33rd Floor, Unit B
Tower 3, Wangjing SOHO
Chaoyang District, Beijing 100027
People's Republic of China
+86 10 53856575
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

Cogency Global Inc.
10 E. 40th Street, 10th Floor
New York, NY 10016
+1 800-221-0102

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

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

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

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

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

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

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

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

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

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 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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

This is our initial public offering, and no public market currently exists for our ordinary shares or American Depositary Shares, also referred to as ADSs, representing our ordinary shares. Each ADS represents of our Class A ordinary shares, par value US$0.0001 per share.

We are offering ADSs. It is currently estimated that the initial public offering price per ADS will be between US$ and US$ .

Prior to this offering, there has been no public market for the ADSs or our ordinary shares. We intend to apply for the listing of ADSs on the New York Stock Exchange under the symbol "CMDS."

We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements.

Investing in the ADSs involves risks. See "Risk Factors" beginning on page 15.

We have granted the underwriters the right to purchase up to an additional ADSs to cover over-allotments.

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

Upon the completion of this offering, our outstanding shares will consist of Class A ordinary shares and Class B ordinary shares. Certain of our co-founders and SVF Cloud (Singapore) Pte. Ltd., directly or through their affiliates, will beneficially own all of our then issued Class B ordinary shares and will be able to exercise % of the total voting power of our issued and outstanding shares if the underwriters do not exercise their over-allotment option, or % if the underwriters exercise their over-allotment option in full. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to 10 votes and is convertible into one Class A ordinary share at any time by the holders thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.

Upon the completion of this offering, our directors, executive officers and principal shareholders will continue to have substantial control over our company. Our directors, executive officers and principal shareholders will be able to exercise % of the total voting power of our issued and outstanding shares assuming the underwriters do not exercise their over-allotment option.

You should rely only on the information contained in this prospectus or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free writing prospectus. We are offering to sell, and seeking offers to buy the ADSs, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs.

Neither we or any of the underwriters has taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of the prospectus or any filed free writing prospectus outside the United States.

Until , 2019 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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 appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to invest in our ADSs. This prospectus contains information from an industry report dated May 16, 2019 commissioned by us and prepared by Frost & Sullivan, an independent market research firm, to provide information regarding our industry and our market position in China and globally. We refer to this report as the "Frost & Sullivan Report."

Our Mission

Operating smart robots for people.

Market Opportunities

We believe the world is entering a new era where intelligent robots will become increasingly prevalent in factories, warehouses, hotels, hospitals, shops and homes. Aging populations, structural labor shortages, rising labor costs and the drive for continuous productivity enhancement create growing demand for both industrial and service robots, according to Frost & Sullivan. Labor shortages are expected to become particularly acute for jobs that are dangerous, tedious or generally less desirable, creating demand for robotic substitutes. The robotics industry is now at the turning point where a new generation of robots is emerging, according to Frost & Sullivan. This new generation of robots is more cost-effective to produce, more maneuverable, capable of dynamic learning, and therefore increasingly competent to operate in uncontrolled environments. As a result, robots are expected to assist and potentially replace humans in roles such as receptionists, cleaners, security guards, and domestic helpers, among others.

For traditional robots designed to perform simple tasks in limited scenarios, the computing capabilities carried by the chips and storage capacity built within robot bodies would be sufficient. However, for more versatile robots geared towards sophisticated tasks, such local capabilities contained in the robot body would not satisfy the needs of complex operations, nor could they deliver the required services without incurring high costs for future upgrades. Limited by their local storage capacity, it is difficult for traditional robots to store, access, or process a large amount of data. To efficiently acquire new skill sets to perform new functions, robots need to be able to self-upgrade on a continual basis, for which the localized computing is not the ideal robot architecture as the functions and applications of traditional robots are often preset with no or limited learning capability.

To address the shortcomings of traditional robots, cloud robots that are powered by the abundant and evolving computing and storage resources in the cloud have been introduced. Cloud robots have scalable access to the powerful computation and storage resources in the cloud, and are endowed with real-time open data center and shared knowledge base via a communication network. By connecting to the knowledge sharing pool, which is contributed by all the connected robot bodies, each cloud robot would become more intelligent, adaptive and responsive to the unstructured information exchange in real world. As a result, the application scenarios of cloud robots could be largely expanded, and we believe cloud robots represent the future trend for robotics.

Our Solution

We have built and operate an open end-to-end cloud robot system, and offer it as a service to the world. We are one of the few players that offer an end-to-end cloud robot system in the global robotics industry and are the very first to commercialize related products and services, according to Frost & Sullivan. Our pioneering world-class architecture, according to Frost & Sullivan, which consists of a "cloud brain," a "nerve network" and robot controllers, is capable of operating a massive number of

intelligent and secure robots simultaneously. This architecture is complemented by our smart joint technology.

•: The "cloud brain" is a highly scalable operating platform that can host a large number of robot "brains" simultaneously, each empowered by our artificial intelligence (AI) capabilities and skills that are developed and customized for robot applications in various service scenarios.
•: The "nerve network," built upon the international mobile network infrastructures, is a highly secure and reliable intranet that is isolated from the public internet and connects robots to the "cloud brain."
•: Our robot controllers are specialized and secured smart devices that are designed to connect robot bodies to the "cloud brain" via the "nerve network" and serve as the local processers as well as the standardized interface through which robot "brains" control the robot bodies.
•: Our standardized smart compliant actuators, or smart joints, enable robots to perform diverse and more precise movement and mechanical manipulations, and enable mass production of highly compliant and secure robots that can perform human-like joint movements and complete complex tasks at reasonable costs. Based on our smart joint technology, we have developed XR-1, the first model of our next-generation XR series cloud robot. XR-1 is capable of performing a wide range of services for users, including grabbing water cups and pouring water. Our smart joints bring standardization to the industry, and other players can adopt these to build different types of robots.

Our cloud robot system leads the evolution of the robotics industry towards an intelligent robot system, according to Frost & Sullivan. The highly scalable operating platform powered by the "cloud brain," the secure and reliable connection offered by the nerve network, the standardized interface of our robot controllers, and our versatile smart joint technology, together, formed an ecosystem with scalability potentials and capability of integrating our products and services with all relevant players in the robotics industry. Moreover, our end-to-end cloud robot system opened up numerous applications and tremendous monetization opportunities that can go beyond just robotics. For example, we generated a substantial amount of revenues from our cloud AI solutions, which has so far centered around smart devices that are embedded with corresponding end-to-end cloud AI operating systems and processing solutions related to smart city projects. In addition, we also generate revenues from sale of smart devices. In the past, revenues from cloud AI solutions and smart devices account for substantially all of our revenues. While we expect revenues from these businesses, especially the smart devices, to decline over time as we focus on ramping up the monetization of our core cloud robot and services, there can be no assurance we will be able to successfully monetize our end-to-end cloud robot system.

Innovation is the key to our success as we are at the cutting edge of the AI field, secured mobile communication, and robotics. Our powerful research and development capabilities are built upon a team of over 400 experienced engineers based in China and the United States as of March 31, 2019. We also conduct joint research programs with top universities and research institutions to advance our cloud robot system. We actively protect our research and development results through intellectual properties. As of March 31, 2019, we had 62 patents registered in China and seven patents registered overseas, and had 579 and 505 pending patent applications in China and overseas, respectively. In order to motivate our team to innovate, we have created a unique patent reward program, which not only provides cash incentive for each successful patent application but also grants cash profit sharing of potential financial gains.

to the decrease in our revenues from cloud AI solutions as a result of delivery timing of purchases related to smart city projects. We recognized revenues amounting to US$130.4 million for the period from April 1, 2019 through May 31, 2019. The revenues recognized were primarily related to the product performance obligation for our cloud AI solutions that is recognized at a point in time, which generally occurs upon delivery. Our net loss was US$156.8 million in 2018 as compared to net loss of US$47.7 million in 2017, and was US$59.9 million for the three months ended March 31, 2019 as compared to net loss of US$28.9 million for the three months ended March 31, 2018. Our adjusted net loss, a non-GAAP measure defined as net loss excluding change in fair value of financial instruments, was US$67.7 million in 2018 as compared to US$37.3 million in 2017, and was US$9.4 million for the three months ended March 31, 2019 as compared to US$12.6 million for the three months ended March 31, 2018. Our continued investment in research and development, amounting to US$22.7 million in 2017 and US$54.1 million in 2018, contributed significantly to our adjusted net loss in the same periods. Our research and development expenses amounted to US$8.3 million for the three months ended March 31, 2018 and US$3.7 million for the three months ended March 31, 2019, the difference between which was primarily due to the decrease in prototype cost and cost of testing materials in line with the development cycle of a certain product. See "Prospectus Summary—Summary Consolidated Financial Data—Non-GAAP Financial Measures."

Our Competitive Strengths

We believe that the following strengths contribute to our success:

•: world's leading cloud robot and services company;
•: innovative cloud intelligence architecture;
•: cutting-edge smart joint technology;
•: numerous applications and tremendous monetization opportunities; and
•: visionary and experienced management team consisting of industry veterans.

Our Strategies

We intend to grow our business by pursuing the following key strategies:

•: continue to invest in our proprietary technologies;
•: expand our product and service offerings;
•: grow our customer base and explore more opportunities with existing customers; and
•: pursue strategic acquisition, investments and alliances opportunities.

Our Challenges

Our business and successful execution of our strategies are subject to certain challenges, risks and uncertainties related to our business and our industry, regulation of our business and corporate structure and doing business in China.

The challenges, risks and uncertainties we face include, but are not limited to, our ability to:

•: successfully operate in an emerging and rapidly evolving market;
•: improve public's willingness to adopt cloud robot technologies and services;
•: timely develop and commercialize new products, services and enhancements;
•: successfully implement our current or future monetization strategies;

•: effectively manage our supply chain;
•: detect, avoid and fix any defects;
•: compete with alternative robot technologies, improvements in the existing robot control mechanism, or other advances in new cloud robot technologies;
•: derive expected benefits from our business partnerships and strategic alliances;
•: reduce our substantial dependence on our top customers, six of which accounted for 97% of our revenues in 2018, and expand supplier base;
•: achieve expected returns from our investments in research and development;
•: turn profitable;
•: protect our intellectual property rights; and
•: defend ourselves in future intellectual property infringement claims.

Please see "Risk Factors" and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face.

Corporate History and Structure

In March 2015, we incorporated CloudMinds Inc. in the Cayman Islands as our offshore holding company to facilitate financing and offshore listing. Shortly following its incorporation, CloudMinds Inc. established a wholly-owned subsidiary in Hong Kong, Cloudminds (Hong Kong) Limited, in May 2015.

In April 2015, we commenced our operations through Cloudminds (Shenzhen) Holdings Co., Ltd., which we refer to as CloudMinds Shenzhen or our VIE. Due to the PRC legal restrictions on foreign ownership in companies that provide telecommunications related services in China, we provide cloud robot and services, cloud AI solutions, smart devices, as well as other related business in China through our VIE.

In September 2015, Cloudminds (Hong Kong) Limited established a wholly-owned subsidiary in China, Cloudminds (Shenzhen) Robotics Systems Co., Ltd., which we refer to as CloudMinds Robotics or our WFOE.

Our contractual arrangements with our VIE and its shareholders (i) allow us to exercise effective control over our VIE, (ii) enable or obligate us to absorb substantially all of the economic benefits or losses from our VIE that could be significant to it, and (iii) give us an exclusive option to purchase or designate any third party to purchase all or part of the equity interests in and assets of our VIE when and to the extent permitted by PRC law. For more details, including risks associated with the VIE structure, please see "Corporate History and Structure—Contractual Arrangements related to Our VIE" and "Risk Factors—Risks Relating to Our Corporate Structure."

As a result of our direct ownership in our WFOE and the VIE contractual arrangements, we are regarded as the primary beneficiary of our VIE, and we treat it and its subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of our VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

The chart below summarizes our corporate structure and identifies our significant subsidiaries, our VIE and its significant subsidiaries, as of the date of this prospectus:

Notes:

(1): Haitao Jiang, Bing Wang, and Guanghua Yang, Jing Wang, Qi Li, Shenzhen Zhongke Growth Equity Investment Fund Partnership (Limited Partnership), Changxing Youqing Investment Management Partnership (Limited Partnership) and Anji Boye Investment Partnership (Limited Partnership) each holds 44.12%, 8.82%, 22.06%, 7.94%, 5.29%, 4.41%, 2.94% and 4.41% equity interests in CloudMinds Shenzhen. Each of Haitao Jiang, Bing Wang, and Guanghua Yang is a co-founder, beneficial owner and employee of our company. Each of Jing Wang, Qi Li, Changxing Youqing Investment Management Partnership (Limited Partnership) and Anji Boye Investment Partnership (Limited Partnership) is a beneficial owner of our company.
(2): Non-controlling individual shareholders who are also beneficial owners of our company hold 45% equity interest in this entity.
(3): An executive of this entity holds 25% equity interest in the entity, which was transferred to him as a share incentive award.

Implications of Being an Emerging Growth Company

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, as

amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards and we do not plan to opt out of such exemptions afforded to an emerging growth company.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.00 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates is at least US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Corporate Information

Our principal executive offices are located at 33rd Floor, Unit B Tower 3, Wangjing SOHO, Chaoyang District, Beijing 100027, People's Republic of China. Our telephone number at this address is +86 10 53856575. Our registered office in the Cayman Islands is located at the office of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.cloudminds.com. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Cogency Global Inc., located at 10 E. 40 Street, 10th Floor, New York, NY 10016.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

•: "ADSs" are to American depositary shares, each of which represents Class A ordinary shares;
•: "China" or the "PRC" are to the People's Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan;
•: "Class A ordinary shares" are to our Class A ordinary shares, par value US$0.0001 per share;
•: "Class B ordinary shares" are to our Class B ordinary shares, par value US$0.0001 per share;
•: "CloudMinds," "we," "us," "our company" and "our" are to CloudMinds Inc., our Cayman Islands holding company and its subsidiaries, its consolidated variable interest entity and the subsidiaries of the consolidated variable interest entity;
•: "ordinary shares" are to our ordinary shares, par value US$0.0001 per share, and upon and after the completion of this offering, are to our Class A and Class B ordinary shares, par value US$0.0001 per share;
•: "RMB" and "Renminbi" are to the legal currency of China;
•: "shares" are to our ordinary shares and preference shares;

•: "US$," "U.S. dollars," "$," and "dollars" are to the legal currency of the United States;
•: "VIE" are to Cloudminds (Shenzhen) Holdings Co., Ltd., or CloudMinds Shenzhen; and
•: "WFOE" are to Cloudminds (Shenzhen) Robotics Systems Co., Ltd., or CloudMinds Robotics.

We use U.S. dollars as the reporting currency in our financial statements and in this prospectus. Assets and liabilities denominated in Renminbi are translated into U.S. dollars at the rates of exchange as of the balance sheet date, equity accounts are translated at historical exchange rates, and revenues and expenses are translated using the average rate of exchange in effect during the reporting period. With respect to amounts not recorded in our consolidated financial statements included elsewhere in this prospectus, all translations from Renminbi to U.S. dollars were made at RMB6.7112 to US$1.00, the noon buying rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System on March 29, 2019. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option.

THE OFFERING


Offering price		We currently estimate that the initial public offering price will be between US$ and US$ per ADS.
ADSs offered by us		ADSs (or ADSs if the underwriters exercise their over-allotment option in full).
ADSs outstanding immediately after this offering		ADSs (or ADSs if the underwriters exercise their over-allotment option in full).
Ordinary shares outstanding immediately after this offering		ordinary shares, comprised of Class A ordinary shares and Class B ordinary shares (or ordinary shares if the underwriters exercise their over-allotment option in full, comprised of Class A ordinary shares and Class B ordinary shares). The number of ordinary shares outstanding immediately after this offering assumes the conversion, on a one-for-one basis, of all outstanding preference shares into ordinary shares immediately upon the completion of this offering, and does not include shares issuable upon (i) full vesting and/or exercise of the options and restricted share units granted and outstanding as of the date of this prospectus; and (ii) exercise of the outstanding warrants to purchase our shares.
The ADSs		Each ADS represents Class A ordinary shares, par value US$0.0001 per share.
		The depositary will hold Class A ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time.
		We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement.
		You may surrender your ADSs to the depositary in exchange for Class A ordinary shares. The depositary will charge you fees for any exchange.
		We and the depository may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended.


		To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.
Ordinary shares		Our ordinary shares will be redesignated to Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A ordinary share will be entitled to one vote, and each Class B ordinary share will be entitled to ten votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale of Class B ordinary shares by a holder thereof to any person other than a Class B Holder or a Class B Holder Affiliate, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares. For a description of Class A ordinary shares and Class B ordinary shares, see "Description of Share Capital."
		Upon the completion of this offering, our directors, executive officers and principal shareholders will continue to have substantial control over our company. Our directors, executive officers and principal shareholders will be able to exercise % of the total voting power of our issued and outstanding shares assuming the underwriters do not exercise their over-allotment option.
Over-allotment option		We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of additional ADSs.
Use of proceeds		We expect that we will receive net proceeds of approximately US$ million from this offering, assuming an initial public offering price of US$ per ADS, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
		We intend to use the net proceeds from this offering for (i) research and development of products, services and technologies, (ii) operation infrastructure investment, ecosystem buildup and expansion of production capacities, (iii) sales and marketing, development of sales channels and expanding market shares and (iv) general corporate purposes, working capital and potential strategic investments and acquisitions. See "Use of Proceeds" for more information.


Lock-up		[We, our directors, executive officers, and all of our existing shareholders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus without the prior written consent of the underwriters, subject to certain exceptions.] [Certain holders of Class B ordinary shares upon the completion of this offering agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of one year after the date of this prospectus without the prior written consent of the underwriters, subject to certain exceptions.] See "Shares Eligible for Future Sale" and "Underwriting."
Directed Share Program		At our request, the underwriters have reserved up to 5% of the ADSs being offered by this prospectus for sale, at the initial public offering price to our directors, officers, employees, and other individuals associated with us and members of their families through a directed share program.
Listing		We intend to apply to have ADSs representing our Class A ordinary shares listed on the New York Stock Exchange under the symbol "CMDS." Our Class A ordinary shares will not be listed on any other stock exchange or traded on any automated quotation system.
Payment and settlement		The underwriters expect to deliver the ADSs against payment therefor through the facilities of the Depository Trust Company on , 2019.
Depositary		The Bank of New York Mellon.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated statements of comprehensive loss and cash flow data for the years ended December 31, 2017 and 2018, and summary consolidated balance sheet data as of December 31, 2017 and 2018 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated statements of comprehensive loss and cash flow data for the three months ended March 31, 2018 and 2019, and summary consolidated balance sheet as of March 31, 2019 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial and Operating Data section together with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

The following table presents our summary consolidated statements of comprehensive loss data for the periods indicated.

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands, except for shares and per share data)
Summary Consolidated Statements of Comprehensive Loss:
Revenues from third parties:
Cloud Robot and Services		25			14,658			43			321
Cloud AI Solutions		14,294			72,607			31,997			6,684
Smart Devices		970			32,641			446			5,110
Others		3,747			837			178			234

Total revenues from third parties		19,036			120,743			32,664			12,349

Revenues from related parties		201			282			3			30

Total revenues		19,237			121,025			32,667			12,379

Cost of revenues		(19,055	)		(114,636	)		(32,251	)		(11,161	)

Gross profit		182			6,389			416			1,218

Operating expenses:
Sales and marketing		(8,470	)		(11,455	)		(1,887	)		(4,361	)
General and administrative		(8,410	)		(13,308	)		(2,003	)		(2,902	)
Research and development		(22,669	)		(54,074	)		(8,342	)		(3,680	)

Total operating expenses		(39,549	)		(78,837	)		(12,232	)		(10,943	)

Operating loss		(39,367	)		(72,448	)		(11,816	)		(9,725	)

Foreign exchange (loss)/gain		(637	)		2,730			(1,034	)		60
Change in fair value of financial instruments		(10,423	)		(89,061	)		(16,332	)		(50,451	)
Other income, net		2,372			1,468			195			208
Loss before income tax		(47,744	)		(156,995	)		(28,890	)		(59,860	)
Income tax benefit		—			227			—			—
Net loss		(47,744	)		(156,768	)		(28,890	)		(59,860	)

Net loss attributable to CloudMinds Inc.		(47,744	)		(156,384	)		(28,890	)		(59,266	)
Net loss per share:
Basic and diluted		(0.71	)		(2.33	)		(0.43	)		(0.88	)
Shares used in the net loss per share computation:
Basic and diluted		67,100,001			67,100,001			67,100,001			67,100,001
Foreign currency translation adjustments		1,489			(3,549	)		443			1,458

Comprehensive loss		(46,255	)		(160,317	)		(28,447	)		(58,402	)

Comprehensive loss attributable to CloudMinds Inc.		(46,255	)		(159,933	)		(28,447	)		(57,808	)

The following table presents our summary consolidated balance sheet data as of December 31, 2017 and 2018 and March 31, 2019.

	As of December 31,						As of March 31,

	2017			2018			2019
	(US$ in thousands)
Summary Consolidated Balance Sheet Data:
Cash and cash equivalents		62,018			17,952			50,126
Inventories		33,039			4,427			4,839
Property and equipment, net		5,561			7,475			7,518
Total assets		183,926			97,032			122,958
Total liabilities		186,953			215,960			300,288
Total mezzanine equity		103,544			129,156			129,156
Total shareholders' deficit		(106,571	)		(251,481	)		(309,289	)

The following table presents our summary consolidated cash flow data for the periods indicated.

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands)
Summary Consolidated Cash Flow Data:
Net cash used in operating activities		(36,713	)		(88,839	)		(9,554	)		(8,772	)
Net cash generated from/(used in) investing activities		7,953			(10,847	)		(723	)		(614	)
Net cash generated from financing activities		83,630			52,682			—			41,532
Exchange rate effect on cash, cash equivalents and restricted cash		(707	)		2,934			(1,054	)		59

Net increase/(decrease) in cash, cash equivalents and restricted cash		54,163			(44,070	)		(11,331	)		32,205
Cash, cash equivalents and restricted cash at beginning of the year/period		7,920			62,083			62,083			18,013

Cash, cash equivalents and restricted cash at end of the year/period		62,083			18,013			50,752			50,218

Non-GAAP Financial Measures

We use adjusted net loss, a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net loss represents net loss excluding change in fair value of financial instruments.

We believe that adjusted net loss helps identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we are included in net loss. We believe that adjusted net loss provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management uses in its financial and operational decision making.

Adjusted net loss should not be considered in isolation or construed as an alternative to net loss or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review our historical non-GAAP financial measures to the most directly comparable GAAP measures. Adjusted net loss presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently,

limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

The table below sets forth a reconciliation of our net loss to adjusted net loss for the periods indicated:

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands)
Net loss		(47,744	)		(156,768	)		(28,890	)		(59,860	)
Add:
Change in fair value of financial instruments		10,423			89,061			16,332			50,451

Adjusted net loss		(37,321	)		(67,707	)		(12,558	)		(9,409	)

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

We operate in an emerging and rapidly evolving market, which makes it difficult to evaluate our business and future prospects.

Cloud robotics represents a new and emerging market within the rapidly evolving robotics industry. Therefore, our business and future prospects are difficult to evaluate. We cannot accurately predict the extent to which demand for robots in general, or cloud robots specifically will increase, if at all. As a result, we apply new and flexible business models to adapt to the rapidly evolving robotic market, but we cannot assure you that our business models are effective or can be timely adjusted to address the market change. You should consider the challenges, risks and uncertainties frequently encountered by companies using new and unproven business models in rapidly evolving markets. These challenges include our ability to:

If we fail to successfully address these and other challenges, risks and uncertainties, our business, results of operations and financial condition would be materially harmed.

Our future growth is dependent upon the public's willingness to adopt cloud robot technologies and services.

Demand for cloud robot technologies and services depends to a large extent on the economic, political and social conditions in a given market: the infrastructure supporting the "cloud brain" and "nerve network," and the introduction of new robot controllers and robot bodies. As our business grows, the economic environment and trends will impact our business, prospects and operating results as well.

In addition, the demand for our products and services will be very dependent on the adoption by enterprises and consumers of robots in general and cloud robots in particular. Due to its nascency, the market for cloud robot systems continue to evolve rapidly, characterized by different robot technologies, solutions and infrastructures, increasing competition, evolving government regulation and industry standards and changing customer demands. Any of the factors described above may cause current or potential customers not to purchase our products or use our services. If the market for cloud robot systems does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be adversely affected.

If we fail to successfully develop and commercialize new cloud robot products and services in a timely manner, our operating results may be materially adversely affected.

Cloud robotics is a new and emerging market with rapid technological advances and evolving standards. Our future growth depends on whether we can continue to develop and introduce cloud robot products and services in a timely manner. Our capability to introduce new or enhanced products is in turn affected by a number of factors, including efficient product manufacturing logistics, reliable distribution channels and, more importantly, our research and development capabilities that bring cutting-edge technologies to the market.

If we are unable to commercialize new products and services, our competitors may increase their market share, which could adversely impact our operating results. In addition, the research and development of new products and services can be complex and costly. The complexity could create delays or materially impact the benefits we expect to achieve at all. In addition, our business may be adversely affected if there is a delay in market acceptance of new products and services or we do not timely optimize complementary product lines and services.

We cannot guarantee that our current or future monetization strategies will be successfully implemented or will generate sustainable revenue, profit or positive operating cash flows.

Our business model is relatively nascent and still evolving. We have historically primarily focused on developing our end-to-end cloud robot system, which consists of a "cloud brain," a "nerve network," robot controllers and robot bodies. However, revenues from cloud AI solutions and smart devices contributed to 79.3%, 87.0% and 95.3% of our total revenues for the years ended December 31, 2017 and 2018 and for the three months ended March 31, 2019, respectively. As we continue to build our end-to-end cloud robot system, we plan to implement multiple monetization strategies, some of which are still at the inception or trial stage and cannot be guaranteed to be successfully implemented. If our current or future monetization strategies do not succeed as we anticipate, we may not be able to maintain or increase our revenue, profits or operating cash flows. Furthermore, we may not be able to identify suitable business partners for our new monetization initiatives. We plan to continue to introduce new products and services to further diversify our revenue streams, including those with which we have little or no prior development or operating experience. If these new products and services fail to engage users or business partners, we may fail to generate sufficient revenue and profit to justify our investments, and our business and operating results may suffer as a result.

We may experience significant delays in the design, manufacture, launch and marketing of new models of our robots due to supply chain problems that could harm our business and prospects.

We rely on suppliers for certain materials, components and robot bodies and parts, and outsource our manufacturing and logistics to third-party or related service providers. A continuous and stable supply of these materials, components and robot bodies and parts that meet our standards is crucial to the timely rollout of our products and services. The inability of suppliers to deliver necessary production materials or equipment could disrupt our production plan and make it more difficult for us to implement our business strategy. The unavailability or reduced availability of materials for our production or the inability of manufacturing and logistics service providers to perform those services on a timely or cost-effective basis may cause significant delays in the design, manufacture, launch and marketing of new models of our robots, which could materially and adversely affect our business and financial results.

If our products are found to have significant defects, our reputation could be damaged, we could incur significant expenses to remediate such defects and we could lose market share.

Our robots, controllers, smart joints and other devices are highly complex. Product defects can occur throughout the product development, design and manufacturing processes or as a result of our

use of third parties' components, raw materials, and manufacturing service. Not all of our suppliers provide back-to-back warranties for the components or raw materials they supply. Although we are protected under back-to-back warranties by the majority of our suppliers, we are not certain that the terms of these warranties can sufficiently shield us from potential liabilities when they arise. We could face risks if our products are found to have defects or cause personal injury or property damage. These risks may increase as we further develop and commercialize our cloud robot system and introduce a wider range of products and services. Our cloud robot system also may experience quality or reliability problems. The highly sophisticated "cloud brain" and "nerve network" we have developed may contain bugs and other defects that interfere with their intended operation. Any defect may cause reduced sales and revenue, damage to our reputation, repair or remediation costs, delays in the release of new products or versions, or legal liability. While we maintain a reserve for product warranty costs based on certain estimates and our knowledge of current events and actions, our actual warranty costs may exceed our reserve, resulting in current period expenses and a need to increase our reserve for warranty costs. Our insurance providers may be unable or unwilling to pay a claim, and losses not covered by insurance could be large, which could negatively impact our financial condition.

We are also subject to potential recalls of our products to repair manufacturing defects or in the event of a failure to comply with customers' order specifications or applicable regulatory standards, and may have to conduct recalls of our products due to defects in components or parts manufactured by suppliers from which we purchase and incorporate into our products. We may also be required to remedy or retrofit hardware products in the event that an order is not built to a customer's specifications or where a design error has been made. The financial cost and impact to our reputation of significant retrofit and remediation events or product recalls could have a material adverse effect on our business and operating results.

Developments in alternative robot technologies, improvements in the existing robot control mechanism or in new cloud robot technologies may impact our market share, impede the development of cloud robotics or make our technologies obsolete, thereby materially and adversely affecting the demand for our products and services.

Developments in alternative robot technologies, improvements in the existing robot control mechanism or in new cloud robot technologies may materially and adversely affect our business and prospects in ways we do not currently anticipate. Other types of robot technologies, such as real-time on-board processing, may become the dominant form of robot control mechanism, which could undermine our competitive position or make our robots obsolete, either generally or for particular types of services. Even if cloud robotics becomes the dominant robot systems, our future success will depend upon our ability to develop and introduce a variety of new capabilities and enhancements to our cloud robot system, as well as introduce a variety of new product and service offerings, to address the changing needs of the markets in which we offer our robots. Delays in introducing new products, services or enhancements, failure to choose correctly among technical alternatives or failure to offer innovative products, services or enhancements at competitive prices may cause existing and potential customers to forego purchases of our products and services and purchase those of our competitors'. Moreover, the development of new products has required, and will continue to require, that we expend significant financial and management resources. If we are unable to devote adequate resources to develop new technologies, products or services or cannot do so on a timely basis, we could lose market share, and our revenue and profits could decline.

We may face operational and reputational risks relating to our business partnerships, strategic alliances and use of our products by third parties.

We have entered into and may in the future enter into cooperation and alliances with various third parties to further our business purpose from time to time. Apart from these alliances, our products may also be used by certain third-parties who are not known to us. Such third parties may acquire our products indirectly through suppliers or in the open market. These alliances and third party use could

subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party, increased expenses in establishing new strategic alliances, as well as reputational risks, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the identity and actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or damage to their reputation from events relating to their business, we may also suffer negative publicity or damage to our reputation by virtue of our association with any such third party. For instance, our products have been and in the future may be indirectly sold to law enforcement and other government agencies by such third parties. In addition, apart from in-house robot bodies, our ecosystem embraces robot bodies supplied by third-party robot manufacturers. Typically, we make modification to the robot bodies so that they become compatible with our cloud robot system and controllable through the "cloud brain." If we encounter difficulties in finding the third-party robot manufacturers and developers creating robot bodies compatible with our cloud robot system, the expansion and monetization of our ecosystem may be delayed.

We received substantially all of our revenue in 2018 from a limited number of customers and we rely on a limited number of suppliers for certain materials or services.

Six of our customers accounted for approximately 26%, 18%, 16%, 15%, 11% and 11%, respectively, of our total revenues in 2018. We expect a small number of customers will continue to account for a significant portion of our revenue in the foreseeable future. If one of our key customers stops purchasing from us, materially reduces its demand for our products and services, or delays its orders for our products and services, this could have a material impact on our operations and financial results. We may experience a reduction in revenue, which could harm our results of operations and financial condition.

We rely on suppliers for certain materials, components and equipment that we use in production and other aspects of our business, as well as for services such as manufacturing and logistics. Continuous and stable supply of these components and services that meet our standards is critical to our operations and production. For certain materials or services, we may rely on a single or a limited number of suppliers, or upon suppliers in a single location. Four suppliers accounted for more than 10% of our cost of revenues during the years ended December 31, 2018. We may experience operational difficulties with our manufacturers, including reductions in the availability of production capacity, failures to comply with product specifications, insufficient quality control, failures to meet production deadlines, increases in manufacturing costs and longer lead time required. Our manufacturers may experience disruptions in their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters, component or material shortages, cost increases or other similar problems. In addition, we may not be able to renew contracts with our contract manufacturers or identify manufacturers who are capable of producing new products we target to launch in the future. Shortages or delays or loss of any of these suppliers and manufacturers could have a material adverse effect on the Company's business.

We make significant investments in research and development that may not achieve expected returns.

Research and development is a core part of our business, thus we will continue to make significant investments in research, development, and commercialization for existing products, services and technologies. This includes the "cloud brain," the "nerve network," robot controllers, and other related product and service offerings. Investments in new technology involve risks. Commercial success depends on many factors, including the extent of technological innovation, infrastructure support, and customer adoption. If customers do not perceive our product and service offerings as providing significant new functionality or other value. We may not achieve material revenue growth from new product, service, and technologies. Our competitors may surpass us in technological innovation, hindering our ability to commercialize new and competitive products that meet the needs and demands of the market in a

timely manner or at all, which consequently may adversely impact our operating results as well as our reputation.

We have incurred losses in the past, and may continue to do so in the future.

We have incurred net losses since our inception, including net losses of US$47.7 million and US$156.8 million for the years ended December 31, 2017 and 2018 and US$28.9 million and US$59.9 million, respectively, for the three months ended March 31, 2018 and March 31, 2019. These losses reflect the substantial investments we made to grow our business. We cannot assure you that we will be able to generate net profits in the future.

We expect to continue to invest in the development and expansion of our business in areas including:

As a result of these increased expenses, we will have to generate and sustain increased revenue to be profitable in future periods. Further, in future periods, our revenue growth rate could decline, and we may not be able to generate sufficient revenue to offset higher costs and achieve or sustain profitability. If we fail to achieve, sustain or increase profitability, our business and operating results could be adversely affected.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.

Our patents, trademarks, trade secrets, copyrights, or other intellectual property rights are important assets. However, our existing and future intellectual property rights may not be sufficient to protect our products, technologies or designs and may not prevent others from developing competing products, technologies or designs. We may not have sufficient intellectual property rights in all countries and regions to prevent unauthorized third-party from misappropriating our proprietary technologies and the scope of our intellectual property might be more limited in certain countries and regions. Furthermore, there is always the possibility, despite our efforts, that the scope of the protection gained will be insufficient or that an issued patent may be deemed invalid or unenforceable.

In addition, it is often difficult to register, maintain and enforce intellectual property rights in China. Chinese statutes and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, intellectual property ownership and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect or enforce our intellectual property rights in China.

Litigation may be necessary to enforce our intellectual property rights. Initiating infringement proceedings against third parties can be expensive and time-consuming, and divert management's attention from other business concerns. In addition, we may not prevail in litigations to enforce our intellectual property rights against unauthorized use.

We are, and may in the future be, subject to intellectual property claims, which are costly to defend, could result in significant damage awards, and could limit our ability to use certain technologies in the future.

As we adopt new technologies and roll out new products and services, we face the risk of being subject to intellectual property infringement claims that may arise from our use of new technologies and provision of new products and services. Any intellectual property claims, with or without merit,

could be time-consuming and expensive to defend, and could divert our management's attention away from the execution of our business plan. Moreover, any settlement or adverse judgment resulting from the claim could require us to pay substantial amounts or obtain a license to continue to use the intellectual property that is the subject of the claim, or otherwise restrict or prohibit our use of the technology. There can be no assurance that we would be able to obtain a license from the third party asserting the claim on commercially reasonable terms, if at all, or that we would be able to develop alternative technology on a timely basis, if at all, or that we would be able to obtain a license to use a suitable alternative technology to permit us to continue offering, and our customers to continue using, our affected product. For example, our trademark application for our company logo is being contested before the United States Patent and Trademark Office. We may continue to be involved in similar disputes and may have to appear in front of administrative bodies to defend against patent assertions against our products by companies, some of whom may attempt to gain competitive advantage or leverage in licensing negotiations.

Revenues from Cloud AI solutions and smart devices account for a significant portion of our revenue, and any inability to further diversify our revenue base or any decrease in such sales may materially and adversely affect our business.

A significant portion of our revenue was derived from cloud AI solutions and smart devices. In 2017 and 2018 and for the three months ended March 31, 2019, revenues from those contributed to 79.3%, 87.0% and 95.3% of our total revenue, respectively. Though we expect this revenue concentration in those sales to decline over time when we ramp up the monetization of our cloud robot system, we may not be successful in our monetization efforts and may continue to heavily rely on cloud AI solutions and smart devices for a significant portion of our revenue. A decrease in the revenues from those products and services, an increase in the material and manufacturing costs, changing user preferences or material quality issues concerning those products and services may materially and adversely affect our business and operating results in the near future. Moreover, the delivery timing of purchases related to smart city projects may cause revenues from cloud AI solutions to fluctuate between periods.

Laws and regulations governing the robotics industry in jurisdictions where we operate are still developing and constantly evolving, and public policies in this area are subject to changes.

Laws and regulations governing the robotics industry in jurisdictions where we operate are still developing and constantly evolving, as industrial and commercial applications of robotics become increasingly prevalent. Examples of such laws and regulations include those related to consumer protection and product liability, autonomous vehicles and traffic, data protection and cyber security, medical devices, commercial contracting, and safety. For example, the European Parliament passed resolution on February 16, 2017 with recommendations to the Commission on Civil Law Rules on Robotics, calling for legislation that will ensure societal stability and the safety of humans. If we fail to comply with existing and future applicable laws, regulations, or if major shifts of governmental policies occur in any jurisdiction that we have operations in, we may be forced to discontinue, partially or entirely, our business in the applicable jurisdictions or even be subject to penalties or sanctions, or our business, financial condition and results of operations would be materially and adversely affected.

We collect, store and use certain user data and information, which subjects us to complex and evolving laws and regulation regarding privacy and data protection.

We collect, store, process and use our customers' identity information and other biometric and behavioral data, and we purchase certain data from third parties as well. While we take measures intended to protect the security, integrity and confidentiality of the personal information and other sensitive information we collect, store or transmit, we cannot guarantee that inadvertent or unauthorized use or disclosure will not occur, or that third parties will not gain unauthorized access to

this information. The loss, misuse or compromise of such information may result in costly investigations, remediation efforts and notification to affected users. If such content is accessed by unauthorized third parties or deleted inadvertently by us or third parties, our brand and reputation and our sales could be adversely affected. Cyberattacks could also adversely affect our operating results, consume internal resources, and result in litigation or potential liability for us and otherwise harm our business.

Many jurisdictions, including China and the United States, continue to consider the need for greater regulation or reform to the existing regulatory framework. In the United States, all 50 states have now passed laws to regulate the actions that a business must take in the event of a data breach, such as prompt disclosure and notification to affected users and regulatory authorities. In addition to the data breach notification laws, some states have also enacted statutes and rules requiring businesses to reasonably protect certain types of personal information they hold or to otherwise comply with certain specified data security requirements for personal information. Additionally, the U.S. federal and state governments will likely continue to consider the need for greater regulation aimed at restricting certain uses of personal data for targeted advertising. In the European Union, or EU, the General Data Protection Regulation, or GDPR, which came into effect on May 25, 2018, increased our burden of regulatory compliance and requires us to change certain of our privacy and data security practices in order to achieve compliance. The GDPR implements more stringent operational requirements for processors and controllers of personal data, including, for example, requiring expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements, and higher standards for data controllers to demonstrate that they have obtained either valid consent or have another legal basis in place to justify their data processing activities. The GDPR further provides that EU member states may make their own additional laws and regulations in relation to certain data processing activities, which could further limit our ability to use and share personal data and could require localized changes to our operating model. Under the GDPR, fines of up to €20 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, may be assessed for non-compliance, which significantly increases our potential financial exposure for non-compliance. Since the GDPR only came into effect recently, the potential risks associated with non-compliance therewith are uniquely difficult to predict. Finally, in China, the PRC Cybersecurity Law, which became effective in June 2017, leaves substantial uncertainty as to the circumstances and standard under which the law would apply and violations would be found. Outside of the United States and the EU, many jurisdictions have adopted or are adopting new data privacy and data protection laws that may impose further onerous compliance requirements, such as data localization, which prohibits companies from storing data relating to resident individuals in data centers outside the jurisdiction. The proliferation of such laws within jurisdictions and countries in which we operate current or may operate in the future may result in conflicting and contradictory requirements.

In order for us to maintain or become compliant with applicable laws as they come into effect, it may require substantial expenditures on resources to continually evaluate our policies and processes and adapt to new requirements that are or become applicable to us. Complying with any additional or new regulatory requirements on a jurisdiction-by-jurisdiction basis would impose significant burdens and costs on our operations or may require us to alter our business practices. While we strive to protect our users' privacy and data security and to comply with material data protection laws and regulations applicable to us, it is possible that our practices are, and will continue to be, inconsistent with certain regulatory requirements. Our international business expansion could be adversely affected if these laws and regulations are interpreted or implemented in a manner that is inconsistent with our current business practices or that requires changes to these practices. If these laws and regulations materially limit our ability to collect and use our users' data, our ability to continue our current operations without modification, develop new services or features of the products and expand our user base will be impaired. Any failure or perceived failure by us to comply with applicable data privacy laws and

regulations, including in relation to the collection of necessary end-user consents and providing end-users with sufficient information with respect to our use of their personal data may result in fines and penalties imposed by regulators, governmental enforcement actions (including enforcement orders requiring us to cease collecting or processing data in a certain way), litigation and/or adverse publicity. Proceedings against us—regulatory, civil or otherwise—could force us to spend money and devote resources in the defense or settlement of, and remediation related to, such proceedings.

Privacy concerns relating to our technology could damage our reputation and deter current and potential users or customers from using our products and services. We could be harmed by data loss or other security breaches.

Concerns about our practices with regard to the collection, use, disclosure, or safekeeping of personal information or other privacy related matters, even if unfounded, could damage our reputation and adversely affect our operating results. Our products and services involve the storage and transmission of users' and customers' proprietary information, and theft and security breaches expose us to a risk of loss of this information, improper use and disclosure of such information, litigation, and potential liability. Any systems failure or compromise of our security that results in the release of our users' data, or in our or our users' inability to access such data, could seriously damage our reputation and brand and, therefore, our business, and impair our ability to attract and retain users. We expect to continue to expend significant resources to maintain security protections that shield against theft and security breaches.

We may experience cyberattacks of varying degrees in the future. Our security measures may also be breached due to employee error, malfeasance, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, their products, or otherwise. Such breach or unauthorized access, increased government surveillance, or attempts by outside parties to fraudulently induce employees, users, or customers to disclose sensitive information in order to gain access to our data or our users' or customers' data could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our products and services that could potentially have an adverse effect on our business. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, become more sophisticated, and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Additionally, cyberattacks could also compromise trade secrets and other sensitive information and result in such information being disclosed to others and becoming less valuable, which could negatively affect our business. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose users and customers.

Interruption, failure of our own "nerve network," or network and communications infrastructure of third-party vendors, could impair our ability to provide products and services, which could damage our reputation and harm our results of operations.

Our ability to provide our cloud robot products and services depends on the continuing operation of our secure global intranet, which is built upon the existing mobile network infrastructures of multiple telecoms operators in different jurisdictions. Any damage to, or failure of, our "nerve network" or the underlying mobile network could interrupt our services and the operation of our products, and we may not have any access to comparable alternative networks or services in the event of disruptions. Service interruptions could reduce our revenue and profit and damage our brand if our systems are perceived to be unreliable. Our network systems may be subject to damage or interruption as a result of regulatory constraints and policy shifts, terrorist attacks, wars, earthquakes, floods, fires, power loss, telecommunications failures, computer viruses, and similar events. In addition, if third-party vendors experience unforeseen difficulties in building and operating technical infrastructure that is crucial for our envisioned cloud robots, such as the 5G mobile intranet network, or if they for a variety of reasons limit or deny our access to and usage of their network infrastructure, our results of operations could also be adversely affected.

We might experience significant coding or configuration errors in our system, products and services.

Despite testing prior to the release and throughout the lifecycle of a product or service, our system, products and services sometimes contain coding errors that can impact their function, performance and security, and result in other negative consequences. The detection and correction of any errors in released products and services can be time consuming and costly. Errors in our system, products and services could affect their ability to properly function or operate with other products and services, could delay the development or release of new products or services or new versions of products or services, could create security vulnerabilities in our system, products and services, and could adversely affect market acceptance of our products or services. If we experience errors or delays in releasing our products and services or new versions thereof, our sales could be affected and revenues could decline. Enterprise customers rely on our system, products and services to run their operations and errors in our system, products and services could expose us to product liability, performance and warranty claims as well as significant harm to our brand and reputation, which could impact our future sales.

If we do not successfully maintain the quality of data, including that gathered and gleaned by ourselves and that purchased from third parties, our cloud robot system and service may be compromised, materially and adversely affecting our business and operating results.

Our AI algorithms are based on analysis of data we gather or purchase from third parties. Size and quality of data is critical to deliver value to customer and our research and development efforts given the continuous self-learning with machine learning. If either is compromised, our cloud robot may not perform effectively and our AI development could be compromised. As a result, our services may be disrupted. Our results of operations and financial condition may be materially and adversely affected.

Any unauthorized control or manipulation of our system or robots or theft or vandalism of our robots could degrade our ability to conduct our business, compromise the integrity of our products, result in significant data losses and the theft of our intellectual property, damage our reputation or, expose us to liability to third parties, among other consequences.

Our cloud robot system contains complex information technology that connects the robot body and controllers through the secure intranet to the "cloud brain". We have designed, implemented and tested security measures intended to prevent unauthorized access to our system and robots. For example, our highly secure global intranet connecting robots to our AI cloud is built upon the existing mobile network infrastructures of multiple telecoms operators, and is isolated from the public internet. We also apply blockchain technologies to authenticate the entrance of devices to the intranet and further boost the security of our network. However, Blockchain technology is still in its early stage of development, and there is no guarantee that it will be as effective as we expected it to be. Hackers may attempt in the future, to gain unauthorized access to modify, alter and use such networks, robots and systems to gain control of, or to change, the system or individuals robot's functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the system. There can be no assurance that vulnerabilities will not be identified in the future, or that our remediation efforts are or will be successful. Any unauthorized access to or control of our system or robot or any loss of data could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to our system, robots and data, as well as other factors that may result in the perception that our system, robots or data are capable of being "hacked," could negatively affect our brand and harm our business, prospects, financial condition and operating results. Moreover, our deployed cloud robots may invite inappropriate handling, theft, vandalism and other damages, the financial cost and impact of which could have a material adverse effect on our business and operating results.

We rely on access to third-party intellectual property, which may not be available to us on commercially reasonable terms or at all.

Certain of products and services we offer incorporate third-party intellectual property, which requires licenses from those third parties. Based on past experience and industry practice, we believe such licenses generally can be obtained on reasonable terms. There is, however, no assurance that the necessary licenses can be obtained on acceptable terms or at all. Failure to obtain the right to use third-party intellectual property, or to use such intellectual property on commercially reasonable terms, could preclude us from selling certain products or services, or otherwise have a material adverse impact on our financial condition and operating results.

We face competition from other players in the robotics and its adjacent industry, including diversified technology providers, as well as competition from providers offering alternative products, which could negatively impact our results of operations and cause our market share to decline.

A number of companies have developed or are developing robots that will compete with our product and service offerings. Many current and potential competitors have substantially greater financial, marketing, research and manufacturing resources than we possess, and there can be no assurance that our current and future competitors will not be more successful than us. The global market for robots is highly competitive, rapidly evolving and subject to changing technologies, shifting customer needs and expectations and the likely increased introduction of new products. Our ability to remain competitive will depend to a great extent upon our ongoing performance in the areas of product development and customer support.

In the event the robotics market expands further, we expect that competition will intensify as additional competitors enter the market and current competitors expand their product lines. Existing competitors or new entrants may price aggressively, have better performance or functionality, or incorporate technological advances that we have not yet developed or implemented. Increased competitive pressure could result in a loss of sales or market share or cause us to lower prices for our products, any of which would harm our business and operating results. We cannot assure you that our products will continue to compete favorably or that we will be successful if the competitive landscape intensified. Our failure to compete successfully could cause our revenue and market share to decline, which would negatively impact our results of operations and financial condition.

Demand for our products is variable and hard to predict. Our operating results could be materially harmed if we are unable to accurately forecast consumer demand for our products or manage our inventory.

Our products and services are used across different industries market segments, and demand for our product and service offerings may vary. We must forecast production and inventory needs in advance with our suppliers and manufacturer, and our ability to do so accurately could be affected by many factors, including an increase or decrease in customer demand for our products or those of our competitors, the success of new products in the market, sales promotions by us or our competitors, and unanticipated shifts in general economic conditions or consumer confidence levels. A material demand shortfall as compared with our forecasts could trigger an inventory write-down or write-off or sell the excess inventory at discounted prices. This would have a negative impact on our gross margin and could create reputation risk. In addition, if we were to have excess inventory, we may have reduced working capital, which could adversely affect our ability to invest in other important areas of our business such as marketing and product development. If demand exceeds our forecast and we do not have sufficient inventory to meet this demand, we would have to rapidly increase production and suffer higher supply and manufacturing costs that would lower our gross margin. Any of these scenarios could adversely impact our operating results and financial condition.

Errors, misconduct and failure to function by our employees or service providers could harm our business and reputation.

We are exposed to many types of operational risks, including the risk of misconduct and errors by our employees and service providers. We depend on our employees and service providers to operate our system, manufacture our products, and provide our services. We could be materially adversely affected by errors, misconduct and failure to function by our employees or service providers, whether as a result of human error, purposeful sabotage or fraudulent manipulation of our operations or systems. For example, in addition to the application of AI, our cloud keeps human supervision in the loop to augment training efficiency, and the machine learning process as well as serve as an additional layer of security. However, this human-in-the-loop element exposes us to risks related to human error. It is not always possible to identify and deter misconduct or errors by employees or service providers, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses. Furthermore, we may be subject to civil or criminal liability as a result of the misconduct of our employees or services providers.

Contractual disputes with customers, suppliers and other business partners could have a material adverse impact on our reputation, results of operations and financial condition.

We enter into business contracts with third parties, such as customers, suppliers and our other business partners in the ordinary course of our business, may from time to time become, a party to contractual disputes with them. Any contractual dispute in this nature could cause our cessation of business relationship with these counterparties or material disruption or failure in our services. Any litigation or allegation arising out of these disputes, with or without merit, or any perceived unfair, unethical, fraudulent or inappropriate business practice engaged by any third-party business partner or us could harm our reputation and generate negative publicity, distract our management from day-to-day operations and cause us to incur significant expenses in dispute resolutions. Moreover, we may not be able to promptly find alternative ways to procure contracted materials or provide services in a timely, reliable and cost-effective manner, or at all. As a result of any service disruptions associated with these contractual disputes, our customer satisfaction, reputation, operations and financial performance may be materially and adversely affected.

If we were to lose the services of key personnel, we may not be able to execute our business strategy.

Our future success depends in a large part upon the continued service of key members of our senior management team. In particular, William Xiao-Qing Huang, our founder and chairman, is critical to the overall management of our business and the development of our technology. They also play a key role in maintaining our culture and setting our strategic direction. The loss of key personnel could seriously harm our business. The loss of any member of our senior management team might significantly delay or prevent the achievement of our business objectives and could materially harm our business and customer relationships. In addition, because of the highly technical nature of our products, any significant loss of our existing and future engineering personnel could have a material adverse effect on our business and operating results. In addition, if any of our senior management or key personnel joins a competitor or forms a competing company, we may be disadvantaged by risks associated with potential loss of knowhow, trade secrets or business partners.

We may need additional capital, and financing may not be available on terms acceptable to us, or at all.

We believe that our current cash and cash equivalents, anticipated cash raised prior to this offering, and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the next 12 months from the date of this prospectus. We may, however, require additional cash resources due to changed business conditions or other future developments. If these resources are insufficient to satisfy our cash requirements, we may seek to obtain a credit facility or sell additional equity or debt securities. The sale of additional equity securities could result in dilution of our existing

shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

We have a limited operating history, which makes it difficult to evaluate our future prospects.

We were established in 2015. As we only have a limited history of operating our business at its current scale, it is difficult to evaluate our future prospects, including our ability to plan for our future growth. Our limited operating experience, uncertainty concerning how the cloud robotics industry may develop, and other economic factors beyond our control, may reduce our ability to accurately forecast demand for our products and accordingly, our quarterly or annual revenues. As such, any predictions about our future revenues and expenses may not be as accurate as they would be if we had a longer operating history or operated in a more developed and predictable market.

We have not recognized any share-based compensation expense to date but will recognize a substantial amount of share-based compensation expense upon the completion of this offering, which will have a significant impact on our results of operations.

On March 28, 2016, our shareholders and board of directors approved the 2016 Share Plan, which we refer to as the 2016 Plan in this prospectus, to offer persons selected by our company an opportunity to acquire a proprietary interest in the success of our company, or to increase such interest by acquiring shares. The maximum aggregate number of ordinary shares that may be issued under the 2016 Plan is 56,507,287 ordinary shares. As of the date of this prospectus, awards to purchase or receive upon request 38,252,246 ordinary shares have been granted and are outstanding, excluding awards that were forfeited after the relevant grant dates. We are required to account for share options and restricted share units granted to our employees, directors and consultants in accordance with Codification of Accounting Standards, or ASC 718, "Compensation—Stock Compensation" and ASC 505-50, "Equity, Equity-Based Payments to Non-Employees." We are required to classify share options granted to our employees, directors and consultants as equity awards and recognize share-based compensation expense based on the grant-date fair value of such share options and restricted share units, with the share-based compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. Because the vesting of the share options and restricted share units granted by us is also conditional upon completion of this offering, we have not recognized share-based compensation expense relating to these share options and restricted share units granted by us yet.

As a result, upon the completion of this offering, we expect to begin to recognize a substantial amount of share-based compensation expense, and we expect the recognition of such share-based compensation expenses to have a significant impact on our results of operations in the fiscal quarter in which this offering is completed. As of March 31, 2019, the total unrecognized compensation costs associated with share options and restricted share units granted to employees and consultants amounted to US$15.5 million. As the vesting of the share options and restricted share units is subject to the completion of this offering, this constitutes a performance condition that is not considered probable until the completion of this offering. Moreover, if additional share options or other equity incentives are granted to our employees, directors or consultants in the future, we will incur additional share-based compensation expense and our results of operations will be further adversely affected. For further information on our equity incentive plans and information on our recognition of related expenses, please see "Management—2016 Share Plan."

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

Prior to this offering, we have been a private company with limited accounting and financial reporting personnel and other resources with which we address our internal control over financial reporting. In connection with the audits of our consolidated financial statements as of and for the years ended December 31, 2017 and 2018, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, or PCAOB, a "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified is the Company's lack of sufficient accounting and financial reporting personnel with requisite knowledge and experience in application of U.S. GAAP and SEC rules. We are in the process of implementing a number of measures to address the material weakness. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting." However, we cannot assure you that these measures may fully address the material weakness and deficiencies in our internal control over financial reporting or that we may conclude that they have been fully remediated.

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

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. If we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, it could result in material misstatements in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our businesses, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

Our international operations include the United States and Japan, among others, and we intend to expand our operations into additional regions. Compliance with foreign laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions. These laws and regulations include data privacy requirements, labor relations laws, tax laws, foreign currency-related regulations, anti-competition regulations, prohibitions on payments to governmental officials, market access, import, export and general trade regulations, including but not limited to economic sanctions and embargos. Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business, including the loss of trade privileges. Any such violations could result in prohibitions on our ability to offer our products and services in one or more countries, could delay or prevent potential acquisitions and could also materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Compliance with these laws requires a significant amount of management attention and effort, which may divert management's attention from running our business operations and could harm our ability to grow our business, or may increase our expenses as we engage specialized or other additional resources to assist us with our compliance efforts. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties. We monitor our operations and investigate allegations of improprieties relating to transactions and the way in which such transactions are recorded. Where circumstances warrant, we provide information and report our findings to government authorities, but no assurance can be given that action will not be taken by such authorities.

We generated substantially all of our revenues from mainland China and Hong Kong in 2018. A majority of our revenues and expenses are denominated in Renminbi. We do not believe that we currently have any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. However, as our business and operation expand in international markets, we could be exposed to increased foreign exchange risks for other currencies.

Our products have been exported overseas. In the event that any of the countries and regions to which we exported or will export imposes trade sanctions on China or enforces import restriction or tariffs in relation to our products, our business and operations may be adversely affected. Furthermore, we use certain overseas suppliers to obtain components and raw materials for the production of our products, such as processors. In the event that the Chinese government imposes import tariffs, trade restrictions or other trade barriers affecting the importation of such components or raw materials, we may not be able to obtain a steady supply of necessary components or raw materials at competitive prices, and our business and operations may be materially and adversely affected.

In particular, on March 8, 2018, the President of the United States exercised his authority to issue the imposition of significant tariffs on imports of steel and aluminum from a number of countries, including China. Following that, the United States and China initiated multiple rounds of tariff increases levied on hundreds of billions' worth of exported merchandise from the other country. On May 9, 2019, The U.S. government announced to increase tariffs to 25%. These tariffs are in addition to two earlier rounds of tariffs implemented against Chinese products on June 6, 2018 and August 16, 2018 that amount to tariffs on US$50 billion of Chinese products imported into the U.S. As of the date of this prospectus, U.S. has already applied 25% tariffs on around US$200 billion worth of Chinese products. In response, China has imposed, and has proposed to impose additional tariffs on a number of the U.S. goods, on a much smaller scale, in the current time.

The tax laws of the jurisdictions in which we operate may adversely affect our business and our financial results and may reduce the value of our shareholders' investment in our ordinary shares or ADSs.

The tax laws applicable to our business activities are subject to change and uncertain interpretation. Our tax position could be adversely impacted by changes in tax rates, tax laws, tax practice, tax treaties or tax regulations or changes in the interpretation thereof by the tax authorities in jurisdictions in which we do business.

Moreover, we conduct operations through our subsidiaries in various tax jurisdictions pursuant to transfer pricing arrangements between us, our parent company and our subsidiaries. While we believe that we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on applicable tax authorities. If tax authorities in any jurisdiction in which we operate were to successfully challenge our transfer prices as not reflecting arms' length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could potentially result in a higher tax liability to us. Furthermore, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions. Such circumstances could adversely affect our financial condition, results of operations and cash flows.

Discontinuation or reduction of any of the government incentives available to us in the PRC could adversely affect our financial condition and results of operations.

Local PRC governmental authorities have implemented various incentive policies to reward and support the development of business. For example, we received certain financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. In addition, certain of our subsidiaries or consolidated entities enjoyed preferential enterprise income tax rates either due to high and new technology enterprise status or operation in certain districts. Government incentives, as well as preferential tax treatment alike, may be subject to review and discretion of the relevant local governmental authorities and may be adjusted or revoked. The discontinuation or reduction of any government incentives currently available to us will cause our income to vary, which could have an adverse effect on our financial condition and results of operations.

We have invested in and acquired, and may continue to invest in and acquire, assets, technologies and businesses, but such efforts may fail.

We have invested in and acquired, and may continue to invest in and acquire, assets, technologies and businesses that are complementary to our business in the future. For example, in 2018, we acquired a controlling stake in INNFOS (Beijing) Technology Co. Acquired businesses or assets may not yield the results we expect. In addition, investments and acquisitions involve uncertainties and risks, including:

Any failure to address these risks successfully may have a material and adverse effect on our financial condition and results of operations. Investments and acquisitions may require a significant amount of capital, which would decrease the amount of cash available for working capital or capital expenditures. In addition, if we use our equity securities to pay for investments and acquisitions, we may dilute the value of our ADSs and the underlying Class A ordinary shares. If we borrow funds to finance investments and acquisitions, such debt instruments may contain restrictive covenants that could, among other things, restrict us from distributing dividends. Moreover, acquisitions may also generate significant amortization expenses related to intangible assets. We may also incur impairment charges to earnings for investments and acquired businesses and assets.

Adverse economic or market conditions or unfavorable media coverage may harm our business.

Adverse economic conditions, including inflation, recession, or other changes in economic conditions, may cause lower or delayed spending on advanced technologies such robots which could adversely impact our revenue. If demand for our robots and other devices declines, our revenue will be adversely affected. Challenging economic conditions also may impair the ability of our customers to pay for products and services they have purchased. As a result, allowances for doubtful accounts and write-offs of accounts receivable may increase.

As our operation involves the rapidly evolving technological frontiers such as AI and cloud computing, we may receive a high degree of media coverage globally. Unfavorable publicity regarding us, for example, our robot products, AI capabilities, privacy practices, product changes, product quality, litigation, or regulatory activity, or regarding the actions of our partners or our users, could seriously harm our reputation. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of our customers and partners and result in decreased revenue or slower revenue growth rates, which could seriously harm our business.

We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and noncompliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.

We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which we conduct activities, including the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws and regulations. Those laws generally prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a "foreign official" for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation.

We have direct or indirect interactions with officials and employees of government agencies and stateowned affiliated entities in the ordinary course of business. We have also entered into business partnerships with government agencies and state-owned or affiliated entities. These interactions subject us to an increased level of compliance-related concerns. We will adopt and implement policies and

procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in our shares.

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

We are a Cayman Islands company and our PRC subsidiaries are currently considered to be foreign-invested enterprises. In March 2015, we incorporated CloudMinds Inc. in the Cayman Islands as our offshore holding company to facilitate financing and offshore listing. In May 2015, we established Cloudminds (Hong Kong) Limited, or CloudMinds HK, in Hong Kong, which subsequently became our wholly-owned subsidiary. In September 2015, we established CloudMinds Robotics, our WFOE, wholly owned by CloudMinds HK. We subsequently obtained control over CloudMinds Shenzhen through our WFOE by entering into a series of contractual arrangements with CloudMinds Shenzhen, our VIE, and its shareholders, which (i) allow us to exercise effective control over our VIE, (ii) enable or obligate us to absorb substantially all of the profits or all the expected losses from our VIE that could be significant to our VIE, and (iii) give us an exclusive option to purchase or designate any third party to purchase all or part of the equity interests in and assets of our VIE when and to the extent permitted by PRC law. As a result of these contractual arrangements, we have control over and are the primary beneficiary of our VIE and hence consolidate its financial results under U.S. GAAP. See "Corporate History and Structure" for further details.

Our PRC legal counsel, Jingtian & Gongcheng, based on its understanding of the relevant laws and regulations, is of the opinion that (i) the ownership structure relating to the VIE complies with current PRC laws and regulations; and (ii) our contractual arrangements with the VIE and its shareholders are valid, binding and enforceable on all parties to the contractual arrangements and do not violate current PRC laws or regulations. However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel.

If we or any of our VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of our VIE in our consolidated financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violation of PRC laws and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of our VIE, our ability or obligation to absorb substantially all of the economic benefits or losses from our VIE that could be significant to it, and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to exert effective control over or consolidate the financial results of our VIE in our consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, would have a material adverse effect on our financial condition and results of operations.

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

Our VIE contributed substantially majority of our consolidated revenues for the years ended December 31, 2017 and 2018 and a majority of our consolidated revenues for the three months ended March 31, 2019, respectively. We have relied and expect to continue to rely on contractual arrangements with our VIE and its shareholders to conduct certain of our key businesses. These contractual arrangements may not be as effective as direct ownership in providing us with control over our VIE. For example, our VIE and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct the operations of our VIE in an acceptable manner or taking other actions that are detrimental to our interests.

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

material and adverse effect on our business." Therefore, our contractual arrangements with our VIE may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

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

Our company and CloudMinds Robotics have entered into a series of contractual arrangements with our VIE and its shareholders. For a description of these contractual arrangements, see "Corporate History and Structure." If our VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, the effectiveness of which may not be enforceable under PRC laws. For example, if the shareholders of our VIE refuse to transfer their equity interest in our VIE to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

All of the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. 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 system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delays. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delays or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our VIE, and our ability to conduct our business may be negatively affected.

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

The shareholders of our VIE include Haitao Jiang, Bing Wang, and Guanghua Yang, all of which are our co-founders, beneficial owners and employees, as well as Jing Wang, Qi Li, Changxing Youqing Investment Management Partnership (Limited Partnership) and Anji Boye Investment Partnership (Limited Partnership), all of which are beneficial owners of our company. Conflicts of interest may arise from them in their roles as shareholders, directors or officers of our company and as shareholders of our consolidated affiliated entity. These shareholders may breach, or cause our VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and our VIE, which would have a material and adverse effect on our ability to effectively control our VIE and receive economic benefits from them. For example, the shareholders may be able to cause our agreements with our VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the amended and restated exclusive purchase option agreement with these shareholders to request them to transfer all of their equity interests in our VIE to CloudMinds Inc. or its designated person, to the extent permitted by PRC laws. For the shareholders who are also our directors and executive officers, we rely on them to abide by the laws of the Cayman Islands and China, which provide that directors owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the best interests of the company and not to use their position for personal gain. There is currently no specific and clear guidance under PRC laws that addresses any conflict between PRC laws and laws of Cayman Islands in respect of any conflict relating to corporate governance. The shareholders of our VIE have executed powers of attorney to appoint our company to vote on their behalf and exercise voting rights as shareholders of our VIE. If we cannot resolve any conflicts of interest or disputes between us and the shareholders of our VIE, we would have to rely on legal proceedings, which may be expensive, time-consuming and disruptive to our operations. There is also substantial uncertainty as to the outcome of any such legal proceedings.

The shareholders of our VIE may be involved in personal disputes with third parties or other incidents that may have an adverse effect on their respective equity interests in our VIE and the validity or enforceability of our contractual arrangements with its shareholders. For example, in the event that any of the shareholders of our VIE divorces his or her spouse, the spouse may claim that the equity interest of our VIE held by such shareholder is part of their community property and should be divided between such shareholder and his or her spouse. If such claim is supported by the court, the relevant equity interest may be obtained by the shareholder's spouse or another third party who is not subject to obligations under our contractual arrangements, which could result in a loss of the effective control over our VIE by us. Similarly, if any of the equity interests of our VIE is inherited by a third party with whom the current contractual arrangements are not binding, we could lose our control over our VIE or have to maintain such control by incurring unpredicted costs, which could cause significant disruption to our business and operations and harm our financial condition and results of operations.

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

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. The Enterprise Income Tax Law requires every enterprise in China to submit its annual enterprise income tax return together with a report on transactions with its related parties to the relevant tax authorities. The tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent with arm's length principles. We may face material and adverse tax consequences if the PRC tax authorities determine the contractual arrangements among our WFOE, our VIE and shareholders of our VIE were not entered into on an arm's length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of our VIE in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by our VIE for PRC tax purposes, which could increase our tax expenses. In addition, the PRC tax authorities may impose interests and other penalties on our VIE, WFOE, or their affiliates, for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if our VIE's tax liabilities increase or if it is required to pay interests and other penalties.

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

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

Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

On March 15, 2019, the National People's Congress approved the Foreign Investment Law, which will come into effect on January 1, 2020 and replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation. For instance, under the Foreign Investment Law, "foreign investment" refers to the investment activities directly or indirectly conducted by foreign individuals, enterprises or other entities in China. Though it does not explicitly classify contractual arrangements as a form of foreign investment, there is no assurance that operation conducted by foreign investors or foreign-invested enterprises via contractual arrangement would not be interpreted as a type of indirect foreign investment activities under the definition in the future. In addition, the definition contains a catch-all provision which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions promulgated by the Stale Council to provide for contractual arrangements as a form of foreign investment. In any of these cases, it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment under the PRC laws and regulations. Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, corporate governance and business operations.

We may fail to obtain, maintain and update licenses and permits necessary to conduct our operations in the PRC, and our business may be materially and adversely affected as a result of any changes in the laws and regulations governing the telecommunication industry in the PRC.

Under the Telecommunications Regulations of the PRC, or the Telecom Regulations, telecommunications service providers are required to procure telecommunication service operating licenses from the telecommunication authorities. We have obtained the telecommunication service operating license from the Ministry of Industry and Information Technology, or MIIT, for our "nerve network" and "cloud brain" service in the PRC. However there can be no assurance that we will be able to maintain our existing licenses or permits necessary to provide our current service in the PRC, renew any of them when their current term expires, or update existing licenses or obtain additional licenses necessary for our future business expansion. The failure to obtain, retain, renew or update any license or permit generally, and our telecommunication service operating license in particular, could materially and adversely disrupt our business and future expansion plans.

For example, the specific classification of types of telecommunication services is provided in the Telecommunication Business Catalogue published and updated by the MIIT, according to the Telecom Regulations. The latest version of the Catalogue of Telecommunications Business (2015 Version), was published on the official website of MIIT on December 28, 2015, together with the Interpretation of New Telecommunication Business Catalogue by Relevant Officials of the MIIT, or the Official Interpretation. According to the Official Interpretation, "the internet resources collaboration services business was added into the Telecommunication Services Catalogue to reflect the rapid developments in the cloud computing industry," and it is believed that the cloud service providers are required to obtain telecommunication service operating license with the internet resources collaboration services business which is included in the internet data center services. We have updated our telecommunication service operating license on July 12, 2018, with the internet resources collaboration services business included. However, since this is a comparatively new requirement without clear explanation for cloud computing or cloud services in the Telecom Regulations or the Telecommunication Services Catalogue, it is uncertain whether the MIIT may regard any of our companies in China as being non-compliant due to lack of necessary operating permit, and penalties could be assessed against us, and our business, financial condition, expected growth and prospects would be materially and adversely affected as a result.

In addition, if future PRC laws or regulations governing the telecom industry require that we obtain additional licenses or permits or update existing licenses in order to continue to provide our "nerve network" and "cloud brain" services, there can be no assurance that we would be able to obtain such licenses or permits or update existing licenses in a timely fashion, or at all. If any of these situations occur, our business, financial condition and prospects would be materially and adversely affected.

Third-party big data collection vendors from whom we purchase data packets may fail to comply with laws of network security and personal information protection in the PRC, and our business may be materially and adversely affected.

Personal information, such as personal identity card information, contact information, whereabouts information, etc., is deemed as part of the right to personality and cannot be bought and sold at will under the PRC laws. For example, according to the Cyber Security Law, network operators shall not provide the personal information to others without the consent of the persons whose data is collected. However the Cyber Security Law also provides that the circumstance where the information has been processed and cannot be recovered and thus it is impossible to match such information with specific persons is an exception. See "Regulations—Regulations on Cyber Security" for additional details. Some part of the big data were purchased from third-party big data collection vendors for our research, and

those data packets were information that we cannot match with specific persons. However, there can be no assurance that the third-party big data collection vendors from whom we purchase data packets comply with the related personal information protection regulations to provide big data collection services in the PRC and their failure to comply with these regulations could materially and adversely affect our business.

In addition, if future PRC laws or regulations governing big data collection industry require that the big data collection vendors from whom we purchase data packets obtain necessary licenses or permits in order to continue to provide their big data collection services, there can be no assurance that they would be able to obtain such licenses or permits in a timely fashion, or at all. If any of these situations occur, our business, financial condition and prospects could be materially and adversely affected.

Our use of certain leased properties for R&D and sales function could be challenged by third parties or governmental authorities, which may cause interruptions to our business operations.

Some of the lessors of our properties leased by us for R&D and sales function in China have not provided us with their property ownership certificates or any other documentation proving their right to those properties. If the lessors do not have the right to lease those properties, or those properties are considered to be illegal property under the PRC laws, our relevant lease agreements could be invalidated. If this occurs, we may have to renegotiate the leases with the owners or other parties who have the right to lease the properties, and the terms of the new leases may be less favorable to us. Although we may seek damages from such lessors, such leases may be void and we may be forced to relocate. We can provide no assurance that we will be able to find suitable replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be subject to material liability resulting from third parties' challenges on our use of such properties. As a result, our business, financial condition and results of operations may be materially and adversely affected.

Certain of our leasehold interests in leased properties have not been registered with the competent PRC governmental authorities as required by relevant PRC laws, which may expose us to potential fines.

We have not registered certain of our lease agreements with the competent government authorities. Under the relevant PRC laws and regulations, we may be required to register and file the executed lease agreements with the relevant government authorities. Any failure to register the lease agreements for our leased properties will not affect the validity of these lease agreements, and we have not received any rectification order or been subject to any fine in respect of non-registration of lease agreements. However, the competent housing authorities may order us to register the lease agreements in a prescribed period of time or impose a fine ranging from RMB1,000 to RMB10,000 for each non-registered lease agreement if we fail to complete the registration within the prescribed timeframe.

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

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

resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing since 2012. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us.

We conduct our business primarily through our PRC subsidiaries and consolidated VIE in China. Our operations in China are governed by PRC laws and regulations. Our PRC subsidiaries are subject to laws and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. In addition, any new or changes in PRC laws and regulations related to foreign investment in China could affect the business environment and our ability to operate our business in China.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. Such unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede our ability to continue our operations.

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

We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity from our PRC subsidiaries for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and for services of any debt we may incur. Our subsidiaries' ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries and our consolidated affiliated entities is

required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiaries to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Our PRC subsidiaries generate primarily all of their revenue in Renminbi, which is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use their Renminbi revenues to pay dividends to us.

The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

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

PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries and consolidated affiliated entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We are an offshore holding company conducting our operations in China through our PRC subsidiaries and VIE. We may make loans to our PRC subsidiaries and VIE subject to the approval or registration from governmental authorities and limitation of amount, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in China. Any loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises under the PRC laws, are subject to foreign exchange loan registrations. In addition, an FIE shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of an FIE shall not be used for the following purposes: (a) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (b) directly or indirectly used for investment in securities or investments other than banks' principal-secured products unless otherwise provided by relevant laws and regulations; (c) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (d) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiaries or VIE or with respect to future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from this offering and to capitalize or otherwise fund

our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

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

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China's foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the Renminbi has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

Significant revaluation of the Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive from this offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

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

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company primarily relies on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China

may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and VIE to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

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

Among other things, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that the Ministry of Commerce of the People's Republic of China, or the MOFCOM, be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008, were triggered. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People's Congress of China which became effective in 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the MOFCOM before they can be completed. In addition, PRC national security review rules which became effective in September 2011 require acquisitions by foreign investors of PRC companies engaged in military related or certain other industries that are crucial to national security be subject to security review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

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

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

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident

who is a direct or indirect shareholder of an SPV, is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

We have requested PRC residents who we know hold direct or indirect interest in our company to make the necessary applications, filings and registrations as required under SAFE Circular 37 and our PRC resident shareholders, namely Haitao Jiang, Guanghua Yang, Bing Wang, Meimei Li, Haotian Cui, Wei Zhu, Wenhua Dai, Chao Song and Lei Huang have completed all necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. However, 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 assurance that these PRC residents will comply with our request to make or obtain any applicable registrations or comply with other requirements under SAFE Circular 37. The failure or inability of our PRC resident shareholders to comply with the registration procedures set forth in these regulations may subject us to fines and legal sanctions, restrict our cross-border investment activities, limit the ability of our wholly foreign-owned subsidiaries in China to distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us, and we may also be prohibited from injecting additional capital into these subsidiaries. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under the PRC laws for circumventing applicable foreign exchange restrictions. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.

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

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options will be subject to these regulations when our company becomes an overseas-listed company upon the completion of this offering. While we believe those executive officers and other employees who have been granted options have completed SAFE registrations, any failure to do so may subject them to fines of up to RMB300,000 for entities and up to RMB50,000 for individuals, and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries' ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional

incentive plans for our directors, executive officers and employees under PRC law. See "Regulation—Regulations on Foreign Exchange—Employee Stock Incentive Plan."

The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and results of operations.

The Standing Committee of the National People's Congress enacted the Labor Contract Law in 2008, and amended it on December 28, 2012. The Labor Contract Law introduced specific provisions related to fixed-term employment contracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies, employment without a written contract, dismissal of employees, severance, and collective bargaining to enhance previous PRC labor laws. Under the Labor Contract Law, an employer is obligated to sign an unlimited-term labor contract with any employee who has worked for the employer for ten consecutive years. Further, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract, with certain exceptions, must have an unlimited term, subject to certain exceptions. With certain exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires. In addition, the PRC governmental authorities have continued to introduce various new labor-related regulations since the effectiveness of the Labor Contract Law.

Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, employees are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance, and housing funds and employers are required, together with their employees or separately, to pay the social insurance premiums and housing funds for their employees. If we fail to make adequate social insurance and housing fund contributions, we may be subject to fines and legal sanctions, and our business, financial conditions and results of operations may be adversely affected.

These laws designed to enhance labor protection tend to increase our labor costs. In addition, as the interpretation and implementation of these regulations are still evolving, our employment practices may not be at all times be deemed in compliance with the regulations. As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations, and our business, financial conditions and results of operations may be adversely affected.

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

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

by organizations or personnel in the PRC; (c) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (d) at least 50% of voting board members or senior executives habitually reside in the PRC.

We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." If the PRC tax authorities determine that CloudMinds Inc. or any of our subsidiaries outside of China is a PRC resident enterprise for PRC enterprise income tax purposes, then we or such subsidiaries could be subject to PRC tax at a rate of 25% on its worldwide income, which could materially reduce our net income. We may also be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to PRC tax at a rate of 10% on gains realized on the sale or other disposition of ADSs or ordinary shares at a rate of 10%, if such income is treated as sourced from within the PRC. Furthermore, if PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, dividends paid to our non-PRC individual shareholders (including our ADS holders) and any gain realized on the transfer of ADSs or ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at source by us), if such gains are deemed to be from PRC sources. These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of CloudMinds Inc. would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that CloudMinds Inc. is treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ADSs.

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

In February 2015, the SAT issued the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or SAT Circular 7. SAT Circular 7 extends its tax jurisdiction to not only indirect transfers but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, SAT Circular 7 provides certain criteria on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an "indirect transfer" by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding regarding Non-PRC Resident Enterprise Income Tax, or the SAT Circular 37, which came into effect on December 1, 2017. The SAT Circular 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax.

We face uncertainties on the reporting and consequences of future private equity financing transactions, share exchanges or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed under SAT Circular 7 and SAT Circular 37, and may be required to expend valuable resources to comply with them or to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse effect on our financial condition and results of operations.

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

Our independent registered public accounting firm that issues the audit reports included in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board, or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities, our auditors are not currently inspected by the PCAOB. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a heightened interest in an issue that has vexed U.S. regulators in recent years. However, it remains unclear what further actions the SEC and PCAOB will take to address the problem.

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

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

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

Starting in 2011 the Chinese affiliates of the "big four" accounting firms, including our independent registered public accounting firm, were affected by a conflict between U.S. and Chinese law. Specifically, for certain U.S.-listed companies operating and audited in China, the SEC and the PCAOB sought to obtain from the Chinese accounting firms access to their audit work papers and related documents. The firms were, however, advised and directed that under Chinese law, they could not respond directly to the U.S. regulators on those requests, and that requests by foreign regulators for access to such papers in China had to be channeled through the CSRC.

In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese accounting firms, including our independent registered public accounting firm. A first instance trial of the

proceedings in July 2013 in the SEC's internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioner had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepts that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms will receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests, which in substance require them to facilitate production via the CSRC. If they fail to meet specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure. Remedies for any future noncompliance could include, as appropriate, an automatic six-month bar on a single firm's performance of certain audit work, commencement of a new proceeding against a firm, or in extreme cases the resumption of the current proceeding against all four firms. If additional remedial measures are imposed on the Chinese affiliates of the "big four" accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging the firms' failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.

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

If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of the ADSs from the New York Stock Exchange Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of the ADSs in the United States.

An active trading market for the ADSs may not develop and the trading price for the ADSs may fluctuate significantly.

We have applied to list ADSs representing our Class A ordinary shares on the New York Stock Exchange. Prior to the completion of this offering, there has been no public market for ADSs or our ordinary shares, and we cannot assure you that a liquid public market for the ADSs will develop. If an active public market for the ADSs does not develop following the completion of this offering, the market price and liquidity of the ADSs may be materially and adversely affected. The initial public offering price for the ADSs will be determined by negotiation between us and the underwriters based upon several factors, and the trading price of the ADSs after this offering could decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

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

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

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

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

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

Immediately prior to the completion of this offering, we expect to create a dual-class share structure such that our ordinary shares will consist of Class A ordinary shares and Class B ordinary shares. In respect of matters requiring the votes of shareholders, holders of Class A ordinary shares will be entitled to one vote per share, while holders of Class B ordinary shares will be entitled to ten votes per share based on our proposed dual-class share structure. We will sell Class A ordinary shares represented by the ADSs in this offering. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into

Class B ordinary shares under any circumstances. Upon any sale of Class B ordinary shares by a holder thereof to any person other than a Class B Holder or a Class B Holder Affiliate, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares.

Immediately prior to the completion of this offering, certain of our co-founders, including William Xiao-Qing Huang, Bing Wang, Guanghua Yang, Haitao Jiang, and Zhe (Robert) Zhang, and SVF Cloud (Singapore) Pte. Ltd., directly or through their affiliates, will beneficially own all of our issued Class B ordinary shares. These Class B ordinary shares will constitute approximately % of our total issued and outstanding share capital immediately after the completion of this offering and % of the aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering due to the disparate voting powers associated with our proposed dual-class share structure, assuming the underwriters do not exercise their over-allotment option. See "Principal Shareholders." As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares will have considerable influence over matters such as decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.

The proposed dual-class structure of our ordinary shares may adversely affect the trading market for the ADSs.

S&P Dow Jones and FTSE Russell have previously announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the proposed dual-class structure of our ordinary shares may prevent the inclusion of our ADSs representing our Class A ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for the ADSs. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of the ADSs.

Our directors, officers and principal shareholders collectively control a significant amount of our shares, and their interests may not align with the interests of our other shareholders.

Currently, our officers, directors and principal shareholders collectively hold a substantial majority of total voting power in our Company. They will continue to have a substantial control of us and collectively hold % of total voting power immediately after this offering, assuming the underwriters do not exercise their over-allotment option. This significant concentration of share ownership and voting power may adversely affect or reduce the trading price of the ADSs because investors often perceive a disadvantage in owning shares in a company with one or several controlling shareholders. Furthermore, our directors and officers, as a group, have the ability to significantly influence or control the outcome of all matters requiring shareholders' approvals, including electing directors and approving mergers or other business combination transactions. These actions may be taken even if they are opposed by our other shareholders. This concentration of share ownership and voting power may also

discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company. For more information regarding our principal shareholders, see "Principal Shareholders."

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

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

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

Sales of substantial amounts of ADSs in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. The ADSs sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There will be ADSs (representing Class A ordinary shares) outstanding immediately after this offering, or ADSs (representing Class A ordinary shares) if the underwriters exercise their option to purchase additional ADSs in full. [In connection with this offering, we, our directors, executive officers, and all of our existing shareholders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus without the prior written consent of the underwriters, subject to certain exceptions.] [Certain holders of Class B ordinary shares upon the completion of this offering agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of one year after the date of this prospectus without the prior written consent of the underwriters, subject to certain exceptions.] However, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. See "Underwriting" and "Shares Eligible for Future Sale" for a more detailed description of the restrictions on selling our securities after this offering.

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

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

Our board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Even if our board of directors decides to

declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in ADSs and you may even lose your entire investment in ADSs.

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

We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase the ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

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

The M&A Rules, which were adopted in August 2006 by six PRC regulatory agencies, including the CSRC, and amended in September 2009, purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and if CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval and any failure to obtain or delay in obtaining CSRC approval for this offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies.

Our PRC counsel, Jingtian & Gongcheng, has advised us that, based on its understanding of the current PRC laws and regulations, we will not be required to submit an application to the CSRC for the approval of the listing and trading of ADSs on the New York Stock Exchange because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours under this prospectus are subject to this regulation, (ii) the CloudMinds Robotics was established as foreign-invested enterprises by means of direct investment and not through a merger or requisition of the equity or assets of a "PRC domestic company" as such term is defined under the M&A Rule, and (iii) no explicit provision in the M&A Rules classifies the respective contractual arrangements among CloudMinds Inc., our WFOE, our VIE and its shareholders as a type of acquisition transaction falling under the M&A Rules.

However, we cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC counsel, and hence we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. If the CSRC or other relevant PRC regulatory authorities subsequently determine that a prior CSRC approval is required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory authorities. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from this offering into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading

price of the ADSs. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on the trading price of the ADSs.

Our proposed post-offering memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and the ADSs.

Pending shareholders' approval, our board of directors have adopted the fourth amended and restated memorandum and articles of association that will become effective immediately prior to the completion of this offering. Our proposed post-offering memorandum and articles of association will contain provisions which could limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions. Our proposed dual-class voting structure gives disproportionate voting power to the Class B ordinary shares. Our board of directors has the authority, without further action by our shareholders, to issue preference shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, including ordinary shares represented by ADS. Preference shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preference shares, the price of ADSs may fall and the voting and other rights of the holders of our ordinary shares and the ADSs may be materially and adversely affected.

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

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law (2018 Revision) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

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

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

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

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

We are a Cayman Islands exempted company. A majority of our operations are conducted in China, and a majority of our assets are located in China. A majority of our directors and executive officers are nationals or residents of jurisdictions other than the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and China, see "Enforceability of Civil Liabilities."

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

Holders of ADSs do not have the same rights as our registered shareholders. As a holder of ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights which are carried by the underlying Class A ordinary shares represented by your ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions of the deposit agreement. Under the deposit agreement, you may vote only by giving voting instructions to the depositary, as the holder of the Class A ordinary shares underlying your ADSs. If we instruct the depositary to ask for your instructions, then upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying Class A ordinary shares which are represented by your ADSs in accordance with your instructions. If we do not instruct the depositary to ask for your instructions, the depositary may still vote in accordance with instructions you give, but it is not required to do so. You will not be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares represented by your ADSs unless you withdraw such shares and become the registered holder of such shares prior to the record date for the general meeting.

Under our proposed post-offering memorandum and articles of association that will become effective immediately prior to completion of this offering, the minimum notice period required to be given by our company to our registered shareholders to convene a general meeting will be ten days. When a general meeting is convened, you may not receive sufficient advance notice of the meeting to withdraw the Class A ordinary shares underlying your ADSs and become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our proposed post-offering articles of association that will become effective prior to the completion of this offering, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the Class A ordinary shares underlying your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We have agreed to give the depositary at least [30] days' prior notice of shareholder meetings. Nevertheless, we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to direct how the Class A ordinary shares underlying your ADSs are voted and you may have no legal remedy if the Class A ordinary shares underlying your ADSs are not voted as you requested.

ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes for plaintiffs.

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

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

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

Nevertheless, if this jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

In addition, the depositary may, in its sole discretion, require that any dispute or difference arising from the relationship created by the deposit agreement be referred to and finally settled by an arbitration conducted under the terms described in the deposit agreement, although the arbitration provisions do not preclude you from pursuing claims under U.S. federal securities laws in federal courts.

The depositary may give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs if you do not vote at shareholders' meetings, which could adversely affect your interests.

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

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

You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary of our ADSs has agreed to pay you the cash dividends or other distributions it or the custodian receives on our Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

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

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

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events, such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

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

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

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

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

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

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."

Upon completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the New York Stock Exchange, impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.07 billion in revenues for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company's internal control over financial reporting. The JOBS Act also permits an emerging growth company to delay adopting new or revised accounting standards until such time as those standards apply to private companies. We will rely on such exemption provided by the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with public company effective dates.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an "emerging growth company," we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the New York Stock Exchange corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we comply fully with the New York Stock Exchange corporate governance listing standards.

As a Cayman Islands company listed on New York Stock Exchange, we are subject to the New York Stock Exchange corporate governance listing standards. However, New York Stock Exchange rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance listing standards. Currently, we do not plan to rely on home country practice with respect to our corporate governance after we complete this offering. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the New York Stock Exchange corporate governance listing standards applicable to U.S. domestic issuers.

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

A non-U.S. corporation, such as our company, will be considered a passive foreign investment company, or PFIC, for any taxable year if either (i) at least 75% of its gross income for such year consists of certain types of "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 a taxable year) is attributable to assets that produce or are held for the production of passive income (the "asset test"). Although the law in this regard is unclear, we treat our VIE as being owned by us for U.S. federal income tax purposes because we control its management decisions and are entitled to substantially all of the economic benefits associated with it. As a result, we consolidate its results of operations in our consolidated U.S. GAAP financial statements.

Assuming that we are the owner of our VIE for U.S. federal income tax purposes, and based upon our current and projected income and assets, including the proceeds from this offering, and projections as to the value of our assets, we do not expect to be a PFIC for the current taxable year or the foreseeable future.

However, no assurance can be given in this regard because the determination of whether we will be or will become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Fluctuations in the market price of our ADSs may cause us to be a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time (which may be volatile). If our market capitalization subsequently declines, we may be or become a PFIC for the current taxable year or future taxable years. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering.

If we were treated as a PFIC for any taxable year during which a U.S. investor held an ADS or an ordinary share, certain adverse U.S. federal income tax consequences could apply to the U.S. investor. See "Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations."

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." Known and unknown risks, uncertainties and other factors, including those listed under "Risk Factors," may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

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

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The cloud robotics industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our ADSs. In addition, the rapidly evolving nature of this industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

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. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

We estimate that we will receive net proceeds from this offering of approximately US$ , or approximately US$ if the underwriters exercise their over-allotment option in full, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$ per ADS, which is the midpoint of the price range shown on the front page 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$ , assuming the number of ADSs offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

The primary purposes of this offering are to create a public market for our shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives, and obtain additional capital. We plan to use the net proceeds of this offering as follows:

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. See "Risk Factors—Risks Related to Our ADSs and This Offering—We have not determined a specific use for a portion of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree."

Pending any use described above, we plan to invest the net proceeds in short-term, interest-bearing, debt instruments or demand deposits.

In using the proceeds of this offering, we are permitted under PRC laws and regulations as an offshore holding company to provide funding to our PRC subsidiaries only through loans or capital contributions and to our VIE only through loans, subject to satisfaction of applicable government registration and approval requirements. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See "Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries and consolidated affiliated entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business."

Our board of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

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

If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the Class A ordinary shares underlying our ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to our ADS holders in proportion to the Class A ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See "Description of American Depositary Shares" Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

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

	As of March 31, 2019

	Actual			Pro forma	Pro forma as adjusted⁽¹⁾
	(in thousands)
	US$			US$	US$
Preference shares:
Series Seed convertible preference shares (US$0.0001 par value; 58,000,000 shares authorized; 57,542,133 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		17,547
Series Seed-1 convertible preference shares (US$0.0001 par value; 9,181,161 shares authorized, issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		3,127
Series A convertible preference shares (US$0.0001 par value; 70,690,000 shares authorized; 63,621,674 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		89,656
Series A+ convertible preference shares (US$0.0001 par value; 31,470,488 shares authorized; 12,312,520 shares issued and outstanding on an actual basis, and none outstanding on a pro forma or a pro forma as adjusted basis)		18,826
Total mezzanine equity		129,156



Shareholders' deficit:
Ordinary shares, (US$0.0001 par value; 330,658,351 shares authorized; 67,100,001 shares issued and outstanding; 209,757,489 ordinary shares issued and outstanding on a pro forma basis; ordinary shares issued and outstanding on a pro forma as adjusted basis)		7
Class A ordinary shares, (US$0.0001 par value; No shares authorized, issued and outstanding; 471,847,581 shares authorized, shares issued and outstanding on a pro-forma basis)		—
Class B ordinary shares, (US$0.0001 par value; No shares authorized, issued and outstanding; 128,152,419 shares authorized, issued and outstanding on a pro-forma basis)		—
Additional paid-in capital⁽²⁾		15,048
Accumulated other comprehensive loss		(1,884	)
Accumulated deficit		(322,460	)
Non-controlling interests		2,803
Total shareholders' deficit⁽²⁾		(309,289	)



Total capitalization

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 shareholders for our presently outstanding ordinary shares.

Our net tangible book value as of March 31, 2019 was approximately US$(182.3) million, or US$(2.72) 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 net tangible book value per ordinary share, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price of US$ per ordinary share, which is the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus adjusted to reflect the ADS-to-ordinary share ratio, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Without taking into account any other changes in net tangible book value after March 31, 2019, 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, which is the midpoint of the estimated initial public offering price range, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2019 would have been US$ , or US$ per ordinary share 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 shareholders 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 such dilution:

A US$1.00 increase (decrease) in the assumed initial public offering price of US$ per ADS would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to this offering by US$ , the pro forma as adjusted net tangible book value per ordinary share and per ADS after giving effect to this offering by US$ per ordinary share and US$ per ADS and the dilution in pro forma as adjusted net tangible book value per ordinary share and per ADS to new investors in this offering by US$ per ordinary share and US$ per ADS, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on a pro forma as adjusted basis as of March 31, 2019, the differences between existing shareholders and the new investors with respect to the number of ordinary shares (in the form of ADSs or shares) purchased from us, the total consideration paid and the average price per ordinary share and per ADS paid before deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The total number of ordinary shares does

not include ordinary shares underlying the ADSs issuable upon the exercise of the over-allotment option granted to the underwriters.

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

The discussion and tables above assume no exercise of any share options outstanding nor any request by holders of restricted shares to register their vested restricted shares as of the date of this prospectus. As of the date of this prospectus, there are 27,912,246 ordinary shares issuable upon exercise of outstanding share options at exercise prices ranging from US$0.13 to US$4.24 per share, and additional 10,340,000 ordinary shares are issuable upon requests from holders of restricted share units. To the extent that any of these options are exercised, there will be further dilution to new investors.

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

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

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

A majority of our operations are conducted in China, and a majority of our assets are located in China. A majority of our directors and executive officers are nationals or residents of jurisdictions other than the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these individuals, or to enforce against 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 been informed by Maples and Calder (Hong Kong) LLP that the United States and the Cayman Islands do not have a treaty providing for reciprocal recognition and enforcement of judgments of U.S. courts in civil and commercial matters and that a final judgment for the payment of money rendered by any federal or state court 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 Cayman Islands. We have also been advised by Maples and Calder (Hong Kong) LLP that a judgment obtained in any federal or state court in the United States will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

There is uncertainty as to whether the courts of the Cayman Islands would recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. Such uncertainty relates to whether a judgment obtained from the United States courts under the civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as

penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company or its directors and officers. Because the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the Cayman Islands.

Jingtian & Gongcheng, our counsel as to PRC law, has advised us that there is uncertainty as to whether the courts of China would:

Jingtian & Gongcheng has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against a company in China for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

It will be, however, difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be 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 jurisdiction as required under the PRC Civil Procedures Law.

In September 2015, Cloudminds (Hong Kong) Limited established a wholly-owned subsidiary in China, which we refer to as CloudMinds Robotics or our WFOE.

Our contractual arrangements with our VIE and its shareholders (i) allow us to exercise effective control over our VIE, (ii) enable or obligate us to absorb substantially all of the economic benefits or losses from our VIE that could be significant to it, and (iii) give us an exclusive option to purchase or designate any third party to purchase all or part of the equity interests in and assets of our VIE when and to the extent permitted by PRC law. For more details, including risks associated with the VIE structure, please see "—Contractual Arrangements related to Our VIE" and "Risk Factors—Risks Relating to Our Corporate Structure."

As a result of our direct ownership in our WFOE and the VIE contractual arrangements, we are regarded as the primary beneficiary of our VIE, and we treat it and its subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of our VIE and their respective subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

The chart below summarizes our corporate structure and identifies our significant subsidiaries, our VIE and its significant subsidiaries, as of the date of this prospectus:

The following is a summary of the currently effective contractual arrangements by and among CloudMinds Inc., our WFOE, our VIE and its shareholders.

Amended and Restated Powers of Attorney. Pursuant to the powers of attorney among our WFOE, the VIE and its shareholders, each of the shareholders of the VIE has executed a power of attorney to irrevocably authorize CloudMinds Inc. or its designated person to act as his, her or its attorney-in-fact to exercise all of his, her or its rights as a shareholder of the VIE, including, but not limited to, the right to attend shareholders' meetings, vote on any resolution that requires a shareholder vote, such as the appointment of directors, supervisors and officers, as well as the sale, transfer and disposal of all or part of the equity interests owned by such shareholder. The powers of attorney will remain effective continuously as long as the shareholders of the VIE remain as registered shareholders of the VIE.

Amended and Restated Equity Pledge Agreement. Pursuant to the amended and restated equity pledge agreement among our WFOE, the VIE and its shareholders, the shareholders of the VIE have pledged 100% equity interests in the VIE to our WFOE to guarantee performance by the shareholders of their obligations under the amended and restated exclusive consulting and services agreement, the amended and restated exclusive purchase option agreement, the amended and restated loan agreements and powers of attorney, as well as the performance by the VIE of its obligations under the amended and restated exclusive consulting and services agreement and the amended and restated exclusive purchase option agreement. During the term of the amended and restated equity pledge agreement, our WFOE has the right to receive all of the VIE's dividends distributed on the pledge equity. In the event of a breach by the VIE or any of its shareholders of contractual obligations under the amended and restated equity pledge agreement, our WFOE, as pledgee, will have the right to dispose of the pledged equity interests in the VIE and will have priority in receiving the proceeds from such disposal. The shareholders of the VIE also undertake that, without the prior written consent of our WFOE, they will not transfer, or create or allow any encumbrance on the pledged equity interests. The VIE undertakes that, without the prior written consent of our WFOE, they will not allow any encumbrance to be created on the pledged equity interests. The amended and restated equity pledge agreement will remain effective until the VIE and its shareholders have fulfilled all the obligations under these contractual agreements.

Amended and Restated Loan Agreements. Pursuant to the amended and restated loan agreements among our WFOE and certain shareholders of the VIE, namely Haitao Jiang, Bing Wang and Guanghua Yang, our WFOE extended loans to these shareholders of the VIE in an aggregate amount equivalent to RMB10.0 million (US$1.5 million) solely for the purpose of capital injection for the VIE. The shareholders of the VIE shall repay his or her loan immediately once they are no longer shareholders of the VIE, and can only repay the loans by the transfer of all his, her or its equity interests in the VIE to our WFOE or its designated person pursuant to the amended and restated exclusive purchase option agreements and pay all of the proceeds from sale of such equity interests to WFOE. The loan agreements will remain effective until the fulfillment of mutual contractual obligation.

Spousal Consent Letters. The spouses of the individual shareholders of the VIE have each signed a spousal consent letter agreeing that the equity interests in the VIE held by and registered under the name of the VIE shareholders will be disposed of pursuant to the amended and restated equity pledge agreement, amended and restated exclusive purchase option agreement, and powers of attorneys. These spouses agreed not to assert any rights over the equity interest in the VIE held by their spouses.

We are in the process of registering the equity pledges under the amended and restated equity pledge agreement with the relevant office of the administration for industry and commerce in accordance with the PRC Property Rights Law.

Amended and Restated Exclusive Consulting and Services Agreement. Pursuant to the amended and restated exclusive consulting and services agreement between our WFOE and the VIE, our WFOE has the sole and exclusive right to provide the VIE with technology support, consulting services and other services. Without our WFOE's prior written consent, the VIE may not directly or indirectly accept any services subject to this agreement from any third party, while our WFOE is entitled to designate any party to provide such services. The VIE agrees to pay our WFOE service fees periodically at arm's length prices subject to WFOE's adjustment at its sole discretion. Our WFOE has the exclusive ownership of all the intellectual property rights created as a result of the performance of the amended and restated exclusive consulting and services agreement to the extent permitted by applicable PRC laws. The amended and restated exclusive consulting and services agreement will continuously remain effective until otherwise terminated by our WFOE in writing at its sole discretion or in accordance with other conditions specified in the amended and restated exclusive consulting and services agreement.

Agreement that provides us with the option to purchase the equity interests in and assets of our VIE

Amended and Restated Exclusive Purchase Option Agreement. Pursuant to the amended and restated exclusive purchase option agreement among CloudMinds Inc., our WFOE, the VIE and its shareholders, each of the shareholders of the VIE has irrevocably granted CloudMinds Inc. an exclusive option to purchase all or part of his, her or its equity interests in the VIE. CloudMinds Inc. or its designated person may exercise such options at the price equivalent to the capital contribution actually paid by the shareholders of the VIE or at the lowest price permitted under applicable PRC laws. Any proceeds received by the shareholders of our VIE from the exercise of the option, distribution of profits or dividends, shall be remitted to us or our designated person(s), to the extent permitted under applicable PRC laws. The shareholders of the VIE undertake that, without prior written consent from CloudMinds Inc., they will not, among other things, (i) create any pledge or encumbrance on their equity interests in the VIE, (ii) transfer or otherwise dispose of their equity interests in the VIE, (iii) change the VIE's registered capital, (iv) amend the VIE's articles of association, (v) dispose of the VIE's material assets or enter into any material contract (except in the ordinary course of business), or (vi) merge the VIE with any other entity. In addition, the VIE undertakes that, without our WFOE's prior written consent, they will not, among other things, create any pledge or encumbrance on any of their assets, or transfer or otherwise dispose of their material assets (except in the ordinary course of business). As part of the arrangement, CloudMinds Inc. is committed to providing financial support to our VIE, to the extent permissible under PRC laws, to ensure that the cash flow requirements of the VIE's daily operations are met and/or to set off any losses that may be incurred, whether or not the VIE actually incurs any such operational losses. We agree not request repayment if our VIE is unable to repay. CloudMinds Inc., at its sole discretion, has the right to decide whether the option and other rights granted under the amended and restated exclusive purchase option agreement will be exercised by CloudMinds Inc. or its designated person. Unless unilaterally terminated by CloudMinds Inc. at its sole discretion, the exclusive purchase option agreement will remain effective until all equity interests in the VIE have been transferred to CloudMinds Inc. or its designated person.

However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules; accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of our VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.

See "Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations" and "Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us."

The following selected consolidated statements of comprehensive loss and cash flow data for the years ended December 31, 2017 and 2018, and selected consolidated balance sheet data as of December 31, 2017 and 2018 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following selected consolidated statements of comprehensive loss and cash flow data for the three months ended March 31, 2018 and 2019, and selected consolidated balance sheet as of March 31, 2019 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Selected Consolidated Financial and Operating Data section together with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

The following table represents our selected consolidated statements of comprehensive loss data for the periods indicated:

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands, except for shares and per share data)
Selected Consolidated Statements of Comprehensive Loss:
Revenues from third parties:
Cloud Robot and Services		25			14,658			43			321
Cloud AI Solutions		14,294			72,607			31,997			6,684
Smart Devices		970			32,641			446			5,110
Others		3,747			837			178			234

Total revenues from third parties		19,036			120,743			32,664			12,349

Revenues from related parties		201			282			3			30

Total revenues		19,237			121,025			32,667			12,379

Cost of revenues		(19,055	)		(114,636	)		(32,251	)		(11,161	)

Gross profit		182			6,389			416			1,218

Operating expenses:
Sales and marketing		(8,470	)		(11,455	)		(1,887	)		(4,361	)
General and administrative		(8,410	)		(13,308	)		(2,003	)		(2,902	)
Research and development		(22,669	)		(54,074	)		(8,342	)		(3,680	)

Total operating expenses		(39,549	)		(78,837	)		(12,232	)		(10,943	)

Operating loss		(39,367	)		(72,448	)		(11,816	)		(9,725	)

Foreign exchange (loss)/gain		(637	)		2,730			(1,034	)		60
Change in fair value of financial instruments		(10,423	)		(89,061	)		(16,332	)		(50,451	)
Other income, net		2,372			1,468			195			208
Loss before income tax		(47,744	)		(156,995	)		(28,890	)		(59,860	)
Income tax benefit		—			227			—			—
Net loss		(47,744	)		(156,768	)		(28,890	)		(59,860	)

Net loss attributable to CloudMinds Inc.		(47,744	)		(156,384	)		(28,890	)		(59,266	)
Net loss per share:
Basic and diluted		(0.71	)		(2.33	)		(0.43	)		(0.88	)
Shares used in the net loss per share computation:
Basic and diluted		67,100,001			67,100,001			67,100,001			67,100,001
Foreign currency translation adjustments		1,489			(3,549	)		443			1,458

Comprehensive loss		(46,255	)		(160,317	)		(28,447	)		(58,402	)

Comprehensive loss attributable to CloudMinds Inc.		(46,255	)		(159,933	)		(28,447	)		(57,808	)

The following table presents our selected consolidated balance sheet data as of December 31, 2017 and 2018 and March 31, 2019.

The following table presents our selected consolidated cash flow data for the periods indicated.

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands)
Selected Consolidated Cash Flow Data:
Net cash used in operating activities		(36,713	)		(88,839	)		(9,554	)		(8,772	)
Net cash generated from/(used in) investing activities		7,953			(10,847	)		(723	)		(614	)
Net cash generated from financing activities		83,630			52,682			—			41,532
Exchange rate effect on cash, cash equivalents and restricted cash		(707	)		2,934			(1,054	)		59

Net increase/(decrease) in cash, cash equivalents and restricted cash		54,163			(44,070	)		(11,331	)		32,205
Cash, cash equivalents and restricted cash at beginning of the year/period		7,920			62,083			62,083			18,013

Cash, cash equivalents and restricted cash at end of the year/period		62,083			18,013			50,752			50,218

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

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. Our actual results and the timing of selected events may differ materially from those we currently anticipate as a result of many factors, including those we describe under "Risk Factors" and elsewhere in this prospectus. See "Special Note Regarding Forward-Looking Statements."

We have built and operate an open end-to-end cloud robot system consisting of a "cloud brain," a "nerve network," robot controllers, and robot bodies enhanced by smart joint technology. We are one of the few players that offer an end-to-end cloud robot system in the global robotics industry and are the very first to commercialize related products and services, according to Frost & Sullivan. Our world-class architecture, which consists of a "cloud brain," a "nerve network" and robot controllers, is capable of operating a massive number of intelligent and secure robots simultaneously. Our cloud robot system leads the evolution of the robotics industry towards an intelligent robot system, according to Frost & Sullivan. The highly scalable operating platform, consisting of the cloud brain, the secure and reliable connection offered by the nerve network, the standardized interface from our robot controllers, and our versatile smart joint technology, together form an ecosystem with scalability potential and capable of integrating our products and services with all relevant players in the robotics industry.

Innovation is the key to our success as we are at the cutting edge of the AI field, secured mobile communication, and robotics. As of March 31, 2019, we had 62 patents registered in China and seven patents registered overseas, and had 579 and 505 pending patent applications in China and overseas, respectively.

Currently, we primarily generate revenues from cloud robots and services, cloud AI solutions, smart devices, and certain other services. Our cloud robot and services business mainly consists of sales or lease of a range of robot products that are embedded with corresponding end-to-end cloud AI operating systems and processing services including cloud robots such as Cloud Pepper and inspection devices such as smart optic detectors and cloud Raman sensor. Our cloud AI solutions business mainly consists of the sale of smart devices that are embedded with corresponding end-to-end cloud AI operating systems and processing solutions related to smart city projects. Our smart devices business consists of sales of smart communication devices such as robot controllers and smartphones. Our other business mainly consists of provision of cloud or network services such as setting up private networks.

Our total revenues increased by 529.1% from US$19.2 million in 2017 to US$121.0 million in 2018. Our total revenues decreased by 62.1% from US$32.7 million for the three months ended March 31, 2018 to US$12.4 million for the three months ended March 31, 2019, which was primarily attributable to the decrease in our revenues from cloud AI solutions as a result of the delivery timing of purchases related to smart city projects. We recognized revenues amounting to US$130.4 million for the period from April 1, 2019 through May 31, 2019. The revenues recognized were primarily related to the product performance obligation for our cloud AI solutions that is recognized at a point in time, which generally occurs upon delivery. Our net loss was US$156.8 million in 2018 as compared to net loss of US$47.7 million in 2017, and was US$59.9 million for the three months ended March 31, 2019 as compared to net loss of US$28.9 million for the three months ended March 31, 2018. Our adjusted net loss, a non-GAAP measure defined as net loss excluding change in fair value of financial instruments, was US$67.7 million in 2018 as compared to US$37.3 million in 2017, and was US$9.4 million for the three months ended March 31, 2019 as compared to US$12.6 million for the three months ended March 31, 2018. Our continued investment in research and development, amounting to US$22.7 million in 2017 and US$54.1 million in 2018, contributed significantly to our adjusted net loss in the same

periods. Our research and development expenses amounted to US$8.3 million for the three months ended March 31, 2018 and US$3.7 million for the three months ended March 31, 2019, the difference between which was primarily due to the decrease in prototype cost and cost of testing materials in line with the development cycle of a certain product. See "Prospectus Summary—Summary Consolidated Financial Data—Non-GAAP Financial Measures."

Our business and operating results are affected by the general factors affecting the global robotics industry, and in particular the global cloud robotics industry, including the development of the regulatory regime, increases in per capita disposable income, shortage of labor supply, as well as technology development and breakthroughs in areas such as AI and cloud computing and the adoption of the 5G mobile network. Changes in any of these general factors could affect the demand for our products and services and our results of operations.

While our business is influenced by factors affecting our industry generally, we believe our results of operations are more directly affected by the following specific factors:

Our business and operating results are affected by public adoption and market acceptance of cloud robot technologies and services. Aging populations, structural labor shortages, rising labor costs and the drive for continuous productivity enhancements create growing demand for both industrial and service robots, according to Frost & Sullivan. As a result, robots are expected to assist and eventually replace humans in roles such as receptionists, cleaners, security guards, domestic helpers, among others. We believe that many industry sectors are in need of smart and useful cloud robots, which are where our market opportunities lie. Built upon our end-to-end cloud robot system, we can offer a range of comprehensive services in key sectors, such as customer reception in retail stores, service centers, hospitals, bank branches, and shopping malls; patrol and security services in residential communities and public areas; smart city administrative services such as human and substance identification; and smart optic detectors to distinguish substances and perform product quality check.

Our long-term growth will depend in part on our continued ability to expand our customer base and increase revenue from existing and new cloud robot application scenarios. We intend to expand into new vertical markets and to increase our presence globally through the active promotion of our brand, the formation of strategic partnerships, the introduction of new products and services as part of our cloud robot solutions. According to Frost & Sullivan, we enjoy a first-mover advantage as one of the first few players that offer an end-to-end cloud robot system in the global robotics industry. Based upon that advantage, we have built an open end-to-end cloud robot system, which, with its world-class infrastructure, according to Frost & Sullivan, is capable of operating a massive number of intelligent and secure robots simultaneously and offer a wide range of applications. As a result, we are well positioned to capture significant monetization opportunities. We started generating revenue from cloud robot and services in 2017. Going forward, as we plan to expand our product and service offerings, including our open end-to-end cloud robot system as a service, and with the introduction of next-generation XR series cloud robot we expect the continued monetization of cloud robot products and services will have a significant and positive impact on our results of operations.

Our success and results of operations depend to a great extent on our ability to implement our business strategies, including to continue to invest in our proprietary technologies, expand our product

and service offerings, grow our customer base and explore more opportunities with existing customers, and pursue strategic acquisition, investments and alliances opportunities.

Over time, we believe we will be able to optimize our products and services offerings while we continue to roll out our products and services strategies and adjusting our products and services mix. We expect the greatest growth potential from our cloud robot and services.

We operate in an evolving market characterized by rapid development in new technologies. We believe that our disruptive technologies underlying our open end-to-end cloud robot system is our crucial competitive strength. To maintain our competitive position, we have invested and will continue to invest significantly in technology development in areas such as AI and recruiting and retaining top technology talents globally. Our research and development expenses increased by 138.5% from US$22.7 million in 2017 to US$54.1 million in 2018, and decreased by 55.9% from US$8.3 million for the three months ended March 31, 2018 to US$3.7 million for the three months ended March 31, 2019, which was attributable to the decrease in prototype cost and cost of testing materials in line with the development cycle of a certain product.

Our ability to achieve profitability is dependent on our ability to further improve our operational efficiency and reduce our total operating expenses as a percentage of our revenues. In addition, as our business grows, we expect to achieve greater operating leverage, increase the productivity of our personnel, and obtain more favorable terms from our suppliers. Our operating expenses increased from US$39.5 million in 2017 to US$78.8 million in 2018, but decreased from 205.6% to 65.1% as a percentage of our total revenues during the same period, contributing considerably to the decrease in our net loss margin. Our operating expenses decreased from US$12.2 million for the three months ended March 31, 2018 to US$10.9 million for the three months ended March 31, 2019, but increased from 37.4% to 88.4% as a percentage of our total revenues during the same period.

The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the periods presented:

	For the Year Ended December 31,								For the Three Months Ended March 31,

	2017				2018				2018				2019
	US$		%		US$		%		US$		%		US$		%
	(in thousands, except for percentages)
Revenues from third parties
Cloud Robot and Services		25		0.1		14,658		12.1		43		0.1		321		2.6
Cloud AI Solutions		14,294		74.4		72,607		60.0		31,997		98.0		6,684		54.0
Smart Devices		970		5.0		32,641		27.0		446		1.4		5,110		41.3
Others		3,747		19.5		837		0.7		178		0.5		234		1.9

Total revenues from third parties		19,036		99.0		120,743		99.8		32,664		100.0		12,349		99.8

Revenues from related parties		201		1.0		282		0.2		3		0.0		30		0.2

Total revenues		19,237		100.0		121,025		100.0		32,667		100.0		12,379		100.0

Cloud Robot and Services. We offer a range of robot products that are embedded with corresponding end-to-end cloud AI operating systems and processing services, including cloud robots such as Cloud Pepper and inspection devices such as smart optic detectors and cloud Raman sensor.

Cloud AI Solutions. We sell a range of smart devices that are embedded with corresponding end-to-end cloud AI operating systems and processing solutions. Such devices have primarily been used in smart city projects.

Smart Devices. Revenues from smart devices consist of revenues from sales of smart communication devices such as robot controllers and smartphones. As we continue to invest in, and expand our product and service offerings of cloud robot and services, expect smart devices to, in the long term, contribute to a decreasing portion of our revenues.

Others. Revenues from others consist of revenues from provisions of services related to cloud and network.

Six of our customers accounted for approximately 26%, 18%, 16%, 15%, 11% and 11%, respectively, of our total revenues in 2018. Those transactions were mainly governed by the following contracts, respectively:

Cost of revenues includes procurement, manufacturing and distribution costs for products sold, costs incurred to support and maintain cloud-based AI services, royalties, warranty costs, inventory valuation adjustments, salaries and benefits for employees directly involved in revenue generation activities, and other expenses directly attributable to the provision of services.

The following table sets forth our gross profit and gross margin for the periods presented:

We classify our operating expenses into three categories: sales and marketing, general and administrative, and research and development. The following table sets forth the break down of our total operating expenses and as percentages of our total revenues for the periods presented:

Sales and marketing expenses. Sales and marketing expenses primarily consist of salaries and benefits for sales and marketing personnel, overhead, marketing consulting services fees, advertising expenses, and facilities, rental and depreciation.

General and administrative expenses. General and administrative expenses primarily consist of salaries and benefits for general and administrative personnel, overhead, professional services fees, and facilities, rental and depreciation.

Research and development expenses. Research and development expenses primarily consist of salaries and benefits for research and development personnel, third party service provider costs, and product and service development costs, including prototype cost and cost of testing materials.

Changes in fair value of financial instruments primarily consist of changes in fair value of warrants.

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments.

Under the current Hong Kong Inland Revenue Ordinance, from the year of assessment 2018/2019 onwards, a two-tiered profits tax rates regime will apply in Hong Kong. Under the two-tiered regime, the corporations in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2,000,000; and 16.5% on any part of assessable profits over HK$2,000,000. For the year ended December 31, 2018, our subsidiary in Hong Kong is subject to 16.5% Hong Kong profit tax on its taxable income generated from operations in Hong Kong. However, each group of "connected entities" can only elect one entity in the group to benefit from the two-tiered regime for a given year of assessment. In general, two entities are regarded as "connected entities" if one entity has control over the other or both of them are under the control of a third entity. "Control" generally refers to one entity holding directly or indirectly of more than 50% of the issued share capital, voting rights, capital or profits of another entity. Additionally, payments of dividends by our subsidiary incorporated in Hong Kong to the Company is not subject to any Hong Kong withholding tax.

Generally, our PRC subsidiaries, consolidated VIE and its subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. The enterprise income tax is calculated based on the entity's global income as determined under PRC tax laws and accounting standards.

One of our PRC subsidiaries, Cloudminds (Beijing) Technologies Co., Ltd., qualified as national high and new technology enterprise, or HNTE, in October 2017, which reduced its enterprise income tax rate to 15% for three years from 2017 to 2019. Our WFOE, our VIE, and one of our PRC subsidiaries, Cloudminds (Shenzhen) Technologies Co., Ltd., enjoy a preferential enterprise income tax rate of 15% as they are located in Qianhai District, Shenzhen, where certain entities can qualify for such preferential tax rate.

Dividends paid by our wholly foreign-owned subsidiary in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the relevant tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. Effective from November 1, 2015, the above mentioned approval requirement has been abolished, but a Hong Kong entity is still required to file application package with the relevant tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority. See "Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business."

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

The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our revenues for the years presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any particular period are not necessarily indicative of our future trends.

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands, except for shares and per share data)
Summary Consolidated Statements of Comprehensive Loss:
Revenues from third parties:
Cloud Robot and Services		25			14,658			43			321
Cloud AI Solutions		14,294			72,607			31,997			6,684
Smart Devices		970			32,641			446			5,110
Others		3,747			837			178			234

Total revenues from third parties		19,036			120,743			32,664			12,349

Revenues from related parties		201			282			3			30

Total revenues		19,237			121,025			32,667			12,379

Cost of revenues		(19,055	)		(114,636	)		(32,251	)		(11,161	)

Gross profit		182			6,389			416			1,218

Operating expenses:
Sales and marketing		(8,470	)		(11,455	)		(1,887	)		(4,361	)
General and administrative		(8,410	)		(13,308	)		(2,003	)		(2,902	)
Research and development		(22,669	)		(54,074	)		(8,342	)		(3,680	)

Total operating expenses		(39,549	)		(78,837	)		(12,232	)		(10,943	)

Operating loss		(39,367	)		(72,448	)		(11,816	)		(9,725	)

Foreign exchange (loss)/gain		(637	)		2,730			(1,034	)		60
Change in fair value of financial instruments		(10,423	)		(89,061	)		(16,332	)		(50,451	)
Other income, net		2,372			1,468			195			208
Loss before income tax		(47,744	)		(156,995	)		(28,890	)		(59,860	)
Income tax benefit		—			227			—			—
Net loss		(47,744	)		(156,768	)		(28,890	)		(59,860	)

Three months ended March 31, 2019 compared to three months ended March 31, 2018

Our revenues decreased by 62.1% from US$32.7 million for the three months ended March 31, 2018 to US$12.4 million for the three months ended March 31, 2019. This decrease was primarily attributable to the decrease in our revenues from cloud AI solutions. Our revenues from cloud robot and services increased from US$43 thousand for the three months ended March 31, 2018 to US$321 thousand for the three months ended March 31, 2019, all of which was due to the growth in the sales or rental of Raman sensors and Cloud Pepper robots. The decreased relative contribution of cloud robot and services revenues in the three months ended March 31, 2019 compared to the twelve months ended December 31, 2018 was primarily due to placement and delivery timing of orders for cloud robot and services, which varies and fluctuates throughout the year. Our revenues from cloud AI solutions decreased from US$32.0 million for the three months ended March 31, 2018 to US$6.7 million for the three months ended March 31, 2019, all of which was attributable to the decrease in revenues due to the delivery timing of purchases related to smart city projects. Our revenues from smart devices increased from US$0.4 million for the three months ended March 31, 2018 to US$5.1 million for the three months ended March 31, 2019, all of which was due to the increase in sales of Hydrogen One smart devices slightly offset by the decrease in sales of other smart devices.

Our cost of revenues decreased by 65.4% from US$32.3 million for the three months ended March 31, 2018 to US$11.2 million for the three months ended March 31, 2019, which was primarily attributable to a US$20.3 million decrease in manufacturing and distribution costs for products sold. The decrease was in line with our sales.

Our gross profit significantly increased by 192.8% from US$0.4 million for the three months ended March 31, 2018 to US$1.2 million for the three months ended March 31, 2019. Our gross margin improved from 1.3% for the three months ended March 31, 2018 to 9.8% for the three months ended March 31, 2019, mainly due to change in our products and services mix in these periods.

Sales and marketing expenses. Our sales and marketing expenses increased by 131.1% from US$1.9 million for the three months ended March 31, 2018 to US$4.4 million for the three months ended March 31, 2019. The increase was primarily attributable to a US$1.8 million increase in salaries and benefits for sales and marketing personnel and a US$0.5 million increase in marketing consulting services, which was due to our launch of new products and services.

General and administrative expenses. Our general and administrative expenses increased by 44.9% from US$2.0 million for the three months ended March 31, 2018 to US$2.9 million for the three months ended March 31, 2019. The increase was primarily attributable to a US$0.5 million increase in salaries and benefits for general and administrative personnel, which was due to an increase in the headcount, and a US$0.3 million increase in professional service fee related to our financing activities.

Research and development expenses. Our research and development expenses decreased by 55.9% from US$8.3 million for the three months ended March 31, 2018 to US$3.7 million for the three months ended March 31, 2019, which was primarily attributable to a US$6.6 million decrease in product and service development costs, due to a decrease in prototype cost and cost of testing materials, in line with the development cycle of a certain product, partially offset by an increase of

other R&D spending, and salaries and benefits due to the increase in headcount for our research and development personnel.

We had foreign exchange gain of US$60 thousand for the three months ended March 31, 2019, compared to foreign exchange loss of US$1.0 million for the three months ended March 31, 2018, primarily due to the changes of exchange rates between Renminbi and U.S. dollars during the respective periods.

We had losses arising from changes in fair value of financial instruments, mainly warrants, of US$16.3 million and US$50.5 million for the three months ended March 31, 2018 and 2019, respectively, primarily due to the increase in the fair value of our ordinary shares.

We had other income, net, of US$0.2 million for the three months ended March 31, 2019, as compared to US$0.2 million for the three months ended March 31, 2018.

As a result of the foregoing, we had a net loss of US$59.9 million for the three months ended March 31, 2019, compared to a net loss of US$28.9 million for the three months ended March 31, 2018. Our adjusted net loss, a non-GAAP measure defined as net loss excluding change in fair value of financial instruments, was US$9.4 million for the three months ended March 31, 2019 as compared to US$12.6 million for the three months ended March 31, 2018. See "Prospectus Summary—Summary Consolidated Financial Data—Non-GAAP Financial Measures."

Our revenues increased by 529.1% from US$19.2 million in 2017 to US$121.0 million in 2018. This increase was primarily attributable to significant increases in revenues from cloud robot and services, cloud AI solutions, and smart devices. Our revenues from cloud robot and services significantly increased from US$25 thousand in 2017 to US$14.7 million in 2018, substantially all of which was attributable to the increase in the sale of smart optic detectors. Our revenues from cloud AI solutions significantly increased by 408.0% from US$14.3 million in 2017 to US$72.6 million in 2018, all of which was attributable to the increase in revenues from smart city purchases. Our revenues from smart devices significantly increased from US$1.0 million in 2017 to US$32.6 million in 2018, substantially all of which was attributable to our sales of Hydrogen One smart devices since 2018.

Our cost of revenues increased by 501.6% from US$19.1 million in 2017 to US$114.6 million in 2018, which was primarily attributable to a US$92.5 million increase in procurement, manufacturing and distribution costs for products sold. The increase was in line with the growth of our sales.

Our gross profit significantly increased from US$0.2 million in 2017 to US$6.4 million in 2018. Our gross margin improved from 0.9% in 2017 to 5.3% in 2018, mainly due to revenues from cloud robot

and services and smart devices, which have relatively higher margins, constituting a larger portion of our revenues as a result of their rapid growth.

Sales and marketing expenses. Our sales and marketing expenses increased by 35.2% from US$8.5 million in 2017 to US$11.5 million in 2018. The increase was primarily attributable to a US$1.5 million increase in salaries and benefits for sales and marketing personnel, a US$0.8 million increase in overhead, and a US$0.7 million increase in marketing consulting services, which was due to our launch of new products and services.

General and administrative expenses. Our general and administrative expenses increased by 58.2% from US$8.4 million in 2017 to US$13.3 million in 2018. The increase was primarily attributable to a US$2.0 million increase in salaries and benefits for general and administrative personnel, which was due to an increase in the headcount, and a US$1.7 million increase in professional services fees related to our financing activities and our acquisition of INNFOS (Beijing) Technology Co. in August 2018.

Research and development expenses. Our research and development expenses increased by 138.5% from US$22.7 million in 2017 to US$54.1 million in 2018, which was primarily attributable to a US$12.6 million increase in third party service provider costs, a US$11.0 million increase in salaries and benefits for research and development personnel, and a US$4.4 million increase in product and service development costs, including prototype cost and cost of testing materials, which were due to our effort to further develop technologies related to our cloud robot and expand our products and service offerings.

We had foreign exchange gain of US$2.7 million in 2018, compared to foreign exchange loss of US$0.6 million in 2017, primarily due to the changes of exchange rates between Renminbi and U.S. dollars during the respective periods.

We had losses arising from changes in fair value of financial instruments, mainly warrants, of US$10.4 million and US$89.1 million in 2017 and 2018, respectively, primarily due to the increase in the fair value of our ordinary shares.

We had other income, net, of US$1.5 million in 2018, as compared to US$2.4 million in 2017. The income mainly consists of government subsidies, and was thus subject to fluctuation.

We recorded an income tax benefit of nil in 2017 and approximately US$227 thousand in 2018, which was primarily due to the difference between the tax effect of the fair value of the assets acquired as part of the business acquisition in August 2018, and its corresponding tax base.

As a result of the foregoing, we had a net loss of US$156.8 million in 2018, compared to a net loss of US$47.7 million in 2017. Our adjusted net loss, a non-GAAP measure defined as net loss excluding change in fair value of financial instruments, was US$67.7 million in 2018 as compared to US$37.3 million in 2017. See "Prospectus Summary—Summary Consolidated Financial Data—Non-GAAP Financial Measures."

The following table sets forth our unaudited consolidated quarterly results of operations for each of the five quarters from January 1, 2018 to March 31, 2019. You should read the following table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. We have prepared this unaudited condensed consolidated quarterly financial data on the same basis as we have prepared our audited consolidated financial statements. The unaudited condensed consolidated quarterly financial data include all adjustments, consisting only of normal and recurring adjustments, that our management considered necessary for a fair statement of our financial position and results of operation for the quarters presented. Our historical results for any particular quarter are not necessarily indicative of our future results.

	For the Three Months Ended,

	March 31, 2018			June 30, 2018			September 30, 2018			December 31, 2018			March 31, 2019
	(Unaudited)
	(US$ in thousands, except for shares and per share data)
Revenues from third parties:
Cloud Robot and Services		43			117			1,888			12,610			321
Cloud AI Solutions		31,997			38			21,768			18,804			6,684
Smart Devices		446			165			2,177			29,853			5,110
Others		178			155			235			269			234
Total revenues from third parties		32,664			475			26,068			61,536			12,349
Revenues from related parties		3			150			16			113			30
Total revenues		32,667			625			26,084			61,649			12,379
Cost of revenues		(32,251	)		(463	)		(25,452	)		(56,470	)		(11,161	)
Gross profit		416			162			632			5,179			1,218
Operating expenses:
Sales and marketing		(1,887	)		(2,082	)		(2,894	)		(4,592	)		(4,361	)
General and administrative		(2,003	)		(2,781	)		(3,512	)		(5,012	)		(2,902	)
Research and development		(8,342	)		(12,538	)		(12,804	)		(20,390	)		(3,680	)
Total operating expenses		(12,232	)		(17,401	)		(19,210	)		(29,994	)		(10,943	)
Operating loss		(11,816	)		(17,239	)		(18,578	)		(24,815	)		(9,725	)
Foreign exchange (loss) gain		(1,034	)		1,526			1,048			1,190			60
Change in fair value of financial instruments		(16,332	)		(20,760	)		(50,315	)		(1,654	)		(50,451	)
Other income, net		195			531			423			319			208
Loss before income tax		(28,890	)		(35,898	)		(67,378	)		(24,829	)		(59,860	)
Income tax benefit		—			—			227			—			—
Net loss		(28,890	)		(35,898	)		(67,151	)		(24,829	)		(59,860	)

Our revenues and cost of revenues vary depending on placement and delivery timing of orders from our customers. For example, The decreased relative contribution of cloud robot and services revenues in the three months ended March 31, 2019 was primarily due to placement and delivery timing of orders for cloud robot and services, which varies and fluctuates throughout the year. Our revenues from cloud AI solutions also decreased for the three months ended March 31, 2019, which was attributable to the decrease in revenues due to the delivery timing of purchases related to smart city projects.

Our operating expenses generally increased substantially during 2018 as we grew our business, specifically, our robot and service solutions, mainly as a result of the development and expansion of our cloud robot platform.

Due to our limited operating history, the quarterly trends that we have experienced in the past may not apply to, or be indicative of, our future operating results.

The following table sets forth a summary of our cash flows for the periods presented:

	For the Year Ended December 31,						For the Three Months Ended March 31,

	2017			2018			2018			2019
	(US$ in thousands)
Selected Consolidated Cash Flow Data:
Net cash used in operating activities		(36,713	)		(88,839	)		(9,554	)		(8,772	)
Net cash generated from/(used in) investing activities		7,953			(10,847	)		(723	)		(614	)
Net cash generated from financing activities		83,630			52,682			—			41,532
Exchange rate effect on cash, cash equivalents and restricted cash		(707	)		2,934			(1,054	)		59
Net increase/(decrease) in cash, cash equivalents and restricted cash		54,163			(44,070	)		(11,331	)		32,205
Cash, cash equivalents and restricted cash at beginning of the year/period		7,920			62,083			62,083			18,013
Cash, cash equivalents and restricted cash at end of the year/period		62,083			18,013			50,752			50,218

To date, we have financed our operating and investing activities primarily through historical equity financing activities. As of December 31, 2017 and 2018 and March 31, 2019, our cash and cash equivalents were US$62.0 million, US$18.0 million and US$50.1 million, respectively. Our cash and cash equivalents primarily consist of cash on hand, money market funds, and highly liquid investments placed with banks, which are unrestricted to withdrawal and use and have original maturities of less than three months.

We believe that our current cash and cash equivalents, anticipated cash raised prior to this offering, and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the next 12 months from the date of this prospectus. After this offering, we may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating 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.

As of March 31, 2019, all of our short-term investments were denominated in Renminbi. Although we consolidate the results of our variable interest entity and its subsidiaries, we only have access to the assets or earnings of our variable interest entity and its subsidiaries through our contractual arrangements with our variable interest entity and its shareholders. See "Corporate History and Structure." For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see "—Holding Company Structure."

In utilizing the proceeds we expect to receive from this offering, we may make additional capital contributions to our PRC subsidiary, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, make loans to our PRC subsidiary, or acquire offshore entities with operations in China in offshore transactions. However, most of these uses are subject to PRC regulations. See "Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries and consolidated affiliated entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business" and "Use of Proceeds."

We expect that a majority of our future revenues will be denominated in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiary is allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, approval from or registration with competent government authorities is required when the 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 at its discretion restrict access to foreign currencies for current account transactions in the future.

Net cash used in operating activities for the three months ended March 31, 2019 was US$8.8 million. This amount was primarily attributable to net loss of US$59.9 million, adjusted for certain non-cash expenses, principally a loss of US$50.5 million associated with fair value changes of warrants.

Net cash used in operating activities in 2018 was US$88.8 million. This amount was primarily attributable to net loss of US$156.8 million, adjusted for certain non-cash expenses, principally a loss of US$89.0 million associated with fair value changes of warrants, and changes in certain working capital accounts that affected operating cash flow, primarily (i) a US$51.0 million decrease in prepayments and other current assets and (ii) a US$28.2 million decrease in inventories, offset by (iii) a US$48.8 million decrease in accrued expenses and other current liabilities and (iv) a US$38.3 million increase in amount due from related parties. The loss associated with fair value changes of warrants was primarily due to the increase in the fair value of our ordinary shares. The decrease in prepayments and other current assets was primarily due to certain other receivables as of December 31, 2017, which represents consideration to be collected on behalf of a supplier in a non-recurring arrangement was fully collected and settled in 2018. The inventory decrease was due to the fulfillment of the outstanding prior year customer orders during the year ended December 31, 2018. The decrease in accrued expenses and other current liabilities was primarily due to certain payables as of December 31, 2017 due to the supplier in a non-recurring arrangement. The increase in amount due from related parties was primarily due to increase in receivable balances from one of our outsourced manufacturers who holds a minority interest in CloudMinds Inc., which was as a result of the increase in sales of smart devices.

Net cash used in operating activities in 2017 was US$36.7 million. This amount was primarily attributable to net loss of US$47.7 million, adjusted for certain non-cash expenses, principally a loss of US$10.2 million associated with fair value changes of warrants, and changes in certain working capital accounts that affected operating cash flow, primarily (i) a US$61.1 million increase in accrued expenses and other current liabilities and (ii) a US$42.9 million increase in accounts payable, partially offset by (iii) a US$61.7 million increase in prepayments and other current assets and (iv) a US$30.7 million increase in inventories. The loss associated with fair value changes of warrants was primarily due to the increase in the fair value of our ordinary shares. The increase in accrued expenses and other current liabilities was primarily due to certain payables as of December 31, 2017 due to the supplier in a non-recurring arrangement. The increase in prepayments and other current assets was primarily due to certain other receivables as of December 31, 2017, which represents consideration to be collected on behalf of a supplier in a non-recurring arrangement. The increases in accounts payable was primarily due to the growth of our business and the increase in inventory was due to customer orders that had not been fulfilled as of December 31, 2017.

Net cash used in investing activities for the three months ended March 31, 2019 was US$0.6 million, primarily due to purchases of property and equipment.

Net cash used in investing activities in 2018 was US$10.8 million, primarily due to advances from related parties, cash paid for purchases of property and equipment and cash paid for business acquisitions (net of cash acquired of nil for 2017 and 2018).

Net cash generated from investing activities in 2017 was US$8.0 million, due to proceeds from maturities of short-term investments, partially offset by cash paid for purchases of property and equipment.

Net cash generated from financing activities for the three months ended March 31, 2019 was US$41.5 million, primarily due to proceeds from convertible notes and bank loan.

Net cash generated from financing activities in 2018 was US$52.7 million, primarily due to proceeds from convertible notes and capital contribution from minority shareholders of a subsidiary.

Net cash generated from financing activities in 2017 was US$83.6 million, due to proceeds from convertible preference shares (net of issuance costs), warrants and convertible notes.

Our capital expenditures are incurred for purchases of property and equipment. Our capital expenditures were US$4.9 million in 2017, US$4.0 million in 2018 and US$614 thousand for the three months ended March 31, 2019. We intend to fund our future capital expenditures with our existing cash balance, short-term investments and proceeds from this offering. We will continue to make capital expenditures to meet the expected growth of our business.

The following table sets forth our contractual obligations as of December 31, 2018:

Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2018.

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

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect the reported amounts of our assets and liabilities and the disclosure of our contingent assets and liabilities at the end of each fiscal period and the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these judgments and estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our consolidated financial statements. For further information on our critical accounting policies, see Note 2 to our consolidated financial statements and interim condensed consolidated financial statements. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial statements.

Effective January 1, 2017, we elected to adopt the requirements of ASC 606 using the full retrospective method. We apply the five-step model outlined in ASC 606, and account for a contract when it has approval and commitment from our customer, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Revenue is allocated to each performance obligation based on its standalone selling price. We generally determine standalone selling prices based on observable prices. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price based on multiple factors, including, but not limited to, historical discounting trends for products and services, gross margin objectives, internal costs, and industry technology lifecycles. Timing of revenue recognition may differ from the timing of invoicing to our customers. For certain revenue contracts our customers are required to pay before the products or services are delivered to them. We recognize a contract asset or a contract liability in the consolidated balance sheets, depending on the relationship between our performance and our customer's payment. Contract liabilities represents the excess of payments received as compared to the consideration earned and is reflected in "deferred revenue and customer advances" in our consolidated balance sheets. Contract assets primarily relate to our rights to consideration for work completed in relation to its services performed but not billed at the reporting date, and is reflected in "prepayments and other current assets" in our consolidated balance sheets. The contract assets are transferred to the receivables when the rights become unconditional. Using the practical expedient in ASC 606, we do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between the transfer of the promised good or service to our customer and when our customer pays for that good or service will be one year or less. Pursuant to ASC 606-10-32-2A, we also elected to exclude sales taxes and other similar taxes from the measurement of the transaction price. Therefore, revenues are recognized net of business tax, value added taxes and surcharges.

We sell a range of robot products that are embedded with corresponding end-to-end cloud AI operating systems and processing services. The end-to-end cloud AI operating systems and processing services, or collectively Cloud Services, are not distinct within the context of the contract because they are considered highly interdependent and our customer can only benefit from these services in conjunction with one another as a two-way dependency exists. Further, these services are not sold separately and would not be purchased/consumed by our customer on a standalone basis. Therefore, the arrangement has two performance obligations, the robot and the Cloud Services. Revenue allocated to the robots is recognized at the point in time when control transfers to our customer, which generally occurs upon delivery. Cloud Services revenue is recognized over time because our customer simultaneously receives and consumes the benefits as we perform throughout a fixed contract term.

We sell a range of smart devices that are embedded with corresponding end-to-end cloud AI operating systems and processing solutions. The end-to-end cloud operating systems and processing

services, or collectively Solutions, are not distinct within the context of the contract because they are considered highly interdependent and our customer can only benefit from these services in conjunction with one another as a two-way dependency exists. Further, these services are not sold separately and would not be purchased/consumed by our customer on a standalone basis. Therefore, the arrangement has two performance obligations, the smart device and the Solutions. Revenue allocated to the smart device is recognized at the point in time when control transfers to our customer, which generally occurs upon delivery. Solutions' revenue is recognized over time because our customer simultaneously receives and consumes the benefits as we perform throughout a fixed contract term.

We sell a range of smart devices. Smart devices revenue contracts consist of only one performance obligation. Revenue is recognized at the point in time when control transfers to our customer, which generally occurs upon delivery.

Others includes services ancillary to our other revenue streams, primarily cloud and network services. Cloud and network service income is recognized when services are provided as our customer simultaneously benefits from the services as they are performed.

To comply with PRC laws and regulations which prohibit foreign control of companies that engage in value-added telecommunication services, we primarily conduct our business in the PRC through our PRC subsidiaries and the VIE. The equity interests of our VIE are legally held by PRC shareholders. Despite the lack of technical majority ownership, we have effective control of our VIE through a series of contractual agreements and a parent-subsidiary relationship exists between us and our VIE. Through the contractual agreements, the shareholders of our VIE effectively assigned all of their voting rights underlying their equity interests in our VIE to us and therefore, we have the power to direct the activities of our VIE that most significantly impact its economic performance. We also have the ability and obligations to absorb substantially all the profits or losses of our VIE that potentially could be significant to our VIE. Based on the above, we consolidate the VIE in accordance with SEC Regulation SX-3A-02 and ASC 810, Consolidation. We will reconsider the initial determination of whether a legal entity is a consolidated affiliated entity upon certain events listed in ASC 810-10-35-4 occurring. We will also continuously reconsider whether we are the primary beneficiary of our affiliated entities as facts and circumstances change. See "Risk Factors—Risks Relating to Our Corporate Structure."

ASC 815, Derivatives and Hedging, requires all contracts which meet the definition of a derivative to be recognized in the consolidated financial statements as either assets or liabilities and recorded at fair value. Changes in the fair value of derivative financial instruments are either recognized periodically in income/loss or in shareholders' deficit as a component of other comprehensive loss depending on the use of the derivative and whether it qualifies for hedge accounting. Changes in fair values of derivatives not qualified as hedges are reported in the consolidated statements of comprehensive loss. The estimated fair values of derivative instruments are determined at discrete points in time based on the relevant market information. We calculated these estimates with reference to the market rates using industry standard valuation techniques with the assistance of an independent third-party valuation firm.

As presented in the subsequent subsection, "Fair Value Estimate," we applied the discounted cash flow analysis to estimate our business enterprise value, or BEV as of various valuation dates and the option-pricing method was used to allocate the BEV to preference shares or other senior securities and ordinary shares. The derived fair value of ordinary share and preference shares was then further used as inputs to the Black-Scholes option pricing model to estimate the fair value of the derivative instruments. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the expected volatility of the underlying stock and the expected life of the derivative instruments. These estimates involve inherent risk and uncertainties and the application of management's judgment. To determine the expected life of the derivative instruments, we have considered factors including the timing of expected various liquidity events and their respective probabilities as well as the contractual life of the derivative instruments. We historically have been a private company and lack company-specific historical and implied volatility information. Therefore, we estimate our expected volatility based on the historical volatility of a group of similar companies, which are publicly-traded.

We have measured the warrants at fair values on a recurring basis using significant unobservable inputs (Level 3) as of December 31, 2017 and 2018 and March 31, 2019. The significant unobservable inputs used in the fair value measurement and the corresponding impacts to the fair values are presented below:

The convertible preference shares, or preference shares, have been classified as mezzanine equity as they may be redeemed upon the occurrence of a conditional event, a deemed liquidation event. The preference shares were initially recorded at issue price net of issuance costs. We concluded that the preference shares are not redeemable currently, and is not probable that the preference shares will become redeemable because the likelihood of a deemed liquidation is remote. Therefore, no adjustment will be made to the initial carrying amount of the preference shares until it is probable that they will become redeemable.

The holders of preference shares have the ability to convert the instrument into our ordinary shares. We have evaluated the embedded conversion option in the preference shares to determine if there were any embedded derivatives requiring bifurcation and to determine if there were any beneficial conversion features. The conversion option of the preference shares does not qualify for bifurcation accounting because the conversion option is clearly and closely related to the host instrument and the underlying ordinary shares are not publicly traded nor readily convertible into cash. The contingent redemption options of the convertible preference shares did not qualify for bifurcation accounting because the underlying ordinary shares were neither publicly traded nor readily convertible into cash. There were no other embedded derivatives that are required to be bifurcated.

Beneficial conversion features exist when the conversion price of the convertible preference shares is lower than the fair value of the ordinary shares at the commitment date, which is the issuance date in our case. When a beneficial conversion feature, or BCF, exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the convertible preference shares as a contribution to additional paid-in capital. We recorded a BCF for certain of our series A and series A+ preference shares, and the resulting discount to the such preference shares was immediately amortized in full as a deemed dividend because the earliest conversion date is the issuance date. We

determined the fair value of our ordinary shares with the assistance of an independent third party valuation firm.

The contingent conversion price adjustment is accounted for as a contingent BCF. In accordance with ASC paragraph 470-20-35-1, changes to the conversion terms that would be triggered by future events not controlled by an issuer should be accounted as contingent conversions, and the intrinsic value of such conversion options would not be recognized until and unless a triggering event occurred. No contingent BCF has been recognized for the periods presented.

We apply ASC 718, Compensation—Stock Compensation, or ASC 718, to account for our employee share-based payments. In accordance with ASC 718, we determined whether an award should be classified and accounted for as a liability award or equity award. All of our share based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values. We elected to account for forfeitures as they occur. With the assistance of an independent third party valuation firm, we used the binomial option pricing model to determine the fair value of the stock options granted to employees.

The share based awards will only vest upon the completion of an initial public offering or an IPO, Given that this constitutes a performance condition that is not considered probable until the IPO completion date, we will not recognize any compensation expense until an IPO occurs. Upon the IPO completion date, we will immediately recognize expenses associated with share awards that are vested as of the IPO completion date. As of March 31, 2019, the total unrecognized compensation costs that will be recognized for awards that will vest upon completion of the IPO amounted to US$11.8 million. In addition, we will also recognize the remaining compensation expenses over the remaining service requisite period using the accelerated method.

We account for equity instruments issued to non-employees in accordance with ASC 505-50, Equity—Equity-based payments to non-employees. All transactions in which goods or services are received in exchange for equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the date on which the counterparty's performance is completed as there is no associated performance commitment. The expense is recognized in the same manner as if we had paid cash for the services provided by the non-employees.

The share based awards will only vest upon the completion of an IPO. Given that this constitutes a performance condition that is not considered probable until the IPO completion date, we will not recognize any compensation expense until an IPO occurs. Upon the IPO completion date, we will immediately recognize expenses associated with share awards that are vested as of the IPO completion date. In addition, we will also recognize the remaining compensation expenses over the remaining service requisite period using the accelerated method.

Significant Factors, Assumptions and Methodologies Used in Determining Fair Value

The fair value of each option grant is estimated using the binomial option-pricing model. The model requires the input of highly subjective assumptions including the estimated expected share price volatility and, the share price upon which (i.e. the exercise multiple) the employees are likely to exercise options. We historically have been a private company and lack information on our share price

volatility. Therefore, we estimate our expected share price volatility based on the historical volatility of a group of similar companies, which are publicly-traded. When selecting these public companies on which we have based our expected share price volatility, we selected companies with characteristics similar to us, including the BEV, business model, development stage, risk profiles, position within the industry, and with historical share price information sufficient to meet the contractual life of our share-based awards. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own share price becomes available. The exercise multiple is estimated as the average ratio of the share price to the exercise price as at the time when employees would decide to voluntarily exercise their vested options. As we did not have sufficient information of past employee exercise history, we considered the statistics on exercise patterns of employees compiled by Huddart and Lang in Huddart, S., and M. Lang. 1996. "Employee Stock Option Exercises: An Empirical Analysis." Journal of Accounting and Economics, vol. 21, no. 1 (February):5-43, which are widely adopted by valuers as authoritative guidance on expected exercise multiples. The risk-free interest rates for the periods within the contractual life of the option are based on the U.S. Treasury yield curve in effect during the period the options were granted. Expected dividend yield is based on the fact that we have never paid, and do not expect to pay cash dividends in the foreseeable future.

The assumptions adopted to estimate the fair value of options using the binomial option pricing model were as follows:

The assumptions used to estimate the fair value of the share options granted are as follows:

These assumptions represented our best estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates when valuing our options, our share-based compensation expense could be materially different.

We are required to estimate the fair value of the ordinary shares underlying our options when performing the fair value calculations with the binomial option model. Therefore, our board of directors has estimated the fair value of our ordinary shares at various dates, with input from management, considering the third-party valuations of ordinary shares at each grant date. The valuations of our ordinary shares were performed using methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series: Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the AICPA Practice Guide. In addition, our board of directors considered various objective and subjective factors, along with input from management and the independent third-party valuation firm, to determine the fair value of our ordinary shares, including: external market conditions affecting the robotics industry, trends within the robotics industry, the prices at which we sold preference shares, the superior rights and preference of the preference shares or other senior securities relative to our ordinary shares at the time of each grant, the results of operations, financials position, status of our research and development efforts, our stage of development and business strategy, and the lack of an active public market for our ordinary shares, and the likelihood of achieving a liquidity event such as

an initial public offering. In order to determine the fair value of our ordinary shares underlying each share-based award grant, we first determined our BEV, and then allocated the BEV to each element of our capital structure (convertible preference shares and ordinary shares) using a hybrid method comprising the probability-weighted expected return method and the option pricing method. In our case, three scenarios were assumed, namely: (i) the liquidation scenario, in which the option pricing method was adopted to allocate the value between convertible preference shares and ordinary shares, and (ii) the redemption scenario, in which the option pricing method was adopted to allocate the value between convertible preference shares and ordinary shares, and (iii) the mandatory conversion scenario, in which equity value was allocated to convertible preference shares and ordinary shares on an as-if converted basis.

In determining the fair value of the ordinary shares in December 2018, we applied the discounted cash flow analysis based on our projected cash flow using our best estimate as of the valuation. The determination of our fair value of the ordinary shares requires complex and subjective judgments to be made regarding our projected financial and operating results, our unique business risks, and our operating history and prospects at the time of valuation.

In determining the fair value of the ordinary shares in March 2019 and June 2019, we applied the back-solve method based on the issuance price of the latest round of preferred share financing.

Fair value of our ordinary shares increased from US$2.72 in December 2018 to US$3.87 in March 2019 primarily due to the following factors:

Fair value of our ordinary shares increased from US$3.87 in March 2019 to US$4.24 in June 2019 pri

Title of each class of securities to be registered	Proposed maximum aggregate offering price⁽²⁾⁽³⁾	Amount of registration fee




Class A Ordinary Shares, par value US$0.0001 per share⁽¹⁾	US$500,000,000	US$60,600

	Ordinary Shares Purchased

			Total Consideration				Average Price Per Ordinary Share
			Total Consideration					Average Price Per ADS
	Number	Percent	Amount	Percent				Average Price Per ADS
Existing shareholders			US$			%	US$	US$
New investors			US$			%	US$	US$

Total			US$		100.0	%

	Payments due by period

	Total		less than 1 year		1 - 3 years		3 - 5 years		more than 5 years
	(US$ in thousands)
Operating lease obligations⁽¹⁾		10,812		4,372		6,440		—		—
Capital expenditure commitments⁽²⁾		130		87		43		—		—
Purchase obligations⁽³⁾		3,000		110		2,890		—		—
Bank loan⁽⁴⁾		691		691		—		—		—
Total		14,633		5,260		9,373		—		—

			Estimation

Financial instrument	Valuation techniques	Unobservable inputs	December 31, 2017	December 31, 2018	March 31, 2019
Warrants	Black-Scholes option pricing model	Volatility for Black-Scholes option pricing model	55.04% - 63.42%	54.42% - 58.88%	51.99% - 59.90%

	For the Year Ended December 31,		For the Three Months Ended March 31,

	2017	2018	2018	2019
Risk-free interest rate	2.21% - 2.38%	2.60% - 3.04%	2.70% - 2.74%	—
Expected volatility range	55.04% - 63.89%	52.62% - 60.13%	55% - 60%	—
Exercise multiple	2.2 - 2.8	2.2 - 2.8	2.2	—
Fair market value per ordinary share as at valuation dates	$0.87 - $1.05	$1.35 - $2.72	$1.35	—


Cayman Islands (State or other jurisdiction of incorporation or organization)		7373 (Primary Standard Industrial Classification Code Number)		Not Applicable (I.R.S. Employer Identification Number)


Copies to:
Z. Julie Gao, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3740-4700		David T. Zhang, Esq. Steve Lin, Esq. Kirkland & Ellis International LLP c/o 26/F, Gloucester Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3761-3300


Prospectus Summary			1
The Offering			8
Summary Consolidated Financial Data			11
Risk Factors			15
Special Note Regarding Forward-Looking Statements			58
Use of Proceeds			59
Dividend Policy			60
Capitalization			61
Dilution			63
Enforceability of Civil Liabilities			65
Corporate History and Structure			67
Selected Consolidated Financial Data			72
Management's Discussion and Analysis of Financial Condition and Results of Operations			74
Industry			98
Business			105
Regulation			124
Management			135
Principal Shareholders			143
Related Party Transactions			146
Description of Share Capital			147
Description of American Depositary Shares			160
Shares Eligible for Future Sale			169
Taxation			171
Underwriting			178
Expenses Related to this Offering			188
Legal Matters			189
Experts			190
Where You Can Find Additional Information			191
Index to Consolidated Financial Statements			F-1

	Per Ordinary Share		Per ADS

Assumed initial public offering price	US$		US$
Net tangible book value as of March 31, 2019	US$	(2.72)	US$
Pro forma net tangible book value after giving effect to the automatic conversion of our preference shares	US$		US$
Pro forma as adjusted net tangible book value after giving effect to the automatic conversion of our preference shares and this offering	US$		US$
Amount of dilution in net tangible book value to new investors in this offering	US$		US$


Citigroup		J.P. Morgan		UBS Investment Bank