities, respectively, which have been eliminated upon consolidation.

	For the year ended December 31,
	2019			2020
	RMB			RMB
Net cash provided by operating activities		100,863			88,726
Net cash used in investing activities		(7,208	)		(58,123	)
Net increase in cash and cash equivalents		93,655			30,603

Liquidity

The Group incurred a net loss of RMB771,123 and RMB951,695 for the years ended December 31, 2019 and 2020, respectively. Accumulated deficit was RMB978,876 and RMB2,037,451 as of December 31, 2019 and 2020, respectively. As of December 31, 2019 and 2020, the Group was in a net current liability position of RMB113,551 and a net current asset position of RMB271,087, respectively. The Group assesses its liquidity by its ability to generate cash from operating activities.

The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while enhancing the efficiency of operations, as well as generating operational cash flows and continuing to gain support from outside sources of financing. Based on the aforementioned considerations, the management is of the opinion that the Group has sufficient funds for sustainable operations and there is no substantial doubt about the Group’s ability to continue as going concern within one year after the consolidated financial statements are issued. The Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

F-14

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

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 (“U.S. GAAP”) and on a going concern basis. Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.

(b) Principles of consolidation

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.

A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.

All inter-company balances and transactions within the Group have been eliminated upon consolidation.

(c) Use of estimates

The preparation of the Group’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes.

Significant accounting estimates include, but are not limited to, the standalone selling price for each distinct performance obligation, the fair value of promotion services received from parents, impairment of long-lived assets, the valuation allowance of deferred tax assets, determination of the fair value of ordinary shares and convertible redeemable preferred shares, as well as the valuation and recognition of share-based compensation expenses. Actual results could differ from those estimates and such differences may be material to the consolidated financial statements.

(d) Functional currency and foreign currency translation

The Group uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its subsidiary incorporated in Hong Kong is United States dollars (“US$” or “USD”). The functional currency of the PRC entities in the Group is RMB.

In the consolidated financial statements, the financial information of the Company has been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and

F-15

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(d) Functional currency and foreign currency translation (Continued)

losses are translated using the average rate for the period. Translation adjustments are reported as foreign currency translation adjustments and are shown as a component of other comprehensive income/(loss) in the consolidated statements of operations and comprehensive loss.

Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in others, net in the consolidated statements of operations and comprehensive loss.

(e) Convenience translation

Translations of balances in the consolidated balance sheets, consolidated statements of operations and comprehensive loss and consolidated statements of cash flows from RMB into USD as of and for the year ended December 31, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.5250 representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate on December 31, 2020, or at any other rate.

(f) Fair value measurements

Fair value reflects 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 it considers assumptions that market participants would use when pricing the asset or liability.

The Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation techniques are observable or unobservable. The hierarchy is as follows:

Level 1—Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

Level 2—Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.

F-16

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(f) Fair value measurements (Continued)

Level 3—Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Accounting guidance also describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.

(g) Cash and cash equivalents

The Group considers all highly liquid investments, which are unrestricted as to withdrawal or use, with original maturities of three months or less as cash equivalents. As of December 31, 2019 and 2020, the Group had total balances of RMB8,697 and RMB25,807, respectively, held in accounts managed by WeChat Pay, Alipay and UnionPay from the collection of tuition fees, which have been classified as cash and cash equivalents on the consolidated balance sheets.

(h) Time deposits

Time deposits in non-current assets represent demand deposits placed with banks with original maturities of more than one year. Interest earned is recorded as interest income in the consolidated statements of operations and comprehensive loss during the periods.

(i) Short-term investments

Short-term investments are investments in financial instruments with variable interest rates. These financial instruments have original maturity dates within 12 months. In accordance with ASC 825, Financial Instruments, the Group elected to adopt the fair value option at the date of initial recognition and carried these investments at fair value. Changes in the fair value are reflected in the consolidated statements of operations and comprehensive loss as interest income.

(j) Expected credit losses

In 2016, the FASB issued ASC Topic 326, which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses. The Group early adopted this guidance on January 1, 2019, and the adoption did not have a material impact on its consolidated financial statements.

F-17

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(j) Expected credit losses (Continued)

The Group’s other receivables classified as prepaid expenses and other current assets and other non-current assets are within the scope of ASC Topic 326. The Group has identified the relevant risk characteristics of its other receivables which include aging, size, nature of the receivables, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Additionally, external data and macroeconomic factors are also considered.

No significant allowance was made for other receivables for the years ended December 31, 2019 and December 31, 2020.

(k) Inventories, net

Inventories, net, consisting of learning kits used in the delivery of online courses, are stated at the lower of cost and net realizable value. Cost of inventory is determined using the first-in-first-out cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged goods. Write downs are recorded in cost of revenues in the consolidated statements of operations and comprehensive loss.

(l) Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range as follows:

Servers, office and other equipment	3 years
Finance leased computers	The shorter of the useful life or term of the lease
Leasehold improvements	The shorter of the useful life or term of the lease

Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of operations and comprehensive loss.

(m) Intangible assets, net

Intangible assets are carried at cost, less accumulated amortization and impairment, if any. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives, which is as follows:

	Useful lives
Software licenses	5 years

F-18

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(n) Impairment of long-lived assets

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will affect the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment charge was recognized for the years ended December 31, 2019 and 2020.

(o) Leases

The Group accounts for leases in accordance with ASC 842, Leases (“ASC 842”), which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The Group adopted ASC 842 on January 1, 2019, along with all subsequent ASU clarifications and improvements that are applicable to the Group, to each lease that existed in the periods presented in the financial statements, using the modified retrospective transition method and used the commencement date of the leases as the date of initial application. Consequently, financial information and the disclosures required under ASC 842 are provided for dates and periods presented in the consolidated financial statements. The Company elected not to apply the recognition requirements of ASC 842 for short-term leases. The Company also elected not to separate non-lease components from lease components, therefore, it will account for a lease component and the non-lease components as a single lease component when there is only one vendor in the lease contract.

The Group recognized lease liabilities at the present value of the future lease payments at the lease commencement date. Right-of-use assets are recognized as the amount of lease prepayments and the lease liabilities, adjusted for lease incentives received. Because most of the Group’s leases do not provide an implicit rate of return, the Group uses the Group’s incremental borrowing rate based on the information available at adoption date or lease commencement date in determining the present value of lease payments.

The Group includes operating leases and finance leases related to substantially all the Group’s lease arrangements in the consolidated balance sheets. Operating leases are primarily for offices and are included in operating lease right-of-use assets, net, operating lease liabilities due within one year and operating lease liabilities. Finance lease are primarily for computers and are included in property and equipment, net, finance lease liabilities due within one year and finance lease liabilities. For operating leases, the lease cost is recognized on a straight-line basis over the lease term. For finance cost, the lease cost is recognized as depreciation and interest; depreciation on a straight-line basis over the lease term and interest using the effective interest method.

(p) Revenue recognition

The Group adopted ASC 606 “Revenue from Contracts with Customers” for all periods presented. According to ASC 606, revenues from contracts with customers are recognized when control of the

F-19

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(p) Revenue recognition (Continued)

promised goods or services is transferred to the Group’s customers, for an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services.

The Group mainly provides online education services in two formats: online small-class courses and AI-enhanced courses to students.

The Group is responsible for course design, teacher sourcing and training, development and maintenance of its online platform and systems, and is the party primarily responsible for fulfilling the promise to provide services to customers, and it has full discretion in establishing the prices for the services provided to customers. Therefore, the Group is the principal for providing the online education services to the customers and recognizes revenue on a gross basis.

Online small-class courses

The Group started offering online small-class courses in March 2018. Customers purchase online small-class courses by subscribing to prepaid packages directly from the Group or through authorized distribution agents. Each course package contains a fixed number of course units, which are consumed when the student takes course sessions. Tuition fees are generally collected in advance and are initially recorded as deferred revenues. The online small-class courses packages typically contain between 20 to 60 course units that students can consume to take course sessions, delivered by a teacher online and live. Students are assigned to a class based on their age and ability, and will stay with the same group of fellow students and teacher throughout the course. Each class has a pre-determined time schedule, usually two sessions every week. The students can take courses on personal computers, tablets or mobile devices, and interact with teachers and with each other during the courses. Each course session is a separately identifiable performance obligation as customers can benefit from each session on its own.

Starting from July 2019, students were given unlimited access to view recordings of completed sessions (“the playback function”) on the Group’s mobile apps. The recorded content cannot be downloaded but there is no limit on the number of times it can be viewed. No other interactions or activities are provided during the playback period. The playback function is not featured prominently in the Group’s marketing materials, and from a customer’s perspective they focus more on the interaction during live courses rather than the playback function. Based on historical data, only a very small portion of recorded sessions were replayed by customers. Given the limited prominence and usage of this function over the eighteen-month period since this function was launched, the Group concluded that the playback function is an immaterial promise in the context of the contract.

Upon the successful purchase of online small-class course packages, customers are rewarded with a certain number of free course units or Spark Coins, the latter which can be redeemed for course units, branded merchandise, or cash vouchers for third-party e-commerce platforms. Spark Coins provide a material right to the customer and give rise to a separate performance obligation.

The transaction price for an online small-class course package is allocated to each performance obligation at the contract inception based on the standalone selling price of each performance obligation. The standalone selling price of Spark Coins is not directly observable. When estimating the

F-20

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(p) Revenue recognition (Continued)

standalone selling price of the Spark Coins, the Group considers the standalone selling price of the services and goods that can be redeemed using the Spark Coins, and the likelihood that the Spark Coins will be redeemed.

Revenues generated from providing online small-class course services are recognized proportionately as each course session is delivered.

When Spark Coins are redeemed for online small-class course units, revenue is recognized when the course units are consumed and related course sessions are delivered. If Spark Coins are redeemed for branded merchandise such as school bags and toys sold on the Group’s mobile apps, the Group concluded that it is the principal in the arrangement and revenue is recognized when the products are delivered to the student. If Spark Coins are redeemed for cash vouchers for third-party e-commerce platforms, the Group concluded that it is the agent in the arrangement. Therefore, the Group recognizes revenue for the net fee retained in exchange for cash vouchers for third-party e-commerce platforms, when the customer obtains a code for the virtual cash voucher, and the Group transfers the obligation to the third party e-commerce platforms, and no longer has a stand-ready obligation in the arrangement.

Students can also earn free online small-class course units or Spark Coins by completing tasks such as submitting homework and assessments on time and participating in research activities. These free online small-class course units and Spark Coins are accounted for as contract modifications. The modification is not a separate contract, but the remaining sessions in the packages are distinct from the sessions taken or Spark Coins redeemed and consumed before the modification. Therefore, this contract modification is effectively treated as the termination of the original contract and the creation of a new contract. The unrecognized transaction price from the original contract is allocated to the remaining performance obligations after the modification, including any unsatisfied performance obligations from the original contract.

AI-enhanced courses

In July 2019, the Group introduced AI-enhanced course packages. Students can access AI-enhanced courses on personal computers, tablets or mobile devices through the student app developed by the Group. Each AI-enhanced course is unlocked according to a pre-determined schedule, twice a week in 2019 and four times a week in 2020. Each session is a separately identifiable performance obligation as students can benefit from each session on its own.

Customers purchase AI-enhanced courses by subscribing to prepaid packages directly from the Group or through authorized distribution agents. Tuition fees for AI-enhanced courses are generally collected in advance and are initially recorded as deferred revenues.

Students can access the pre-recorded courses for an unlimited number of times within a 3-year period starting from the date the course is unlocked. The Group considers the average length of period from the date a course is unlocked until the date a course is last visited, to arrive at the best estimates for the length of the period during which the students are receiving the Group’s online education services through AI-enhanced courses (the “learning period”). The Group recognizes revenue from each course of the AI-enhanced course packages ratably over the estimated average learning period.

F-21

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(p) Revenue recognition (Continued)

Course materials

The Group also provides students with course materials, i.e. physical learning kits for both online small-class courses and AI-enhanced courses. These learning kits are delivered to students prior to the start of online small-class courses or before the first session is unlocked, and are used during the courses to enhance the learning experience. The learning kits are not considered a distinct performance obligation as students cannot benefit from the learning kits on their own. Instead, the costs of learning kits are considered a cost to fulfil the online small-class courses services and AI-enhanced courses, and therefore are capitalized and recognized as an asset in prepaid expenses and other current assets, and amortized in a pattern consistent with the pattern of the transfer of the online small-class courses services and AI-enhanced courses services.

The balance and movement of the Group’s contract fulfilment costs for the periods presented are as follows:

	As of December 31, 2018		Addition		Amortization			As of December 31, 2019		Addition		Amortization			As of December 31, 2020
Deferred cost for learning kits		—		30,789		(23,912	)		6,877		87,827		(75,159	)		19,545

Promotion incentives

In order to encourage parents to promote the Group’s course packages, customers can also earn free course units or Spark Coins by sharing posters that recommend the Group’s online courses on certain social media platforms (the “promotion program”) and can earn free online small-class course units by successfully referring new customers for online small-class courses (the “referral program”). A substantial majority of the Spark Coins are redeemed for online small-class course units provided by the Group. The Group determined that the exchange of Spark Coins/free online small-class course units in return for the customers posting on certain social media platforms and new customer referrals is a nonmonetary exchange of the Group’s services for a distinct and substantive promotion service from the customers. Accordingly, the Group recognizes sales and marketing expenses and deferred revenues upon the sharing of the posters or successful referrals. Revenues are recognized using the same pattern as stated in the online small-class courses section.

Revenue from such exchange is measured based on the value of the promotion service provided by the customers. The Group considered the amount that the customer could have redeemed the Spark Coins they received as part of the exchange for cash vouchers to be the most appropriate value of the promotion service from the customer. This effective cash-out value is similar to the cash amount that the Group is willing to pay for the promotion service. The Group also made reference to other similar promotion services where applicable. Where free online small-class course units were provided for referrals then they were valued on the same basis as if the equivalent number of Spark Coins needed for one online small-class course unit had been rewarded instead.

The values attributed to promotion services received from parents in exchange for Spark Coins and online small-class course units are RMB61,194 and RMB142,859 for the years ended

F-22

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(p) Revenue recognition (Continued)

December 31, 2019 and 2020, respectively, which are recorded as sales and marketing expenses. The Group recorded the same amounts as additions to deferred revenues in the same period. The Group recognized revenue of RMB17,284 and RMB65,648 as a result of the nonmonetary transaction described above for the years ended December 31, 2019 and 2020 respectively.

Practical expedients

The Group has used the following practical expedients as allowed under ASC 606:

(i) The effect of a significant financing component has not been adjusted for in contracts where the Group expects, at contract inception date, that the period between when the Group transfers a promised good or service to the customer and when the customer pays for that good or service will be one year or less.

(ii) The Group elected to expense the incremental costs of obtaining a contract with a customer as incurred when the expected amortization period is one year or less. There are no incremental costs of obtaining a contract with a customer with expected amortization period over 1 year that require capitalization.

(iii) The Group also elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Group from a customer.

Contract liability

Contract liability is related to the payments received by the Group in advance from customers representing the Group’s obligations to transfer goods or services to customers. Contract prices are generally collected in advance and recorded as deferred revenues. For online small-class courses and AI-enhanced courses, the Group offers customers a full and unconditional refund within the first three course sessions and first eight course sessions, respectively. After the expiration of such full refund period, customers can still receive a pro-rata unconditional refund for the sessions that have not been used. The contract liability does not include any amount that may be refunded in the future if a customer withdraws from any remaining undelivered lessons. Refund liability is estimated based on historical refund data and the length of the remaining period for which customers are eligible for a refund for each contract still unfulfilled at the end of each reporting period. Given the Group provides customers with the option to redeem Spark Coins for cash vouchers to be used on third-party e-commerce platforms, of which the Group is not the principal, contract liability does not include amounts that may be used to redeem the cash vouchers on the third-party e-commerce platforms in the future. Cash voucher liability is estimated based on the historical redemption ratio.

F-23

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(p) Revenue recognition (Continued)

The following table provides information about the Group’s contract liabilities arising from contracts with customers. The increase in contract liabilities primarily resulted from the Group’s organic business growth.

	As of December 31,
	2019		2020
	RMB		RMB
Contract liability		379,188		1,112,091
Future output VAT associated with contract liability		22,751		66,726
Refund liability		8,536		35,530
Cash voucher liability		455		2,409
Deferred revenues		410,930		1,216,756

The additions to the contract liability balance were primarily due to cash and noncash consideration received in advance of delivering performance obligations, while the reductions to the contract liability balance were primarily due to the recognition of revenues upon fulfillment of performance obligations.

The opening balance of contract liability as of January 1, 2019 was RMB39,296. RMB28,302 of revenue recognized in the year ended December 31, 2019 was included in the contract liability balance as of January 1, 2019. RMB365,682 of revenue recognized in year ended December 31, 2020 was included in the contract liability balance as of January 1, 2020. No revenue was recognized for the years ended December 31, 2019 and 2020 from performance obligations satisfied (or partially satisfied) in previous periods.

As of December 31, 2019 and 2020, the aggregate amount of the transaction price allocated to unsatisfied performance obligations is RMB379,188 and RMB1,112,091. The Group expects to recognize substantially all this balance as revenue over the next 12 months, and the remainder thereafter.

Revenue Disaggregation

The following table presents the Group’s net revenues disaggregated by revenue sources:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Online small-class courses		193,863		1,123,243
AI-enhanced courses and others		1,549		51,116
Total net revenues		195,412		1,174,359

(q) Cost of revenues

Cost of revenues mainly consists of salaries, welfare and service fees for teachers and tutors, course materials, bandwidth costs, warehousing and other direct costs of providing these services.

F-24

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(r) Sales and marketing expenses

Sales and marketing expenses mainly consist of (i) marketing and promotional expenses, including the cost of branding activities, the promotion program and the referral program, and (ii) salaries and benefits, office rental expenses, depreciation and amortization of property and equipment related to the Group’s sales and marketing team. The Group expenses all advertising costs as incurred. For the years ended December 31, 2019 and 2020, advertising expenses were RMB71,201 and RMB386,059, respectively.

(s) Research and development expenses

Research and development expenses primarily consist of (i) salaries and benefits for research and development personnel, and (ii) office rental, general expenses and depreciation expenses associated with the research and development activities. The Group’s research and development activities primarily consist of the development and enhancement of the Group’s pedagogy, products, applications and platforms.

For internal use software, the Group expenses all costs incurred for the preliminary project stage and post implementation-operation stage of development, and costs associated with the repair or maintenance of the existing platforms. The amount of the Group’s research and development expenses that qualify to be capitalized during the periods presented was immaterial, and as a result all development costs incurred for development of internal used software have been expensed as incurred.

(t) Share-based compensation

The Group grants options to its employees with service conditions attached. Such compensation is classified as equity awards and measured at the grant date based on the fair value of the awards, which is in accordance with ASC 718, Compensation-Stock Compensation.

Options granted to employees with service condition periods only are classified as equity awards and are measured at the grant date based on the fair value of the awards. The compensation expense is recognized using the straight-line method over the requisite service period, and the Group elects to account for forfeitures when they occur. The share-based compensation expenses have been categorized as either cost of revenues, sales and marketing expenses, research and development expenses or general and administrative expenses depending on the nature of the role performed by grantees.

The Group adopts the binomial option pricing model to determine the fair value of stock options. The determination of the fair value is affected by the share price as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected employee share option exercise behavior, risk-free interest rates and expected dividends. The fair value of the ordinary shares is 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.

F-25

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(t) Share-based compensation (Continued)

Restricted shares

On January 3, 2017, in Series A Preferred Shares financing, Founders entered into Share Restriction Agreements (“SRA”) with the Company. According to the agreements, all the shares then held by them became restricted and would be vested in periods of 48 months, with vesting commencement date on June 28, 2016. In the event the Founders ceases to be a full-time employee of the Group entities for any reason, the related founder shall sell to the Company, and the Company shall repurchase from the founder, all of the restricted shares (not vested shares) at a price of US$0.0001 per share. These escrowed share arrangements are considered compensatory and equivalent to a reverse stock split followed by the grant of restricted stocks. Accordingly, the Company recognizes compensation cost based on the fair value of the shares at the grant date and recognize that cost over the requisite service period. The unvested restricted shares are deemed as treasury stocks.

On June 13, 2018, in Series B+ Preferred Shares financing, another SRA was entered into among the same parties with the same term and condition, except for the effective date, the effective date was changed to November 1, 2017. Upon the modification, the Company would recognize the unrecognized compensation cost over modified requisite service period. Other than the shares treated as modification, the remaining shares that are subject to restriction as of Jun 13, 2018, were treated as new grants.

On July 30, 2019, in Series D Preferred Shares financing, another SRA was entered into among the same parties with the same term and condition, except for the vesting schedule. The vesting schedule was changed to 25% of the Restricted Shares be vested on effective date, that is July 30, 2019, and 75% in equal annual installments over the three (3)-year period after the effectively date. On April 14, 2020, the vesting condition of Mr. Jian Luo is changed as 9,923,687 vested on July 30, 2019 and the remaining in equal annual installments over the three (3)-year period after July 30, 2019. The modification on July 30, 2019 and April 14, 2020 are treated in the same way as the modification on June 13, 2018.

(u) Employee social security and welfare benefits

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, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries and the VIE of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions made. Employee social security and welfare benefits included as expenses in the consolidated statements of operations and comprehensive loss amounted to RMB168,572 and RMB239,379 for the years ended December 31, 2019 and 2020, respectively. The total balances of employee welfare benefits, including the accruals for estimated underpaid amounts, were approximately RMB91,917 and RMB192,761 as of December 31, 2019 and 2020 respectively.

F-26

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(v) Taxation

Income taxes

Current income taxes are provided based on income/(loss) 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. Deferred income taxes are provided using the liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of operations and comprehensive loss in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all the deferred tax assets will not be realized.

Uncertain tax positions

In order to assess uncertain tax positions, the Group applies a more likely than not threshold and a two-step approach for the tax position measurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not, that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Group recognizes interest and penalties, if any, under accrued expenses and other current liabilities on its consolidated balance sheets and under other expenses in its consolidated statements of operations and comprehensive loss. The Group did not have any significant unrecognized uncertain tax positions as of December 31, 2019 and 2020 nor did the Group recognize any related interest and penalties.

(w) Net loss per share

Net loss per share is computed in accordance with ASC 260, “Earnings per Share”. In the event the Group has net income available for distribution, net income is allocated between ordinary shares and other participating securities based on their participating rights. Net losses are not allocated to other participating securities as they are not obligated to share the losses based on their contractual terms. Basic net loss per share is computed by dividing the net loss attributable to ordinary shareholders, after considering the accretion of convertible redeemable preferred shares to redemption value and deemed dividends due to extinguishment of preferred shares, by the weighted average number of ordinary shares outstanding during the year. Diluted net loss per share is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period under the treasury stock method. Potential ordinary shares include options to purchase ordinary shares and preferred shares, unless they were anti-dilutive. The computation of diluted net loss per share does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect (i.e. an increase in earnings per share or a decrease in loss per share) on the net loss per share.

F-27

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(x) Comprehensive loss

Comprehensive loss is defined to include all changes in equity/(deficit) of the Group during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive loss includes net loss and foreign currency translation adjustments of the Group.

(y) Segment reporting

Operating segments are defined as components of an enterprise engaging in businesses activities for which separate financial information is available that is regularly evaluated by the Group’s chief operating decision maker in deciding how to allocate resources and assess performance. The Group’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews consolidated results including revenue, gross profit and operating profit at a consolidated level only. The Group does not distinguish between markets for the purpose of making decisions about resources allocation and performance assessment. Hence, the Group has only one operating segment. The Group operates business mainly on the internet, so it also has overseas customers. For the years ended December 31, 2019 and 2020, total net revenues generated from China were RMB195,208 and RMB1,126,521, and total net revenues generated from overseas were RMB204 and RMB47,838, respectively.

(z) Government subsidy

As part of the Chinese government’s effort to ease the burden of businesses affected by the coronavirus (COVID-19), the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration temporarily reduced and exempted employer obligations for social security contributions from February 2020. The impact of the coronavirus policies on welfare expenses was RMB46,015 for the year ended December 31, 2020, reducing the welfare expenses in the cost of revenues, sales and marketing expenses, research and development expenses and general and administrative expenses.

In addition, the Ministry of Finance and the State Taxation Administration jointly announced on February 6, 2020 that paying output value-added tax (“VAT”) related to specific consumer services could be waived, effective from January 2020. Companies with eligible revenues can voluntarily elect to take advantage of this policy, which is valid until March 31, 2021. In connection with this election, the allowable offset of input VAT is suspended, reducing the benefit to the Group to the net amount that it would ordinarily remit to the authorities. The favorable impact of this relief policy was nil and RMB11,120, for the years ended December 31, 2019 and 2020, respectively. And it has been recognized as a government subsidy in other income in the consolidated statements of operations and comprehensive loss.

On September 30, 2019, Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, a taxpayer engaging in the provision of consumer services is allowed to credit the amount of input VAT deductible in the current period plus 15% thereof against the amount of taxes payable. The impact of the policy of additional value-added tax credit for the income generated by consumer services provided by enterprises was RMB808 and RMB5,673 for the years ended December 31, 2019 and 2020 respectively. And it has been recognized as a

F-28

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(z) Government subsidy (Continued)

government subsidy in other income in the consolidated statements of operations and comprehensive loss.

(aa) Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The guidance replaced the incurred loss impairment methodology with an expected credit loss model for which an entity recognizes an allowance based on the estimate of expected credit losses. For public companies, the amendments were effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal year. Early adoption is permitted. The Group early adopted this guidance on January 1, 2019, and the adoption did not have a material impact on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower cost and reduce volatility in the income statement. The guidance was effective for public business entities in annual periods beginning after December 15, 2018, and interim periods within those years. The Group adopted such pronouncement on January 1, 2019. The adoption did not have a material impact to the Group’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-1, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which was effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted from the date of issuance. The Group elected to early adopt this guidance on January 1, 2019, and the adoption did not have a material impact on its consolidated financial statements.

(ab) Recently issued accounting pronouncements not yet adopted

In December 2019, the FASB issued ASU No. 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance eliminates certain exceptions related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. For public business entities, the amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after

F-29

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

2. Summary of Significant Accounting Policies (Continued)

(ab) Recently issued accounting pronouncements not yet adopted (Continued)

December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The impact of this standard to the Group’s consolidated financial statements is immaterial.

3. Concentration and Risks

(a) Credit and concentration risk

Financial instruments that potentially expose the Group to significant concentration of credit risk primarily consist of cash and cash equivalents, short-term investments and time deposits. As of December 31, 2019 and 2020, substantially all the Group’s cash and cash equivalents, short-term investments and time deposits were held in major financial institutions located in Mainland China and Hong Kong, which management considered to be of high credit quality.

(b) Major customers and suppliers

There were no customers whose revenues individually represented greater than 10% of the net revenues of the Group for the years ended December 31, 2019 and 2020.

Also, there were no suppliers that individually represented greater than 10% of the cost of revenues of the Group for the years ended December 31, 2019 and 2020.

(c) Concentration of foreign currency risks

For the years ended December 31, 2019 and 2020, most of the Group’s revenues were received in RMB. As of December 31, 2019 and 2020, the Group’s cash and cash equivalents, short-term investments and time deposits balances denominated in RMB were RMB142,644 and RMB566,359 respectively, accounting for 28% and 27% of the Group’s total cash and cash equivalents, short-term investments and time deposits balances.

RMB is not freely convertible into foreign currencies. The value of the RMB is affected by changes in central government policies and international economic and political developments. In PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by companies in China must be processed through the PBOC or other PRC foreign exchange regulatory bodies and requires certain supporting documentation in order to affect the remittance.

F-30

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

4. Prepaid expenses and other current assets

	As of December 31,
	2019		2020
	RMB		RMB
Prepayments for value-added tax		18,736		25,916
Deferred cost of learning kits		6,877		19,545
Receivables from third-party payment platforms		3,893		29,883
Prepayments for promotion fees		196		21,938
Deposits		1,447		4,622
Others		17,251		14,087
Total		48,400		115,991

5. Property and Equipment, Net

	As of December 31,
	2019			2020
	RMB			RMB
Leasehold improvements		74,883			101,946
Finance leased computers		34,217			38,168
Servers, office and other equipment		4,463			6,457
Total		113,563			146,571
Less: accumulated depreciation		(31,396	)		(64,615	)
Net book value		82,167			81,956

Depreciation expenses recognized for the years ended December 31, 2019 and 2020 were RMB30,712 and RMB 51,782, respectively.

6. Taxation

(a) Value-added tax (“VAT”)

The Group’s services are subject to VAT at the rate of 3% for small-scale-VAT-payer entities or at the rate of 6% for general-VAT-payer entities in accordance with relevant PRC tax rules.

(b) Income tax

Composition of income tax

The Group did not have any current or deferred income tax expense for the years ended December 31, 2019 and 2020.

Cayman Islands

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company in the Cayman Islands to their shareholders, no Cayman Islands withholding tax will be imposed. No provision for income taxes in Cayman Islands has been made as the Company had no taxable income for the years ended December 31, 2019 and 2020.

F-31

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

6. Taxation (Continued)

(b) Income tax (Continued)

Hong Kong

The subsidiary incorporated in Hong Kong was subject to Hong Kong profits tax at a rate of 16.5% for taxable income earned in Hong Kong before April 1, 2018. Starting from the financial year commencing on April 1, 2018, the two-tiered profits tax regime took effect, under which the tax rate is 8.25% for assessable profits on the first HK$2 million and 16.5% for any assessable profits in excess of HK$2 million. Payments of dividends to its shareholders are not subject to withholding tax in Hong Kong. No provision for Hong Kong profits tax was made as the Group had no estimated assessable profit that was subject to Hong Kong profits tax for the years ended December 31, 2019 and 2020.

PRC

Under the PRC Enterprise Income Tax Law (“EIT Law”), the standard enterprise income tax rate is 25%. Entities qualifying as High and New Technology Enterprises (“HNTE”) qualify for a preferential tax rate of 15% subject to a requirement that they re-apply for HNTE status every three years.

Xingengyuan initially qualified as a HNTE in 2018, and is subject to a preferential tax rate of 15% from 2018 to 2021. As of December 31, 2020, Xingengyuan was in an accumulative loss position.

All other PRC incorporated entities of the Group were subject to a 25% income tax rate for all the periods presented and were in an accumulative loss position.

According to relevant laws and regulations promulgated by the State Administration of Tax of the PRC effective from 2008 onwards, enterprises engaging in R&D activities are entitled to claim 175% of their qualified research and development expenses so incurred as tax deductible expenses when determining their assessable profits for the year (‘Super Deduction’). The additional deduction of 75% of qualified research and development expenses can only be claimed directly in the annual EIT filing and subject to the approval from the relevant tax authorities.

The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its entities registered outside of the PRC should be considered as resident enterprises for PRC tax purposes. However, due to limited guidance and implementation history of the EIT Law, there is uncertainty as to the application of the EIT Law. Should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC income tax on worldwide income at a uniform tax rate of 25%.

F-32

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

6. Taxation (Continued)

(b) Income tax (Continued)

The following table presents a reconciliation of the differences between the statutory income tax rate and the Group’s effective income tax rate for the years ended December 31, 2019 and 2020:

	For the Year Ended December 31,
	2019		2020
	%		%
Statutory income tax rate		25%		25%
Permanent differences		(1%)		1%
Effect of preferential tax treatments		(2%)		(3%)
Effect on tax rates in different tax jurisdictions		(2%)		(1%)
Change in valuation allowance		(20%)		(22%)
Effective income tax rate		—		—

(c) Deferred tax assets

The following table presents the tax impact of net operating tax losses and significant temporary differences that give rise to the deferred tax assets and valuation allowance as of December 31, 2019 and 2020:

	As of December 31,
	2019			2020
	RMB			RMB
Deferred tax assets
Net operating tax losses carried forward		176,971			371,822
Advertising and promotion expenses in excess of deduction limits		3,798			15,846
Expense accruals		6,585			17,458
Less: valuation allowance		(187,354	)		(405,126	)
Total deferred tax assets, net		—			—

The following table sets forth the movement of the valuation allowances for deferred tax assets for the periods presented:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Balance as of January 1,		30,437		187,354
Change of valuation allowance		156,917		217,772
Balance as of December 31,		187,354		405,126

The tax losses of the Group expire over different time intervals depending on the local jurisdiction. Certain entity’s expiration periods for tax losses have been extended from five years to ten years in

F-33

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

6. Taxation (Continued)

(c) Deferred tax assets (Continued)

2020 due to new tax legislation. As of December 31, 2020, certain entities of the Group had net operating tax losses carried forward, which if not utilized, will expire as follows:

	RMB
Loss expiring in 2021		—
Loss expiring in 2022		11,588
Loss expiring in 2023		64,942
Loss expiring in 2024		520,410
Loss expiring in 2025 and thereafter		1,034,188
		1,631,128

(d) Withholding income tax

The EIT Law imposes a withholding income tax of 10% on dividends distributed by a foreign-invested enterprise (“FIE”) to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the previous EIT Law, which was effective before January 1, 2008. The Cayman Islands, where the Company is incorporated, does not have such a tax treaty with China. According to the arrangement between Mainland China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate that may be lowered to 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). The State Administration of Taxation (“SAT”) further promulgated Circular 601 on October 27, 2009, which provides that tax treaty benefits will be denied to “conduit” or shell companies without business substance and that a beneficial ownership analysis will be used based on a “substance-over-form” principle to determine whether or not to grant the tax treaty benefits.

As of December 31, 2019, and 2020, the Group did not record any withholding income tax as the PRC entities were still in an accumulated deficit position.

7. Taxes Payable

The following is a summary of taxes payable as of December 31, 2019 and 2020:

	As of December 31,
	2019		2020
	RMB		RMB
Withholding individual income taxes for employees		16,869		27,257
VAT payable		513		5,055
Others		—		724
Total		17,382		33,036

F-34

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

8. Accrued expenses and other current liabilities

	As of December 31,
	2019		2020
	RMB		RMB
Salary, welfare and service fees payable		167,325		353,465
Accrued marketing expenses		6,111		75,169
Accrued professional fees		1,345		6,158
Accrued administrative expenses		3,717		9,648
Others		2,350		8,372
Total		180,848		452,812

9. Ordinary Shares

The Company was incorporated in the Cayman Islands on July 18, 2016. Upon its incorporation, 64,420,000 ordinary shares were issued at a par value of US$0.0001 per share, including 56,045,400 ordinary shares issued to the Founders, and 8,374,600 ordinary shares issued to 6 angel investors. In January 2017, 5,218,984 ordinary shares were issued and held by one of Founders, which were reserved for the future exercise of 5,218,984 options granted to certain employees of the Group.

In May 2018, the Company repurchased 1,334,703 ordinary shares from one of the Founders for cash consideration of RMB2,859. Concurrently, the Company issued Series B Preferred Shares to one of the Series B Preferred Share subscribers for the same consideration of RMB2,859. This transaction was effectively a transfer between the founder and the Series B Preferred Share subscriber for which the Company did not receive any proceeds. The difference between the fair value and par value of the ordinary shares, which was RMB1,010, was allocated to the accumulated deficit; and the difference between the repurchase price and the fair value of the ordinary shares, which was RMB1,858, was accounted for as a compensation expense to the founder.

In July 2019, the Company repurchased 7,374,470 ordinary shares from the Founders for cash consideration of RMB73,571, including RMB16,509 for 1,525,575 ordinary shares held by one of the Founders and reserved for the future exercise of vested options. Concurrently, the Company issued 3,554,026 Series D Preferred Shares to Series D Preferred Share subscribers for cash consideration of RMB40,719 and issued 3,820,444 ordinary shares to ordinary share subscribers for cash consideration of RMB32,839. This was effectively a transfer between the Founders and either the Series D Preferred Shares subscribers or the new ordinary share subscribers, for which the Company did not receive any proceeds. When accounting for the repurchase, the difference between the fair value and par value of the ordinary shares, which was RMB19,872, was allocated to the accumulated deficit; and the difference between the repurchase consideration and the fair value of the ordinary shares, which was RMB32,214, was accounted for as a compensation expense to the Founders.

In July 2019, the Company also repurchased 1,206,081 ordinary shares from two shareholders, for total consideration of RMB10,367. Concurrently, the Company issued ordinary shares to unrelated shareholders, and received consideration of RMB10,367. This was effectively a transfer between the selling and buying ordinary shareholders for which the Company did not receive any proceeds. Neither the seller nor the buyer were officers or employees of the Company. When accounting for the repurchase, the difference between the repurchase price and the fair value of the ordinary shares,

F-35

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

9. Ordinary Shares (Continued)

which was RMB3,606, was accounted for as a deemed dividend and allocated to the accumulated deficit, and the difference between the issuance price and the fair value of the ordinary shares, which was RMB3,606, was recorded as additional paid-in capital.

In July 2020, the Company repurchased 2,892,803 ordinary shares from two ordinary shareholders, for total consideration of RMB54,309. Concurrently, the Company issued Series E-1 preferred shares to one of the Series E-1 preferred share subscribers and received consideration of RMB 54,309. This was effectively a transfer between the selling ordinary shareholders and the Series E-1 preferred shares subscribers for which the Company received no proceeds. Neither the selling ordinary shareholders nor the Series E-1 preferred shares subscribers were officers or employees of the Company. When accounting for the repurchase, the difference between the fair value and par value of the ordinary shares, which was RMB36,598, was allocated to the accumulated deficit; and the difference between the repurchase price and the fair value of the ordinary shares, which was RMB17,780, was accounted for as deemed dividend to the selling ordinary shareholders and allocated to the accumulated deficit.

Other transactions involving ordinary shares occurred amongst the ordinary shareholders, mainly 3,693,615 ordinary shares transferred from certain angel investors to one of the Founders in April 2018, and 2,147,036 ordinary shares transferred from one of the Founders to certain investors in March 2020, which did not impact the Group’s consolidated financial statements.

Concurrent with the issuance of Series E-1 convertible redeemable preferred shares in July 2020, the Company re-designated 50,408,381 ordinary shares held by the Founders as Class B ordinary shares. The 3,693,409 ordinary shares held by one of the Founders for future exercise of options granted to certain employees, and ordinary shares held by all other shareholders were re-designated into Class A ordinary shares. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for the conversion and voting rights. Each Class A Ordinary Share is entitled to one vote, and each Class B Ordinary Share is entitled to eight votes. Class B ordinary shares are convertible into Class A ordinary shares at any time, at the Class B ordinary shareholder’s sole discretion.

Concurrently with each round of preferred shares financing, the Founders entered into share restriction agreements (“SRAs”) with the Company and the preferred shares investors. According to the SRAs, certain ordinary shares held by the Founders by then became restricted and were to be vested over certain periods. Such arrangements were considered compensatory in nature and equivalent to a reverse stock split followed by the grant of restricted stock, the restricted ordinary shares are not considered outstanding from accounting perspective until they become vested. As of December 31, 2019 and 2020, 39,416,563 and 26,277,709 ordinary shares held by the Founders were still restricted and subject to future vesting. For details of the SRAs please see Note 11.

Also, as of December 31, 2019, one of the Founders still held 3,693,409 ordinary shares issued which were reserved for the future exercise of certain options granted to employees. These ordinary shares were not considered outstanding from an accounting perspective. In September 2020, these 3,693,409 ordinary shares were surrendered to the Company.

As of December 31, 2019, 337,883,319 ordinary shares were authorized, and 64,750,255 ordinary shares were issued, and 21,640,283 ordinary shares were outstanding.

F-36

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

9. Ordinary Shares (Continued)

As of December 31, 2020, 505,181,536 Class A ordinary shares and 50,408,381 Class B ordinary shares were authorized, 7,755,662 Class A ordinary shares and 50,408,381 Class B ordinary shares were issued, and 7,755,662 Class A ordinary shares and 24,130,672 Class B ordinary shares were outstanding.

10. Convertible Redeemable Preferred Shares

The following table summarizes the issuances of convertible redeemable preferred shares up to December 31, 2020:

Series	Issuance Date	Shares Issued		Issue Price per Share	Aggregated issuance price
A	January 3, 2017		22,973,381	US$ 0.30	US$ 7,000
B	May 10, 2018		30,994,766	US$ 0.34	US$ 10,450
B+	June 13, 2018		33,367,574	US$ 0.45	US$ 15,000
C	November 12, 2018		29,167,458	US$ 1.03	US$ 30,000
D	July 30, 2019		45,613,502	US$ 1.66	US$ 75,915
D+	April 14, 2020		8,411,895	US$ 2.38	US$ 20,000
E-1	July 21, 2020		43,868,754	US$ 2.92	US$ 128,000
E-2	September 22, 2020		30,845,218	US$ 2.92	US$ 90,000

The key terms of the preferred shares are as follows:

Conversion Rights

Preferred shares of the Company are convertible to Class A ordinary shares at any time at the option of the holders, and would automatically be converted into Class A ordinary Shares: 1) upon a qualified IPO (“QIPO”); or 2) upon the written consent of the holders of a majority of the outstanding preferred shares of each class with respect to conversion of each class.

The initial conversion ratio of preferred shares to ordinary shares shall be 1:1, and shall be subject to adjustment and readjustment from time to time for share splits and combinations, ordinary share (on an as converted basis) dividends and distributions, reorganizations, mergers, consolidations, reclassifications, exchanges, substitutions, and dilutive issuance.

Redemption Rights

The Company shall redeem, at the option of any holder of outstanding preferred shares, all or any part of the outstanding preferred shares held by the requesting holder, upon the following redemption events: (i) the Company’s failure to complete a QIPO within five (5) years after the date of the Series E-1 preferred shares issuance closing , or (ii) any occurrence of a material breach or any material change of the relevant laws or the occurrence of any other factors, which has resulted or is likely to result in the Company’s inability to control and consolidate the financial statements of any of the PRC subsidiaries or VIE. Each preferred share shall be redeemable at the option of such preferred shareholder, out of funds legally available therefor by the Company.

The preferred shares’ redemption price shall be equal to the respective preferred shares’ issue price compounded with an interest rate of 6% per annum, plus all declared but unpaid dividends

F-37

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

10. Convertible Redeemable Preferred Shares (Continued)

Redemption Rights (Continued)

thereon up to the date of redemption, proportionally adjusted for any share splits, share dividends, share combinations, recapitalizations or the like.

Upon redemption, Series E-2 and Series E-1 Preferred Shares shall rank senior to Series D+ Preferred Shares, Series D+ Preferred Shares shall rank senior to Series D Preferred Shares, Series D Preferred Shares shall rank senior to Series C Preferred Shares, Series C Preferred Shares shall rank senior to Series B+ Preferred Shares, Series B+ Preferred Shares shall rank senior to Series B Preferred Shares, Series B Preferred Shares shall rank senior to Series A Preferred Shares.

Insufficient funds for redemption

If the Company’s assets or funds which are legally available on the date that any redemption payment is due are insufficient to pay in full all redemption payments, those assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all redemption amounts due on such date on the preferred shares in proportion to the full amounts to which the holders to which such amounts due would otherwise be respectively entitled, and the Company shall execute and deliver to each holder a promissory note for the full amount of the redemption payment due but not paid to such holder.

Liquidation preference

Upon any deemed liquidation event, including as defined below, prior to and in preference to any distribution of any of the assets of the Company to the ordinary shareholders, the preferred shareholders shall be entitled to receive:

• an amount equal to 100% of the relevant applicable original preferred share issue price (as adjusted), plus all dividends accrued but unpaid with respect thereto each series of preferred shares then held by such holder; and

• if the assets of the Company available for distribution to shareholders shall be insufficient to pay the preferred shareholders, the preferred shareholders shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

A ‘Deemed Liquidation Event’ shall be deemed to be any change of control event such as a liquidation, dissolution or winding up, merger and acquisition, reorganization of the Company, a sale, transfer, lease or other disposition of all or substantially all of the assets of any entities in the Group, or the exclusive, irrevocable licensing of all or substantially all of intellectual property of any entities in the Group to a third party.

Terms regarding the liquidation preference were modified during the issuance of Series E-1 preferred shares, whereby the calculation of the liquidation payment was changed from 120% of the original issuance price to 100%. All other liquidation preference terms remained unchanged.

F-38

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

10. Convertible Redeemable Preferred Shares (Continued)

Dividend Rights

Shareholders of the preferred shares shall be entitled to receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the adjusted original preferred share issue price, payable in cash when and as such cash becomes legally available therefore; provided that such dividends or distributions shall be payable only when, as, and if declared by the Company’s Board of Directors.

After receiving the dividends pursuant to the above, the holders of the preferred shares shall also be entitled to participate pro rata in any dividends or distributions set out or paid in any fiscal year to the holders of ordinary shares on an as-converted basis.

Voting Rights

All holders of preferred shares shall be entitled to such number of votes as equals the whole number of ordinary shares into which such holder’s collective preferred shares are then held, on an as-if converted basis.

Ordinary shares were divided into Class A and Class B ordinary shares concurrently with the issuance of Series E-1 preferred shares. Holders of Class A and Class B ordinary shares shall have 1 vote and 8 votes, respectively, for each share they held. All preferred shares are convertible into Class A ordinary shares.

(1) Accounting for preferred shares

The Company has classified the preferred shares in the mezzanine equity of the consolidated balance sheets because they were redeemable at the holders’ option upon the occurrence of Deemed Liquidation Events and certain events outside the Company’s control. The issuance of the preferred shares is recognized at the respective issue price at the date of issuance, net of issuance costs.

When assessing the accounting for the embedded features, including the conversion features, redemption features and liquidation features of preferred shares, the Company first determined the host contract of the preferred shares is more akin to debt-like, given the preferred shareholders have potential creditors’ rights in the event that there are insufficient funds available upon redemption, along with other debt-like features including the redemption rights.

The equity-like conversion feature is considered not clearly and closely related to the debt host, but the conversion feature also does not meet the definition of a derivative instrument, since the contractual terms do not permit net settlement of the conversion features. Therefore, the conversion feature is not bifurcated and accounted for separately. For the redemption feature, as it would not result in any substantial premium or discount, nor would it accelerate the repayment of the contractual principal amount, it is assessed to be clearly and closely related to the debt host, and therefore shall not be bifurcated and accounted for separately. The liquidation preference, on the other hand, may result in a substantial premium and could accelerate the repayment of the principal upon occurrence of contingent redemption events. Hence, the liquidation preference is considered not clearly and closely related to the debt host and should be bifurcated and accounted for separately. The Company assessed the fair value of the derivative liability arising from the liquidation preference and concluded

F-39

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

10. Convertible Redeemable Preferred Shares (Continued)

(1) Accounting for preferred shares (Continued)

that the fair value of the bifurcated liquidation feature was insignificant initially and as of December 31, 2019 and 2020.

The Company also determined that the conversion prices were higher than the estimated fair values of the ordinary shares on the issuance dates of each series of preferred shares and as such that there was no beneficial conversion feature embedded in the issuance of the preferred shares.

The Company recognized accretion to the respective redemption value of the preferred shares over the period starting from issuance date to the fifth (5th) anniversary of Series E-1 preferred shares issuance date, which is July 21, 2025. using the effective interest method. The accretions are recorded against retained earnings, or in the absence of retained earnings, by charges against additional paid-in capital. Once addition paid-in capital has been exhausted, additional charges are recorded by increasing the accumulated deficit. The Company recognized accretion of the preferred shares amounted to RMB40,788 and RMB100,895 for the year ended December 31, 2019 and 2020, respectively.

(2) Accounting for Modifications

As mentioned above, concurrently with the issuance of Series E-1 preferred shares, the liquidation payment calculation for all preferred shares issued prior to Series E-1 preferred shares was changed from 120% to 100% of the original issuance price of the respective preferred shares. The Company evaluated the change in accordance with its accounting policy and concluded that this is a modification, rather than an extinguishment of preferred shares, since the fair value before and after the modification is not substantially different. The modification of liquidation payment resulted in a value transfer from preferred shareholders to ordinary shareholders. This modification should be analogizing to the share-based payment model. Under that model, modifications that result in a decrease in the fair value of an equity-classified share-based payment award are not recognized. By analogizing to the share-based payment model, this modification, that result in a decrease in the fair value of preferred shares of RMB9,151, was not be recognized.

(3) Accounting for the Extinguishment of preferred shares related to a Series B Investor

In July 2020, concurrent with the issuance of Series E-1 preferred shares, the Company repurchased 832,465 Series B preferred shares from an investor for consideration of RMB15,629. The Company assessed and concluded that the reduction of shares is an extinguishment of mezzanine equity. A loss of RMB13,415, which was the difference between the repurchase price and the carrying value of preferred shares upon the repurchase date, was recorded in accumulated deficit.

F-40

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

10. Convertible Redeemable Preferred Shares (Continued)

The Company’s preferred shares activities for the year ended December 31, 2019 and 2020 are summarized as below:

	Series A				Series B						Series B+				Series C				Series D				Series D+				Series E-1				Series E-2				Total
	Number of shares		Amount		Number of shares			Amount			Number of shares		Amount		Number of shares		Amount		Number of shares		Amount		Number of shares		Amount		Number of shares		Amount		Number of shares		Amount		Number of shares			Amount
			RMB					RMB					RMB				RMB				RMB				RMB				RMB				RMB					RMB
Balance as of January 1, 2019		22,973,381		53,319		30,994,766			69,444			33,367,574		102,602		29,167,458		204,138		—		—		—		—		—		—		—		—		116,503,179			429,503
Issuance of Series D Preferred Shares		—		—		—			—			—		—		—		—		45,613,502		521,730		—		—		—		—		—		—		45,613,502			521,730
Accretion of preferred share redemption value		—		3,280		—			4,525			—		6,426		—		13,105		—		13,452		—		—		—		—		—		—		—			40,788
Balance as of December 31, 2019		22,973,381		56,599		30,994,766			73,969			33,367,574		109,028		29,167,458		217,243		45,613,502		535,182		—		—		—		—		—		—		162,116,681			992,021
Issuance of Series D+ Preferred Shares		—		—		—			—			—		—		—		—		—		—		8,411,895		138,758		—		—		—		—		8,411,895			138,758
Issuance of Series E-1 Preferred Shares		—		—		—			—			—		—		—		—		—		—		—		—		43,868,754		881,344		—		—		43,868,754			881,344
Issuance of Series E-2 Preferred Shares		—		—		—			—			—		—		—		—		—		—		—		—		—		—		30,845,218		611,346		30,845,218			611,346
Accretion of preferred share redemption value		—		3,458		—			4,743			—		6,771		—		13,865		—		33,026		—		5,959		—		23,151		—		9,922		—			100,895
Repurchase of Series B		—		—		(832,465	)		(2,050	)		—		—		—		—		—		—		—		—		—		—		—		—		(832,465	)		(2,050	)
Balance as of December 31, 2020		22,973,381		60,057		30,162,301			76,662			33,367,574		115,799		29,167,458		231,108		45,613,502		568,208		8,411,895		144,717		43,868,754		904,495		30,845,218		621,268		244,410,083			2,722,314

F-41

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

11. Share-based Compensation

Share-based compensation expenses recognized during the years presented are as follows:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Share-based compensation expenses
Related to Incentive Compensation Plan		6,561		23,841
Related to Founders’ Restricted shares		17,981		22,969
Related to repurchase of Founders’ ordinary shares and certain vested options of employees		32,214		—
Total		56,756		46,810

Table below shows the summary of share-based compensation expenses:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Cost of revenues		774		1,873
Sales and marketing expenses		1,150		3,338
Research and development expenses		3,318		10,761
General and administrative expenses		51,514		30,838
Total		56,756		46,810

(a) Incentive Compensation Plan

2019 Incentive Compensation Plan

On November 14, 2019, the Group adopted the 2019 Incentive Compensation Plan (the “2019 Plan”), whereby the maximum aggregate number of ordinary shares that may be issued under the 2019 Plan is 29,183,325 Shares, 3,693,409 of which were issued to and held by one of the Founders, and 25,489,916 of which have been reserved for issuance in the future.

In September 2020, the 3,693,409 ordinary shares held by one of the Founders were surrendered to the Company and removed from the number of shares reserved for issuance under the 2019 Plan. Concurrently, the Company increased the number of the ordinary shares reserved from 25,489,916 to 32,861,206 with a new reservation of 7,371,290 ordinary shares for issuance under the 2019 Plan.

Any stock option granted under the 2019 Plan shall be subject to a four-year vesting schedule pursuant to which twenty-five percent of such option shall vest on the one year anniversary of the vesting commencement date, with the remaining seventy-five percent to vest in equal semi-annually installments over the next three years.

F-42

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

11. Share-based Compensation (Continued)

(a) Incentive Compensation Plan (Continued)

The following table presents a summary of the Company’s options activities for the years ended December 31, 2019 and 2020:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual life		Weighted Average Fair value				Aggregate Intrinsic Value
				US$		Years		US$		RMB		US$		RMB
Outstanding as of January 1, 2019		14,271,367			0.0300		18.55		0.1192		0.8207		6,355		43,756
Granted		7,310,460			0.1584				0.5617		3.9388
Exercised		—			—				—		—
Forfeited		(303,104	)		0.1049				0.1425		0.9991
Outstanding as of December 31, 2019		21,278,723			0.0730		18.19		0.2709		1.8996		16,794		117,773
Granted		14,405,053			0.2898				1.8817		12.3101
Exercised		—			—				—		—
Forfeited		(1,286,304	)		0.6170				0.8203		5.3666
Outstanding as of December 31, 2020		34,397,472			0.1435		18.19		0.9249		6.0508		80,106		524,069
Vested and exercisable as of December 31, 2019		8,525,398			0.0191		16.26		0.0722		0.4726		20,915		146,673
Vested and exercisable as of December 31, 2020		13,723,329			0.0430		15.92		0.1834		1.2001		33,338		218,104

The Group recognizes share-based compensation expenses in its consolidated statements of operations and comprehensive loss based on awards ultimately expected to vest after considering actual forfeitures.

As of December 31, 2020, total unrecognized compensation expenses of the Group’s employees related to unvested awards were 179,873 and are expected to be recognized through the remaining vesting period of each grant. As of December 31, 2020, the weighted average remaining vesting period was 3.09 years.

F-43

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

11. Share-based Compensation (Continued)

(a) Incentive Compensation Plan (Continued)

Valuation

The Company uses a binomial option pricing model to determine the fair value of the options. The fair value of each option granted for the years ended December 31, 2019 and 2020 is estimated on the date of grant using the following assumptions:

	For the Year Ended December 31,
	2019			2020
Expected volatility		51.2%-53.0	%		53.6%-58.0	%
Expected dividends yield		—			—
Risk-free interest rate		1.9%-2.1	%		0.6%-0.9	%
Expected term (in years)		19.8-20.2			19.8-20.0
Exercise multiple		2.2-2.8			2.2-2.8
Fair value of underlying ordinary share (US$)		0.50-0.86			1.15-2.47
Expected forfeiture rate (post-vesting)		—			—

In order to determine the fair value of the Company’s ordinary shares, the Company first determined its equity value and then allocated the equity value to each element of its capital structure (preferred shares and ordinary shares) using the hybrid method, comprising of the probability-weighted expected return method and the option pricing method. In determining its equity value, the Company used the discounted cash flow (DCF) method of the income approach as the primary valuation approach, and to cross-check the reasonableness of results derived under the income approach by the market approach. The DCF analysis is performed using the projected cash flows developed by the Company based on its best estimates as of the valuation date. The determination of fair value requires complex and subjective judgments to be made regarding projected financial and operating results, unique business risks, the liquidity of shares and operating history and prospects at the time of valuation. The major assumptions are discount rate used in the DCF analysis and discount for lack of marketability (DLOM). The discount rates applied in the DCF analysis are based on the weighted average cost of capital (WACC) determined after considering factors including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors; while the DLOM was estimated based on the Finnery Average-Strike put options model. Under this option-pricing method, which assumed that the put option is struck at the average price of the stock before the privately held shares can be sold, the cost of the put option was considered as a basis to determine the DLOM.

The expected volatility at each option valuation date was estimated based on the annualized standard deviation of the daily return embedded in historical share prices of comparable peer companies with a time horizon close to the expected expiry of the term of the options. The Company has never declared or paid any cash dividends on its capital stock, and the Company does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options. The Company estimated the risk-free interest rate based on the yield to maturity of U.S. treasury bonds denominated in USD at the option valuation date.

F-44

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

11. Share-based Compensation (Continued)

(a) Incentive Compensation Plan (Continued)

Option Modifications

In December 2020, a portion of the share options granted under Incentive Option Plan were exercised early, and the resulting ordinary shares were transferred to trusts with the original option grantees as beneficiaries. The trusts will distribute the ordinary shares to those beneficiaries in installments based on the vesting requirements under the original option agreements. Although these trust arrangements caused a modification of the terms of these share options, the modification was not considered substantive. Accordingly, no incremental fair value related to these ordinary shares resulted from the modification, and the remaining share-based compensation expense for these ordinary shares continued to be recognized over the original remaining vesting period.

(b) Founders’ Restricted Shares

On January 3, 2017, as part of the Series A Preferred Shares financing, the Founders each entered into a share restriction agreement (collectively the “Share Restriction Agreements”, or “SRAs”) with the Company. According to the SRAs, 56,045,400 shares then held by founders became restricted (the “Restricted Shares”) and will be vested in equal installments over the 48-month period after June 28, 2016 (the “Effective Date”). In the event one or both of the Founders ceases to be a full-time employee of the Group entities for any reason, the related founder shall sell to the Company, and the Company shall repurchase from the founder, all of that founder’s restricted shares (that are not vested) at a price of US$0.0001 per share. These escrowed share arrangements are considered compensatory and equivalent to a reverse stock split followed by the grant of restricted stock. Accordingly, the Company recognizes compensation cost based on the fair value of the shares at the grant date and recognizes that cost over the requisite service period.

On June 13, 2018, as part of the Series B+ Preferred Shares financing, another SRA was entered into among the same parties with the same terms and conditions, except for the Effective date, which was changed to November 1, 2017. Upon the modification, 23 out of 48 installments (representing 26,855,085 shares) of the original award had vested, and 25 out of 48 installments (representing 29,190,315 shares) of the original award, were yet to vest. After the modification, 8,517,294 shares remained as vested and 49,887,018 shares were subject to further vesting. Therefore, the 29,190,315 shares to be vested were treated as a modification and 20,696,703 shares were treated as a new grant. Since the awards are classified as equity and the modification is probable to probable, and there was no modification of terms affecting the estimate of fair value, therefore, there is no incremental value resulting from the modification. Upon the modification, the Company recognized the unrecognized compensation cost over the modified requisite service period. Other than the shares treated as modification, the remaining 20,696,703 shares that were subject to restriction as of June 13, 2018, were treated as a new grant.

On July 30, 2019, as part of the Series D Preferred Shares financing, another SRA was entered into among the same parties with the same terms and conditions, except for the vesting schedule. The vesting schedule was changed to 25% of the Restricted Shares be vested on the Effective date, which was changed to July 30, 2019, and 75% would be vested in equal annual installments over the three (3)-year period after the Effective date.

F-45

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

11. Share-based Compensation (Continued)

(b) Founders’ Restricted Shares (Continued)

On April 14, 2020, the vesting conditions of Mr. Jian Luo’s SRA were changed such that 9,923,687 shares were vested as at July 30, 2019 and the remaining were to vest in equal annual installments over the three (3)-year period starting from July 30, 2019.

The modification on July 30, 2019 and April 14, 2020 are treated in the same manner as described above for the modification on June 13, 2018 being that the awards are classified as equity, the modification is probable to probable, and there was no modification of terms affecting the estimate of fair value.

Related share-based compensation expense of RMB17,981 and RMB22,969 were recorded for the year ended December 31, 2019 and 2020.

As of December 31, 2020, total unrecognized compensation expenses of the Restricted shares to founders, were RMB36,367 and are expected to be recognized through the remaining vesting period of each grant. As of December 31, 2020, the remaining vesting period was 1.5 years.

(c) Repurchase of Founders’ ordinary shares

Concurrently with the issuance of the Company’s Series B preferred shares and Series D preferred shares, the Company repurchased a certain number of the Founders’ ordinary shares, and ordinary shares held by one of Founders but reserved for future exercise of employees’ vested options. The excess of the repurchase consideration over the fair value of the ordinary shares was recorded as share-based compensation expenses. For details please see Note 9.

12. Net Loss per Share

Basic and diluted net loss per share have been calculated in accordance with ASC 260- “Earnings Per Share” for the years ended December 31, 2019 and 2020:

	For the Year Ended December 31,
	2019			2020
	RMB			RMB
Numerator:
Net loss		(771,123	)		(951,695	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(100,895	)
Deemed dividends due to extinguishment of preferred shares		—			(13,415	)
Net loss attributable to ordinary shareholders of the Company		(811,911	)		(1,066,005	)
Denominator:
Weighted average number of ordinary shares outstanding, basic		24,770,658			29,605,885
Weighted average number of ordinary shares outstanding, diluted		24,770,658			29,605,885
Net loss per share, basic		(32.78	)		(36.01	)
Net loss per share, diluted		(32.78	)		(36.01	)

F-46

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

12. Net Loss per Share (Continued)

Basic and diluted net loss per share are computed using the weighted average number of ordinary shares outstanding during the period, including 1,436,655 and 3,696,414 weighted average vested options with little consideration of exercise price for the year ended December 31, 2019 and December 31, 2020.

For the years ended December 31, 2019 and 2020, the Company had potential ordinary shares, including preferred shares, share options granted and restricted shares. The following ordinary share equivalents were excluded from the computation of diluted net loss per ordinary share for the periods presented because including them would have had an anti-dilutive effect:

	For the Year Ended December 31,
	2019		2020
Preferred shares—weighted average		135,748,328		196,080,160
Share options—weighted average		878,973		4,502,447
Restricted shares—weighted average		12,932,624		3,259,606

13. Financial Instruments

Recurring

The following table sets forth the financial instruments measured or disclosed at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2019 and 2020:

	Fair Value Measurements
	Total		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2019
Short-term investments		10,472		—		10,472		—
Total		10,472		—		10,472		—

	Fair Value Measurements
	Total		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2020
Short-term investments		32,637		—		32,637		—
Total		32,637		—		32,637		—

Non-Recurring

As of December 31, 2019 and 2020, the Group had no financial assets or financial liabilities that were measured at fair value on a non-recurring basis.

F-47

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

13. Financial Instruments (Continued)

Assets and liabilities not measured at fair value but fair value disclosure is required

Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, time deposits, other receivables, accounts payable, deferred revenues, accrued expenses and other current liabilities, finance lease liabilities of which the carrying values approximate their fair value.

14. Leases

Operating Leases

Leases are classified as operating leases or finance leases in accordance with ASC842. The Group has operating leases for office space and finance leases for office computers that the Group utilizes under lease arrangements. For operating leases with terms greater than 12 months, the Group records the related assets and lease liability at the present value of lease payments over the terms. Certain leases include rental escalation clauses, renewal options and/or termination options, which are factored into the Group’s determination of lease payments when appropriate.

The components of operating lease cost for the year ended December 31, 2019 and 2020 were as follows:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Operating lease cost		39,483		55,376
Lease cost for leases with terms less than one year		197		618
Total lease cost		39,680		55,994

Supplemental cash flow information related to operating leases was as follows:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Cash paid for amounts included in the measurement of operating lease liabilities		33,957		53,120
Right-of-use assets obtained in exchange for operating lease liabilities		109,973		62,249

F-48

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

14. Leases (Continued)

Operating Leases (Continued)

Maturities of operating lease liabilities are as follows:

	As of December 31,
	2020
	RMB
2021		69,105
2022		29,403
2023		12,617
2024		581
2025 and thereafter		—
Total undiscounted lease payments		111,706
Less: imputed interest		6,519
Total lease liabilities		105,187

The following table provides a summary of the Group’s operating lease terms and discount rates for the year ended December 31, 2020:

	As of December 31,
	2019			2020
	RMB			RMB
Weighted average remaining lease term (years)		2.71			2.08
Weighted average discount rate (percentage)		4.75	%		4.75	%

Finance Leases

The components of finance lease cost for the year ended December 31, 2019 and 2020 were as follows:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Accumulated depreciation of property and equipment		12,856		18,641
Interest on the lease liabilities arising from finance leases		926		825
Total lease cost		13,782		19,466

Supplemental cash flow information related to finance leases was as follows:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Repayments of the principal portion of the lease liabilities		11,588		18,474
Interest on the lease liabilities		806		900

F-49

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

14. Leases (Continued)

Finance Leases (Continued)

Maturities of finance lease liabilities are as follows:

	As of December 31,
	2020
	RMB
2021		13,758
2022		5,694
2023		11
2024		—
2025 and thereafter		—
Total undiscounted lease payments		19,463
Less: imputed interest		588
Total lease liabilities		18,875

The following table provides a summary of the Group’s finance lease terms and discount rates for the year ended December 31, 2020:

	As of December 31,
	2019			2020
	RMB			RMB
Weighted average remaining lease term(years)		1.38			1.33
Weighted average discount rate(percentage)		4.75	%		4.75	%

15. Related Party Transactions

Major transaction amounts with related parties were as follows:

	For the Year Ended December 31,
	2019		2020
	RMB		RMB
Repayment of amount owed by Mr. Jian Luo (a)		17,350		—

(a) In 2018 Mr. Jian Luo acted as an intermediary for intra-group transactions between the Company, Beijing Spark Education and Xingengyuan. The cash flows in and out offset each other, and there was no personal benefit for Mr. Jian Luo. The outstanding balance of RMB17,350 was settled in early 2019. There were no further transactions or balances with related parties after this date.

F-50

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

16. Commitments and Contingencies

(a) Commitments

Products and services purchase commitments

Purchase commitments mainly included minimum commitments for non-cancellable advertising service contracts and inventory purchase contracts. Purchase commitments as of December 31, 2020 were as follows

	Total		Less than One Year		Over One Year
	RMB		RMB		RMB
Purchase commitments		43,063		43,063		—
Total		43,063		43,063		—

Operating lease commitments

As of December 31, 2020, operating lease commitments contracted but not yet reflected in the consolidated financial statements amounted to RMB34, all of which will fall due within one year.

b) Litigation

From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of any unresolved matters, individually and in the aggregate, is reasonably possible to have a material adverse effect on the Group’s financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the future. The Group records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis. The Group has not recorded any material liabilities in this regard as of December 31, 2019 and 2020.

17. Subsequent Events

In January, 2021, the Company issued 38,716,682 Series E-3 convertible redeemable preference shares with an issuance price of US$3.8756 per share for total cash consideration of US$150,000.

A Warrant was issued pursuant to the Series E-3 Share Subscription Agreement dated January 20, 2021 and entered into by the Company and one investor (the “Holder”). The Holder is entitled to purchase from the Company 2,567,667 Series E-3 shares of the Company with a par value of US$0.0001 per share (the “Warrant Shares”) for an exercise price of US$3.8756 and the aggregate purchase price of the Warrant Shares shall be US$10 million. In February 2021, the Holder exercised its right for all the Warrant Shares.

In March 2021, the Company adjusted the number of Class A Ordinary Shares reserved for future issuance under the 2019 Plan to 43,198,157 shares and to 48,557,859 shares upon the completion of a Qualified IPO prior to December 31, 2022.

F-51

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

17. Subsequent Events (Continued)

The Group has performed an evaluation of subsequent events through April 6, 2021, which is the date the consolidated financial statements are available to be issued, no other material events or transactions needing recognition or disclosure were found.

18. Restricted Net Assets

Relevant PRC laws and regulations permit payments of dividends by the Group’s entities incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Group’s entities in the PRC are required to annually appropriate 10% of their net after-tax income to the statutory general reserve fund prior to payment of any dividends, unless such reserve funds have reached 50% of their respective registered capital. As a result of these and other restrictions under PRC laws and regulations, the Company’s subsidiaries, the VIE and VIE’s subsidiaries incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances, which restricted portion amounted to RMB178,139 as of December 31, 2020. Except for the above, there is no other restriction on the use of proceeds generated by the Company’s subsidiaries, the VIE and VIE’s subsidiaries to satisfy any obligations of the Company.

19. Parent Company Only Condensed Financial Information

The Company performed a test on the restricted net assets of its consolidated subsidiaries and VIE in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial information for the Company only.

The subsidiaries did not pay any dividend to the Company for the years presented. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The footnote disclosures contain supplemental information relating to the operations of the Company, as such, these statements are not the general-purpose financial statements of the reporting entity and should be read in conjunction with the notes to the consolidated financial statements of the Company.

The Company did not have significant capital and other commitments or guarantees as of December 31, 2020.

F-52

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

19. Parent Company Only Condensed Financial Information (Continued)

Condensed Balance Sheets

	As of December 31,
	2019			2020			2020
	RMB			RMB			US$
							Note 2(e)
ASSETS
Cash and cash equivalents		33,133			760,530			116,556
Amounts due from inter-company entities		534,769			1,048,789			160,734
Total current assets		567,902			1,809,319			277,290
Total assets		567,902			1,809,319			277,290
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
LIABILITIES
Deficit of investments in subsidiaries and VIE		491,957			1,165,632			178,641
Amounts due to inter-company entities		32,146			30,615			4,692
Accrued expenses and other current liabilities		60			3,493			535
Taxes payable		8,503			7,953			1,219
Total current liabilities		532,666			1,207,693			185,087
Total liabilities		532,666			1,207,693			185,087
MEZZANINE EQUITY		992,021			2,722,314			417,213
SHAREHOLDERS’ DEFICIT
Ordinary shares		40			38			6
Treasury stock		(28	)		(19	)		(3	)
Additional paid-in capital		14,998			—			—
Accumulated deficit		(978,876	)		(2,037,451	)		(312,253	)
Accumulated other comprehensive income/(loss)		7,081			(83,256	)		(12,760	)
Total shareholders’ deficit		(956,785	)		(2,120,688	)		(325,010	)
Total liabilities, mezzanine equity and shareholders’ deficit		567,902			1,809,319			277,290

F-53

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

19. Parent Company Only Condensed Financial Information (Continued)

Condensed Statements of Operations and Comprehensive Loss

	For the Year Ended December 31,
	2019			2020			2020
	RMB			RMB			US$
							Note 2(e)
Operating expenses
General and administrative expenses		(50,195	)		(26,754	)		(4,100	)
Total operating expenses		(50,195	)		(26,754	)		(4,100	)
Loss from operations		(50,195	)		(26,754	)		(4,100	)
Interest expenses and other expenses, net		(1	)		—			—
Share of loss of subsidiaries and VIE		(720,927	)		(924,941	)		(141,754	)
Loss before income tax expense		(771,123	)		(951,695	)		(145,854	)
Income tax expense		—			—			—
Net loss		(771,123	)		(951,695	)		(145,854	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(100,895	)		(15,463	)
Deemed dividends due to extinguishment of preferred shares		—			(13,415	)		(2,056	)
Net loss attributable to ordinary shareholders of the Company		(811,911	)		(1,066,005	)		(163,373	)
Net loss		(771,123	)		(951,695	)		(145,854	)
Other comprehensive income/(loss):
Foreign currency translation adjustments		1,583			(90,337	)		(13,845	)
Total other comprehensive income/(loss)		1,583			(90,337	)		(13,845	)
Total comprehensive loss, net of tax		(769,540	)		(1,042,032	)		(159,699	)
Accretion of convertible redeemable preferred shares to redemption value		(40,788	)		(100,895	)		(15,463	)
Deemed dividends due to extinguishment of preferred shares		—			(13,415	)		(2,056	)
Total comprehensive loss attributable to ordinary shareholders of the Company		(810,328	)		(1,156,342	)		(177,218	)

F-54

SPARK EDUCATION LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data)

19. Parent Company Only Condensed Financial Information (Continued)

Condensed Statements of Cash Flows

	For the Year Ended December 31,
	2019			2020			2020
	RMB			RMB			US$
							Note 2(e)
Cash flows from operating activities:
Net cash provided by/(used in) operating activities		7,179			(103,369	)		(15,842	)
Cash flows from investing activities:
Capital injection to a subsidiary		(146,468	)		(172,192	)		(26,390	)
Loan made to a subsidiary		(519,837	)		(514,020	)		(78,777	)
Net cash used in investing activities		(666,305	)		(686,212	)		(105,167	)
Cash flows from financing activities:
Repurchase of ordinary shares		(77,658	)		(54,380	)		(8,334	)
Proceeds from issuance of ordinary shares		43,316			—			—
Proceeds from issuance of convertible redeemable preferred shares, net of issuance cost		521,730			1,631,448			250,030
Repurchase of Series B shares convertible redeemable preferred shares		—			(15,649	)		(2,398	)
Net cash provided by financing activities		487,388			1,561,419			239,298
Effects of exchange rate changes on cash and cash equivalents		1,438			(44,441	)		(6,811	)
Net (decrease)/increase in cash and cash equivalents		(170,300	)		727,397			111,478
Cash and cash equivalents at beginning of the year		203,433			33,133			5,078
Cash and cash equivalents at end of the year		33,133			760,530			116,556

F-55

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 6. Indemnification of Directors and Officers

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences or committing a crime. Under our post-offering memorandum and articles of association, which will become effective immediately prior to the completion of this offering, to the fullest extent permissible under Cayman Islands law every director and officer of our company shall be indemnified against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by him in connection with the execution or discharge of his duties, powers, authorities or discretions as a director or officer of our company, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere.

Pursuant to the form of indemnification agreements to be filed as Exhibit 10.2 to this Registration Statement, we will agree to indemnify our directors and executive officers against certain liabilities and expenses that they incur in connection with claims made by reason of their being a director or officer of our company.

The Underwriting Agreement, the form of which to be filed as Exhibit 1.1 to this Registration Statement, will also provide for indemnification of us and our officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 7. Recent Sales of Unregistered Securities

During the past three years, we have issued the following securities (including options to acquire our ordinary shares) without registering the securities under the Securities Act. We believe that each of the following issuances was exempt from registration under the Securities Act in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions, pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering and/or Rule 701 of the Securities Act. None of the transactions involved an underwriter.

Securities/Purchaser	Date of Sale or Issuance	Number of Securities	Consideration
Ordinary Shares
Hike Capital L.P.	July 30, 2019	1,020,861	US$1,274,271.78
GGV VII Investments, L.L.C.	July 30, 2019	2,861,189	US$3,571,428.57
GGV VII Plus Investments, L.L.C.	July 30, 2019	1,144,475	US$1,428,571.43
Kun Yu Holding Limited	March 5, 2020	2,147,036	US$2,680,000
Class A Ordinary Shares
Venus Mission Limited	July 24, 2020	3,693,409	Reclassified from the same number of ordinary shares held by Venus Mission Limited

II-1

Securities/Purchaser	Date of Sale or Issuance	Number of Securities	Consideration
Lightspeed China Partners III, L.P.	July 24, 2020	935,610	Reclassified from the same number of ordinary shares held by Lightspeed China Partners III, L.P.
GSR Ventures VI (Singapore) PTE. LTD.	July 24, 2020	667,352	Reclassified from the same number of ordinary shares held by GSR Ventures VI (Singapore) PTE. LTD.
GGV VII Investments, L.L.C.	July 24, 2020	2,861,189	Reclassified from the same number of ordinary shares held by GGV VII Investments, L.L.C.
GGV VII Plus Investments, L.L.C.	July 24, 2020	1,144,475	Reclassified from the same number of ordinary shares held by GGV VII Plus Investments, L.L.C.
Kun Yu Holding Limited	July 24, 2020	2,147,036	Reclassified from the same number of ordinary shares held by Kun Yu Holding Limited
Class B Ordinary Shares
Venus Mission Limited	July 24, 2020	46,135,857	Reclassified from the same number of ordinary shares held by Venus Mission Limited
Fun Kingdom Limited	July 24, 2020	4,272,524	Reclassified from the same number of ordinary shares held by Fun Kingdom Limited
Series B Preferred Shares
Venus Mission Limited	May 10, 2018	652,521	US$220,000
Lightspeed China Partners III, L.P.	May 10, 2018	2,966,006	US$1,000,000
GSR Ventures VI (Singapore) PTE. LTD.	May 10, 2018	1,334,703	US$450,000
Hike Capital L.P.	May 10, 2018	9,342,920	US$3,150,000
IDG China Venture Capital Fund IV L.P.	May 10, 2018	7,888,094	US$2,659,500
IDG China IV Investors L.P.	May 10, 2018	1,009,925	US$340,500
ANG YUE GLOBAL LIMITED	May 10, 2018	5,932,013	US$2,000,000
Universe Sourcecode Technology Ltd.	May 10, 2018	533,881	US$180,000
Series B+ Preferred Shares
Lightspeed China Partners III, L.P.	June 13, 2018	1,356,948	US$610,000.00
GSR Ventures VI (Singapore) PTE. LTD.	June 13, 2018	333,676	US$150,000.00
Hike Capital L.P.	June 13, 2018	756,332	US$340,000.00

II-2

Securities/Purchaser	Date of Sale or Issuance	Number of Securities	Consideration
IDG China Venture Capital Fund IV L.P.	June 13, 2018	1,774,821	US$797,850
IDG China IV Investors L.P.	June 13, 2018	227,233	US$102,150
SCC Venture VI Holdco, Ltd.	June 13, 2018	11,122,525	US$5,000,000.00
Sequoia Capital CV IV Holdco, Ltd.	June 13, 2018	11,122,524	US$5,000,000.00
Northern Light Venture Capital V, Ltd.	June 13, 2018	6,673,515	US$3,000,000.00
Series C Preferred Shares
Lightspeed China Partners III, L.P.	November 12, 2018	2,916,746	US$3,000,000.00
GSR Ventures VI (Singapore) PTE. LTD.	November 12, 2018	388,899	US$400,000.00
Hike Capital L.P.	November 12, 2018	1,555,598	US$1,600,000.00
IDG China Venture Capital Fund IV L.P.	November 12, 2018	2,714,980	US$2,792,475.00
IDG China IV Investors L.P.	November 12, 2018	347,603	US$357,525
SCC Venture VI Holdco, Ltd.	November 12, 2018	3,402,870	US$3,500,000.00
Sequoia Capital CV IV Holdco, Ltd.	November 12, 2018	3,402,870	US$3,500,000.00
Northern Light Venture Capital V, Ltd.	November 12, 2018	7,632,152	US$7,850,000.00
Everbay Investment Limited	November 12, 2018	6,805,740	US$7,000,000.00
Series D Preferred Shares
Lightspeed China Partners III, L.P.	July 30, 2019	1,405,988	US$2,340,000.50
Hike Capital L.P.	July 30, 2019	600,850	US$1,000,000.00
GGV VII Investments, L.L.C.	July 30, 2019	12,875,350	US$21,428,571.43
GGV VII Plus Investments	July 30, 2019	5,150,140	US$8,571,428.57
IDG China Venture Capital Fund IV L.P.	July 30, 2019	1,597,960	US$2,659,500.00
IDG China IV Investors L.P.	July 30, 2019	204,589	US$340,500.00
Northern Light Venture Capital V, Ltd.	July 30, 2019	1,802,549	US$3,000,000.00
Everbay Investment Limited	July 30, 2019	1,502,124	US$2,500,000.00
SCC Venture VII Holdco, Ltd.	July 30, 2019	5,407,647	US$9,000,000.00
GSR 2017 Opportunities (Singapore) Pte. Ltd.	July 30, 2019	3,049,312	US$5,075,000.08
ZETA ASIA HOLDINGS PTE. LTD.	August 27, 2019	12,016,993	US$20,000,000.00

II-3

Securities/Purchaser	Date of Sale or Issuance	Number of Securities	Consideration
Series D+ Preferred Shares
COSMIC BLUE INVESTMENTS LIMITED	April 14, 2020	8,411,895	US$20,000,000.00
Series E Preferred Shares
GSR Ventures VI (Singapore) PTE. LTD.	July 24, 2020	5,140,870	US$15,000,000.00
GGV VII Investments, L.L.C.	July 24, 2020	1,713,623	US$4,999,999.44
GGV VII Plus Investments, L.L.C.	July 24, 2020	6,854,493	US$20,000,000.67
IDG China Venture Capital Fund IV L.P.	July 24, 2020	911,476	US$2,659,500.00
IDG China IV Investors L.P.	July 24, 2020	116,698	US$340,500.00
LFC Investment Hong Kong Limited	July 24, 2020	6,854,493	US$20,000,000.00
SCC Venture VII Holdco, Ltd.	July 24, 2020	1,713,623	US$5,000,000.00
GSR 2017 Opportunities (Singapore) Pte. Ltd.	July 24, 2020	3,427,246	US$10,000,000.00
ZETA ASIA HOLDINGS PTE. LTD.	July 24, 2020	17,136,232	US$50,000,000.00
Series E+ Preferred Shares
Tencent Mobility Limited	September 22, 2020	13,708,986	US$40,000,000.00
Yuan Inc	September 22, 2020	6,854,493	US$20,000,000.00
CGI VIII Investments	September 22, 2020	10,281,739	US$30,000,000.00
Series E-1 Preferred Shares
GSR Ventures VI (Singapore) PTE. LTD.	Jan 20, 2021	5,140,870	Reclassified from the same number of Series E Preferred Shares held by GSR Ventures VI (Singapore) PTE. LTD.
GGV VII Investments, L.L.C.	Jan 20, 2021	1,713,623	Reclassified from the same number of Series E Preferred Shares held by GGV VII Investments, L.L.C.
GGV VII Plus Investments, L.L.C.	Jan 20, 2021	6,854,493	Reclassified from the same number of Series E Preferred Shares held by GGV VII Plus Investments, L.L.C.
IDG China Venture Capital Fund IV L.P.	Jan 20, 2021	911,476	Reclassified from the same number of Series E Preferred Shares held by IDG China Venture Capital Fund IV L.P.

II-4

Securities/Purchaser	Date of Sale or Issuance	Number of Securities	Consideration
IDG China IV Investors L.P.	Jan 20, 2021	116,698	Reclassified from the same number of Series E Preferred Shares held by IDG China IV Investors L.P.
LFC Investment Hong Kong Limited	Jan 20, 2021	6,854,493	Reclassified from the same number of Series E Preferred Shares held by LFC Investment Hong Kong Limited
SCC Venture VII Holdco, Ltd.	Jan 20, 2021	1,713,623	Reclassified from the same number of Series E Preferred Shares held by SCC Venture VII Holdco, Ltd.
GSR 2017 Opportunities (Singapore) Pte. Ltd.	Jan 20, 2021	3,427,246	Reclassified from the same number of Series E Preferred Shares held by GSR 2017 Opportunities (Singapore) Pte. Ltd.
ZETA ASIA HOLDINGS PTE. LTD.	Jan 20, 2021	17,136,232	Reclassified from the same number of Series E Preferred Shares held by ZETA ASIA HOLDINGS PTE. LTD.
Series E-2 Preferred Shares
Tencent Mobility Limited	January 20, 2021	13,708,986	Reclassified from the same number of Series E Preferred Shares held by Tencent Mobility Limited
Yuan Inc	January 20, 2021	6,854,493	Reclassified from the same number of Series E Preferred Shares held by Yuan Inc
CGI VIII Investments	January 20, 2021	10,281,739	Reclassified from the same number of Series E Preferred Shares held by CGI VIII Investments
Series E-3 Preferred Shares
Tencent Mobility Limited	January 20, 2021	1,687,260	US$6,539,079.00
TBP Sparkling Holdings Limited	January 20, 2021	25,802,718	US$100,000,000.00
Hike Capital II L.P.	January 20, 2021	5,173,148	US$20,048,850.00
HIKE Hera L.P.	January 20, 2021	2,580,272	US$10,000,000.00
United Strength Delight Limited	January 20, 2021	2,580,272	US$10,000,000.00

II-5

Securities/Purchaser	Date of Sale or Issuance	Number of Securities	Consideration
Lighthousecap Fello L.P.	January 20, 2021	77,408	US$300,000.00
Lighthouse International Growth Fund L.P.	January 20, 2021	815,604	US$3,160,921.00
Share-based Awards
Certain executive officers and employees	Between January 15, 2018 to March 31, 2021	Option to purchase 42,158,189 ordinary shares	Past and future services provided by these individuals to us

Item 8. Exhibits and Financial Statement Schedules

(a) Exhibits:

See Exhibit Index beginning on page II-8 for a complete list of all exhibits filed as part of this registration, which Exhibit Index is incorporated herein by reference.

(b) Financial Statement Schedules

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements and the notes thereto.

Item 9. Undertakings

The undersigned hereby undertakes:

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

II-6

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-7

SPARK EDUCATION LIMITED

EXHIBIT INDEX

Exhibit Number	Description of Document
1.1*	Form of Underwriting Agreement
3.1	Eleventh Amended and Restated Memorandum and Articles of Association of the Registrant, as currently in effect
3.2*	Form of Twelfth Amended and Restated Memorandum and Articles of Association of the Registrant, as effective immediately prior to the completion of this offering
4.1*	Form of Registrant’s Specimen American Depositary Receipt (included in Exhibit 4.3)
4.2*	Registrant’s Specimen Certificate for Ordinary Shares
4.3*	Form of Deposit Agreement between the Registrant, the depositary and holders of the American Depositary Shares
5.1*	Opinion of Maples and Calder (Hong Kong) LLP regarding the validity of the ordinary shares being registered
8.1*	Opinion of Maples and Calder (Hong Kong) LLP regarding certain Cayman Island tax matters (included in Exhibit 5.1)
8.2*	Opinion of Tian Yuan Law Firm regarding certain PRC tax matters (included in Exhibit 99.2)
10.1	The Amended and Restated 2019 Incentive Compensation Plan
10.2*	Form of Indemnification Agreement with each of the Registrant’s directors and executive officers
10.3*	Form of Employment Agreement between the Registrant and an executive officer of the Registrant
10.4(1)	Shareholders’ Agreement relating to Spark Education Limited by and among the Registrant and certain shareholders of the Registrant named therein amended and restated as of January 20, 2021
10.5	Share Subscription Agreement concerning Ordinary Shares and Series D Shares in the Registrant, dated July 30, 2019
10.6	Share Subscription Agreement concerning Series D Shares in the Registrant, dated August 15, 2019
10.7	Share Subscription Agreement concerning Series E Shares in Spark Education Limited, dated July 21, 2020
10.8	Exclusive Business Cooperation Agreement dated January 3, 2017 among Beijing Spark Education and Technology Co., Ltd. (formerly known as Wan Le Duo Network Technology (Beijing) Co., Ltd.) and Beijing Xingengyuan Technology Development Co., Ltd.
10.9	Power of Attorney dated July 24, 2020 executed by Jian Luo
10.10	Power of Attorney dated November 12, 2018 executed by Zebing Shan
10.11	Exclusive Purchase Option Agreement dated July 24, 2020 among Jian Luo, Beijing Spark Education and Technology Co., Ltd. and Beijing Xingengyuan Technology Development Co., Ltd.

II-8

Exhibit Number	Description of Document
10.12	Exclusive Purchase Option Agreement dated November 12, 2018 among Zebing Shan, Beijing Spark Education and Technology Co., Ltd. and Beijing Xingengyuan Technology Development Co., Ltd.
10.13	Equity Pledge Agreement dated February 24, 2021 among Jian Luo, Beijing Spark Education and Technology Co., Ltd. and Beijing Xingengyuan Technology Development Co., Ltd.
10.14	Equity Pledge Agreement dated November 12, 2018 among Zebing Shan, Beijing Spark Education and Technology Co., Ltd. and Beijing Xingengyuan Technology Development Co., Ltd.
10.15	Spousal Consent dated July 24, 2020 executed by the spouse of Jian Luo
10.16	Spousal Consent dated November 12, 2018 executed by the spouse of Zebing Shan
21.1	Principal Subsidiaries and Variable Interest Entity of the Registrant
23.1*	Consent of PricewaterhouseCoopers Zhong Tian LLP, Independent Registered Public Accounting Firm
23.2*	Consent of Maples and Calder (Hong Kong) LLP (included in Exhibit 5.1)
23.3*	Consent of Tian Yuan Law Firm (included in Exhibit 99.2)
24.1*	Powers of Attorney (included on signature page)
99.1*	Code of Business Conduct and Ethics of the Registrant
99.2*	Opinion of Tian Yuan Law Firm regarding certain PRC law matters
99.3*	Consent of CIC

* To be filed by amendment.

(1) Portions of this exhibit have been omitted in reliance of the revised Item 601 of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted portions upon request by the Securities and Exchange Commission.

II-9

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Beijing, the People’s Republic of China, on             , 2021.

Spark Education Limited
By:
	Name:
	Title:

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints              and              and each of them, individually, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, in connection with this registration statement, including to sign in the name and on behalf of the undersigned, this registration statement and any and all amendments thereto, including post-effective amendments and registrations filed pursuant to Rule 462 under the U.S. Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on             , 2021 in the capacities indicated:

Signature	Title
	Director (principal executive officer)
Jian (Mark) Luo
	Director (principal financial officer and principal accounting officer)
Wei (Wilson) Li
	Director
Zebing Shan
	Director
Zhai Jia
	Director
Xin Wang
Hong Wei Jenny Lee	Director

II-10

Signature	Title
Zheng Sun	Director
Weiqian Xun	Director
Shuhong Ye	Director

II-11

SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES

Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of Spark Education Limited, has signed this registration statement or amendment thereto in New York on                 , 2021.

Authorized U.S. Representative
By:
	Name:
	Title:

II-12

EX-3.1

Exhibit 3.1

Company No.: OS-313455

ELEVENTH AMENDED AND RESTATED

MEMORANDUM AND ARTICLES OF ASSOCIATION

OF

Spark Education Limited

Incorporated on the 18th day of July, 2016

Amended and Restated on January 20, 2021

INCORPORATED IN THE CAYMAN ISLANDS

1

THE COMPANIES LAW (AS AMENDED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

ELEVENTH AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION

OF

Spark Education Limited

(adopted by special resolution on January 20, 2021 and effective from January 20, 2021)

1. The name of the Company is Spark Education Limited.

2. The registered office of the Company shall be at the offices of Osiris International Cayman Limited, Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands or at such other place as the Directors may from time to time decide.

3. The objects for which the Company is established are unrestricted and shall include, but without limitation, the following:

a) To carry on the business of an investment company and to act as promoters and entrepreneurs and to carry on business as financiers, capitalists, concessionaires, merchants, brokers, traders, dealers, agents, importers and exporters and to undertake and carry on and execute all kinds of investment, financial, commercial, mercantile, trading and other operations;

b) To carry on whether as principals, agents or otherwise howsoever the business of realtors, developers, consultants, estate agents or managers, builders, contractors, engineers, manufacturers, dealers in or vendors of all types of property including services;

c) To exercise and enforce all rights and powers conferred by or incidental to the ownership of any shares, stock, obligations or other securities including but without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of the holding by the Company of some special proportion of the issued or nominal amount thereof, to provide managerial and other executive, supervisory and consultant services for or in relation to any company in which the Company is interested upon such terms as may be thought fit;

d) To purchase or otherwise acquire, to sell, exchange, surrender, lease, mortgage, charge, convert, turn to account, dispose of and deal with real and personal property and rights of all kinds and, in particular, mortgages, debentures, produce, concessions, options, contracts, patents, annuities, licenses, stocks, shares, bonds, policies, book debts, business concerns, undertakings, claims, privileges and choses in action of all kinds;

2

e) To subscribe for, conditionally or unconditionally, to underwrite, issue on commission or otherwise, take, hold, deal in and convert stocks, shares and securities of all kinds and to enter into partnership or into any arrangement for sharing profits, reciprocal concessions or cooperation with any person or company and to promote and aid in promoting, to constitute, form or organize any company, syndicate or partnership of any kind, for the purpose of acquiring and undertaking any property and liabilities of the Company or of advancing, directly or indirectly, the objects of the Company or for any other purpose which the Company may think expedient;

f) To stand surety for or to guarantee, support or secure the performance of all or any of the obligations of any person, firm or company whether or not related or affiliated to the Company in any manner and whether by personal covenant or by mortgage, charge or lien upon the whole or any part of the undertaking, property and assets of the Company, both present and future, including its uncalled capital or by any such method and whether or not the Company shall receive valuable consideration therefore;

g) To engage in or carry on any other lawful trade, business or enterprise which may at any time appear to the Directors of the Company capable of being conveniently carried on in conjunction with any of the aforementioned businesses or activities or which may appear to the Directors of the Company likely to be profitable to the Company.

In the interpretation of this Eleventh Amended and Restated Memorandum of Association in general and of this Article in particular no object, business or power specified or mentioned shall be limited or restricted by reference to or inference from any other object, business or power, or the name of the Company, or by the juxtaposition of two or more objects, businesses or powers and that, in the event of any ambiguity in this Article or elsewhere in this Eleventh Amended and Restated Memorandum of Association, the same shall be resolved by such interpretation and construction as will widen and enlarge and not restrict the objects, businesses and powers of and exercisable by the Company.

4. As provided by Section 27(2) of the Companies Law (2020 Revision) (as amended or modified from time to time), the Company shall have and be capable of from time to time and at all times exercising any and all of the powers and functions at any time or from time to time exercisable by a natural person or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or consequential thereon, including, but without in any way restricting the generality of the foregoing, the power to make any alterations or amendments to this Eleventh Amended and Restated Memorandum of Association and the Eleventh Amended and Restated Articles of Association of the Company considered necessary or convenient in the manner set out in the Eleventh Amended and Restated Articles of Association of the Company, and the power to do any of the following acts or things:

3

to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company to do business in any other jurisdiction; to sell, lease or dispose of any property of the Company; to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments; to lend money or other assets and to act as guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the Company including uncalled capital or without security; to invest money of the Company in such manner as the Directors determine; to promote other companies; to sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to Members of the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to Directors, officers, employees, past or present and their families; to purchase Directors and officers liability insurance and to carry on any trade or business and generally to do all acts and things which, in the opinion of the Company or the Directors, may be conveniently or profitably or usefully acquired and dealt with, carried on, executed or done by the Company in connection with the aforesaid business, provided that the Company shall only carry on the businesses for which a license is required under the laws of the Cayman Islands when so licensed under the terms of such laws.

5. The liability of each Member is limited to the amount from time to time unpaid on such Member’s shares.

6. The share capital of the Company is US$80,000 divided into 800,000,000 shares, consisting of 463,897,187 Class A Ordinary Shares of par value of US$0.0001 each, 50,408,381 Class B Ordinary Shares of par value of US$0.0001 each, 22,973,381 convertible and redeemable Series A Shares of par value of US$0.0001 each, 30,162,301 convertible and redeemable Series B Shares of par value of US$0.0001 each, 33,367,574 convertible and redeemable Series B+ Shares of par value of US$0.0001 each, 29,167,458 convertible and redeemable Series C Shares of par value of US$0.0001 each, 45,613,502 convertible and redeemable Series D Shares of par value of US$0.0001 each, 8,411,895 convertible and redeemable Series D+ Shares of par value of US$0.0001 each, 43,868,754 convertible and redeemable Series E-1 Shares of par value of US$0.0001 each, 30,845,218 convertible and redeemable Series E-2 Shares of par value of US$0.0001 each, and 41,284,349 convertible and redeemable Series E-3 Shares of par value of US$0.0001 each, each with power for the Company insofar as is permitted by law, to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of the Companies Law (2020 Revision) of the Cayman Islands (as amended or modified from time to time) and the Eleventh Amended and Restated Articles of Association and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether declared to be preference or otherwise shall be subject to the powers hereinbefore contained.

7. The Company may exercise the power contained in Section 206 of the Companies Law (2020 Revision) of the Cayman Islands (as amended or modified from time to time) to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

4

THE COMPANIES LAW (AS AMENDED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

ELEVENTH AMENDED AND RESTATED ARTICLES OF ASSOCIATION

OF

Spark Education Limited

(Adopted by Special Resolution on January 20, 2021 and Effective from January 20, 2021)

1. In these Articles, Table A in the Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:

2. “Additional Equity Securities” means all Equity Securities issued by the Company; provided that the term “Additional Equity Securities” does not include (i) the securities in connection with the sale of ESOP Shares that are reserved by the approval of the Board (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors) in an amount not to exceed the total number of Class A Ordinary Shares reserved under the ESOP as of the Completion (defined in the Series E-3 Share Subscription Agreement); (ii) Class A Ordinary Shares issued or issuable in connection with any share split, share dividend, combination, recapitalization or other similar transaction of the Company; (iii) Class A Ordinary Shares issued or issuable upon conversion or exercise of the Preferred Shares; (iv) Shares issued in an underwritten registered public offering by the Company; or (v) Shares issued pursuant to the Warrant.

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person, and in the case of a natural person, the Affiliate also includes (i) such Person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brothers-in-law and sisters-in-law; and (ii) any trust controlled by or held for the benefit of such Person, and the term “affiliated” has the meaning correlative to the foregoing.

“ANG YUE” means ANG YUE GLOBAL LIMITED.

“Articles” means these Articles as originally adopted or as from time to time altered by Special Resolution as amended from time to time by Special Resolution.

“As Adjusted” means as appropriately adjusted for any subsequent bonus issue, share split, consolidation, subdivision, reclassification, recapitalization or similar arrangement.

“as-converted basis” means assuming the conversion of all issued and outstanding Preferred Shares into Ordinary Shares.

“Auditor” means an accounting firm retained by the Company.

“Beijing WFOE” means Beijing Spark Education and Technology Co., Ltd. (北京火花思维教育科技有限公司), a limited liability company incorporated in the PRC.

“Board” means the board of directors of the Company.

“Carlyle” means CGI VIII Investments.

“Chairman” means the chairman of the Board.

“Class A Ordinary Share” means the class A ordinary shares in the capital of the Company with a par value of US$0.0001 per share having the rights set out in this Articles.

“Class B Ordinary Share” means the class B ordinary shares in the capital of the Company with a par value of US$0.0001 per share having the rights set out in this Articles.

“Company” means Spark Education Limited, an exempted limited liability company organized and existing under the laws of the Cayman Islands.

“COSMIC BLUE” means COSMIC BLUE INVESTMENTS LIMITED.

“Completion” shall have the meaning ascribed to it in the Series E-3 Share Subscription Agreement.

“Control” or “control” of a given Person means the power or authority, whether exercised or not, to direct the business, management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, which power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such Person; the terms “Controlling” and “Controlled” (and their lower-case counterparts) have meanings correlative to the foregoing.

“Conversion Share” has the meaning specified in Section 4(c) of Schedule A.

“Debenture” means debenture stock, mortgages, bonds and any other such securities of the Company whether constituting a charge on the assets of the Company or not.

“Director” means a member of the Board.

“Domestic Company” means Beijing Xingengyuan Technology Ltd. (北京心更远科技发展有限公司), a limited liability company organized and existing under the laws of the PRC.

“ESOP Shares” means up to 32,861,206 Class A Ordinary Shares issued or issuable to employees, officers, directors or consultants of the Company either in connection with the provision of services to the Company or on exercise of any options to purchase ESOP Shares granted under a share incentive plan (the “ESOP”) or other arrangement approved by the Company’s Board, including without limitation in connection with a restricted stock or other equity compensation plan or arrangement approved by the Company’s Board (such number of Class A Ordinary Shares shall be amended and approved by the Board and/or shareholders of the Company in accordance with these Articles and the Shareholders’ Agreement from time to time).

“Equity Securities” means any Ordinary Shares or Ordinary Share Equivalents of the Company.

“Follow-up Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos, KKR and certain other parties thereto, dated August 15, 2019, regarding the issuance of Series D Shares.

“Founder Holdcos” means Venus Mission Limited and Fun Kingdom Limited, business companies with limited liability incorporated and existing under the laws of the British Virgin Islands.

“Founders” means Luo Jian (a PRC citizen with ID No. ***************) and Shan Zebing (a PRC citizen with ID No. ***************).

“Founder Parties” means Founders and the Founder Holdcos.

“GGV” means GGV VII Investments, L.L.C. and GGV VII Plus Investments, L.L.C..

“GGV Director” has the meaning specified in Section 7(b)(i) of Schedule A.

“Group Company” means the Company, the HK Co, the Domestic Company, the WFOEs and any other direct or indirect subsidiary of any Group Company (with each of such Group Companies being referred to as a “Group Company”).

“GSR” means GSR Ventures VI (Singapore) Pte. Ltd. and GSR 2017 Opportunities (Singapore) Pte. Ltd..

“Hike” means Hike Capital L.P., Spruce Fund L.P., Hike Capital II L.P., Hike Hera L.P. and HIKE Helios L.P..

“HK Co” means Spark Education (HongKong) Limited, a limited liability company incorporated and existing under the laws of the Hong Kong Special Administrative Region of the PRC.

“Hony” means United Strength Delight Limited.

“IDG” means IDG China Venture Capital Fund IV L.P. and IDG China IV Investors L.P..

“IDG Director” has the meaning specified in Section 7(b)(ii) of Schedule A.

“IFRS” means the International Financial Reporting Standards prepared by the International Accounting Standards Board, as amended from time to time.

“Issue Date” means, with respect to the Series A Share, the date on which the first Series A Share was issued, and with respect to the Series B Shares, the date on which the first Series B Share was issued, and with respect to the Series B+ Shares, the date on which the first Series B+ Share was issued, and with respect to the Series C Shares, the date on which the first Series C Share was issued, and with respect to the Series D Shares, the date on which the first Series D Share was issued, and with respect to the Series D+ Shares, the date on which the first Series D+ Share was issued, and with respect to the Series E-1 Shares, the date on which the first Series E-1 Share was issued, and with respect to the Series E-2 Shares, the date on which the first Series E-2 Share was issued, with respect to the Series E-3 Shares held by the holders of Series E-3 Shares except for the Warrant Holder, the date on which the first Series E-3 Share was issued; and with respect to the Series E-3 Shares held by the Warrant Holder in accordance with the Warrant, the date on such Warrant Shares are issued to the Warrant Holder.

“LFC” means LFC Investment Hong Kong Limited.

“Lighthouse” means Lighthousecap Fellow L.P. and Lighthouse International Growth Fund L.P..

“Lightspeed” means Lightspeed China Partners III, L.P.

“Liquidation Event” has the meaning specified in Section 2(b) of Schedule A.

“KKR” means ZETA ASIA HOLDINGS PTE. LTD..

“KKR Director” has the meaning specified in Section 7(b)(iii) of Schedule A.

“Member” has the meaning ascribed to it in the Statute.

“Memorandum” means the eleventh amended and restated memorandum of association of the Company as amended from time to time by a Special Resolution of the Company.

“Northern Light” means Northern Light Venture Capital V, Ltd.

“Observer” means a non-voting observer of the Board.

“Month” means calendar month.

“Ordinary Shares” means Class A Ordinary Shares and Class B Ordinary Shares, collectively.

“Ordinary Share Equivalents” means any rights, options, or warrants to purchase or exercisable for Ordinary Shares, or securities of any type whatsoever that are, or may become, convertible into, exchangeable for or exercisable for said equity securities, including, without limitation, the Preferred Shares and the Ordinary Shares.

“Original Preferred Share Issue Price” means the Original Series A Share Issue Price, Original Series B Share Issue Price, Original Series B+ Share Issue Price, Original Series C Share Issue Price, Original Series D Share Issue Price, Original Series D+ Share Issue Price, Original Series E-1 Share Issue Price, Original Series E-2 Share Issue Price and/or Original Series E-3 Share Issue Price, as applicable.

“Original Series A Share Issue Price” means US$0.30470047 per share (As Adjusted).

“Original Series B Share Issue Price” means US$0.33715368 per share (As Adjusted).

“Original Series B+ Share Issue Price” means US$0.44953823 per share (As Adjusted).

“Original Series C Share Issue Price” means US$1.02854350 per share (As Adjusted).

“Original Series D Share Issue Price” means US$1.66430988 per share (As Adjusted).

“Original Series D+ Share Issue Price” means US$2.37758553 per share (As Adjusted).

“Original Series E-1 Share Issue Price” means US$2.91779431 per share (As Adjusted).

“Original Series E-2 Share Issue Price” means US$2.91779431 per share (As Adjusted).

“Original Series E-3 Share Issue Price” means US$3.87556073 per share (As Adjusted).

“Paid-up” means paid-up and/or credited as paid-up.

“Person” or “person” means any individual, sole proprietorship, partnership, firm, joint venture, estate, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or governmental or regulatory authority or other entity of any kind or nature.

“PRC” means the People’s Republic of China, but solely for the purposes of these Articles, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan.

“Preferred Directors” has the meaning specified in Section 7(b)(vi) of Schedule A.

“Preferred Holders” means the holders of Preferred Shares.

“Preferred Shares” means Series A Shares, Series B Shares, Series B+ Shares, Series C Shares, Series D Shares, Series D+ Shares, Series E-1 Shares, Series E-2 Shares and Series E-3 Shares.

“Preferred Share Conversion Price” has the meaning specified in Section 4 of the Schedule A.

“Qualified IPO” means a lawful firm-commitment underwritten public offering and listing by the Company of its Ordinary Shares in the United States or in any other jurisdiction (on any combination of such exchanges and jurisdictions) that has been registered under the Securities Act of 1933, as amended, approved by the Super Preferred Majority Holders and at a public offering price per share corresponding to a pre-IPO valuation of the Company of at least US$2,500,000,000 with gross proceeds to the Company in excess of US$200,000,000 (excluding underwriting discounts, commissions and expenses) or in a substantially similar public offering of Ordinary Shares in a jurisdiction and on an internationally recognized securities exchange outside of the United States approved by the Super Preferred Majority Holders, provided such public offering price, offering proceeds and regulatory approval is reasonably equivalent to the aforementioned public offering in the United States. For avoidance of doubts, the cost of the Qualified IPO shall be borne by the Company, and the commissions shall be borne by the respective selling shareholders.

“Redemption Closing” has the meaning specified in Section 5(a) of Schedule A.

“Redemption Date” has the meaning specified in Section 5(a) of Schedule A.

“Redemption Event” has the meaning specified in Section 5(a) of Schedule A.

“Redemption Notice” has the meaning specified in Section 5(a) of Schedule A.

“Redemption Price” has the meaning specified in Section 5(a) of Schedule A.

“Registered Office” means the registered office for the time being of the Company.

“Required Consenters” has the meaning specified in Article 33.

“Related Parties” means, collectively, (i) the Group Companies, (ii) the Founder Parties, (iii) any entity Controlled by any Founder Party, (iv) the shareholders, officers and directors of each of the foregoing, and (v) the parents, spouses, siblings, children, mother-in-law, father-in-law, brothers-in-law and sisters-in-law of any of the foregoing that is an individual and any Person Controlled by any of the foregoing; and “Related Party” means any of them.

“Related Party Transaction” means any contract or other transaction, arrangement or agreement between or among any Related Party, on the one hand, and any Group Company, on the other.

“Restructuring Documents” means (i) the Exclusive Business Cooperation Agreement entered into by and among the Beijing WFOE and the Domestic Company on January 3, 2017, (ii) the Equity Interest Pledge Agreements, Exclusive Option Agreement, Spousal Consents and Powers of Attorney entered into by and among the Beijing WFOE, the Domestic Company and Shan Zebing (单泽兵) or the spouse of Shan Zebing (单泽兵) on November 12, 2018, (iii) the Equity Interest Pledge Agreement, Exclusive Option Agreement, Spousal Consents and Power of Attorney entered into by and among the Beijing WFOE, the Domestic Company and Luo Jian (罗剑) or the spouse of Luo Jian (罗剑) on July 24, 2020.

“SCC” means SCC Venture VI Holdco, Ltd., Sequoia Capital CV IV Holdco, Ltd. and SCC Venture VII Holdco, Ltd..

“SCC Capital” means Sequoia Capital CV IV Holdco, Ltd.

“SCC Director” has the meaning specified in Section 7(b)(iv) of Schedule A.

“Schedule A” means Schedule A to these Articles, as amended from time to time.

“Seal” means the common seal of the Company and includes every duplicate seal.

“Secretary” includes an assistant secretary and any person appointed to perform the duties of Secretary of the Company.

“Series A Preference Amount” has the meaning specified in Section 2(a)(viii) of Schedule A.

“Series A Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated August 23, 2016, regarding the issuance of Series A Shares.

“Series A Shares” has the meaning specified in Article 8.

“Series B Preference Amount” has the meaning specified in Section 2(a)(vii) of Schedule A.

“Series B Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated May 10, 2018, regarding the issuance of Series B Shares.

“Series B Shares” has the meaning specified in Article 8.

“Series B+ Majority Holders” means the holders of at least a simple majority (1/2) of the votes carried by the then issued and outstanding Series B+ Shares, voting as a separate class, and on as-converted basis.

“Series B+ Preference Amount” has the meaning specified in Section 2(a)(vi) of Schedule A.

“Series B+ Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated June 13, 2018, regarding the issuance of Series B+ Shares.

“Series B+ Shares” has the meaning specified in Article 8.

“Series C Majority Holders” means the holders of at least a simple majority (1/2) of the votes carried by the then issued and outstanding Series C Shares, voting as a separate class, and on as-converted basis.

“Series C Preference Amount” has the meaning specified in Section 2(a)(v) of Schedule A.

“Series C Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated November 12, 2018, regarding the issuance of Series C Shares.

“Series C Shares” has the meaning specified in Article 8.

“Series D Majority Holders” means the holders of at least two-thirds (2/3) of the votes carried by the then issued and outstanding Series D Shares, voting as a separate class, and on as-converted basis.

“Series D Preference Amount” has the meaning specified in Section 2(a)(iv) of Schedule A.

“Series D Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated July 30, 2019, regarding the issuance of Series D Shares.

“Series D Shares” has the meaning specified in Article 8.

“Series D+ Majority Holders” means the holders of at least a simple majority (1/2) of the votes carried by the then issued and outstanding Series D+ Shares, voting as a separate class, and on as-converted basis.

“Series D+ Preference Amount” has the meaning specified in Section 2(a)(iii) of Schedule A.

“Series D+ Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated April 14, 2020, regarding the issuance of Series D+ Shares.

“Series D+ Shares” has the meaning specified in Article 8.

“Series E-1 Preference Amount” has the meaning specified in Section 2(a)(ii) of Schedule A.

“Series E-1 Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated July 21, 2020, regarding the issuance of Series E-1 Shares.

“Series E-1 Shares” has the meaning specified in Article 8.

“Series E-2 Preference Amount” has the meaning specified in Section 2(a)(ii) of Schedule A.

“Series E-2 Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated September 18, 2020, regarding the issuance of Series E-2 Shares.

“Series E-2 Shares” has the meaning specified in Article 8.

“Series E-3 Majority Holders” means the holders of at least a simple majority (1/2) of the votes carried by the then issued and outstanding Series E-3 Shares, voting as a separate class, and on as-converted basis.

“Series E-3 Preference Amount” has the meaning specified in Section 2(a)(i) of Schedule A.

“Series E-3 Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated January 20, 2021, regarding the issuance of Series E-3 Shares.

“Series E-3 Shares” has the meaning specified in Article 8.

“Share” has the meaning specified in Article 8 and may also be referenced as “share” and includes any fraction of a share.

“Shareholders’ Agreement” means that certain ninth amended and restated shareholders’ agreement entered into by and among the Company, the Founders, the Founder Holdcos, Tencent, YUAN, CGI VIII Investments, COSMIC BLUE, KKR, GGV, IDG, Lightspeed, Hike, ANG YUE, GSR, Universe Sourcecode, SCC, Northern Light, LFC, TBP, Lighthouse, Hony and certain other parties thereto, dated January 20, 2021.

“Share Restriction Agreements” means that certain ninth amended and restated share restriction agreements entered into by and among each of the Founders, each of the Founder Holdcos, with the Company, Tencent, YUAN, CGI VIII Investments, COSMIC BLUE, KKR, GGV, IDG, Lightspeed, Hike, ANG YUE, GSR, Universe Sourcecode, SCC, Northern Light, LFC, TBP, Lighthouse, Hony and certain other parties thereto, respectively, dated January 20, 2021.

“Special Resolution” except as otherwise provided by these Articles (including Section 6(a) of the Schedule A), has the same meaning as in the Statute and includes a unanimous resolution approved in writing as described therein.

“Statute” means the Companies Law (2020 Revision) of the Cayman Islands, and every statutory modification or re-enactment thereof for the time being in force.

“Super Preferred Majority Holders” shall mean the holders of at least two-thirds (2/3) of the votes carried by the then outstanding Preferred Shares, voting as a single and separate class, and on as-converted basis.

“Super Series A Majority Holders” means the holders of at least two-thirds (2/3) of the votes carried by the then issued and outstanding Series A Shares, voting as a separate class, and on as-converted basis.

“Super Series B Majority Holders” means the holders of at least two-thirds (2/3) of the votes carried by the then issued and outstanding Series B Shares, voting as a separate class, and on as-converted basis.

“Super Series D Majority Holders” means the holders of at least eighty five percent (85%) of the votes carried by the then issued and outstanding Series D Shares and Series D+ Shares, voting as a separate class, and on as-converted basis.

“Super Series E Majority Holders” means the holders of at least eighty percent (80%) of the votes carried by the then issued and outstanding Series E-1 Shares and Series E-2 Shares, voting as a separate class, and on as-converted basis.

“TBP” means TBP Sparkling Holdings Limited.

“TBP Director” has the meaning specified in Section 7(b)(v) of Schedule A.

“Tencent” means Tencent Mobility Limited.

“Tencent Director” has the meaning specified in Section 7(b)(vi) of Schedule A.

“Tianjin WFOE” means Tianjin Spark Education and Technology Co., Ltd. (天津火花思维教育科技有限公司), a limited liability company incorporated in the PRC.

“Transaction Documents” means (i) with respect to Series A Shares, the Series A Share Subscription Agreement, with respect to Series B Shares, the Series B Share Subscription Agreement , with respect to Series B+ Shares, the Series B+ Share Subscription Agreement, with respect to Series C Shares, the Series C Share Subscription Agreement, with respect to Series D Shares, the Series D Share Subscription Agreement and the Follow-up Share Subscription Agreement, with respect to Series D+ Shares, the Series D+ Share Subscription Agreement, with respect to Series E-1 Shares, the Series E-1 Share Subscription Agreement, with respect to Series E-2 Shares, the Series E-2 Share Subscription Agreement, with respect to Series E-3 Shares, the Series E-3 Share Subscription Agreement, (ii) the Shareholders’ Agreement, (iii) the Memorandum and these Articles, (iv) the Share Restriction Agreements, (v) the Restructuring Documents, and (vi) and the exhibits attached to any of the foregoing and any other document, certificate, and agreement delivered in connection with the transactions contemplated hereby and thereby.

“Universe Sourcecode” means Universe Sourcecode Technology Ltd..

“Warrant” means the Warrant to Purchase Series E-3 Shares issued by the Company to Eternal Starship Holding Limited on January 20, 2021.

“Warrant Holder” means Eternal Starship Holding Limited or its permitted assignees pursuant to the Warrant.

“Warrant Shares” means 2,567,667 Series E-3 Shares to be issued to the Warrant Holder.

“WFOEs” means Beijing WFOE and Tianjin WFOE.

“Written” and “in writing” include all modes of representing or reproducing words in visible form.

“YUAN” means YUAN Inc.

Words importing the singular number also include the plural number and vice-versa.

Words importing the masculine gender also include the feminine gender and vice-versa.

The term “day” means “calendar day.”

3. The business of the Company may be commenced as soon after incorporation as the Directors shall see fit, notwithstanding that only part of the shares may have been allotted.

4. The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company including the expenses of registration.

CERTIFICATES FOR SHARES

5. The Company shall maintain a register of its Members. A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Certificates representing shares of the Company shall be in such form as shall be determined by the Directors. Such certificates may be under Seal. Share certificates shall be signed by one or more Directors or other persons authorized by the Directors. The Directors may authorize certificates to be issued with the Seal and authorized signature(s) affixed by mechanical process. The Company shall not be bound to issue more than one certificate for shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. All certificates for shares shall be consecutively numbered or otherwise identified and shall specify the shares to which they relate. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered in the register of Members of the Company. All certificates surrendered to the Company for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled.

6. Notwithstanding Article 5 of these Articles, if a share certificate is defaced, lost, stolen, or destroyed, it may be renewed on payment of a fee of one dollar (US$1.00) or such lesser sum and on such terms (if any) as the Directors may reasonably prescribe to indemnify the Company from any loss incurred by it in connection with such certificate, including the payment of the expenses incurred by the Company in investigating evidence, as the Directors may prescribe.

ISSUE OF SHARES

7. Subject to the provisions of the Memorandum and these Articles (including but not limited to Schedule A), any direction that may be given by the Company in a general meeting, the right of first offer under the Shareholders’ Agreement, and without prejudice to any special rights previously conferred on the holders of existing shares, the Directors may allot, issue, grant options over or otherwise dispose of shares of the Company (including fractions of a share) with or without preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper. The Company shall not issue shares in bearer form.

CLASSES, NUMBER AND PAR VALUE OF THE SHARES

8. At the date of the adoption of these Articles the authorized share capital of the Company is US$80,000, divided into 800,000,000 shares of par value US$0.0001 each, comprised of 514,305,568 ordinary shares, par value US$0.0001 per share (the “Ordinary Shares”), consisting of (i) 463,897,187 voting Class A Ordinary Shares of a nominal or par value of US$0.0001 each (the “Class A Ordinary Shares”), (ii) 50,408,381 voting Class B Ordinary Shares of a nominal or par value of US$0.0001 each (the “Class B Ordinary Shares”), 22,973,381 redeemable convertible series A preferred shares, par value US$0.0001 per share (“Series A Shares”), 30,162,301 redeemable convertible series B preferred shares, par value US$0.0001 per share (the “Series B Shares”), 33,367,574 redeemable convertible series B+ preferred shares, par value US$0.0001 per share (the “Series B+ Shares”), 29,167,458 redeemable convertible series C preferred shares, par value US$0.0001 per share (the “Series C Shares”), 45,613,502 redeemable convertible series D preferred shares, par value US$0.0001 per share (the “Series D Shares”), 8,411,895 redeemable convertible series D+ preferred shares, par value US$0.0001 per share (the “Series D+ Shares”), 43,868,754 redeemable convertible series E-1 preferred shares, par value US$0.0001 per share (the “Series E-1 Shares”), 30,845,218 redeemable convertible series E-2 preferred shares, par value US$0.0001 per share (the “Series E-2 Shares”) and 41,284,349 redeemable convertible series E-3 preferred shares, par value US$0.0001 per share (the “Series E-3 Shares”). The Ordinary Shares and the Preferred Shares are collectively referred to herein as the “Shares”. The rights, preferences and restrictions of the Preferred Shares and the Ordinary Shares are set forth in Schedule A to these Articles of Association.

TRANSFER OF SHARES

9. Subject to any agreements binding on the Company, shares are transferable, and the Company will only register transfers of shares that are made in accordance with such agreements (if any) and will not register transfers of shares that are not made in accordance with such agreements (if any). The instrument of transfer of any share shall be in writing and shall be executed by or on behalf of the transferor, and the transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the register in respect thereof.

REDEMPTION AND PURCHASE OF SHARES

10. Subject to the provisions of the Statute, the Memorandum and these Articles (including without limitation Schedule A), shares may be issued on the terms that they are, or at the option of the Company or the holder are, to be redeemed on such terms and in such manner as the Company, before the issue of the shares, may by special resolution determine.

11. Subject to the provisions of the Statute, the Memorandum and these Articles (including without limitation Schedule A), the Company may purchase its own shares (including fractions of a share), including any redeemable shares, provided that the manner of purchase has first been authorized by the Company in general meeting and may make payment therefore in any manner authorized by the Statute (unless the redemption is in respect of the Preferred Shares in which case the redemption must be effected in accordance with Schedule A to these Articles), including out of capital.

VARIATION OF RIGHTS OF SHARES

12. Subject to Schedule A, if at any time the share capital of the Company is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may not, whether or not the Company is being wound-up, be varied without the consent in writing of the holders of at least a majority of the issued shares of that class or series.

13. The provisions of these Articles relating to general meetings shall apply to every such general meeting of the holders of one class of shares except that the necessary quorum shall be one (1) person holding, or representing by proxy, at least a majority of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll.

14. Subject to Schedule A, the rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

COMMISSION ON SALE OF SHARES

15. Subject to the provisions of the Statute and these Articles (including but not limited to Schedule A), the Company may (i) pay a commercially reasonable commission to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any shares of the Company, which commissions may be satisfied by the payment of cash or the lodgment of fully or partly paid-up shares or partly in one way and partly in the other and (ii) pay, on any issue of shares, such brokerage fees as may be lawful and commercially reasonable.

NON-RECOGNITION OF TRUSTS

16. No person shall be recognized by the Company as holding any share upon any trust, and the Company shall not be bound by or be compelled in any way to recognize (even when having notice thereof), any equitable, contingent, future, or partial interest in any share, or any interest in any fractional part of a share, or (except only as is otherwise provided by these Articles or the Statute) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

REGISTRATION OF EMPOWERING INSTRUMENTS

17. The Company shall be entitled to charge a fee not exceeding one dollar (US$1.00) on the registration of every probate, letters of administration, certificate of death or marriage, power of attorney, or other instrument.

TRANSMISSION OF SHARES

18. In case of the death of a Member, the survivor or survivors where the deceased was a joint holder, and the legal personal representatives of the deceased where he was a sole holder, shall be the only persons recognized by the Company as having any title to his interest in the shares, but nothing herein contained shall release the estate of any such deceased holder from any liability in respect of any shares which had been held by him solely or jointly with other persons.

19. Any person becoming entitled to a share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may from time to time be required by the Directors and, subject as hereinafter provided, elect either to be registered himself as holder of the share or to make such transfer of the share to such other person nominated by him as the deceased or bankrupt person could have made and to have such person registered as the transferee thereof, but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that Member before his death or bankruptcy as the case may be. If the person so becoming entitled shall elect to be registered himself as holder, such person shall deliver or send to the Company a notice in writing signed by such person so stating such election.

20. A person becoming entitled to a share by reason of the death or bankruptcy or liquidation or dissolution of the holder (or in any other case than by voluntary transfer) shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a Member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company; provided that the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share and if the notice is not complied with within ninety (90) days the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share until the requirements of the notice have been complied with.

AMENDMENT OF MEMORANDUM OF ASSOCIATION, ALTERATION OF

CAPITAL & CHANGE OF LOCATION OF REGISTERED OFFICE

21. Subject to the provisions of the Statute and these Articles (including but not limited to Section 6 of Schedule A), the Company may from time to time alter or amend its Memorandum with respect to any objects, powers or other matters specified therein to:

a) by Ordinary Resolution increase the share capital by such sum to be divided into shares of such amount or without nominal or par value as the resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;

b) by Ordinary Resolution consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

c) by Ordinary Resolution divide or subdivide all or any of its share capital into shares of smaller amount than is fixed by the Memorandum or into shares without nominal or par value; or

d) by Ordinary Resolution cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

22. All new shares created hereunder shall be subject to the same provisions with reference to transfer, transmission, and otherwise as the shares in the original share capital.

23. Subject to the provisions of the Statute and these Articles (including but not limited to Schedule A), the Company may by Special Resolution reduce its share capital and any capital redemption reserve fund.

24. Subject to the provisions of the Statute and these Articles (including but not limited to Schedule A), the Company may by resolution of the Directors change the location of its registered office.

FIXING RECORD DATE

25. The Directors may fix in advance a date as the record date for any determination of Members entitled to notice of or to attend or vote at a meeting of the Members. For the purpose of determining the Members entitled to receive payment of any dividend, the Directors may, at or within ninety (90) days prior to the date of declaration of such dividend, fix a subsequent date as the record date for such determination.

26. If no record date is fixed for the determination of Members entitled to notice of or to attend or vote at a meeting of Members or Members entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to attend or receive notice of, attend or vote at any meeting of Members has been made as provided in this Article 26, such determination shall apply to any adjournment thereof.

GENERAL MEETING

27. All general meetings other than annual general meetings shall be called extraordinary general meetings.

28. The Company may hold a general meeting as its annual general meeting but shall not (unless required by Statute) be obliged to hold an annual general meeting. The annual general meeting, if held, shall be held at such time and place as the Directors shall appoint with notices properly given pursuant to Article 33. At these meetings the report of the Directors (if any) shall be presented.

29. The Directors may call general meetings, and they shall, on the requisition of Members of the Company holding at the date of deposit of the requisition not less than ten percent (10%) of the paid up capital of the Company as at the date of the deposit carries the right of voting at general meetings of the Company, forthwith proceed to convene an extraordinary general meeting of the Company.

30. The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the registered office of the Company and may consist of several documents in like form each signed by one or more requisitionists.

31. If the Directors do not within twenty-one (21) days from the date of the deposit of the requisition duly proceed to convene a general meeting, the requisitionists, or any of them representing not less than a majority of the aggregate voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three (3) months after the expiration of the said twenty-one (21) days.

32. A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.

NOTICE OF GENERAL MEETINGS

33. At least seven (7) days’ notice shall be given of an annual general meeting and at least twenty (20) days’ notice shall be given of any other general meeting unless such notice is waived either before, at or after such annual or other general meeting (a) in the case of a general meeting called as an annual general meeting, by all the Members entitled to attend and vote thereat or their proxies; and (b) in the case of any other general meeting, by holders of not less than the minimum number of Shares required to approve the actions submitted to the Members for approval at such meeting, or their proxies (collectively, the “Required Consenters”). Every notice shall be exclusive of the day on which it is given or deemed to be given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned; provided that any general meeting of the Company shall, whether or not the notice specified in this Article 33 has been given and whether or not the provisions of Articles 28-32 have been complied with, be deemed to have been duly convened if it is so agreed by the Required Consenters.

PROCEEDINGS AT GENERAL MEETINGS

34. No business shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business. The holders of greater than fifty percent (50%) of the aggregate voting power of all of the Ordinary shares (on an as converted basis) entitled to notice of and to attend and vote at such general meeting (including the holders of greater than two-thirds (2/3) of the aggregate voting power of the Preferred Shares) present in person or by proxy or if a company or other non-natural person by its duly authorized representative shall be a quorum.

35. A person shall be deemed to be present at a general meeting if he participates by telephone or other electronic means and all persons participating in the meeting are able to communicate with each other or if such person is represented by proxy in accordance with Articles 47-50.

36. An action that may be taken by the members at a meeting may also be taken by a resolution of members consented to in writing or by telex, telegram, cable, facsimile or other written electronic communication, without the need for any notice. A resolution to be passed by way of written resolution must be unanimous.

37. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment. If, however, such quorum shall not be present or represented at any general meeting, the Members (or their proxies) holding a majority of the aggregate voting power of all of the Shares of the Company represented at the meeting may adjourn the meeting from time to time, until a quorum shall be present or represented; provided that, if notice of such meeting has been duly delivered to all Members seven (7) days in respect of an annual general meeting or twenty (20) days in respect of any other general meeting prior to the scheduled meeting in accordance with the notice procedures hereunder, and the quorum is not present within fifteen (15) minutes from the time appointed for the meeting solely because of the absence of any Preferred Holder(s), the meeting shall be adjourned to the seventh (7th) following Business Day at the same time and place (or to such other later time or such other place as the directors may determine) with notice delivered to all Members five (5) days prior to the adjourned meeting in accordance with the notice procedures under Articles 34 through 40 and, if at the adjourned meeting, the quorum is not present within fifteen (15) minutes from the time appointed for the meeting solely because of the absence of any Preferred Holder(s), then the presence of such holders shall not be required at such adjourned meeting for purposes of establishing a quorum. At such adjourned meeting, only such business as included in the notice of the original meeting may be transacted. For the avoidance of doubt, nothing in this Article 37 shall prejudice the provisions of Section 6(a) of Schedule A which require the approval of the Super Preferred Majority Holders, the Super Series A Majority Holders, the Super Series B Majority Holders, the Series B+ Majority Holders, the Series C Majority Holders, the Super Series D Majority Holders, the Super Series E Majority Holders and the Series E-3 Majority Holders (as applicable).

38. The chairman, if any, of the Board shall preside as chairman at every general meeting of the Company, or if there is no such chairman, or if he shall not be present within fifteen (15) minutes after the time appointed for the holding of the meeting, or is unwilling to act, the members present shall elect one (1) of their number to be chairman of the meeting.

39. The chairman may, with the consent of any general meeting duly constituted hereunder at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a general meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice.

40. At any general meeting, a resolution put to the vote of the meeting shall be decided by the vote of the requisite majority pursuant to a poll of the Members. Unless otherwise required by Statute or these Articles or any other Transaction Document, such requisite majority shall be a simple majority of votes cast.

VOTES OF MEMBERS

41. Subject to these Articles (including but not limited to Schedule A), every Member of record present or, if such Member is a corporation or other non-natural person, such Member is present by its duly authorized representative, shall have one (1) vote for each share registered in his name in the register of Members.

42. In the case of joint holders of record, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of Members.

43. A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote by his committee, receiver, curator bonis, or other person in the nature of a committee, receiver or curator bonis appointed by that court, and any such committee, receiver, curator bonis, or other person may vote by proxy.

44. No Member shall be entitled to vote at any general meeting unless he is registered as a Member of the Company on the record date for such meeting nor unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.

45. No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at such general meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the determination of the chairman of the general meeting to be exercised in his or her reasonable discretion.

46. Votes may be given either personally or by proxy.

PROXIES

47. The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his attorney duly authorized in writing, or, if the appointor is a corporation under the hand of an officer or attorney duly authorized in that behalf. A proxy need not be a Member of the Company.

48. The instrument appointing a proxy shall be deposited at the registered office of the Company or at such other place as is specified for that purpose in the notice convening the meeting no later than the time for holding the meeting, or adjourned meeting.

49. The instrument appointing a proxy may be in any usual or common form and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked.

50. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given provided that no intimation in writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company at the registered office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.

CORPORATE MEMBERS

51. Any corporation which is a Member of record of the Company may in accordance with its articles or other governing documents, or in the absence of such provision by resolution of its directors or other governing body, authorize such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members of the Company, and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member of record of the Company.

SHARES THAT MAY NOT BE VOTED

52. Shares of its own capital belonging to the Company or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time.

DIRECTORS

53. There shall be a Board consisting of not more than nine (9) persons, unless increased by a resolution adopted by ordinary resolution of the Board and with the consent required pursuant to Schedule A.

54. Directors shall be entitled to be reimbursed for traveling, hotel and other expenses properly incurred by them in going to, attending and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or otherwise in connection with the business of the Company, or to receive a fixed allowance in respect thereof as may be determined by the Directors from time to time in good faith, or a combination partly of one such method and partly the other. Subject to these Articles (including but not limited to Schedule A), the Directors may by resolution award special remuneration to any Director of the Company undertaking any special work or services for, or undertaking any special mission on behalf of, the Company other than his ordinary routine work as a Director.

55. Subject to these Articles (including but not limited to Schedule A), a Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine in good faith.

56. Subject to these Articles (including but not limited to Schedule A), a Director may act by himself or his firm in a professional capacity for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director.

57. A shareholder qualification for Directors may be fixed by the Company in general meeting, but unless and until so fixed no qualification shall be required.

58. Subject to these Articles (including but not limited to Schedule A), a Director of the Company may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as shareholder or otherwise and no such Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company.

59. In addition to any further restrictions set forth in these Articles (including but not limited to Schedule A), no person shall be disqualified from the office of Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director shall be in any way interested be or be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or transaction by reason of such Director holding office or of the fiduciary relation thereby established. A Director shall be at liberty to vote in respect of any contract or transaction in which he is interested; provided that the nature of the interest of any Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon.

60. A general notice or disclosure to the Directors or otherwise contained in the minutes of a meeting or a written resolution of the directors or any committee thereof that a Director is a member of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure under Article 59 and after such general notice it shall not be necessary to give special notice relating to any particular transaction.

POWERS AND DUTIES OF DIRECTORS

61. The business of the Company shall be managed by the Directors (or a sole Director if only one is appointed) who may pay all expenses incurred in promoting, registering and setting up the Company, and may exercise all such powers of the Company as are not inconsistent, from time to time with the Statute, or with these Articles, or as may be prescribed by the Company in general meeting provided that no regulations made by the Company in general meeting shall invalidate any prior act of the Directors which would have been valid if that regulation had not been made, and provided further that, for the avoidance of doubt and without limiting the generality of the foregoing, the Directors shall undertake none of those acts described in Section 6 of Schedule A or in Article 12 without the prior approval therein required.

62. The Directors may from time to time and at any time by powers of attorney appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorneys as the Directors may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him.

63. All checks, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall from time to time by resolution determine.

64. The Directors shall cause minutes to be made in books provided for the purpose:

1) of all appointments of officers made by the Directors;

2) of the names of the Directors (including those represented thereat by proxy) present at each meeting of the Directors and of any committee of the Directors; and

3) of all resolutions and proceedings at all meetings of the Company and of the Directors and of committees of Directors.

65. Subject to these Articles (including but not limited to Schedule A), the Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependents and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

66. Subject to these Articles (including but not limited to Schedule A), the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue Debentures whether outright or as security for any debt, liability or obligation of the Company or of any third party.

MANAGEMENT

67. Subject to these Articles (including but not limited to Schedule A):

1) The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following paragraphs shall be without prejudice to the general powers conferred by this paragraph.

2) The Directors from time to time and at any time may establish any committees (including a compensation committee), local boards or agencies for managing any of the affairs of the Company and may appoint any persons to be members of such committees or local boards or any managers or agents and may fix their remuneration in good faith.

3) The Directors from time to time and at any time may delegate to any such committee (including a compensation committee), local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorize the members for the time being of any such local board, or any of them to fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby, provided that any Preferred Director as a committee member shall only be removed and replaced by such person so appointed by the relevant holder(s) of Preferred Shares entitled to appoint such Preferred Director, respectively.

4) Any such delegates as aforesaid may be authorized by the Directors to sub-delegate all or any of the powers, authorities, and discretions for the time being vested in them.

PROCEEDINGS OF DIRECTORS

68. Subject to these Articles (including but not limited to Schedule A) and the Statute, the Directors shall meet together for the dispatch of business, convening, adjourning and otherwise regulating their meetings as they think fit, and questions arising at any meeting shall be decided by a majority of votes (unless a higher vote is required pursuant to the Statute or these Articles, including but not limited to Schedule A) of the Directors present at a meeting at which there is a quorum, with the Chairman Director having six (6) votes and each of the other Directors having one (1) vote. Unless otherwise determined by the vote of all of the Directors then in office, the Board shall meet at least quarterly within the following two weeks of such relevant quarter in each calendar year, subject to such notice requirement set forth in Article 69 below.

69. A Director may, and the secretary of the Company on the requisition of a Director, shall, at any time, summon a meeting of the Directors by at least five (5) business days’ notice in writing to every Director which notice shall set forth the general nature of the business to be considered and shall include the agenda of the board meeting as well as all board papers; provided that notice is given pursuant to Articles 99 - 103; provided further that notice may be waived on behalf of all of the Directors before, after, or at the meeting by the vote or consent of all the Directors.

70. The quorum necessary for the transaction of the business of the Directors is a majority of Directors, including the Chairman Director and all Preferred Directors; provided, however, if such quorum cannot be obtained in two (2) consecutive duly called meetings of Directors due to the failure of any Preferred Director to attend such meetings of Directors whose presence is required to constitute a quorum, then the attendance of a majority of the directors at the second (2nd) duly called meeting of Directors of the foregoing two (2) consecutive duly called meetings of Directors shall constitute a quorum, provided that at such second (2nd) duly called meeting the business not included in the notice shall not be transacted. For the purposes of this Article 70 a proxy appointed by a Director shall only be counted in a quorum at a meeting at which the Director appointing him is not present; provided always that if there shall at any time be only a sole Director the quorum shall be one (1). For the avoidance of doubt, nothing in this Article 70 shall prejudice the provisions of Section 6(b) of the Schedule A which require the approval of the affirmative votes of at least two-thirds (2/3) of all Preferred Directors.

71. Subject to Article 70, the continuing Directors may act notwithstanding any vacancy in their body. However, if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors or Director may act for the purpose of increasing the number of Directors to that number, or of summoning a general meeting of the Company, but for no other purpose.

72. The Directors may elect a chairman of their board and determine the period for which he is to hold office, but if no such chairman is elected, or if at any meeting the chairman is not present, the Directors present may choose one of their numbers to be chairman of the meeting.

73. Subject to these Articles (including but not limited to Schedule A), the Directors may delegate any of their powers (subject to any limitations imposed on the Directors) to committees consisting of such member or members of the Board as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors and by these Articles (including but not limited to Schedule A). A committee may meet and adjourn as it thinks proper. Subject to these Articles (including but not limited to Schedule A), questions arising at any committee meeting shall be determined by a majority of votes of the members present.

74. The Company shall provide that members of the Board or of any committee thereof may participate in a meeting of the Board or of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can communicate with each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting; provided that a meeting of a Board or committee shall not be valid if the Company does not make such means of participation reasonably available to the members thereof.

75. A resolution in writing (in one or more counterparts), signed by all the Directors for the time being or all the members of a committee of Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors or committee as the case may be duly convened and held.

76. A Director may be represented at any meetings of the Board by a proxy appointed by him in which event the presence or vote of the proxy shall for all purposes be deemed to be that of the Director. The provisions of Articles 47 – 50 shall apply, mutatis mutandis, to the appointment of proxies by Directors.

VACATION OF OFFICE OF DIRECTOR

77. The office of a Director shall be vacated if he or she gives notice in writing to the Company that he or she resigns the office of Director, if he or she dies or if he or she is found a lunatic or becomes of unsound mind, and such vacated office may be filled only pursuant to Articles 78, 79 and Schedule A.

APPOINTMENT AND REMOVAL OF DIRECTORS

78. Subject to Section 7 of Schedule A, all Directors shall be elected and appointed by a majority vote of issued and outstanding Ordinary Shares and Preferred Shares (voting together and not as separate classes) at a general or extraordinary meeting or by written consent.

79. Any vacancy on the Board occurring because of the death, resignation or removal of a Director shall be filled by the same party or parties entitled to appoint such Director on the Board pursuant to Section 7 of Schedule A.

PRESUMPTION OF ASSENT

80. A Director who is present at a meeting of the Board at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

SEAL

81. The Company may, if the Directors so determine, have a Seal which shall, subject to this Article 81, only be used by the authority of the Directors or of a committee of the Directors authorized by the Directors in that behalf and every instrument to which the Seal has been affixed shall be signed by at least one (1) person who shall be either a Director or the secretary or secretary-treasurer or some person appointed by the Directors for the purpose. The Company may have a duplicate Seal or Seals each of which shall be a facsimile of the common seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used. A Director, secretary or other duly authorized officer or representative or attorney may without further authority of the Directors affix the Seal of the Company over his signature alone to any document of the Company required to be authenticated by him under Seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.

OFFICERS

82. The Company may have a president, a secretary or secretary-treasurer appointed by the directors who may also from time to time appoint such other officers as they consider necessary, all for such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors from time to time prescribe.

DIVIDENDS, DISTRIBUTIONS AND RESERVE

83. Subject to the Statute and the provisions of these Articles (including but not limited to Schedule A), the Directors may from time to time declare dividends (including interim dividends) and distributions on shares of the Company outstanding and authorize payment of the same out of the funds of the Company lawfully available therefor.

84. Subject to the Statute and the provisions of these Articles (including but not limited to Section 6 in Schedule A), the Directors may, before declaring any dividends or distributions, set aside such sums as they think proper as a reserve or reserves which shall at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the like discretion, be employed in the business of the Company.

85. No dividend or distribution shall be payable except out of the profits of the Company, realized or unrealized, or out of the share premium account or as otherwise permitted by the Statute.

86. Subject to the rights of persons, if any, with shares with special rights as to dividends or distributions, if dividends or distributions are to be declared on a class of shares they shall be declared and paid according to the amounts paid or credited as paid on the shares of such class outstanding on the record date for such dividend or distribution as determined in accordance with these Articles but no amount paid or credited as paid on a share in advance of calls shall be treated for the purpose of this Article 86 as paid on the share.

87. The Directors may deduct from any dividend or distribution payable to any Member all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

88. Subject to these Articles (including but not limited to Schedule A), the Directors may declare that any dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of paid up shares or Debentures of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem expedient to the Directors.

89. Any dividend, distribution, interest or other monies payable in cash in respect of shares may be paid by check or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the holder who is first named on the register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such check or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses, or other monies payable in respect of the share held by them as joint holders.

90. No dividend or distribution shall bear interest against the Company.

CAPITALIZATION

91. Subject to these Articles (including but not limited to Schedule A), upon the recommendation of the Board, the Members may by Special Resolution authorize the Directors to capitalize any sum standing to the credit of any of the Company’s reserve accounts (including share premium account and capital redemption reserve fund) or any sum standing to the credit of profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of dividend and to apply such sum on their behalf in paying up in full unissued shares for allotment and distribution credited as fully paid up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalization, with full power to the Directors to make such provisions as they think fit for the case of shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). Subject to these Articles (including but not limited to Schedule A), the Directors may authorize any person to enter into, on behalf of all of the Members interested, an agreement with the Company providing for such capitalization and matters incidental thereto and any agreement made under such authority shall be effective and legally binding on all concerned.

BOOKS OF ACCOUNT

92. The Directors shall cause proper books of account to be kept with respect to:

(1) All sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place;

(2) All sales and purchases of goods by the Company; and

(3) The assets and liabilities of the Company.

93. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions.

94. Subject to any agreement binding on the Company, the Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorized by the Company.

95. The Directors may from time to time cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.

AUDIT

96. Subject to these Articles (including but not limited to Schedule A), the Board may at any time appoint or remove an Auditor or Auditors of the Company who shall hold office for a period specified by the Board.

97. Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditors.

98. Auditors shall, following their appointment and at any other time during their term of office, upon request of the Directors, make a report on the accounts of the Company during their tenure of office.

NOTICES

99. Notices shall be in writing and may be given by the Company or any person entitled to give notice to any Member either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means to him or to his address as shown in the register of Members, such notice, if mailed, to be forwarded airmail if the address is outside the Cayman Islands.

(1) Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a confirmation of delivery, and by two (2) days having passed after the letter containing the same is sent as aforesaid.

(2) Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected on the same day that it has been properly addressed and sent through a transmitting organization, with a reasonable confirmation of delivery (if applicable).

100. A notice may be given by the Company to the joint holders of record of a share by giving the notice to the joint holder first named on the register of Members in respect of the share.

101. A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a share or shares in consequence of the death or bankruptcy of a Member by sending it, subject to Article 99 and Article 100, to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

102. Notice of every general meeting shall be given in any manner hereinbefore authorized to:

(1) every person shown as a Member in the register of Members as of the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the register of Members; and

(2) every person upon whom the ownership of a share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member of record where the Member of record but for his death or bankruptcy would be entitled to receive notice of the meeting.

103. No other person shall be entitled to receive notices of general meetings pursuant to these Articles.

WINDING UP

104. Subject to these Articles (including but not limited to Schedule A), the Company may voluntarily commence to wind up and dissolve by a Special Resolution. Subject to these Articles (including but not limited to Schedule A), if the Company shall be wound up, any liquidator must be approved by an Ordinary Resolution of the Company.

105. If the Company shall be wound up, the assets available for distribution amongst the Members shall be distributed in accordance with Section 2 of Schedule A; provided that no Member shall be compelled to accept any shares or other securities whereon there is any liability.

INDEMNITY

106. To the maximum extent permitted by applicable law, the Directors and officers for the time being of the Company and any trustee for the time being acting in relation to any of the affairs of the Company and their heirs, executors, administrators and personal representatives respectively shall be indemnified out of the assets of the Company from and against all actions, proceedings, costs, charges, losses, damages and expenses which they or any of them shall or may incur or sustain by reason of any act done or omitted in or about the execution of their duty in their respective offices or trusts, except such (if any) as they shall incur or sustain by or through their own willful neglect or willful default, and no such Director or officer or trustee shall be answerable for the acts, receipts, neglects or defaults of any other Director or officer or trustee or for joining in any receipt for the sake of conformity or for the solvency or honesty of any banker or other persons with whom any monies or effects belonging to the Company may be lodged or deposited for safe custody or for any insufficiency of any security upon which any monies of the Company may be invested or for any other loss or damage due to any such cause as aforesaid or which may happen in or about the execution of his office or trust unless the same shall happen through the willful neglect or willful default of such Director or officer or trustee.

107. To the maximum extent permitted by applicable law, the Directors and officers for the time being of the Company and any trustee for the time being acting in relation to any of the affairs of the Company and their heirs, executors, administrators and personal representatives respectively shall not be personally liable to the Company or its Members for monetary damages for breach of their duty in their respective offices, except such (if any) as they shall incur or sustain by or through their own willful neglect or willful default respectively.

FINANCIAL YEAR

108. Unless a majority of the Board agrees otherwise, the financial year of the Company shall end on December 31 in each year and, following the year of incorporation, shall begin on January 1 in each year.

TRANSFER BY WAY OF CONTINUATION

109. If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of (i) a Special Resolution and (ii) the Super Preferred Majority Holders, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

MERGERS AND CONSOLIDATIONS

110. Subject to these Articles (including but not limited to Schedule A), the Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.

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SCHEDULE A

The holders of Preferred Shares and Ordinary Shares shall, in addition to any other rights conferred on them under these Memorandum and these Articles, have the rights set forth in this Schedule A, which forms part of these Articles. In the event of any inconsistency between the provisions set forth herein and other provisions of the Memorandum and these Articles, the provisions set forth herein shall prevail to the extent permitted by applicable laws.

1. DIVIDENDS AND DISTRIBUTIONS.

(a) Subject to the provisions of the Statute and these Articles (including but not limited to the other requirements of this Schedule A), no dividends or distributions shall be declared or paid on the Ordinary Shares or any future series of preferred shares, unless and until a dividend or distributions is declared and paid on each issued and outstanding Preferred Share (on an as-converted basis) pursuant to Sections 1(b) of Schedule A.

(b) Non-Cumulative Dividend Preference of the Preferred Shares

(i) The Company shall not pay or set aside any dividends or other distributions on any Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares, Series C Shares, Series B+ Shares, Series B Shares, Series A Shares, Ordinary Shares or other Equity Securities of the Company unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series E-3 Shares then outstanding shall firstly receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series E-3 Share held by such holder, pari passu with each other, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(ii) After all the holders of the Series E-3 Shares have received their dividend preference and other distribution in full pursuant to clause (i) above, the Company shall not pay or set aside any dividends or other distributions on any Series D+ Shares, Series D Shares, Series C Shares, Series B+ Shares, Series B Shares, Series A Shares, Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series E-2 Shares and Series E-1 Shares then outstanding shall firstly receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series E-2 Share and Series E-1 Share held by such holder, pari passu with each other, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(iii) After all the holders of the Series E-3 Shares, Series E-2 Shares and the Series E-1 Shares have received their dividend preference and other distribution in full pursuant to clauses (i) and (ii) above, the Company shall not pay or set aside any dividends or other distributions on any Series D Shares, Series C Shares, Series B+ Shares, Series B Shares, Series A Shares, Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares, the Series E-2 Shares and the Series E-1 Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series D+ Shares then outstanding shall firstly receive, or simultaneously receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series D+ Share held by such holder, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(iv) After all the holders of the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares and the Series D+ Shares have received their dividend preference and other distribution in full pursuant to clause (i), (ii) and (iii) above, the Company shall not pay or set aside any dividends or other distributions on any Series C Shares, Series B+ Shares, Series B Shares, Series A Shares, Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares and the Series D+ Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series D Shares then outstanding shall firstly receive, or simultaneously receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series D Share held by such holder, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(v) After all the holders of the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, Series D+ Shares and the Series D Shares have received their dividend preference and other distribution in full pursuant to clauses (i), (ii), (iii) and (iv) above, the Company shall not pay or set aside any dividends or other distributions on any Series B+ Shares, Series B Shares, Series A Shares, Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares and the Series D Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series C Shares then outstanding shall firstly receive, or simultaneously receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series C Share held by such holder, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(vi) After all the holders of the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares and the Series C Shares have received their dividend preference and other distribution in full pursuant to clauses (i), (ii), (iii), (iv) and (v) above, the Company shall not pay or set aside any dividends or other distributions on any Series B Shares, Series A Shares, Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares , the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares and the Series C Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series B+ Shares then outstanding shall firstly receive, or simultaneously receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series B+ Share held by such holder, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(vii) After all the holders of the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares, the Series C Shares and the Series B+ Shares have received their dividend preference and other distribution in full pursuant to clauses (i), (ii), (iii), (iv), (v) and (vi) above, the Company shall not pay or set aside any dividends or other distributions on any Series A Shares, Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares, the Series C Shares and the Series B+ Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series B Shares then outstanding shall firstly receive, or simultaneously receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series B Share held by such holder, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(viii) After all the holders of the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares, the Series C Shares, the Series B+ Shares and the Series B Shares have received their dividend preference and other distribution in full pursuant to clauses (i), (ii), (iii), (iv), (v), (vi) and (vii) above, the Company shall not pay or set aside any dividends or other distributions on any Ordinary Shares or other Equity Securities of the Company (other than the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares, the Series C Shares, the Series B+ Shares and the Series B Shares) unless (in addition to the obtaining of any consents required elsewhere in these Articles) the holders of Series A Shares then outstanding shall firstly receive, or simultaneously receive, on an annual basis, preferential, non-cumulative dividends or distributions at the rate equal to six percent (6%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted) for each Series A Share held by such holder, payable in cash when and as such cash becomes legally available therefor; provided that such dividends or distributions shall be payable only when, as, and if declared by the Board.

(ix) All declared, accrued but unpaid dividends shall be paid in cash when and as such cash becomes legally available to the holders of Preferred Shares immediately prior to the closing of a Qualified IPO or and upon a Liquidation Event.

(c) After receiving the dividends pursuant to subsection (b) above, the holders of the Preferred Shares shall also be entitled to participate pro rata in any dividends or distributions set aside or paid in any fiscal year among the holders of Ordinary Shares on an as-converted basis.

2. LIQUIDATION PREFERENCE.

(a) Liquidation Preferences. Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary:

(i) Before any distribution or payment shall be made to the holders of any Ordinary Shares, holders of Series A Shares, holders of Series B Shares, holders of Series B+ Shares, holders of Series C Shares, holders of Series D Shares, holders of Series D+ Shares, holders of Series E-1 Shares, and/or holders of Series E-2 Shares, each holder of Series E-3 Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series E-3 Preference Amount”) per Series E-3 Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders shall be insufficient to pay the holders of Series E-3 Shares the full amount to which they shall be entitled under this Section 2(a)(i), the holders of Series E-3 Shares shall, pari passu with each other, share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(i) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(ii) After the full Series E-3 Preference Amount has been paid on all outstanding Series E-3 Shares pursuant to Section 2(a)(i), before any distribution or payment shall be made to the holders of any Ordinary Shares, holders of Series A Shares, holders of Series B Shares, holders of Series B+ Shares, holders of Series C Shares, holders of Series D Shares or holders of Series D+ Shares, (x) each holder of Series E-2 Shares shall be entitled, pari passu with each holder of Series E-1 Shares, to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series E-2 Preference Amount”) per Series E-2 Share then held by such holder and (y) each holder of Series E-1 Shares shall be entitled, pari passu with each holder of Series E-2 Shares, to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series E-1 Preference Amount”) per Series E-1 Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount on all outstanding Series E-3 Shares shall be insufficient to pay the holders of Series E-2 Shares and Series E-1 Shares the full amount to which they shall be entitled under this Section 2(a)(ii), the holders of Series E-2 Shares and Series E-1 Shares shall, pari passu with each other, share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(ii) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(iii) After the full Series E-3 Preference Amount, Series E-2 Preference Amount and Series E-1 Preference Amount has been paid on all outstanding Series E-3 Shares, Series E-2 Shares and Series E-1 Shares pursuant to Sections 2(a)(i) and (ii), before any distribution or payment shall be made to the holders of any Ordinary Shares, holders of Series A Shares, holders of Series B Shares , holders of Series B+ Shares, holders of Series C Shares or holders of Series D Shares, each holder of Series D+ Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series D+ Preference Amount”) per Series D+ Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount, Series E-2 Preference Amount and Series E-1 Preference Amount on all outstanding Series E-3 Shares, Series E-2 Shares and Series E-1 Shares (as applicable) shall be insufficient to pay the holders of Series D+ Shares the full amount to which they shall be entitled under this Section 2(a)(iii), the holders of Series D+ Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(iii) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(iv) After the full Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount and Series D+ Preference Amount has been paid on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares and Series D+ Shares pursuant to Sections 2(a)(i), (ii) and (iii), before any distribution or payment shall be made to the holders of any Ordinary Shares, holders of Series A Shares, holders of Series B Shares, holders of Series B+ Shares or holders of Series C Shares, each holder of Series D Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series D Preference Amount”) per Series D Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount and Series D+ Preference Amount on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares and Series D+ Shares (as applicable) shall be insufficient to pay the holders of Series D Shares the full amount to which they shall be entitled under this Section 2(a)(iv), the holders of Series D Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(iv) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(v) After the full Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount and Series D Preference Amount has been paid on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares and Series D Shares pursuant to Sections 2(a)(i), (ii), (iii) and (iv), before any distribution or payment shall be made to the holders of any Ordinary Shares, holders of Series A Shares, holders of Series B Shares or holders of Series B+ Shares, each holder of Series C Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series C Preference Amount”) per Series C Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount and Series D Preference Amount on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares and Series D Shares (as applicable) shall be insufficient to pay the holders of Series C Shares the full amount to which they shall be entitled under this Section 2(a)(v), the holders of Series C Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(v) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(vi) After the full Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount, Series D Preference Amount and Series C Preference Amount has been paid on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares and Series C Shares pursuant to Sections 2(a)(i), (ii), (iii), (iv) and (v), before any distribution or payment shall be made to the holders of any Ordinary Shares, holders of Series A Shares or holders of Series B Shares, each holder of Series B+ Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series B+ Preference Amount”) per Series B+ Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount, Series D Preference Amount and Series C Preference Amount on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares and Series C Shares (as applicable) shall be insufficient to pay the holders of Series B+ Shares the full amount to which they shall be entitled under this Section 2(a)(vi), the holders of Series B+ Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(vi) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(vii) After the full Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount, Series D Preference Amount, Series C Preference Amount and Series B+ Preference Amount has been paid on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares, Series C Shares and Series B+ Shares pursuant to Sections 2(a)(i), (ii), (iii), (iv), (v) and (vi), before any distribution or payment shall be made to the holders of any Ordinary Shares or holders of Series A Shares, each holder of Series B Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series B Preference Amount”) per Series B Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount, Series D Preference Amount, Series C Preference Amount and Series B+ Preference Amount on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares, Series C Shares and Series B+ Shares (as applicable) shall be insufficient to pay the holders of Series B Shares the full amount to which they shall be entitled under this Section 2(a)(vii), the holders of Series B Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(vii) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(viii) After the full Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount, Series D Preference Amount, Series C Preference Amount, Series B+ Preference Amount and Series B Preference Amount has been paid on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares, Series C Shares, Series B+ Shares and Series B Shares pursuant to Sections 2(a)(i), (ii), (iii), (iv), (v), (vi) and (vii), before any distribution or payment shall be made to the holders of any Ordinary Shares, each holder of Series A Shares shall be entitled to receive an amount equal to one hundred percent (100%) of the relevant applicable Original Preferred Share Issue Price (As Adjusted), plus all dividends accrued but unpaid with respect thereto (As Adjusted) (collectively, the “Series A Preference Amount”) per Series A Share then held by such holder. If upon any such liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders after the full payment of Series E-3 Preference Amount, Series E-2 Preference Amount, Series E-1 Preference Amount, Series D+ Preference Amount, Series D Preference Amount, Series C Preference Amount, Series B+ Preference Amount and Series B Preference Amount on all outstanding Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D+ Shares, Series D Shares, Series C Shares, Series B+ Shares and Series B Shares (as applicable) shall be insufficient to pay the holders of Series A Shares the full amount to which they shall be entitled under this Section 2(a)(viii), the holders of Series A Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts under this Section 2(a)(viii) which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(ix) After the full payment of the Series E-3 Preference Amount, the Series E-2 Preference Amount, the Series E-1 Preference Amount, the Series D+ Preference Amount, the Series D Preference Amount, the Series C Preference Amount, the Series B+ Preference Amount, the Series B Preference Amount and the Series A Preference Amount has been made pursuant to this Sections 2(a) of Schedule A, the remaining assets of the Company available for distribution to shareholders shall be distributed ratably among the holders of issued and outstanding Ordinary Shares and the holders of Preferred Shares on an as-converted basis.

(b) Liquidation on Sale or Merger. The following events shall be treated as a liquidation (each, a “Liquidation Event”) under this Section 2 of Schedule A unless waived by the Super Series A Majority Holders, the Super Series B Majority Holders, the Series B+ Majority Holders, the Series C Majority Holders, Series D Majority Holders, the Series D+ Majority Holders, the Super Series E Majority Holders and the Series E-3 Majority Holders:

(i) any consolidation, reorganization, amalgamation or merger of the Company and/or its subsidiaries or shareholders of the subsidiaries with or into any Person, or any other corporate reorganization or scheme of arrangement, including a sale or acquisition of Equity Securities of the Company, in which the shareholders of the Company or shareholders of the subsidiaries immediately before such transaction own less than fifty percent (50%) of the voting power of the surviving company immediately after such transaction (excluding any transaction effected solely for tax purposes or to change the Company’s domicile); or

(ii) a sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any Group Company of all or substantially all of the assets and/or intellectual property and/or business of the Company (or of all of the Group Companies taken as a whole).

And upon any such event, any proceeds from such Liquidation Event or proceeds resulting to the shareholders of the Company therefrom shall be distributed in accordance with the terms of Section 2(a) of Schedule A.

(c) Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the shareholders of the Company upon any such Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Company or the acquiring Person. If the amount deemed paid or distributed under this Section 2 is made in property other than in cash, the value of such distribution shall be the fair market value of such property, determined in good faith by the Board (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors). Any securities not subjected to investment letter or similar restrictions on free marketability shall be valued as follows:

(i) If traded on a securities exchange, the value shall be deemed to be the average of the security’s closing prices on such exchange over the thirty (30) day period ending one (1) day prior to the distribution;

(ii) If traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the thirty (30) day period ending three (3) days prior to the distribution; and

(iii) If there is no active public market, the value shall be the fair market value thereof as determined in good faith by the Board (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors).

The method of valuation of securities subject to investment letter or other restrictions on free marketability shall be adjusted to make an appropriate discount from the market value determined as above in clauses (i), (ii) or (iii) to reflect the fair market value thereof as determined in good faith by the Board (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors), or by a liquidator if one is appointed.

The Super Preferred Majority Holders shall have the right to challenge any determination by the Board of fair market value pursuant to this Section 2(c) of Schedule A, in which case the determination of fair market value shall be made by an independent appraiser selected jointly by the Board and the challenging parties, the cost of such appraisal to be borne equally by the Company and the challenging parties.

3. VOTING RIGHTS.

At all general meetings of the Company: (i) the holder of any Class A Ordinary Shares issued and outstanding shall have one (1) vote for each Class A Ordinary Share held by such holder, (ii) the holder of each Class B Ordinary Share issued and outstanding shall have eight (8) votes for each Class B Ordinary Share held by such holder, and (iii) the holder of each Preferred Share shall be entitled to such number of votes as equals the whole number of Ordinary Shares into which such holder’s collective Preferred Shares are convertible immediately after the close of business on the record date of the determination of the Company’s shareholders entitled to vote or, if no such record date is established, at the date such vote is taken or any written consent of the Company’s shareholders is first solicited. Subject to provisions to the contrary elsewhere in the Memorandum and these Articles, or as required by the Statute, the holders of Preferred Shares shall vote together with the holders of Ordinary Share, and not as a separate class or series, on all matters put before the shareholders. The parties shall agree on voting or such other arrangement to ensure that the Founders shall retain voting control of the Company notwithstanding subsequent equity issuances by the Company.

4. CONVERSION RIGHTS.

If any of the Founder Parties directly or indirectly transfers, in accordance with the Transaction Documents, any Class B Ordinary Shares (including but not limited to transferring voting rights thereof) beneficially held by him/her/it to a Person that is not also a Founder Party or other Person which is not beneficially wholly owned by a Founder Party, or such applicable Founder no longer serves as a director or officer of any Group Company, then such transferred Class B Ordinary Shares shall be automatically converted into the same number of fully-paid and nonassessable Class A Ordinary Shares as of the date of such transfer.

Subject to the provisions of this Section 4 and the requirements of the Statute, any Class B Ordinary Share may, at the option of the holder thereof, be converted at any time into the same number of fully paid and nonassessable Class A Ordinary Shares.

The holders of the Preferred Shares shall have the following rights described below with respect to the conversion of the Preferred Shares into Class A Ordinary Shares. Subject to the provisions of Section 4(b) of Schedule A, the number of Class A Ordinary Shares to which a holder shall be entitled upon conversion of any Preferred Share shall be the quotient of the applicable Original Preferred Share Issue Price divided by the applicable then-effective Preferred Share Conversion Price. The “Preferred Share Conversion Price” shall initially equal the applicable Original Preferred Share Issue Price, and shall be adjusted from time to time as provided below. For the avoidance of doubt, the initial conversion ratio for Preferred Shares to Class A Ordinary Shares shall be 1:1.

(a) Optional Conversion.

(i) Subject to and in compliance with the provisions of this Section 4(a) of Schedule A, and subject to compliance with the requirements of the Statute, any Preferred Share may, at the option of the holder thereof, be converted at any time into fully-paid and nonassessable Class A Ordinary Shares based on the then-effective Preferred Share Conversion Price.

(ii) The holder of any Preferred Shares who desires to convert such shares into Class A Ordinary Shares shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or any transfer agent for such Preferred Shares, and shall give written notice to the Company at such office that such holder has elected to convert such shares. Such notice shall state the number of Preferred Shares being converted. Thereupon, the Company shall promptly issue and deliver to such holder at such office a certificate or certificates for the number of Class A Ordinary Shares to which the holder is entitled and shall update the Register of Members accordingly. No fractional Class A Ordinary Shares shall be issued upon conversion of the Preferred Shares, and the number of Class A Ordinary Shares to be so issued to a holder of Preferred Shares upon the conversion of such Preferred Shares (after aggregating all fractional Class A Ordinary Shares that would be issued to such holder) shall be rounded to the nearest whole share (with one-half being rounded upward). Such conversion shall be deemed to have been made at the close of business on the date of the surrender of the certificates representing the Preferred Shares to be converted, and the person entitled to receive the Class A Ordinary Shares issuable upon such conversion shall be treated for all purposes as the record holder of such Class A Ordinary Shares on such date.

(b) Automatic Conversion.

(i) Without any action being required by the holder of such share and whether or not the certificates representing such share are surrendered to the Company or its transfer agent, the Preferred Shares shall automatically be converted into Class A Ordinary Shares in accordance with this Section 4 upon (a) the closing of a Qualified IPO; (b) with respect to the Preferred Shares (other than the Series E-3 Shares, Series E-2 Shares, Series E-1 Shares, Series D Shares and Series D+ Shares), the date when the Company obtains the vote or consent of the Super Series A Majority Holders, the Super Series B Majority Holders, the Series B+ Majority Holders and the Series C Majority Holders; (c) with respect to the Series D Shares, the date when the Company obtains the vote or consent of the Series D Majority Holders; (d) with respect to the Series D+ Shares, the date when the Company obtains the vote or consent of the Series D+ Majority Holders; (e) with respect to the Series E-1 Shares and Series E-2 Shares, the date when the Company obtains the vote or consent of the Super Series E Majority Holders; and/or (f) with respect to the Series E-3 Shares, the date when the Company obtains the vote or consent of the Series E-3 Majority Holders.

(ii) The Company shall not be obligated to issue certificates for any Class A Ordinary Shares issuable upon the automatic conversion of any Preferred Shares unless the certificate or certificates evidencing such Preferred Shares is either delivered as provided below to the Company or any transfer agent for the Preferred Shares, or the holder notifies the Company or its transfer agent that such certificate has been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificate. The Company shall, as soon as practicable after receipt of certificates for Preferred Shares, or satisfactory agreement for indemnification in the case of a lost certificate, promptly issue and deliver at its office to the holder thereof a certificate or certificates for the number of Class A Ordinary Shares to which the holder is entitled and shall update the Register of Members accordingly. No fractional Ordinary Shares shall be issued upon conversion of the Preferred Shares, and the number of Class A Ordinary Shares to be so issued to a holder of converting Preferred Shares (after aggregating all fractional Class A Ordinary Shares that would be issued to such holder) shall be rounded to the nearest whole share (with one-half being rounded upward). Any person entitled to receive Class A Ordinary Shares issuable upon the automatic conversion of the Preferred Shares shall be treated for all purposes as the record holder of such Class A Ordinary Shares on the date of such conversion.

(c) Mechanics of Conversion.

The conversion hereunder of any Preferred Share (the “Conversion Share”) shall be effected in the following manner:

The Company shall give effect to any conversion pursuant to these Articles by any of the following methods (or a combination thereof) and in all such cases the form, manner, timing and execution of the conversion shall, subject to these Articles, occur as set out below: (i) by the repurchase or redemption of the Conversion Shares and, in consideration, the issue of the appropriate number of shares of the class into which such shares are to be converted and distribute to the respective holder of the Conversion Shares all other assets distributable, upon such conversion. The Directors have the authority (notwithstanding any other provision of these Articles to the contrary) to effect such repurchase or redemption and issue of shares in such manner as it considers appropriate and, in particular, may ascribe such value as it considers appropriate by way of determination of the repurchase or redemption price and issue price. As a general rule, the aggregate consideration of the repurchase or redemption of the Conversions Shares shall be (a) the aggregate par value of any capital shares of the Company to be issued upon such conversion; and (b) the aggregate value, as determined by the Directors, of any other assets which are to be distributed upon such conversion. Shares that are repurchased or redeemed pursuant to this Article are cancelled and shall form part of the authorized but unissued share capital of the Company and shall not be re-issued as shares carrying a conversion right; and (ii) such other method as may be permitted by law from time to time as the Directors consider to be in the best interests of the Company.

No fractional Class A Ordinary Shares shall be issued upon conversion of the Preferred Shares. All Class A Ordinary Shares (including any fractions thereof) issuable upon conversion of Preferred Shares by a holder thereof shall be aggregated for purposes of determining whether the issuance would result in the issuance of any fractional share. In lieu of any fractional shares to which the holder thereof would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the then effective Preferred Share Conversion Price applicable, unless the payment would amount to less than US$50.00 in aggregate payable to any single converting holder of the Preferred Shares in which case such amount will not be distributed but shall be retained for the benefit of the Company.

(d) Adjustments to Preferred Share Conversion Price.

(i) Adjustment for Share Splits and Combinations. If the Company shall at any time, or from time to time, effect a subdivision of the outstanding Class A Ordinary Shares, the applicable Preferred Share Conversion Price in effect immediately prior to such subdivision shall be proportionately decreased. Conversely, if the Company shall at any time, or from time to time, combine the outstanding Class A Ordinary Shares into a smaller number of shares, the applicable Preferred Share Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.

(ii) Adjustment for Ordinary Share Dividends and Distributions. If the Company makes (or fixes a record date for the determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in Additional Equity Securities, the applicable Preferred Share Conversion Price then in effect shall be decreased as of the time of such issuance (or in the event such record date is fixed, as of the close of business on such record date) by multiplying such Preferred Share Conversion Price then in effect by a fraction (i) the numerator of which is the total number of Ordinary Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the total number of Ordinary Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Ordinary Shares issuable in payment of such dividend or distribution.

(iii) Adjustments for Other Dividends. If the Company at any time, or from time to time, makes (or fixes a record date for the determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution payable in securities of the Company other than Ordinary Shares or Ordinary Share Equivalents, then, and in each such event, provision shall be made so that, upon conversion of any Preferred Share, thereafter, the holder thereof shall receive, in addition to the number of Ordinary Shares issuable thereon, the amount of securities of the Company which the holder of such share would have received had the Preferred Shares, been converted into Class A Ordinary Shares immediately prior to such event, all subject to further adjustment as provided herein.

(iv) Reorganizations, Mergers, Consolidations, Reclassifications, Exchanges, Substitutions. If at any time, or from time to time, any capital reorganization or reclassification of the Ordinary Shares (other than as a result of a share dividend, subdivision, split or combination otherwise treated above) occurs or the Company is consolidated, merged or amalgamated with or into another Person (other than a consolidation, merger or amalgamation treated as a Liquidation Event), then in any such event, provision shall be made so that, upon conversion of any Preferred Share, thereafter, the holder thereof shall receive the kind and amount of shares and other securities and property which the holder of such share would have received had the Preferred Shares, been converted into the Class A Ordinary Shares on the date of such event, all subject to further adjustment as provided herein, or with respect to such other securities or property, in accordance with any terms applicable thereto.

(v) Deemed Issue of Additional Equity Securities. In the event the Company at any time or from time to time after the applicable Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class or series of shares entitled to receive any such Options or Convertible Securities, then the maximum number of Ordinary Shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number that would result in an adjustment pursuant to clause (B) of this Section 4(d)(v) below) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Equity Securities issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Equity Securities shall not be deemed to have been issued unless the issue price per share (determined pursuant to Sections 4(d)(vi)(B)(1), (2) and (3) hereof) of such Additional Equity Securities would be less than the applicable Preferred Share Conversion Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Equity Securities are deemed to be issued:

(A) no further adjustment in the applicable Preferred Share Conversion Price shall be made upon the subsequent issue of Convertible Securities or Ordinary Shares upon the exercise of such Options or conversion or exchange of such Convertible Securities;

(B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or increase or decrease in the number of Ordinary Shares issuable, upon the exercise, conversion or exchange thereof, the applicable Preferred Share Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the applicable Preferred Share Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

(1) in the case of Convertible Securities or Options for Ordinary Shares, the only Additional Equity Securities issued were Ordinary Shares, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange, and

(2) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Company for the Additional Equity Securities deemed to have been then issued was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

(D) no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the applicable Preferred Share Conversion Price to an amount which exceeds the lower of (i) the applicable Preferred Share Conversion Price on the original adjustment date, or (ii) the applicable Preferred Share Conversion Price that would have resulted from any issuance of Additional Equity Securities between the original adjustment date and such readjustment date;

(E) in the case of any Options which expire by their terms not more than thirty (30) days after the date of issue thereof, no adjustment of the applicable Preferred Share Conversion Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the manner provided in clause (C) above; and

(F) for purposes of this Section 4(d)(v), the term “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Ordinary Shares or Convertible Securities; the term “Convertible Securities” shall mean any evidences of indebtedness, shares (other than the Preferred Shares) or other securities or rights directly or indirectly convertible into or exchangeable for Ordinary Shares.

(vi) Issuance of Shares below the applicable Preferred Share Conversion Price.

(A) In the event the Company shall at any time after the applicable Issue Date issue Additional Equity Securities, without consideration or for a consideration per share less than the applicable Preferred Share Conversion Price in effect immediately prior to such issue (the “Future Issuance Price”), then the applicable Preferred Share Conversion Price for the affected Preferred Shares in effect immediately prior to each such issuance shall forthwith be adjusted to a price (calculated to the nearest one-thousandth of a cent) determined in accordance with the following formula:

AP = OP *	Ordinary Shares + (New Money / OP) Outstanding
	Ordinary Shares + Additional Equity Outstanding             Securities

WHERE:

OP	=	Old Preferred Share Conversion Price (before the price-based adjustment).
AP	=	Adjusted Preferred Share Conversion Price (after the price-based adjustment).
Ordinary Shares Outstanding	=	The number of Ordinary Shares Outstanding immediately before the issuance of the dilutive securities.
New Money	=	The amount raised in the dilutive financing. See Sections 4(d)(vi)(B)(1), (2) and (3), which cover how to value the consideration received for the dilutive securities.
Additional Equity Securities	=	The number of Ordinary Shares (on an as-if converted and fully-diluted basis) issued in the dilutive financing.

For purposes of this Section 4(d)(vi)(A), the term “Ordinary Shares Outstanding” shall mean and include the following: (1) outstanding Ordinary Share, (2) Class A Ordinary Share issuable upon conversion of outstanding Preferred Share, (3) Class A Ordinary Share issuable upon exercise of outstanding share options and (4) Class A Ordinary Share issuable upon exercise (and, in the case of warrants to purchase Preferred Share, conversion) of outstanding warrants. Shares described in (1) through (4) above shall be included whether vested or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.

(B) Determination of Consideration.

For the purpose of making any adjustment to the Preferred Share Conversion Price or the number of Class A Ordinary Shares issuable upon conversion of the Preferred Shares, as the case may be, as provided above:

(1) To the extent it consists of cash, the consideration received by the Company for any issue or sale of securities shall be computed at the net amount of cash received by the Company after deduction of any underwriting or similar commissions, compensations, discounts or concessions paid or allowed by the Company in connection with such issue or sale;

(2) To the extent it consists of property other than cash, consideration other than cash received by the Company for any issue or sale of securities shall be computed at the fair market value thereof (as determined in good faith by a majority of the votes of the Directors on the Board, including the affirmative vote or consent of the affirmative votes of at least two-thirds (2/3) of all Preferred Directors), as of the date of the adoption of the resolution specifically authorizing such issue or sale, irrespective of any accounting treatment of such property; and

(3) If Additional Equity Securities or Ordinary Share Equivalents exercisable, convertible or exchangeable for Additional Equity Securities are issued or sold together with other stock or securities or other assets of the Company for consideration which covers both, the consideration received for the Additional Equity Securities or such Ordinary Share Equivalents shall be computed as that portion of the consideration received (as determined in good faith by a majority of the votes of the Directors on the Board, including the affirmative vote or consent of affirmative votes of at least two-thirds (2/3) of all Preferred Directors) to be allocable to such Additional Equity Securities or Ordinary Share Equivalents.

(vii) Other Dilutive Events. In case any event shall occur as to which the other provisions of this Section 4 of Schedule A are not strictly applicable, but the failure to make any adjustment to the Preferred Share Conversion Price would not fairly protect the conversion rights of the applicable series of Preferred Shares in accordance with the essential intent and principles hereof, then, in each such case, the Company, in good faith, shall determine the appropriate adjustment to be made, on a basis consistent with the essential intent and principles established in this Section 4 of Schedule A necessary to preserve, without dilution, the conversion rights of such series of Preferred Shares.

(viii) Certificate of Adjustment. In the case of any adjustment or readjustment of the applicable Preferred Share Conversion Price, the Company, at its sole expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder of affected Preferred Shares at such holder’s address as shown in the Company’s books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or deemed to be received by the Company for any Additional Equity Securities issued or sold or deemed to have been issued or sold, (ii) the number of Additional Equity Securities issued or sold or deemed to be issued or sold, (iii) the applicable Preferred Share Conversion Price in effect before and after such adjustment or readjustment, and (iv) the number of the Class A Ordinary Shares and the type and amount, if any, of other property which would be received upon conversion of such series of Preferred Shares after such adjustment or readjustment.

(ix) Notice of Record Date. In the event the Company shall propose to take any action of the type or types requiring an adjustment to the Preferred Share Conversion Price or the number or character of the Preferred Shares as set forth herein, the Company shall give notice to the holders of such Preferred Shares, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the applicable Preferred Share Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable upon the occurrence of such action or deliverable upon the conversion of Preferred Shares. In the case of any action which would require the fixing of a record date, such notice shall be given at least twenty (20) days prior to the date so fixed, and in the case of all other actions, such notice shall be given at least thirty (30) days prior to the taking of such proposed action.

(x) Reservation of Shares Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued Class A Ordinary Shares, solely for the purpose of effecting the conversion of the Preferred Shares, such number of its Class A Ordinary Shares as shall from time to time be sufficient to effect the conversion of all issued and outstanding Preferred Shares. If at any time the number of authorized but unissued Class A Ordinary Shares shall not be sufficient to effect the conversion of all then issued and outstanding Preferred Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Class A Ordinary Shares to such number of shares as shall be sufficient for such purpose.

(xi) Notices. Any notice required or permitted pursuant to this Section 4 of Schedule A shall be given in writing and shall be given either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means to each holder of record at the address of such holder appearing on the books of the Company. Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a confirmation of delivery, and to have been effected at the expiration of two (2) days after the letter containing the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected by properly addressing, and sending such notice through a transmitting organization, with a written confirmation of delivery (if applicable), and to have been effected on the day the same is sent as aforesaid.

(xii) Payment of Taxes. The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or allotment of the Class A Ordinary Shares upon conversion of Preferred Shares, excluding any tax or other charge imposed in connection with any transfer involved in the issue and allotment of the Class A Ordinary Shares in a name other than that in which the Preferred Shares so converted were registered.

5. REDEMPTION

(a) At any time after the earlier of (i) the occurrence of a material breach by any Group Company or any of the Founders and the Founder Holdcos of any of their respective representations, warranties, covenants or undertakings under the Transaction Documents, which is not capable of remedy or is not remedied within thirty (30) days after its occurrence, or (ii) the fifth (5th) anniversary of the Issue Date of the first Series E-1 Share, provided that the Company had not consummated a Qualified IPO by such time, or (iii) any material adverse change in the regulatory environment that will render the Restructuring Documents illegal or unenforceable (if applicable), or (iv) any request for redemption by another holder of Preferred Shares of such holder’s Preferred Shares upon the occurrence of the Redemption Event as contemplated under item (i), (together with the foregoing item (i), (ii) and (iii), collectively the “Redemption Events” and each a “Redemption Event”), each Preferred Share shall be redeemable at the option of each holder of the Preferred Shares, out of funds legally available therefor in accordance with the following terms applicable to such holders of the Preferred Shares. Following receipt of the request for redemption from any such holder, the Company shall within fifteen (15) business days give written notice (the “Redemption Notice”) to each holder of record of a Preferred Share, at the address last shown on the records of the Company for such holder(s). Such notice shall indicate that certain holders of Preferred Shares have elected redemption of all or a portion of such Preferred Shares pursuant to the provisions of this Section 5, shall specify the redemption date which shall be not earlier than ten (10) business days from the date of the Redemption Notice and not more than three (3) months from the date of the Redemption Notice (the “Redemption Date”), and shall direct the holders of such shares to submit their share certificates to the Company on or before the scheduled Redemption Date. The redemption price of each Preferred Share requested to be redeemed shall be, with respect to the holder of such Preferred Share, equal to the sum of the relevant Original Preferred Share Issue Price together with an internal rate of compounded return calculated at six percent (6%) annually thereon, through the period commencing from the applicable Issue Date of such Preferred Share to the date of the full payment of the Redemption Price for such Preferred Share, plus in each case all dividends declared and unpaid with respect thereto (the “Redemption Price”). The closing (the “Redemption Closing”) of the redemption of the Preferred Shares pursuant to this Section 5(a) will take place on the Redemption Date at the offices of the Company, or such earlier date or other place as the Super Preferred Majority Holders and the Company may mutually agree in writing (but in no event shall be earlier than ten (10) business days from the date of the Redemption Notice). At the Redemption Closing, subject to applicable law, the Company will, from any source of assets or funds legally available therefore, redeem the Preferred Shares held and requested to be redeemed by each holder by paying in cash therefore the Redemption Price against surrender by such holder at the Company’s principal office of the certificate representing such share. From and after the Redemption Closing, if the Company makes the applicable full Redemption Price available to a holder of a Preferred Share requested to be redeemed by such holder, all rights of the holder of such Preferred Share (except the right to receive the applicable Redemption Price therefore) will cease with respect to such Preferred Share, and such Preferred Share will not thereafter be transferred on the books of the Company or be deemed outstanding for any purpose whatsoever.

(b) Insufficient Funds. If the Company’s assets or funds which are legally available on the date that any redemption payment under this Section 5 is due are insufficient to pay in full all redemption payments to be paid at the Redemption Closing, (i) those assets or funds which are legally available shall be used to the extent permitted by applicable law to firstly pay all Redemption Price due on such date on the Series E-3 Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, (ii) after the full payment of the Redemption Price for the Series E-3 Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all Redemption Price due on such date on the Series E-2 Shares and the Series E-1 Shares, pari passu with each other, in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, (iii) after the full payment of the Redemption Price for the Series E-3 Shares, the Series E-2 Shares and the Series E-1 Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all Redemption Price due on such date on the Series D+ Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, (iv) after the full payment of the Redemption Price for the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares and the Series D+ Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all Redemption Price due on such date on the Series D Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, (v) after the full payment of the Redemption Price for the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares and the Series D Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all Redemption Price due on such date on the Series C Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, (vi) after the full payment of the Redemption Price for the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares and the Series C Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all Redemption Price due on such date on the Series B+ Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, (vii) after the full payment of the Redemption Price for the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares, the Series C Shares and the Series B+ Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by applicable law to pay all Redemption Price due on such date on the Series B Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon; (viii) after the full payment of the Redemption Price for the Series E-3 Shares, the Series E-2 Shares, the Series E-1 Shares, the Series D+ Shares, the Series D Shares, the Series C Shares, the Series B+ Shares and the Series B Shares, those remaining assets or funds which are legally available shall be used to the extent permitted by law to pay all applicable Redemption Price due on such date on the Series A Shares in proportion to the full amounts to which the holders to which such Redemption Price are due would otherwise be respectively entitled thereon, and (ix) the Company shall execute and deliver to each holder a promissory note for the full amount of the Redemption Price due but not paid to such holder pursuant to clause (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above.

(c) Un-redeemed Shares. Without limiting any rights of the holders of Preferred Shares which are set forth in these Articles, or are otherwise available under law, the balance of any shares subject to redemption hereunder with respect to which the Company has become obligated to pay the Redemption Price but which it has not paid in full shall continue to have all the powers, designations, preferences and relative participating, optional, and other special rights (including, without limitation, rights to accrue dividends) which such shares had prior to such date, until the redemption payment has been paid in full with respect to such shares.

6. ACTS OF THE COMPANY.

(a) Acts Requiring Approval by Holders of Preferred Shares.

So long as there are any Preferred Shares outstanding, in addition to any other vote or consent required elsewhere in these Articles, the Shareholders’ Agreement or by any applicable statute, each Group Company shall not, do any of the following matters, without the written approval of the Super Preferred Majority Holders (regardless if such matter would have to be approved by the Board, shareholders, or any other corporate body or organ) (for these purposes, references to Company in this Section 6 shall mean “the Company and/or any Group Company”; provided that items (i) and (vi) shall require the prior written approval of (s) the Series E-3 Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series E-3 Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-3 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-3 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (t) the Super Series E Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series E-1 Shares and/or Series E-2 Shares (only with respect to the holders of Series E-1 Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-1 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-1 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares; and only with respect to holders of Series E-2 Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-2 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-2 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (u) the Super Series D Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series D Shares and/or Series D+ Shares (only with respect to the holders of Series D Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series D Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series D Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares, and only with respect to the holders of Series D+ Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series D+ Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series D+ Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (v) the Series C Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series C Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series C Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series C Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (w) the Series B+ Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series B+ Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series B+ Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series B+ Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (x) the Super Series B Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series B Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series B Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series B Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), and (y) the Super Series A Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series A Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series A Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series A Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares):

(i) any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Preferred Shares;

(ii) any action that authorizes, creates or issues, or obligates the Company to authorize, create or issue, shares of any class of capital stock of the Company, or instruments that are convertible into shares, having preferences superior to or on a parity with the Preferred Shares;

(iii) any share split, share consolidation or stock dividend or any action that reclassifies any outstanding shares of the Company;

(iv) any increase, decrease or cancellation in the number of authorized or outstanding Ordinary Shares or Preferred Shares of the Company or share capital of any other Group Company, or any issuance, distribution, purchase or redemption of any convertible security or warrant or any issuance of option, except for any such action under the terms of the ESOP or the redemption of any Preferred Shares in accordance with their terms in these Articles;

(v) incurrence of indebtedness for money borrowed in excess of US$300,000 per commitment or US$1,500,000 in the aggregate during any twelve (12) months’ period by any Group Company from any Person(s) (except for other Group Companies), or such higher amounts set by the Board (including the affirmative votes of at least fifty percent (50%) of all Preferred Directors) according to the expansion of the Company’s business;

(vi) any adoption, amendment or waiver of any provision of the memorandum or articles of association of the Company or similar organizational documents of any other Group Company;

(vii) the liquidation, dissolution or winding up of any Group Company;

(viii) authorizing or consummating a Liquidation Event or authorizing or consummating the merger, acquisition, reorganization, consolidation, business combination or similar transaction, or sale, conveyance or other disposition of all or substantially all of the assets or business, or exclusive licensing of all or substantially all of the intellectual property, of any Group Company;

(ix) the declaration or payment of a dividend on the capital stock of any Group Company;

(x) the redemption or repurchase of capital stock (including exercising the purchase option of the Company pursuant to Section 6.2(b) of the Shareholders’ Agreement), other than the redemption of any Preferred Shares in accordance with their terms in these Articles or repurchases from employees upon termination of employment at the employee’s original purchase price or pursuant to contractual rights of first refusal under the ESOP plan duly approved by the Board;

(xi) any change to the size of the Board of Directors of any Group Company or any change to the manner in which the directors of any Group Company are appointed;

(xii) any sale of all or substantially all of any of the Group Company’s assets, goodwill or any material asset or undertaking of any Group Company, or any transaction resulting in a change of control of any Group Company;

(xiii) any sale, transfer, or exclusive licensing to any third party any material patent, brand, copyright, trademark or any material intellectual property of the Group Company;

(xiv) a public offering of or other listing of securities of the Company or its subsidiaries (including the selection of any underwriter for such offering);

(xv) any termination of, unapproved amendment to or breach of any contracts among the Group Companies designed to provide the Company with control over, and the ability to consolidate the financials statements of, direct or indirect subsidiaries and/or controlled entities, including without limitation the Restructuring Documents;

(xvi) any amendment to the foregoing; and

(xvii) any agreement or commitment by any Group Company to do any of the foregoing items.

(b) Acts Requiring Approval of at least two-thirds (2/3) of all Preferred Directors.

For so long as certain holders of Preferred Shares are entitled to designate the Preferred Directors, in addition to such other limitations as may be provided in these Articles or in the applicable laws, the Shareholders’ Agreement or any of the Company’s contractual obligations, the Company and the other Group Companies shall not, directly or indirectly take any of the following actions, except with a majority of the votes of the Directors including affirmative votes of at least two-thirds (2/3) of all Preferred Directors:

(i) the issuance of any securities by any Group Company (other than the Company) to any third party;

(ii) amend or terminate the ESOP plan or approve any new equity-based compensation plan or any bonus or incentive plan;

(iii) the issuance or reservation of Class A Ordinary Shares under the Company’s ESOP plan in excess of the total number of Class A Ordinary Shares reserved under the ESOP as of the Completion, except for the issuance and reservation of Class A Ordinary Shares according to Section 7.1A of the Shareholders’ Agreement;

(iv) appointment and change of Auditor of and any material change in the accounting policies, procedures or internal control of any Group Company;

(v) entering into or amending any Related Party Transactions in excess of US$150,000, other than (a) the transactions with COSMIC BLUE or any of its Affiliates to the extent not exceeding US$2,000,000 in the aggregate in any fiscal year , and (b) (x) the transactions with Tencent or any of its Affiliates with respect to service of email, wechat and network cloud, and (y) other transactions with Tencent or any of its Affiliates to the extent not exceeding US$4,000,000 in the aggregate in any fiscal year;

(vi) any increase in compensation of any employee of the Group Companies with monthly salary of at least RMB20,000 by more than forty percent (40%) in a twelve 12 months’ period;

(vii) establish any committees (including a compensation committee), local boards or agencies for managing any of the affairs of the Group Companies;

(viii) any other action that would materially affect the rights or interests of any holder of Preferred Shares;

(ix) having any subsidiary that is not wholly owned by any Group Company;

(x) any amendment to the foregoing; and

(xi) any agreement or commitment by any Group Company to do any of the foregoing items.

Furthermore, for so long as certain holders of Preferred Shares are entitled to designate the Preferred Directors, the Company and the other Group Companies shall not, directly or indirectly, cease to conduct or carry on its Business substantially as now conducted by the Group Companies, change of any material part of its business or enter into business that is outside of the Business, except with a majority of the votes of the Directors including affirmative votes of at least two-thirds (2/3) of all Preferred Directors.

(c) Acts Requiring Approval by at least two-thirds (2/3) of all Preferred Directors other than KKR Director.

For so long as certain holders of Preferred Shares are entitled to designate the Preferred Directors, in addition to such other limitations as may be provided in these Articles or in the applicable laws, the Shareholders’ Agreement or any of the Company’s contractual obligations, the Company and the other Group Companies shall not, directly or indirectly take any of the following actions, except with a majority of the votes of the Directors including affirmative votes of at least two-thirds (2/3) of all Preferred Directors other than KKR Director:

(i) the creation of any new joint ventures or joint partnership;

(ii) incurrence of capital expenditures exceeding US$300,000 per commitment or US$1,500,000 in the aggregate during twelve (12) months’ period (or such higher amounts set by the Board according to the expansion of the Company’s business) outside of Board approved annual Budget;

(iii) approving or amending the annual Budget;

(iv) purchase or disposal of business or assets in excess of US$300,000 per commitment or US$1,500,000 in the aggregate during any twelve (12) months’ period by any Group Company;

(v) extension by the any of the Group Companies of any loan or guarantee for indebtedness in excess of US$100,000 per commitment or US$500,000 in the aggregate during any twelve (12) months’ period to any third party;

(vi) equity investment in any third party with the amount of investment in excess of US$100,000 per commitment or US$500,000 in the aggregate during any twelve (12) months’ period;

(vii) other transactions that is outside ordinary course of business and involving an amount in excess of US$100,000 per commitment or US$500,000 in the aggregate during any twelve (12) months’ period or exclusive relationship;

(viii) appointment or replacement of the CEO, CFO, COO and CTO of the Group Companies;

(ix) initiate or settle any material litigation or arbitration;

(x) any amendment to the foregoing; and

(xi) any agreement or commitment by any Group Company to do any of the foregoing items.

(d) Acts Requiring Approval by Holders of Ordinary Shares.

So long as there are any Ordinary Shares outstanding (excluding the Ordinary Shares held by the Founder Parties), in addition to any other vote or consent required elsewhere in these Articles, the Shareholders’ Agreement or by any applicable statute, the Group Companies shall not, impose any additional restrictions or make amendment to existing restrictions which is detrimental to the holders of Ordinary Shares (excluding the Founder Parties) (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Ordinary Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Ordinary Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Ordinary Shares (other than the Founder Parties)), except with the written consent of the holders of at least two-thirds (2/3) of the then outstanding Ordinary Shares (excluding the Ordinary Shares held by the Founder Parties), voting as a separate class.

7. APPOINTMENT AND REMOVAL OF DIRECTORS.

(a) There shall be a Board consisting of up to nine (9) persons, unless increased by a resolution adopted by the Board and with the consent required pursuant to Section 6 of Schedule A.

(b) All Directors shall be elected pursuant the following:

(i) GGV, as long as their shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) Director (the “GGV Director”) to the Board.

(ii) IDG, as long as their shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) Director (the “IDG Director”) to the Board.

(iii) KKR, as long as its shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) Director (the “KKR Director”) to the Board.

(iv) SCC, as long as their shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) Director (the “SCC Director”) to the Board.

(v) TBP, as long as its and its Affiliates’ aggregate shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) Director (the “TBP Director”) to the Board.

(vi) Tencent shall be entitled to elect and remove one (1) director of the Board (the “Tencent Director”, together with the GGV Director, the IDG Director, the KKR Director, the TBP Director and the SCC Director, collectively the “Preferred Directors” and each a “Preferred Director”), provided that upon the completion of the next bona fide equity financing of the Company after the date hereof, Tencent shall only be entitled to elect and remove the Tencent Director for so long as Tencent’s and its Affiliates’ aggregate shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis.

(vii) The holders of a majority of the Ordinary Shares (voting as a single class) shall be entitled to elect and remove three (3) directors of the Board, one of whom shall be the then current chief executive officer of the Company and the Chairman of the Board (the “Chairman Director”).

(c) Lightspeed, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be James Qun Mi. The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(d) SCC, as long as their shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be He Tiantian (何田田). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(e) LFC, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Yi Duoduo (易多多). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(f) Hike, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Xu Shi (徐诗). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(g) Northern Light, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Lin Lu (林路). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(h) KKR, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Ray Jin. The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(i) GSR, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Liu Jia (刘佳). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(j) GGV, as long as their shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Yu Hong (于红). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(k) IDG, as long as their shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Ding Shanshan (丁姗姗). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(l) COSMIC BLUE, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Su Hua (宿华). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(m) Carlyle, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Liu Wanlin (刘婉琳). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(n) Tencent, upon the completion of the next bona fide equity financing of the Company after the date hereof and as long as its and its Affiliates’ aggregate shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(o) TBP, as long as its and its Affiliates’ aggregate shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Du Nan (杜南). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(p) Each Shareholder also agrees to vote all of his, her or its Shares from time to time and at all times in whatever manner as shall be necessary to ensure that (i) no director elected pursuant to Section 7 of this Schedule A may be removed from office unless (A) such removal is directed or approved by the affirmative vote of the holders of the shares entitled under Section 7 to designate that director; or (B) the person(s) or entity(ies) originally entitled to designate or approve such director or occupy such Board seat pursuant to Section 7 is no longer so entitled to designate or approve such director or occupy such Board seat; and (ii) any vacancies created by the resignation, removal or death of a director elected pursuant to Section 7 shall be filled pursuant to the provisions of Section 7. All Shareholders agree to execute any written consents required to effectuate the obligations of this Schedule A, and the Company agrees at the request of any Shareholder entitled to designate directors to call a special meeting of shareholders for the purpose of electing directors.

[End of Schedule A]

EX-10.1

Exhibit 10.1

SPARK EDUCATION LIMITED

AMENDED AND RESTATED 2019 INCENTIVE COMPENSATION PLAN

1. Purposes of the Plan. The purposes of this Amended and Restated 2019 Incentive Compensation Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants, and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Restricted Shares may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Chief Executive Officer of the Company.

(b) “Affiliate” means an entity other than a Subsidiary which, together with the Company, is under common control of a third person or entity.

(c) “Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal or state laws, Cayman Islands laws, People’s Republic of China laws, any Stock Exchange rules or regulations, and the applicable laws, rules or regulations of any other country or jurisdiction where Options or Restricted Shares are granted under the Plan or Participants reside or provide services, as such laws, rules, and regulations shall be in effect from time to time.

(d) “Award” means any award of an Option or Restricted Shares under the Plan.

(e) “Board” means the Board of Directors of the Company.

(f) “Cashless Exercise” means a program approved by the Administrator in which payment of the Option exercise price or tax withholding obligations may be satisfied, in whole or in part, with Shares subject to the Option, including by delivery of an irrevocable direction to a Company designated securities broker (on a form prescribed by the Administrator) to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate exercise price in full and, if applicable, the amount necessary to satisfy the Company’s withholding obligations.

(g) “Cause” for termination of a Participant’s Continuous Service Status will exist (unless another definition is provided in an applicable Option Agreement, Restricted Shares Purchase Agreement, employment agreement or other applicable written agreement) if the Participant’s Continuous Service Status is terminated for any of the following reasons: (i) Participant’s willful failure to perform his or her duties and responsibilities to the Company or Participant’s violation of any written Company policy; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in injury to the Company; (iii) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s material breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant’s Continuous Service Status has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be interpreted to include any Group Company or any successor thereto, if appropriate.

(h) “Code” means the Internal Revenue Code of 1986, as amended.

(i) “Company” means Spark Education Limited, a company organized under the laws of the Cayman Islands, or any successor corporation thereto.

(j) “Constitutional Documents” means the memorandum and articles of association of the Company and the shareholders agreement of the Company, each as amended from time to time.

(k) “Consultant” means any person, including an advisor but not an Employee, who is engaged by any Group Company, to render services (other than capital-raising services) and is compensated for such services, and any Director whether compensated for such services or not.

(l) “Continuous Service Status” means the absence of any interruption or termination of service as an Employee or Consultant. Continuous Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of: (i) Company approved sick leave; (ii) military leave; (iii) any other bona fide leave of absence approved by the Administrator, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written Company policy. Also, Continuous Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of a transfer between locations of the Group Companies, or their respective successors, or a change in status from an Employee to a Consultant or from a Consultant to an Employee. The term “Company” will be interpreted to include any Group Company or any successor thereto, if appropriate.

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(m) “Corporate Transaction” means (i) a sale of all or substantially all of the Company’s assets; (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity, or person; or (iii) the consummation of a transaction in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities, except that any change in the beneficial ownership of the securities of the Company as a result of a private financing of the Company that is approved by the Board shall not be deemed to be a Corporate Transaction. Notwithstanding anything stated herein, a transaction shall not constitute a “Corporate Transaction” if its sole purpose is to change the state of the Company’s incorporation, or to create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s securities immediately before such transaction.

(n) “Director” means a member of the Board.

(o) “Disability” means “disability” within the meaning of Section 22(e)(3) of the Code.

(p) “Employee” means any person employed by any Group Company, with the status of employment determined pursuant to such factors as are deemed appropriate by the Administrator in its sole discretion, subject to any requirements of the Applicable Laws, including the Code. The payment by the Group Company of a director’s fee shall not be sufficient to constitute “employment” of such director by such Group Company.

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(r) “Fair Market Value” means, as of any date, the per share fair market value of the Ordinary Shares, as determined by the Administrator in good faith on such basis as it deems appropriate and applied consistently with respect to Participants. Whenever possible, the determination of Fair Market Value shall be based upon the per share closing price for the Shares as reported in the Wall Street Journal for the applicable date.

(s) “Family Members” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Optionee, any person sharing the Optionee’s household (other than a tenant or employee), a trust in which these persons (or the Optionee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionee) control the management of assets, and any other entity in which these persons (or the Optionee) own more than 50% of the voting interests.

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(t) “Group Companies” means the Company, a Parent, a Subsidiary, an Affiliate, and any controlled affiliate of each of the Company, the Parent, the Subsidiary, and the Affiliate that is not a natural person (each, a “Group Company”).

(u) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.

(v) “Involuntary Termination” means (unless another definition is provided in the applicable Option Agreement, Restricted Shares Purchase Agreement, employment agreement or other applicable written agreement) the termination of a Participant’s Continuous Service Status other than for death or Disability or for Cause by a Group Company or successor thereto, as appropriate.

(w) “Listed Security” means any security of the Company that is listed or approved for listing on any securities exchange following the initial public offering of its Ordinary Shares or designated or approved for designation as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc.

(x) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement.

(y) “Option” means a share option granted pursuant to the Plan.

(z) “Option Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of share option grant and a form of exercise notice. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board of the Directors deems appropriate for inclusion in a Share Option Agreement.

(aa) “Option Exchange Program” means a program approved by the Administrator whereby outstanding Options (i) are exchanged for Options with a lower exercise price or Restricted Shares or (ii) are amended to decrease the exercise price as a result of a decline in the Fair Market Value of the Ordinary Shares.

(bb) “Optioned Shares” means Shares that are subject to an Option or that were issued pursuant to the exercise of an Option.

(cc) “Optionee” means an Employee or Consultant who receives an Option.

(dd) “Ordinary Shares” means the Company’s ordinary shares, par value $0.0001 per share.

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(ee) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of grant of the Award, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

(ff) “Participant” means any holder of one or more Awards or Shares issued pursuant to an Award.

(gg) “Plan” means this Amended and Restated 2019 Incentive Compensation Plan.

(hh) “Qualified IPO” has the same meaning as such term is defined under the Shareholders Agreement.

(ii) “Restricted Shares” means Shares acquired pursuant to a right to purchase Ordinary Shares granted pursuant to Section 11 below.

(jj) “Restricted Shares Purchase Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of Restricted Shares granted under the Plan and includes any documents attached to such agreement.

(kk) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

(ll) “Share” means an Ordinary Share, as adjusted in accordance with Section 14 below.

(mm) “Shareholders Agreement” means the Ninth Amended and Restated Shareholders’ Agreement dated January 20, 2021, entered into by the Company and certain other parties named therein, as amended from time to time.

(nn) “Stock Exchange” means any stock exchange or consolidated stock price reporting system on which prices for the Ordinary Shares are quoted at any given time.

(oo) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of grant of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

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(pp) “Ten Percent Holder” means a person who owns securities representing more than 10% of the voting power of all classes of shares of the Company measured as of an Award’s date of grant.

3. Shares Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 43,198,157 Shares, all of which has been reserved for issuance under this Plan. The Shares issued under the Plan may be authorized, but unissued, or reacquired Shares; provided that, upon the completion by the Company of a Qualified IPO prior to December 31, 2022, the maximum aggregate number of Shares that may be issued under this Section shall be automatically and immediately increased from 43,198,157 Shares to 48,557,859 Shares. If an Award should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan. In addition, any Shares which are retained by the Company upon exercise of an Award in order to satisfy the exercise or purchase price for such Award or any withholding taxes due with respect to such Award shall be treated as not issued and shall continue to be available under the Plan. Shares issued under the Plan and later repurchased by the Company pursuant to any repurchase right that the Company may have shall not be available for future grant under the Plan.

4. Administration of the Plan.

(a) General. The Plan shall be administered by the Administrator. The Plan may be administered by different administrative bodies with respect to different classes of Participants and, if permitted by Applicable Laws, the Board may authorize one or more officers of the Company to make Awards under the Plan to Employees and Consultants (who are not subject to Section 16 of the Exchange Act) within parameters specified by the Board.

(b) Powers of the Administrator. Subject to the provisions of the Plan and the Constitutional Documents of the Company, the Administrator shall have the authority, in its sole discretion:

(i) to determine the Fair Market Value of the Ordinary Shares in accordance with Section 2(r) above, provided that such determination shall be applied consistently with respect to Participants under the Plan;

(ii) to select the Employees and Consultants to whom Awards may from time to time be granted;

(iii) to determine the number of Shares to be covered by each Award;

(iv) to approve the form(s) of agreement(s) and other related documents used under the Plan;

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(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, which terms and conditions include but are not limited to the exercise or purchase price, the time or times when Awards may be exercised (which may be based on performance criteria), the circumstances (if any) when forfeiture restrictions will be waived, and any restriction or limitation regarding any Award, Optioned Shares, or Restricted Shares;

(vi) to amend any outstanding Award or agreement related to any Optioned Shares or Restricted Shares, including any amendment adjusting vesting (e.g., in connection with a change in the terms or conditions under which such person is providing services to the Group Company), provided that no amendment shall be made that would materially and adversely affect the rights of any Participant without his or her consent, provided, however, that an amendment or modification that may cause an Incentive Share Option to become a Non-Qualified Share Option shall not be treated as adversely affecting the rights of the Participant;

(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 10(c) instead of Ordinary Shares;

(viii) to implement an Option Exchange Program and establish the terms and conditions of such Option Exchange Program, provided that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Optionee shall be made without his or her consent;

(ix) to grant Awards to, or to modify the terms of any outstanding Option Agreement or Restricted Shares Purchase Agreement or any agreement related to any Optioned Shares or Restricted Shares held by, Participants who are foreign nationals or employed outside of the United States with such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences in local law, tax policy or custom which deviate from the terms and conditions set forth in this Plan to the extent necessary or appropriate to further the purpose of the Plan; and

(x) to construe and interpret the terms of the Plan, any Option Agreement or Restricted Shares Purchase Agreement, and any agreement related to any Optioned Shares or Restricted Shares, which constructions, interpretations and decisions shall be final and binding on all Participants.

(c) Indemnification. To the maximum extent permitted by Applicable Laws, each member of the Board, as applicable, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or pursuant to the terms and conditions of any Award except for actions taken in bad faith or failures to act in bad faith, and (ii) any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided that such member shall give the Company an opportunity, at the Company’s own expense, to handle and defend any such claim, action, suit or proceeding before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Memorandum and Articles of Incorporation, as such may be amended or restated from time to time, or by contract, as a matter of law, or otherwise, or under any other power that the Company may have to indemnify or hold harmless each such person.

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5. Eligibility.

(a) Recipients of Grants. Nonstatutory Stock Options and Restricted Shares may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees, provided that Employees of Affiliates shall not be eligible to receive Incentive Stock Options.

(b) Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

(c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b), to the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(c), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares subject to an Incentive Stock Option shall be determined as of the date of the grant of such Option.

(d) No Employment Rights. Neither the Plan nor any Award shall confer upon any Employee or Consultant any right with respect to continuation of an employment or consulting relationship with any Group Company, nor shall it interfere in any way with such Employee’s or Consultant’s right or the Group Company’s right to terminate his or her employment or consulting relationship at any time, with or without cause.

6. Term of Plan. The Plan shall become effective upon its adoption by the Board of Directors. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 16 below.

7. Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided that the term shall be no more than ten (10) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

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8. Restrictions on Transfer of Shares. Any Restricted Shares granted under the Plan or any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Administrator may determine. Such restrictions shall be set forth in the applicable Restricted Shares Purchase Agreement or Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

9. Option Exercise Price and Consideration.

(a) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option shall be such price as is determined by the Administrator and set forth in the Option Agreement, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value on the date of grant;

(B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value on the date of grant;

(ii) Except as provided in subsection (iii) below, in the case of a Nonstatutory Stock Option the per Share exercise price shall be such price as is determined by the Administrator, provided that, if the per Share exercise price is less than 100% of the Fair Market Value on the date of grant, it shall otherwise comply with all Applicable Laws, including Section 409A of the Code;

(iii) In the case of a Nonstatutory Stock Option that is intended to qualify as performance-based compensation under Section 162(m) of the Code and is granted on or after the date, if ever, on which the Ordinary Shares becomes a Listed Security, the per Share exercise price shall be no less than 100% of the Fair Market Value on the date of grant; and

(iv) Notwithstanding the foregoing, in the case of an Award issued pursuant to Section 14(d) below, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction and determined in accordance with the provisions of the relevant instrument evidencing the agreement to issue such Award.

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(b) Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option and to the extent required by Applicable Laws, shall be determined at the time of grant) and may consist entirely of (1) cash; (2) check; (3) to the extent permitted under Applicable Laws, delivery of a promissory note with such recourse, interest, security and redemption provisions as the Administrator determines to be appropriate; (4) cancellation of indebtedness; (5) other previously owned Shares that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is exercised; (6) a Cashless Exercise; (7) such other consideration and method of payment permitted under Applicable Laws; or (8) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company and the Administrator may, in its sole discretion, refuse to accept a particular form of consideration at the time of any Option exercise.

10. Exercise of Option.

(a) General.

(i) Exercisability. Unless duly approved by the Board in accordance with the Shareholders Agreement, any Option granted under the Plan shall be subject to a four-year vesting schedule pursuant to which twenty-five percent (25%) of such Option shall vest on the one (1) year anniversary of the vesting commencement date, with the remaining seventy-five percent (75%) to vest in equal semi-annually installments over the next three (3) years. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, consistent with the terms of the Plan and reflected in the Option Agreement, including vesting requirements and/or performance criteria with respect to any Group Company, and/or the Optionee.

(ii) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any such unpaid leave (unless otherwise required by the Applicable Laws). Notwithstanding the foregoing, in the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon a Optionee’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Optionee continued to provide services to the Company (or any Parent or Subsidiary, if applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

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(iii) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Administrator may require that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent an Optionee from exercising the full number of Shares as to which the Option is then exercisable.

(iv) Procedures for and Results of Exercise. An Option shall be deemed exercised when written notice of such exercise has been received by the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and the Company has received full payment for the Shares with respect to which the Option is exercised and has paid, or made arrangements to satisfy, any applicable withholding requirements in accordance with Section 12 below. The exercise of an Option shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(v) Rights as Holder of Capital Shares. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a holder of capital shares shall exist with respect to the Optioned Shares, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the share certificate is issued, except as provided in Section 14 below.

(b) Termination of Employment or Consulting Relationship. The Administrator shall establish and set forth in the applicable Option Agreement the terms and conditions upon which an Option shall remain exercisable, if at all, following termination of an Optionee’s Continuous Service Status, which provisions may be waived or modified by the Administrator at any time. To the extent that an Option Agreement does not specify the terms and conditions upon which an Option shall terminate upon termination of an Optionee’s Continuous Service Status, the following provisions shall apply:

(i) General Provisions. If the Optionee (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified below, the Option shall terminate and the Optioned Shares underlying the unexercised portion of the Option shall revert to the Plan. In no event may any Option be exercised after the expiration of the Option term as set forth in the Option Agreement (and subject to Section 7).

(ii) Termination other than Upon Disability or Death or for Cause. In the event of termination of an Optionee’s Continuous Service Status other than under the circumstances set forth in subsections (iii) through (v) below, such Optionee may exercise any outstanding Option at any time within three (3) months following such termination (or such later date as the Board may determine) to the extent the Optionee was vested in the Optioned Shares as of the date of such termination.

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(iii) Disability of Optionee. In the event of termination of an Optionee’s Continuous Service Status as a result of his or her Disability, such Optionee may exercise any outstanding Option at any time within six (6) months following such termination (or such later date as the Board may determine) to the extent the Optionee was vested in the Optioned Shares as of the date of such termination.

(iv) Death of Optionee. In the event of the death of an Optionee during the period of Continuous Service Status since the date of grant of any outstanding Option, or within three (3) months following termination of Optionee’s Continuous Service Status, the Option may be exercised by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, at any time within twelve (12) months following the date of death (or such later date as the Board may determine) or, if earlier, the date the Optionee’s Continuous Service Status terminated, but only to the extent the Optionee was vested in the Optioned Shares as of the date of death.

(v) Termination for Cause. In the event of termination of an Optionee’s Continuous Service Status for Cause, any outstanding Option (including any vested portion thereof) and Option Shares held by such Optionee shall immediately terminate, be surrendered and be forfeited in its entirety upon first notification to the Optionee of termination of the Optionee’s Continuous Service Status for Cause. If an Optionee’s Continuous Service Status is suspended pending an investigation of whether the Optionee’s Continuous Service Status will be terminated for Cause, all the Optionee’s rights under any Option, including the right to exercise the Option, shall be suspended during the investigation period. Nothing in this Section 10(b)(v) shall in any way limit the Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the applicable Option Agreement.

(c) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. Further, in the event of termination of an Optionee’s Continuous Service Status not for Cause, the Company reserves the right to repurchase all or part of the vested portion of the Option and the Shares that were issued pursuant to the exercise of the Option held by the Optionee based on a valuation equivalent to fifty percent (50%) of the Company’s valuation in the then most recent round of equity financing of the Company or at such other price mutually agreed by the Optionee and the Administrator.

11. Restricted Shares.

(a) Rights to Purchase. When a right to purchase Restricted Shares is granted under the Plan, the Administrator shall advise the recipient in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid (which shall be as determined by the Administrator, subject to Applicable Laws, including any applicable securities laws), and the time within which such person must accept such offer. The permissible consideration for Restricted Shares shall be determined by the Administrator and shall be the same as is set forth in Section 9(b) with respect to exercise of Options. The offer to purchase Shares shall be accepted by execution of a Restricted Shares Purchase Agreement in the form determined by the Administrator.

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(b) Repurchase Option.

(i) General. Unless approved by the unanimous consent of the Board, any Restricted Shares granted under the Plan shall be subject to a four-year vesting schedule pursuant to which twenty-five percent (25%) of such Restricted Shares shall vest on the one (1) year anniversary of the vesting commencement date, with the remaining seventy-five percent (75%) to vest in equal semi-annually installments over the next thirty-six (36) months. Unless the Administrator determines otherwise, the Restricted Shares Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the Participant’s Continuous Service Status for any reason (including death or Disability) to repurchase (a) all or any portion of the Restricted Shares held by the purchaser as of such termination date which have not yet been vested at the original purchase price paid by the purchaser and (b) all or any portion of the Restricted Shares held by purchaser as of such termination date which have been vested based on a valuation equivalent to fifty percent (50%) of the Company’s valuation in the then most recent round of equity financing of the Company or at such other price mutually agreed by the purchaser and the Administrator. The repurchase option shall lapse at such rate as the Administrator may determine.

(ii) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the lapsing of Company repurchase rights shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, such lapsing shall be tolled during any such unpaid leave (unless otherwise required by the Applicable Laws). Notwithstanding the foregoing, in the event of military leave, the lapsing of Company repurchase rights shall toll during any unpaid portion of such leave, provided that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Shares purchased pursuant to the Restricted Stock Purchase Agreement to the same extent as would have applied had the Participant continued to provide services to the Company (or any Parent or Subsidiary, if applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

(c) Other Provisions. The Restricted Shares Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Shares Purchase Agreements need not be the same with respect to each Participant.

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(d) Rights as a Holder of Capital Shares. Once the Restricted Shares is purchased, the Participant shall have the rights equivalent to those of a holder of capital shares, and shall be a record holder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Restricted Shares is purchased, except as provided in Section 14 of the Plan.

12. Taxes.

(a) As a condition of the grant, vesting and exercise of an Award, the Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) shall make such arrangements as the Administrator may require for the satisfaction of any applicable tax withholding obligations or foreign tax withholding obligations in accordance with

(b) Applicable Laws that may arise in connection with such Award. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied.

(c) The Administrator may permit a Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) to satisfy all or part of his or her tax withholding obligations by Cashless Exercise or by surrendering Shares (either directly or by share attestation) that he or she previously acquired; provided that, unless the Cashless Exercise is an approved broker-assisted Cashless Exercise, the Shares tendered for payment have been previously held for a minimum duration (e.g., to avoid financial accounting charges to the Company’s earnings), or as otherwise permitted to avoid financial accounting charges under applicable accounting guidance, amounts withheld shall not exceed the amount necessary to satisfy the Group Company’s tax withholding obligations at the minimum statutory withholding rates, including, but not limited to, income taxes, payroll taxes, and any foreign taxes in accordance with Applicable Laws, if applicable. Any payment of taxes by surrendering Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the Securities and Exchange Commission.

13. Non-Transferability of Options.

(a) General. Except as set forth in this Section 13 or unless agreed otherwise by the Administrator, Options, Optioned Shares and Restricted Shares may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by an Optionee pursuant to Section 18 hereof will not constitute a transfer. An Option may be exercised, during the lifetime of the holder of the Option, only by such holder or a transferee permitted by this Section 13.

(b) Limited Transferability Rights. Notwithstanding anything else in this Section 13, the Administrator may in its sole discretion grant Nonstatutory Stock Options that may be transferred by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to Family Members.

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14. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions.

(a) Changes in Capitalization. Subject to any action required under Applicable Laws by the holders of capital shares of the Company, (i) the numbers and class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the price per Share covered by each such outstanding Option, and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award shall be proportionately adjusted in the event of a share split, reverse share split, share dividend, combination, consolidation, recapitalization or reclassification of the Shares, subdivision of the Shares, or other distribution of the Shares without the receipt of consideration by the Company of or on the Shares; provided that (i), (ii) and/or (iii) may be adjusted by the Administrator in its sole discretion in the event of a dividend with respect to the Shares payable in a form other than Shares in an amount that has a material effect on the price of the Shares, a reorganization, merger, liquidation, spin-off, split-up, exchange of Shares, repurchase of Shares, change in corporate structure or other similar occurrence. Any adjustment by the Administrator pursuant to this Section 14(a) shall be made in the Administrator’s sole and absolute discretion and shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award. If, by reason of a transaction described in this Section 14(a) or an adjustment pursuant to this Section 14(a), a Participant’s Award agreement or agreement related to any Optioned Shares or Restricted Shares covers additional or different shares or securities, then such additional or different shares, and the Award agreement or agreement related to the Optioned Shares or Restricted Shares in respect thereof, shall be subject to all of the terms, conditions and restrictions which were applicable to the Award, Optioned Shares and Restricted Shares prior to such adjustment. Any such adjustments to the outstanding Awards will be effected in a manner that precludes the material enlargement of rights and benefits under such Awards.

(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award will terminate immediately prior to the consummation of such action, unless otherwise determined by the Administrator.

(c) Corporate Transactions. In the event that the Company is subject to a Corporate Transaction, each outstanding Award (vested or unvested) shall be subject to the agreement evidencing the Corporate Transaction, which need not treat all outstanding Options (or portion thereof) in an identical manner and need not obtain the consent of any Participant to such treatment. Such agreement, without the consent of any Participant, may dispose of Awards that are not vested as of the effective date of such Corporate Transaction in any manner permitted by applicable law, including (without limitation) the cancellation of Options without the payment of any consideration. Without limiting the foregoing, such agreement, without the consent of any Participant, may provide for one or more of the following with respect to Options (or portion thereof) that are vested and exercisable as of the effective date of such Corporate Transaction: (i) the continuation of such outstanding Options by the Company (if the Company is the surviving corporation); (ii) the assumption of such outstanding Options by the surviving corporation or its parent; (iii) the substitution by the surviving corporation or its parent of new options or equity awards for such Options; (iv) the cancellation of such Options and a payment to the Participants equal to the excess of (A) the Fair Market Value of the Shares subject to such Options as of the closing date of such Corporate Transaction over (B) the exercise price or purchase price for the Shares to be issued pursuant to the exercise of such Options. Such payment shall be made in the form of cash, cash equivalents and/or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. If the exercise price or purchase price per Share of the Shares to be issued pursuant to the exercise of such Options exceeds the Fair Market Value per Share of such Shares, as of the closing date of the Corporate Transaction, then such Options may be cancelled without making a payment to the Participants; or (v) the cancellation of such Options for no consideration. Upon a Corporate Transaction, all outstanding Options shall terminate and cease to be outstanding, except to the extent such Options have been continued or assumed, as described in Sections 14(c)(i) and/or 14(c)(ii).

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(d) Acquisitions and Other Transactions. The Administrator may issue Awards under the Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or any other Group Company acquiring another entity, an interest in another entity or an additional interest in any Group Company whether by merger, share purchase, asset purchase or other form of transaction.

15. Time of Granting Options and Right to Purchase Restricted Shares. The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such other date as is determined by the Administrator, provided that in the case of any Incentive Stock Option, the grant date shall be the later of the date on which the Administrator makes the determination granting such Incentive Stock Option or the date of commencement of the Optionee’s employment relationship with the Group Company.

16. Amendment and Termination of the Plan. Subject to the restrictions set out in the Company’s memorandum and articles of associations, as such may be amended from time to time, the Board may at any time amend or terminate the Plan, but no amendment or termination (other than an adjustment pursuant to Section 14 above) shall be made that would materially and adversely affect the rights of any Participant under any outstanding Award, without his or her consent. In addition, to the extent necessary and desirable to comply with the Applicable Laws, the Company shall obtain the approval of holders of capital shares with respect to any Plan amendment in such a manner and to such a degree as required.

17. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. As a condition to the exercise of any Option or purchase of any Restricted Shares, the Company may require the person exercising the Option or purchasing the Restricted Shares to represent and warrant at the time of any such exercise or purchase that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by Applicable Laws. Shares issued upon exercise of Options or purchase of Restricted Shares prior to the date, if ever, on which the Ordinary Shares becomes a Listed Security shall be subject to a right of first refusal in favor of the Company pursuant to which the Participant will be required to offer Shares to the Company before selling or transferring them to any third party on such terms and subject to such conditions as is reflected in the applicable Option Agreement or Restricted Shares Purchase Agreement. As a condition to the exercise of any Option or purchase of any Restricted Shares, the Company may require the person exercising the Option or purchasing the Restricted Shares to be bound by and subject to the terms of the shareholders agreement in effect at the time of such exercise or purchase of such Shares, so as to cause Participant to become a party thereto and to be bound by the terms and conditions thereof.

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18. Beneficiaries. Unless stated otherwise in an Award agreement, a Participant may designate one or more beneficiaries with respect to an Award by timely filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then after a Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate.

19. Approval of Holders of Capital Shares. This Plan shall be approved by the Company’s shareholders in accordance with the Company’s Memorandum and Articles of Incorporation, as such may be amended or restated from time to time. In addition, if required by the Applicable Laws, continuance of the Plan shall be subject to approval by the holders of capital shares of the Company within twelve (12) months before or after the date the Plan is adopted or, to the extent required by Applicable Laws, any date the Plan is amended. Such approval shall be obtained in the manner and to the degree required under the Applicable Laws.

20. Addenda. The Board may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Awards to Employees or Consultants, which Awards may contain such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences in local law, tax policy or custom, which, if so required under Applicable Laws, may deviate from the terms and conditions set forth in this Plan. The terms of any such addenda shall supersede the terms of the Plan to the extent necessary to accommodate such differences but shall not otherwise affect the terms of the Plan as in effect for any other purpose.

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EX-10.4

Exhibit 10.4

NINTH AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

DATED: January 20, 2021

NINTH AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

relating to

Spark Education Limited

NINTH AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

DATED: January 20, 2021

AMONG:

(1) Spark Education Limited, an exempted company incorporated in the Cayman Islands with limited liability with its registered office located at Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands (the “Company”);

(2) the parties listed on Schedule 1-A attached to this Agreement (each a “Series E-3 Investor” and collectively, the “Series E-3 Investors”);

(3) the parties listed on Schedule 1-B attached to this Agreement (each a “Series E-2 Investor” and collectively, the “Series E-2 Investors”);

(4) the parties listed on Schedule 1-C attached to this Agreement (each a “Series E-1 Investor” and collectively, the “Series E-1 Investors”);

(5) the party listed on Schedule 1-D attached to this Agreement (the “Series D+ Investor”);

(6) the parties listed on Schedule 1-E attached to this Agreement (each a “Series D Investor” and collectively, the “Series D Investors”);

(7) the parties listed on Schedule 1-F attached to this Agreement (each a “Series C Investor” and collectively, the “Series C Investors”);

(8) the parties listed on Schedule 1-G attached to this Agreement (each a “Series B+ Investor” and collectively, the “Series B+ Investors”);

(9) the parties listed on Schedule 1-H attached to this Agreement (each a “Series B Investor” and collectively, the “Series B Investors”);

(10) the parties listed on Schedule 1-I attached to this Agreement (each a “Series A Investor” and collectively, the “Series A Investors”);

(The Series A Investors, Series B Investors, Series B+ Investors, Series C Investors, Series D Investors, Series D+ Investor, Series E-1 Investors and Series E-2 Investors, each a “Prior Investor” and collectively, the “Prior Investors”, together with the Series E-3 Investors, collectively the “Investors”, and each an “Investor”; for the avoidance of doubt and for the purpose of the Transaction Documents (as defined in the Series E-3 Purchase Agreement (as defined below)), a party listed on Schedule 1-A to Schedule 1-I shall constitute and be deemed as an Investor and a holder of Preferred Shares only with respect to the Preferred Shares held by it and/or Ordinary Shares converted or convertible from the Preferred Shares held by it);

(11) the parties listed on Schedule 1-J attached to this Agreement (each an “Angel Party” and collectively, the “Angel Parties”);

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(12) the parties listed on Schedule 1-K attached to this Agreement (each a “Founder Party” and collectively, the “Founder Parties”);

(13) Spark Education (Hongkong) Limited, a limited liability company incorporated under the laws of Hong Kong with its registered office located at Unit 806, 8/F, Tower II, Cheung Sha Wan Plaza, 833 Cheung Sha Wan Road, Kowloon, Hong Kong (the “HK Co”);

(14) Beijing Spark Education and Technology Co., Ltd. (北京火花思维教育科技有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B306, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Beijing WFOE”);

(15) Tianjin Spark Education and Technology Co., Ltd. (天津火花思维教育科技有限公司), a limited liability company incorporated in the PRC with its registered office located at 1-1702-a-60, Yanzhao Building, Tianjin Pilot Free Trade Zone (the “Tianjin WFOE”, together with “Beijing WFOE”, collectively, the “WFOEs”);

(16) Beijing Xingengyuan Technology Ltd. (北京心更远科技发展有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B202, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Domestic Company”);

(17) Beijing Spark Juli Education Consulting Co., Ltd. (北京火花聚力教育咨询有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B303, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Beijing Co”); and

(18) Wuhan Spark Education Consulting Co., Ltd. (武汉火花思维教育咨询有限公司), a limited liability company incorporated in the PRC with its registered office located at 13 / F, Building A4, Guanggu Financial Port, No.77, Guanggu Avenue, East Lake High-tech Development Zone, Wuhan (the “Wuhan Co”, together with the “Beijing Co”, collectively, the “Domestic Subsidiaries”).

Each of the Company, the Series E-3 Investors, the Prior Investors, the Angel Parties, the Founder Parties, the HK Co, the WFOEs, the Domestic Company and the Domestic Subsidiaries shall be referred to individually as a “Party” and collectively as the “Parties”.

WHEREAS:

(A) certain Parties hereof are parties to the SHARE SUBSCRIPTION AGREEMENT dated January 20, 2021 (the “Series E-3 Purchase Agreement”);

(B) certain Parties hereof have entered into that certain Eighth Amended and Restated Shareholders’ Agreement on September 22, 2020 (the “Prior Shareholders’ Agreement”); and

(C) in order to induce the Company to enter into the Series E-3 Purchase Agreement and to induce Series E-3 Investors to invest funds in the Company pursuant to the Series E-3 Purchase Agreement, the Parties desire to enter into this Agreement to amend and restate the Prior Shareholders’ Agreement in its entirety and make the respective representations, warranties, covenants and agreements set forth herein on the terms and conditions set forth herein.

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NOW IT IS HEREBY AGREED as follows:

1. INTERPRETATION

1.1 For purposes of this Agreement, capitalized terms shall have the meanings set forth in Exhibit A attached hereto.

2. REGISTRATION RIGHTS

2.1 The registrations rights of the Holders with respect to the Company and the rights and obligations of the parties with respect to registration of the Registrable Securities are set forth on Exhibit B attached hereto.

2.2 The rights set forth in Exhibit B shall terminate upon the earlier of:

(i) the date that is five (5) years following the consummation of the Qualified IPO of the Company;

(ii) as to any Holder, the date of the completion of a Liquidation Event in which such Holder receives cash or publicly traded shares for all Registrable Securities held by such Holder; and

(iii) as to any Holder, when all Registrable Securities held by such Holder (together with any Affiliate of such Holder with whom such Holder must aggregate its sales under SEC Rule 144) could be sold without restriction under SEC Rule 144(k) within a ninety (90) period.

3. INFORMATION, INSPECTION AND OBSERVER RIGHTS

3.1 Delivery of Financial Statements

The Company shall deliver to each of the Investors other than YUAN the following information with respect to all Group Companies:

(a) within ninety (90) days after the end of each financial year of the Company, (i) an audited consolidated balance sheet of the Group Companies as of the last day of such year; (ii) an audited consolidated income statement of the Group Companies for such year; and (iii) an audited consolidated statement of cash flows of the Group Companies for such year; such year-end financial statements to be in reasonable detail, prepared in accordance with IFRS or generally accepted accounting principles in the U.S. (the “US GAAP”), by an accounting firm selected by the Company with the approval of the Board of Directors (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors);

(b) within forty-five (45) days after the end of each of the first three quarters for each financial year of the Company, (i) an unaudited consolidated balance sheet of the Group Companies as of the last day of such quarter; (ii) an unaudited consolidated income statement of the Group Companies for such quarter; (iii) an unaudited consolidated statement of cash flows of the Group Companies for such quarter; and (iv) the management accounts of the Group Companies for such quarter, such quarterly financial statements and management accounts to be in reasonable detail;

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(c) within thirty (30) days after the end of each month, (i) an unaudited consolidated balance sheet of the Group Companies as of the last day of such month; (ii) an unaudited consolidated income statement of the Group Companies for such month; and (iii) an unaudited consolidated statement of cash flows of the Group Companies for such month;

(d) at least fifteen (15) days prior to the beginning of each financial year, a proposed capital expenditures and operating budget and business plan of the Group Companies for such next financial year (the “Budget”); and

(e) as soon as practicable, such other information relating to the financial condition, business, prospects or corporate affairs of the Company (or any other Group Company) as any Investor other than YUAN may from time to time reasonably request; provided, however, that the Company (or any other Group Company) shall not be obligated under this Section 3.1(e) or any of the above paragraphs to provide information which it reasonably deems in good faith would adversely affect the attorney-client privilege between the Company (or any other Group Company) and its counsel.

3.2 Inspection

The Company and any other Group Company shall permit each of the Investors other than YUAN, and such Investor’s representatives, at such Investor’s expense, to visit and inspect the Company or any other Group Company’s properties, to examine its books of account and records and to discuss the Company or any other Group Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be reasonably requested by such Investor; provided, however, that the Company (or any other Group Company) shall not be obligated pursuant to this Section 3.2 to provide access to any information which it reasonably considers would adversely affect the attorney-client privilege between the Company (or any other Group Company) and its counsel.

3.3 Termination of Information and Inspection Rights

The covenants set forth in Section 3.1 and Section 3.2 shall terminate and be of no further force or effect as to the Investors immediately prior to the consummation of an initial public offering.

3.4 Confidentiality

(a) Each Investor agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than to monitor its investment in the Company, any confidential information obtained from the Company pursuant to the terms of this Agreement, unless such confidential information (i) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.4(a) by such Investor), (ii) is or has been independently developed or conceived by an Investor without use of the Company’s confidential information or (iii) is or has been made known or disclosed to an Investor by a third party without, to such Investor’s knowledge, a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that each Investor may disclose confidential information (a) to its legal advisers, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (b) to any prospective investor or purchaser of any Registrable Securities from such Investor as long as such Person agrees to be bound by the provisions of this Section 3.4(a), (c) to any its Affiliate, employee, partner, member, shareholder or wholly owned Subsidiary of such Investor in the ordinary course of business, or (d) as may otherwise be requested or required by any regulatory, self-regulatory or government agency or in connection with any Law, rules of any securities exchange, regulation or legal proceeding or process or as otherwise legally compelled (including pursuant to a deposition, interrogatory, subpoena, civil investigation or similar process), provided that such Investor shall take reasonable steps to minimize the extent of any such required disclosure, and provided further that such Investor shall ensure that all such persons in (a), (b) and (c) named above to whom such Investor discloses confidential information are bound by provisions substantially the same as provisions of this Section 3.4(a) or, in the case of person in (a), are otherwise subject to professional obligations of confidentiality.

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(b) The Company agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than for the discharge of their obligations under this Agreement, any confidential information obtained from the Investors pursuant to the terms of this Agreement, unless such confidential information (i) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.4(b) by the Company), (ii) is or has been independently developed or conceived by the Company without use of any of an Investor’s confidential information or (iii) is or has been made known or disclosed to the Company by a third party without a breach of any obligation of confidentiality such third party may have to an Investor; provided, however, that the Company may disclose confidential information (a) to its legal advisers, accountants, consultants, and other professionals to the extent necessary for the discharge of their obligations under this Agreement, (b) to any Affiliate, partner, member, shareholder or wholly-owned Subsidiary of the Company in the ordinary course of business, or (c) as may otherwise be requested or required by any regulatory, self-regulatory or government agency or in connection with any Law, rules of any securities exchange, regulation or legal proceeding or process or as otherwise legally compelled (including pursuant to a deposition, interrogatory, subpoena, civil investigation or similar process), provided that the Company shall take reasonable steps to minimize the extent of any such required disclosure, and provided further that the Company shall ensure that all such persons in (a), (b) and (c) named above to whom the Company discloses confidential information are bound by the same provisions of this Section 3.4(b) or, in the case of persons in (a), are otherwise subject to professional obligations of confidentiality.

4. RIGHT OF PARTICIPATION

4.1 Right of Participation

Subject to the terms and conditions specified in this Section 4.1 and Section 7.3, and applicable securities laws, in the event the Company proposes to offer or sell any Additional Equity Securities, each holder of Preferred Shares (each an “Offeree”) shall be entitled to purchase up to its Pro Rata Share (as defined below) of the Additional Equity Securities in accordance with the following provisions of this Section 4.1. Any Offeree shall be entitled to apportion the right of first offer hereby granted to it among its Affiliates and itself in such proportions as it deems appropriate; provided that such Affiliates do not hold any equity interest in the Competitor (as defined below). Each Offeree’s “Pro Rata Share” for purposes of this Section 4.1 is the ratio of (a) the number of Class A Ordinary Shares (calculated on an as-converted and fully-diluted basis) held by such Offeree (specially, for each of Founder Holdcos, GSR, GGV and Lightspeed, the number of Class A Ordinary Shares calculated on an as-converted and fully-diluted basis of only Preferred Shares held by such Offeree), to (b) the total number of Class A Ordinary Shares (calculated on an as-converted and fully-diluted basis) then outstanding immediately prior to the issuance of Additional Equity Securities.

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(a) The Company shall deliver a notice, in accordance with the provisions of Section 8.4 hereof, (the “Offer Notice”) to the Offerees stating (i) its bona fide intention to offer such Additional Equity Securities, (ii) the number of such Additional Equity Securities to be offered, (iii) the price and terms, if any, upon which it proposes to offer such Additional Equity Securities, and (iv) the identity of the proposed purchaser(s).

(b) Within twenty (20) calendar days after receipt of the Offer Notice (the “Offer Notice Period”), each Offeree shall have an option to elect to purchase an amount up to its Pro Rata Share of the Additional Equity Securities at the same price and subject to the same terms as specified in the Offer Notice.

(c) Each Offeree may exercise such purchase option and thereby, have the right to purchase all or any portion of its Pro Rata Share (with the re-allotments as provided below) of the Additional Equity Securities, by notifying the Company in writing, before the expiration of the twenty (20) calendar days period as to the number of such shares that it wishes to purchase.

(d) Subject to the terms and conditions specified in Section 7.3 hereof, in the event the Company proposes to offer or sell any Additional Equity Securities to any Person listed on Exhibit E attached hereto and/or any of its Affiliates (each, a “COSMIC BLUE Restricted Person”) during COSMIC BLUE Restricted Period, within ten (10) calendar days after the expiration of the Offer Notice Period specified in Section 4.1(b) above, so long as COSMIC BLUE or its Affiliates holds any Shares in the Company, the Company shall give COSMIC BLUE a written notice (the “COSMIC BLUE Additional Offer Notice”) which shall include all the information required in the Offer Notice and shall additionally identify the remaining Additional Equity Securities which equals to the total amount of Additional Equity Securities minus the amount of Additional Equity Securities purchased by the Offerees pursuant to Section 4.1(a) to Section 4.1(c) above (the “COSMIC BLUE Remaining Securities”). COSMIC BLUE shall have an additional re-allotment right to purchase all but no less than all of the COSMIC BLUE Remaining Securities for a period of ten (10) calendar days commencing immediately after receipt of the COSMIC BLUE Additional Offer Notice (the “COSMIC BLUE Additional Offer Notice Period”) at same price and on the same terms and conditions as specified in the COSMIC BLUE Additional Offer Notice, by notifying the Company in writing, before the expiration of the COSMIC BLUE Additional Offer Notice Period.

(e) Without prejudice to an Offeree’s right to apportion its right of first offer among its Affiliates and itself, the right of first offer set forth in this Section 4.1 may not be assigned or transferred separately without transfer of relevant Preferred Shares except that such right is assignable by an Investor to any Affiliate of such Investor.

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4.2 To the extent that the Offerees have not exercised their rights to purchase all the Additional Equity Securities and COSMIC BLUE has not exercised its rights to purchase COSMIC BLUE Remaining Securities (if applicable), within the time periods specified in Section 4.1, the Company may, for a period of ninety (90) calendar days following the expiration of such rights, have a right to offer the Additional Equity Securities or COSMIC BLUE Remaining Securities, as the case may be, to the third-party offeree as identified in the Offer Notice upon terms and conditions (including the purchase price) no more favorable than those specified in the Offer Notice. In the event that (i) the Company fails to enter into an agreement for the sale of the Additional Equity Securities or COSMIC BLUE Remaining Securities, as the case may be, to the prospective offeree within the foregoing ninety (90) day period; or (ii) the Company fails to consummate the offer within thirty (30) days of the execution of the relevant agreement, the Offerees’ rights of first offer as set forth in Section 4.1 shall continue to be applicable to any subsequent offer of the Additional Equity Securities or COSMIC BLUE Remaining Securities by the Company until such rights lapse in accordance with the terms of this Agreement.

4.3 Termination

The provisions of this Section 4 shall terminate immediately prior to the consummation of an initial public offering.

5. BOARD COMPOSITION AND VOTING MATTERS

5.1 Board Composition

Each Shareholder agrees to vote all of his, her or its Shares in the Company (whether now owned or hereafter acquired or which the Shareholder may be empowered to vote), from time to time and at all times, in whatever manner shall be necessary to ensure that at each annual or special meeting of shareholders at which an election of directors is held or pursuant to any written consent of the shareholders, the following persons shall be elected to the Board:

(a) GGV, as long as their shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) director of the Board (the “GGV Director”). The initial GGV Director shall be LEE HONG WEI, JENNY.

(b) IDG, as long as their shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) director of the Board (the “IDG Director”). The initial IDG Director shall be Wang Xin (王辛).

(c) KKR, as long as its shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) director of the Board (the “KKR Director”). The initial KKR Director shall be Chris Sun.

(d) SCC, as long as their shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) director of the Board (the “SCC Director”). The initial SCC Director shall be Zhai Jia (翟佳).

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(e) Tencent shall be entitled to elect and remove one (1) director of the Board (the “Tencent Director”), provided that upon the completion of the next bona fide equity financing of the Company after the date hereof, Tencent shall only be entitled to elect and remove the Tencent Director for so long as Tencent’s (including its Affiliates) aggregate shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis. The initial Tencent Director shall be Xun Weiqian (荀为谦).

(f) TBP, as long as its and its Affiliates’ aggregate shareholding percentage is no less than six percent (6%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to elect and remove one (1) director of the Board (the “TBP Director”, together with the GGV Director, the IDG Director, the KKR Director, the SCC Director and the Tencent Director, collectively the “Preferred Directors” and each a “Preferred Director”). The initial TBP Director shall be Ye Shuhong (叶树蕻).

(g) The holders of more than fifty percent (50%) of the then outstanding Ordinary Shares (voting as a single class) shall be entitled to elect and remove three (3) directors of the Board (each, an “Ordinary Director”), one of whom shall be the then current chief executive officer of the Company and the chairman of the Board (the “Chairman Director”). The initial Ordinary Directors shall be Luo Jian (罗剑), who is the Company’s chief executive officer and the Chairman Director, Shan Zebing (单泽兵) and Li Wei (李维).

(h) Lightspeed, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be James Qun Mi. The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(i) SCC, as long as their shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be He Tiantian (何田田). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

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(j) LFC, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Yi Duoduo (易多多). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(k) Hike, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Xu Shi (徐诗). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(l) GSR, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Liu Jia (刘佳). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(m) KKR, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Ray Jin. The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

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(n) Northern Light, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Lin Lu (林路). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(o) GGV, as long as their shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Yu Hong (于红). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(p) IDG, as long as their shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Ding Shanshan (丁姗姗). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(q) COSMIC BLUE, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observers shall be Su Hua (宿华). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

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(r) Carlyle, as long as its shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Liu Wanlin (刘婉琳). The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(s) Tencent, upon the completion of the next bona fide equity financing of the Company after the date hereof and as long as its and its Affiliates’ aggregate shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The Observer may participate in a meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

(t) TBP, as long as its and its Affiliates’ aggregate shareholding percentage is no less than two percent (2%) in the Company calculated on an as-converted and fully-diluted basis, shall be entitled to designate, appoint, remove, replace and reappoint one (1) Observer. The initial Observer shall be Du Nan (杜南). The Observer may participate in any meeting of the Board or of any committee of the Board by means of conference telephone or other communications equipment by means of which all persons participating in such meeting can communicate with each other at the same time. The Observer may be represented at any meetings of the Board of Directors by a proxy appointed in writing by him. The Observer has the right to give advice and make suggestions, but does not have a right in any way to vote on any matters determined by any resolutions. The Company shall deliver to the Observer copies of all notices, minutes, consents and other materials in relation to the meetings that the Company provides to the members of the Board at the same time and in the same manner as provided to the Board.

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Subject to the Company Law, the Chairman Director has such number of votes equal to the total number of votes of all other Directors minus two (2) and each of the other Directors has one (1) vote.

5.2 Size of the Board

Each Shareholder agrees to vote all of its Shares from time to time and at all times, in whatever manner shall be necessary to ensure that the size of the Board shall be set at up to nine (9) directors.

5.3 Removal of Board Members

Each Shareholder also agrees to vote all of his, her or its Shares from time to time and at all times in whatever manner as shall be necessary to ensure that (i) no director elected pursuant to Section 5.1 of this Agreement may be removed from office unless (A) such removal is directed or approved in writing by the affirmative vote of the holders of the shares entitled under Section 5.1 to designate that director; or (B) the person(s) or entity(ies) originally entitled to designate or approve such director or occupy such Board seat pursuant to Section 5.1 is no longer so entitled to designate or approve such director or occupy such Board seat; and (ii) any vacancies created by the resignation, removal or death of a director elected pursuant to Section 5.1 shall be filled pursuant to the provisions of Section 5.1. All Shareholders agree to execute any written consents required to effectuate the obligations of this Agreement, and the Company agrees at the request of any Shareholder entitled to designate directors to call a special meeting of shareholders for the purpose of electing directors.

5.4 Board of Subsidiary

At the request of any Investor with respect to the director nominated by such Investor (if applicable), the board of directors of each Subsidiary of the Company (including without limitation all the Group Companies) shall be re-constituted to include the director nominated by such Investor.

5.5 Indemnification

To the maximum extent permitted by the law of the jurisdiction in which the Company is organized, the Company shall indemnify and hold harmless each of the Preferred Directors while such Preferred Director is acting in his or her capacity as a director of the Company as long as such Preferred Director acts in good faith and in a manner he or she reasonably believes to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, has no reasonable cause to believe his or her conduct is unlawful, and shall comply with the terms of the indemnification agreements with any Preferred Director and such Investor(s) who nominated such Preferred Director.

5.6 No Liability for Board Designees.

No Shareholder, nor any Affiliate of any Shareholder, shall have any liability as a result of designating a Person for election as a director for any act or omission by such designated Person in his or her capacity as a director of the Company, nor shall any Shareholder have any liability as a result of voting for any such designee in accordance with the provisions of this Agreement.

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5.7 Term.

Provisions of this Section 5 shall be effective as of the date hereof and shall continue in effect until and shall terminate immediately prior to the consummation of an initial public offering.

6. RIGHT OF FIRST REFUSAL, CO-SALE AND RESTRICTIONS ON SALE

6.1 Restrictions on Transfer

(a) Transfer of Shares

Subject to Section 6.6 and Section 7.3, any proposed assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, disposition of or any other like transfer or encumbrance, through one or a series of transactions, of any interest in any Shares now or hereafter owned or held by a Shareholder, either directly or indirectly (in each case, a “Transfer”) shall be made in compliance with the terms of this Section 6. For the avoidance of doubt, any change in the equity interest of any Founder Holdco, including without limitation as a result of (i) the issuance or redemption by any Founder Holdco of any portion of its outstanding shares or Equity Securities; and/or (ii) a Transfer of any Founder Holdco’s Equity Securities by its equity holder, shall constitute a “Transfer” for purposes of this Agreement.

(b) Prohibition on Transfer of Ordinary Shares held by the Founder Holdcos

In addition to the restrictions set forth in Sections 6.2 and 6.3 and subject to the terms and conditions specified in Section 7.3, the Founder Holdcos (together with the Founders, the “Restricted Shareholders” and each a “Restricted Shareholder”) shall not effectuate a Transfer of Ordinary Shares, nor shall any Founder effectuate any Transfer of Ordinary Shares through the relevant Founder Holdco, unless otherwise approved in writing by a majority of the votes of the Directors (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors).

(c) Prohibition on Issuance of Shares or Similar Rights by the Founder Holdcos

The Founder Holdcos shall not, and the Founders shall procure the relevant Founder Holdco not to, issue any shares or any securities, debenture or obligation in whatsoever nature that is convertible into or exercisable for the relevant Founder Holdco’s shares, any other right that may grant the recipient rights and privileges similar to that of a shareholder of the relevant Founder Holdco, or in any other manner that may have similar effect to any of the above, unless otherwise approved in writing by a majority of votes of the Directors (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors).

6.2 Right of First Refusal

(a) Proposed Transfer Notice

Each Restricted Shareholder (including its successors and permitted assignees) (a “Transferor”) proposing to make a proposed Transfer must deliver a notice (the “Proposed Transfer Notice”) to the Company and the holders of Preferred Shares (“Eligible Holders”, each an “Eligible Holder”). Such Proposed Transfer Notice shall contain the material terms and conditions of the Proposed Transfer, including without limitation a description of the Shares (the “Transfer Shares”) that such Transferor proposes to transfer (a “Proposed Transfer”), and the identity of the Prospective Transferee.

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(b) Company’s Option.

The Company shall have the right, exercisable upon written notice to the Transferor and the Eligible Holders, within twenty (20) days after receipt of the Proposed Transfer Notice (the “Company First Refusal Period”), to elect to purchase all or any part of the Transfer Shares at the same price as described in the Proposed Transfer Notice and subject to the same material terms and conditions as described in the Proposed Transfer Notice (if any). The Company may exercise such purchase option and purchase all or any portion of the Transfer Shares by notifying the Transferor in writing before expiration of such twenty (20) day period as to the number of shares that it wishes to purchase. If the Company gives the notice that it desires to purchase such shares, then payment for the Transfer Shares shall be made by check or wire transfer, against the allotment of the Transfer Shares to be purchased at a place agreed upon between the parties and at the time of the scheduled closing therefor, which shall be no later than thirty (30) days after the delivery to the Company of such notice.

(c) Eligible Holders’ Right of First Refusal.

(i) To the extent the Company fails, is disapproved or declines to purchase any or all of the Transfer Shares of the Transferor by exercising its right under Section 6.2 within the Company First Refusal Period, the remaining Transfer Shares shall be subject to the right of the Eligible Holders pursuant to this Section 6.2. Within five (5) days following the expiration of the Company First Refusal Period, or if earlier, the date when the Company indicates its declination to purchase all, or a portion of, the Transfer Shares, the Transferor shall give each Eligible Holder an “Additional Transfer Notice” that shall include all of the information required in a Proposed Transfer Notice and shall additionally identify the Transfer Shares of the Transferor that the Company has declined or failed to purchase (the “Remaining Shares”).

(ii) Each Eligible Holder shall have an option for a period of twenty (20) days after receipt of the Additional Transfer Notice (the “Option Period”) to elect to purchase all or any portion of its Pro Rata ROFR Share of the Remaining Shares at the same price and subject to the same material terms and conditions (if any) as described in the Additional Transfer Notice, by notifying the Transferor and the Company in writing before expiration of the Option Period as to the number of such Remaining Shares that it wishes to purchase (the “Right of First Refusal”).

(iii) For the purposes of this Section 6.2(c), an Eligible Holder’s “Pro Rata ROFR Share” of the Transfer Shares shall be equal to (A) the total number of Remaining Shares, multiplied by (B) a fraction, the numerator of which shall be the aggregate number of Class A Ordinary Shares held by such Eligible Holder on the date of the Additional Transfer Notice (including all Preferred Shares held by such Eligible Holder on an as-converted basis) (specially, for each of Founder Holdcos, GSR, GGV and Lightspeed, the numerator of which shall be the aggregate number of Class A Ordinary Shares calculated on an as-converted and fully-diluted basis of only Preferred Shares held by such Founder Holdcos, GSR, GGV or Lightspeed, respectively) and the denominator of which shall be the total number of Class A Ordinary Shares held by all Eligible Holders on such date (solely including all Preferred Shares held by such Eligible Holders on an as-converted basis).

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(d) Re-allotment Notice of Transfer Shares.

Should any Eligible Holder fail to purchase its full Pro Rata ROFR Share of the Remaining Shares within the Option Period, then, within five (5) calendar days after the expiration thereof, the Transferor shall send a written notice (the “Re-allotment Notice”) to each Eligible Holder who has fully exercised its Right of First Refusal in accordance with Section 6.2(c) above (each an “Exercising Eligible Holder”). Such Re-allotment Notice shall include all the information required in the Proposed Transfer Notice and shall additionally identify the number of remaining Transfer Shares not purchased (the “Additional Remaining Shares”).

(e) Re-allotment of Transfer Shares.

Each Exercising Eligible Holder shall have a re-allotment right to purchase all or any portion of the Additional Remaining Shares on the terms and conditions set forth in the Proposed Transfer Notice. To exercise such re-allotment right with respect to the Additional Remaining Shares, the Exercising Eligible Holder must deliver to the Transferor and the Company an exercise notice indicating the additional number of Transfer Shares that it wishes to purchase within ten (10) calendar days after its receipt of the Re-allotment Notice (the “Reallotment Exercise Period”). Within five (5) calendar days after the expiration of the Reallotment Exercise Period, the Transferor shall give written notice to the Company and each Eligible Holder confirming and specifying the number of Transfer Shares that such Eligible Holder has elected to purchase (including any re-allotments) by exercising its Right of First Refusal pursuant to this Section 6.2 (the “Confirmation Notice”). In the event that the Exercising Eligible Holders have elected to purchase more than the amount of the Additional Remaining Shares available for purchase, the Additional Remaining Shares shall be allocated among the Exercising Eligible Holders electing to purchase based on the Pro Rata ROFR Share applied to the Exercising Eligible Holders electing to purchase the Additional Remaining Shares.

(f) Additional Re-allotment Right of COSMIC BLUE.

Subject to the terms and conditions specified in Section 7.3, in the event (a) the Transferor proposes to transfer any Transfer Shares to any COSMIC BLUE Restricted Person during COSMIC BLUE Restricted Period; and (b) the Company and the Eligible Holders have not fully exercised their Right of First Refusal or the re-allotment right to purchase all the Transfer Shares within the time periods specified in Section 6.2(a) to Section 6.2(e) above, so long as COSMIC BLUE or its Affiliates holds any Shares in the Company, within five (5) calendar days after the expiration of Re-allotment Exercise Period, the Transferor shall give COSMIC BLUE an additional written notice (the “COSMIC BLUE Additional Re-allotment Notice”) which shall include all the information required in the Additional Transfer Notice and shall additionally identify the portion of the remaining Transfer Shares available which have not be purchased by the Company and the Eligible Holders pursuant to Section 6.2(a) to Section 6.2(e) above (the “COSMIC BLUE Remaining Transfer Shares”). COSMIC BLUE shall have an additional re-allotment right to purchase all but no less than all of the COSMIC BLUE Remaining Transfer Shares at the same price and on the same terms and conditions as specified in the COSMIC BLUE Additional Re-allotment Notice. To exercise such additional reallotment right with respect to the COSMIC BLUE Remaining Transfer Shares, COSMIC BLUE shall deliver to the Transferor, the Company and other Eligible Holders an exercise notice (the “COSMIC BLUE Additional Confirmation Notice”), within ten (10) calendar days after receipt of the COSMIC BLUE Additional Re-allotment Notice.

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(g) Consideration; Closing.

Should the purchase price of the Transfer Shares specified in the Proposed Transfer Notice be payable in property, services or other non-cash consideration, each Eligible Holder shall have the right to pay the purchase price in the form of cash equal in amount to the value of such non-cash consideration. If the Transferor and the Eligible Holder fail to agree on such cash value within ten (10) days after the date on which the Eligible Holder exercises its Right of First Refusal pursuant to Section 6.2(c) and Section 6.2(e) above, the valuation shall be determined by the Board in good faith. The closing of the purchase of the Transfer Shares by the Eligible Holder shall take place, and the consideration payable by such Eligible Holder for the Transfer Shares shall have been allotted to the Transferor, by the later of (i) the intended closing date specified in the Proposed Transfer Notice; and (ii) ten (10) calendar days after delivery of the Confirmation Notice or COSMIC BLUE Additional Confirmation Notice, as the case may be.

6.3 Right of Co-Sale

(a) If any Transfer Shares subject to a Proposed Transfer are not purchased pursuant to Section 6.2 above and thereafter are to be sold to a Prospective Transferee (such Transfer Shares, the “Co-Sale Eligible Shares”), each Eligible Holder that has not exercised its rights under Section 6.2(c) or Section 6.2(f) (the “Co-Sale Eligible Holder”) may elect to exercise its right (a “Right of Co-Sale”) and participate on a pro-rata basis in the Proposed Transfer on the same terms and conditions specified in the Proposed Transfer Notice. To exercise its Right of Co-Sale, the Co-Sale Eligible Holder must give the Transferor written notice to that effect within fifteen (15) calendar days (the “Co-Sale Period”) after receipt of the Confirmation Notice as provided in Section 6.2(e) or COSMIC BLUE Additional Confirmation Notice, as provided in Section 6.2(f), as applicable, and upon giving such notice the Co-Sale Eligible Holder shall be deemed to have effectively exercised the Right of Co-Sale.

(b) Each Co-Sale Eligible Holder, by timely exercising its Right of Co-Sale by delivering the written notice provided for above in Section 6.3(a) may include in the Proposed Transfer all or any part of its Shares equal to the product obtained by multiplying (i) the aggregate number of Co-Sale Eligible Shares by (ii) a fraction, the numerator of which is the total number of Class A Ordinary Shares held by such Co-Sale Eligible Holder immediately before consummation of the Proposed Transfer (including all Preferred Shares held by such Co-Sale Eligible Holder on an as-converted basis) (specially, for each of Founder Holdcos, GSR, GGV and Lightspeed, the numerator of which shall be the aggregate number of Class A Ordinary Shares calculated on an as-converted basis of only Preferred Shares held by such Founder Holdcos, GSR, GGV or Lightspeed, respectively) and the denominator of which is the total number of Class A Ordinary Shares held, in the aggregate, by all Co-Sale Eligible Holders immediately prior to the consummation of the Proposed Transfer (solely including all Preferred Shares held by such Co-Sale Eligible Holders on an as-converted basis), plus the number of Ordinary Shares held by the Transferor (excluding any Ordinary Shares convertible from any Preferred Shares held by the Founder Holdcos), provided that such Co-Sale Eligible Holder shall not be obligated in connection with such Transfer to (x) pay any amount with respect to any liabilities arising from the representations and warranties severally made by it in excess of its share of the total consideration paid by the Prospective Transferee or (y) make any representations or warranties concerning the business, operations or condition (financial or otherwise) of any of the Group Companies. To the extent that one or more of the Co-Sale Eligible Holders exercises such right of participation in accordance with the terms and conditions set forth herein, the number of Co-Sale Eligible Shares that the Transferor may sell in the Proposed Transfer shall be correspondingly reduced.

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(c) The sale of the Co-Sale Eligible Shares and remaining Transfer Shares shall occur within twenty-five (25) calendar days from the beginning of the Co-Sale Period (the “Co-sale Closing”). For the avoidance of doubt, the Right of Co-Sale shall not apply with respect to Transfer Shares sold or to be sold to the Eligible Holders under the Right of First Refusal in Section 6.2.

(d) A Co-Sale Eligible Holder shall effect its participation in the Proposed Transfer by delivering to the Transferor, prior to the Co-Sale Closing, a signed instrument of transfer and one or more share certificates, properly endorsed for transfer to the Prospective Transferee, representing:

(i) the number of Ordinary Shares that such Co-Sale Eligible Holder elects to include in the Proposed Transfer; or

(ii) the number of Preferred Shares that are at such time convertible into the number of Class A Ordinary Shares that such Co-Sale Eligible Holder elects to include in the Proposed Transfer; provided, however, that if the Prospective Transferee objects to the allotment of convertible Preferred Shares in lieu of the Class A Ordinary Shares, such Co-Sale Eligible Holder shall first convert the Preferred Shares into Class A Ordinary Shares and allot such Class A Ordinary Shares as provided above. The Company agrees to make any such conversion concurrent with and contingent upon the actual transfer of such shares to the Prospective Transferee.

(e) The terms and conditions of any sale pursuant to this Section 6.3 will be contained in, and governed by, a written purchase and sale agreement with customary terms and provisions for such a transaction.

(f) The register of members of the Company will be updated in consummation of the sale of the Transfer Shares pursuant to the terms and conditions specified in the Proposed Transfer Notice and the purchase and sale agreement, and the Transferor shall concurrently therewith remit to each Co-Sale Eligible Holder the portion of the sale proceeds to which such Co-Sale Eligible Holder is entitled by reason of its participation in such sale. If any Prospective Transferee or Transferees refuse(s) to purchase securities subject to the Right of Co-Sale from any Co-Sale Eligible Holder exercising its Right of Co-Sale hereunder, no Transferor may sell any Transfer Shares to such Prospective Transferee or Transferees unless and until, simultaneously with such sale, such Transferor purchases all securities subject to the Right of Co-Sale from such Co-Sale Eligible Holder at the same price and subject to the same material terms and conditions (if any) as described in the Proposed Transfer Notice.

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6.4 Severability

The exercise or election not to exercise any right by the Eligible Holders hereunder shall not adversely affect its right to participate in any other sales of Transfer Shares subject to this Section 6.

6.5 Effect of Failure to Comply

(a) Any Transfer not made in compliance with the requirements of this Agreement (including without limitation this Section 6 and Section 7.3) shall be null and void ab initio, shall not be recorded on the books or register of the Company or its transfer agent and shall not be recognized by the Company. Each party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other parties hereto for which monetary damages alone could not adequately compensate. Therefore, the parties hereto unconditionally and irrevocably agree that any non-breaching party hereto shall be entitled to seek protective orders, injunctive relief and other remedies available at law or in equity (including, without limitation, seeking specific performance or the rescission of purchases, sales and other transfers of Shares not made in strict compliance with this Agreement).

(b) If the Transferor purports to sell any Shares in contravention of the Right of Co-Sale (a “Prohibited Transfer”), each Co-Sale Eligible Holder, in addition to such remedies as may be available by Law, in equity or hereunder, is entitled to require such Transferor to purchase Shares from the Co-Sale Eligible Holder, as provided below, and such Transferor will be bound by the terms of such option. If a Transferor makes a Prohibited Transfer, each Co-Sale Eligible Holder upon timely exercise of its Right of Co-Sale under Section 6.3 may require such Transferor to purchase from such Eligible Holder the type and number of Shares that such Co-Sale Eligible Holder would have been entitled to sell to the Prospective Transferee under Section 6.3 had the Prohibited Transfer been effected pursuant to and in compliance with the terms of Section 6.3. The sale will be made on the same terms and subject to the same conditions as would have applied had the Transferor not made the Prohibited Transfer, except that the sale (including, without limitation, the delivery of the purchase price) must be made within ninety (90) days after the Co-Sale Eligible Holder learns of the Prohibited Transfer, as opposed to the timeframe prescribed in Section 6.3. Such Transferor shall also reimburse such Co-Sale Eligible Holder for any and all fees and expenses, including legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of the Co-Sale Eligible Holders’ rights under Section 6.3.

6.6 Exempt Transfers

Notwithstanding the foregoing or anything to the contrary herein, the provisions of Section 6.1(b), Section 6.2 and Section 6.3 shall not apply: (i) to a repurchase of Shares from a Transferor by the Company at a price no greater than that originally paid by such Transferor for such Shares and pursuant to Share Restriction Agreements and an agreement containing vesting and/or repurchase provisions under ESOP plan approved by the Board; (ii) in the case of a Transferor that is a natural person, upon a transfer of Shares by such Transferor, either during his or her lifetime or on death by will or intestacy, to his or her Immediate Family Members for bona fide estate and tax planning purposes, or any custodian or trustee for the account of a Transferor or a Transferor’s Immediate Family Members for bona fide estate and tax planning purposes, or any company whose Equity Securities are directly or indirectly 100% owned by such Transferor, provided that in each case, such transferee shall, as a condition of such transfer, agree to be subject to the same restrictions and obligations as such Transferor (including in the capacity as a Founder or Founder Holdco, as applicable) by executing and delivering an Assumption Agreement substantially in the form attached hereto as Exhibit C and the Transferor shall continue to be responsible for its obligations hereunder on a joint and several basis with such transferee; and (iii) the sale of any Shares to the public in an initial public offering.

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6.7 Restrictions on Transfer of Preferred Shares

Subject to the terms and conditions specified in Section 7.3, each of the holders of the Preferred Shares may, whether in a single transaction or in a series of transactions, make a transfer of its outstanding Preferred Shares at any time prior to a Qualified IPO to any third party; provided, however, that the holders of the Preferred Shares shall not, without the prior written consent of the Company, make a transfer of its Preferred Shares to (i) any Person which operates any of the businesses listed on Exhibit D attached hereto, which list is subject to a yearly update based on the resolution of the Board (including the affirmative votes of at least two-thirds (2/3) of all Preferred Directors) of the Company; (ii) the De Facto Controlling Person of any of such Persons specified in clause (i) above; (iii) the current chief executive officer of such Persons specified in clause (i) above or any of his/her Relatives; and/or (iv) any other Person who is Controlled by any of the Persons specified in clauses (i), (ii) or (iii) above (each a “Competitor”). For purposes of this Section 6.7, “Control” with respect to any specified Person means any other Person (a) owns, directly or indirectly, share capital or other equity interests representing more than (x) in the case such specified Person’s equity interests are listed on a securities exchange, thirty percent (30%) of the outstanding voting power or economic interest of the outstanding equity interests of such specified Person and no other Person owns a greater number of outstanding voting power or economic interest of such specified Person or (y) in the case such specified Person’s equity interests are not listed on a securities exchange, 50% in voting power or economic interest of the outstanding equity interests of such specified Person or (b) has the direct or indirect power to designate, appoint or remove directors representing more than 50% in the voting power of the board of directors of such specified Person; “De Facto Controlling Person” with respect to any specified Person means such other Person who Controls such specified Person and any of his/her Relatives; and “Relatives” with respect to any specified Person means such specified Person’s spouse, parents, children, siblings, mother-in-law, father-in-law, and brothers and sisters-in-law.

6.8 Restrictions on Transfer of Shares by Angel Parties

Subject to the terms and conditions specified in Section 7.3, each Angel Party may, whether in a single transaction or in a series of transactions, make a transfer of its outstanding Shares at any time prior to a Qualified IPO to any third party; provided, however, that the Angel Parties shall not, without the prior written consent of the Company, make a transfer of its Shares to any Competitor of the Company.

6.9 Term

The provisions of this Section 6 shall terminate immediately prior to the Company’s initial public offering.

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7. ADDITIONAL COVENANTS

7.1 Share Incentive Plan

The Company has established a share incentive option (the “ESOP”), under which the Company has reserved a total of 32,861,206 Class A Ordinary Shares for issuance to officers, directors, employees and consultants of the Company. Unless approved by the consent of the Board of Directors (including the approval of at least two-thirds (2/3) of all Preferred Directors), all employees, officers, directors and consultants of the Company who shall purchase, or receive options to purchase, shares of the Company under the ESOP shall be required to execute share purchase or option agreements on terms no less strict than the following: (i) vesting of shares over a four-year period since the date of commencement of services, with 25% of the shares vesting at the first anniversary of the aforesaid date, and the remaining 75% of the shares vesting in equal monthly installments over the next thirty-six (36) months; and (ii) a one-hundred eighty (180) day lockup period in connection with the Company’s IPO. Unless approved by the holders of a majority of the Ordinary Shares and the Super Preferred Majority Holders, no acceleration shall be applicable to such vesting schedule. It is agreed by the Parties that as to the grant and vesting of no more than 5% of the ESOP Shares, all the Directors of the Board shall not unreasonably withhold their consents from voting in favor of any resolutions regarding the ESOP Shares proposed by the Founder Parties. It is further agreed by the Parties that in January of each year, the Company has an option right to repurchase up to 20% of the then vested ESOP Shares in any grantee’s (other than the Founders, chief executive officer and chief technology officer of the Group Companies) possession by using the funds out of up to 1% of the Company’s own cash/cash equivalents lawfully available therefor other than any cash/cash equivalents obtained from any debt financing, at a price per share equal to that adopted in the Company’s most recent round of financing, provided that (a) the Company may only repurchase vested ESOP Shares from the grantee (other than the Founders, chief executive officer and chief technology officer of the Group Companies) who has served at least two (2) years of employment or engagement with any Group Company, (b) approval of a resolution on such repurchase requires consents of the majority of the votes of the Directors, and (c) all the ESOP Shares so repurchased shall be cancelled and reserved for issuance pursuant to the ESOP. Except for the estate planning, no Class A Ordinary Shares subject to the vesting schedule in this Section 7.1 shall be transferrable prior to such vesting. The Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and the right to repurchase unvested shares at cost in accordance with the Transaction Documents.

7.1A ESOP Expansion and Issuance

The Parties expressly agree that in the event that, prior to December 31, 2022, the Company has either (A) completed a new bona fide equity financing with (i) the post-money valuation of the Company in such round of equity financing being no less than US$3,000,000,000 and (ii) the total investment amount in such round of equity financing being no less than US$150,000,000, or (B) completed a Qualified IPO, then Company shall further reserve up to 15,696,653 number of Class A Ordinary Shares in aggregate for issuance to officers, directors, employees and consultants of the Company pursuant to the ESOP.

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7.2 Protective Provisions

(a) Acts Requiring Approval by Holders of Preferred Shares.

So long as there are any Preferred Shares outstanding, in addition to any other vote or consent required elsewhere in this Agreement, the Articles or by any applicable statute, each of the Company and the Group Companies hereby covenants and agrees that it shall not, and the Founder Parties shall procure that the Group Companies do not directly or indirectly, do any of the following matters, without the approval of the affirmative vote of the Super Preferred Majority Holders (regardless if such matter would have to be approved by the Board, shareholders, or any other corporate body or organ) (for these purposes, references to Company in this Section 7.2 shall mean the Company and/or any Group Company); provided that items (i) and (vi) shall require the prior written approval of (s) the Series E-3 Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series E-3 Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-3 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-3 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (t) the Super Series E Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series E-1 Shares and/or Series E-2 Shares (only with respect to the holders of Series E-1 Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-1 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-1 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares; and only with respect to holders of Series E-2 Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-2 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-2 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (u) the Super Series D Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series D Shares and/or Series D+ Shares (only with respect to the holders of Series D Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series D Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series D Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares, and only with respect to the holders of Series D+ Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series D+ Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series D+ Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (v) the Series C Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series C Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series C Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series C Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (w) the Series B+ Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series B+ Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series B+ Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series B+ Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), (x) the Super Series B Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series B Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series B Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series B Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares), and (y) the Super Series A Majority Holders, where such matter(s) will affect any right, preference, privilege, obligation or restriction of the holders of Series A Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series A Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series A Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares):

(i) any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Preferred Shares;

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(ii) any action that authorizes, creates or issues, or obligates the Company to authorize, create or issue, shares of any class of capital stock of the Company, or instruments that are convertible into shares, having preferences superior to or on a parity with the Preferred Shares;

(iii) any share split, share consolidation or stock dividend or any action that reclassifies any outstanding shares of the Company;

(iv) any increase or decrease or cancellation in the number of authorized or outstanding Ordinary Shares or Preferred Shares of the Company or share capital of any other Group Company, or any issuance, distribution, purchase or redemption of any convertible security or warrant or any issuance of option, except for any such action under the terms of the ESOP or the redemption of any Preferred Shares in accordance with their terms in the Articles;

(v) incurrence of indebtedness for money borrowed in excess of US$300,000 per commitment or US$1,500,000 in the aggregate during any twelve (12) months’ period by any Group Company from any Person(s) (except for other Group Companies), or such higher amounts set by the Board (including the affirmative votes of at least fifty percent (50%) of all Preferred Directors) according to the expansion of the Company’s business;

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(vi) any adoption, amendment or waiver of any provision of the memorandum or articles of association of the Company or similar organizational documents of any other Group Company;

(vii) the liquidation, dissolution or winding up of any Group Company;

(viii) authorizing or consummating a Liquidation Event or authorizing or consummating the merger, acquisition, reorganization, consolidation, business combination or similar transaction, or sale, conveyance or other disposition of all or substantially all of the assets or business, or exclusive licensing of all or substantially all of the intellectual property, of any Group Company;

(ix) the declaration or payment of a dividend on the capital stock of any Group Company;

(x) the redemption or repurchase of capital stock (including exercising the purchase option of the Company pursuant to Section 6.2(b)), other than the redemption of any Preferred Shares in accordance with their terms in the Articles or repurchases from employees upon termination of employment at the employee’s original purchase price or pursuant to contractual rights of first refusal under the ESOP plan duly approved by the Board;

(xi) any change to the size of the Board of Directors of any Group Company or any change to the manner in which the directors of any Group Company are appointed;

(xii) any sale of all or substantially all of any of the Group Company’s assets, goodwill or any material asset or undertaking of any Group Company, or any transaction resulting in a change of control of any Group Company;

(xiii) any sale, transfer, or exclusive licensing to any third party any material patent, brand, copyright, trademark or any material intellectual property of the Group Company;

(xiv) a public offering of or other listing of securities of the Company or its subsidiaries (including the selection of any underwriter for such offering);

(xv) any termination of, unapproved amendment to or breach of any contracts among the Group Companies designed to provide the Company with control over, and the ability to consolidate the financials statements of, direct or indirect subsidiaries and/or controlled entities, including without limitation the Restructuring Documents;

(xvi) any amendment to the foregoing items; and

(xvii) any agreement or commitment by any Group Company to do any of the foregoing items.

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(b) Acts Requiring Approval by at least two-thirds (2/3) of all Preferred Directors.

For so long as certain Investors are entitled to designate the Preferred Directors, in addition to such other limitations as may be provided herein or in the applicable laws, the Articles of the Company or any of the Company’s contractual obligations, the Company and the other Group Companies shall not, directly or indirectly take any of the following actions, except with a majority of the votes of the Directors including affirmative votes of at least two-thirds (2/3) of all Preferred Directors:

(i) the issuance of any securities by any Group Company (other than the Company) to any third party;

(ii) amend or terminate the ESOP plan or approve any new equity-based compensation plan or any bonus or incentive plan;

(iii) the issuance or reservation of Class A Ordinary Shares under the Company’s ESOP plan in excess of the total number of Class A Ordinary Shares reserved under the ESOP as of the Completion, except for the issuance and reservation of Class A Ordinary Shares according to Section 7.1A hereof;

(iv) appointment and change of Auditor of and any material change in the accounting policies, procedures or internal control of any Group Company;

(v) entering into or amending any Related Party Transactions in excess of US$150,000, other than (a) the transactions with COSMIC BLUE or any of its Affiliates to the extent not exceeding US$2,000,000 in the aggregate in any fiscal year, and (b) (x) the transactions with Tencent or any of its Affiliates with respect to service of email, wechat and network cloud, and (y) other transactions with Tencent or any of its Affiliates to the extent not exceeding US$4,000,000 in the aggregate in any fiscal year;

(vi) any increase in compensation of any employee of the Group Companies with monthly salary of at least RMB20,000 by more than forty percent (40%) in a twelve 12 months’ period;

(vii) establish any committees (including a compensation committee), local boards or agencies for managing any of the affairs of the Group Companies;

(viii) any other action that would materially affect the rights or interests of Investors;

(ix) having any subsidiary that is not wholly owned by any Group Company;

(x) any amendment to the foregoing items; and

(xi) any agreement or commitment by any Group Company to do any of the foregoing items.

Furthermore, for so long as certain Investors are entitled to designate the Preferred Directors, the Company and the other Group Companies shall not, directly or indirectly, cease to conduct or carry on its Business substantially as now conducted by the Group Companies, change of any material part of its business or enter into business that is outside of the Business, except with a majority of the votes of the Directors including affirmative votes of at least two-thirds (2/3) of all Preferred Directors.

(c) Acts Requiring Approval by at least two-thirds (2/3) of all Preferred Directors other than KKR Director.

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For so long as certain Investors are entitled to designate the Preferred Directors, in addition to such other limitations as may be provided herein or in the applicable laws, the Articles of the Company or any of the Company’s contractual obligations, the Company and the other Group Companies shall not, directly or indirectly take any of the following actions, except with a majority of the votes of the Directors including affirmative votes of at least two-thirds (2/3) of all Preferred Directors other than KKR Director:

(i) the creation of any new joint ventures or joint partnership;

(ii) incurrence of capital expenditures exceeding US$300,000 per commitment or US$1,500,000 in the aggregate during twelve (12) months’ period (or such higher amounts set by the Board according to the expansion of the Company’s business) outside of Board approved annual Budget;

(iii) approving or amending the annual Budget;

(iv) purchase or disposal of business or assets in excess of US$300,000 per commitment or US$1,500,000 in the aggregate during any twelve (12) months’ period by any Group Company;

(v) extension by the any of the Group Companies of any loan or guarantee for indebtedness in excess of US$100,000 per commitment or US$500,000 in the aggregate during any twelve (12) months’ period to any third party;

(vi) equity investment in any third party with the amount of investment in excess of US$100,000 per commitment or US$500,000 in the aggregate during any twelve (12) months’ period;

(vii) other transactions that is outside ordinary course of business and involving an amount in excess of US$100,000 per commitment or US$500,000 in the aggregate during any twelve (12) months’ period or exclusive relationship;

(viii) appointment or replacement of the CEO, CFO, COO and CTO of the Group Companies;

(ix) initiate or settle any material litigation or arbitration;

(x) any amendment to the foregoing items; and

(xi) any agreement or commitment by any Group Company to do any of the foregoing items.

(d) Acts Requiring Approval by Holders of Ordinary Shares.

So long as there are any Ordinary Shares outstanding (excluding the Ordinary Shares held by the Founder Parties), in addition to any other vote or consent required elsewhere in this Agreement, the Articles or by any applicable statute, the Group Companies shall not, impose any additional restrictions or make amendment to existing restrictions which is detrimental to the holders of Ordinary Shares (excluding the Founder Parties) (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Ordinary Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Ordinary Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Ordinary Shares (other than the Founder Parties)), except with the written consent of the holders of at least two-thirds (2/3) of the then outstanding Ordinary Shares (excluding the Ordinary Shares held by the Founder Parties), voting as a separate class.

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7.3 Tencent Restricted Person Transaction

Notwithstanding any other provision to the contrary in this Agreement, the Articles and other Transaction Documents, and in addition to any other rights available to Tencent under the Transaction Documents, prior to any IPO, for so long as Tencent, together with its Affiliates, hold all the Shares it acquired at the Completion (as defined in the Series E-2 Share Subscription Agreement),

(a) without the prior written consent of Tencent, (i) the Company shall not, and the Shareholders of the Company shall not permit the Company to, propose, issue or agree to issue any Equity Securities or other securities of the Company, and each other Group Company shall not propose, issue or agree to issue any Equity Securities or other securities in such Group Company, to any Tencent Restricted Person, and (ii) except as provided in Section 7.3(b), no Founder Party (with respect to both the Ordinary Shares and Preferred Shares held by it) and/or its permitted assigns may directly or indirectly, sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose through one or a series of transactions any Equity Securities of the Company or any other Group Company held by it to any Tencent Restricted Person, and no Group Company shall recognize, register or effect such sale, assignment, transfer, pledge, hypothecation, mortgage, encumbrance or other disposal;

(b) in the event that any Shareholder (including its successors and permitted assignees) other than the Founder Holdcos (a “Tencent Restricted Person Transferor”) proposes to transfer any Shares (the “Tencent Restricted Person Transfer Shares”) to any Tencent Restricted Person (the “Tencent Restricted Person Share Transfer”), such Tencent Restricted Person Transferor must deliver a written notice (the “Tencent Restricted Person Share Transfer Notice”) to Tencent. Such Tencent Restricted Person Share Transfer Notice shall contain the material terms and conditions of the Tencent Restricted Person Share Transfer, including without limitation a description of the Tencent Restricted Person Transfer Shares that such Tencent Restricted Person Transferor proposes to transfer, and the identity of the prospective transferee. Tencent shall have the right for a period of ten (10) Business Days after receipt of the Tencent Restricted Person Share Transfer Notice (the “Tencent’s Option Period of Share Transfer”) to elect to purchase all but not less than all of such Tencent Restricted Person Transfer Shares at the same price and on the same terms and conditions as specified in the Tencent Restricted Person Share Transfer Notice, by notifying such Tencent Restricted Person Transferor and the Company in writing before expiration of the Tencent’s Option Period of Share Transfer (the “Tencent’s Option of Share Transfer”). The closing of the purchase of the Tencent Restricted Person Transfer Shares by Tencent shall take place, and the consideration payable by Tencent for the Tencent Restricted Person Transfer Shares shall have been delivered to the applicable Tencent Restricted Person Transferor(s), by sixty (60) Business Days after delivery of the notice by Tencent to the applicable Tencent Restricted Person Transferor(s) for exercising the Tencent’s Option of Share Transfer.

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(c) Without limiting the generality of the foregoing, if any proposal to transfer any Shares to any Tencent Restricted Person by any Founder Holdco constitutes a Liquidation Event, by itself or together with transfer of Shares by other Shareholders, such transfer by such Founder Holdco shall not be subject to Section 7.3(a)(ii), provided that:

(i) all of the Shares proposed to be transferred by the Shareholders other than the Founder Holdcos shall be subject to Tencent’s Option of Share Transfer as set out in Section 7.3(b) above; and,

(ii) all of the Shares proposed to be transferred by the Founder Holdcos shall be subject to the Right of First Refusal set forth in Section 6.2(b) to Section 6.2(e). If, following the Re-allotment Exercise Period, the Company and the Eligible Holders (including, for the avoidance of doubt, Tencent) have not fully exercised their Right of First Refusal and (if any) re-allotment right to purchase all of the Transfer Shares pursuant to the terms of Section 6.2, the Transferor(s) shall give to Tencent an additional written notice (the “Tencent Additional Re-allotment Notice”) which shall include the same information as required in the Additional Transfer Notice and identify the portion of the remaining Transfer Shares which have not been purchased by the Company and/or Eligible Holders (the “Tencent Re-allotment Shares”), and Tencent shall have the right to elect to purchase all but not less than all of the Tencent Reallotment Shares at the same price and on the same terms and conditions as specified in the Tencent Additional Re-allotment Notice, exercisable by delivery of written confirmation to the Transferor(s) within ten (10) calendar days after receipt of the Tencent Additional Re-allotment Notice; provided that,

(x) if the Prospective Transferee is both a Tencent Restricted Person and a COSMIC BLUE Restricted Person during the COSMIC BLUE Restricted Period, then the Tencent Re-allotment Shares shall be allocated between COSMIC BLUE and Tencent based on the ratio of the number of Class A Ordinary Shares held by COSMIC BLUE and Tencent on an as-converted basis, or otherwise mutually agreed upon by COSMIC BLUE and Tencent; and

(y) the closing of the purchase of the Tencent Re-allotment Shares by Tencent and/or COSMIC BLUE (as the case may be) shall take place, and the consideration payable by Tencent and/or COSMIC BLUE (as the case maybe) for the Tencent Re-allotment Shares shall have been delivered to the Founder Holdcos, by sixty (60) Business Days after delivery of the notice by Tencent and/or COSMIC BLUE (as the case may be) to the applicable Founder Holdcos.

(d) in the event the Company proposes a sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any Group Company of all or substantially all of the assets and/or intellectual property and/or business of the Company (or of all of the Group Companies taken as a whole) (the “Tencent Restricted Person Transfer Assets”) to any Tencent Restricted Person (the “Tencent Restricted Person Asset Transfer”), the Company must deliver a written notice (the “Tencent Restricted Person Asset Transfer Notice”) to Tencent. Such Tencent Restricted Person Asset Transfer Notice shall contain the material terms and conditions of the Tencent Restricted Person Asset Transfer, including without limitation a description of the Tencent Restricted Person Transfer Assets that the Company proposes to transfer, and the identity of the prospective transferee. Tencent shall have the right for a period of twenty (20) Business Days after receipt of the Tencent Restricted Person Asset Transfer Notice (the “Tencent’s Option Period of Asset Transfer”) to elect to purchase all but no less than all of such Tencent Restricted Person Transfer Assets at the same price and on the same terms and conditions as specified in the Tencent Restricted Person Asset Transfer Notice, by notifying the Company in writing before expiration of the Tencent’s Option Period of Asset Transfer (the “Tencent’s Option of Asset Transfer”), provided that, the closing of the purchase of the Tencent Restricted Person Transfer Assets by Tencent shall take place, and the consideration payable by Tencent for the Tencent Restricted Person Transfer Assets shall have been delivered to the applicable Group Companies, by sixty (60) Business Days after delivery of the notice by Tencent to the applicable Group Companies for exercising the Tencent’s Option of Asset Transfer.

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7.4 Meetings of the Board

Unless otherwise determined by the vote of all of the directors then in office, the Board shall meet at least quarterly within the following two weeks of such relevant quarter in each calendar year, subject to such notice requirement set forth in Article 69 of the Articles.

7.5 Successor Indemnification

In the event that the Company or any of its successors or assignees (i) consolidates with or merges into any other entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets or business, or exclusive licensing of all or substantially all of its intellectual property, to any person or entity, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board as in effect immediately prior to such transaction, whether in the Company’s Articles or elsewhere, as the case may be.

7.6 Employee Agreements

The Company shall cause (i) all the Key Employees to enter into non-competition, non-solicitation, confidentiality, proprietary information and invention assignment agreements in substantially the form satisfactory to the Series E-3 Investors; each in the forms attached to the Series E-3 Purchase Agreement as Exhibit G, Exhibit H-1 and Exhibit H-2; (ii) all the employees and consultants of any Group Company, except for the Key Employees, to enter into a confidentiality, proprietary information agreement.

7.7 Most Favoured Investor

In the event before the Completion, that the Company and/or the Founder Parties grant or have granted any other Person in the capacity of the holder of any Equity Securities of any Group Company any rights, privileges or protections more favorable than those granted to the Series E-3 Investors (except for (i) any rights, privileges or protections granted to any Person under the Transaction Documents, and (ii) any rights, privileges or protections having no further force or effect upon or immediately after the Completion, such as those granted under the Prior Shareholders’ Agreement), the Series E-3 Investors shall, solely with respect to the Series E-3 Shares held by them, be automatically entitled to the same rights, privileges or protections pari passu with such other Persons.

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In the event that before the Completion, the Company and/or the Founder Parties grant or have granted any other Person in the capacity of the holder of any Equity Securities of any Group Company any rights, privileges or protections more favorable than those granted to the Prior Investors (except for (i) any rights, privileges or protections granted to any Person under the Transaction Documents, and (ii) any rights, privileges or protections having no further force or effect upon or immediately after the Completion, such as those granted under the Prior Shareholders’ Agreement), the Prior Investors shall, solely with respect to the Preferred Shares held by them, each at their option, be entitled to the same rights, privileges or protections pari passu with such other Persons.

7.8 Option to Purchase Equity Interest in the Domestic Company

The Parties hereby acknowledge and agree that, as part of the consideration for each Investor’s investment in the Company and for other valuable consideration, each of the Investors shall have an option, exercisable at its sole discretion respectively by giving notice to the Company of its intention to so exercise at any time after the Completion, to designate an Affiliate which shall be a PRC resident, to purchase certain fully paid-up equity interest of the Domestic Company from the then shareholders of the Domestic Company, and the Founder Parties and Group Companies shall cause the then shareholders of the Domestic Company to transfer such fully paid-up equity interest of the Domestic Company to such Investor or its designated Affiliate, for an aggregate nominal consideration of RMB 1, so that such Investor shall hold the same shareholding percentage in the Domestic Company as it does in the Company. The Parties shall take or cause to be taken all actions, to do or cause to be done, and to assist and cooperate with the other Parties in doing, all things and execute all instruments necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the addition of such Investor (if it is a PRC resident) or its Affiliate as an equity holder in the Domestic Company in accordance with this Section 7.8. If such Investor or its Affiliate incurs any taxes or any other costs and expenses in connection with the transaction contemplated under this Section 7.8, then the Company and its Affiliates shall bear sole responsibility for such taxes and/or costs and expenses on behalf of such Investor and/or its Affiliate.

7.9 No Investment in Company Restricted Person

Notwithstanding any other provision to the contrary contained herein, as long as COSMIC BLUE and/or its Affiliates hold any Shares in the Company, in the event COSMIC BLUE and/or its Affiliates directly or indirectly hold any Equity Securities in any Company Restricted Person (occurrence of such holding, the “COSMIC BLUE Trigger Event”) during the COSMIC BLUE Restricted Period, then:

(a) COSMIC BLUE shall notify the Company of the COSMIC BLUE Trigger Event within five (5) Business Days thereafter; and

(b) the provisions under Section 4.1(d) and Section 6.2(f) shall automatically terminate and be of no force upon the COSMIC BLUE Trigger Event.

7.10 Business Restriction to YUAN

Notwithstanding any other provision to the contrary contained herein, as long as YUAN and/or its Affiliates hold any Shares in the Company, YUAN and/or its Affiliates shall not, without the prior written consent of the Company, directly or indirectly hold any Equity Securities in (i) any Person which operates any of the businesses under the brand name of “***************”, and/or (ii) any Affiliate of such Person.

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7.11 Tax Matters

(i) The Company shall not, without the written consent of Super Preferred Majority Holders, issue or transfer securities in the Company to any investor if following such issuance or transfer, the Company, in the determination of counsel or accountants for any Investor, would be a “Controlled Foreign Corporation” (“CFC”) as defined in the U.S. Internal Revenue Code of 1986, as amended (or any successor thereto) (the “Code”) with respect to the securities held by such investor. No later than two (2) months following the end of each Company taxable year, the Company shall provide the following information to each Investor: (i) the Company’s capitalization table as of the end of the last day of such taxable year and (ii) a report regarding the Company’s status as a CFC. In addition, the Company shall provide each Investor with access to such other Company information as may be necessary for such Investor to determine the Company’s status as a CFC and to determine whether such Investor or any of such Investor’s partners is required to report its pro rata portion of the Company’s “Subpart F income” (as defined in Section 952 of the Code) on its United States federal income tax return, or to allow such Investor or such Investor’s partners to otherwise comply with applicable United States federal income tax laws. For purposes of this Section 7.11(i) and Section 7.11(ii) below, (i) the term “Investor’s partners” shall mean such Investor’s partners and/or members and any direct or indirect equity owners of such partners and/or members, and (ii) the “Company” shall mean the Company and any of its direct or indirect subsidiaries. The Company shall make due inquiry with its tax advisors on at least an annual basis regarding its status as a CFC and regarding whether any portion of the Company’s income is Subpart F income. In the event that the Company is determined by the Company’s tax advisors to be a CFC with respect to the securities held by any Investor, the Company agrees to use commercially reasonable efforts to avoid generating Subpart F income. In the event that the Company is determined by the Company’s tax advisors to be a CFC with respect to the securities held by any Investor, the Company agrees, to the extent permitted by law, to annually make dividend distributions to such Investor in an amount equal to 50% of any income deemed distributed to any Investor pursuant to Section 951(a) of the Code had such Investor been a “United States person” as such term is defined in Section 7701(a)(30) of the Code.

(ii) The Company will not be at any time during the calendar year in which the Completion occurs a “passive foreign investment company” within the meaning of Section 1297 of the Code (a “PFIC”). The Company shall use its best efforts to avoid being a PFIC. The Company shall make due inquiry with its tax advisors if requested by any Investor regarding its status as a PFIC, and if the Company is informed by its tax advisors that it has become a PFIC, or that there is a likelihood of the Company being classified as a PFIC for any taxable year, the Company shall promptly notify such Investor of such status or risk, as the case may be. In connection with a “Qualified Electing Fund” election made by any Investor or any of such Investor’s partners pursuant to Section 1295 of the Code or a “Protective Statement” filed by such Investor or any of such Investor’s partners pursuant to Treasury Regulation Section 1.1295-3, as amended (or any successor thereto), if requested by such Investor, the Company shall provide annual financial information to such Investor in the form satisfactory to such Investor as soon as reasonably practicable following the end of each taxable year of such Investor (but in no event later than 90 days following the end of each such taxable year), and shall provide such Investor with access to such other Company information as may be required for purposes of filing U.S. federal income tax returns in connection with such Qualified Electing Fund election or Protective Statement.

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(iii) The Company shall take such actions, including making an election to be treated as a corporation or refraining from making an election to be treated as a partnership, as may be required to ensure that at all times the Company is treated as corporation for United States federal income tax purposes.

(iv) The Company shall make due inquiry with its tax advisors if requested by any Investor regarding whether such Investor’s interest in the Company is subject to the reporting requirements of either or both of Sections 6038 and 6038B (and the Company shall duly inform such Investor of the results of such determination), and in the event that the Company’s tax advisors determine that such Investor’s interest in the Company is subject to any such reporting requirements, the Company agrees, upon a request from such Investor, to provide such information to such Investor as may be necessary to fulfill such Investor’s obligations thereunder.

7.12 Compliance

The Company shall not, and shall procure that none of the Group Companies nor any of their respective directors, officers, employees, agents or other Persons acting on their behalf (the “Relevant Persons”) shall:

(a) take any action in violation of any Anti-Corruption Laws or undertake or cause to be undertaken any Anti-Corruption Prohibited Activity;

(b) engage in any dealings or transactions with or for the benefit of any Sanctioned Person or otherwise violate Sanctions;

(c) directly or indirectly loan, use, contribute or otherwise make available to any Sanctioned Person any proceeds of any Investor’s investment in the Company or its Subsidiaries;

(d) violate any Anti-Corruption Laws or Anti-Money Laundering Laws; or

(e) invest any earnings from criminal activities in the Company or any other Group Company

7.13 Government Officials

No Government Official shall: (i) hold an ownership or other economic interest, direct or indirect, in the Equity Securities of any Group Company held by the Founder Parties or in the contractual relationship formed by this Agreement or (ii) serve as an officer, director or employee of any Group Company.

7.14 Books and Records

As soon as practical after the Completion, the Company shall, and shall procure that the Subsidiaries shall, establish and maintain their books and records, and prepare their periodic statements of accounts, in accordance with IFRS or US GAAP.

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7.15 Ethical Business Practices

The Company shall undertake to conduct, and confirm in writing that the Company and all the other Group Companies and their respective Relevant Persons have always conducted, their business in compliance with all ethical business practices including confirming continued compliance with Sections 7.11 to 7.15 hereof.

7.16 Notification of Breaches

If the Company becomes aware of any actual or suspected breach of any Anti-Corruption Laws, Anti-Money Laundering Laws, Sanctions or the provisions of Sections 7.11 to 7.14 by any Group Company or any of their respective Relevant Persons, the Company shall promptly notify the Investors in writing setting out full details of the matter.

7.17 No Violation of Laws

Notwithstanding anything to the contrary in this Agreement, no Investor shall be required by this Agreement or the Articles to take any action, or omit to take any action, that such Investor believes would cause it to be in violation of Anti-Corruption Laws or Sanctions or any other Laws (including Export Control Laws or Anti-Money Laundering Laws) applicable to it.

7.18 Termination of Covenants

The covenants set forth in this Section 7 (other than Sections 7.11 to 7.16) shall terminate and be of no further force or effect immediately prior to the consummation of an initial public offering; provided, for the avoidance of doubt, that the rights set forth in Section 7.3 shall terminate immediately prior to the consummation of an IPO.

8. MISCELLANEOUS

8.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of Hong Kong, without giving effect to any principles of conflicts of laws.

8.2 Counterparts

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by electronic PDF, facsimile, email transmission, scanned copies or other electronic form of signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.3 Interpretation

This Agreement shall be construed according to its fair language. The rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. The headings and subheadings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

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8.4 Notices

All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address, or to such email address, facsimile number or address as set forth on Schedule 2 hereto or as subsequently modified by written notice given in accordance with this Section 8.4.

8.5 Costs of Enforcement

If any party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings, the non-prevailing party shall pay all costs and expenses incurred by the prevailing party, including, without limitation, all reasonable legal adviser’s fees.

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8.6 Amendments and Waivers

Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of (i) the Company, (ii) the Founders, and (iii) the Super Preferred Majority Holders; provided that, any amendment or waiver that affects any holder of Preferred Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares shall require the written consent of the holder so disproportionately and adversely affected; provided further that, (r) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series E-3 Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-3 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-3 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Series E-3 Majority Holders, (s) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series E-1 Shares and/or Series E-2 Shares (only with respect to the holders of Series E-1 Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-1 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-1 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares; and only with respect to the holders of Series E-2 Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series E-2 Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series E-2 Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Super Series E Majority Holders, (t) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series D Shares and/or Series D+ Shares (only with respect to the holders of Series D Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series D Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series D Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares, and only with respect to the holders of Series D+ Shares, other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series D+ Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series D+ Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Super Series D Majority Holders, (u) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series C Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series C Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series C Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Series C Majority Holders, (v) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series B+ Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series B+ Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series B+ Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Series B+ Majority Holders, (w) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series B Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series B Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series B Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Super Series B Majority Holders, (x) any amendment or waiver that affects any right, preference, privilege, obligation or restriction of the holders of Series A Shares (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Series A Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Series A Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Preferred Shares) shall require the written consent of the Super Series A Majority Holders, and (y) any amendment of restrictions that is detrimental to the holders of Ordinary Shares (excluding the Founder Parties) (other than such diminishment of right, preference and privilege resulting solely from issuance of securities of the Company that ranks senior to Ordinary Shares with a pre-money valuation of the Company higher than the post-money valuation of the Company immediately after the Completion and which will not affect any holder of Ordinary Shares in a disproportionate and adverse manner than the effect of such amendment or waiver on other holders of Ordinary Shares (other than the Founder Parties)), shall require the written consent of the holders of at least two-thirds (2/3) of the then outstanding Ordinary Shares (excluding the Ordinary Shares held by the Founder Parties), voting as a separate class. Notwithstanding the foregoing, the observance of any specific right expressly granted to any Investor (other than those granted to it in its capacity as a holder of a certain series of Preferred Shares) may not be waived without the prior written consent of such Investor and any amendment or change of any rights or obligations of any Investor (to the extent any provision applies specifically in respect of such Investor and such Investor is specifically named in connection with such right or obligation in this Agreement) shall require the prior written consent of such Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities then outstanding, each future holder of all such Registrable Securities and the Company. The Company shall give prompt written notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination or waiver. Any amendment, termination or waiver effected in accordance with this Section 8.6 shall be binding on all Parties hereto, even if they do not execute such consent. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. Notwithstanding the foregoing, (i) any amendment to (A) the definition of Qualified IPO in this Agreement or in the Articles, (B) the Series E-3 Preference Amount (as defined in the Articles), (C) the definition of Series E-3 Majority Holders in this Agreement or in the Articles, or (D) this clause (i), shall in each case also require the prior written consent of the Series E-3 Majority Holders; (ii) any amendment to (A) the Series E-2 Preference Amount or Series E-1 Preference Amount (as defined in the Articles), (B) the definition of Super Series E Majority Holders in this Agreement or in the Articles, or (C) this clause (ii), shall in each case also require the prior written consent of the Super Series E Majority Holders; (iii) any amendment to (A) the Series D Preference Amount or the Series D+ Preference Amount (as defined in the Articles), (B) the definition of Super Series D Majority Holders in this Agreement or in the Articles, or (C) this clause (iii), shall in each case also require the prior written consent of the Super Series D Majority Holders; (iv) any amendment to (A) the Series C Preference Amount (as defined in the Articles), (B) the definition of Series C Majority Holders in this Agreement or in the Articles, or (C) this clause (iv), shall in each case also require the prior written consent of the Series C Majority Holders; (v) any amendment to (A) the Series B+ Preference Amount (as defined in the Articles), (B) the definition of Series B+ Majority Holders in this Agreement or in the Articles, or (C) this clause (v), shall in each case also require the prior written consent of the Series B+ Majority Holders;.(vi) any amendment to (A) the Series B Preference Amount (as defined in the Articles), (B) the definition of Super Series B Majority Holders in this Agreement or in the Articles, or (C) this clause (vi), shall in each case also require the prior written consent of the Super Series B Majority Holders; and (vii) any amendment to (A) the Series A Preference Amount (as defined in the Articles), (B) the definition of Super Series A Majority Holders in this Agreement or in the Articles, or (C) this clause (vii), shall in each case also require the prior written consent of the Super Series A Majority Holders.

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8.7 Severability

The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. In such event, the Parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement in respect of the severed provisions, which most closely effects the parties’ intent in entering into this Agreement.

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8.8 Aggregation of Shares

All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

8.9 Entire Agreement

This Agreement (including the Schedules and Exhibits hereto, if any) and other Transaction Documents constitutes the full and entire understanding and agreement between the Parties with respect to the subject matter hereof and thereof, and any other written or oral agreement relating to the subject matter hereof and thereof existing between the Parties (including without limitation to the Prior Shareholders’ Agreement) are expressly canceled; provided, however, that nothing in this Agreement or related agreements shall be deemed to terminate or supersede the provisions of any confidentiality and nondisclosure agreements executed by the Parties prior to the date of this Agreement, which agreements shall continue in full force and effect until terminated in accordance with their respective terms.

8.10 Transfers, Successors and Assignees

(a) Unless provided otherwise in this Agreement, this Agreement, and the rights and obligations hereunder, shall not be assigned without the mutual written consents of the Investors and the Company; provided that each of the Investors may assign its rights and obligations in connection with a Transfer of Equity Securities of the Company in accordance with this Agreement but only to the extent of such Transfer. The terms and conditions of this Agreement shall insure to the benefit of and be binding upon the respective successors and assignees of the Parties.

(b) Each transferee or assignee of the Shares subject to this Agreement shall continue to be subject to the terms hereof, and, as a condition to the Company’s recognizing such transfer, each transferee or assignee shall agree in writing to be subject to each of the terms of this Agreement by executing and delivering an Assumption Agreement substantially in the form attached hereto as Exhibit C. Upon the execution and delivery of an Assumption Agreement by any transferee, such transferee shall be deemed to be a Party hereto as if such transferee’s signature appeared on the signature pages of this Agreement. By execution of this Agreement or of any Assumption Agreement, each of the Parties appoints the Company as its attorney in fact for the purpose of executing any Assumption Agreement that may be required to be delivered under the terms of this Agreement. The Company shall not permit the transfer of the Shares subject to this Agreement on its books or issue a new certificate representing any such Shares unless and until such transferee shall have complied with the terms of this Section 8.10. Each certificate representing the Shares subject to this Agreement if issued on or after the date of this Agreement shall be endorsed by the Company with the legend set forth in Section 8.11.    

(c) Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties or their respective executors, administrators, heirs, successors and assignees any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

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8.11 Additional Parties

Notwithstanding anything to the contrary contained herein, if the Company issues additional Series E-3 Shares pursuant to the Warrant (as defined in the Series E-3 Purchase Agreement) after the date hereof, as a condition to the issuance of such shares, the Company shall require that any purchaser of such Series E-3 Shares become a party to this Agreement by executing and delivering the Assumption Agreement substantially in the form attached hereto as Exhibit C. In such event, each such person shall thereafter be deemed an Investor and Series E-3 Investor for all purposes under this Agreement.

8.12 Legend

(a) Each certificate representing Shares of a Founder Holdco issued by the Company shall be endorsed with the following legend:

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED BY, THE TERMS AND CONDITIONS OF A CERTAIN SHAREHOLDERS’ AGREEMENT (AS AMENDED FROM TIME TO TIME) BY AND AMONG THE SHAREHOLDER, THE COMPANY AND CERTAIN OTHER HOLDERS OF SHARES OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

(b) The Founders agree that the Company may instruct its transfer agent to impose transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 8.12(a) above to enforce the provisions of this Agreement, and the Company agrees to promptly do so. The legend shall be removed upon termination of this Agreement at the request of the holder.

8.13 Dispute Resolution

(a) Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall first be subject to resolution through consultation of the parties to such dispute, controversy or claim. Such consultation shall begin within seven (7) days after one Party hereto has delivered to the other Parties involved a written request for such consultation. If within thirty (30) days following the commencement of such consultation the dispute cannot be resolved, the dispute shall be submitted to arbitration upon the request of any Party with notice to the other Parties.

(b) The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the “HKIAC”). There shall be three (3) arbitrators. The complainant and the respondent to such dispute shall each select one (1) arbitrator within thirty (30) days after giving or receiving the demand for arbitration. Such arbitrators shall be freely selected, and the Parties shall not be limited in their selection to any prescribed list. The Chairman of the HKIAC shall select the third arbitrator. If either party to the arbitration does not appoint an arbitrator who has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of the HKIAC.

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(c) The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the Arbitration Rules of the HKIAC in effect at the time of the arbitration. However, if such rules are in conflict with the provisions of this Section 8.13, including the provisions concerning the appointment of arbitrators, the provisions of this Section 8.13 shall prevail.

(d) Each Party hereto shall cooperate with any party to the dispute in making full disclosure of and providing complete access to all information and documents requested by such party in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on the Party receiving the request.

(e) The award of the arbitration tribunal shall be final and binding upon the disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for enforcement of such award.

(f) Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

8.14 Delays or Omissions

No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

8.15 Conflict with Articles of Association

In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the Company’s Articles or other constitutional documents, the terms of this Agreement shall prevail as among the shareholders of the Company only. The Investors, the Angel Parties and the Founder Parties shall, notwithstanding the conflict or inconsistency, act so as to effect the intent of this Agreement to the greatest extent possible under the circumstances and shall promptly amend the conflicting constitutional documents to conform to this Agreement to the greatest extent possible.

8.16 Holding Companies

The Founders shall procure the relevant Founder Holdcos controlled by them to fully comply with and perform all of the obligations, covenants, undertakings and commitments of such Founder Holdcos under this Agreement.

8.17 Termination of Prior Shareholders’ Agreement

This Agreement supersedes and replaces the Prior Shareholders’ Agreement in its entirety, and such Prior Shareholders’ Agreement shall be of no further force or effect upon execution of this Agreement by the parties required to amend and restate the Prior Shareholders’ Agreement hereto. Each of the Parties that is a party to the Prior Shareholders’ Agreement hereby expressly consents and agrees that this replacement of the Prior Shareholders’ Agreement has been duly approved by the requisite parties to the Prior Shareholders’ Agreement sufficient to constitute a valid replacement of the Prior Shareholders’ Agreement that is binding on all parties to the Prior Shareholders’ Agreement.

– EXECUTION PAGES FOLLOW –

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IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

COMPANY:	Spark Education Limited
	By:	/s/ Luo Jian (罗剑)
	Name: Luo Jian (罗剑)
	Title: Director
HK CO:	Spark Education (Hongkong) Limited
	By:	/s/ Luo Jian (罗剑)
	Name: Luo Jian (罗剑)
	Title: Director
BEIJING WFOE:	Beijing Spark Education and Technology co., Ltd. (北京火花思维教育科技有限公司)
	By:	/s/ Luo Jian (罗剑)
	Name: Luo Jian (罗剑)
	Title: Legal Representative
	Affix Seal:
TIANJIN WFOE:	Tianjing Spark Education and Technology co., Ltd. (天津火花思维教育科技有限公司)
	By:	/s/ Ge Qing (葛青)
	Name: Ge Qing (葛青)
	Title: Legal Representative
	Affix Seal:

Signature Page to shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

DOMESTIC COMPANY:	Beijing Xingengyuan Technology Ltd. (北京心更远科技发展有限公司)
	By:	/s/ Luo Jian (罗剑)
	Name: Luo Jian (罗剑)
	Title: Legal Representative
	Affix Seal:
BEIJING CO:	Beijing Spark Juli Education Consulting Co., Ltd. (北京火花聚力教育咨询有限公司)
	By:	/s/ Wang Xiaonan (王霄楠)
	Name: Wang Xiaonan (王霄楠)
	Title: Legal Representative
	Affix Seal:
WUHAN CO:	Wuhan Spark Education Consulting Co., Ltd. (武汉火花思维教育咨询有限公司)
	By:	/s/ Luo Jian (罗剑)
	Name: Luo Jian (罗剑)
	Title: Legal Representative
	Affix Seal:

Signature Page to shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

Founder Parties:

Venus Mission Limited
By:	/s/ Luo Jian
Name: Luo Jian (罗剑)
Title: Director
Luo Jian (罗剑)
By:	/s/ Luo Jian
Fun Kingdom Limited
By:	/s/ Shan Zebing
Name: Shan Zebing (单泽兵)
Title: Director
Shan Zebing (单泽兵)
By:	/s/ Shan Zebing

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

ANGEL PARTY:	Kun Yu Holding Limited
	By:	/s/ ZHENG, Chengzhen
	Name: ZHENG, Chengzhen 郑成溱
	Title: Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTORS:	IDG China Venture Capital Fund IV L.P.
	By: IDG China Venture Capital Fund IV Associates L.P., Its General Partner
	By: IDG China Venture Capital Fund GP IV Associates Ltd., Its General Partner
	By:	/s/ Chi Sing HO
	Name: Chi Sing HO
	Title: Authorized Signatory
	IDG China IV Investors L.P.
	By: IDG China Venture Capital Fund GP IV Associates Ltd., Its General Partner
	By:	/s/ Chi Sing HO
	Name: Chi Sing HO
	Title: Authorized Signatory

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR & ANGEL PARTY:	Lightspeed China Partners III, L.P.
	By: Lightspeed China Partners III GP, LLC,
	Its General Partner
	By:	/s/ Qun Mi
	Title: Managing Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	LFC Investment Hong Kong Limited
	By:	/s/ Duoduo Yi
	Title: Authorized Signatory

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTORS:	Hike Capital L.P.
	By:	/s/ Shi Xu
	Title: Authorized Signatory
	Spruce Fund L.P.
	By:	/s/ Shi Xu
	Title: Authorized Signatory
	HIKE HELIOS L.P.
	By:	/s/ Shi Xu
	Title: Authorized Signatory
	HIKE CAPITAL II L.P.
	By:	/s/ Shi Xu
	Title: Authorized Signatory
	HIKE HERA L.P.
	By:	/s/ Shi Xu
	Title: Authorized Signatory

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	ANG YUE GLOBAL LIMITED
	By:	/s/ Hongli Tee
	Title: Authorized Signatory

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR & ANGEL PARTY:	GSR VENTURES VI (SINGAPORE) PTE. LTD.
	By:	/s/ Xiaohu Zhu
	Title: Authorized Signatory
	GSR Chop. Notwithstanding any other provision in this Agreement, this Agreement shall not be effective unless and until GSR VENTURES VI (SINGAPORE) PTE. LTD. has affixed its chop on the appropriate signature page hereof.
INVESTOR:	GSR 2017 Opportunities (Singapore) Pte. Ltd.
	By:	/s/ Xiaohu Zhu
	Title: Authorized Signatory
	GSR CHOP. Notwithstanding any other provision in this Agreement, this Agreement shall not be effective unless and until GSR 2017 OPPORTUNITIES (SINGAPORE) PTE. LTD. has affixed its chop on the appropriate signature page hereof.

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	Venus Mission Limited
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	Universe Sourcecode Technology Ltd.
	By:	/s/ XU Peng
	Name: XU Peng
	Title: Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTORS:	SCC Venture VI Holdco, Ltd.
	By:	/s/ Ip Siu Wai Eva
	Name: Ip Siu Wai Eva
	Title: Authorized Signatory
	Date:
	Sequoia Capital CV IV Holdco, Ltd.
	By:	/s/ Ip Siu Wai Eva
	Name: Ip Siu Wai Eva
	Title: Authorized Signatory
	Date:
	SCC Venture VII Holdco, Ltd.
	By:	/s/ Ip Siu Wai Eva
	Name: Ip Siu Wai Eva
	Title: Authorized Signatory
	Date:

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	Northern Light Venture Capital V, Ltd.
	By:	/s/ Jeffrey D. Lee
	Name: Jeffrey D. Lee
	Title: Authorized Signatory

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTORS & ANGEL PARTIES:	GGV VII Investments, L.L.C.
	By: GGV Capital VII L.L.C., its Manager
	By:	/s/ Stephen Hyndman
	Name: Stephen Hyndman
	Title: Attorney in Fact
	GGV VII Plus Investments, L.L.C.
	By: GGV Capital VII Plus L.L.C., its Manager
	By:	/s/ Stephen Hyndman
	Name: Stephen Hyndman
	Title: Attorney in Fact

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	ZETA ASIA HOLDINGS PTE. LTD.
	By:	/s/ Yan ChengKang
	Name: Yan ChengKang
	Title: Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	COSMIC BLUE INVESTMENTS LIMITED
	By:	/s/ Hua Su
	Name:
	Title:

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	Tencent Mobility Limited
	By:	/s/ Martin Lau
	Name:
	Title:

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	YUAN Inc
	By:	/s/ Yong Li
	Name:
	Title:

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	CGI VIII Investments
	By:	/s/ Kshitish Ballah
	Name: Kshitish Ballah
	Title: Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	TBP Sparkling Holdings Limited
	By:	/s/ David Lin Ning
	Name:
	Title:

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTOR:	United Strength Delight Limited
	By:	/s/ Zhao John Huan
	Name: Zhao John Huan
	Title: Director

Signature Page to Shareholders’ Agreement – Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

INVESTORS:	Lighthousecap Fellow L.P.
	By:	/s/ Xuanle Zheng
	Name:
	Title:
	Lighthouse International Growth Fund L.P.
	By:	/s/ Xuanle Zheng
	Name:
	Title:

Signature Page to Shareholders’ Agreement – Spark Education Limited

EXHIBIT A

DEFINITIONS

For purposes of this Agreement, capitalized terms shall have the meanings set forth in this Exhibit A.

1. The term “Additional Equity Securities” has the meaning set forth in the Articles.

2. The term “Additional Remaining Shares” has the meaning ascribed to it in Section 6.2(d).

3. The term “Additional Transfer Notice” has the meaning ascribed to it in Section 6.2(c)(i).

4. The term “Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person. In the case of a natural person, the Affiliate also includes (i) such Person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brothers-in-law and sisters-in-law; and (ii) any trust Controlled by or held for the benefit of such Person. The term “affiliated” has the meaning correlative to the foregoing. Notwithstanding the Parties acknowledge and agree that (x) the name “Sequoia Capital” is commonly used to describe a variety of entities (collectively, the “Sequoia Entities”) that are affiliated by ownership or operational relationship and engaged in a broad range of activities related to investing and securities trading and (y) notwithstanding any other provision of this Agreement to the contrary, this Agreement shall not be binding on, or restrict the activities of, any (i) Sequoia Entity outside of the Sequoia China Sector Group, (ii) entity primarily engaged in investment and trading in the secondary securities market; (iii) the ultimate beneficial owner of an Sequoia Entity (or its general partner or ultimate general partner) who is a natural Person, and such Person’s relatives (including but without limitation, such Person’s spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law), (iv) any officer, director or employee of a Sequoia Entity (or its general partner or ultimate general partner) and such Person’s relatives, and (v) for the avoidance of doubt, any portfolio companies of any Sequoia Entity and portfolio companies of any affiliated investment fund or investment vehicle of any Sequoia Entity. For purposes of the foregoing, the “Sequoia China Sector Group” means all Sequoia Entities (whether currently existing or formed in the future) that are principally focused on companies located in, or with connections to, the People’s Republic of China that are exclusively managed by Sequoia Capital.

5. The term “Agreement” has the meaning ascribed to it in the Preamble to this Agreement.

6. The term “Angel Party” or “Angel Parties” has the meaning ascribed to it in the Preamble to this Agreement.

7. The term “ANG YUE” means ANG YUE GLOBAL LIMITED.

8. The term “Anti-Corruption Laws” means any anti-bribery or anti-corruption Laws (including Laws that prohibit the corrupt payment, giving, offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any Government Official, commercial entity or any other Person to obtain a business advantage) applicable to the Group and its operations from time to time, including without limitation (i) the U.S. Foreign Corrupt Practices Act of 1977, (ii) the UK Bribery Act of 2010, (iii) any legislation adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and (iv) any similar Laws in any other jurisdiction in which any Group Company operates, in each case as amended from time to time.

9. The term “Anti-Corruption Prohibited Activity” means offering, paying, promising to pay or authorizing the payment of any money or the giving of anything of value to any Government Official, or to any other Person, for the purpose of (i) influencing any act or decision of such Government Official in his official capacity, (ii) inducing such Government Official to do or omit to do any act in relation to his lawful duty, (iii) securing any improper advantage, or (iv) inducing such Government Official to influence of affect any act or decision of any Governmental Authority, in each case, in order to assist the Person carrying out such activity in obtaining or retaining business for or with, or in directing business to, any Person, or any other activity prohibited by any Anti-Corruption Laws.

10. The term “Anti-Money Laundering Laws” means any anti-money laundering-related Laws and codes of practice applicable to the Group and its operations from time to time, including without limitation (i) the EU Anti-Money Laundering Directives and any laws, decrees, administrative orders, circulars, or instructions implementing or interpreting the same, and (ii) the applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transaction Reporting Act of 1970.

11. The term “Articles” means the Company’s Eleventh Amended and Restated Memorandum and Articles of Association, as amended from time to time.

12. The term “Assumption Agreement” has the meaning ascribed to it in the Preamble to Exhibit C.

13. The term “Auditor” means an accounting firm retained by the Company to audit the annual financial statements of the Company in accordance with IFRS or US GAAP.

EXHIBIT A

14. The term “Beijing Co” has the meaning ascribed to it in the Preamble to this Agreement.

15. The term “Beijing WFOE” has the meaning ascribed to it in the Preamble to this Agreement.

16. The term “Board” or “Board of Directors” means the Company’s Board of Directors.

17. The term “Budget” has the meaning ascribed to it in Section 3.1(d).

18. The term “Business” means the businesses of live online educational courses for children aged 3-12 conducted by the Company, its consolidated subsidiaries and the PRC Companies;

19. The term “Business Day” means any day, other than a Saturday, Sunday or other day on which the commercial banks in Cayman Islands, the U.S.A., Hong Kong or PRC are authorized or required to be closed for the conduct of regular banking business.

20. The term “Carlyle” means CGI VIII Investments.

21. The term “Class A Ordinary Share” means the class A ordinary shares in the capital of the Company with a par value of US$0.0001 per share having the rights set out in the Articles.

22. The term “Class B Ordinary Share” means the class B ordinary shares in the capital of the Company with a par value of US$0.0001 per share having the rights set out in the Articles.

23. The term “Chairman Director” has the meaning ascribed to it in Section 5.1(g).

24. The term “Completion” has the meaning ascribed to it in the Series E-3 Purchase Agreement.

25. The term “Company” has the meaning ascribed to it in the Preamble to this Agreement.

26. The term “Company First Refusal Period” has the meaning ascribed to it in Section 6.2(b).

27. The term “Company Law” means the Companies Law (as amended) of the Cayman Islands.

28. The term “Company Restricted Person” means (i) any Person which operates any of the businesses listed on Exhibit G attached hereto and/or (ii) any Affiliate of such Person.

29. The term “Competitors” has the meaning ascribed to it in Section 6.7.

30. The term “Confirmation Notice” has the meaning ascribed to it in Section 6.2(e).

31. The term “Contract” means, as to any Person, any contract, agreement, undertaking, understanding, indenture, note, bond, loan, instrument, lease, mortgage, deed of trust, franchise, or license to which such Person is a party or by which such Person or any of its property is bound, whether oral or written.

32. The term “Control” or “control” of a given Person means the power or authority, whether exercised or not, to direct the business, management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, which power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such Person; the terms “Controlling” and “Controlled” (and their lower-case counterparts) have meanings correlative to the foregoing.

33. The term “COSMIC BLUE” means COSMIC BLUE INVESTMENTS LIMITED.

34. The term “COSMIC BLUE Additional Confirmation Notice” has the meaning ascribed to it in Section 6.2(d).

35. The term “COSMIC BLUE Additional Offer Notice” has the meaning ascribed to it in Section 4.1(d).

36. The term “COSMIC BLUE Additional Offer Notice Period” has the meaning ascribed to it in Section 4.1(d).

37. The term “COSMIC BLUE Additional Re-allotment Notice” has the meaning ascribed to it in Section 6.2(f).

38. The term “COSMIC BLUE Remaining Securities” has the meaning ascribed to it in Section 4.1(d).

39. The term “COSMIC BLUE Remaining Transfer Shares” has the meaning ascribed to it in Section 6.2(f).

40. The term “COSMIC BLUE Restricted Period” shall mean the period commencing from the date of the Completion till the later of (i) the expiration of eighteenth (18th) months after April 14, 2020; and (ii) if the shareholding percentage in the Company calculated on an as-converted and fully-diluted basis of COSMIC BLUE reaches ten percent (10%) in any time during the period set forth in (i) above, the date such shareholding percentage decreases to less than ten percent (10%).

41. The term “COSMIC BLUE Restricted Person” has the meaning ascribed to it in Section 4.1(d).

EXHIBIT A

42. The term “COSMIC BLUE Trigger Event” has the meaning ascribed to it in Section 7.9(i).

43. The term “Conversion Shares” means Class A Ordinary Shares issued or issuable upon conversion of any Preferred Shares.

44. The term “Co-Sale Closing” has the meaning ascribed to it in Section 6.3(c).

45. The term “Co-Sale Eligible Holder” has the meaning ascribed to it in Section 6.3(a).

46. The term “Co-Sale Eligible Shares” has the meaning ascribed to it in Section 6.3(a).

47. The term “Co-Sale Period” has the meaning ascribed to it in Section 6.3(a).

48. The term “Directors” means the members of the Board of Directors.

49. The term “Domestic Company” has the meaning ascribed to it in the Preamble to this Agreement.

50. The term “Domestic Subsidiaries” has the meaning ascribed to it in the Preamble to this Agreement.

51. The term “Eligible Holder” has the meaning ascribed to it in Section 6.2(a).

52. The term “Equity Securities” means, with respect to any Person that is a legal entity, any and all shares of capital stock, membership interests, units, profits interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment, conversion privilege, preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing.

53. The term “ESOP” has the meaning ascribed to it in Section 7.1.

54. The term “ESOP Shares” means the Shares subject to the then applicable ESOP plan of the Company.

55. The term “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any comparable law of any other jurisdiction in which the Company’s Shares are subject to regulation.

56. The term “Exercising Investor” has the meaning ascribed to it in Section 6.2(d).

57. The term “Export Control Laws” means the U.S. Export Administration Act, U.S. Export Administration Regulations, U.S. Arms Export Control Act, U.S. International Traffic in Arms Regulations, and their respective implementing rules and regulations and the U.K. Export Control Act 2002 (as amended and extended by the Export Control Order 2008) and its implementing rules and regulations.

58. The term “Form S-3” or “Form F-3” means such form under the Securities Act as in effect on the date hereof (including Form S-3 or Form F-3, as appropriate) or any registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

59. The term “Founder” or “Founders” has the meaning ascribed to it in the Schedule 1-K to this Agreement.

60. The term “Founder Holdco” or “Founder Holdcos” has the meaning ascribed to it in the Schedule 1-K to this Agreement.

61. The term “Founder Party” or “Founder Parties” has the meaning ascribed to it in the Preamble to this Agreement.

62. The term “GGV” means GGV VII Investments, L.L.C. and GGV VII Plus Investments, L.L.C..

63. The term “GGV Director” has the meaning ascribed to it in Section 5.1(a).

64. The term “Government” or “Governmental Authority” means: (a) any supranational, national, state, city, municipal, county or local government, governmental authority or political subdivision thereof; (b) any agency or instrumentality of any of the authorities referred to in (a) above; (c) any regulatory or administrative authority, body or other similar organization, to the extent that the rules, regulations, standards, requirements, procedures or orders of such authority, body or other organization have the force of Law; (d) any court or tribunal having jurisdiction; and/or (e) the governing body of any stock exchange(s).

65. The term “Government Official” means any officer, employee or other person acting in an official capacity on behalf of (a) any Governmental Authority or any department or agency of a Government, including elected officials, judicial officials, civil servants and military personnel, children, spouses, siblings or parents of a Government Official; (b) any public international organization, such as the World Bank; (c) any company, business or instrumentality that is owned or Controlled by a Governmental Authority; and/or (d) any political party, as well as candidates for political office.

66. The term “Group Companies” means the Company, the HK Co, the Domestic Company, the Domestic Subsidiaries, the WFOEs, and any other direct or indirect Subsidiary of a Group Company collectively, and a Group Company means any one of them.

EXHIBIT A

67. The term “GSR” means GSR Ventures VI (Singapore) Pte. Ltd. and GSR 2017 Opportunities (Singapore) Pte. Ltd.

68. The term “Hike” means Hike Capital L.P., Spruce Fund L.P., HIKE Helios L.P., Hike Capital II L.P. and Hike Hera L.P..

69. The term “HK Co” has the meaning ascribed to it in the Preamble to this Agreement.

70. The term “HKIAC” has the meaning ascribed to it in Section 8.12(b).

71. The term “Holder” means, for purposes of Exhibit B, any person owning or having the rights to acquire Registrable Securities or any permitted assignee of record of such Registrable Securities to whom rights under Exhibit B have been duly assigned in accordance with this Agreement.

72. The term “Hong Kong” means the Hong Kong Special Administrative Region of the PRC.

73. The term “HONY” means United Strength Delight Limited.

74. The term “IDG” means IDG China Venture Capital Fund IV L.P. and IDG China IV Investors L.P.

75. The term “IDG Director” has the meaning ascribed to it in Section 5.1(b).

76. The term “IFRS” mean International Financial Reporting Standards.

77. The term “Immediate Family Member” means a child, stepchild, grandchild, parent, step-parent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a person referred to herein.

78. The term “Initiating Holders” has the meaning ascribed to it in Section 2.2(a) of Exhibit B

79. The term “Investor” or “Investors” has the meaning ascribed to it in the Preamble to this Agreement.

80. The term “IPO” means the Company’s first underwritten public offering of its Ordinary Shares and listing on an internationally-recognized securities exchange.

81. The term “Key Employee” has the meaning set forth in the Series E-3 Purchase Agreement.

82. The term “KKR” means ZETA ASIA HOLDINGS PTE. LTD..

83. The term “KKR Director” has the meaning ascribed to it in Section 5.1(c).

84. The term “LFC” means LFC Investment Hong Kong Limited.

85. The term “Lighthouse” means Lighthousecap Fellow L.P. and Lighthouse International Growth Fund L.P..

86. The term “Lightspeed” means Lightspeed China Partners III, L.P..

87. The term “Liquidation Event” has the meaning ascribed to it in Section 2 of Schedule A of the Articles of the Company.

88. The term “Law” means and includes statutes, enactments, acts of legislature or the parliament, laws, regulations, ordinances, notifications, rules, judgments, Orders, decrees, by-laws, approvals from the concerned authority (including a Governmental Authority), resolutions, directives, guidelines, policies, requirements, or other governmental restrictions or any similar form of decision of, or determination by, or any interpretation or adjudication having the force of law of any of the foregoing, by any concerned Governmental Authority having jurisdiction over the matter in question.

89. The term “Northern Light” means Northern Light Venture Capital V, Ltd..

90. The term “Observer” means a non-voting observer of the Board.

91. The term “Offer Notice” has the meaning ascribed to it in Section 4.1(a).

92. The term “Offer Notice Period” has the meaning ascribed to it in Section 4.1(b).

93. The term “Offeree” has the meaning ascribed to it in Section 4.1.

94. The term “on an as-converted basis” shall mean assuming all issued and outstanding Preferred Shares having been converted into Ordinary Shares.

95. The term “on an as-converted and fully-diluted basis” shall mean assuming the conversion, exercise and exchange of all securities, directly or indirectly, convertible, exercisable or exchangeable into or for Ordinary Shares, including without limitation the Preferred Shares.

96. The term “Option Period” has the meaning ascribed to it in Section 6.2(c)(ii).

EXHIBIT A

97. The term “Ordinary Director” has the meaning ascribed to it in Section 5.1(g).

98. The term “Ordinary Shares” means Class A Ordinary Shares and Class B Ordinary Shares, collectively.

99. The term “Party” or “Parties” has the meaning ascribed to it in the Preamble of this Agreement.

100. The term “Related Parties” means, collectively, (i) the Group Companies, (ii) the Founder Parties, (iii) any entity Controlled by any Founder Party, (iv) the shareholders, officers and directors of each of the foregoing, and (v) the parents, spouses, siblings, children, mother-in-law, father-in-law, brothers-in-law and sisters-in-law of any of the foregoing that is an individual and any Person Controlled by any of the foregoing; and “Related Party” means any of them.

101. The term “Related Party Transaction” means any Contract or other transaction, arrangement or agreement between or among any Related Party, on the one hand, and any Group Company, on the other.

102. The term “Relevant Persons” has the meaning ascribed to it in Section 7.12.

103. The term “Person” means any individual, sole proprietorship, partnership, firm joint venture, estate, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or governmental authority or other entity of any kind or nature.

104. The term “PRC” means the People’s Republic of China, which for purposes of this Agreement excludes Hong Kong, the Macau Special Administrative Region and Taiwan.

105. The term “Preferred Directors” has the meaning ascribed to it in Section 5.1(f).

106. The term “Preferred Shares” mean the Series A Shares, the Series B Shares, the Series B+ Shares, the Series C Shares, the Series D Shares, the Series D+ Shares, the Series E-1 Shares, the Series E-2 Shares and the Series E-3 Shares.

107. The term “Prior Investor” or “Prior Investors” has the meaning ascribed to it in the Preamble to this Agreement.

108. The term “Prior Shareholders’ Agreement” has the meaning ascribed to it in the recitals.

109. The term “Prohibited Transfer” has the meaning ascribed to it in Section 6.5(b).

110. The term “Proposed Transfer” has the meaning ascribed to it in Section 6.2(a).

111. The term “Proposed Transfer Notice” has the meaning ascribed to it in Section 6.2(a).

112. The term “Prospective Transferee” means any Person to whom any Founder Holdco proposes to make a Proposed Transfer.

113. The term “Pro Rata Share” has the meaning ascribed to it in Section 4.1.

114. The term “Pro Rata ROFR Share” has the meaning ascribed to it in Section 6.2(c)(iii).

115. The term “Qualified IPO” means a lawful firm-commitment underwritten public offering and listing by the Company of its Ordinary Shares in the United States or in any other jurisdiction (on any combination of such exchanges and jurisdictions) that has been registered under the Securities Act of 1933, as amended, approved by the Super Preferred Majority Holders and at a public offering price per share corresponding to a pre-IPO valuation of the Company of at least US$2,500,000,000 with gross proceeds to the Company in excess of US$200,000,000 (excluding underwriting discounts, commissions and expenses) or in a substantially similar public offering of Ordinary Shares in a jurisdiction and on an internationally recognized securities exchange outside of the United States approved by the Super Preferred Majority Holders, provided such public offering price, offering proceeds and regulatory approval is reasonably equivalent to the aforementioned public offering in the United States. For avoidance of doubts, the cost of the Qualified IPO shall be borne by the Company, and the commissions shall be borne by the respective selling shareholders.

116. The term “Re-allotment Exercise Period” has the meaning ascribed to it in Section 6.2(e).

117. The term “Re-allotment Notice” has the meaning ascribed to it in Section 6.2(d).

118. The term “register,” “registered,” and “registration” refers to a registration effected by preparing and filing a registration statement which is in a form which complies with, and is declared effective by the SEC in accordance with, the Securities Act.

119. The term “Registrable Securities” means: (1) any Ordinary Shares of the Company issued or issuable pursuant to conversion of any Preferred Shares, (2) any Ordinary Shares of the Company issued (or issuable upon the conversion or exercise of any warrant, right or other security which is issued) as a dividend or other distribution with respect to, or in exchange for or in replacement of, any Preferred Shares, and (3) any other Ordinary Shares owned or hereafter acquired by the Investors. Notwithstanding the foregoing, “Registrable Securities” shall exclude any Registrable Securities sold by a person in a transaction in which rights under Exhibit B are not assigned in accordance with this Agreement and any Registrable Securities which are sold in a registered public offering under the Securities Act or analogous statute of another jurisdiction, or sold pursuant to Rule 144 promulgated under the Securities Act or analogous rule of another jurisdiction.

EXHIBIT A

120. The term “Registrable Securities then Outstanding” means the number of Ordinary Shares of the Company that are Registrable Securities and are then issued and outstanding, issuable upon conversion of Preferred Shares then issued and outstanding or issuable upon conversion or exercise of any warrant, right or other security then outstanding.

121. The term “Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 2, 3 and 4 of Exhibit B, including, without limitation, all registration and filing fees, printing expenses, fees, and disbursements of counsel for the Company, reasonable fees and disbursements of one (1) counsel for the Holders, “blue sky” fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

122. The term “Remaining Shares” has the meaning ascribed to it in Section 6.2(c)(i).

123. The term “Request Notice” has the meaning ascribed to it in Section 2.1 of Exhibit B.

124. The term “Restricted Shareholder” or “Restricted Shareholders” has the meaning ascribed to it in Section 6.1(b).

125. The term “Restructuring Documents” has the meaning set forth in the Series E-3 Purchase Agreement.

126. The term “Right of Co-Sale” has the meaning ascribed to it in Section 6.3(a).

127. The term “Right of First Refusal” has the meaning ascribed to it in Section 6.2.

128. The term “Rule 144” means Rule 144 promulgated by the SEC under the Securities Act (or comparable law in a jurisdiction other than the United States).

129. The term “Sanctioned Person” means (a) any Person that is the subject or target of Sanctions (including but not limited to any Person that is designated on the list of “Specially Designated Nationals and Blocked Persons” administered by the U.S. Treasury Department’s Office of Foreign Assets Control, or on any list of any economic or financial sanctions administered by the U.S. State Department, the United Nations, the European Union or any member state thereof, the United Kingdom, or any similar list maintained by, or public announcement of Sanctions designation made by, any applicable national economic sanctions authority), (b) any government, national, or resident of, or legal entity located in or organized under, the laws of a country or territory which is the subject of country- or territory-wide Sanctions (including without limitation Cuba, Iran, North Korea, Syria, or the Crimea region of Ukraine), (c) any Person who is owned 50% (fifty percent) or more, or Controlled, by any of the foregoing, or (d) any Person with whom business transactions, including exports and re-exports, would violate Sanctions.

130. The term “Sanctions” means all trade, economic and financial sanctions Laws administered, enacted or enforced from time to time by (i) the United States (including without limitation the Department of Treasury, Office of Foreign Assets Control and the United States Department of State), (ii) the European Union and enforced by its member states, (iii) the United Nations, (iv) the United Kingdom (including without limitation Her Majesty’s Treasury), or (v) any other similar Governmental Authority with regulatory authority over the Company or any its Subsidiary from time to time.

131. The term “SCC” means SCC Venture VI Holdco, Ltd., Sequoia Capital CV IV Holdco, Ltd. and SCC Venture VII Holdco, Ltd.

132. The term “SCC Capital” means Sequoia Capital CV IV Holdco, Ltd.

133. The term “SCC Director” has the meaning ascribed to it in Section 5.1(d).

134. The term “SCC Venture” means SCC Venture VI Holdco, Ltd.

135. The term “SCC Venture VII” means SCC Venture VII Holdco, Ltd.

136. The term “SEC” means the United States Securities and Exchange Commission, or comparable regulatory authority in any other jurisdiction having oversight over the trading of the Company’s Shares.

137. The term “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, (or comparable law in a jurisdiction other than the United States).

138. The term “Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities pursuant to Sections 2, 3 and 4 of Exhibit B.

139. The term “Series A Shares” means series A redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

140. The term “Series B Shares” means series B redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

141. The term “Series B+ Majority Holders” shall mean the holders of at least a simple majority (1/2) of the votes carried by the then outstanding Series B+ Shares, voting as a separate class.

EXHIBIT A

142. The term “Series B+ Shares” means series B+ redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

143. The term “Series C Majority Holders” shall mean the holders of at least a simple majority (1/2) of the votes carried by the then outstanding Series C Shares, voting as a separate class.

144. The term “Series C Shares” means series C redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

145. The term “Series D Shares” means series D redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

146. The term “Series D+ Shares” means series D+ redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

147. The term “Series E-1 Shares” means series E-1 redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

148. The term “Series E-2 Shares” means series E-2 redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

149. The term “Series E-2 Share Subscription Agreement” means that certain share subscription agreement entered into by and among the Company, the Founders, the Founder Holdcos and certain other parties thereto, dated September 18, 2020, regarding the issuance of Series E-2 Shares.

150. The term “Series E-3 Majority Holders” shall mean the holders of at least a simple majority (1/2) of the votes carried by the then outstanding Series E-3 Shares, voting as a separate class.

151. The term “Series E-3 Purchase Agreement” has the meaning ascribed to it in the Preamble to this Agreement.

152. The term “Series E-3 Shares” means series E-3 redeemable convertible preferred shares of the Company, par value US$0.0001 per share.

153. The term “Shareholder” shall mean each of the holders of Ordinary Shares and Preferred Shares.

154. The term “Share Restriction Agreements” has the meaning set forth in the Series E-3 Purchase Agreement.

155. The term “Shares” means (i) Ordinary Shares (whether now outstanding or hereafter issued in any context), (ii) Preferred Shares, and (iii) Ordinary Shares issued or issuable upon exercise or conversion, as applicable, of share options, warrants or other convertible securities of the Company, in each case now owned or subsequently acquired by any Party herein or its successors or permitted transferees or assignees.

156. The term “Subsidiary” or “subsidiary” means, as of the relevant date of determination, with respect to any Person (the “subject entity”), (i) any Person: (1) more than 50% of whose shares or other interests entitled to vote in the election of directors or (2) more than a fifty percent (50%) interest in the profits or capital of such Person are owned or Controlled directly or indirectly by the subject entity or through one (1) or more Subsidiaries of the subject entity, (ii) any Person whose assets, or portions thereof, are consolidated with the net earnings of the subject entity and are recorded on the books of the subject entity for financial reporting purposes in accordance with IFRS or US GAAP, or (iii) any Person with respect to which the subject entity has the power to otherwise direct the business and policies of that entity directly or indirectly through another subsidiary. For the avoidance of doubt, the Subsidiaries of the Company shall include the Group Companies.

157. The term “Super Preferred Majority Holders” shall mean the holders of at least two-thirds (2/3) of the votes carried by the then outstanding Preferred Shares, voting as a single and separate class, and on as-converted basis.

158. The term “Super Series A Majority Holders” shall mean the holders of at least two-thirds (2/3) of the votes carried by the then outstanding Series A Shares, voting as a separate class.

159. The term “Super Series B Majority Holders” shall mean the holders of at least two-thirds (2/3) of the votes carried by the then outstanding Series B Shares, voting as a separate class.

160. The term “Super Series D Majority Holders” shall mean the holders of at least eighty-five percent (85%) of the votes carried by the then outstanding Series D Shares and Series D+ Shares, voting as a separate class, and on as-converted basis.

161. The term “Super Series E Majority Holders” shall mean the holders of at least eighty percent (80%) of the votes carried by the then outstanding Series E-1 Shares and Series E-2 Shares, voting as a separate class, and on as-converted basis.

162. The term “TBP” means TBP Sparkling Holdings Limited.

EXHIBIT A

163. The term “TBP Director” has the meaning ascribed to it in Section 5.1(f).

164. The term “Tencent” means Tencent Mobility Limited.

165. The term “Tencent Additional Re-allotment Notice” has the meaning ascribed to it in Section 7.3(c)(ii).

166. The term “Tencent Director” has the meaning ascribed to it in Section 5.1(e).

167. The term “Tencent’s Option of Asset Transfer” has the meaning ascribed to it in Section 7.3(d).

168. The term “Tencent’s Option of Share Transfer” has the meaning ascribed to it in Section 7.3(b).

169. The term “Tencent’s Option Period of Share Transfer” has the meaning ascribed to it in Section 7.3(b).

170. The term “Tencent Re-allotment Shares” has the meaning ascribed to it in Section 7.3(c)(ii).

171. The term “Tencent Restricted Person” means the Persons set forth on Exhibit F.

172. The term “Tencent Restricted Person Share Transfer” has the meaning ascribed to it in Section 7.3(b).

173. The term “Tencent Restricted Person Share Transfer Notice” has the meaning ascribed to it in Section 7.3(b).

174. The term “Tencent Restricted Person Transferor” has the meaning ascribed to it in Section 7.3(b).

175. The term “Tencent Restricted Person Transfer Shares” has the meaning ascribed to it in Section 7.3(b).

176. The term “Tencent’s Option Period of Asset Transfer” has the meaning ascribed to it in Section 7.3(d).

177. The term “Tencent Restricted Person Asset Transfer” has the meaning ascribed to it in Section 7.3(d).

178. The term “Tencent Restricted Person Asset Transfer Notice” has the meaning ascribed to it in Section 7.3(d).

179. The term “Tencent Restricted Person Transfer Assets” has the meaning ascribed to it in Section 7.3(d).

180. The term “Tianjin WFOE” has the meaning ascribed to it in the Preamble to this Agreement.

181. The term “Transfer” has the meaning ascribed to it in Section 6.1(a).

182. The term “Transfer Shares” has the meaning ascribed to it in Section 6.2(a).

183. The term “Transferor” has the meaning ascribed to it in Section 6.2(a).

184. The term “US$” means the United States dollar, the lawful currency of the United States of America.

185. The term “Universe Sourcecode” means Universe Sourcecode Technology Ltd..

186. The term “Violation” means losses, claims, damages, or liabilities (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act or other applicable laws of the United States or other relevant jurisdictions, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations: (i) any untrue statement or alleged untrue statement of a material fact contained in a registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by any other party hereto, of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act, any state securities law, or other applicable laws of the United States or other relevant jurisdictions.

187. The term “WFOEs” has the meaning ascribed to it in the Preamble to this Agreement.

188. The term “Wuhan Co” has the meaning ascribed to it in the Preamble to this Agreement.

189. The term “YUAN” means YUAN Inc.

EXHIBIT A

EXHIBIT B

REGISTRATION RIGHTS

1. APPLICABILITY OF RIGHTS; NON-U.S. REGISTRATIONS

1.1 The Holders (as defined below) shall be entitled to the following rights with respect to any potential public offering of the Company’s Ordinary Shares in the United States and shall be entitled to reasonably analogous or equivalent rights with respect to any other offering of Company securities in any other jurisdiction pursuant to which the Company undertakes to publicly offer or list such securities for trading on a recognized securities exchange.

1.2 For purposes of this Agreement and Exhibit B, reference to registration of securities under the Securities Act and the Exchange Act shall be deemed to mean the equivalent registration in a jurisdiction other than the United States as designated by such Holders, it being understood and agreed that in each such case all references in this Agreement to the Securities Act, the Exchange Act and rules, forms of registration statements and registration of securities thereunder, U.S. law and the SEC, shall be deemed to refer, to the equivalent statutes, rules, forms of registration statements, registration of securities and laws of and equivalent government authority in the applicable non-U.S. jurisdiction.

1.3 All reference in this Exhibit B to designated “Sections” and other subdivisions are to the designated Sections and other subdivisions of the body of this Exhibit B, unless explicitly stated otherwise.

2. DEMAND REGISTRATION

2.1 Request by Holders

If the Company shall, at any time after the earlier of (i) five (5) years after the Completion or (ii) six (6) months following the taking effect of a registration statement for a Qualified IPO, receive a written request from the Holders of Preferred Shares that the Company file a registration statement under the Securities Act covering the registration of at least thirty percent (30%) of the Registrable Securities pursuant to this Section 2, then the Company shall, within ten (10) Business Days of the receipt of such written request, give written notice of such request (the “Request Notice”) to all Holders, and use its best efforts to effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered and included in such registration by written notice given by such Holders to the Company within twenty (20) days after receipt of the Request Notice, subject only to the limitations of this Section 2; provided that the Company shall not be obligated to effect any such registration if the Company has, within the six (6) month period preceding the date of such request, already effected a registration under the Securities Act pursuant to this Section 2 or Section 4 or in which the Holders had an opportunity to participate pursuant to the provisions of Section 3, other than a registration from which the Registrable Securities of the Holders have been excluded (with respect to all or any portion of the Registrable Securities the Holders requested be included in such registration) pursuant to the provisions of Sections 2.2(b) or 3.2(b).

2.2 Underwriting

(a) If the Holders initiating the registration request under this Section 2 (the “Initiating Holders”) intend to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to this Section 2 and the Company shall include such information in the Request Notice. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Holders of a majority of the Registrable Securities being registered and reasonably acceptable to the Company.

EXHIBIT B

(b) Notwithstanding any other provision of this Section 2, if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten then the Company shall so advise all Holders of Registrable Securities which would otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be reduced as required by the underwriter(s) and allocated (i) first, to the Investors on a pro rata basis and (ii) then, to the other Holders of Registrable Securities on a pro rata basis according to the number of Registrable Securities then Outstanding held by each such Holder requesting registration; provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities are first entirely excluded from the underwriting and registration including, without limitation, all shares that are not Registrable Securities and are held by any other person, including, without limitation, any person who is an employee, officer or director of the Company or any subsidiary of the Company; provided further, that at least twenty-five percent (25%) of shares of Registrable Securities requested by the Holders to be included in such underwriting and registration shall be so included. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. Notwithstanding the foregoing, in the event of such marketing limitations provided in such Section 2.2(b), the Investors shall have the right to include shares in preference to any other holders of securities. No Person shall be granted registration rights on parity with or superior to those of the Investors, without the prior consent of the Super Preferred Majority Holders.

2.3 Maximum Number of Demand Registrations

The Company shall not be obligated to effect more than two (2) such registrations pursuant to this Section 2.

2.4 Deferral

Notwithstanding the foregoing, if the Company shall furnish to Holders requesting registration pursuant to this Section 2, a certificate signed by the president or chief executive officer of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its shareholders for such registration statement to be filed at such time, then the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period; provided further, that the Company shall not register any other of its shares during such ninety (90) day period. A demand right shall not be deemed to have been exercised until such deferred registration shall have been effected.

3. PIGGYBACK REGISTRATIONS

3.1 The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to any registration under Section 2 or Section 4 or to any employee benefit plan or a corporate reorganization or a transaction in Rule 145 under the Securities Act) and shall afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

3.2 Underwriting

(a) If a registration statement under which the Company gives notice under this Section 3 is for an underwritten offering, then the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder’s Registrable Securities to be included in a registration pursuant to this Section 3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting.

EXHIBIT B

(b) Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, second, to the Investors, third, to the other Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the total number of shares of Registrable Securities then held by each such Holder and fourth, to holders of other securities of the Company; provided, however, that the right of the underwriter(s) to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that (i) the number of Registrable Securities included in any such registration is not reduced below twenty-five percent (25%) of the aggregate number of shares of Registrable Securities for which inclusion has been requested; and (ii) all shares that are not Registrable Securities and are held by any other person, including, without limitation, any person who is an employee, officer or director of the Company (or any subsidiary of the Company) shall first be excluded from such registration and underwriting before any Registrable Securities are so excluded, unless otherwise approved by the holders of a majority of the Registrable Securities. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

3.3 Not Demand Registration

Registration pursuant to this Section 3 shall not be deemed to be a demand registration as described in Section 2 above.

4. FORM F-3 REGISTRATION

In case the Company shall receive from any Holder or Holders of a majority of all Registrable Securities then Outstanding a written request or requests that the Company effect a registration on Form F-3 (or an equivalent registration in a jurisdiction outside of the United States) and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then the Company will act upon the requirements set forth in Sections 4.1, 4.2, 4.3 and 4.4 accordingly.

4.1 Notice

Promptly give written notice of the proposed registration and the Holder’s or Holders’ request therefor, and any related qualification or compliance, to all other Holders of Registrable Securities.

4.2 Registration

As soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within twenty (20) days after the Company provides the notice contemplated by Section 4.1; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 4:

(a) if Form F-3 is not available for such offering by the Holders;

(b) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an anticipated aggregate offering price net of discounts and commissions to the public of less than US$1,000,000;

(c) if the Company shall furnish to the Holders a certificate signed by the president or chief executive officer of the Company stating that in the good faith judgment of the Board of Directors, it would be materially detrimental to the Company and its shareholders for such Form F-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form F-3 registration statement no more than once during any twelve (12) month period for a period of not more than sixty (60) days after receipt of the request of the Holder or Holders under this Section 4; provided that the Company shall not register any of its other shares during such sixty (60) day period;

(d) if the Company has, within the six (6) month period preceding the date of such request, already effected a registration under the Securities Act other than a registration from which the Registrable Securities of Holders have been excluded (with respect to all or any portion of the Registrable Securities the Holders requested be included in such registration) pursuant to the provisions of Sections 2.2 and 3.2; or

EXHIBIT B

(e) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

4.3 Not a Demand Registration

Form F-3 registrations shall not be deemed to be demand registrations as described in Section 2 above.

4.4 Underwriting

If the Holders of Registrable Securities requesting registration under this Section 4 intend to distribute the Registrable Securities covered by their request by means of an underwriting, the provisions of Section 2.2 shall apply to such registration.

5. EXPENSES

All Registration Expenses incurred in connection with any registration pursuant to Sections 2, 3 or 4 (but excluding Selling Expenses) shall be borne by the Company. Each Holder participating in a registration pursuant to Sections 2, 3 or 4 shall bear such Holder’s proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all Selling Expenses or other amounts payable to underwriter(s) or brokers, in connection with such offering by the Holders. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered, unless the Holders of a majority of the Registrable Securities then Outstanding agree that such registration constitutes the use by the Holders of one (1) demand registration pursuant to Section 2 (in which case such registration shall also constitute the use by all Holders of Registrable Securities of one (1) such demand registration); provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company not known to the Holders at the time of their request for such registration and have withdrawn their request for registration with reasonable promptness after learning of such material adverse change, then the Holders shall not be required to pay any of such expenses and such registration shall not constitute the use of a demand registration pursuant to Section 2.

6. OBLIGATIONS OF THE COMPANY

Whenever required to effect the registration of any Registrable Securities under this Agreement the Company shall, as expeditiously as reasonably possible, act upon the requirements set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7 accordingly.

6.1 Registration Statement

Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to ninety (90) days or, in the case of Registrable Securities registered under Form F-3 in accordance with Rule 415 under the Securities Act or a successor rule, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such ninety (90) day period shall be extended for a period of time equal to the period any Holder refrains from selling any securities included in such registration at the request of the underwriter(s), and (ii) in the case of any registration of Registrable Securities on Form F-3 which are intended to be offered on a continuous or delayed basis, such ninety (90) day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold.

6.2 Amendments and Supplements

Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

6.3 Prospectus

Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration.

EXHIBIT B

6.4 Blue Sky

Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.

6.5 Underwriting

In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement in usual and customary form, with the managing underwriter(s) of such offering.

6.6 Notification

Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of (i) the issuance of any stop order by the SEC in respect of such registration statement, or (ii) the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

6.7 Opinion and Comfort Letter

Furnish, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriter(s) for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and (ii) letters dated as of (1) the effective date of the registration statement covering such Registrable Securities and (2) the closing date of the offering from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

7. FURNISH INFORMATION

It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2, 3 or 4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to timely effect the Registration of their Registrable Securities.

8. INDEMNIFICATION

In the event any Registrable Securities are included in a registration statement under Sections 2, 3 or 4, the Company shall act upon the requirements set forth in Sections 8.1, 8.2, 8.3, 8.4 and 8.5 accordingly.

8.1 By the Company

To the extent permitted by law, the Company will indemnify and hold harmless each Holder, its partners, officers, directors, legal counsel, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other United States federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (each a “Violation”):

(a) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;

EXHIBIT B

(b) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or

(c) any violation or alleged violation by the Group Companies of the Securities Act, the Exchange Act, any United States federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any United States federal or state securities law in connection with the offering covered by such registration statement;

and the Company will reimburse each such Holder, its partner, officer, director, legal counsel, underwriter or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 8.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder or any partner, officer, director, counsel, underwriter or controlling person of such Holder.

8.2 By Selling Holders

To the extent permitted by law, each selling Holder will, if Registrable Securities held by Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors, officers, legal counsel or any person who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, legal counsel, controlling person, underwriter or other such Holder, partner or director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other United States federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 8.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further, that in no event shall any indemnity under this Section 8.2 exceed the net proceeds received by such Holder in the registered offering out of which the applicable Violation arises.

8.3 Notice

Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnified party under this Section 8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of liability to the indemnified party under this Section 8 to the extent the indemnifying party is prejudiced as a result thereof, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 8.

EXHIBIT B

8.4 Contribution

In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any indemnified party makes a claim for indemnification pursuant to this Section 8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party in circumstances for which indemnification is provided under this Section 8; then, and in each such case, the indemnified party and the indemnifying party will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that a Holder (together with its related persons) is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by and sold under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company and other selling Holders are responsible for the remaining portion. The relative fault of the indemnifying Party and of the indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying Party or by the indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case: (A) no Holder will be required to contribute any amount in excess of the net proceeds to such Holder from the sale of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

8.5 Survival

The obligations of the Company and Holders under this Section 8 shall survive the completion of any offering of Registrable Securities in a registration statement, regardless of the expiration of any statutes of limitation or extensions of such statutes. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

9. NO REGISTRATION RIGHTS TO THIRD PARTIES

Without the prior written consent of the Holders of a majority in interest of the Registrable Securities then Outstanding, the Company covenants and agrees that it shall not grant, or cause or permit to be created, for the benefit of any person or entity any registration rights of any kind (whether similar to the demand, “piggyback” or Form F-3 registration rights described in this Exhibit B, or otherwise) relating to any securities of the Company which are senior to, or on a parity with, those granted to the Holders of Registrable Securities.

10. RULE 144 REPORTING

With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration or pursuant to a registration on Form F-3, after such time as a public market exists for the Ordinary Shares, the Company agrees to:

(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

(b) File with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

(c) So long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the Company’s initial public offering), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or its qualification as a registrant whose securities may be resold pursuant to Form F-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to Form F-3.

EXHIBIT B

11. MARKET STAND-OFF

Each Shareholder agrees that, so long as it holds any voting securities of the Company, upon request by the Company or the underwriters managing the initial public offering of the Company’s securities, it will not sell or otherwise transfer or dispose of any securities of the Company (other than those permitted to be included in the registration and other transfers to Affiliates permitted by law) without the prior written consent of the Company or such underwriters, as the case may be, for a period of time specified by the representative of the underwriters not to exceed one hundred and eighty (180) days from the effective date of the registration statement covering such initial public offering or the pricing date of such offering as may be requested by the underwriters. The foregoing provision of this Section 11 shall not apply to the sale of any securities of the Company to an underwriter pursuant to any underwriting agreement, and shall only be applicable to the Holders if all officers, directors and holders of one percent (1%) or more of the Company’s outstanding share capital enter into similar agreements, and if the Company or any underwriter releases any officer, director or holder of one percent (1%) or more of the Company’s outstanding share capital from his or her sale restrictions so undertaken, then each Holder shall be notified prior to such release and shall itself be simultaneously released to the same proportional extent. The Company shall require all future acquirers of the Company’s securities holding at least one percent (1%) of the then outstanding share capital of the Company to execute prior to a Qualified IPO a market stand-off agreement containing substantially similar provisions as those contained in this Section 11. Subject to the relevant provisions and restrictions in the applicable laws and regulations, the Company and the Founders hereby covenant that they will take all necessary actions to shorten the period of market stand-off with respect to the Registrable Securities.

12. TERMINATION OF THE COMPANY’S OBLIGATIONS

The Company shall have no obligations pursuant to Sections 2, 3 and 4 with respect to any Registrable Securities proposed to be sold by a Holder in a registration pursuant to Section 2, 3 or 4 more than five (5) years after taking effect of a registration statement for an IPO.

13. Other Provisions

The holders of Ordinary Shares issued or issuable upon the conversion of Preferred Shares shall be entitled to reasonably analogous or equivalent rights with respect to any offering of the Company’s securities in any non-U.S. jurisdiction pursuant to which the Company undertakes to offer publicly or list such securities for trading on a recognized securities exchange.

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EXHIBIT B

EX-10.5

Exhibit 10.5

July 30, 2019

SHARE SUBSCRIPTION AGREEMENT

concerning Ordinary Shares and Series D Shares in

Wan Duoduo Limited

SHARE SUBSCRIPTION AGREEMENT

DATED July 30, 2019

AMONG

(1) Wan Duoduo Limited, a company incorporated in the Cayman Islands with its registered office located at Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands (the “Company”);

(2) Wan Duoduo Hongkong Limited, a company incorporated in the Hong Kong with its registered office located at Unit 806, 8/F, Tower II, Cheung Sha Wan Plaza, 833 Cheung Sha Wan Road, Kowloon, Hong Kong (the “HK Co”);

(3) Wan Le Duo Network Technology (Beijing) Co., Ltd. (玩乐多网络技术（北京）有限公司), a limited liability company incorporated in the PRC with its registered office located at 201-A131, Unit 1, Building No.17, No.3 of Gao Li Zhang Road, Haidian District, Beijing (the “WFOE”);

(4) Beijing Xin Geng Yuan Technology Development Co., Ltd. (北京心更远科技发展有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B202, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Domestic Company”, collectively with the WFOE, the “PRC Companies”);

(5) the parties listed in Part A of Schedule 1 (the “Subscribers”, and each a “Subscriber”);

(6) the parties listed in Part B of Schedule 1 (the “Purchasers”, and each an “Purchaser”, together with the Subscribers, the “Investors”, and each an “Investor”); and

(7) the parties listed in Schedule 2 (the “Founder Parties”, and each a “Founder Party”);

Each of the parties listed above is referred to herein individually as a “Party” and collectively as the “Parties”.

WHEREAS

(A) Immediately prior to the Completion, the Company has an authorized capital of US$50,000 divided into (i) 383,496,821 Ordinary Shares of a par value of US$0.0001 per share, 68,304,281 of which are issued and outstanding; (ii) 22,973,381 Series A Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; 30,994,766 Series B Shares of a par value of US$0.0001 per share; 33,367,574 Series B+ Shares of a par value of US$0.0001 per share, and 29,167,458 Series C Shares of a par value of US$0.0001 per share, all of which are issued and outstanding. All issued and outstanding shares have been fully paid (or credited as fully paid). The capitalization of the Company immediately prior to the Completion Date is set out in Part A of Exhibit B hereto. Further particulars of the Group Companies and the Founder Parties are set out in Schedule 2 and Schedule 3. The Company has adopted an employee share option plan (the “ESOP”), under which the Company has reserved a total of 24,583,734 Ordinary Shares, representing 12.04% of the fully-diluted capitalization of the Company for issuance of restricted shares or issuance of shares pursuant to share options granted under the ESOP, of which 5,218,984 Ordinary Shares has been issued to and held in trust by Venus Mission Limited, the Founder Holdco wholly owned by Luo Jian (“Founder Holdco ESOP Shares”).

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(B) Prior to or on the date of the Completion, the Company has entered into certain share repurchase agreement (the “Share Repurchase Agreement”) with Venus, Fun Kingdom, Wan Duoduo DU Limited and Albert King Limited (collectively, the “Transferors”, and each a “Transferor”), pursuant to which the Company agrees to repurchase from the Transferors, and the Transferors agree to sale and transfer to the Company (the “Repurchase”), a total of 8,580,551 Ordinary Shares at the aggregate consideration of US$12,189,272.36, which shall contain 1,525,575 Ordinary Shares held in trust by Venus Mission Limited.

(C) The Company hereby agrees to issue and sell to each Subscriber and each Subscriber hereby agrees, severally but not jointly to subscribe for and purchase from the Company, the Subscription Shares (as defined below) pursuant to the terms and conditions of this Agreement.

(D) The Company hereby agrees to issue and sell to each Purchaser and each Purchaser hereby agrees, severally but not jointly to subscribe for and purchase from the Company, the Purchased Shares (as defined below) pursuant to the terms and conditions of this Agreement.

(E) NOW IT IS HEREBY AGREED as follows:

1. INTERPRETATION

1.1 In this Agreement, including the Recitals and the Schedules, the following expressions shall, except where the context otherwise requires, have the following meanings:

“Action” has the meaning ascribed to it in Clause 11 of Schedule 4;

“Additional Completion” has the meaning ascribed to it in Clause 3.4;

“Additional Shares” has the meaning ascribed to it in in Clause 3.4;

“Agreement” means this Share Subscription Agreement;

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person, and the term “affiliated” has the meaning correlative to the foregoing. Notwithstanding the Parties acknowledge and agree that (x) the name “Sequoia Capital” is commonly used to describe a variety of entities (collectively, the “Sequoia Entities”) that are affiliated by ownership or operational relationship and engaged in a broad range of activities related to investing and securities trading and (y) notwithstanding any other provision of this Agreement to the contrary, this Agreement shall not be binding on, or restrict the activities of, any (i) Sequoia Entity outside of the Sequoia China Sector Group, (ii) entity primarily engaged in investment and trading in the secondary securities market; (iii) the ultimate beneficial owner of an Sequoia Entity (or its general partner or ultimate general partner) who is a natural Person, and such Person’s relatives (including but without limitation, such Person’s spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law), (iv) any officer, director or employee of a Sequoia Entity (or its general partner or ultimate general partner) and such Person’s relatives, and (v) for the avoidance of doubt, any portfolio companies of any Sequoia Entity and portfolio companies of any affiliated investment fund or investment vehicle of any Sequoia Entity. For purposes of the foregoing, the “Sequoia China Sector Group” means all Sequoia Entities (whether currently existing or formed in the future) that are principally focused on companies located in, or with connections to, the People’s Republic of China that are exclusively managed by Sequoia Capital.

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“Associate” means, with respect to any Person, (1) a corporation or organization (other than the Group Companies) of which such Person is an officer or partner or is, directly or indirectly, the record or beneficial owner of ten percent (10%) or more of any class of Equity Securities of such corporation or organization, (2) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar capacity, or (3) any child, brother, sister, parent or spouse of such Person, or any child, brother, sister, parent of the spouse.

“Balance Sheet Date” has the meaning ascribed to it in Clause 16 of Schedule 4;

“Board” or “Board of Directors” means the board of directors of the Company;

“Business” means the live online educational courses for children aged 3-12 conducted by the Company, its consolidated subsidiaries and the PRC Companies;

“Business Day” means any day, other than a Saturday, Sunday or other day on which the commercial banks in Cayman Islands, Hong Kong or PRC are authorized or required to be closed for the conduct of regular banking business;

“CFC” has the meaning ascribed to it in Clause 6.2(a);

“Code” has the meaning ascribed to it in Clause 6.2(a);

“Completion” has the meaning ascribed to it in Clause 4.1(a);

“Completion Date” has the meaning ascribed to it in Clause 4.1(a);

“Conditions” means the conditions precedent to the Completion set out in Clause 2;

“Consents” includes an approval, authorisation, exemption, filing, licence, order, permission, permit, recording or registration, certificate or declaration, or report or notice to, any Person, including any governmental authority;

“Constitutional Documents” has the meaning ascribed to it in Clause 13 of Schedule 4;

“Control”, “Controls”, “Controlled” (or any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of the management of a Person, whether through the ownership of voting securities, by contract, credit arrangement or proxy, as trustee, executor, agent or otherwise. For the purpose of this definition, a Person shall be deemed to Control another Person if such first Person, directly or indirectly, owns or holds more than 50% of the voting equity interests in such other Person;

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“Conversion Shares” mean the Ordinary Shares issuable upon conversion of any Series D Shares;

“Disclosing Party” has the meaning ascribed to it in Clause 12.3;

“Domestic Company” has the meaning ascribed to it in the preamble;

“Environmental Claim” has the meaning ascribed to it in Clause 19 of Schedule 4;

“Environmental Laws” has the meaning ascribed to it in Clause 19 of Schedule 4;

“ESOP” has the meaning ascribed to it in the recitals;

“ESOP Expansion” has the meaning ascribed to it in Clause 2.1(r);

“Equity Securities” means, with respect to any Person that is a legal entity, any and all shares of capital stock, membership interests, units, profits interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment, conversion privilege, preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing.

“Equity Transfer Documents” has the meaning ascribed to it in Clause 6.6(a);

“Event of Force Majeure” has the meaning ascribed to it in Clause 19;

“Everbay” means EVERBAY INVESTMENT LIMITED;

“Exhibits” mean the exhibits of this Agreement;

“Financial Statements” has the meaning ascribed to it in Clause 16 of Schedule 4;

“FCPA” has the meaning ascribed to it in Clause 26 of Schedule 4;

“Founder” or “Founders” has the meaning set forth in Schedule 2;

“Founder Holdco” or “Founder Holdcos” has the meaning set forth in Schedule 2;

“Founder Holdco ESOP Shares” has the meaning ascribed to it in the recitals;

“Founder Party” or “Founder Parties” has the meaning ascribed to it in the preamble;

“Fun Kingdom” means Fun Kingdom Limited;

“GGV” means GGV VII Investments, L.L.C. and GGV VII Plus Investments, L.L.C. and/or any of its Affiliates;

“GGV Director” has the meaning ascribed to it in Clause 2.1(i);

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“Group Companies” means the Company, the HK Co, the PRC Companies, and their respective Subsidiaries from time to time, particulars of which are set out in Schedule 3;

“Group Company” means any one of them;

“Group Company Contract” has the meaning ascribed to it in Clause 10 of Schedule 4.

“GSR” means GSR 2017 Opportunities (Singapore) Pte. Ltd.;

“Hike” means Hike Capital L.P.;

“HKIAC” has the meaning ascribed to it in Clause 17.3;

“Hong Kong” means the Hong Kong Special Administrative Region of the PRC;

“HK Co” has the meaning ascribed to it in the preamble;

“IDG” means IDG CHINA VENTURE CAPITAL FUND IV L.P. and IDG CHINA IV INVESTORS L.P.;

“Indemnification Agreement” means the director indemnification agreement to be entered into by GGV, the Company and the GGV Director on or before the Completion, substantially in the form and substance as set forth in Exhibit J of this Agreement;

“Indemnifiable Losses” has the meaning ascribed to it in Clause 7.1;

“Indemnitees” has the meaning ascribed to it in Clause 7.1 and “Indemnitee” means any one of them;

“Investor” or “Investors” has the meaning ascribed to it in the preamble;

“Key Employees” means the employees as set forth in the Exhibit C of this Agreement;

“Lightspeed” means Lightspeed China Partners III, L.P.;

“Management Rights Letter” means the management rights letter to be issued by the Company to GGV on or before the Completion, substantially in the form and substance as set forth in Exhibit K of this Agreement;

“Material Adverse Effect” means (i) a material adverse effect on the business (as presently conducted and proposed to be conducted), assets (including intangible assets), affairs, liabilities, condition (financial or otherwise), properties, prospects or results of operations of the Group Companies, taken as a whole; (ii) material impairment of the ability of any Warrantor to any of the Transaction Documents to perform the material obligations of such party under any Transaction Documents; or (iii) material impairment of the validity or enforceability of this Agreement of any other Transaction Documents against any Warrantor hereto or thereto.

“Materials of Environmental Concern” has the meaning ascribed to it in Clause 20 of Schedule 4;

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“Non-Disclosing Parties” has the meaning ascribed to it in Clause 12.3;

“Northern Light” means Northern Light Venture Capital V, Ltd.;

“Onshore Transfer” has the meaning ascribed to it in Clause 2.1(u);

“Ordinary Shares” means ordinary shares of par value of US$0.0001 each in the capital of the Company;

“Person” means any individual, sole proprietorship, partnership, firm joint venture, estate, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or governmental authority or other entity of any kind or nature;

“PRC” means the People’s Republic of China;

“PRC Companies” has the meaning ascribed to it in the preamble;

“PRC GAAP” has the meaning ascribed to it in Clause 16 of Schedule 4;

“Preferred Directors” has the meaning ascribed to it in the Shareholders Agreement.

“Preferred Shareholder” means the holder of Preferred Shares;

“Preferred Shares” means any of the preferred shares of the Company, including the Series A Shares, the Series B Shares, Series B+ Shares, Series C Shares and the Series D Shares;

“Proprietary Assets” has the meaning ascribed to it in Clause 9(a) of Schedule 4;

“Purchase Price” mean US$12,189,272.36 for a total of 5,026,525 Ordinary Share and 3,554,026 Series D Shares;

“Purchased Shares” means a total of 5,026,525 Ordinary Share and 3,554,026 Series D Shares to be issued to the Purchasers pursuant to this Agreement;

“Purchaser” or “Purchasers” has the meaning ascribed to it in the preamble;

“Registered Intellectual Property” has the meaning ascribed to it in Clause 9(a) of Schedule 4;

“Relevant Period” has the meaning ascribed to it in Clause 6.1;

“Repurchase” has the meaning ascribed to it in the recitals;

“Restated M&A” means the sixth amended and restated memorandum and articles of association of the Company as set forth in Exhibit E of this Agreement, and any amendments thereto from time to time;

“Restructuring Documents” means the Exclusive Business Cooperation Agreement, the Equity Interest Pledge Agreement, Exclusive Option Agreement, Exclusive Business Cooperation Agreement, Power of Attorney and Spousal Consents entered into by and among the WFOE, the Domestic Company and/or the shareholders of the Domestic Company dated on or before the Completion, substantially in the form and substance as set out in Exhibit I of this Agreement;

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“Restriction Period” has the meaning ascribed to it in Clause 6.1 (a);

“Returns” has the meaning ascribed to it in Clause 18 (a) of Schedule 4;

“RMB” means Renminbi, the lawful currency of the People’s Republic of China;

“SAFE” means the PRC State Administration of Foreign Exchange;

“SAFE No. 37 Notice” means the Notice on Issues Relating to the Administration of Foreign Exchange in Overseas Investment, Fund-raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies (《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》) issued by the SAFE on July 14, 2014 and any of its implementing measures or guidelines, in relation to the transactions contemplated under this Agreement;

“SCC” means SCC Venture VII Holdco, Ltd.;

“Schedules” means the schedules of this Agreement;

“Series A Shares” means series A redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series B Shares” means series B redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series B+ Shares” means series B+ redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series C Shares” means series C redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series D Shares” means series D redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Shareholders’ Agreement” means the fourth amended and restated shareholders’ agreement to be entered into among the Subscribers, the Company, the HK Co, the PRC Companies, the Founder Parties and certain other parties thereto, substantially in the form and substance as set forth in Exhibit F of this Agreement;

“Shares” means all shares of the Company, including the Ordinary Shares, the Series A Shares, the Series B Shares, Series B+ Shares, Series C Shares and the Series D Shares;

“Share Repurchase Agreement” has the meaning ascribed to it in the recitals;

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“Share Restriction Agreements” means the fourth amended and restated share restriction agreements to be entered into by and among the Subscribers, the Company, each of the Founder Parties respectively and certain other parties thereto, substantially in the form and substance as set forth in Exhibit L of this Agreement;

“Subpart F Income” has the meaning ascribed to it in Clause 6.2(a);

“Subscriber” or “Subscribers” has the meaning ascribed to it in the preamble;

“Subscription Price” means US$50,000,000 for a total of 30,042,483 Series D Shares or US$1.66430988 per Series D Share;

“Subscription Shares” means a total of 30,042,483 Series D Shares to be issued to the Subscribers pursuant to this Agreement;

“Tax Indemnifiable Loss” has the meaning ascribed to it in Clause 7.2;

“Transaction Documents” means this Agreement, Share Repurchase Agreement, the Shareholders’ Agreement, the Restated M&A, the Share Restriction Agreements, the Restructuring Documents, the Indemnification Agreement, the Management Rights Letter, the exhibits attached to any of the foregoing and any other document, certificate, and agreement delivered in connection with the transactions contemplated hereby and thereby.

“Transferor” or “Transferors” has the meaning ascribed to it in the recitals;

“US$” or “US Dollar” means United States dollars, the lawful currency of the United States of America;

“Venus” means Venus Mission Limited.

“Warranties” means the representation, warranties and undertakings as set out in Clause 5 and Schedule 4;

“Warrantors” means the Founder Parties and the Group Companies collectively and

“Warrantor” means any one of them;

“WFOE” has the meaning ascribed to it in the preamble; and

“WFOE Capital Injection Amount” has the meaning ascribed to it in Clause 6.18; and

“Written Resolutions” means the written resolutions of the shareholders of the Company in a form satisfactory to the Subscribers where the shareholders of the Company agree to, among other things, amend the Memorandum and Articles of Association of the Company, and approve the terms and conditions of the Shareholders’ Agreement and the appointment of new directors to the Board of Directors of the Company.

1.2 In this Agreement:

(a) references to recitals, Clauses, sub-Clauses, Schedules and Exhibits are to the Clauses and sub-Clauses of, and the recitals, Schedules and Exhibits to, this Agreement;

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(b) references to any statutory provision or any rule or regulation (whether or not having the force of law) shall be construed as references to the same as amended, varied, modified, consolidated or re-enacted from time to time and to any subordinate legislation made under such statutory provision;

(c) references to parties are to parties of this Agreement;

(d) words importing the singular include the plural and vice versa, words importing one gender include every gender, and references to persons include bodies corporate and unincorporated;

(e) headings are for ease of reference only and shall not affect the interpretation of this Agreement; and

(f) references to a document in the “agreed form” are references to a document the form of which has been or may from time to time be agreed among all parties hereto.

1.3 The recitals, the Schedules and the Exhibits form parts of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement and any reference to this Agreement shall include the Recitals, the Schedules and the Exhibits.

1.4 All references to dates and time are, unless the context requires otherwise, to Hong Kong time.

2. CONDITIONS PRECEDENT

2.1 The obligations of each Investor to purchase its portion of the Subscription Shares and/or the Purchased Shares and pay its portion of the Subscription Price and/or the Purchase Price on the Completion Date in accordance with Clause 3 hereof shall be conditional on the fulfilment of all of the following Conditions (subject to any waiver in written form by such Investor in its absolute discretion of any or all of the Conditions):

(a) the Written Resolutions having been duly approved and passed by the shareholders and the board of directors of the Company and remaining valid and effective as at the Completion, and the Restated M&A, in the form attached hereto as Exhibit E, having been adopted accordingly;

(b) the issue and allotment of the Subscription Shares and the Purchased Shares to the Investors pursuant to the terms of this Agreement, the execution of the Transaction Documents to which it is a party, and the performance of its obligations hereunder and thereunder having been duly approved by the shareholders and directors of the Company;

(c) each of the Founder Holdcos, the PRC Companies and the HK Co having provided to the Investors true copies of the shareholders’ resolutions and/or the board resolutions (as required under laws of its jurisdiction) to approve the execution of the Transaction Documents to which it is a party, and the performance of its obligations hereunder and thereunder;

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(d) execution and delivery of the Shareholders’ Agreement in the form attached hereto as Exhibit F, by the parties to the Shareholders’ Agreement (other than the Investors);

(e) solely with respect to the Subscribers, all the Warranties remaining true and correct at all times as from the signing of this Agreement up to the Completion, as if they were made and repeated on and as of the Completion; while solely with respect to the Purchasers, all the representation and warranties set out in Schedule 4A remaining true and correct at all times as from the signing of this Agreement up to the Completion, as if they were made and repeated on and as of the Completion;

(f) no Material Adverse Effect having occurred, and no event having occurred or arising, and no circumstance existing, that would reasonably be expected to result in a Material Adverse Effect;

(g) no provision of any applicable laws shall prohibit the consummation of any transactions contemplated by the Transaction Documents;

(h) all Consents of any competent governmental authority or of any other Person that are required for the entering into and performance of the Transaction Documents, the ESOP Expansion to be completed at the Completion and the implementation of the transactions therein contemplated having been obtained and remaining valid and effective as at Completion;

(i) the Company having taken all necessary corporate action such that immediately upon the Completion the Board of the Company shall have eight (8) members, of which one (1) director shall be designated by GGV (the “GGV Director”), and the evidence of the foregoing shall have been delivered to GGV;

(j) the Company having delivered to the Investors a copy of the updated Register of Members and Register of Directors of the Company certified by the registered office provider or a director of the Company as required pursuant to Clauses 4.3(e) and (f);

(k) each of the Key Employees having entered into an employment contract, a non-competition, non-solicitation, confidentiality, proprietary information and invention assignment agreement with the appropriate Group Company in substantially the form attached hereto as Exhibit G, Exhibit H-1 and Exhibit H- 2;

(l) except as required or contemplated by this Agreement or the Shareholders’ Agreement, no resolution of the directors or members of any of the Group Companies having been passed nor having any contract or commitment been entered into prior to the Completion without the prior written consent of the Investors, except for the purposes of giving effect to the transactions contemplated by this Agreement, or the Shareholders’ Agreement and except for those made during the ordinary course of business;

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(m) each of the Company and the Founders having delivered to the Investors a certificate of compliance dated the Completion Date and signed by a director of the Company and the Founders certifying that (i) all of the conditions set forth in this Clause 2.1 have been fulfilled and stating that there having been no Material Adverse Effect since the Balance Sheet Date; (ii) all corporate and other proceedings on the part of the Warrantors in connection with the transactions to be completed at the Completion and all documents incident thereto, including without limitation written approval from the board of directors and all of the then current holders of equity interests of each Group Company, as applicable, with respect to this Agreement and the other Transaction Documents shall have been completed, and each Group Company shall have delivered to the Investors all such counterpart copies of such documents as the Investors may reasonably request; (iii) attaching thereto (aa) the Constitutional Documents of the Group Companies as then in effect, (bb) copies of all resolutions approved by the shareholders and boards of directors of each Group Company related to the transactions contemplated hereby, and (cc) copies of good standing certificate with respect to the Company from the applicable authority dated no more than fifteen (15) days prior to the Completion, with respect to the Group Companies which are incorporated under the laws of the PRC, the business licenses of such entity.

(n) all corporate proceedings on the part of the Group Companies in connection with the transactions contemplated at the Completion having been taken to the reasonable satisfaction of the Investors, and the Investors having received all such counterpart originals or certified or other copies of such documents as it may reasonably request;

(o) the Group Companies and the Founder Parties having performed and complied with all agreements, obligations and conditions contained in this Agreement and ancillary agreements that are required to be performed or complied with by them on or before the Completion;

(p) the director indemnification agreement in the form attached hereto as Exhibit J having been duly executed and delivered to the relevant parties;

(q) the management rights letter in form attached hereto as Exhibit K having been duly executed and delivered to the relevant parties;

(r) the Company and the Founder Parties having executed and delivered to the Investors the Share Restriction Agreements in the form attached hereto as Exhibit L;

(s) the Investors having received reasonably satisfactory evidence that the Group Companies have duly obtained all required and appropriate permits and licenses for conducting the Business, except as otherwise provided in this Agreement;

(t) the Company having additionally reserved 6,125,166 Ordinary Shares for issuance pursuant to the ESOP of the Company, and accordingly having the option pool of the Company under the ESOP to be expanded from 24,583,734 Ordinary Shares to 29,183,325 Ordinary Share (the “ESOP Expansion”);

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(u) the Founder(s) shall have signed and delivered share transfer agreements with Du Xueqian (杜雪骞) and Li Ni (李妮) respectively, pursuant to which Du Xueqian (杜雪骞) and Li Ni (李妮) agree to transfer all of their equity interests of the Domestic Company to the Founder(s) (the “Onshore Transfer”), and the shareholders resolutions of the Domestic Company shall been duly passed to approve the Onshore Transfer;

(v) the Company and the Transferors have entered into the Share Repurchase Agreement, the shareholders resolutions of the Company shall been duly passed to approve the Repurchase, and the “Closing” (as defined in the Share Repurchase Agreement) shall have taken place prior to or concurrently with the Closing hereunder; and

(w) each of the Restructuring Documents listed in Exhibit I hereto shall have been duly executed and delivered by the parties thereto.

2.2 In the event that any of the Conditions specified in Clause 2.1 has not been fulfilled (or waived by the Investors in writing) before July 31, 2019 after the signing of this Agreement (or such later date as the Company and the Investors may mutually agree in writing), the obligations of the Investors under this Agreement may be terminated by written notice by any Investor or the Company to other parties, at such Party’s own election and discretion, after which this Agreement shall be of no further force or effect with respect to the Investors.

2.3 Each of the Group Companies and the Founder Parties shall use its best endeavours to procure the fulfilment of the Conditions on or before the date set forth in Clause 2.1.

3. AGREEMENT TO SUBSCRIBE FOR SHARES

3.1 As of the Completion, the Company shall have authorized (a) 500,000,000 shares with par value of US$0.0001 per share, among which, 33,596,509 shares shall be designated as Series D Shares, 29,167,458 shares shall be designated as Series C Shares, 33,367,574 shares shall be designated as Series B+ Shares, 30,994,766 shares shall be designated as Series B Shares, 22,973,381 shares shall be designated as Series A Shares and the other 349,900,312 shares as Ordinary Shares; (b) the issuance, pursuant to the terms and conditions of this Agreement, of 33,596,509 Series D Shares and 5,026,525 Ordinary Shares having the rights, preferences, privileges and restrictions as set forth in the Restated M&A, which shall have been duly adopted by the Company as of the Completion and the Shareholders’ Agreement, and (c) reservation of at least 33,596,509Ordinary Shares for conversion of the Series D Shares and 6,125,166 Ordinary Shares for the ESOP.

3.2 At the Completion, each Subscriber shall pay its portion of the Subscription Price by wire transfer of immediately available funds in the aggregate amount as set forth on Part A of Schedule 1 hereto to the bank account designated by the Company.

3.3 At the Completion, each Purchaser shall pay its portion of the Purchase Price by transfer of immediately available funds in the aggregate amount as set forth on Part B of Schedule 1 hereto to the bank account designated by the Company.

3.4 At the Completion, the Company shall, subject to the terms and conditions of this Agreement, validly allot and issue the Subscription Shares to the Subscribers, free from all charges, liens, encumbrances, equities or other third party rights, claims or interests.

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3.5 At the Completion, the Company shall, subject to the terms and conditions of this Agreement, validly allot and issue the Purchased Shares to the Purchasers, free from all charges, liens, encumbrances, equities or other third party rights, claims or interests.

3.6 At any time and from time to time upon and following the Completion, but in any event no later than fifteen (15) Business Days after the Completion or such longer period agreed by GGV, the Company may, at one or more additional closings (each an “Additional Completion”), offer and sell to other subscriber(s) designated by the Founders and acceptable to GGV up to, in the aggregate, 12,016,993 Series D Shares (the “Additional Shares”) at a per share price equal to the Series D Issue Price (as defined in the Restated M&A) on no more favourable terms and conditions than those being offered to the Subscribers under the Transaction Documents.

4. COMPLETION

4.1 Upon satisfaction (fulfilment or waiver according to Clause 2.2, if any) of the Conditions by the Group Companies and the Founder Parties, the Completion shall take place remotely via exchange of electronic documents and signatures within seven (7) business days after the fulfilment of the conditions as set forth in Clause 2.1 (the “Completion Date”), or at such other place and time as the Company and GGV shall mutually agree in writing (the “Completion”).

4.2 At the Completion, each Subscriber shall, severally but not jointly:

(a) pay to the Company that amount set forth opposite such Subscriber’s name on Part A of Schedule 1 by depositing such amount into the bank account designated by the Company for value on the Completion Date (for avoidance of doubt, the obligations of such Subscriber under Clause 4.2(a) shall be deemed satisfied by the delivery to the Company a copy of the bank confirmation confirming the wiring of relevant portion of Subscription Price to the bank account designated by the Company); and

(b) deliver or procure to be delivered to the Company a counterpart of the Transaction Documents duly executed by the Subscribers.

4.3 At the Completion, each Purchaser shall, severally but not jointly:

(a) pay to the Company that amount set forth opposite such Purchaser’s name on Part B of Schedule 1 by depositing such amount into the bank account designated by the Company for value on the Completion Date (for avoidance of doubt, the obligations of such Purchaser under Clause 4.3(a) shall be deemed satisfied by the delivery to the Company a copy of the bank confirmation confirming the wiring of relevant portion of Purchase Price to the bank account designated by the Company); and

(b) deliver or procure to be delivered to the Company a counterpart of the Transaction Documents duly executed by the Purchasers.

4.4 At the Completion, the Company shall deliver to the Subscribers and Purchasers:

(a) the original or a true copy of the board resolutions of the Company approving:

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(i) this Agreement and other Transaction Documents to which the Company is a party, and the entry into and performance of each of such documents by the Company including the allotment and issue of the Subscription Shares and Purchased Shares in accordance with the terms of this Agreement and the issue and delivery of the share certificates to the Subscribers and Purchasers; and

(ii) the authorized size of the board of directors of the Company shall be up to eight (8), one of which is reserved for the GGV Director.

(b) a true copy of the Written Resolutions;

(c) the certificate of compliance referred to in Clause 2.1(m) as of the Completion Date;

(d) a true copy (with the original to be delivered to the Subscribers and Purchasers as soon as possible after the Completion) of the share certificate issued in the name of the Subscribers and Purchasers for the Subscription Shares and Purchased Shares, duly signed and sealed for and on behalf of the Company;

(e) a copy of the Register of Members of the Company as updated to reflect the Subscription Shares and Purchased Shares being purchased by the Subscribers and Purchasers and the Repurchase, and certified by the registered office provider or a director of the Company;

(f) a copy of the Register of Directors of the Company as updated to reflect the appointment of directors in accordance with Clause 4.4(a)(ii) and certified by the registered office provider or a director of the Company; and

(g) all other documentation the delivery of which is made an express Condition pursuant to Clause 2.1.

5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

5.1 Except as set forth in the Schedule of Exceptions, the Warrantors hereby jointly and severally represent, warrant and undertake to the Subscribers that each of the matters set out in Schedule 4 are as of the date hereof true, complete and correct and will be for all times after the date hereof and up to and including the Completion Date true, complete and correct.

5.2 The Company hereby represents, warrants and undertakes to the Purchasers that each of the matters set out in Schedule 4A are as of the date hereof true, complete and correct and will be for all times after the date hereof and up to and including the Completion Date true, complete and correct.

5.3 Each of the Warranties is without prejudice to any other Warranty and, except where expressly stated otherwise, no provision contained in this Agreement shall govern or limit the extent or application of any other Warranty.

5.4 Each of the Warrantors undertakes to notify the Subscribers in writing as soon as practicable of any matter or event which becomes known to it prior to the Completion which may render any Warranty to be or to have been untrue or inaccurate.

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5.5 The rights and remedies of the Subscribers in respect of a breach of any Warranty shall not be affected by any due diligence review or investigation made by or on behalf of such Subscribers into the affairs of any Group Company.

5.6 Notwithstanding any rule of law or equity to the contrary, any release, waiver or compromise or any other arrangement of any kind whatsoever which the Subscribers may agree to or effect in relation to any of the Warrantors in connection with this Agreement, and in particular the Warranties, shall not affect the rights and remedies of the Subscribers as regards to any other parties.

5.7 Each of the parties hereto hereby severally represents and warrants to the other parties that it has full power and authority to enter into and perform this Agreement; this Agreement when executed and delivered by them shall constitute valid and legally binding obligations of such party enforceable in accordance with their respective terms.

5.8 Each of the Warrantors undertakes, in relation to any Warranty which refers to his /its knowledge or information, that he /it has made best enquiry into the subject matter of that Warranty and that he /it does not have the knowledge or information or belief that the subject matter of that Warranty may not be true, complete or accurate.

5.9 Each of the Warrantors hereby jointly and severally undertakes to the Subscribers to perform and procure the performance of this Agreement, and undertakes to indemnify the Subscribers for any failure to perform this Agreement in accordance with Clause 7 of this Agreement.

6. POST-COMPLETION COVENANTS

Each of the Warrantors hereby jointly and severally covenants to the Subscribers as follows. For avoidance of doubts, the covenants of the Warrantors under this Section 6 is intended solely as part of the inducement and consideration of the Subscribers’ subscription of the Subscription Shares, and shall in no event be deemed to be any part of the inducement and consideration of the Purchasers’ purchase of the Purchased Shares.

6.1 Non-Compete

Each of the Founders acknowledges that the Subscribers agree to invest in the Company and become a Preferred Shareholder on the basis of continued and exclusive services of and full devotion and commitment by him to the Group Companies, and agrees that the Subscribers should have reasonable assurance of such basis of investment. Each of the Founders hereby undertakes to the Subscribers that neither he nor will any of his associates, nominees, trustees or the like directly or indirectly:

(a) during the Relevant Period and for a period of two (2) years after expiration of the Relevant Period (collectively “Restriction Period”), participate, assist, advise, consult, be concerned with, engaged or interested in, any business or entity in any manner, directly or indirectly, alone or in concert with others, which is in competition with the business carried on by any Group Company at any time during the Restriction Period;

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(b) during the Restriction Period, solicit in any manner any person who is or has been during the Restriction Period a customer or client of any Group Company for the purpose of offering to such person any goods or services similar to or competing with any of the businesses conducted by any Group Company at any time during the Restriction Period;

(c) during the Restriction Period, solicit or entice away, or endeavour to solicit or entice away, any employee or officer of any Group Company; or

(d) at any time disclose to any person, or use for any purpose, any information concerning the business, accounts, finance, transactions or Intellectual Property rights of any Group Company or any trade secrets or confidential information of or relating to any of the Group Companies.

Each undertaking in paragraphs (a), (b), (c), and (d) of this Clause 6.1 shall be treated as independent of the other undertakings so that, if any of them is held to be invalid or unenforceable for any reason, the remaining undertakings shall be valid to the extent that they are not affected.

Each of the Founders hereby expressly acknowledges and declares that he has duly considered the undertakings set out in this Clause 6.1 and considers that they are reasonable in the circumstances, and warrants and undertakes to each of the Subscribers that he shall not challenge or query the validity and enforceability of these undertakings.

For the purposes of this Clause 6.1, “Relevant Period” means, in relation to each Founder and/or his associates, nominees, trustees or the like, the period during which he or any of his associates, nominees, trustees or the like is a shareholder, director, employee and/or has any direct or indirect interest (legal or beneficial) in the capital of any of the Group Companies.

6.2 Tax Covenants

The Warrantors jointly and severally undertake to each of the Subscribers that:

(a) Immediately after the Completion, the Company will not be a “Controlled Foreign Corporation” (“CFC”) as defined in the U.S. Internal Revenue Code of 1986, as amended (or any successor thereto) (the “Code”). The Company shall make due inquiry with its tax advisors on at least an annual basis regarding the Company’s status as a CFC and regarding whether any portion of the Company’s income is “subpart F income” (as defined in Section 952 of the Code) (“Subpart F Income”). Each Subscriber shall reasonably cooperate with the Company to provide information about such Subscriber and such Subscriber’s partners in order to enable the Company’s tax advisors to determine the status of such Subscriber and/or any of such Subscriber’s partners as a “United States Shareholder” within the meaning of Section 951(b) of the Code. No later than two (2) months following the end of each Company’s taxable year, the Company shall provide the following information to each of the Subscribers: (i) the Company’s capitalization table as of the end of the last day of such taxable year, and (ii) a report regarding the Company’s status as a CFC. In addition, the Company shall provide each Subscriber with access to such other Company information as may be necessary for such Subscriber to determine the Company’s status as a CFC and to determine whether such Subscriber or any of such Subscriber’s partners is required to report its pro rata portion of the Company’s Subpart F Income on its United States federal income tax return, or to allow such Subscriber or such Subscriber’s partners to otherwise comply with applicable United States federal income tax laws. For purposes of the foregoing, (i) the term “Subscriber’s partners” shall mean such Subscriber’s partners and/or members and any direct or indirect equity owners of such partners and/or members, and (ii) the “Company” shall mean the Company and any of its direct or indirect subsidiaries. In the event that the Company is determined by the Company’s tax advisors or by counsel or accountants for any Subscriber to be a CFC, the Company agrees to use commercially reasonable efforts to avoid generating Subpart F Income. In the event that the Company is determined by the Company’s tax advisors or by counsel or accountants for any Subscriber to be a CFC, the Company agrees to use commercially reasonable efforts to annually make dividend distributions to any Subscriber, to the extent permitted by law, in an amount equal to 50% of any income of the Company that would have been deemed distributed to any Subscriber pursuant to Section 951(a) of the Code had such Subscriber been a “United States person” as such term is defined in Section 7701(a)(30) of the Code.

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(b) The Company has never been, and, to the best of its knowledge after consultation with its tax advisors, will not be with respect to its taxable year during which the Completion occurs, a “passive foreign investment company” within the meaning of Section 1297 of the Code. The Company shall use its best efforts to avoid being a “passive foreign investment company” within the meaning of Section 1297 of the Code. In connection with a “Qualified Electing Fund” election made by any Subscriber or any of such Subscriber’s partners pursuant to Section 1295 of the Code or a “Protective Statement” filed by any Subscriber or any of such Subscriber’s partners pursuant to Treasury Regulation Section 1.1295-3, as amended (or any successor thereto), the Company shall provide annual financial information to such Subscriber in the form provided in Exhibit D hereto (or in such other form as may be required to reflect changes in applicable law) as soon as reasonably practicable following the end of each taxable year of the Company (but in no event later than 90 days following the end of each such taxable year), and shall provide such Subscriber with access to such other Company information as may be required for purposes of filing U.S. federal income tax returns of such Subscriber or such Subscriber’s partners in connection with any such Qualified Electing Fund election or Protective Statement. In the event that any Subscriber or any of such Subscriber’s partner who has made a “Qualified Electing Fund” election must include in its gross income for a particular taxable year its pro rata share of the Company’s earnings and profits pursuant to Section 1293 of the Code, the Company agrees to make a dividend distribution to such Subscriber (no later than 90 days following the end of the Company’s taxable year or, if later, 90 days after the Company is informed by such Subscriber that such Subscriber’s partner has been required to recognize such an income inclusion) in an amount equal to 50% of the amount that would be included by such Subscriber if such Subscriber was a “United States person” as such term is defined in Section 7701(a)(30) of the Code and had such Subscriber made a valid and timely “Qualified Electing Fund” election which was applicable to such taxable year.

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(c) The Company shall take such actions, including making an election to be treated as a corporation or refraining from making an election to be treated as a partnership, as may be required to ensure that at all times the Company is classified as a corporation for United States federal income tax purposes. The Company shall make due inquiry with its tax advisors (and shall cooperate with each Subscriber’s tax advisors with respect to such inquiry) on at least an annual basis regarding whether a Subscriber or any of such Subscriber’s partners are subject to the reporting requirements of either or both of Sections 6038 and 6038B of the Code (and the Company shall duly inform the Subscribers of the results of such determination), and in the event that any Subscriber or any of such Subscriber’s partners are determined by the Company’s tax advisors or any Subscriber’s tax advisors to be subject to the reporting requirements of either or both of Sections 6038 and 6038B, the Company agrees, upon a request from the relevant Subscriber, to provide such information to such Subscriber as may be necessary to fulfil such Subscriber’s or such Subscriber’s partner’s obligations thereunder.

6.3 Regulatory Filings

The Group Companies, the Founder Parties and the other direct or indirect holders or beneficial owners of Ordinary Shares (except for Lightspeed China Partners III, L.P. and GSR Ventures VI (Singapore) Pte. Ltd. and GGV) shall duly complete all filings and registrations with the PRC authorities as required by the applicable laws and regulations, including but not limited to the relevant filing and registrations with the Ministry of Commerce, the Ministry of Industry and Information Technology, the State Administration of Industry and Commerce, the SAFE, tax bureau, customs authority and the local counterpart of each of the aforementioned governmental authorities, in each case, as applicable.

6.4 Filing of Restated M&A

Within fifteen (15) days following the Completion, the Restated M&A together with the special or written shareholders resolutions on approving its adoption shall have been duly filed with the Registrar of Companies of the Cayman Islands.

6.5 Compliance

Each Group Company shall, and the Founder Parties shall cause each Group Company to, comply with all applicable laws in all material respects, including not limited to, applicable PRC laws relating to telecommunication business, software, transportation, Intellectual Property, anti-monopoly, financing, taxation, lease, employment and social welfare and benefits and SAFE No. 37 Notice. Without limiting the generality of the foregoing, as soon as practical after the Completion, each Group Company shall use its best efforts to obtain all licenses, consents, registrations and filings that are necessary to (i) own, lease, license, or use current or future properties and assets, and (ii) to conduct or perform its business in the manner as presently conducted and intended to be conducted. Without prejudicing the generality of the foregoing, after the Completion and upon the written request by GGV, the relevant Group Company shall, and the Founder Parties shall cause such Group Company to, use reasonable best efforts to rectify any non-compliance with applicable laws.

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6.6 Option to Purchase Equity Interest in the Domestic Company

Each of the Subscribers shall have an option, exercisable at its sole discretion respectively by giving notice to the Company of its intention to so exercise at any time after the Completion, to designate an Affiliate which shall be a PRC resident (as defined in SAFE No. 37 Notice), to purchase certain equity interest of the Domestic Company from the then shareholders of the Domestic Company, and the Warrantors shall cause the then shareholders of the Domestic Company to transfer such equity interest of the Domestic Company to such Subscriber or its designated Affiliate, for an aggregate nominal consideration of RMB 1 or at other minimum prices to the extent permitted by applicable laws, so that such Subscriber shall hold the same shareholding percentage in the Domestic Company as it does in the Company.

6.7 Availability of Ordinary Shares.

The Company hereby covenants that at all times there shall be made available, free of any liens, for issuance and delivery upon conversion of the Subscription Shares such number of Ordinary Shares or other shares in the share capital of the Company as are from time to time issuable upon conversion of the Subscription Shares from time to time, and will take all steps necessary to increase its authorized share capital to provide for sufficient number of Ordinary Shares issuable upon conversion of the Subscription Shares.

6.8 Business of the Company and the HK Company.

The business of the Company shall be restricted to the holding of shares or equity interest in the HK Co. The business of the HK Co shall be restricted to the holding of shares or equity interest in the WFOE.

6.9 Business of the PRC Companies.

Prior to entering into any new business other than those in the scope of the Business, each Group Companies shall use its reasonable commercial efforts and take all necessary actions to implement and carry out the new business plan as approved by the Board of Directors of the Company (including the approval of at least two-thirds (2/3) of all Preferred Directors), including, without limitation, hiring employees, renting office space, employing legal and technical consultants and undertaking other customary business activities. From the Completion and until the new business plan is duly amended in accordance with all necessary procedures, the business of the PRC Companies shall be limited to the Business.

6.10 Use of Investor’s Name or Logo.

Without the prior written consent of GGV, and whether or not GGV is then the shareholders of the Company, none of the Group Companies, their shareholders (excluding GGV), nor the Founders shall use, publish or reproduce the names of GGV or any similar names, trademarks or logos in any of their marketing, advertising or promotion materials or otherwise for any marketing, advertising or promotional purposes, except for the fact of the equity investments and shareholding in the Group Companies by GGV (and in any such case shall not disclose the aggregate or individual investment amounts, pricing or ownership percentage, or any of the term of this Agreement, the Shareholders’ Agreement, the Restricted Share Agreements or any other Transaction Documents).

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6.11 D&O Insurance.

Upon the request of GGV Director, the Company shall obtain, at the cost no more than the average market price of such insurance, for the GGV Director insurance against liability for negligence, default, breach of duty or breach of trust incurred in the course of discharging his or her duties as director or officer of the Company, including without limitation, director and officer liability insurance in an agreed insured amount.

6.12 FCPA.

Each of the Warrantors jointly and severally represents that it shall not and shall not permit any of its subsidiaries or Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to promise, authorize or make any payment to, or otherwise contribute any item of value, directly or indirectly, to any third party, including any Non-U.S. Official, in each case, in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. Each of the Founder Parties and the Group Companies further represents that it shall, and shall cause each of its subsidiaries and Affiliates to cease all of its or their respective activities, as well as remediate any actions taken by the Group Companies, its subsidiaries or Affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. Each of the Founder Parties and the Group Companies further represents that it shall and shall cause each of its subsidiaries and Affiliates to maintain systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law.

6.13 Permit and License.

To the extent permitted by the applicable laws, each of the Group Companies and the Founder Parties shall procure each of the Group Companies to, use its best efforts to obtain and maintain in a timely manner all requisite consents and permits for conducting the ordinary course of business or any business to carry out in the future in compliance with all applicable laws.

6.14 Exclusivity.

From the date of this Agreement to the Completion, without the consent of GGV, the Group Companies and the Founder Parties shall not (i) discuss the sale of any securities of any Group Company with any third party, or (ii) to provide any information with respect to any Group Company to any third party in connection with a potential investment by such third party in any securities of any Group Company, or (iii) to close any financing transaction of any securities of any Group Company with any third party.

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6.15 Employee Matters.

The PRC Companies shall use its commercially reasonable efforts to comply with all applicable PRC labour laws and regulations in all material respects, including without limitation, laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, and pensions.

The PRC Companies shall use its commercially reasonable efforts to comply with all applicable PRC education laws and regulations in all material respects, including without limitation, laws and regulations pertaining to the teaching and online education for children and teenagers aged 3-12. The PRC Companies shall use its commercially reasonable efforts to hire employees who have the qualification for the teaching and educations with respect to children and teenagers aged 3-12.

6.16 Tax Matters.

The PRC Companies shall comply with all applicable PRC tax laws and regulations in all material respects, including without limitation, laws and regulations pertaining to income tax, value added tax and business tax.

6.17 Tax Basis in Relation to an Indirect Transfer.

Within one hundred and eighty (180) days following the Completion, all of the Subscription Price shall have been injected into the WFOE as the registered capital of the WFOE with copies of documents evidencing the same provided to the Subscribers (such injected amount, the “WFOE Capital Injection Amount”). Each of the Warrantors, jointly and severally, agrees that (i) in the event of a subsequent sale of Shares in the Company by any Subscriber, it shall ensure that such Subscriber is entitled to apply all Subscription Price paid by such Subscriber to its indirect basis in the equity (or equity cost) of the WFOE with respect to any tax filing, tax position and other communication with the relevant PRC tax authorities for purposes of determining any income tax, capital gains tax or any other tax calculated with reference to gains made through the subscription, purchase and sale of the Company’s Shares, and (ii) it shall use its commercially reasonable efforts to not take any position that is inconsistent with (or would otherwise adversely impact the credibility of) clause (i) above in its filings or other communications with the relevant PRC tax authorities. Notwithstanding anything to the contrary herein, the Warrantors shall indemnify each Subscriber against and all Indemnifiable Losses, in connection with such Subscriber’s sale of its shares, levied on such Subscriber by the relevant PRC tax authorities as the result of the tax base for such Shares determined by the relevant PRC tax authorities being less than all Subscription Price paid by such Subscriber for such Shares.

6.18 Employment Agreement and Confidentiality, Non-Competition and Intellectual Property Rights Agreements.

The Group Companies shall cause the Founder and each of their respective current and future employees to enter into an employment agreement in form and substance satisfactory to the Board (including the affirmative votes of at least two-thirds (2/3) of the directors appointed by the holders of the Preferred Shares). The Group Companies shall cause the Founder and each of their respective current and future employees and consultants to enter into a confidentiality, non-competition and proprietary information and inventions agreement in form and substance satisfactory to the Board (including the affirmative votes of at least two-thirds (2/3) of the directors appointed by the holders of the Preferred Shares).

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6.19 Lease.

As soon as practicable after the Completion, the Warrantors shall cause the PRC Companies to register their leases with competent local housing authorities to file such records so that the leases of the PRC Companies are properly filed and registered in compliance with relevant PRC Laws.

6.20 Intellectual Property.

The Group Companies shall establish and maintain appropriate intellectual property protection system to protect the intellectual property of the Group Companies. Without limiting the generality of the foregoing sentence, the Group Companies shall, and other Warrantors shall cause the Group Companies to complete the registration of the trademark, patents, copyrights, domain names and other intellectual property related to the operation of the Business of the Group Companies as soon as applicable. The Group Companies shall, and the Founders shall cause the Group Companies to fully comply with the laws and regulations in respect of the protection of the intellectual property and refrain from infringing from the intellectual property of other parties.

6.21 WFOE’s Registered Capital

As soon as practicable after the Completion, the Founders and the Group Companies shall procure the registered capital of the WFOE to be fully paid in accordance with the charter documents of the WFOE and applicable laws and regulations.

6.22 Transfer of Assets.

(a) Transfer of Intellectual Property and Business Contracts. When and as advised by the underwriter of the Company prior to its initial public offering, (i) the Intellectual Property and the business contracts of the Domestic Company shall, to the maximum extent permitted by the applicable laws, be transferred to the WFOE; (ii) to the maximum extent permitted by the applicable laws, any future Intellectual Property of the Group Companies shall be owned in the WFOE’s name and any future business contract shall be entered into by the WFOE; and (iii) the WFOE shall be primarily responsible for the research and development of technology related to the Business.

(b) Transfer of Employees. Within twelve (12) months following the Completion or any later time as agreed by the Subscribers, to the maximum extent permitted by the applicable laws, the employment relationship of the Key Employees, as requested by the Subscribers shall have been transferred to the WFOE.

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6.23 SAFE Amendment Registration.

If and to the extent required by applicable law, the Founder Parties shall, with respect to both of the Ordinary Shares and Preferred Shares held by them, and the Warrantors shall cause each of other direct and indirect holders or beneficial owners of the Ordinary Shares (except for direct or indirect holders of Lightspeed, GSR and GGV) to amend and update each of their registrations with SAFE in respect of the financing of the Company contemplated hereunder, and shall deliver to each Subscriber and its counsel satisfactory evidence for completion of such amendment registration.

6.24 Covenants between Signing and Completion.

(a) Between the date hereof and the Completion, except as the Subscribers otherwise agree in writing or for the transactions contemplated under the Transaction Documents, each of the Group Companies shall (i) conduct its business in the ordinary course consistent with past practice, as a going concern and in compliance with all applicable laws, (ii) pay or perform its debts, Taxes, and other obligations when due, (iii) maintain its assets in a condition comparable to their current condition, reasonable wear, tear and depreciation excepted, (iv) use reasonable best efforts to preserve intact its current business organizations and keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it, (v) otherwise periodically report to the Subscribers concerning the status of its business, operations and finance, and (vi) take all actions reasonably necessary, to consummate the transactions contemplated by this Agreement promptly, including the taking of all reasonable acts necessary to cause all of the conditions precedent of the Subscribers to be satisfied.

(b) From the date hereof until the Completion, (i) the Company shall promptly notify the Subscribers in writing of any Action commenced or threatened against any Group Company, (ii) each Party hereto shall promptly notify the other Parties of any breach, violation or non-compliance by of any representation, warranty or covenant made by such Party hereunder, and (iii) each Party will promptly provide the other Parties with copies of all correspondence and inquiries to and from, and all filings made with, any governmental authority with respect to the transactions contemplated hereby.

6.25 Negative Covenants between Signing and Completion.

Between the date hereof and the Completion, except as the Subscribers otherwise agree in writing or for the transactions contemplated under the Transaction Documents, none of the Group Companies shall (and the Warrantors shall not permit any of the Group Companies to) (a) take any action that would make any Warranties inaccurate at the Completion, (b) waive, release or assign any material right or claim, (c) take any action that would reasonably be expected to materially impair the value of the Group Companies, (d) sell, purchase, assign, lease, transfer, pledge, encumber or otherwise dispose of any material asset, (e) issue, sell, or grant any Share unless otherwise pursuant to the Transaction Documents, (f) declare, issue, make, or pay any dividend or other distribution with respect to any Share, (g) incur any indebtedness for borrowed money or capital lease commitments or assume or guarantee any indebtedness of any Person, (h) enter into any contract or other transaction with any related party unless otherwise pursuant to the Transaction Documents, (i) any amendment to or termination of any Group Company Contract, any entering of any new contract that would have been a Material Contract if in effect on the date hereof, or any amendment to or waiver under any Constitutional Document; (j) any change in any compensation arrangement or contract with any Key Employee, or adoption of any new ESOP, or made any change in any existing ESOP; (k) any change in accounting methods or practices or any revaluation of any of its assets; or (l) authorize, approve or agree to any of the foregoing. If at any time before the Completion, any of the Warrantors comes to know of any material fact or event which:

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(a) is in any way materially inconsistent with any of the Warranties given by each Warrantor, subject to any qualification by the Schedule of Exceptions,

(b) suggests that any material fact warranted may not be as warranted or may be materially misleading, or

(c) might affect the willingness of a reasonable investor in making a prudent decision to purchase the Subscription Shares or the amount of consideration which the Subscribers would be prepared to pay for the Subscription Shares,

such Warrantor shall give immediate written notice thereof to the Subscribers in which event the Subscribers may within five (5) Business Days of receiving such notice terminate this Agreement by written notice without any penalty whatsoever and without prejudice to any rights that the Subscribers may have under this Agreement or applicable law, provided, that, if (i) the event described in (a), (b) or (c) above would not, result or reasonably be expected to result, in a Material Adverse Effect, and (ii) in each case such event is curable within reasonable period time, then this Agreement may not be terminated under this Clause 6.27. If this Agreement is terminated in the event of (a) or (b) above, or in the event of (c) above when such fact or event is caused by the Company, solely in the event of fraud or gross negligence by any Warrantor, each Warrantor shall jointly and severally indemnify the Subscribers against all costs, charges and expenses incurred by it in connection with the negotiation, preparation and termination of this Agreement and other Transaction Documents.

6.26 Onshore Transfer

As soon as practicable after the Completion but no later than two (2) months after the Completion, the Domestic Company shall, and the other Warrantors shall cause the Domestic Company to duly register with the State Administration for Industry and Commerce of the Onshore Transfer.

6.27 Registration of Equity Pledge

As soon as practicable after the Completion but no later than three (3) months after the Completion, the Domestic Company shall, and the other Warrantors shall cause the Domestic Company to duly register with the State Administration for Industry and Commerce of the equity pledge contemplated under the relevant Equity Pledge Agreements (股权质押协议) in the Restructuring Documents.

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6.28 Business Termination

As soon as practical after the Completion, the PRC Companies shall use its reasonable commercial efforts and take all necessary actions to complete the refund of all deposit, advanced payment, membership fees and other similar fees (if any) received from the customers with respect to the business of online toy rental used to be conducted by the PRC Companies.

6.29 Tax under Announcement 7.

Venus Mission Limited shall, and Warrantors shall procure Venus Mission Limited to, perform the tax withholding duties in connection with the purchase of shares of the Company from Wan Duoduo Goddess Limited, Wan Duoduo DU Limited, Venus Holdings Limited, and Taihe Leaf Ltd according to the requirements of the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises (“Circular No. 7”), and (ii) as soon as practicably possible but no later than three (3) months after the Completion, Venus Mission Limited shall, and Warrantors shall procure Venus Mission Limited to, complete (or cause the relevant sellers to complete) the payment of the applicable taxes pursuant to Circular 7.

6.30 Registration Address.

As soon as practicably possible after the Completion, the Group Companies shall, and the Warrantors shall cause the Group Companies to, change its registration address to the address where it conducts business, and complete relevant filing and registration with the competent local branch of the State Administration for Market Regulation (if applicable).

6.31 Establishment of Branches.

As soon as practicably possible after the Completion, the Group Companies shall, and the Warrantors shall cause the Group Companies to, establish branches in Xi’an and Shanghai where the Group Companies has actually conducted business, and complete relevant filing and registration with the competent local branch of the State Administration for Market Regulation.

7. INDEMNITIES

7.1 The Warrantors hereof jointly and severally undertake to fully indemnify the Subscribers, its associates, directors, officers, employees, limited partners, members, stockholders, attorneys (including, without limitation, those retained in connection with the transactions contemplated herein), agents and representatives (each an “Indemnitee” and collectively, the “Indemnitees”), and to keep such Indemnitee harmless from and against all direct losses, liabilities, costs and damages (including without limitation legal costs) (the “Indemnifiable Losses”) which may be suffered or incurred by any of them in connection with, arising out of or as a result of any of the following:

(a) any of the Warranties (including but not limited to warranties regarding tax and incorporation matters) not being true, correct or accurate in all respects or not being fully complied with at all times;

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(b) any breach or violation of any covenant or agreement contained herein or any of the Transaction Documents;

(c) any claim by the Group Companies and their associates against the Subscribers, provided that such Subscribers and/or its associates is not liable, or against any Group Company; and

(d) any of the Covenants in Clause 6 and any other undertakings or obligations in this Agreement not being fully performed or fully complied with at all times.

7.2 Notwithstanding the foregoing, the Warrantor shall, jointly and severally, indemnify and keep indemnified the Indemnitees at all times and hold them harmless against any and all Indemnifiable Losses resulting from, or arising out of, or due to, directly or indirectly, (x) any claim for tax which has been made or may hereafter be made against the Domestic Company and any other Group Company wholly or partly in respect of or in consequence of any event occurring or any income, profits or gains earned, accrued or received by the Domestic Company and any Group Company on or before the Completion, (y) all liability for any taxes of any other person imposed by any governmental authority on any Group Company as a transferee, successor, withholding agent, or accomplice in connection with an event or transaction occurring before the Completion, and (z) all liability for taxes attributable to any misrepresentation or breach of warranty made in Clause 18 of Schedule 4 of this Agreement, and any reasonable costs, fees or expenses incurred and other liabilities which the Domestic Company and any Group Company may properly incur in connection with the investigation, assessment or the contesting of any claim, the settlement of any claim for tax, any legal proceedings in which the Domestic Company claims in respect of the claim for tax and in which an arbitration award or judgment is given for the Domestic Company or other Group Company and the enforcement of any such arbitration award or judgment, whether or not such tax is chargeable against or attributable to any other person (“Tax Indemnifiable Loss”), provided, however, that the Warrantors shall be under no liability for any tax matters, if any:

(a) to the extent that such Tax Indemnifiable Loss is promptly cured within thirty (30) days after the occurrence of such Tax Indemnifiable Loss without recourse to cash or other assets of any Group Company;

(b) to the extent that such Tax Indemnifiable Loss has been clearly disclosed in the Financial Statements (as defined in Schedule 4);

(c) if it has arisen in and relates to the ordinary course of business of a Group Company since the Balance Sheet Date, subject to compliance with applicable law;

(d) to the extent that the liability arises as a result only of a provision or reserve in respect of the liability made in the Financial Statements being insufficient by reason of any increase in rates of tax announced after the Completion with retrospective effect; or

(e) to the extent that the liability arises as a result of legislation which comes into force after the Completion and which is retrospective in effect.

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7.3 Notwithstanding anything contained in the Schedule of Exceptions, each of the Group Companies shall jointly and severally indemnify at all times and hold harmless each Indemnitee from and against any Indemnifiable Loss directly or indirectly, as a result of, or based upon or arising from (i) the non-payment or underpayment of social insurance or housing fund contributions, (ii) any dispute or infringement claim in connection with violation of any of the Intellectual Property of any other person or entity before the Completion, or (iii) any action, suit, arbitration or other court proceeding, pending or threatened, due to the non-compliance with any applicable laws or contracts existing prior to the Completion even if the liability is actually incurred after the Completion).

7.4 If any Indemnitee believes that it has a claim that may give rise to an obligation of any Warrantor pursuant to this Clause 7, it shall give prompt notice thereof to the Warrantors stating specifically the basis on which such claim is being made, the material facts related thereto, and the amount of the claim asserted. Any dispute related to this Clause 7 shall be resolved pursuant to Clause 17.

7.5 For the avoidance of doubt, each of the Warrantors hereby agrees and covenants that he /it will do all such things and undertake all such actions, including without limitation, any applications to and registrations with the governmental authorities and any other protective measures reasonably requested by the Subscribers, to ensure that the agreement of the parties with respect to joint and several liability of the Warrantors under the Transaction Documents is given full force and effect.

7.6 Notwithstanding the above provisions, absent of fraud, intentional misconduct on the part of any Warrantor, none of the Warrantors shall have any liability under the warranties and representations to the extent that any individual claim against any of them in respect thereof does not exceed US$10,000 (in respect of the Group Companies) and US$20,000 (in respect of the Founder Parties). For the avoidance of doubt, if the total amount of the Indemnifiable Loss exceeds US$10,000 (in respect of the Group Companies) or US$20,000 (in respect of the Founder Parties), the Warrantors shall be liable for the full amount of Indemnifiable Loss. Notwithstanding any other provision contained herein, absent fraud or willful misconduct by any of the Founder Parties, the maximum liability of the Founder Parties shall be limited to one hundred percent (100%) of the shares directly or indirectly held by the Founder Parties in the Company. Absent of fraud, intentional misconduct on the part of any Warrantor, the Indemnitees shall not be entitled to make any claim against the Founder Parties unless written notice thereof has been given to each of the Founder Parties within two (2) years from the date of Completion.

7.7 This Clause 7 shall not be deemed to preclude or otherwise limit in any way the exercise of any other rights or pursuit of equitable remedies (including but not limited to injunctive relief and/or specific performance) for the breach of this Agreement or with respect to any misrepresentation.

7.8 The Warrantors’ obligations under this Clause 7 shall survive the Completion.

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8. PROCEEDS OF SUBSCRIPTION

8.1 The parties acknowledge and agree that the proceeds of the subscription for the Series D Shares under this Agreement shall be used, in accordance with the directions of the Company’s Board of Directors, as it shall be constituted in accordance with the Shareholders’ Agreement, to fund the WFOE’s register capital and for the capital expenditures, equipment purchase, hiring, research and development and general working capital of the Group Companies, in particular for the expansion of the existing lines of business.

9. SEVERABILITY AND SURVIVAL

9.1 If at any time any one or more provisions hereof is or becomes invalid, illegal, unenforceable or incapable of performance in any respect, the validity, legality, enforceability or performance of the remaining provisions hereof shall not thereby in any way be affected or impaired.

9.2 The obligations of the Group Companies and the Founder Parties shall survive the Completion.

10. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement and understanding between the parties in connection with the subject matter of this Agreement and supersedes all previous term sheets, proposals, representations, warranties, agreements or undertakings relating thereto whether oral, written or otherwise and no party has relied or is entitled to rely on any such term sheets, proposals, representations, warranties, agreements or undertakings.

11. TIME OF ESSENCE AND REMEDIES AND WAIVERS

11.1 Time shall be of the essence of this Agreement.

11.2 No delay or omission by any party in exercising any right, power or remedy provided by law or under this Agreement shall:

(a) affect that right, power or remedy; or

(b) operate as a waiver of it.

11.3 The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy.

11.4 The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.

11.5 It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any other party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

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12. PUBLIC ANNOUNCEMENTS

12.1 The investment and subscription of the Subscription Shares by the Subscribers in the Company, including without limitation the existence of such investment and the terms and conditions of this Agreement, the term sheets preceding this Agreement and any other Transaction Documents shall be confidential information and shall not be disclosed by any Group Company or any of their associates to any person not being a party hereto except with the prior written consent of the Subscribers.

12.2 Notwithstanding Clause 12.1, each Group Company may disclose the terms of the investment to its employees, investment bankers, lenders, accountants, attorneys, business partners, directors, shareholders, senior management and bona fide prospective investors, in each case only where such persons or entities are under appropriate non-disclosure obligations. For the avoidance of doubt, other than disclosures to the foregoing permitted persons, none of the Group Companies may disclose the investment amounts in relation to the Subscription Shares, the valuation of the Company, the rights and privileges of the Subscribers under this Agreement and the Shareholders’ Agreement and the share capital structure of the Company to any person except with the prior written consent of the Subscribers.

12.3 In the event that any party becomes legally compelled (including without limitation, pursuant to securities laws and regulations) to make disclosure not permitted under Clauses 12.1 and 12.2, such party (“Disclosing Party”) shall provide the other parties (“Non-Disclosing Parties”) with prompt written notice of that fact so that the appropriate party may seek (with the cooperation and reasonable efforts of the other parties) a protective order, confidential treatment or other appropriate remedies. In such event, the Disclosing Party shall furnish only that portion of the information which is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such information to the extent reasonably requested by any Non-Disclosing Party.

13. ASSIGNMENT AND COUNTERPARTS

13.1 This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective assigns and successors.

13.2 Each Subscriber may assign and transfer, to its associates, any of its rights, benefits and obligations in this Agreement including without limitation the benefit of any representations, warranties and undertakings contained herein. Save as aforesaid, no party hereto may assign or transfer any of his or its rights or obligations under this Agreement.

13.3 This Agreement may be entered into by any party by executing a counterpart hereof and may be delivered by electronic PDF or facsimile transmission, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

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14. NOTICES AND OTHER COMMUNICATION

14.1 All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address, or to such email address, facsimile number or address as set forth on Schedule 5 hereto or as subsequently modified by written notice given in accordance with this Clause 14.1.

15. FURTHER ASSURANCE

Each of the parties shall at its (as the case may be) own costs, from time to time upon request, do or procure the doing of all acts and/or execute or procure the execution of all documents in a form satisfactory to the other parties which the other parties may reasonably request for giving full effect to this Agreement and securing to the other parties the full benefit of the rights, powers and remedies conferred upon the other parties in this Agreement.

16. COSTS AND EXPENSES

16.1 Each Party shall bear the legal, financial and all other expenses incurred by itself in respect of the negotiation, preparation, execution and carrying into effect of this Agreement and the transactions contemplated herein; provided, however, the Company not only shall bear its own costs and expenses in connection with this Agreement but also shall pay at the Completion, or as soon as possible if the Completion fails due to reason(s) solely attributable to the Warrantors, the reasonable costs and expenses incurred by GGV not to exceed a maximum aggregate amount of US$150,000.

17. GOVERNING LAW AND JURISDICTION

17.1 This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of Hong Kong without regard to the conflict of laws principles thereof.

17.2 Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall first be subject to resolution through consultation of the parties to such dispute, controversy or claim. Such consultation shall begin within seven (7) days after one Party hereto has delivered to the other Parties involved a written request for such consultation. If within thirty (30) days following the commencement of such consultation the dispute cannot be resolved, the dispute shall be submitted to arbitration upon the request of any Party with notice to the other Parties.

17.3 The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the “HKIAC”). There shall be three (3) arbitrators. The complainant and the respondent to such dispute shall each select one (1) arbitrator within thirty (30) days after giving or receiving the demand for arbitration. Such arbitrators shall be freely selected, and the Parties shall not be limited in their selection to any prescribed list. The Chairman of the HKIAC shall select the third arbitrator. If either party to the arbitration does not appoint an arbitrator who has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of the HKIAC.

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17.4 The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the Arbitration Rules of the HKIAC in effect at the time of the arbitration. However, if such rules are in conflict with the provisions of this Clause 17, including the provisions concerning the appointment of arbitrators, the provisions of this Clause 17 shall prevail.

17.5 Each Party hereto shall cooperate with any party to the dispute in making full disclosure of and providing complete access to all information and documents requested by such party in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on the Party receiving the request.

17.6 The award of the arbitration tribunal shall be final and binding upon the disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for enforcement of such award.

17.7 Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

18. FINDER’S FEES

Except as disclosed in the Schedule of Exceptions, each party (a) represents and warrants to the other parties hereto that it has retained no finder or broker in connection with the transactions contemplated by this Agreement, and (b) hereby agrees to indemnify and to hold harmless the other party hereto from and against any liability for any commission or compensation in the nature of a finder’s fee of any broker or other person or firm (and the costs and expenses of defending against such liability or asserted liability) for which the indemnifying party or any of its employees or representatives are responsible.

19. FORCE MAJEURE

In the event of earthquakes, typhoon, flood, war or other events (the “Event of Force Majeure”), the consequences of which are beyond the parties’ control, prevention or avoidance and which directly affects the performance of this Agreement or hinders performance of its items, the party which is affected by it should immediately inform the other parties in writing, and within five (5) days shall provide details of the event and valid documentary evidence supporting the reasons for which matters agreed in this Agreement cannot be performed in whole or in part or for which performance will be delayed. Such documents must be issued by the notary public office in the place where the said event has occurred. Notwithstanding the foregoing, the Party affected by the Event of Force Majeure shall (i) use all reasonable efforts to remedy the situation and minimize or remove the effects of Event of Force Majeure so far as possible and, subject thereto, comply with its obligations hereunder; (ii) within the shortest time practicable, attempt to resume performance of the obligations suspended by Event of Force Majeure.

– EXECUTION PAGES FOLLOW –

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IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

COMPANY:	WAN DUODUO LIMITED
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Director
HK CO:	WAN DUODUO HONGKONG LIMITED
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Director
WFOE:	WAN LE DUO NETWORK TECHNOLOGY (BEIJING) CO., LTD. (玩乐多网络技术（北京）有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Legal Representative
	Affix Seal:
DOMESTIC COMPANY:	BEIJING XIN GENG YUAN TECHNOLOGY DEVELOPMENT CO., LTD. (北京心更远科技发展有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title. Legal Representative
	Affix Seal:

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

Founder Parties:

VENUS MISSION LIMITED
By:	/s/ Luo Jian
Name: Luo Jian (罗剑)
Title: Director
Luo Jian (罗剑)
By:	/s/ Luo Jian
FUN KINGDOM LIMITED
By:	/s/ Shan Zebing
Name: Shan Zebing (单泽兵)
Title: Director
Shan Zebing (单泽兵)
By:	/s/ Shan Zebing

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS & PURCHASERS:	GGV VII Investments, L.L.C. By: GGV Capital VII L.L.C., its Manager
	By:	/s/ Stephen Hyndman
	Name: Stephen Hyndman
	Title:   Attorney in Fact
	GGV VII Plus Investments, L.L.C.
	By: GGV Capital VII Plus L.L.C., its Manager
	By:	/s/ Stephen Hyndman
	Name: Stephen Hyndman
	Title:   Attorney in Fact

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS:	SCC Venture VII Holdco, Ltd.
	By:	/s/ Ip Siu Wai Eva
	Name: Ip Siu Wai Eva
	Title: Authorized Signatory
	Date: 30 July 2019

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS:	IDG CHINA VENTURE CAPITAL FUND IV L.P.
	By: IDG China Venture Capital Fund IV Associates L.P., Its General Partner
	By: IDG China Venture Capital Fund GP IV Associates Ltd., Its General Partner
	By:	/s/ Chi Sing HO
	Name: Chi Sing HO
	Title: Authorized Signatory
	IDG CHINA IV INVESTORS L.P.
	By: IDG China Venture Capital Fund GP IV Associates Ltd., Its General Partner
	By:	/s/ Chi Sing HO
	Name: Chi Sing HO
	Title: Authorized Signatory

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS:	Lightspeed China Partners III, L.P.
	By: Lightspeed China Partners III GP, LLC, Its General Partner
	By:	/s/ Qun Mi
	Title:	Managing Director

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS:	Northern Light Venture Capital V, Ltd.
	By:	/s/ Jeffrey D. Lee
	Name:
	Title:	Authorized Signatory

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS:	Hike Capital L.P.
	By:	/s/ Shi Xu
	Name:
	Title:	Authorized Signatory

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

SUBSCRIBERS:	EVERBAY INVESTMENT LIMITED
	By:	/s/ Yajun Wu
	Name: Yajun Wu
	Title:   Director

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

PURCHASER:	GSR 2017 Opportunities (Singapore) Pte. Ltd.
	By:	/s/ Xiaohu Zhu
	Name:
	Title:
	GSR Chop.    Notwithstanding any other provision in this Agreement, this Agreement shall not be effective unless and until GSR 2017 OPPORTUNITIES (SINGAPORE) PTE. LTD. has affixed its chop on the appropriate signature page hereof.

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

EX-10.6

Exhibit 10.6

August 15, 2019

SHARE SUBSCRIPTION AGREEMENT

concerning Series D Shares in

Wan Duoduo Limited

SHARE SUBSCRIPTION AGREEMENT

DATED August 15, 2019

AMONG

(1) Wan Duoduo Limited, a company incorporated in the Cayman Islands with its registered office located at Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands (the “Company”);

(2) Wan Duoduo Hongkong Limited, a company incorporated in the Hong Kong with its registered office located at Unit 806, 8/F, Tower II, Cheung Sha Wan Plaza, 833 Cheung Sha Wan Road, Kowloon, Hong Kong (the “HK Co”);

(3) Wan Le Duo Network Technology (Beijing) Co., Ltd. (玩乐多网络技术（北京）有限公司), a limited liability company incorporated in the PRC with its registered office located at 201-A131, Unit 1, Building No.17, No.3 of Gao Li Zhang Road, Haidian District, Beijing (the “WFOE”);

(4) Beijing Xin Geng Yuan Technology Development Co., Ltd. (北京心更远科技发展有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B202, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Domestic Company”, collectively with the WFOE, the “PRC Companies”);

(5) the party listed in Schedule 1 (the “Investor”); and

(6) the parties listed in Schedule 2 (the “Founder Parties”, and each a “Founder Party”);

Each of the parties listed above is referred to herein individually as a “Party” and collectively as the “Parties”.

WHEREAS

(A) Immediately prior to the Completion, the Company has an authorized capital of US$50,000 divided into (i) 349,900,312 Ordinary Shares of a par value of US$0.0001 per share, 64,750,255 of which are issued and outstanding; (ii) 22,973,381 Series A Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (iii) 30,994,766 Series B Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (iv) 33,367,574 Series B+ Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (v) 29,167,458 Series C Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; and (vi) 33,596,509 Series D Shares of a par value of US$0.0001 per share, all of which are issued and outstanding. All issued and outstanding shares have been fully paid (or credited as fully paid). The capitalization of the Company immediately prior to the Completion Date is set out in Part A of Exhibit B hereto. Further particulars of the Group Companies and the Founder Parties are set out in Schedule 2 and Schedule 3. The Company has adopted an employee share option plan (the “ESOP”), under which the Company has reserved a total of 29,183,325 Ordinary Shares, representing 12.1425% of the fully-diluted capitalization of the Company for issuance of restricted shares or issuance of shares pursuant to share options granted under the ESOP, of which 3,693,409 Ordinary Shares has been issued to and held in trust by Venus Mission Limited, the Founder Holdco wholly owned by Luo Jian (“Founder Holdco ESOP Shares”).

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(B) The Company hereby agrees to issue and sell to the Investor and the Investor hereby agrees to subscribe for and purchase from the Company the Subscription Shares (as defined below) pursuant to the terms and conditions of this Agreement.

(C) NOW IT IS HEREBY AGREED as follows:

1. INTERPRETATION

1.1 In this Agreement, including the Recitals and the Schedules, the following expressions shall, except where the context otherwise requires, have the following meanings:

“Action” has the meaning ascribed to it in Clause 11 of Schedule 4;

“Agreement” means this Share Subscription Agreement;

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person, and the term “affiliated” has the meaning correlative to the foregoing.

“Anti-Corruption Laws” means any anti-bribery or anti-corruption Laws (including Laws that prohibit the corrupt payment, giving, offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any Government Official, commercial entity or any other Person to obtain a business advantage) applicable to the Group and its operations from time to time, including without limitation (i) the U.S. Foreign Corrupt Practices Act of 1977, (ii) the UK Bribery Act of 2010, (iii) any legislation adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and (iv) any similar Laws in any other jurisdiction in which any entity of the Group operates, in each case as amended from time to time.

“Anti-Corruption Prohibited Activity” means offering, paying, promising to pay or authorizing the payment of any money or the giving of anything of value to any Government Official, or to any other Person, for the purpose of (i) influencing any act or decision of such Government Official in his official capacity, (ii) inducing such Government Official to do or omit to do any act in relation to his lawful duty, (iii) securing any improper advantage, or (iv) inducing such Government Official to influence of affect any act or decision of any Governmental Authority, in each case, in order to assist the Person carrying out such activity in obtaining or retaining business for or with, or in directing business to, any Person, or any other activity prohibited by any Anti-Corruption Laws.

“Anti-Money Laundering Laws” means any anti-money laundering-related Laws and codes of practice applicable to the Group and its operations from time to time, including without limitation (i) the EU Anti-Money Laundering Directives and any laws, decrees, administrative orders, circulars, or instructions implementing or interpreting the same, and (ii) the applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transaction Reporting Act of 1970.

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“Applicable Law(s)” or “Law(s)” means and includes statutes, enactments, acts of legislature or the parliament, laws, regulations, ordinances, notifications, rules, judgments, Orders, decrees, by-laws, approvals from the concerned authority (including a Governmental Authority), resolutions, directives, guidelines, policies, requirements, or other governmental restrictions or any similar form of decision of, or determination by, or any interpretation or adjudication having the force of law of any of the foregoing, by any concerned Governmental Authority having jurisdiction over the matter in question.

“Associate” means, with respect to any Person, (1) a corporation or organization (other than the Group Companies) of which such Person is an officer or partner or is, directly or indirectly, the record or beneficial owner of ten percent (10%) or more of any class of Equity Securities of such corporation or organization, (2) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar capacity, or (3) any child, brother, sister, parent or spouse of such Person, or any child, brother, sister, parent of the spouse.

“Balance Sheet Date” has the meaning ascribed to it in Clause 16 of Schedule 4;

“Board” or “Board of Directors” means the board of directors of the Company;

“Business” means the live online educational courses for children aged 3-12 conducted by the Company, its consolidated subsidiaries and the PRC Companies;

“Business Day” means any day, other than a Saturday, Sunday or other day on which the commercial banks in Cayman Islands, Hong Kong, New York City or PRC are authorized or required to be closed for the conduct of regular banking business;

“CFC” has the meaning ascribed to it in Clause 6.2(a);

“Code” has the meaning ascribed to it in Clause 6.2(a);

“Completion” has the meaning ascribed to it in Clause 4.1(a);

“Completion Date” has the meaning ascribed to it in Clause 4.1(a);

“Conditions” means the conditions precedent to the Completion set out in Clause 2;

“Consents” includes an approval, authorisation, exemption, filing, licence, order, permission, permit, recording or registration, certificate or declaration, or report or notice to, any Person, including any governmental authority;

“Constitutional Documents” has the meaning ascribed to it in Clause 13 of Schedule 4;

“Control”, “Controls”, “Controlled” (or any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of the management of a Person, whether through the ownership of voting securities, by contract, credit arrangement or proxy, as trustee, executor, agent or otherwise. For the purpose of this definition, a Person shall be deemed to Control another Person if such first Person, directly or indirectly, owns or holds more than 50% of the voting equity interests in such other Person;

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“Conversion Shares” mean the Ordinary Shares issuable upon conversion of any Series D Shares;

“Disclosing Party” has the meaning ascribed to it in Clause 12.3;

“Domestic Company” has the meaning ascribed to it in the preamble;

“Environmental Claim” has the meaning ascribed to it in Clause 19 of Schedule 4;

“Environmental Laws” has the meaning ascribed to it in Clause 19 of Schedule 4;

“ESOP” has the meaning ascribed to it in the recitals;

“Equity Securities” means, with respect to any Person that is a legal entity, any and all shares of capital stock, membership interests, units, profits interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment, conversion privilege, preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing.

“Equity Transfer Documents” has the meaning ascribed to it in Clause 6.6(a);

“Event of Force Majeure” has the meaning ascribed to it in Clause 19;

“Exhibits” mean the exhibits of this Agreement;

“Export Control Laws” means the U.S. Export Administration Act, U.S. Export Administration Regulations, U.S. Arms Export Control Act, U.S. International Traffic in Arms Regulations, and their respective implementing rules and regulations and the U.K. Export Control Act 2002 (as amended and extended by the Export Control Order 2008) and its implementing rules and regulations.

“Financial Statements” has the meaning ascribed to it in Clause 16 of Schedule 4;

“FCPA” has the meaning ascribed to it in Clause 26 of Schedule 4;

“Founder” or “Founders” has the meaning set forth in Schedule 2;

“Founder Holdco” or “Founder Holdcos” has the meaning set forth in Schedule 2;

“Founder Holdco ESOP Shares” has the meaning ascribed to it in the recitals;

“Founder Party” or “Founder Parties” has the meaning ascribed to it in the preamble;

“Fun Kingdom” means Fun Kingdom Limited;

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“Government” or “Governmental Authority” means: (a) any supranational, national, state, city, municipal, county or local government, governmental authority or political subdivision thereof; (b) any agency or instrumentality of any of the authorities referred to in (a) above; (c) any regulatory or administrative authority, body or other similar organization, to the extent that the rules, regulations, standards, requirements, procedures or orders of such authority, body or other organization have the force of Law; (d) any court or tribunal having jurisdiction; or (e) the governing body of any stock exchange(s).

“Government Official” means any officer, employee or other person acting in an official capacity on behalf of (a) any Governmental Authority or any department or agency of a Government, including elected officials, judicial officials, civil servants and military personnel, children, spouses, siblings or parents of a Government Official; (b) any public international organization, such as the World Bank; (c) any company, business or instrumentality that is owned or Controlled by a Governmental Authority; and (d) any political party, as well as candidates for political office.

“GGV” means GGV VII Investments, L.L.C. and GGV VII Plus Investments, L.L.C. and/or any of its Affiliates;

“GGV SSA” means the share subscription agreement dated July 30, 2019 by and among the Group Companies, the Founder Parties, GGV and certain other parties therein relating to the issuance and sale of Series D Shares;

“Group Companies” means the Company, the HK Co, the PRC Companies, and their respective Subsidiaries from time to time, particulars of which are set out in Schedule 3;

“Group Company” means any one of the Group Companies;

“Group Company Contract” has the meaning ascribed to it in Clause 10 of Schedule 4.

“GSR” means GSR 2017 Opportunities (Singapore) Pte. Ltd.;

“HKIAC” has the meaning ascribed to it in Clause 17.3;

“Hong Kong” means the Hong Kong Special Administrative Region of the PRC;

“HK Co” has the meaning ascribed to it in the preamble;

“Indemnifiable Losses” has the meaning ascribed to it in Clause 7.1;

“Indemnitees” has the meaning ascribed to it in Clause 7.1 and “Indemnitee” means any one of them;

“Investor” has the meaning ascribed to it in the preamble;

“Key Employees” means the employees as set forth in the Exhibit C of this Agreement;

“Lightspeed” means Lightspeed China Partners III, L.P.;

“Management Rights Letter” means the management rights letter to be issued by the Company to the Investor on or before the Completion, substantially in the form and substance as set forth in Exhibit J of this Agreement.

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“Material Adverse Effect” means (i) a material adverse effect on the business (as presently conducted and proposed to be conducted), assets (including intangible assets), affairs, liabilities, condition (financial or otherwise), properties, prospects or results of operations of the Group Companies, taken as a whole; (ii) material impairment of the ability of any Warrantor to any of the Transaction Documents to perform the material obligations of such party under any Transaction Documents; or (iii) material impairment of the validity or enforceability of this Agreement of any other Transaction Documents against any Warrantor hereto or thereto.

“Materials of Environmental Concern” has the meaning ascribed to it in Clause 20 of Schedule 4;

“Non-Disclosing Parties” has the meaning ascribed to it in Clause 12.3;

“Ordinary Shares” means ordinary shares of par value of US$0.0001 each in the capital of the Company;

“Person” means any individual, sole proprietorship, partnership, firm joint venture, estate, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or governmental authority or other entity of any kind or nature;

“PRC” means the People’s Republic of China;

“PRC Companies” has the meaning ascribed to it in the preamble;

“PRC GAAP” has the meaning ascribed to it in Clause 16 of Schedule 4;

“Preferred Directors” has the meaning ascribed to it in the Shareholders’ Agreement.

“Preferred Shareholder” means any holder of Preferred Shares;

“Preferred Shares” means any of the preferred shares of the Company, including the Series A Shares, the Series B Shares, the Series B+ Shares, the Series C Shares and the Series D Shares;

“Proprietary Assets” has the meaning ascribed to it in Clause 9(a) of Schedule 4;

“Registered Intellectual Property” has the meaning ascribed to it in Clause 9(a) of Schedule 4;

“Relevant Period” has the meaning ascribed to it in Clause 6.1;

“Restated M&A” means the seventh amended and restated memorandum and articles of association of the Company as set forth in Exhibit E of this Agreement, and any amendments thereto from time to time;

“Restructuring Documents” means the Exclusive Business Cooperation Agreement, the Equity Interest Pledge Agreement, Exclusive Option Agreement, Exclusive Business Cooperation Agreement, Power of Attorney and Spousal Consents entered into by and among the WFOE, the Domestic Company and/or the shareholders of the Domestic Company dated on or before the Completion, in the form and substance as set out in Exhibit I of this Agreement;

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“Restriction Period” has the meaning ascribed to it in Clause 6.1 (a);

“Returns” has the meaning ascribed to it in Clause 18 (a) of Schedule 4;

“RMB” means Renminbi, the lawful currency of the People’s Republic of China;

“SAFE” means the PRC State Administration of Foreign Exchange;

“SAFE No. 37 Notice” means the Notice on Issues Relating to the Administration of Foreign Exchange in Overseas Investment, Fund-raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies (《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇 管理有关问题的通知》) issued by the SAFE on July 14, 2014 and any of its implementing measures or guidelines, in relation to the transactions contemplated under this Agreement;

“Sanctioned Person” means (a) any Person that is the subject or target of Sanctions (including but not limited to any Person that is designated on the list of “Specially Designated Nationals and Blocked Persons” administered by the U.S. Treasury Department’s Office of Foreign Assets Control, or on any list of any economic or financial sanctions administered by the U.S. State Department, the United Nations, the European Union or any member state thereof, the United Kingdom, or any similar list maintained by, or public announcement of Sanctions designation made by, any applicable national economic sanctions authority), (b) any government, national, or resident of, or legal entity located in or organized under, the laws of a country or territory which is the subject of country- or territory-wide Sanctions (including without limitation Cuba, Iran, North Korea, Syria, or the Crimea region of Ukraine), (c) any Person who is owned 50% (fifty percent) or more, or Controlled, by any of the foregoing, or (d) any Person with whom business transactions, including exports and re-exports, would violate Sanctions.

“Sanctions” means all trade, economic and financial sanctions Laws administered, enacted or enforced from time to time by (i) the United States (including without limitation the Department of Treasury, Office of Foreign Assets Control and the United States Department of State), (ii) the European Union and enforced by its member states, (iii) the United Nations, (iv) the United Kingdom (including without limitation Her Majesty’s Treasury), or (v) any other similar Governmental Authority with regulatory authority over the Company or any Subsidiary from time to time.

“Schedules” means the schedules of this Agreement;

“Series A Shares” means series A redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series B Shares” means series B redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

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“Series B+ Shares” means series B+ redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series C Shares” means series C redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series D Shares” means series D redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Shareholders’ Agreement” means the fifth amended and restated shareholders’ agreement to be entered into among the Investor, the Company, the HK Co, the PRC Companies, the Founder Parties and certain other parties thereto, substantially in the form and substance as set forth in Exhibit F of this Agreement;

“Shares” means all shares of the Company, including the Ordinary Shares, the Series A Shares, the Series B Shares, the Series B+ Shares, the Series C Shares and the Series D Shares;

“Share Restriction Agreements” means the fifth amended and restated share restriction agreements to be entered into by and among the Investor, the Company, each of the Founder Parties respectively and certain other parties thereto, substantially in the form and substance as set forth in Exhibit K of this Agreement;

“Subpart F Income” has the meaning ascribed to it in Clause 6.2(a);

“Subscription Price” means US$20,000,000 for a total of 12,016,993 Series D Shares or US$1.66430988 per Series D Share;

“Subscription Shares” means a total of 12,016,993 Series D Shares to be issued to the Investor pursuant to this Agreement;

“Tax Indemnifiable Loss” has the meaning ascribed to it in Clause 7.2;

“Transaction Documents” means this Agreement, the Shareholders’ Agreement, the Restated M&A, the Share Restriction Agreements, the Restructuring Documents, the Management Rights Letter, the exhibits attached to any of the foregoing and any other document, certificate, and agreement delivered in connection with the transactions contemplated hereby and thereby;

“US$” or “US Dollar” means United States dollars, the lawful currency of the United States of America;

“Warranties” means the representation, warranties and undertakings as set out in Clause 5 and Schedule 4;

“Warrantors” means the Founder Parties and the Group Companies collectively and “Warrantor” means any one of them;

“WFOE” has the meaning ascribed to it in the preamble;

“WFOE Capital Injection Amount” has the meaning ascribed to it in Clause 6.18; and

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“Written Resolutions” means the written resolutions of the shareholders of the Company in form and substance satisfactory to the Investor where the shareholders of the Company agree to, among other things, amend the Memorandum and Articles of Association of the Company, and approve the terms and conditions of the Shareholders’ Agreement.

1.2 In this Agreement:

(a) references to recitals, Clauses, sub-Clauses, Schedules and Exhibits are to the Clauses and sub-Clauses of, and the recitals, Schedules and Exhibits to, this Agreement;

(b) references to any statutory provision or any rule or regulation (whether or not having the force of law) shall be construed as references to the same as amended, varied, modified, consolidated or re-enacted from time to time and to any subordinate legislation made under such statutory provision;

(c) references to parties are to parties of this Agreement;

(d) words importing the singular include the plural and vice versa, words importing one gender include every gender, and references to persons include bodies corporate and unincorporated;

(e) headings are for ease of reference only and shall not affect the interpretation of this Agreement;

(f) references to a document in the “agreed form” are references to a document the form of which has been or may from time to time be agreed among all parties hereto; and

(g) the terms “tax” and “taxes” shall include all taxes, assessments, duties, tariffs, registration fees, and other governmental charges in the nature of taxes including all income, franchise, property, production, sales, use, payroll, license, windfall profits, value added, severance, withholding, excise, gross receipts and other taxes, as well as any interest, additions or penalties relating thereto and any interest in respect of such additions of penalties.

1.3 The recitals, the Schedules and the Exhibits form parts of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement and any reference to this Agreement shall include the Recitals, the Schedules and the Exhibits.

1.4 All references to dates and time are, unless the context requires otherwise, to Hong Kong time.

2. CONDITIONS PRECEDENT

2.1 The obligations of the Investor to purchase the Subscription Shares and pay the Subscription Price on the Completion Date in accordance with Clause 3 hereof shall be conditional on the fulfilment of all of the following Conditions (subject to any waiver in written form by the Investor in its absolute discretion of any or all of the Conditions):

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(a) the Written Resolutions having been duly approved and passed by the shareholders and the board of directors of the Company and remaining valid and effective as at the Completion, and the Restated M&A, in the form attached hereto as Exhibit E, having been adopted accordingly;

(b) the issue and allotment of the Subscription Shares to the Investor pursuant to the terms of this Agreement, the execution of the Transaction Documents to which it is a party, and the performance of its obligations hereunder and thereunder having been duly approved by the shareholders and directors of the Company;

(c) each of the Founder Holdcos, the PRC Companies and the HK Co having provided to the Investor true copies of the shareholders’ resolutions and/or the board resolutions (as required under laws of its jurisdiction) to approve the execution of the Transaction Documents to which it is a party, and the performance of its obligations hereunder and thereunder;

(d) execution and delivery of the Shareholders’ Agreement in the form attached hereto as Exhibit F, by the parties to the Shareholders’ Agreement (other than the Investor);

(e) all the Warranties remaining true and correct at all times as from the signing of this Agreement up to the Completion, as if they were made and repeated on and as of the Completion;

(f) no Material Adverse Effect having occurred, and no event having occurred or arising, and no circumstance existing, that would reasonably be expected to result in a Material Adverse Effect;

(g) no provision of any applicable laws shall prohibit the consummation of any transactions contemplated by the Transaction Documents;

(h) all Consents of any competent governmental authority or of any other Person that are required for the entering into and performance of the Transaction Documents and the implementation of the transactions therein contemplated having been obtained and remaining valid and effective as at Completion;

(i) the Company having delivered to the Investor a copy of the updated Register of Members certified by the registered office provider or a director of the Company as required pursuant to Clauses 4.3(e);

(j) each of the Key Employees having entered into an employment contract, a non-competition, non-solicitation, confidentiality, proprietary information and invention assignment agreement with the appropriate Group Company in substantially the form attached hereto as Exhibit G, Exhibit H-1 and Exhibit H-2;

(k) except as required or contemplated by this Agreement or the Shareholders’ Agreement, no resolution of the directors or members of any of the Group Companies having been passed nor having any contract or commitment been entered into prior to the Completion without the prior written consent of the Investor, except for the purposes of giving effect to the transactions contemplated by this Agreement, or the Shareholders’ Agreement and except for those made during the ordinary course of business;

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(l) each of the Company and the Founders having delivered to the Investor a certificate of compliance dated the Completion Date and signed by a director of the Company and the Founders certifying that (i) all of the conditions set forth in this Clause 2.1 have been fulfilled and stating that there having been no Material Adverse Effect since the Balance Sheet Date; (ii) all corporate and other proceedings on the part of the Warrantors in connection with the transactions to be completed at the Completion and all documents incident thereto, including without limitation written approval from the board of directors and all of the then current holders of equity interests of each Group Company, as applicable, with respect to this Agreement and the other Transaction Documents shall have been completed, and each Group Company shall have delivered to the Investor all such counterpart copies of such documents as the Investor may reasonably request; (iii) attaching thereto (aa) the Constitutional Documents of the Group Companies as then in effect, (bb) copies of all resolutions approved by the shareholders and boards of directors of each Group Company related to the transactions contemplated hereby, and (cc) copies of good standing certificate with respect to the Company from the applicable authority dated no more than fifteen (15) days prior to the Completion, with respect to the Group Companies which are incorporated under the laws of the PRC, the business licenses of such entity.

(m) all corporate proceedings on the part of the Group Companies in connection with the transactions contemplated at the Completion having been taken to the reasonable satisfaction of the Investor, and the Investor having received all such counterpart originals or certified or other copies of such documents as it may reasonably request;

(n) the Group Companies and the Founder Parties having performed and complied with all agreements, obligations and conditions contained in this Agreement and ancillary agreements that are required to be performed or complied with by them on or before the Completion;

(o) the management rights letter in form attached hereto as Exhibit J having been duly executed and delivered to the Investor;

(p) the Company and the Founder Parties having executed and delivered to the Investor the Share Restriction Agreements in the form attached hereto as Exhibit K;

(q) the Investor having received reasonably satisfactory evidence that the Group Companies have duly obtained all required and appropriate permits and licenses for conducting the Business, except as otherwise provided in this Agreement; and

(r) each of the Restructuring Documents listed in Exhibit I hereto shall have been duly executed and delivered by the parties thereto.

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2.2 In the event that any of the Conditions specified in Clause 2.1 has not been fulfilled (or waived by the Investor in writing) before August 31, 2019 after the signing of this Agreement (or such later date as the Company and the Investor may mutually agree in writing), the obligations of the Investor under this Agreement may be terminated by written notice by the Investor or the Company to other Parties, at such Party’s own election and discretion, after which this Agreement shall be of no further force or effect with respect to the Investor.

2.3 Each of the Group Companies and the Founder Parties shall use its best endeavours to procure the fulfilment of the Conditions on or before the date set forth in Clause 2.2.

3. AGREEMENT TO SUBSCRIBE FOR SHARES

3.1 As of the Completion, the Company shall have authorized (a) 500,000,000 shares with par value of US$0.0001 per share, among which, 45,613,502 shares shall be designated as Series D Shares, 29,167,458 shares shall be designated as Series C Shares, 33,367,574 shares shall be designated as Series B+ Shares, 30,994,766 shares shall be designated as Series B Shares, 22,973,381 shares shall be designated as Series A Shares and the other 337,883,319 shares as Ordinary Shares; (b) the issuance, pursuant to the terms and conditions of this Agreement, of 12,016,993 Series D Shares having the rights, preferences, privileges and restrictions as set forth in the Restated M&A, which shall have been duly adopted by the Company as of the Completion and the Shareholders’ Agreement, and (c) reservation of at least 45,613,502 Ordinary Shares for conversion of the Series D Shares.

3.2 At the Completion, the Investor shall, subject to the terms and conditions of this Agreement, pay the Subscription Price by wire transfer of immediately available funds in the aggregate amount as set forth on Schedule 1 hereto to the bank account designated by the Company.

3.3 At the Completion, the Company shall, subject to the terms and conditions of this Agreement, validly allot and issue the Subscription Shares to the Investor, free from all charges, liens, encumbrances, equities or other third party rights, claims or interests.

4. COMPLETION

4.1 Upon satisfaction (fulfilment or waiver according to Clause 2.2, if any) of the Conditions by the Group Companies and the Founder Parties, the Completion shall take place remotely via exchange of electronic documents and signatures within fifteen (15) days after the fulfilment of the conditions as set forth in Clause 2.1 (the “Completion Date”), or at such other place and time as the Company and the Investor shall mutually agree in writing (the “Completion”).

4.2 At the Completion, the Investor shall:

(a) pay to the Company that amount set forth opposite the Investor’s name on Schedule 1 by depositing such amount into the bank account designated by the Company on the Completion Date (for avoidance of doubt, the obligations of the Investor under Clause 4.2(a) shall be deemed satisfied by the delivery to the Company a copy of the bank confirmation confirming the wiring of relevant portion of Subscription Price to the bank account designated by the Company); and

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(b) deliver or procure to be delivered to the Company a counterpart of the Transaction Documents duly executed by the Investor.

4.3 At the Completion, the Company shall deliver to the Investor:

(a) the original or a true copy of the board resolutions of the Company approving this Agreement and the other Transaction Documents to which the Company is a party, and the entry into and performance of each of such documents by the Company including the allotment and issue of the Subscription Shares in accordance with the terms of this Agreement and the issue and delivery of the share certificates to the Investor;

(b) a true and complete copy of the Written Resolutions;

(c) the certificate of compliance referred to in Clause 2.1(l) as of the Completion Date;

(d) a true and complete copy (with the original to be delivered to the Investor as soon as possible after the Completion) of the share certificate issued in the name of the Investor for the Subscription Shares, duly signed and sealed for and on behalf of the Company;

(e) a copy of the Register of Members of the Company as updated to reflect the Subscription Shares being purchased by the Investor, and certified by the registered office provider or a director of the Company; and

(f) all other documentation the delivery of which is made an express Condition pursuant to Clause 2.1.

5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

5.1 Except as set forth in the Schedule of Exceptions, the Warrantors hereby jointly and severally represent, warrant and undertake to the Investor that each of the matters set out in Schedule 4 are as of the date hereof true, complete and correct and will be for all times after the date hereof and up to and including the Completion Date true, complete and correct.

5.2 Each of the Warranties is without prejudice to any other Warranty and, except where expressly stated otherwise, no provision contained in this Agreement shall govern or limit the extent or application of any other Warranty.

5.3 Each of the Warrantors undertakes to notify the Investor in writing as soon as practicable of any matter or event which becomes known to it prior to the Completion which may render any Warranty to be or to have been untrue or inaccurate.

5.4 The rights and remedies of the Investor in respect of a breach of any Warranty shall not be affected by any due diligence review or investigation made by or on behalf of the Investor into the affairs of any Group Company.

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5.5 Notwithstanding any rule of law or equity to the contrary, any release, waiver or compromise or any other arrangement of any kind whatsoever which the Investor may agree to or effect in relation to any of the Warrantors in connection with this Agreement, and in particular the Warranties, shall not affect the rights and remedies of the Investor as regards to any other parties.

5.6 Each of the Parties hereby severally represents and warrants to the other Parties that it has full power and authority to enter into and perform this Agreement; this Agreement when executed and delivered by them shall constitute valid and legally binding obligations of such party enforceable in accordance with their respective terms.

5.7 Each of the Warrantors undertakes, in relation to any Warranty which refers to his/its knowledge or information, that he/it has made best enquiry into the subject matter of that Warranty and that he/it does not have the knowledge or information or belief that the subject matter of that Warranty may not be true, complete or accurate.

5.8 Each of the Warrantors hereby jointly and severally undertakes to the Investor to perform and procure the performance of this Agreement, and undertakes to indemnify the Investor for any failure to perform this Agreement in accordance with Clause 7 of this Agreement.

6. POST-COMPLETION COVENANTS

Each of the Warrantors hereby jointly and severally covenants to the Investor as is set forth in the remainder of this Clause 6.

6.1 Non-Compete

Each of the Founders acknowledges that the Investor agrees to invest in the Company and become a Preferred Shareholder on the basis of continued and exclusive services of and full devotion and commitment by him to the Group Companies, and agrees that the Investor should have reasonable assurance of such basis of investment. Each of the Founders hereby undertakes to the Investor that neither he nor will any of his associates, nominees, trustees or the like directly or indirectly:

(a) during the Relevant Period and for a period of two (2) years after expiration of the Relevant Period (together, the “Restriction Period”), participate, assist, advise, consult, be concerned with, engaged or interested in, any business or entity in any manner, directly or indirectly, alone or in concert with others, which is in competition with the business carried on by any Group Company at any time during the Restriction Period;

(b) during the Restriction Period, solicit in any manner any person who is or has been during the Restriction Period a customer or client of any Group Company for the purpose of offering to such person any goods or services similar to or competing with any of the businesses conducted by any Group Company at any time during the Restriction Period;

(c) during the Restriction Period, solicit or entice away, or endeavour to solicit or entice away, any employee or officer of any Group Company; or

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(d) at any time disclose to any person, or use for any purpose, any information concerning the business, accounts, finance, transactions or Intellectual Property rights of any Group Company or any trade secrets or confidential information of or relating to any of the Group Companies.

Each undertaking in paragraphs (a), (b), (c), and (d) of this Clause 6.1 shall be treated as independent of the other undertakings so that, if any of them is held to be invalid or unenforceable for any reason, the remaining undertakings shall be valid to the extent that they are not affected.

Each of the Founders hereby expressly acknowledges and declares that he has duly considered the undertakings set out in this Clause 6.1 and considers that they are reasonable in the circumstances, and warrants and undertakes to the Investor that he shall not challenge or query the validity and enforceability of these undertakings.

For the purposes of this Clause 6.1, “Relevant Period” means, in relation to each Founder and/or his associates, nominees, trustees or the like, the period during which he or any of his associates, nominees, trustees or the like is a shareholder, director, employee and/or has any direct or indirect interest (legal or beneficial) in the capital of any of the Group Companies.

6.2 Tax Covenants

The Warrantors jointly and severally undertake to the Investor that:

(a) Immediately after the Completion, the Company will not be a “Controlled Foreign Corporation” (“CFC”) as defined in the U.S. Internal Revenue Code of 1986, as amended (or any successor thereto) (the “Code”). The Company shall make due inquiry with its tax advisors on at least an annual basis regarding the Company’s status as a CFC and regarding whether any portion of the Company’s income is “subpart F income” (as defined in Section 952 of the Code) (“Subpart F Income”). The Investor shall reasonably cooperate with the Company to provide information about the Investor and the Investor’s partners in order to enable the Company’s tax advisors to determine the status of the Investor and/or any of the Investor’s partners as a “United States Shareholder” within the meaning of Section 951(b) of the Code. No later than two (2) months following the end of each Company’s taxable year, the Company shall provide the following information to the Investor: (i) the Company’s capitalization table as of the end of the last day of such taxable year, and (ii) a report regarding the Company’s status as a CFC. In addition, the Company shall provide the Investor with access to such other Company information as may be necessary for the Investor to determine the Company’s status as a CFC and to determine whether the Investor or any of the Investor’s partners is required to report its pro rata portion of the Company’s Subpart F Income on its United States federal income tax return, or to allow the Investor or the Investor’s partners to otherwise comply with applicable United States federal income tax laws. For purposes of the foregoing, (i) the term “Investor’s partners” shall mean the Investor’s partners and/or members and any direct or indirect equity owners of such partners and/or members, and (ii) the “Company” shall mean the Company and any of its direct or indirect subsidiaries. In the event that the Company is determined by the Company’s tax advisors or by counsel or accountants for the Investor to be a CFC, the Company agrees to use commercially reasonable efforts to avoid generating Subpart F Income. In the event that the Company is determined by the Company’s tax advisors or by counsel or accountants for the Investor to be a CFC, the Company agrees to use commercially reasonable efforts to annually make dividend distributions to the Investor, to the extent permitted by law, in an amount equal to 50% of any income of the Company that would have been deemed distributed to the Investor pursuant to Section 951(a) of the Code had the Investor been a “United States person” as such term is defined in Section 7701(a)(30) of the Code.

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(b) The Company has never been, and, to the best of its knowledge after consultation with its tax advisors, will not be with respect to its taxable year during which the Completion occurs, a “passive foreign investment company” within the meaning of Section 1297 of the Code. The Company shall use its best efforts to avoid being a “passive foreign investment company” within the meaning of Section 1297 of the Code. In connection with a “Qualified Electing Fund” election made by the Investor or any of the Investor’s partners pursuant to Section 1295 of the Code or a “Protective Statement” filed by the Investor or any of the Investor’s partners pursuant to Treasury Regulation Section 1.1295-3, as amended (or any successor thereto), the Company shall provide annual financial information to the Investor in the form provided in Exhibit D hereto (or in such other form as may be required to reflect changes in applicable law) as soon as reasonably practicable following the end of each taxable year of the Company (but in no event later than 90 days following the end of each such taxable year), and shall provide the Investor with access to such other Company information as may be required for purposes of filing U.S. federal income tax returns of the Investor or the Investor’s partners in connection with any such Qualified Electing Fund election or Protective Statement. In the event that the Investor or any of the Investor’s partners who has made a “Qualified Electing Fund” election must include in its gross income for a particular taxable year its pro rata share of the Company’s earnings and profits pursuant to Section 1293 of the Code, the Company agrees to make a dividend distribution to the Investor (no later than 90 days following the end of the Company’s taxable year or, if later, 90 days after the Company is informed by the Investor that the Investor’s partner has been required to recognize such an income inclusion) in an amount equal to 50% of the amount that would be included by the Investor if the Investor was a “United States person” as such term is defined in Section 7701(a)(30) of the Code and had the Investor made a valid and timely “Qualified Electing Fund” election which was applicable to such taxable year.

(c) The Company shall take such actions, including making an election to be treated as a corporation or refraining from making an election to be treated as a partnership, as may be required to ensure that at all times the Company is classified as a corporation for United States federal income tax purposes. The Company shall make due inquiry with its tax advisors (and shall cooperate with the Investor’s tax advisors with respect to such inquiry) on at least an annual basis regarding whether the Investor or any of the Investor’s partners are subject to the reporting requirements of either or both of Sections 6038 and 6038B of the Code (and the Company shall duly inform the Investor of the results of such determination), and in the event that the Investor or any of the Investor’s partners are determined by the Company’s tax advisors or the Investor’s tax advisors to be subject to the reporting requirements of either or both of Sections 6038 and 6038B, the Company agrees, upon a request from the Investor, to provide such information to the Investor as may be necessary to fulfil the Investor’s or the Investor’s partner’s obligations thereunder.

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6.3 Regulatory Filings

The Group Companies, the Founder Parties and the other direct or indirect holders or beneficial owners of Ordinary Shares (except for Lightspeed China Partners III, L.P. and GSR Ventures VI (Singapore) Pte. Ltd. and GGV) shall duly complete all filings and registrations with the PRC authorities as required by the applicable laws and regulations, including but not limited to the relevant filing and registrations with the Ministry of Commerce, the Ministry of Industry and Information Technology, the State Administration of Industry and Commerce, the SAFE, tax bureau, customs authority and the local counterpart of each of the aforementioned governmental authorities, in each case, as applicable.

6.4 Filing of Restated M&A

Within fifteen (15) days following the Completion, the Restated M&A together with the special or written shareholders resolutions on approving its adoption shall have been duly filed with the Registrar of Companies of the Cayman Islands.

6.5 Compliance

Each Group Company shall, and the Founder Parties shall cause each Group Company to, comply with all applicable laws in all material respects, including not limited to, applicable PRC laws relating to telecommunication business, software, transportation, intellectual property, anti-monopoly, financing, taxation, lease, employment and social welfare and benefits and SAFE No. 37 Notice. Without limiting the generality of the foregoing, as soon as practical after the Completion, each Group Company shall use its best efforts to obtain all licenses, consents, registrations and filings that are necessary to (i) own, lease, license, or use current or future properties and assets, and (ii) to conduct or perform its business in the manner as presently conducted and intended to be conducted. Without prejudicing the generality of the foregoing, after the Completion and upon the written request by the Investor, the relevant Group Company shall, and the Founder Parties shall cause such Group Company to, use reasonable best efforts to rectify any non-compliance with applicable laws.

6.6 Option to Purchase Equity Interest in the Domestic Company

The Investor shall have an option, exercisable at its sole discretion by giving notice to the Company of its intention to so exercise at any time after the Completion, to designate an Affiliate which shall be a PRC resident (as defined in SAFE No. 37 Notice), to purchase certain equity interest of the Domestic Company from the then shareholders of the Domestic Company, and the Warrantors shall cause the then shareholders of the Domestic Company to transfer such equity interest of the Domestic Company to the Investor or its designated Affiliate, for an aggregate nominal consideration of RMB 1 or at other minimum prices to the extent permitted by applicable laws, so that the Investor or its Affiliate (as applicable) shall hold the same shareholding percentage in the Domestic Company as it does in the Company.

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6.7 Availability of Ordinary Shares.

The Company hereby covenants that at all times there shall be made available, free of any liens, for issuance and delivery upon conversion of the Subscription Shares such number of Ordinary Shares or other shares in the share capital of the Company as are from time to time issuable upon conversion of the Subscription Shares from time to time, and will take all steps necessary to increase its authorized share capital to provide for sufficient number of Ordinary Shares issuable upon conversion of the Subscription Shares.

6.8 Business of the Company and the HK Company.

The business of the Company shall be restricted to the holding of shares or equity interest in the HK Co. The business of the HK Co shall be restricted to the holding of shares or equity interest in the WFOE.

6.9 Business of the PRC Companies.

Prior to entering into any new business other than those in the scope of the Business, each Group Companies shall use its reasonable commercial efforts and take all necessary actions to implement and carry out the new business plan as approved by the Board of Directors of the Company (including the approval of at least two-thirds (2/3) of all Preferred Directors), including, without limitation, hiring employees, renting office space, employing legal and technical consultants and undertaking other customary business activities. From the Completion and until the new business plan is duly amended in accordance with all necessary procedures, the business of the PRC Companies shall be limited to the Business.

6.10 Use of Investor’s Name or Logo.

Without the prior written consent of the Investor, and whether or not the Investor is then the shareholders of the Company, none of the Group Companies, their shareholders (excluding the Investor), nor the Founders shall use, publish or reproduce the name of the Investor (or its Affiliates) or any similar names, trademarks or logos in any of their marketing, advertising or promotion materials or otherwise for any marketing, advertising or promotional purposes, except for the fact of the equity investments and shareholding in the Group Companies by the Investor (and in any such case shall not disclose the aggregate or individual investment amounts, pricing or ownership percentage, or any of the term of this Agreement, the Shareholders’ Agreement, the Restricted Share Agreements or any other Transaction Documents).

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6.11 FCPA.

Each of the Warrantors jointly and severally represents that it shall not and shall not permit any of its subsidiaries or Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to promise, authorize or make any payment to, or otherwise contribute any item of value, including the proceeds of the transactions under this Agreement, directly or indirectly, to any third party, including any Non-U.S. Official, in each case, in violation of the FCPA, the U.K. Bribery Act, or any other Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions and will not transfer any such proceeds to or for the benefit of any Sanctioned Person or otherwise in violation of Sanctions. Each of the Founder Parties and the Group Companies further represents that it shall, and shall cause each of its subsidiaries and Affiliates to cease all of its or their respective activities, as well as remediate any actions taken by the Group Companies, its subsidiaries or Affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA, the U.K. Bribery Act, or any other Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions. Each of the Founder Parties and the Group Companies further represents that it shall and shall cause each of its subsidiaries and Affiliates to maintain systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law.

6.12 Permit and License.

To the extent permitted by the applicable laws, each of the Group Companies and the Founder Parties shall procure each of the Group Companies to, use its best efforts to obtain and maintain in a timely manner all requisite consents and permits for conducting the ordinary course of business or any business to carry out in the future in compliance with all applicable laws.

6.13 Exclusivity.

From the date of this Agreement to the Completion, without the consent of the Investor, the Group Companies and the Founder Parties shall not (i) discuss the sale of any securities of any Group Company with any third party, or (ii) to provide any information with respect to any Group Company to any third party in connection with a potential investment by such third party in any securities of any Group Company, or (iii) to close any financing transaction of any securities of any Group Company with any third party.

6.14 Employee Matters.

The PRC Companies shall use its commercially reasonable efforts to comply with all applicable PRC labour laws and regulations in all material respects, including without limitation, laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, and pensions.

The PRC Companies shall use its commercially reasonable efforts to comply with all applicable PRC education laws and regulations in all material respects, including without limitation, laws and regulations pertaining to the teaching and online education for children and teenagers aged 3-12. The PRC Companies shall use its commercially reasonable efforts to hire employees who have the qualification for the teaching and educations with respect to children and teenagers aged 3-12.

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6.15 Tax Matters.

The PRC Companies shall comply with all applicable PRC tax laws and regulations in all material respects, including without limitation, laws and regulations pertaining to income tax, value added tax and business tax.

6.16 Tax Basis in Relation to an Indirect Transfer.

Within one hundred and eighty (180) days following the Completion, all of the Subscription Price shall have been injected into the WFOE as the registered capital of the WFOE with copies of documents evidencing the same provided to the Investor (such injected amount, the “WFOE Capital Injection Amount”). Each of the Warrantors, jointly and severally, agrees that (i) in the event of a subsequent sale of Shares in the Company by the Investor, it shall ensure that the Investor is entitled to apply all Subscription Price paid by the Investor to its indirect basis in the equity (or equity cost) of the WFOE with respect to any tax filing, tax position and other communication with the relevant PRC tax authorities for purposes of determining any income tax, capital gains tax, withholding tax and any late payment interest and/or penalties derived thereto, or any other tax calculated with reference to gains made through the subscription, purchase and sale of the Company’s Shares, and (ii) it shall use its commercially reasonable efforts to not take any position that is inconsistent with (or would otherwise adversely impact the credibility of) clause (i) above in its filings or other communications with the relevant PRC tax authorities. Notwithstanding anything to the contrary herein, the Warrantors shall indemnify the Investor against all Indemnifiable Losses, in connection with the Investor’s sale of its shares, levied on the Investor by the relevant PRC tax authorities as the result of the tax base for such Shares determined by the relevant PRC tax authorities being less than all Subscription Price paid by the Investor for such Shares.

6.17 Employment Agreement and Confidentiality, Non-Competition and Intellectual Property Rights Agreements.

The Group Companies shall cause the Founder and each of their respective current and future employees to enter into an employment agreement in form and substance satisfactory to the Board (including the affirmative votes of at least two-thirds (2/3) of the directors appointed by the holders of the Preferred Shares). The Group Companies shall cause the Founder and each of their respective current and future employees and consultants to enter into a confidentiality, non-competition and proprietary information and inventions agreement in form and substance satisfactory to the Board (including the affirmative votes of at least two-thirds (2/3) of the directors appointed by the holders of the Preferred Shares).

6.18 Lease.

As soon as practicable after the Completion, the Warrantors shall cause the PRC Companies to register their leases with competent local housing authorities to file such records so that the leases of the PRC Companies are properly filed and registered in compliance with relevant PRC Laws.

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6.19 Intellectual Property.

The Group Companies shall establish and maintain appropriate intellectual property protection systems to protect the intellectual property of the Group Companies. Without limiting the generality of the foregoing sentence, the Group Companies shall, and other Warrantors shall cause the Group Companies to complete the registration of the trademark, patents, copyrights, domain names and other intellectual property related to the operation of the Business of the Group Companies as soon as applicable. The Group Companies shall, and the Founders shall cause the Group Companies to fully comply with the laws and regulations in respect of the protection of the intellectual property and refrain from infringing from the intellectual property of other parties.

6.20 WFOE’s Registered Capital

As soon as practicable after the Completion, the Founders and the Group Companies shall procure the registered capital of the WFOE to be fully paid in accordance with the charter documents of the WFOE and applicable laws and regulations.

6.21 Transfer of Assets.

(a) Transfer of Intellectual Property and Business Contracts. When and as advised by the underwriter of the Company prior to its initial public offering, (i) the intellectual property and the business contracts of the Domestic Company shall, to the maximum extent permitted by the applicable laws, be transferred to the WFOE; (ii) to the maximum extent permitted by the applicable laws, any future intellectual property of the Group Companies shall be owned in the WFOE’s name and any future business contract shall be entered into by the WFOE; and (iii) the WFOE shall be primarily responsible for the research and development of technology related to the Business.

(b) Transfer of Employees. Within twelve (12) months following the Completion (as defined in the GGV SSA) or any later time as agreed by the Investor, to the maximum extent permitted by the applicable laws, the employment relationship of the Key Employees, as requested by the Investor, shall have been transferred to the WFOE.

6.22 SAFE Amendment Registration.

If and to the extent required by applicable law, the Founder Parties shall, with respect to both of the Ordinary Shares and Preferred Shares held by them, and the Warrantors shall cause each of other direct and indirect holders or beneficial owners of the Ordinary Shares (except for direct or indirect holders of Lightspeed, GSR and GGV) to amend and update each of their registrations with SAFE in respect of the financing of the Company contemplated hereunder, and shall deliver to the Investor and its counsel satisfactory evidence for completion of such amendment registration.

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6.23 Covenants between Signing and Completion.

(a) Between the date hereof and the Completion, except as the Investor otherwise agrees in writing or for the transactions contemplated under the Transaction Documents, each of the Group Companies shall (i) conduct its business in the ordinary course consistent with past practice, as a going concern and in compliance with all applicable laws, (ii) pay or perform its debts, Taxes, and other obligations when due, (iii) maintain its assets in a condition comparable to their current condition, reasonable wear, tear and depreciation excepted, (iv) use reasonable best efforts to preserve intact its current business organizations and keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it, (v) otherwise periodically report to the Investor concerning the status of its business, operations and finance, and (vi) take all actions reasonably necessary, to consummate the transactions contemplated by this Agreement promptly, including the taking of all reasonable acts necessary to cause all of the conditions precedent of the Investor to be satisfied.

(b) From the date hereof until the Completion, (i) the Company shall promptly notify the Investor in writing of any Action commenced or threatened against any Group Company, (ii) each Party hereto shall promptly notify the other Parties of any breach, violation or non-compliance by of any representation, warranty or covenant made by such Party hereunder, and (iii) each Party will promptly provide the other Parties with copies of all correspondence and inquiries to and from, and all filings made with, any governmental authority with respect to the transactions contemplated hereby.

6.24 Negative Covenants between Signing and Completion.

Between the date hereof and the Completion, except as the Investor otherwise agrees in writing or for the transactions contemplated under the Transaction Documents, none of the Group Companies shall (and the Warrantors shall not permit any of the Group Companies to) (a) take any action that would make any Warranties inaccurate at the Completion, (b) waive, release or assign any material right or claim, (c) take any action that would reasonably be expected to materially impair the value of the Group Companies, (d) sell, purchase, assign, lease, transfer, pledge, encumber or otherwise dispose of any material asset, (e) issue, sell, or grant any Share unless otherwise pursuant to the Transaction Documents, (f) declare, issue, make, or pay any dividend or other distribution with respect to any Share, (g) incur any indebtedness for borrowed money or capital lease commitments or assume or guarantee any indebtedness of any Person, (h) enter into any contract or other transaction with any related party unless otherwise pursuant to the Transaction Documents, (i) make or permit any amendment to or effect any termination of any Group Company Contract, enter into any new contract that would have been a Material Contract if in effect on the date hereof, or make any amendment to or waiver under any Constitutional Document; (j) make or permit any change in any compensation arrangement or contract with any Key Employee, or adoption of any new ESOP, or made any change in any existing ESOP; (k) make or permit any change in accounting methods or practices or any revaluation of any of its assets; or (l) authorize, approve or agree to any of the foregoing. If at any time before the Completion, any of the Warrantors comes to know of any material fact or event which:

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(a) is in any way materially inconsistent with any of the Warranties given by each Warrantor, subject to any qualification by the Schedule of Exceptions,

(b) suggests that any material fact warranted may not be as warranted or may be materially misleading, or

(c) might affect the willingness of a reasonable investor in making a prudent decision to purchase the Subscription Shares or the amount of consideration which the Investor would be prepared to pay for the Subscription Shares,

such Warrantor shall give immediate written notice thereof to the Investor in which event the Investor may within five (5) Business Days of receiving such notice terminate this Agreement by written notice without any penalty whatsoever and without prejudice to any rights that the Investor may have under this Agreement or applicable law, provided, that, if (i) the event described in (a), (b) or (c) above would not, result or reasonably be expected to result, in a Material Adverse Effect, and (ii) in each case such event is, and is so cured within thirty (30) days thereof, then this Agreement may not be terminated under this Clause 6.27. If this Agreement is terminated in the event of (a) or (b) above, or in the event of (c) above when such fact or event is caused by the Company, solely in the event of fraud or gross negligence by any Warrantor, each Warrantor shall jointly and severally indemnify the Investor against all costs, charges and expenses incurred by it in connection with the negotiation, preparation and termination of this Agreement and other Transaction Documents.

6.25 Onshore Transfer

As soon as practicable after the Completion but no later than two (2) months after the Completion (as defined in the GGV SSA), the Domestic Company shall, and the other Warrantors shall cause the Domestic Company to duly register with the State Administration for Industry and Commerce of the Onshore Transfer.

6.26 Registration of Equity Pledge

As soon as practicable after the Completion but no later than three (3) months after the Completion (as defined in the GGV SSA), the Domestic Company shall, and the other Warrantors shall cause the Domestic Company to duly register with the State Administration for Industry and Commerce of the equity pledge contemplated under the relevant Equity Pledge Agreements ( 股权质押协议 ) in the Restructuring Documents.

6.27 Business Termination

As soon as practicable after the Completion, the PRC Companies shall use its reasonable commercial efforts and take all necessary actions to complete the refund of all deposit, advanced payment, membership fees and other similar fees (if any) received from the customers with respect to the business of online toy rental used to be conducted by the PRC Companies.

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6.28 Tax under Announcement 7.

Venus Mission Limited shall, and Warrantors shall procure Venus Mission Limited to, perform the tax withholding duties in connection with the purchase of shares of the Company from Wan Duoduo Goddess Limited, Wan Duoduo DU Limited, Venus Holdings Limited, and Taihe Leaf Ltd according to the requirements of the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises (“Circular No. 7”), and (ii) as soon as practicably possible but no later than three (3) months after the Completion (as defined in the GGV SSA), Venus Mission Limited shall, and Warrantors shall procure Venus Mission Limited to, complete (or cause the relevant sellers to complete) the payment of the applicable taxes pursuant to Circular 7.

6.29 Registration Address.

As soon as practicably possible after the Completion, the Group Companies shall, and the Warrantors shall cause the Group Companies to, change its registration address to the address where it conducts business, and complete relevant filing and registration with the competent local branch of the State Administration for Market Regulation (if applicable).

6.30 Establishment of Branches.

As soon as practicably possible after the Completion, the Group Companies shall, and the Warrantors shall cause the Group Companies to, establish branches in Xi’an and Shanghai where the Group Companies has actually conducted business, and complete relevant filing and registration with the competent local branch of the State Administration for Market Regulation.

6.31 Compliance Program.

Company shall, and shall procure that each Group Company shall, adopt compliance policies, procedures and related training programs (the “Compliance Program”), as soon as practicable and in any event within six months after the Completion and in consultation with the Investor and/or its counsel, reasonably adequate and designed to detect, prevent and deter violations of applicable (i) Anti-Corruption Laws, (ii) Sanctions, (iii) export controls, and (iv) Anti-Money Laundering Laws. The Company shall not subsequently amend any element of the Compliance Program without the Investor’s prior written consent and undertake to inform the Investor immediately of any potential non-compliance of the Compliance Program. The Investor shall be issued by the Company a certificate on a quarterly basis acknowledging on a quarterly basis and in a form and substance agreeable to the Investor, the Company’s ongoing understanding of their compliance obligations under this Agreement and the Shareholders’ Agreement.

6.32 Sanctioned Persons. The Company represents and warrants to the Investor that: (i) neither it nor any of its Relevant Persons is a Sanctioned Person nor acting for or on behalf of any Sanctioned Person, and (ii) no Group Company nor any of its Relevant Persons is a Sanctioned Person or acting for or on behalf of any Sanctioned Person.

6.33 Compliance Audit or Inquiry. The Company agrees to cooperate with any compliance audit or inquiry by the Investor and/or its professional advisors related to a violation or potential violation of Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions, and to implement any remediation measures reasonably requested by the Investor and/or its professional advisors in response to the same.

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6.34 Tax Function. As soon as practicable after the Completion, the Company shall establish a segregated in-house Tax function, with dedicated Tax personnel, that will be responsible for managing the Tax affairs of the Group Companies, and develop enhanced internal Tax control procedures.

7. INDEMNITIES

7.1 The Warrantors hereof jointly and severally undertake to fully indemnify the Investor, its associates, directors, officers, employees, limited partners, members, stockholders, attorneys (including, without limitation, those retained in connection with the transactions contemplated herein), agents and representatives (each an “Indemnitee” and collectively, the “Indemnitees”), and to keep each such Indemnitee harmless from and against all direct losses, liabilities, costs and damages (including without limitation legal costs) (the “Indemnifiable Losses”) which may be suffered or incurred by any of them in connection with, arising out of or as a result of any of the following:

(a) any of the Warranties (including but not limited to warranties regarding tax and incorporation matters) not being true, correct or accurate in all respects or not being fully complied with at all times;

(b) any breach or violation of any covenant or agreement contained herein or any of the Transaction Documents;

(c) any claim by the Group Companies and their associates against the Investor, provided that the Investor and/or its Associates is not liable, or against any Group Company; and

(d) any of the Covenants in Clause 6 and any other undertakings or obligations in this Agreement not being fully performed or fully complied with at all times.

7.2 Notwithstanding the foregoing, the Warrantor shall, jointly and severally, indemnify and keep indemnified the Indemnitees at all times and hold them harmless against any and all Indemnifiable Losses resulting from, or arising out of, or due to, directly or indirectly, (x) any claim for tax which has been made or may hereafter be made against the Domestic Company and any other Group Company wholly or partly in respect of or in consequence of any event occurring or any income, profits or gains earned, accrued or received by the Domestic Company and any Group Company on or before the Completion, (y) all liability for any taxes of any other person imposed by any governmental authority on any Group Company as a transferee, successor, withholding agent, or accomplice in connection with an event or transaction occurring before the Completion, and (z) all liability for taxes attributable to any misrepresentation or breach of warranty made in Clause 18 of Schedule 4 of this Agreement, and any reasonable costs, fees or expenses incurred and other liabilities which the Domestic Company and any Group Company may properly incur in connection with the investigation, assessment or the contesting of any claim, the settlement of any claim for tax, any legal proceedings in which the Domestic Company claims in respect of the claim for tax and in which an arbitration award or judgment is given for the Domestic Company or other Group Company and the enforcement of any such arbitration award or judgment, whether or not such tax is chargeable against or attributable to any other person (“Tax Indemnifiable Loss”), provided, however, that the Warrantors shall be under no liability for any tax matters, if any:

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(a) to the extent that such Tax Indemnifiable Loss is promptly cured within thirty (30) days after the occurrence of such Tax Indemnifiable Loss without recourse to cash or other assets of any Group Company;

(b) to the extent that such Tax Indemnifiable Loss has been clearly disclosed in the Financial Statements (as defined in Schedule 4);

(c) if it has arisen in and relates to the ordinary course of business of a Group Company since the Balance Sheet Date, subject to compliance with applicable law;

(d) to the extent that the liability arises as a result only of a provision or reserve in respect of the liability made in the Financial Statements being insufficient by reason of any increase in rates of tax announced after the Completion with retrospective effect; or

(e) to the extent that the liability arises as a result of legislation which comes into force after the Completion and which is retrospective in effect.

7.3 Notwithstanding anything contained in the Schedule of Exceptions, each of the Group Companies shall jointly and severally indemnify at all times and hold harmless each Indemnitee from and against any Indemnifiable Loss directly or indirectly, as a result of, or based upon or arising from (i) the non-payment or underpayment of social insurance or housing fund contributions, (ii) any dispute or infringement claim in connection with violation of any of the Intellectual Property of any other person or entity before the Completion, or (iii) any action, suit, arbitration or other court proceeding, pending or threatened, due to the non-compliance with any applicable laws or contracts existing prior to the Completion even if the liability is actually incurred after the Completion).

7.4 If any Indemnitee believes that it has a claim that may give rise to an obligation of any Warrantor pursuant to this Clause 7, it shall give prompt notice thereof to the Warrantors stating specifically the basis on which such claim is being made, the material facts related thereto, and the amount of the claim asserted. Any dispute related to this Clause 7 shall be resolved pursuant to Clause 17.

7.5 For the avoidance of doubt, each of the Warrantors hereby agrees and covenants that he/it will do all such things and undertake all such actions, including without limitation, any applications to and registrations with the governmental authorities and any other protective measures reasonably requested by the Investor, to ensure that the agreement of the parties with respect to joint and several liability of the Warrantors under the Transaction Documents is given full force and effect.

7.6 Notwithstanding the above provisions, absent fraud or any wilful misconduct on the part of any Warrantor, none of the Warrantors shall have any liability under the warranties and representations to the extent that any individual claim against any of them in respect thereof does not exceed US$10,000 (in respect of the Group Companies) and US$20,000 (in respect of the Founder Parties). For the avoidance of doubt, if the total amount of the Indemnifiable Loss exceeds US$10,000 (in respect of the Group Companies) or US$20,000 (in respect of the Founder Parties), the Warrantors shall be liable for the full amount of Indemnifiable Loss. Notwithstanding any other provision contained herein, absent fraud or wilful misconduct by any of the Founder Parties, the maximum liability of the Founder Parties shall be limited to one hundred percent (100%) of the shares directly or indirectly held by the Founder Parties in the Company. Absent fraud or wilful misconduct on the part of any Warrantor, the Indemnitees shall not be entitled to make any claim against the Founder Parties unless written notice thereof has been given to each of the Founder Parties within two (2) years from the date of Completion.

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7.7 This Clause 7 shall not be deemed to preclude or otherwise limit in any way the exercise of any other rights or pursuit of equitable remedies (including but not limited to injunctive relief and/or specific performance) for the breach of this Agreement or with respect to any misrepresentation.

7.8 The Warrantors’ obligations under this Clause 7 shall survive the Completion.

8. PROCEEDS OF SUBSCRIPTION

8.1 The parties acknowledge and agree that the proceeds of the subscription for the Series D Shares under this Agreement shall be used, in accordance with the directions of the Company’s Board of Directors, as it shall be constituted in accordance with the Shareholders’ Agreement, to fund the WFOE’s register capital and for the capital expenditures, equipment purchase, hiring, research and development and general working capital of the Group Companies, in particular for the expansion of the existing lines of business.

9. SEVERABILITY AND SURVIVAL

9.1 If at any time any one or more provisions hereof is or becomes invalid, illegal, unenforceable or incapable of performance in any respect, the validity, legality, enforceability or performance of the remaining provisions hereof shall not thereby in any way be affected or impaired.

9.2 The obligations of the Group Companies and the Founder Parties shall survive the Completion.

10. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement and understanding between the parties in connection with the subject matter of this Agreement and supersedes all previous term sheets, proposals, representations, warranties, agreements or undertakings relating thereto whether oral, written or otherwise and no party has relied or is entitled to rely on any such term sheets, proposals, representations, warranties, agreements or undertakings.

11. TIME OF ESSENCE AND REMEDIES AND WAIVERS

11.1 Time shall be of the essence of this Agreement.

11.2 No delay or omission by any party in exercising any right, power or remedy provided by law or under this Agreement shall:

(a) affect that right, power or remedy; or

(b) operate as a waiver of it.

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11.3 The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy.

11.4 The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.

11.5 It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any other party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

12. PUBLIC ANNOUNCEMENTS

12.1 The investment and subscription of the Subscription Shares by the Investor in the Company, including without limitation the existence of such investment and the terms and conditions of this Agreement, the term sheets preceding this Agreement and any other Transaction Documents shall be confidential information and shall not be disclosed by any Group Company or any of their associates to any person not being a party hereto except with the prior written consent of the Investor.

12.2 Notwithstanding Clause 12.1, each Group Company may disclose the terms of the investment to its employees, investment bankers, lenders, accountants, attorneys, business partners, directors, shareholders, senior management and bona fide prospective investors, in each case only where such persons or entities are under appropriate non-disclosure obligations. For the avoidance of doubt, other than disclosures to the foregoing permitted persons, none of the Group Companies may disclose the investment amounts in relation to the Subscription Shares, the valuation of the Company, the rights and privileges of the Investor under this Agreement and the Shareholders’ Agreement and the share capital structure of the Company to any person except with the prior written consent of the Investor.

12.3 In the event that any Group Company becomes legally compelled (including without limitation, pursuant to securities laws and regulations) to make disclosure not permitted under Clauses 12.1 and 12.2, such Group Company (“Disclosing Party”) shall provide the other parties (“Non-Disclosing Parties”) with prompt written notice of that fact so that the appropriate party may seek (with the cooperation and reasonable efforts of the other parties) a protective order, confidential treatment or other appropriate remedies. In such event, the Disclosing Party shall furnish only that portion of the information which is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such information to the extent reasonably requested by any Non-Disclosing Party.

13. ASSIGNMENT AND COUNTERPARTS

13.1 This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective assigns and successors.

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13.2 The Investor may assign and transfer, to its associates, any of its rights, benefits and obligations in this Agreement including without limitation the benefit of any representations, warranties and undertakings contained herein. Save as aforesaid, no party hereto may assign or transfer any of his or its rights or obligations under this Agreement.

13.3 This Agreement may be entered into by any party by executing a counterpart hereof and may be delivered by electronic PDF or facsimile transmission, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

14. NOTICES AND OTHER COMMUNICATION

14.1 All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address, or to such email address, facsimile number or address as set forth on Schedule 5 hereto or as subsequently modified by written notice given in accordance with this Clause 14.1.

15. FURTHER ASSURANCE

Each of the parties shall at its (as the case may be) own costs, from time to time upon request, do or procure the doing of all acts and/or execute or procure the execution of all documents in a form satisfactory to the other parties which the other parties may reasonably request for giving full effect to this Agreement and securing to the other parties the full benefit of the rights, powers and remedies conferred upon the other parties in this Agreement.

16. COSTS AND EXPENSES

16.1 Each Party shall bear the legal, financial and all other expenses incurred by itself in respect of the negotiation, preparation, execution and carrying into effect of this Agreement and the transactions contemplated herein.

17. GOVERNING LAW AND JURISDICTION

17.1 This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of Hong Kong without regard to the conflict of laws principles thereof.

17.2 Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall first be subject to resolution through consultation of the parties to such dispute, controversy or claim. Such consultation shall begin within seven (7) days after one Party hereto has delivered to the other Parties involved a written request for such consultation. If within thirty (30) days following the commencement of such consultation the dispute cannot be resolved, the dispute shall be submitted to arbitration upon the request of any Party with notice to the other Parties.

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17.3 The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the “HKIAC”). There shall be three (3) arbitrators. The complainant and the respondent to such dispute shall each select one (1) arbitrator within thirty (30) days after giving or receiving the demand for arbitration. Such arbitrators shall be freely selected, and the Parties shall not be limited in their selection to any prescribed list. The Chairman of the HKIAC shall select the third arbitrator. If either party to the arbitration does not appoint an arbitrator who has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of the HKIAC.

17.4 The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the Arbitration Rules of the HKIAC in effect at the time of the arbitration. However, if such rules are in conflict with the provisions of this Clause 17, including the provisions concerning the appointment of arbitrators, the provisions of this Clause 17 shall prevail.

17.5 Each Party hereto shall cooperate with any party to the dispute in making full disclosure of and providing complete access to all information and documents requested by such party in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on the Party receiving the request.

17.6 The award of the arbitration tribunal shall be final and binding upon the disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for enforcement of such award.

17.7 Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

18. FINDER’S FEES

Except as disclosed in the Schedule of Exceptions, each party (a) represents and warrants to the other parties hereto that it has retained no finder or broker in connection with the transactions contemplated by this Agreement, and (b) hereby agrees to indemnify and to hold harmless the other party hereto from and against any liability for any commission or compensation in the nature of a finder’s fee of any broker or other person or firm (and the costs and expenses of defending against such liability or asserted liability) for which the indemnifying party or any of its employees or representatives are responsible.

19. FORCE MAJEURE

In the event of earthquakes, typhoon, flood, war or other events (the “Event of Force Majeure”), the consequences of which are beyond the parties’ control, prevention or avoidance and which directly affects the performance of this Agreement or hinders performance of its items, the party which is affected by it should immediately inform the other parties in writing, and within five (5) days shall provide details of the event and valid documentary evidence supporting the reasons for which matters agreed in this Agreement cannot be performed in whole or in part or for which performance will be delayed. Such documents must be issued by the notary public office in the place where the said event has occurred. Notwithstanding the foregoing, the Party affected by the Event of Force Majeure shall (i) use all reasonable efforts to remedy the situation and minimize or remove the effects of Event of Force Majeure so far as possible and, subject thereto, comply with its obligations hereunder; (ii) within the shortest time practicable, attempt to resume performance of the obligations suspended by Event of Force Majeure.

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20. NO RECOURSE

Notwithstanding anything that may be expressed or implied in this Agreement, no recourse under this Agreement shall be had against any current or future Affiliate of the Investor, any current or future direct or indirect shareholder, member, general or limited partner, controlling person or other beneficial owner (as applicable) of the Investor or any of their respective Affiliates, representatives or successors and assigns of each of the foregoing (collectively, “Non-Liable KKR Persons”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Non-Liable KKR Person for any obligation of the Investor under this Agreement or for any claim based on, in respect of or by reason of such obligations or their creation. Each Non-Liable KKR Person shall be an express third party beneficiary of, and entitled to directly enforce, this Clause 20.

– EXECUTION PAGES FOLLOW –

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IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

COMPANY:	WAN DUODUO LIMITED
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑) Title:    Director
HK CO:	WAN DUODUO HONGKONG LIMITED
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑) Title:   Director
WFOE:	WAN LE DUO NETWORK TECHNOLOGY (BEIJING) CO., LTD. (玩乐多网络技术(北京)有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑) Title:   Legal Representative
	Affix Seal:
DOMESTIC COMPANY:	BEIJING XIN GENG YUAN TECHNOLOGY DEVELOPMENT CO., LTD. (北京心更远科技发展有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑) Title:   Legal Representative
	Affix Seal:

Signature Page to Share Subscriptions Agreement – Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

Founder Parties:

VENUS MISSION LIMITED
By:	/s/ Luo Jian
Name:	Luo Jian (罗剑)
Title:	Director
Luo Jian (罗剑)
By:	/s/ Luo Jian
FUN KINGDOM LIMITED
By:	/s/ Shan Zebing
Name:	Shan Zebing (单泽兵)
Title:	Director
Shan Zebing (单泽兵)
By:	/s/ Shan Zebing

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTOR:	Zeta Asia Holdings Pte. Ltd.
	By:	/s/ Yan ChengKang
	Name: Yan ChengKang
	Title: Director

Signature Page to Share Subscription Agreement - Wan Duoduo Limited

EX-10.7

Exhibit 10.7

July 21, 2020

SHARE SUBSCRIPTION AGREEMENT

concerning Series E Shares in

Spark Education Limited

SHARE SUBSCRIPTION AGREEMENT

DATED July 21, 2020

AMONG

(1) Spark Education Limited, a company incorporated in the Cayman Islands with its registered office located at Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands (the “Company”);

(2) Spark Education (HongKong) Limited, a company incorporated in the Hong Kong with its registered office located at Unit 806, 8/F, Tower II, Cheung Sha Wan Plaza, 833 Cheung Sha Wan Road, Kowloon, Hong Kong (the “HK Co”);

(3) Beijing Spark Education and Technology Co., Ltd. (北京火花思维教育科技有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B306, floor 3, building B, No.101, Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Beijing WFOE”);

(4) Tianjin Spark Education and Technology Co., Ltd. (天津火花思维教育科技有限公司), a limited liability company incorporated in the PRC with its registered office located at 1-1702-a-60, Yanzhao Building, Tianjin Pilot Free Trade Zone (the “Tianjin WFOE”, together with “Beijing WFOE”, collectively, the “WFOEs”);

(5) Beijing Xingengyuan Technology Ltd. (北京心更远科技发展有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B202, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Domestic Company”);

(6) Beijing Spark Juli Education Consulting Co., Ltd. (北京火花聚力教育咨询有限公司), a limited liability company incorporated in the PRC with its registered office located at Room B303, Block B, No.101 of Wangjing Lize Zhongyuan, Chaoyang District, Beijing (the “Beijing Co”);

(7) Wuhan Spark Education Consulting Co., Ltd. (武汉火花思维教育咨询有限公司), a limited liability company incorporated in the PRC with its registered office located at 13 / F, Building A4, Guanggu Financial Port, No.77, Guanggu Avenue, East Lake Hi-tech Development Zone, Wuhan (the “Wuhan Co”, together with “Beijing Co”, collectively, the “Domestic Subsidiaries”);

(8) the parties listed in Schedule 1 (the “Investors” and each an “Investor”); and

(9) the parties listed in Schedule 2 (the “Founder Parties”, and each a “Founder Party”).

Each of the parties listed above is referred to herein individually as a “Party” and collectively as the “Parties”.

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WHEREAS

(A) The Company has entered into certain share repurchase agreement (the “Share Repurchase Agreement”) with SGH Limited and Hike (collectively, the “Transferors”, and each a “Transferor”), pursuant to which the Company agrees to repurchase from the Transferors, and the Transferors agree to sale and transfer to the Company (the “Repurchase”), a total of 2,892,803 Ordinary Shares and 832,465 Series B Shares at the aggregate consideration of US$10,000,000.50.

(B) Immediately prior to the Completion, the Company has an authorized capital of US$80,000 divided into (i) 630,303,889 Ordinary Shares of a par value of US$0.0001 per share, among which (a) 579,895,508 Class A Ordinary Shares of a par value of US$0.0001 per share, 11,449,071 of which are issued and outstanding; (b) 50,408,381 Class B Ordinary Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (ii) 22,973,381 Series A Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (iii) 30,162,301 Series B Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (iv) 33,367,574 Series B+ Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (v) 29,167,458 Series C Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; (vi) 45,613,502 Series D Shares of a par value of US$0.0001 per share, all of which are issued and outstanding; and (vii) 8,411,895 Series D+ Shares of a par value of US$0.0001 per share, all of which are issued and outstanding. All issued and outstanding shares have been fully paid (or credited as fully paid). The capitalization of the Company immediately prior to the Completion Date is set out in Part A of Exhibit B hereto. Further particulars of the Group Companies and the Founder Parties are set out in Schedule 2 and Schedule 3. The Company has adopted an employee share option plan (the “ESOP”), under which the Company has reserved a total of 29,183,325 Class A Ordinary Shares, representing 11.3535% of the fully-diluted capitalization of the Company for issuance of restricted shares or issuance of shares pursuant to share options granted under the ESOP, of which 3,693,409 Class A Ordinary Shares has been issued to and held in trust by Venus Mission Limited, the Founder Holdco wholly owned by Luo Jian (“Founder Holdco ESOP Shares”).

(C) The Company hereby agrees to issue and sell to the Investors and each of the Investors hereby agrees to, severally but not jointly, subscribe for and purchase from the Company the Subscription Shares (as defined below) pursuant to the terms and conditions of this Agreement.

(D) NOW IT IS HEREBY AGREED as follows:

1. INTERPRETATION

1.1 In this Agreement, including the Recitals and the Schedules, the following expressions shall, except where the context otherwise requires, have the following meanings:

“Action” has the meaning ascribed to it in Clause 11 of Schedule 4.

“Agreement” means this Share Subscription Agreement;

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person. In the case of a natural person, the Affiliate also includes (i) such Person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brothers-in-law and sisters-in-law; and (ii) any trust Controlled by or held for the benefit of such Person. The term “affiliated” has the meaning correlative to the foregoing;

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“Anti-Corruption Laws” means any anti-bribery or anti-corruption Laws (including Laws that prohibit the corrupt payment, giving, offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any Government Official, commercial entity or any other Person to obtain a business advantage) applicable to the Group and its operations from time to time, including without limitation (i) the U.S. Foreign Corrupt Practices Act of 1977, (ii) the UK Bribery Act of 2010, (iii) any legislation adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and (iv) any similar Laws in any other jurisdiction in which any entity of the Group operates, in each case as amended from time to time;

“Anti-Corruption Prohibited Activity” means offering, paying, promising to pay or authorizing the payment of any money or the giving of anything of value to any Government Official, or to any other Person, for the purpose of (i) influencing any act or decision of such Government Official in his official capacity, (ii) inducing such Government Official to do or omit to do any act in relation to his lawful duty, (iii) securing any improper advantage, or (iv) inducing such Government Official to influence of affect any act or decision of any Governmental Authority, in each case, in order to assist the Person carrying out such activity in obtaining or retaining business for or with, or in directing business to, any Person, or any other activity prohibited by any Anti-Corruption Laws;

“Anti-Money Laundering Laws” means any anti-money laundering-related Laws and codes of practice applicable to the Group and its operations from time to time, including without limitation (i) the EU Anti-Money Laundering Directives and any laws, decrees, administrative orders, circulars, or instructions implementing or interpreting the same, and (ii) the applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transaction Reporting Act of 1970;

“Applicable Law(s)” or “Law(s)” means and includes statutes, enactments, acts of legislature or the parliament, laws, regulations, ordinances, notifications, rules, judgments, Orders, decrees, by-laws, approvals from the concerned authority (including a Governmental Authority), resolutions, directives, guidelines, policies, requirements, or other governmental restrictions or any similar form of decision of, or determination by, or any interpretation or adjudication having the force of law of any of the foregoing, by any concerned Governmental Authority having jurisdiction over the matter in question;

“Associate” means, with respect to any Person, (1) a corporation or organization (other than the Group Companies) of which such Person is an officer or partner or is, directly or indirectly, the record or beneficial owner of ten percent (10%) or more of any class of Equity Securities of such corporation or organization, (2) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar capacity, or (3) any child, brother, sister, parent or spouse of such Person, or any child, brother, sister, parent of the spouse;

“Balance Sheet Date” has the meaning ascribed to it in Clause 16 of Schedule 4;

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“Beijing Co” has the meaning ascribed to it in the preamble;

“Beijing WFOE” has the meaning ascribed to it in the preamble;

“Board” or “Board of Directors” means the board of directors of the Company;

“Business” means the live online educational courses for children aged 3-12 conducted by the Company, its consolidated subsidiaries and the PRC Companies;

“Business Day” means any day, other than a Saturday, Sunday or other day on which the commercial banks in Cayman Islands, the U.S.A., Hong Kong or PRC are authorized or required to be closed for the conduct of regular banking business;

“CFC” has the meaning ascribed to it in Clause 6.2(a);

“Circular No. 7” has the meaning ascribed to it in Clause 6.25;

“Class A Ordinary Share” means the class A ordinary shares in the capital of the Company with a par value of US$0.0001 per share having the rights set out in the Restated M&A.

“Class B Ordinary Share” means the class B ordinary shares in the capital of the Company with a par value of US$0.0001 per share having the rights set out in the Restated M&A.

“Code” has the meaning ascribed to it in Clause 6.2(a);

“Completion” has the meaning ascribed to it in Clause 4.1(a);

“Completion Date” has the meaning ascribed to it in Clause 4.1(a);

“Conditions” means the conditions precedent to the Completion set out in Clause 2;

“Consents” includes an approval, authorisation, exemption, filing, licence, order, permission, permit, recording or registration, certificate or declaration, or report or notice to, any Person, including any governmental authority;

“Constitutional Documents” has the meaning ascribed to it in Clause 13 of Schedule 4;

“Control”, “Controls”, “Controlled” (or any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of the management of a Person, whether through the ownership of voting securities, by contract, credit arrangement or proxy, as trustee, executor, agent or otherwise. For the purpose of this definition, a Person shall be deemed to Control another Person if such first Person, directly or indirectly, owns or holds more than 50% of the voting equity interests in such other Person;

“Conversion Shares” means the Class A Ordinary Shares issuable upon conversion of any Series E Shares;

“Disclosing Party” has the meaning ascribed to it in Clause 12.3;

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“Domestic Company” has the meaning ascribed to it in the preamble;

“Domestic Subsidiaries” has the meaning ascribed to it in the preamble;

“Environmental Claim” has the meaning ascribed to it in Clause 19 of Schedule 4;

“Environmental Laws” has the meaning ascribed to it in Clause 19 of Schedule 4;

“ESOP” has the meaning ascribed to it in the recitals;

“Equity Securities” means, with respect to any Person that is a legal entity, any and all shares of capital stock, membership interests, units, profits interests, ownership interests, equity interests, registered capital, and other equity securities of such Person, and any right, warrant, option, call, commitment, conversion privilege, preemptive right or other right to acquire any of the foregoing, or security convertible into, exchangeable or exercisable for any of the foregoing;

“Event of Force Majeure” has the meaning ascribed to it in Clause 19;

“Exhibits” mean the exhibits of this Agreement;

“Export Control Laws” means the U.S. Export Administration Act, U.S. Export Administration Regulations, U.S. Arms Export Control Act, U.S. International Traffic in Arms Regulations, and their respective implementing rules and regulations and the U.K. Export Control Act 2002 (as amended and extended by the Export Control Order 2008) and its implementing rules and regulations;

“Financial Statements” has the meaning ascribed to it in Clause 16 of Schedule 4;

“FCPA” has the meaning ascribed to it in Clause 6.11;

“Founder” or “Founders” has the meaning set forth in Schedule 2;

“Founder Holdco” or “Founder Holdcos” has the meaning set forth in Schedule 2;

“Founder Holdco ESOP Shares” has the meaning ascribed to it in the recitals;

“Founder Party” or “Founder Parties” has the meaning ascribed to it in the preamble;

“Fun Kingdom” means Fun Kingdom Limited;

“Government” or “Governmental Authority” means: (a) any supranational, national, state, city, municipal, county or local government, governmental authority or political subdivision thereof; (b) any agency or instrumentality of any of the authorities referred to in (a) above; (c) any regulatory or administrative authority, body or other similar organization, to the extent that the rules, regulations, standards, requirements, procedures or orders of such authority, body or other organization have the force of Law; (d) any court or tribunal having jurisdiction; or (e) the governing body of any stock exchange(s);

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“Government Official” means any officer, employee or other person acting in an official capacity on behalf of (a) any Governmental Authority or any department or agency of a Government, including elected officials, judicial officials, civil servants and military personnel, children, spouses, siblings or parents of a Government Official; (b) any public international organization, such as the World Bank; (c) any company, business or instrumentality that is owned or Controlled by a Governmental Authority; and (d) any political party, as well as candidates for political office;

“GGV” means GGV VII Investments, L.L.C. and GGV VII Plus Investments, L.L.C.;

“GGV SSA” means the Share Subscription Agreement concerning Ordinary Shares and Series D Shares entered into by and among the Company, GGV, SCC Venture VII Holdco, Ltd., IDG China Venture Capital Fund IV L.P., IDG China IV Investors L.P., Lightspeed, Northern Light Venture Capital V, Ltd., Hike, LFC Investment Hong Kong Limited, GSR 2017 Opportunities (Singapore) Pte. Ltd. and certain other parties, dated as of July 30, 2019;

“Group Companies” means the Company, the HK Co, the PRC Companies, and their respective Subsidiaries from time to time, particulars of which are set out in Schedule 3;

“Group Company” means any one of the Group Companies;

“Group Company Contract” has the meaning ascribed to it in Clause 10 of Schedule 4;

“GSR” means GSR VENTURES VI (SINGAPORE) PTE. LTD.;

“Hike” means Hike Capital L.P.;

“HKIAC” has the meaning ascribed to it in Clause 17.3;

“Hong Kong” means the Hong Kong Special Administrative Region of the PRC;

“HK Co” has the meaning ascribed to it in the preamble;

“Indemnifiable Losses” has the meaning ascribed to it in Clause 7.1;

“Indemnitees” has the meaning ascribed to it in Clause 7.1 and “Indemnitee” means any one of them;

“Investor(s)” has the meaning ascribed to it in the preamble;

“Key Employees” means the employees as set forth in the Exhibit C of this Agreement;

“KKR” means ZETA ASIA HOLDINGS PTE. LTD.;

“KKR SSA ” means the Share Subscription Agreement concerning Series D Shares entered into by and among the Company, ZETA ASIA HOLDINGS PTE. LTD. and certain other parties, dated as of August 15, 2019;

“Lightspeed” means Lightspeed China Partners III, L.P.;

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“Material Adverse Effect” means any event, occurrence, fact, condition, change or development that has had or could reasonably be expected to have, individually or in aggregate, (i) a material adverse effect on the business (as presently conducted and proposed to be conducted), assets (including intangible assets), affairs, liabilities, condition (financial or otherwise), properties, prospects or results of operations of the Group Companies, taken as a whole; (ii) material impairment of the ability of any Warrantor to perform the material obligations of such party under any Transaction Document; or (iii) material impairment of the validity or enforceability of this Agreement or any other Transaction Documents against any Warrantor;

“Materials of Environmental Concern” has the meaning ascribed to it in Clause 19 of Schedule 4;

“Non-Disclosing Parties” has the meaning ascribed to it in Clause 12.3;

“Onshore Transfer” has the meaning ascribed to it in Clause 2.1(l);

“Ordinary Shares” means Class A Ordinary Shares and Class B Ordinary Shares, collectively or any of them;

“Person” means any individual, sole proprietorship, partnership, firm joint venture, estate, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or governmental authority or other entity of any kind or nature;

“PRC” means the People’s Republic of China;

“PRC Companies” means the WFOEs, the Domestic Company, the Domestic Subsidiaries and their respective Subsidiaries from time to time;

“PRC GAAP” has the meaning ascribed to it in Clause 16 of Schedule 4;

“Preferred Directors” has the meaning ascribed to it in the Shareholders’ Agreement;

“Preferred Shareholder” means any holder of Preferred Shares;

“Preferred Shares” means any of the preferred shares of the Company, including the Series A Shares, the Series B Shares, the Series B+ Shares, the Series C Shares, the Series D Shares, the Series D+ Shares and the Series E Shares;

“Proprietary Assets” has the meaning ascribed to it in Clause 9(a) of Schedule 4;

“Registered Intellectual Property” has the meaning ascribed to it in Clause 9(a) of Schedule 4;

“Relevant Period” has the meaning ascribed to it in Clause 6.1;

“Repurchase” has the meaning ascribed to it in the recitals;

“Restated M&A” means the ninth amended and restated memorandum and articles of association of the Company as set forth in Exhibit E of this Agreement, and any amendments thereto from time to time;

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“Restructuring Documents” means (i) the Exclusive Business Cooperation Agreement entered into by and between the Beijing WFOE and the Domestic Company dated on January 3, 2017, (ii) the Equity Interest Pledge Agreement, Exclusive Option Agreement, Power of Attorney and Spousal Consents dated prior to or on the Completion Date entered into by and among the Beijing WFOE, the Domestic Company and Luo Jian (罗剑) or the spouse of Luo Jian (罗剑), (iii) the Equity Interest Pledge Agreement, Exclusive Option Agreement, Power of Attorney and Spousal Consents dated on November 12, 2018 entered into by and among the Beijing WFOE, the Domestic Company and Shan Zebing (单泽兵) or the spouse of Shan Zebing (单泽兵);

“Restriction Period” has the meaning ascribed to it in Clause 6.1 (a);

“Returns” has the meaning ascribed to it in Clause 18 (a) of Schedule 4;

“RMB” means Renminbi, the lawful currency of the People’s Republic of China;

“SAFE” means the PRC State Administration of Foreign Exchange;

“SAFE No. 37 Notice” means the Notice on Issues Relating to the Administration of Foreign Exchange in Overseas Investment, Fund-raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies (《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》) issued by the SAFE on July 14, 2014 and any of its implementing measures or guidelines, in relation to the transactions contemplated under this Agreement;

“Sanctioned Person” means (a) any Person that is the subject or target of Sanctions (including but not limited to any Person that is designated on the list of “Specially Designated Nationals and Blocked Persons” administered by the U.S. Treasury Department’s Office of Foreign Assets Control, or on any list of any economic or financial sanctions administered by the U.S. State Department, the United Nations, the European Union or any member state thereof, the United Kingdom, or any similar list maintained by, or public announcement of Sanctions designation made by, any applicable national economic sanctions authority), (b) any government, national, or resident of, or legal entity located in or organized under, the laws of a country or territory which is the subject of country- or territory-wide Sanctions (including without limitation Cuba, Iran, North Korea, Syria, or the Crimea region of Ukraine), (c) any Person who is owned 50% (fifty percent) or more, or Controlled, by any of the foregoing, or (d) any Person with whom business transactions, including exports and re-exports, would violate Sanctions;

“Sanctions” means all trade, economic and financial sanctions Laws administered, enacted or enforced from time to time by (i) the United States (including without limitation the Department of Treasury, Office of Foreign Assets Control and the United States Department of State), (ii) the European Union and enforced by its member states, (iii) the United Nations, (iv) the United Kingdom (including without limitation Her Majesty’s Treasury), or (v) any other similar Governmental Authority with regulatory authority over the Company or any Subsidiary from time to time;

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“Schedules” means the schedules of this Agreement;

“Series A Shares” means series A redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series B Shares” means series B redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series B+ Shares” means series B+ redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series B+ SSA” means the Share Subscription Agreement concerning Series B+ Preferred Shares entered into by and among the Company, IDG China Venture Capital Fund IV L.P., IDG China IV Investors L.P., Hike, Lightspeed, GSR, Northern Light Venture Capital V, Ltd., SCC Venture VI Holdco, Ltd., Sequoia Capital CV IV Holdco, Ltd. and certain other parties, dated as of June 13, 2018;

“Series C Shares” means series C redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series D Shares” means series D redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series D+ Shares” means series D+ redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Series E Shares” means series E redeemable convertible preferred shares of par value of US$0.0001 each in the capital of the Company;

“Shareholders’ Agreement” means the seventh amended and restated shareholders’ agreement to be entered into among the Investors, the Company, the HK Co, the PRC Companies, the Founder Parties and certain other parties thereto, substantially in the form and substance as set forth in Exhibit F of this Agreement;

“Shares” means all shares of the Company, including the Ordinary Shares, the Series A Shares, the Series B Shares, the Series B+ Shares, the Series C Shares, the Series D Shares, the Series D+ Shares and the Series E Shares;

“Share Repurchase Agreement” has the meaning ascribed to it in the recitals;

“Share Restriction Agreements” means the seventh amended and restated share restriction agreements to be entered into by and among the Investors, the Company, each of the Founder Parties respectively and certain other parties thereto, substantially in the form and substance as set forth in Exhibit I of this Agreement;

“Subpart F Income” has the meaning ascribed to it in Clause 6.2(a);

“Subscription Price” means US$128,000,000.11 for a total of 43,868,754 Series E Shares or US$2.91779431 per Series E Share;

“Subscription Shares” means a total of 43,868,754 Series E Shares to be issued to the Investors pursuant to this Agreement;

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“Tax Indemnifiable Loss” has the meaning ascribed to it in Clause 7.2;

“Tianjin WFOE” has the meaning ascribed to it in the preamble;

“Transaction Documents” means this Agreement, the Shareholders’ Agreement, the Restated M&A, the Share Restriction Agreements, the Restructuring Documents, the exhibits attached to any of the foregoing and any other document, certificate, and agreement delivered in connection with the transactions contemplated hereby and thereby;

“Transferor(s)” has the meaning ascribed to it in the recitals;

“US$” or “US Dollar” means United States dollars, the lawful currency of the United States of America;

“Warranties ” means the representation, warranties and undertakings as set out in Clause 5 and Schedule 4;

“Warrantors” means the Founder Parties and the Group Companies collectively and “Warrantor” means any one of them;

“WFOEs” has the meaning ascribed to it in the preamble;

“WFOEs Capital Injection Amount” has the meaning ascribed to it in Clause 6.16; and

“Written Resolutions” means the written resolutions of the shareholders of the Company in form and substance satisfactory to the Investors where the shareholders of the Company agree to, among other things, amend the Memorandum and Articles of Association of the Company, and approve the terms and conditions of the Shareholders’ Agreement;

“Wuhan Co” has the meaning ascribed to it in the preamble.

1.2 In this Agreement:

(a) references to recitals, Clauses, sub-Clauses, Schedules and Exhibits are to the Clauses and sub-Clauses of, and the recitals, Schedules and Exhibits to, this Agreement;

(b) references to any statutory provision or any rule or regulation (whether or not having the force of law) shall be construed as references to the same as amended, varied, modified, consolidated or re-enacted from time to time and to any subordinate legislation made under such statutory provision;

(c) references to parties are to parties of this Agreement;

(d) words importing the singular include the plural and vice versa, words importing one gender include every gender, and references to persons include bodies corporate and unincorporated;

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(e) headings are for ease of reference only and shall not affect the interpretation of this Agreement;

(f) references to a document in the “agreed form” are references to a document the form of which has been or may from time to time be agreed among all parties hereto; and

(g) the terms “tax” and “taxes” shall include all taxes, assessments, duties, tariffs, registration fees, and other governmental charges in the nature of taxes including all income, franchise, property, production, sales, use, payroll, license, windfall profits, value added, severance, withholding, excise, gross receipts and other taxes, as well as any interest, additions or penalties relating thereto and any interest in respect of such additions of penalties.

1.3 The recitals, the Schedules and the Exhibits form parts of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement and any reference to this Agreement shall include the Recitals, the Schedules and the Exhibits.

1.4 All references to dates and time are, unless the context requires otherwise, to Hong Kong time.

2. CONDITIONS PRECEDENT

2.1 The obligations of each Investor to purchase its portion of the Subscription Shares and pay its portion of the Subscription Price on the Completion Date in accordance with Clause 3 hereof shall be conditional on the fulfilment of all of the following Conditions (subject to any waiver in written form by such Investor in its absolute discretion of any or all of the Conditions, provided that each Investor may waive any Condition only with respect to itself):

(a) the Written Resolutions having been duly approved and passed by the shareholders and the board of directors of the Company and remaining valid and effective as at the Completion, and the Restated M&A, in the form attached hereto as Exhibit E, having been adopted accordingly;

(b) the issue and allotment of the Subscription Shares to the Investors pursuant to the terms of this Agreement, the execution of the Transaction Documents to which it is a party, and the performance of its obligations hereunder and thereunder having been duly approved by the shareholders and directors of the Company;

(c) each of the Founder Holdcos, the PRC Companies and the HK Co having provided to the Investors true copies of the shareholders’ resolutions and/or the board resolutions (as required under laws of its jurisdiction) to approve the execution of the Transaction Documents to which it is a party, and the performance of its obligations hereunder and thereunder;

(d) execution and delivery of the Shareholders’ Agreement in the form attached hereto as Exhibit F, by the parties to the Shareholders’ Agreement (other than the Investors);

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(e) all the Warranties remaining true and correct at all times as from the signing of this Agreement up to the Completion, as if they were made and repeated on and as of the Completion;

(f) no Material Adverse Effect having occurred, and no event having occurred or arising, and no circumstance existing, that would reasonably be expected to result in a Material Adverse Effect;

(g) no provision of any Applicable Laws shall prohibit the consummation of any transactions contemplated by the Transaction Documents;

(h) all Consents of any competent governmental authority or of any other Person that are required for the entering into and performance of the Transaction Documents and the implementation of the transactions therein contemplated having been obtained and remaining valid and effective as at Completion;

(i) each of the Key Employees having entered into an employment contract, a non-competition, non-solicitation, confidentiality, proprietary information and invention assignment agreement with the appropriate Group Company in substantially the form attached hereto as Exhibit G, Exhibit H-1 and Exhibit H-2;

(j) each of the Company and the Founders having delivered to the Investors a certificate of compliance dated the Completion Date and signed by a director of the Company and the Founders certifying that (i) all of the conditions set forth in this Clause 2.1 have been fulfilled and stating that there having been no Material Adverse Effect since the Balance Sheet Date; (ii) all corporate and other proceedings on the part of the Warrantors in connection with the transactions to be completed at the Completion and all documents incident thereto, including without limitation written approval from the board of directors and all of the then current holders of equity interests of each Group Company, as applicable, with respect to this Agreement and the other Transaction Documents shall have been completed, and each Group Company shall have delivered to such Investor all such counterpart copies of such documents as such Investor may reasonably request; (iii) attaching thereto (aa) the Constitutional Documents of the Group Companies as then in effect, (bb) copies of all resolutions approved by the shareholders and boards of directors of each Group Company related to the transactions contemplated hereby, and (cc) copies of good standing certificate with respect to the Company from the applicable authority dated no more than thirty (30) days prior to the Completion, with respect to the Group Companies which are incorporated under the laws of the PRC, the business licenses of such entity;

(k) the Company, SGH Limited and Hike have entered into the Share Repurchase Agreement and the shareholders resolutions of the Company shall been duly passed to approve the Repurchase;

(l) the Founder(s) shall have signed and delivered share transfer agreements with Yang Haoyong (杨浩涌), pursuant to which Yang Haoyong (杨浩涌) agrees to transfer all of his equity interests of the Domestic Company to the Founder(s) (the “Onshore Transfer”), and the shareholders resolutions of the Domestic Company shall been duly passed to approve the Onshore Transfer;

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(m) The Company shall have received, (a) in respect of the Series B+ SSA, a waiver letter from the Subscribers (as defined in the Series B+ SSA), in which any and all indemnification of such Investors under the Series B+ SSA in connection with any breach by any of the Warrantors (as defined in the Series B+ SSA) of Section 6.17 thereunder shall unconditionally and irrevocably be waived and relinquished; (b) in respect of the GGV SSA, a waiver letter from the Subscribers (as defined in the GGV SSA), in which any and all indemnification of such Investors under the GGV SSA in connection with any breach by any of the Warrantors (as defined in the GGV SSA) of Section 6.26, 6.27, 6.28 and 6.29 thereunder shall unconditionally and irrevocably be waived and relinquished; and (c) in respect of the KKR SSA, a waiver letter from the Investor (as defined in the KKR SSA), in which any and all indemnification of such Investors under the KKR SSA in connection with any breach by any of the Warrantors (as defined in the KKR SSA) of Section 6.25, 6.26, 6.27, 6.28 and 6.31 thereunder shall unconditionally and irrevocably be waived and relinquished;

(n) all corporate proceedings on the part of the Group Companies in connection with the transactions contemplated at the Completion having been taken to the reasonable satisfaction of the Investors, and the Investors having received all such counterpart originals or certified or other copies of such documents as it may reasonably request;

(o) the Group Companies and the Founder Parties having performed and complied with all agreements, obligations and conditions contained in this Agreement and ancillary agreements that are required to be performed or complied with by them on or before the Completion; and

(p) the Company and the Founder Parties having executed and delivered to the Investors the Share Restriction Agreements in the form attached hereto as Exhibit I.

2.2 In the event that any of the Conditions specified in Clause 2.1 has not been fulfilled (or, with respect to any Investor, waived by such Investor in writing) before the fifth (5th) Business Day after the signing of this Agreement (or such later date as the Company and the Investors may mutually agree in writing), the obligations of any of the Investors under this Agreement may be terminated by written notice by such Investor or the Company to other Parties, at such Party’s own election and discretion, after which this Agreement shall automatically be of no further force or effect only with respect to such Investor (in case terminated by such Investor) or with respect to all Parties (in case terminated by the Company).

2.3 Each of the Group Companies and the Founder Parties shall use its best endeavours to procure the fulfilment of the Conditions on or before the date set forth in Clause 2.2.

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3. AGREEMENT TO SUBSCRIBE FOR SHARES

3.1 As of the Completion, the Company shall have authorized (a) 800,000,000 shares with par value of US$0.0001 per share, among which, 43,868,754 shares shall be designated as Series E Shares, 8,411,895 shares shall be designated as Series D+ Shares, 45,613,502 shares shall be designated as Series D Shares, 29,167,458 shares shall be designated as Series C Shares, 33,367,574 shares shall be designated as Series B+ Shares, 30,162,301 shares shall be designated as Series B Shares, 22,973,381 shares shall be designated as Series A Shares, 50,408,381 shares shall be designated as Class B Ordinary Shares and the other 536,026,754 shares shall be designated as Class A Ordinary Shares; (b) the issuance, pursuant to the terms and conditions of this Agreement, of 43,868,754 Series E Shares having the rights, preferences, privileges and restrictions as set forth in the Restated M&A, which shall have been duly adopted by the Company as of the Completion and the Shareholders’ Agreement, and (c) reservation of at least 43,868,754 Class A Ordinary Shares for conversion of the Series E Shares.

3.2 At the Completion, each of the Investors shall, subject to the terms and conditions of this Agreement, pay its portion of the Subscription Price by wire transfer of immediately available funds in the aggregate amount as set forth on Schedule 1 hereto to the bank account designated by the Company.

3.3 At the Completion, the Company shall, subject to the terms and conditions of this Agreement, validly allot and issue the Subscription Shares to the Investors, free from all charges, liens, encumbrances, equities or other third party rights, claims or interests.

4. COMPLETION

4.1 Upon fulfilment and satisfaction (or waiver according to Clause 2.2, if any) of the Conditions by the Group Companies and the Founder Parties, the Completion shall take place remotely via exchange of electronic documents and signatures on July 24, 2020 (the “Completion Date”), or at such other place and time as the Company and the Investors shall mutually agree in writing (the “Completion”).

4.2 At the Completion, each Investor shall, severally but not jointly:

(a) pay to the Company that amount set forth opposite such Investor’s name on Schedule 1 by depositing such amount into the bank account designated by the Company on the Completion Date (for avoidance of doubt, the obligations of such Investor under Clause 4.2(a) shall be deemed satisfied by the delivery to the Company of a copy of the bank confirmation or MT-103 wiring instructions confirming the wiring of relevant portion of Subscription Price to the bank account designated by the Company); and

(b) deliver or procure to be delivered to the Company a counterpart of the Transaction Documents duly executed by such Investor.

4.3 At the Completion, the Company shall deliver to each Investor:

(a) the original, or a true and complete copy of, the board resolutions of the Company approving this Agreement and the other Transaction Documents to which the Company is a party, and the entry into and performance of each of such documents by the Company including the allotment and issue of the Subscription Shares in accordance with the terms of this Agreement and the issue and delivery of the share certificates to the Investors;

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(b) a true and complete copy of the Written Resolutions;

(c) the certificate of compliance referred to in Clause 2.1(j) as of the Completion Date;

(d) a true and complete copy (with the original to be delivered to the Investors as soon as possible after the Completion) of the share certificate issued in the name of such Investor for the Subscription Shares, duly signed and sealed for and on behalf of the Company;

(e) a copy of the Register of Members of the Company as updated to reflect the Subscription Shares being purchased by such Investor and the Repurchase, and certified by the registered office provider or a director of the Company; and

(f) all other documentation the delivery of which is made an express Condition pursuant to Clause 2.1.

5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

5.1 Except as set forth in the Schedule of Exceptions, the Warrantors hereby jointly and severally represent, warrant and undertake to the Investors that each of the matters set out in Schedule 4 are as of the date hereof true, complete and correct and will be for all times after the date hereof and up to and including the Completion Date true, complete and correct.

5.2 Each of the Warranties is without prejudice to any other Warranty and, except where expressly stated otherwise, no provision contained in this Agreement shall govern or limit the extent or application of any other Warranty.

5.3 Each of the Warrantors undertakes to notify the Investors in writing within three (3) Business Days after any matter or event which becomes known to it prior to the Completion and which may render any Warranty to be or to have been untrue or inaccurate.

5.4 The rights and remedies of any Investor in respect of a breach of any Warranty shall not be affected by any due diligence review or investigation made by or on behalf of such Investor into the affairs of any Group Company.

5.5 Notwithstanding any rule of law or equity to the contrary, any release, waiver or compromise or any other arrangement of any kind whatsoever which the Investors may agree to or effect in relation to any of the Warrantors in connection with this Agreement, and in particular the Warranties, shall not affect the rights and remedies of the Investors with regards to any other Parties.

5.6 Each of the Parties hereby severally represents and warrants to the other Parties that it has full power and authority to enter into and perform this Agreement; this Agreement when executed and delivered by them shall constitute valid and legally binding obligations of such party enforceable in accordance with their respective terms.

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5.7 Each of the Warrantors undertakes, in relation to any Warranty which refers to his/its knowledge or information, that he/it has, with respect to the subject matter of such Warranty, made such due inquiry and exercised such due diligence as a prudent business person would have made or exercised in the management of his/ its business affairs, including due inquiry of those officers and directors of such Person who would be reasonably expected to be aware of such knowledge or information.

5.8 Each of the Warrantors hereby jointly and severally undertakes to the Investors to perform and procure the performance of this Agreement, and undertakes to indemnify the Investors for any failure to perform this Agreement in accordance with Clause 7 of this Agreement.

6. POST-COMPLETION COVENANTS

Each of the Warrantors hereby jointly and severally covenants to the Investors as is set forth in the remainder of this Clause 6.

6.1 Non-Compete

Each of the Founders acknowledges that the Investors agree to invest in the Company and become a Preferred Shareholder on the basis of continued and exclusive services of and full devotion and commitment by him to the Group Companies, and agrees that the Investors should have reasonable assurance of such basis of investment. Each of the Founders hereby undertakes to the Investors that neither he nor any of his Affiliates, nominees, trustees or the like directly or indirectly, will:

(a) during the Relevant Period and for a period of two (2) years after expiration of the Relevant Period (together, the “Restriction Period”), participate in, assist, advise, consult, be concerned with, engaged or interested in, any business or entity in any manner, directly or indirectly, alone or in concert with others, which is in competition with the business carried on by any Group Company at any time during the Restriction Period;

(b) during the Restriction Period, solicit in any manner any person who is or has been during the Restriction Period a customer or client of any Group Company for the purpose of offering to such person any goods or services similar to or competing with any of the businesses conducted by any Group Company at any time during the Restriction Period;

(c) during the Restriction Period, solicit or entice away, or endeavour to solicit or entice away, any employee or officer of any Group Company; or

(d) at any time disclose to any person, or use for any purpose, any information concerning the business, accounts, finance, transactions or intellectual property rights of any Group Company or any trade secrets or confidential information of or relating to any of the Group Companies.

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Each undertaking in paragraphs (a), (b), (c), and (d) of this Clause 6.1 shall be treated as independent of the other undertakings so that, if any of them is held to be invalid or unenforceable for any reason, the remaining undertakings shall be valid to the extent that they are not affected.

Each of the Founders hereby expressly acknowledges and declares that he has duly considered the undertakings set out in this Clause 6.1 and considers that they are reasonable in the circumstances, and warrants and undertakes to each of the Investors that he shall not challenge or query the validity and enforceability of these undertakings.

For the purposes of this Clause 6.1, “Relevant Period” means, in relation to each Founder and/or his Affiliates, nominees, trustees or the like, the period during which he or any of his Affiliates, nominees, trustees or the like is a shareholder, director, employee and/or has any direct or indirect interest (legal or beneficial) in the capital of any of the Group Companies.

6.2 Tax Covenants

The Warrantors jointly and severally undertake to each of the Investors that:

(a) Immediately after the Completion, the Company will not be a “Controlled Foreign Corporation” (“CFC”) as defined in the U.S. Internal Revenue Code of 1986, as amended (or any successor thereto) (the “Code”). The Company shall make due inquiry with its tax advisors on at least an annual basis regarding the Company’s status as a CFC and regarding whether any portion of the Company’s income is “subpart F income” (as defined in Section 952 of the Code) (“Subpart F Income”). Each Investor shall reasonably cooperate with the Company to provide information about such Investor and such Investor’s partners in order to enable the Company’s tax advisors to determine the status of such Investor and/or any of such Investor’s partners as a “United States Shareholder” within the meaning of Section 951(b) of the Code. No later than two (2) months following the end of each Company’s taxable year, the Company shall provide the following information to each of the Investors: (i) the Company’s capitalization table as of the end of the last day of such taxable year, and (ii) a report regarding the Company’s status as a CFC. In addition, the Company shall provide each Investor with access to such other Company information as may be necessary for such Investor to determine the Company’s status as a CFC and to determine whether such Investor or any of such Investor’s partners is required to report its pro rata portion of the Company’s Subpart F Income on its United States federal income tax return, or to allow such Investor or such Investor’s partners to otherwise comply with applicable United States federal income tax laws. For purposes of this Section 6.2(a) and Section 6.2(b), (i) the term “Investor’s partners” shall mean such Investor’s partners and/or members and any direct or indirect equity owners of such partners and/or members, and (ii) the “Company” shall mean the Company and any of its direct or indirect subsidiaries. In the event that the Company is determined by the Company’s tax advisors or by counsel or accountants for any Investor to be a CFC, the Company agrees to use commercially reasonable efforts to avoid generating Subpart F Income. In the event that the Company is determined by the Company’s tax advisors or by counsel or accountants for any Investor to be a CFC, the Company agrees to use commercially reasonable efforts to annually make dividend distributions to any Investor, to the extent permitted by law, in an amount equal to 50% of any income of the Company that would have been deemed distributed to any Investor pursuant to Section 951(a) of the Code had such Investor been a “United States person” as such term is defined in Section 7701(a)(30) of the Code.

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(b) The Company has never been, and, to the best of its knowledge after consultation with its tax advisors, will not be with respect to its taxable year during which the Completion occurs, a “passive foreign investment company” within the meaning of Section 1297 of the Code. The Company shall use its best efforts to avoid being a “passive foreign investment company” within the meaning of Section 1297 of the Code. In connection with a “Qualified Electing Fund” election made by any Investor or any of such Investor’s partners pursuant to Section 1295 of the Code or a “Protective Statement” filed by any Investor or any of such Investor’s partners pursuant to Treasury Regulation Section 1.1295-3, as amended (or any successor thereto), the Company shall provide annual financial information to such Investors in the form provided in Exhibit D hereto (or in such other form as may be required to reflect changes in applicable law) as soon as reasonably practicable following the end of each taxable year of the Company (but in no event later than 90 days following the end of each such taxable year), and shall provide such Investor with access to such other Company information as may be required for purposes of filing U.S. federal income tax returns of such Investor or such Investor’s partners in connection with any such Qualified Electing Fund election or Protective Statement. In the event that any Investor or any of such Investor’s partners who has made a “Qualified Electing Fund” election must include in its gross income for a particular taxable year its pro rata share of the Company’s earnings and profits pursuant to Section 1293 of the Code, the Company agrees to make a dividend distribution to such Investor (no later than 90 days following the end of the Company’s taxable year or, if later, 90 days after the Company is informed by such Investor that such Investor’s partner has been required to recognize such an income inclusion) in an amount equal to 50% of the amount that would be included by such Investor if such Investor was a “United States person” as such term is defined in Section 7701(a)(30) of the Code and had such Investor made a valid and timely “Qualified Electing Fund” election which was applicable to such taxable year.

(c) The Company shall take such actions, including making an election to be treated as a corporation or refraining from making an election to be treated as a partnership, as may be required to ensure that at all times the Company is classified as a corporation for United States federal income tax purposes. The Company shall make due inquiry with its tax advisors (and shall cooperate with each Investor’s tax advisors with respect to such inquiry) on at least an annual basis regarding whether an Investor or any of such Investor’s partners are subject to the reporting requirements of either or both of Sections 6038 and 6038B of the Code (and the Company shall duly inform the Investors of the results of such determination), and in the event that any Investor or any of such Investor’s partners are determined by the Company’s tax advisors or any Investor’s tax advisors to be subject to the reporting requirements of either or both of Sections 6038 and 6038B, the Company agrees, upon a request from the relevant Investor, to provide such information to such Investor as may be necessary to fulfil such Investor’s or such Investor’s partner’s obligations thereunder.

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6.3 Regulatory Filings

The Group Companies, the Founder Parties and the other direct or indirect holders or beneficial owners of Ordinary Shares (except for Lightspeed, GGV and GSR) shall duly complete all filings and registrations with the PRC authorities as required by Applicable Laws and regulations, including but not limited to the relevant filing and registrations with the Ministry of Commerce, the Ministry of Industry and Information Technology, the State Administration of Industry and Commerce, the SAFE, tax bureau, customs authority and the local counterpart of each of the aforementioned governmental authorities, in each case, as applicable.

6.4 Filing of Restated M&A

Within fifteen (15) days following the Completion, the Restated M&A together with the special or written shareholders resolutions on approving its adoption shall have been duly filed with the Registrar of Companies of the Cayman Islands.

6.5 Compliance

Each Group Company shall, and the Founder Parties shall cause each Group Company to, comply with all Applicable Laws in all material respects, including not limited to, applicable PRC laws relating to telecommunication business, software, transportation, intellectual property, anti-monopoly, financing, taxation, lease, employment and social welfare and benefits and SAFE No. 37 Notice. Without limiting the generality of the foregoing, as soon as practical after the Completion, each Group Company shall use its best efforts to obtain all licenses, consents, registrations and filings that are necessary to (i) own, lease, license, or use current or future properties and assets, and (ii) to conduct or perform its business in the manner as presently conducted and intended to be conducted. Without prejudicing the generality of the foregoing, after the Completion and upon the written request by the Investors, the relevant Group Company shall, and the Founder Parties shall cause such Group Company to, use reasonable best efforts to rectify any non-compliance with Applicable Laws.

6.6 Option to Purchase Equity Interest in the Domestic Company

Each of the Investors shall have an option, exercisable at its sole discretion by giving notice to the Company of its intention to so exercise at any time after the Completion, to designate an Affiliate which shall be a PRC resident (as defined in SAFE No. 37 Notice), to purchase certain equity interest of the Domestic Company from the then shareholders of the Domestic Company, and the Warrantors shall cause the then shareholders of the Domestic Company to transfer such equity interest of the Domestic Company to such Investor or its designated Affiliate, for an aggregate nominal consideration of RMB 1 or at other minimum prices to the extent permitted by Applicable Laws, so that such Investor or its Affiliate (as applicable) shall hold the same shareholding percentage in the Domestic Company as it does in the Company.

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6.7 Availability of Class A Ordinary Shares.

The Company hereby covenants that at all times there shall be made available, free of any liens, for issuance and delivery upon conversion of the Subscription Shares such number of Class A Ordinary Shares or other shares in the share capital of the Company as are from time to time issuable upon conversion of the Subscription Shares from time to time, and will take all steps necessary to increase its authorized share capital to provide for sufficient number of Class A Ordinary Shares issuable upon conversion of the Subscription Shares.

6.8 Business of the Company and the HK Company.

The business of the Company shall be restricted to the holding of shares or equity interest in the HK Co. The business of the HK Co shall be restricted to the holding of shares or equity interest in the WFOEs.

6.9 Business of the PRC Companies.

Prior to entering into any new business other than those in the scope of the Business, each Group Companies shall use its reasonable commercial efforts and take all necessary actions to implement and carry out the new business plan as approved by the Board of Directors of the Company (including the approval of at least two-thirds (2/3) of all Preferred Directors), including, without limitation, hiring employees, renting office space, employing legal and technical consultants and undertaking other customary business activities. From the Completion and until the new business plan is duly amended in accordance with all necessary procedures, the business of the PRC Companies shall be limited to the Business.

6.10 Use of Investor’s Name or Logo.

Without the prior written consent of the relevant Investor, and whether or not such Investor is then a shareholder of the Company, none of the Group Companies, their shareholders (excluding such Investor), the Founders shall use, publish or reproduce the name of such Investor (or its Affiliates) or any similar names, trademarks or logos in any of their marketing, advertising or promotion materials or otherwise for any marketing, advertising or promotional purposes.

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6.11 Compliance.

Each of the Warrantors jointly and severally represents that it shall not and shall not permit any of its subsidiaries or Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to promise, authorize or make any payment to, or otherwise contribute any item of value, including the proceeds of the transactions under this Agreement, directly or indirectly, to any third party, including any Non-U.S. Official, in each case, in violation of the FCPA, the U.K. Bribery Act, or any other Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions and will not transfer any such proceeds to or for the benefit of any Sanctioned Person or otherwise in violation of Sanctions. Each of the Founder Parties and the Group Companies further represents that it shall, and shall cause each of its subsidiaries and Affiliates to cease all of its or their respective activities, as well as remediate any actions taken by the Group Companies, its subsidiaries or Affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA, the U.K. Bribery Act, or any other Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions, or any Export Control Laws. Each of the Founder Parties and the Group Companies further represents that it shall and shall cause each of its subsidiaries and Affiliates to maintain systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law, and any Export Control Laws.

6.12 Permit and License.

To the extent permitted by the Applicable Laws, each of the Group Companies and the Founder Parties shall procure each of the Group Companies to, use its best efforts to obtain and maintain in a timely manner all requisite consents and permits for conducting the ordinary course of business or any business to carry out in the future in compliance with all Applicable Laws.

6.13 Exclusivity.

From the date of this Agreement to the Completion, without the consent of the Investors, the Group Companies and the Founder Parties shall not (i) discuss the sale of any securities of any Group Company with any third party, or (ii) provide any information with respect to any Group Company to any third party in connection with a potential investment by such third party in any securities of any Group Company, or (iii) close any financing transaction of any securities of any Group Company with any third party.

6.14 Employee Matters.

The PRC Companies shall use its commercially reasonable efforts to comply with all applicable PRC labour laws and regulations in all material respects, including without limitation, laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, and pensions.

The PRC Companies shall use their commercially reasonable efforts to comply with all applicable PRC education laws and regulations in all material respects, including without limitation, laws and regulations pertaining to the teaching and online education for children and teenagers aged 3-12. The PRC Companies shall use their commercially reasonable efforts to hire employees who have the qualification for the teaching and educations with respect to children and teenagers aged 3-12.

6.15 Tax Matters.

The PRC Companies shall comply with all applicable PRC tax laws and regulations in all material respects, including without limitation, laws and regulations pertaining to income tax, value added tax and business tax.

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6.16 Tax Basis in Relation to an Indirect Transfer.

Within one hundred and eighty (180) days following the Completion, all of the Subscription Price shall have been injected into the WFOEs as the registered capital of the WFOEs with copies of documents evidencing the same provided to the Investors (such injected amount, the “WFOEs Capital Injection Amount”). Each of the Warrantors, jointly and severally, agrees that (i) in the event of a subsequent sale of Shares in the Company by any Investor, it shall ensure that such Investor is entitled to apply all Subscription Price paid by such Investor to its indirect basis in the equity (or equity cost) of the WFOEs with respect to any tax filing, tax position and other communication with the relevant PRC tax authorities for purposes of determining any income tax, capital gains tax, withholding tax and any late payment interest and/or penalties derived thereto, or any other tax calculated with reference to gains made through the subscription, purchase and sale of the Company’s Shares, and (ii) it shall use its commercially reasonable efforts to not take any position that is inconsistent with (or would otherwise adversely impact the credibility of) clause (i) above in its filings or other communications with the relevant PRC tax authorities. Notwithstanding anything to the contrary herein, the Warrantors shall indemnify each Investor against all Indemnifiable Losses, in connection with such Investor’s sale of its shares, levied on such Investor by the relevant PRC tax authorities as the result of the tax base for such Shares determined by the relevant PRC tax authorities being less than all Subscription Price paid by such Investor for such Shares.

6.17 Employment Agreement and Confidentiality, Non-Competition and Intellectual Property Rights Agreements.

The Group Companies shall cause the Founder and each of their respective current and future employees to enter into an employment agreement in form and substance satisfactory to the Board (including the affirmative votes of at least two-thirds (2/3) of the directors appointed by the holders of the Preferred Shares). The Group Companies shall cause the Founder and each of their respective current and future employees and consultants to enter into a confidentiality, non-competition and proprietary information and inventions agreement in form and substance satisfactory to the Board (including the affirmative votes of at least two-thirds (2/3) of the directors appointed by the holders of the Preferred Shares).

6.18 Lease.

As soon as practicable after the Completion, the Warrantors shall cause the PRC Companies to register their leases with competent local housing authorities to file such records so that the leases of the PRC Companies are properly filed and registered in compliance with relevant PRC Laws.

6.19 Intellectual Property.

The Group Companies shall establish and maintain appropriate intellectual property protection systems to protect the intellectual property of the Group Companies. Without limiting the generality of the foregoing sentence, the Group Companies shall, and other Warrantors shall cause the Group Companies, to complete the registration of the trademarks, patents, copyrights, domain names and other intellectual property related to the operation of the Business of the Group Companies as soon as practicable. The Group Companies shall, and the Founders shall cause the Group Companies to, fully comply with the laws and regulations in respect of the protection of the intellectual property and refrain from infringing any intellectual property of any third party.

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6.20 WFOEs’ Registered Capital

As soon as practicable after the Completion, the Founders and the Group Companies shall procure the registered capital of the WFOEs to be fully paid in accordance with the charter documents of the WFOEs and Applicable Laws and regulations.

6.21 Transfer of Assets.

(a) Transfer of Intellectual Property and Business Contracts. When and as advised by the underwriter of the Company prior to its initial public offering, (i) the intellectual property and the business contracts of the Domestic Company shall, to the maximum extent permitted by applicable laws, be transferred to the WFOEs; (ii) to the maximum extent permitted by Applicable Laws, any future intellectual property of the Group Companies shall be owned in the WFOEs’ name and any future business contract shall be entered into by the WFOEs; and (iii) the WFOEs shall be primarily responsible for the research and development of technology related to the Business.

(b) Transfer of Employees. Within twelve (12) months following the Completion or any later time as agreed by the Investors, to the maximum extent permitted by Applicable Laws, the employment relationship of the Key Employees, as requested by the Investors, shall have been transferred to the WFOEs.

6.22 SAFE Amendment Registration.

If and to the extent required by Applicable Law, the Founder Parties shall, with respect to both of the Ordinary Shares and Preferred Shares held by them, and the Warrantors shall cause each of the other direct and indirect holders or beneficial owners of the Ordinary Shares (except for direct or indirect holders of Lightspeed, GGV and GSR) to amend and update each of their registrations with SAFE in respect of the financing of the Company contemplated hereunder, and shall deliver to the Investors and its counsel satisfactory evidence for completion of such amendment registration.

6.23 Covenants between Signing and Completion.

(a) Between the date hereof and the Completion, except as the Investors otherwise agree in writing or for the transactions contemplated under the Transaction Documents, each of the Group Companies shall (i) conduct its business in the ordinary course consistent with past practice, as a going concern and in compliance with all Applicable Laws, (ii) pay or perform its debts, Taxes, and other obligations when due, (iii) maintain its assets in a condition comparable to their current condition, reasonable wear, tear and depreciation excepted, (iv) use reasonable best efforts to preserve intact its current business organizations and keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it, (v) otherwise periodically report to the Investors concerning the status of its business, operations and finance, and (vi) take all actions reasonably necessary, to consummate the transactions contemplated by this Agreement promptly, including the taking of all reasonable acts necessary to cause all of the conditions precedent of the Investors to be satisfied.

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(b) From the date hereof until the Completion, (i) the Company shall promptly notify the Investors in writing of any Action commenced or threatened against any Group Company, (ii) each Party hereto shall promptly notify the other Parties of any breach, violation or non-compliance by of any representation, warranty or covenant made by such Party hereunder, and (iii) each Party will promptly provide the other Parties with copies of all correspondence and inquiries to and from, and all filings made with, any governmental authority with respect to the transactions contemplated hereby.

6.24 Negative Covenants between Signing and Completion.

Between the date hereof and the Completion, except as the Investors otherwise agree in writing or for the transactions contemplated under the Transaction Documents, none of the Group Companies shall (and the Warrantors shall not permit any of the Group Companies to) (a) take any action that would make any Warranty inaccurate at the Completion, (b) waive, release or assign any material right or claim, (c) take any action that would reasonably be expected to materially impair the value of the Group Companies, (d) sell, purchase, assign, lease, transfer, pledge, encumber or otherwise dispose of any material asset, (e) issue, sell, or grant any Share unless otherwise pursuant to the Transaction Documents, (f) declare, issue, make, or pay any dividend or other distribution with respect to any Share, (g) incur any indebtedness for borrowed money or capital lease commitments or assume or guarantee any indebtedness of any Person, (h) enter into any contract or other transaction with any related party unless otherwise pursuant to the Transaction Documents, (i) make or permit any amendment to or effect any termination of any Group Company Contract, enter into any new contract that would have been a Material Contract if in effect on the date hereof, or make any amendment to or waiver under any Constitutional Document; (j) make or permit any change in any compensation arrangement or contract with any Key Employee, or adoption of any new ESOP, or made any change in any existing ESOP; (k) make or permit any change in accounting methods or practices or any revaluation of any of its assets; or (l) authorize, approve or agree to any of the foregoing. If at any time before the Completion, any of the Warrantors comes to know of any material fact or event which:

(a) is in any way materially inconsistent with any of the Warranties given by each Warrantor, subject to any qualification by the Schedule of Exceptions,

(b) suggests that any material fact warranted may not be as warranted or may be materially misleading, or

(c) might affect the willingness of a reasonable investor in making a prudent decision to purchase the Subscription Shares or the amount of consideration which such Investor would be prepared to pay for the Subscription Shares,

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such Warrantor shall give immediate written notice thereof to the Investors in which event the Investors may within fifteen (15) Business Days of receiving such notice terminate this Agreement by written notice without any penalty whatsoever and without prejudice to any rights that the Investors may have under this Agreement or Applicable Law, provided, that, if (i) the event described in (a), (b) or (c) above would not, result or reasonably be expected to result, in a Material Adverse Effect, and (ii) in each case such event is, and is so cured within thirty (30) days thereof, then this Agreement may not be terminated under this Clause 6.24. If this Agreement is terminated in the event of (a) or (b) above, or in the event of (c) above when such fact or event is caused by the Company, solely in the event of fraud or gross negligence by any Warrantor, each Warrantor shall jointly and severally indemnify the Investors against all costs, charges and expenses incurred by it in connection with the negotiation, preparation and termination of this Agreement and other Transaction Documents.

6.25 Tax under Announcement 7.

Venus Mission Limited shall, and Warrantors shall procure Venus Mission Limited to, perform the tax duties in connection with the sale of shares of the Company to Kun Yu Holding Limited according to the requirements of the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises (“Circular No. 7”), including (a) the completion of the tax filing pursuant to Circular No. 7 as soon as practicably possible but no later than December 31, 2020, and (b) the completion of the payment of the applicable taxes pursuant to Circular No. 7 as soon as practicably possible.

6.26 Onshore Transfer

As soon as practicable after the Completion but no later than two (2) months after the Completion, the Domestic Company shall, and the other Warrantors shall cause the Domestic Company to duly register with the State Administration for Industry and Commerce of the Onshore Transfer.

6.27 Registration of Equity Pledge

As soon as practicable after the Completion but no later than three (3) months after the Completion, the Domestic Company shall, and the other Warrantors shall cause the Domestic Company to duly register with the State Administration for Industry and Commerce of the equity pledge contemplated under the relevant Equity Pledge Agreements (股权质押协议) in the Restructuring Documents.

6.28 Sanctioned Persons. The Company represents and warrants to the Investors that: (i) neither it nor any of its Relevant Persons is a Sanctioned Person nor acting for or on behalf of any Sanctioned Person, and (ii) no Group Company nor any of its Relevant Persons is a Sanctioned Person or acting for or on behalf of any Sanctioned Person.

6.29 Compliance Audit or Inquiry. The Company agrees to cooperate with any compliance audit or inquiry by any Investor and/or its professional advisors related to a violation or potential violation of Anti-Corruption Laws, Anti-Money Laundering Laws, Export Control Laws or Sanctions, and to implement any remediation measures reasonably requested by such Investor and/or its professional advisors in response to the same.

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6.30 ICP Filling. As soon as practicable and within six (6) months after the Completion, the Warrantors shall procure the Domestic Company to complete the fillings of Internet Content Provider License with competent Governmental Authorities with respect to the change of share capital of the Domestic Company after Yang Haoyong (杨浩涌) transferring all of his equity interests of the Domestic Company to the Founder(s).

6.31 Compliance Program. Company shall, and shall procure that each Group Company shall, adopt compliance policies, procedures and related training programs (the “Compliance Program”), as soon as practicable and in any event within six months after the Completion and in consultation with KKR and/or its counsel, reasonably adequate and designed to detect, prevent and deter violations of applicable (i) Anti-Corruption Laws, (ii) Sanctions, (iii) export controls, (iv) Anti-Money Laundering Laws, and (v) Export Control Laws. The Company shall not subsequently amend any element of the Compliance Program without KKR’s prior written consent and undertake to inform KKR immediately of any potential non-compliance of the Compliance Program. KKR shall be issued by the Company a certificate on a quarterly basis acknowledging on a quarterly basis and in a form and substance agreeable to KKR, the Company’s ongoing understanding of their compliance obligations under this Agreement and the Shareholders’ Agreement.

7. INDEMNITIES

7.1 The Warrantors hereof jointly and severally undertake to fully indemnify the Investors, its Affiliates, directors, officers, employees, limited partners, members, stockholders, attorneys (including, without limitation, those retained in connection with the transactions contemplated herein), agents and representatives (each an “Indemnitee” and collectively, the “Indemnitees”), and to keep each such Indemnitee harmless from and against all direct losses, liabilities, costs and damages (including without limitation legal costs) (the “Indemnifiable Losses”) which may be suffered or incurred by any of them in connection with, arising out of or as a result of any of the following:

(a) any of the Warranties (including but not limited to warranties regarding tax and incorporation matters) not being true, correct or accurate in all respects or not being fully complied with at all times;

(b) any breach or violation of any covenant or agreement contained herein or any of the Transaction Documents; and

(c) any of the Covenants in Clause 6 and any other undertakings or obligations in this Agreement not being fully performed or fully complied with at all times.

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7.2 Notwithstanding the foregoing, the Warrantor shall, jointly and severally, indemnify and keep indemnified the Indemnitees at all times and hold them harmless against any and all Indemnifiable Losses resulting from, or arising out of, or due to, directly or indirectly, (x) any claim for tax which has been made or may hereafter be made against the Domestic Company and any other Group Company wholly or partly in respect of or in consequence of any event occurring or any income, profits or gains earned, accrued or received by the Domestic Company and any Group Company on or before the Completion, (y) all liability for any taxes of any other person imposed by any governmental authority on any Group Company as a transferee, successor, withholding agent, or accomplice in connection with an event or transaction occurring before the Completion, and (z) all liability for taxes attributable to any misrepresentation or breach of warranty made in Clause 18 of Schedule 4 of this Agreement, and any reasonable costs, fees or expenses incurred and other liabilities which the Domestic Company and any Group Company may properly incur in connection with the investigation, assessment or the contesting of any claim, the settlement of any claim for tax, any legal proceedings in which the Domestic Company claims in respect of the claim for tax and in which an arbitration award or judgment is given for the Domestic Company or other Group Company and the enforcement of any such arbitration award or judgment, whether or not such tax is chargeable against or attributable to any other person (“Tax Indemnifiable Loss”), provided, however, that the Warrantors shall be under no liability for any tax matters, if any:

(a) to the extent that such Tax Indemnifiable Loss is promptly cured within thirty (30) days after the occurrence of such Tax Indemnifiable Loss without recourse to cash or other assets of any Group Company;

(b) to the extent that such Tax Indemnifiable Loss has been clearly disclosed in the Financial Statements (as defined in Schedule 4);

(c) if it has arisen in and relates to the ordinary course of business of a Group Company since the Balance Sheet Date, subject to compliance with Applicable Law;

(d) to the extent that the liability arises as a result only of a provision or reserve in respect of the liability made in the Financial Statements being insufficient by reason of any increase in rates of tax announced after the Completion with retrospective effect; or

(e) to the extent that the liability arises as a result of legislation which comes into force after the Completion and which is retrospective in effect.

7.3 Notwithstanding anything contained in the Schedule of Exceptions, each of the Group Companies shall jointly and severally indemnify at all times and hold harmless each Indemnitee from and against any Indemnifiable Loss directly or indirectly, as a result of, or based upon or arising from (i) the non-payment or underpayment of social insurance or housing fund contributions, (ii) any dispute or infringement claim in connection with violation of any of the Proprietary Assets of any other person or entity before the Completion, and (iii) any Action, suit, arbitration or other court proceeding, pending or threatened, due to the non-compliance with any Applicable Laws or Group Company Contracts existing prior to the Completion, in each case, even if the liability is actually incurred after the Completion or the liability has been disclosed to the Investors.

7.4 If any Indemnitee believes that it has a claim that may give rise to an obligation of any Warrantor pursuant to this Clause 7, it shall give prompt notice thereof to the Warrantors stating specifically the basis on which such claim is being made, the material facts related thereto, and the amount of the claim asserted. Any dispute related to this Clause 7 shall be resolved pursuant to Clause 17.

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7.5 For the avoidance of doubt, each of the Warrantors hereby agrees and covenants that he/it will do all such things and undertake all such actions, including without limitation, any applications to and registrations with the governmental authorities and any other protective measures reasonably requested by the Investors, to ensure that the agreement of the parties with respect to joint and several liability of the Warrantors under the Transaction Documents is given full force and effect.

7.6 Notwithstanding the above provisions, absent fraud or any wilful misconduct on the part of any Warrantor, none of the Warrantors shall have any liability under the warranties and representations to the extent that any individual claim against any of them in respect thereof does not exceed US$10,000 (in respect of the Group Companies) or US$20,000 (in respect of the Founder Parties). For the avoidance of doubt, if the total amount of the Indemnifiable Loss exceeds US$10,000 (in respect of the Group Companies) or US$20,000 (in respect of the Founder Parties), the Warrantors shall be liable for the full amount of Indemnifiable Loss. Notwithstanding any other provision contained herein, absent fraud or wilful misconduct by any of the Founder Parties, the maximum liability of the Founder Parties shall be limited to one hundred percent (100%) of the shares directly or indirectly held by the Founder Parties in the Company. Absent fraud or wilful misconduct on the part of any Warrantor, the Indemnitees shall not be entitled to make any claim against the Founder Parties unless written notice thereof has been given to each of the Founder Parties (a) with respect to claims made pursuant to Section 7.2 hereof, within five (5) years from the date of Completion, and (b) with respect to all other claims, within two (2) years from the date of Completion.

7.7 This Clause 7 shall not be deemed to preclude or otherwise limit in any way the exercise of any other rights or pursuit of equitable remedies (including but not limited to injunctive relief and/or specific performance) for the breach of this Agreement or with respect to any misrepresentation.

7.8 The Warrantors’ obligations under this Clause 7 shall survive the Completion.

8. PROCEEDS OF SUBSCRIPTION

8.1 The parties acknowledge and agree that the proceeds of the subscription for the Series E Shares under this Agreement shall be used, in accordance with the directions of the Company’s Board of Directors, as it shall be constituted in accordance with the Shareholders’ Agreement, to fund the WFOEs’ register capital and for the capital expenditures, equipment purchase, hiring, research and development and general working capital of the Group Companies, in particular for the expansion of the existing lines of business.

9. SEVERABILITY AND SURVIVAL

9.1 If at any time any one or more provisions hereof is or becomes invalid, illegal, unenforceable or incapable of performance in any respect, the validity, legality, enforceability or performance of the remaining provisions hereof shall not thereby in any way be affected or impaired.

9.2 The obligations of the Group Companies and the Founder Parties shall survive the Completion.

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10. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement and understanding between the parties in connection with the subject matter of this Agreement and supersedes all previous term sheets, proposals, representations, warranties, agreements or undertakings relating thereto whether oral, written or otherwise and no party has relied or is entitled to rely on any such term sheets, proposals, representations, warranties, agreements or undertakings.

11. TIME OF ESSENCE AND REMEDIES AND WAIVERS

11.1 Time shall be of the essence under this Agreement.

11.2 No delay or omission by any party in exercising any right, power or remedy provided by law or under this Agreement shall:

(a) affect that right, power or remedy; or

(b) operate as a waiver of it.

11.3 The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy.

11.4 The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.

11.5 It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any other party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

12. PUBLIC ANNOUNCEMENTS

12.1 The investment and subscription of the Subscription Shares by the Investors in the Company, including without limitation the existence of such investment and the terms and conditions of this Agreement, the term sheets preceding this Agreement and any other Transaction Documents shall be confidential information and shall not be disclosed by any Warrantor or any of their Affiliates to any person not being a party hereto except with the prior written consent of the Investors.

12.2 Notwithstanding Clause 12.1, each Warrantor may disclose the terms of the investment to its employees, investment bankers, lenders, accountants, attorneys, business partners, directors, shareholders, senior management and bona fide prospective investors, in each case only where such persons or entities are under appropriate non-disclosure obligations. For the avoidance of doubt, other than disclosures to the foregoing permitted persons, none of the Warrantors may disclose the investment amounts in relation to the Subscription Shares, the valuation of the Company, the rights and privileges of the Investors under this Agreement and the Shareholders’ Agreement and the share capital structure of the Company to any person except with the prior written consent of the Investors.

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12.3 In the event that any Warrantor becomes legally compelled (including without limitation, pursuant to securities laws and regulations) to make disclosure not permitted under Clauses 12.1 and 12.2, such Warrantor (“Disclosing Party”) shall provide the other parties (“Non-Disclosing Parties”) with prompt written notice of that fact so that the appropriate party may seek (with the cooperation and reasonable efforts of the other parties) a protective order, confidential treatment or other appropriate remedies. In such event, the Disclosing Party shall furnish only that portion of the information which is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such information to the extent reasonably requested by any Non-Disclosing Party.

13. ASSIGNMENT AND COUNTERPARTS

13.1 This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective assigns and successors.

13.2 Each Investor may assign and transfer, to its Affiliates, any of its rights, benefits and obligations in this Agreement including without limitation the benefit of any representations, warranties and undertakings contained herein. Save as aforesaid, no party hereto may assign or transfer any of his or its rights or obligations under this Agreement.

13.3 This Agreement may be entered into by any party by executing a counterpart hereof and may be delivered by electronic PDF or facsimile transmission, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

14. NOTICES AND OTHER COMMUNICATION

14.1 All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address, or to such email address, facsimile number or address as set forth on Schedule 5 hereto or as subsequently modified by written notice given in accordance with this Clause 14.1.

15. FURTHER ASSURANCE

Each of the parties shall at its (as the case may be) own costs, from time to time upon request, do or procure the doing of all acts and/or execute or procure the execution of all documents in a form satisfactory to the other parties which the other parties may reasonably request for giving full effect to this Agreement and securing to the other parties the full benefit of the rights, powers and remedies conferred upon the other parties in this Agreement.

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16. COSTS AND EXPENSES

16.1 Each Party shall pay all of its own costs and expenses incurred in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and other Transaction Documents and the transactions contemplated hereby and thereby.

17. GOVERNING LAW AND JURISDICTION

17.1 This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of Hong Kong without regard to the conflict of laws principles thereof.

17.2 Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall first be subject to resolution through consultation of the parties to such dispute, controversy or claim. Such consultation shall begin within seven (7) days after one Party hereto has delivered to the other Parties involved a written request for such consultation. If within thirty (30) days following the commencement of such consultation the dispute cannot be resolved, the dispute shall be submitted to arbitration upon the request of any Party with notice to the other Parties.

17.3 The arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong International Arbitration Centre (the “HKIAC”). There shall be three (3) arbitrators. The complainant and the respondent to such dispute shall each select one (1) arbitrator within thirty (30) days after giving or receiving the demand for arbitration. Such arbitrators shall be freely selected, and the Parties shall not be limited in their selection to any prescribed list. The Chairman of the HKIAC shall select the third arbitrator. If either party to the arbitration does not appoint an arbitrator who has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of the HKIAC.

17.4 The arbitration proceedings shall be conducted in Hong Kong in English. The arbitration tribunal shall apply the Arbitration Rules of the HKIAC in effect at the time of the arbitration. However, if such rules are in conflict with the provisions of this Clause 17, including the provisions concerning the appointment of arbitrators, the provisions of this Clause 17 shall prevail.

17.5 Each Party hereto shall cooperate with any party to the dispute in making full disclosure of and providing complete access to all information and documents requested by such party in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on the Party receiving the request.

17.6 The award of the arbitration tribunal shall be final and binding upon the disputing parties, and any party to the dispute may apply to a court of competent jurisdiction for enforcement of such award.

17.7 Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

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18. FINDER’S FEES

Except as disclosed in the Schedule of Exceptions, each party (a) represents and warrants to the other parties hereto that it has retained no finder or broker in connection with the transactions contemplated by this Agreement, and (b) hereby agrees to indemnify and to hold harmless the other party hereto from and against any liability for any commission or compensation in the nature of a finder’s fee of any broker or other person or firm (and the costs and expenses of defending against such liability or asserted liability) for which the indemnifying party or any of its employees or representatives are responsible.

19. FORCE MAJEURE

In the event of earthquakes, typhoon, flood, war or other events (the “Event of Force Majeure”), the consequences of which are beyond the parties’ control, prevention or avoidance and which directly affects the performance of this Agreement or hinders performance of its items, the party which is affected by it should immediately inform the other parties in writing, and within five (5) days shall provide details of the event and valid documentary evidence supporting the reasons for which matters agreed in this Agreement cannot be performed in whole or in part or for which performance will be delayed. Such documents must be issued by the notary public office in the place where the said event has occurred. Notwithstanding the foregoing, the Party affected by the Event of Force Majeure shall (i) use all reasonable efforts to remedy the situation and minimize or remove the effects of Event of Force Majeure so far as possible and, subject thereto, comply with its obligations hereunder; (ii) within the shortest time practicable, attempt to resume performance of the obligations suspended by Event of Force Majeure.

20. NO RECOURSE

Notwithstanding anything that may be expressed or implied in this Agreement, no recourse under this Agreement shall be had against any current or future Affiliate of KKR, any current or future direct or indirect shareholder, member, general or limited partner, controlling person or other beneficial owner (as applicable) of KKR or any of their respective Affiliates, representatives or successors and assigns of each of the foregoing (collectively, “Non-Liable KKR Persons”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Non-Liable KKR Person for any obligation of KKR under this Agreement or for any claim based on, in respect of or by reason of such obligations or their creation. Each Non-Liable KKR Person shall be an express third party beneficiary of, and entitled to directly enforce, this Clause 20.

21. LIABILITYOF INVESTORS

Notwithstanding anything to the contrary herein, the obligations of the Investors in this Agreement shall be several and not joint.

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22. SEQUOIA ENTITIES

The parties hereto acknowledge and agree that (a) the name “Sequoia Capital” is commonly used to describe a variety of entities (collectively, the “Sequoia Entities”) that are affiliated by ownership or operational relationship and engaged in a broad range of activities related to investing and securities trading and (b) notwithstanding any other provision of this Agreement to the contrary, this Agreement shall not be binding on, or restrict the activities of, any (i) Sequoia Entity outside of the Sequoia China Sector Group, (ii) entity primarily engaged in investment and trading in the secondary securities market; (iii) the ultimate beneficial owner of an Sequoia Entity (or its general partner or ultimate general partner) who is a natural Person, and such Person’s relatives (including but without limitation, such Person’s spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law), (iv) any officer, director or employee of a Sequoia Entity (or its general partner or ultimate general partner) and such Person’s relatives, and (v) for the avoidance of doubt, any portfolio companies of any Sequoia Entity and portfolio companies of any affiliated investment fund or investment vehicle of any Sequoia Entity. For purposes of the foregoing, the “Sequoia China Sector Group” means all Sequoia Entities (whether currently existing or formed in the future) that are principally focused on companies located in, or with connections to, the People’s Republic of China that are exclusively managed by Sequoia Capital.

23. RESTRICTION ON THE USE OF “SEQUOIA” AND CONFIDENTIALITY

Without the written consent of Sequoia, the Company, its shareholders (excluding Sequoia) and the Founder, shall not use the name or brand of Sequoia or its Affiliate, claim itself as a partner of Sequoia or its Affiliate, make any similar representations. Without the written approval of Sequoia, the Company, its shareholders (excluding Sequoia) and the Founder, shall not make or cause to be made, any press release, public announcement or other disclosure to any third party in respect of this Agreement or Sequoia’s subscription of share interest of the Company.

– EXECUTION PAGES FOLLOW –

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IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

COMPANY:	Spark Education Limited
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Director
HK CO:	Spark Education (HongKong) Limited
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Director
BEIJING WFOE:	Beijing Spark Education and Technology Co., Ltd. (北京火花思维教育科技有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Legal Representative
	Affix Seal:
TIANJIN WFOE:	Tianjin Spark Education and Technology Co., Ltd. (天津火花思维教育科技有限公司)
	By:	/s/ Ge Qing
	Name: Ge Qing (葛青)
	Title: Legal Representative
	Affix Seal:

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

DOMESTIC COMPANY:	Beijing Xingengyuan Technology Ltd. (北京心更远科技发展有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Legal Representative
	Affix Seal:
BEIJING CO:	Beijing Spark Juli Education Consulting Co., Ltd. (北京火花聚力教育咨询有限公司)
	By:	/s/ Wang Xiaonan
	Name: Wang Xiaonan (王霄楠)
	Title: Legal Representative
WUHAN CO:	Wuhan Spark Education Consulting Co., Ltd. (武汉火花思维教育咨询有限公司)
	By:	/s/ Luo Jian
	Name: Luo Jian (罗剑)
	Title: Legal Representative

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

Founder Parties:

Venus Mission Limited
By:	/s/ Luo Jian
Name: Luo Jian (罗剑)
Title: Director
Luo Jian (罗剑)
By:	/s/ Luo Jian
Fun Kingdom Limited
By:	/s/ Shan Zebing
Name: Shan Zebing (单泽兵)
Title: Director
Shan Zebing (单泽兵)
By:	/s/ Shan Zebing

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTOR:	ZETA ASIA HOLDINGS PTE. LTD.
	By:	/s/ Yan ChengKang
	Name:	Yan ChengKang
	Title:	Director

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTORS:	GGV VII Investments, L.L.C.
	By:	GGV Capital VII L.L.C., its Manager
	By:	/s/ Stephen Hyndman
	Name:	Stephen Hyndman
	Title:	Attorney in Fact
	GGV VII Plus Investments, L.L.C.
	By:	GGV Capital VII Plus L.L.C., its Manager
	By:	/s/ Stephen Hyndman
	Name:	Stephen Hyndman
	Title:	Attorney in Fact

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTOR:	GSR VENTURES VI (SINGAPORE) PTE. LTD.
	By:	/s/ Xiaohu Zhu
	Title:	Authorized Signatory
	GSR Chop. Notwithstanding any other provision in this Agreement, this Agreement shall not be effective unless and until GSR VENTURES VI (SINGAPORE) PTE. LTD. has affixed its chop on the appropriate signature page hereof.

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTOR:	GSR 2017 Opportunities (Singapore) Pte. Ltd.
	By:	/s/ Xiaohu Zhu
	Title:	Authorized Signatory
	GSR CHOP. Notwithstanding any other provision in this Agreement, this Agreement shall not be effective unless and until GSR 2017 OPPORTUNITIES (SINGAPORE) PTE. LTD. has affixed its chop on the appropriate signature page hereof.

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTOR:
	LFC Investment Hong Kong Limited
	By:	/s/ Duoduo Yi
	Title: Authorized Signatory

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTOR:	SCC Venture VII Holdco, Ltd.
	By:	/s/ Ip Siu Wai Eva
	Name: Ip Siu Wai Eva
	Title: Authorized Signatory
	Date:

Signature Page to Share Subscription Agreement - Spark Education Limited

IN WITNESS WHEREOF, the parties have executed this Share Subscription Agreement as of the date first written above.

INVESTORS:	IDG China Venture Capital Fund IV L.P.
	By: IDG China Venture Capital Fund IV Associates L.P.,
	Its General Partner
	By: IDG China Venture Capital Fund GP IV Associates Ltd.,
	Its General Partner
	By:	/s/ Chi Sing HO
	Name: Chi Sing HO
	Title: Authorized Signatory
	IDG China IV Investors L.P.
	By: IDG China Venture Capital Fund GP IV Associates Ltd.,
	Its General Partner
	By:	/s/ Chi Sing HO
	Name: Chi Sing HO
	Title: Authorized Signatory

Signature Page to Share Subscription Agreement - Spark Education Limited

EX-10.8

Exhibit 10.8

Exclusive Business Cooperation Agreement

This Exclusive Business Cooperation Agreement (this “Agreement”) is made and entered into by and between the following parties on January 3, 2017 in Beijing, the People’s Republic of China (“PRC” or “China”).

Party A: Wanleduo Network Technology (Beijing) Co., Ltd.

Address: Room C022, 2/F, 88 Xiangshan Road, Haidian District, Beijing

Party B: Beijing Xingengyuan Science and Technology Co., Ltd.

Address: Room 1805A, 18/F, Building 5, No. 15 Hongjunying South Road, Chaoyang District, Beijing

Each of Party A and Party B shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively.

Whereas:

1. Party A is a wholly-foreign-owned enterprise established in PRC, and has the necessary resources to provide technical and consulting services;

2. Party B is a company established in PRC with exclusively domestic capital and is permitted to engage in technology development, consulting, services, promotion and transfer by the relevant PRC government authorities; computer system services; basic software services; economic and trade consulting; conference services; design, production, agency and release of advertisements; organization of cultural and art exchange events (excluding shows); business planning; arts and crafts designs; computer graphic designs; product designs; toys leasing; and sale of toys and handicraft articles, etc. The businesses conducted by Party B currently and any time during the term of this Agreement are collectively referred to as the “Principal Business”;

3. Party A is willing to provide Party B with technical support, consulting services and other services on exclusive basis in relation to the Principal Business during the term of this Agreement, utilizing its advantages in technology, human resources, and information, and Party B is willing to accept such services provided by Party A or Party A’s designee (s), each on the terms set forth herein.

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Now, therefore, through mutual discussion, the Parties have reached the following agreements:

1. Services Provided by Party A

1.1 Party B hereby appoints Party A as Party B’s exclusive services provider to provide Party B with comprehensive technical support, consulting services and other services during the term of this Agreement, in accordance with the terms and conditions of this Agreement, including but not limited to the following:

(1) Licensing Party B to use any software legally owned by Party A;

(2) Development, maintenance and updating of software involved in Party B’s business;

(3) Design, installation, daily management, maintenance and updating of network systems, hardware and database design;

(4) Technical support and training for employees of Party B;

(5) Assisting Party B in consultancy, collection and research of technology and market information (excluding market research business that wholly foreign-owned enterprises are prohibited from conducting under PRC law);

(6) Providing business management consultation for Party B;

(7) Providing marketing and promotional services for Party B;

(8) Providing customer order management and customer services for Party B;

(9) Leasing of equipment or assets; and

(10) Other services requested by Party B from time to time to the extent permitted under PRC law.

1.2 Party B accepting such services provided by Party A. Party B further agrees that unless with Party A’s prior written consent, during the term of this Agreement, Party B shall not directly or indirectly accept the same or any similar services provided by any third party and shall not establish similar corporation relationship with any third party regarding the matters contemplated by this Agreement. Party A may appoint other parties, who may enter into certain agreements described in Section 1.3 with Party B, to provide Party B with the services under this Agreement.

1.3 Service Providing Methodology

1.3.1 Party A and Party B agree that during the term of this Agreement, where necessary, Party B may enter into further service agreements with Party A or any other party designated by Party A, which shall provide the specific contents, methods, personnel, and fees for the specific services.

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1.3.2 To fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, where necessary, Party B may enter into equipment or assets leases with Party A or any other party designated by Party A which shall permit Party B to use Party A’s relevant equipment or assets based on the needs of the business of Party B.

1.3.3 Party B hereby grants to Party A an irrevocable and exclusive option to purchase from Party B, at Party A’s sole discretion, any or all of the assets and business of Party B, to the extent permitted under PRC law, and at the lowest purchase price permitted by PRC law. The Parties shall then enter into a separate assets or business transfer agreement, specifying the terms and conditions of the transfer of the assets.

2. The Calculation and Payment of the Service Fees

2.1 The fees payable by Party B to Party A during the term of this Agreement shall be calculated as follows:

2.1.1 Party B shall pay a service fee to Party A in each month. The service fee for each month shall consist of a management fee and a fee for services provided, which shall be determined by the Parties through negotiation after considering:

(1) Complexity and difficulty of the services provided by Party A;

(2) Title of and time consumed by employees of Party A in order to provide the services;

(3) Contents and value of the services provided by Party B;

(4) Market price of the same type of services;

(5) Operation conditions of the Party B.

2.1.2 If Party A transfers technology to Party B, develops software or other technology as entrusted by Party B or leases equipments or assets to Party B, the technology transfer price, development fees or rent shall be determined by the Parties based on the actual situations.

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3. Intellectual Property Rights and Confidentiality Clauses

3.1 Party A shall have exclusive and proprietary ownership, rights and interests in any and all intellectual properties arising out of or created during the performance of this Agreement, including but not limited to copyrights, patents, patent applications, software, technical secrets, trade secrets and others. Party B shall execute all appropriate documents, take all appropriate actions, submit all filings and/or applications, render all appropriate assistance and other wise conduct whatever is necessary as deemed by Party A at its sole discretion for the purposes of vesting any ownership, right or interest of any such intellectual property rights in Party A, and/or perfecting the protections for any such intellectual property rights in Party A.

3.2 The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

4. Representations and Warranties

4.1 Party A hereby represents, warrants and covenants as follows:

4.1.1 Party A is a wholly foreign-owned enterprise legally established and validly existing in accordance with the laws of PRC; Party A or the service providers designated by Party A will obtain all government permits and licenses for providing the service under this Agreement before providing such services.

4.1.2 Party A has taken all necessary corporate actions, obtained all necessary authorization as well as all consents and approvals from third parties and government agencies (if required) for the execution, delivery and performance of this Agreement. Party A’s execution, delivery and performance of this Agreement do not violate any explicit requirements under any law or regulation binding on Party A.

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4.1.3 This Agreement constitutes Party A’s legal, valid and binding obligations, enforceable in accordance with its terms.

4.2 Party B hereby represents, warrants and covenants as follows:

4.2.1 Party B is a company legally established and validly existing in accordance with the laws of PRC and has obtained and will maintain all permits and licenses for engaging in the Principal Business in a timely manner.

4.2.2 Party B has taken all necessary corporate actions, obtained all necessary authorization as all consents and approvals from third parties and government agencies (if required) for the execution, delivery and performance of this Agreement. Party B’s execution, delivery and performance of this Agreement do not violate any law or regulation binding on Party B.

4.2.3 This Agreement constitutes Party B’s legal, valid and binding obligations, and shall be enforceable against it.

5. Term of Agreement

5.1 This Agreement shall become effective upon execution by the Parties. Unless terminated in accordance with the provisions of this Agreement or terminated in writing by Party A, this Agreement shall remain effective.

5.2 During the term of this Agreement, each Party shall renew its operation term prior to the expiration thereof so as to enable this Agreement to remain effective. This Agreement shall be terminated upon the expiration of the operation term of a Party if the application for the renewal of its operation term is not approved by the relevant government authorities.

5.3 The rights and obligations of the Parties under Sections 3, 6, 7 and this Section 5.3 shall survive the termination of this Agreement.

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6. Governing Law and Resolution of Disputes

6.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of PRC.

6.2 In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party ‘s request to the other Party for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Beijing. The arbitration award shall be final and binding on both Parties.

6.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

7. LIABILITY FOR BREACH OF AGREEMENT AND INDEMNIFICATION

7.1 If Party B conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require Party B to indemnify all damages; this Section 7.1 shall not prejudice any other rights of Party A herein.

7.2 Unless otherwise required by applicable laws, Party B shall not have any right to terminate this Agreement in any event.

7.3 Party B shall indemnify and hold harmless Party A from any losses, injuries, obligations or expenses caused by any lawsuit, claims or other demands against Party A arising from or caused by the services provided by Party A to Party B pursuant this Agreement, except where such losses, injuries, obligations or expenses arise from the gross negligence or willful misconduct of Party A.

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8. Force Majeure

8.1 In the case of any force majeure events (the “Force Majeure”) such as earthquake, typhoon, flood, fire, flu, war, strikes or any other events that cannot be predicted and are unpreventable and unavoidable by the affected Party, which directly or indirectly causes the failure of either Party to perform or completely perform this Agreement, then the Party affected by such Force Majeure shall not be liable for such non-performance or partial performance. However, the affected Party shall give written notice to the other Party without any delay and shall, within 15 days of sending such written notice, provide details of the event of Force Majeure, explaining the reasons for such failure of, partial or delay of performance.

8.2 If such Party claiming Force Majeure fails to notify the other Party and furnish it with proof pursuant to the above provision, such Party shall not be excused from the non-performance of its obligations hereunder. The Party so affected by the event of Force Majeure shall use reasonable efforts to minimize the consequences of such Force Majeure and to promptly resume performance hereunder whenever the causes of such excuse are cured. Should the Party so affected by the event of Force Majeure fail to resume performance hereunder when the causes of such excuse are cured, such Party shall be liable to the other Party.

8.3 In the event of Force Majeure, the Parties shall immediately consult with each other to find an equitable solution and shall use all reasonable endeavors to minimize the consequences of such Force Majeure.

9. Notices

9.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

9.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of receipt or refusal at the address specified for notices.

9.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

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9.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A: Wanleduo Network Technology (Beijing) Co., Ltd.

Address: Room C022, 2/F, 88 Xiangshan Road, Haidian District, Beijing

Attn: Luo Jian

E-mail: daluo@wanduoduo.com

Party B: Beijing Xingengyuan Science and Technology Co., Ltd.

Address: Room 1805A, 18/F, Building 5, No. 15 Hongjunying South Road, Chaoyang District, Beijing

Attn: Luo Jian

E-mail: daluo@wanduoduo.com

9.3 Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms hereof.

10. Assignment

10.1 Without Party A’s prior written consent, Party B shall not assign its rights and obligations under this Agreement to any third party.

10.2 Party B agrees that Party A may assign its obligations and rights under this Agreement to any third party and in case of such assignment, Party A is only required to give written notice to Party B but without the consent of Party B.

11. Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any aspect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

12. Amendment and Supplement

Any amendments and supplements to this Agreement shall be in writing. The amendment agreements and supplementary agreements that have been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

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13. Language and Counterparts

This Agreement is written in Chinese in two (2) counterparts, each Party having one copy.

The remainder of this page is intentionally left blank.] IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Business Cooperation Agreement as of the date first above written.

Party A: Wanleduo Network Technology (Beijing) Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                             

Name: Luo Jian

Title: Legal Reprehensive

Party B: Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                             

Name: Luo Jian

Title: Legal Reprehensive

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EX-10.9

Exhibit 10.9

POWER OF ATTORNEY

I, Luo Jian, a PRC citizen with Chinese Identification Card No.: ***************, own Beijing Xingengyuan Science and Technology Co., Ltd. (“Xingengyuan “) 86.95% of equity interests as of the date hereof. With respect to all equity interests now and in the future held by me in Xingengyuan (“My Equity Interests”), I hereby irrevocably authorize Beijing Spark Education and Technology Co., Ltd. (“WFOE”) to exercise the following rights during the term of this Power of Attorney:

The WFOE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Equity Interests, including without limitation to: 1) attend shareholders’ meetings of Xingengyuan; 2) exercise all the shareholder’s rights and shareholder’s voting rights I am entitled to under the laws of China and Xingengyuan ‘Articles of Association, including but not limited to the sale or transfer or pledge or disposition of My Equity Interests in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Xingengyuan.

Without limiting the generality of the powers granted hereunder, WFOE shall have the power and authority to, on behalf of myself, execute all the documents I shall sign as stipulated in the Exclusive Option Agreement entered into by and among me, the WFOE and Xingengyuan on July 24, 2020, the Equity Pledge Agreement entered into by and among me, the WFOE and Xingengyuan July 24, 2020, and the Spouse’s Consent Letter dated July 24, 2020 (including any modification, amendment and restatement thereto, collectively the “Transaction Documents”), and perform the terms of the Transaction Documents.

All the actions associated with My Equity Interests conducted by the WFOE shall be deemed as my own actions, and all the documents related to My Equity Interests executed by the WFOE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WFOE.

The WFOE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. If required by PRC laws, the WFOE shall designate a PRC citizen to exercise the aforementioned rights.

This Power of Attorney shall be coupled with an interest and shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Xingengyuan.

During the term of this Power of Attorney, I hereby waive all the rights associated with My Equity Interests which have been authorized to the WFOE through this Power of Attorney, and shall not exercise such rights by myself.

Power of Attorney (Execution Page)

Luo Jian

Signature:

Date: July 24, 2020

Accepted by:

Beijing Spark Education and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                             

Name: Luo Jian

Title: Legal Reprehensive

Acknowledged by:

Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                             

Name: Luo Jian

Title: Legal Reprehensive

Power of Attorney (Execution Page)

EX-10.10

Exhibit 10.10

POWER OF ATTORNEY

I, Shan Zebing, a PRC citizen with Chinese Identification Card No.: ***************, own Beijing Xingengyuan Science and Technology Co., Ltd. (“Xingengyuan “) 13.05% of equity interests as of the date hereof. With respect to all equity interests now and in the future held by me in Xingengyuan (“My Equity Interests”), I hereby irrevocably authorize Wanleduo Network Technology (Beijing) Co., Ltd. (“WFOE”) to exercise the following rights during the term of this Power of Attorney:

The WFOE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Equity Interests, including without limitation to: 1) attend shareholders’ meetings of Xingengyuan; 2) exercise all the shareholder’s rights and shareholder’s voting rights I am entitled to under the laws of China and Xingengyuan ‘Articles of Association, including but not limited to the sale or transfer or pledge or disposition of My Equity Interests in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Xingengyuan.

Without limiting the generality of the powers granted hereunder, WFOE shall have the power and authority to, on behalf of myself, execute all the documents I shall sign as stipulated in the Exclusive Option Agreement entered into by and among me, the WFOE and Xingengyuan on November 12, 2018, the Equity Pledge Agreement entered into by and among me, the WFOE and Xingengyuan November 12, 2018, and the Spouse’s Consent Letter dated November 12, 2018 (including any modification, amendment and restatement thereto, collectively the “Transaction Documents”), and perform the terms of the Transaction Documents.

All the actions associated with My Equity Interests conducted by the WFOE shall be deemed as my own actions, and all the documents related to My Equity Interests executed by the WFOE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WFOE.

The WFOE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. If required by PRC laws, the WFOE shall designate a PRC citizen to exercise the aforementioned rights.

This Power of Attorney shall be coupled with an interest and shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Xingengyuan.

During the term of this Power of Attorney, I hereby waive all the rights associated with My Equity Interests which have been authorized to the WFOE through this Power of Attorney, and shall not exercise such rights by myself.

Power of Attorney (Execution Page)

Shan Zebing

Signature:

Date: November 12, 2018

Accepted by:

Wanleduo Network Technology (Beijing) Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                             

Name: Luo Jian

Title: Legal Reprehensive

Acknowledged by:

Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                             

Name: Luo Jian

Title: Legal Reprehensive

Power of Attorney (Execution Page)

EX-10.11

Exhibit 10.11

EXCLUSIVE OPTION AGREEMENT

This Exclusive Option Agreement (this “Agreement”) is executed by and among the following Parties on November 12, 2018 in Beijing, the People’s Republic of China (“PRC” or “China”):

Party A:	Beijing Spark Education and Technology Co., Ltd.,a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its address at Room B306, 3/F, Building B, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing ;
Party B:	Luo Jian a PRC citizen with ID Card No.: ***************; and
Party C:	Beijing Xingengyuan Science and Technology Co., Ltd.,a limited liability company organized and existing under the laws of the PRC, with its address at Room B202, 2/F, Building B, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing..

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Party B is a shareholder of Party C and as of the date hereof holds 86.95% of equity interest in Party C, representing RMB 1,998,851 of the registered capital of Party C.

Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement:

1 Sale and Purchase of Equity Interest

1.1 Option Granted

In consideration of the payment of RMB10 .00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party B, Party B hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase the equity interests in Party C then held by Party B once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by PRC laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”). Except for Party A and the Designee (s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B. Party C hereby agrees to the grant by Party B of the Equity Interest Purchase Option to Party A. The “person” referred to in this section and this Agreement shall mean individual, company, joint venture, partnership, enterprise, trust or unincorporated organization.

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1.2 Steps for Exercise

Subject to the provisions of the laws and regulations of China, Party A’s exercise of the Equity Interest Purchase Option shall be subject to the provisions of the laws and regulations of China. Party A may exercise the Equity Interest Purchase Option by issuing a written notice to Party B (the “Equity Interest Purchase Option Notice”), specifying: (a) Party A’s or the Designee’s decision to exercise the Equity Interest Purchase Option; (b) the portion of equity interests to be purchased by Party A or the Designee from Party B (the “Optioned Interests”); and (c) the date for purchasing the Optioned Interests and/or the date for transfer of the Optioned Interests.

1.3 Equity Interest Purchase Price

The purchase price of the Optioned Interests (the “Base Price”) shall be RMB 10. If PRC law requires a minimum price higher than the Base Price when Party A exercises Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the minimum price (collectively, the “Equity Interest Purchase Price”).

1.4 Transfer of Optioned Interests

When Party A exercises the Equity Interest Purchase Option each time,

1.4.1 Party B shall cause Party C to promptly convene a shareholders’ meeting, at which a resolution shall be adopted approving Party B’s transfer of the Optioned Interests to Party A and/or the Designee (s);

1.4.2 Party B shall obtain written statements from the other shareholders of Party C giving consent to the transfer of the equity interest to Party A and/or the Designee (s) and waiving any right of first refusal related thereto;

1.4.3 Party B shall execute a share transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable), in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests;

1.4.4 The relevant Parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses and permits and take all necessary actions to transfer valid ownership of the Optioned Interests to Party A and/or the Designee (s), unencumbered by any security interests, and cause Party A and/or the Designee (s) to become the registered owner (s) of the Optioned Interests. For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party’s rights or interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements, but shall be deemed to exclude any security interest created by this Agreement, Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney. “Party B’s Equity Interest Pledge Agreement “as used in this Agreement shall refer to the Interest Pledge Agreement executed by and among Party A, Party B and Party C on the date hereof and any modification, amendment and restatement thereto.” Party B’s Power of Attorney “as used in this Agreement shall refer to the Power of Attorney executed by Party B on the date hereof granting Party A with power of attorney and any modification, amendment and restatement thereto.

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2 Covenants

2.1 Covenants Relating to Party C

Party B (as the shareholders of Party C) and Party C hereby covenant as follows:

2.1.1 Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association and bylaws of Party C, increase or decrease its registered capital, or change its structure of registered capital in other manners;

2.1.2 They shall maintain Party C’s corporate existence in accordance with good financial and business standards and practices, obtain and maintain all necessary government licenses and permits by prudently and effectively operating its business and handling its affairs;

2.1.3 Without the prior written consent of Party A, they shall not at any time following the date hereof, sell, transfer, mortgage or dispose of in any manner any material assets of Party C or legal or beneficial interest in the material business or revenues of Party C of more than RMB500,000, or allow the encumbrance thereon of any security interest;

2.1.4 Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, except for payables incurred in the ordinary course of business other than through loans;

2.1.5 They shall always operate all of Party C’s businesses during the ordinary course of business to maintain the asset value of Party C and refrain from any action/omission that may affect Party C’s operating status and asset value;

2.1.6 Without the prior written consent of Party A, they shall not cause Party C to execute any major contract, except the contracts in the ordinary course of business (for purpose of this subsection, a contract with a price exceeding RMB500,000 shall be deemed a major contract);

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2.1.7 Without the prior written consent of Party A, they shall not cause Party C to provide any person with any loan or credit;

2.1.8 They shall provide Party A with information on Party C’s business operations and financial condition at Party A’s request;

2.1.9 If requested by Party A, they shall procure and maintain insurance in respect of Party C’s assets and business from an insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses;

2.1.10 Without the prior written consent of Party A, they shall not cause or permit Party C to merge, consolidate with, acquire or invest in any person;

2.1.11 They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to Party C’s assets, business or revenue;

2.1.12 To maintain the ownership by Party C of all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

2.1.13 Without the prior written consent of Party A, they shall ensure that Party C shall not in any manner distribute dividends to its shareholders, provided that upon Party A’s written request, Party C shall immediately distribute all distributable profits to its shareholders;

2.1.14 At the request of Party A, they shall appoint any persons designated by Party A as the director or executive director of Party C.

2.1.15 Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and

2.1.16 Unless otherwise required by PRC law, Party C shall not be dissolved or liquated without prior written consent by Party A.

2.2 Covenants of Party B

Party B hereby covenants as follows:

2.2.1 Without the prior written consent of Party A, Party B shall not sell, transfer, mortgage or dispose of in any other manner any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon of any security interest, except for the interest placed in accordance with Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney;

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2.2.2 Party B shall cause the shareholders’ meeting and/or the directors (or the executive director) of Party C not to approve the sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon of any security interest, without the prior written consent of Party A, except for the interest placed in accordance with Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney;

2.2.3 Party B shall cause the shareholders’ meeting or the directors (or the executive director) of Party C not to approve the merger or consolidation with any person, or the acquisition of or investment in any person, without the prior written consent of Party A;

2.2.4 Party B shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the equity interests in Party C held by Party B;

2.2.5 Party B shall cause the shareholders’ meeting or the directors (or the executive director) of Party C to vote their approval of the transfer of the Optioned Interests as set forth in this Agreement and to take any and all other actions that may be requested by Party A;

2.2.6 To the extent necessary to maintain Party B’s ownership in Party C, Party B shall execute all necessary or appropriate documents, take all necessary or appropriate actions, file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

2.2.7 Party B shall appoint any designee of Party A as the director or the executive director of Party C, at the request of Party A;

2.2.8 Party B hereby waives its right of first of refusal to transfer of equity interest by any other shareholder of Party C to Party A (if any), and gives consent to execution by each other shareholder of Party C with Party A and Party C the exclusive option agreement, the equity interest pledge agreement and the power of attorney similar to this Agreement, Party B’s Equity Interest Pledge Agreement and Party B’s Power of attorney and undertakes not to take any action in conflict with such documents executed by the other shareholders;

2.2.9 Party B shall promptly donate any profit, interest, dividend or proceeds of liquidation to Party A or any other person designated by Party A to the extent permitted under applicable PRC laws; and

2.2.10 Party B shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party B, Party C and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. To the extent that Party B has any remaining rights with respect to the equity interests subject to this Agreement hereunder or under the Party B’s Equity Interest Pledge Agreement or under the Party B’s Power of Attorney, Party B shall not exercise such rights except in accordance with the written instructions of Party A.

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3 Representations and Warranties

Party Band Party C hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of the Optioned Interests, that:

3.1 They have the power, capacity and authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each, a “Transfer Contracts”), and to perform their obligations under this Agreement and any Transfer Contracts. Party Band Party C agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

3.2 Party Band Party C have obtained any and all approvals and consents from government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

3.3 The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable laws of PRC; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party C; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, or constitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of any condition for the grant and/or maintenance of any licenses or permits issued to either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

3.4 Party B has a good and merchantable title to the equity interests in Party C he holds. Except for Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney, Party B has not placed any security interest on such equity interests;

3.5 Party Chas a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets;

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3.6 Party C does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained.

3.7 Party C has complied with all laws and regulations of China applicable to asset acquisitions; and

3.8 There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party C, assets of Party C or Party C.

4 Effective Date and Term

This Agreement shall become effective upon execution by the Parties and remain effective until all equity interests held by Party B in Party C have been transferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement.

5 Governing Law and Resolution of Disputes

5.1 Governing Law

The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of PRC.

5.2 Methods of Resolution of Disputes

In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Beijing. The arbitration award shall be final and binding on all Parties.

6 Taxes and Fees

Each Party shall pay any and all transfer and registration tax, expenses and fees incurred thereby or levied thereon in accordance with the laws of PRC in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactions contemplated under this Agreement and the Transfer Contracts.

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7 Notices

7.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

7.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of receipt or refusal at the address specified for notices;

7.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

7.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A: Beijing Spark Education and Technology Co., Ltd.

Address: 202, Block B, Qiming International Building, Chaoyang District, Beijing

Attn: Luo Jian

E-mail: luojian@huohua.cn

Party B: Luo Jian

Address: ***************

Phone: ***************

Party C: Beijing Xingengyuan Science and Technology Co., Ltd.

Address: 202, Block B, Qiming International Building, Chaoyang District, Beijing

Attn: Luo Jian

E-mail: luojian@huohua.cn

7.3 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

8 Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of other Parties, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall beheld liable for breach of this Agreement.

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9 Further Warranties

The Parties agree to promptly execute documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

10 Liability for Breach

10.1 If Party B or Party C conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require the Party B or Party C to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein;

10.2 Party B or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws.

11 Miscellaneous

11.1 Amendment, change and supplement

Any amendment, modification and supplement to this Agreement shall require the execution of a written agreement by all of the Parties.

11.2 Entire agreement

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and written consultations, representations and agreements reached with respect to the subject matter of this Agreement, including, without limitation, the Exclusive Option Agreement executed among the Parties on July 30, 2019 .

11.3 Headings

The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of the provisions of this Agreement.

11.4 Language

This Agreement is written in Chinese in three counterparts, Party A, Party B and Party C having one copy.

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11.5 Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any aspect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

11.6 Successors

This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties.

11.7 Survival

11.7.1 Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

11.7.2 The provisions of Sections 5, 8, 10 and this Section 11.7 shall survive the termination of this Agreement.

11.8 Waiver

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require the signatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such a Party with respect to any similar breach in other circumstances.

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INWITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Option Agreement as of the date first above written.

Party A: Beijing Huohuasiwei Education Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                             

Name: Luo Jian

Title: Legal Reprehensive

Party B: Luo Jian

Signature: /s/ Luo Jian                             

Party C: Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                             

Name: Luo Jian

Title: Legal Reprehensive

EX-10.12

Exhibit 10.12

EXCLUSIVE OPTION AGREEMENT

This Exclusive Option Agreement (this “Agreement”) is executed by and among the following Parties on November 12, 2018 in Beijing, the People’s Republic of China (“PRC” or “China”):

Party A: Wanleduo Network Technology (Beijing) Co., Ltd.,a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its address at Room 201-A131, Unit 1, Building 17, No.3 Zhanggaoli Road, Haidian District;

Party B: Shan Zebing a PRC citizen with ID Card No.: ***************; and

Party C: Beijing Xingengyuan Science and Technology Co., Ltd.,a limited liability company organized and existing under the laws of the PRC, with its address at Room B202, 2/F, Building B, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing..

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Party B is a shareholder of Party C and as of the date hereof holds 13.05% of equity interest in Party C, representing RMB 300,000 of the registered capital of Party C.

Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement:

1 Sale and Purchase of Equity Interest

1.1 Option Granted

In consideration of the payment of RMB10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party B, Party B hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase the equity interests in Party C then held by Party B once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by PRC laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”). Except for Party A and the Designee (s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B. Party C hereby agrees to the grant by Party B of the Equity Interest Purchase Option to Party A. The “person” referred to in this section and this Agreement shall mean individual, company, joint venture, partnership, enterprise, trust or unincorporated organization.

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1.2 Steps for Exercise

Subject to the provisions of the laws and regulations of China, Party A’s exercise of the Equity Interest Purchase Option shall be subject to the provisions of the laws and regulations of China. Party A may exercise the Equity Interest Purchase Option by issuing a written notice to Party B (the “Equity Interest Purchase Option Notice”), specifying: (a) Party A’s or the Designee’s decision to exercise the Equity Interest Purchase Option; (b) the portion of equity interests to be purchased by Party A or the Designee from Party B (the “Optioned Interests”); and (c) the date for purchasing the Optioned Interests and/or the date for transfer of the Optioned Interests.

1.3 Equity Interest Purchase Price

The purchase price of the Optioned Interests (the “Base Price”) shall be RMB 10. If PRC law requires a minimum price higher than the Base Price when Party A exercises Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the minimum price (collectively, the “Equity Interest Purchase Price”).

1.4 Transfer of Optioned Interests

When Party A exercises the Equity Interest Purchase Option each time,

1.4.1 Party B shall cause Party C to promptly convene a shareholders’ meeting, at which a resolution shall be adopted approving Party B’s transfer of the Optioned Interests to Party A and/or the Designee (s);

1.4.2 Party B shall obtain written statements from the other shareholders of Party C giving consent to the transfer of the equity interest to Party A and/or the Designee (s) and waiving any right of first refusal related thereto;

1.4.3 Party B shall execute a share transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable), in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests;

1.4.4 The relevant Parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses and permits and take all necessary actions to transfer valid ownership of the Optioned Interests to Party A and/or the Designee (s), unencumbered by any security interests, and cause Party A and/or the Designee (s) to become the registered owner (s) of the Optioned Interests. For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party’s rights or interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements, but shall be deemed to exclude any security interest created by this Agreement, Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney. “Party B’s Equity Interest Pledge Agreement “as used in this Agreement shall refer to the Interest Pledge Agreement executed by and among Party A, Party B and Party C on the date hereof and any modification, amendment and restatement thereto.” Party B’s Power of Attorney “as used in this Agreement shall refer to the Power of Attorney executed by Party B on the date hereof granting Party A with power of attorney and any modification, amendment and restatement thereto.

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2 Covenants

2.1 Covenants Relating to Party C

Party B (as the shareholders of Party C) and Party C hereby covenant as follows:

2.1.1 Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association and bylaws of Party C, increase or decrease its registered capital, or change its structure of registered capital in other manners;

2.1.2 They shall maintain Party C’s corporate existence in accordance with good financial and business standards and practices, obtain and maintain all necessary government licenses and permits by prudently and effectively operating its business and handling its affairs;

2.1.3 Without the prior written consent of Party A, they shall not at any time following the date hereof, sell, transfer, mortgage or dispose of in any manner any material assets of Party C or legal or beneficial interest in the material business or revenues of Party C of more than RMB500,000, or allow the encumbrance thereon of any security interest;

2.1.4 Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, except for payables incurred in the ordinary course of business other than through loans;

2.1.5 They shall always operate all of Party C’s businesses during the ordinary course of business to maintain the asset value of Party C and refrain from any action/omission that may affect Party C’s operating status and asset value;

2.1.6 Without the prior written consent of Party A, they shall not cause Party C to execute any major contract, except the contracts in the ordinary course of business (for purpose of this subsection, a contract with a price exceeding RMB500,000 shall be deemed a major contract);

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2.1.7 Without the prior written consent of Party A, they shall not cause Party C to provide any person with any loan or credit;

2.1.8 They shall provide Party A with information on Party C’s business operations and financial condition at Party A’s request;

2.1.9 If requested by Party A, they shall procure and maintain insurance in respect of Party C’s assets and business from an insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses;

2.1.10 Without the prior written consent of Party A, they shall not cause or permit Party C to merge, consolidate with, acquire or invest in any person;

2.1.11 They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to Party C’s assets, business or revenue;

2.1.12 To maintain the ownership by Party C of all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

2.1.13 Without the prior written consent of Party A, they shall ensure that Party C shall not in any manner distribute dividends to its shareholders, provided that upon Party A’s written request, Party C shall immediately distribute all distributable profits to its shareholders;

2.1.14 At the request of Party A, they shall appoint any persons designated by Party A as the director or executive director of Party C.

2.1.15 Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and

2.1.16 Unless otherwise required by PRC law, Party C shall not be dissolved or liquated without prior written consent by Party A.

2.2 Covenants of Party B

Party B hereby covenants as follows:

2.2.1 Without the prior written consent of Party A, Party B shall not sell, transfer, mortgage or dispose of in any other manner any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon of any security interest, except for the interest placed in accordance with Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney;

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2.2.2 Party B shall cause the shareholders’ meeting and/or the directors (or the executive director) of Party C not to approve the sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon of any security interest, without the prior written consent of Party A, except for the interest placed in accordance with Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney;

2.2.3 Party B shall cause the shareholders’ meeting or the directors (or the executive director) of Party C not to approve the merger or consolidation with any person, or the acquisition of or investment in any person, without the prior written consent of Party A;

2.2.4 Party B shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the equity interests in Party C held by Party B;

2.2.5 Party B shall cause the shareholders’ meeting or the directors (or the executive director) of Party C to vote their approval of the transfer of the Optioned Interests as set forth in this Agreement and to take any and all other actions that may be requested by Party A;

2.2.6 To the extent necessary to maintain Party B’s ownership in Party C, Party B shall execute all necessary or appropriate documents, take all necessary or appropriate actions, file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

2.2.7 Party B shall appoint any designee of Party A as the director or the executive director of Party C, at the request of Party A;

2.2.8 Party B hereby waives its right of first of refusal to transfer of equity interest by any other shareholder of Party C to Party A (if any), and gives consent to execution by each other shareholder of Party C with Party A and Party C the exclusive option agreement, the equity interest pledge agreement and the power of attorney similar to this Agreement, Party B’s Equity Interest Pledge Agreement and Party B’s Power of attorney and undertakes not to take any action in conflict with such documents executed by the other shareholders;

2.2.9 Party B shall promptly donate any profit, interest, dividend or proceeds of liquidation to Party A or any other person designated by Party A to the extent permitted under applicable PRC laws; and

2.2.10 Party B shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party B, Party C and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. To the extent that Party B has any remaining rights with respect to the equity interests subject to this Agreement hereunder or under the Party B’s Equity Interest Pledge Agreement or under the Party B’s Power of Attorney, Party B shall not exercise such rights except in accordance with the written instructions of Party A.

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3 Representations and Warranties

Party Band Party C hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of the Optioned Interests, that:

3.1 They have the power, capacity and authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each, a “Transfer Contracts”), and to perform their obligations under this Agreement and any Transfer Contracts. Party Band Party C agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

3.2 Party Band Party C have obtained any and all approvals and consents from government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

3.3 The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable laws of PRC; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party C; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, or constitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of any condition for the grant and/or maintenance of any licenses or permits issued to either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

3.4 Party B has a good and merchantable title to the equity interests in Party C he holds. Except for Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney, Party B has not placed any security interest on such equity interests;

3.5 Party Chas a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets;

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3.6 Party C does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained.

3.7 Party C has complied with all laws and regulations of China applicable to asset acquisitions; and

3.8 There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party C, assets of Party C or Party C.

4 Effective Date and Term

This Agreement shall become effective upon execution by the Parties and remain effective until all equity interests held by Party B in Party C have been transferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement.

5 Governing Law and Resolution of Disputes

5.1 Governing Law

The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of PRC.

5.2 Methods of Resolution of Disputes

In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Beijing. The arbitration award shall be final and binding on all Parties.

6 Taxes and Fees

Each Party shall pay any and all transfer and registration tax, expenses and fees incurred thereby or levied thereon in accordance with the laws of PRC in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactions contemplated under this Agreement and the Transfer Contracts.

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7 Notices

7.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

7.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of receipt or refusal at the address specified for notices;

7.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

7.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Wanleduo Network Technology (Beijing) Co., Ltd.
Address:	202, Block B, Qiming International Building, Chaoyang District, Beijing
Attn:	Luo Jian
E-mail:	luojian@huohua.cn
Party B:	Shan Zebing
Address:	***************
Phone:	***************
Party C:	Beijing Xingengyuan Science and Technology Co., Ltd.
Address:	202, Block B, Qiming International Building, Chaoyang District, Beijing
Attn:	Luo Jian
E-mail:	luojian@huohua.cn

7.3 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

8 Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of other Parties, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall beheld liable for breach of this Agreement.

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9 Further Warranties

The Parties agree to promptly execute documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

10 Liability for Breach

10.1 If Party B or Party C conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require the Party B or Party C to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein;

10.2 Party B or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws.

11 Miscellaneous

11.1 Amendment, change and supplement

Any amendment, modification and supplement to this Agreement shall require the execution of a written agreement by all of the Parties.

11.2 Entire agreement

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and written consultations, representations and agreements reached with respect to the subject matter of this Agreement, including, without limitation, the Exclusive Option Agreement executed among the Parties on January 3, 2017.

11.3 Headings

The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of the provisions of this Agreement.

11.4 Language

This Agreement is written in Chinese in three counterparts, Party A, Party B and Party C having one copy.

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11.5 Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any aspect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

11.6 Successors

This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties.

11.7 Survival

11.7.1 Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

11.7.2 The provisions of Sections 5, 8, 10 and this Section 11.7 shall survive the termination of this Agreement.

11.8 Waiver

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require the signatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such a Party with respect to any similar breach in other circumstances.

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INWITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Option Agreement as of the date first above written.

Party A: Wanleduo Network Technology (Beijing) Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                         

Name: Luo Jian

Title: Legal Reprehensive

Party B: Shan Zebing

Signature: /s/ Shan Zebing                                  

Party C: Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                         

Name: Luo Jian

Title: Legal Reprehensive

EX-10.13

Exhibit 10.13

EQUITY INTEREST PLEDGE AGREEMENT

This Equity Interest Pledge Agreement (this “Agreement”) has been executed by and among the following parties on February 24, 2021 in Beijing, the People’s Republic of China (“PRC” or “China”):

Party A: Beijing Spark Education and Technology Co., Ltd. (the “Pledgee”), a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its address at Room B306, 3/F, Building B, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing ;

Party B: Luo Jian (the “Pledgor”), a PRC citizen, with his ID card number of ***************; and

Party C: Beijing Xingengyuan Science and Technology Co., Ltd.a limited liability company organized and existing under the laws of the PRC, with its address at Room B202, 2/F, Building B, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing.

In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Pledgor is a citizen of the PRC, and as of the date hereof, holds 86.95% of equity interest in Party C, representing RMB 1,998,851 in the registered capital of Party C. Party C is a limited liability company incorporated in Beijing, PRC, engaging in technology development, consultation, service, promotion, transfer; data processing (excluding cloud computing data center with a PUE value above 1.5) computer system service; basic software service; economic and trade consultation; conference service; design, production, agency and release of advertisement; organization of cultural and artistic exchange activities (excluding performance); business planning; industrial arts and crafts design; computer graphic design; product design; education consultation; leasing of toys; sale of toys and handicrafts; books, newspapers, periodicals, electronic publications, audio-visual products, wholesale, retail and online sales (the license for publications shall be valid till 30 April 2022); information services in the second category value-added telecommunication business (the license for value-added telecommunication business shall be valid till 26 September 2022) (the license for value-added telecommunication business shall be valid till 26 September 2022); radio and television program production; performance brokerage; engagement in Internet cultural activities. (With respect to businesses requiring approvals under laws, business operations may be carried out only upon their approvals and in accordance with their approvals) after the approval of the competent authorities. Party C acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge;

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2. Pledgee is a wholly foreign-owned enterprise registered in PRC. Pledgee and Party C which is partially owned by Pledgor have executed an Exclusive Business Cooperation Agreement (as defined below) in Beijing; Pledgee, Pledgors and Party C have executed an Exclusive Option Agreement (as defined below); Pledgor has executed a Power of Attorney (as defined below) in favor of Pledgee; The spouse of Pledgor has executed a Letter of Spousal Consent (as defined below);

3. To ensure that Party C and Pledgors fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Letter of Spouse’s Consent and the Power of Attorney, Pledgor hereby pledges to the Pledgee all of the equity interest that Pledgor holds in Party C as security for Party C’s and Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Letter of Spouse’s Consent and the Power of Attorney.

To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon the following terms.

1. Definitions

Unless otherwise provided herein, the terms below shall have the following meanings:

1.1 Pledge: shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to be compensated on a preferential basis with the conversion, auction or sales price of the Equity Interest.

1.2 Equity Interest: shall refer to 86.95% of equity interest in Party C currently held by Pledgor, representing RMB 1,998,851 in the registered capital of Party C., i.e. the amount of the Equity Interest corresponding to RMB 1,998,851 in the registered capital of Party C.

1.3 Term of Pledge: shall refer to the term set forth in Section 3 of this Agreement.

1.4 Transaction Documents: shall refer to the Exclusive Business Cooperation Agreement executed by and between Party C and Pledgee on January 3, 2017(the “Exclusive Business Cooperation Agreement”), the Exclusive Option Agreement executed by and among Party C, Pledgee and Pledgor on July 24, 2020 (the “Exclusive Option Agreement”), the Power of Attorney executed on July 24, 2020 by Pledgor (the “Power of Attorney”), the spousal consent letter executed on July 24, 2020 by Pledgor’s spouse (“spousal consent letter”) and any modification, amendment and restatement to the aforementioned documents.

1.5 Contract Obligations: shall refer to all the obligations of Pledgor under the Exclusive Option Agreement, the Power of Attorney, the Spouse’s Consent Letter and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Spouse’s Consent Letter and this Agreement.

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1.6 Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred as a result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecast of Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses incurred in connection with enforcement by Pledgee of Pledgors’ and/or Party C’s Contract Obligations, and such loss shall not be limited to the amount of the secured debt as registered with the competent administrative authority for industry and commerce. If the competent administrative authority for industry and commerce requires to specify the amount of the Secured Indebtedness for the sole purpose of registering the Secured Indebtedness, the Parties agree to register the amount of the Secured Indebtedness as RMB 40,000,000. The Parties further confirm that for the purpose of handling the registration of pledge, it is specified that the aforementioned amounts are not diminished or restricted by all rights and interests which Pledgee is entitled to under the Transaction Documents and this Agreement.

1.7 Event of Default: shall refer to any of the circumstances set forth in Section 7 of this Agreement.

1.8 Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default.

2. Pledge

2.1 Pledgors agree to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under this Agreement. Party C hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

2.2 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgor on Equity Interest after deduction of individual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

2.3 Pledgors may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as a result of Pledgor ‘s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest.

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2.4 In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon Party C’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

3. Term of Pledge

3.1 The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein is registered ‘with relevant administration for industry and commerce (the “AIC”). The Pledge shall remain effective until all Contract Obligations have been fully performed and all Secured Indebtedness have been fully paid. The Pledge shall be continuously valid until all payments due under the Business Cooperation Agreement have been fulfilled by Party C. Pledgor and Party C shall (1) register the Pledge in the shareholders’ register of Party C within 3 business days following the execution of this Agreement, and (2) submit an application to the AIC for the registration of the Pledge of the Equity Interest contemplated herein within 30 business days following the execution of this Agreement. The parties covenant that for the purpose of registration of the Pledge, the parties hereto and all other shareholders of Party C shall submit to the AIC this Agreement or an equity interest pledge contract in the form required by the AIC at the location of Party C which shall truly reflect the information of the Pledge hereunder (the “AIC Pledge Contract”) .For matters not specified in the AIC Pledge Contract, the parties shall be bound by the provisions of this Agreement. Pledgor and Party C shall submit all necessary documents and complete all necessary procedures, as required by the PRC laws and regulations and the relevant AIC, to ensure that the Pledge of the Equity Interest shall be registered with the AIC as soon as possible after filing.

3.2 During the Term of Pledge, in the event Pledgors and/or Party C fails to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have the right, but not the obligation, to exercise the Pledge in accordance with the provisions of this Agreement.

4. Custody of Records for Equity Interest subject to Pledge

4.1 During the Term of Pledge set forth in this Agreement, Pledgors shall deliver to Pledgee’s custody the capital contribution certificate for the Equity Interest and the shareholders’ register containing the Pledge within one week from the execution of this Agreement. Pledgee shall have custody of such original documents during the entire Term of Pledge set forth in this Agreement.

5. Representations and Warranties of Each Pledgor and Party C

As of the execution date of this Agreement, Pledgor and Party C hereby jointly and severally represent and warrant to Pledgee that:

5.1 Pledgor is the sole legal and beneficial owner of the Equity Interest;

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5.2 Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement;

5.3 Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest;

5.4 Pledgor and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

5.5 The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles of association, bylaws or other constitutional documents; (iii) result in any breach of or constitute any breach under any contract or instrument to which it is a party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or permit issued to any Party; or (v) cause any permit or permit issued to any Party to be suspended, cancelled or attached with additional conditions.

6. Covenants of Each Pledgor and Party C

6.1 During the term of this Agreement, Pledgor and Party C hereby jointly and severally covenant to the Pledgee:

6.1.1 Pledgor shall not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest or any portion thereof, without the prior written consent of Pledgee, except for the performance of the Transaction Documents;

6.1.2 Pledgor and Party C shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within five (5) days of receipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall present the aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee’s reasonable request or upon consent of Pledgee;

6.1.3 Pledgor and Party C shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on any guarantees and other obligations of Pledgor arising out of this Agreement;

6.1.4 Party C shall complete the registration procedures for extension of the term of operation within three (3) months prior to the expiration of such term to maintain the validity of this Agreement.

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6.2 Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmed by Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings.

6.3 To protect or perfect the security interest granted by this Agreement for the Contract Obligations and Secured Indebtedness, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes to perform and to cause other parties who have an interest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee (s) of Pledgee (natural persons/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, orders and decisions regarding the Pledge that are required by Pledgee.

6.4 Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shall indemnify Pledgee for all losses resulting therefrom.

7. Event of Breach

7.1 The following circumstances shall be deemed Event of Default:

7.1.1 Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement.

7.1.2 Party C ‘s any breach to any obligations under the Transaction Documents and/or this Agreement.

7.2 Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section 7.1, Pledgor and Party C shall immediately notify Pledgee in writing accordingly.

7.3 Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee’s satisfaction within twenty (20) days after the Pledgee and/or Party C delivers a notice to the Pledgor requesting ratification of such Event of Default, Pledgee may issue a Notice of Default to Pledgor in writing at any time thereafter, demanding the Pledgor to immediately exercise the Pledge in accordance with the provisions of Section 8 of this Agreement.

8. Exercise of Pledge

8.1 Pledgee shall issue a written Notice of Default to Pledgor when it exercises the Pledge.

8.2 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge at any time after the issuance of the Notice of Default in accordance with Section 8.1. Once Pledgee elects to enforce the Pledge, Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.

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8.3 After Pledgee issues a Notice of Default to Pledgee in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicable PRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgee shall not be liable for any loss incurred by its duly exercise of such rights and powers.

8.4 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest, perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance shall be returned to Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where Pledgor resides, with all expense incurred being borne by Pledgor. To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

8.5 Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest under this Agreement, without exercising any other remedy measure first.

8.6 Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgor or Party C shall not raise any objection to such exercise.

8.7 When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enable Pledgee to enforce the Pledge in accordance with this Agreement.

9. Liability for Breach

9.1 If the Pledgors or Party C conducts any material breach of any term of this Agreement, the Pledgee shall have right to terminate this Agreement and/or require the Pledgors or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of the Pledgee herein.

9.2 Pledgor or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws.

10. Assignment

10.1 Without Pledgee’s prior written consent, Pledgor and Party C shall not have the right to assign or delegate their rights and obligations under this Agreement.

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10.2 This Agreement shall be binding on Pledgor and his/her successors and permitted assigns, and shall be valid with respect to Pledgee and each of his/her successors and assigns.

10.3 At any time, Pledgee may assign any and all of its rights and obligations under the Transaction Documents and this Agreement to its designee (s), in which case the assigns shall have the rights and obligations of Pledgee under the Transaction Documents and this Agreement, as if it were the original party to the Transaction Documents and this Agreement.

10.4 In the event of change of Pledgee due to an assignment, Pledgor and/or Party C shall, at the request of Pledgee, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AIC.

10.5 Pledgor and Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any of them, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to the Equity Interest pledged hereunder shall not be exercised by Pledgor except in accordance with the written instructions of Pledgee.

11. Termination

11.1 Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgors and Party C, Pledgee shall release the Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgors to de-register the Pledge from the shareholders’ register of Party C and with relevant PRC local administration for industry and commerce.

11.2 The provisions under Sections9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement.

12. Handling Fees and Other Expenses

All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees, shall be borne by Party C.

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13. Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

14. Governing Law and Resolution of Disputes

14.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of PRC.

14.2 In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Beijing. The arbitration award shall be final and binding on all Parties.

14.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

15. Notices

15.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

15.2 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

15.3 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

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15.4 For the purpose of notices, the addresses of the Parties are as follows:

Party A:  Beijing Spark Education and Technology Co., Ltd.

Address: 202, Block B, Qiming International Building, Chaoyang District, Beijing

Attn:       Luo Jian

E-mail:   luojian@huohua.cn

Party B:  Luo Jian

Address: ***************

Phone:    ***************

Party C:  Beijing Xingengyuan Science and Technology Co., Ltd.

Address: 202, Block B, Qiming International Building, Chaoyang District, Beijing

Attn:       Luo Jian

E-mail:   luojian@huohua.cn

15.5 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

16. Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any aspect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

17. Entire agreement

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the matter hereof, and shall supersede all prior oral and written consultations, representations and agreements reached with respect to the matter of this Agreement, including, without limitation, the Equity Pledge Agreement executed by and among the Parties on July 24, 2020.

18. Attachments

The attachments set forth herein shall be an integral part of this Agreement.

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19. Effectiveness

18.1 This Agreement shall become effective upon execution by the Parties.

18.2 Any amendments, changes and supplements to this Agreement shall be in writing and shall become effective upon completion of the governmental filing procedures (if applicable) after the affixation of the signatures or seals of the Parties.

20. Language and Counterparts

This Agreement is written in Chinese in four counterparts. Pledgee, Pledgor and Party C shall hold one counterpart and the remaining counterpart shall be for registration.

The Remainder of this page is intentionally left blank.

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INWITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Equity Interest Pledge Agreement as of the date first above written.

Party A: Beijing Spark Education and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                     

Name: Luo Jian

Title: Legal Reprehensive

Party B: Luo Jian

Signature: /s/ Luo Jian                                     

Party C: Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                     

Name: Luo Jian

Title: Legal Reprehensive

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Attachments:

1. Register of Shareholders of Party C

2. Exclusive Business Cooperation Agreement

3. Exclusive Option Agreement

4. Power of Attorney

5. Spousal Consent

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EX-10.14

Exhibit 10.14

EQUITY INTEREST PLEDGE AGREEMENT

This Equity Interest Pledge Agreement (this “Agreement”) has been executed by and among the following parties on November 12, 2018 in Beijing, the People’s Republic of China (“PRC” or “China”):

Party A: Wanleduo Network Technology (Beijing) Co., Ltd. (the “Pledgee”), a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its address at Room 201-A131, Unit 1, Building 17, No.3 Gaolizhang Road, Haidian District, Beijing;

Party B: Shan Zebing (the “Pledgor”), a PRC citizen, with his ID card number of ***************; and

Party C: Beijing Xingengyuan Science and Technology Co., Ltd.a limited liability company organized and existing under the laws of the PRC, with its address at Room B202, 2/F, Building B, No. 101 Wangjing Lize Zhongyuan, Chaoyang District, Beijing.

In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Pledgor is a citizen of the PRC, and as of the date hereof, holds 13.05% of equity interest in Party C, representing RMB 300,000 in the registered capital of Party C. Party C is a limited liability company incorporated in Beijing, PRC, engaging in technology development, consultation, service, promotion, transfer; computer system service; basic software service; economic and trade consultation; conference service; design, production, agency and release of advertisement; organization of cultural and artistic exchange activities (excluding performance); business planning; industrial arts and crafts design; computer graphic design; product design; leasing of toys; sale of toys and handicrafts. Party C acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge;

2. Pledgee is a wholly foreign-owned enterprise registered in PRC. Pledgee and Party C which is partially owned by Pledgor have executed an Exclusive Business Cooperation Agreement (as defined below) in Beijing; Pledgee, Pledgors and Party C have executed an Exclusive Option Agreement (as defined below); Pledgor has executed a Power of Attorney (as defined below) in favor of Pledgee; The spouse of Pledgor has executed a Letter of Spousal Consent (as defined below);

3. To ensure that Party C and Pledgors fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Letter of Spouse’s Consent and the Power of Attorney, Pledgor hereby pledges to the Pledgee all of the equity interest that Pledgor holds in Party C as security for Party C’s and Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Letter of Spouse’s Consent and the Power of Attorney.

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To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon the following terms.

1. Definitions

Unless otherwise provided herein, the terms below shall have the following meanings:

1.1 Pledge: shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to be compensated on a preferential basis with the conversion, auction or sales price of the Equity Interest.

1.2 Equity Interest: shall refer to 13.05% of equity interest in Party C currently held by Pledgor, representing RMB 300,000 in the registered capital of Party C, and all equity interests in Party C to be held by Pledgor hereafter.

1.3 Term of Pledge: shall refer to the term set forth in Section 3 of this Agreement.

1.4 Transaction Documents: shall refer to the Exclusive Business Cooperation Agreement executed by and between Party C and Pledgee on January 3, 2017 (the “Exclusive Business Cooperation Agreement”), the Exclusive Option Agreement executed by and among Party C, Pledgee and Pledgor on November 12, 2018 (the “Exclusive Option Agreement”), the Power of Attorney executed on November 12, 2018 by Pledgor (the “Power of Attorney”), the spousal consent letter executed on November 12, 2018 by Pledgor’s spouse (“spousal consent letter”) and any modification, amendment and restatement to the aforementioned documents.

1.5 Contract Obligations: shall refer to all the obligations of Pledgor under the Exclusive Option Agreement, the Power of Attorney, the Spouse’s Consent Letter and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Spouse’s Consent Letter and this Agreement.

1.6 Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred as a result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecast of Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses incurred in connection with enforcement by Pledgee of Pledgors’ and/or Party C’s Contract Obligations.

1.7 Event of Default: shall refer to any of the circumstances set forth in Section 7 of this Agreement.

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1.8 Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default.

2. Pledge

2.1 Pledgors agree to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under this Agreement. Party C hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

2.2 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgor on Equity Interest after deduction of individual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

2.3 Pledgors may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as a result of Pledgor ‘s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest.

2.4 In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon Party C’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

3. Term of Pledge

3.1 The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein is registered with relevant administration for industry and commerce (the “AIC”). The Pledge shall remain effective until all Contract Obligations have been fully performed and all Secured Indebtedness have been fully paid. The Pledge shall be continuously valid until all payments due under the Business Cooperation Agreement have been fulfilled by Party C. Pledgor and Party C shall (1) register the Pledge in the shareholders’ register of Party C within 3 business days following the execution of this Agreement, and (2) submit an application to the AIC for the registration of the Pledge of the Equity Interest contemplated herein within 30 business days following the execution of this Agreement. The parties covenant that for the purpose of registration of the Pledge, the parties hereto and all other shareholders of Party C shall submit to the AIC this Agreement or an equity interest pledge contract in the form required by the AIC at the location of Party C which shall truly reflect the information of the Pledge hereunder (the “AIC Pledge Contract”) .For matters not specified in the AIC Pledge Contract, the parties shall be bound by the provisions of this Agreement. Pledgor and Party C shall submit all necessary documents and complete all necessary procedures, as required by the PRC laws and regulations and the relevant AIC, to ensure that the Pledge of the Equity Interest shall be registered with the AIC as soon as possible after filing.

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3.2 During the Term of Pledge, in the event Pledgors and/or Party C fails to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have the right, but not the obligation, to exercise the Pledge in accordance with the provisions of this Agreement.

4. Custody of Records for Equity Interest subject to Pledge

4.1 During the Term of Pledge set forth in this Agreement, Pledgors shall deliver to Pledgee’s custody the capital contribution certificate for the Equity Interest and the shareholders’ register containing the Pledge within one week from the execution of this Agreement. Pledgee shall have custody of such original documents during the entire Term of Pledge set forth in this Agreement.

5. Representations and Warranties of Each Pledgor and Party C

As of the execution date of this Agreement, Pledgor and Party C hereby jointly and severally represent and warrant to Pledgee that:

5.1 Pledgor is the sole legal and beneficial owner of the Equity Interest;

5.2 Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement;

5.3 Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest;

5.4 Pledgor and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

5.5 The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles of association, bylaws or other constitutional documents; (iii) result in any breach of or constitute any breach under any contract or instrument to which it is a party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or permit issued to any Party; or (v) cause any permit or permit issued to any Party to be suspended, cancelled or attached with additional conditions.

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6. Covenants of Each Pledgor and Party C

6.1 During the term of this Agreement, Pledgor and Party C hereby jointly and severally covenant to the Pledgee:

6.1.1 Pledgor shall not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest or any portion thereof, without the prior written consent of Pledgee, except for the performance of the Transaction Documents;

6.1.2 Pledgor and Party C shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within five (5) days of receipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall present the aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee’s reasonable request or upon consent of Pledgee;

6.1.3 Pledgor and Party C shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on any guarantees and other obligations of Pledgor arising out of this Agreement;

6.1.4 Party C shall complete the registration procedures for extension of the term of operation within three (3) months prior to the expiration of such term to maintain the validity of this Agreement.

6.2 Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmed by Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings.

6.3 To protect or perfect the security interest granted by this Agreement for the Contract Obligations and Secured Indebtedness, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes to perform and to cause other parties who have an interest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee (s) of Pledgee (natural persons/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, orders and decisions regarding the Pledge that are required by Pledgee.

6.4 Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shall indemnify Pledgee for all losses resulting therefrom.

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7. Event of Breach

7.1 The following circumstances shall be deemed Event of Default:

7.1.1 Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement.

7.1.2 Party C ‘s any breach to any obligations under the Transaction Documents and/or this Agreement.

7.2 Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section 7.1, Pledgor and Party C shall immediately notify Pledgee in writing accordingly.

7.3 Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee’s satisfaction within twenty (20) days after the Pledgee and/or Party C delivers a notice to the Pledgor requesting ratification of such Event of Default, Pledgee may issue a Notice of Default to Pledgor in writing at any time thereafter, demanding the Pledgor to immediately exercise the Pledge in accordance with the provisions of Section 8 of this Agreement.

8. Exercise of Pledge

8.1 Pledgee shall issue a written Notice of Default to Pledgor when it exercises the Pledge.

8.2 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge at any time after the issuance of the Notice of Default in accordance with Section 8.1. Once Pledgee elects to enforce the Pledge, Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.

8.3 After Pledgee issues a Notice of Default to Pledgee in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicable PRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgee shall not be liable for any loss incurred by its duly exercise of such rights and powers.

8.4 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest, perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance shall be returned to Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where Pledgor resides, with all expense incurred being borne by Pledgor. To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

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8.5 Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest under this Agreement, without exercising any other remedy measure first.

8.6 Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgor or Party C shall not raise any objection to such exercise.

8.7 When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enable Pledgee to enforce the Pledge in accordance with this Agreement.

9. Liability for Breach

9.1 If the Pledgors or Party C conducts any material breach of any term of this Agreement, the Pledgee shall have right to terminate this Agreement and/or require the Pledgors or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of the Pledgee herein.

9.2 Pledgor or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws.

10. Assignment

10.1 Without Pledgee’s prior written consent, Pledgor and Party C shall not have the right to assign or delegate their rights and obligations under this Agreement.

10.2 This Agreement shall be binding on Pledgor and his/her successors and permitted assigns, and shall be valid with respect to Pledgee and each of his/her successors and assigns.

10.3 At any time, Pledgee may assign any and all of its rights and obligations under the Transaction Documents and this Agreement to its designee (s), in which case the assigns shall have the rights and obligations of Pledgee under the Transaction Documents and this Agreement, as if it were the original party to the Transaction Documents and this Agreement.

10.4 In the event of change of Pledgee due to an assignment, Pledgor and/or Party C shall, at the request of Pledgee, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AIC.

10.5 Pledgor and Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any of them, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to the Equity Interest pledged hereunder shall not be exercised by Pledgor except in accordance with the written instructions of Pledgee.

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11. Termination

11.1 Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgors and Party C, Pledgee shall release the Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgors to de-register the Pledge from the shareholders’ register of Party C and with relevant PRC local administration for industry and commerce.

11.2 The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement.

12. Handling Fees and Other Expenses

All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees, shall be borne by Party C.

13. Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

14. Governing Law and Resolution of Disputes

14.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of PRC.

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14.2 In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Beijing. The arbitration award shall be final and binding on all Parties.

14.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

15. Notices

15.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

15.2 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

15.3 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

15.4 For the purpose of notices, the addresses of the Parties are as follows:

Party A: Wanleduo Network Technology (Beijing) Co., Ltd.

Address: 202, Block B, Qiming International Building, Chaoyang District, Beijing

Attn:       Luo Jian

E-mail:   luojian@huohua.cn

Party B:  Shan Zebing

Address: ***************

Phone:    ***************

Party C:  Beijing Xingengyuan Science and Technology Co., Ltd.

Address: 202, Block B, Qiming International Building, Chaoyang District, Beijing

Attn:       Luo Jian

E-mail:   luojian@huohua.cn

15.5 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

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16. Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any aspect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

17. Entire agreement

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the matter hereof, and shall supersede all prior oral and written consultations, representations and agreements reached with respect to the matter of this Agreement, including, without limitation, the Equity Pledge Agreement executed by and among the Parties on January 3, 2017.

18. Attachments

The attachments set forth herein shall be an integral part of this Agreement.

19. Effectiveness

18.1 This Agreement shall become effective upon execution by the Parties.

18.2 Any amendments, changes and supplements to this Agreement shall be in writing and shall become effective upon completion of the governmental filing procedures (if applicable) after the affixation of the signatures or seals of the Parties.

20. Language and Counterparts

This Agreement is written in Chinese in four counterparts. Pledgee, Pledgor and Party C shall hold one counterpart and the remaining counterpart shall be for registration.

The Remainder of this page is intentionally left blank.

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INWITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Equity Interest Pledge Agreement as of the date first above written.

Party A: Wanleduo Network Technology (Beijing) Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                     

Name: Luo Jian

Title: Legal Reprehensive

Party B: Shan Zebing

Signature: /s/ Shan Zebing                              

Party C: Beijing Xingengyuan Science and Technology Co., Ltd. (Seal)

Signature: /s/ Luo Jian                                     

Name: Luo Jian

Title: Legal Reprehensive

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Attachments:

1. Register of Shareholders of Party C

2. Exclusive Business Cooperation Agreement

3. Exclusive Option Agreement

4. Power of Attorney

5. Spousal Consent

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EX-10.15

Exhibit 10.15

SPOUSAL CONSENT

I, Shen Xia (ID No.: ***************), is the legally spouse of Luo Jian (ID No.: ***************). I hereby unconditionally and irrevocably consent to the execution of the following documents (collectively the “Transaction Documents”, including, for the avoidance of doubt, other relevant documents executed for the purpose of engaging in the transactions contemplated by the Transaction Documents, as the same may be amended from time to time) by Luo Jian and to the disposal of the equity interest in Beijing Xingengyuan Science and Technology Co., Ltd. (the “Company”) registered in the name of Luo Jian in accordance with the following Transaction Documents:

1. Exclusive Option Agreement among Luo Jian , the Company and Beijing Spark Education and Technology Co., Ltd. (the “WFOE”) on July 24, 2020 ;

2. Equity Pledge Agreement among Luo Jian , the Company and WFOE on July 24, 2020 ;

3. Power of Attorney among Luo Jian , the Company and the WFOE on July 24, 2020.

I undertake not to make any claims in respect of the equity interest held by Luo Jian in the Company. I further confirm that the performance by Luo Jian of the Transaction Documents and further amendment to or termination of the Transaction Documents do not need my further authorization or consent. I undertake to execute all necessary documents and take all necessary actions to ensure that the Transaction Documents shall be duly performed.

I agree and undertake that if I acquire any equity interest in the Company held by Luo Jian for whatever reason, I shall be bound by the Transaction Documents and comply with my obligations as a shareholder of the Company thereunder, and for this purpose, upon request by the WFOE, I shall sign a series of written documents substantially in the same form and substance as the Transaction Documents.

This Consent Letter shall become effective from the date of signing.

Signature: /s/ Shen Xia                                     

Name: Shen Xia

Date: July 24, 2020

SPOUSAL CONSENT LETTER

EX-10.16

Exhibit 10.16

SPOUSAL CONSENT

I, Lin Lizhen (ID No.: ***************), is the legally spouse of Shan Zebing (ID No.: ***************). I hereby unconditionally and irrevocably consent to the execution of the following documents (collectively the “Transaction Documents”, including, for the avoidance of doubt, other relevant documents executed for the purpose of engaging in the transactions contemplated by the Transaction Documents, as the same may be amended from time to time) by Shan Zebing and to the disposal of the equity interest in Beijing Xingengyuan Science and Technology Co., Ltd. (the “Company”) registered in the name of Shan Zebing in accordance with the following Transaction Documents:

1. Exclusive Option Agreement among Shan Zebing, the Company and Wanleduo Network Technology (Beijing) Co., Ltd. (the “WFOE”) on November 12, 2018;

2. Equity Pledge Agreement among Shan Zebing, the Company and WFOE on November 12, 2018;

3. Power of Attorney among Shan Zebing, the Company and the WFOE on November 12, 2018.

I undertake not to make any claims in respect of the equity interest held by Shan Zebing in the Company. I further confirm that the performance by Shan Zebing of the Transaction Documents and further amendment to or termination of the Transaction Documents do not need my further authorization or consent. I undertake to execute all necessary documents and take all necessary actions to ensure that the Transaction Documents shall be duly performed.

I agree and undertake that if I acquire any equity interest in the Company held by Shan Zebing for whatever reason, I shall be bound by the Transaction Documents and comply with my obligations as a shareholder of the Company thereunder, and for this purpose, upon request by the WFOE, I shall sign a series of written documents substantially in the same form and substance as the Transaction Documents.

This Consent Letter shall become effective from the date of signing.

Signature: /s/ Lin Lizhen                                     

Name: Lin Lizhen

Date: November 5, 2018

SPOUSAL CONSENT LETTER

EX-21.1

Exhibit 21.1

Principal Subsidiaries and Variable Interest Entity of the Registrant

Subsidiary	Place of Incorporation
Spark Education (Hongkong) Limited	Hong Kong
Beijing Spark Education and Technology Co., Ltd.	PRC
Chengdu Spark Education and Technology Co., Ltd.	PRC
Chengdu Juli Education Consulting Co., Ltd.	PRC
Tianjin Spark Education and Technology Co., Ltd.	PRC
Variable Interest Entity	Place of Incorporation
Beijing Xingengyuan Technology Ltd.	PRC