F-1 1 a2203517zf-1.htm F-1

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As filed with the Securities and Exchange Commission on April 20, 2011.

Registration No. 333-    

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



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



Jiayuan.com International Ltd.
(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)
  7371
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Room 1005, Changxin Building
No. 39 Anding Road
Chaoyang District, Beijing
The People's Republic of China
(8610) 6442-8783
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

CT Corporation System
111 Eighth Avenue
New York, New York 10011
(212) 894-8800
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

David S. Wang, Esq.
Steven D. Winegar, Esq.
Paul, Hastings, Janofsky & Walker LLP
35th Floor, Park Place
1601 Nanjing West Road
Shanghai 200040 China
(8621) 6103-2900

 

David T. Zhang, Esq.
Latham & Watkins
41st Floor, One Exchange Square
8 Connaught Place, Central
Hong Kong
(852) 2922-7886



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 earliest 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, par value US$0.001 per share(1)(2)

  US$100,000,000   US$11,610

 

(1)
Includes (a) ordinary shares represented by American depositary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and (b) ordinary shares represented by American depositary shares that are issuable upon the exercise of the underwriters' over-allotment option to purchase additional ordinary shares. These ordinary shares are not being registered for the purposes of sales outside the United States.

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

(3)
Estimated solely for the purpose of computing the amount of registration fee in accordance with Rule 457(o) under the Securities Act.

          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 Securities and Exchange 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. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell and it is not soliciting an offer to purchase these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS DATED                        , 2011

GRAPHIC

                American Depositary Shares

Jiayuan.com International Ltd.

Representing                Ordinary Shares



        This is the initial public offering of our American depositary shares, or ADSs. We are offering                ADSs. Each ADS represents                ordinary shares, par value US$                per share. We intend to use approximately $             million from the proceeds to pay dividends due to the holders of our Series A preferred shares, including US$             million to Fame Gain Investments Ltd., Qiming Venture Partners, L.P. and Qiming Managing Directors Fund, L.P. Fame Gain Investments Ltd. is 100% owned by our chairman, Mr. Yongqiang Qian. The general partner of Qiming Venture Partners, L.P. is Qiming GP, L.P. and one of our directors, Mr. JP Gan, is a managing director of the general partner of both Qiming GP, L.P. and Qiming Managing Directors Fund, L.P.

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

        Investing in the ADSs involves risks. See "Risk Factors" beginning on page 12.

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

 
  Per ADS   Total

Initial public offering price

  US$           US$        

Underwriting discount

  US$           US$        

Proceeds to Jiayuan.com International Ltd. (before expenses)

  US$           US$        

        The underwriters expect to deliver the ADSs to purchasers on or about                        , 2011.

        The selling shareholders have granted the underwriters an option to purchase up to                ADSs at the public offering price, less underwriting discount and commission, within 30 days from the date of this prospectus to cover over-allotments. We will not receive any proceeds from the sale of ADSs by the selling shareholders if the over-allotment option is exercised.

        Immediately following this offering, Fame Gain Investments Ltd., Aprilsky Ltd., funds affiliated with Qiming Venture Partners, L.P. and other shareholders will continue to hold a majority of our outstanding ordinary shares. Fame Gain Investments Ltd. is 100% owned by our chairman, Mr. Yongqiang Qian. Aprilsky Ltd. is 100% owned by our chief executive officer, Ms. Haiyan Gong. The general partner of Qiming Venture Partners, L.P. is Qiming GP, L.P. and one of our directors, Mr. JP Gan, is a managing director of the general partner of Qiming GP, L.P. Our other shareholders include other executive officers as well as shareholders who were shareholders of our company prior to this offering.



BofA Merrill Lynch   Citi



        The date of this prospectus is                        , 2011.


Table of Contents

 
  Page

Prospectus Summary

  1

The Offering

  7

Summary Consolidated Financial and Operating Data

  9

Risk Factors

  12

Forward-Looking Statements

  46

Enforceability of Civil Liabilities

  47

Our History and Corporate Structure

  49

Use of Proceeds

  56

Dividend Policy

  57

Capitalization

  58

Dilution

  59

Exchange Rate Information

  61

Selected Consolidated Financial and Operating Data

  62

Recent Developments

  65

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

  68

Industry

  100

Business

  104

Regulation

  118

Management

  128

Principal and Selling Shareholders

  135

Related Party Transactions

  138

Description of Share Capital

  139

Description of American Depositary Shares

  151

Shares Eligible for Future Sale

  161

Taxation

  163

Underwriting

  171

Expenses Relating to this Offering

  178

Legal Matters

  179

Experts

  180

Where You Can Find Additional Information

  181

Conventions That Apply to This Prospectus

  182

Index to Consolidated Financial Statements

  F-1

        You should rely only on the information contained in this prospectus or any free writing prospectus filed with the United States Securities and Exchange Commission, or the SEC, in connection with this offering. We and the selling shareholders have not, and the underwriters have not, authorized anyone to provide you with additional information or information different from that contained in this prospectus or any filed free writing prospectus. We and the selling shareholders are offering to sell, and seeking offers to buy, our ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus or any filed free writing prospectus is accurate only as of its date, regardless of the time of its delivery or any sale of our ADSs.

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PROSPECTUS SUMMARY

        The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs, discussed under "Risk Factors," before deciding whether to buy our ADSs. We commissioned iResearch Consulting Group, or iResearch, a market research firm in China, to prepare a report for the purpose of providing various industry and other information and illustrating our position in the online dating industry in China. Information from this report appears in the "Prospectus Summary," "Industry," "Business" and other sections of this prospectus. Reference to iResearch in this prospectus is to the information provided in the report prepared by iResearch.

Our Company

        We operate the largest online dating platform in China. As a pioneer in China's online dating market, we are committed to addressing the dating and marriage needs of China's rapidly growing urban singles population by providing a trusted, effective platform and a superior user experience. According to iResearch, we ranked first and commanded a 43.7% share of the total amount of money spent in China's online dating market in 2010. Our website, Jiayuan.com, provides single adults with unique opportunities to meet, interact and form a long-term relationship aimed towards marriage. Jiayuan.com also ranked first in terms of number of visits from different Internet Protocol addresses, or unique visitors, average time spent per user and average page views per user among all online dating websites in China in 2010, according to iResearch.

        We employ a results-based pricing model, which we believe distinguishes us from other online dating service providers. Unlike dating websites that follow a subscription-based model, we offer users free registration with immediate full search access to our database. This feature engages new users in the site and entices them to begin exploring our database for potential companions. Although the search capabilities and exploratory services are provided for free and our users are not required to pay to send an initial message to another user, either the sender or recipient must purchase a RMB2.00 virtual stamp in order for the message to be readable. After the initial message is read, future communications between the same users are free on Jiayuan.com. Our pricing strategy for the initial message is designed to reach and target the mass market with its affordability. Given the nominal cost of a virtual stamp, we believe this feature of our business is recession-resistant and serves as a strong foundation of our revenue model. Furthermore, for users who intend to send or who have received a large amount of initial messages, we offer various types of fee plans that include the option to send up to 100 initial readable messages per day or unlimited message reading during a specified subscription period.

        We believe our results-based pricing model is more attractive to users because they only pay for the results and services that they can see and has been one of the key factors enabling us to attract and retain a large user base. We believe most of our users are well-educated singles seeking long-term relationships aimed towards marriage. Our large and attractive user base combined with our results-based fee structure and user-friendly interface have created what we believe is a superior user experience. According to a survey conducted by iResearch in January 2011, we ranked first in customer satisfaction among our major competitors in China's online dating industry.

        We believe that our " GRAPHIC " (Shiji Jiayuan) brand, which is our Chinese name, has become the most well-known and trusted online dating brand in China. From July to December 2010, " GRAPHIC " (Shiji Jiayuan) was searched 25-times more often than " GRAPHIC " (Jiao You), a common term for "dating" in Chinese, on Baidu.com. Leveraging our brand and national recognition, we have attracted a critical user mass locally in not only first-tier cities, such as Beijing, Shanghai, Guangzhou and Shenzhen, but also in many second-tier cities across China. We intend to continue expanding our user base into other

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second-tier and third-tier cities. A large user base is a major attraction for new users because of the large number of potential companions available to each of our users at their preferred location. We believe our localized critical mass on a national scale and well-regarded brand name is difficult for competitors to replicate and provides us with an important competitive advantage.

        Leveraging the prominence of our brand in China's online dating market, we have been expanding our business to offline events and VIP services. Since 2008, we have hosted on average 670 large scale social gatherings per year in cities throughout China to provide our users offline opportunities to meet in person. Such offline events also promote our national brand name and benefit our online platform. Our VIP services, which offer personalized search services geared towards more affluent clients, help to diversify our revenue mix.

        We only started charging fees for messaging services provided on our Jiayuan.com website in October 2008, and currently we derive most of our revenues from our online business. As of March 31, 2011, we had a total of 40.2 million registered user accounts, with an average of 4,744,705 active user accounts in the first quarter of 2011. Active user accounts refer to registered user accounts through which registered users have logged-in to our Jiayuan.com website at least once within a calendar month in the case of user accounts registered in prior months, or on at least two separate days within a calendar month, including the day of completion of the registration process, in the case of user accounts newly registered in the calendar month. In the first quarter of 2011, the number of our average monthly paying user accounts was 882,471, compared to 306,163 in the first quarter of 2010, representing an increase of 188.2%. We generated net revenues of RMB27.6 million, RMB63.9 million and RMB167.6 million (US$25.4 million) in 2008, 2009 and 2010, respectively. We had a net loss of RMB13.9 million in 2008 and net income of RMB5.7 million and RMB16.7 million (US$2.5 million) in 2009 and 2010, respectively. Excluding non-cash share-based compensation expenses, we had a non-GAAP net loss of RMB13.7 million in 2008 and non-GAAP net income of RMB7.3 million and RMB23.7 million (US$3.6 million) in 2009 and 2010, respectively. For a reconciliation of our non-GAAP net (loss)/income to our U.S. GAAP net (loss)/income, see "Summary Consolidated Financial and Operating Data."

Industry Background

        China's online dating market has grown significantly due to improved public acceptance of and confidence in online dating services. While the online dating industry has reached a mature stage in some markets, such as the United States, China's online dating market is still early in its development and is undergoing rapid growth. China's online dating market is projected by iResearch to grow from RMB487 million in 2010 to RMB1.9 billion in 2015, representing a compound annual growth rate for the online dating market of 31.3%, significantly outpacing the 3.4% compound annual growth rate for the online dating market in the United States during the same period as projected by IBISWorld. The tremendous demand for online dating services in China is primarily driven by (i) unprecedented urbanization, (ii) rapid demographic changes, including a growing gender imbalance, (iii) China's unique cultural considerations and traditional values and (iv) China's fast growing Internet industry. According to iResearch, the number of singles over the age of 18 visiting online dating websites increased from 14 million in 2009 to 19 million in 2010 and is expected to reach 60 million in 2015.

Our Competitive Strengths

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

    leading market position in the fast growing online dating industry;

    nationally renowned and trusted brand;

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    large user base and extensive network of cities with critical scale;

    effective and innovative pricing strategy and business model; and

    experienced management team.

Our Strategies

        We aim to continue to strengthen our leading market position in China and strive to develop our group of websites into a leading global online dating, marriage and family platform. We intend to achieve this goal by implementing the following strategies:

    continue to promote our brand name and increase our market penetration;

    further increase our paying user base and monetize the services we provide them;

    expand our wireless dating services;

    leverage the success of our online dating platform by expanding our business scope into related areas and niche markets; and

    continue to enhance our research and development capabilities.

Our Challenges

        The successful execution of our strategies is subject to certain risks and uncertainties, including those relating to:

    our ability to continue to attract users to our websites;

    our ability to develop and introduce new online dating services and products that meet our users' needs and expectations;

    our ability to compete effectively with present and future competitors or to adjust to changing market conditions and trends;

    the continued recognition of our " GRAPHIC

    " (Shiji Jiayuan) brand and the further enhancement of our other brands;

    substantial uncertainties and restrictions with respect to the interpretation and application of PRC laws and regulations relating to the distribution of Internet content in China; and

    the corporate structure we have adopted to operate our business in China, under which we do not have equity ownership of our PRC operating companies and Shanghai Shiji Jiayuan Matchmaking Service Center, or Jiayuan Shanghai Center, and instead exercise control over them through contractual arrangements.

        See "Risk Factors" and other information included elsewhere in this prospectus for a discussion of these and other challenges, risks and uncertainties.

Our History and Corporate Structure

        Our founder and chief executive officer, Ms. Haiyan Gong, commenced our online dating business in 2003. Due to PRC legal restrictions on foreign ownership and investment in value-added telecommunications service businesses and the prohibition on privately funded non-enterprise institutions from engaging in profit-making business operations in China, we do not have any direct ownership interests or direct voting rights in any of our PRC operating companies and Jiayuan Shanghai Center. We operate our online dating services and offline VIP services through a series of contractual arrangements entered into (i) among Miyuan (Shanghai) Information Technology Co., Ltd., or Shanghai Miyuan, Shanghai Huaqianshu Information Technology Co., Ltd, or Shanghai Huaqianshu, its shareholders and Jiayuan Shanghai Center and (ii) among Beijing Miyuan Information Technology Co., Ltd., or Beijing Miyuan, Beijing Huaqianshu Information Technology Co., Ltd., or Beijing Huaqianshu, Beijing Shiji Xique Information Technology Co., Ltd., or Xique, and their respective shareholders. Shanghai Huaqianshu, Beijing Huaqianshu and Xique, hold, or are in the process of obtaining, the licenses and approvals that are required to operate our business. As a result

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of these contractual arrangements, we have the right to control management decisions and direct the economic activities that most significantly impact Shanghai Huaqianshu, Beijing Huaqianshu, Xique and Jiayuan Shanghai Center, and to obtain substantially all of the economic benefits in Shanghai Huaqianshu, Beijing Huaqianshu, Xique and Jiayuan Shanghai Center and the obligation to fund their losses. Therefore, we are deemed to be the primary beneficiary of Shanghai Huaqianshu, Beijing Huaqianshu, Xique and Jiayuan Shanghai Center, and, accordingly, under generally accepted accounting principles in the United States, or U.S. GAAP, we consolidate their operating results in our consolidated financial statements. For a more detailed discussion of these contractual arrangements, see "Our History and Corporate Structure," and for a detailed description of the regulatory environment for Internet-based businesses and offline VIP services in China that necessitates our adoption of this structure, see "Regulation." In addition, for a detailed description of the risks associated with our corporate structure and the contractual arrangements that support our corporate structure, see "Risk Factors—Risks Relating to Regulation of Our Business and to Our Structure."

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        The following diagram illustrates our anticipated shareholding and corporate structure immediately following this offering and assuming that Harper Capital Inc., or Harper, has completed the transfer of its 100% equity interest in Shanghai Miyuan to Jiayuan Hong Kong and that the underwriters do not exercise their over-allotment option*:

GRAPHIC


(1)
Harper is in the process of transferring its 100% equity interest in Shanghai Miyuan to Jiayuan Hong Kong. We expect to complete this transfer in the second quarter of 2011.

(2)
These contracting shareholders are Ms. Haiyan Gong, our founder and chief executive officer, Mr. Yongqiang Qian, our chairman, Mr. Xu Liu, Mr. Fuping Yu, Mr. Qingjun Zhu and Mr. Cheng Li.

(3)
Jiayuan Shanghai Center was established by Shanghai Huaqianshu as a privately funded non-enterprise institution that engages in non-profit social services.

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        Immediately following this offering, Fame Gain, Aprilsky, funds affiliated with Qiming Venture Partners, L.P. and other shareholders will continue to hold a majority of our outstanding ordinary shares. Fame Gain is 100% owned by our chairman, Mr. Yongqiang Qian. Aprilsky is 100% owned by our chief executive officer, Ms. Haiyan Gong. The general partner of Qiming Venture Partners, L.P. is Qiming GP, L.P. and one of our directors, Mr. JP Gan, is a managing director of the general partner of Qiming GP, L.P. Our other shareholders include other executive officers as well as shareholders who were shareholders of our company prior to this offering. In addition, Mr. Qian, Ms. Gong and Mr. Gan will serve as three of the five members of our board of directors immediately following this offering.

Our Corporate Information

        Our principal executive offices are located at Room 1005, Changxin Building, No. 39 Anding Road, Chaoyang District, Beijing, the People's Republic of China, and our telephone number is +8610 6442-8783. Our website address is http://www.jiayuan.com. The information on our website does not form a part of this prospectus. Our registered office in the Cayman Islands is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011. Investor inquiries shall be directed to us at the address and telephone number of our principal office set forth above.

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THE OFFERING

Total ADSs offered by us

                  ADSs

ADSs outstanding immediately after this offering

 

                ADSs

Ordinary shares outstanding immediately after this offering

 

                ordinary shares(1)

The ADSs

 

Each ADS represents                ordinary shares.

 

The depositary will hold the ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement. You may turn in your ADSs to the depositary in exchange for ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs, you agree to be bound by the deposit agreement as amended.

 

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

Depositary

 

Citibank, N.A.

Over-allotment option

 

The selling shareholders have granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to                additional ADSs at the initial public offering price, less underwriting discount and commission, solely for the purpose of covering over-allotments.

Use of proceeds

 

Our net proceeds from this offering are expected to be approximately US$                 million. We plan to use the net proceeds we receive from this offering to pay dividends due to holders of Series A preferred shares, including US$             million to Fame Gain, Qiming Venture Partners L.P. and Qiming Managing Directors Fund, L.P., and for general corporate purposes, including capital expenditures, such as in connection with establishing new offices, expanding our services and purchasing additional hardware for expanded capacity and to meet new demands from new services, and funding possible future strategic acquisitions. See "Use of Proceeds" for additional information.

 

We will not receive any of the proceeds from the sale of ADSs by the selling shareholders if the over-allotment option is exercised.

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Listing

 

We have applied to have our ADSs listed on the Nasdaq Global Market. Our ADSs and ordinary shares will not be listed on any other stock exchange or traded on any over-the-counter trading system.

Proposed Nasdaq Global Market symbol

 

"DATE"

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of risks you should carefully consider before investing in our ADSs.

Lock-up

 

We, our directors and executive officers, all of our existing shareholders and certain of our existing option-holders have agreed with the underwriters not to sell, transfer or dispose of, directly or indirectly, any of our ADSs or ordinary shares or securities convertible into or exercisable or exchangeable for our ADSs or ordinary shares for a period of 180 days following the date of this prospectus. See "Underwriting."

Reserved ADSs

 

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


(1)
The number of ordinary shares that will be outstanding immediately after this offering assumes the automatic conversion of all of our preferred shares, but excludes                ordinary shares issuable upon the exercise of options outstanding as of the date of this prospectus

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following summary consolidated financial data for the periods and as of the dates indicated should be read in conjunction with our consolidated financial statements and the accompanying notes, "Selected Consolidated Financial and Operating Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," all of which are included elsewhere in this prospectus.

        The summary consolidated statement of operations data for the fiscal years ended December 31, 2008, 2009 and 2010, and the summary consolidated balance sheet data as of December 31, 2008, 2009 and 2010, are derived from our audited consolidated financial statements included elsewhere in this prospectus.

        Our consolidated financial statements are prepared in accordance with U.S. GAAP. Our results of operations in any period may not necessarily be indicative of the results that may be expected for any future periods.

        For a description of our selected unaudited consolidated financial data as of and for the three months ended March 31, 2011, see "Recent Developments."

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Consolidated Statement of Operations Data:

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except share and per share data)
 

Net revenues

    27,625     63,894     167,589     25,392  

Cost of revenues(1)

    (21,353 )   (28,448 )   (61,049 )   (9,250 )
                   

Gross profit

    6,272     35,446     106,540     16,142  

Operating expenses:

                         
 

Selling and marketing expenses(1)

    (14,677 )   (16,574 )   (57,867 )   (8,767 )
 

General and administrative expenses(1)

    (5,872 )   (8,631 )   (24,338 )   (3,685 )
 

Research and development expenses(1)

        (8 )   (381 )   (58 )
                   
 

Total operating expenses

    (20,549 )   (25,213 )   (82,586 )   (12,510 )
                   

Operating (loss)/income

    (14,277 )   10,233     23,954     3,632  
                   
 

Interest income, net

    734     1,189     1,876     284  
 

Foreign currency exchange losses, net

    (299 )   (3 )        
 

Other (expenses)/income, net

    (19 )   6     898     134  
                   

(Loss)/income before income tax

    (13,861 )   11,425     26,728     4,050  
 

Income tax expenses

        (5,748 )   (10,011 )   (1,517 )
                   

Net (loss)/income attributable to Jiayuan.com International Ltd. 

    (13,861 )   5,677     16,717     2,533  
                   
 

Accretion of Series A redeemable convertible preferred shares

    (7,504 )   (7,976 )   (8,690 )   (1,317 )
 

Income allocated to participating preferred shareholders

        (5,677 )   (16,717 )   (2,533 )
                   

Net loss attributable to ordinary shareholders

    (21,365 )   (7,976 )   (8,690 )   (1,317 )
                   

Net loss per share:

                         
 

Basic

    (0.78 )   (0.29 )   (0.32 )   (0.05 )
 

Diluted

    (0.78 )   (0.29 )   (0.32 )   (0.05 )

Weighted average shares used in calculating net loss per share, basic

    27,272,727     27,272,727     27,272,727     27,272,727  

Weighted average shares used in calculating net loss per share, diluted

    27,272,727     27,272,727     27,272,727     27,272,727  
                   

Non-GAAP net (loss)/income(2)

    (13,716 )   7,302     23,680     3,588  

(1)
Includes share-based compensation expenses as follow:

   
  Years ended
December 31,
 
   
  2008   2009   2010   2010  
   
  RMB
  RMB
  RMB
  US$
 
   
  (in thousands)
 
 

Cost of revenues

    96     178     2,041     310  
 

Selling and marketing expenses

        52     700     106  
 

General and administrative expenses

    49     1,395     4,174     632  
 

Research and development expenses

            48     7  
                     
 

Total

    145     1,625     6,963     1,055  
                     
(2)
We define non-GAAP net (loss)/income as net (loss)/income attributable to Jiayuan.com International Ltd. excluding share-based compensation expenses. We review non-GAAP net (loss)/income together with net (loss)/income attributable to Jiayuan.com International Ltd. to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of non-GAAP net (loss)/income has material limitations as an analytical tool. One of the limitations of using non-GAAP net (loss)/income is that it does not include all items that impact our net (loss)/income attributable to Jiayuan.com International Ltd. during the period. In addition, because non-GAAP net (loss)/income is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP net (loss)/income in isolation from or as an alternative to

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    net (loss)/income attributable to Jiayuan.com International Ltd. prepared in accordance with U.S. GAAP. Our non-GAAP net (loss)/income is calculated as follows for the periods presented:

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Net (loss)/income attributable to Jiayuan.com International Ltd. 

   
(13,861

)
 
5,677
   
16,717
   
2,533
 

Add: Share-based compensation expenses

   
145
   
1,625
   
6,963
   
1,055
 
                   

Non-GAAP net (loss)/income

   
(13,716

)
 
7,302
   
23,680
   
3,588
 
                   

Consolidated Balance Sheet Data:

 
  As of December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Total current assets

    50,655     76,407     149,229     22,612  

Total assets

    54,517     80,572     164,258     24,889  

Total liabilities

    6,813     25,566     85,572     12,966  

Series A redeemable convertible preferred shares

    79,795     87,694     93,559     14,176  

Total shareholders' deficit

    (32,091 )   (32,688 )   (14,873 )   (2,253 )

Key Operating Data:

 
  As of December 31,   As of
March 31,
 
 
  2008   2009   2010   2011  

Number of registered user accounts

    12,702,855     19,243,134     35,090,025     40,156,311  

 

 
  Years ended December 31,  
 
  2008   2009   2010  

Number of average monthly active user accounts(1)

            3,700,348  

Number of average monthly paying user accounts

    92,102     203,317     552,930  

 
  Three months ended  
 
  March 31, 2009   June 30, 2009   September 30, 2009   December 31, 2009   March 31, 2010   June 30, 2010   September 30, 2010   December 31, 2010   March 31, 2011  

Number of average monthly active user accounts(1)

                    2,509,917     3,686,260     4,201,952     4,403,262     4,744,705  

Number of average monthly paying user accounts

    174,690     191,349     210,134     237,094     306,163     495,036     649,250     761,271     882,471  

(1)
The information prior to 2010 is not available.


 
  Three months ended  
 
  March 31, 2010   June 30, 2010   September 30, 2010   December 31, 2010   March 31, 2011  

Number of average monthly VIP customers

    157     194     252     278     276  

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RISK FACTORS

        You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before investing in our ADSs. Any of the following risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and prospects. The market price of our ADSs could decline due to any of these risks and uncertainties, and you may lose all or part of your investment.

Risks Relating to Our Business

Our limited operating history and relatively new business model in an emerging and rapidly evolving market make it difficult to evaluate our future prospects.

        Our founder, Ms. Haiyan Gong, commenced our online dating business in 2003. We only began charging our users message fees on our online dating website in October 2008. Prior to this, we generated revenues primarily from charging for non-message related value-added services, such as advanced memberships, priority search rankings and from selling advertisement space on our website. As such, we have a limited relevant operating history from which to evaluate our business, financial performance and prospects. Since the change in our business model in 2008, we have derived a substantial portion of our net revenues from service fees generated from online dating services on our website. Our online services revenue represented 56.8%, 71.0% and 80.0% of our net revenues in 2008, 2009 and 2010, respectively. As a result, we have a short operating history under our current revenue model for you to evaluate in assessing our future prospects. We may not be able to achieve similar results or growth in future periods. Our business model may become obsolete due to development of other business models or technologies. You must consider our business and prospects in light of the risks and difficulties we will encounter as a young company in a new and rapidly evolving market. Our ability to maintain profitability primarily depends on, among other factors, the growth of the online dating industry in China, the continued acceptance of our business model by our users, our ability to generate continuing interest in our websites, our ability to provide services that meet the needs of our users and our ability to control costs and expenses. Accordingly, you should not rely on our results of operations for any prior period as an indication of our future performance. We may not be able to effectively assess or address the evolving risks and difficulties present in the market, which could threaten our capacity to continue operations successfully in the future.

If our efforts to attract a large number of users, convert users into paying users and retain paying users are not successful, our operating results would suffer.

        Our future growth depends on our ability to attract a large number of users, convert our users into paying users and retain our paying users. This depends in part on our ability to deliver a high-quality online dating experience to our users and our development and introduction of enhanced services to retain our paying users. As a result, we must invest significant resources in order to enhance our existing services and continue to introduce new services that people will use. If we are unable to predict user preferences or industry changes, or if we are unable to modify and enhance our services on a timely basis, we may lose user interest and fail to attract new and paying users. Our operating results would also be adversely affected if our services are not responsive to the needs of our users and paying users.

Our selling and marketing expenses may increase and if efforts to increase traffic to our websites are not successful or cost-effective, our net revenues and profitability may be materially and adversely affected.

        We rely on a variety of different marketing efforts to attract traffic to our various websites and convert users into paying users. Our marketing activities involve considerable expenditures for online and traditional offline advertising and marketing. Our online advertising is designed to direct traffic to

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our websites and includes purchased listings on various major Internet search engines in China as well as advertising on third-party websites. Purchased listings generally are displayed if searches for a particular word are performed on a search engine. Advertising on third-party websites includes purchasing advertising space and links to our website. Depending on the arrangement, we pay a fixed fee when visitors to these websites click through to our website, a fee based on the volume of clicks to our website or a fee based on the volume of successful registrations from visitors who click through to our website. These arrangements are generally not exclusive. Our offline advertising includes advertising on conventional media such as television stations and print media.

        Our selling and marketing expenses vary over time, depending upon a number of factors, many of which are beyond our control. For example, the cost of online advertising has recently increased substantially, and we expect those costs to continue to rise as long as the demand for online advertising remains robust. If we are not able to reduce our other operating costs, increase our paying user base or increase average revenue per user to offset such anticipated increases, our profitability may be materially and adversely affected. In addition, our marketing activities may not be successful or cost-effective. Existing arrangements with third parties can be terminated or allowed to lapse upon their expiration and we may not be able to replace this traffic and the related revenues. We also may not be able to enter into new arrangements with third parties in response to industry trends, which would adversely affect our business, financial condition and results of operations.

        Marketing strategies in China are evolving. This further requires us to enhance our marketing strategies and experiment with new marketing methods to keep pace with industry developments. Failure to refine our existing marketing activities or to introduce new effective marketing activities in a cost-effective manner could reduce our market share, cause our net revenues to decline and negatively impact our profitability.

If one or more of our users suffers, or alleges to have suffered physical, financial or emotional harm or our online dating services is misused by users, we may suffer damage to our reputation and our brand, which in turn could adversely affect our net revenues and cause the value of our ADSs to decline.

        The nature of online dating is such that we cannot control the actions of our users in their communications or physical actions. It is possible that one or more of our users could be physically, financially or emotionally harmed following interaction with other users. We warn our users to exercise caution in meetings they arrange following the use of our services or participation in our offline events, but if one or more of our users suffers or alleges to have suffered physical, financial or emotional harm following contact initiated on our online dating website or an online dating website of one of our competitors, any resulting negative publicity could materially and adversely affect us or China's online dating industry in general, including, but not limited, to increased government scrutiny and regulation. From time to time, we are subject to claims by users relating to incidents that have occurred after users meet each other.

        Users may also be able to circumvent the controls we have in place to prevent illegal or dishonest activities and behaviors on our website, such as seeking payment for sexual activity and related activities. Users could also post fraudulent profiles or create false profiles on behalf of other non-consenting parties.

        Any such incident involving our online dating services could damage our reputation and our brand. This, in turn, could adversely affect our net revenues and could cause the value of our ADSs to decline. In addition, the affected users could initiate legal or other actions against us, which could cause us to incur significant expenses and damage our reputation.

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If we are unable to maintain and enhance our brands, we may be unable to maintain or expand our user base.

        We believe that the reputation and level of market awareness for our " GRAPHIC " (Shiji Jiayuan) and " GRAPHIC " (Jiayuan) brands have contributed significantly to the success of our business. Maintaining and enhancing our brand recognition and reputation depends primarily on the quality and consistency of our services, as well as the success of our marketing and promotional efforts. We believe that maintaining and enhancing our brand is critical to our efforts to attract and expand our user base. We believe that the importance of brand recognition will continue to increase given the growing number of Internet sites and the low barriers to entry for companies to set up online dating services. To attract and retain users, and to promote and maintain our brands in response to competitive pressures, we intend to increase our financial commitment to creating and maintaining distinct brand loyalty. If visitors and users to our websites do not perceive our existing services to be of high quality, or if we introduce new services that are not favorably received, the value of our brands could be diluted, thereby decreasing the attractiveness of our websites. While we have devoted significant resources to brand promotion efforts in recent years, we cannot assure you that our ongoing marketing efforts will be successful in further promoting our brand. In addition, our brand image may be harmed by negative publicity relating to our company or websites regardless of its veracity. If we are unable to further maintain and enhance our brand recognition and increase market awareness for our company and services, our ability to attract users may be harmed and our business prospects may be materially and adversely affected.

We have not obtained the trademark registration for the " GRAPHIC " (Shiji Jiayuan) trademark for dating and marriage agency services. If we cannot secure rights to use this trademark for dating and marriage agency services, we may be subject to third-party claims, including claims by an individual who applied to register such trademark in 2005, and may be forced to discontinue using this trademark for dating and marriage agency services, which may adversely affect our ability to maintain our brands, cause us to incur litigation costs and divert resources and management attention.

        We have not obtained the trademark registration of the " GRAPHIC " (Shiji Jiayuan) trademark, the Chinese character form of our "Shiji Jiayuan" brand, for dating and marriage agency services under Class 45 (Dating and Marriage Agency Services) of the International Classification of Goods and Services for such services. We have used this trademark since 2003 and have obtained the trademark registration for this trademark for use on a website under Class 42 (Website).

        We applied to the PRC Trademark Office of the State Administration for Industry and Commerce, or the PRC Trademark Office, for the registration of such trademark for dating and marriage agency services under Class 45 (Dating and Marriage Agency Services) in September 2009. In October 2010, the PRC Trademark Office rejected our trademark registration application on the basis that an individual had applied to register the " GRAPHIC " (Shiji Jiayuan) trademark under Class 45 in June 2005. After being informed by the PRC Trademark Office of their decision in October 2010, we filed an opposition to this individual's trademark registration application under Class 45 on the ground of malicious registration. Our opposition is currently pending. If we are unable to prevail in our opposition to the trademark registration application with the PRC Trademark Office, there is a risk that litigation may become necessary, which may force us to incur significant costs and divert resources and management attention. We may lose the right to use our " GRAPHIC " (Shiji Jiayuan) trademark for dating and marriage agency services, which could have a material adverse impact on our brand recognition and reputation, our business, results of operations and financial condition.

        We are in the process of registering some of our other key trademarks in China. If our applications for our key trademarks are unsuccessful or a third party is able to register them, we may lose our ability to use our key trademarks and be unable to prevent others from using similar or identical trademarks. Furthermore, a lack of registration or license to legally use the trademarks may

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subject us to trademark infringement claims for our use of key trademarks. Losing the right to use our key trademarks for any reason or being subject to trademark infringement claims may adversely affect our ability to maintain and protect our brands, cause us to incur litigation costs and divert resources and management attention.

Competition presents an ongoing threat to the performance of our business and may make it difficult for us to attract and retain users.

        The online dating sector in China is highly competitive. The market is characterized by the frequent introduction of new websites and services, short website life cycles, constantly evolving trends, rapid adoption of technological advancements, as well as price sensitive users. We expect competition in the online dating business in China to continue to increase because there are no substantial barriers to setting up an online dating website. As of December 31, 2010, there were more than 50 online dating websites in China and we compete directly with online dating service providers such as Baihe.com and Zhenai.com. In addition, we face competition from Internet portals and social networking websites such as Sina.com.cn, Sohu.com, QQ.com, 163.com, Renren.com and Kaixin001.com. We also face competition and potential competition from overseas operators of online dating services and Internet companies that offer or seek to offer online dating services in China.

        In addition, we compete with traditional dating services, as well as newspapers, magazines and other traditional media companies that provide dating services. We believe that our ability to compete successfully depends upon many factors both within and beyond our control, including the following:

    the size and diversity of our user base;

    the timing and market acceptance of our services, including the developments of and enhancements to those services relative to those offered by our competitors;

    customer service and support efforts;

    selling and marketing efforts; and

    our brand strength in the marketplace relative to our competitors.

        Many of our current and potential competitors, including overseas companies that offer or seek to offer online dating services in China, have longer operating histories, significantly greater financial, technical, marketing and other resources and larger user bases than we do. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in user requirements. These competitors may engage in more extensive technological development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies which may allow them to build larger user bases than we have. Our competitors may develop products or services that are equal or superior to our services or that achieve greater market acceptance than our services. These activities could attract users away from our websites and reduce our market share.

        In addition, current and potential competitors may make, strategic acquisitions or establish cooperative and, in some cases, exclusive relationships with significant companies or competitors to expand their businesses or to offer more comprehensive services. To the extent these competitors or potential competitors establish exclusive relationships with major portals, search engines and Internet service providers, our ability to reach potential users may be restricted. Any of these competitors could cause us difficulty in attracting and retaining users and could jeopardize our existing relationships with portals, search engines and other web properties.

If we fail to keep pace with rapid technological change, our competitive position will suffer.

        We operate in a market characterized by rapidly changing technologies, evolving industry standards, frequent new product and service announcements, enhancements and changing user

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demands. Accordingly, our performance will depend on our ability to adapt to rapidly changing technologies and industry standards, and our ability to continually improve the speed, performance, features, ease of use and reliability of our services in response to both evolving demands of the marketplace and competitive services. There may be occasions when we may not be as responsive as many of our competitors in adapting our services to changing industry standards and the needs of our users. Our industry has been subject to constant innovation and competition. Historically, new features may be introduced by one competitor, and if they are perceived as attractive to users, they are often copied later by others. Over the last few years, such new feature introductions in the industry have included instant messaging, message boards, e-cards, virtual gifts, personality profiles and mobile content delivery. In addition, the number of people who access the Internet through devices other than desktop and laptop computers, including mobile telephones and other handheld computing devices, has increased dramatically in the past few years, and we expect this growth to continue.

        Introducing new technologies into our systems involves numerous technical challenges, substantial amounts of capital and personnel resources and often takes many months to complete. For example, the lower resolution, functionality and memory currently associated with mobile devices may make the use of our services through such mobile devices more difficult and impair the user experience relative to access via desktop and laptop computers. We intend to continue to devote effort and funds toward the development of additional technologies and services. We may not be able to effectively integrate new technologies on a timely basis or at all, which may decrease user satisfaction with our online dating services. Such technologies, even if integrated, may not function as expected or may be unable to attract and retain a substantial number of mobile device users to our online dating services. We also may not be able to protect such technology from being used by our competitors. Our failure to keep pace with rapid technological changes could have a material and adverse effect on our business.

If we were to lose the services of our founder and chief executive officer, Ms. Haiyan Gong, our business could be disrupted and our business prospects could be adversely affected.

        Our founder and chief executive officer, Ms. Haiyan Gong, has played an important role in the growth and development of our business since its inception. To date, we have relied heavily on her expertise in our business operations, relationships with our employees and business partners and reputation in the online dating industry. In addition, she continues to be primarily responsible for formulating our overall business strategies and spearheading the growth of our operations. If Ms. Gong becomes unable or unwilling to continue in her present position, we may not be able to find a suitable replacement and may incur additional expenses in identifying and training a successor. In addition, if she joins a competitor or forms a competing business, it could severely disrupt our business and negatively affect our financial condition and results of operations. Although Ms. Gong is subject to a non-competition agreement wherein Ms. Gong is subject to certain non-competition restrictions during and for a period of two years after termination of her employment with us, we cannot assure you that such non-competition restrictions will be effective or enforceable under PRC law. Moreover, even if the departure of Ms. Gong from our company did not have any actual impact on our operations and the growth of our business, it could create the perception among investors or the marketplace that her departure may severely damage our business and operations and negatively affect investor confidence in us, which may cause the market price of our ADSs to decline. We do not maintain key-person insurance on Ms. Gong.

If we are unable to attract, retain and motivate key personnel or hire qualified personnel, or if such personnel do not work well together, our growth prospects and profitability will be harmed.

        Our performance is largely dependent on the talents and efforts of highly skilled individuals. We have recently recruited several members of our management, some of whom have limited experience in the online dating industry. As members of our management have only worked together as a team for a

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limited time, there are inherent risks in the management of our company with respect to decision-making, business direction, product development and strategic relationships. In the event that the members of our management team are unable to work well together or agree on operating principles, business direction or business transactions or are unable to provide cohesive leadership, our business could be harmed and one or more of those individuals may discontinue their service to our company forcing us to find a suitable replacement. The loss of any of our management or key personnel could seriously harm our business.

        Competition in our industry for personnel is intense, and we are aware that our competitors have directly targeted our employees. We do not have non-competition agreements with many of our non-executive employees. We also do not maintain key-person life insurance policies on our executive officers. The incentives to attract, retain and motivate employees provided by our option grants or by future arrangements, such as cash bonuses, may not be as effective as they have been in the past. If we do not succeed in attracting necessary personnel or retaining and motivating existing personnel, we may be unable to grow effectively.

Our inability to effectively manage our growth could materially and adversely affect our profitability.

        We have recently experienced a period of rapid growth and expansion. The growth and expansion of our business and services place a continuous significant strain on our management, operational and financial resources. We are required to manage multiple relationships with various strategic associates, technology licensors, users and other third parties. In the event of further growth of our operations or in the number of our third-party relationships, our computer systems or procedures may not be adequate to support our operations, and our management may not be able to manage such growth effectively. To effectively manage our growth, we must continue to implement and improve our operational, financial and management information systems and to expand, train and manage our employee base. If we fail to do so, our management, operational and financial resources could be overstrained and adversely impacted.

Our business depends on our server and network hardware and software and our ability to obtain network capacity; if our current systems safeguards are unable to prevent an interruption in the availability of our services, our reputation and brand may be adversely affected and our net revenue may be reduced.

        The performance of our server and networking hardware and software infrastructure is critical to our business and reputation, to our ability to attract visitors and users to our websites, to convert users into paying users and to retain paying users. An unexpected or substantial increase in the use of our websites could strain the capacity of our systems, which could lead to a slower response time or system failures. We have in the past experienced delays due to hacking activities, including an incident in 2009 which caused our online dating website to be temporarily unavailable for less than a day but resulted in no material loss to us. Any future slowdowns or system failures could adversely affect the speed and responsiveness of our websites and would diminish the experience for our visitors and users. We face risks related to our ability to scale up to our expected user levels while maintaining superior performance. If the usage of our websites substantially increases, we may need to purchase additional servers and networking equipments and services to maintain adequate data transmission speeds, the availability of which may be limited or the cost of which may be significant. Any system failure that causes an interruption in service or a decrease in the responsiveness of our websites could reduce traffic on our websites and, if sustained or repeated, could impair our reputation and the attractiveness of our brands as well as reduce net revenue and negatively impact our operating results.

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        Furthermore, we rely on many different hardware systems and software applications, some of which have been developed internally. If these hardware systems or software applications fail, it would adversely affect our ability to provide our services. If we are unable to protect our data from loss or electronic or magnetic corruption, or if we receive a significant unexpected increase in usage and are not able to rapidly expand our transaction-processing systems and network infrastructure without any systems interruptions, it could seriously harm our business and reputation. We have experienced occasional systems interruptions in the past, and we cannot assure you that we will not incur similar or more serious interruptions in the future. From time to time, our company and our websites have been subject to delays and interruptions due to software viruses, or variants thereof, such as internet worms. To date, we have not experienced delays or systems interruptions that have had a material impact on our business.

        In addition, while we have backup systems in place, we do not have disaster recovery systems and in the event of a catastrophic failure involving our websites, we may be unable to serve our web traffic for a significant period of time. Our business is therefore susceptible to earthquakes and other catastrophic events, including acts of terrorism. Our servers operate from two sites in close proximity to one another in Beijing and the absence of a redundant network in a different location could exacerbate this disruption. Any system failure, including network, software or hardware failure, that causes an interruption in the delivery of our websites and services or a decrease in responsiveness of our websites would result in reduced visitor traffic, reduced net revenue and would adversely affect our reputation and brands.

We rely on third-party advertising service providers and their failure or unwillingness to effectively provide services to us could harm us by increasing our costs and reducing our operating margins.

        We rely on third-party advertising service providers, such as Baidu, that help market our services. Any failure of such third parties to provide their services could significantly harm our business. The steps we take to improve the marketing of our services will increase our cost and reduce our operating margin and may not be successful. Furthermore, any financial or other difficulties such providers face, the nature and extent of which we cannot predict, may adversely affect our business. Except for certain rights in our contracts with such third-party service providers, we exercise little or no control over them, which increases our vulnerability to problems with the services that they provide.

We are required to estimate a portion of our reported revenues and cost of revenues at period-end, which may require adjustments once we receive billing statements from WVAS partners, which may require subsequent adjustments to our financial statements.

        We do not directly bill our users that elect to pay for our online services through their telecommunication operators. Instead, we depend on wireless value-added services, or WVAS, partners to record the sales volume, bill our users, collect payments from the telecommunication operators and remit to us our portion of the revenues. In the years ended December 31, 2008, 2009 and 2010, revenue remitted from WVAS partners accounted for approximately 61.2%, 32.2%, and 19.7%, respectively, of our online revenues. Due to our past experience with the timing of receipt of the monthly statements provided by our WVAS partners, we rely on our own internal estimates for the portion of our reported revenues and cost of revenues and are required to make adjustments when we actually receive the monthly billing statements from our WVAS partners if such statements are materially different from our estimates. Historically, there have been no significant differences between our estimates and WVAS partners' billing statements and we have generally received billing statements a few weeks after the month-end. To the extent that our WVAS partners require longer periods of time to send us monthly billing statements, we may not be able to make any adjustment prior to releasing our period-end results and we cannot assure you that any adjustment which we subsequently make would not be material.

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        Furthermore, our WVAS partners collect user fees from telecommunication operators, such as China Mobile, China Unicom and China Telecom. Our WVAS partners' relationship with these telecommunication operators could in turn impact our business. Any loss or deterioration of our WVAS partners' relationships with telecommunication operators may affect our ability to collect fees from our users, which would have an adverse effect on our cash flows and any write-off of receivables would affect our results of operations.

If we fail to develop or maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm the value of our shares.

        Prior to this offering, we have been a private company with a short operating history and limited accounting personnel with U.S. GAAP experience and other resources with which to address our internal control and procedures over financial reporting. In the preparation of our consolidated financial statements for the years ended December 31, 2008, 2009 and 2010, we identified one material weakness in our internal control over financial reporting, as defined in AU 325, Communicating Internal Control Related Matters Identified in an Audit, of the PCAOB Standard and Related Rules. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of our company's financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal control over financial reporting is necessary for us to provide reliable financial reports, effectively prevent fraud and operate as a public company.

        The material weakness identified relates to the lack of sufficient accounting personnel with knowledge to perform period-end reporting procedures under U.S. GAAP, to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. The material weakness identified resulted in adjustments in stock-based compensation expenses, accretions on redeemable convertible preferred shares, the presentation of certain revenue items on a gross versus net basis and certain deferred revenue items relating to customer loyalty points and services offered as bundled packages.

        We will take initiatives to improve our internal control over financial reporting and disclosure controls. For details on these initiatives, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting." However, the implementation of these initiatives may not fully address the material weakness in our internal control over financial reporting. In addition, 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 satisfies our reporting obligations. Our failure to remediate the material weakness or our failure to discover and address any other material weaknesses or deficiencies may result in inaccuracies in our financial statements or delay in the preparation of our financial statements. 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. Ineffective internal control over financial reporting could also expose us to increased risk of fraud or misappropriations of corporate assets and subject us to potential delisting from the stock exchange on which our ADSs are listed, regulatory investigations or civil or criminal sanctions.

        Upon the completion of this offering, we will become a public company in the United States and be subject to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. The SEC, as required under Section 404 of the Sarbanes-Oxley Act, or Section 404, has adopted rules requiring public companies to include a management report on the effectiveness of their internal control over financial reporting in their annual reports. In addition, an independent registered public accounting firm must report on the effectiveness of the companies' internal control over financial reporting. These requirements will first apply to us beginning with our annual report on Form 20-F for the fiscal year ending December 31,

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2012. Management may conclude that our internal control over financial reporting is not effective due to our failure to remediate the identified material weakness and deficiencies or otherwise. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may not conclude that our internal control over financial reporting is effective or may issue a report that is qualified if it is not satisfied with our internal control over financial reporting or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. During the course of the evaluation, documentation and testing of our internal control over financial reporting, we may identify other deficiencies and material weaknesses that we may not be able to remediate in time to meet the deadline imposed by the SEC for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act, our independent registered public accounting firm may determine that our internal control over financial reporting is not effective or it may decline to attest to the effectiveness of our internal control over financial reporting.

Future strategic alliances or acquisitions may have a material and adverse effect on our business, reputation and results of operations.

        We may in the future enter into strategic alliances with various third parties. Strategic alliances with third parties could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the counter-party and an increase in expenses incurred in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have little ability to control or monitor their actions and to the extent strategic third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with such third parties.

        In addition, although we have no current acquisition plans, if we become aware of appropriate opportunities, we may acquire additional assets, technologies or businesses that are complementary to our existing business. Future acquisitions and the subsequent integration of new assets and businesses into our own would require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the financial results we expect. In addition, acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the incurrence of debt, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible shareholders' approval, we may also have to obtain approvals and licenses from the government authorities in the PRC for the acquisitions and comply with applicable PRC laws and regulations, which could result in increased costs and delays.

If we are unable to protect our Internet domain names or proprietary rights upon which our business relies or to avoid claims that we infringe upon the proprietary rights of others, our profitability may be materially and adversely affected.

        We regard substantial elements of our websites and the underlying technology as proprietary, and attempt to protect them by relying on copyright, service mark, trademark and trade secret laws as well as restrictions on disclosure, transferring title and other methods. Contracts with our employees and consultants generally contain confidentiality provisions, and we generally seek to control access to and the distribution of our technology, documentation and other proprietary information. We also enter into agreements with key employees and officers, pursuant to which our key employees and officers assign to us the intellectual property rights in works generated by them as a result of their employment duties or from our resources while they are employed by us. Despite these precautions, it may be

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possible for a third party to copy or otherwise obtain and use our proprietary information without authorization, or to develop similar or superior technology independently. Copyright, service mark, trademark and trade secret protection may not be effective and policing unauthorized use of our proprietary information is difficult. Any such misappropriation or development of similar or superior technology by third parties could adversely impact our profitability and our future financial results.

        We believe that our websites, services and other proprietary technologies do not infringe upon the rights of third parties. However, there can be no assurance that our business activities do not and will not infringe upon the proprietary rights of others, or that other parties will not assert infringement claims against us. From time to time and in the ordinary course of business, we have been, and expect to continue to be, subject to claims of alleged infringement of the copyrights, service marks and other intellectual property rights of third parties. Although such claims have not resulted in any significant litigation or had a material adverse effect on our business to date, any such claims and resultant litigation might subject us to temporary injunctive restrictions on the use of our services or brand names and could result in significant liability for damages for intellectual property infringement, require us to enter into royalty agreements, or restrict us from using infringing software, services, trademarks or technologies in the future. Even if not meritorious, such litigation could be time-consuming and expensive and could result in the diversion of management's time and attention away from our day-to-day business.

        We currently hold various domain names relating to our brand and in the future may acquire new web domain names. The regulation of domain names in China and in foreign countries is subject to change. Governing bodies may establish additional top level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may be unable to acquire or maintain relevant domain names. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights are unclear. We may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our existing trademarks and other proprietary rights or those we may seek to acquire. Any such inability to protect ourselves could cause us to lose a significant portion of our users to our competitors.

We may face potential liability, loss of users and damage to our reputation for any failure to protect the confidential information of our users.

        Our user database holds confidential information concerning our users. We may be unable to prevent third parties, such as hackers or criminal organizations, from stealing information provided by our users to us through our website. Confidential information of our users may also be misappropriated or inadvertently disclosed through employee misconduct or mistake. We may also in the future be required to disclose to government authorities certain confidential information concerning our users.

        In addition, many of our users pay for our services through third-party online payment services. In such transactions, maintaining complete security during the transmission of confidential information, such as personal information, is essential to maintaining consumer confidence. We have limited influence over the security measures of third-party online payment service providers. In addition, our third-party merchants may violate their confidentiality obligations and disclose information about our users. Any compromise of our security or third-party service providers' security could have a material adverse effect on our reputation, business, prospects, financial condition and results of operations.

        If we are accused of failing to protect the confidential information of our users, we may be forced to expend significant financial and managerial resources in defending against these accusations and we may face potential liability. Any negative publicity may adversely affect our public image and reputation. In addition, any perception by the public that online commerce is becoming increasingly unsafe or that the privacy of user information is vulnerable to attack could inhibit the growth of online services generally, which in turn may reduce the number of our users.

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Our quarterly results may fluctuate because of a number of factors, including seasonality, and, as a result, investors should not rely on quarterly operating results as indicative of future results.

        Fluctuations in operating results or the failure of operating results to meet the expectations of public market analysts and investors may negatively impact the value of our ADSs. Quarterly operating results may fluctuate in the future due to a variety of factors that could affect net revenues or expenses in any particular quarter. Fluctuations in quarterly operating results could cause the value of our securities to decline. Investors should not rely on quarter-to-quarter comparisons of results of operations as an indication of future performance. Factors that may affect our quarterly results include:

    the demand for, and acceptance of, our online dating services and enhancements to these services;

    the introduction, development, timing, competitive pricing and market acceptance of our websites and services and those of our competitors;

    the magnitude and timing of marketing initiatives and capital expenditures relating to expansion of our operations;

    the cost and timing of online and offline advertising and other marketing efforts;

    the maintenance and development of relationships with portals, search engines, Internet service providers and other web properties and other entities capable of attracting potential and paying users to our websites;

    technical difficulties, system failures, system security breaches, or downtime of the Internet, in general, or of our services, in particular;

    costs related to any acquisitions or dispositions of technologies or businesses; and

    general economic conditions, as well as those specific to the Internet, online dating and related industries.

        In addition, we experience seasonality in our businesses. We generally experience lower user traffic and acquire fewer new users for our online dating services and hold fewer offline events during major national holidays in China, such as the Chinese New Year holidays, which fall in January or February, and the National Day holidays, which fall in the beginning of October. Also, as we expand into the online wedding and event planning business, the frequency of weddings may vary from quarter to quarter.

        As a result of the foregoing factors and because the online dating business is still immature, making it difficult to predict consumer demand, it is possible that in future periods results of operations may be below the expectations of public market analysts and investors. This could cause the market price of our securities to decline.

We have a history of net losses prior to 2009 and may experience earnings declines or losses in the future.

        We incurred net losses in all periods prior to 2009. We cannot assure you that we can sustain profitability or avoid net losses in the future. Although we experienced significant revenue growth in recent periods, such growth rates may not be sustainable and may decrease in the future. In addition, our ability to be profitable depends on our ability to control our costs and operating expenses, which we expect will increase as we expand our business. We incurred in the past and expect to continue to incur in future periods certain share-based compensation expenses, which will reduce our net income and may result in future losses. If we fail to increase net revenues at the rate we anticipate or if our costs and operating expenses increase without a commensurate increase in our net revenues, our business, financial condition and results of operations will be negatively affected.

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We may need additional capital to finance our growth or to compete, which may cause dilution to existing shareholders or limit our flexibility in conducting our business activities.

        We currently anticipate that existing cash, cash equivalents and cash flow from operations will be sufficient to meet our anticipated needs for working capital, operating expenses and capital expenditures for at least the 12 months after the date of this prospectus. We may need to raise additional capital in the future to fund expansion, whether in new vertical affinity or geographic markets, to develop newer or enhanced services, respond to competitive pressures or acquire complementary businesses, technologies or services. Such additional financing may not be available on terms acceptable to us or at all. To the extent that we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution, and to the extent we engage in debt financing, if available, we may become subject to restrictive covenants that could limit our flexibility in conducting future business activities. If additional financing is not available or not available on acceptable terms, we may not be able to fund our expansion, promote our brands, take advantage of acquisition opportunities, develop or enhance services or respond to competitive pressures.

We do not have insurance coverage and thus may incur substantial costs in the event of any business interruption, litigation or natural disaster.

        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 business liability, loss of data or disruption insurance coverage for our operations in China. Any business disruption, litigation or natural disaster might result in our incurring substantial costs and the diversion of our resources.

Potential intellectual property rights infringement claims against us may materially affect our business and results of operations.

        We could face claims by others that we are improperly using intellectual property owned by them or otherwise infringing upon their rights in intellectual property, including using unlicensed software. Although we take measures to ensure that we obtain licenses with respect to the intellectual property we use, we cannot assure you that we will not be subject to infringement claims, including due to our failure to obtain necessary licenses. Irrespective of the validity or the successful assertion of such claims, we could incur costs in either defending or settling any intellectual property disputes alleging infringement and the defense of these claims would be both costly and time-consuming, and could significantly divert the efforts and resources of our management and technical personnel. Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to pay monetary damages, seek licenses from third parties on unfavorable terms, pay ongoing royalties or be restricted by injunctions. Any of these factors could prevent or restrict us from pursuing some or all of our business and materially adversely affect our business and results of operations.

Our efforts to capitalize upon opportunities to expand into new services may fail and could result in a loss of capital and other valuable resources.

        One of our growth strategies is to expand into new services to increase our revenue base. We intend to target identifiable groups of people who share common interests and the desire to meet other individuals with similar interests, backgrounds or traits. Our planned expansion into new services will occupy our management's time and attention and will require us to invest significant capital resources. The results of our expansion efforts into new services are unpredictable and there is no guarantee that our efforts will have a positive effect on our revenue base. We face many risks associated with our planned expansion into new services, including but not limited to the following possibilities:

    competition from pre-existing competitors with significantly stronger brand recognition in the markets we enter;

    our erroneous evaluations of the potential of such markets;

    diversion of capital and other valuable resources away from our core business;

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    foregoing opportunities that are potentially more profitable; and

    weakening our current brands by over expansion into too many new markets.

        We have a limited history of operating these new businesses, which makes predicting our future results of operations more difficult than it otherwise would be. Therefore, our past results of operations should not be taken as indicative of our future performance. Our ability to achieve satisfactory financial results in these new businesses is unproven.

Risks Related to Our Industry

Our network is vulnerable to security breaches and inappropriate use by users, which could disrupt or deter future use of our services.

        Concerns over the security of transactions conducted on the Internet and the privacy of users may inhibit the growth of the Internet and other online services generally, and online dating services like ours, in particular. To date, we have not experienced any material breach of our security systems. However, our failure to effectively prevent security breaches could significantly harm our business, reputation and results of operations and could expose us to lawsuits and sanctions by governmental authorities in the jurisdictions in which we operate, and by our users. Anyone who is able to circumvent our security measures could misappropriate proprietary information, including the personal data of our users, and cause interruptions in our operations or damage our brand and reputation. Such breach of our security measures could involve the disclosure of personal information and could expose us to a material risk of litigation, liability or governmental enforcement proceeding. We cannot assure you that our financial systems and other technology resources are completely secure from security breaches or sabotage, and we have occasionally experienced security breaches and attempts at hacking. We may be required to incur significant additional costs to protect against security breaches or to alleviate problems caused by such breaches. Any well-publicized compromise of our security or the security of any other website could deter people from using our services or the Internet to conduct transactions that involve transmitting confidential information or uploading personal information, which could have a detrimental impact on our potential user base.

        Computer viruses may cause delays or other service interruptions and could damage our reputation, affect our ability to provide our services and adversely affect our revenues. The inadvertent transmission of computer viruses could also expose us to a material risk of loss or litigation and possible liability. Moreover, if a computer virus affecting our system were highly publicized, our reputation could be significantly damaged, resulting in the loss of current and future users and paying members.

Interruptions, delays or capacity problems on our computer and telecommunications infrastructure may have a material and adverse effect on our revenue.

        Our services are dependent upon the use of the Internet and telephone and broadband communications to provide high-capacity data transmission without system downtime. There have been instances where regional and national telecommunications outages in China have caused us, and other Internet businesses, to experience systems interruptions. Any additional interruptions, delays or capacity problems experienced with telephone or broadband connections could adversely affect our ability to provide services to our customers. The temporary or permanent loss of all, or a portion, of the telecommunications system could cause disruption to our business activities and result in a loss of revenue. Additionally, the telecommunications industry in China is subject to strict regulatory control. Amendments to current regulations, which could affect our telecommunications providers, could disrupt or adversely affect the profitability of our business.

        In addition, if any of our current agreements with telecommunications providers were terminated, we may not be able to replace any terminated agreements with equally beneficial agreements. There can be no assurance that we will be able to renew any of our current agreements when they expire or, if we are able to do so, that such renewals will be available on acceptable terms. We also do not know

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whether we will be able to enter into additional agreements or that any relationships, if entered into, will be on terms favorable to us.

Our business depends, in part, on the stability of the Internet, and our ability to provide services to our users may be limited by outages, interruptions and diminished capacity in the Internet.

        Our performance will depend, in part, on the continued stability of the Internet. This includes maintenance of a reliable network backbone in China with the necessary speed, data capacity and security for providing reliable Internet services. Internet infrastructure may be unable to support the demands placed on it if the number of Internet users continues to increase, or if existing or future Internet users access the Internet more often or increase their bandwidth requirements. In addition, viruses, worms and similar programs may harm the performance of the Internet. We have no control over the third-party telecommunications, cable or other providers of access services to the Internet that our users rely upon. There have been instances where regional and national telecommunications outages have caused us to experience service interruptions during which our users could not access our services. Any additional interruptions, delays or capacity problems experienced with any points of access between the Internet and our users could adversely affect our ability to provide services reliably to our users. The temporary or permanent loss of all, or a portion, of our services on the Internet, the Internet infrastructure generally, or our users' ability to access the Internet could disrupt our business activities, harm our business reputation and result in a loss of revenue. Additionally, the Internet, electronic communications and telecommunications industries are subject to national, provincial, municipal and foreign governmental regulation. New laws and regulations governing such matters could be enacted or amendments may be made to existing regulations at any time that could adversely impact our services. Any such new laws, regulations or amendments to existing regulations could disrupt or adversely affect the profitability of our business.

We may be liable as a result of information retrieved from or transmitted over the Internet.

        We may be sued for defamation, negligence, copyright or trademark infringement, invasion of privacy or personal injury, or under other legal theories, relating to information that is published or made available through our websites and the other sites linked to it. These types of claims have been brought, sometimes successfully, against online services in the past. We also offer various messaging services, which may subject us to potential risks, such as liabilities or claims resulting from unsolicited messages, or spamming, lost or misdirected messages, security breaches, illegal or fraudulent use of personal information or interruptions or delays in the delivery of messages. We do not have insurance coverage of these types of claims. In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not held liable. If any of these events occurs, our revenues could be materially and adversely affected or we could incur significant additional expense, and the market price of our securities may decline.

Our business, financial condition and results of operations may be adversely affected by the downturn in the global or Chinese economy.

        The global financial markets have experienced significant disruptions since 2008. China's economy has also faced challenges. To the extent that there have been improvements in some areas, it is uncertain whether such recovery is sustainable. Since we derive substantially all of our net revenues from users in China, our business and prospects may be affected by economic conditions in China. A slowdown in China's economy may lead to a reduced amount of personal spending on online dating services, which could materially adversely affect our financial condition and results of operations.

        Moreover, a slowdown in the global or Chinese economy or the recurrence of any financial disruptions may have a material and adverse impact on financings available to us. The weakness in the economy could erode investors' confidence, which constitutes the basis of the equity markets. The recent turmoil in the financial markets may significantly restrict our ability to obtain financing in the capital markets or from financial institutions on commercially reasonable terms, or at all. Although we

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are uncertain about the extent to which the recent global financial and economic crisis and slowdown of the Chinese economy may impact our business in the long term, there is a risk that our business, results of operations and prospects would be materially adversely affected by the global economic downturn and the slowdown of the Chinese economy.

Risks Relating to Regulation of Our Business and to Our Structure

If the PRC government finds that the agreements that establish the structure for operating our China business do not comply with restrictions on foreign investment in the online dating services industry and prohibitions on privately funded non-enterprise institutions from engaging in profit-making business operations, we could be subject to severe penalties, including discontinuation of our operations.

        On December 11, 2001, the PRC State Council promulgated Regulations for the Administration of Foreign-invested Telecommunications Enterprises, or the FITE Regulations, which became effective on January 1, 2002 and were subsequently amended on September 10, 2008. Under the FITE Regulations, foreign ownership of companies that provide value-added telecommunication services, including online dating services, is limited to 50%. In addition, foreign enterprises and wholly foreign-owned enterprises are currently not able to apply for the licenses required to operate online dating services in China. Since we are a Cayman Islands exempted company and therefore are a foreign enterprise under PRC law, neither we nor our PRC subsidiaries are eligible to hold a license to operate online dating services in China. In order to comply with the foreign ownership restrictions, we operate our online businesses in China through Shanghai Huaqianshu, Beijing Huaqianshu and Xique, each of which is wholly-owned by Ms. Haiyan Gong, Mr. Yongqiang Qian, Mr. Xu Liu, Mr. Fuping Yu, Mr. Cheng Li and Mr. Qingjun Zhu, all of whom are PRC citizens. Our PRC operating companies hold, or are in the process of obtaining, the licenses and approvals that are required to operate our online businesses. Our PRC subsidiaries have entered into a series of contractual arrangements with our PRC operating companies and/or their respective shareholders. As a result of these contractual arrangements, we are considered the primary beneficiary of our PRC operating companies and their subsidiaries and consolidate the results of operations of our PRC operating companies and their subsidiaries in our financial statements. For a description of these contractual arrangements, see "Our History and Corporate Structure."

        On July 13, 2006, the Ministry of Information Industry, or MII, issued the Circular on Strengthening the Administration of Foreign Investment in Value-added Telecommunication Services, or the MII Circular 2006. According to the MII Circular 2006, since the FITE Regulations went into effect, some foreign investors had engaged in value-added telecom services illegally by conspiring with domestic value-added telecom enterprises to circumvent the requirements of the FITE Regulations by delegating domain names and licensing trademarks. In order to further strengthen the administration of FITE Regulations, the MII Circular 2006 provides that any domain name or trademark used in value-added telecommunication business operations should be directly owned by the telecommunication business operator or its shareholders. The MII Circular 2006 also provides that the operation site and facilities of a value-added telecom carrier shall be installed within the scope as prescribed by operating licenses obtained by the carrier and shall correspond to the value-added telecom services that the carrier has been approved to provide. In addition, value-added telecom carriers are required to establish or improve the measures to ensure network security. As to the companies which have obtained the operating licenses for value-added telecom services, they are required to conduct a self-examination and self-correction according to the above requirements and report the results of such self-examination and self-correction to the provincial branches of the MII. As some of the trademarks that we use in our operations are not owned by our PRC operating companies or their shareholders, we may be in violation of the provisions of the MII Circular 2006. As a result, we may be subject to various penalties, including fines and the discontinuation of or restrictions on our operations.

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        In addition, on October 25, 1998, the PRC State Council promulgated the Provisional Regulations for the Registration Administration of Privately Funded Non-enterprise Institutions, or the Privately Funded Non-enterprise Institutions Regulation. According to the Privately Funded Non-enterprise Institutions Regulation, privately funded non-enterprise institutions may not engage in profit-making business operations, and lawful income accrued from their activities can only be used for business operations prescribed by their articles of association. We have established a privately funded non-enterprise entity under the supervision of the Shanghai Yangpu District Bureau of Civil Affairs, Jiayuan Shanghai Center, whose business scope includes marriage agency services, through which we plan to operate some of our VIP services. Jiayuan Shanghai Center has entered into a series of contractual arrangements with Shanghai Miyuan pursuant to which Jiayuan Shanghai Center agreed to pay service fees equal to a certain percentage of Jiayuan Shanghai Center's annual revenues to Shanghai Miyuan in exchange for technology services from Shanghai Miyuan. See "Our History and Corporate Structure."

        PRC laws and regulations, including without limitation the Provisions Guiding Foreign Investment and the Catalogue for the Guidance of the Foreign Investment Industries (2007) jointly promulgated by the National Development and Reform Commission and the Ministry of Commerce, or the Catalogue for the Guidance of the Foreign Investment Industries (2007), the FITE Regulations and the Privately Funded Non-enterprise Institutions Regulation, do not expressly provide that contractual arrangements between wholly foreign-owned enterprises, such as our PRC subsidiaries, on the one hand, and domestic enterprises, such as our PRC operating companies, and/or their shareholders and/or privately funded non-enterprise institutions, on the other hand, shall be deemed or regulated as foreign direct equity ownership. In addition, the MIIT and the Ministry of Civil Affairs have also not specifically issued any regulation or rule prohibiting contractual arrangements between wholly foreign-owned enterprises and domestic enterprises and/or their shareholders and/or privately funded non-enterprise institutions in relation to the online dating services. In addition, the equity interests pledged to Shanghai Miyuan and Beijing Miyuan under the relevant equity pledge agreements are treated as equity pledges by PRC individuals in favor of PRC legal persons as wholly-foreign owned enterprises such as Shanghai Miyuan and Beijing Miyuan are "PRC legal persons" under PRC law. As such, the equity pledges to Shanghai Miyuan and Beijing Miyuan are regulated as domestic security interests and are not treated as equity pledges to foreign investors under PRC law.

        In the opinion of Zhong Lun Law Firm, our PRC legal counsel, (i) the corporate structures of our company, our PRC subsidiaries, our PRC operating companies and Jiayuan Shanghai Center are in compliance with existing PRC laws and regulations and (ii) the contractual arrangements between our PRC subsidiaries, on the one hand, and our PRC operating companies and/or their shareholders and/or Jiayuan Shanghai Center, on the other hand, are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. However, our PRC legal counsel has further advised us that substantial uncertainties still exist as to how the FITE Regulations, MII Circular 2006 and Privately Funded Non-enterprise Institutions Regulation will be interpreted and implemented by the PRC authorities and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the FITE Regulations, MII Circular 2006 and Privately Funded Non-enterprise Institutions Regulation. If the Ministry of Industry and Information Technology, or MIIT, the successor of MII, the Ministry of Civil Affairs, or another PRC regulatory agency subsequently takes a view contrary to ours or if we, our PRC subsidiaries, or any of our PRC operating companies and Jiayuan Shanghai Center are found to have violated any existing or future PRC laws or regulations, or our corporate structure is found to be in violation with any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violations, including:

    revoking our PRC operating companies' or Jiayuan Shanghai Center's business and operating licenses;

    discontinuing or restricting our PRC operating companies' or Jiayuan Shanghai Center's operations;

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    imposing conditions or requirements with which we or our PRC companies or Jiayuan Shanghai Center may not be able to comply;

    requiring us, our PRC companies or Jiayuan Shanghai Center to restructure the relevant corporate structure or operations; or

    taking other regulatory or enforcement actions, including levying fines and confiscating income, which could be harmful to our business.

        Any of these actions could have a material adverse effect on our business, financial condition and results of operations to suffer and the market price of our ADSs to decline.

The contractual arrangements related to critical aspects of our operations with our PRC operating companies and their shareholders and Jiayuan Shanghai Center may not be as effective in providing operational control as direct ownership.

        We rely on contractual arrangements with our PRC operating companies and their shareholders and Jiayuan Shanghai Center to operate our business. These contractual arrangements may not be as effective as direct ownership in providing us with control over PRC operating companies and Jiayuan Shanghai Center and their subsidiaries. Direct ownership would allow us, for example, to directly or indirectly exercise our rights as a shareholder to effect changes in the boards of directors of our PRC operating companies, which, in turn, could effect changes, subject to any applicable fiduciary obligations, at the management level. However, under the current contractual arrangements, as a legal matter, if any of our PRC operating companies, any of their shareholders, or Jiayuan Shanghai Center fails to perform its, his or her respective obligations under these contractual arrangements, we may have to incur substantial costs and expend significant resources to enforce those arrangements and rely on legal remedies under PRC law. These remedies may include seeking specific performance or injunctive relief and claiming damages, any of which may not be effective.

        Under the equity pledge agreements described in "Our History and Corporate Structure," the shareholders of Shanghai Huaqianshu, Beijing Huaqianshu and Xique have pledged their respective equity interests in Shanghai Huaqianshu, Beijing Huaqianshu and Xique to Shanghai Miyuan and Beijing Miyuan, respectively. According to the PRC Property Rights Law, which became effective on October 1, 2007, a pledge is created only when such pledge is registered with the relevant office of the administration for industry and commerce. We have completed the registration of the equity pledge by the shareholders of Shanghai Huaqianshu with the relevant office of the administration of industry and commerce. However, we are still in the process of registering the equity pledges by the shareholders of Beijing Huaqianshu and Xique with the relevant offices of the administration for industry and commerce.

        However, all of these contractual arrangements, including the equity pledge agreements, are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in 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. In the event we are unable to enforce these contractual arrangements, we may be unable to exert effective control over our PRC operating companies and Jiayuan Shanghai Center, and our ability to conduct our business may be materially adversely affected.

Shareholders of our PRC operating companies may potentially have a conflict of interest with us, and they may breach their contracts with us or cause such contracts to be amended in a manner contrary to the interest of our company.

        We conduct substantially all of our operations, and generate substantially all of our revenues, through our PRC operating companies and Jiayuan Shanghai Center. Our control over our PRC

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operating companies is based upon contractual arrangements with our PRC operating companies and their shareholders, which provide us with the substantial ability to control our PRC operating companies. These shareholders may potentially have a conflict of interest with us, and they may breach their contracts with us or cause such contracts to be amended in a manner contrary to the interest of our company, if they believe such action furthers their own interest, or if they otherwise act in bad faith. If the shareholders of our PRC operating companies breach their contracts with us or otherwise have disputes with us, we may have to initiate legal proceedings, which involve significant uncertainty. Such disputes and proceedings may significantly disrupt our business operations, adversely affect our ability to control our PRC operating companies and otherwise result in negative publicity, and we cannot assure you that the outcome of such disputes and proceedings will be in our favor.

Our arrangements with our PRC operating companies and Jiayuan Shanghai Center may be reviewed by the PRC tax authorities for transfer pricing adjustments and subject us to material adverse tax consequences as well as penalties for under-paid taxes.

        We could face material adverse tax consequences if the PRC tax authorities determine that the contractual arrangements between our PRC subsidiaries and our PRC operating companies and Jiayuan Shanghai Center were not entered into based on arm's length negotiations. Although we based our contractual arrangements on those of similar businesses, if the PRC tax authorities determine that these contracts were not entered into on an arm's length basis, they may adjust our income and expenses for PRC tax purposes in the form of a transfer pricing adjustment. A transfer pricing adjustment could adversely affect us by increasing our PRC operating companies' and Jiayuan Shanghai Center's tax liabilities without reducing our PRC subsidiaries' tax liabilities, which could further result in late payment fees and other penalties to our PRC operating companies for under-paid taxes. As a result, any transfer pricing adjustment could materially adversely affect our financial condition and results of operations.

Our holding company structure may restrict our ability to receive dividends from, or transfer funds to, our PRC subsidiaries, which could restrict our ability to act in response to changing market conditions and reallocate funds among our Chinese entities in a timely manner.

        We are a Cayman Islands holding company and conduct substantially all of our operations through our PRC operating companies and Jiayuan Shanghai Center. We may rely on dividends and other distributions on equity by our PRC subsidiaries for our cash requirements, including the funds to pay dividends on the ordinary shares underlying our ADSs and to service any debt we may incur or financing we may need for our operations. If any of our PRC subsidiaries incurs its own debt in the future, the instruments governing the debt may restrict such PRC subsidiary's ability to pay dividends or make other distributions to Jiayuan Hong Kong and to us. Furthermore, under PRC laws and regulations, each PRC subsidiary is only permitted to pay dividends out of its retained earnings, if any, determined in accordance with PRC accounting standards and regulations. Under PRC law, each PRC subsidiary is also required to set aside at least 10% of its after-tax profit (calculated based on PRC accounting standards) each year to its general reserves until the cumulative amount of such reserves reaches 50% of its registered capital. These reserves are not distributable as cash dividends, loans or advances. Each PRC subsidiary may also allocate a portion of its after-tax profits, as determined by its board of directors, to its staff welfare and bonus funds, which may not be distributed to us. Furthermore, if our subsidiaries in China incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Most of our assets are held by, and substantially all of our earnings and cash flows are attributable to, our PRC subsidiaries. If earnings from our PRC subsidiaries were to decline, our earnings and cash flow would be materially adversely affected. Our cash flows are principally derived from dividends paid to us by our PRC subsidiaries. As a result, our ability to distribute dividends largely depends on earnings from our PRC subsidiaries and their ability to pay dividends out of those earnings. We cannot assure you that our PRC subsidiaries will generate sufficient earnings and cash flows in the near future to make up

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the historical accumulated losses and pay dividends or otherwise distribute sufficient funds to enable us to meet our obligations, pay interest and expenses or declare dividends. Any limitation on the ability of our PRC subsidiaries to transfer funds to us as dividends, loans or advances could materially adversely limit our ability to grow, make investments or acquisitions that could benefit our businesses, pay debt or dividends, and otherwise fund and conduct our business.

        In addition, in utilizing the proceeds of this offering in the manner described in "Use of Proceeds," as an offshore holding company of our PRC subsidiaries, we may make loans to our PRC subsidiaries, or we may make additional capital contributions to our PRC subsidiaries. However, any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject to registration or approval of PRC governmental authorities, including the relevant administration of foreign exchange and/or the relevant examining and approval authority. PRC companies are also generally prohibited by PRC law to directly lend money to each other. Therefore, loans by us to our PRC subsidiaries in China to finance their activities cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange, or SAFE, or its local counterpart. Capital contributions must be approved by the PRC Ministry of Commerce or its local counterpart. We may not be able to obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to our PRC subsidiaries. If we fail to receive such approvals, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to act in response to changing market conditions and reallocate funds among our PRC companies on a timely basis.

There are currently no laws or regulations in the PRC governing property rights of virtual assets and therefore it is not clear what liabilities, if any, we may have relating to the loss of virtual assets by our users.

        In the course of using our online dating services, some virtual assets, such as virtual stamps and virtual gifts, can be acquired. In practice, virtual assets can be lost for various reasons, such as data loss caused by delay of network service, by a network crash, or by hacking activities. There are currently no PRC laws and regulations governing property rights of virtual assets. As a result, it is unclear who the legal owner of virtual assets is and whether the ownership of virtual assets is protected by law. In addition, it is unclear under PRC law whether an operator of online services such as us would have any liability (whether in contract, tort or otherwise) for loss of such virtual assets by users. Based on several judgments in the online gaming industry, courts have generally required the game operators to provide well-developed security systems to protect virtual assets owned by game players. In some cases, courts have issued judgements in favor of users and required the game operator to restore the virtual assets and to pay the users for damages. Such requirements may also be held to be applicable to other online operators, such as ourselves. In the event of a loss of virtual assets, we may be sued by users and may be held liable for damages.

The laws and regulations governing the online dating industry and other related business in China are evolving and subject to substantial uncertainties and future changes and we may fail to obtain or maintain all applicable permits and approvals, subjecting us to severe penalties.

        As the online dating industry is at an early stage of development in China, new laws and regulations may be adopted from time to time to require additional licenses and permits other than those we currently have, and address new issues that arise. In addition, substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations applicable to the online dating industry. We cannot assure you that we will be able to obtain timely, or at all, required licenses or any other new license required in the future. We cannot assure you that we will not be found in violation of any current PRC laws or regulations should their interpretations change, or that we will not be found in violation of any future PRC laws or regulations. For example, the General Office of the State Council issued a rule in December 1994 pursuant to which no marriage agency or individual is permitted to engage in international marriage agency services. We believe that

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this rule does not apply to our online dating services, but since the interpretation and application of this rule is unclear, there is no assurance that the relevant regulatory agencies will not interpret this rule to apply to online dating.

        Furthermore, we have provided offline VIP services to certain of our clients through Shanghai Huaqianshu and its Beijing branch in China, which may be deemed as a type of marriage agency service. As China has not adopted a comprehensive and specific regulatory framework governing marriage agency services, there are substantial uncertainties regarding the interpretation and implementation of the relevant laws and regulations, especially by the local authorities in different areas, and no assurance can be given that we will not be found in violation such laws and regulations. For example, the business scope of Shanghai Huaqianshu's Beijing branch includes "marriage agency services," while the relevant Shanghai governmental authority did not accept our application for inclusion of "marriage agency services" in the business scope of Shanghai Huaqianshu. If the relevant governmental authorities in Shanghai determine that Shanghai Huaqianshu has provided marriage agency services without a proper business license, we may be subject to various administrative penalties, including suspension of marriage agency services by Shanghai Huaqianshu, fines or confiscation of illegal gains. To date, we have not received any notices from the competent governmental authorities in Shanghai threatening to impose penalties on us and we have successfully passed all annual inspections. To further comply with the relevant laws and regulations, we have recently established Jiayuan Shanghai Center, through which we plan to provide all our VIP services previously provided by Shanghai Huaqianshu. Although we believe the risks that we will be retroactively punished by the competent governmental authorities in Shanghai are remote, there is no assurance that the relevant authorities will not impose penalties on us in the future and we will not be found in violation of any other current PRC laws or regulations should their interpretations change.

Our operations may be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet-related business 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 uncertainty. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violations of applicable laws and regulations. Issues, risks and uncertainties relating to PRC regulation of the Internet business include, but are not limited to, the following:

    Pursuant to the Administrative Provisions on Internet Audio-visual Program Service, or the Audio/visual Program Provisions, and other applicable laws and regulations, online transmission of audio and video programs requires an Internet audio/video program transmission license and the online audio/video service providers must be either wholly state-owned or state-controlled. The audio/video contents we currently provide are mainly self-introductory video clips of our users and we do not believe these video clips are audio/video programs defined in the Audio/visual Program Provisions and therefore the above license requirements may not apply to us. We have not received notices from any regulator threatening to suspend the service we provided due to the lack of this license. We did not receive benefits directly from this service either. However, the interpretation and application of the Audio/visual Program Provisions remain unclear and there can be no assurance that the State Administration of Radio, Film and Television or its local branches will not take a view that is contrary to ours. If we are deemed to have violated the Audio/visual Program Provisions by the relevant regulatory government authorities, we may be required to remove all relevant self-introductory video clips on our website, to cease dissemination of such video clips and subject to administrative fines.

    The permits, licenses or operations at some of our companies may be subject to challenge, or we may fail to obtain permits or licenses that may be deemed necessary for our operations or we

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      may not be able to obtain or renew certain permits or licenses. For example, Xique, our newly established PRC operating company, is required to hold an Internet content provider license, or ICP license, for its operation of Xique.com. In addition, Xique's business license should include operation of an advertising business within its business scope. Currently, Xique has obtained an ICP license and intends to update the license to include the Xique.com website and is applying to expand its business scope to include operation of an advertising business in its business license in accordance with applicable PRC laws and regulations. If we fail to obtain and maintain any required licenses or approvals, we may be subject to various penalties, including fines and discontinuation of or restriction on our operations. Any such disruption in our business operations may have a material and adverse effect on our results of operations.

        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 may be found to violate the existing or future laws and regulations given the uncertainty and complexity of China's regulation of internet business.

Risks Related to Doing Business in China

Changes in economic and political policies of the PRC government could materially adversely affect the overall economic growth of China, which could adversely affect our business.

        Substantially all of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in China. Due to the global financial crisis, the growth of the Chinese economy also slowed down in the second half of 2008 and early 2009. There is uncertainty with respect to the Chinese economy for 2011 and beyond. Any prolonged slowdown in the Chinese economy, in particular the online social network or online dating industry, could negatively impact our business, operating results and financial condition in a number of ways. For example, our users may decrease spending on our services, while we may have difficulty expanding our users base fast enough, or at all, to offset the impact of decreased spending by our existing users.

        Although the Chinese economy is no longer a planned economy, the PRC government continues to exercise significant control over China's economic growth through direct allocation of resources, monetary and tax policies, and a host of other government policies such as those that encourage or restrict investment in certain industries by foreign investors, control the exchange between RMB and foreign currencies, and regulate the growth of the general or specific market. These government involvements have been instrumental in China's significant growth in the past 30 years. If the PRC government's current or future policies fail to help the Chinese economy achieve further growth or otherwise negatively affect our business, our growth rate or strategy, our results of operations could be adversely affected as a result.

Our business benefits from certain government tax preferential treatment and incentives. Expiration, reduction or discontinuation of, or changes to, these incentives will increase our tax burden and reduce our net income.

        Prior to January 1, 2008, under applicable PRC tax laws, companies established in China were generally subject to an enterprise income tax, or EIT, at the statutory rate of 33%. However, certain types of foreign-invested enterprises and high or new-technology enterprises located in certain specified high-tech zones were entitled to preferential tax treatments. In March 2007, the National People's Congress enacted the Enterprise Income Tax Law, or the EIT Law, and in December 2007, the State Council promulgated the implementing rules of the EIT Law, both of which became effective on January 1, 2008. The EIT Law significantly curtails tax incentives granted to foreign-invested

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enterprises under the previous tax law. The EIT Law, however, (i) reduces the statutory rate of EIT from 33% to 25%, (ii) permits companies to continue to enjoy their existing tax incentives, subject to certain transitional phase-out rules, and (iii) introduces new tax incentives, subject to various qualification criteria. In addition, the EIT Law and its implementing rules permit qualified "high and new technology enterprises," or HNTEs, to enjoy a reduced EIT rate of 15%. The qualification criteria are significantly higher than those prescribed by the old tax rules under which we had been granted preferential treatment.

        Shanghai Huaqianshu has been deemed to qualify as an HNTE under the EIT Law with a valid period of three years starting from calendar year 2010 to 2012. We cannot assure you, however, that Shanghai Huaqianshu will continue to qualify as a HNTE under the EIT Law. In addition, various local governments in China have provided discretionary incentives to us. However, these local governments may decide to reduce or eliminate these preferential tax treatments or incentives at any time. Furthermore, these local implementations of tax laws may be found to violate national laws or regulations and we may be subject to retroactive imposition of higher taxes as a result. Any expiration, reduction, discontinuation or revocation of, or changes to, these tax incentives will increase our tax burden and reduce our net income and thus materially adversely affect our operating results.

Dividends we receive from our PRC subsidiaries may be subject to PRC withholding tax and we cannot assure you that we will be able to enjoy the preferential withholding tax treatment.

        Under the EIT Law, and the Implementing Rules, both of which became effective on January 1, 2008, dividends generated from the business of our PRC subsidiaries after January 1, 2008 and payable to us may be subject to a withholding tax rate of 10% if the PRC tax authorities subsequently determine that we are a non-resident enterprise, unless there is a tax treaty with China that provides for a different withholding arrangement. We are a Cayman Islands holding company and substantially all of our income may come from the dividends we received from our PRC subsidiaries through our Hong Kong subsidiary. Under the Arrangement between the Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion, which became effective on January 1, 2007, income tax on dividends payable to a company resident in Hong Kong that holds more than a 25% equity interest in a PRC resident enterprise may be reduced to a rate of 5%. However, we cannot assure you that we will be able to enjoy such preferential withholding tax treatment. According to the Circular of the State Administration of Taxation on Printing and Issuing the Administrative Measures for Non-resident Individuals and Enterprises to Enjoy the Treatment Under Taxation Treaties, which became effective on October 1, 2009, the 5% tax rate does not automatically apply and approvals from competent local tax authorities are required before an enterprise can enjoy the relevant tax treatments relating to dividends under relevant taxation treaties. In addition, according to a tax circular issued by the State Administration of Taxation, or the SAT, in February 2009, if the main purpose of an offshore arrangement is to obtain a preferential tax treatment, the PRC tax authorities have the discretion to adjust the preferential tax rate enjoyed by the relevant offshore entities.

We may be classified as a "resident enterprise" for PRC enterprise income tax purposes, which could result in our global income becoming subject to 25% PRC enterprise income tax.

        The EIT Law also provides that enterprises established outside of China whose "de facto management bodies" is located in China are considered "resident enterprises" and will generally be subject to the uniform 25% EIT rate as to their global income. Under the implementation regulations, "de facto management bodies" is defined as substantial and overall management and control over such aspects as the production and business, personnel, accounts and properties of an enterprise.

        On April 22 2009, the SAT released the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or SAT Circular 82, that sets out the standards and procedures for recognizing the location of

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the "de facto management bodies" of an enterprise registered outside of the PRC and funded by Chinese enterprises as controlling investors, or a Chinese Funded Enterprise. Under SAT Circular 82, a Chinese Funded Enterprise shall be considered a resident enterprise if all of the following applies: (i) a Chinese Funded Enterprise's major management department and personnel who are responsible for carrying out daily operations are located in the PRC; (ii) the department or the personnel who have the right to decide or approve the Chinese Funded Enterprise's financial and human resource matters are located in the PRC; (iii) the major assets, account book, company seal and meeting minutes of the Chinese Funded Enterprise are located or stored in the PRC; and (iv) the directors or management personnel holding no less than 50% voting rights of the Chinese Funded Enterprise habitually reside in the PRC. SAT Circular 82 explicitly provides that the above standards shall apply to the enterprises which are registered outside of the PRC and funded by Chinese enterprises as controlling investors, and therefore such standards may be cited for reference only and may not be directly adopted when considering whether our "de facto management bodies" is in the PRC or not. Accordingly, it is still uncertain whether we may be considered a resident enterprise under the EIT Law. If we are considered a resident enterprise and earn income other than dividends from our PRC subsidiary such as income from our international operations, we will be subject to a 25% PRC income tax on our global income and such 25% PRC enterprise income tax on our global income could significantly increase our tax burden and materially adversely affect our cash flow and profitability.

If we are classified as a "resident enterprise" for PRC enterprise income tax purposes, you may be subject to PRC withholding tax on dividends from us or to PRC income tax on gain realized on the transfer of our ADSs or ordinary shares.

        Under the EIT Law and related implementation regulations, PRC income tax at the rate of 10% is applicable to dividends payable to investors that are "non-resident enterprises," which do not have an establishment or place of business in the PRC, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends have their sources within the PRC. Similarly, any gain realized on the transfer of ADSs or shares by such investors is also subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC unless a treaty otherwise provides. If we are considered a PRC "resident enterprise," it is unclear whether dividends we pay with respect to our ordinary shares or ADSs, or the gain you may realize from the transfer of our ordinary shares or ADSs, would be treated as income derived from sources within the PRC and be subject to PRC tax. If we are required under the EIT Law to withhold PRC income tax on dividends payable to our non-PRC investors that are "non-resident enterprises," or if you are required to pay PRC income tax on the transfer of our ordinary shares or ADSs, the value of your investment in our ordinary shares or ADSs may be materially adversely affected.

Indirect transfers of equity interests in PRC resident enterprises by our non-PRC holding companies may subject us to taxation by the PRC authorities.

        Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the SAT 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 by disposition 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 competent tax authority of the PRC resident enterprise this Indirect Transfer. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. SAT Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity

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interests 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 uncertainty as to the application of SAT Circular 698. For example, while the term "Indirect Transfer" is not clearly defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax rates in foreign tax jurisdictions, and the process and format of the reporting of an Indirect Transfer to the competent tax authority of the relevant PRC resident enterprise remain unclear. In addition, there are no formal declarations with regard to how to determine whether a foreign investor has adopted an abusive arrangement in order to reduce, avoid or defer PRC tax. SAT Circular 698 may be determined by the tax authorities to be applicable to private equity transactions involving transfer of shares in our company by non-resident investors other than through public markets. In addition to the relevant filing obligations with the PRC tax authorities by the non-resident transferor, if the offshore structure of our company were determined by the tax authorities to lack reasonable commercial purpose then such share transfer could be subject to PRC taxation without regard to the offshore structure of our company. Further, the PRC tax authorities also retain the power to apply adjustments to tax base if the share transfer is determined to be underpriced. As a result, we and our non-resident investors may face the risk of being taxed under SAT Circular 698 and may be required to expend valuable resources to comply with SAT Circular 698 or to establish that we or our non-resident investors should not be taxed under SAT Circular 698, which may have a material adverse effect on our financial condition and results of operations or the results of investments in us by our non-resident investors.

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

        We conduct our business primarily through our PRC companies in China. Our operations in China are governed by PRC laws and regulations. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.

        Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, 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) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. We cannot predict any future development in the PRC legal system. We may be required to procure additional permits, authorizations and approval for our operations, which we may not be able to obtain. Our inability to obtain such permits or authorizations may materially adversely affect our business, financial condition and results of operations.

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

        The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of foreign currency out of China. We currently receive substantially all of our revenues in Renminbi. Under our current corporate structure, our income is primarily derived from dividend payments from our PRC subsidiaries. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated

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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 may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs. In addition, on August 29, 2008, the SAFE promulgated Circular 142 to regulate the conversion of foreign currency into Renminbi by a foreign-invested company by restricting the use of the converted Renminbi. Circular 142 requires that the registered capital of a foreign-invested company that has been settled in Renminbi converted from foreign currencies may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless otherwise permitted in its business scope or under applicable laws and regulations. In addition, the SAFE strengthened its oversight of the flow and use of the funds of a foreign-invested company settled in Renminbi converted from foreign currencies. The use of such Renminbi capital may not be changed without the SAFE's approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been used for purposes within the company's approved business scope. Violations of Circular 142 will result in severe penalties, such as heavy fines. As a result, Circular 142 may significantly limit our PRC subsidiaries' ability to utilize the net proceeds transferred to it from this offering. We expect that if we convert the net proceeds we receive from this offering into Renminbi pursuant to Circular 142, our use of Renminbi funds will be for purposes within the approved business scope of our PRC subsidiaries. However, we may not be able to use such Renminbi funds to make equity investments in the PRC through our PRC subsidiaries.

Fluctuation in the value of the RMB may materially adversely affect the value of your investment.

        The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. For almost two years after reaching a high against the U.S. dollar in July 2008, the Renminbi traded within a narrow band against the U.S. dollar. As a consequence, the RMB has fluctuated significantly since July 2008 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 and since that time the Renminbi has gradually appreciated against the U.S. dollar. 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 greater fluctuation of the Renminbi against the U.S. dollar. Substantially all of our revenues and costs are denominated in RMB, and a significant portion of our financial assets are also denominated in RMB. We principally rely on dividends and other distributions paid to us by our subsidiaries in China. Any significant revaluation of the RMB may materially 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. Any fluctuations of the exchange rate between the RMB and the U.S. dollar could also result in foreign currency translation losses for financial reporting purposes.

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

        SAFE has promulgated several regulations, including the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-Raising and Round-trip Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or SAFE Circular No. 75, effective on November 1, 2005, and other related rules. These regulations require PRC residents and PRC corporate entities to register with competent local branches of SAFE before establishing or acquiring direct or indirect interest of an offshore special purpose company, or the Offshore SPV, for the purpose of financing such Offshore SPV with assets of, or equity interests in, an enterprise in the PRC. These regulations apply to our shareholders who are PRC residents and may apply to any offshore acquisitions that we make in the future.

        SAFE Circular No. 75 applies retroactively and to direct and indirect shareholdings. PRC residents who have established or acquired direct or indirect interest of any Offshore SPVs that have made onshore investments in the PRC in the past are required to complete the registration procedures by March 31, 2006. Any PRC resident, who is a direct or indirect shareholder of an Offshore SPV, is required to update the previously filed registration with competent local branch of SAFE, with respect to the Offshore SPV, to reflect any material change. In addition, the PRC subsidiaries of the Offshore SPV are required to urge the PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder fails to make the required registration or update the previously filed registration, the PRC subsidiaries of the Offshore SPV may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to their SPV parent, and the Offshore SPV may also be prohibited from injecting additional capital into its PRC subsidiaries. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in fines and other liabilities for such PRC subsidiaries under PRC laws for evasion of applicable foreign exchange restrictions. Furthermore, the persons-in-charge and other persons at such PRC subsidiaries who are held directly liable for the violations may be subject to criminal sanctions.

        We have requested PRC residents holding direct or indirect interest in our company to our knowledge to make the necessary applications, filings and amendments as required under SAFE Circular No. 75 and other related rules. Ms. Haiyan Gong, Mr. Yongqiang Qian and Mr. Xu Liu have registered with the local SAFE branch as required under the SAFE Circular No. 75 and are currently handling the amendment registration in relation to our Reorganization and their ownership changes pursuant to the SAFE Circular No. 75 and Mr. Fuping Yu, Mr. Cheng Li and Mr. Qingjun Zhu are currently handling the registration in relation to our Reorganization in accordance with SAFE Circular No. 75. We cannot assure you, however, that such amendment registration and registration will be duly completed with the local SAFE branch. In addition, we may not be informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurances that all of our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain or update any applicable registrations or comply with other requirements required by Circular No. 75 or other related rules. The failure or inability of our PRC resident shareholders to make any required registrations or comply with other requirements under SAFE Circular No. 75 and other related rules may subject such PRC residents or our PRC subsidiaries to fines and legal sanctions and may also limit our ability to contribute additional capital into or provide loans to (including using the proceeds from this offering) our PRC subsidiaries, limit our PRC subsidiaries' ability to pay dividends or otherwise distribute profits to us, or otherwise adversely affect us.

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The approval of the China Securities Regulatory Commission, or the CSRC, may be required in connection with this offering under PRC regulations and, if required, we cannot assure you that we will be able to obtain such approval.

        On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the SAT, the State Administration for Industry and Commerce, the CSRC, and the SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009. The M&A Rule requires Offshore SPVs that are controlled by PRC companies or residents and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. On September 21, 2006, the CSRC published a notice on its websites specifying the documents and materials that special purpose vehicles are required to submit when seeking CSRC approval for their listings outside of China. The interpretation and application of the M&A Rule remain unclear, and this offering may ultimately require approval from the CSRC, and if it does, it is uncertain how long it will take us to obtain the approval.

        Our PRC legal counsel, Zhong Lun Law Firm, has advised us that, based on their understanding of the current PRC laws, regulations and rules and the procedures announced on September 21, 2006, because (i) we established our PRC subsidiaries by means of direct investment other than by merger or acquisition of the equity or assets of a PRC domestic company owned by PRC companies or individuals as defined under the M&A Rules that are our beneficial owners after the effective date of the M&A Rules, and (ii) no provisions in the M&A Rules clearly classify our contractual arrangements with our PRC operating companies as the acquisition subject to the M&A Rules, we are not required to apply with the CSRC for the approval of the listing and trading of our ADSs on the Nasdaq Global Market.

        However, our PRC legal counsel has further advised us uncertainties still exist as to how the M&A Rules will be interpreted and implemented and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. If CSRC or another PRC regulatory agency subsequently determines that prior CSRC approval was required, we may be unable to obtain a waiver of CSRC approval requirements and we may face regulatory actions or other sanctions from CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations, limit our operating privileges, delay or restrict the repatriation of the proceeds from this offering into the PRC or payment or distribution of dividends by our PRC subsidiaries, or take other actions that could materially adversely affect our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if CSRC later requires that we obtain its approval for this offering, we may be unable to obtain a waiver of CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding CSRC approval requirements could have a material adverse effect on the trading price of our ADSs.

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

        Pursuant to the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rule, promulgated on January 5, 2007 by the SAFE and the Processing Guidance on Foreign Exchange Administration of Domestic Individuals Participating in the Employee Stock Ownership Plans or Stock Option Plans of Overseas-Listed Companies, or the Stock Option Rule, issued by the SAFE in March 2007, PRC citizens who are granted shares or share options

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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 the 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 agent is 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. Our PRC citizen employees, who have been granted share options, or PRC optionees, will be subject to the Stock Option Rule when our company becomes an overseas listed company upon the completion of this offering. If we or our PRC optionees fail to comply with the Individual Foreign Exchange Rule and the Stock Option Rule, we and/or our PRC optionees may be subject to fines and other legal sanctions. We may also face regulatory uncertainties that could restrict our ability to adopt additional option plans for our directors and employees under PRC law. In addition, the SAT has issued certain circulars concerning employee share options. Under these circulars, our employees working in the PRC who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC government authorities. Furthermore, there are substantial uncertainties regarding the interpretation and implementation of the Individual Foreign Exchange Rule and the Stock Option Rule. No assurance can be given that our consultants, who have been or will be granted share options, would be deemed as our employees under the Stock Option Rule and will successfully complete the registration of share options with SAFE after the completion of this offering. See "Regulation—Regulations on Employee Share Options."

We face risks of health epidemics and other disasters, which could severely disrupt our business operations.

        Our business could be materially adversely affected by the outbreak of H1N1, or swine influenza, avian influenza, severe acute respiratory syndrome, or SARS, or another epidemic. In 2009 and early 2010, there were outbreaks of swine influenza in certain regions of the world, including China. In 2006 and 2007, there were reports on the occurrences of avian influenza in various parts of China, including a few confirmed human cases and deaths. Any prolonged recurrence of swine influenza, avian influenza, SARS or other adverse public health developments in China could adversely affect economic activities in China and require the temporary closure of our offices. Such closures could severely disrupt our business operations and adversely affect our results of operations.

        Our operations are vulnerable to interruption and damage from man-made or natural disasters, including wars, acts of terrorism, snowstorms, earthquakes, fire, floods, environmental accidents, power loss, communications failures and similar events. If any man-made or natural disaster were to occur in the future, our ability to operate our business could be seriously impaired.

Labor laws in the PRC may adversely affect our results of operations.

        China adopted a labor contract law effective on January 1, 2008, that establishes more restrictions and increases costs for employers to dismiss employees. For example, the labor contract law requires certain terminations to be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce in the PRC, the labor contract law could adversely affect our ability to effect such changes in a manner that is most advantageous to our circumstances or in a timely and cost effective manner, thus our results of operations could be adversely affected. In addition, the labor contract law requires employers to pay compensation to their employees who agree to bear non-competition obligations on a monthly basis after the employees' employment expires or terminates, which will increase employers' operating expenses.

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Our failure to fully comply with PRC labor-related laws exposes us to potential penalty risks.

        Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain pension, housing and other welfare-oriented payment obligations. One of our PRC operating companies, Shanghai Huaqianshu, has not fully paid the contributions for such plans, as required by applicable PRC regulations. As of December 31, 2010, the outstanding contributions to social insurance funds and housing funds of Shanghai Huaqianshu we made provisions for amounted to RMB1.8 million (US$0.3 million). While we believe we have made adequate provision of such outstanding amounts in our audited financial statements, our prior failure to make payments may be in violation of applicable PRC labor-related laws and we may be subject to fines if we fail to rectify any such breaches within the period prescribed by the relevant authorities. In addition, in the event that any current or former employee files a complaint with the PRC government, we may be required to make up the contributions for such employee benefit plans as well as to pay administrative fines.

        According to the applicable PRC regulations, employers failing to pay various government sponsored employee benefit plans in accordance with the relevant rules may be ordered to rectify the noncompliance and pay the required contributions for such plans within a stipulated deadline. If payment is not made by the stipulated deadline, employers can be assessed a late fee of 0.2% of the amount overdue per day from the original due date by the relevant authority. Employers failing to make housing fund contributions may be ordered to rectify any such violation within a prescribed time limit. If an employer fails to rectify a failure to pay within such a prescribed time limit, fines ranging between RMB10,000 and RMB50,000 may be imposed and an application may be made to a local court for compulsory enforcement. However, late fee charges and fines may only be imposed if the employer fails to make up such payments after receipt of a written notice from the authorities. We have not received any such written notice.

Risks Related to Our ADSs and This Offering

There has been no public market for our ordinary shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.

        Prior to this initial public offering, there has been no public market for our ordinary shares or ADSs. We have applied to list our ADSs on the Nasdaq Global Market. Our ordinary shares will not be listed or quoted for trading on any exchange. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs will be materially adversely affected.

        The initial public offering price for our ADSs will be determined by negotiations between us and the underwriters and may bear no relationship to the market price for our ADSs after the initial public offering. We cannot assure you that an active trading market for our ADSs will develop or that the market price of our ADSs will not decline below the initial public offering price.

The market price movement of our ADSs may be volatile, and the value of your investment in our ADSs may decrease.

        The market price of our ADSs may be volatile and subject to wide fluctuations. Among the factors that could affect the price of our ADSs are risk factors described in this section and other factors, including:

    announcements by us or our competitors of new services, acquisitions, strategic relationships, joint ventures or capital commitments;

    regulatory developments in our target markets affecting us, our users or our competitors;

    actual or anticipated fluctuations in our quarterly operating results;

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    failure of our quarterly financial and operating results to meet market expectations or failure to meet our previously announced guidance;

    changes in financial estimates by securities research analysts;

    negative publicity, studies or reports;

    changes in the economic performance or market valuations of other Internet or online dating services companies;

    additions or departures of our executive officers and other key personnel;

    announcements regarding intellectual property litigation (or potential litigation) involving us or any of our directors and officers;

    release or expiration of the underwriters' post-offering lock-up or other transfer restrictions on our outstanding ordinary shares and ADSs; and

    sales or anticipated sales of additional ordinary shares or ADSs.

        In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular industries or companies. These market fluctuations may also materially adversely affect the market price of our ADSs.

Since the initial public offering price is substantially higher than our net tangible book value per share, 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 common shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately $            per ADS (assuming no exercise of outstanding options to acquire common shares), representing the difference between our pro forma net tangible book value per ADS as of December 31, 2010, after giving effect to this offering and the assumed initial public offering price of $            per ADS (which is the midpoint of the estimated initial public offering price range). In addition, you will experience further dilution to the extent that our common shares are issued upon the exercise of share options. All of the common 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. See "Dilution" for a more complete description of how the value of your investment in our ADSs will be diluted upon the completion of this offering.

We may be required to withhold PRC income tax on the dividends we pay you (if any), and any gain you realize on the transfer of our ordinary shares and/or ADSs may also be subject to PRC withholding tax.

        Pursuant to the EIT Law, we may be treated as a PRC resident enterprise for PRC tax purposes. See "—Risks Related to Doing Business in China—We may be classified as a "resident enterprise" for PRC enterprise income tax purposes, which could result in our global income becoming subject to 25% PRC enterprise income tax." If we are so treated by the PRC tax authorities, we would be obligated to withhold PRC income tax of up to 5% on payments of dividends on our shares and/or ADSs to investors that are non-resident enterprises of the PRC located in Hong Kong and 10% on payments of dividends on our ordinary shares and/or ADSs to investors that are non-resident enterprises of the PRC located outside Hong Kong, because the dividends payable on our ordinary shares and/or ADSs would be regarded as being derived from sources within the PRC. In addition, any gain realized by any investors who are non-resident enterprises of the PRC from the transfer of our ordinary shares and/or ADSs could be regarded as being derived from sources within the PRC and be subject to a 10% PRC withholding tax. Such PRC withholding tax would reduce your investment return on our ordinary shares and/or ADSs and may also materially adversely affect the price of our ordinary shares and/or ADSs.

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Substantial future sales of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could cause the price of our ADSs to decline.

        Additional sales of our ADSs or ordinary shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have                        ordinary shares outstanding. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act. The remaining ordinary shares outstanding after this offering will be available for sale, upon the expiration of the applicable lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable under Rule 144 and Rule 701 under the Securities Act. See "Shares Eligible for Future Sale" and "Underwriting" for a detailed description of the lock-up restrictions. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the lead underwriters for this offering. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of our ADSs could decline.

        In addition, as disclosed under "Description of Share Capital—Registration Rights," certain holders of our preferred shares and ordinary shares converted from our preferred shares have the right to cause us to register the sale of their shares under the Securities Act, subject to a 180-day lock-up period in connection with this offering. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the related registration statement. Sales of these registered shares in the public market could cause the price of our ADSs to decline.

Your right as a holder of ADSs to participate in any future rights offerings may be limited, which may cause dilution to your holdings and you may not receive cash dividends if it is impractical to make them available to you.

        We may, from time to time, distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make any such rights available to our ADS holders in the United States unless we register such rights and the securities to which such rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement provides that the depositary bank will not make rights available to you unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

        In addition, the depositary has agreed to pay 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 may, at its discretion, decide that it is not lawful or practical to make a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property and you will not receive such distribution.

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

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or

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the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

As we are a Cayman Islands company, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.

        Our corporate affairs are governed by our second amended and restated memorandum and articles of association, the Companies Law and the common law of the Cayman Islands. The rights of our shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands, as well as that 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 precedents in some jurisdictions in the United States. In particular, because Cayman Islands law has no legislation specifically dedicated to the rights of investors in securities, and thus no statutorily defined private causes of action to investors in securities such as those found under the Securities Act or the Securities Exchange Act of 1934 in the United States, it provides significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the federal courts of the United States.

        As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation organized in a jurisdiction in the United States.

You may have difficulties in enforcing judgments obtained against us.

        We are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current operations are conducted in the PRC. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States.

        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 due to the lack of reciprocal treaty in the Cayman Islands or the PRC providing statutory recognition of judgments obtained in the United States. Furthermore, it is uncertain whether such Cayman Islands or PRC courts would be competent to hear original actions brought in the Cayman Islands or the PRC against us or such persons who reside outside the United States predicated upon the securities laws of the United States or any state. See "Enforceability of Civil Liabilities."

The voting rights of holders of ADSs must be exercised in accordance wth the terms of the deposit agreement, the ADRs and the procedures established by the depositary. The process of voting through the depositary may involve delays that limit the time available for you to consider proposed shareholders' actions and may restrict your ability to exercise your right to vote.

        As a holder of our ADSs, you may only be able to exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Under the

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deposit agreement, if the vote is by show of hands, the depositary will vote the underlying ordinary shares in accordance with the voting instructions received from a majority of holders of ADSs that provided timely voting instructions. If the vote is by poll, the depositary will vote the underlying ordinary shares in accordance with the voting instructions it timely receives from ADS holders. Upon receipt of voting instructions of 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. Under our second amended and restated memorandum and articles of association and Cayman Islands law, the minimum notice period required for convening a general meeting is five days. When a general meeting is convened, you may 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. In addition, the depositary and its agents may 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 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 may not be able to exercise your right to vote and you may lack recourse if the ordinary shares underlying your ADSs are not voted as you requested.

The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not vote at shareholders' meetings, except in limited circumstances, which could adversely affect your interests.

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

    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 a material adverse impact on shareholders; or

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

        The effect of this discretionary proxy is that if you do not vote at shareholders' meetings, you cannot prevent our ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

Our management will have considerable discretion as to the use of the net proceeds from this offering and you may not agree with our management on these uses.

        Our allocation of the net proceeds to be received by us of this offering is based on current plans and business conditions. Our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether 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 may be used for general corporate purposes that do not improve our efforts to maintain profitability or increase our ADS price. The net proceeds from this offering may be utilized in ways or placed in investments that do not produce income or that lose value.

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We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax consequences to United States Holders of our ADSs or ordinary shares.

        Although it is not clear how the contractual arrangements between us and our PRC operating companies will be treated for purposes of the "passive foreign investment company," or PFIC, rules, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ending December 31, 2011 or in the foreseeable future based upon the projected composition of our income and valuation of our assets, including goodwill. However, the application of the PFIC rules is subject to ambiguity in several respects and, in addition, we must make a separate determination each year as to whether we are a PFIC after the close of each taxable year. A non-United States corporation will be considered a PFIC for any taxable year if either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during the taxable year) is attributable to assets that produce or are held for the production of passive income. Because we expect to continue to hold a substantial amount of cash and other passive assets following this offering, and because the determination of whether we are a PFIC will depend on the character of our income and assets and the value of our assets from time to time, which may be based in part on the market price of our ADSs, which is likely to fluctuate after this offering, we cannot assure you that we will not be a PFIC for our current taxable year ending December 31, 2011 or any future taxable year. Moreover, while we believe that the contractual arrangements between us and our PRC operating companies should be treated as ownership of stock, if the PRC adversely determines that such arrangements should not be treated as ownership of stock, we would likely be treated as a PFIC. If we were to be treated as a PFIC for any taxable year during which a United States Holder (as defined in "Taxation—United States Federal Income Tax Consequences") held an ADS or an ordinary share, certain adverse United States federal income tax consequences could apply to such person. For example, if we are a PFIC, a United States Holder could be subject to additional United States federal income taxes on certain distributions and on gain recognized with respect to the ADSs or ordinary shares and may be subject to certain reporting requirements. See "Taxation—United States Federal Income Tax Consequences—Passive Foreign Investment Company."

Our articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders' opportunity to sell their shares, including ordinary shares represented by our ADSs, at a premium.

        Our second amended and restated memorandum and articles of association, which will take effect upon the completion of this offering, include provisions that could limit the ability of others to acquire control of us, including provisions that authorize our board of directors, without action by our shareholders, to issue preferred shares and to issue additional ordinary shares, including ordinary shares represented by ADSs. These provisions could have the effect of depriving you of an opportunity to sell your ADSs at a premium over prevailing market prices by discouraging third parties from seeking to acquire control of us in a tender offer or similar transactions.

We will incur increased costs as a public company.

        As a public company, we will incur a significantly higher level of legal, accounting and other expenses than we did as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq Global Market, has required changes in corporate governance practices of public companies.

        When we become a public company, we will establish additional board committees and will adopt and implement additional policies regarding internal control over financial reporting and disclosure controls and procedures. In particular, compliance with Section 404 of the Sarbanes-Oxley Act, which requires public companies to include a report of management on the effectiveness of their internal control over financial reporting, will increase our costs. In addition, we will incur costs associated with public company reporting requirements, such as the requirements to file an annual report and other reports with the SEC. We expect these rules and regulations to increase our legal and financial compliance costs. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical fact in this prospectus are forward-looking statements. These forward-looking statements can be identified by words or phrases such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "is/are likely to," "may," "plan," "should," "will," or other similar expressions. The forward-looking statements included in this prospectus relate to, among others:

    our future business development, financial condition and results of operations;

    our ability to maintain and strengthen our position as the leading provider of online dating services in China;

    our ability to develop and commercialize additional online dating, family and marriage services;

    market acceptance of our online dating services;

    our various initiatives to implement our business strategies to expand our business;

    competition from other online dating service providers and operators;

    our planned use of proceeds;

    the expected growth of and change in the online dating services industry in China;

    our ability to effectively protect our intellectual property rights and not infringe on the intellectual property rights of others; and

    the PRC laws, regulations and policies relating to the Internet and Internet content providers, including online dating service providers and operators.

        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 may turn out 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 "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and other sections in this prospectus.

        The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

        This prospectus also contains data related to the online dating services industry in China. These industry data, including data from iResearch, include projections that are based on a number of assumptions. The online dating services industry may not grow at the rate projected by the industry data, or at all. The failure of this industry to grow at the projected rate may have a material adverse effect on our business and the market price of our ADSs. In addition, the rapidly changing nature of the online dating services industry subjects any projections or estimates relating to the growth prospects or future condition of our industry to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may differ from the projections based on these assumptions.

        Unless otherwise indicated, information in this prospectus concerning economic conditions and our industry is based on information from independent industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable.

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ENFORCEABILITY OF CIVIL LIABILITIES

        We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands corporation, such as political and economic stability, an effective judicial system, 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 do not have standing to sue before the federal courts of the United States.

        Substantially all of our assets are located outside the United States. In addition, a majority of our directors and officers are nationals or 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.

        We have appointed CT Corporation System 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 Zhong Lun 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, (i) 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 (ii) 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.

        Maples and Calder has further advised us that the courts of the Cayman Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the federal or state courts in the United States against us under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) and would give a judgment based thereon, provided that: (i) such federal or state courts had proper jurisdiction over the parties subject to such judgment; (ii) such federal or state courts did not contravene the rules of natural justice of the Cayman Islands; (iii) such judgment was not obtained by fraud; (iv) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (v) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (vi) there is due compliance with the correct procedures under the laws of the Cayman Islands. Our shareholders can, under certain circumstances, originate actions against us. See "Description of Share Capital—Differences in Corporate Law—Shareholders' Suits."

        Zhong Lun Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions, provided that the foreign judgments do not violate the basic principles of laws of the PRC or its sovereignty, security, or social and public interest. Zhong Lun Law Firm has advised us further that there are no treaties between China and the United States for the mutual recognition and

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enforcement of court judgments, thus making the recognition and enforcement of a U.S. court judgment in China difficult.

        In addition, although U.S. shareholders may be able to originate actions against us in China in accordance with PRC law, it will be difficult for U.S. shareholders to do so because we are incorporated under the laws of the Cayman Islands and it is difficult for U.S. shareholders, by virtue only of holding our ADSs or ordinary shares, to establish a connection to the PRC for a PRC court to have subject matter jurisdiction as required by the PRC Civil Procedures Law. U.S. shareholders may be able to originate actions against us in the Cayman Islands based on Cayman Islands law. However, we do not have any substantial assets other than certain corporate documents and records in the Cayman Islands and it may be difficult for a shareholder to enforce a judgment obtained in a Cayman Islands court in China, where substantially all of our operations are conducted.

        Paul, Hastings, Janofsky & Walker, our counsel as to Hong Kong law, has further advised us that Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. There is therefore doubt as to the enforceability in Hong Kong in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States.

        Maples and Calder, our counsel as to BVI laws, has further advised us that the United States and the BVI do not have a treaty providing for reciprocal recognition and enforcement of judgments of courts of the United States in civil and commercial matters and that a final judgment for the payment of money rendered by any federal or state courts in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be automatically enforceable in the BVI. In addition, Maples and Calder has advised us that a final and conclusive judgment obtained in U.S. federal or state courts under which a sum of money is payable as compensatory damages (i.e., not being a sum claimed by a revenue authority, for taxes or other charges of a similar nature by a governmental authority, or in respect of a fine or penalty or multiple or punitive damages) may be the subject of an action on a debt in the court of the BVI.

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OUR HISTORY AND CORPORATE STRUCTURE

Our History

        Our founder and chief executive officer, Ms. Haiyan Gong, commenced our online dating business in 2003, focusing on highly educated users, such as college educated users or users who had received post-secondary education. In April 2004, Ms. Gong incorporated Shanghai Huaqianshu, a PRC limited liability company, to operate our online dating service business. Ms. Haiyan Gong and Mr. Fuping Yu each held 61% and 39% of the equity interests, respectively, in Shanghai Huaqianshu.

        In June 2005, Ms. Haiyan Gong and Mr. Yongqiang Qian, through their wholly-owned companies, incorporated Flower Trees Limited, or Flower Trees, in the British Virgin Islands. In January and February of 2006, Flower Trees established a wholly-owned PRC subsidiary, Souyuan (Shanghai) Information Technology Co., Ltd., or Souyuan, which entered into a series of contractual arrangements with Shanghai Huaqianshu and its shareholders to acquire effective control over Shanghai Huaqianshu.

        In February 2007, Harper was incorporated in the British Virgin Islands. In March 2007, Ms. Haiyan Gong, Mr. Yongqiang Qian, Mr. Xu Liu and Ms. Jing Yang became the initial shareholders of Harper. In May 2007, Harper established a wholly-owned PRC subsidiary, Shanghai Miyuan. In May 2007, Shanghai Miyuan entered into an assignment agreement with Souyuan, Shanghai Huaqianshu and its shareholders to assume Souyuan's effective control over Shanghai Huaqianshu. As a result, Flower Trees and Souyuan no longer hold any assets and have no operations.

        In January 2008, we opened our registration to all single users above the age of 18 and in October 2008, we began charging fees for messaging services on our Jiayuan.com website.

        In preparation for this offering, we incorporated Jiayuan in September 2010 in the Cayman Islands as our listing vehicle. Jiayuan became our ultimate holding company on January 26, 2011 when it issued shares to the existing shareholders of Harper in exchange for all of the outstanding shares of Harper at an exchange ratio of one to one, or the Share Swap. After the Share Swap, Harper became our direct wholly-owned subsidiary. In addition, in October 2010, Harper established a wholly-owned subsidiary, Jiayuan Hong Kong. Jiayuan Hong Kong may qualify for the PRC preferential tax treatment for dividend payments from PRC entities to certain shareholders that are Hong Kong resident enterprises. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Taxation—PRC—Withholding Tax." We also operate our English language dating website through Jiayuan Hong Kong.

        We also took the following steps:

    in December 2010, Shanghai Huaqianshu established Jiayuan Shanghai Center, a privately funded non-enterprise institution;

    in January 2011, Jiayuan Hong Kong established another wholly-owned PRC subsidiary, Beijing Miyuan;

    in February 2011, Beijing Miyuan entered into a series of contractual arrangements with Beijing Huaqianshu, Xique and their respective shareholders to acquire effective control over Beijing Huaqianshu and Xique. As a result, Beijing Huaqianshu and Xique became our variable interest entities. Beijing Huaqianshu and Xique commenced operations in November 2010; and

    Harper is in the process of transferring its 100% equity interest in Shanghai Miyuan to Jiayuan Hong Kong. We expect to complete this transfer in the second quarter of 2011.

        The following diagram illustrates our anticipated shareholding and corporate structure immediately following this offering and assuming that Harper has completed the transfer of its 100% equity interest

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in Shanghai Miyuan to Jiayuan Hong Kong and that the underwriters do not exercise their over-allotment option*:

GRAPHIC


(1)
Harper is in the process of transferring its 100% equity interest in Shanghai Miyuan to Jiayuan Hong Kong. We expect to complete this transfer in the second quarter of 2011.

(2)
These contracting shareholders are Ms. Haiyan Gong, our founder and chief executive officer, Mr. Yongqiang Qian, our chairman, Mr. Xu Liu, Mr. Fuping Yu, Mr. Qingjun Zhu and Mr. Cheng Li.

(3)
Jiayuan Shanghai Center was established by Shanghai Huaqianshu as a privately funded non-enterprise institution that engages in non-profit social services.

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Contractual Arrangements with Shanghai Huaqianshu, Beijing Huaqianshu, Xique and their Respective Shareholders and Jiayuan Shanghai Center

        In order to comply with PRC law restricting foreign ownership and investment in value-added telecommunications service businesses and the prohibition on privately funded non-enterprise institutions from engaging in profit-making business operations in China, we operate our online dating and offline VIP services through a series of contractual arrangements (i) among Shanghai Miyuan, Shanghai Huaqianshu, its shareholders and Jiayuan Shanghai Center, (ii) among Beijing Miyuan, Beijing Huaqianshu and its shareholders, and (iii) among Beijing Miyuan, Xique and its shareholders. Such contractual arrangements include exclusive technology licenses and service agreements, equity pledge agreements, exclusive equity transfer option agreements, shareholders' voting rights entrustment agreements and loan agreements. As a result of these contractual arrangements,

    through Shanghai Miyuan, we exercise effective control over Shanghai Huaqianshu and Jiayuan Shanghai Center, and through Beijing Miyuan, we exercise effective control over Beijing Huaqianshu and Xique;

    in exchange for the provision of services, through Shanghai Miyuan we receive substantially all of the earnings and other economic benefits of Shanghai Huaqianshu and Jiayuan Shanghai Center, and through Beijing Miyuan, we receive substantially all of the earnings and other economic benefits of Beijing Huaqianshu and Xique, in each case to the extent permissible under PRC law;

    through Shanghai Miyuan, we have an exclusive option to purchase all or part of the equity interests in Shanghai Huaqianshu, and through Beijing Miyuan, we have an exclusive option to purchase all or part of the equity interests in Beijing Huaqianshu and Xique, in each case when and to the extent permitted by PRC law.

        Because we effectively control Shanghai Huaqianshu, Jiayuan Shanghai Center, Beijing Huaqianshu and Xique, we consolidate their operating results in our consolidated financial statements under U.S. GAAP.

        Below is a summary of the material provisions of these agreements.

Agreements That Transfer Economic Benefit to Us

        Exclusive Technology License and Service Agreement with Shanghai Huaqianshu.    Pursuant to the amended and restated exclusive technology license and service agreement entered into on January 25, 2011 between Shanghai Miyuan and Shanghai Huaqianshu, Shanghai Huaqianshu retains Shanghai Miyuan as its exclusive provider of software and hardware licenses, technology support, hardware and data maintenance and updates, software development, maintenance and professional training, information collection and research, technology consulting services related to the business operations of Shanghai Huaqianshu. As consideration for such services, Shanghai Huaqianshu agreed to pay service fees equal to a certain percentage of Shanghai Huaqianshu's annual revenues as agreed by the parties from time to time. The exclusive technology license and service agreement will expire on January 24, 2021, and, except by mutual agreement upon early termination by the parties in writing, the term of this agreement will be automatically extended for ten years.

        Exclusive Technology License and Service Agreement with Jiayuan Shanghai Center.    Pursuant to the exclusive technology license and service agreement entered into on January 25, 2011 between Shanghai Miyuan and Jiayuan Shanghai Center, Jiayuan Shanghai Center retains Shanghai Miyuan as its exclusive provider of software and hardware licenses, technology support, hardware and data maintenance and updates, software development, maintenance and professional training, information collection and research, technology consulting services related to the business operations of Jiayuan Shanghai Center. As consideration for such services, Jiayuan Shanghai Center agreed to pay service

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fees equal to a certain percentage of Jiayuan Shanghai Center's annual revenues as agreed by the parties from time to time. The exclusive technology license and service agreement will expire on January 24, 2021, and, except by mutual agreement upon early termination by the parties in writing, the term of this agreement will be automatically extended for ten years.

        Exclusive Technology License and Service Agreement with Beijing Huaqianshu.    Pursuant to the exclusive technology license and service agreement entered into on February 17, 2011 between Beijing Miyuan and Beijing Huaqianshu, Beijing Miyuan provides software and hardware licenses, technology support, hardware and data maintenance, software development, maintenance and update, professional training, information collection and research, technology consulting services related to the business operations of Beijing Huaqianshu. As consideration for such services, Beijing Huaqianshu agreed to pay service fees equal to a certain percentage of Beijing Huaqianshu's annual revenues as agreed by the parties from time to time. This agreement will expire on February 16, 2021 and, except by mutual agreement upon early termination by the parties in writing, the term will be automatically extended for ten years.

        Exclusive Technology License and Service Agreement with Xique.    Pursuant to the exclusive technology license and service agreement entered into on February 17, 2011 between Beijing Miyuan and Xique, Beijing Miyuan provides software and hardware licenses, technology support, hardware and data maintenance, software development, maintenance and update, professional training, information collection and research, technology consulting services related to the business operations of Xique. As consideration for such services, Xique agreed to pay service fees equal to a certain percentage of Xique's annual revenues as agreed by the parties from time to time. This agreement will expire on February 16, 2021 and, except by mutual agreement upon early termination by the parties in writing, the term will be automatically extended for ten years.

Agreements That Provide Us Effective Control Over Shanghai Huaqianshu and Jiayuan Shanghai Center

        Loan Agreements.    Pursuant to an amended and restated loan agreement entered into on January 25, 2011, between Shanghai Miyuan and Ms. Haiyan Gong and Mr. Xu Liu, Shanghai Miyuan made interest-free loans of the equivalent of US$624,480 and US$575,520, respectively, to Ms. Haiyan Gong and Mr. Xu Liu. The loans are repayable on demand. If Ms. Gong and Mr. Liu intend to voluntarily repay the loans in whole or in part, or if Shanghai Miyuan requires Ms. Gong and Mr. Liu to repay the loans in whole or in part, Shanghai Miyuan or its designee may acquire a proportionate amount of the equity interests of Shanghai Huaqianshu from Ms. Gong and Mr. Liu for a purchase price equal to the principal amount of the repaid loans. Pursuant to a loan transfer agreement dated January 19, 2011, the rights and obligations under this loan agreement by Ms. Gong and Mr. Liu were transferred to the current shareholders of Shanghai Huaqianshu.

        Pursuant to another loan agreement entered into on July 10, 2007, between Shanghai Miyuan and Ms. Gong, Shanghai Miyuan made a loan of RMB9.0 million to Ms. Gong for increasing the capital of Shanghai Huaqianshu. Except as otherwise provided therein, neither Shanghai Miyuan may require Ms. Gong to, nor Ms. Gong may, repay the loan in advance. Shanghai Miyuan or its designee may acquire such increased capital of Shanghai Huaqianshu from Ms. Gong for a purchase price equal to the principal amount of the repaid loan. After the completion of the restructuring, the rights and obligations under this loan agreement by Ms. Gong were transferred to the current shareholders of Shanghai Huaqianshu.

        Shareholders' Voting Rights Entrustment Agreement.    Pursuant to the amended and restated shareholders' voting rights entrustment agreement entered into on January 25, 2011, between Shanghai Miyuan, Shanghai Huaqianshu and its shareholders, the shareholders of Shanghai Huaqianshu shall grant a PRC citizen, as agreed by Shanghai Miyuan, the right to exercise all their voting rights as

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shareholders of Shanghai Huaqianshu under its then-effective articles of association. Upon Shanghai Miyuan's request, the grantors shall revoke the proxy and grant the same proxy to another PRC citizen as designated by the designee of Shanghai Miyuan. The shareholders' voting rights entrustment agreement will remain effective until January 24, 2021, and, except by mutual agreement upon early termination by the parties in writing or any termination arising from Shanghai Huaqianshu or its shareholders' material breach of obligations thereunder, the term of the shareholders' voting rights entrustment agreement will be automatically extended for ten years.

        Exclusive Equity Transfer Option Agreement.    Pursuant to the amended and restated exclusive equity transfer option agreement entered into on January 25, 2011 between Shanghai Miyuan, Shanghai Huaqianshu and its shareholders, Shanghai Miyuan has an exclusive option to purchase, or to designate another qualified individual or entity to purchase, to the extent permitted by PRC law, part or all of the equity interests in Shanghai Huaqianshu owned by Shanghai Huaqianshu's shareholders. The purchase price for the entire equity interest of Shanghai Huaqianshu shall be the proportionate amount of the registered capital owned by such shareholder or an amount agreed by the parties in writing provided that, in case of any compulsory requirement by then PRC laws, the purchase price shall be the minimum price permitted by applicable PRC law. The exclusive equity transfer option agreement remains in effect until the completion of the transfer of all the shares in accordance with this agreement.

        Equity Pledge Agreement.    Pursuant to the amended and restated equity pledge agreement entered into on January 25, 2011 between Shanghai Miyuan and Shanghai Huaqianshu's shareholders, Shanghai Huaqianshu's shareholders pledged their equity interest in Shanghai Huaqianshu to Shanghai Miyuan to secure such shareholders' obligations under the loan agreement, the shareholders voting rights entrustment agreement and the exclusive equity transfer option agreement as well as Shanghai Huaqianshu's obligations under the exclusive technology license and service agreement, each as described above. The equity pledge agreement will expire when the shareholders and Shanghai Huaqianshu have fully performed their obligations under the agreements described above.

        Cooperative Operation Agreement.    Pursuant to the cooperative operation agreement entered into on January 25, 2011 among Shanghai Miyuan, Shanghai Huaqianshu and Jiayuan Shanghai Center, in order to ensure Jiayuan Shanghai Center's ability to make payments to Shanghai Miyuan under an exclusive technology license and service agreement between Jiayuan Shanghai Center and Shanghai Miyuan, Shanghai Huaqianshu agrees to appoint designees of Shanghai Miyuan as the members of the management committee and the key employees of Jiayuan Shanghai Center upon the request of Shanghai Miyuan. This agreement will expire on January 24, 2021 and, unless terminated early by Shanghai Miyuan, the term will be automatically extended for ten years.

Agreements That Provide Us Effective Control Over Beijing Huaqianshu

        Loan Agreement.    Pursuant to a loan agreement entered into on February 17, 2011, between Beijing Miyuan and Ms. Haiyan Gong and Mr. Yu Zhang, Beijing Miyuan made interest-free loans of RMB0.7 million and RMB0.3 million, respectively, to Ms. Gong and Mr. Zhang, the original shareholders of Beijing Huaqianshu at the date of its establishment. The loans are repayable on demand. If Ms. Gong and Mr. Zhang intend to voluntarily repay the loans, Beijing Miyuan or its designee may acquire the equity investments of Beijing Huaqianshu from Ms. Gong and Mr. Zhang for a purchase price equal to the principal amount of the loans. Pursuant to a loan transfer agreement dated January 19, 2011, the rights and obligations under this loan agreement by Ms. Gong and Mr. Zhang were transferred to the current shareholders of Beijing Huaqianshu.

        Shareholders' Voting Rights Entrustment Agreement.    Pursuant to the shareholders' voting rights entrustment agreement entered into on February 17, 2011, between Beijing Miyuan, Beijing Huaqianshu and its shareholders, the shareholders of Beijing Huaqianshu have granted

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Ms. Haiyan Gong, who is a PRC citizen, as agreed by Beijing Miyuan, the right to exercise all their voting rights as shareholders of Beijing Huaqianshu as provided under its articles of association. Upon Beijing Miyuan's request, the grantors shall revoke the proxy and grant the same proxy to another PRC citizen as designated by Beijing Miyuan. The shareholders' voting rights entrustment agreement will remain effective until February 16, 2021 and, except by mutual agreement upon early termination by the parties in writing or any termination arising from Beijing Huaqianshu or its shareholders' material breach of obligations thereunder, the term of the shareholders' voting rights entrustment agreement will be automatically extended for ten years.

        Exclusive Equity Transfer Option Agreement.    Pursuant to the exclusive equity transfer option agreement entered into on February 17, 2011, between Beijing Miyuan, Beijing Huaqianshu and its shareholders, Beijing Miyuan has an exclusive option to purchase, or to designate another qualified individual or entity to purchase, to the extent permitted by PRC law, part or all of the equity interests in Beijing Huaqianshu owned by Beijing Huaqianshu's shareholders. The purchase price for the entire equity interest of Beijing Huaqianshu shall be the amount of the proportionate registered capital owned by such shareholder or an amount agreed by the parties in writing, provided that, in case of any compulsory requirement by then PRC laws, the purchase price shall be the minimum price permitted by applicable PRC law. The exclusive equity transfer option agreement remains in effect until the completion of the transfer of all the shares in accordance with this agreement.

        Equity Pledge Agreement.    Pursuant to the equity pledge agreement entered into on February 17, 2011, between Beijing Miyuan and Beijing Huaqianshu's shareholders, Beijing Huaqianshu's shareholders pledged their equity interest in Beijing Huaqianshu to Beijing Miyuan to secure such shareholders' obligations under the loan agreement, the shareholders' voting rights entrustment agreement and exclusive equity transfer option agreement and Beijing Huaqianshu's obligations under the exclusive technology license and service agreement, each as described above. The equity pledge agreement will expire when the shareholders and Beijing Huaqianshu have fully performed their obligations under the agreements described above.

Agreements That Provide Us Effective Control Over Xique

        Loan Agreement.    Pursuant to a loan agreement entered into on February 17, 2011, between Beijing Miyuan and Ms. Haiyan Gong and Mr. Yu Zhang, Beijing Miyuan made interest-free loans of RMB0.7 million and RMB0.3 million, respectively, to Ms. Gong and Mr. Zhang, the original shareholders of Xique at the date of its establishment. The loans are repayable on demand. If Ms. Gong and Mr. Zhang intend to voluntarily repay the loans, Beijing Miyuan or its designee may acquire the equity investments of Xique from Ms. Gong and Mr. Zhang for a purchase price equal to the principal amount of the loans. Pursuant to a loan transfer agreement dated January 19, 2011, the rights and obligations under this loan agreement by Ms. Gong and Mr. Zhang were transferred to the current shareholders of Xique.

        Shareholders' Voting Rights Entrustment Agreement.    Pursuant to the shareholders' voting rights entrustment agreement entered into on February 17, 2011, between Beijing Miyuan, Xique and its shareholders, the shareholders of Xique have granted Ms. Haiyan Gong, who is a PRC citizen, as agreed by Beijing Miyuan, the right to exercise all their voting rights as shareholders of Xique as provided under its articles of association. Upon Beijing Miyuan's request, the grantors shall revoke the proxy and grant the same proxy to another PRC citizen as designated by Beijing Miyuan. The shareholders' voting rights entrustment agreement will remain effective until February 16, 2021 and, except by mutual agreement upon early termination by the parties in writing or any termination arising from Xique or its shareholders' material breach of obligations thereunder, the term of the shareholders' voting rights entrustment agreement will be automatically extended for ten years.

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        Exclusive Equity Transfer Option Agreement.    Pursuant to the exclusive equity transfer option agreement entered into on February 17, 2011, between Beijing Miyuan, Xique and its shareholders, Beijing Miyuan has an exclusive option to purchase, or to designate another qualified individual or entity to purchase, to the extent permitted by PRC law, part or all of the equity interests in Xique owned by Xique's shareholders. The purchase price for the entire equity interest of Xique shall be the amount of the proportionate registered capital owned by such shareholder or an amount agreed by the parties in writing, provided that, in case of any compulsory requirement by then PRC laws, the purchase price shall be the minimum price permitted by applicable PRC law. The exclusive equity transfer option agreement remains in effect until the completion of the transfer of all the shares in accordance with the exclusive equity transfer option agreement.

        Equity Pledge Agreement.    Pursuant to the equity pledge agreement entered into on February 17, 2011, between Beijing Miyuan and Xique's shareholders, Xique's shareholders pledged their equity interest in Xique to Beijing Miyuan to secure such shareholders' obligations under the loan agreement, the shareholders' voting rights entrustment agreement and exclusive equity transfer option agreement and Xique's obligations under the exclusive technology license and service agreement, each as described above. The equity pledge agreement will expire when the shareholders and Xique have fully performed their obligations under the agreements described above.

        In the opinion of Zhong Lun Law Firm, our PRC legal counsel:

    the corporate structure of our PRC subsidiaries, our PRC operating companies and Jiayuan Shanghai Center, currently complies with, and immediately after this offering, will comply with, current PRC laws, rules and regulations; and

    our contractual arrangements among our PRC subsidiaries, our PRC operating companies and their respective shareholders, and Jiayuan Shanghai Center are valid and binding on all parties to these arrangements, and do not violate current PRC laws, rules or regulations.

        Our PRC legal counsel has further advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. There can be no assurance that the PRC regulatory authorities will not take a view that is contrary to the above opinion of our PRC legal counsel in the future and if the PRC government determines that the agreements that establish the structure for operating our PRC value-added telecommunications service businesses and offline VIP services do not comply with applicable restrictions on foreign investment in the telecommunications industry and the prohibition on privately funded non-enterprise institutions from engaging in profit-making business operations, we could be subject to severe penalties including being prohibited from continuing operation. See "Risk Factors—Risks Relating to Regulation of Our Business and to Our Structure."

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USE OF PROCEEDS

        We estimate that we will receive net proceeds from this offering of approximately US$             million, after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us and based upon an assumed initial public offering price of US$            per ADS (the midpoint of the estimated initial public offering price range shown on the front cover of this prospectus). A US$1.00 increase (decrease) in the assumed initial public offering price of US$            per ADS would increase (decrease) the net proceeds to us from this offering by US$             million, after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us and assuming no other change to the number of ADSs offered by us as set forth on the cover page of this prospectus.

        We currently intend to use the net proceeds we will receive from this offering as follows:

    approximately US$             million to pay accrued but unpaid dividends due to the holders of our Series A preferred shares payable upon the completion of this offering, including US$             million to Fame Gain, Qiming Venture Partners, L.P. and Qiming Managing Directors Fund, L.P.; and

    the remaining amount for general corporate purposes, including capital expenditures, such as in connection with establishing new offices, expanding our services and purchasing additional hardware for expanded capacity and to meet new demand from new services, and funding possible future strategic acquisitions.

        We have no current plans, proposals or arrangements for any material acquisitions.

        Fame Gain is 100% owned by our chairman, Mr. Yongqiang Qian. The general partner of Qiming Venture Partners, L.P. is Qiming GP, L.P. and one of our directors, Mr. JP Gan, is a managing director of the general partner of both Qiming GP, L.P. and Qiming Managing Directors Fund, L.P.

        The foregoing represents our current intentions with respect to the use and allocation of the net proceeds of this offering based upon our present plans and business condition, but our management will have significant flexibility and discretion in applying the net proceeds we receive from this 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.

        Pending use of the net proceeds, we intend to invest our net proceeds in investment-grade short-term, interest-bearing debt instruments or bank deposits.

        We will not receive any of the proceeds from the sale of ADSs by the selling shareholders if the over-allotment option is exercised.

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DIVIDEND POLICY

        We have not paid any dividends since our inception. Except for accrued but unpaid dividends to be paid to holders of our Series A preferred shares, we currently intend to retain all available funds and any future earnings to finance our business and to fund the growth and expansion of our business, and, therefore, do not expect to pay any cash dividends on our ordinary shares, including those represented by ADSs, in the foreseeable future.

        We are a holding company incorporated in the Cayman Islands. We rely on dividends from our subsidiaries in China. Current PRC regulations permit our subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our subsidiaries in China are required to set aside each year a certain amount of their accumulated after-tax profits, if any, to fund certain statutory reserves. These reserves may not be distributed as cash dividends. Further, if our subsidiaries in China incur debt on their own behalf, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. For a detailed discussion, see "Risk Factors—Risks Relating to Regulation of Our Business and to Our Structure—Our holding company structure may restrict our ability to receive dividends from, or transfer funds to, our PRC subsidiaries, which could restrict our ability to act in response to changing market conditions and reallocate funds among our Chinese entities in a timely manner." Limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely affect our ability to grow, make investments or acquisitions, pay dividends, and otherwise fund and conduct our businesses. Any future determination to pay dividends, if any, will be made at the discretion of our board of directors and will be based upon our future operations and earnings, capital requirements and surplus, general financial condition, shareholders' interests, contractual restrictions and other factors our board of directors may deem relevant.

        The holders of our Series A preferred shares are entitled to receive cumulative dividends in preference to any dividends on the ordinary shares equal to, the greater of (i) 10% of the purchase price per annum (as adjusted for any share splits, share dividends, recapitalization or similar transactions), and (ii) the dividends that would be paid to ordinary shares into which the preferred shares could be converted, provided that the dividends are payable only when, and as declared, by our board of directors. Under the Shareholders' Agreement, all accrued but unpaid dividends are required to be paid in cash immediately prior to the closing of a qualified IPO. Holders of our Series A preferred shares subsequently agreed to postpone receipt of such dividends until 30 days after the closing of this offering.

        Holders of our ADSs will be entitled to receive dividends, if any, subject to the terms of the deposit agreement, to the same extent as the holders of our ordinary shares. Cash dividends will be paid to the depositary in U.S. dollars, which will distribute them to the holders of ADSs according to the terms of the deposit agreement. Other distributions, if any, will be paid by the depositary to the holders of ADSs in any means it deems legal, fair and practical. See "Description of American Depositary Shares—Share Dividends and Other Distributions."

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CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2010 presented on:

    an actual basis;

    a pro forma basis to give effect to (1) the automatic conversion of all of the Series A preferred shares and (2) the cash dividend of approximately US$            million payable immediately prior to the conversion of the Series A preferred shares; and

    a pro forma as adjusted basis to give effect to (i) the above and (ii) the issuance and sale of                         ADSs in this offering, assuming an 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, and assuming the underwriters do not exercise their over-allotment option, and after deducting underwriting discount and estimated offering expenses payable by us.

        There has been no material change in our consolidated capitalization since December 31, 2010.

        The pro forma adjustments reflected below are subject to change and are based upon available information, and assumptions that we believe are reasonable. You should read this section in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and corresponding notes thereto included elsewhere in this prospectus.

 
  As of December 31, 2010  
 
  Actual   Pro Forma   Pro Forma
As Adjusted(1)
 
 
  RMB
  US$
  RMB
  US$
  RMB
  US$
 
 
  (in thousands, except share and per share data)
 

Series A preferred shares, US$0.001 par value; 9,566,667 shares authorized, issued and outstanding; none outstanding on a pro forma basis as of December 31, 2010

    93,559     14,176                      

Shareholders' equity:

                                     

Ordinary shares, US$0.001 par value; 40,433,333 shares authorized; 27,272,727 shares issued and outstanding; 36,839,394 shares issued and outstanding on a pro forma basis as of December 31, 2010

    210     32     276     42              

Additional paid-in capital(2)

            69,413     10,518              

Statutory reserves

    392     59     392     59              

Accumulated deficit

    (23,887 )   (3,619 )   (23,887 )   (3,619 )            

Foreign currency translation

    8,412     1,275     8,412     1,275              

Total shareholders' (deficit)/equity(2)

    (14,873 )   (2,253 )   54,606     8,275              
                               

Total capitalization(2)

    78,686     11,923     54,606     8,275              
                               

(1)
Assumes that the underwriters do not exercise their over-allotment option to purchase additional ADSs.

(2)
Assuming the number of ADSs offered by us as set forth on the cover page of this prospectus remains the same, and after deduction of underwriting discount and the estimated offering expenses payable by us, a $1.00 increase (decrease) in the assumed initial public offering price of $            per ADS would increase (decrease) each of additional paid-in capital, total shareholders' equity and total capitalization by approximately $             million.

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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 net tangible book value per ADS after this offering. Dilution results from 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 shareholder for our presently outstanding ordinary shares.

        Our net tangible book value as of December 31, 2010 was approximately RMB78.7 million (US$11.9 million), or RMB2.89 (US$0.44) per ordinary share as of that date, and US$            per ADS. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting pro forma net tangible book value per ordinary share from the assumed initial public offering price per ordinary share, which is the midpoint of the estimated initial public offering price range shown on the front cover of this prospectus and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

        Our pro forma net tangible book value as of December 31, 2010 was approximately RMB54.6 million (US$8.3 million), or RMB1.48 (US$0.22) per ordinary share outstanding on that date, equivalent to $            per ADS. Pro forma net tangible book value adjusts net tangible book value to give effect to (i) the conversion of all of our outstanding Series A preferred shares into our ordinary shares, and (ii) the cash dividend of approximately US$3.6 million payable immediately prior to the automatic conversion of the Series A preferred shares as if it had been declared and payable prior to December 31, 2010.

        Without taking into account any other changes in net tangible book value after December 31, 2010, other than to give effect to our sale of the ADSs offered in this offering at the assumed initial public offering price of US$            per ADS, the midpoint of the estimated initial public offering price range shown on the front cover of this prospectus, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2010 would have been US$             million, or US$            per outstanding ordinary share, including ordinary shares underlying our outstanding ADSs, and US$            per ADS. This represents an immediate increase in net tangible book value of US$            per ordinary share and US$            per ADS, to the existing shareholder and an immediate dilution in net tangible book value of US$            per ordinary share and US$            per ADS, to investors purchasing ADSs in this offering.

        The following table illustrates this dilution:

 
  Per ordinary share   Per ADS  
 
  US$
  US$
 

Assumed initial public offering price

             

Net tangible book value as of December 31, 2010

    0.44        

Pro forma net tangible book value as of December 31, 2010

    0.22        

Increase in net tangible book value attributable to existing shareholders

             

Pro forma as adjusted net tangible book value after this offering

             

Dilution in net tangible book value to new investors in this offering

             

        A US$1.00 increase or decrease in the assumed initial public offering price of US$            per ADS would increase or decrease our adjusted net tangible book value after giving effect to this offering in each case by US$             million, or by US$            per ordinary share or 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 estimated underwriting discounts and commissions and other estimated

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offering expenses of this offering. The adjusted information discussed above is illustrative only. Our pro forma as adjusted net tangible book value following the completion of this offering is subject to adjustments 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 an as adjusted basis, the number of ordinary shares purchased from us as of December 31, 2010, the total consideration paid to us and the average price per ordinary share paid by our existing shareholders and by new investors purchasing ordinary shares evidenced by ADSs in this offering at the assumed initial public offering price of US$            per ADS, the midpoint of the estimated range of the initial public offering price per ADS, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us.

 
  Ordinary Shares
Purchased
   
   
   
   
 
 
  Total Consideration   Average
Price per
Ordinary
Share
   
 
 
  Average
Price per
ADS
 
 
  Number   Percent   Amount   Percent  

Existing shareholders

            US$           US$     US$    

New investors

            US$           US$     US$    
                               

Total

        100 % US$       100 %            
                               

        A US$1.00 increase or decrease in the assumed initial public offering price of US$            per ADS would increase or decrease total consideration paid by new investors, total consideration paid by all shareholders and the average price per ordinary share paid by all shareholders by US$             million, US$             million and US$             million, respectively, assuming no change in the number of ADSs sold by us as set forth on the cover page of this prospectus and after deducting underwriting discounts and commissions and other offering expenses payable by us.

        The discussions and tables above also assume no exercise by the underwriters of their over-allotment option to purchase up to                        additional ADSs representing                         ordinary shares and assume no exercise of options outstanding and no vesting of any outstanding restricted shares. As of December 31, 2010, there were options to purchase 3,221,800 ordinary shares and 2,012,120 ordinary shares available for future issuance upon the exercise of future grants under our 2007 Plan. To the extent that any such options are exercised or any such restricted shares become vested, there will be further dilution to new investors.

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EXCHANGE RATE INFORMATION

        Our business is primarily conducted in China and a substantial majority of our revenues are denominated in Renminbi. This prospectus contains translations of Renminbi amounts into U.S. dollars at specific rates solely for the convenience of the reader, and unless otherwise indicated, conversions of Renminbi into U.S. dollars in this prospectus were made at a rate of RMB6.6000 to $1.00, the noon buying rate in effect on December 31, 2010 as certified by the H.10 weekly statistical release of the Federal Reserve. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. On April 15, 2011, the daily exchange rate reported by the Federal Reserve Board was RMB6.5317 to $1.00.

        The following table sets forth information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated.

        We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes controls over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade.

 
  Renminbi per U.S. dollar Noon Buying Rate  
Period
  Period-End   Average(1)   Low   High  
 
  (RMB per US$1.00)
 

2006

    7.8041     7.9579     8.0702     7.8041  

2007

    7.2946     7.5806     7.8127     7.3040  

2008

    6.8225     6.6193     7.2946     6.7800  

2009

    6.8259     6.8313     6.8470     6.8176  

2010

    6.6000     6.7603     6.8330     6.6000  
 

October

    6.6707     6.6678     6.6912     6.6397  
 

November

    6.6670     6.6538     6.6892     6.6330  
 

December

    6.6000     6.6497     6.6745     6.6000  

2011

                         
 

January

    6.6017     6.5964     6.6364     6.5809  
 

February

    6.5713     6.5761     6.5965     6.5520  
 

March

    6.5483     6.5645     6.5743     6.5483  
 

April (through April 15)

    6.5317     6.5382     6.5477     6.5310  

Source: Federal Reserve Bank of New York and Board of Governors of the Federal Reserve System.

(1)
Annual averages were calculated by using the average of the exchange rates on the last day of each month during the relevant year. Monthly averages were calculated by using the average of the daily rates during the relevant month.

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following selected consolidated financial data for the periods and as of the dates indicated should be read in conjunction with, and is qualified in its entirety by reference to, our consolidated financial statements and related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

        The selected consolidated statements of operations data for the fiscal years ended December 31, 2008, 2009 and 2010, and the selected consolidated balance sheets data as of December 31, 2008, 2009 and 2010, are derived from our audited consolidated financial statements included elsewhere in this prospectus.

        Our consolidated financial statements are prepared in accordance with U.S. GAAP. Our results of operations in any period may not necessarily be indicative of the results that may be expected for any future period.

        We have not included financial information for the years ended December 31, 2006 and 2007 because such information is not available on a basis that is consistent with the consolidated financial information for the years ended December 31, 2008, 2009 and 2010, and cannot be provided on a U.S. GAAP basis without unreasonable effort or expense.

        For a description of our selected unaudited consolidated financial data as at and for the three months ended March 31, 2011, see "Recent Developments."

Consolidated Statement of Operations Data:

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except share and per share data)
 

Net revenues

    27,625     63,894     167,589     25,392  

Cost of revenues(1)

    (21,353 )   (28,448 )   (61,049 )   (9,250 )
                   

Gross profit

    6,272     35,446     106,540     16,142  

Operating expenses:

                         
 

Selling and marketing expenses(1)

    (14,677 )   (16,574 )   (57,867 )   (8,767 )
 

General and administrative expenses(1)

    (5,872 )   (8,631 )   (24,338 )   (3,685 )
 

Research and development expenses(1)

        (8 )   (381 )   (58 )
                   
 

Total operating expenses

    (20,549 )   (25,213 )   (82,586 )   (12,510 )
                   

Operating (loss)/income

    (14,277 )   10,233     23,954     3,632  
                   
 

Interest income, net

    734     1,189     1,876     284  
 

Foreign currency exchange losses, net

    (299 )   (3 )        
 

Other (expenses)/income, net

    (19 )   6     898     134  
                   
 

(Loss)/income before income tax

    (13,861 )   11,425     26,728     4,050  
 

Income tax expenses

        (5,748 )   (10,011 )   (1,517 )
                   

Net (loss)/income attributable to Jiayuan.com International Ltd. 

    (13,861 )   5,677     16,717     2,533  
                   
 

Accretion of Series A preferred shares

    (7,504 )   (7,976 )   (8,690 )   (1,317 )
 

Income allocated to participating preferred shareholders

        (5,677 )   (16,717 )   (2,533 )
                   

Net loss attributable to ordinary shareholders

    (21,365 )   (7,976 )   (8,690 )   (1,317 )
                   

                         

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  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except share and per share data)
 

Net loss per share:

                         
   

Basic

    (0.78 )   (0.29 )   (0.32 )   (0.05 )
   

Diluted

    (0.78 )   (0.29 )   (0.32 )   (0.05 )

Weight average shares used in calculating net loss per share, basic

    27,272,727     27,272,727     27,272,727     27,272,727  

Weighted average shares used in calculating net loss per share, diluted

    27,272,727     27,272,727     27,272,727     27,272,727  

Non-GAAP net (loss)/income(2)

    (13,716 )   7,302     23,680     3,588  

(1)
Includes share-based compensation expenses as follows:

   
  Years ended
December 31,
 
   
  2008   2009   2010   2010  
   
  RMB
  RMB
  RMB
  US$
 
   
  (in thousands)
 
 

Cost of revenues

    96     178     2,041     310  
 

Selling and marketing expenses

        52     700     106  
 

General and administrative expenses

    49     1,395     4,174     632  
 

Research and development expenses

            48     7  
                     
 

Total

    145     1,625     6,963     1,055  
                     
(2)
We define non-GAAP net (loss)/income as net (loss)/income attributable to Jiayuan.com International Ltd. excluding share-based compensation expenses. We review non-GAAP net (loss)/income together with net (loss)/income attributable to Jiayuan.com International Ltd. to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of non-GAAP net (loss)/income has material limitations as an analytical tool. One of the limitations of using non-GAAP net (loss)/income is that it does not include all items that impact our net (loss)/income attributable to Jiayuan.com International Ltd. during the period. In addition, because non-GAAP net (loss)/income is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP net (loss)/income in isolation from or as an alternative to net (loss)/income attributable to Jiayuan.com International Ltd. prepared in accordance with U.S. GAAP. Our non-GAAP net (loss)/income is calculated as follows for the periods presented:

   
  For the years ended December 31,  
   
  2008   2009   2010   2010  
   
  RMB
  RMB
  RMB
  US$
 
   
  (in thousands)
 
 

Net (loss)/income attributable to Jiayuan.com International Ltd. 

   
(13,861

)
 
5,677
   
16,717
   
2,533
 
 

Add: Share-based compensation expenses

   
145
   
1,625
   
6,963
   
1,055
 
                     
 

Non-GAAP net (loss)/income

   
(13,716

)
 
7,302
   
23,680
   
3,588
 
                     

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Consolidated Balance Sheet Data:

 
  As of December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Total current assets

    50,655     76,407     149,229     22,612  

Total assets

    54,517     80,572     164,258     24,889  

Total liabilities

    6,813     25,566     85,572     12,966  

Series A preferred shares

    79,795     87,694     93,559     14,176  

Total shareholders' deficit

    (32,091 )   (32,688 )   (14,873 )   (2,253 )

Key Operating Data:

 
  As of December 31,   As of
March 31,
 
 
  2008   2009   2010   2011  

Number of registered user accounts

    12,702,855     19,243,134     35,090,025     40,156,311  

 

 
  Years ended December 31,  
 
  2008   2009   2010  

Number of average monthly active user accounts(1)

            3,700,348  

Number of average monthly paying user accounts

    92,102     203,317     552,930  

 
  Three months ended  
 
  March 31, 2009   June 30, 2009   September 30, 2009   December 31,
2009
  March 31,
2010
  June 30,
2010
  September 30,
2010
  December 31,
2010
  March 31, 2011  

Number of average monthly active user accounts(1)

                    2,509,917     3,686,260     4,201,952     4,403,262     4,744,705  

Number of average monthly paying user accounts

    174,690     191,349     210,134     237,094     306,163     495,036     649,250     761,271     882,471  

(1)
This information prior to 2010 is not available.

 
  Three months ended  
 
  March 31, 2010   June 30, 2010   September 30, 2010   December 31, 2010   March 31, 2011  

Number of average monthly VIP customers

    157     194     252     278     276  

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RECENT DEVELOPMENTS

        The following tables set forth our selected unaudited consolidated statements of operations data for the three months ended March 31, 2010 and 2011 and our selected unaudited consolidated balance sheets data as of March 31, 2011. We have prepared the unaudited consolidated financial information on the same basis as our audited consolidated financial statements. This unaudited consolidated financial information reflects all adjustments, consisting only of normal and recurring adjustments, which we consider necessary for a fair presentation of our financial position and operating results for the periods presented. Our financial results for the three months ended March 31, 2011 may not be indicative of our full year results for 2011 or any future interim periods. Please refer to "Risk Factors—Risks Relating to Our Business—Our quarterly results may fluctuate because of a number of factors, including seasonality, and, as a result, investors should not rely on quarterly operating results as indicative of future results" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus for information regarding trends and other factors that may affect our results of operations.

Consolidated Statement of Operations Data:

 
  Three months ended March 31,  
 
  2010   2011  
 
  RMB
  RMB
 
 
  (in thousands, except share
and per share data)

 

Net revenues

    22,923     68,392  

Cost of revenues(1)

    (9,869 )   (21,970 )
           

Gross profit

    13,054     46,422  

Operating expenses:

             
 

Selling and marketing expenses(1)

    (11,022 )   (19,788 )
 

General and administrative expenses(1)

    (3,106 )   (8,167 )
 

Research and development expenses(1)

    (17 )   (1,923 )
           
 

Total operating expenses

    (14,145 )   (29,878 )
           

Operating (loss)/income

    (1,091 )   16,544  
           
 

Interest income, net

    344     394  
 

Other expenses, net

        (278 )
           
 

(Loss)/income before income tax

    (747 )   16,660  
 

Income tax expenses

    (466 )   (4,514 )
           

Net (loss)/income attributable to Jiayuan.com International Ltd. 

    (1,213 )   12,146  
           
 

Accretion of Series A preferred shares

    (2,114 )   (2,243 )
 

Income allocated to participating preferred shareholders

        (12,033 )
           

Net loss attributable to ordinary shareholders

    (3,327 )   (2,130 )
           

             

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  Three months ended March 31,  
 
  2010   2011  
 
  RMB
  RMB
 
 
  (in thousands, except share
and per share data)

 

Net loss per share:

             
   

Basic

    (0.13 )   (0.08 )
   

Diluted

    (0.13 )   (0.08 )

Weight average shares used in calculating net loss per share, basic

    27,272,727     27,272,727  

Weighted average shares used in calculating net loss per share, diluted

    27,272,727     27,272,727  

Non-GAAP net (loss)/income(2)

    (15 )   14,773  

(1)
Includes share-based compensation expenses as follows:

   
  Three months ended
March 31,
 
   
  2010   2011  
   
  RMB
  RMB
 
   
  (in thousands)
 
 

Cost of revenues

    123     632  
 

Selling and marketing expenses

    77     222  
 

General and administrative expenses

    997     1,538  
 

Research and development expenses

    1     235  
             
 

Total

    1,198     2,627  
             
(2)
We define non-GAAP net (loss)/income as net (loss)/income attributable to Jiayuan.com International Ltd. excluding share-based compensation expenses. We review non-GAAP net (loss)/income together with net (loss)/income attributable to Jiayuan.com International Ltd. to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of non-GAAP net (loss)/income has material limitations as an analytical tool. One of the limitations of using non-GAAP net (loss)/income is that it does not include all items that impact our net (loss)/income attributable to Jiayuan.com International Ltd. during the period. In addition, because non-GAAP net (loss)/income is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP net (loss)/income in isolation from or as an alternative to net (loss)/income attributable to Jiayuan.com International Ltd. prepared in accordance with U.S. GAAP. Our non-GAAP net (loss)/income is calculated as follows for the periods presented:

   
  For the
three months ended March 31,
 
   
  2010   2011  
   
  RMB
  RMB
 
   
  (in thousands)
 
 

Net (loss)/income attributable to Jiayuan.com International Ltd. 

    (1,213 )   12,146  
 

Add: Share-based compensation expenses

    1,198     2,627  
             
 

Non-GAAP net (loss)/income

    (15 )   14,773  
             

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Consolidated Balance Sheet Data:

 
  As of March 31, 2011  
 
  RMB
 
 
  (in thousands)
 

Total current assets

    185,295  

Total assets

    202,693  

Total liabilities

    109,234  

Series A preferred shares

    94,856  

Total shareholders' deficit

    (1,397 )

        Our total net revenues increased by 198.4% from RMB22.9 million in the three months ended March 31, 2010 to RMB68.4 million in three months ended March 31, 2011. This increase was primarily due to the 205.9% increase in net revenues from online services in the three months ended March 31, 2011, compared to the three months ended March 31, 2010, as our average monthly paying user accounts increased from 306,163 in the three months ended March 31, 2010 to 882,471 in the three months ended March 31, 2011. In addition, net revenues from events and VIP services increased by 180.9% and net revenues from other services increased by 71.0%.

        Our total cost of revenues increased by 122.6% from RMB9.9 million in three months ended March 31, 2010 to RMB22.0 million in three months ended March 31, 2011. This increase resulted primarily from the 124.7% increase in costs of revenues from online services in the three months ended March 31, 2011, compared to the three months ended March 31, 2010. Our average monthly active user accounts in the three months ended March 31, 2011 was 4,744,705. Cost of revenues from events and VIP services increased by 97.1% and cost of revenues from other services increased by 277.9%.

        As a result of the foregoing, our gross profit increased by 255.6% from RMB13.1 million in three months ended March 31, 2010 to RMB46.4 million in three months ended March 31, 2011. Our gross margin increased from 56.9% in three months ended March 31, 2010 to 67.9% in three months ended March 31, 2011. This growth is attributable primarily to the substantial increase in the number of our paying user accounts.

        Our total operating expenses increased by 111.2% from RMB14.1 million in the three months ended March 31, 2011 to RMB29.9 million in three months ended March 31, 2011. This increase was primarily due to the increase in selling and marketing expenses and general and administrative expenses. Selling and marketing expenses increased by 79.5% in the three months ended March 31, 2011, compared to the three months ended March 31, 2010, primarily due to greater online spending on new user acquisitions. General and administrative expenses increased by 162.9% in the three months ended March 31, 2011, compared to the three months ended March 31, 2010, primarily as a result of the expansion of our operations. Research and development expenses increased to RMB1.9 million in the three months ended March 31, 2011 from RMB17,000 in the three months ended March 31, 2010, primarily due to an increase in research and development personnel in connection with our strategy to enhance our research and development capabilities.

        We had an operating income of RMB16.5 million in three months ended March 31, 2011, compared to an operating loss of RMB1.1 million in three months ended March 31, 2010. Our operating margin was 24.2% in three months ended March 31, 2011.

        Our net income attributable to Jiayuan.com International Ltd. was RMB12.1 million in the three months ended March 31, 2011, compared to a net loss attributable to Jiayuan.com International Ltd. of RMB1.2 million in three months ended March 31, 2010. Our net margin was 17.8% in three months ended March 31, 2011.

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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 section entitled "Selected Consolidated Financial Information" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of 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 the largest online dating platform in China. According to iResearch, we ranked first and commanded a 43.7% share of the total amount of money spent in China's online dating market in 2010. Jiayuan.com also ranked first in terms of number of unique visitors, average time spent per user and average page views per user among all online dating websites in China in 2010, according to iResearch.

        We derive most of our revenues from our Jiayuan.com website. We offer users free registration with immediate full search access to our database, and we only began charging fees for messaging services provided on our website in October 2008. Our online revenues are mainly derived from initial message fees, periodic subscription fees and revenues from a number of fee-based value-added services. We charge either the sender or the recipient a RMB2.00 fee in order for an initial message to be readable, a pricing strategy designed to target and reach the mass market with its affordability. We intend to generate additional revenue from our online businesses by increasing the number of our paying users and by encouraging our users to purchase additional services. We intend to achieve this by broadening the scope of our advertising campaign in online and offline channels and enhancing user experience by optimizing our search methodologies. We also plan to develop new services for our users, such as adding additional types of subscription packages and increasing the ways in which users can interact with one another. As our paying user base grows, we also intend to generate additional sources of revenues by offering new value-added services such as virtual gifts, virtual dating and video profiles. As of March 31, 2011, we had a total of 40.2 million registered user accounts, with an average of 4,744,705 monthly active user accounts in the first quarter of 2011. The number of our average monthly paying user accounts in the first quarter of 2011 was 882,471, compared to 306,163 in the first quarter of 2010, representing an increase of 188.2%.

        We have also been expanding our business to offline events and VIP services. Since 2008, we have hosted on average 670 large scale social gatherings per year in cities throughout China to provide our users offline opportunities to meet in person. Such offline events also promote our national brand name and benefit our online platform. Our VIP services, which offer personalized search services geared towards more affluent clients, help to diversify our revenue mix.

        We generated net revenues of RMB27.6 million, RMB63.9 million and RMB167.6 million (US$25.4 million) in 2008, 2009 and 2010, respectively. We had a net loss of RMB13.9 million in 2008, and net income of RMB5.7 million and RMB16.7 million (US$2.5 million) in 2009 and 2010, respectively. Excluding non-cash share-based compensation expenses, we had a non-GAAP net loss of RMB13.7 million in 2008, and non-GAAP net income of RMB7.3 million and RMB23.7 million (US$3.6 million) in 2009 and 2010, respectively. For a reconciliation of our non-GAAP net (loss)/income to our U.S. GAAP net (loss)/income, see "Summary Consolidated Financial and Operating Data."

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Factors Affecting Our Results of Operations

        Continued popularity of online dating services.    Our business is highly dependent upon online dating remaining a popular means of seeking committed relationships in China. We have benefited from the growth in the demand for online dating services in recent years as an increasingly accepted means for single adults to meet new companions, form relationships and get married. According to iResearch, the number of singles over the age of 18 visiting online dating websites increased from 14 million in 2009 to 19 million in 2010 and is expected to reach 60 million in 2015. Unprecedented urbanization, rapidly changing demographics, China's unique cultural considerations and traditional values and China's fast growing Internet industry have all contributed to the demand for online dating services in China. Our results of operations are significantly affected by the number of our paying users and the long-term growth of our business will be driven by the appeal of our online services relative to traditional matchmaking services or forms of dating and related services that might emerge in the future. Should the popularity of online dating services decline, such as due to negative publicity, our results of operations may be adversely affected.

        Our ability to attract and engage paying users.    Our revenues in any given period are significantly affected by the number of users who pay for our online dating services. Rising income levels and overall economic growth in China in recent years have led to an increasing willingness of users to pay for our services. Net revenues from our online services increased by 189.4% from RMB15.7 million in 2008 to RMB45.4 million in 2009 and by 195.4% from RMB45.4 million in 2009 to RMB134.1 million (US$20.3 million) in 2010. This corresponded to a 120.8% increase in average monthly paying user accounts from 92,102 in 2008 to 203,317 in 2009 and a 172.0% increase in average monthly paying user accounts from 203,317 in 2009 to 552,930 in 2010. In addition, according to iResearch, our users on average spent 11 minutes and viewed 22 pages on our website each day in 2010. The long-term growth of our business is largely driven by our ability to attract new users and to convert these users into paying users. We believe we attract users because of our reputation for providing a serious and reliable online dating platform, our large active user base, the high-quality user experience and the general market awareness of our "Jiayuan" brand. Our users become and remain paying users because of the value and variety of our services as well as our results-based fee structure, which we believe align revenue generation with results experienced by our users. The growth in revenues to date has been driven by the increasing number of our paying users and our revenues for future periods will depend on our continued success in attracting and retaining paying users.

        However, our ability to attract and engage paying users is also subject to challenges, such as increasing competition in the online dating business in China. We compete with other online dating service providers, social networking websites and traditional dating services. If we fail to compete successfully, our results of operations may be adversely affected.

        Our ability to introduce new products and services.    Prior to October 2008, we generated revenues primarily from non-message related value-added services and selling advertisement space on our website. In an effort to generate additional revenue from our user base, we began charging fees for messaging between users via our online dating website in October 2008, which contributed to our rapid revenue growth. As a result, 84.2% of net revenue from our online services was generated from our initial message and periodic message-related subscription fees in 2010. We also introduced other value-added services, such as virtual gifts, improved search rankings and online chatting services as well as premium user subscriptions such as "advanced memberships" to attract and retain users. We intend to introduce more value-added services in the future. Although we expect net revenue generated from our value-added services to increase going forward, our results of operations will be affected by the level of user acceptance and popularity of such new products and services.

        Our ability to control our operating costs and expenses and improve operational efficiency.    Our profitability is significantly affected by our cost of revenues and operating expenses. Our cost of

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revenues from online services, which is directly related to the number of our active user accounts, increased by 28.7% from RMB15.8 million in 2008 to RMB20.3 million in 2009 and by 98.0% from RMB20.3 million in 2009 to RMB40.2 million (US$6.1 million) in 2010 corresponding to an increase in our active user accounts. While our cost of revenues from online services grew in absolute terms in 2009 compared to 2008 and in 2010 compared to 2009 due to the growth in active user accounts, they declined as a percentage of our net revenues from online services from 100.7% in 2008 to 44.8% in 2009 and to 30.0% in 2010 as we began to benefit from the increase in the number of paying user accounts. The main factors affecting our selling and marketing expenses are our advertising and promotional expenses to attract new users to our website and our personnel costs. Our selling and marketing expenses have increased significantly from RMB14.7 million in 2008 to RMB16.6 million in 2009 to RMB57.9 million (US$8.8 million) in 2010 as we expanded our marketing and brand promotion efforts, as well as due to the increase in advertising fees charged by our third-party service providers, such as commercial search engines and Internet portals. The increase in 2010 from 2009 corresponded to a 143.1% increase in new registered user accounts from 6.5 million in 2009 to 15.8 million in 2010. We expect our selling and marketing expenses to increase in the future as we seek to expand our user base and as advertising fees charged by third-party service providers continue to increase. Therefore, our ability to control such costs and expenses will directly impact our profitability.

Description of Certain Statement of Operations Items

Net Revenues

        We derive our revenues from three segments, namely online services, events and VIP services and other services. Our net revenues are gross revenues net of the PRC business taxes and surcharges, ranging from 5.50% to 9.55%, that our PRC operating companies pay on their gross revenues.

        The following table sets forth our net revenues by segment for the periods indicated:

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Online Services

    15,682     45,387     134,062     20,312  

Events and VIP Services

    7,761     12,801     26,265     3,980  

Other Services

    4,182     5,706     7,262     1,100  
                   

Total

    27,625     63,894     167,589     25,392  
                   

Online services

        Net revenues from online services reflect net revenue generated from our online dating services. Net revenues generated from online dating services primarily consist of initial message fees and periodic subscription fees, as well as fees from value-added services such as virtual gifts, improved search rankings, online chatting services and "advanced memberships." In 2010, 84.2% of net revenues from our online services were generated from our initial message and periodic message-related subscription fees. Net revenue from online services accounted for 56.8%, 71.0% and 80.0% of our net revenues in 2008, 2009 and 2010, respectively.

Events and VIP services

        Net revenues from events and VIP services accounted for 28.1%, 20.0% and 15.7% of our net revenues in 2008, 2009 and 2010, respectively. Net revenues from events are generated from organizing and hosting events, including speed-dating, dance parties and other social events for our users and consist primarily of ticket sales. Since 2008, we have hosted on average approximately 670 large scale

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social gatherings per year in cities throughout China to provide our users offline opportunities to meet in person. We expect our events services to continue to attract a large attendance due to our established brand and reputation in the online dating sector.

        Net revenues from VIP services primarily reflect net revenues from providing special, personalized services for our VIP clients where our service representatives take a proactive approach in finding potential companions for our VIP clients. Payments for VIP services are typically collected upon execution of the VIP service agreement. Our VIP services have become increasingly popular due to our reputation as an effective and serious online dating service provider, and the ability of our VIP sales representatives to better serve higher income clients.

Other services

        Other services revenue consists primarily of advertising revenues. Advertising revenues are principally derived from online advertising arrangements, which allow advertisers to place advertisements on particular areas of our websites, in particular formats and over particular periods of time. Historically, advertisements were placed on our Jiayuan.com website, representing less than 5% of our net revenues in 2010. We have begun to phase out third-party advertisements on our Jiayuan.com website as part of our strategy to devote our online dating website to a results-based fee structure. In the future, we expect our other websites to be the main platforms for third-party advertisements. Net revenue from other services accounted for 15.1%, 9.0% and 4.3% of our net revenues in 2008, 2009 and 2010, respectively.

Cost of Revenues

        Our cost of revenues includes the cost of services in our three segments. Personnel costs include share-based compensation expense. The following table sets forth the components of our cost of revenues for the periods indicated.

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Online Services

    15,791     20,319     40,228     6,095  

Events and VIP Services

    5,204     7,245     18,787     2,847  

Other Services

    358     884     2,034     308  
                   

Total

    21,353     28,448     61,049     9,250  
                   

Online services

        Cost of services in our online services segment primarily consists of commission expenses, network costs, personnel costs and depreciation. Commission expenses primarily consist of the payment made to distribution and collection companies for money collection. Network costs consist of server hosting fees, bandwidth fees and related fees paid to a vendor that hosts our server network. Personnel costs include salary and benefits paid to our staff and customer service personnel. We anticipate that our cost of online services will continue to increase as we continue to attract more active users. However, we anticipate cost of revenues from online services as a percentage of net revenues from online services to decrease going forward as a higher percentage of our active user accounts become paying user accounts.

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Events and VIP services

        Cost of services in our events and VIP services segment primarily include personnel and events expenses. Cost of revenues from events and VIP services accounted for 24.4%, 25.5% and 30.8% of our cost of revenues in 2008, 2009 and 2010, respectively.

Other services

        Cost of services in our other services segment primarily include personnel costs, including salaries as well as commissions paid to our staff in respect of advertising revenue. Cost of revenues from other services accounted for 1.6%, 3.1% and 3.3% of our cost of revenues in 2008, 2009 and 2010, respectively

Operating Expenses

        Our operating expenses consist of selling and marketing expenses and general and administrative expenses. The following table sets forth our operating expenses by amount for the periods indicated:

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Selling and Marketing Expenses

    14,677     16,574     57,867     8,767  

General and Administrative Expenses

    5,872     8,631     24,338     3,685  

Research and Development Expenses

        8     381     58  
                   

Total

    20,549     25,213     82,586     12,510  
                   

Selling and Marketing Expenses

        Our selling and marketing expenses primarily consist of advertising and promotion expenses for our online services, salary and benefits for our sales and marketing personnel, share-based compensation expense and other expenses incurred by our sales and marketing personnel. We incur substantial expenses related to our advertising. These advertising costs are primarily online advertising, including fees we pay to third-party service providers, such as commercial search engines and Internet portals, for the purpose of promoting and increasing traffic to our website, which helps us to raise our brand profile. We expect our selling and marketing expenses to increase in the future as we continue to promote our website and our brand, and as we try to deepen our penetration in second-tier and third-tier cities in China.

General and Administrative Expenses

        Our general and administrative expenses primarily consist of salary and benefits for general management, finance, administrative personnel, professional services fees, share-based compensation expenses, office expenses, communication expenses and other expenses in relation to general and administrative purposes. We expect our general and administrative expenses to increase in the near term in connection with the growth of our business and the costs associated with being a public company, including costs necessary to enhance our internal control over financial reporting to meet obligations under the Sarbanes-Oxley Act.

Research and Development Expenses

        Our research and development expenses consist primarily of salaries and benefits for personnel engaged in the research and development of our websites.

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Share-based Compensation Expenses

        We have granted certain options to purchase our ordinary shares to our directors, officers, employees and non-employees. As of December 31, 2008, 2009 and 2010, options to purchase 1,173,400 ordinary shares, 2,424,400 ordinary shares and 3,221,800 ordinary shares, respectively, were outstanding, including options to purchase 188,319 ordinary shares, 110,346 ordinary shares and 713,892 ordinary shares, respectively, that were legally vested.

        In 2008, 2009 and 2010, we recognized share-based compensation expenses totaling RMB0.1 million, RMB1.6 million and RMB7.0 million (US$1.1 million), respectively, all of which were related to option grants to our directors, officers and employees. These costs are included in cost of revenues, sales and marketing expenses, general and administrative expenses and research and development expenses, and are associated with the expensing of vested options. The following table sets forth a breakdown of our share-based compensation expenses recognized for the periods indicated.

 
  Years ended
December 31,
 
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Cost of revenues

    96     178     2,041     310  

Selling and marketing expenses

        52     700     106  

General and administrative expenses

    49     1,395     4,174     632  

Research and development expenses

            48     7  
                   

Total

    145     1,625     6,963     1,055  
                   

        As of December 31, 2010, we had RMB13.6 million (US$2.1 million) unrecognized share-based compensation expenses related to unvested share-based awards for which services had not been provided, with the costs expected to be recognized over a weighted average period of 2.41 years. In addition, as of December 31, 2010, we had RMB6.5 million (US$1.0 million) in unrecognized share-based compensation expenses related to unvested performance condition share-based awards for employees and non-employee consultants, for which the costs are expected to be recognized upon the completion of this offering. The performance condition share-based awards granted to non-employee consultants will be recognized at fair value as of the date this offering is completed. We plan to continue to issue options and other share-based compensation as part of our recruitment and retention policies, which may lead to significant share-based compensation expenses in the future. For more information, see "—Critical Accounting Policies—Share-based Compensation."

Taxation

Cayman Islands

        We are not subject to Cayman Islands tax on our income or capital gains. Payment of dividends is not subject to withholding tax in the Cayman Islands.

British Virgin Islands

        Harper is not subject to British Virgin Islands tax on income or capital gains. Payment of dividends is not subject to withholding tax in the British Virgin Islands.

Hong Kong

        Jiayuan Hong Kong, our wholly-owned subsidiary, is not subject to Hong Kong profits tax on foreign-sourced dividends and capital gains. As an entity incorporated in Hong Kong, Jiayuan Hong Kong was subject to 16.5% income tax for the year ended December 31, 2010 on its taxable income

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generated from operations in Hong Kong. Payment of dividends is not subject to withholding tax in Hong Kong.

PRC

Enterprise Income Tax

        Our subsidiaries and affiliates in China are subject to Enterprise Income Tax, or EIT, in China. Prior to January 1, 2008, under applicable PRC tax laws, our subsidiaries and affiliated entities were generally subject to EIT at a statutory rate 33%, which comprised 30% national income tax and 3% local income tax. However, certain types of foreign-invested enterprises and high or new technology enterprises located in certain specified high-tech zones were entitled to preferential tax treatments.

        On March 16, 2007, the National People's Congress adopted the Enterprise Income Tax Law, or the EIT Law, and in December 2007, the State Council promulgated the implementing rules of the EIT Law, both of which became effective from January 1, 2008. The EIT Law significantly curtails tax incentives granted to foreign-invested enterprises under the previous tax law. The EIT Law, however, (i) reduces the statutory rate of enterprise income tax from 33% to 25%, (ii) permits companies to continue to enjoy their existing tax incentives, subject to certain transitional phase-out rules, and (iii) introduces new tax incentives, subject to various qualification criteria. Under the phase-out rules, enterprises established before the promulgation date of the EIT Law and which were granted preferential EIT treatment under the then effective tax laws or regulations may continue to enjoy their preferential tax treatments until their expiration. In addition, the EIT Law and its implementing rules permit qualified high and new technology enterprises, or HNTEs, to enjoy a reduced EIT rate of 15%. The qualification criteria are significantly higher than those prescribed by the old tax rules. See "Risk Factors—Risk Factors Relating to Doing Business in China—Our business benefits from certain government tax preferential treatment and incentives. Expiration, reduction or discontinuation of, or changes to, these incentives will increase our tax burden and reduce our net income."

        Our subsidiaries and affiliated entities in China were subject to the statutory EIT rate of 33% on taxable income prior to January 1, 2008 and the standard EIT rate of 25% thereafter, except that Shanghai Huaqianshu has been deemed to qualify as an HNTE under the EIT Law in 2010 and will be entitled to the reduced EIT rate of 15%.

Withholding tax

        As a holding company, substantially all of our income may be derived from dividends we receive from Shanghai Miyuan and Beijing Miyuan through our Hong Kong subsidiary. The EIT Law and its implementing rules provide that dividends paid by a PRC entity to a non-resident enterprise for EIT purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with the PRC. In addition, under the Arrangement between the Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion, income tax on dividends payable to a company resident in Hong Kong that holds more than a 25% equity interest in a PRC resident enterprise may be reduced to a rate of 5%. See "Risk Factors—Risks Related to Doing Business in China—Dividends we receive from our PRC subsidiaries may be subject to PRC withholding tax and we cannot assure you that we will be able to enjoy the preferential withholding tax treatment."

Business tax and surcharges

        Our PRC operating companies are subject to business tax and surcharges at the rate ranging from 5.5% to 9.55% of their revenues. We recognized RMB1.5 million, RMB3.6 million and RMB10.2 million (US$1.6 million) of business tax and surcharges as a reduction of revenues for the years ended December 31, 2008, 2009 and 2010, respectively.

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Critical Accounting Policies

        We prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect our reporting of, among other things, assets and liabilities, revenues and expenses and contingent assets and liabilities. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other factors that we believe to be relevant under the circumstances. Since our financial reporting process inherently relies on the use of estimates and assumptions, our actual results could differ from what we expect. This is especially true with some accounting policies that require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our audited consolidated financial statements because they involve the greatest reliance on our management's judgment.

Revenue Recognition and Deferred Revenue

        We derive our revenues from three segments, namely online services, events and VIP services, and other services. We recognize revenues only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and the collectability of the related fee is reasonably assured.

        In October 2009, the FASB issued a new guidance to address the accounting for multiple-element deliverables arrangements. This new guidance is effective prospectively in fiscal years beginning upon or after June 15, 2010, and early adoption is permitted. We have elected to early adopt this new guidance through a retrospective application to all revenue arrangements for all periods presented in our consolidated financial statements included elsewhere in this prospectus.

Online services

        We offer two types of online services through our Jiayuan.com website, including message exchanging services and value-added services. Users prepay for virtual stamps which can be used as consideration for our online services. We charge for message exchanging services when a registered user initiates contact with another registered user via our website, and either the sender or recipient may pay for the service. Subsequently, we do not charge for any message exchanges between these same two users. Based on our historical data, the average exchange between two users on our website lasts 3.5 days. We believe that users place the most value on the initial connection, and that users interested in further interactions exchange personal contact information to communicate with each other directly. We also offer value-added services, including sending virtual gifts, improved search rankings and online chatting. For the years ended December 31, 2008, 2009, and 2010, revenues recognized from our value-added services was RMB9.3 million, RMB13.6 million and RMB21.2 million (US$3.2 million), respectively.

        We have adopted two primary fee models for the online services: a pay-per-use model and a periodic subscription model. Online services offered under the pay-per-use model includes message sending or receiving, virtual gifts and improved search rankings for the duration of one day. As we provide these services within a short period of time, revenue is recognized when the virtual stamps are used and services are rendered. If the communication patterns of our users change, the timing of our revenue recognition for these services may be impacted and revenue may be deferred and recognized over a longer period. Virtual stamps purchased by users that have yet to be used are initially recorded as deferred revenue.

        Under the periodic subscription model, users pay a fixed subscription fee for certain services which are delivered over a predetermined subscription period. Online services offered under the subscription model include sending multiple messages a day, reading unlimited number of messages, improved search rankings for a period longer than a day, unlimited online chatting and premium user

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subscriptions. Fees for subscription services are collected upfront and initially recognized as deferred revenue, and revenue is recognized proportionately over the applicable subscription periods as services are rendered.

        Virtual stamps can be purchased through our website, and cash is collected directly through online payment platforms or through our WVAS partners, whom remits the cash to us after payment is collected. Due to the time lag between when services are delivered and when billing statements are received from our WVAS partners, revenue from virtual stamps are estimated based on our internal billing records. We adjust discrepancies between our internal estimated revenues and actual revenues confirmed by our WVAS partners when billing statements are received. There were no significant differences between our estimates and actual revenue confirmed by our WVAS partners as of the date of this prospectus.

        Users earn loyalty points based on their activities on our website and/or purchase of online services, and the loyalty points can be used to redeem online services once a minimum number of points have been accumulated. We consider loyalty points awarded for purchase of online services to be part of the revenue generating activities, and such arrangements are considered to have multiple elements. We estimate the selling price of each loyalty point based on the consideration users would be required to pay to purchase the underlying services if they were not redeemed using the loyalty points, and the average number of the loyalty points needed to redeem these services. Consideration is allocated to the loyalty points using the relative selling price method and is initially recorded as deferred revenue, and revenue is recognized when the loyalty points are redeemed and services are rendered. As of December 31, 2010, loyalty points do not have an expiration date.

Events and VIP services

        We earn revenue from organizing and hosting events, including speed-dating, dance parties, and other social events for our users. Tickets are generally sold at the events, and revenue is recognized upon the conclusion of the events when services have been rendered. For certain events where tickets are prepaid by our users, prepaid fees are initially recorded as deferred revenue and revenue is recognized upon the completion of the events. Payments for VIP services are collected upfront and initially recorded as deferred revenue, and revenue is recognized ratably over the contract service period.

        We also provide VIP services to individual users, which consist of personalized services where our service representatives take a proactive approach in finding potential companions for our VIP clients. We also provide various VIP services throughout the contract period on an as-needed basis. When we enter into a customized service contract with an individual user, we are unable to determine or estimate the amount of each separate service to be provided to the user. Different types of services under customized bundled contracts are provided over the contract period, and as such, we account for the VIP services as a single unit of accounting on a contract basis. Payments for VIP services are collected upfront and initially recorded as deferred revenue, and revenue is recognized ratably over the contractual period.

Other services

        Other services revenue primarily consists of advertising revenues, which are principally derived from online advertising arrangements that allow advertisers to place advertisements on particular areas of our website, in particular formats, such as banners, links and logos, and over a specified period of time. We enter into advertising contracts to establish the fixed price and advertising services to be provided, and payment is collected upfront and initially recognized as deferred revenue. We recognize revenue from advertising contracts on a straight-line basis as services are rendered.

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Share-based Compensation

        We award share-based compensation to individuals pursuant to our Share Incentive Plan, or the Plan. Awards for our employees or directors vest in one of the three following ways: (i) over a four year service period with 25% of the options vesting on the first anniversary of the date of grant and the remaining 75% of the options vesting on a pro-rata basis as of the calendar quarter-end of each of the 12 quarters after the first anniversary of the date of grant; (ii) over a four year service period with 25% of the options vesting on the date of this offering and the remaining 75% of the options vesting on a pro-rata basis as of the calendar quarter end of each of the 12 quarters after the first anniversary of the date of this offering; or (iii) 100% upon the date of this offering. Awards for our consultants shall vest in one of the two following ways: (i) over four years with 25% of the options vesting on the date of this offering and the remaining 75% of the options vesting on a pro-rata basis as of the calendar quarter end of each of the 12 quarters after the first anniversary of the date of this offering; or (ii) 100% upon the date of this offering. Holders of these stock options can exercise the options from the date on which the options become vested until the expiration of the options or up to 90 days after the holder is no longer our employee, consultant or director, whichever is earlier.

        Share-based compensation expense for employee share-based awards is determined based on fair value of the shares on the grant date. The awards are measured at the grant date fair value and are recognized as an expense using the graded vesting method, net of estimated forfeiture rate. We recognize awards with service condition terms only over the requisite service period, which is generally the vesting period. For awards with performance conditions, such as awards that vest partly or entirely upon the date of this offering, share-based compensation is recognized based on the probable outcome of the performance conditions.

        We also granted share options to non-employee with performance conditions that vest partially or entirely upon this offering. Recognition of the fair value of such awards is assessed based upon whether the non-employee can control the performance outcome. Given these awards only become vested or exercisable upon this offering and the event is outside of the non-employees' control, we use the "lowest aggregate" fair value to measure these awards. As the awards we have issued to non-employees to date do not require subsequent services after this offering, the fair value of the awards would be recognized upon the completion of this offering.

        As of December 31, 2010, options to purchase a total of 3,221,800 ordinary shares were outstanding.

        We engaged American Appraisal China Limited, or American Appraisal, an independent third-party appraiser, to assist us in our determination of the fair value of our share options as of each grant date. Our management is ultimately responsible for such determination.

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        Our option activities for the years ended December 31, 2008, 2009 and 2010 are summarized below:

 
  Share options outstanding  
 
  Share
options
  Weighted
average
exercise
price
  Weighted
average
remaining
contractual
life
(In years)
  Weighted
average grant
date fair
value
 
 
   
  US$
   
  US$
 

Balances outstanding at January 1, 2008

    1,201,500     0.75     5.30     0.09  
 

Granted

    194,400     1.05           0.19  
 

Forfeited

    (222,500 )   0.70           0.07  
                   

Balances outstanding at December 31, 2008

    1,173,400     0.81     4.48     0.11  
                   
 

Granted

    1,769,000     1.08           0.58  
 

Forfeited

    (518,000 )   1.05           0.08  
                   

Balances outstanding at December 31, 2009

    2,424,400     0.96     5.04     0.46  
                   
 

Granted

    866,500     2.99           2.67  
 

Forfeited

    (69,100 )   1.06           0.41  
                   

Balances outstanding at December 31, 2010

    3,221,800     1.50     4.50     1.05  
                   

Exercisable at December 31, 2008

    188,319     1.05     4.43     0.07  

Exercisable at December 31, 2009

    110,346     1.05     3.66     0.10  

Exercisable at December 31, 2010

    713,892     1.08     4.69     0.51  

        Significant batches of share options we have granted under the Plan are as follows:

Grant Date
  Ordinary Shares
Underlying
Options Granted
  Exercise Price per
Ordinary Share
  Fair Value per
Ordinary Shares at
the Grant Date
 
 
   
  (US$)
  (US$)
 

August 15, 2006

    102,500     0.300     0.1239  

February 1, 2007

    50,000     1.045     0.3651  

June 6, 2007 (batch 1)

    90,000     1.045     0.3991  

June 6, 2007 (batch 2)

    270,000     0.300     0.3991  

June 6, 2007 (batch 3)

    75,000     1.045     0.3991  

June 6, 2007 (batch 4)

    491,500     1.045     0.3991  

May 29, 2008

    120,000     1.045     0.6494  

February 1, 2009

    300,000     1.045     1.2466  

October 12, 2009

    1,000,000     1.045     1.4859  

December 1, 2009

    120,000     1.256     1.5216  

July 1, 2010

    288,500     1.256     4.5644  

December 8, 2010

    350,000     5.000     5.2315  

February 1, 2011

    59,000     5.000     6.0330  

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        We use the binomial option pricing model, or binomial model, to determine the fair value of stock options where the exercisability is conditional upon completion of the service conditions through the vesting date. Assumptions adopted in the binomial model are:

 
  Years ended December 31,  
 
  2008   2009   2010  

Risk-free interest rate

    4.66%-5.30%     3.18%-3.92%     3.04%-3.18%  

Exercise multiple

    2.80     2.80     2.80  

Expected forfeiture rate

    5%     5%     5%  

Contractual life of option

    6 years     6 years     6 years  

Expected volatility

    39.09%-39.49%     37.79%-38.96%     36.74%-38.96%  

Dividend yield

             

        As a private company with no quoted market for our ordinary shares, we need to estimate the fair value of our ordinary shares at the relevant grant dates. The determination of the fair value of our ordinary shares requires complex and subjective judgments to be made regarding our projected financial and operating results, our unique business risks, the liquidity of our ordinary shares and our operating history and prospects at the time of each grant.

        We estimate the expected volatility of our future share price based on the price volatility of the publicly traded shares of comparable listed companies over the most recent period to be equal to the expected option life of our employees' share options.

        We estimate the risk-free interest rate based on the market yield of the US dollar denominated China International Government Bond with a maturity comparable to the contractual life of the option. We incorporate the employees' early exercise behavior by assuming that early exercise happens when the share price is a certain multiple of the exercise price. Due to insufficient observations and no exercise history by employees, we estimate the multiple of the exercise price using considerations from an empirical research study regarding exercise patterns based on historical statistical data. An exercise multiple of 2.8 was used for all options as of each grant date. The expected volatility at the date of grant and each option valuation date was estimated based on price volatility of the shares of comparable companies in the industry, which are listed and publicly traded over the most recent period, equal to the expected maturity period of the issued options. Expected forfeiture rate was estimated based on our understanding in the human resources market and the staff turnover rate of our company. The annual staff turnover rate is estimated at 5% for periods after June 2007. We have no history or expectation of paying dividends on our ordinary shares. In determining the estimated fair value of our share options, we believe that the expected volatility and the fair value of our ordinary shares are the most subjective assumptions, as we are a private company prior to the completion of this offering.

        In determining the fair values of our ordinary shares as of each award grant date between 2006 and 2010, three generally accepted approaches to value were considered: cost, market and income approaches. While useful for certain purposes, the cost approach is generally not considered applicable to the valuation of a company as a going concern, as it does not capture the future earning potential of the business. The comparability of the financial metrics of comparable companies in our industry and thus the relevance of the market approach were also considered low because our target market and stage of development were different from those of the publicly listed companies in the same industry. In view of the above, we determined that the income approach is the most appropriate method to derive the fair values of our ordinary shares. In addition, from October 2009 through December 2010, there were transactions in our ordinary shares which we used to check against the valuation derived from the income approach. In addition, we took into consideration the guidance prescribed by the

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American Institute of Certified Public Accountants Audit and Accounting Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the Practice Aid.

        The income approach involves applying appropriate discount rates to estimated cash flows that are subject to a number of assumptions. These assumptions include: (i) no material changes in the existing political, legal, fiscal and economic conditions in China; (ii) our ability to recruit and retain competent management, key personnel and technical staff to support our ongoing operations; (iii) exchange rates and interest rates will not differ materially from those presently prevailing; (iv) the availability of financing will not be a constraint on the future growth of our operation; and (v) industry trends and market conditions for related industries will not deviate significantly from economic forecasts. These assumptions are inherently uncertain and subjective.

        The risks associated with achieving an estimated cash flow were assessed in selecting the appropriate discount rates. The discount rates were based on the estimated market required rate of return for investing in our company, or weighted average cost of capital, or WACC, which was derived using the capital asset pricing model, a method that market participants commonly use to price securities. The change in WACC was the combined result of the changes in risk-free interest rate, industry-average correlative relative volatility coefficient beta, equity risk premium, size of our company, scale of our business and our ability in achieving forecast projections.

        A discount for lack of marketability, or DLOM, was also applied to reflect the fact there is no ready public market for our shares as we are a closely held private company. American Appraisal quantified DLOM using the Black-Scholes option pricing model. Under this option-pricing method, the cost of the put option, which can hedge the price change before the privately held shares can be sold, was considered as a basis to determine the DLOM. This option pricing method is one of the methods commonly used in estimating DLOM as it can take into consideration factors such as timing of a liquidity event (such as an initial public offering) and estimated volatility of equity securities. The farther the valuation date is from an expected liquidity event, the higher the put option value and thus the higher the implied DLOM. The lower the DLOM used for the valuation, the higher the determined fair value of the ordinary shares.

        The discount rates and DLOM used are provided as follows:

Valuation dates
  WACC   DLOM  

August 15, 2006

    26%     23.22%  

February 1, 2007

    26%     21.07%  

May 14, 2007

    25%     20.00%  

June 6, 2007

    25%     18.98%  

May 29, 2008

    23%     19.06%  

February 1, 2009

    22%     19.00%  

October 12, 2009

    22%     18.50%  

December 1, 2009

    22%     18.00%  

July 1, 2010

    18%     14.50%  

December 8, 2010

    18%     12.00%  

February 1, 2011

    18%     11.00%  

        The option pricing method was used to allocate the equity value of our company to preferred and ordinary shares, taking into account the guidance prescribed by the Practice Aid. This method involves making estimates of the anticipated timing of a potential liquidity event, such as a sale of our company or an initial public offering, and estimates of the volatility of our equity securities. The anticipated timing is based on the plans of our board and management. Estimating the volatility of the share price of a privately held company is complex because there is no readily available market for the shares. The volatility of our shares was estimated based on the historical volatility of the shares of comparable

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listed companies. Had we used different estimates of volatility, the allocations between preferred and ordinary shares would have been different.

        The fair value of our ordinary shares increased from US$0.1239 per share as of August 15, 2006, to US$0.3651 per share as of February 1, 2007 to US$0.3991 per share as of June 6, 2007 to US$0.6494 per share as of May 29, 2008, primarily due to the following reasons:

    the overall economic growth in our principal geographic markets and organic growth of our business;

    we experienced an increase in net revenues from 2006 to 2007 and from 2007 to 2008; and

    as our business grew, the discount rate used for valuation of our shares decreased from 26% for the August 15, 2006 valuation to 23% for the May 29, 2008 valuation.

        The fair value of our ordinary shares increased from US$0.6494 per share as of May 29, 2008 to US$1.2466 per share as of February 1, 2009, primarily due to the following reasons:

    we experienced significant growth of 131.3% in net revenue from RMB27.6 million in 2008 to RMB63.9 million in 2009 as we began charging fees for messaging services on our Jiayuan.com website in October 2008;

    we also began to standardize our VIP pricing and services by offering more customized personal offerings to attract more VIP customers and enable us to increase our VIP services fees; and

    our performance in 2009 helped to reduce the perceived risk of realizing the financial forecast going forward by demonstrating the viability of our business strategy and execution capability and thus the discount rate used for our valuation decreased from 23% for the May 29, 2008 valuation to 22% for the February 1, 2009 valuation.

        The fair value of our ordinary shares increased from US$1.5216 per share as of December 1, 2009 to US$4.5644 per share as of July 1, 2010, primarily due to the following reasons:

    our operating cash flow performance in the first half of 2010 exceeded the original forecast as of December 1, 2009. We had originally forecasted operating cash inflow of RMB142 million for 2010, while by the middle of 2010, we revised our forecasted operating cash inflow to RMB196 million due to our financial and operating performance in the first half of 2010 to reflect the operating performance that was achieved in the first half of 2010;

    the number of our average monthly paying user accounts increased by 29.1% in the first quarter of 2010 compared to the fourth quarter of 2009 and increased by 61.7% in the second quarter of 2010 compared to the first quarter of 2010 due to successful advertising and promotion activities. The number of our monthly active user accounts increased by 46.9% in the second quarter of 2010 compared to the first quarter of 2010;

    our financial and operating performance improved significantly in the first six months of 2010 as our net revenues increased by 15.3% in the first quarter of 2010 compared to the fourth quarter of 2009 and net revenues increased by 64.5% in the second quarter of 2010 compared to the first quarter of 2010;

    we successfully launched several promotional programs in the first six months of 2010, such as our collaboration with several national and regional television shows and placement of television and bus advertisements throughout China, which further enhanced our brand recognition and helped to attract new users to our website;

    from September 2009 to July 2010, transactions between our existing shareholders and new investors in which consideration of US$1.2563 per share was paid in September 2009 and US$5.0251 per share was paid in July 2010;

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    with the anticipation of future revenue growth and plans to expand our viable business model, we accelerated the timetable of our initial public offering which led the DLOM used in our valuation to decrease from 18% for our December 1, 2009 valuation to 14.5% for our July 1, 2010 valuation;

    as a result of the above factors and, in particular, our financial and operating performance, and decreased risk premium arising from better performance and liquidity, our discount rate decreased from 22% to 18%.

        The fair value of our ordinary shares increased from US$4.5644 per share as of July 1, 2010 to US$5.2315 per share as of December 8, 2010, primarily due to the following reasons:

    due to the adjustments we made in calculating our financial forecasts as of July 1, 2010 based on the results of our financial and operating performance in the first half of 2010, we maintained the same estimates in preparing our financial forecast as of December 8, 2010;

    the number of our average monthly paying user accounts increased by 31.2% in the third quarter of 2010 compared to the second quarter of 2010 and by 17.3% in the fourth quarter of 2010 compared to the third quarter of 2010. In the same period, the number of our average monthly active user accounts increased by 14.0% in the third quarter of 2010 compared to the second quarter of 2010 and by 4.8% in the fourth quarter of 2010 compared to the third quarter of 2010;

    our net revenues increased by 30.6% in the third quarter of 2010 compared to the second quarter of 2010 and net revenues increased by 17.1% in the fourth quarter of 2010 compared to the third quarter of 2010;

    from July 2010 to December 2010, transactions between our existing shareholders and new investors in which consideration of US$5.0251 per share was paid in July 2010 and US$5.0251 per share was paid in December 2010; and

    with the initial public offering process underway, the DLOM used for our valuation decreased from 14.5% for the July 1, 2010 valuation to 12% for the December 8, 2010 valuation.

        The fair value of our ordinary shares increased from US$5.2315 per share as of December 8, 2010 to US$6.033 as of February 1, 2011, primarily due to the following reasons:

    our average monthly paying user accounts increased by 4.3% in January 2011 compared to December 2010 and by 1.8% in December 2010 compared to November 2010. Our average monthly active user accounts decreased slightly by 2.4% in January 2011 from December 2010 due to the Chinese New Year holiday and increased by 1.4% in December 2010 from November 2010;

    our business tax rate decreased from 5% to 3%, which directly improved our net revenue;

    based on our management accounts, our actual operating cash inflow in January 2011 was RMB26.5 million, an increase of 19.4% from our forecasted cash inflow of RMB22.2 million estimated in December 2010 and an increase of 27.4% from our forecasted cash inflow of RMB20.8 million estimated in November 2010; and

    with the initial public offering process underway, the DLOM used for our valuation decreased from 12% for the December 8, 2010 valuation to 11% for the February 2, 2011 valuation.

Consolidation of Affiliated Entities

        PRC law currently restricts foreign ownership of Internet content distribution businesses and prohibits privately funded non-enterprise institutions from engaging in profit making business

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operations in China. To comply with these legal requirements, we operate our website and provide events, VIP and other services in China through Shanghai Huaqianshu and Jiayuan Shanghai Center. We have entered into a series of contractual arrangements with Shanghai Huaqianshu and their respective equity owners and Jiayuan Shanghai Center. As a result of these contractual arrangements, we have the ability to effectively control Shanghai Huaqianshu and Jiayuan Shanghai Center, and accordingly, each of Shanghai Huaqianshu and Jiayuan Shanghai Center is a VIE of our company. As we are deemed to have the power to direct the economic activities most significant to Shanghai Huaqianshu and Jiayuan Shanghai Center and the right to obtain substantially all of the economic benefits and obligation to fund substantially all of the losses, we are considered to be the primary beneficiary of our VIE, and therefore we consolidated the results in our consolidated financial statements under U.S. GAAP. We have consulted our PRC legal counsel in assessing our ability to control our PRC operating companies and Jiayuan Shanghai Center through these contractual arrangements. Any changes in PRC laws and regulations that affect our ability to control our PRC operating companies and Jiayuan Shanghai Center might preclude us from consolidating these companies in the future.

Impairment of Long-Lived Assets

        We review long-lived assets and certain identifiable intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparing their carrying amounts to the future undiscounted cash flows the assets are expected to generate. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we recognize an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value.

Income Taxes

        We follow the asset and liability method of accounting for income taxes. Deferred income taxes are accounted for using an asset and liability approach which requires the recognition of income taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred income taxes are determined based on the differences between the financial reporting and tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred tax assets if it is considered more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Uncertain tax positions

        The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating our uncertain tax positions and determining its provision for income taxes. We did not have any significant interest and penalties associated with uncertain tax positions for the years ended December 31, 2008, 2009 and 2010. As of December 31, 2010, we did not have any significant unrecognized uncertain tax positions.

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Internal Control over Financial Reporting

        Prior to this offering, we have been a private company with a short operating history and limited accounting personnel with U.S. GAAP experience and other resources with which to address our internal control and procedures over financial reporting. In the course of the preparation of our consolidated financial statements for the two years ended December 31, 2009, we identified one material weakness in our internal control over financial reporting, as defined in AU 325, Communicating Internal Control Related Matters Identified in an Audit, of the PCAOB Standards and Related Rules. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of our company's financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls over financial reporting are necessary for us to provide reliable financial reports, effectively prevent fraud and operate as a public company. The material weakness identified relates to the lack of sufficient accounting personnel with knowledge to perform period-end reporting procedures under U.S. GAAP, to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. The material weakness identified resulted in adjustments in stock-based compensation expenses, the accretions on redeemable convertible preferred shares, the presentation of certain revenue items on a gross versus net basis and certain deferred revenue items relating to customer loyalty points and services offered as a bundled package.

        We will take initiatives to improve our internal control over financial reporting and disclosure controls, including (i) hiring more staff with U.S. GAAP, SEC reporting and accounting experience for financial reporting and analysis, and hiring additional qualified professionals with relevant experience for our finance and accounting department (ii) providing additional training for our new and existing personnel by expanding the training program on U.S. GAAP financial statement preparation and financial reporting, (iii) establish an internal audit department and an audit committee to oversee the accounting and financial reporting processes as well as external audits of the Group, (iv) establishing a task force which would include representatives from key departments to formalize and implement our internal control over financial reporting, and (v) increasing the level of interaction among our management, audit committee, independent registered public accounting firm and other external advisors. However, the implementation of these initiatives may not fully address the material weakness in our internal control over financial reporting. See "Risk Factors—Risks Relating to Our Business—If we fail to develop or maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm the value of our shares." We have hired a reporting manager with U.S. GAAP, SEC reporting and accounting experience and provided additional training on U.S. GAAP financial statement preparation and financial reporting to our employees. In addition, we intend to hire staff to help us improve our internal control over financial reporting in preparation for compliance with the Sarbanes-Oxley Act and other applicable SEC rules and regulations.

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Consolidated Results of Operations

        The following table sets forth a summary of our consolidated statements of operations for the periods indicated.

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except share and
per share data)

 

Net revenues

    27,625     63,894     167,589     25,392  

Cost of revenues

    (21,353 )   (28,448 )   (61,049 )   (9,250 )
                   

Gross profit

    6,272     35,446     106,540     16,142  

Operating expenses:

                         
 

Selling and marketing expenses

    (14,677 )   (16,574 )   (57,867 )   (8,767 )
 

General and administrative expenses

    (5,872 )   (8,631 )   (24,338 )   (3,685 )
 

Research and development expenses

        (8 )   (381 )   (58 )
                   
 

Total operating expenses

    (20,549 )   (25,213 )   (82,586 )   (12,510 )
                   

Operating (loss)/income

    (14,277 )   10,233     23,954     3,632  
                   
 

Interest income, net

   
734
   
1,189
   
1,876
   
284
 
 

Foreign currency exchange losses, net

    (299 )   (3 )        
 

Other (expenses)/income, net

    (19 )   6     898     134  
                   
 

(Loss)/income before income tax

   
(13,861

)
 
11,425
   
26,728
   
4,050
 
 

Income tax expenses

        (5,748 )   (10,011 )   (1,517 )
                   

Net (loss)/income attributable to Jiayuan.com International Ltd.

    (13,861 )   5,677     16,717     2,533  
                   
 

Accretion of Series A preferred shares

    (7,504 )   (7,976 )   (8,690 )   (1,317 )
 

Income allocated to participating preferred shareholders

        (5,677 )   (16,717 )   (2,533 )
                   

Net loss attributable to ordinary shareholders

    (21,365 )   (7,976 )   (8,690 )   (1,317 )
                   

Comparison of the Years Ended December 31, 2010 and 2009

        Net Revenues.    Our total net revenues increased by 162.3% from RMB63.9 million in 2009 to RMB167.6 million (US$25.4 million) in 2010.

    Online services contributed RMB45.4 million, or 71.0%, of our net revenues in 2009, compared to RMB134.1 million (US$20.3 million), or 80.0%, of our net revenues in 2010. The 195.4% increase in our net revenues from online services in 2010, compared to 2009, resulted primarily from greater acceptance and a higher number of paying users. Average monthly paying user accounts increased by 172.0% from 203,317 in 2009 to 552,930 in 2010.

    Events and VIP services contributed RMB12.8 million, or 20.0%, of our net revenues in 2009, compared to RMB26.3 million (US$4.0 million), or 15.7%, of our net revenues in 2010. The 105.2% increase in our net revenues from events and VIP services in 2010, compared to 2009, resulted primarily from restructuring our VIP pricing and services in the second quarter of 2009 by offering more customized and personal service offerings, which attracted more VIP customers and enabled us to increase our fees for VIP services. Our average monthly VIP customers increased from 146 customers in 2009 to 220 customers in 2010 and the average contract value signed for our VIP services increased by 113.7% in 2010 from 2009. In addition, the number of events we held increased from 597 in 2009 to 864 in 2010 and the total number of attendees at these events increased from approximately 79,540 in 2009 to approximately 151,665 in 2010.

    Other services contributed RMB5.7 million, or 9.0%, of our net revenues in 2009, compared to RMB7.3 million (US$1.1 million), or 4.3%, of our net revenues in 2010. The 27.3% increase in

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      our net revenues from other services in 2010, compared to 2009, resulted from higher advertising revenue. While our advertising revenue increased in absolute amounts, it decreased as a percentage of our net revenues due to our decision to phase out third-party advertisements on our Jiayuan.com website as part of our strategy to devote our online dating website to using a results-based fee structure.

        Cost of Revenues.    Our total cost of revenues increased by 114.6% from RMB28.4 million in 2009 to RMB61.0 million (US$9.3 million) in 2010. This increase resulted primarily from increases in personnel costs, fees to third-party payment providers, broadband rental and network costs, depreciation expenses, operating lease expenses and share-based compensation expenses.

    The cost of revenues from online services was RMB20.3 million in 2009, compared to RMB40.2 million (US$6.1 million) in 2010. Our cost of revenues from online services, which primarily comprises of fees to third-party payment providers, personnel costs and broadband rental and network costs, is directly related to the number of active user accounts. While our cost of revenues from online services grew in absolute amounts in 2010, due to the growth in active user accounts, they declined as a percentage of our net revenues from online services from 44.8% in 2009 to 30.0% in 2010, as we began to benefit from the faster increase in the number of paying user accounts.

    The cost of revenues from events and VIP services was RMB7.2 million in 2009, compared to RMB18.8 million (US$2.8 million) in 2010. The 159.3% increase in our cost of revenues from events and VIP services in 2010, compared to 2009, resulted primarily from an increase in personnel and events costs as personnel costs increased from RMB4.2 million in 2009 to RMB12.1 million (US$1.8 million) in 2010 and event costs increased from RMB1.4 million in 2009 to RMB2.5 million (US$0.4 million) in 2010.

    The cost of revenues from other services was RMB0.9 million in 2009, compared to RMB2.0 million (US$0.3 million) in 2010. The 130.1% increase in our cost of revenues in 2010, compared to 2009, resulted primarily from increases in personnel cost paid in connection with our advertising revenue.

        Gross Profit and Gross Margin.    As a result of the foregoing, our gross profit increased by 200.6% from RMB35.4 million in 2009 to RMB106.5 million (US$16.1 million) in 2010. Our gross margin increased from 55.5% in 2009 to 63.6% in 2010. This growth is attributable primarily to our online services segment as a result of the substantial growth in the number of our paying user accounts, increasing faster than the increase in the number of active user accounts.

    Our gross profit in online services increased from RMB25.1 million in 2009 to RMB93.8 million (US$14.2 million) in 2010. Our gross margin in online services increased from 55.2% in 2009 to 70.0% in 2010, primarily as a result of the improved cost efficiency due to the economies of scale achieved through our growing number of paying user accounts.

    Our gross profit in events and VIP services increased from RMB5.6 million in 2009 to RMB7.5 million (US$1.1 million) in 2010. Our gross margin in events and VIP services decreased from 43.4% in 2009 to 28.5% in 2010. The decline in gross margin resulted primarily from more events being held in second-tier and third-tier cities, which typically generated lower margins than events held in the first-tier cities due to lower entry fees.

    Our gross profit in other services increased from RMB4.8 million in 2009 to RMB5.2 million (US$0.8 million) in 2010. Our gross margin in other services decreased from 84.5% in 2009 to 72.0% in 2010 due to an increase in personnel costs in our advertising department.

        Operating Expenses.    Our total operating expenses increased by 227.6% from RMB25.2 million in 2009 to RMB82.6 million (US$12.5 million) in 2010. This increase was primarily due to increases in our

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selling and marketing expenses, our general and administrative expenses and our research and development expenses.

    Selling and Marketing Expenses.  Our selling and marketing expenses increased by 249.1% from RMB16.6 million in 2009 to RMB57.9 million (US$8.8 million) in 2010. This increase resulted primarily from greater online spending on new user acquisitions, in particular on commercial search engines and Internet portals due to increase in advertising fees charged by such third-party service providers as well as offline brand building efforts. Selling and marketing expenses on commercial search engines and Internet portals increased from RMB15.6 million in 2009 to RMB40.0 million (US$6.1 million) in 2010. Selling and marketing expenses on offline brand building efforts increased from RMB0.5 million in 2009 to RMB15.9 million (US$2.4 million) in 2010. Our selling and marketing expenses also increased as a percentage of our net revenues, amounting to 25.9% of our net revenues in 2009, compared to 34.5% of our net revenues in 2010, primarily due to our strategy to increase our market share.

    General and Administrative Expenses.  Our general and administrative expenses increased by 182.0% from RMB8.6 million in 2009 to RMB24.3 million (US$3.7 million) in 2010. This increase resulted primarily from headcount growth from 15 in 2009 to 57 in 2010 and the related increase in salaries and benefits for our general and administrative personnel, as well as an increase in share-based compensation expenses from RMB1.4 million in 2009 to RMB4.2 million (US$0.6 million) in 2010 as a result of more share option grants and higher fair value of the awards. Our general and administrative expenses have increased slightly as a percentage of our net revenues, amounting to 13.5% of our net revenues in 2009, compared to 14.5% of our net revenues in 2010.

    Research and Development Expenses.  Our research and development expenses increased from RMB8,000 in 2009 to RMB0.4 million (US$58,000) in 2010. This increase was primarily due to an increase in the number of our research and development personnel.

        Operating Income and Operating Margin.    As a result of the foregoing, our operating income increased by 134.1% from RMB10.2 million in 2009 to RMB24.0 million (US$3.6 million) in 2010. Our operating margin decreased from 16.0% in 2009 to 14.3% in 2010, resulting primarily from higher selling and marketing expenses, particularly online spending on new user acquisitions.

        Interest Income.    Our interest income increased by 57.8% from RMB1.2 million in 2009 to RMB1.9 million (US$0.3 million) in 2010 primarily due to the larger amount of funds we kept in fixed-rate short-term deposits.

        Other (Expense)/Income, Net.    Our other income, net, increased to RMB0.9 million (US$0.1 million) in 2010 from RMB6,000 in 2009. The increase was primarily due to government subsidies relating to software development.

        Income Tax Expenses.    We incurred income tax expenses of RMB10.0 million (US$1.5 million) in 2010 compared to RMB5.7 million in 2009. Although we enjoyed preferential corporate income tax rates due to the status of Shanghai Huaqianshu as an HNTE in 2010, causing our effective income tax rate to decrease from 50.3% to 37.5%, our tax expenses still rose as a result of our increased pre-tax profit. Our effective income tax rate is mainly comprised of statutory EIT and non-deductible expenses under the new EIT law. Our advertising expenses exceeded the maximum deductible allowance of 15% of revenues, as determined under PRC GAAP, resulting in our high effective tax rate. Our share-based compensation expenses were also excluded from our pretax income for PRC tax purposes.

        Net Income Attributable to Jiayuan.com International Ltd. and Net Margin.    As a result of the foregoing, our net income attributable to Jiayuan.com International Ltd. increased by 194.5% from

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RMB5.7 million in 2009 to RMB16.7 million (US$2.5 million) in 2010. Our net margin increased from 8.9% in 2009 to 10.0% in 2010.

        Accretion of Preferred Shares.    Accretion of preferred shares increased from RMB8.0 million in 2009 to RMB8.7 million (US$1.3 million) in 2010. We accreted the preferred shares to the redemption amount on the earliest redemption date using the effective interest method.

        Income Allocated to Participating Preferred Shareholders.    Income allocated to participating preferred shareholders increased from RMB5.7 million in 2009 to RMB16.7 million (US$2.5 million) in 2010. We allocated income to our preferred shareholders on a pari passu basis.

        Net Loss Attributable to Ordinary Shareholders.    Our net loss attributable to ordinary shareholders increased by 9.0% from RMB8.0 million in 2009 to RMB8.7 million (US$1.3 million) in 2010.

Comparison of the Years Ended December 31, 2009 and 2008

        Net Revenues.    Our total net revenues increased by 131.3% from RMB27.6 million in 2008 to RMB63.9 million in 2009. This increase was primarily due to our decision to begin charging users to send or read messages from other users in October 2008.

    Online services contributed RMB15.7 million, or 56.8%, of our net revenues in 2008, compared to RMB45.4 million, or 71.0%, of our net revenues in 2009. The 189.4% increase in our net revenues from online services in 2009, compared to the same period in 2008, was due to new revenues in connection with our decision to begin charging users for messaging services on our online dating website in October 2008.

    Events and VIP services contributed RMB7.8 million, or 28.1%, of our net revenues in 2008, compared to RMB12.8 million, or 20.0%, of our net revenues in 2009 as the total number of attendees at our offline events increased from approximately 70,880 in 2008 to approximately 79,540 in 2009 and average ticket prices at these events increased by 7.2% in 2009 from 2008. We also began to standardize our VIP pricing and services in the second quarter of 2009 by offering more customized and personal service offerings, which attracted more VIP customers as our average monthly VIP customers increased from 53 customers in 2008 to 146 customers in 2009 and our average contract value signed increased by 358.0% in 2009 from 2008.

    Other services contributed RMB4.2 million, or 15.1%, of our net revenues in 2008, compared to RMB5.7 million, or 9.0%, of our net revenues in 2009 primarily due to increased advertising revenue as our user activity and site traffic increased.

        Cost of Revenues.    Our cost of revenues increased by 33.2% from RMB21.4 million in 2008 to RMB28.4 million in 2009. This increase was primarily due to increases in network costs, agency fees paid for money collection, salary and wages, depreciation of property and equipment and rental costs of premises and facilities.

    The cost of revenues from online services was RMB15.8 million in 2008, compared to RMB20.3 million in 2009. While our cost of revenues from online services grew in absolute terms in 2009, they began to decline as a percentage of our net revenues as we began to benefit from the increase in the number of paying user accounts since we started to charge for messaging services in October 2008.

    The cost of revenues from events and VIP services was RMB5.2 million in 2008, compared to RMB7.2 million in 2009. The increase primarily resulted from higher personnel costs due to an increase in headcount as a result of the growth of our events and VIP service businesses.

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    The cost of revenues from other services was RMB0.4 million in 2008, compared to RMB0.9 million in 2009 primarily due to increase in personnel costs.

        Gross Profit and Gross Margin.    As a result of the foregoing, our gross profit increased by 465.1% from RMB6.3 million in 2008 to RMB35.4 million in 2009. Our gross margin increased from 22.7% in 2008 to 55.5% in 2009 primarily as a result of an increase in revenues since we started to charge for messaging services in October 2008.

    We incurred gross loss in online services of RMB0.1 million in 2008 as we did not charge for messaging services until October 2008. Gross profit from online services in 2009 was RMB25.1 million and we recorded a gross margin in online services of 55.2% in 2009 as we charged for messaging services for the full year in 2009.

    Our gross profit in events and VIP services increased from RMB2.6 million in 2008 to RMB5.6 million in 2009. Our gross margin in events and VIP services increased from 32.9% in 2008 to 43.4% in 2009 primarily due to the increase in ticket prices at our events.

    Our gross profit in other services increased from RMB3.8 million in 2008 to RMB4.8 million in 2009. Our gross margin in other services decreased from 91.4% in 2008 to 84.5% in 2009 primarily due to an increase in personnel costs in our advertising department.

        Operating Expenses.    Our total operating expenses increased by 22.7% from RMB20.5 million in 2008 to RMB25.2 million in 2009. This increase resulted from increases in both our selling and marketing expenses and our general and administrative expenses.

    Selling and Marketing Expenses.  Our selling and marketing expenses increased by 12.9% from RMB14.7 million in 2008 to RMB16.6 million in 2009. This increase was primarily due to increased online advertising expenses from RMB14.7 million in 2008 to RMB15.6 million in 2009 and an increase in our employee headcount in marketing from two in 2008 to nine in 2009.

    General and Administrative Expenses.  Our general and administrative expenses increased by 47.0% from RMB5.9 million in 2008 to RMB8.6 million in 2009. This increase was primarily due to an increase in our employee headcount from nine in 2008 to 15 in 2009, as well as an increase in share-based compensation expenses as a result of additional share option grants and higher fair value of the awards.

    Research and Development Expenses.  Our research and development expenses were RMB8,000 in 2009, compared to nil in 2008, due to an increase in our research and development personnel.

        Operating (Loss)/Income and Operating Margin.    As a result of the foregoing, our operating loss was RMB14.3 million in 2008 and our operating income was RMB10.2 million 2009. Our operating margin was 16.0% in 2009.

        Interest Income.    Our interest income increased by 62.0% from RMB0.7 million in 2008 to RMB1.2 million in 2009. This increase was primarily due to the larger amount of funds we kept in fixed-rate short-term deposits.

        Other (Expense)/Income, Net.    We had other expense, net, of RMB19,000 in 2008 primarily due to donations we made in connection with the Sichuan earthquake in 2008. We had other income, net, of RMB6,000 in 2009 primarily due to income we received from the sublease of a lease contract.

        Income Tax Expense.    We had no income tax expenses in 2008 as we had a loss before income tax of RMB13.9 million while we incurred income tax expenses of RMB5.7 million in 2009. The increase in our tax expenses was principally the result of our increased pre-tax profit.

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        Net (Loss)/Income Attributable to Jiayuan.com International Ltd. and Net Margin.    As a result of the foregoing, our net loss attributable to Jiayuan.com International Ltd. was RMB13.9 million in 2008 and our net income attributable to Jiayuan International Ltd. was RMB5.7 million in 2009. Our net margin was 8.9% in 2009.

        Accretion of Series A Preferred Shares.    Accretion of Series A preferred shares increased from RMB7.5 million in 2008 to RMB8.0 million in 2009. We accreted the preferred shares to the redemption amount on the earliest redemption date using the effective interest method.

        Income Allocated to Participating Preferred Shareholders.    Income allocated to participating preferred shareholders increased from nil in 2008 to RMB5.7 million in 2009. We allocated income to our preferred shareholders on a pari passu basis.

        Net Loss Attributable to Ordinary Shareholders.    Our net loss attributable to ordinary shareholders decreased by 62.7% from RMB21.4 million in 2008 to RMB8.0 million in 2009.

Selected Quarterly Results of Operations

        The following table presents our unaudited consolidated quarterly results of operations for the eight quarters ended December 31, 2010. You should read the following table in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. We have prepared the unaudited consolidated quarterly financial information on the same basis as our audited consolidated financial statements. This unaudited consolidated financial information includes all adjustments, consisting of normal and recurring adjustments that we consider necessary for a fair representation of our financial position and results of operations for the quarters presented. Our operating results for any particular quarter are not necessarily indicative of our future results. Our limited operating history makes it difficult to predict future operating results. The historical quarterly

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results presented below are not necessarily indicative of the results that may be expected for any future quarters or periods.

 
  Three months ended  
 
  March 31, 2009   June 30, 2009   September 30, 2009   December 31, 2009   March 31, 2010   June 30, 2010   September 30, 2010   December 31, 2010  
 
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
 
 
  (in thousands, except share and per share data)
 

Net revenues

    12,839     14,605     16,571     19,879     22,923     37,718     49,271     57,677  

Cost of revenues(1)

    (6,762 )   (6,654 )   (6,976 )   (8,056 )   (9,869 )   (14,582 )   (17,498 )   (19,100 )
                                   

Gross profit

    6,077     7,951     9,595     11,823     13,054     23,136     31,773     38,577  

Operating expenses:

                                                 
 

Selling and marketing expenses(1)

    (3,441 )   (3,888 )   (4,262 )   (4,983 )   (11,022 )   (16,280 )   (14,162 )   (16,403 )
 

General and administrative expenses(1)

    (1,959 )   (1,819 )   (2,006 )   (2,847 )   (3,106 )   (4,168 )   (8,160 )   (8,904 )
 

Research and development expenses(1)

                (8 )   (17 )   (60 )   (199 )   (105 )
                                   
 

Total operating expenses

    (5,400 )   (5,707 )   (6,268 )   (7,838 )   (14,145 )   (20,508 )   (22,521 )   (25,412 )
                                   

Operating income/(loss)

    677     2,244     3,327     3,985     (1,091 )   2,628     9,252     13,165  
                                   
 

Interest income, net

    282     303     282     322     344     359     519     654  
 

Foreign currency exchange losses, net

    (3 )                            
 

Other (expense)/income, net

    (2 )   13     (1 )   (4 )       (91 )   553     436  
                                   
 

Income/(loss) before income tax

    954     2,560     3,608     4,303     (747 )   2,896     10,324     14,255  

Income tax expenses

    (732 )   (1,344 )   (1,554 )   (2,118 )   (466 )   (2,175 )   (3,065 )   (4,305 )
                                   

Net income/(loss) attributable to Jiayuan.com International Ltd. 

    222     1,216     2,054     2,185     (1,213 )   721     7,259     9,950  
                                   

Non-GAAP net income/(loss)(2)

    424     1,474     2,336     3,068     (15 )   2,031     9,556     12,108  

(1)
Includes share-based compensation expenses as follows:

   
  Three months ended  
   
  March 31, 2009   June 30, 2009   September 30, 2009   December 31, 2009   March 31, 2010   June 30, 2010   September 30, 2010   December 31, 2010  
   
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
 
   
  (in thousands)
 
 

Cost of revenues

    34     26     44     74     123     315     788     815  
 

Selling and marketing expenses

        11     16     25     77     73     278     272  
 

General and administrative expenses

    168     221     222     784     997     920     1,211     1,046  
 

Research and development expenses

                    1     2     20     25  
                                     
 

Total

    202     258     282     883     1,198     1,310     2,297     2,158  
                                     
(2)
We define non-GAAP net income/(loss) as net income/(loss) attributable to Jiayuan.com International Ltd. excluding share-based compensation expenses. We review non-GAAP net income/(loss) together with net income/(loss) attributable to Jiayuan.com International Ltd. to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of non-GAAP net income/(loss) has material limitations as an analytical tool. One of the limitations of using non-GAAP net income/(loss) is that it does not include all items that impact our net income/(loss) attributable to Jiayuan.com International Ltd. during the period. In addition, because non-GAAP net income/(loss) is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP net income/(loss) in isolation from or as an alternative to

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    net income/(loss) attributable to Jiayuan.com International Ltd. prepared in accordance with U.S. GAAP. Our non-GAAP net income/(loss) is calculated as follows for the periods presented:

   
  Three months ended  
   
  March 31, 2009   June 30, 2009   September 30, 2009   December 31, 2009   March 31, 2010   June 30, 2010   September 30, 2010   December 31, 2010  
   
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
 
   
  (in thousands)
 
 

Net income/(loss) attributable to Jiayuan.com International Ltd. 

    222     1,216     2,054     2,185     (1,213 )   721     7,259     9,950  
 

Add: Share-based compensation expenses

    202     258     282     883     1,198     1,310     2,297     2,158  
                                     
 

Non-GAAP net income/(loss)

    424     1,474     2,336     3,068     (15 )   2,031     9,556     12,108  
                                     

        Our net revenues increased in the eight-quarter period from January 1, 2009 to December 31, 2010 primarily due to the increase in net revenues from our online services and our cost of revenues generally increased in the same period due to the increase in our net revenues. Except for the three months ended March 31, 2010, our gross margins generally increased in the eight-quarter period from January 1, 2009 to December 31, 2010 due to economies of scale and decreasing commission expenses as the proportion of users paying through their telecommunication operators decreased. Our gross margins decreased slightly in the three months ended March 31, 2010 primarily due to seasonality. Our selling and marketing expenses generally increased quarter to quarter and increased significantly in the three months ended March 31, 2010 and June 30, 2010, primarily due to increasing marketing efforts to attract more users to our Jiayuan.com website. Our general and administrative expenses generally increased quarter to quarter and increased significantly beginning the three months ended March 31, 2010 due to the increase in headcount and share-based compensation expenses as we increased the scale of our operations. General and administrative expenses increased significantly in the three months ended September 30, 2010 primarily due to the increase in the scale of our operations. Except for net loss attributable to Jiayuan.com International Ltd. in the three months ended March 31, 2010 due to the significant increase in selling and marketing expenses and seasonality, we recorded net income attributable to Jiayuan.com International Ltd., which generally increased quarter to quarter.

        Our quarterly results of operations are affected by seasonal trends. We generally experience lower user traffic and acquire fewer new users for our online dating services and hold fewer offline events during major national holidays in China, such as the Chinese New Year holidays, which fall in January or February, and the National Day holidays, which fall in the beginning of October. The seasonality of our results of operations may appear less prominent in the past eight-quarter period ended December 31, 2010 because our online dating business experienced rapid growth during this period, but may become more prominent in the future. See "Risk Factors—Risks Relating to Our Business—Our quarterly results may fluctuate because of a number of factors, including seasonality, and, as a result, investors should not rely on quarterly operating results as indicative of future results."

Liquidity and Capital Resources

Cash Flows and Working Capital

        To date, we have financed our operations primarily through cash generated from operations and the issuance of Series A Preferred Shares. Our cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. As of December 31, 2008, 2009 and 2010, we had RMB16.1 million, RMB11.4 million and RMB19.4 million (US$2.9 million) in cash and cash equivalents, respectively. As of December 31, 2008, 2009 and 2010, we had RMB26.0 million, RMB58.0 million and RMB116.0 million (US$17.6 million) of short-term deposits, respectively. We anticipate that our primary sources of liquidity will come from cash flow from operations and the proceeds of this offering.

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        We believe that our current cash and cash equivalents, cash flow from operations and the proceeds from this offering will be sufficient to meet our anticipated cash needs, including for working capital and capital expenditures, for at least the next 12 months as of the date of this prospectus. We may, however, require additional cash resources due to changed business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell debt securities or additional equity securities or obtain short-term or long-term bank financing. The sale of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financial covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

        From time to time, we evaluate possible investments or acquisitions and may, if a suitable opportunity arises, make an investment or acquisition or conduct a divestment.

        The following table sets forth information relating to our cash flows for the periods presented:

 
  Years ended December 31,  
 
  2008   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Net cash (used in)/provided by operating activities

    (11,166 )   30,061     79,576     12,057  
                   

Net cash used in investing activities

    (28,534 )   (34,718 )   (71,609 )   (10,850 )
                   

Net cash provided by financing activities

    212              
                   

Effect of exchange rate changes on cash and cash equivalents

    (1,901 )   (3 )        
                   

Net change in cash and cash equivalents

    (41,389 )   (4,660 )   7,967     1,207  
                   

Cash and cash equivalents at beginning of year

    57,470     16,081     11,421     1,731  
                   

Cash and cash equivalents at end of year

    16,081     11,421     19,388     2,938  
                   

Operating Activities

        Net cash provided by operating activities amounted to RMB79.6 million (US$12.1 million) in 2010, primarily attributable to net income of RMB16.7 million (US$2.5 million), an increase in deferred revenue of RMB40.3 million (US$6.1 million), an increase in income tax payable of RMB9.4 million (US$1.4 million), an increase in accrued expenses and other current liabilities of RMB8.2 million (US$1.2 million) and share-based compensation expenses of RMB7.0 million (US$1.1 million). This was partially offset by an increase in prepaid expenses and other current assets of RMB2.6 million (US$0.4 million), such as advances to employees for business travel, reimbursement of expenses incurred by our users who participated in television programs and deposits paid in connection with advertising. The increase in our deferred revenue was primarily due to the significant increase in prepayments for our online services such as purchases of virtual stamps and periodic subscription fees in connection with the increase in our sales. The increase in our accrued expenses and other current liabilities was primarily due to accrued salary and welfare expenses of RMB5.2 million (US$0.8 million), accrued business and other tax payables of RMB3.6 million (US$0.5 million) and accrued advertising expenses of RMB2.6 million (US$0.4 million) as a result of our business expansion.

        Net cash provided by operating activities amounted to RMB30.1 million in 2009, primarily attributable to net income of RMB5.7 million, an increase in deferred revenue of RMB10.4 million, an increase in income tax payable of RMB5.7 million and an increase in accrued expenses and other liabilities of RMB2.6 million, primarily consisting of payroll and advertising expenses. The increase in our deferred revenue was primarily due to the significant increase in prepayments for our online

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services such as purchases of virtual stamps and periodic subscription fees in connection with the increase in our sales.

        Net cash used in operating activities amounted to RMB11.2 million in 2008, primarily attributable to a net loss of RMB13.9 million, an increase in accounts receivable of RMB3.6 million relating to receivables from our third-party payment channels and an increase in prepaid expenses and other current assets of RMB1.7 million. This was partially offset by an increase in deferred revenue of RMB4.5 million and an increase in accrued expenses and other liabilities of RMB1.0 million primarily consisting of payroll expenses. The increase in our accounts receivable was primarily due to the increase in our online business. The increase in our prepaid expenses and other current assets was primarily due to an increase in prepaying more advertising expenses. The increase in our deferred revenue was primarily due to the significant increase in prepayments for our online services such as purchases of virtual stamps and periodic subscription fees in connection with the increase in our sales.

Investing Activities

        Net cash used in or provided by investing activities largely reflects our cash management, and to a lesser extent our purchases of equipment in connection with our servers and computers.

        Net cash used in investing activities was RMB71.6 million (US$10.9 million) in 2010, primarily attributable to investment in short-term deposits totaling RMB116.0 million (US$17.6 million) and purchases of equipment totaling RMB13.6 million (US$2.1 million), partially offset by maturities of short-term deposits totaling RMB58.0 million (US$8.8 million).

        Net cash used in investing activities amounted to RMB34.7 million in 2009, primarily attributable to investment in short-term deposits totaling RMB58.0 million and purchases of equipment totaling RMB2.7 million, partially offset by maturities of short-term deposits totaling RMB26.0 million.

        Net cash used in investing activities amounted to RMB28.5 million in 2008, primarily attributable to investment in short-term deposits totaling RMB26.0 million and purchases of equipment totaling RMB2.5 million.

Financing Activities

        We generated no net cash from, and used no net cash in, financing activities in 2010 and 2009.

        Net cash provided by financing activities amounted to RMB0.2 million in 2008, primarily attributable to remaining proceeds from the issuance of our Series A preferred shares.

Capital Expenditures

        Our capital expenditures amounted to RMB2.5 million, RMB2.7 million and RMB13.6 million (US$2.1 million) in 2008, 2009 and 2010, respectively. Our capital expenditures in 2008, 2009 and 2010 principally consisted of purchases of, or investments in, our online dating services network infrastructure. The significant increase in our capital expenditures in 2010 was primarily due to the purchase of equipment, such as computers and servers, in connection with the significant increase in our registered user accounts and active user accounts. We expect our capital expenditures in 2011 and 2012 to primarily consist of purchases of additional servers, computer sof