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TABLE OF CONTENTS
WOWO LIMITED

Table of Contents

As filed with the Securities and Exchange Commission on January 9, 2015

Registration No. 333-            


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Wowo Limited
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

Cayman Islands
(State or other jurisdiction of
incorporation or organization)
  7379
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Third Floor, Chuangxin Building
No. 18 Xinxi Road, Haidian District, Beijing
People's Republic of China
(8610) 5906 5200

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



Law Debenture Corporate Services Inc.
400 Madison Avenue, 4th Floor
New York, New York 10017
(212) 750-6474

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



Copies to:

Julian Lin
Jones Day
31st Floor. Edinburgh Tower, the Landmark
15 Queen's Road Central
Hong Kong
(852) 3189-7282

 

Andrew P. Gilbert, Esq.
David C. Schwartz, Esq.
DLA Piper LLP (US)
51 John F. Kennedy Parkway, Suite 120
Short Hills, New Jersey 07078-2704
(973) 520-2550



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

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

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

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

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



CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities
to be registered

  Proposed maximum
aggregate offering
price(3)

  Amount of
registration fee

 

Ordinary Shares(1)(2)

  US$40,000,000   US$4,648

 

(1)
Includes                    ordinary shares that may be purchased by the underwriters to cover over-allotments, if any. Also includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These ordinary shares are not being registered for the purpose of sales outside the United States.

(2)
American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-            ). Each American depositary share represents                ordinary shares.

(3)
Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

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

   


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

Subject to Completion
Preliminary Prospectus dated                        , 2015

LOGO

Wowo Limited

                American Depositary Shares
Representing        Ordinary Shares

        This is the initial public offering of American Depositary Shares, or ADSs, of Wowo Limited. Each ADS represents the right to receive             ordinary shares, par value US$0.00001 per share. The ADSs may be evidenced by American Depositary Receipts, or ADRs.

        Prior to this offering, there has been no public market for our ADSs or our ordinary shares. We anticipate the initial public offering price per ADS will be between US$      and US$      . We have applied to have the ADSs listed on the Nasdaq Global Market under the symbol "WOWO".

        The offering price to the public will be determined by negotiation between us and Axiom Capital Management, Inc. (the "Underwriter"), but will be fixed prior to the commencement of the offering by the Underwriter. We anticipate that the offering will be on a "best efforts" basis and that the Underwriter will not be required to sell any specific number or dollar amount of our ADSs but will use its best efforts to sell the ADSs offered. Delivery of the ADSs will be made as soon as practicable after the effective date of this Registration Statement. We have not made any arrangements to place the funds in an escrow, trust, or similar account. Please see the "Plan of Distribution" section for more information.

        We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements.

        Investing in the ADSs involves risks. See "Risk Factors" beginning on page 16.

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

 
  Per ADS   Total  

Initial public offering price

  US$     US$    

Underwriting discounts and commissions(1)

  US$     US$    

Proceeds to Wowo Limited (before expenses)

  US$     US$    

(1)
See "Underwriting" for a description of compensation payable to the underwriters.

        We have granted the underwriters a 45-day option to purchase up to an additional            ADSs to cover over-allotments at the initial public offering price less underwriting discounts and commissions. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be US$            and our total proceeds, before expenses, will be US$            .

        The underwriters expect to deliver the ADSs to purchasers on or about            , 2015.



LOGO

   

The date of this prospectus is            , 2015.


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TABLE OF CONTENTS

Prospectus Summary

  1

The Offering

  11

Summary Consolidated Financial and Operating Data

  13

Risk Factors

  16

Special Note Regarding Forward-looking Statements

  57

Use of Proceeds

  58

Dividend Policy

  59

Capitalization

  60

Dilution

  61

Enforcement of Civil Liabilities

  63

Our History and Corporate Structure

  65

Selected Consolidated Financial and Operating Data

  70

Management's Discussion and Analysis of Financial Condition and Results of Operations

  74

Industry Overview

  105

Our Business

  113

Regulations

  130

Management

  141

Principal Shareholders

  149

Related Party Transactions

  151

Description of Share Capital

  153

Description of American Depositary Shares

  166

Shares Eligible for Future Sales

  177

Taxation

  179

Underwriting

  188

Expenses Related to this Offering

  195

Legal Matters

  196

Experts

  196

Where You Can Find More Information

  197

Index to Financial Statements

  F-1

        No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or in any free writing prospectus we may authorized to be delivered or made available to you. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the ADSs offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. Unless otherwise stated, all amounts reported in this prospectus are in U.S. Dollars ($).

        Neither we nor the underwriters has done anything that would permit this offering or possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States.

        Through and including                        , 2015 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

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PROSPECTUS SUMMARY

        This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our ADSs. The industry data discussed herein and elsewhere in this prospectus are primarily sourced from "2014 China Comprehensive Local Lifestyle E-Commerce Report" that we commissioned from iResearch Consulting Group, or iResearch. You should carefully read the entire prospectus, including "Risk Factors" and the financial statements, before making an investment decision.


Our Goal

        Our goal is to make direct interaction possible between local lifestyle merchants and their target customers through unique offerings. We help local customers discover food, shops, activities and events near the places where they live and work, while supporting local merchants to grow their businesses exponentially and raise awareness of their brands.


Overview

        We operate one of China's leading third-party e-commerce platforms, focusing on local entertainment and lifestyle services such as restaurants, movie theaters and beauty salons. We do not compete with our merchant clients by offering our own goods and services nor do we keep inventory of any merchandise. Our unique platform allows local merchants to customize and manage their online stores, make direct sales to their target customers and process a large volume of online sales for consumption at their brick and mortar stores. According to iResearch, our platform represents the largest e-commerce platform for local lifestyle services in terms of number of merchants and registered users as of June 30, 2014. As of September 30, 2014, we have also established a nationwide network of merchant service centers to support local businesses in 150 major cities and population centers across China.

        Our platform consists of an e-commerce website, "WoWo Mall", a mobile commerce infrastructure, "WoWo Mobile", and an electronic management system, "WoWo EMS". The three components of our platform are designed to create an integrated network that enhances the interaction between businesses and consumers that reinforces brand awareness and fosters repeat customers for our merchant clients.

        Our "WoWo Mall" website located at 55.com is used to promote and market our company's brand eminence and complete e-service platform by exhibiting our merchant client's online stores and introduce certain selected services and products. Potential customers may then be directed to 55tuan.com to obtain information on the latest attractive offerings available through such merchants. We began our business as a group buying website under the brand "WoWo Buy" located at 55tuan.com in March 2010. We quickly found that the group buying business model did not fully meet the needs of local service providers. While the group buying business model often helps merchants increase their sales by selling extra capacity, we believe it does not, as a stand-alone offering, significantly promote brand awareness for the merchants or create customer loyalty to the merchants. Merchants also face additional margin pressure from the fees charged by these group buying sites that could further erode their margin. For example, flash sales conducted by third-party group buying websites often promote the brands of the websites over the brands of the merchants. At the same time, local merchants continue to have limited branding power or control over the marketing direction. By June 2012, we augmented our WoWo Buy model with our promotional portal at 55.com to complete our WoWo Mall. WoWo Mall not only permits merchants to establish their own online stores, it also allows the merchants to increase their branding power by providing them with customizable features to establish the look and feel they want to be associated with their brands. In the third quarter of 2014, we hosted and provided operating services to over 100,000 local entertainment and lifestyle merchants on our websites.

 

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        Our "WoWo Mobile" services focus on enhancing the real time interactions between consumers' mobile devices and our e-commerce platform. Since most local merchants in China have a geographic coverage of only a few miles around their brick and mortar stores, location-based search result is the best way to provide local merchants with access to instant potential customers within a few miles around their stores. As of September 30, 2014, we had 17.3 million activated WoWo Mobile App installed on mobile devices. We believe a significant portion of our nationwide subscriber base can still be converted to mobile users, which will continue to facilitate the expansion of our mobile commerce business with low subscriber acquisition and retention costs. As of September 30, 2014, approximately 64% of our monthly gross billings were derived from mobile device transactions. In July 2014, we launched our latest "WoWo Merchant App", a customized storefront on mobile devices that integrates reservations, payment, special promotions, membership management and other features which enables local merchants to directly self-manage their marketing and sales campaign on mobile devices.

        Our "WoWo EMS" is a proprietary electronic management system designed for the local merchants. WoWo EMS provides linkage to our central server and facilitates a number of back-office services to our merchant clients. Through WoWo EMS, our merchant clients may also instantly communicate with the WoWo Mobile App utilized by our retail customers. This extends the capabilities of WoWo Mobile by providing our merchant clients with additional customer relationship management tools, such as sending follow-on promotional messages to customers with identifiable purchasing habits.

        We believe our focus in helping local merchants to promote their own brands distinguishes our platform from other e-commerce providers in China. With the technical support available through 150 service centers and over 2,000 merchant service representatives, we have empowered local merchants with limited resources to create sophisticated online branding campaigns and offer better integration of their online and offline resources. With the promotional power of our WoWo Mall, the ability to capture mobile consumers through WoWo Mobile and the specialized electronic management system of our WoWo EMS, we believe we are uniquely positioned to fulfill the needs of local merchants and can be the trusted one-stop e-commerce platform for them.

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Our Value Proposition

Merchants choose us for our:

    Affordable and effective e-commerce platform.  We offer both online and mobile commerce platform for local lifestyle merchants to build their online and mobile presence. Our platform helps merchants remain competitive in gaining and retaining the new generation of internet and mobile consumers.

    Ability to customize promotions.  Our platform empowers the traditional merchants to run special promotions on a real-time basis to create better offering packages and conduct targeted marketing. We also allow our merchant clients to reach a broader customer base in a way that cannot be achieved through traditional media or offline marketing.

    Brand building and cost effectiveness.  Our merchant service representatives help local merchants bring their business online and promote their own brands. Our online store platform is designed as an online place where merchants can distinguish their own brand identities and customize their image and brand awareness. We also do not compete with the merchants to sell services like group buying sites.

    Complete cost-effective and integrated infrastructure.  Merchants not only build their storefronts online; they can also rely on our platform for a range of essential support services to operate their businesses. These include integration of online reservation payment system, management of customer orders and relationships, data analysis, availability of mobile app to conduct mobile commerce and direct assistance by live personal merchant service representatives.

    Broad network of relevant location-based customers.  Our platform enables local merchants to access a large number of prospective consumers from our existing customer base that seek local lifestyle services through our precise, location-based searches.

Consumers choose us for our:

    Personalization.  Our platform is designed to provide a massive amount of local information that consumers can quickly and effectively view and search. Our data analysis and management capabilities allow us to anticipate consumers' needs and tailor the service offering displays to match the consumer with the most relevant merchants and information.

    Compelling mobile experience.  Our WoWo Mobile App makes it easy for consumers to access our WoWo Mall through smart phones and mobile devices. Location-based services and other mobile functionalities drive a higher level of user engagement.

    Up-to-date interconnectivity to the merchants.  Customers have the option to install only the WoWo Merchant Apps of the stores that they desire or frequent and receive tailored promotion, interact with the merchant and make reservations. The convenience exceeds traditional membership cards.

    Delightful shopping experience.  We believe that our marketplaces deliver a delightful shopping experience to consumers. The simple and clear layout of our WoWo Mall, the bargains available from the online stores and our optimized search capabilities allow consumers to easily browse and find the suitable service provider at the ideal location.

        We have two major revenue sources: (i) storefront fees for a limited category of merchants that have opened online stores with us through WoWo Mall, and (ii) commissions on sales made by merchant clients through the use of WoWo Coupons in our e-commerce platform. We have experienced rapid growth in recent years. Our net revenues were US$27.8 million and US$36.3 million for the years ended December 31, 2012 and 2013, respectively, including storefront fees of US$2.8 million and US$10.0 million, respectively. At the same time, our net loss decreased from US$39.0 million to

 

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US$32.2 million for the years ended December 31, 2012 and 2013, respectively. For the nine months ended September 30, 2013 and 2014, our net revenue was US$27.6 million and US$20.6 million, respectively, including storefront fees of US$6.7 million and US$7.3 million, respectively. At the same time, our net loss was US$21.1 million and US$32.4 million for the nine months ended September 30, 2013 and 2014, respectively. We have incurred significant expenses to achieve our current economy of scale and build a premier platform, including establishing 150 service centers and promoting our "WoWo" brand across the major cities and population centers in China. However, we believe that our current cash balance, anticipated cash flows from operations, proceeds from this offering and the financial support obtained from our Chairman and CEO, Mr. Maodong Xu, will be sufficient to meet our anticipated capital needs through December 31, 2015. Specifically, Mr. Maodong Xu has personally committed in writing to provide adequate funds to enable us to meet in full our financial obligations as they fall due through December 31, 2015, which commitment is further supported by pledges of certain assets from Mr. Xu. The funds, if and when called, will be provided in the form of a cash equity investment. This committment is for an amount subject to our requirements without any limitation and regardless of whether this offering has taken place. As of January 7, 2015, Mr. Xu has provided interest free funds to support our working capital needs to the amount of US$62.6 million. We will convert all of our indebtedness owed to Mr. Xu to additional ordinary shares to be issued to him, or his designees, at our initial offering price upon the completion of this offering. Mr. Xu will own approximately                         ordinary shares, or            %, of our ordinary shares outstanding after this offering. With the financing provided by this offering and the commitment from Mr. Xu, we believe we are ready to leverage on the success we have in the past few years in terms of initial infrastructure building, gaining merchant and consumer recognition and deployment of highly effective teams to achieve future growth.


Our Competitive Advantages

        Our e-commerce platform is attractive to local merchants and mobile users.    We allow merchants to target location specific consumers with special promotions, build brand loyalty and repeat customers with a cost-effective and technologically integrated solution. Consumers are attracted to our mobile applications for its location-based searches, real-time information and promotions, and integrated reservation and payment solution.

        Early Mover in Establishing E-Commerce Platform Dedicated to Local Merchants.    We believe we are one of the first e-commerce platforms created with a view to provide dedicated services to location-based, entertainment and lifestyle merchants. Our platform empowers our merchant clients to create a strong online presence without a significant increase in capital expenditures. Our merchant clients can enjoy the network effect from our large subscriber base, cross sell to customers with related needs and conduct targeted marketing for potential customers in their neighborhoods. In addition, the ability to promote multiple service packages online also allows our merchant clients to price their services dynamically to attract customers at non-peak hours to increase sales and better manage their production yield. Over the years, we have established a strong brand name among merchants and customers and successfully extended our network across China.

        Established Local Service Network and Expertise.    Strong local presence and knowledge is critical to the long-term competitiveness of our business. We have over 2,000 merchant service representatives serving over 100,000 local merchants located in 150 major cities and population centers in China as of September 30, 2014. We staff each service center with a view to provide localized services, including employing local personnel who are familiar with the local culture, dialect, merchant and consumer habits and behavior. We believe a local employee base, with extensive local knowledge and experience, provides us with a unique competitive advantage to establish a favorable working relationship with local merchants.

        Instantaneous Mobile Connection Between Merchant Clients and Retail Consumers.    We conduct location-based marketing through our customers' use of smart phones and mobile devices. Our WoWo

 

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Mobile App, which can be installed on our customers' smart phones or mobile devices, provides a direct link for our merchant clients to reach everyone in our nationwide customer base. Location-based search result is also the best way to provide location-based service providers with access to instant potential customers within a few miles around their stores. WoWo Mobile App also allows our merchant clients to offer dynamically priced services instantly through push technology to potential customers that fits certain specific details or exhibit certain consumer behavior.

        Proprietary Electronic Management System Facilitates Real Time Interactivity and Data Analysis.    WoWo EMS simplifies and increases the efficiency of the purchase authentication process. WoWo EMS also communicates with our central server to upload customer behavior data such as price and timing of the purchases. In turn, the customer database stored at our server can produce reports on customer analysis and feedbacks to enable the merchants or us to make follow-on service recommendation.

        Superior Online Experience and Strong Brand Recognition.    We believe our commitment to maintain the highest quality in every aspect of our service offerings enhances the online experience of the retail consumers and increases brand recognition for our merchant clients. Each day, we help our merchant clients put attractive entertainment and lifestyle packages online. Our team of writers/editors provides informative and engaging descriptions to highlight the featured deals, often with colloquial dialect designed to appeal to the retail consumers of the target location. We have also established two call centers to provide a variety of services, including merchant services, customer refunds, complaint processing and general inquiry.

        Management Team with Significant Online and Offline Experience.    Our Chairman and Chief Executive Officer, Mr. Maodong Xu, has extensive entrepreneural experience in the retail and new media industries in China. Mr. Xu has over two decades of experiences in managing China-based retail business and technology companies. Between 1992 and 2000, he founded and managed Qilu Supermarket, the largest supermarket chain in Shandong province. Mr. Xu also founded one of the leading wireless advertising companies in China, Welink Information Technology Co., Ltd. in 2009. Our Chief Financial Officer, Mr. Frank Zhao has over two decades of experience in financial and accounting management with auditing firms and public companies. Our Executive President, Mr. Tiger Jianguang Wu, also has over 10 years of experience in the Internet industry. In addition, many of our senior management team and engineers have prior working experiences with many well-known companies in China.


Our Strategy

        Our goal is to make direct interaction possible between local lifestyle merchants and their target customers. Key elements of our strategy to achieve this goal include the following:

        Increase Penetration Rate within our Covered Market.    We intend to deepen our reach in the 150 cities and population centers we cover by raising awareness among the untapped local merchants the benefits of opening a store in our WoWo Mall. We believe our focus in helping local merchants to create their own brand distinguishes our platform from other e-commerce providers in China. Local service providers that seek repeat local customers but do not have the resources to independently create or efficiently maintain a strong online presence can rely on our one-stop platform for online and offline integration of their businesses.

        Increase Service Features to Solidify Client Loyalty.    We intend to increase the service features we offer to our merchant clients, including online reservations, cash coupons, takeout orders and other features dedicated to each vertical of service offerings. Within each vertical, we intend to develop features to accommodate the business models of various types of merchants. Through broadening our services available to the merchant clients, we will help our merchant clients increase loyalty among their customers, which, in turn, we believe would also solidify our merchant clients' loyalty to us.

 

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        Leverage our Comprehensive Electronic Management System to Sign More Clients.    We will continue to invest in and make improvements to our merchant interface. With each upgraded versions of our WoWo EMS, we intend to provide more features that will empower our merchant clients to more efficiently self manage their online stores and businesses and, at the same time, improve our services to our merchant clients. We will continue to introduce and deploy WoWo EMS services to more local merchants and our WoWo Mobile App will also enhance our merchant clients' ability to target nearby consumers through the smart phones or mobile devices they carry. We strive to help our clients increase their production yield and build brand. We believe loyalty of our own clients must come from their own success through utilizing our platform.

        Grow our Mobile Commerce Platform.    We plan to continue to add service features available to mobile consumers, including options for recording both online payment and on-site cash payment. We are currently rolling out our "WoWo Merchant App". Once installed, the WoWo Merchant App creates an icon on a retail customer's smart phones or mobile devices that provides an instant link to a particular merchant client's dedicated online store as well as other features available through our WoWo Mall. We have made the availability of WoWo Merchant App as a service feature that our merchant clients may request starting from August 1, 2014. As of September 30, 2014, we have signed approximately 1,000 contracts with various merchant clients to develop dedicated WoWo Merchant Apps for them. Integration between our WoWo EMS and WoWo Merchant Apps will also allow our merchant clients to provide interactive feedbacks to the mobile consumers and provide more tailored services. We believe WoWo Merchant App will increase customer stickiness for our merchant clients and thereby increase client loyalty to us.


Our Challenges

        We expect to face risks and uncertainties related to our business and industry, including but not limited to:

    our limited operating history;

    our ability to achieve and maintain profitability, especially in light of our past losses;

    our ability to compete in the intensively competitive environment;

    our ability to control operating expenses in connection with any strategic acquisitions and to successfully integrate the acquired businesses;

    our ability to source high quality products and services from local merchants;

    our ability to adapt to the evolving market from e-commerce to mobile commerce;

    our ability to maintain the existing subscriber base and to attract new subscribers and merchant clients;

    our ability to maintain and enhance our reputation and brand;

    our ability to maintain an effective system of internal control over financial reporting;

    control over our consolidated affiliated entities, which is based upon contractual arrangements rather than equity ownership; and

    the regulatory environment in China.

        We also face other risks and uncertainties that may materially affect our business, financial conditions, results of operations and prospects. You should consider the risks discussed in "Risk Factors" and elsewhere in this prospectus before investing in our ADSs.

 

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Our Corporate Structure

        Wowo Limited is a Cayman Islands holding company incorporated on July 13, 2011. We conduct our operations in China principally through contractual arrangements between our wholly-owned PRC subsidiary, Beijing Wowo Shijie Information Technology Co., Ltd. ("Wowo Shijie") and two consolidated affiliated entities in China, namely, Beijing Wowo Tuan Information Technology Co., Ltd. ("Beijing WoWo Tuan") and Beijing Kai Yi Shi Dai Network Technology Co., Ltd. ("Kai Yi Shi Dai") and their respective shareholders. The following diagram illustrates our corporate structure as of the date of this prospectus. See "Our History and Corporate Structure" for more information on the history and operations of our corporate entities. For additional information on risks relating to the countries in which our subsidiaries operate, see "Risk Factors—Risks Relating to Doing Business in China".

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(1)
Beijing Wowo Shijie Information Technology Co., Ltd.

(2)
Mr. Maodong Xu and Mr. Hanyu Liu respectively own 95% and 5% of the equity interests in Beijing Wowo Tuan.

 

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(3)
Mr. Maodong Xu and Beijing Wowo Shiji Information Technology Co., Ltd. respectively own 60% and 40% of the equity interests in Kai Yi Shi Dai. Beijing Wowo Shiji Information Technology Co., Ltd. is principally owned by Mr. Hanyu Liu, holding 51% equity interest, Mr. Yongming Zhang, holding 15% equity interest, Mr. Weihong Xiao, holding 8% equity interest, Mr. Jianguang Wu, holding 7.5% equity interest, and Ms. Yonghong Lv, holding 6.3% equity interest.

(4)
The entity is in the process of entity deregistration.

(5)
Pursuant to the relevant agreements in connection with the acquisition of Jilin Wowo Tuan Information Technology Co., Ltd. in 2011, Beijing Wowo Tuan has transferred 49% equity interests in this entity to one of the former shareholders three years after the acquisition.

        Beijing WoWo Tuan was established in May, 2008. Mr. Maodong Xu and Mr. Hanyu Liu are the shareholders of Beijing WoWo Tuan, with Mr. Xu owning 95% and Mr. Liu owning 5% as of the date of this prospectus. We entered into a series of contractual arrangements with Beijing WoWo Tuan and the shareholders of Beijing WoWo Tuan in August 2012, which we refer to as the Beijing WoWo Tuan Agreements. These Agreements were subsequently amended and restated on August 6, 2014.

        Kai Yi Shi Dai was established in September, 2010. Mr. Maodong Xu and Beijing Wowo Shiji Information Technology Co., Ltd. are the shareholders of Kai Yi Shi Dai, with Mr. Xu owning 60% and Beijing Wowo Shiji Information Technology Co., Ltd. owning 40% as of the date of this prospectus. We entered into a series of contractual arrangements with Kai Yi Shi Dai and the shareholders of Kai Yi Shi Dai in April 2012, which we refer to as the Kai Yi Shi Dai Agreements. These Agreements were subsequently amended and restated in August 6, 2014.

        The Beijing WoWo Tuan Agreements and the Kai Yi Shi Dai Agreements include the following:

    Exclusive Consulting and Service Agreements.  Wowo Shijie and each of Beijing WoWo Tuan and Kai Yi Shi Dai entered into exclusive consulting and service agreements, under which each of Beijing WoWo Tuan and Kai Yi Shi Dai, including its subsidiaries or any companies or entities under its control, agrees to engage Wowo Shijie as its exclusive provider of technical platform, technical support, maintenance and other services. Beijing WoWo Tuan and Kai Yi Shi Dai will pay to Wowo Shijie service fees determined based on the gross billings of the affiliated consolidated entities on a quarterly basis. Wowo Shijie will exclusively own any intellectual property arising from the performance of the exclusive consulting and service agreements. The fees for such consulting and services are determined at Wowo Shijie's discretion. The exclusive consulting and service agreements will be effective for ten years unless earlier terminated as set forth in the agreements or other written agreements entered into by the parties thereto. The exclusive consulting and service agreements may be extended upon the written confirmation by Wowo Shijie before the expiry of thereof, the extended term may be determined by Wowo Shijie. During the term of the exclusive consulting and service agreements, none of the affiliated consolidated entities may terminate the agreements except in the case of Wowo Shijie's gross negligence, fraud, other illegal action, bankruptcy or termination of Wowo Shijie, and in the event of bankruptcy or termination of the affiliated consolidated entities before the expiry of the exclusive consulting and service agreements, the agreements will be terminated automatically.

    Equity Pledge Agreements.  The shareholders of each of Beijing WoWo Tuan and Kai Yi Shi Dai entered into equity pledge agreements with Wowo Shijie, under which the shareholders pledged all of their equity interests in each of Beijing WoWo Tuan and Kai Yi Shi Dai to Wowo Shijie as collateral to secure performance of all obligations of the affiliated consolidated entities and their shareholders under the applicable exclusive consulting and service agreement and the exclusive call option agreement. Wowo Shijie is entitled to collect dividends and other distributions (in cash or non-cash) of the shares pledged during the term of the pledge. If any event of default as provided for therein occurs, Wowo Shijie, as the pledgee, will be entitled to request immediate payment of the service fees or other fees, or to dispose of the pledged equity interests through transfer or assignment.

 

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    Power of Attorney.  The shareholders of each of Beijing WoWo Tuan and Kai Yi Shi Dai signed irrevocable power of attorney to appoint Wowo Shijie as the attorney-in-fact to act on his behalf on all matters pertaining to Beijing WoWo Tuan and Kai Yi Shi Dai and to exercise all of his rights as a shareholder of Beijing WoWo Tuan and Kai Yi Shi Dai including the right to attend shareholders meeting, to exercise voting rights and to transfer all or a part of his equity interests therein pursuant to the exclusive call option agreements. The power of attorney with each shareholder expires when the shareholder ceases to hold any equity interests in Beijing WoWo Tuan and Kai Yi Shi Dai.

    Exclusive Call Option Agreements.  The shareholders of Beijing WoWo Tuan and Kai Yi Shi Dai entered into exclusive call option agreements with Wowo Shijie, pursuant to which Wowo Shijie has an exclusive option to purchase, or to designate other persons to purchase, to the extent permitted by applicable PRC laws, rules and regulations, all of the equity interest in Beijing WoWo Tuan and Kai Yi Shi Dai from the shareholders. The purchase price for the entire equity interest would be the minimum price permitted by applicable PRC laws, rules and regulations, unless otherwise required by PRC laws or agreed in writing by Wowo Shijie and the shareholders of the affiliated consolidated entities. The term of each exclusive call option agreement will be ten years, and can be extended upon the written confirmation by Wowo Shijie prior to the expiration of the agreement and the extended term may be determined by Wowo Shijie.

        We rely on the contractual arrangements described above to control and operate our businesses and the assets held by Beijing WoWo Tuan and the Kai Yi Shi Dai and their subsidiaries. These contractual arrangements are not the same as direct ownership and might not be effective in providing operational control of our business and assets. If Beijing WoWo Tuan and the Kai Yi Shi Dai or the shareholders fail to perform their respective obligations under these contractual arrangements, our ability to enforce the contractual arrangement that provides us an effective control over Beijing WoWo Tuan and the Kai Yi Shi Dai could be limited. Furthermore, if we were unable to maintain an effective control over Beijing WoWo Tuan and the Kai Yi Shi Dai, we would not be able to continue to consolidate the financial results of Beijing WoWo Tuan and the Kai Yi Shi Dai and their subsidiaries with ours. See "Risk Factors—Risks Related to Our Corporate Structure and Dependence on our Contractual Arrangements with our Affiliates—We rely on contractual arrangements with our consolidated affiliated entities in China and their shareholders for our operations, which might not be as effective as in direct ownership in providing operational control". Our Chairman and CEO, Mr. Maodong Xu, beneficially owns approximately 37.35% of our ordinary shares prior to this offering and will continue to own approximately                                of our ordinary shares after this offering. Mr. Xu, is also the shareholder of Beijing Wowo Tuan and Kai Yi Shi Dai. Notwithstanding that Mr. Xu is our single largest shareholder, his interest could differ from the interests of our company as a whole. See "Risk Factors—Risks Related to Our Corporate Structure and Dependence on our Contractual Arrangements with our Affiliates—The shareholder of Beijing Wowo Tuan, Mr. Maodong Xu could have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business could be adversely affected" and "—Any failure by our consolidated affiliated entities or their respective shareholders to perform their obligations under our contractual arrangements with them could have an adverse effect on our business".

Our Corporate Information

        Our principal offices are located at Third Floor, Chuangxin Building, No.18 Xinxi Road, Haidian District, Beijing, People's Republic of China. Our telephone number at this address is +8610 5906 5200 and our fax number is +8610 5906 5500. Our registered office in the Cayman Islands is at Offshore Incorporations (Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman KY1-1112, Cayman Islands. Our website is 55.com. The information contained on our website does not constitute a part of this prospectus.

 

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        Investor inquiries should be directed to us at the address and telephone number of our principal offices set forth above. Our agent for service of process in the United States is [Law Debenture Corporate Services Inc.]

Implications of Being an Emerging Growth Company

        As a company with less than US$1.0 billion in revenues for the last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Furthermore, we are not required to present selected financial information or any management's discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.

        We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the previous three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.


Conventions That Apply to This Prospectus

        In this prospectus, unless otherwise indicated or the context otherwise requires, references to:

    "we", "us", "our company", or "our" refers to Wowo Limited, its subsidiaries and consolidated affiliated entities;

    "ordinary shares" refer to, prior to the completion of this offering, our ordinary shares, par value US$0.00001 per share, and, after the completion of this offering, our ordinary shares, par value US$0.00001 per share;

    "ADS" refers to American depositary shares, each of which represents                ordinary shares;

    "China" or the "PRC" refers to the People's Republic of China excluding, for the purpose of this prospectus only, Hong Kong, Macau and Taiwan;

    "Renminbi" or "RMB" refers to the legal currency of China; and

    "$", "US$", "dollars" or "U.S. dollars" refers to the legal currency of the United States.

        Unless specifically indicated otherwise or unless the context otherwise requires, all references to our ordinary shares (i) assume no exercise by the underwriters of their option to purchase additional ADSs (ii) excludes options to purchase up to 29,889,914 of our ordinary shares outstanding as of the date of this prospectus.

        Our reporting and functional currency is U.S. dollar. This prospectus contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB6.0537 to $1.00, the noon buying rate on December 31, 2013 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On September 30, 2014, the noon buying rate for Renminbi was RMB 6.1380 to $1.00.

 

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THE OFFERING

Price per ADS

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

ADSs offered by us

 

            ADSs

ADSs outstanding immediately after this offering

 

            ADSs (or            ADSs if the underwriters exercise in full the over-allotment option).

Ordinary shares outstanding immediately prior to this offering

 

            ordinary shares.

Ordinary shares outstanding immediately after this offering

 

            ordinary shares (or            ordinary shares if the underwriters exercise in full the over-allotment option).

Over-allotment option

 

We have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to an aggregate of            additional ADSs at the initial public offering price, less underwriting discounts and commissions, solely for the purpose of covering over-allotments.

[Reserved ADSs

 

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

The ADSs

 

Each ADS represents            ordinary shares. The ADSs will be evidenced by American Depositary Receipts, or ADRs.

 

The depositary, [Citibank, N.A.], will be the holder of the ordinary shares represented by the ADSs and you will have the rights of an ADR holder as provided in the deposit agreement dated            , 2015 among us, the depositary and holders and beneficial owners of ADSs from time to time.

 

You may surrender your ADSs to the depositary to withdraw the ordinary shares represented by your ADSs. The depositary will charge you a fee for such an exchange.

 

We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.

 

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To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares". We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.

Use of proceeds

 

We anticipate using the net proceeds of this offering for general corporate purposes, including future operating losses and working capital needs by December 31, 2015. See "Use of Proceeds".

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of the risks relating to investing in our ADSs. You should carefully consider these risks before deciding to invest in our ADSs.

Listing

 

We have applied to list our ADSs on the Nasdaq Global Market under the symbol "WOWO". Our ordinary shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system.

Depositary

 

[Citibank, N.A.]

Lock-up

 

We, our directors, executive officers, existing shareholders and option holders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. See "Shares Eligible for Future Sale" and "Underwriting".

 

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following summary consolidated statements of operations for the years ended December 31, 2012 and 2013, and summary consolidated balance sheet data as of December 31, 2012 and 2013, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of operations and summary consolidated statements of cash flow data presented below for the nine-month periods ended September 30, 2013 and 2014 and the summary consolidated balance sheet data as of September 30, 2014 have been derived from the unaudited condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements and include all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for the period presented. The summary consolidated statements of operations and balance sheet data for the year ended and as of December 31, 2011 are derived from our audited financial statements not included in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial Data section together with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

 
  For the year ended December 31,   For the nine months
ended September 30,
 
 
  2011   2012   2013   2013   2014  
 
  (US$ in thousands, except share and share related data)
 

Summary consolidated statements of operations data

                               

Net revenues

    11,540     27,815     36,253     27,633     20,642  

Cost of revenues

    5,986     7,185     6,583     4,739     5,516  
                       

Gross profit

    5,554     20,630     29,670     22,894     15,126  
                       

Operating expenses:

                               

Marketing

    36,092     12,487     10,426     8,077     8,719  

Selling, general and administrative

    60,498     47,010     49,280     35,825     38,697  

Impairment of intangible assets

            2,035          
                       

Total operating expenses

    96,590     59,497     61,741     43,902     47,416  
                       

Loss from operations

    (91,036 )   (38,867 )   (32,071 )   (21,008 )   (32,290 )
                       

Interest income

    77     21     44     43     6  

Interest expense

    (166 )   (224 )   (137 )   (107 )   (12 )

Other income/(expense), net

    410     20     (89 )   (55 )   (151 )

Gain (loss) from disposal of VIE and VIE's subsidiaries

    266     (29 )            
                       

Loss before provision for income taxes

    (90,449 )   (39,079 )   (32,253 )   (21,127 )   (32,447 )

Provision for income tax benefits

    (60 )   (69 )   (81 )   6      
                       

Net loss

    (90,389 )   (39,010 )   (32,172 )   (21,121 )   (32,447 )
                       
                       

Less: net loss attributable to noncontrolling interests

    (422 )                

Net loss attributable to Wowo Limited

    (89,967 )   (39,010 )   (32,172 )   (21,121 )   (32,447 )
                       

Accretion for Series A-1 convertible redeemable preferred shares

    553     289     1,199     878     1,058  

Accretion for Series A-2 convertible redeemable preferred shares

    4,040     15,748     34,336     24,425     36,443  

Accretion for Series B convertible redeemable preferred shares

        1,544     2,106     1,552     1,785  
                       

Net loss attributable to holders of ordinary shares of Wowo Limited

    (94,560 )   (56,591 )   (69,813 )   (47,976 )   (71,733 )
                       

Net loss per ordinary share:

                               

Basic

    (0.30 )   (0.18 )   (0.23 )   (0.16 )   (0.24 )

Diluted

    (0.30 )   (0.18 )   (0.23 )   (0.16 )   (0.24 )

Net income per Series A-1 convertible redeemable preferred shares—Basic

    0.13     0.03     0.10     0.07     0.09  

Net income per Series A-2 convertible redeemable preferred shares—Basic

    0.14     0.14     0.28     0.20     0.30  

Net income per Series B convertible redeemable preferred shares—Basic

    N/A     0.06     0.07     0.05     0.06  

Shares used in computation of net loss per ordinary share:

                               

Basic

    319,927,791     310,188,010     303,886,640     303,886,640     303,886,640  

Diluted

    319,927,791     310,188,010     303,886,640     303,886,640     303,886,640  

Shares used in computation of net income per Series A-1 convertible redeemable preferred share

    4,105,923     11,151,244     12,202,988     12,202,988     12,202,988  

Shares used in computation of net income per Series A-2 convertible redeemable preferred share

    28,930,139     110,937,536     122,029,877     122,029,877     122,029,877  

Shares used in computation of net income per Series B convertible redeemable preferred share

    N/A     25,659,708     30,507,471     30,507,471     30,507,471  

 

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  As of September 30, 2014  
 
  As of December 31,  
 
   
  Unaudited
pro forma(1)
  Pro forma
as adjusted(2)
 
 
  2011   2012   2013   Actual  
 
  (US$ in thousands)
 

Summary consolidated balance sheet data

                                     

Total current assets

    20,843     11,753     11,640     10,309     10,309        

Total assets

    38,323     26,991     23,375     20,782     20,782        

Total current liabilities

    53,324     67,297     96,425     123,754     70,080        

Total liabilities

    53,484     67,387     96,425     123,754     70,080        

Total deficit

    (74,544 )   (86,594 )   (156,889 )   (226,097 )   (49,298 )      

Total liabilities, mezzanine equity and deficit

    38,323     26,991     23,375     20,782     20,782        

Notes:

(1)
The consolidated balance sheet data as of September 30, 2014 are adjusted on a unaudited pro forma basis to give effect to the automatic conversion of all of our outstanding series A-1, series A-2 and series B preferred shares into 164,740,336 ordinary shares and all indebtedness owed to Mr. Xu at IPO price upon the completion of this offering.

(2)
The consolidated balance sheet data as of September 30, 2014 are adjusted on a unaudited pro forma as adjusted basis to give effect to (i) the automatic conversion of all of our outstanding series A-1, series A-2 and series B preferred shares into 164,740,336 ordinary shares and all indebtedness owed to Mr. Xu at IPO price upon the completion of this offering and (ii) the sale of ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$                  per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, assuming the underwriters do not exercise the over-allotment option.

 

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        The following operating metrics are derived from our operating database:

 
  As of or for the three months ended,  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 30,
2013
  December 31,
2013
  March 31,
2014
  June 30,
2014
  September 30,
2014
 

Operating Metrics

                                                                   

Number of merchant clients(1)

    35,194     34,299     41,082     43,982     45,051     56,676     69,851     76,910     77,355     92,002     105,430  

Number of merchant clients with an active online store during the quarter(2)

    2,075     8,185     23,358     29,346     32,588     43,442     55,065     60,306     57,862     63,134     70,417  

Number of service offerings(3)

    74,348     87,254     107,239     142,827     156,777     203,681     261,662     295,108     302,547     366,659     430,473  

Number of installed WoWo Mall Apps(4)

    101,419     1,034,706     2,359,908     3,811,820     5,588,879     7,163,276     8,872,398     10,426,455     12,484,304     14,511,022     17,294,932  

Notes:

(1)
Number of merchant clients reflects the number of total merchant clients, which includes number of merchant clients that have opened a storefront in our WoWo Mall as well as merchant clients that have only participated in our group buy/flash sale channel without opening a storefront in our WoWo Mall, that have made a sale during the given period.

(2)
Number of merchant clients with an active online store during the quarter reflects the number of merchant clients who has an active online store in our WoWo Mall at any time during the given period, no matter if the online store is still opened at the end of the given period. A merchant client may open more than one online store. Typically for a franchised merchant, the entire franchise may open only one online store though it may have multiple brick and mortar stores.

(3)
Number of service offerings reflects the variety of service offerings provided by our merchant clients that our customers may view and purchase in our group buy/flash sale channel and online stores in our WoWo Mall during a given period.

(4)
Number of installed WoWo Apps reflects the number of WoWo Mobile Apps the retail consumers have downloaded and installed on their smart phones or mobile devices since the commencement of our mobile commerce operation in the end of 2011 to a specific date.

 

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RISK FACTORS

        Investing in our ADSs involves a high degree of risk. You should carefully consider the following risk factors that we have identified and all other information contained in this prospectus before purchasing our ADSs. If any of the following risks occur, our business, financial condition or results of operations could be adversely affected. In that case, the trading price of our ADSs could decline, and you could lose some or all of your investment.

Risks Relating to Our Business and Industry

We have a limited operating history and our business model is subject to uncertainties, which makes it difficult to evaluate our business.

        We launched our group buying services in March 2010 and augmented it with our new WoWo Mall services in June 2012. We have a limited operating history and a relatively new business model in an emerging and rapidly evolving market. This makes it difficult for you to evaluate our business, financial performance and prospects, and our historical growth rate might not be indicative of our future performance. Although we have achieved significant revenue growth since our inception, we cannot assure you that we will be able to achieve similar growth in the future. Moreover, a portion of such growth was achieved through acquisition of selected local group buying/flash sale service providers in second-, third- and fourth-tier cities in China in 2010. We do not plan to continue our growth through similar acquisition strategy in the future and we cannot assure you that the acquired local group buying/flash sale businesses will grow as quickly as we have planned. In addition, the business model of building a third-party e-commerce platform dedicated to location-based, entertainment and lifestyle service providers such as restaurants, movie theaters and beauty salons, is still a new business model in China. Although we have experienced substantial growth since our inception in early 2010, given our limited history it is difficult to predict if the growth will be sustainable in the future, and the market might evolve in ways that are difficult to anticipate. You should consider our prospects in light of the risks and uncertainties that fast-growing companies in a rapidly evolving market might encounter. These risks and difficulties include, but are not limited to:

    a new and relatively unproven business model;

    our ability to anticipate and adapt to a developing market and industry;

    our need to achieve greater brand recognition;

    our ability to attract sufficient merchant clients and retail customers, and generate sufficient net sales or cash flow;

    market acceptance of our business model;

    difficulties in managing rapid growth in personnel and operations;

    high expenditures associated with our geographic expansion, brand promotion and marketing activities; and

    our ability to compete in the market.

        We cannot be certain that our business strategy will be successful or that we will successfully address these risks. Our failure to address any of the risks described above could have adverse effect on our business, financial condition and results of operations.

We have never been profitable and expect to continue to incur losses in the future.

        We incurred net loss in the amount of US$39.0 million, US$32.2 million and US$32.4 million for the years ended December 31, 2012 and 2013, and for the nine months ended September 30, 2014, respectively, primarily due to the significant expenses incurred to achieve our current economy of scale and build our platform. Although we expect our net loss to decrease as a percentage of our total net

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revenues, as we continue to expand and develop, we expect to continue to incur losses in the near future.

        In addition, our total current liabilities exceed our total current assets by US$113.4 million as of September 30, 2014. We have incurred net losses and experienced negative cash flow from operating activities since our inception. We anticipate that we will incur additional $20 million negative cash flow from operating activities until December 31, 2015.

        Mr. Xu has provided interest-free funds of US$62.6 million to support our working capital needs as of January 7, 2015. We will convert all of our outstanding indebtedness owe to Mr. Xu to additional ordinary shares to be issued to him, or his designees, at our initial offering price upon the closing of this offering. We are obligated to repay the loans from Mr. Xu when it falls due if this offering is not successful. If Mr. Xu fails to provide adequate funds to enable us to meet our financial obligations and we are not able to obtain additional funding in sufficient amount or on terms acceptable to us when needed, we may have to significantly delay, scale back or discontinue certain portion of our operations. Any of these events could significantly harm our business, financial condition and prospects. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

We have spent substantial amounts in operating expenses and could require additional funding in the future.

        Our operations have consumed substantial amounts of cash since our inception. We expect to continue to spend additional amounts in operating expenses in line with our projected growth. We estimate that our net proceeds from this offering will be approximately US$             million, based upon an assumed initial public offering price of US$            per ADS, the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We expect that our existing cash balances and the commitment for future financial support obtained from our Chairman and CEO, Maodong Xu, will be sufficient to fund our capital requirements for at least the next 12 months. However, we may require additional cash due to changing business conditions or other future development, including any investments we may decide to pursue. We cannot be certain that additional funding will be available to us on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us when needed, we may have to significantly delay, scale back or discontinue certain portion of our operations. Any of these events could significantly harm our business, financial condition and prospects.

We operate in an intensely competitive environment, which could lead to declining revenue growth or other circumstances that could negatively affect our business, financial condition and results of operations.

        The e-commerce industry in China is highly competitive due to a number of factors, such as the relatively low barriers to entry, the continued growth of e-commerce in China and the growing acceptance of online shopping by Chinese Internet users that has resulted in a large number of e-commerce players. Many major Chinese portal, social network and e-commerce websites such as taobao.com also offer e-commerce for local services, including. restaurant pre-order and takeaway dining services. Major Chinese social network sites have also started to offer group buying/flash sale services and e-commerce for local services, which could pose significant competition to our business, given the usually large user base of such social network sites and the synergy of the business models between social network, group buying/flash sale services and e-commerce for local services. In addition, certain specialized Internet websites offer e-commerce for local services by specific service providers, such as those in the restaurants industry, that could directly or indirectly compete with our business and our merchant clients. Some of our competitors invest significant capital and human resources in advertisements and promotions, which could potentially dilute our brand recognition and affect our customer base. Our competitors may also offer similar offerings at lower prices than we do or with

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packages more attractive than ours. In addition, certain competitors may be willing to offer retail packages to consumers or e-commerce service packages to local service merchants that generate low or negative gross margins in an effort to increase market share. Some of these e-commerce websites have longer operating histories, greater financial, marketing and other resources and larger customer bases than we do. Such competitors may leverage their resources and existing customer base to quickly increase their market shares. The Chinese e-commerce industry has been going through a consolidation phase due to intense competition and as a result, many e-commerce service providers that cannot adapt quickly did not or will not survive the market evolvement. See "Our Business—Competition". If we are not able to respond to the change in market conditions or customer preferences, or if we fail to successfully execute our business strategy, our business, financial condition and results of operations could be adversely affected.

The economy of China in general and the online service industry in particular might not grow as quickly as expected, which could adversely affect our revenues and business prospects.

        Our business and prospects depend on the continuing development and expansion of the e-commerce and mobile commerce industries in China, which in turn depends upon the continuing growth of the economy of China in general and the local, entertainment and lifestyle service providers, such as restaurants, movie theaters and beauty salons, in particular. Both the e-commerce for local services industry and group buying/flash sale industry in China have experienced substantial growth in recent years in terms of number of customers and revenues. We cannot assure you, however, that e-commerce for local services will continue to grow at the same pace as in the past. Growth is affected by numerous factors, such as regulatory changes, public perception of and receptiveness towards the e-commerce for local services industry, customers' general online purchasing experiences, technological innovations, development of Internet and Internet-based services, and the macroeconomic environment. Moreover, concerns about fraud, privacy and other problems could discourage additional merchant clients and retail consumers from adopting e-commerce and mobile commerce. If the e-commerce for local services industry in China does not grow as quickly as expected, both our merchant client base and our retail customer base could decrease and our business and prospects could be adversely affected.

If we fail to retain existing merchant clients or attract new merchant clients, our business, financial conditions and results of operations could be adversely affected.

        We depend on our merchant clients to provide location-based, entertainment and lifestyle services that draw retail consumers to our website. We have a large number of merchant service representatives who maintain cooperative relationships with existing merchant clients and identify and form new relationships with other local merchants on an ongoing basis. We are in the process of converting many local merchant clients that historically have provided goods and services for group buying/flash sales on a deal-by-deal basis to long term business partners with a storefront in our WoWo Mall. Our ability to retain existing merchant clients and to attract or convert new local merchants to our platform service offering is crucial to our ability to offer attractive and diversified e-commerce opportunities for local services to the retail consumers on a continuous basis. However, our merchant clients may find our services no longer suitable to their business operations due to a number of factors, such as changing market conditions, changing business goals of the merchant clients, or other factors that are out of our control, which could prevent us from designing and promoting a marketing campaign suitable for such merchant client. If existing merchant clients find our services to be ineffective or not tailored to their needs, they may decide not to continue their cooperation with us. Existing merchant clients may also switch to our competitors who offer better services or more attractive pricing terms. On the other hand, we might not succeed in our efforts to secure new business arrangements with local merchants due to a number of factors, such as lack of access to the local merchants' desired customer base, or inability to offer brand building campaigns that are acceptable to the local businesses. If we are not able to retain

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and expand our local merchant client base, the number and variety of service offerings we are able to offer our customer and storefronts in the WoWo Mall could decrease, which, as a result, could also adversely affect our business, financial conditions and results of operations.

We might not be able to maintain and improve the network effects of our merchant and customer bases, which could negatively affect our business and prospects.

        Our ability to maintain a strong network effect, generated by the usage of our platform by our large merchant client and retail customer base, is critical to our success. The extent to which we are able to maintain and strengthen this network depends on our ability to:

    offer a secure and open platform for all of our merchant clients and retail customers;

    provide tools and services that meet the evolving needs of merchants and consumers;

    provide a wide range of high-quality service categories and offerings to retail consumers;

    provide merchants with a high level of traffic flow with strong commercial intent and effective online marketing services;

    enhance the attractiveness of our mobile commerce platform;

    arrange secure and trusted payment settlement;

    maintain the quality of our merchant client services and retail customer services; and

    continue to adapt to the changing demands of the market.

        In addition, changes we make to enhance and improve our network and balance the needs and interests of the various merchants and consumers might not be viewed positively from every merchant and consumer. If we fail to balance the interests of our merchant clients and retail customers, certain customer could stop visiting our marketplaces, conduct fewer transactions or use alternative platforms, any of which could result in a material decrease in our revenue and net income.

Our operating philosophy and interest in maintaining a strong network effect could negatively influence our short-term financial performance.

        Consistent with our operating philosophy and focus on the long-term interests of our merchant clients, we may take actions that fail to generate short-term financial results and we cannot assure you that these actions will produce long-term benefits. For example, in order to focus on creating a thriving marketplace, we currently charge storefront fees only to certain small- and medium-sized local lifestyle service providers and we plan to enlarge the category of paying merchant clients to larger or higher revenue merchants only when this business model have gained a wide base acceptance. Our efforts relating to our mobile platform have also emphasized on building the brand recognition of individual merchants, rather than the entire WoWo Mall network. We focus on sourcing local consumers to local merchants for repeat visits and brand loyalty over immediate financial gain. We also make investments in new categories of services and offerings that might not provide economic benefits to us in the short-term or at all.

If Internet search engines' ranking methodologies are modified or our search result page rankings declines, our user traffic could decrease.

        We depend in part on various Internet companies in China, such as baidu.com, to direct traffic to our website. Our ability to maintain and increase the number of visitors directed to our website is not entirely within our control. Our competitors' search engine optimization efforts could result in their websites receiving a higher search result page ranking than ours, or Internet companies could revise their methodologies in an attempt to improve their search results, which could adversely affect the placement of our search result page ranking. If Internet companies modify their search algorithms in

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ways that are detrimental to our subscriber growth or in ways that make it harder for retail consumers to find our website, or if our competitors' search engine optimization efforts are more successful than ours, our overall growth in user traffic could slowdown or decrease, and we could lose existing customers. Our website has experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future. Any reduction in the number of visitors directed to our website could harm our business, financial condition and results of operations.

User behavior on smart phones and mobile devices is rapidly evolving, and if we fail to successfully adapt to these changes, our competitiveness and market position could suffer.

        Chinese consumers are increasingly using smart phones and mobile devices for a wide range of purposes, including purchasing local services. While a significant and growing portion of China's consumers are accessing our platform through mobile devices, this area of connectivity is still relatively new and developing and we might not be able to continue to increase the level of mobile access to and engagement on our WoWo Mall. The variety of technical and other configurations across different smart phones, mobile devices and platforms increase the challenges associated with this environment. Our ability to successfully expand the use of smart phones and mobile devices to access our platform is affected by the following factors:

    our ability to continue to provide compelling e-commerce platforms and tools in a multi-device environment;

    the quality of our mobile commerce offerings and mobile-based payment services;

    our ability to successfully deploy apps on popular mobile operating systems that we do not control, such as Android and iOS;

    our ability to adapt to the device standards used by third-party manufacturers and distributors; and

    the attractiveness of alternative platforms.

        If we are unable to attract significant numbers of new mobile customers and increase levels of mobile engagement, our ability to maintain or grow our business could be adversely affected.

We might not be able to successfully monetize traffic on our mobile commerce platform, which could have an adverse effect on our business.

        An increasing percentage of our users are accessing our WoWo Mall through smart phones and mobile devices, a trend that we expect to continue. Our ability to monetize our mobile user traffic through our WoWo Mobile infrastructure is critical to our business and our growth. We face a number of challenges to successfully monetizing our mobile user traffic, including:

    providing branding services for our merchant clients in a compelling and effective manner on smart phones and mobile devices;

    developing alternative sources of revenue generated from mobile access to our platforms;

    offering a comprehensive user experience on our WoWo Apps and WoWo Merchant Apps; and

    ensuring that the mobile services we provide are secure and trusted.

        If we are unable to monetize that increased use of smart phones and mobile devices for mobile commerce use, our business might not grow or could even decline, and our revenues and net income could reduce. For instance, to date we have chosen not to display as many marketing impressions on our WoWo Apps and WoWo Merchant Apps as compared to on our personal computer-based websites due to the limited screen size of the smart phones and mobile devices. Although we do not believe the increasing use of mobile devices to conduct commerce has had an adverse effect on our business, our rapid overall growth could make less apparent any adverse effects of this trend on our near-term

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financial performance. Going forward we believe our financial results will become increasingly dependent on our ability to monetize the use of smart phones and mobile devices to access our platform. We expect this trend will have a greater effect on our business to the extent that shopping on smart phones and mobile devices displaces transactions that could otherwise have occurred on personal computers.

If we are not able to continue to innovate or if we fail to adapt to changes in our industry, our business, financial condition and results of operations could be adversely affected.

        The Internet industry is characterized by rapidly changing technology, evolving industry standards, new service and product introductions and changing customer demands. Furthermore, our competitors are constantly developing innovations in Internet search, online marketing, communications, social networking and other services to enhance users' online experience. We continue to invest significant resources in our infrastructure, research and development and other areas in order to enhance our platform technology and our existing products and services as well as to introduce new high quality products and services that will attract more local merchants and retail consumers to our platform. The changes and developments taking place in our industry could also require us to re-evaluate our business model and adopt significant changes to our long-term strategies and business plan. Our failure to innovate and adapt to these changes could have an adverse effect on our business, financial condition and results of operations.

Our quality control might not always be sufficient to review the goods and services our merchant clients offer to the retail customers, which could result in the need for refunds or replacements and could affect our profits and brand.

        We create, promote and help operate online storefronts in our WoWo Mall in collaboration with our merchant clients. Once the retail customers purchase the goods or services from our website, we rely on our merchant clients to provide such goods and services to the retail customers. Any customer dissatisfaction resulting from poor quality of goods or services provided by our merchant clients could have an adverse effect on our reputation or revenue, if customers make claims publicly. Many of our merchant clients are small local business operators that lack the necessary resources for adequate quality control. Moreover, when we create an online storefront in our WoWo Mall for our merchant clients, we and our merchant clients might not always accurately estimate the merchant clients' inventories or service capacity, which could lead to overselling goods and services and result in the local merchants' failure to provide quality goods or services. Our business depends on our ability to ensure that high quality goods and services are provided to consumers on a consistent basis. This has placed, and will continue to place, substantial demands on our operational, technological and other resources. We cannot assure you that such measures will always be sufficient in discovering and remedying merchandise defects or service shortcomings, some of which are out of our control. If customers are not satisfied with the goods and services and request a large amount of refunds or replacement of goods, it could adversely affect our cash flows, financial conditions and results of operations. In addition, as we expand the types of goods and services for which we offer, the operational cost of quality control will also likely increase, which will have a negative effect on our profits.

If we are forced to offer a more favorable or accelerated payment scheme to our merchant clients, our operating cash flow and results of operations could be adversely affected.

        Currently, we generate a substantial portion of our revenues as commission from the sales of WoWo Coupons to the retail customers, which amounts to 72.5% and 64.7% of our net revenue in 2013 and the nine months ended September 30, 2014, respectfully. We collect cash upfront when the retail customers purchase WoWo Coupons, and we make payments to the merchant clients who provide the goods or services for which the coupons are redeemed on later dates and in several installments, usually proportional to the ratio of the redeemed WoWo Coupons as to the total number of WoWo

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Coupons sold. We leverage the operating cash inflows provided by the payments received from the retail customers to fund our working capital needs. If we are forced to offer a more favorable or accelerated payment scheme to our merchant clients as a result of a shift in market practice or an increase in the bargaining power of our merchant clients, our operating cash flow and results of operations could be adversely affected and we would have to seek alternative financing to fund our working capital needs.

An increase in our refunds to the retail customers could adversely affect our liquidity and profitability.

        To enhance our customers' satisfaction and service quality, we offer immediate refunds, if the customer is not satisfied with the goods or services provided as specified on such WoWo Coupon, or within 20 days after expiration if the WoWo Coupon had not been redeemed upon expiration. Retail customers can contact our call center for a refund request. After we grant a refund to a customer, we typically claim reimbursements from the merchant client who provided the goods or services pursuant to our contractual arrangement with such merchant client, but we cannot guarantee that we will always be reimbursed in full, or at all. In addition, our standard agreements with our merchant clients generally limit the time period during which we can claim reimbursement of refunds we pay to our customers. The continued growth of business and the increased number of our merchant clients put a high demand on our service and merchandise quality control. If we are not able to scale our quality control operations correspondingly we could incur a higher refund expense as a result, which would have an adverse effect on our liquidity and profitability.

We might not be able to successfully expand the types of goods and services available on our WoWo Mall, which could adversely affect our business, financial conditions and results of operations.

        We currently organize our service offerings into verticals in the WoWo Mall, namely, restaurants, movies and entertainment, hotels and travel, beauty and health, and lifestyle and household services, as well as retail goods. We intend to continue to increase the variety of goods and services in each vertical, as well as add new service categories to better characterize and manage our offerings and enhance customer purchase experience. We would need to make substantial investments in connection with such efforts. We could also face greater competition in specific categories from other e-commerce service providers that are more focused on such categories. In addition, we need to make investments in quality control and after-sale services for new categories of goods and services and such investments could be significant or even exceed our budget. If the launch of a new category requires investments greater than we expect, or if we are unable to offer enough goods and services that are of high quality, value and variety or if the revenue generated from a new category grows more slowly or produces lower gross profits than we expect, our business, financial condition and results of operations could be adversely affected.

The development and launch of new services or new technologies might not be achieved in a timely manner or at all and such services or technologies might not be successful.

        Our success in attracting new merchant clients and retail customers and retaining existing merchant clients and retail customers depends partly on our ability to consistently develop and launch new and innovative services and technologies. Although we will continue to focus on research and development going forward, we cannot assure you that we will continue to be able to upgrade the technology required to maintain our leading position in, or to keep up-to-date with, developments across the e-commerce industry and to launch such services or new technologies in a timely manner or at all. New technologies and software are also less likely to be reliable, robust and resistant to viruses or failure. Given the fast growth of the e-commerce industry, we might not have enough time to fully test the new technologies and software we develop before we deploy them on our website, which could cause service problems and a negative customer experience. We are developing and upgrading a number of new services and technologies, such as our mobile device applications, WoWo Mobile App

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and WoWo Merchant App, and our proprietary electronic management system, WoWo EMS, as well as continue to fine-tune our WoWo Mall websites and introduce more features and functions for location-based marketing, to enhance the customer experience and facilitate access to and usage of our services. There is no guarantee such new services and technologies will achieve their desired effect of retaining existing and attracting new merchants and consumers, or generating sufficient revenue or other value to justify our investment, and as a result our business, financial conditions and results of operations could be adversely affected.

        Moreover, the applications we developed for mobile devices, WoWo Mobile App and WoWo Merchant App, might not be able to gain wide adoption as we expect. Compared with personal computer, smart phones and mobile devices typically have lower screen resolution, less memory and more limited functionality, which makes the access to our services through such devices relatively difficult, especially for displaying coupon images and descriptions that are designed primarily for online distribution. If we are unable to attract and retain a substantial number of mobile device consumers to our services or if we are slow to develop services and technologies that are more compatible with smart phones and mobile devices relative to our competitors, we could fail to capture a significant share of new retail consumers or lose our existing customers who switch to mobile Internet devices for their purchases.

The successful operation of our business depends upon the performance and reliability of the Internet and mobile telecommunications infrastructures in China.

        Our business depends on the performance and reliability of the Internet and mobile telecommunications infrastructures in China. Almost all access to the Internet is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology of China. In addition, the national networks in China are connected to the Internet through state-owned international gateways, which are the only channels through which a domestic user can connect to the Internet outside of China. We might not have access to alternative networks in the event of disruptions, failures or other problems with China's Internet infrastructure. In addition, the Internet infrastructure in China might not support the demands associated with continued growth in Internet usage.

        The failure of telecommunications network operators to provide us with the requisite bandwidth could also interfere with the speed and availability of our websites. We have no control over the costs of the services provided by the national telecommunications operators. If the prices that we pay for telecommunications and Internet services rise significantly, or if the telecommunication network in China is disrupted or failed, our gross margins could be adversely affected. Technical limitations on Internet use could also be developed or implemented. For example, restrictions could be implemented on personal Internet use in the workplace in general or access to our website in particular. This could lead to a reduction of customers' activities or a loss of customers altogether, which in turn could have an adverse effect on our financial position and results of operations. In addition, if Internet access fees or other charges to Internet users increase, our user traffic might decrease, which in turn could significantly decrease our revenues.

Our own information technology systems and infrastructure could fail or be subject to disruption.

        Our platform depends on the efficient and uninterrupted operation of our computer and communications systems. Substantially all of our computer hardware and our cloud computing services are currently located in China. In addition, a large number of merchants maintain their customer relationship management systems on our web-based computing platform, WoWo EMS, which contains substantial quantities of data relating to their accounts, transaction data, customer information and other data that enables merchants to operate and manage their online stores. Although we have prepared for contingencies through redundancy measures and disaster recovery plans, such preparation

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might not be sufficient and we do not carry business interruption insurance. Despite any precautions we take, the occurrence of a natural disaster, such as an earthquake, flood or fire, or other unanticipated problems at our facilities in China, including power outages, telecommunications delays or failures, break-ins to our systems or computer viruses, could result in delays or interruptions to our WoWo Mall website or other portion of our platform, loss of our and our merchant clients' data and business interruption for us and our merchant clients. Any of these events could damage our reputation, significantly disrupt our operations and the operations of the merchants and subject us to liability, which could adversely affect our business, financial condition and results of operations.

        Security breaches and attacks against our systems and network, and any potentially resulting breach or failure to otherwise protect confidential and proprietary information could damage our reputation and negatively impact our business, as well as adversely affect our business, reputation, financial condition and results of operations.

        Although we have employed significant resources to develop our security measures against breaches, our cyber security measures might not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that could jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain. Breaches of our cyber security measures could result in unauthorized access to our systems, misappropriation of information or data, deletion or modification of client or customer information, or a denial-of-service or other interruption to our business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently and might not be known until launched against us or our third-party service providers, such as our online payment processors, we might not be able to anticipate, or implement adequate measures to protect against, these attacks.

        We have in the past and are likely again in the future to be subject to these types of attacks, although to date no such attack has resulted in any material damages or remediation costs. If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liability, our reputation could be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. We might not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks could target us, our merchant clients, our customers, third-party service providers, such as our online payment processors, or the communication infrastructure on which we depend. Actual or anticipated attacks and risks might cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. Cyber security breaches would not only harm our reputation and business, but also could decrease our revenue and net income.

Our business generates and processes a large amount of data, and the improper use or disclosure of such data could harm our reputation as well as have an adverse effect on our business and prospects.

        Our platform generates and processes a large quantity of transaction, demographic and behavioral data. We face risks inherent in handling large volumes of data and in protecting the security of such data. In particular, we face a number of challenges relating to data from transactions and other activities on our platform, including:

    protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior by our employees;

    addressing concerns related to privacy and sharing, safety, security and other factors; and

    complying with applicable laws, rules and regulations relating to the collection, use, disclosure or security of personal information, including any requests from regulatory and government authorities relating to such data.

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        We process personal data of our retail customers (including name, address, age, bank details and purchase history) as part of our business and therefore must comply with data protection laws in China. Data protection laws restrict our ability to collect and use personal information relating to existing customers and potential customers. Any systems failure or security breach or lapse that results in the release of user data could harm our reputation and brand and, consequently, our business, in addition to exposing us to potential legal liability. Our privacy policies and practices concerning the collection, use and disclosure of user data are posted on our websites. Any failure, or perceived failure, by us, or any of the third party service providers on which we rely fail to transmit customer information and payment details online in a secure manner, to comply with our posted privacy policies or with any regulatory requirements or privacy protection-related laws, rules and regulations could result in proceedings or actions against us by governmental entities or others. These proceedings or actions could subject us to significant penalties and negative publicity, require us to change our business practices, increase our costs and severely disrupt our business.

Any restrictions on the sending of email or messages or a decrease in customer willingness to receive deals and updates through messages could adversely affect our revenue and business.

        We offer our retail customers an option to receive deals and updates through email and other messaging services. Goods and services purchased as a result of email and other messages sent by us, generate a portion of our revenue. In addition, we rely on email and other messaging services to implement the location-based customer sourcing for our merchant clients. If we are unable to successfully deliver email or other messages to our retail customers or potential customers, or if our retail customers decline to open our email or other messages, our revenue and profitability could be adversely affected. Actions by third parties to block, impose restrictions on, or charge for the delivery of emails or other messages could also adversely affect our business. From time to time, Internet service providers block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver email or other messages to third parties. In addition, our use of email and other messaging services to send communications about our website or other matters could result in legal claims against us, which, if successful, could limit or prohibit our ability to send emails or other messages. Any disruption or restriction on the distribution of email or other messages or any increase in the associated costs could adversely affect our revenues and profitability.

We rely on third parties online payment processors; and any disruption to the provision of these services to us could adversely affect our business and results of operations.

        We rely on third parties online payment processors to provide payment processing services, including the processing of credit cards and debit cards. Retail customers can make purchases through all major online payment systems in China, including Alipay, Unionpay, Tenpay and Chinabank Payments. Each online payment system provide payment processing services to us and we pay service fees pursuant to our agreements with the payment system operators. Typically the term of each of these agreements is one year, and would be automatically renewed for a term of one year unless otherwise requested by payment system operator or us in writing within one month prior to the expiration date. Our business could be disrupted if any of these online payment system operators becomes unwilling or unable to provide payment processing services to us, and we could incur additional cost as we seek alternative payment processing service providers. Moreover, the third-party online payment processors could fail to obtain, maintain or renew their required qualifications, which could result in disruption in their services to us.

        For all the online payment transactions, secured transmission of confidential information, such as customers' credit card numbers and expiration dates, personal information and billing addresses, over public networks is essential to maintain customers' confidence in us. Our current security measures and those of the third parties online payment processors might not be adequate. We must be prepared to

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increase and enhance our security measures and efforts so that local merchants and retail consumers have confidence in the reliability of the online payment systems that we use, which will impose additional costs and expenses and might still not guarantee complete security. In addition, we do not have control over the security measures implemented by our third-party payment processors. Security breaches of the online payment systems that we use could expose us to litigation and possible liability for failing to secure confidential customer information and could, among other things, damage our reputation and the perceived security of the online payment systems that we use.

        In addition, we may in the future increase the variety of payment methods accepted on our website. As we offer new payment options to retail customers, we could be subject to additional regulations and compliance requirements. We pay intercharge and other fees to third-party payment channels, which would increase over time and raise our operating costs and lower profitability.

Strategic acquisitions could have an adverse effect on our business, financial conditions and results of operations.

        As part of our strategy to enhance our local presence, between January to April 2010, Beijing Wowo Tuan entered into agreements with 21 local group buying/flash sale service providers in second- and third-tier cities in China to establish new companies in which Beijing Wowo Tuan holds controlling equity interests or to acquire such local group buying/flash sale service providers' businesses. We formulate the overall business strategy for these newly established companies or acquired businesses, while the local service providers manage the daily operations in their respective cities. As a result, we had operations in 150 cities and population centers across China, as of September 30, 2014, with localized management, sales, operations and execution teams in each city. As a result of the acquisitions and the increase in our workforce, we anticipate our operating expenses to increase accordingly, which could have an adverse effect on our financial condition and results of operations.

        We cannot assure you that we can achieve the intended business and revenue growth through our strategic acquisitions. Newly formed companies that became our consolidated affiliated entities might not achieve the financial results we expect. Acquisitions of controlling equity interests and the subsequent integration of the newly formed consolidated affiliated entities into our business network require significant attention from our management and could result in a diversion of resources from our existing business, which in turn would have an adverse effect on our business, financial conditions and results of operations.

The success of our business depends on our ability to maintain and enhance our reputation and brand.

        We believe that our reputation among the local merchants and retail consumers as a quality e-commerce platform for local services and our "WoWo" brand is of significant importance to the success of our business. A well-recognized brand is critical to increasing our customer base and, in turn, increasing our revenue. Since the e-commerce industry is highly competitive, our ability to remain competitive depends to a large extent on our ability to maintain and enhance our reputation and brand, which could be difficult and expensive. To maintain and enhance our reputation and brand, we need to successfully manage many aspects of our business, such as:

    cost-effective market campaigns to increase brand recognition and awareness in a highly competitive market;

    our ability to deliver highly-valued services on a continuous basis; and

    effective quality control of goods and services provided to the retail customers by our merchant clients.

        We have conducted, and will continue to conduct, various marketing and brand promotion activities. We cannot assure you, however, that these activities will be successful and achieve the brand

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promotion goals we expect. If we fail to maintain and enhance our reputation and brand, or if we incur excessive expenses in our efforts to do so, our business, financial conditions and results of operations could be adversely affected.

Negative publicity on the group buying industry could adversely affect our business.

        The success of our business depends on the continued growth of public acceptance of the e-commerce platform for local services. We began our business as a group buying website under the brand "WoWo Buy" in March 2010 and our platform is still being associated with the group buying/flash sale industry. The group buying/flash sale industry in China has received certain negative publicity of customer dissatisfaction since its inception due to poor quality of goods and services offered by certain group buying/flash sale service providers, partially attributable to its exponential growth and the substantial number of new market entrants. The group buying/flash sale industry in China has been going through a consolidation phase due to intense competition and as a result, many group buying/flash sale service providers that cannot adapt quickly did not or will not survive the market evolution. Market share has been converging to a limited number of primary e-commerce service providers. The overall quality of group buying/flash sale services is expected to increase as a result, which could in turn enhance the public image and acceptance of the group buying industry. However, there is no guarantee such market consolidation will achieve the expected effect, and if public opinion of the group buying/flash sale industry is affected by continued negative publicity, we could experience a slowdown in market growth and as a result our business, financial conditions and results of operations could be adversely affected.

Our management team has a limited history of working together and might not be able to execute our business plan.

        Although we believe our experienced management team is one of our competitive strengths, our management team has worked together only for a limited period of time and has a limited track record of executing our business plan as a team. We have recently filled a number of positions in our senior management and finance and accounting staff. Accordingly, certain key personnel have only recently assumed the duties and responsibilities they are now performing, and thus, it is difficult to predict whether our management team, individually and collectively, will be effective in operating our business. In addition, while we formulate the overall business strategy at our headquarters in Beijing, we also give latitude to our local merchant service representatives to manage the daily operations in their respective cities. We cannot assure you that communications between the senior management team and the local management teams will always be effective, or the executions at the local levels will always have the results that the senior management team expects. Moreover, the integration process could take longer than we expected, which could have an adverse effect on our results of operations.

We rely on our senior management and key employees.

        Our success is dependent upon the expertise and continued service of our senior management and other key personnel. Our Chairman and Chief Executive Officer, Mr. Maodong Xu, is a highly regarded entrepreneur in the retail and new media industries in China. Mr. Xu has over two decades of experience in managing China-based retail business and technology companies. He founded and managed Qilu Supermarket, the largest supermarket chain in Shandong province, between 1992 and 2000. Mr. Xu also founded one of the leading wireless advertising companies in China, Welink Information Technology Co., Ltd., in 2009. Our Chief Financial Officer, Mr. Frank Zhao, has over two decades of experience in financial and accounting management with auditing firms and public companies. Our Executive President, Mr. Tiger Jianguang Wu, also has over 10 years of experience in the Internet industry. Other members of our senior management team are also crucial to our smooth operation and continued innovation. In addition, we rely on a limited number of specialized staff

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members in certain areas of our IT operations where we do not receive support from external service providers. Furthermore, our ability to expand our operations to accommodate our anticipated growth will also depend on our ability to retain the management teams of the local businesses in which we acquired controlling equity interests and attract additional personnel such as qualified risk managers, finance, management, marketing, and technical personnel and others. Competition for these employees is intense due to the limited number of suitably qualified professionals. If we fail to attract and retain such personnel, it would be difficult for us to manage our business and meet our objectives, and our operational results or financial conditions could be adversely affected.

We have limited insurance coverage and could incur losses resulting from liability claims or business interruptions.

        As the insurance industry in China is still in an early stage of development, insurance companies in China currently offer limited business insurance products. We do not have any product liability insurance or business interruption insurance. As we continue to expand the service offerings by our merchant clients, we could be increasingly exposed to various liability claims related to the products and services provided by our merchant clients. Any liability claims, business disruption, or natural disaster could result in substantial costs and the diversion of resources, which would have an adverse effect on our business and results of operations.

We might not be able to adequately protect our intellectual property rights.

        We believe our domain names, trademarks, technology know-how and other intellectual properties are our competitive advantages and are important to our success to date and our future prospects. We have been investing resources to develop our own intellectual properties and we take prudent steps to protect our intellectual properties and know-how. But we cannot assure you such steps would be sufficient to prevent the infringement of our intellectual properties. If we fail to adequately protect our intellectual property rights, including our rights in know-how or our trademark, it could have an adverse effect on our operations.

        The validity, enforceability and scope of protection available under intellectual property laws with respect to the Internet industry in China are uncertain and still evolving. Implementation and enforcement of PRC intellectual property-related laws have historically been deficient and ineffective. Accordingly, protection of intellectual property rights in China might not be as effective as in the United States or other western countries. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce or defend our intellectual property rights or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and the diversion of resources and management's attention.

We depend on regulatory approvals and licenses to operate in our existing markets and to gain access to new services.

        The Internet and telecommunication industries in China is highly regulated by the PRC government and numerous regulatory authorities of the central PRC government are empowered to issue and implement regulations governing various aspects of the Internet industry including foreign ownership of and licensing and permit requirements pertaining to companies in the Internet industry. These Internet- and telecommunication-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances, it could be difficult to determine what actions or omissions could be deemed to be in violation of applicable laws and regulations. Our consolidated affiliated entities are required to obtain and maintain applicable licenses or approvals from different regulatory authorities in order to provide their current services, including but not limited to the ICP license with electronic bulletin boards

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service, the Surveying and Mapping Qualification Certificate for Internet mapping and the Employment Agency License.

        Furthermore, our consolidated affiliated entities could be required to obtain additional licenses. If any of them fails to obtain or maintain any of the required licenses or approvals, its continued business operations in the Internet industry could subject it to various penalties, such as confiscation of illegal net sales, fines and the discontinuation or restriction of its operations. Any such disruption in the business operations of our consolidated affiliated entities will materially and adversely affect our business, financial condition and results of operations.

Failure to effectively detect and prevent fraudulent transactions would increase our losses and adversely affect our business, financial conditions and results of operations.

        We allow our merchant clients to make direct sales to retail customers through online payment authenticated by a two-dimensional barcode and an alphanumeric security code. It is possible that consumers or other third parties will seek to create counterfeit barcode or security code in order to fraudulently purchase goods and services from our merchant clients. While we use advanced anti-fraud technologies, it is possible that technically knowledgeable criminals could attempt to circumvent our anti-fraud systems using increasingly sophisticated methods. In addition, our services could be subject to employee fraud or other internal security breaches, and we might be required to reimburse customers and/or merchant clients for any funds stolen or revenue lost as a result of such breaches. Our merchant clients could also request reimbursement, or stop using our coupon marketing campaign, if they are affected by buyer fraud or other types of fraud.

        We could incur significant losses from fraud and counterfeit barcodes and security codes. We could also incur losses from merchant client fraud and from erroneous transmissions. While we have taken measures to detect and reduce the risk of fraud, these measures need to be continually improved and might not be effective against new and continually evolving forms of fraud or in connection with new product offerings. If these measures do not succeed, we could suffer direct losses as well as lost business due to the resulting reputational harm and our business, financial conditions and results of operations could be adversely affected.

During the course of the audit of our financial statements, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results in accordance with U.S. GAAP could be materially and adversely affected. In addition, investor confidence in us and the market price of our ADSs could decline significantly if we or our independent registered public accounting firm conclude that our internal control over financial reporting is not effective.

        We will be subject to reporting obligations under U.S. securities laws after this offering. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Prior to this offering, we were a private company and have had limited accounting personnel and other resources with which to address our internal control over financial reporting. We and our independent registered public accounting firm, in connection with the preparation and external audit of our consolidated financial statements for the year ended December 31, 2013, identified three material weaknesses, each as defined in the U.S. Public Company Accounting Oversight Board Standard AU Section 325, Communications About Control Deficiencies in an Audit of Financial Statements, or AU325, in our internal control over financial reporting. As defined in AU325, a "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency,

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or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

        The material weaknesses identified are related to (i) lack of accounting personnel with appropriate knowledge of accounting principles generally accepted in the United States of America, or U.S. GAAP, (ii) lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP, and (iii) lack of risk assessment process. These identified material weaknesses could affect our ability to accurately and timely report our financial results in accordance with U.S. GAAP and to prevent or detect material misstatements of the company's annual or interim financial statements on a timely basis.

        Neither we nor our independent registered public accounting firm have undertaken a comprehensive assessment of our internal control for purposes of identifying and reporting material weaknesses and other control deficiencies in our internal control over financial reporting as we and they will be required to do after we become a public company. In light of the number of material weaknesses and other control deficiencies that were identified as a result of the limited procedures performed, we believe it is possible that, had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have been identified.

        Following the identification of these material weaknesses, we have begun taking measures and plan to continue to take measures to remedy these weaknesses and deficiencies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting". However, the implementation of these measures might not fully address these material weaknesses and other control deficiencies in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct these material weaknesses and other control deficiencies or our failure to discover and address any other control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and make related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected.

        Upon completion of this offering, we will become subject to the Sarbanes Oxley Act of 2002 Section 404 of the Sarbanes Oxley Act will require that we include a report from management in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2015. Once we cease to be an "emerging growth company" as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. In addition, beginning at the same time, our independent registered public accounting firm would be required to report on the effectiveness of our internal control over financial reporting. If we fail to remedy the problems identified above, our management and our independent registered public accounting firm may conclude that our internal control over financial reporting is not effective. This could adversely affect the market price of our ADSs due to a loss of investor confidence in the reliability of our reporting processes. We will need to incur significant costs and use significant management and other resources in order to comply with Section 404 of the Sarbanes-Oxley Act.

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

        Our independent registered public accounting firm that issues the audit reports included in our prospectus filed with the U.S. Securities and Exchange Commission, as auditors of companies that are traded publicly in the United States and a firm registered with the U.S. Public Company Accounting

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Oversight Board ("the "PCAOB"), is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in the PRC, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditors are not currently inspected by the PCAOB.

        Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms' audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating our auditor's audits and its quality control procedures. As a result, investors are deprived of the benefits of PCAOB inspections.

        The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor's audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Proceedings instituted by the SEC against five PRC-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

        In late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the PRC affiliates of the "big four" accounting firms (including our auditors) and also against Dahua (the former BDO affiliate in China). The Rule 102(e) proceedings initiated by the SEC relate to these firms' inability to produce documents, including audit work papers, in response to the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act of 2002, as the auditors located in the PRC are not in a position lawfully to produce documents directly to the SEC because of restrictions under PRC law and specific directives issued by the China Securities Regulatory Commission. The issues raised by the proceedings are not specific to our auditors or to us, but affect equally all audit firms based in China and all China-based businesses with securities listed in the United States.

        In January 2014, the administrative judge reached an Initial Decision that the "big four" accounting firms should be barred from practicing before the Commission for six months. However, it is currently impossible to determine the ultimate outcome of this matter as the accounting firms have filed a Petition for Review of the Initial Decision and pending that review the effect of the Initial Decision is suspended. The SEC Commissioners will review the Initial Decision, determine whether there has been any violation and, if so, determine the appropriate remedy to be placed on these audit firms. Once such an order was made, the accounting firms would have a further right to appeal to the U.S. Federal courts, and the effect of the order might be further stayed pending the outcome of that appeal.

        Depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our ADSs may be adversely affected.

Our ability to raise capital in the future could be limited, and our failure to raise capital when needed could prevent us from expanding or growing our business.

        We could in the future be required to raise capital through public or private financing or other arrangements. Such financing might not be available on acceptable terms, or at all, and our failure to

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raise capital when needed could harm our business. Additional equity financing could dilute the interests of holders of our ordinary shares, and debt financing, if available, could involve restrictive covenants and would reduce our profitability. If we cannot raise funds on acceptable terms, we might not be able to grow our business or respond to competitive pressures.

Our legal right to lease certain properties could be challenged by property owners or other third parties, which could cause interruptions to our business operations.

        We lease all of the premises used for our offices. Certain lessors have not been able to provide the relevant housing ownership certificates for the properties leased by us. We have not filed certain leases of the properties for registration with the relevant government authorities, as required under PRC law. In addition, some of our leased premises were mortgaged by the owners before we entered into lease agreements with them. As of September 30, 2014, we are not aware of any actions, claims or investigations being contemplated by the relevant government authorities with respect to the defects in our leased real properties or any challenges by third parties to our use of these properties. However, if third parties who purport to be property owners or beneficiaries of the mortgaged properties challenge our right to lease these properties, we might not be able to protect our leasehold interest and could be ordered to vacate the affected premises, which would "in turn" adversely affect our business operations and results of operations.

Risks Related to Our Corporate Structure and Dependence on our Contractual Arrangements with our Affiliates

If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmental restrictions on foreign investment in Internet business, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

        Current PRC laws and regulations place certain restrictions on foreign ownership of companies that engage in Internet businesses, including the provision of Internet content distribution services. Specifically, foreign investors are not allowed to own more than 50% of the equity interests in any entity conducting Internet content distribution business or other value-added telecom businesses. And any such foreign investor must have experience in providing value-added telecommunications services overseas and maintain a good track record in accordance with the Guidance Catalog of Industries for Foreign Investment promulgated in 2007, as amended in 2011, and other applicable laws and regulations. We conduct our operations in China principally through contractual arrangements between our wholly-owned PRC subsidiary, Beijing Wowo Shijie Information Technology Co., Ltd., or Wowo Shijie, and two consolidated affiliated entities in China, namely, Beijing Wowo Tuan Information Technology Co., Ltd., or Beijing Wowo Tuan, and Beijing Kai Yi Shi Dai Network Technology Co., Ltd., or Kai Yi Shi Dai, and their respective shareholders. Beijing Wowo Tuan has three PRC subsidiaries, namely Wuxi Yuzhong Internet Technology Co., Ltd., Jilin Wowo Tuan Information Technology Co., Ltd. and Shandong Wowo Mall Information Technology Co., Ltd., as well as 109 local branches as of the date of this prospectus. Our contractual arrangements with Beijing Wowo Tuan and Kai Yi Shi Dai and their respective shareholders enable us to exercise effective control over these entities and hence treat them as our consolidated affiliated entities and consolidate their results. For a detailed discussion of these contractual arrangements, see "Our History and Corporate Structure".

        In the opinion of our PRC counsel, B&D Law Firm, our current ownership structure, the ownership structure of our PRC subsidiary and our VIEs, and the contractual arrangements among our PRC subsidiary, our variable interest entities, or VIEs, and their shareholders are in compliance with existing PRC laws, rules and regulations. There are, however, substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. Thus, we cannot assure you, however, that we will be able to enforce these contracts. Although we believe we are in

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compliance with current PRC regulations, we cannot assure you that the PRC government would agree that these contractual arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that might be adopted in the future. PRC laws and regulations governing the validity of these contractual arrangements are uncertain and the relevant government authorities have broad discretion in interpreting these laws and regulations. If the PRC government determines that we are not in compliance with applicable laws and regulations, it could revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, restrict or prohibit our use of proceeds from this offering to finance our business and operations in China, shut down our servers or block our website, require us to restructure our operations, impose additional conditions or requirements with which we might not be able to comply, levy fines, confiscate our income or the income of our PRC subsidiary or affiliated PRC entities, or take other regulatory or enforcement actions against us that could be harmful to our business. The imposition of any of these penalties would result in an adverse effect on our ability to conduct our business.

We rely on contractual arrangements with our consolidated affiliated entities in China and their shareholders for our operations, which might not be as effective as direct ownership in providing operational control.

        Since PRC laws restrict foreign equity ownership in companies engaged in Internet businesses in China, we rely on contractual arrangements with our consolidated affiliated entities, in which we do not hold shares, and their respective shareholders to operate our business in China. If we held the shares of Beijing Wowo Tuan and Kai Yi Shi Dai, we would be able to exercise our rights as a shareholder to effect changes in their respective board of directors, which in turn could effectuate changes at the management level, subject to any applicable fiduciary obligations. However, under the current contractual arrangements, we rely on our consolidated affiliated entities and their respective shareholders' performance of their contractual obligations to exercise effective control, while our Chairman and CEO, Mr. Xu, who holds 37.35% of Wowo Limited shares as of the date of this prospectus, also holds 95% and 60% of the equity interest in Beijing Wowo Tuan and Kai Yi Shi Dai, respectively. In addition, our contractual arrangements generally have a term of ten years with an automatic extension of another ten years on the same terms subject to Wowo Shijie's confirmation. In general, neither our consolidated affiliated entities nor their respective shareholders could terminate the contracts prior to the expiration date. However, the shareholders of the consolidated affiliated entities might not act in the best interests of our company or might not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with our consolidated affiliated entities. We can replace the shareholders of our consolidated affiliated entities at any time pursuant to our contractual arrangements with them and their shareholders. However, if any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operation of PRC law and courts and therefore will be subject to uncertainties in the PRC legal system. See "—Any failure by our consolidated affiliated entities or their respective shareholders to perform their obligations under our contractual arrangements with them could have an adverse effect on our business". Therefore, these contractual arrangements might not be as effective as direct holding of shares.

Any failure by our consolidated affiliated entities or their respective shareholders to perform their obligations under our contractual arrangements with them could have an adverse effect on our business.

        Our consolidated affiliated entities and their respective shareholders could fail to take certain actions required for our business or follow our instructions despite their contractual obligations to do so. If they fail to perform their obligations under their respective agreements with us, we might have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, which might not be effective.

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        All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. The equity pledge under the equity interests pledge agreements has been registered with the local branch of State Administration of Industry and Commerce, or the SAIC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in certain other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements, which could make it difficult to exert effective control over our consolidated affiliated entities, and our ability to conduct our business could be adversely affected. Additionally, under PRC law, rulings by arbitrators are final. Parties cannot appeal the arbitration results in courts. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may enforce the arbitration awards only in PRC courts through arbitration award recognition proceedings, which could require additional expenses and delay.

Contractual arrangements with our consolidated affiliated entities might result in adverse tax consequences to us.

        Under applicable PRC tax laws and regulations, arrangements and transactions among related parties could be subject to audit or scrutiny by the PRC tax authorities within ten years after the taxable year when the arrangements or transactions are conducted. We could face adverse tax consequences if the PRC tax authorities were to determine that the contractual arrangements between Wowo Shijie, our wholly-owned subsidiary in China, our consolidated affiliated entities in China and their respective shareholders were not entered into on an arm's-length basis and therefore constituted unfavorable transfer pricing arrangements. Unfavorable transfer pricing arrangements could, among other things, result in an upward adjustment on taxation. In addition, the PRC tax authorities could impose late payment fees and other penalties on our consolidated affiliated entities for the adjusted but unpaid taxes. Our results of operations could be adversely affected if our consolidated affiliated entities' tax liabilities increase significantly or if they are required to pay late payment fees or other penalties.

The shareholder of Beijing Wowo Tuan, Mr. Maodong Xu could have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business could be adversely affected.

        Our Chairman and CEO, Mr. Maodong Xu, is the shareholder of Beijing Wowo Tuan and Kai Yi Shi Dai. The interests of Mr. Xu as the major shareholder of Beijing Wowo Tuan and Kai Yi Shi Dai could differ from the interests of our company as a whole, notwithstanding that Mr. Xu is our single largest shareholder. We cannot assure you that when conflicts of interest arise, Mr. Xu will act in the best interests of our company or that conflicts of interests will always be resolved in our favor. In addition, Mr. Xu could breach or cause Beijing Wowo Tuan and Kai Yi Shi Dai to breach or refuse to renew the existing contractual arrangements with us. Currently, we do not have existing arrangements to address potential conflicts of interest Mr. Xu could encounter in his capacity as a beneficial owner and director of Beijing Wowo Tuan and Kai Yi Shi Dai. We rely on Mr. Xu to comply with the laws of China, which protect contracts, including the contractual arrangements that Beijing Wowo Tuan and Kai Yi Shi Dai and its shareholder have entered into with us, provide that directors and executive officers owe a duty of loyalty to our company and require them to avoid conflicts of interest and not to take advantage of their positions for personal gains. We also rely on Mr. Xu to abide by the laws of the Cayman Islands, which provide that directors have a duty of care and a duty of loyalty to act honestly in good faith with a view to our best interests. See "Description of Share Capital—Difference in Corporate Law—Directors' Fiduciary Duties" for further information on how conflicts of interest is addressed in our [third] amended and restated memorandum and articles of association. However, the legal frameworks of China and the Cayman Islands do not provide guidance on resolving conflicts in the event of a conflict with another corporate governance regime. If we cannot resolve any conflicts of

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interest or disputes between us and Mr. Xu, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

Other shareholders of our consolidated affiliated entities could also have potential conflicts of interest with us, which could adversely affect our business.

        We can replace the shareholders of our consolidated affiliated entities at any time pursuant to the equity option agreements. In addition, each of the shareholders of our consolidated affiliated entities has executed a power of attorney to appoint Wowo Shijie to vote on his or her behalf and exercise the full voting rights as the shareholder of the consolidated affiliated entities. However, we cannot assure you that when conflicts arise, the shareholders of our consolidated affiliated entities will act in the best interests of our company or that conflicts will be resolved in our favor. If we cannot resolve any conflicts of interest or disputes between us and the shareholders of our consolidated affiliated entities, we would have to rely on legal proceedings, which could be expensive, time-consuming and disruptive to our operations. There is also substantial uncertainty as to the outcome of any such legal proceedings.

We rely principally on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we might have. Any limitation on the ability of our PRC and Hong Kong subsidiaries to pay dividends to us could have an adverse effect on our ability to conduct our business.

        We are a holding company, and we rely principally on dividends and other distributions on equity paid by our wholly-owned PRC subsidiary, Wowo Shijie, and our wholly-owned Hong Kong subsidiary, Wowo Mall (China) Limited (formerly known as WoWo Holding Limited), which is the direct holding company of Wowo Shijie, for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we might incur. If Wowo Shijie or Wowo Mall (China) Limited, as the case may be, incurs debt on their own behalf in the future, the instruments governing the debt could restrict their ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities could require us to adjust our taxable income under the contractual arrangements Wowo Shijie currently has in place with our consolidated affiliated entities in a manner that would adversely affect its ability to pay dividends and other distributions to us.

        Under PRC laws and regulations, Wowo Shijie, as a wholly foreign-owned enterprise in China, can pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise such as Wowo Shijie is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital. At its discretion, it may allocate a portion of its after-tax profits based on PRC accounting standards to other funds. These statutory reserve funds and other funds are not distributable as cash dividends. As of September 30, 2014, the paid-in registered capital of Wowo Shijie was US$22 million. Any limitation on the ability of Wowo Shijie or Wowo Mall (China) Ltd. (HK) to pay dividends or make other distributions to us could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion could limit our use of the proceeds we receive from this offering to fund our expansion or operations.

        In utilizing the proceeds we receive from this offering in the manner described in "Use of Proceeds", as an offshore holding company with a PRC subsidiary, we could (i) make additional capital contributions to our PRC subsidiary, (ii) establish new PRC subsidiaries and make capital contributions

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to these new PRC subsidiaries, (iii) make loans to our PRC subsidiary or consolidated affiliated entities, or (iv) acquire offshore entities with business operations in China in an offshore transaction. However, most of these uses are subject to PRC regulations and approvals. For example:

    capital contributions to our PRC subsidiaries, whether the existing one or newly established ones, must be approved by the PRC Ministry of Commerce or its local counterparts;

    loans by us to our PRC subsidiaries, each of which is a foreign-invested enterprise, to finance their activities cannot exceed statutory limits and must be registered with the PRC State Administration of Foreign Exchange, or SAFE, or its local branches; and

    medium and long-term loans by us to our consolidated affiliated entities, which are domestic PRC entities, must be approved by the National Development and Reform Commission and must also be registered with SAFE or its local branches.

        On August 29, 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency-registered capital into Renminbi by restricting how the converted Renminbi may be used. In addition, SAFE promulgated Circular 45 on November 9, 2011 in order to clarify the application of SAFE Circular 142. Under SAFE Circular 142 and Circular 45, the Renminbi capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from foreign currency registered capital of foreign-invested enterprises. The use of such Renminbi capital cannot be changed without SAFE's approval, and such Renminbi capital cannot in any case be used to repay Renminbi loans if the proceeds of such loans have not been used. Furthermore, SAFE promulgated Circular 59 in November 2010, which tightens the regulation over settlement of net proceeds from overseas offerings, such as our initial public offering, and requires, among other things, the authenticity of settlement of net proceeds from offshore offerings to be closely examined and the net proceeds to be settled in the manner described in the offering documents or otherwise approved by our board. Violations of these SAFE regulations could result in severe monetary or other penalties, including confiscation of earnings derived from such violation activities, a fine of up to 30% of the Renminbi funds converted from the foreign invested funds or in the case of a severe violation, a fine ranging from 30% to 100% of the Renminbi funds converted from the foreign-invested funds.

        In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to our future plans to use the U.S. dollar proceeds we receive from this offering for our expansion and operations in China. If we fail to receive such registrations or approvals, our ability to use the proceeds of this offering and to capitalize our PRC operations could be negatively affected, which could adversely affect our liquidity and ability to fund and expand our business.

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We could lose the ability to use and enjoy assets held by our consolidated affiliated entities that are important to the operation of our business if such entities go bankrupt or become subject to dissolution or liquidation proceedings.

        As part of our contractual arrangements with our consolidated affiliated entities, such entities hold certain assets that are important to the operation of our business. If our consolidated affiliated entities go bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we might not be able to continue some or all of our business activities, which could adversely affect our business, financial condition and results of operations. If our consolidated affiliated entities undergo voluntary or involuntary liquidation proceedings, the unrelated third-party creditors could claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could adversely affect our business, financial condition and results of operations.

If our consolidated affiliated entities fail to obtain and maintain the requisite assets, licenses and approvals required under the complex regulatory environment for online businesses in China, our business, financial condition and results of operations could be adversely affected.

        The Internet industry in China is highly regulated by the PRC government and numerous regulatory authorities of the central PRC government are empowered to issue and implement regulations governing various aspects of the Internet industry. See "Regulations". Our consolidated affiliated entities are required to obtain and maintain certain assets relevant to their business as well as applicable licenses or approvals from different regulatory authorities in order to provide their current services. These assets and licenses are essential to the operation of our business and are generally subject to annual review by the relevant governmental authorities. Furthermore, our affiliated PRC entities could be required to obtain additional licenses. If our consolidated affiliated entities fail to obtain or maintain any of the required assets, licenses or approvals, their continued business operations in the Internet industry could subject them to various penalties, such as the confiscation of illegal net revenues, fines and the discontinuation or restriction of their operations. Any such disruption in the business operations of our affiliated PRC entities could adversely affect our business, financial condition and results of operations.

Risks Relating to Doing Business in China

We could be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet businesses and companies.

        The PRC government extensively regulates the Internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the Internet industry. These Internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it could be difficult to determine what actions or omissions could be deemed to be in violation of applicable laws and regulations. Issues, risks and uncertainties relating to PRC regulation of Internet businesses include, but are not limited to, the following:

    there are uncertainties relating to the regulation of Internet businesses in China, including evolving licensing practices. This means that permits, licenses or operations at some of our companies could be subject to challenge, or we could fail to obtain permits or licenses that would be deemed necessary for our operations or we might not be able to obtain or renew certain permits or licenses. The major permits and licenses that could be involved include, without limitation, the ICP license. If we fail to maintain any of these required licenses or approvals, we could be subject to various penalties, including fines and the discontinuation of or restrictions on our operations. Any such disruption in our business operations could have an adverse effect on our results of operations;

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    new laws and regulations could be promulgated that will regulate Internet activities, including online services. If these new laws and regulations are promulgated, additional licenses could be required for our operations. If our operations do not comply with these new regulations after they become effective, or if we fail to obtain any licenses required under these new laws and regulations, we could be subject to penalties; and

    we only have contractual control over our operating websites, 55.com and 55tuan.com. We do not own the website due to the restriction of foreign investment in businesses providing value-added telecom services in China, including Internet content distribution services. This could significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us.

        The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the Internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, Internet businesses in China, including our business. We cannot assure you that we have obtained all the permits or licenses required for conducting our business in China or will be able to maintain our existing licenses or obtain any new licenses required under any new laws or regulations. There are also risks that we could be found to violate the existing or future laws and regulations given the uncertainty and complexity of China's regulation of Internet businesses.

        On July 13, 2006, the Ministry of Industry and Information Technology, or the MIIT, the successor of the Ministry of Information Industry, issued the Notice of the Ministry of Information Industry on Intensifying the Administration of Foreign Investment in Value-added Telecom Services. This notice prohibits domestic telecom services providers from leasing, transferring or selling telecom business operating licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of a telecom business in China. According to this notice, either the holder of a value-added telecom business operating license or its shareholders must directly own the domain names and trademarks used by such license holders in their provision of value-added telecom services. The notice also requires each license holder to have the necessary facilities, including servers, for its approved business operations and to maintain such facilities in the regions covered by its license. Currently, Beijing Wowo Tuan and Kai Yi Shi Dai, two of our PRC consolidated affiliated entities, own the related domain names, hold the ICP licenses necessary for the operation of our 55.com and 55tuan.com websites, and are in the process of applying for related trademarks with the Trademark Office of the State Administration for Industry and Commerce. In addition, as a result of our recent acquisitions, we are in the process of integrating three websites operated by our consolidated affiliated entities which have not received ICP licenses into the 55.com and 55tuan.com domains. Pursuant to the Administrative Measures on Internet Information Services effective since September 25, 2000, commercial Internet information services are subject to licensing system. In case the operator provides commercial Internet information services without obtaining an operation license or the services provided by the operator exceed the scope of the services as permitted by the operation license, the relevant telecom administrative agency could order to have such act corrected within a specified period. Where there is illegal income, the illegal income could be confiscated and a fine of no less than three times but no more than five times the value of the illegal income would be imposed; where there is no illegal income or the illegal income does not exceed RMB50,000, a fine of no less than RMB100,000 but no more than RMB1,000,000 could be imposed; in the event of a serious case, the operator shall be ordered to close down its website.

Uncertainties with respect to the PRC legal system could have an adverse effect on us.

        The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions in a civil law system may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the

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protections afforded to various forms of foreign investments in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always consistent, and enforcement of these laws, regulations and rules involves uncertainties, which could limit the available legal protections.

        In addition, the PRC administrative and court authorities have significant discretion in interpreting and implementing or enforcing statutory rules and contractual terms, and it could be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection we could enjoy in the PRC than under some more developed legal systems. These uncertainties could affect our judgment on the relevance of legal requirements and our decisions on the measures and actions to be taken to fully comply therewith, and could affect our ability to enforce our contractual or tort rights. Such uncertainties could therefore increase our operating costs and expenses as well as adversely affect our business and results of operations.

        Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and could have a retroactive effect. As a result, we might not be aware of our violation of any of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could adversely affect our business and impede our ability to continue our operations.

The approval of the China Securities Regulatory Commission, or the CSRC, could be required in connection with this offering. Any requirement to obtain prior CSRC approval could delay, or create uncertainties regarding, this offering, and our failure to obtain this approval, if required, could have an adverse effect on our business, results of operations, reputation and trading price of our ADSs.

        On August 8, 2006, six PRC regulatory authorities, including the CSRC, jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the 2006 M&A Rules, which were later amended on June 22, 2009. According to the 2006 M&A Rules, an offshore special purpose vehicle, or SPV, refers to an overseas company controlled directly or indirectly by domestic companies or individuals for purposes of overseas listing of equity interests in domestic companies (defined as enterprises in the PRC other than foreign-invested enterprises). The 2006 M&A Rules require that the overseas listing by the SPV must be approved by the CSRC. However, the applicability of the 2006 M&A Rules with respect to CSRC approval is unclear. Accordingly, the application of the 2006 M&A Rules with respect to this offering and our corporate structure for this offering established under contractual arrangements remains unclear.

        We believe that the 2006 M&A Rules do not require that we obtain prior CSRC approval for the listing and trading of our ADSs on the Nasdaq Global Market, given that (i) our PRC subsidiary, Wowo Shijie, was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition by our company of the equity interest or assets of any "domestic company" as defined under the 2006 M&A Rules, and no provision in the 2006 M&A Rules classifies the contractual arrangements between our company, our PRC subsidiary and any of our consolidated affiliated entities as a type of acquisition transaction falling under the 2006 M&A Rules; (ii) we do not hold any equity interests in Beijing Wowo Tuan or Kai Yi Shi Dai or any of their PRC subsidiaries; and (iii) the CSRC currently has not issued any definitive rule concerning whether offerings like the offering contemplated by our company under this prospectus are subject to prior CSRC approval.

        However, if the CSRC subsequently determines that its prior approval is required, we could face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies could impose fines and penalties on our operations, limit our operating privileges, delay or restrict our sending the proceeds from this offering into China, or take other actions that

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could have an adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory agencies also could take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that such settlement and delivery might not occur.

        We cannot predict when the CSRC would promulgate additional rules or other guidance, if at all. If implementing rules or guidance are issued prior to the completion of this offering and consequently we conclude that we are required to obtain CSRC approval, this offering will be delayed until we obtain CSRC approval, which could take several months or longer. Moreover, the implementing rules or guidance, to the extent issued, could fail to resolve current ambiguities under the 2006 M&A Rules. Uncertainties or negative publicity regarding the 2006 M&A Rules could have an adverse effect on the trading price of our ADSs.

Regulation and censorship of information distribution over the Internet in China could adversely affect our business, and we could be liable for information displayed on, retrieved from or linked to our website.

        China has enacted laws and regulations governing Internet access and the distribution of products, services, news, information and other content through the Internet. In the past, the PRC government has prohibited the distribution of information through the Internet that it deems to be in violation of PRC laws and regulations. If any of our Internet content were deemed by the PRC government to violate any content restrictions, we would not be able to continue to display such content and could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, which could adversely affect our business, financial condition and results of operations. We could also be subject to potential liability for any unlawful actions of users of our website or for content we distribute that is deemed inappropriate. It could be difficult to determine the type of content that could result in liability to us, and if we are found to be liable, we could be prevented from operating our website in China.

Governmental control of currency conversion could affect the value of your investment.

        The PRC government imposes controls on the convertibility between the Renminbi and foreign currencies despite the significant reduction over the years by the PRC government of control over routine foreign exchange transactions under current accounts. Currently all of our revenues are denominated in Renminbi. Under our current holding company corporate structure, our income is primarily derived from dividend payments from our PRC subsidiary. Shortages in the availability of foreign currency or other restrictions could restrict the ability of our PRC subsidiary to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency- denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from SAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we might not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

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Fluctuations in exchange rates of the Renminbi could affect our reported results of operations.

        The exchange rates between the Renminbi and the U.S. dollar and other foreign currencies are affected by, among other things, changes in China's political and economic conditions. In July 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi was permitted to fluctuate within a band against a basket of certain foreign currencies. As a result, the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. However, the People's Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates and achieve policy goals. For almost two years after July 2008, the Renminbi traded within a very narrow range against the U.S. dollar, remaining within 1% of its July 2008 high. As a consequence, the Renminbi fluctuated significantly during that period against other freely traded currencies, in tandem with the U.S. dollar. In June 2010, the PRC government announced that it would increase Renminbi exchange rate flexibility. However, it remains unclear how this flexibility might be implemented. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar.

        As we rely on dividends and other fees paid to us by our subsidiary and affiliated consolidated entities in China, any significant revaluation of the Renminbi could adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. To the extent that we need to convert U.S. dollars we received from our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. In addition, since our functional and reporting currency is the U.S. dollar while the functional currency of our subsidiary and consolidated affiliated entities in China is Renminbi, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would have a positive or negative effect on our reported financial results, which might not reflect any underlying change in our business, financial condition or results of operations.

Our operations could be adversely affected by changes in China's political, economic and social conditions.

        Substantially all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects could be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

        The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China's economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

        While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources.

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Some of these measures might benefit the overall Chinese economy, but could have a negative effect on us. For example, our financial condition and results of operations could be adversely affected by government control over capital investments or changes in tax regulations. In the past the PRC government has implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures could cause decreased economic activity in China, which could adversely affect our business and operating results. Any significant increase in China's inflation rate could increase our costs and have an adverse effect on our operating margins. In addition, any sudden changes to China's political system or the occurrence of widespread social unrest could have negative effects on our business and results of operations.

Under the PRC enterprise income tax law, we could be classified as a "resident enterprise" of China. Such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

        Under the PRC Enterprise Income Tax Law, or the New EIT Law, and the Implementation Rules to the New EIT Law, or the Implementation Rules, both of which became effective on January 1, 2008, an enterprise established outside of the PRC with "de facto management bodies" within the PRC is considered a resident enterprise and is subject to PRC enterprise income tax at the rate of 25% on its global income. The Implementation Rules define the term "de facto management bodies" as "establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc. of an enterprise". The only detailed guidance currently available regarding the definition of "de facto management body" as well as the determination of the tax residence of offshore incorporated enterprises whose primary controlling shareholder is a PRC company or a PRC corporate group, and such enterprises' tax administrations are set forth in two notices, the Notice On Issues Relating to Determination of Chinese-Controlled Offshore Enterprise as PRC Resident Enterprises by applying the "De Facto Management Body", or Circular 82, and the Administrative Measures of Enterprise Income of Chinese Controlled Offshore Incorporated Resident Enterprise (Trial), or Circular 45, issued by the PRC State Administration of Taxation, or the Circulars. The Circulars provide that a foreign enterprise controlled by a PRC enterprise or a PRC enterprise group would be classified as a "resident enterprise" with its "de facto management body" located within China if all of the following requirements are satisfied: (i) the enterprise's day-to-day operations management is primarily exercised in China, (ii) decisions relating to the enterprise's financial and human resource matters are made or subject to approval by organizations or personnel in China, (iii) the enterprise's primary assets, accounting books and records, company seals, board and shareholders' meeting minutes are located or maintained in China, and (iv) 50% or more of voting board members or senior executives of the enterprise habitually reside in China. If all of these criteria are met, the relevant offshore enterprise controlled by PRC enterprises or PRC enterprise groups would be deemed to have its "de facto management body" in China and therefore be deemed a PRC resident enterprise. The Circulars made clarification in the areas of resident status determination, post-determination administration, as well as the exercise of competent tax authorities' procedures. The Circulars also specify that when provided with a copy of PRC tax resident determination certificate from a resident Chinese controlled offshore incorporated enterprise, a payer of PRC-sourced dividends, interest, royalties, etc. should not withhold 10% income tax on such payments to such Chinese controlled offshore incorporated enterprise. Although the Circulars apply only to offshore enterprises controlled by PRC enterprises and not those controlled by PRC individuals such as us, the determination criteria and administration clarification made in the Circulars reflect the PRC State Administration of Taxation's general position on how the "de facto management body" test should be applied in determining the tax residency status of offshore enterprises and how the administration measures should be implemented. There is no assurance that the PRC State Administration of Taxation will not apply the same or similar criteria as stated in the Circulars to determine whether the "de facto management body" of an offshore incorporated enterprise controlled by PRC individuals (like us) is located within the PRC in the future. If the PRC authorities were to

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determine that we should be treated as a PRC resident enterprise for the purpose of PRC enterprise income tax, a 25% enterprise income tax on our global income could significantly increase our tax burden and adversely affect our financial condition and results of operations.

        Pursuant to the New EIT Law and the Implementation Rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors will be subject to a 10% withholding tax, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for a reduced withholding arrangement. We are a Cayman Islands holding company and substantially all of our income comes from dividends from our PRC subsidiary through our Hong Kong holding company. To the extent these dividends are subject to withholding tax, the amount of funds available to us to meet our cash requirements, including the payment of dividends to our shareholders and ADS holders, will be reduced.

        The Implementation Rules provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or capital gains are treated as PRC-sourced income. It is not clear how "domicile" might be interpreted under the New EIT Law, and it could be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered to be a PRC resident enterprise for tax purposes, any dividends we pay to our overseas corporate shareholders or ADS holders as well as gains realized by such shareholders or ADS holders from the transfer of our shares or ADSs could be regarded as PRC-sourced income and as a result subject to PRC withholding tax at a rate of up to 10%, subject to the provisions of any applicable tax treaty. If dividends we pay to our overseas individual shareholders or ADS holders, or gains realized by such holders from the transfer of our shares or ADSs, are treated as China-sourced income, the withholding rate would be 20%, subject to the provisions of any applicable tax treaty.

        If we are required under the New EIT Law to withhold PRC income tax on any dividends paid to our non-PRC shareholders and ADS holders or if gains from dispositions of our shares or ADSs are subject to PRC tax, your investment in our ADSs or ordinary shares could be adversely affected.

        Furthermore, the State Administration of Taxation promulgated the Notice on How to Understand and Determine the Beneficial Owners in Tax Treaties in October 2009, or Circular 601, which provides guidance for determining whether a resident of a contracting state is the "beneficial owner" of an item of income under China's tax treaties and tax arrangements. According to Circular 601, a beneficial owner generally must be engaged in substantive business activities. An agent or conduit company cannot be regarded as a beneficial owner and, therefore, cannot qualify for treaty benefits. The conduit company normally refers to a company that is set up for the purpose of avoiding or reducing taxes or transferring or accumulating profits. We cannot assure you that any dividends distributed by us to our non-PRC shareholders and ADS holders whose jurisdiction of incorporation has a tax treaty with China providing for avoidance of double taxation will be entitled to the benefits under the relevant withholding arrangement.

A failure by our shareholders or beneficial owners who are PRC citizens or residents in China to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liability under PRC laws, which could adversely affect our business and financial condition.

        The State Administration of Foreign Exchange, or SAFE, issued the Circular Relating to Foreign Exchange Administration of Offshore Investment, Financing and Return Investment by Domestic Residents Utilizing Special Purpose Vehicles, or SAFE Circular 37, that was promulgated and become effective on July 14, 2014. It requires a PRC natural person or a PRC company (a "PRC Resident") to file a "Registration Form of Overseas Investments Contributed by PRC Resident" and register with the local SAFE branch before it contributes assets or equity interests in an overseas special purpose

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vehicle, or SPV, that is directly established and controlled by PRC Resident for the purpose of conducting investment or financing. Following the initial registration, the PRC resident is also required to register with the local SAFE branch timely for any major change in respect of SPV, including, among other things, any major change of SPV's PRC Resident shareholder, name of the SPV, term of operation or any increase or reduction of the SPV's registered capital, share transfer or swap, and merger or division. Failure to comply with the registration procedures of Circular 37 could result in the penalties including the imposition of restrictions on the ability of SPV's PRC subsidiaries to dividends to its overseas parent company.

        As Circular 37 was recently promulgated, it remains unclear how this regulation and any future related legislation will be interpreted, amended and implemented by the relevant PRC government authorities. As of September 30, 2014, to the best of our knowledge, most of our PRC Resident shareholders with offshore investments had registered with SAFE to their offshore investments according to the predecessor regulation of Circular 37, namely the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75, which was replaced by the SAFE Circular 37 but still effective when the relevant PRC shareholders made their investments.

        We are committed to complying, and to ensuring that our shareholders and beneficial owners who are PRC citizens or residents comply with SAFE Circular 37 requirements. The rest of our PRC citizen or resident beneficial owners are also applying for registrations under SAFE Circular 37 with the relevant local counterpart of SAFE in Beijing. However, we might not be fully informed of the identities of all our beneficial owners who are PRC citizens or residents, and we cannot compel our beneficial owners to comply with SAFE Circular 37 requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC citizens or residents have complied with, or will in the future make or obtain the necessary any applicable registrations or approvals as required by, SAFE Circular 37 or other related regulations. Failure by such shareholders or beneficial owners to comply with SAFE Circular 37, or failure by us to amend the foreign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries' ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects. In addition, as disclosed in the "Prospectus Summary", upon the completion of this offering, we will convert all of our indebtedness owed to Mr.Xu to additional ordinary shares to be issued to him or his designees. Pursuant to SAFE Circular 37, PRC citizens or residents must register with the relevant local SAFE branch before making capital contribution to any offshore entity directly established or indirectly controlled by that PRC citizen or resident for the purpose of investment or financing and with onshore or offshore assets or equity interests legally owned by that PRC citizen or resident. We understand that Mr. Xu or his designees will be required to register with the local SAFE branch before they change the equity interests in our company upon the completion of this offering. As a result, we cannot assure you that Mr. Xu or his designees will in the future make or obtain any necessary applicable registration changes as required by SAFE Circular 37 or other related regulations. Failure by us to amend the foreign exchange registrations in compliance with SAFE Circular 37 could subject us to fines or legal sanctions restrict our overseas or cross-border ownership structure, which could adversely affect our business and prospects. See "—We rely principally on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we might have. Any limitation on the ability of our PRC and Hong Kong subsidiaries to pay dividends to us could have an adverse effect on our ability to conduct our business".

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A failure to comply with PRC regulations regarding the registration of shares and share options held by our employees who are PRC citizens could subject such employees or us to fines and legal or administrative sanctions.

        Pursuant to the Implementation Rules of the Administrative Measures on Individual Foreign Exchange, or the Individual Foreign Exchange Rules, promulgated by SAFE on January 5, 2007 and a relevant guidance issued by SAFE in March 2007, PRC citizens who are granted shares or share options by an overseas-listed company according to its employee share option or share incentive plan are required, through the PRC subsidiary of such overseas-listed company or other qualified PRC agents, to register with SAFE and complete certain other procedures related to the share option or other share incentive plan. In addition, the overseas-listed company or its PRC subsidiary or other qualified PRC agents are required to appoint an asset manager or administrator and a custodian bank, and open special foreign currency accounts to handle transactions relating to the share option or other share incentive plan. For participants who had already participated in an employee share option or share incentive plan before the date of the guidance, the guidance require their PRC employers or PRC agents to complete the relevant formalities within three months of the date of the guidance. We and our PRC citizen employees, who have been granted share options, or PRC option holders, will be subject to these rules upon the listing and trading of our ADSs on the Nasdaq Global Market. If we or our PRC option holders fail to comply with these rules, we or our PRC option holders could be subject to fines and legal or administrative sanctions. See "Regulations—Regulations on Foreign Exchange".

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

        Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Enterprises, or SAT Circular 698, issued by the State Administration of Taxation on December 10, 2009 with retroactive effect from January 1, 2008, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly via disposing of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the relevant tax authority of the PRC resident enterprise this Indirect Transfer. Using a "substance over form" principle, the PRC tax authority could disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer could be subject to PRC enterprise income tax at the rate of up to 10%. SAT Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interest in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

        There is little guidance and practical experience regarding the application of SAT Circular 698, and there is uncertainty as to its interpretation and application. SAT Circular 698 could be determined by the PRC tax authorities to be applicable to our private equity financing transactions or other transactions regarding this offering where non-resident investors were involved. As a result, we and our non-resident investors in such transactions could become subject to the reporting obligations and even at risk of being taxed under SAT Circular 698 and we could be required to expend valuable resources to comply with SAT Circular 698 or to establish that we should not be taxed under the general anti-avoidance rules of the New EIT Law, which could have an adverse effect on our financial condition and results of operations or such non-resident investors' investment in us.

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PRC laws and regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

        PRC laws and regulations, such as the 2006 M&A Rules, the Anti-Monopoly Law promulgated by the PRC National People's Congress in 2007 and the Notice on the Establishment of the Security Review System in Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated by the State Council, or the Security Review Rule, establish procedures and requirements that could make some acquisitions of Chinese companies by foreign investors and companies more time-consuming and complex, including requirements in some instances that various governmental authorities be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. For example, on February 3, 2011, the State Council promulgated the Security Review Rule, which provides, among other things, that merger and acquisition transactions by foreign investors of PRC enterprises in sensitive sectors or industries, such as Internet information service industry, which our operations fall within, could be subject to security review. Consequently, any such transaction could be blocked due to their effect on the national defense security, national economic stability, basic social life order, or capacity of indigenous research and development of key technologies. On August 25, 2011, the Ministry of Commerce promulgated the Regulations on Implementing the Security Review System in Mergers and Acquisition of Domestic Enterprises by Foreign Investors, which, among other things, set forth detailed provisions on how the security review of relevant transactions would be conducted, and provide for that foreign investors could not for any reason evade the security review process through entrustment, phased-in investment, leasing, loans and control agreement, and overseas transactions. We could expand our business in part by acquiring complementary businesses. Complying with the requirements of the relevant PRC laws and regulations to complete such transactions could be time-consuming, and any required approval processes could delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Increases in labor costs in the PRC may adversely affect our business and results of operations.

        The economy of China has been experiencing increases in inflation and labor costs in recent years. As a result, the average wages in the PRC are expected to continue to grow. In addition, we are required by PRC laws and regulations to pay various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments of the requisite statutory employee benefits, and those employers who fail to make adequate payments could be subject to late payment fees, fines and/or other penalties. If the relevant PRC authorities determine that we should make supplemental social insurance and housing fund contributions and that we are subject to fines and legal sanctions, our business, financial condition and results of operations could be adversely affected. We expect that our labor costs, including wages and employee benefits, would continue to increase. Unless we are able to pass on these increased labor costs to our customers by increasing the prices of our products and services, our financial condition and results of operations could be adversely affected.

The dissolution of certain branches and subsidiaries of Beijing Wowo Tuan could result in the incurrence of liabilities and other adverse consequences that could affect our business, financial condition and results of operations.

        Because of changes in our strategy and business needs, we filed with the relevant PRC authorities to dissolve certain branches and subsidiaries of Beijing Wowo Tuan, but the dissolution process will not completed prior to the completion of this offering. To complete the dissolution process, we must wait until we receive the formal revocation of the business licenses for each such branches and subsidiaries

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being dissolved. Although we do not believe there are any material liabilities currently owed by these branches and subsidiaries of Beijing Wowo Tuan, we cannot guarantee you that we would not face unanticipated liabilities during the dissolution process. While we are currently unaware of any unanticipated liabilities and, therefore, cannot quantify such liabilities, nevertheless, we cannot rule out that the risk of unanticipated liabilities exists and will exist until the dissolution is completed when the branch and subsidiary business licenses of these branches and subsidiaries have been officially cancelled. If any unanticipated liabilities were to be identified, our business, financial condition and results of operations could be adversely affected.

We are subject to consumer protection laws that could require us to modify our current business practices and incur increased costs.

        We are subject to numerous PRC laws and regulations that govern e-commerce business, such as the Consumer Protection Law. If these regulations were to change or if we or our merchant clients were to violate them, the costs of certain products or services could increase, or we could be subject to fines or penalties or suffer reputational harm, which could reduce demand for the products or services offered on our website and adversely affect our business and results of operations. For example, the recently amended Consumer Protection Law, which became effective in March 2014, further strengthens the protection of consumers and imposes more stringent requirements and obligations on business operators, especially for businesses that operate on the Internet. We do not maintain product liability insurance for products and services transacted on our platform, and our rights of indemnity from the vendors and service providers might not adequately cover us for any liability we incur. Even unsuccessful claims could result in the expenditure of funds and management time and resources and could reduce our net income and profitability. Legal requirements are frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations. We could be required to make significant expenditures or modify our business practices to comply with existing or future laws and regulations, which could increase our costs and limit our ability to operate our business.

The enforcement of stricter labor laws and regulations in the PRC could adversely affect our business and our profitability.

        We have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract law, that became effective in January 2008, as amended on December 28, 2012 and effective as of July 1, 2013, and its implementation rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees' probation and ability to unilaterally terminating labor contracts. In the event that we decide to terminate the employment of any of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules could limit our ability to effect these changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. On October 28, 2010, the Standing Committee of the National People's Congress promulgated the PRC Social Insurance Law, or the Social Insurance Law, which became effective on July 1, 2011. According to the Social Insurance Law, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance and maternity insurance and the employers must, together with their employees or separately, pay the social insurance premiums for such employees. As the interpretation and implementation of labor-related laws and regulations are still evolving, we could be liable for payments and fines arising from our delinquent payments of previous social insurance and housing funds that we did not anticipate. Moreover, we cannot assure you that our

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employment practices do not and will not violate labor-related laws and regulations in China, which could subject us to labor disputes or government investigations. If we are deemed to have violated relevant labor laws and regulations, our business and results of operations could be adversely affected.

Risks Relating to Our ADSs and This Offering

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

        Prior to this offering, there has been no public market for our ADSs or our ordinary shares represented by the ADSs. If an active public market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs could be adversely affected. We have applied to list our ADSs on the Nasdaq Global Market. A liquid public market for our ADSs might not develop. The initial public offering price for our ADSs will be determined by negotiation between us and the underwriters based upon several factors, including prevailing market conditions, our historical performance, estimates of our business potential and earnings prospects, and the market valuations of similar companies. The price at which the ADSs are traded after this offering could decline below the initial public offering price, meaning that you could experience a decrease in the value of your ADSs regardless of our operating performance or prospects. In the past, following periods of volatility in the market price of a company's securities, shareholders have often instituted securities class action litigation against that company. If we were involved in a class action suit, it could divert the attention of senior management, and, if the suit is adversely determined, it could have an adverse effect on our results of operations.

Future sales or perceived sales of our ADSs or ordinary shares by existing shareholders could cause our ADSs' price to decline.

        If our existing shareholders sell, indicate an intention to sell, or are perceived to intend to sell, substantial amounts of our ordinary shares in the public market after the 180-day contractual lock-up period and other legal restrictions on resale discussed in this prospectus lapse, the trading price of our ordinary shares could decline. Upon closing of this offering, we will have outstanding ordinary shares. All ADSs sold in this offering will be freely tradable, without restriction, in the public market. The representatives of the underwriters could, in their sole discretion, permit our officers, directors, employees and current option holders and shareholders to sell shares prior to the expiration of the lock-up agreements. After the lock-up agreements pertaining to this offering expire (180 days or more from the date of this prospectus), all of our outstanding shares will be eligible for sale in the public market, but they will be subject to volume limitations under Rule 144 under the U.S. Securities Act of 1933, as amended, or the Securities Act. In addition, ordinary shares subject to outstanding options under our share incentive plan will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, the lock-up agreements and Rules 144 and 701 under the Securities Act. If these additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our ordinary shares could decline.

Because the initial public offering price is substantially higher than our pro forma net tangible book value per ADS, you will incur immediate and substantial dilution.

        If you purchase ADSs in this offering, you will pay more for your ADSs than the amount paid by existing shareholders for their ordinary shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately US$            per ADS (assuming no exercise of outstanding options to acquire ordinary shares), representing the difference between our pro forma net tangible book value per ADS as of            , 2014, after giving effect to this offering and the assumed initial public offering price of US$            per ADS (the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus). In addition, you could experience

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further dilution to the extent that our ordinary shares are issued upon the exercise of outstanding share options. Substantially all of the ordinary shares issuable upon the exercise of currently outstanding share options will be issued at a purchase price on a per ADS basis that is less than the initial public offering price per ADS in this offering.

We could be a passive foreign investment company, or PFIC, which would result in adverse United States tax consequences to United States investors.

        For any taxable year, we would be a passive foreign investment company, or PFIC, for United States federal income tax purposes if either (i) 75% or more of our gross income in that taxable year is passive income or (ii) the average percentage of our assets (generally by value) in that taxable year that produce or are held for the production of passive income (which includes cash) is at least 50%. Although we do not believe we were a PFIC for our most recent taxable year, in light of our significant cash balances (taking into account the expected proceeds from this offering) and the uncertainty as to the extent, if any, that our goodwill could be taken into account in determining our PFIC status for the 2013 taxable year, we might be a PFIC for the 2013 taxable year. With respect to the 2014 taxable year and foreseeable future taxable years, we presently do not anticipate that we will be a PFIC based upon the expected value of our assets, including goodwill (determined, in part, based on the expected price of our ADSs in the offering), and the expected composition of our income and assets. However, we might be a PFIC for the 2014 taxable year or any future taxable years due to changes in our asset or income composition, or the value of our assets, including if our market capitalization is less than anticipated or subsequently declines. In addition, there is uncertainty as to the treatment of our contractual arrangements with our consolidated affiliated entities for purposes of the PFIC rules. If it is determined that we do not own the stock of our consolidated affiliated entities for United States federal income tax purposes, we could be treated as a PFIC. If we are a PFIC for any taxable year during which you hold our ADSs or ordinary shares, we generally will continue to be treated as a PFIC as to you for all succeeding taxable years during which you hold our ADSs or ordinary shares, except if you have made a mark-to-market election. Because there are uncertainties in the application of the relevant rules and PFIC status is a fact-intensive determination made on an annual basis, no assurance can be given that we will not be a PFIC for any year. If we are a PFIC, U.S. holders of our ADSs or ordinary shares could be subject to increased tax liabilities under United States federal income tax laws and could be subject to burdensome reporting requirements. See "Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company". As the determination of PFIC status is based on an annual determination that cannot be made until the close of a taxable year, our U.S. counsel expresses no opinion with respect to our PFIC status.

We are a "foreign private issuer", and have disclosure obligations that are different from those of U.S. domestic reporting companies; as a result, you should not expect to receive the same information about us at the same time when a U.S. domestic reporting company provides the information required to be disclosed.

        We are a foreign private issuer and, as a result, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Securities Exchange Act of 1934, or the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly reports or proxy statements. We will have four months from the end of each fiscal year to file our annual report on Form 20-F. We are not required to disclose detailed individual executive compensation information that is required to be disclosed by U.S. domestic issuers. Further, our directors and executive officers are not required to report equity holdings under Section 16 of the Securities Act and are not subject to the insider short- swing profit disclosure and recovery regime. As a foreign private issuer, we are also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. We are, however, still subject to the anti-fraud and

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anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer are different than those imposed on U.S. domestic reporting companies, our shareholders should not expect to receive the same information about us and at the same time as the information received from, or provided by U.S. domestic reporting companies.

We are an emerging growth company and cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ADSs less attractive to investors.

        We are an "emerging growth company" under the Jumpstart Our Business Startups Act (the "JOBS Act"), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Furthermore, we are not required to present selected financial information or any management's discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.

        We have not opted out of these exemptions available to the emerging growth companies from various reporting requirements that are applicable to other public companies. This decision would allow us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies or otherwise become applicable to us. As a result, our financial statements might not be comparable to public companies or other emerging growth companies that have opted out of these exemptions. We cannot predict if investors will find our ADSs less attractive because we will rely on these exemptions. If some investors find our ADSs less attractive as a result, our stock price could be lower than it otherwise would be, there could be a less active trading market for our ADSs and our stock price could be more volatile.

        We will remain an emerging growth company until the earliest of (i) the last day of our fiscal year during which we have total annual gross revenues of at least $1.0 billion; (ii) the last day of our fiscal year ending after the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act.

You might not receive certain distributions we made on our ordinary shares or other deposited securities if the depositary decides not to make such distributions to you.

        The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary could, at its discretion, decide that it is inequitable or impractical to make a distribution available to any holders of ADSs. For example, the depositary could determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions could be less than the cost of mailing them. In these cases, the depositary could decide not to distribute such property and you will not receive such distribution.

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The trading price of our ADSs could be volatile, which would result in substantial losses to investors.

        The trading price of our ADSs could be volatile and could fluctuate widely in response to factors relating to our business as well as external factors beyond our control. Factors such as variations in our financial results, announcements of new business initiatives by us or by our competitors, recruitment or departure of key personnel, changes in the estimates of our financial results or changes in the recommendations of any securities analysts electing to follow our securities or the securities of our competitors could cause the market price for our ADSs to change substantially. At the same time, securities markets could from time to time experience significant price and volume fluctuations that are not related to the operating performance of particular companies. For example, in late 2008 and early 2009, the securities markets in the United States, China and other jurisdictions experienced the largest decline in share prices since September 2001. These market fluctuations could also have an adverse effect on the market price of our ordinary shares.

        The performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States could affect the volatility in the price of and trading volumes for our ADSs. In recent years, a number of PRC companies have listed their securities, or are in the process of preparing for listing their securities, on U.S. stock markets. Some of these companies have experienced significant volatility, including significant price declines in connection with their initial public offerings. The trading performances of these PRC companies' securities at the time of or after their offerings could affect the overall investor sentiment towards PRC companies listed in the United States and consequently could affect the trading performance of our ADSs. These broad market and industry factors could significantly affect the market price and volatility of our ADSs, regardless of our actual operating performance. Any of these factors could result in large and sudden changes in the trading volume and price for our ADSs.

Anti-takeover provisions in our charter documents could discourage a third party from acquiring us, which could limit our shareholders' opportunities to sell their shares at a premium.

        Our [third] amended and restated memorandum and articles of association include provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change-of-control transactions. For example, our board of directors will have the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix the designations, powers, preferences and relative, participating, optional and other rights, if any, and the qualifications, limitations and restrictions thereof, if any, including, without limitation, the number of shares constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers, full or limited or no voting powers, and liquidation preferences, any or all of which could be greater than the rights associated with our ordinary shares. Preferred shares could thus be issued quickly with terms calculated to delay or prevent a change in control or make removal of management more difficult. In addition, if our board of directors issues preferred shares, the market price of our ordinary shares could fall and the voting and other rights of the holders of our ordinary shares could be adversely affected. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of us in a tender offer or similar transaction.

We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you could have less protection of your shareholder rights than you would under U.S. law.

        Our corporate affairs are governed by our [third] amended and restated memorandum and articles of association, the Cayman Islands Companies Law (2013 Revision), as amended, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by noncontrolling shareholders and the fiduciary responsibilities of our directors to us under Cayman

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Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States and provides significantly less protection to investors. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.

        There is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. Maples and Calder has advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States, a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment:

    is given by a foreign court of competent jurisdiction;

    imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;

    is final;

    is not in respect of taxes, a fine or a penalty; and

    was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

        You should also read "Description of Share Capital—Differences in Corporate Law" for some of the differences between the corporate and securities laws in the Cayman Islands and the United States.

You will have limited ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, because we are incorporated in the Cayman Islands, because we conduct a majority of our operations in China and because all of our directors and officers reside outside the United States.

        We are incorporated in the Cayman Islands and conduct our operations exclusively in China. All of our assets are located outside the United States. All of our officers and directors reside outside the United States and a substantial portion of the assets of those persons are located outside of the United States. As a result, it could be difficult or impossible for you to bring an action against us or against these individuals in the Cayman Islands or in China in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China could render you unable to enforce a judgment against our assets or the assets of our directors and officers. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state, and it is uncertain whether such Cayman Islands or

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PRC courts would be competent to hear original actions brought in the Cayman Islands or China against us or such persons predicated upon the securities laws of the United States or any state. For more information regarding the relevant laws of the Cayman Islands and China, see "Enforcement of Civil Liabilities".

        Shareholders of Cayman Islands exempted companies such as ourselves have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. Our directors have discretion under Cayman Islands law to determine whether or not, and under what conditions, our corporate records could be inspected by our shareholders, but are not obliged to make them available to our shareholders. This could make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

        As a result of all of the above, public shareholders might have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.

Your ability to protect your rights as shareholders through the U.S. federal courts could be limited because we are incorporated under Cayman Islands law.

        Cayman Islands companies might not have standing to initiate a derivative action in a federal court of the United States. As a result, your ability to protect your interests if you are harmed in a manner that would otherwise enable you to sue in a United States federal court could be limited to direct shareholder lawsuits.

We have not determined a specific use for the net proceeds from this offering and we could use these proceeds in ways with which you might not agree.

        We have not determined a specific use for the net proceeds of this offering. Our management will have considerable discretion in the application of these proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds could be used for corporate or other purposes with which you do not agree or that do not improve our profitability or increase our ADS price. The net proceeds from this offering could also be placed in investments that do not produce income or that lose value.

The voting rights of holders of ADSs are limited in several significant ways by the terms of the deposit agreement.

        Holders of our ADSs will only be able to exercise their voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depository. Upon receipt of voting instructions from a holder of ADSs in the manner set forth in the deposit agreement, the depositary will endeavor to vote the underlying ordinary shares in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. Under our [third] amended and restated memorandum and articles of association and Cayman Islands law, the minimum notice period required for convening a general meeting is 10 clear days. When a general meeting is convened, you might not receive sufficient notice of a shareholders' meeting to permit you to withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter at the meeting. In addition, the depositary and its agents might not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the

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depositary to vote your shares. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you might not be able to exercise your right to vote and you could lack recourse if your ordinary shares are not voted as you requested.

The depositary of our ADSs will, except in limited circumstances, grant to us a discretionary proxy to vote the ordinary shares underlying your ADSs if you do not vote at shareholders' meetings, which could adversely affect your interests and the ability of our shareholders as a group to influence the management of our company.

        Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at shareholders' meetings if you do not vote, unless:

    we have failed to timely provide the depositary with our notice of meeting and related voting materials;

    we have instructed the depositary that we do not wish a discretionary proxy to be given;

    we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

    a matter to be voted on at the meeting would have an adverse effect on shareholders; or

    voting at the meeting is made on a show of hands.

        The effect of this discretionary proxy is that you cannot prevent our ordinary shares underlying your ADSs from being voted, absent the situations described above, and it makes it more difficult for holders of ADSs to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

You might not receive distributions on our ordinary shares or any value for them if it is unlawful or impractical for us to make them available to you.

        The depositary of our ADSs has agreed to pay you the cash dividends or other distributions it or the custodian for our ADSs receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, the depositary is not responsible if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs, if any government approval or registration is required for such distribution. We have no obligation to take any other action to permit the distribution of our ADSs, ordinary shares, rights or anything else to holders of our ADSs. This means that you might not receive the distributions we make on our ordinary shares or any value for them if it is unlawful or impractical for us to make them available to you. These restrictions could have an adverse effect on the value of your ADSs.

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

        Your ADSs, represented by ADRs, are transferable on the books of the depositary. However, the depositary could close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary could close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary could also close its books in emergencies, and on weekends and public

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holidays. The depositary could refuse to deliver, transfer or register transfers of our ADSs generally when our books or the books of the depositary are closed, or at any time if we think or the depositary thinks it is necessary or advisable to do so in connection with the performance of its duty under the deposit agreement, including due to any requirement of law or any government or governmental body, or under any provision of the deposit agreement.

Compliance with rules and requirements applicable to public companies might cause us to incur increased costs, which could negatively affect our results of operations.

        As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and Nasdaq Global Market, has required changes in corporate governance practices of public companies. We expect these rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. Complying with these rules and requirements could be especially difficult and costly for us because we might have difficulty locating sufficient personnel in China with experience and expertise relating to U.S. GAAP and U.S. public company reporting requirements, and such personnel could command higher salaries relative to what similarly experienced personnel would command in the United States. If we cannot employ sufficient personnel to ensure compliance with these rules and regulations, we might need to rely more on outside legal, accounting and financial experts, which could be very costly. In addition, we will incur additional costs associated with our public company reporting requirements. We are evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we might incur or the timing of such costs.

Our corporate actions are substantially influenced by Maodong Xu, our founder, chairman and chief executive officer, whose interests might differ from yours and our company as a whole.

        Immediately following this offering, Maodong Xu will beneficially own approximately        % of our outstanding shares or         % if the underwriters exercise their option to purchase additional ADSs in full.

        Accordingly, Mr. Xu will have significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. This concentration of ownership could also discourage, delay or prevent a change of control transactions involving our company, which would deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our ADSs. These actions could be taken even if they are opposed by our other shareholders, including those who purchase ADSs in this offering.

As a foreign private issuer, we are permitted to, and we plan to, rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer's directors consist of independent directors. This might afford less protection to holders of our ordinary shares and ADSs.

        Section 5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent, and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination of directors. As a foreign private issuer, however, we are permitted to, and we plan to follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors or the implementation of a nominating and corporate governance committee. Since a majority of our board of directors will not consist of independent directors as long as we rely on the foreign

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private issuer exemption, fewer board members will be exercising independent judgment and the level of board oversight on the management of our company might decrease as a result. In addition, we currently intend to follow Cayman Islands law instead of the Nasdaq requirements that mandate that we obtain shareholder approval for certain dilutive events, such as an issuance that will result in a change of control, certain transactions other than a public offering involving issuances of 20% or greater interests in the company and certain acquisitions of the shares or assets of another company. For a description of the material corporate governance differences between the Nasdaq requirements and Cayman Islands law, see "Description of Share Capital—Differences in Corporate Law".

The Deposit Agreement could be amended or terminated without your consent under certain circumstances, which limits your rights and could adversely affect your interests in our ADSs.

        We could agree with the depositary to modify the deposit agreement at any time without your consent. We undertake to give holders [30] days' prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit agreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges you are required to pay. In addition, we might not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.

        You will be bound by the modifications to the deposit agreement if you continue to hold your ADSs after the modifications to the deposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the ordinary shares represented by your ADSs (except as permitted by law).

        We also have the right to direct the depositary to terminate the deposit agreement. Similarly, the depositary could in certain circumstances on its own initiative terminate the deposit agreement. In either case, the depositary must give notice to the holders at least 30 days before termination. Until termination, your rights under the deposit agreement will be unaffected. After termination, the depositary will continue to collect distributions received (but will not distribute any such property until you request the cancellation of your ADSs) and could sell the securities held on deposit. After the sale, the depositary would hold the proceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the depositary would have no further obligations to holders other than to account for the funds then held for the holders of ADSs still outstanding (after deduction of applicable fees, taxes and expenses).

        In the event the Deposit Agreement is modified or terminated, you could have different rights relating to the ADSs than when you first invested in our ADSs. These modifications could differ from your expectations upon your initial investment. Moreover, in the event the Deposit Agreement is terminated, whether by us or the depositary, we might not be able to enter into a replacement Deposit Agreement on commercially reasonable terms, in a timely manner or at all, in which case your rights and interests in our ADSs would be adversely affected.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about us and our industry. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary", "Risk Factors", "Use of Proceeds", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Our Business". In some cases, these forward-looking statements can be identified by words or phrases such as "aim", "anticipate", "believe", "estimate", "expect", "going forward", "intend", "ought to", "plan", "project", "potential", "seek", "may", "might", "can", "could", "will", "would", "shall", "should", "is likely to" and the negative form of these words and other similar expressions. The forward-looking statements included in this prospectus relate to, among others:

    our goals and strategies;

    our prospects, business development, growth of our operations, financial condition and results of operations;

    the expected growth of the Internet and mobile user populations in China;

    our plans to enhance subscriber experience, upgrade our infrastructure and increase our service offerings;

    our expectations regarding demand for and market acceptance of our services;

    competition in our industry in China;

    our planned use of proceeds; and

    fluctuations in general economic and business conditions in China.

        These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations could later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in "Prospectus Summary—Our Challenges", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Our Business", "Regulations" and other sections in this prospectus. You should thoroughly read this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

        This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The online service industry might not grow at the rate projected by market data, or at all. The failure of this market to grow at the projected rate may have a material adverse effect on our business and the market price of our ADSs. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results could differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

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USE OF PROCEEDS

        We expect the offering to be made on a best-efforts basis with no minimum number of ADSs required to be sold in order for the offering to proceed. The offering price per share is $            . The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100%, respectively, of the ADSs offered for sale by us. There is no assurance that we will raise the full $                        . In addition, there is no guarantee that we will raise any funds in this offering.

 
  25%   50%   75%   100%  

Gross proceeds

  $     $     $     $    

Offering expenses

  $     $     $     $    

Net proceeds

  $     $     $     $    

        We anticipate using the net proceeds of this offering for general corporate purposes, including future operating losses and working capital needs by December 31, 2015.

        In addition, the purposes of this offering also include the creation of a public market for our ordinary shares represented by the ADSs for the benefit of our shareholders. We did not have any agreements or understandings to make any material acquisitions of, or investments in, other businesses as of the date of this prospectus.

        The foregoing represents our intentions as of the date of this prospectus based upon our present plans and business conditions, but our management will have significant flexibility and discretion in applying the net proceeds of the offering. The occurrence of unforeseen events or changed business conditions may result in application of the proceeds of this offering in a manner other than as described in this prospectus.

        To the extent that the net proceeds we receive from this offering are not immediately applied for the above purposes, we intend to invest our net proceeds in short-term, interest bearing, debt instruments or bank deposits. These investments may have a material adverse effect on the United States federal income tax consequences of your investment in our ADSs. See "Risk Factors—Risks Relating to Our ADSs and This Offering—We could be a passive foreign investment company, or PFIC, which would result in adverse United States tax consequences to United States investors" and "Taxation—Material United States Federal Income Tax Considerations—Passive Foreign Investment Company".

        In utilizing the proceeds of this offering, we, as an offshore holding company, are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions and to other entities only through loans. Subject to satisfaction of applicable government registration and approval requirements, we may extend inter-company loans to our PRC subsidiaries or make additional capital contributions to our PRC subsidiaries to fund their capital expenditures or working capital. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See "Risk Factors—Risk Related to Our Corporate Structure—PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion could limit our use of the proceeds we receive from this offering to fund our expansion or operations".

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DIVIDEND POLICY

        Since our inception, we have not declared or paid any dividends on our ordinary shares. We have no present plan to pay any dividends on our ordinary shares in the foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

        Any future determination to pay dividends will be made at the discretion of our board of directors subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. In addition, our shareholders may declare a dividend at a general meeting of our company. Our board of directors' decision to declare and pay dividends may be based on a number of factors, including our future operations and earnings, capital requirements and surplus, the amount of distributions, if any, received by us from our PRC subsidiary, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See "Description of American Depositary Shares". Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

        We are a holding company incorporated in the Cayman Islands. In order for us to distribute any dividends to our shareholders and ADS holders, we will rely on dividends distributed by our PRC subsidiary, Wowo Shijie. Certain payments from our PRC subsidiary to us are subject to PRC taxes, such as withholding income tax. In addition, regulations in China currently permit payment of dividends of a PRC company only out of accumulated distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations in China. Our PRC subsidiary is required to set aside at least 10% of its after-tax profit based on PRC accounting standards every year to a statutory common reserve fund until the aggregate amount of such reserve fund reaches 50% of the registered capital of such subsidiary. Such statutory reserves are not distributable as loans, advances or cash dividends. Our PRC subsidiary may set aside a certain amount of its after-tax profits to other funds at its discretion. These reserve funds can only be used for specific purposes and are not transferable to the company's parent in the form of loans, advances or dividends. See "Risk Factors—Risks Relating to Our Corporate Structure—We rely principally on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we might have. Any limitation on the ability of our PRC and Hong Kong subsidiaries to pay dividends to us could have an adverse effect on our ability to conduct our business".

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CAPITALIZATION

        The following table sets forth our capitalization as of September 30, 2014 presented on:

    an actual basis;

    a pro forma basis to reflect the automatic conversion of all of our outstanding (i) Series A-1 and A-2 convertible redeemable preferred shares; (ii) Series B convertible redeemable preferred shares; and (iii) indebtedness owed to Mr. Xu into ordinary shares immediately upon the completion of the offering; and

    a pro forma as adjusted basis to reflect the automatic conversion of all of our outstanding Series A convertible redeemable preferred shares, Series B convertible redeemable preferred shares and all indebtedness owed to Mr. Xu , the issuance and sale of the ordinary shares in the form of ADSs offered hereby at an assumed initial public offering price of US$        per ADS, the mid-point of the estimated public offering price range shown on the front cover of this prospectus, after deducting underwriting discounts, commissions and estimated offering expenses payable by us and assuming no exercise of the underwriters' over-allotment option and no other change to the number of ADS sold by us as set forth on the cover page of this prospectus.

        The as adjusted information below is illustrative only and our capitalization following the closing of this offering is subject to adjustment based on the initial public offering price of our ADSs and other terms of this offering determined at pricing. You should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  As of September 30, 2014    
 
 
  Pro forma
as adjusted
 
 
  Actual   Pro forma  
 
  US$
  US$
  US$
 

Amounts due to related parties

  $ 53,967,782   $ 293,382        

Series A-1 convertible redeemable preferred shares, US$0.00001 par value per share, 20,000,000 preferred shares authorized, 12,202,988 shares issued and outstanding

    6,369,091            

Series A-2 convertible redeemable preferred shares, US$0.00001 par value per share, 122,029,877 preferred shares authorized, 122,029,877 shares issued and outstanding

    98,852,033            

Series B convertible redeemable preferred shares, US$0.00001 par value per share, 30,507,471 preferred shares authorized, 30,507,471 shares issued and outstanding

    17,903,844            

Shareholders' equity (deficit):

                   

Ordinary shares, US$0.00001 par value per share, 1,928,660,537 shares authorized; 303,886,640 shares issued and outstanding; 468,626,976 shares issued and outstanding on a pro forma basis

    3,039     4,686        

Additional paid-in capital

        176,797,721        

Accumulated deficit

    (224,242,747 )   (224,242,747 )      

Accumulated other comprehensive loss

    (1,857,491 )   (1,857,491 )      
               

Total shareholders' deficit

    (226,097,199 )   (49,297,831 )      
               

Total

  $ (49,004,449 ) $ (49,004,449 )      
               
               

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DILUTION

        If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our total assets per ADS after this offering. Our net tangible book value as of September 30, 2014 was approximately negative US$233.6 million and our net tangible book value per share was approximately negative $0.77. The issuance of additional shares will be anti-dilutive to our net tangible liabilities. Therefore, we will present the dilution impact based on our total assets. Dilution results from the conversion of our preferred shares and the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

        Our total assets as of September 30, 2014 was approximately US$20.8 million, or US$            per ordinary share, and US$            per ADS. Total assets per ordinary share is determined by dividing our total assets by the number of outstanding ordinary shares. Dilution is determined by subtracting total assets per ordinary share after giving effect to the automatic conversion of all our issued and outstanding preferred shares into ordinary shares immediately upon the completion of this offering, and the issuance and sales by us of            ADS offered in this offering at the initial public offering price of US$            per ADS after deduction of the underwriting discounts and commissions and estimated net offering expenses.

        Without taking into account any other changes in our total assets after September 30, 2014, other than to give effect to (i) the automatic conversion of all of our issued and outstanding preferred shares into ordinary shares, at the conversion rate of one for one, immediately upon the completion of this offering, (ii) our sale of            ADSs offered in this offering at the assumed initial public offering price of US$            per ADS, which is the mid-point of our estimated initial public offering price range as set forth on the cover of this prospectus, with estimated net proceeds of US$             million after deducting underwriting discounts and commissions and estimated offering expenses and (iii) conversion of all of our indebtedness owed to our Chairman and CEO, Mr. Xu, which amounts to US$62.6 million as of January 7, 2015, to ordinary shares issued to him, or his designees, at the same assumed initial public offering price, our pro forma total assets as of September 30, 2014 would have been US$             million, US$            per outstanding ordinary share, including ordinary shares represented by our outstanding ADSs, and US$            per ADS. This represents an immediate increase in pro forma total assets of US$            per ordinary share, or US$            per ADS, to existing shareholders and an immediate dilution in pro forma total assets of US$            per ordinary share, or US$            per ADS, to new investors in this offering. The following table illustrates such per ordinary share dilution:

Assumed initial public offering price per ADS

  US$    

Pro forma total assets per share after giving effect to the automatic conversion of all of our issued and outstanding preferred shares into ordinary shares

  US$    

Increase in total assets per ordinary share attributable to price paid by new investors

  US$    

Pro forma total assets per ordinary share after the offering

  US$    

Dilution in total assets per ordinary share to new investors in the offering

  US$    

Dilution in total assets per ADS to new investors in the offering

  US$    

        A US$1.00 increase (decrease) in the assumed initial public offering price of US$            per ADS would increase (decrease) our pro forma total assets after giving effect to the offering by US$             million, the pro forma total assets per ordinary share and per ADS after giving effect to this offering by US$            per ordinary share and US$            per ADS and the dilution in pro forma total assets per ordinary share and per ADS to new investors in this offering by US$            per ordinary share and US$             per ADS, assuming no change to the number of ADSs offered by us as set forth on the cover page of this prospectus, and after deducting underwriting discounts and

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commissions and other expenses of the offering. The pro forma information discussed above is illustrative only. Our total assets following the closing of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering determined at pricing.

        The following table summarizes on a pro forma basis the differences as of September 30, 2014 between the existing shareholders including holders of our preferred shares, and the new investors with respect to the number of ordinary shares (in the form of ADSs) purchased from us including the conversion of our indebtedness owed to Mr. Xu to ordinary shares issued to him or his designees, the total consideration paid and the average price per ordinary share paid before deducting underwriting discounts and commissions and other expenses of this offering. The total number of ordinary shares does not include ordinary shares represented by ADSs issuable upon the exercise of the over-allotment option granted to the underwriters.

 
  Ordinary shares
Purchased
   
   
  Average
Price per
Ordinary
share
Equivalent
   
 
 
  Total Consideration   Average
Price per
ADS
Equivalent
 
 
  Number   Percent   Amount   Percent  

Existing shareholders

    468,626,976     100 % US$ 78,471,015     100 % US$            US$           

New investors

            %           %            

Shares converted from indebtedness owed to Mr. Xu

            %           %            
                               

Total

          100.0 % US$              100.0 % US$            US$           
                           
                           

        A US$1.00 increase (decrease) in the assumed initial public offering price of US$            per ADS would increase (decrease) total consideration paid by new investors, total consideration paid by all shareholders and the average price per ADS paid by all shareholders by US$             million, US$             million and US$            , respectively, assuming no change in the number of ADSs sold by us as set forth on the cover page of this prospectus and without deducting underwriting discounts and commissions and other expenses of this offering.

        The discussion and table above assumes no exercise of the underwriters' over-allotment option and do not take into consideration any outstanding share options as of the date of this prospectus. As of            , 2015, there were            ordinary shares issuable upon exercise of outstanding share options at a weighted average exercise price of US$            per share, and there were            ordinary shares available for future issuance upon the exercise of future grants under our 2011 Share Incentive Plan. To extent that any of these options are exercised, there will be further dilution to new investors.

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ENFORCEMENT OF CIVIL LIABILITIES

        We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability, because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system under which the legal judgments may be reached and enforced in a relatively reliable fashion, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a significantly lesser extent. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.

        A substantial portion of our assets are located in China. In addition, all of our directors and officers are residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce in United States courts judgments obtained in United States courts based on the civil liability provisions of the United States federal securities laws against us, our officers and directors.

        We have appointed [Law Debenture Corporate Services Inc.] as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

        Maples and Calder, our counsel as to Cayman Islands law, and, B & D Law Firm, our counsel as to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would, respectively, (1) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (2) entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

        There is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. Maples and Calder has advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States, a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment:

    (i)
    is given by a foreign court of competent jurisdiction;

    (ii)
    imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;

    (iii)
    is final;

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    (iv)
    is not in respect of taxes, a fine or a penalty; and

    (v)
    was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

        B & D Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in China will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. In addition, it will be difficult for shareholders to originate actions against us in China under PRC law, because we are incorporated under the laws of the Cayman Islands and it is difficult for shareholders, by virtue of only holding our ADSs or ordinary shares, to establish a connection to China for a PRC court to have subject matter jurisdiction as required by the PRC Civil Procedures Law.

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OUR HISTORY AND CORPORATE STRUCTURE

Overview

        Wowo Limited is a Cayman Islands holding company incorporated on July 13, 2011. We conduct our operations in China principally through contractual arrangements between our wholly-owned PRC subsidiary, Beijing Wowo Shijie Information Technology Co., Ltd., or Wowo Shijie, and two consolidated affiliated entities in China, namely, Beijing Wowo Tuan Information Technology Co., Ltd., or Beijing Wowo Tuan, and Beijing Kai Yi Shi Dai Network Technology Co., Ltd., or Kai Yi Shi Dai, and their respective shareholders. The following diagram illustrates our corporate structure as of the date of this prospectus. See "Risk Factors—Risks Relating to Doing Business in China".

GRAPHIC


(1)
Beijing Wowo Shijie Information Technology Co., Ltd.

(2)
Mr. Maodong Xu and Mr. Hanyu Liu respectively own 95% and 5% of the equity interests in Beijing Wowo Tuan.

(3)
Mr. Maodong Xu and Beijing Wowo Shiji Information Technology Co., Ltd. respectively own 60% and 40% of the equity interests in Kai Yi Shi Dai. Beijing Wowo Shiji Information Technology Co., Ltd. is principally owned by Mr. Hanyu Liu,

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    holding 51% equity interest, Mr. Yongming Zhang, holding 15% equity interest, Mr. Weihong Xiao, holding 8% equity interest, Mr. Jianguang Wu, holding 7.5% equity interest, and Ms. Yonghong Lv, holding 6.3% equity interest.

(4)
The entity is in the process of entity deregistration.

(5)
Pursuant to the relevant agreements in connection with the acquisition of Jilin Wowo Tuan Information Technology Co., Ltd. in 2011, Beijing Wowo Tuan has transferred 49% equity interests in this entity to one of the former shareholders three years after the acquisition.

Our History

        We commenced business operations in March 2010 through Beijing Wowo Tuan, a limited liability company established in China, which was formerly known as Beijing Jihe Weilai Technology Co., Ltd., or Jihe Weilai, and incorporated in May 2008. In December 2010, Mr. Maodong Xu and his wife, Ms. Fang Zhou, acquired 100% equity of Jihe Weilai from its previous shareholders. To enable us to raise capital from international investors, Wowo Group Limited, was incorporated as our initial holding company under the laws of the British Virgin Islands in January 2011. In January 2011, we incorporated Wowo Mall (China) Limited in Hong Kong as a wholly owned subsidiary of Wowo Group Limited. Wowo Mall (China) Limited subsequently established its wholly owned subsidiary, Wowo Shijie, in China in May 2011. In April 2011, Mr. Maodong Xu acquired 100% equity of Kai Yi Shi Dai, a limited liability company incorporated in China in September 2010. Beijing Wowo Tuan holds the licenses required for our operation of 55.com and 55tuan.com.

        Foreign investment in Internet companies is currently subject to significant restrictions under current PRC laws and regulations. As a result, Wowo Shijie entered into a series of contractual arrangements with Kai Yi Shi Dai, Beijing Wowo Tuan and their shareholders to gain effective control over the operation of Kai Yi Shi Dai, Beijing Wowo Tuan and their respective subsidiaries.

        In April 2011, Wowo Group Limited ("Wowo BVI") issued in private placement 5,489,604 Series A-1 convertible redeemable preferred shares to Zero2IPO China Fund II L.P. for a purchase price of US$5.0 million. During the period from May 2011 to July 2011, Wowo BVI issued in private placements an aggregate of 51,339,464 Series A-2 convertible redeemable preferred shares to several investors, including without limitation Zero2IPO China Fund II L.P., CDH Barley Limited, and Besto Holdings Limited, for an aggregate purchase price of US$50 million. In August, 2011, the Company became the ultimate holding company of the Group upon the completion of the reorganization and share swap, in which shareholders of Wowo BVI, our previous holding company, received one share of the Company in exchange for each share of the same class they hold in Wowo BVI as above mentioned.

        Our company, Wowo Limited, was incorporated in the Cayman Islands in July 2011. On August 4, 2011, we effected a share swap in which shareholders of Wowo BVI, our previous holding company, received one ordinary share of Wowo Limited in exchange for each share of the same class they held in Wowo BVI.

        In February 2012, we issued an aggregate of 30,507,471 Series B convertible redeemable preferred shares to several investors, including without limitation CDH Barley Limited, Besto Holdings Limited, and New Field Worldwide Limited, for a purchase price of US$12.5 million. On the same day, we issued an aggregate of 6,713,384 Series A-1 preferred shares and 70,690,413 Series A-2 Preferred Shares to existing Series A-1 and Series A-2 investors for no consideration.

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Our Subsidiaries and Consolidated Affiliated Entities

        As of the date of this prospectus, we had the following significant subsidiaries and consolidated affiliated entities:

    Non-PRC Subsidiary

        On January 24, 2011, we established our wholly owned subsidiary in Hong Kong, Wowo Holding Limited, which name was changed to Wowo Mall (China) Limited on April 26, 2012. Wowo Mall (China) Limited subsequently established our PRC wholly owned subsidiary in May 2011.

    PRC Subsidiary

        We have one PRC wholly owned subsidiary as of the date hereof, namely Wowo Shijie. Wowo Shijie was incorporated on May 19, 2011, and is 100% owned by Wowo Mall (China) Limited, our wholly owned subsidiary in Hong Kong.

    Agreements that Transfers Economic Benefits and Risks to Us

        Exclusive Consulting and Service Agreements.    Wowo Shijie and each of Beijing Wowo Tuan and Kai Yi Shi Dai, entered into exclusive consulting and service agreements, under which each of Beijing Wowo Tuan and Kai Yi Shi Dai, including their subsidiaries and any companies or entities under their control, agrees to engage Wowo Shijie as its exclusive provider of technical platforms, technical support, maintenance and other services. The consolidated affiliated entities shall pay to Wowo Shijie service fees determined based on the gross billings of the consolidated affiliated entities on a quarterly basis. Wowo Shijie shall have the right to adjust at any time the fee based on the operation performance. Wowo Shijie exclusively owns any intellectual property arising from the performance of the exclusive consulting and service agreements. The exclusive consulting and service agreements will be effective for ten years unless earlier terminated as set forth in the agreements or other written agreements entered into by the parties thereto. The exclusive consulting and service agreements shall be extended upon the written confirmation by Wowo Shijie before the expiry thereof, the extended term shall be determined by Wowo Shijie. During the term of the exclusive consulting and service agreements, any of the consolidated affiliated entities may not terminate the agreements except in the case of Wowo Shijie's gross negligence, fraud, or other illegal action or bankruptcy or termination of Wowo Shijie, and in the event of bankruptcy or termination of the affiliated consolidated entities before the expiry of the exclusive consulting and service agreements, the agreements shall be terminated automatically.

    Agreements that Provide Us with Effective Control over Our Affiliated Consolidated Entities

        Foreign investment in Internet companies is currently subject to significant restrictions under PRC laws and regulations. As a Cayman Islands holding company, we do not qualify to conduct these businesses under PRC regulations. In addition, foreign investment in the online service industry requires the foreign investor to possess certain qualifications, which we do not have, and our PRC subsidiary, Wowo Shijie, is considered a foreign invested enterprise which is restricted from holding the licenses that are essential to the operation of our business, such as licenses for operating our website. See "Regulations". As a result, Wowo Shijie has entered into a series of contractual arrangements with Beijing Wowo Tuan, Kai Yi Shi Dai and their shareholders described below, through which we exercise effective control over the operations of Beijing Wowo Tuan, Kai Yi Shi Dai and their respective subsidiaries. We conduct our operations in China principally through Beijing Wowo Tuan, Kai Yi Shi Dai and their respective subsidiaries, which we treated as our consolidated affiliated entities in China. Each of the contractual arrangements between Wowo Shijie, Beijing Wowo Tuan, Kai Yi Shi Dai, and their shareholders was executed in May 2011 and amended subsequent to the changes in shareholding of Beijing Wowo Tuan and Kai Yi Shi Dai respectively in June 2011, April 2012, August 2012 and

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August 6, 2014. These contractual arrangements enable us to exercise effective control over these entities and receive substantially all of the economic benefits from them.

    In May 2011, Wowo Shijie entered into an exclusive consulting and service agreement, an equity pledge agreement, a power of attorney and an exclusive call option agreement with Beijing Wowo Shiji Information Technology Co., Ltd. and its then shareholders. In April 2012, the parties terminated the above mentioned contractual arrangement because Beijing Wowo Shiji Information Technology Co., Ltd. ceased to conduct business operation but held equity interests in Kai Yi Shi Dai.

    In May 2011, Wowo Shijie entered into an exclusive consulting and service agreement, an equity pledge agreement, a power of attorney and an exclusive call option agreement with Kai Yi Shi Dai and its then shareholders. In April 2012, Wowo Shijie entered into a new equity pledge agreement, power of attorney and exclusive call option agreement with Kai Yi Shi Dai to reflect the changes in shareholders.

    In June 2011, Wowo Shijie entered into an exclusive consulting and service agreement, an equity pledge agreement, a power of attorneys and an exclusive call option agreement with Beijing Wowo Tuan and its then shareholders. In August 2012, Wowo Shijie entered into a new equity pledge agreement, power of attorneys and exclusive call option agreement with Beijing Wowo Tuan to reflect the changes in shareholders.

        Exclusive Call Option Agreements.    The shareholders of Beijing Wowo Tuan, and Kai Yi Shi Dai have signed exclusive call option agreements with Wowo Shijie, pursuant to which Wowo Shijie has an exclusive option to purchase, or to designate other persons to purchase, to the extent permitted by applicable PRC laws, rules and regulations, all of the equity interest in Beijing Wowo Tuan and Kai Yi Shi Dai from the shareholders. The purchase price for the entire equity interest is to be the minimum price permitted by applicable PRC laws, rules and regulations, unless otherwise required by PRC laws or agreed in writing by Wowo Shijie and the shareholders of the consolidated affiliated entities. The term of each exclusive call option agreement will be ten years, and can be extended upon the written confirmation by Wowo Shijie prior to the expiration of the agreement and the extended term shall be determined by Wowo Shijie.

        Power of Attorney.    The shareholders of each of Beijing Wowo Tuan, and Kai Yi Shi Dai have signed irrevocable powers of attorney appointing Wowo Shijie as the attorney-in-fact to act on their behalf on all matters pertaining to Beijing Wowo Tuan and Kai Yi Shi Dai and to exercise all of their rights as shareholders of Beijing Wowo Tuan and Kai Yi Shi Dai, including the right to attend shareholders meetings, to exercise voting rights and to transfer all or a part of their equity interests therein pursuant to the exclusive call option agreements. The power of attorney with each shareholder expires when the shareholder ceases to hold any equity interests in Beijing Wowo Tuan and Kai Yi Shi Dai.

        Equity Pledge Agreements.    The shareholders of each of Beijing Wowo Tuan and Kai Yi Shi Dai entered into equity pledge agreements with Wowo Shije, under which the shareholders pledged all of their equity interests in each of Beijing Wowo Tuan and Kai Yi Shi Dai, to Wowo Shijie as collateral to secure performance of all obligations of the consolidated affiliated entities and their shareholders under the applicable exclusive consulting and service agreements and the exclusive call option agreements. Wowo Shijie is entitled to collect dividends and other distributions (in cash or non-cash) of the shares pledged during the term of the pledge. If any event of default as provided for therein occurs, Wowo Shijie, as the pledgee, will be entitled to request immediate payment of the service fees or other fees, or to dispose of the pledged equity interests through transfer or assignment.

        We have been advised by our PRC legal counsel, B & D Law Firm, that the ownership structure and the contractual arrangements among Wowo Shijie and our consolidated affiliated entities and their

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respective shareholders, both currently and immediately after giving effect to this offering, will not result in any violation of PRC laws or regulations currently in effect. However, we have been further advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, rules and regulations. Accordingly, there can be no assurance that the PRC regulatory authorities will not take a view that is contrary to or otherwise different from the above opinion of our PRC legal counsel. Our PRC legal counsel has further advised that if the PRC government authority finds that our corporate structure, the contractual arrangements or the reorganization to establish our current corporate structure do not comply with any applicable PRC laws, rules or regulations, the contractual arrangements will become invalid or unenforceable, and we could be subject to severe penalties including being prohibited from continuing operations. See "Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmental restrictions on foreign investment in Internet business, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations" and "Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could have an adverse effect on us".

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following tables set forth the selected financial and operating data of Wowo Limited, for the periods indicated.

        The selected consolidated statements of operations and balance sheet data for the years ended and as of December 31, 2012 and 2013 are derived from our audited consolidated financial statements of Wowo Limited, which are included elsewhere in this prospectus. The selected consolidated statements of operations and balance sheet data for the year ended and as of December 31, 2011 are derived from our audited consolidated financial statements, which are not included elsewhere in this prospectus.

        The following selected consolidated financial data for the periods and as of the dates indicated are qualified by reference to, and should be read in conjunction with, the consolidated financial statements and related notes of Wowo Limited and "Management's Discussion and Analysis of Financial Condition and Results of Operations", both of which are included elsewhere in this prospectus. The consolidated financial statements of Wowo Limited are prepared and presented in accordance with U.S. GAAP. Our historical results are not necessarily indicative of our results expected for any future periods.

        The following selected consolidated statements of operations for the nine-months ended September 30, 2013 and 2014, selected consolidated balance sheet data as of September 30, 2014 and selected consolidated cash flow data for the nine-months ended September 30, 2013 and 2014 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements and include all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair presentation of our financial position and operation results for the period presented.

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  For the year ended December 31,   For the nine months
ended September 30,
 
 
  2011   2012   2013   2013   2014  
 
  (US$ in thousands, except share and share related data)
 

Selected consolidated statements of operations data

                               

Net revenues

    11,540     27,815     36,253     27,633     20,642  
                       

Cost of revenues

    5,986     7,185     6,583     4,739     5,516  
                       

Gross profit

    5,554     20,630     29,670     22,894     15,126  
                       

Operating expenses:

                               

Marketing

    36,092     12,487     10,426     8,077     8,719  

Selling, general and administrative

    60,498     47,010     49,280     35,825     38,697  

Impairment of intangible assets

            2,035          
                       

Total operating expenses

    96,590     59,497     61,741     43,902     47,416  
                       

Loss from operations

    (91,036 )   (38,867 )   (32,071 )   (21,008 )   (32,290 )
                       

Interest income

    77     21     44     43     6  

Interest expense

    (166 )   (224 )   (137 )   (107 )   (12 )

Other income/(expense), net

    410     20     (89 )   (55 )   (151 )

Gain (loss) from disposal of VIE and VIE's subsidiaries

    266     (29 )            
                       

Loss before provision for income taxes

    (90,449 )   (39,079 )   (32,253 )   (21,127 )   (32,447 )

Provision for income tax benefits

    (60 )   (69 )   (81 )   6      
                       

Net loss

    (90,389 )   (39,010 )   (32,172 )   (21,121 )   (32,447 )
                       
                       

Less: Net loss attributable to noncontrolling interests

    (422 )                

Net loss attributable to Wowo Limited

    (89,967 )   (39,010 )   (32,172 )   (21,121 )   (32,447 )
                       

Accretion for Series A-1 convertible redeemable preferred shares

    553     289     1,199     878     1,058  

Accretion for Series A-2 convertible redeemable preferred shares

    4,040     15,748     34,336     24,425     36,443  

Accretion for Series B convertible redeemable preferred shares

          1,544     2,106     1,552     1,785  
                       

Net loss attributable to holders of ordinary shares of Wowo Limited

    (94,560 )   (56,591 )   (69,813 )   (47,976 )   (71,733 )
                       

Net loss per ordinary share:

                               

Basic

    (0.30 )   (0.18 )   (0.23 )   (0.16 )   (0.24 )

Diluted

    (0.30 )   (0.18 )   (0.23 )   (0.16 )   (0.24 )

Net income per Series A-1 convertible redeemable preferred shares—Basic

    0.13     0.03     0.10     0.07     0.09  

Net income per Series A-2 convertible redeemable preferred shares—Basic

    0.14     0.14     0.28     0.20     0.30  

Net income per Series B convertible redeemable preferred shares—Basic

    N/A     0.06     0.07     0.05     0.06  

Shares used in computation of net loss per ordinary share:

                               

Basic

    319,927,791     310,188,010     303,886,640     303,886,640     303,886,640  

Diluted

    319,927,791     310,188,010     303,886,640     303,886,640     303,886,640  

Shares used in computation of net income per Series A-1 convertible redeemable preferred share

    4,105,923     11,151,244     12,202,988     12,202,988     12,202,988  

Shares used in computation of net income per Series A-2 convertible redeemable preferred share

    28,930,139     110,937,536     122,029,877     122,029,877     122,029,877  

Shares used in computation of net income per Series B convertible redeemable preferred share

    N/A     25,659,708     30,507,471     30,507,471     30,507,471  

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  As of September 30, 2014  
 
  As of December 31,  
 
   
  Unaudited
pro forma(1)
  Pro forma
as adjusted(2)
 
 
  2011   2012   2013   Actual  
 
  (US$ in thousands)
 

Selected consolidated balance sheet data

                                     

Total current assets

    20,843     11,753     11,640     10,309     10,309        

Total assets

    38,323     26,991     23,375     20,782     20,782        

Total current liabilities

    53,324     67,297     96,425     123,754     70,080        

Total liabilities

    53,484     67,387     96,425     123,754     70,080        

Total deficit

    (74,544 )   (86,594 )   (156,889 )   (226,097 )   (49,298 )      

Total liabilities, mezzanine equity and deficit

    38,323     26,991     23,375     20,782     20,782        

Notes:

(1)
The consolidated balance sheet data as of September 30, 2014 are adjusted on a unaudited pro forma basis to give effect to the automatic conversion of all of our outstanding series A-1, series A-2 and series B preferred shares into 164,740,336 ordinary shares and all indebtedness owed to Mr. Xu at IPO price immediately upon the completion of this offering.

(2)
The consolidated balance sheet data as of September 30, 2014 are adjusted on a unaudited pro forma as adjusted basis to give effect to (i) the automatic conversion of all of our outstanding series A-1, series A-2 and series B preferred shares into 164,740,336 ordinary shares and all indebtedness owed to Mr. Xu at IPO price immediately upon the completion of this offering and (ii) the sale of ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$                per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, assuming the underwriters do not exercise the over-allotment option.

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        The following operating metrics are derived from our operating database:

 
  As of or for the three months ended,  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 30,
2013
  December 31,
2013
  March 31,
2014
  June 30,
2014
  September 30,
2014
 

Operating Metrics

                                                                   

Number of merchant clients(1)

    35,194     34,299     41,082     43,982     45,051     56,676     69,851     76,910     77,355     92,002     105,430  

Number of merchant clients with an active online store during the quarter(2)

    2,075     8,185     23,358     29,346     32,588     43,442     55,065     60,306     57,862     63,134     70,417  

Number of service offerings(3)

    74,348     87,254     107,239     142,827     156,777     203,681     261,662     295,108     302,547     366,659     430,473  

Number of installed WoWo Mobile Apps(4)

    101,419     1,034,706     2,359,908     3,811,820     5,588,879     7,163,276     8,872,398     10,426,455     12,484,304     14,511,022     17,294,932  

Notes:

(1)
Number of merchant clients reflects the number of total merchant clients, which includes number of merchant clients that have opened a storefront in our WoWo Mall as well as merchant clients that have only participated in our group buy/flash sale channel without opening a storefront in our WoWo Mall, that have made a sale during the given period.

(2)
Number of merchant clients with an active online store during the quarter reflects the number of merchant clients who has an active online store in our WoWo Mall at any time during the given period, no matter if the online store is still opened at the end of the given period. A merchant client may open more than one online store. Typically for a franchised merchant, the entire franchise may open only one online store though it may have multiple brick and mortar stores.

(3)
Number of service offerings reflects the variety of service offerings provided by our merchant clients that our customers may view and purchase in our group buy/flash sale channel and online stores in our WoWo Mall during a given period.

(4)
Number of installed WoWo Apps reflects the number of WoWo Mobile Apps the retail consumers have downloaded and installed on their smart phones or mobile devices since the commencement of our mobile commerce operation in the end of 2011 to a specific date.

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

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

Overview

        We operate one of China's leading third-party e-commerce platforms, focusing on local entertainment and lifestyle services such as restaurants, movie theaters and beauty salons. We do not compete with our merchant clients by offering our own goods and services nor do we keep inventory of any merchandise. Our unique platform allows local merchants to customize and manage their online stores, make direct sales to their target customers and process a large volume of online sales for consumption at their brick and mortar stores. According to iResearch, our platform represents the largest e-commerce platform for local lifestyle services in terms of number of merchants and registered users as of June 30, 2014. As of September 30, 2014, we have also established a nationwide network of merchant service centers to support local businesses in 150 major cities and population centers across China.

        Our platform consists of an e-commerce website, "WoWo Mall", a mobile commerce infrastructure, "WoWo Mobile", and an electronic management system, "WoWo EMS". The three components of our platform are designed to create an integrated network that enhances the interaction between businesses and consumers that reinforces brand awareness and fosters repeat customers for our merchant clients.

        Our "WoWo Mall" website located at 55.com is used to promote and market our company's brand eminence and complete e-service platform by exhibiting our merchant client's online stores and introduce certain selected services and products. Potential customers may then be directed to 55tuan.com to obtain information on the latest attractive offerings available through such merchants. We began our business as a group buying website under the brand "WoWo Buy" located at 55tuan.com in March 2010. We quickly found that the group buying business model did not fully meet the needs of local service providers. While the group buying business model often helps merchants increase their sales by selling extra capacity, we believe it does not, as a stand-alone offering, significantly promote brand awareness for the merchants or create customer loyalty to the merchants. Merchants also face additional margin pressure from the fees charged by these group buying sites that could further erode their margin. For example, flash sales conducted by third-party group buying websites often promote the brands of the websites over the brands of the merchants. At the same time, local merchants continue to have limited branding power or control over the marketing direction. By June 2012, we augmented our WoWo Buy model with our promotional portal at 55.com to complete our WoWo Mall. WoWo Mall not only permits merchants to establish their own online stores, it also allows the merchants to increase their branding power by providing them with customizable features to establish the look and feel they want to be associated with their brands. In the third quarter of 2014, we hosted and provided operating services to over 100,000 local entertainment and lifestyle merchants on our websites.

        Our "WoWo Mobile" services focus on enhancing the real time interactions between consumers' mobile devices and our e-commerce platform. Since most local merchants in China have a geographic coverage of only a few miles around their brick and mortar stores, location-based search result is the best way to provide local merchants with access to instant potential customers within a few miles

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around their stores. As of September 30, 2014, we had 17.3 million activated WoWo Mobile App installed on mobile devices. We believe a significant portion of our nationwide subscriber base can still be converted to mobile users, which will continue to facilitate the expansion of our mobile commerce business with low subscriber acquisition and retention costs. As of September 30, 2014, approximately 64% of our monthly gross billings were derived from mobile device transactions. In July 2014, we launched our latest "WoWo Merchant App", a customized storefront on mobile devices that integrates reservations, payment, special promotions, membership management and other features which enables local merchants to directly self-manage their marketing and sales campaign on mobile devices.

        Our "WoWo EMS" is a proprietary electronic management system designed for the local merchants. WoWo EMS provides linkage to our central server and facilitates a number of back-office services to our merchant clients. Through WoWo EMS, our merchant clients may also instantly communicate with the WoWo Mobile App utilized by our retail customers. This extends the capabilities of WoWo Mobile by providing our merchant clients with additional customer relationship management tools, such as sending follow-on promotional messages to customers with identifiable purchasing habits.

        We believe our focus in helping local merchants to promote their own brands distinguishes our platform from other e-commerce providers in China. With the technical support available through 150 service centers and over 2,000 merchant service representatives, we have empowered local merchants with limited resources to create sophisticated online branding campaigns and offer better integration of their online and offline resources. With the promotional power of our WoWo Mall, the ability to capture mobile consumers through WoWo Mobile and the specialized electronic management system of our WoWo EMS, we believe we are uniquely positioned to fulfill the needs of local merchants and can be the trusted one-stop e-commerce platform for them.

Our Value Proposition

Merchants choose us for our:

    Affordable and effective e-commerce platform.  We offer both online and mobile commerce platform for local lifestyle merchants to build their online and mobile presence. Our platform helps merchants remain competitive in gaining and retaining the new generation of internet and mobile consumers.

    Ability to customize promotions.  Our platform empowers the traditional merchants to run special promotions on a real-time basis to create better offering packages and conduct targeted marketing. We also allow our merchant clients to reach a broader customer base in a way that cannot be achieved through traditional media or offline marketing.

    Brand building and cost effectiveness.  Our merchant service representatives help local merchants bring their business online and promote their own brands. Our online store platform is designed as an online place where merchants can distinguish their own brand identities and customize their image and brand awareness. We also do not compete with the merchants to sell services like group buying sites.

    Complete cost-effective and integrated infrastructure.  Merchants not only build their storefronts online; they can also rely on our platform for a range of essential support services to operate their businesses. These include integration of online reservation payment system, management of customer orders and relationships, data analysis, availability of mobile app to conduct mobile commerce and direct assistance by live personal merchant service representatives.

    Broad network of relevant location-based customers.  Our platform enables local merchants to access a large number of prospective consumers from our existing customer base that seek local lifestyle services through our precise, location-based searches.

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Consumers choose us for our:

    Personalization.  Our platform is designed to provide a massive amount of local information that consumers can quickly and effectively view and search. Our data analysis and management capabilities allow us to anticipate consumers' needs and tailor the service offering displays to match the consumer with the most relevant merchants and information.

    Compelling mobile experience.  Our WoWo Mobile App makes it easy for consumers to access our WoWo Mall through smart phones and mobile devices. Location-based services and other mobile functionalities drive a higher level of user engagement.

    Up-to-date interconnectivity to the merchants.  Customers have the option to install only the WoWo Merchant Apps of the stores that they desire or frequent and receive tailored promotion, interact with the merchant and make reservations. The convenience exceeds traditional membership cards.

    Delightful shopping experience.  We believe that our marketplaces deliver a delightful shopping experience to consumers. The simple and clear layout of our WoWo Mall, the bargains available from the online stores and our optimized search capabilities allow consumers to easily browse and find the suitable service provider at the ideal location.

Operating Metrics

        We measure our business using several operating metrics that directly affect our revenues. The key metrics regarding our merchant client base are as follows:

        Number of merchant clients.    Number of merchant clients represents number of total merchant clients, including number of merchant clients that have opened a storefront in our WoWo Mall and merchant clients that have only participated in our group buy/flash sale channel without opening a storefront in our WoWo Mall, that have made a sale during a given period. We have experienced a generally steady increase in the number of our overall merchant clients on a quarter by quarter basis, from 35,194 in the first quarter of 2012 to 105,430 in the third quarter of 2014. Notwithstanding this steady growth in the number of merchant clients, we also tend to sign up more merchants or have more merchants renew their subscription of an online stores in the third quarter of each calendar year when students increase their purchases during summer vacation. Conversely, we may experience a slight decline in merchant numbers in the first and fourth quarters where purchasing activities declined over Chinese New Year and PRC National Holidays and fewer merchants participate in the group buy/flush sale channel as a result.

        Number of merchant clients with an open online store.    Number of merchant clients with an open online store represents number of merchant clients who have opened an online store in our WoWo Mall at any point during the given period no matter the online stores are still open at the end of the given period. A merchant client may open more than one online store. Typically for a franchised merchant, the entire franchise may open only one online store though it may have multiple brick and mortar stores. Subject to seasonal fluctuation described above, we have experienced a generally steady increase in the number of our online stores, on a quarter by quarter basis, from 2,075 in the first quarter of 2012 to 70,417 in the third quarter of 2014, demonstrating the attractiveness of WoWo Mall business model to the merchants.

        Number of stock keeping units.    Number of stock keeping units reflects the variety of service offerings provided by our merchant clients that our customers may view and purchase in our group buy/flash sale channel and online stores in our WoWo Mall during a given period. The number of our stock keeping units increased on a quarter by quarter basis generally in line with the increase in the number of merchant clients and online stores from 74,348 in the first quarter of 2012 to 430,473 in the third quarter of 2014. We believe this steady increase in the number of stock keeping units reflects the

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variety of offerings available and strengthens the attractiveness of our platform to both merchants and consumers.

        The key metrics regarding our customer base are as follows:

        Number of installed Wowo Mobile Apps.    We define the number of installed WoWo Mobile Apps as the number of retail consumers who have downloaded and installed our WoWo Mobile App on their smart phones or mobile devices since the commencement of our mobile commerce operation in the end of 2011 to the end of each subsequent quarters. We have experienced a steady increase in the number of installed WoWo Merchant App from 101,419 as of March 31, 2012 to 17,294,932 as of September 30, 2014, demonstrating consumers' adoption of our mobile commerce platform.

        Gross billings.    We define gross billings as the gross amounts collected from retail customers for services and goods sold on 55tuan.com and through WoWo Mobile Apps in a given time period without deducting the amount claimed for refund during the same period. Gross billings also do not include cash payments by retail customers directly to merchants without utilizing the online payment systems available through our WoWo Mobile App. Gross billings are not equivalent to revenues or any other financial metrics presented in our consolidated financial statements. Our gross billings were US$399.9 million and US$437.0 million for the years ended December 31, 2012 and 2013 and US$338.1 million and US$356.5 million for the nine months ended September 30, 2013 and 2014, respectively. Subject to seasonal fluctuation, we have experienced a steady increase in gross billings, as our scale of operation continued to grow.

        Among the total gross amounts we collected from our retail customers, approximately 5.8% and 26.2% of our gross billings were contributed by mobile users who made purchases on our WoWo Mobile App for the years ended December 31, 2012 and 2013 and 23.5% and 50.7% for the nine months ended September 30, 2013 and 2014, respectively. For the month of September 2014, approximately 64% of our monthly gross billings were derived from mobile commerce. We believe the proportion of transactions from mobile as of total transactions will continue to increase.

        Average take rate.    We define average take rate as the gross amounts we retained as a percentage of gross billings for services and goods sold in the applicable period. The gross amounts we retained for goods and services sold is calculated by deducting amounts paid to local merchants from gross billings for such services and goods sold.

        Currently, take rate for merchant clients ranges from 2%-8%, depending on their respective business categories or our other strategic considerations. The take rate we establish varies according to our estimate of the industry profit margins in specific verticals, which we believe mainly determines the amount a merchant is willing to pay to generate sales or attract buyers through this channel, as well as other strategic considerations. For example, for verticals that typically have lower gross margins, such as movie tickets, we charge a lower take rate, whereas for verticals such as beauty salons, photography, where gross margins are generally higher for the merchants, we charge a higher take rate.

        Our average take rate was 7.5% and 6.9% for the years ended December 31, 2012 and 2013 and 7.2% and 4.6% for the nine months ended September 30, 2013 and 2014, respectively. The decrease was mainly due to competition and as we continued to offer attractive take rate to increase our client base. One of the ways for a merchant client to receive a more attractive deal includes switching to our storefront fee paying model by paying a storefront fee that range between RMB4,000 to RMB6,000 per year.

        Number of subscribers.    We define subscribers as the total number of registered accounts at 55tuan.com and WoWo Mobile Apps that are able to receive our group buying/flash sale deal information through our email direct marketing (EDM) system or short messaging service (SMS) system, less individuals who have unsubscribed since the inception of our business in March 2010 through a specific date. To sign up for our service and become a subscriber, an individual provides an

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email address or a mobile phone number. We can measure our overall growth in the market as well as our potential revenue opportunity as a function of our total subscriber base. The subscriber base does not take into consideration the activity level of the subscriber with our service, nor does it adjust for multiple or unused accounts. Despite these drawbacks, we believe this metric provides valuable insight on the trajectory and scale of our business. We had 18.9 million and 26.9 million subscribers as of December 31, 2012 and 2013 and 25.0 million and 34.1 million as of September 30, 2013 and 2014, respectively. We have experienced a steady increase in the number of consumers.

        Number of cumulative customers.    We define cumulative customers as the total number of unique subscribers who have made at least one purchase since the inception of our business in March 2010 through a specific date. We consider this metric to be an important indicator of our business performance as it helps us to understand the activity rate of our subscribers in purchasing goods and services as oppose to merely receiving information for comparison shopping. We had 13.0 million and 19.1 million cumulative subscribers as of December 31, 2012 and 2013 and 17.9 million and 23.3 million as of September 30, 2013 and 2014, respectively. We have experienced a steady increase in the number of cumulative consumers, demonstrating consumers' increase adoption of our business model.

        Number of cumulative repeat customers.    We define cumulative repeat customers as the number of unique subscribers who have made more than one purchase since the inception of our business in March 2010 through a specified date. We believe this metric indicates customer with high contact level using our services. We had 6.5 million and 9.4 million cumulative repeat subscribers as of December 31, 2012 and 2013 and 8.8 million and 11.5 million as of September 30, 2013 and 2014, respectively.

        Average gross billings per customer.    This metric represents the average gross billings generated per paying customer on our Wowo Mall website in a given time period. This metric is presented as the gross billings generated on Wowo Mall website in a given period, divided by the number of paying customers on our Wowo Mall website in the same period. Although this metric is difficult to evaluate in light of our rapid customer growth, we believe that this measure is an indicator of the revenue generating capacity of our customers. Our average gross billings per paying customer were US$42.4, US$49.7 for the years ended December 31, 2012 and 2013 and US$44.1 and US$54.6 for the nine months ended September 30, 2013 and 2014, respectively.

Other Factors Affecting Our Results of Operations

        Besides our operating metrics that directly affect our revenues, there are a number of factors that affect our results of operations, including:

        Continued growth of China's economy and location-based, entertainment and lifestyle services in general.    We conduct all of our business and operations in China. Accordingly, our results of operations have been, and are expected to continue to be, affected by the general performance of China's economy. Since the inception of our business, we have benefited from overall economic growth in China. In addition, as the leading location-based, entertainment and lifestyle e-commerce platform service provider, our financial results have been, and are expected to continue to be, affected by the performance of the location-based, entertainment and lifestyle service industry in China.

        Competitive pressure.    We operate in a highly competitive market. We compete with a number of other e-commerce service providers that have significant capital and human resources, some of which have also launched initiatives in direct competition with our business. The terms and conditions we offer our merchant clients are affected by our competitors' strategies, which, as a result, affect our cost of operation. Competition also has a direct effect on our ability to retain existing subscribers and attract new subscribers.

        Marketing expense.    We engage in a variety of different online marketing efforts tailored to our targeted retail consumers to expand our customer base. Expenses incurred for marketing and other

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promotional efforts may have a negative impact on our profitability, if they prove to be ineffective and do not expand our subscriber base as intended.

        Seasonality.    Our business is affected by seasonality. For example, purchasing activities are usually lower in the first quarter over the Chinese New Year and the fourth quarter over PRC National Holidays. Purchasing activities may be the highest during the third quarter over summer holidays when students increase their purchases.

        We had no outstanding short-term bank loan as of September 30, 2014.

Net Revenues

        We derive our net revenues from commission and storefront fees.

        Our revenues from commission are presented on a net basis (representing the amount billed to retail consumers less the amount paid to merchant clients). We act as an agent rather than as the principal in the delivery of the service or products underlying a WoWo Coupon and do not assume the risks and rewards of ownership of the products nor are we responsible for the actual fulfillment of services. As such, revenue recognition for commission is deferred until the redemption of the WoWo Coupons by the retail consumers, at which time the underlying sale has been culminated and we have completed our service obligations to our merchant clients.

        We have adopted an operational return and refund policy that offers our customers refunds on the coupon they have purchased, if a customer is not satisfied with the goods or services after redemption, or if a customer has not redeemed the coupon within twenty days after expiration date of the coupon (the "Refund Period"). Until redemption, the proceeds received by us from selling the products and services are recorded as advance from customers. Historically, the amounts of refund claimed by customers for the redeemed coupons was clearly insignificant. Based on an analysis of historical patterns and amounts of claims by customers, we provide a refund reserve with an estimated refund rate close to zero for the redeemed coupons. Therefore, we do not recognize refunds for redeemed coupons in profit or loss upon revenue recognition for coupon redemption. Currently, unredeemed amounts beyond the Refund Period remains in advance from customers on our balance sheet due to uncertainty in the relevant laws and policies, including PRC Civil Law, Law on the Protection of the Rights and Interests of Consumers and certain normative documents enacted by the SAIC, where the basis of a legal right could exist for a coupon purchaser to claim a refund, if such right exists at all. These laws and policies currently do not unequivocally provide any definition or explanation on the legal nature of the unredeemed amounts, specifically who has the right to them. As a result, whether the coupon purchasers have a right to request a refund, or whether the period is limited, is not certain under the current practice of PRC laws. Due to this lack of certainty and to avoid any potential risk of legal claims for these amounts in the future, we have taken a conservative approach for the time being by not immediately recognize this revenue.

        We started our coupon business in 2011 and had limited operating history to make a reliable estimation until 2014. Based on the historical data over the past three years, out of the total refund amount made during the year, over 97% was from the unredeemed coupon during the past one year, 2% was from the past two years and 1% from the past three years. After three years, the refund amount was close to 0%, therefore we determined that the possibility of the initiation of a customer claim becomes remote after three years. In 2012 and 2013, we began to experience an increasing amount of WoWo Coupons that remained unredeemed beyond the Refund Period. As a result, our advances from customers were US$21.0 million and US$28.7 million as of December 31, 2012 and 2013, respectively, and US$29.6 million as of September 30, 2014, respectively.

        We also derive a portion of our net revenues from storefront fees for merchants featured on our WoWo Mall. Our merchants pay a fixed fee for an agreed contract period (generally one year).

        Our net revenues were US$27.8 million and US$36.3 million for the years ended December 31, 2012 and 2013 and US$27.6 million and US$20.6 million for the nine months ended September 30, 2013 and 2014, respectively.

Cost of Revenues

        Our costs of revenues are direct and indirect costs incurred to generate revenues, and consist primarily of:

    salaries and benefits to employees, which are salaries and benefits we pay to our editorial, logistic and server maintenance staff;

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    server maintenance and depreciation, which are for maintenance and depreciation of our server equipment;

    short message distribution fees, which are fees we pay for sending short text messages to retail consumers' cell phones to acknowledge their purchases and provide authenticating two-dimensional barcodes and security codes;

    amortization of intangible assets, which is amortization expense of the domain names we acquire from local group buying/flash sale service providers;

    depreciation of property and equipment, which are depreciation expenses for our servers and office equipment; and

    online payment processing fees, which are processing fees we pay to third party payment service providers in connection with our consumers' online payments to us.

Our cost of revenues was US$7.2 million and US$6.6 million for the years ended December 31, 2012 and 2013 and US$4.7 million and US$5.5 million for the nine months ended September 30, 2013 and 2014, respectively.

Gross Profit

        As a result of the above, our gross profits were US$20.6 million and US$29.7 million, representing a gross profit margin of 74.2% and 81.8% for the years ended December 31, 2012 and 2013, respectively. For the nine months ended September 30, 2013 and 2014, our gross profits were US$22.9 million and US$15.1 million, representing a gross profit margin of 82.9% and 73.3%, respectively.

Operating Expenses

        The following table sets forth our operating expenses by amount and as a percentage of total operating expenses for the periods indicated:

 
  For the year ended
December 31
  For the nine months ended
September 30
 
 
  2012   2013   2013   2014  
 
  US$   %   US$   %   US$   %   US$   %  
 
  (in thousands, except for percentages)
 

Operating Expenses

                                                 

Marketing

    12,487     21.0 %   10,426     16.9 %   8,077     18.4 %   8,719     18.4 %

Selling, general and administrative

    47,010     79.0 %   49,280     79.9 %   35,825     81.6 %   38,697     81.6 %

Impairment of intangible assets

            2,035     3.2 %                
                                   

Total operating expenses

    59,497     100 %   61,741     100 %   43,902     100 %   47,416     100 %
                                   
                                   

        Our operating expenses consist of marketing expenses and selling, general and administrative expenses. Our total operating expenses were US$59.5 million and US$61.7 million for the years ended December 31, 2012 and 2013 and US$43.9 million and US$47.4 million for the nine months ended September 30, 2013 and 2014, respectively.

    Marketing expenses

        Our marketing expenses primarily consist of expenses incurred in connection with advertisements and market promotion events.

        Our marketing expenses were US$12.5 million and US$10.4 million, for the years ended December 31, 2012 and 2013, respectively, representing 44.9% and 28.8% of the net revenues of the

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respective periods. For the nine months ended September 30, 2013 and 2014, our marketing expenses were US$8.1 million and US$8.7 million, respectively, representing 29.2% and 42.2% of the net revenues of the respective periods.

    Selling, general and administrative expenses

        Our selling, general and administrative expenses primarily consist of:

    salaries and benefits for employees, which are the salaries and benefits for our management, merchant service representatives and general administrative staff;

    share-based compensation to employees, which is the expenses incurred in connection with the grant of share options to our directors, officers and other employees pursuant to our share incentive plan; and

    office expenses, which consist primarily of office rental, maintenance and utilities expenses, depreciation of office equipment and other office expenses.

        Our selling, general and administrative expenses were US$47.0 million and US$49.3 million, for the years ended December 31, 2012 and 2013, respectively, representing 169.0% and 135.9% of the net revenues of the respective periods. For the nine months ended September 30, 2013 and 2014, our selling, general and administrative expenses were US$35.8 million and US$38.7 million, respectively, representing 129.6% and 187.5% of the net revenues of the respective periods.

Loss from Operations

        We incurred net losses of US$39.0 million and US$32.2 million, for the years ended December 31, 2012 and 2013, respectively. For the nine months ended September 30, 2013 and 2014, our net losses were US$21.1 million and US$32.4 million, respectively. The losses were primarily due to the higher growth rate of our operating expenses compared with the growth rate of our net revenues as we establish our local network across China. We made significant investments in sales and marketing to build our WoWo Mall brand among local merchants and retail consumers.

Provision for Income Tax Benefit

        We are subject to PRC Enterprise Income Tax Law on taxable income in accordance with the relevant PRC income tax laws. We incurred net losses of US$39.0 million and US$32.2 million, for the years ended December 31, 2012 and 2013 and net losses of US$21.1 million and US$32.4 million, for the nine months ended September 30, 2013 and 2014, respectively. Our provision for income tax benefit were US$0.1 million and US$0.1 million, for the years ended December 31, 2012 and 2013, respectively, and US$5,819 and nil for the nine months ended September 30, 2013 and 2014, respectively.

Critical Accounting Policies

        The preparation of financial statements of Wowo Limited and related notes requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our management has discussed the development, selection and disclosure of these estimates with our board of directors. Actual results may differ from these estimates under different assumptions or conditions. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that

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reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.

        We believe that the following critical accounting policies are the most sensitive and require more significant estimates and assumptions used in the preparation of our consolidated financial statements.

        You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included in this prospectus.

Revenue Recognition

        We generate most of our revenues from the sales of WoWo Coupons.

        We present revenues on a net basis (representing the amount billed to subscribers less the amount paid to merchant clients). We act as an agent rather than as a principal in the delivery of the goods or services underlying the WoWo Coupons as we do not assume the risks and rewards of ownership of goods nor are we responsible for the actual provision of services. Both of these are the responsibilities of the merchant clients.

        We recognize revenues when all of the following criteria are met: (i) persuasive evidence of existence of an arrangement, which is typically at the point when we enter into cooperating agreements with merchant clients to sell WoWo Coupons and the price becomes fixed or determinable; (ii) collectability is reasonably assured, which occurs when retail consumers remit payments to third party online payment service providers for WoWo Coupons purchased; and (iii) goods or services are provided.

        We earn the related commission revenue as an agent when our consumers actually redeem their WoWo Coupons. Until such time, the proceeds received by us from selling the WoWo Coupons are recorded as proceeds received in connection with unredeemed coupons. During the period from the sale of a WoWo Coupon to the point of coupon redemption, we are also contractually obligated to provide, maintain and support an online coupon verification system which our merchant clients must use to validate the WoWo Coupon before goods or services are provided to the retail consumers. We also provide ongoing customer service support to our merchant clients through the coupon redemption period. We have concluded these performance obligations to be a substantive and integral part of our service delivery process from which we earn our net revenues. Based on the above considerations, revenue recognition is deferred until the redemption of the WoWo Coupons by the retail consumers for the delivery of goods or consumption of the services, at which time the underlying sale from which we earn our commission has been culminated and we have completed our service obligations to our merchants. Our remaining obligations to our merchants after coupon redemption by the retail consumers are inconsequential.

        We adopt return and refund policy pursuant to which we offer a retail consumer a refund if the consumer is not satisfied with the goods or services provided on the WoWo Coupon after redemption, and we offer retail consumers a refund on a WoWo Coupon within 20 days after expiration if the WoWo Coupon was not redeemed upon expiration. Historically, the amounts of refund claimed by customers for the redeemed coupons was clearly insignificant. Based on an analysis of historical patterns and amounts of claims by customers, we provide a refund reserve with an estimated refund rate close to zero for the redeemed coupons. Currently, unredeemed amounts beyond the Refund Period remains in advance from customers on the balance sheet on a gross basis due to the ambiguity and uncertainty regarding interpretation and application of current PRC laws with respect to the nature of these unredeemed amounts, such as PRC Civil Law, Law on the Protection of the Rights and Interests of Consumers and certain normative documents enacted by the State Administration of Industry and Commerce, or the SAIC. We recognize revenue from these unredeemed amounts until the

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third anniversary from the expiration date of the coupon, when the possibility for a customer to initiate a claim becomes remote. We did not recognize any revenue from these unredeemed amounts for the years ended December 31, 2012 and 2013, respectively. And we recognized $1,830,495 unredeemed amounts to revenue for the nine-month period ended September 30, 2014.

        In addition, the merchants are contractually responsible and liable for the quality of the products or services provided and we also hold the right to claim reimbursements from the merchants, therefore, the amounts of costs that we incurred as a result of such refunds have been minimal for the years presented.

        We provide online storefronts to certain merchants. We charge the merchants a storefront fee for an agreed contract period. We recognize revenues from the storefront fees collected ratably over the contract period.

Impairment of Goodwill and Intangible Assets

        Goodwill represents the cost of an acquired business in excess of the fair value of tangible and identifiable intangible net assets purchased. We generally seek the assistance of an independent valuation firm in determining the fair value of the identifiable intangible net assets of the acquired business. We assign all the assets and liabilities of an acquired business, including goodwill, to reporting units.

        There are several methods that can be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, we typically use the discounted cash flow, or DCF, method of income approach. This method starts with a forecast of all of the expected future net cash flows associated with a particular intangible asset. These cash flows are then discounted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. We once used cost approach for the determination of the fair value of specific acquired intangible assets. Cost approach is based upon the concept of replacement as an indicator of value. In the valuation of specific assets under the cost approach, value is being estimated based on the cost of reproducing or replacing the asset, less depreciation from functional obsolescence, and economic obsolescence, if present and measurable. For goodwill, we use the income approach in determining the impairment of goodwill on reporting unit, with reference to valuation report prepared by an independent valuation firm based on data we provided. This approach includes the DCF method, taking into consideration the market approach and certain market multiples as a validation of the values derived using the discounted cash flow methodology.

        Some of the significant estimates and assumptions inherent in the DCF method or other methods include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows and the assessment of the asset's economic life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory or economic barriers to entry. Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives.

        Specifically, the income approach involves applying appropriate discount rates to estimated cash flows that are based on earnings forecasts developed by us. The financial projections used in deriving the fair values of intangible assets were consistent with our business plan. However, these assumptions were inherently uncertain and highly subjective. These assumptions include: no material changes in the existing political, legal and economic conditions in China; no major changes in the tax rates applicable to our subsidiaries and consolidated affiliated entities in China; our ability to retain competent management, key personnel and staff to support our ongoing operations; and no material deviation in market conditions from economic forecasts.

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        Goodwill is tested for impairment at least once annually or more frequently if we believe indications of impairment exist. Impairment is tested using a two-step process. The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. We currently have one reporting unit, which recorded goodwill in relation to the acquisition of 21 local group buying businesses in 2011.

        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 compares 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. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. Estimating the fair value of reporting unit is performed by the DCF method.

        In circumstances where our reporting unit has zero or negative carrying amounts, we will perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill exists, we would consider whether there are any adverse qualitative factors indicating that impairment may exist. Since our carrying amount of equity interest was negative as of December 31, 2012, 2013 and September 30, 2014, we considered that it was more likely than not that goodwill impairment might exist given that we had been generating losses and negative cash flows during the year ended December 31, 2012, 2013 and September 30, 2014. Hence, we proceeded directly to Step 2 of goodwill impairment test.

        The following table sets forth the details of the goodwill impairment test as of December 31, 2012, 2013 and September 30, 2014.

 
  December 31, 2012   December 31, 2013   September 30, 2014  
 
  (US$ in thousands, except percentages)
 

Estimated fair value of the reporting unit

    94,000     69,200     72,600  

Carrying value of reporting unit, net

    (86,600 )   (156,900 )   (226,100 )

Amounts by which the fair value exceed the carrying value of reporting unit

    180,600     226,100     298,700  

Implied fair value of goodwill

   
115,900
   
119,700
   
166,100
 

Carrying value of goodwill, net

    7,400     7,600     7,500  

Percentage by which the fair value exceed the carrying value of goodwill

    1,566 %   1,575 %   2,215 %

        As of December 31, 2012, 2013 and September 30, 2014, the implied fair values of goodwill of the reporting unit significantly exceeded their respective carrying values. As a result, no goodwill impairment was recorded for the years ended December 31, 2012 and 2013 and the period ended September 30, 2014.

        The principal assumptions in preparing the financial projection for the purpose of determining whether the goodwill is impaired included the following:

    As of December 31, 2012, we assumed that our business will growing at a compound annual revenue growth rate of 16% during the years from 2013 to 2020 and a terminal growth rate of 3% after 2020. EBIT margin was expected to turnaround from negative in 2013 to a positive level during the years from 2014 to 2020, ranging from 9% to 31%. The discount rate selected was 26%.

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    As of December 31, 2013, we assumed that our business will growing at a compound annual revenue growth rate of 14% during the years from 2014 to 2020 and a terminal growth rate of 3% after 2020. EBIT margin was expected to turnaround from negative in 2014 to a positive level during the years from 2015 to 2020, ranging from 8% to 28%. The discount rate selected was 25%.

    As of September 30, 2014, we assumed that our business will growing at a compound annual revenue growth rate of 40% during the years from 2015 to 2020 and a terminal growth rate of 3% after 2020. EBIT margin was expected to turnaround from negative in 2015 and 2016 to a positive level during the years from 2017 to 2020, ranging from 3% to 28%. The discount rate selected was 27%.

        The estimation of fair value of a reporting unit or goodwill using the DCF method requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, or WACC, which are used as the discount rates under the income approach. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment of the reporting unit. A lower revenue growth rate due to failure to achieve expected sales, or higher costs and expenses in operation due to the loose budget control, could negatively impact the result of the fair value of the reporting unit. The risk associated with achieving our forecasts were assessed in selecting the appropriate discount rates as discussed above. A higher discount rate would result in a lower fair value of reporting unit and could negatively impact the result of goodwill impairment test. However, as the calculated and implied fair value of the goodwill are much larger than its carrying value on the book, any change to increase the weighted average cost of capital, or WACC, or an estimated low growth rate even to a level as low as zero growth rate on annual revenue over the projected period, would not result in an impairment of the carrying amount at goodwill.

        The fair values of the intangible assets were estimated by us, with the assistance from an independent third-party appraiser. We are ultimately responsible for the determination of all amounts related to the intangible assets recorded in the financial statements.

        Acquired intangible assets are amortized over their useful lives. Useful lives are based on management's estimates of the period that the assets will generate revenue. In particular, trade name/domain name acquired through the business acquisitions which will be used to redirect the users to the primary sites is amortized using the straight-line method over two years and the trade name/domain name acquired for the operation of the online group buying/flash sale business are amortized using the straight-line method over ten years. Theoretically, the acquired domain name can be used indefinitely by renewing the registration with relevant authority upon expiry at immaterial costs. Therefore, its legal life would be indefinite. However, with a consideration of the fact that the group buying/flash sale industry in China is relatively new with intense competition, the management, after taking into consideration the benefits expected to be generated from the trade name/domain name, has estimated a useful life of two years for the trade name/domain name which will be used to redirect the users to the primary sites and a useful life of 10 years for trade name/domain name of 55.com.

        We acquired user base that contains information about the user's name, contact information, order history and demographic information. As most of the users were attracted by lucky draw activities and had no stable order history, the economic life of the user base is estimated to be short, approximately 2 years. Operating system acquired is amortized using the straight-line method over three years based on the estimated technological life of the operating system.

        We amortize intangible assets with determinable useful lives on a straight-line basis. We evaluate intangible assets with determinable useful lives for recoverability whenever events or changes in

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circumstances indicate that their carrying amounts may not be recoverable. We measure recoverability of long-lived assets to be held and used as part of a cash generating unit by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If we believe the assets are impaired, the impairment will equal the amount by which the carrying value of the assets exceeds the fair value of the assets. We recorded an impairment of intangible assets of $2,034,791 for the year ended December 31, 2013 because the post-acquisition performance contributed by the acquired intangible assets was not in line with our expectations at the date of acquisition.

        Estimates of fair value involve a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. Our judgments in determining an estimate of fair value can materially impact our results of operations. We base these valuations on information available as of the impairment review date and on expectations and assumptions that management deems reasonable. Any changes in key assumptions, including unanticipated events and circumstances, may affect the accuracy or validity of such estimates and could potentially result in impairment charges.

Income Taxes

        In preparing our consolidated financial statements, we must estimate our income taxes in each of the jurisdictions in which we operate. We estimate our actual tax exposure and assess temporary differences resulting from different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which we include in our consolidated balance sheet. We must then assess the likelihood that we will recover our deferred tax assets from future taxable income. If we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance, we must include an expense within the tax provision in our statement of operations.

        Management must exercise significant judgment to determine our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We base the valuation allowance on our estimates of taxable income in each jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. If actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an additional valuation allowance, which could materially impact our financial position and results of operations.

        U.S. GAAP requires that the impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant tax authority. If we ultimately determine that the payment of these liabilities will be unnecessary, we reverse the liability and recognize a tax benefit during that period. Conversely, we record additional tax charges in a period in which we determine that a recorded tax liability is less than we expect the ultimate assessment to be. We did not recognize any significant unrecognized tax benefits during the periods presented in this prospectus.

Fair Value of Our Ordinary Shares and Share-Based Compensation

        We are a private company with no quoted market prices for our ordinary shares. We therefore needed to make estimates of the fair value of our ordinary shares at various dates for the purposes of (1) determining the fair value of our ordinary shares at the date of the grant/re-measurement of share-based compensation award to our employees as one of the inputs in determining the fair value of the award and (2) at the date of issuance of convertible instruments as one of the inputs into determining the intrinsic value of the beneficial conversion feature.

        The fair value of the ordinary shares and share-based compensation award granted to our employees were estimated by us, with assistance from an independent third-party appraiser (the

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"Appraiser"). We are ultimately responsible for the determination of all amounts related to share-based compensation and the convertible instruments recorded in the financial statements.

        The following table sets forth the fair value of our ordinary shares estimated at different dates prior to September 30, 2014:

Date
  Class of
shares
  Fair value   Purpose of valuation   Type of valuation

February 29, 2012 and March 9, 2012

  Ordinary Shares   US$ 0.0989   Re-measurement of share options granted and determination of potential beneficial conversion feature in connection with the issuance of Series B Preferred Shares   Contemporaneous

July 1, 2012

 

Ordinary Shares

 
US$

0.0600
 

Share options granted as of July 1 2012

 

Contemporaneous

October 1, 2012

 

Ordinary Shares

 
US$

0.0594
 

Share options granted as of October 1, 2012

 

Contemporaneous

March 15, 2013

 

Ordinary Shares

 
US$

0.0611
 

Share options granted as of March 15, 2013

 

Contemporaneous

April 18, 2014

 

Ordinary Shares

 
US$

0.0081
 

Share options granted as of April 18, 2014

 

Contemporaneous

June 29, 2014

 

Ordinary Shares

 
US$

0.0221
 

Ordinary share compensation to executives and certain directors as of June 29, 2014

 

Contemporaneous

        In determining the fair value of our ordinary shares, we have considered the guideline prescribed by the AICPA Audit and Accounting Practice Aid, Valuation of Privately-Held Company Equity Securities Issued and Compensation, or the Practice Aid. Specifically, paragraph 16 of the Practice Aid sets forth the preferred types of valuation that should be used.

        The Appraiser used the discounted cash flow, or DCF, method of the income approach to derive the fair value of our ordinary shares as of June 29, 2014. We considered the market approach and searched for public companies located in China with similar business nature and in a stage of development similar to ours. However, no companies similar to us in many aspects could be identified, and we therefore only used the results obtained from the market approach as a sanity check on the results obtained from the income approach. The determination of the fair value of our ordinary shares required complex and subjective judgments to be made regarding our projected financial and operating results, our unique business risks, the liquidity of our shares and our operating history and prospects at the time of valuation. These estimations will not be necessary to determine the fair value of our ordinary shares once trading commences.

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

    Weighted average cost of capital, or WACC: The WACCs were determined based on a consideration of such factors as risk-free rate, comparative industry risk, equity risk premium, company size and company-specific factors. The changes in WACC from 26% as of October 1, 2012 to 25% as of March 15, 2013 were primarily due to our business growth and recovery in the global capital markets and economic conditions for accelerating our development. In deriving the WACCs, which are used as the discount rates under the income approach, certain publicly traded companies in the online commerce and travel service agency business were

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      selected for reference as our guideline companies. To reflect the operating environment in China and the general sentiment in the U.S. capital markets towards the online commerce industries, the guideline companies were selected with consideration of the following factors: (i) the guideline companies should be online services provider; and (ii) the guideline companies should either have their principal operations in China, as we operate in China, and/or are publicly listed companies in the U.S., as we plan to become a public company in the U.S. The WACC increased from 25% as of April 18, 2014 to 27% as of June 29, 2016. Additional 2% risk premium was added to reflect additional risk/uncertainty involved in the new business operation of WoWo Merchant App.

    Discount for lack of marketability, or DLOM: When determining the DLOM, the option-pricing method (put option) was applied to quantify the DLOM where applicable. Although it is reasonable to expect that the completion of this offering will add value to our ordinary shares because we will have increased liquidity and marketability as a result of this offering, the amount of additional value can be measured with neither precision nor certainty. The DLOMs were estimated to be 22% as of October 1, 2012 and 25% as of March 15, 2013. The higher DLOM is used for the valuation, the lower is the determined fair value of the ordinary shares. DLOM decreased from 13% as of April 18, 2014 to 9% as of June 29, 2014 due to a shorter period to the expected initial public offering date.

        The income approach involves applying appropriate discount rates to estimated cash flows that are based on earnings forecasts developed by us. The assumptions used in deriving the fair values were consistent with our business plan. However, these assumptions were inherently uncertain and highly subjective. These assumptions include: no material changes in the existing political, legal and economic conditions in China; no major changes in the tax rates applicable to our subsidiaries and consolidated affiliated entities in China; our ability to retain competent management, key personnel and staff to support our ongoing operations; and no material deviation in market conditions from economic forecasts. The risk associated with achieving our forecasts were assessed in selecting the appropriate discount rates, which ranged from 27% to 25%.

        The fair value of our ordinary shares slightly decreased from US$0.06 per share as of July 1, 2012 to US$0.0594 per share as of October 1, 2012, primarily due to the following reasons:

    revenue growth rate was lower when the management expected more intense competition in the group buying business;

    the company's 2012 actual performance missed budget; but

    additional cost from platform usage fee and cost reduction that achieved more efficient cost control which could result in increase in EBIT.

        The fair value of our ordinary shares increased from US$0.0594 per share as of October 1, 2012 to US$0.0611 per share as of March 15, 2013, primarily due to the following reasons:

    revenue growth rate is higher as the company aims to expand market share from the growing Internet consumption market though lower profit margin; and

    recovery in the global capital markets and economic conditions.

        The fair value of our ordinary shares decreased from US$0.0611 per share as of March 15, 2013 to US$0.0081 per share as of April 18, 2014, primarily due to the following reasons:

    the company's 2013 actual performance missed budget; and

    profitibility declined due to intense competition in the market resulting in our lower bargaining power to counterparties in negotiating the take rate (margin) and higher operating expenses (e.g. sales commission cost).

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        The fair value of our ordinary shares increased from US$0.0081 per share as of April 18, 2014 to US$0.0221 per share as of June 29, 2014, primarily due to the following reasons:

    Financial performance was expected to be better in the long run when the company's business was expected to receive contribution from the new operation of WoWo Merchant App; and

    DLOM was lower due to a shorter period to the expected initial public offering date.

        Our share-based compensation with employees are measured based on the grant date fair value of the equity instrument we issued and recognized as compensation expense over the requisite service period based on the straight-line method, with a corresponding impact reflected in additional paid-in capital.

        The following table sets forth certain information regarding the share options granted to our employees at different dates prior to June 30, 2014:

Grant/Re-measurement date
  Type of award   Number of
award
  Exercise
price
  Fair value of
ordinary
share
  Intrinsic
value
  Type of
valuation

January 1, 2012

  Employee share option     2,532,600   US$ 0.00   US$ 0.1078   US$ 273,014   Contemporaneous

January 1, 2012

  Employee share option     583,550   US$ 0.20   US$ 0.1078       Contemporaneous

July 1, 2012

  Employee share option     661,100   US$ 0.20   US$ 0.0600       Contemporaneous

October 1, 2012

  Employee share option     7,977,216   US$ 0.00   US$ 0.0594   US$ 473,847   Contemporaneous

October 1, 2012

  Employee share option     175,000   US$ 0.20   US$ 0.0594       Contemporaneous

March 15, 2013

  Employee share option     1,228,590   US$ 0.20   US$ 0.0611       Contemporaneous

April 18, 2014

  Employee share option     11,445,500   US$ 0.01   US$ 0.0081       Contemporaneous

        In determining the value of share options to employees, we have used the Binomial option-pricing model, with assistance from the Appraiser. Under this option pricing model, certain assumptions, including risk-free interest rate, the contractual life of the options, the expected dividends on the underlying ordinary shares, the expected volatility of the price of the underlying shares for the contractual life of the options, the post-vesting forfeiture rate and the expected exercise multiple are required in order to determine the fair value of our options. Changes in these assumptions could significantly affect the fair value of share options and hence the amount of compensation expense we recognize in our consolidated financial statements.

        In determining the value of ordinary shares to directors and executives, we have considered the fair value of the ordinary share and the expected dividend paid-out ratio. Because we have no plan to pay dividend, the fair value of the share granted to directors and executives is the fair value of the ordinary share.

        The key assumptions used in valuation of the employee share options are summarized in the following table:

 
  Grants on
January 1,
2012
  Grants on
July 1,
2012
  Grants on
October 1,
2012
  Grants on
March 15,
2013
  Grants on
April 18,
2014

Risk-free rate of return(1)

  1.8%   1.7%   1.7%   0.9%   1.8%

Contractual life of the options(2)

  5.0 years   5.0 years   5.0 years   5.0 years   5.0 years

Volatility(3)

  53%   64%   64%   65%   55%

Expected dividend yield(4)

  0%   0%   0%   0%   0%

Post-vesting forfeiture rate(5)

  5.0%/10.0%/0%   20.0%   0%/5.0%/20.0%   25.0%/40.0%   9.0%/40.0%

Exercise multiple(6)

  2x / 3x   2x   2x / 3x   2x / 3x   3x / 2x

(1)
The risk-free rate of return is based on the yield curve of USD China Sovereign Bonds as of the valuation dates as extracted from Bloomberg.

(2)
The contractual life of the options is based on the option grant letter.

(3)
The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of listed guideline companies over a period comparable to the contractual life of the options.

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(4)
We estimate the dividend yield based on our expected dividend policy over the expected term of the options.

(5)
The post vesting forfeiture rate was based on our historical statistical data. 9.0% and 40.0% was applied to options granted to general staff as of different valuation dates. 0% was applied to options granted to executive management with expectation that the executive management will not quit from the company over the contractual life of the options.

(6)
Exercise multiple is the ratio of fair value of share over the exercise price at the time which the option will be exercised, estimated based on a consideration of research study regarding exercise pattern from historical statistical data. A multiple of three was used for the executive management and a multiple of two was used for general staff.

Limited Operating History

        We began our current business operations in March 2010 and, accordingly, we have a very limited operating history upon which you can evaluate the viability and sustainability of our business. It may also be difficult to evaluate the viability of our group buying/flash sale services as a business model because we may not have sufficient experience to address the risks frequently encountered by early stage companies using new business models and entering new and rapidly evolving markets. In addition, certain of our senior management and employees have worked with us for only a relatively short period of time. Our future results and performance are likely to depend on the success of our group buying/flash sale services, as well as other services we may launch and that remain untested, and on the synergies that may develop among our senior management in implementing our business model.

Internal Control over Financial Reporting

        Prior to this offering, we were a private company and had limited accounting personnel and other resources with which to address our internal control over financial reporting.

        In connection with the audit of our consolidated financial statements as of and for the two years ended December 31, 2012 and 2013, we and our independent registered public accounting firm identified three material weaknesses as of December 31, 2013. As defined in standards established by the PCAOB, a "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

        The material weaknesses identified related to (i) lack of accounting personnel with appropriate knowledge of accounting principles generally accepted in the United States of America, or U.S. GAAP, (ii) the lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP, and (iii) the lack of risk assessment process. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in our internal control over financial reporting. We and they are required to do so only after we become a public company. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have been identified.

        To remedy our identified material weaknesses we have adopted several measures to improve our internal control over financial reporting, including (i) hiring more U.S. GAAP experienced personnel and setting up the U.S. GAAP reporting team in near future to strengthen the resources in preparing the financial statements under U.S. GAAP and developing and implementing a full set of U.S. GAAP accounting policies and financial reporting procedures as well as related internal control policies; (ii) preparing a comprehensive accounting manual in accordance with U.S. GAAP and will conduct training for the relevant personnel; and (iii) designing the risk assessment process, preparing the risk assessment documentation and performing the formal evaluation process for evaluating related risks based on such documentation. We expect to complete the measures above as soon as practicable and

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we will continue to implement measures to remedy our internal control deficiencies in order to meet the deadline imposed under Section 404 of the Sarbanes-Oxley Act.

        The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation. See "Risk Factors—Risks Relating to Our Business and Industry—During the course of the audit of our financial statements, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results in accordance with U.S. GAAP could be materially and adversely affected. In addition, investor confidence in us and the market price of our ADSs may decline significantly if we or our independent registered public accounting firm conclude that our internal control over financial reporting is not effective".

Exemptions Available Under the JOBS Act

        We are an "emerging growth company" under the Jumpstart Our Business Startups Act (the "JOBS Act"), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Furthermore, we are not required to present selected financial information or any management's discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.

        We have not opted out of these exemptions available to the emerging growth companies from various reporting requirements that are applicable to other public companies. This decision allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies or otherwise become applicable to us. As a result, our financial statements might not be comparable to public companies or other emerging growth companies that have opted out of these exemptions. We cannot predict if investors will find our ADSs less attractive because we will rely on these exemptions. If some investors find our ADSs less attractive as a result, our stock price could be lower than it otherwise would be, there could be a less active trading market for our ADSs and our stock price could be more volatile.

        We will remain an emerging growth company until the earliest of (i) the last day of our fiscal year during which we have total annual gross revenues of at least $1.0 billion; (ii) the last day of our fiscal year ending after the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act.

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Results of Operations

        The following table presents selected financial data from consolidated statements of operations of Wowo Limited for the periods indicated. Our limited operating history makes it difficult to predict future operating results. We believe that period-to-period comparisons of results of operations should not be relied upon as indicative of our future performance.

 
  For the year ended
December 31,
  For the nine months
ended September 30,
 
 
  2012   2013   2013   2014  
 
  (US$ in thousands)
 

Consolidated statements of operations data

                         

Net revenues

    27,815     36,253     27,633     20,642  

Cost of revenues

    7,185     6,583     4,739     5,516  
                   

Gross profit

    20,630     29,670     22,894     15,126  

Operating expenses:

                         

Marketing

    12,487     10,426     8,077     8,719  

Selling, general and administrative

    47,010     49,280     35,825     38,697  

Impairment of intangible assets

        2,035          
                   

Total operating expenses

    59,497     61,741     43,902     47,416  
                   

Loss from operations

    (38,867 )   (32,071 )   (21,008 )   (32,290 )

Interest income

    21     44     43     6  

Interest expense

    (224 )   (137 )   (107 )   (12 )

Other income/(expenses), net

    20     (89 )   (55 )   (151 )

Loss from disposal of VIE and VIE's subsidiaries

    (29 )            
                   

Loss before provision for income tax

    (39,079 )   (32,253 )   (21,127 )   (32,447 )

Provision for income tax benefits

    (69 )   (81 )   6      
                   

Net loss

    (39,010 )   (32,172 )   (21,121 )   (32,447 )
                   
                   

Nine Months ended September 30, 2013 compared to the Nine Months ended September 30, 2014

    Net revenues

        Our net revenues decreased by US$6.9 million, or 25.3%, from US$27.6 million for the nine months ended September 30, 2013 to US$20.6 million for the nine months ended September 30, 2014.

        Net revenues from commission decreased by US$7.6 million, or 36.2%, from US$20.9 million for the nine months ended September 30, 2013 to US$13.4 million for the nine months ended September 30, 2014, primarily due to a decrease in our effective take rate due to competition and as we continue to offer lower take rate to increase our merchant client base. Our effective take rate was 7.2% and 4.6% for the nine months ended September 30, 2013 and 2014, respectively.

        Net revenues from our storefront fees increased by US$0.6 million, or 8.6%, from US$6.7 million for the nine months ended September 30, 2013 to US$7.3 million for the nine months ended September 30, 2014 as we signed up more merchant clients by continue to improve our service offerings and web page contents. In the three months ended September 30, 2014, we had approximately 13,100 storefront fee paying merchant clients.

    Cost of revenues

        Our cost of revenues increased by US$0.8 million, or 16.4%, from US$4.7 million for the nine months ended September 30, 2013 to US$5.5 million for the nine months ended September 30, 2014, primarily due to an increase in electronic payment processing fees of US$0.6 million resulting

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from an increase of mobile app customers. Our gross billings for the nine months ended September 30, 2013 and 2014 was US$338.0 million and US$356.2 million.

    Total Operating expenses

        Our total operating expenses increased by US$3.5 million, or 8.0%, from US$43.9 million for the nine months ended September 30, 2013 to US$47.4 million for the nine months ended September 30, 2014, primarily due to increases in selling, general and administrative expenses of US$2.9 million.

    Marketing expenses

        Our marketing expenses increased by US$0.6 million, or 7.9%, from US$8.1 million for the nine months ended September 30, 2013 to US$8.7 million for the nine months ended September 30, 2014, primarily due to our expansion into the mobile commerce market and the related marketing expenses.

    Selling, general and administrative expenses

        Our selling, general and administrative expenses increased by US$2.9 million, or 8.0%, from US$35.8 million for the nine months ended September 30, 2013 to US$38.7 million for the nine months ended September 30, 2014, primarily due to an increase in share based compensation of US$1.0 million, an increase in salary of US$0.9 million, an increase in offices expenses of US$0.5 million and an increase in selling expenses for vouchers of US$0.5 million.

    Loss from operation

        As a result of the foregoing our loss from operation increased by US$11.3 million, or 53.7%, from US$21.0 million for the nine months ended September 30, 2013 to US$32.3 million for the nine months ended September 30, 2014.

    Net loss

        As a result of the foregoing, our net losses increased by US$11.3 million, or 53.6%, from US$21.1 million for the nine months ended September 30, 2013 to US$32.4 million for the nine months ended September 30, 2014.

Year ended December 31, 2012 compared to Year ended December, 2013

    Net revenues

        Starting from November 2011, we began to encourage our local merchant clients to open online stores on our WoWo Mall website. Starting from July 2012, we began to charge an annual storefront fee for a limited category of merchant clients that have opened an online store with us. Our net revenues increased significantly by US$8.5 million, or 30.3%, from US$27.8 million for the year ended December 31, 2012 to US$36.3 million for the year ended December 31, 2013.

        Net revenues from commission increased by US$1.3 million, or 5.2%, from US$25.0 million for the year ended December 31, 2012 to US$26.3 million for the year ended December 31, 2013, primarily due to an increase in gross billings, offset in part by a decrease in our effective take rate. Our effective take rate was 7.5% and 6.9% for the years ended December 31, 2012 and 2013, respectively.

        Net revenues from our storefront fees increased by US$7.2 million, or 254.4%, from US$2.8 million for the year ended December 31, 2012 to US$10.0 million for the year ended December 31, 2013, primarily due to increases in the number of fee paying merchants.

    Cost of revenues

        Our cost of revenues decreased by US$0.6 million, or 8.4%, from US$7.2 million for the year ended December 31, 2012 to US$6.6 million for the year ended December 31, 2013, primarily due to a decrease in employee salary and benefit costs by US$1.1 million as we became more efficient in our

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operation and required fewer writers/editors and logistic personnel and a decrease in amortization of intangibles by US$0.2 million, offset in part by an increase in electronic payment processing fees of US$0.9 million due to an increase in gross billings.

    Total Operating expenses

        Our total operating expenses increased by US$2.2 million, or 3.8%, from US$59.5 million for the year ended December 31, 2012 to US$61.7 million for the year ended December 31, 2013, primarily due to increases in selling, general and administrative expenses of US$2.3 million and an increase in impairment of intangible assets of US$2.0 million; offset in part by a decrease in marketing expenses of US$2.1 million.

    Marketing expenses

        Our marketing expenses decreased by US$2.1 million, or 16.5%, from US$12.5 million for the year ended December 31, 2012 to US$10.4 million for the year ended December 31, 2013, primarily due to a decrease in the marketing and promotion expenses of US$1.8 million as we forego certain low performance online advertising channels and became more performance oriented in our selection of online advertising channels.

    Selling, general and administrative expenses

        Our selling, general and administrative expenses increased by US$2.3 million, or 4.8%, from US$47.0 million for the year ended December 31, 2012 to US$49.3 million for the year ended December 31, 2013, primarily due to an increase in employee expenses of US$5.4 million. Head count for our merchant client representatives increased from 1,506 as of December 31, 2012 to 2,119 as of December 31, 2013, as we continue to expand our network of client service centers. The increase in our employee expenses is offset in part by a decrease in share based compensation expenses of US$1.0 million, a decrease in office expenses of US$1.1 million, a decrease in bad debts of US$0.5 million and a decrease in depreciation of equipment of US$0.3 million.

    Loss from operation

        As a result of the foregoing our loss from operation decreased by US$6.8 million, or 17.5%, from US$38.9 million for the year ended December 31, 2012 to US$32.1 million for the year ended December 31, 2013.

    Net loss

        As a result of the foregoing, our net losses decreased by US$6.8 million, or 17.5%, from US$39.0 million for year ended December 31, 2012 to US$32.2 million for the year ended December 31, 2013.

Selected Quarterly Results of Operations

        The following table sets forth our selected unaudited quarterly results of operations for the 11 quarters in the period from January 1, 2012 to September 30, 2014. You should read the following table in conjunction with our audited consolidated financial statements and related notes contained elsewhere in this prospectus. We have prepared the selected unaudited quarterly financial information on the same basis as our audited consolidated financial statements, and it includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for the quarters presented.

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Table of Contents

 
  For the three months ended,  
 
  March 31,
2012
  June 30,
2012
  September 30,
2012
  December 31,
2012
  March 31,
2013
  June 30,
2013
  September 30,
2013
  December 31,
2013
  March 31,
2014
  June 30,
2014
  September 30,
2014
 
 
  US$ in thousands, except share and share related data
 

Selected consolidated statements of operations

                                                                   

Net revenues

                                                                   

Commission

    5,133     5,527     7,509     6,836     7,160     6,773     6,988     5,375     4,184     4,073     5,096  

Storefront fees

    76     299     1,357     1,078     1,997     1,981     2,734     3,245     1,333     2,625     3,331  
                                               

Total net revenues

    5,209     5,826     8,866     7,914     9,157     8,754     9,722     8,620     5,517     6,698     8,427  
                                               

Cost of revenues

    1,931     1,757     1,808     1,689     1,405     1,515     1,819     1,844     1,851     1,732     1,934  
                                               

Gross profit

    3,278     4,069     7,058     6,225     7,752     7,239     7,903     6,776     3,666     4,966     6,493  
                                               

Operating expenses:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Marketing

    2,912     3,669     3,188     2,718     2,327     2,895     2,855     2,349     2,518     2,735     3,466  

Selling, general and administrative

    14,277     11,427     10,789     10,517     11,080     11,715     13,030     13,455     11,248     13,584     13,865  

Impairment of intangible assets

                                2,035              
                                               

Total operating expenses

    17,189     15,096     13,977     13,235     13,407     14,610     15,885     17,839     13,766     16,319     17,331  
                                               

Loss from operations

    (13,911 )   (11,027 )   (6,919 )   (7,010 )   (5,655 )   (7,371 )   (7,982 )   (11,063 )   (10,100 )   (11,353 )   (10,838 )

Interest income

    11     2     4     4     3     39     1     1     2     3     1  

Interest expense

    (88 )   (53 )   (43 )   (40 )   (35 )   (33 )   (40 )   (29 )   (11 )        

Other (expense)/ income, net

    227     (194 )   9     (22 )   (199 )   161     (17 )   (34 )   (8 )   (69 )   (74 )

Gain/(loss) from disposal of VIE and VIE's subsidiaries

    (33 )   2     2