SEC Info - 58.com Inc. - ‘20-F/A’ for 12/31/19

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		Alternative Formats (Word, et al.) Consolidated Balance Sheets as of December 31, 2018 and 2019 Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2018 and 2019 Consolidated Statements of Changes in Shareholders' Deficit for the Years Ended December 31, 2017, 2018 and 2019 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2017 , 2018 and 2019 F-2 F-4 F-5 F-6 F-7 F-8 Notes to the Consolidated Financial Statements Report of Independent Auditors
1	1st Page – Filing Submission
"	Report of Independent Auditors
"	F-2
"	Consolidated Balance Sheets as of December 31, 2018 and 2019
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"	Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2017 , 2018 and 2019
"	F-5
"	Consolidated Statements of Changes in Shareholders' Deficit for the Years Ended December 31, 2017, 2018 and 2019
"	F-6
"	Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2018 and 2019
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"	Notes to the Consolidated Financial Statements
"	F-8

F- C: 1

We have audited the accompanying consolidated financial statements of 58 Daojia Inc. and its subsidiaries, which comprise the consolidated statements of comprehensive loss, of shareholders’ deficit and of cash flows for the year ended December 31, 2017.

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit 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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of 58 Daojia Inc. and its subsidiaries’ operations and their cash flows for the year ended December 31, 2017 in accordance with accounting principles generally accepted in the United States of America.

F-2

The accompanying consolidated balance sheets of 58 Daojia Inc. and its subsidiaries as of December 31, 2018 and 2019, and the related consolidated statements of comprehensive loss, changes in shareholders’ deficit and cash flows for the years then ended are presented for purposes of complying with Rule 3-09 of SEC Regulation S-X; however, Rule 3-09 does not require the 2018 and 2019 financial statements to be audited and they are therefore not covered by this report.

F-3

The accompanying notes are an integral part of these consolidated financial statements.

F-4

The accompanying notes are an integral part of these consolidated financial statements.

F-5

The accompanying notes are an integral part of these consolidated financial statements.

F-6

The accompanying notes are an integral part of these consolidated financial statements.

F-7

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

58 Daojia Inc. (the “Company” or “58 Home”), through its consolidated subsidiaries, including wholly-foreign owned enterprises (“WFOEs”), VIEs and VIEs’ subsidiaries (collectively, the “Group”), operates a mobile-based closed-loop transactional platform for home services, which directly connects consumers and individual service providers for local services such as domestic services, ad-hoc delivery services and platform services provided at home.

The Company was incorporated in British Virgin Islands (“BVI”) on January 26, 2015.

The Group began its operations in China in August 2014 through Tianjin 58 Daojia Life Services Co., Ltd. (“Tianjin 58 Home”), a limited liability company registered in the People’s Republic of China (“PRC”) and founded by Mr. Xiaohua Chen, the CEO of the Group, Mr. Jinbo Yao, the CEO of 58.com Inc. and 58 Co., Ltd.

In July 2015, the Company, through Beijing 58 Daojia Information Technology Co., Ltd (“Beijing 58 Home”), entered into a series of contractual agreements with Tianjin 58 Home whereby Tianjin 58 Home became the 100% consolidated VIE of the Company.

On November 27, 2015, the Company completed a Series A round of equity financing, with participation from Taobao, global investment firm KKR, and Ping An Group. Following the closing of the Series A round of equity financing of the Company, 58.com Inc. held 87.9% of the total outstanding ordinary shares of the Company and 61.7% of the total outstanding shares of the Company on an as-converted basis. On August 7, 2018, Taobao forfeited 54,211,111 Series A Preferred Shares of the Company for the subscription of 75,476,660 Series A Preferred Shares of 58 Freight Inc. (“58 Freight”), one of the Company’s subsidiaries undertaking ad-hoc delivery services. Following the closing of this conversion, 58.com Inc. held 68.8% of the total outstanding shares of the Company on an as-converted basis.

In August 2017, the Company, through Tianjin 58 Daojia Technology Limited Company (“Tianjin Technology”), entered into a series of contractual agreements with Tianjin 58 Daojia Freight Service Limited Company (“Tianjin Freight”). As of December 31, 2019, the Company holds 77.8% of the shares of Tianjin Technology, it effectively owns 77.8% equity interests of Tianjin Freight. (See Note d)

In July 2018, 58 Freight completed the initial closing of a Series B round of equity financing with participation from several investors. In January and July, 2019, 58 Freight completed additional closing of the Series B round of equity financing. As of December 31, 2019, the Company held 73.8% of the total outstanding ordinary shares of 58 Freight and 51.5% of the total outstanding shares of 58 Freight on fully diluted and as-converted basis.

In May 2018, 58 Daojia Limited (“58 Daojia”) was incorporated in the Cayman Islands to enable a group reorganization (“Reorganization”). The Company transfers its mobile-based platforms for home services such as cleaning services, nanny services, maternity nurse and infant nanny service and market place services, which directly connect end customers and individual service providers (collectively the “Daojia Business”) in the PRC to 58 Daojia. The Reorganization was approved by the Board of Directors and the shareholders of 58 Daojia Inc. in January 2019. Pursuant to a series of agreements between the Group and 58 Daojia entered into in January 2019, all key employees, contracts, operating assets and liabilities relating to Daojia Business started to transfer to 58 Daojia. As of the reporting date, the Reorganization is still in process.

In January 2019, 58 Daojia completed the initial closing of a Series A round of equity financing through issuance of Series A convertible and redeemable preferred shares (The “58 Daojia Series A Preferred Shares”) and convertible loans and warrants with the right to purchase 58 Daojia Series A Preferred Shares (“58 Daojia Series A Convertible Loans and Warrants) to investors. In November and December 2019, 58 Daojia issued additional 58 Daojia Series A Convertible Loans and Warrants 58 Daojia to two new investors. 58 Daojia collected aggregated purchase price of US$55,010 for 58 Daojia Series A Preferred Shares and RMB414,980 for 58 Daojia Series A Convertible Loans and Warrants, respectively. As of December 31, 2019, the Company held 100% of the total outstanding ordinary shares of 58 Daojia and 89.7% of the total outstanding shares of 58 Daojia on an as-converted basis.

58.com Inc. accounted for its investment in 58 Home using the equity method. As 58 Home is considered to be a significant equity method investee of 58.com Inc. for the fiscal year of 2017, its financial statements are included as an exhibit to the Annual Report of 58.com Inc. on Form 20-F in accordance with Securities and Exchange Commission (“SEC”) Rule 3-09 of Regulation S-X.

F-8

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

F-9

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The Company has through Beijing 58 Home entered into contractual arrangements with Tianjin 58 Home and its shareholders described below, which are referred to as the Tianjin 58 Home Agreements. Through the Tianjin 58 Home Agreements, Beijing 58 Home exercises control over the operations of Tianjin 58 Home and receives substantially all its economic benefits and residual returns. Through the exclusive business cooperation agreement between Beijing 58 Home and Tianjin 58 Home, Beijing 58 Home agrees to provide certain technical and business support and related consulting services to Tianjin 58 Home in exchange for service fees. In addition, pursuant to the exclusive option agreements, Tianjin 58 Home is prohibited from declaring and paying any dividends without Beijing 58 Home’s prior consent and Beijing 58 Home enjoys an irrevocable and exclusive option to purchase Tianjin 58 Home shareholders’ equity interests, to the extent permitted by applicable PRC laws, at a specified price equal to the loan amount provided by Beijing 58 Home to the shareholders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shall apply. Through these arrangements, 58 Home can obtain all of the income and the residual interests of Tianjin 58 Home, such as undistributed earnings, either through dividend distributions or purchase of equity interests of Tianjin 58 Home from its existing shareholders. As a result of the contractual arrangements, 58 Home consolidates the financial results of Tianjin 58 Home in its consolidated financial statements. In July 2016, one shareholder of Tianjin 58 Home transferred his equity interest in Tianjin 58 Home to 58 Co., Ltd. As a result, Beijing 58 Home amended and restated its contractual arrangements with Tianjin 58 Home to reflect the change in shareholding of Tianjin 58 Home.

Under the exclusive business cooperation agreement between Tianjin 58 Home and Beijing 58 Home, Beijing 58 Home has the exclusive right to provide, among other things, technical support and business support and related consulting services to Tianjin 58 Home and Tianjin 58 Home agrees to accept all the consultation and services provided by Beijing 58 Home. Without Beijing 58 Home’s prior written consent, Tianjin 58 Home is prohibited from engaging any third party to provide any of the services under this agreement. In addition, Beijing 58 Home exclusively owns all intellectual property rights arising out of or created during the performance of this agreement. Tianjin 58 Home agrees to pay a monthly service fee to Beijing 58 Home at an amount determined solely by Beijing 58 Home after taking into account factors including the complexity and difficulty of the services provided, the time consumed, the seniority of the Beijing 58 Home employees providing services to Tianjin 58 Home, the value of services provided, the market price of comparable services and the operating conditions of Tianjin 58 Home. This agreement will remain effective unless Beijing 58 Home terminates the agreement in writing or a competent governmental authority rejects the renewal applications by either Tianjin 58 Home or Beijing 58 Home to renew its respective business license upon expiration. Tianjin 58 Home is not permitted to terminate this agreement in any event unless required by applicable laws. Beijing 58 Home did not collect any service fee payments from Tianjin 58 Home in 2017, 2018 and 2019.

F-10

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

Pursuant to the powers of attorney, the shareholders of Tianjin 58 Home each irrevocably appointed Beijing 58 Home as the attorney-in-fact to act on their behalf on all matters pertaining to Tianjin 58 Home and to exercise all of their rights as a shareholder of Tianjin 58 Home, including but not limited to attend shareholders’ meetings, vote on their behalf on all matters of Tianjin 58 Home requiring shareholders’ approval under PRC laws and regulations and the articles of association of Tianjin 58 Home, designate and appoint directors and senior management members. Beijing 58 Home may authorize or assign its rights under this appointment to any other person or entity at its sole discretion without prior notice to the shareholders of Tianjin 58 Home. Each power of attorney will remain in force until the shareholder ceases to hold any equity interest in Tianjin 58 Home.

Under the equity interest pledge agreements between Beijing 58 Home, Tianjin 58 Home and the shareholders of Tianjin 58 Home, the shareholders pledged all of their equity interests in Tianjin 58 Home to Beijing 58 Home to guarantee Tianjin 58 Home’s and Tianjin 58 Home’s shareholders’ performance of their obligations under the contractual arrangements including, but not limited to, the payments due to Beijing 58 Home for services provided. If Tianjin 58 Home or any of Tianjin 58 Home’s shareholders breaches its contractual obligations under the contractual arrangements, Beijing 58 Home, as the pledgee, will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Tianjin 58 Home in accordance with legal procedures. Beijing 58 Home has the right to receive dividends generated by the pledged equity interests during the term of the pledge. If any event of default as provided in the contractual arrangements occurs, Beijing 58 Home, as the pledgee, will be entitled to dispose of the pledged equity interests in accordance with PRC laws and regulations. The pledge will become effective on the date when the pledge of equity interests contemplated in these agreements are registered with the relevant local administration for industry and commerce and will remain binding until Tianjin 58 Home and its shareholders discharges all their obligations under the contractual arrangements. These equity interest pledge agreements are registered with the Tianjin Binhai New Area Market and Quality Supervision and Administration Bureau on September 8, 2015.

Under the exclusive option agreements among Beijing 58 Home, Tianjin 58 Home and each of the shareholders of Tianjin 58 Home, each of the shareholders irrevocably granted Beijing 58 Home or its designated representative(s) an exclusive option to purchase, to the extent permitted under PRC law, all or part of his, her or its equity interests in Tianjin 58 Home. In addition, Beijing 58 Home has the option to acquire all the equity interests held by the shareholders in Tianjin 58 Home at a specified price equal to the loan amount provided by Beijing 58 Home to the individual shareholders. At the moment, Beijing 58 Home cannot exercise the exclusive options to purchase the current shareholders’ equity interests in Tianjin 58 Home due to the PRC regulatory restrictions on foreign ownership in the value-added telecommunications services. Beijing 58 Home may exercise the options if PRC opens up these industries to foreign investment.

F-11

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

Pursuant to the loan agreements between Beijing 58 Home and each individual shareholder of Tianjin 58 Home, Beijing 58 Home would provide interest-free loans with an aggregate amount of approximately RMB100 million to the individual shareholders of Beijing 58 Home for the sole purpose of funding the capital increase of Tianjin 58 Home. The loans can be repaid by transferring the individual shareholders’ equity interest in Tianjin 58 Home to Beijing 58 Home or its designated person pursuant to Exclusive Option Agreements. The term of each loan agreement is ten years from the date of the agreement expiring on August 25, 2025 and can be extended with the written consent of both parties before expiration.

The spouse of each shareholder of Tianjin 58 Home has each signed a spousal consent letter. Under the spousal consent letter, the signing spouse unconditionally and irrevocably approved the execution by her spouse of the power of attorney, equity interest pledge agreement and exclusive option agreement, and that her spouse may perform, amend or terminate such agreements without her consent. The signing spouse confirms she will not assert any rights over the equity interests in Tianjin 58 Home held by her spouse. In addition, in the event that the spouse obtains any equity interest in Tianjin 58 Home held by her spouse for any reason, she agrees to be bound by and sign any legal documents substantially similar to the contractual arrangements entered into by her spouse, as may be amended from time to time.

In August 2017, 58 Freight, through its PRC subsidiary, Tianjin Technology, has entered into contractual arrangements with Tianjin Freight and its shareholders with terms substantially similar to those under the Beijing 58 Home Agreements, which are referred to as the Tianjin Technology Agreements. Through the Tianjin Technology Agreements, 58 Freight exercises control over the operations of Tianjin Freight and receives all its economic benefits and residual returns substantially. Through the exclusive business cooperation agreement between Tianjin Technology and Tianjin Freight, Tianjin Technology agrees to provide certain technical and business support and related consulting services to Tianjin Freight in exchange for service fees. In addition, pursuant to the exclusive option agreements, Tianjin Freight is prohibited from declaring and paying any dividends without Tianjin Technology’s prior consent and Tianjin Technology enjoys an irrevocable and exclusive option to purchase Tianjin Freight shareholders’ equity interests, to the extent permitted by the applicable PRC laws, at a specified price equal to the loan amount provided by Tianjin Technology to the shareholders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under the PRC laws shall apply. Through these arrangements, 58 Freight can obtain all of the income and the interests of Tianjin Freight, such as undistributed earnings, either through dividend distributions or purchase of equity interests of Tianjin Freight from its existing shareholders. As a result of the contractual arrangements, the Company, through 58 Freight, consolidates the financial results of Tianjin Freight in its consolidated financial statements in accordance with U.S. GAAP.

F-12

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

In connection with the Reorganization in January 2019, contractual arrangements including exclusive business cooperation agreement, power of attorney, equity interest pledge agreements, exclusive option agreements, loan agreements and spousal consent letters, have been entered into among the Changsha Daojia Youxiang and Tianjin 58 Daojia (collectively, the “Daojia WFOEs”), Changsha 58 Home, Changsha Daojia Youxiang Home Service, Tianjin Haodaojia (collectively, the “Daojia VIEs”) and the respective nominee shareholders of Daojia VIEs with terms substantially similar to those under the Beijing 58 Home Agreements, which are referred to as the Daojia Agreements. Through the Daojia Agreements, 58 Daojia exercises control over the operations of the Daojia VIEs and receives all their economic benefits and residual returns substantially. Through the exclusive business cooperation agreement between Daojia WFOEs and Daojia VIEs, Daojia WFOEs agree to provide certain technical and business support and related consulting services to the Daojia VIEs in exchange for service fees. In addition, pursuant to the exclusive option agreements, the Daojia VIEs are prohibited from declaring and paying any dividends without Daojia WFOEs’ prior consent and Daojia WFOEs enjoy an irrevocable and exclusive option to purchase the Daojia VIEs shareholders’ equity interests, to the extent permitted by the applicable PRC laws, at a specified price equal to the loan amount provided by Daojia WFOEs to the shareholders of Daojia VIEs. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under the PRC laws shall apply. Through these arrangements, 58 Daojia can obtain all of the income and the interests of the Daojia VIEs, such as undistributed earnings, either through dividend distributions or purchase of equity interests of Daojia VIEs from their existing shareholders. As a result of the contractual arrangements, the Company, through 58 Daojia, consolidates the financial results of Daojia VIEs in its consolidated financial statements in accordance with U.S. GAAP.

It is possible that the Company’s operation of certain of its businesses through the VIEs could be found by PRC authorities to be in violation of PRC law and regulations prohibiting or restricting foreign ownership of companies that engage in such operations and businesses. While the Company’s management considers the possibility of such a finding by PRC regulatory authorities under current PRC law and regulations to be remote. In March 2019, a new draft of Foreign Investment Law (the “New Draft FIE Law”) was submitted to the National People’s Congress for review and was approved on March 15, 2019, which came into effect from January 1, 2020. The approved Foreign Investment Law (the “FIE Law”) does not touch upon the relevant concepts and regulatory regimes that were historically suggested for the regulation of VIE structures, and thus this regulatory topic remains unclear under FIE Law. Since the FIE Law is new, there are substantial uncertainties that exist with respect to its implementation and interpretation and it is also possible that variable interest entities will be deemed as FIEs and be subject to restrictions in the future. Such restrictions may cause interruptions to the Group’s operations, products and services and may incur additional compliance cost, which may in turn materially and adversely affect the Group’s business, financial condition and results of operations.

In addition, if the legal structure and contractual arrangements were found to be in violation of any other existing PRC laws and regulations, the PRC government could:

F-13

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct the Group’s business. In addition, if the imposition of any of these penalties causes the Company to lose the right to direct the activities of any of the VIEs (through its equity interest in its subsidiaries) or the right to receive their economic benefits, the Company would no longer be able to consolidate the relevant VIEs and its subsidiaries, if any. In the opinion of management, the likelihood of loss in respect of the Company's current ownership structure or the contractual arrangements with its VIEs is remote.

There is no VIE for which the Company has variable interest but not the primary beneficiary.

As of December 31, 2019, the aggregate accumulated deficit of VIEs and VIEs’ subsidiaries were RMB2,951,921 which has been included in the consolidated financial statements.

The following financial statement amounts and balances of the Company's VIEs and VIEs’ subsidiaries were included in the accompanying consolidated financial statements as of December 31, 2018 and 2019 and for each of the three years ended December 31, 2017, 2018 and 2019. All intercompany transactions have been eliminated in consolidated financial statements.

F-14

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

Under the contractual arrangements with the VIEs and through its respective equity interests in its subsidiaries, the Company has the power to direct activities of the VIEs and the VIEs’ subsidiaries and direct the transfer of assets out of the VIEs and the VIEs’ subsidiaries. Therefore, the Company considers that there is no asset of the VIEs and the VIEs’ subsidiaries that can be used only to settle their obligations. As the consolidated VIEs and VIEs’ subsidiaries are incorporated as limited liability companies under the PRC Company Law, the creditors do not have recourse to the general credit of the Company for the liabilities of the consolidated VIEs and the VIEs’ subsidiaries.

The Company believes that the contractual arrangements among VIEs, its respective shareholders and relevant WFOEs are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements and if the shareholders of VIEs were to reduce their interest in the Company, their interests may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms.

Through the design of the power of attorney agreements, the shareholders of the VIEs effectively assigned their full voting rights to WFOEs, which gives WFOEs the power to direct the activities of VIEs and VIEs’ subsidiaries. As noted above, the Company believes this power of attorney is legally enforceable but may not be as effective as direct equity ownership.

Currently there is no contractual arrangement that could require the Company to provide additional financial support to VIEs. As the Company is conducting its business mainly through VIEs, the Company may provide such support on a discretionary basis in the future, which could expose the Company to a loss.

The Company’s VIEs’ assets are comprised of recognized and unrecognized revenue-producing assets. The recognized revenue producing assets mainly include purchased servers, which were in the line of “Property and equipment, net” in the table above. The unrecognized revenue-producing assets mainly consist of the Internet Content Provider license (“ICP” license), trademarks, copyrights and registered patents, which have no recorded value.

The VIEs’ business operations rely in part on the technologies covered by the registered patents to generate revenues. Such technologies include (1) the data verification and processing technology used to verify and process local merchant information; (2) the data researching technology provided to end-users enable them to find the exact information they want in the shortest time; (3) the data publishing technology provided to merchants to help them to publish their service information more efficiently.

The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. The Group incurred net loss of RMB769,839, RMB1,423,428 and RMB967,054 for each of the three years ended December 31, 2017, 2018 and 2019, respectively, and the net cash used in operating activities was RMB527,647, RMB816,664 and RMB757,188 for each of the three years ended December 31, 2017, 2018 and 2019, respectively. Accumulated deficit was RMB3,780,994 and RMB4,670,325 as of December 31, 2018 and 2019, respectively. As of December 31, 2019, the Group’s total current liabilities exceeded the current assets by RMB618,848. The Company regularly monitors current and expected liquidity requirements to ensure that it maintains sufficient cash balances to meet its liquidity requirements in the short and long term. The Company has adopted Accounting Standards Update (“ASU”) No. 2014-15 “Presentation of Financial Statements – Going Concern” which addresses management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures if the substantial doubt exists.

F-15

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The liquidity of the Company is primarily dependent on its ability to generate adequate cash flows from operations and new financing events, including the issuance of preferred shares and convertible notes to investors of the Company or any of its major subsidiaries.

In February and March 2020, 58 Daojia executed the transaction documents for its Series B round of equity financing (the “58 Daojia Series B financing”) with total cash consideration of US$100,000 (approximately RMB697,620). Upon completion of 58 Daojia Series B financing, the Company lost its control over 58 Daojia and deconsolidated the financial results of 58 Daojia from its consolidated financing statements in accordance with Accounting Standard Codification (“ASC”) 810 “Consolidation”. All the cash consideration has been received by 58 Daojia as of the date of this report.

In February 2020, the Group borrowed a short-term loan from 58.com Inc. amounted to RMB104,652, which will be due within one-year from the date of borrowing.

Based on the Group’s working capital forecast, the management is of the opinion that, the Group’s available cash, term deposits and anticipated cash flow from operations and financing events provide sufficient funds to meet the working capital requirements to fund planned operations and other commitments for at least the next twelve months from the date the consolidated financial statements for the year ended December 31, 2019 are issued. As a result, the Company’s consolidated financial statements for the year ended December 31, 2019 have been prepared on a going concern basis.

The consolidated financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and VIEs’ subsidiaries for which the Company is the ultimate primary beneficiary.

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, 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 directors.

A VIE is an entity in which the Company or its subsidiary, through contractual arrangements, 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 significant transactions and balances among the Company, its subsidiaries, the VIEs and VIEs’ subsidiaries have been eliminated upon consolidation.

The preparation of the Company’s consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements mainly include the determination of the fair value of identifiable assets and liabilities acquired through business combination, the determination of the fair value of the financial instruments, the valuation allowance of deferred tax assets, the valuation and recognition of share-based compensation, impairment of long-term investments and other long-lived assets and the determination of the estimated useful lives of property and equipment and intangible assets.

F-16

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The functional currency of the Company and its subsidiaries incorporated outside of PRC is the United States dollar (“US$”), while the functional currency of the PRC entities in the Group is Chinese Renminbi ("RMB") as determined based on ASC 830, “Foreign Currency Matters”. Effective December 31, 2017, the Group changed its reporting currency from US$ to 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 losses are translated using the average rate for the periods. Translation adjustments arising from these are reported as foreign currency translation adjustments and are shown as a component of other comprehensive loss in the consolidated statements of changes in shareholders’ deficit. Total foreign currency translation gain adjustments, net of nil tax was RMB85,984, RMB49,566 and RMB15,783 for the years ended December 31, 2017, 2018 and 2019, respectively.

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. The resulting exchange differences are included in the consolidated statements of comprehensive loss. Total foreign currency exchange gain was RMB642 and RMB553 for the year ended December 31, 2017 and 2018 respectively. Total foreign currency exchange loss was RMB7,997 for the year ended December 31, 2019.

Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the exchange rate of RMB6.9762 per US$1.00, the middle rate on December 31, 2019, the last business day in fiscal year 2019, as published on the website of the State Administration of Foreign Exchange of the PRC. No representation is made that the RMB amounts could have been, or could be converted into U.S. dollars at such rate.

Accounting guidance defines fair value as 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 Company 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.

Accounting guidance establishes 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 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace

Level 3 - Unobservable inputs which are supported by little or no market activity

F-17

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The Group’s financial instruments mainly include term deposits, short-term investments, accounts receivable, other current assets, accounts payable, customer advances, accrued expenses, other current liabilities and convertible notes. The carrying value of the Company’s short-term financial instruments approximates their fair value because of their short maturities. The Company measures certain financial assets, including the investments under the cost method, intangible assets and fixed assets on other-than-temporary basis, which are marked to fair value when an impairment charge is recognized. Please see Note 13 for additional information.

Cash and cash equivalents represent cash on hand, demand deposits and highly liquid investments placed with banks or other financial institutions, which are unrestricted as to withdrawal or use, and which have original maturities of three months or less and are readily convertible to known amounts of cash. As of December 31, 2018 and 2019, majority of the Group’s cash and cash equivalents were held by major financial institutions located in the PRC and Hong Kong which management believes are of high credit quality.

Cash that is legally restricted from withdrawal is reported separately on the face of the Group’s consolidated balance sheets. In accordance with ASU No. 2016-18, the amounts generally described as restricted cash are included in the total cash, cash equivalents and restricted cash balances in the consolidated statements of cash flows.

Term deposits represent time deposits placed with banks with original maturities of more than three months. Interest earned is recorded as interest income in the consolidated statements of comprehensive loss during the periods presented.

The carrying value of accounts receivable is reduced by an allowance that reflects the Company’s best estimate of the amounts that will not be collected. The Company makes estimations for the collectability of accounts receivable considering many factors including but not limited to reviewing accounts receivable balances, historical bad debt rates, accounts aging, repayment patterns, customer credit worthiness, financial conditions of the customers and industry trend analysis, resulting in their inability to make payments due to the Group. An accounts receivable is written off after all collection effort has ceased. The Company recognized RMB123, RMB46,597 and RMB57,218 allowance for doubtful accounts for the years ended December 31, 2017, 2018 and 2019, respectively.

Property and equipment are stated at cost less accumulated depreciation and impairment. Property and equipment are depreciated over the estimated useful lives on a straight-line basis. The estimated useful lives are as follows:

F-18

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

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 under others, net in the consolidated statements of comprehensive loss.

Intangible assets acquired through business acquisitions are recognized as assets separate from goodwill if they satisfy either the "contractual legal" or "separability" criterion. Intangible assets purchased are recognized and measured at fair value upon acquisition.

Intangible assets with finite lives are carried at cost less accumulated amortization. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:

Intangible assets with infinite lives are evaluated to determine the fair value annually. An impairment loss is recognized if the carrying amount exceeds the fair value. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the asset. Accordingly, the Company recognized RMB2,696, nil and nil impairment loss of intangible assets for the years ended December 31, 2017, 2018 and 2019, respectively.

Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company's acquisitions of interests in its subsidiaries and VIEs. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the two step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.

In performing the two-step quantitative impairment test, the first step is to compare the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step is to compare the implied fair value of goodwill to the carrying value of a reporting unit's goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for the purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets, liabilities and goodwill to reporting units, and determining the fair value of each reporting unit.

F-19

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

In accordance with ASC 323 Investment-Equity Method and Joint Ventures, the Group applies the equity method of accounting to equity investments, in common stock or in-substance common stock, over which it has significant influence but does not own a majority equity interests or otherwise control. Under the equity method, the Group initially records its investment at cost. The Group subsequently adjusts the carrying amount of the investment to recognize the Group’s proportionate share of each equity investee’s net income or loss into consolidated statements of comprehensive loss after the date of acquisition.

An investment in in-substance common stock is an investment that has risk and reward characteristics that are substantially similar to that entity’s common stock. The Group considers subordination, risks and rewards of ownership and obligation to transfer value when determining whether an investment in an entity is substantially similar to one in that entity’s common stock.

The equity method investments are subject to periodic testing for other-than-temporary impairment, by considering factors including, but not limited to, current economic and market conditions, operating performance of the investees such as current earnings trends and undiscounted cash flows, and other company-specific information, such as recent financing rounds. The fair value determination, particularly for investments in privately-held companies whose revenue model is still evolving, requires significant judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investments and the determination of whether any identified impairment is other-than-temporary. If any impairment is considered other-than-temporary, the Group will write down the asset to its fair value and take the corresponding charge to the consolidated statements of comprehensive loss. The Group did not record any impairment charges for equity method investments for the years ended December 31, 2017, 2018 and 2019, respectively.

Based on ASU 2016-01, the Group will be able to elect to record equity investments without readily determinable fair values and not accounted for by the equity method either at fair value with changes in fair value recognized in net income or at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer (“measurement alternative”). An election to measure an equity security shall be made for each investment separately. If the Group elects to use this measurement alternative method, the Group should measure the equity security at fair value as of the date that observable transaction occurred and report changes in the carrying value of the equity investments in current earnings whenever there are observable price changes in orderly transactions for the identical or similar investment of the same issuer. The values were estimated based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs including volatility, as well as rights and obligations of the securities that the Group holds.

For each reporting period, the Group would make a qualitative assessment considering impairment indicators to evaluate whether the equity investment without a readily determinable fair value is impaired. Impairment indicators that considered by the Group include, but are not limited to, 1) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, 2) a significant adverse change in the regulatory, economic, or technological environment of the investee, 3) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, 4) a bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment, and 5) factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.

F-20

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

When indicators of impairment exist, the Group prepares quantitative assessments of the fair value of the equity investments. When the assessment indicates that an impairment exists, the Group will include an impairment loss in net income equal to the difference between the fair value of the investment and its carrying amount.

Because certain investees’ operation metrics and financial performance did not meet the expectations, the Group recorded RMB19,040 impairment loss for the cost method investments for the year ended December 31, 2017. The Group did not record any impairment loss for investments accounted for under the measurement alternative method for the year ended December 31, 2018 and 2019, respectively.

The carrying amounts of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to future undiscounted net cash flows expected to be generated by the assets. Such assets are considered to be impaired if the sum of the expected undiscounted cash flow is less than the carrying amount of the assets. The impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment of other long-lived assets was recognized for the years ended December 31, 2017, 2018 and 2019, respectively.

On January 1, 2018, the Company adopted ASC 606, applying the modified retrospective method to contracts that were not completed as of January 1, 2018. Adoption did not have a material impact on accumulated deficit as of January 1, 2018. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605. ASC 606 does not have a material impact on the Company’s consolidated financial statements.

Revenues have been subject to value added tax (“VAT”). Revenues are recorded net of VAT in accordance with the ASC 606. Judgment is required in determining whether the Group is the principal or agent in transactions with vehicle drivers, service providers and end customers. The Group evaluates the presentation of revenue on a gross or net basis based on whether it controls the service provided to the end customers and is the principal (i.e. “gross”), or the Group arranges for other parties to provide the service to the end customers and is an agent (i.e. “net”).

The following table presents the Group’s revenues disaggregated by products and services:

F-21

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

As noted above, in accordance with the modified retrospective method upon adoption of ASC 606, prior period amounts have not been adjusted.

Delivery services revenues include revenues from logistics services and logistics platform services.

Revenue from logistics services is recognized on gross basis considering the Group is the party contractually and primarily responsible for fulling the promise to provide logistics services to third party companies and has the full discretion in establishing the prices for the services provided. Revenue is recognized when the logistics service is rendered.

Revenue from logistics platform services is recognized on a net basis. Logistics platform services revenue is commission revenue earned from vehicle drivers for logistics services orders placed through the Group’s website and mobile platforms. Commission revenue is recognized upon the completion of successful matching between end customers and vehicle drivers. The commission is generally determined based on a certain percentage of service fees charged by vehicle drivers.

Domestic services revenues mainly include revenues from household staffing services, on-demand dispatching services, market place services and training services.

Household staffing revenue is the commission revenue earned from matching of service providers of nanny service, maternity nurse and infant nanny service with end customers.

Revenue from matching of nanny service is recognized on net basis. The Group earns service fees from both nannies and end customers. Such fees are determined based on the contract period and the fees paid by the end customers to the nannies. The service fee from nannies is due upon matching and is not refundable. The service fees from the end customers are proportionally refundable if the end customers determine to early terminate the contract. The Group’s performance obligation to nanny is providing a one-time matching service, so service fees from nanny are recognized when the Group successfully helps nannies to match with end customers. The Group determined its arrangement with the end customer is a day-to-day contract and its performance obligation to end customers is providing a matching service over the contract period. Accordingly, service fees from end customers are recognized ratably over the contract period when services are provided.

Revenue from matching of maternity nurse and infant nanny service is recognized on net basis. The service fees from maternity nurse and infant nanny are proportionally refundable if the contract are early terminated. The Group determined its arrangement with maternity nurse and infant nanny is a day-to-day contract and its performance obligation to maternity nurse and infant nanny is providing matching service over the contract period. Accordingly, service fees from maternity nurse and infant nanny are recognized ratably over the contract period when services are provided.

The Group also cooperates with third-party partners to recommend them end customers’ orders and the Group has no responsibility to provide any additional service. The Group charges commission fees to third-party partners and recognizes such revenue at the time when the referral service is successfully completed. Commission fees are refundable if and when service provided to end customers by service providers is terminated and the service fee charged by the third-party partner returned to them. Such refund is considered as variable consideration. The Group considers the constraint on variable consideration and only recognizes revenue to the extent that it is probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable considerations are estimated based on historical experience and the Group updates its assessment at the end of each reporting period. Such variable consideration is insignificant for all of the periods presented.

F-22

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

On-demand dispatching revenue is commission revenue earned from service providers for cleaning services orders placed through the Group’s website and mobile platforms. Commission revenue is recognized upon the completion of successful matching between end customers and service providers. The commission is generally determined based on a certain percentage of service fees charged by service providers.

Revenue from market place service is recognized on a net basis. It mainly consists of providing a platform for on-demand domestic services and displaying merchants’ promotional links on the Group’s mobile application. The Group earns commission revenue from the merchants. Commission revenue is recognized upon the completion of the services and is generally determined based on certain percentage of service fees charged by merchants.

Revenue from training service is recognized on a gross basis. The Group designs various training programs to help service providers improve their skills and earn service revenue from it. The Group is responsible for fulfilling the promise to provide training to service providers until they pass the test prepared by the Group. The Group has discretion in establishing prices of the training programs. The revenues from providing training programs are recognized upon service providers passing the test.

Other revenues mainly consist of sales of fuel card arrangement service. Revenue from sales of fuel card and related costs are recognized on a gross basis as the Group acts as a principal. Revenue from fuel card sales are recognized when the customers accepted the goods and the related risks and rewards of ownership.

Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, when the Group has satisfied its performance obligations and has the unconditional right to payment. The allowance for doubtful accounts is estimated based upon the Company’s assessment of various factors, including historical experience, the age of the accounts receivable balances, current economic conditions and other factors that may affect the Group’s customers’ ability to pay. Contract assets as of December 31, 2019 were not material. The allowance for doubtful accounts was RMB46,597 and RMB57,218, respectively, as of December 31, 2018 and December 31, 2019.

As of December 31, 2018, there was no contract liabilities recorded in the Group’s consolidated financial statements and no transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied. As of December 31, 2019, contract liabilities mainly consisted of advances from market place services, training services and change of refund policy of nanny services. For the year ended December 31, 2019, revenue recognized in the current period from performance obligations related to prior periods was not material.

F-23

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

Cost of revenues mainly consist of commissions to drivers in the logistics services, costs associated with sales of fuel card arrangement service and costs associated with the operation and maintenance of websites and app, which include payroll-related expenses, equipment depreciation, fees paid to third parties for internet connection and services, etc.

Advertising expenses are generally prepaid to the third parties for television, internet and outdoor advertising services. Advertising expenses are expensed when the services are received. For the years ended December 31, 2017, 2018 and 2019, advertising expenses recognized under sales and marketing expenses in the consolidated statements of comprehensive loss were RMB195,807, RMB238,167 and RMB165,899, respectively.

Research and development expenses mainly consist of personnel, rent and depreciation expenses associated with the development of and enhancement to the Group’s platforms and expenses associated with research and development. The research and development expenses are expensed as incurred for all the periods presented.

Costs incurred for the preliminary project stage of internal use software are expensed in research and development expenses when incurred. Costs incurred during the application development stage are capitalized when certain criteria are met as stated in ASC 350-40. Costs incurred during the post-implementation-operation stage are also expensed as incurred. As the period qualified for capitalization has historically been very short and the development costs incurred during this period have been insignificant, development costs of internal use software to date have been expensed when incurred.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessors are accounted for as operating leases. Payments made under operating leases are charged to the operating expenses in the consolidated statements of comprehensive loss on a straight-line basis over the terms of underlying lease.

The Group has incentive plans for the granting of share-based awards, including share options, restricted ordinary shares and restricted share units to its employees and directors. Share-based compensation expenses are recognized as costs and expenses on a graded vesting basis over the vesting period in the consolidated statements of comprehensive loss based on the fair value of the related share-based awards on their grant date, if no performance conditions are required. Under ASC 718, compensation cost should be accrued if it is probable that the performance condition will be achieved and should not be accrued if it is not probable that the performance condition will be achieved. As a result, the Group recognizes no compensation expense for share-based awards with performance conditions unless the performance conditions become probable of being achieved.

F-24

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The Company uses the binominal option pricing model to determine the fair value of share options and account for share-based compensation expenses using an estimated forfeiture rate at the time of grant and revising the rate, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation expenses are recorded net of estimated forfeitures such that expenses are recorded only for those share-based awards that are expected to vest.

See Note 17 for further information regarding share-based compensation assumptions and expenses.

Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are provided using the asset and 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 under income tax expense in the consolidated statements of 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 of the deferred tax assets will not be realized.

The guidance prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

Full-time employees of the Group in mainland China are entitled to staff welfare benefits including pension, work-related injury benefits, maternity insurance, medical insurance, unemployment benefit and housing fund plans through a PRC government-mandated defined contribution plan. Chinese labor regulation requires that the Group makes contributions to the government for these benefits based on certain percentage of the employees’ salaries, up to a maximum amount specified by the local government. Currently, the Group is paying contributions to the social insurance plan for all full-time employees and to the housing fund plans for some employees, but the amounts paid for these employees may not be sufficient as required by the PRC laws and regulations, for which the Company have made provision based on its best estimate. The Company has no legal obligation for the benefits beyond the required contributions.

The Company recorded employee benefit expenses of RMB96,210, RMB170,740 and RMB317,410 for the years ended December 31, 2017, 2018 and 2019, respectively.

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognized under others, net in the consolidated statements of comprehensive loss over the period necessary to match them with the costs that they are intended to compensate.

F-25

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Government grants relating to the property and equipment and other non-current assets are presented in the consolidated balance sheets by deducting the grants in arriving at the assets carrying amount and are credited to operating expenses in the consolidated statements of comprehensive loss on a straight-line basis over the expected lives of the related assets.

For the years ended December 31, 2017, 2018 and 2019, the Company recognized government grants of RMB10,860, RMB5,832 and RMB7,353, respectively, in others, net in the consolidated statements of comprehensive loss.

The Company accounts for repurchased ordinary shares under the cost method and includes such treasury stock as a component of the common shareholders’ equity. Cancellation of treasury stock is recorded as a reduction of ordinary shares, additional paid-in capital and retained earnings, as applicable. An excess of purchase price over par value is allocated to additional paid-in capital first with any remaining excess charged entirely to retained earnings.

The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Group to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference will be recognized directly in the consolidated statements of comprehensive loss. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of comprehensive loss.

In a business combination achieved in stages, the Company re-measures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition date fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of comprehensive loss.

The Company’s PRC subsidiaries, the VIEs and VIEs’ subsidiaries in PRC are required to make appropriations to certain non-distributable reserve funds.

In accordance with China’s Company Laws, the Company’s PRC subsidiary, the VIEs and VIEs’ subsidiaries that are Chinese companies, must make appropriations from their after-tax profit as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”) to non-distributable reserve funds including (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the respective company. Appropriation to the discretionary surplus fund is made at the discretion of the respective company.

F-26

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Pursuant to the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiaries that are foreign investment enterprises in PRC have to make appropriations from their after-tax profit as determined under PRC GAAP to reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the respective company. Appropriations to the other two reserve funds are at the respective company’s discretion. The use of the general reserve fund, statutory surplus fund and discretionary surplus fund are restricted to the offsetting of losses to increase the registered capital of the respective company. These reserves are not allowed to be transferred out as cash dividends, loans or advances, nor can they be distributed except under liquidation.

As of December 31, 2019, the Company’s PRC entities were in an accumulated deficit position and no statutory reserve was made accordingly.

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence of the same party, such as a family member or relative, shareholder, or a related corporation.

Comprehensive income is defined as the change in equity 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 income is reported in the consolidated statements of comprehensive loss. Accumulated other comprehensive income, as presented on the accompanying consolidated balance sheets, consists of accumulated foreign currency translation adjustment.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which amends the existing accounting standards for lease accounting. For operating leases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet with terms of more than twelve months. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. The standard is effective for the Group for annual periods beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. Based on its preliminary assessment, the Group expects to record a right-of-use asset of approximately RMB190.6 million and a lease liability of approximately RMB179.5 million on its adoption date of January 1, 2020. The Group will use a modified retrospective approach under ASU 2018-11 and will not restate prior periods.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)”, which requires entities to measure all expected credit losses for financial assets held at the reporting date. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. The amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Group does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

F-27

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Group does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles — Goodwill and Other—Internal-Used Software (Subtopic 350-40)” (“ASU 2018-15”). The guidance intended to align the requirements for capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract with the existing guidance for internal-use software. Capitalized implementation costs should be amortized over the term of the hosting arrangement and recorded in the same financial statement line items as amounts for the hosting arrangement. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Group does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

The Group’s credit risk arises from cash, restricted cash, term deposits, as well as credit exposures to receivables due from its customers, equity investee and other parties.

The Company believes that there is no significant credit risk associated with cash and term deposits which were held by reputable financial institutions in the jurisdictions where the Company, its subsidiaries, the VIEs and VIEs’ subsidiaries are located.

The Group has no significant concentrations of credit risk with respect to its customers. The Company assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantees from third parties, their credit history and other factors such as current market conditions.

There was no customer whose revenue represented over 10% of total revenues for the years ended December 31, 2017, 2018 and 2019, respectively.

The accounts receivable, net of allowance for doubtful accounts from two customers each represented 14% of total accounts receivable, net of allowance for doubtful accounts as of December 31, 2018. The accounts receivable, net of allowance for doubtful accounts from one customer represented 13% of total accounts receivable, net of allowance for doubtful accounts as of December 31, 2019.

F-28

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The Group’s operating transactions are mainly denominated in RMB. RMB is not freely convertible into foreign currencies. The value of the RMB is subject to changes by the central government policies and to international economic and political developments. In the 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 (the “PBOC”). Remittances in currencies other than RMB by the Group in PRC must be processed through the PBOC or other PRC foreign exchange regulatory bodies which require certain supporting documentation in order to effect the remittance.

4. Acquisition of GoGo Tech Holdings Limited’s subsidiaries (“GoGoVan Business”)

In August, 2017, the Company and 58 Freight, entered into an agreement with GoGo Tech Holdings Limited (“GoGoVan Cayman”) where the Company issued 22.2% of its equity interests in 58 Freight to GoGoVan Cayman, and 58 Freight acquired 100% equity interests of GoGoVan Cayman’s wholly-owned subsidiaries and VIEs (collectively referred to as “GoGoVan”) through a series of planned and integrated transactions. The transactions were completed on August 29, 2017. This arrangement is intended to enable the Group to expand into overseas markets and business lines by combining the Group’s delivery service with GoGoVan’s platform. Total consideration for this acquisition was 88,888,888 newly issued ordinary shares of 58 Freight to GoGoVan Cayman. The Company owned 77.8% equity interest in 58 Freight, which owned 100% of equity interest in GoGoVan after the acquisition. The Company considered that it had a controlling financial interest over the equity interest of GoGoVan through 58 Freight under the voting interest model, and as a result consolidated GoGoVan since August 29, 2017.

The acquisition has been accounted for as a business acquisition and the results of operations of GoGoVan from the acquisition date have been included in the Company’s consolidated financial statements. The Company made estimates and judgments in determining the fair value of acquired assets and liabilities, with the assistance of an independent valuation firm and management’s experience with similar assets and liabilities. In performing the purchase price allocation, the Company considered the analyses of historical financial performance and estimates of future performance of GoGoVan.

F-29

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The excess of purchase price over net tangible assets and identifiable intangible assets acquired were recorded as goodwill. Goodwill primarily represented the expected synergies from combining the Group’s delivery business with GoGoVan’s platform. The goodwill was not expected to be deductible for tax purposes. There is no impairment recognized for above goodwill in the years ended December 31, 2017, 2018 and 2019.

The allowance for doubtful accounts as of December 31, 2019 mainly consists of one customer who is not capable of making the payment to the Group.

F-30

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Depreciation expenses for the years ended December 31, 2017, 2018 and 2019 were RMB22,359, RMB28,226 and RMB32,904, respectively.

Amortization expenses for the years ended December 31, 2017, 2018 and 2019 were RMB8,040, RMB22,606 and RMB23,486, respectively. The Company recorded RMB2,696, nil and nil impairment loss for intangible assets for the years ended December 31, 2017, 2018 and 2019, respectively.

The estimated aggregate amortization expenses for each of the five succeeding fiscal years and thereafter are as follows:

F-31

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

(a) In 2015, the Company acquired shares of investee A for cash consideration of RMB12,000. In 2017, the Company acquired additional shares of investee A at total cash consideration of RMB3,000, among which RMB1,500 was paid in 2017 and remaining paid in 2018. Investee A is mainly engaged in the business of providing make-up services. The investment is accounted for under cost method, and measurement alternative after the Group adopted ASU 2016-01 since January 1, 2018 as the shares invested by the Company were not considered as in-substance common stock and the shares do not have readily determinable fair value.

(b) In 2015, the Company acquired shares of investee B for cash consideration of RMB11,300. Investee B is mainly engaged in the business of providing health-care services. The investment is accounted for under cost method, and measurement alternative after the Group adopted ASU 2016-01 since January 1, 2018 as the shares invested by the Company were not considered as in-substance common stock and the shares do not have readily determinable fair value.

(c) In 2016, the Company acquired shares of investee C for total consideration of RMB18,750. Investee C is mainly engaged in the business of providing management services for enterprises. The investment is accounted for under cost method, and measurement alternative after the Group adopted ASU 2016-01 since January 1, 2018 as the shares invested by the Company were not considered as in-substance common stock and the shares do not have readily determinable fair value.

(d) Others represent other cost method investments, the shares of which the Company invested were not considered as in-substance common stock and the shares do not have readily determinable fair value. As a result, the Company accounted for its investments in these investees using cost method, and measurement alternative after the Group adopted ASU 2016-01 since January 1, 2018.

(e) In 2019, the Company made an investment in investee E for cash consideration of RMB8,000. The investment is accounted for under equity method as the Group can exert significant influence over the investee. For the year ended December 31, 2019, the Group recorded RMB530 investment income in the consolidated statements of comprehensive loss.

F-32

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

F-33

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The Company measured its financial assets including cash equivalents, restricted cash, term deposits, and financial liabilities including current liability and non-current liability at fair value on a recurring basis as of December 31, 2018 and 2019. The following table sets forth the financial instruments, measured at fair value on recurring basis, by level within the fair value hierarchy:

The Group measures cash equivalents, restricted cash and term deposits at fair value based on the pervasive interest rates in the market, which are also the interest rates as stated in the contracts with the banks. The Group classifies the valuation techniques that use the pervasive interest rates input as Level 2 of fair value measurements. Generally, there are no quoted prices in active markets for identical time deposits at the reporting date. In order to determine the fair value, the Group must use the discounted cash flow method and observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

The Company classified the warrants to purchase preferred shares as current liability and measured warrants at fair value based on the fair value of 58 Freight. The Company classifies the valuation techniques that use fair value of the principle as Level 3 of fair value measurements. Generally, there are no quoted prices in active markets and other inputs that are directly or indirectly observable in the marketplace for the warrants issued during the period at the reporting date. In order to determine the fair value, the Company must use the discounted cash flow method, net asset of principle and earning forecast as unobservable inputs other than quoted prices in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

The Company classified the convertible notes as non-current liability and measured the convertible notes at fair value based on the fair value of 58 Freight and 58 Daojia. The Company classifies the valuation techniques that use fair value of the principle as Level 3 of fair value measurements. Generally, there are no quoted prices in active markets and other inputs that are directly or indirectly observable in the marketplace for the convertible notes issued during the period at the reporting date. In order to determine the fair value, the Company must use the discounted cash flow method, net asset of principle and earning forecast as unobservable inputs other than quoted prices in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

The following are other financial instruments not measured at fair value in the balance sheets but the fair value is estimated for disclosure purposes.

Accounts receivable and other current assets are financial assets with carrying values that approximate fair value due to their short term nature. Accounts payable and other current liabilities are financial liabilities with carrying values that approximate fair value due to their short term nature. The Company estimates fair values of short-term receivables and payables and classifies the valuation technique as Level 3 of fair value measurement, as it uses estimated cash flow input which is unobservable in the market.

F-34

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Non-current assets of receivables for rental deposits is a financial asset with carrying value that approximate to the fair value due to the impact of discounting is immaterial. The Company estimated fair values of non-current assets using the discounted cash flow method. The Company classifies the valuation technique as Level 3 of fair value measurement, as it uses estimated cash flow input which is unobservable in the market.

The Group’s non-financial assets, such as long-term investments, goodwill and intangible assets would be measured at fair value only if they were determined to be impaired.

As of December 31, 2018, and 2019, the Group had RMB52,650 and RMB61,180, respectively, long-term investments in equity securities of privately-held companies. Such investments are reviewed periodically for impairment using fair value measurement which requires significant unobservable inputs (Level 3). Impairment loss of RMB19,040, RMB nil and RMB nil was recorded in the consolidated statements of comprehensive loss for the years ended December 31, 2017, 2018 and 2019, respectively.

The Company is exempted from income tax in the BVI on its foreign-derived income. There are no withholding taxes in the BVI.

Under the current laws of the Cayman Islands, subsidiaries incorporated in the Cayman Islands were not subject to tax on income or capital gains. Additionally, upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.

Subsidiaries in Hong Kong are subject to 16.5% income tax rate for 2017. Under the current Hong Kong Inland Revenue Ordinance, from the year of assessment 2018/2019 onwards, the subsidiaries in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2,000, and 16.5% on any part of assessable profits over HK$2,000. The payments of dividends by these companies to their shareholders are not subject to any Hong Kong withholding tax.

On March 16, 2007, the National People’s Congress of PRC enacted an Enterprise Income Tax Law (“EIT Law”), under which FIEs and domestic companies would be subject to EIT at a uniform rate of 25%. The EIT law became effective on January 1, 2008.

F-35

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Pursuant to the “Circular on Enterprise Income Tax Policy concerning Deductions for Equipment and Appliances” (Cai Shui [2018] 54) issued by the State Administration of Taxation, during the period from January 1, 2018 to December 31, 2020, the cost of newly purchased equipment with the original cost less than RMB5 million can be fully deducted against taxable profit in the next month after the asset is put into use, instead of being depreciated annually for tax filing.

According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaging in research and development activities are entitled to claim 150% of the research and development expenses so incurred in a year as tax deductible expenses in determining its tax assessable profits for that year, or the Super Deduction. From January 1, 2018 to December 31, 2020, all Chinese resident enterprises will enjoy the Super Deduction of 175% in accordance with the updated policy promulgated by the Stated Tax Bureau of the PRC. Changsha 58 Home, Changsha Daojia Youxiang and Tianjin Technology had claimed such Super Deduction in ascertaining its tax assessable income for the year ended December 31, 2019.

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 Company does not believe that it is likely that its operations outside of the PRC should be considered a resident enterprise for PRC tax purposes.

The EIT Law also imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of PRC, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within PRC or if the received dividends have no connection with the establishment or place of such immediate holding company within PRC, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with PRC that provides for a different withholding arrangement. The British Virgin Island, where the Company was incorporated, does not have such tax treaty with PRC. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in PRC to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). The Company’s subsidiaries and VIEs were in accumulated loss positions as of December 31, 2019. Accordingly, no deferred income tax was accrued as of December 31, 2019.

F-36

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

The following table sets forth reconciliation between the statutory EIT rate and the effective tax rate:

The following table sets forth the significant components of the aggregate deferred tax assets and liabilities:

A valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods.

As of December 31, 2019, the net operating losses carried forward in overseas jurisdictions, subject to the tax laws enacted or substantially enacted in the countries where the Company’s subsidiaries operate and generate income, amounted to RMB608 million, are allowed to be carried forward to offset against future taxable profits. Such carry forward of tax losses of RMB505 million has no time limit, while the tax losses of RMB103 million will expire, if unused, in the years ending December 31, 2019 through 2027. As of December 31, 2019, the Group had net operating losses carried forward of subsidiaries incorporated in the PRC and subject to the agreement of the PRC tax authorities of RMB3.3 billion which will expire during the period between December 31, 2019 and December 31, 2024.

The Group has incurred net accumulated operating losses for income tax purposes since its inception. The Company believes that except for subsidiaries in Hong Kong, it is more likely than not that these net accumulated operating losses and other deferred tax assets will not be utilized in the future. Therefore, the Company had provided valuation allowances of RMB801,968 and RMB1,029,214 for the deferred tax assets as of December 31, 2018 and 2019, respectively.

F-37

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

On November 27, 2015, the Company completed its Series A round of equity financing, with participation from Taobao, global investment firm KKR, and Ping An Group. Following the closing of the Series A round of equity financing, 58.com Inc. holds 87.9% of the total outstanding ordinary shares of the Company and 61.7% of the total outstanding shares of the Company on an as-converted basis.

On August 7, 2018, Taobao converted 54,211,111 Series A Preferred Shares of 58 Home to 75,476,660 Series A Preferred Shares of 58 Freight, with fair value of US$1.8134 per share in 58 Freight. Following the closing of the share conversion, 58.com Inc. holds 68.8% of the total outstanding shares of the Company on an as-converted basis. The difference between the fair value of converted Series A Preferred Shares of 58 Freight and the book value of the original Series A Preferred Shares of 58 Home was recognized as deemed dividend to Taobao in the consolidated financial statements.

The holders of the Series A Preferred Shares shall be entitled to noncumulative dividends in preference to any dividend on the ordinary shares at the rate of 5% per annum of Series A Preferred Shares issue price. After payment of all declared dividends on the Series A Preferred Shares has been paid or set aside for payment to the holders of Series A Preferred Shares in a calendar year, any additional dividends declared shall be distributed among all holders of ordinary shares. All shareholders shall also be entitled to receive any non-cash dividends declared by the board of directors pursuant to the foregoing distribution priority.

F-38

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

In the event of a liquidation, each holder of the Series A Preferred Shares then outstanding shall be entitled to receive, prior to any distribution or payment to any holder of ordinary shares or any other shares, an amount per Series A Preferred Share equal to the greater of (i) the sum of (a) one hundred and twenty percent (120%) of Series A Preferred Share issue price, plus (b) any dividends declared and unpaid with respect to each Series A Preferred Share, and (ii) such amount per share as would have been payable had all funds and assets legally available for distribution to the shareholders been distributed pro rata among the holders of Series A Preferred Shares (on an as converted basis) and ordinary shares immediately following the liquidation. In the event that available assets are insufficient to permit payment of the Series A Preferred Share amount in full to all holders of Series A Preferred Shares, then the assets of the Company shall be distributed ratably to the Series A Preferred Shares holders based on their proportionate share ownership.

There is no redemption right with respect to the Series A Preferred Share. However, if the Company grants any investor redemption rights in any future financing, each holder of Series A Preferred Shares shall have the same redemption rights automatically without further consideration.

Each of the Series A Preferred Shares is convertible into the number of fully-paid ordinary shares as determined by dividing the original issue price applicable to such preferred shares by the conversion price in effect at that time. The initial conversion ratio for Series A Preferred Shares to Class A Ordinary Shares shall be 1:1 adjusted for share splits, share dividends, recapitalization and similar transactions.

The Series A Preferred Shares shall automatically be converted into ordinary shares at the conversion price in effect upon the closing of a qualified initial public offering (“Qualified IPO”).

Each Series A Preferred Share conveys the voting right of one vote for each Class A Ordinary Shares into which such Series A Preferred Shares can be converted.

In August, 2018, 58 Freight completed its Series B round of equity financing, with participation from Taobao, Cainiao Smart Logistics Network (Hong Kong) Limited (“Cainiao”), Vision Carnation Limited and other investors. In conjunction with the issuance of Series B Preferred Shares, 58 Freight granted the investors the warrants to purchase up to 57,988,166 Series B Preferred Shares of 58 Freight at a purchase price of US$1.3580 per share for Cainiao and US$1.8107 per share for other investors. These warrants were exercisable upon issuance with an exercise period of nine months and were not exercised then.

In January, 2019, 58 Freight completed subsequent closing of Series B round of equity financing and issued 8,511,496 Series B Preferred Shares at an issuance price of US$1.8107 per share for a total cash consideration of US$15,412.

In July 2019, 58 Freight completed additional subsequent closing of Series B round of equity financing from Mega Prime Development Limited (“Mega Prime”). 58 Freight issued 7,889,546 Series B Preferred Shares at an issuance price of US$1.90125 per share for a total cash consideration of US$15,000. In conjunction with the issuance of Series B Preferred Shares, 58 Freight granted warrants to Mega Prime to purchase up to 21,038,790 Series B Preferred Shares of 58 Freight with a purchase price of US$1.90125. The warrants were measured at fair value of RMB15,808 on the date of issuance with the assistance of an independent valuation firm. The original exercise period of the warrants was from the date of issuance to February 29, 2020 and was later extended to June 30, 2020 in amendment agreements with Mega Prime. Until the date of this report, the warrants are not exercised.

F-39

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

For the Series B Preferred shares with warrants, 58 Freight has allocated the gross proceeds of Series B Preferred Shares first to warrants based on their standalone fair value at issuance, and the residual proceeds to Series B Preferred Shares. For certain investors to whom 58 Freight issued a combination of Series B Preferred Shares, warrants and the convertible notes (Note 18), the residual proceeds equivalent to the total gross proceeds from Series B Preferred Shares and convertible notes minus the fair value of both warrants and convertible notes were allocated to Series B Preferred Shares. The warrants were initially recorded as a liability because they were exercisable to purchase Series B Preferred Shares which are redeemable upon the failure to consummate a Qualified IPO by 58 Freight on or prior to the fifth anniversary of the issuance date. The warrants were marked to market from the warrants issuance date until the date they were exercised or expired. The loss on fair value change of warrants was RMB13,068 for the year ended December 31, 2018 and the gain on fair value change of warrants was RMB125,788 for the year ended December 31, 2019.

Following the closing of the Series B financing of 58 Freight, the Company holds 73.8% of the total outstanding ordinary shares of 58 Freight and 51.5% of the total outstanding shares of 58 Freight on fully diluted and as-converted basis.

The preferred shares of 58 Freight were accounted for as Mezzanine classified non-controlling interest in the consolidated financial statements of the Company.

As of December 31, 2019, 58 Freight’s preferred shares comprised of the following:

Key terms of 58 Freight’s Series B Preferred Shares are summarized as follows:

In the event of a liquidation, dissolution or winding up of 58 Freight, including deemed liquidation event, available assets of 58 Freight are first distributed to the holders of Series A and Series B Preferred Shares at their original issuance price per share multiplied by a simple annual interest of ten percent (10%) per preferred share, plus any declared but unpaid dividends adjusted for share splits, share dividends.

If 58 Freight fails to consummate a Qualified IPO, nor has a trade sale of 58 Freight occurred, on or prior to the fifth anniversary of the issuance of Series A and Series B Preferred Shares, any holder of the Series A and Series B Preferred Shares may require 58 Freight to redeem up to all of the preferred shares held by such holder with 10% interest and all declared but not paid dividend.

The accretion to the redemption value commenced at the issuance date and continue until such time that the preferred shares are no longer redeemable. The Company recognized changes in the redemption value of the preferred shares, as if the reporting date is the redemption date of the preferred shares.

F-40

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Each of the Series A and Series B Preferred Shares is convertible into the number of Class A Ordinary Shares as determined by dividing the original issue price applicable to such preferred shares by the conversion price in effect at that time. The initial conversion ratio for Series A and Series B Preferred Shares to Class A Ordinary Shares shall be 1:1 adjusted for share splits, share dividends, recapitalization and similar transactions.

The Series A and Series B Preferred Shares shall automatically be converted into Class A Ordinary Shares at the conversion price in effect upon the closing of a Qualified IPO.

Each Series A and Series B Preferred Share conveys the voting right of one vote for each Class A Ordinary Share into which such Series A and Series B Preferred Shares can be converted.

In January 2019, 58 Daojia completed its Series A round of equity financing. 58 Daojia issued 22,004,000 Series A Preferred Shares to offshore investors at an issuance price of US$2.5 per share for a total cash consideration of US$55,010 (approximately RMB372,825). In conjunction with the issuance of Series A Preferred Shares, 58 Daojia issued loans to onshore investors in an aggregated principle amount of RMB259,899 and warrants to entitle them to purchase Series A Preferred Shares at then applicable purchase price.

As of December 31, 2019, 58 Daojia’s Series A Preferred Shares comprised of the following:

The Series A Preferred Shares of 58 Daojia were accounted for as mezzanine classified non-controlling interest in the consolidated financial statements of the Company as they are contingently redeemable at the options of the holders. In addition, the Company records accretions of the Series A Preferred Shares of 58 Daojia to the redemption value from the issuance date to the earliest redemption date. The accretions using the effective interest method, are recorded against retained earnings, or in the absence of retained earnings, by charging against additional paid-in capital. Once additional paid-in capital has been exhausted, additional charges are recorded by increasing the accumulated deficit. Each issuance of the Series A Preferred Shares of 58 Daojia is recognized at the respective fair value at the date of issuance net of issuance costs. The issuance costs for Series A Preferred Shares were RMB7,694.

The Company has determined that there was no beneficial conversion feature attributable to the Series A Preferred Shares because the initial effective conversion prices of these Series A Preferred Shares were higher than the fair value of 58 Daojia’s common shares determined by the Company taking into account independent valuations.

Following the closing of the Series A financing of 58 Daojia, the Company holds 100% of the total outstanding ordinary shares of 58 Daojia and 89.7% of the total outstanding shares of 58 Daojia on fully diluted and as-converted basis.

F-41

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Each holder of Series A Preferred Shares shall have the right, at such holder’s sole discretion, to convert all or any portion of the holder’s Series A Preferred Shares into Class A ordinary shares at any time at an initial conversion ratio of 1:1, which will be subject to adjustment to reflect share splits, share combinations, share dividends, recapitalization, merger and similar transactions.

The Series A Preferred Shares shall automatically be converted into Class A ordinary shares, at the then applicable Series A Preferred Shares conversion price, upon the consummation of a Qualified IPO. The initial conversion price will be the original issuance price (US$2.5), which will be subject to adjustment to reflect share splits, share combinations, share dividends, recapitalization, merger and similar transactions.

Series A Preferred Shares are redeemable at any time and from time to time on or after the earlier date of the occurrence of (i) 58 Daojia fails to consummate a Qualified IPO within five years, or (ii) the occurrence of certain deemed liquidation event on or prior to the fifth anniversary of the issuance of Series A Preferred Shares. Any holder of the Series A Preferred Shares may require 58 Daojia to redeem up to all of the Series A Preferred Shares held by such holder with a simple non-compounded interest rate of 10% per annum and all declared but not paid dividend thereon up to the date of redemption.

The accretion to the redemption value commenced at the issuance date and continue until such time that the Series A Preferred Shares are no longer redeemable. The Company recognized changes in the redemption value of the Series A Preferred Shares, as if the reporting date is the redemption date of the Series A Preferred Shares.

Each Series A Preferred Share conveys the voting right of one vote for each Class A ordinary share into which such Series A Preferred Shares can be converted.

The Series A Preferred Shares shall be entitled to receive, pari passu with each other and out of any funds and assets legally available therefor, non-cumulative dividends at the rate of 5% per annum of the Series A Preferred Shares issuance price (“Series A Issuance Price”) per share prior to, and in preference to, any dividend on any other class or series of shares of 58 Daojia.

In the event of deemed liquidation events, the Series A Preferred Shares holder has preferential right than the holders of any ordinary shares of 58 Daojia to obtain the distribution or payment from 58 Daojia. The distribution amount is either i) on a per-share basis, an amount equal to the Series A Issuance Price plus a simple non-compounded interest of 10% per annum on the Series A Issuance Price and all declared but unpaid dividends relating to such preferred share; or ii) such holder’s pro rata share of the assets of 58 Daojia as of the date such holder receives all the amount due.

Deemed liquidation events include: i) a sale of all or substantially all of the assets of 58 Daojia; ii) any merger or consolidation of 58 Daojia with or into another entity; iii) a transfer in which more than fifty percent of the outstanding voting power of 58 Daojia is transferred; iv) a liquidation, dissolution or winding up of 58 Daojia.

F-42

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The Company was incorporated in BVI in January 2015. The Company was authorized to issue a maximum of 640,800,000 shares with a par value of US$0.00001 per share. As of December 31, 2015, 83,100,000 Class A Ordinary Shares, 1,880,000 Class B Ordinary Shares and 6,000,000 Class C Ordinary Shares were issued.

Under the share repurchase agreement approved by the Company’s board of directors on July 4, 2016, the Company repurchased 3,100,000 Class A Ordinary Shares from a shareholder for total considerations of RMB10,000.

On July 8, 2016, a 4-for-1 stock split for all ordinary shares and Series A Preferred Shares was approved by the shareholders. While the stock split increased the number of shares for each shareholder, the percentage of their ownership in the Company was not affected. This share split has been retrospectively reflected for all periods presented. The authorized 640,800,000 shares were divided into 2,563,200,000 shares including 163,200,000 preferred shares in connection with the issuance of Series A Preferred Shares with a par value of US$0.0000025 per share.

In September 2016, the Company granted 12,400,000 fully vested restricted shares to a senior management member of the Company.

As of December 31, 2018 and 2019, 332,400,000 Class A Ordinary Shares, 7,520,000 Class B Ordinary Shares and 24,000,000 Class C Ordinary Shares were issued and outstanding.

In February 2015, the Company adopted its 2015 Share Incentive Plan, or the 58 Home 2015 Plan. The maximum aggregate number of shares which may be issued pursuant to all awards under the 58 Home 2015 Plan is 80,000,000 ordinary shares of 58 Home. The 58 Home 2015 Plan permits the awards of options and restricted shares. Unless terminated earlier, the 58 Home 2015 Plan will terminate automatically in 2025. In connection with the Series A round of equity financing closed on November 27, 2015, the maximum aggregate number of shares which may be issued under the 58 Home 2015 Plan was increased by 8,000,000 ordinary shares of 58 Home.

F-43

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

A summary of the 58 Home’s share option activities for the year ended December 31, 2017, 2018 and 2019 is presented below:

In October 2017, the Company granted 3,356,000 share options to certain employees at the exercise price of US$0.92 per share and 1,538,000 share options to certain employees at the exercise price of US$1.31 per share, where 50% of the options shall be vested upon the second anniversary of grant date and remaining shall vest every six months thereafter in four equal installments. There is no grant of share options in 2018 and 2019.

The weighted average grant date fair value of options granted for the year ended December 31, 2017 was US$1.84. There was no new granted award for the years ended December 31, 2018 and 2019.

The Company estimated the fair value of share options using the binominal option-pricing model with the assistance from an independent valuation firm. The fair value of each option granted under the 58 Home 2015 Plan was estimated on the date of grant with the following assumptions:

The Company estimated the risk free rate based on the yield to maturity of US treasury bonds denominated in US$ at the option valuation date. The exercise multiple is estimated as the ratio of fair value of underlying shares over the exercise price as at the time the option is exercised, based on a consideration of research study regarding exercise pattern based on historical statistical data. Expected term is the contract life of the option. The expected volatility at the date of grant date and each option valuation date was estimated based on the historical stock prices of comparable companies. The Company has never declared or paid any cash dividends on its capital stock, and the Company does not anticipate any dividend payments on its ordinary shares in the foreseeable future.

For the years ended December 31, 2017, 2018 and 2019, the Company recognized share-based compensation expenses of RMB527, RMB605 and RMB294 for share options granted under 58 Home 2015 Plan.

As of December 31, 2019, there were a total of RMB69,233 unrecognized compensation expenses, adjusted for estimated forfeitures, related to non-vested share-based compensation arrangement under 58 Home 2015 Plan. The expense is expected to be recognized over a weighted average period of 0.93 years. Total unrecognized compensation expenses may be adjusted for future changes in estimated forfeitures.

F-44

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

On March 24, 2015, GogoVan Cayman adopted a Share Incentive Plan (the “GogoVan Plan”) which provides share-based awards to employees and non-employees for their services. The maximum aggregate number of shares which may be issued pursuant to all awards under the GogoVan Plan is 14,901,508 of GogoVan Cayman’s ordinary shares. GogoVan Cayman became the principal shareholder of 58 Freight after it was acquired by newly issued ordinary shares of 58 Freight in August 2017, so the cost relating to such share-based awards is recognized by the Company as a contribution from principal shareholder in connection with the services provided.

The options granted vest over a period of three years and have a term of ten years. Upon the termination of an option holder’s employment, all unvested options will immediately terminate and vested options will remain exercisable for a period of 90 days after date of termination (one year in the case of death or disability), unless otherwise specified in an option holder’s employment or stock option agreement.

In April 2018, 8,957,602 of GogoVan Cayman’s share options were granted at the exercise price of US$0.0001 per share. The weighted average grant date fair value was US$1.90 per share. There is no grant of share options in 2019. The Company estimated the fair value of share options using the binominal option-pricing model with the assistance from an independent valuation firm.

For the years ended December 31, 2018 and 2019, the Company recognized share-based compensation of RMB96,417 and RMB11,032 under GogoVan Plan, respectively.

As of December 31, 2019, there were a total of RMB8,632 of unamortized compensation costs related to these outstanding share-based awards under GogoVan Plan granted by GogoVan Cayman, adjusted for estimated forfeitures. The expense is expected to be recognized over a weighted average period of 0.94 years.

In connection with 58 Daojia’s issuance of Series A convertible redeemable preferred shares, 58 Daojia has granted 6,991,255 and 942,477 RSUs to key management in January and October 2019, respectively. The vesting of RSUs issued is subject to a market condition related to the fair value of 58 Daojia. Share-based compensation expense will be recognized in the requisite service period of 1.35 and 1.18 years respectively, which is the estimated period that it will take for the market condition to be achieved.

The fair value of the RSUs was calculated based on the fair value of ordinary shares of 58 Daojia with the assistance of an independent valuation firm. The fair value of the RSUs awards was estimated on the grant date with the following assumptions:

F-45

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The expected volatility was estimated based on the historical stock prices of comparable companies. 58 Daojia has never declared or paid any cash dividends on its capital stock, and 58 Daojia does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the share-based awards. 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.

For the year ended December 31, 2019, the Company recognized RMB17,884 share-based compensation expenses associated with the RSUs. As of December 31, 2019, the total unrecognized compensation expenses related to the RSUs were RMB10,092. These amounts are expected to be recognized over a weighted average remaining derived service period of 0.53 years.

Concurrent with the foregoing RSUs issuance to key management, 58 Daojia has also granted 75,398,146 ordinary shares to 58 Home and 754,735 Series A Preferred Shares to Zhuhai Hengqin Ruilin Huaxin Investment Partnership (“Ruilin Huaxin”). 58 Home and Ruilin Huaxin can only receive the shares when a market condition related to the fair value of 58 Daojia is satisfied.

On July 12, 2018, 58 Freight issued loans of RMB159,400, which is convertible into equity interests in Tianjin Freight, and warrants to purchase Series B Preferred Shares of 58 Freight (“Warrant Shares”) at a per-share price of US$1.8107 to Qianhai Equity Investment Fund (“Qianhai Fund”) and Zhuhai Hengqin Fortune Huaxin Investment Partnership (“Fortune Huaxin”).

On January 25, 2019, 58 Freight repaid RMB3,800 of the convertible note to Fortune Huaxin. Concurrently, 58 Freight issued loans of RMB11,607, which is convertible into equity interests in Tianjin Freight, and Warrant Shares at a per-share price of US$1.8107 to Zhuhai Hengqin Borui Huaxin Investment Partnership (“Borui Huaxin”).

The exercise of such warrants and repayment of the loan are in conjunction with each other, and conditional upon the approval by PRC government authority on converting loan of RMB into USD for the purchase of the Series B Preferred Shares of 58 Freight by exercise of warrants. The Company accounted for the combined instruments as convertible notes, which is convertible to Series B Preferred Shares of 58 Freight with a conversion price of US$ 1.8107, which equivalent to the original issuance price of Series B Preferred Shares of 58 Freight, and shall be subject to adjustment from time to time for any Share Dividends, Subdivisions, Combinations of Ordinary Shares, Distributions, Reorganization, or any other similar events. The exercise period of such convertible notes is 15.2 years.

The holders of such convertible notes are entitled to participate in the redemption and liquidation of 58 Freight with the equivalent rights as the holders of Series B Preferred Shares of 58 Freight. The Company elected the fair value option and recognized the convertible notes as financial liabilities measured with fair value at the end of each reporting period.

The Group engaged an independent valuation firm to assist the management in its assessment of fair value of convertible notes of 58 Freight as of December 31, 2018 and 2019. The loss in fair value of convertible notes of RMB6,545 was recognized for the year ended December 31, 2018 and the gain in fair value of convertible notes of RMB6,348 was recognized for the year ended December 31, 2019.

F-46

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The fair value measurements of convertible notes are based on significant inputs not observable in the market, and thus represent Level 3 fair value measurements.

In 2019, 58 Daojia issued loans and the warrants with the rights to purchase Series A Preferred Shares of 58 Daojia at a per-share price of US$2.5 to certain investors with an aggregated consideration of RMB414,980, respectively. The exercise of such warrants and repayment of the loans are in conjunction with each other, and conditional upon the approval by PRC government authority on converting loan of RMB into USD for the purchase of the Series A Preferred Shares of 58 Daojia by exercise of warrants. The Company accounted for the combined instruments as convertible notes, which is convertible into Series A Preferred Shares of 58 Daojia with a conversion price of US$2.5, which equivalent to the original issuance price of Series A Preferred Shares of 58 Daojia, and shall be subject to adjustment from time to time for any Share Dividends, Subdivisions, Combinations of Ordinary Shares, Distributions, Reorganization, or any other similar events. The exercise period of such convertible notes is 15.2 years.

The holders of such convertible notes are entitled to participate in the redemption and liquidation of 58 Daojia with the equivalent rights as the holders of Series A Preferred Shares. The Company elected the fair value option and recognized the convertible notes as financial liabilities measured with fair value at the end of each reporting period.

The Group engaged an independent valuation firm to assist the management in its assessment of fair value of convertible notes of 58 Daojia as of December 31, 2019, and the loss in fair value of convertible notes of RMB7,814 was recognized for the year ended December 31, 2019.

The fair value measurements of convertible notes are based on significant inputs not observable in the market, and thus represent Level 3 fair value measurements.

Details of related party balances and transactions as of December 31, 2018 and 2019 are as follows:

As of December 31, 2018 and 2019, amounts due from related parties were RMB1,672 and RMB6,845, respectively, and details are as follows.

F-47

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

Prepayment to a related party represented amounts prepaid to Company B for its services. As of December 31, 2018 and 2019, prepayment to Company B was nil and RMB7,740, respectively.

Amounts due to related parties represented amounts due to Cainiao for rental vehicles from it. As of December 31, 2018 and 2019, amounts due to Cainiao was RMB2,901 and RMB1,447, respectively.

As of December 31, 2019, future minimum commitments under non-cancelable agreements were as follows:

Other than those shown above, the Company does not have any significant capital or other commitments, long-term obligations, or guarantees as of December 31, 2019.

F-48

December 31, 2017, 2018 (not covered by the auditor’s report) and 2019 (not covered by the auditor’s report)

(In thousands, unless otherwise noted)

The Group is not currently a party to, nor is aware of, any legal proceeding, investigation or claim which is likely to have a material adverse effect on the Group’s business, financial condition, results of operations, or cash flows. The Group did not record any legal contingencies as of December 31, 2019.

In February and March 2020, 58 Daojia executed the transaction documents for the 58 Daojia Series B financing with total cash consideration of US$100,000 (approximately RMB697,620), for 7.4% of the total outstanding shares on fully diluted and as-converted basis. Upon completion of 58 Daojia Series B financing, the Company lost its control over 58 Daojia and deconsolidated the financial results of 58 Daojia from its consolidated financing statements in accordance with ASC 810 “Consolidation”. All the cash consideration has been received by 58 Daojia as of the date of this report.

In February 2020, the Group borrowed a short-term loan from 58.com Inc. amounted to RMB104,652, which will be due within one-year from the date of borrowing.

Since the outbreak of COVID-19, PRC government has implemented a series of strict measures, including travel restrictions, quarantines, and a temporary shutdown of businesses which resulted in a decrease in activity level between both service providers and end customers. In particular, both delivery service business and domestic service business require in-person meetings to conduct their business and have been adversely and materially affected by these interruptions and delayed business resumption. As the Group’s revenues are generated primarily from delivery service business and domestic service business, the outbreak of COVID-19 and subsequent prevention and control measures have adversely affected the Group’s business operations and financial conditions in the first half of 2020. The Group also scaled back certain expenses, particularly some discretionary advertising expenses to mitigate the adverse impact on its profit. During February 2020, a majority of the Group’s employees worked from home. As the service providers and end customers, part of whom are migrant workers, took longer to resume normal businesses due to these quarantine measures, the Group also delayed hiring for its sales and customer services teams. Since the end of February 2020, the number of daily new cases of COVID-19 in the PRC have been contained at a relatively low level, the quarantine measures have been gradually relaxed or lifted. Offline business activities have been recovering and the Group’s employees are going back to offices. Despite the recovering trend the Group has observed till the date of this report, there is still high uncertainty as to how the ongoing pandemic will develop and its impact on the Group’s business going forward. For example, authorities in Beijing have locked down certain residential communities in response to new confirmed COVID-19 cases in June 2020 and the health officials in PRC warned the risk of the outbreak worsening was “very high”. If the pandemic continues to impact economic activity subsequent to the date of this report, the Group’s business, financial condition and results of operations for the remainder of the fiscal year ending December 31, 2020 may continue to be adversely affected, the extent of which cannot be reasonably estimated at the current stage. The Group will regularly assess and adopt measures to offset any challenges created by the ongoing pandemic.

F-49

	As of December 31,
	2018*			2019*			2019*
	RMB			RMB			US$
							Note 2(c)
ASSETS
Current assets:
Cash and cash equivalents		378,411			554,721			79,516
Restricted cash		-			1,289			185
Term deposits		10,571			-			-
Accounts receivable (net of allowance for doubtful accounts of RMB46,597 and RMB57,218 as of December 31, 2018 and 2019, respectively)		75,880			72,334			10,369
Prepayments and other current assets		160,596			181,430			26,007
Total current assets		625,458			809,774			116,077
Non-current assets:
Property and equipment, net		52,513			91,127			13,063
Intangible assets, net		131,107			109,276			15,664
Long-term investments		52,650			61,180			8,770
Long-term prepayments		18,096			29,548			4,236
Deferred tax assets, net		7,464			4,222			605
Goodwill		1,017,474			1,017,474			145,849
Total non-current assets		1,279,304			1,312,827			188,187
Total assets		1,904,762			2,122,601			304,264
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable (including accounts payable of the consolidated variable interest entity (“VIEs”) without recourse to the Company of RMB100,169 and RMB40,879 as of December 31, 2018 and 2019, respectively)		174,326			93,163			13,354
Contract liabilities (including contract liabilities of the consolidated VIEs without recourse to the Company of nil and RMB16,093 as of December 31, 2018 and 2019, respectively)		-			24,440			3,503
Taxes payable (including taxes payable of the consolidated VIEs without recourse to the Company of RMB4,159 and RMB5,929 as of December 31, 2018 and 2019, respectively)		8,067			17,560			2,517
Salary and welfare payable (including salary and welfare payable of the consolidated VIEs without recourse to the Company of RMB27,597 and RMB 123,668 as of December 31, 2018 and 2019, respectively)		103,269			237,290			34,014
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Company of RMB403,071 and RMB525,440 as of December 31, 2018 and 2019, respectively)		974,635			1,056,169			151,396
Total current liabilities		1,260,297			1,428,622			204,784
Non-current liabilities:
Convertible notes		165,945			590,198			84,602
Deferred tax liabilities		27,589			22,920			3,285
Total liabilities		1,453,831			2,041,740			292,671
Commitments and contingencies (Note 20)
Mezzanine equity
Series A Preferred Shares		1,280,521			1,280,521			183,556
Mezzanine classified noncontrolling interests		1,472,517			2,201,818			315,619
Total mezzanine equity		2,753,038			3,482,339			499,175
Shareholders’ deficit:
58 Daojia Inc. shareholders’ deficit
Ordinary shares		6			6			1
Additional paid-in capital		1,410,083			1,286,223			184,373
Accumulated deficit		(3,780,994	)		(4,670,325	)		(669,465	)
Accumulated other comprehensive income		66,588			79,435			11,387
Total 58 Daojia Inc. shareholders’ deficit		(2,304,317	)		(3,304,661	)		(473,704	)
Noncontrolling interests		2,210			(96,817	)		(13,878	)
Total shareholders’ deficit		(2,302,107	)		(3,401,478	)		(487,582	)
Total liabilities, mezzanine equity and shareholders’ deficit		1,904,762			2,122,601			304,264

	For the Year Ended December 31,
	2017			2018*			2019*			2019*
	RMB			RMB			RMB			US$
										Note 2 (c)
Revenues		484,952			950,803			1,241,516			177,965
Cost of revenues(1)		(178,745	)		(452,357	)		(520,208	)		(74,569	)
Gross profit		306,207			498,446			721,308			103,396
Operating expenses(1):
Sales and marketing expenses		(740,996	)		(1,126,467	)		(1,177,946	)		(168,852	)
General and administrative expenses		(171,671	)		(511,926	)		(368,494	)		(52,822	)
Research and development expenses		(157,589	)		(269,303	)		(287,209	)		(41,170	)
Total operating expenses		(1,070,256	)		(1,907,696	)		(1,833,649	)		(262,844	)
Loss from operations		(764,049	)		(1,409,250	)		(1,112,341	)		(159,448	)
Other income/(expenses):
Interest income		7,144			4,946			5,049			724
Investment income		10,277			77			582			83
Impairment of long-term investments		(19,040	)		-			-			-
Foreign currency exchange gain/(loss), net		642			553			(7,997	)		(1,146	)
Gain/(loss) on fair value change of financial instruments		-			(19,613	)		124,322			17,821
Others, net		(2,622	)		(3,878	)		21,863			3,134
Loss before income tax		(767,648	)		(1,427,165	)		(968,522	)		(138,832	)
Income tax benefit/(expenses)		(2,191	)		3,737			1,468			210
Net loss		(769,839	)		(1,423,428	)		(967,054	)		(138,622	)
Exclude: Net loss attributable to noncontrolling interests		34,187			195,712			77,723			11,141
Net loss attributable to 58 Daojia Inc.		(735,652	)		(1,227,716	)		(889,331	)		(127,481	)
Net loss		(769,839	)		(1,423,428	)		(967,054	)		(138,622	)
Other comprehensive income:
Foreign currency translation adjustment, net of nil tax		85,984			49,566			15,783			2,262
Total comprehensive loss		(683,855	)		(1,373,862	)		(951,271	)		(136,360	)

	For the Year Ended December 31,
	2017		2018*		2019*		2019*
	RMB		RMB		RMB		US$
							Note 2(c)
Cost of revenue		284		3,004		2,504		359
Sales and marketing expenses		398		754		548		79
Research and development expenses		55		31		31		4
General and administrative expenses		2,317		93,233		26,127		3,745

	Ordinary shares**				Additional paid-in			Accumulated			Accumulated other comprehensive			Noncontrolling			Total shareholders’
	Shares		Amount		capital			deficit			(loss)/income			interest			deficit
			RMB		RMB			RMB			RMB			RMB			RMB
Balance as of December 31, 2016		363,920,000		6		834,096			(1,817,626	)		(68,659	)		-			(1,052,183	)
Share-based compensation		-		-		3,054			-			-			-			3,054
Change in 58 Daojia Inc.’s ownership interests in 58 Freight Inc. (Note 4)		-		-		888,975			-			-			-			888,975
Issuance of subsidiary shares for business combination (Note 4)		-		-		-			-			-			277,100			277,100
Net loss		-		-		-			(735,652	)		-			(34,187	)		(769,839	)
Foreign currency translation adjustment		-		-		-			-			86,634			(650	)		85,984
Balance as of December 31, 2017		363,920,000		6		1,726,125			(2,553,278	)		17,975			242,263			(566,909	)
Share-based compensation		-		-		97,022			-			-			-			97,022
Net loss		-		-		-			(1,227,716	)		-			(195,712	)		(1,423,428	)
Foreign currency translation adjustment		-		-		-			-			48,613			953			49,566
Preferred shares redemption value accretions		-		-		(117,819	)		-			-			(45,294	)		(163,113	)
Deemed dividends to Taobao China Holding Limited (“Taobao”) (Note 15)		-		-		(300,792	)		-			-			-			(300,792	)
Beneficial conversion feature		-		-		5,547			-			-			-			5,547
Balance as of December 31, 2018*		363,920,000		6		1,410,083			(3,780,994	)		66,588			2,210			(2,302,107	)
Share-based compensation		-		-		11,326			-			-			17,884			29,210
Net loss		-		-		-			(889,331	)		-			(77,723	)		(967,054	)
Foreign currency translation adjustment		-		-		-			-			12,847			2,936			15,783
Preferred shares redemption value accretions		-		-		(135,186	)		-			-			(42,124	)		(177,310	)
Balance as of December 31, 2019*		363,920,000		6		1,286,223			(4,670,325	)		79,435			(96,817	)		(3,401,478	)

	For the Year Ended December 31,
	2017			2018*			2019*			2019
	RMB			RMB			RMB			US$
										Note 2(c)
Cash flows from operating activities:
Net loss		(769,839	)		(1,423,428	)		(967,054	)		(138,622	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expenses		3,054			97,022			29,210			4,187
Depreciation and amortization expenses		30,399			50,832			56,390			8,083
Investment income		(10,277	)		(77	)		(530	)		(76	)
Deferred tax benefit		-			(4,197	)		(1,468	)		(210	)
Impairment of long-term investments		19,040			-			-			-
Impairment of prepayments and other current assets and bad debt allowance for accounts receivable		24,320			68,555			10,107			1,449
Impairment of intangible assets		2,696			-			-			-
Foreign currency exchange loss/(gain), net		(642	)		(553	)		7,997			1,146
Loss/(gain) on fair value change of financial instruments		-			19,613			(124,322	)		(17,821	)
Loss on disposal of property and equipment		-			-			677			97
Changes in operating assets and liabilities:
Accounts receivable		9,591			(76,291	)		(7,075	)		(1,014	)
Prepayments and other assets		(139,367	)		34,328			(36,646	)		(5,253	)
Accounts payable		(1,400	)		136,629			(88,685	)		(12,713	)
Salary and welfare payable		16,209			39,689			134,021			19,211
Taxes payable		284			(2,151	)		9,493			1,361
Accrued expenses and other liabilities		288,285			243,365			220,697			31,636
Net cash used in operating activities		(527,647	)		(816,664	)		(757,188	)		(108,539	)
Cash flows from investing activities:
Purchase of property and equipment		(13,603	)		(48,714	)		(67,034	)		(9,609	)
Purchase of intangible assets		(339	)		-			(2	)		-
Cash received for disposal of property and equipment		289			-			2,604			373
Purchase of long-term investments		(2,500	)		(1,500	)		(8,000	)		(1,147	)
Purchase of term deposits		(718,439	)		(98,246	)		-			-
Proceeds from maturity of term deposits		1,163,888			219,157			10,571			1,515
Purchase of short-term investments		(2,344,000	)		(25,000	)		(8,240	)		(1,181	)
Proceeds from maturity of short-term investments		2,756,277			25,077			8,240			1,181
Cash received from acquisition of GoGoVan Business		9,246			-			-			-
Net cash provided by investing activities		850,819			70,774			(61,861	)		(8,868	)
Cash flows from financing activities:
Repurchase of ordinary shares		(477	)		-			-			-
Issuance cost of convertible notes		-			-			(4,742	)		(679	)
Repayment of convertible notes		-			-			(3,800	)		(545	)
Proceeds from convertible notes		-			159,400			426,587			61,149
Proceeds from issuance of Series A Preferred Shares of 58 Daojia Limited		-			-			365,131			52,340
Proceeds from issuance of Series B Preferred Shares and warrants of 58 Freight Inc.		-			475,293			206,807			29,645
Net cash (used in)/provided by financing activities		(477	)		634,693			989,983			141,910
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(27,199	)		6,956			6,665			955
Net increase/(decrease) in cash, cash equivalents and restricted cash		295,496			(104,241	)		177,599			25,458
Cash, cash equivalents and restricted cash at the beginning of the year		187,156			482,652			378,411			54,243
Cash, cash equivalents and restricted cash at the end of the year		482,652			378,411			556,010			79,701
Supplemental disclosure of non-cash activities:
Property and equipment in accounts payable		913			246			9,051			1,297
Consideration payable for acquisition of GoGoVan Business		1,166,075			-			-			-
Conversion of Taobao’s Series A Preferred Shares of 58 Daojia Limited to 58 Freight Inc.		-			300,792			-			-
Deemed dividend to mezzanine classified noncontrolling interests		-			163,113			177,310			25,416

58.com Inc. – ‘20-F/A’ for 12/31/19 – ‘EX-99.1’

On: Monday, 6/29/20, at 9:14am ET · For: 12/31/19 · Accession #: 1104659-20-77772 · File #: 1-36140

Previous ‘20-F’: ‘20-F’ on 4/29/20 for 12/31/19 · Latest ‘20-F’: This Filing · 4 References:

Amendment to Annual Report by a Foreign Non-Canadian Issuer — Form 20-F — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘EX-99.1’ — Miscellaneous Exhibit
Exhibit Table of Contents

This Exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

4 Subsequent Filings that Reference this Filing

Consolidated Financial Statements
Report of Independent Auditors		F-2
Consolidated Balance Sheets as of December 31, 2018 and 2019		F-4
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2017, 2018 and 2019		F-5
Consolidated Statements of Changes in Shareholders’ Deficit for the Years Ended December 31, 2017, 2018 and 2019		F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2018 and 2019		F-7
Notes to the Consolidated Financial Statements		F-8

/s/*PricewaterhouseCoopers Zhong Tian LLP*
Beijing, the People’s Republic of China
June 29, 2018

Note:
(1)	Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows:

	*	Not covered by the auditor’s report.
	**	Ordinary shares include Class A ordinary share, Class B ordinary share and Class C ordinary share. The number of ordinary shares is presented using the stock split basis, please refer to Note 16.

Name	Date of incorporation or acquisition	Place of incorporation	Percentage of direct or indirect economic ownership on as-converted basis as of December 31, 2019
Subsidiaries of the Company:
58 Daojia Holding Limited (“Daojia Holding”)	Incorporated on February 12, 2015	Hong Kong		100	%
58 Freight	Incorporated on June 8, 2017	Cayman Islands		56.4	%
58 Freight Holdings Limited (“Freight Hong Kong”)	Incorporated on June 26, 2017	Hong Kong		56.4	%
Tianjin Technology	Incorporated on July 26, 2017	The PRC		56.4	%
GoGo Energy Limited	Acquired on August 29, 2017	Hong Kong		56.4	%
GoGo Tech Limited	Acquired on August 29, 2017	Hong Kong		56.4	%
58 Daojia	Incorporated on May 16, 2018	Cayman Islands		89.7	%
58 Daojia Home Service Inc.	Incorporated on December 13, 2017	The Cayman Islands		89.7	%
58 Daojia Life Service Inc.	Incorporated on May 25, 2018	The Cayman Islands		89.7	%
Changsha Daojia Youxiang Network Technology Limited (“Changsha Daojia Youxiang”)	Incorporated on January 26, 2018	The PRC		89.7	%
Tianjin 58 Daojia Information Technology Limited (“Tianjin 58 Daojia”)	Incorporated on July 12, 2018	The PRC		89.7	%
Beijing 58 Home	Incorporated on July 10, 2015	The PRC		100	%

VIEs and VIEs’ subsidiaries:
Tianjin 58 Home	Incorporated on August 19, 2014	The PRC		100	%
Zhenjiang 58 Daojia Supply Chain Management Limited Company (“Zhenjiang Supply Chain”)	Incorporated on March 20, 2017	The PRC		56.4	%
Tianjin Freight	Incorporated on July 10, 2017	The PRC		56.4	%
Shanghai GoGo Information Technology Limited Company	Acquired on August 29, 2017	The PRC		56.4	%
58 Daojia Co., Ltd. (“Changsha 58 Home”)	Incorporated on August 13, 2015	The PRC		89.7	%
Changsha Daojia Youxiang Home Service Co., Ltd. (“Changsha Daojia Youxiang Home Service”)	Incorporated on January 2, 2018	The PRC		89.7	%
Tianjin Haodaojia Information Technology Co., Ltd. (“Tianjin Haodaojia”)	Incorporated on July 13, 2018	The PRC		89.7	%

	As of December 31,
	2018		2019
	RMB		RMB
Cash and cash equivalents		294,504		379,591
Accounts receivable, net		44,780		9,906
Inter-company receivables		484,353		741,075
Prepayments and other current assets		60,800		100,911
Property and equipment, net		12,319		56,934
Long-term investments		52,650		61,180
Intangible assets, net		70,492		57,888
Long-term prepayments		11,143		15,331
Total assets		1,031,041		1,422,816
Accounts payable		100,169		40,879
Contract liabilities		-		16,093
Taxes payable		4,159		5,929
Salary and welfare payable		27,597		123,668
Inter-company payables		1,245,575		2,264,481
Accrued expenses and other current liabilities		403,071		525,440
Deferred tax liabilities		17,623		14,474
Convertible notes		165,945		590,198
Total liabilities		1,964,139		3,581,162

	For the year ended December 31,
	2017			2018			2019
	RMB			RMB			RMB
Revenue		246,588			450,480			846,955
Net loss		(260,609	)		(484,546	)		(1,211,527	)
Net cash used in operating activities		(175,566	)		(84,298	)		(270,207	)
Net cash provided by/(used in) investing activities		345,298			(22,903	)		(67,493	)
Net cash provided by financing activities		126,686			160,400			422,787

Computers and equipment		3 years
Furniture and fixtures		5 years
Leasehold improvements		Over the shorter of lease terms or the estimated useful lives of assets
Software		3 years
Vehicles		4 years
Buildings		40 years

Domain names			3 - 10 years
Software			3 years
Trademark			10 years
Customer relationship			6 years
License			15 years

	Year Ended December 31, 2017 (in thousands)		Year Ended December 31, 2018 (in thousands)		Year Ended December 31, 2019 (in thousands)
Delivery services		233,175		498,918		540,332
Domestic services		236,042		401,346		611,321
Other revenues		15,735		50,539		89,863
Total		484,952		950,803		1,241,516

	Amounts			Amortization Years
		RMB
Net assets acquired		14,108
Amortizable intangible assets:
Domain names and trademarks		96,100			10
Software		15,000			3
Customer relationship		47,600			6
Goodwill		1,017,474
Deferred tax assets		9,397
Deferred tax liabilities		(33,604	)
Total		1,166,075

Total purchase price
-Equity consideration		1,166,075
Total		1,166,075

	Amounts
		RMB
For the year ended December 31, 2019
2020		21,460
2021		18,024
2022		18,024
2023		18,024
2024		18,024
Thereafter		15,720
Total		109,276

			As of December 31,
Financial instruments	Fair value hierarchy		2018		2019
			RMB		RMB
Cash equivalents		Level 2		94,055		144,086
Restricted cash		Level 2		-		1,289
Term deposits		Level 2		10,571		-
Warrants (Note 15)		Level 3		113,190		3,210
Convertible notes (Note 18)		Level 3		165,945		590,198

	For the year ended December 31,
	2017			2018			2019
	RMB			RMB			RMB
Current tax expense		(2,191	)		(460	)		-
Deferred tax benefit		-			4,197			1,468
Income tax (expense)/benefit		(2,191	)		3,737			1,468

	For the year ended December31,
	2017		2018		2019
	RMB		RMB		RMB
Balance at beginning of the period		302,642		481,420		801,968
Provision		178,778		320,548		227,246
Balance at the end of the period		481,420		801,968		1,029,214

Name	Issuance Date	Original Issuance Price per share	Number of Shares
Series A Preferred Shares	August 7, 2018	US$0.0000025	75,476,660
Series B Preferred Shares	August 7, 2018	US$1.8107	57,446,943
Series B Preferred Shares	January 31, 2019	US$1.8107	8,511,496
Series B Preferred Shares	July 26, 2019	US$1.90125	7,889,546

	Number of Options			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
				US$		In years		US$
Outstanding as of December 31, 2017		30,543,500			0.43		7.76		66,344
Granted		-			-
Forfeited		(347,500	)		0.75
Outstanding as of December 31, 2018		30,196,000			0.40		6.70		63,632
Granted		-			-
Forfeited		(2,224,750	)		0.79
Outstanding as of December 31, 2019		27,971,250			0.37		5.63		58,495

	2017
Expected volatility		50.53	%
Risk-free interest rate (per annum)		2.33	%
Exercise multiple		2.2
Expected dividend yield		0.00	%
Expected term (in years)		10
Expected forfeiture rate (post-vesting)		0.00	%
Fair value per share of the underlying shares on the date of option grants (US$)		1.75-1.88

	January, 2019			October, 2019
Expected volatility		45.4	%		43.8	%
Risk-free interest rate (per annum)		2.60	%		1.70	%
Expected dividend yield		0.00	%		0.00	%
Expected term (in years)		3.0			2.2
Fair value per share of the underlying shares (USD)		1.87			1.92

	For the year ended of December 31,
	2017		2018		2019
	RMB		RMB		RMB
Company A		3,432		1,238		1,234
58.com Inc.		-		-		409
Cainiao		-		1,074		-
Total		3,432		2,312		1,643

58.com Inc. – ‘20-F/A’ for 12/31/19 – ‘EX-99.1’

On: Monday, 6/29/20, at 9:14am ET · For: 12/31/19 · Accession #: 1104659-20-77772 · File #: 1-36140

Previous ‘20-F’: ‘20-F’ on 4/29/20 for 12/31/19 · Latest ‘20-F’: This Filing · 4 References: By: 58.com Inc. – ‘SC 13E3/A’ on 9/18/20 By: 58.com Inc. – ‘SC 13E3/A’ on 9/8/20 By: 58.com Inc. – ‘SC 13E3/A’ on 8/20/20 By: 58.com Inc. – ‘SC 13E3/A’ on 8/7/20

Amendment to Annual Report by a Foreign Non-Canadian Issuer — Form 20-F — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘EX-99.1’ — Miscellaneous ExhibitExhibit Table of Contents

This Exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

4 Subsequent Filings that Reference this Filing

Previous ‘20-F’: ‘20-F’ on 4/29/20 for 12/31/19 · Latest ‘20-F’: This Filing · 4 References:

Amendment to Annual Report by a Foreign Non-Canadian Issuer — Form 20-F — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘EX-99.1’ — Miscellaneous Exhibit
Exhibit Table of Contents

This ‘20-F/A’ Filing	Date	Other Filings

	8/25/25
	12/31/24
	12/31/20
	12/15/20
	6/30/20
Filed on:	6/29/20	6-K
	2/29/20
	1/1/20
For Period end:	12/31/19	20-F
	12/15/19
	7/26/19
	3/15/19
	1/31/19
	1/25/19	SC 13G/A
	1/21/19
	12/31/18	20-F, 20-F/A, S-8
	8/7/18
	7/13/18
	7/12/18
	6/29/18	20-F/A
	5/25/18	6-K
	5/16/18
	1/26/18
	1/2/18
	1/1/18
	12/31/17	20-F, 20-F/A
	12/13/17
	8/29/17
	7/26/17
	7/10/17
	6/26/17
	6/8/17
	3/20/17
	12/31/16	20-F, 20-F/A
	7/8/16
	7/4/16
	12/31/15	20-F, 6-K/A, NT 20-F
	11/27/15
	9/8/15
	8/13/15
	7/10/15
	3/24/15
	2/12/15
	1/26/15
	8/19/14
	1/1/08
	3/16/07
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