424B3 1 f424b30321_ucommune.htm PROSPECTUS

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-254442

6,030,670 CLASS A ORDINARY SHARES,
8,015,623 CLASS A ORDINARY SHARES UNDERLYING WARRANTS,
333,002 CLASS A ORDINARY SHARES UNDERLYING THE UNIT PURCHASE OPTIONS,
333,002 WARRANTS TO PURCHASE CLASS A ORDINARY SHARES UNDERLYING THE UNIT PURCHASE OPTIONS,
333,002 RIGHTS TO CONVERT TO CLASS A ORDINARY SHARES UNDERLYING THE UNIT PURCHASE OPTIONS,
166,501 CLASS A ORDINARY SHARES ISSUABLE UPON EXERCISE OF WARRANTS UNDERLYING THE UNIT PURCHASE OPTIONS,
33,300 CLASS A ORDINARY SHARES ISSUABLE UPON CONVERSION OF THE RIGHTS UNDERLYING THE UNIT PURCHASE OPTIONS

Ucommune International Ltd
(incorporated in Cayman Islands)

________________________

This prospectus relates to the resale from time to time of an aggregate of 6,030,670 Class A ordinary shares, par value US$0.0001 per share, or Class A ordinary shares, of Ucommune International Ltd issued to certain investors (the “PIPE Investors”) in private placements in a PIPE investment (as defined below) in connection with our Business Combination (as defined below).

This prospectus also relates to the issuance by us of (i) up to 2,336,612 Class A ordinary shares upon the exercise of outstanding warrants, each exercisable to purchase one-half of one Class A ordinary share at a price of US$11.50 per share, expiring on November 17, 2025 (the “Prior Warrants”) and (ii) up to 5,679,011 Class A ordinary shares upon the exercise of outstanding warrants, each exercisable to purchase one Class A ordinary share at a price of US$4.05 per share, expiring on February 2, 2026 (the “New Warrants,” and together with the Prior Warrants, the “Warrants”).

This prospectus also relates to the issuance by us of (i) 333,002 Class A ordinary shares upon the exercise of unit purchase options (the “UPOs”) (the “UPO Shares”), (ii) 333,002 warrants to purchase an additional 166,501 Class A ordinary shares upon the exercise of the UPOs (the “UPO Warrants”), (iii) 333,002 rights to convert to an additional 33,300 Class A ordinary shares upon the exercise of the UPOs (the “UPO Rights”), (iv) 166,501 Class A ordinary shares upon the exercise of the UPO Warrants, and (v) 33,300 Class A ordinary shares upon the conversion of the UPO Rights.

We do not know whether the holders of the Warrants, UPOs and UPO Warrants will exercise any of these securities or whether the holder of the UPO Rights will convert the rights to our Class A ordinary shares. If all of the Warrants, UPOs and UPO Warrants described in this prospectus are exercised in full and the UPO Rights are fully converted, we will issue an aggregate of 8,548,426 Class A ordinary shares.

The selling shareholders named in this prospectus (each a “Selling Shareholder” and, collectively, the “Selling Shareholders”) may offer all or part of the shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices.

We will not receive any of the proceeds from the resale of the Class A ordinary shares by the Selling Shareholders. We will receive the proceeds from the exercise of the Warrants, UPOs and UPO Warrants for cash, but not from the sale of the Class A ordinary shares underlying the Warrants, UPOs, UPO Warrants and UPO Rights.

We will bear all costs, expenses and fees in connection with the registration of the Class A ordinary shares. The Selling Shareholders will bear all commissions and discounts, if any, attributable to their respective sales of Class A ordinary shares.

Our Class A ordinary shares and Prior Warrants are listed on The Nasdaq Capital Market under the symbols “UK” and “UKOMW,” respectively. On March 15, 2021, the closing sale price of our Class A ordinary shares and the Prior Warrants was US$3.35 and US$0.37, respectively. Our New Warrants are not listed on Nasdaq or any national securities exchange or market.

We are an “emerging growth company” under applicable federal securities laws and are subject to reduced public company reporting requirements.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire prospectus and any amendments or supplements carefully before you make your investment decision.

Investing in our Class A ordinary shares involves risks that are described in the “Risk Factors” section beginning on page 18 of this prospectus.

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

The date of this prospectus is March 22, 2021.

 

Table of Contents

TABLE OF CONTENTS

 

Page

Prospectus Summary

 

1

The Offering

 

10

Our Summary Combined and Consolidated Financial Data and Operating Data

 

11

Risk Factors

 

18

Special Note Regarding Forward-Looking Statements

 

57

Use of Proceeds

 

58

Dividend Policy

 

59

Enforceability of Civil Liabilities

 

60

Corporate History and Structure

 

62

Selected Combined and Consolidated Financial Data

 

67

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

 

73

Industry Overview

 

103

Business

 

108

Regulation

 

135

Management

 

147

Principal Shareholders

 

155

Selling Shareholders

 

157

Related Party Transactions

 

160

Description of Share Capital and Warrants

 

162

Shares Eligible for Future Sale

 

175

Taxation

 

178

Plan of Distribution

 

185

Legal Matters

 

188

Experts

 

188

Where You Can Find Additional Information

 

188

Index to Financial Statements

 

F-1

________________________

You should rely only on the information contained in this prospectus. No one has been authorized to provide you with any information other than that contained in this prospectus. This prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this prospectus is accurate as of any date other than that date.

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Prospectus Summary

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements and the related notes appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ordinary shares discussed under “Risk Factors,” “Business,” and information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before deciding whether to buy the ordinary shares. Investors should note that Ucommune International Ltd, our ultimate Cayman Islands holding company, does not directly own any substantive operations in the PRC and our businesses in the PRC described in this prospectus are operated through our VIEs.

What is Ucommune

We are China’s leading agile office space manager and provider with global ambitions. We operate the largest agile office space community in China in terms of number of agile office spaces, aggregate managed area and number of cities covered in China as of December 31, 2019, according to Frost & Sullivan.

Our mission is to cultivate a new working culture anchored in four foundations: “Sharing, Innovation, Responsibility and Success for all.”

We are dedicated to providing specialized, integrated services for managing agile office spaces in China. With our strong management and chain operating capabilities, we distinguish ourselves through seamless integration of physical spaces offline and member community online, empowering our members to fulfil their dreams.

The agile office space we envisage is based on a standardized, intelligent, humanized, digital and physical setting. It is an open platform complemented by enterprise services, with office space covering both online and offline members.

Our Business

The urban transformation and the evolution in working culture in China have created strong demand for flexible and innovative working space, creating a unique and significant opportunity for the agile office space industry. Our Ucommune brand is the most recognized agile office space brand in China, according to Frost & Sullivan. Our leading brand position, evidenced by brand awareness and member satisfaction according to a survey conducted by Frost & Sullivan, demonstrates our operating excellence and supports our future development.

Our nationwide agile office space network covers economically vibrant regions, including all the tier-1 and new tier-1 cities in China. Our unique and comprehensive network provides enterprise members with flexible and cost-efficient office space solutions, helping them to expand into new geographic locations quickly and enhance productivity. We are also actively involved in the urban transformation of older and under-utilized buildings, redefining the commercial real estate sector in China.

We believe the establishment of an Ucommune agile office space can attract more traffic to and improve the image of the surrounding neighborhood. Through our physical spaces, we also offer a comprehensive suite of corporate services to empower our members, which we refer to as U Plus services.

Our expertise in the real estate and retail industries has enabled us to operate our agile office spaces with high efficiency. Since the launch of our first agile office space in September 2015, we have replicated our success across China and expanded our footprint overseas with our strong management and chain operating capabilities.

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We had 222 spaces across 51 cities as of September 30, 2020, which 158 spaces were in operation, providing approximately 58,000 workstations to our members, and 64 spaces were under construction or preparation for construction. The following map illustrates our agile office space network in Greater China as of September 30, 2020:

In addition, we provide spaces operated by our associates (which refer to spaces in which we have a minority interest investment but are operated by our associates and for which we do not consolidate the revenue from such spaces) to supplement our agile office space network. We refer members who need agile office space services in locations we do not operate directly to spaces operated by our associates and share our service experiences for such members with our associates. This network of spaces operated by our associates allows members to expand into new geographic locations by receiving a similar level of services provided by our agile office spaces. As of September 30, 2020, we had five spaces operated by our associates across three cities in Greater China and New York.

We currently operate our spaces under the following two models:

•        Self-operated Model.    We have three categories of spaces under our self-operated model.

•        U Space, under which we enter into leases with landlords for spaces with area generally over 200 m2 each, and design and build the spaces using our proprietary standard operating procedure, or SOP.

•        U Studio, under which we lease scattered and small office spaces with area generally less than 200 m2 each from landlords, and design and build the spaces using our proprietary SOP.

•        U Design, under which we provide one-stop customized services from location selection to daily operations in accordance with the specifications of our members.

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•        Asset-light Model.    We provide space design and build as well as management services to develop and manage agile office spaces for landlords who bear most of the capital investments to build out and launch new spaces. We have two categories under our asset-light model.

•        U Brand, under which we primarily charge landlords management fees for branding, consulting and operating services.

•        U Partner, under which we share revenue with landlords.

We have also been focusing on developing our asset-light model, under which we provide space design and build as well as management services to develop and manage agile office spaces for landlords who bear most of the capital investments to build and launch new spaces. The asset-light model allows more landlords to benefit from our professional capabilities and strong brand recognition, which in turn enables our business to scale in a cost-efficient manner.

As of September 30, 2020, we had 106 spaces under the asset-light model with managed area of approximately 272,900 m2, representing 45.7% of the aggregate managed area of approximately 597,100 m2 of all spaces. In the nine months ended September 30, 2020, we launched 59 new spaces under our asset-light model with managed area of approximately 101,700 m2, representing a 151% increase and a 73% increase in the number and managed area of new spaces under our asset-light model in the same period in 2019. In 2018, 2019 and the nine months ended September 30, 2020, we generated operating profit from the subsidiary that operates agile office spaces under our asset-light model. We intend to focus on expanding our asset-light business as one of our major growth drivers.

The profitability of our agile office space services is partly driven by the maturity of our agile office spaces, or the length of time a space has been open to our members. We define spaces that have been open for more than 24 months as mature spaces. Once a space reaches maturity, occupancy is generally stable, our initial investment in build-out and sales and marketing to drive member acquisition is complete and the space typically generates recurring revenue and cash flows. As of September 30, 2020, the overall occupancy rate for our 158 total spaces in operation and 95 mature spaces was approximately 72% and 78%, respectively.

While physical office spaces constitute our core offering, we have built a smart and integrated platform connecting offline and online services via technological innovation. Our app U Bazaar, and data management system, Udata, together with our smart office system and IOT solutions, have created a seamless working experience for our members to go beyond physical spaces and provide them with convenient access to our U Plus services (described in more detail below), resulting in enhanced member loyalty and an expanded member base. As of September 30, 2020, we had approximately 860,400 members, including approximately 830,500 individuals and 29,900 enterprises, ranging from large enterprises to SMEs.

Agile office spaces provide unique access to a large urban population with high disposable income in an office setting, providing significant monetization opportunities. Our individual members using workstations generally spend an average of eight hours in our spaces during a typical working day, building rapport with our Ucommune community and generating significant traffic and data. Powered by our technology capabilities, we offer various U Plus services meeting our members’ needs and preferences and build a vibrant Ucommune community serving a wider group of members beyond physical spaces.

Cooperating with over 700 business partners and more than 30 investees, we provide a comprehensive suite of U Plus services, including individual services, such as catering, fitness, healthcare, training and entertainment; general corporate services, such as corporate secretary, human resources, legal, finance, IT support and tax services; incubation and corporate venturing services; design and build services; advertising and branding services; and related services to our community.

We receive revenue from members by providing U Plus services and charging members fees based on services provided. We also generate revenue from our business partners and investees through different arrangements, including (i) revenue sharing arrangements under which we share part of the revenue of our business partners as fees, and (ii) fixed fee arrangements under which we charge our business partners and investees fixed fees for leasing our spaces to provide services.

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We also generate revenue by providing SAAS services, such as lease contract management, CRM promotion management, IOT intelligent device management, and tenant and member operation management services, to office buildings and industrial parks through our DOMES platform, described below. The client base and revenue of our SAAS business grew significantly in the fourth quarter of 2020 as China recovered from COVID-19. We expect this trend to continue as we develop our SAAS business.

Our total revenue increased by 160.3% from RMB448.5 million in 2018 to RMB1,167.4 million (US$167.3 million) in 2019, and decreased by 31.6% from RMB874.6 million for the nine months ended September 30, 2019 to RMB598.5 million (US$88.1 million) in the same period of 2020. Our spaces in operation increased from 162 as of December 31, 2018 to 174 as of December 31, 2019 and decreased to 158 as of September 30, 2020. Our member base increased from approximately 252,000 as of December 31, 2018 to approximately 715,600 as of December 31, 2019 and further to approximately 860,400 as of September 30, 2020. In the first nine months of 2020, our financial condition and results of operation were materially and adversely affected by the impact of COVID-19 outbreak. Despite the adverse conditions, we have maintained our market leading position, as evidenced by the overall occupancy rate of 72% for all our spaces in operation as of September 30, 2020.

The following chart illustrates our business model:

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The following chart illustrates our community:

Our Strengths

We believe that the following strengths contribute to our success:

•        China’s leading agile office space brand rooted in deep understanding of local market dynamics;

•        our superior space operating efficiency and chain operating capabilities;

•        our technology-driven platform;

•        our dynamic agile office ecosystem empowering enterprise members;

•        our diversified monetization channels enabled by expansion of member base beyond physical spaces; and

•        our innovative management.

Our Strategies

We intend to achieve our mission and further grow our business by pursuing the following strategies:

•        reinforce leading market position by exploring growth under our asset-light model and pursuing target expansion;

•        expand U Plus services to refine our ecosystem;

•        invest in technology to enhance operating efficiency and upgrade smart office system; and

•        selectively pursue acquisition and investment opportunities.

Our Challenges

Investing in the ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties summarized below, the risks described under the “Risk Factors” section beginning on page 18 of, and the other information contained in, this prospectus before you decide whether to purchase the ordinary shares.

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Our ability to achieve our mission and execute our strategies is subject to certain challenges, risks and uncertainties, including our ability to:

•        sustain and manage our growth and expansion;

•        obtain sufficient funds to expand our business and respond to business opportunities;

•        attract more members;

•        successfully operate our spaces and U Plus services;

•        develop our technology;

•        compete with other players in co-working space industry efficiently; and

•        comply with the relevant laws and regulations in the PRC and other jurisdictions in which we operate.

Our History and Corporate Structure

Our Corporate History

Ucommune International Ltd has been our ultimate holding company since November 2020 after the completion of the Business Combination. Ucommune International Ltd was incorporated in the Cayman Islands on June 16, 2020 as an exempted company with limited liability.

We commenced our operations in April 2015 through Ucommune (Beijing) Venture Investment Co., Ltd. or Ucommune Venture. We expanded our operations beyond Greater China to Singapore in July 2017. We entered into New York market through the space operated by our associate in April 2018. In August 2018, we established Beijing Ubazaar Technology Co., Ltd., or Beijing U Bazaar.

We underwent a series of restructuring transactions, which primarily included the following:

•        In September 2018, Ucommune Group Holdings Limited was incorporated under the laws of the Cayman Islands.

•        In December 2018, Ucommune Group Holdings (Hong Kong) Limited was incorporated under the laws of Hong Kong.

•        In January 2019, Ucommune (Beijing) Technology Co., Ltd., or Ucommune Technology, was incorporated in the PRC as a wholly owned subsidiary of Ucommune Group Holdings (Hong Kong) Limited.

•        In May 2019, Ucommune Technology entered into a series of contractual arrangements with Ucommune Venture as well as its shareholders, and the contractual arrangements were renewed in July 2019 and in November 2019.

•        In May 2019, Ucommune Technology entered into a series of contractual arrangements with Beijing U Bazaar as well as its shareholder. We obtained control over Ucommune Venture and Beijing U Bazaar and their respective subsidiaries through contractual arrangements.

In May 2019, we acquired Melo Inc., a holding company incorporated under the laws of Delaware. Beijing Melo Technology Co., Ltd., or Beijing Melo, a company engaging in smart office systems development, is a wholly-owned subsidiary of Melo Inc. We believe the acquisition strengthens our technology capability and enables us to provide advanced office solutions to our members. Beijing Melo entered into a series of contractual arrangements with Beijing Weixue Tianxia Education Technology Co., Ltd or Weixue Tianxia, a company incorporated in the PRC in December 2017, as well as its respective shareholders, through which we obtained control over Weixue Tianxia.

On November 17, 2020, we consummated a business combination pursuant to a merger agreement with Orisun Acquisition Corp. and certain other parties. Upon completion of the Business Combination, the combined company, or Ucommune International Ltd, remains as the surviving publicly traded entity. Following the business combination, Ucommune Group Holdings Limited became a wholly owned subsidiary of Ucommune International Ltd.

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Starting from November 17, 2020, our Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol “UK” and our warrants, expiring on November 17, 2025 are listed on the Nasdaq under the symbol “UKOMW.”

We are regarded as the primary beneficiary of each of Ucommune Venture, Beijing U Bazaar and Weixue Tianxia and their respective subsidiaries. We treat them as our consolidated affiliated entities under with United States generally accepted accounting principles, or U.S. GAAP, and have consolidated the financial results of these entities in our combined and consolidated financial statements in accordance with U.S. GAAP.

We refer to Ucommune Technology and Beijing Melo as our wholly foreign owned entities, or WFOEs, and to each of Ucommune Venture, Beijing U Bazaar and Weixue Tianxia as our variable interest entities, or VIEs, in this prospectus. For more details and risks related to our variable interest entity structure, please see “Corporate History and Structure — Contractual Arrangements with our VIEs and Their Respective Shareholders” and “Risk Factors — Risks Relating to Our Corporate Structure.”

On February 2, 2021, we completed a follow-on offering of our Class A ordinary shares and a warrant offering. The warrant will expire on February 2, 2026. The underwriter in this offering exercised its option in full to purchase additional warrants from us, the transaction of which was closed concurrently on February 2, 2021.

Our Corporate Structure

The following chart shows our corporate structure as of the date of this prospectus, including our principal subsidiaries and our VIEs.

____________

Notes:

(1)      Our shareholders and their affiliates hold 100% of Ucommune Venture’s equity interests.

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(2)      Ms. Nan Shi, our employee responsible for our branding and marketing strategies, holds 100% of Beijing U Bazaar’s equity interests.

(3)      Our shareholders and their affiliates hold 100% of Weixue Tianxia’s equity interests.

Corporate Information

Our principal executive offices are located at Floor 8, Tower D, No.2 Guang Hua Road, Chaoyang District, Beijing, People’s Republic of China. Our telephone number at this address is +8610 6506-7789.

Our registered office in the Cayman Islands is located at Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

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

Conventions Which Apply to this Prospectus

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

•        “AI” refers to artificial intelligence;

•        “app” refers to mobile app;

•        “Business Combination” refers to (1) reincorporation of Orisun Acquisition Corp in Cayman Islands by merging with and into our company; and (2) merger of Everstone International Ltd, a Cayman Islands exempted company and wholly owned subsidiary of our company, with and into Ucommune Group Holdings Limited, resulting in Ucommune Group Holdings Limited being a wholly owned subsidiary of our company.

•        “CAGR” refers to compound annual growth rate;

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

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

•        “Class B ordinary shares” refers to our Class B ordinary shares, par value US$0.0001 per share, carrying 15 votes per share;

•        “Frost & Sullivan” refers to Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., a third-party industry research firm;

•        “Generation Z” refers to the demographic cohort in China of individuals born from 1990 to 2009;

•        “GMV” refers to gross merchandize value;

•        “Greater China” refers to, for the purpose of this prospectus only, China as well as Hong Kong, Macau Special Administrative Region and Taiwan;

•        “Hong Kong” or “HK” refers to the Hong Kong Special Administrative Region of the PRC;

•        “individual members using workstations” refers to the individuals that use our workstations under a membership agreement as of a given date, excluding the individuals that have access to a workstation on as-needed basis;

•        “IOT” refers to internet of things;

•        “IT” refers to information technology;

•        “mature spaces” refers to spaces that have been open for more than 24 months;

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•        “members” refers to the individuals and enterprises that have registered on U Bazaar and have received reward points as of a given date;

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

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

•        “PIPE investment” refers to the investment of US$60.9 million in by certain backstop investors in connection with the Company’s Business Combination.

•        “RMB” or “Renminbi” refers to the legal currency of the PRC;

•        “SME” refers to small and medium enterprises;

•        “space(s) operated by our associate(s)” refers to the co-working space(s) in which we have a minority interest investment but are operated by our associate(s); and we account for our investment under the equity method but do not consolidate the revenue of such spaces into our combined and consolidated financial statements;

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

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

•        “variable interest entities” or “VIEs” refers to Ucommune (Beijing) Venture Investment Co., Ltd., Beijing U Bazaar Technology Co., Ltd. and Beijing Weixue Tianxia Education Technology Co., Ltd., which are PRC companies in which we do not have equity interests but whose financial results have been consolidated into our combined and consolidated financial statements in accordance U.S. GAAP due to our having effective control over, and our being the primary beneficiary of, such entities;

•        “we,” “us,” “our company,” “our” or “Ucommune” refers to Ucommune International Ltd, a Cayman Islands company, its subsidiaries and, in the context of describing our operations and combined and consolidated financial statements, its VIEs;

•        “2019 plan” refers to a share incentive plan we adopted on August 22, 2019; and

•        “2020 plan” refers to a share incentive plan we adopted in November 17, 2020, to assume and replace the 2019 plan.

Unless otherwise noted, all statistics with respect to our co-working spaces, cities covered by our co-working space network, managed area of co-working spaces, workstations, occupancy rates and members exclude the spaces operated by our associates.

Certain amounts, percentages and other figures, such as key operating data, presented in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals, dollars or percentages may not represent the arithmetic summation or calculation of the figures that accompany them.

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this prospectus are made at RMB6.7896 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. On February 26, 2021, the noon buying rate for Renminbi was RMB6.4730 to US$1.00.

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

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The Offering

We are registering (i) the resale from time to time of an aggregate of 6,030,670 Class A ordinary shares, (ii) the issuance by us of up to 2,336,612 Class A ordinary shares upon the exercise of Prior Warrants, (iii) the issuance by us of up to 5,679,011 Class A ordinary shares upon the exercise of New Warrants, (iv) the issuance by us of 333,002 Class A ordinary shares upon the exercise of the UPOs, (v) the issuance by us of 333,002 UPO Warrants to purchase an additional 166,501 Class A ordinary shares upon the exercise of the UPOs, (vi) the issuance by us of 333,002 UPO Rights to convert to an additional 33,300 Class A ordinary shares upon the exercise of the UPOs, (vii) the issuance by us of 166,501 Class A ordinary shares upon the exercise of the UPO Warrants, and (viii) the issuance by us of 33,300 Class A ordinary shares upon the conversion of the UPO Rights.

Terms of the Prior Warrants

 

Each Prior Warrant entitles the holder to purchase one-half of one Class A ordinary share for US$11.50 per share. The Prior Warrants will expire at 5:00 p.m., New York time, on November 17, 2025 (five years after the completion of the Business Combination) or earlier upon redemption or liquidation.

Terms of the New Warrants

 

Each New Warrant entitles the holder to purchase one Class A ordinary share for US$4.05 per share. The New Warrants will expire at 5:00 p.m., New York time, on February 2, 2026 (five years after the issuance of the New Warrants) or earlier upon redemption or liquidation.

Terms of the UPOs

 

We sold to an investor (and its designees) an option to purchase units exercisable initially at US$11.50 per unit. Each unit consists of one UPO Share, one UPO Warrant and one UPO Right. Each UPO Warrant was initially exercisable to purchase one-half of one Class A ordinary share at an exercise price of US$11.50 per whole share, and each UPO Right will convert into one-tenth (1/10) of one Class A ordinary share, subject to adjustment. The UPOs may be exercised for cash or on a cashless basis, at the holder’s option, and will expire on August 2, 2024. In March 2021, we agreed to amend the exercise price of UPOs and UPO Warrants to US$3.05.

Class A ordinary shares outstanding prior to the exercise of Warrants

 



75,937,707.

Class A ordinary shares outstanding assuming exercise of the Warrants, UPOs and UPO Warrants and upon conversion of the UPO Rights

 



84,486,133.

Risk factors

 

Before investing in our securities, you should carefully read and consider the information set forth in “Risk Factors.”

Use of proceeds

 

We expect to receive proceeds of approximately (i) US$26.9 million from the exercise of the Prior Warrants if they are all exercised for cash at an exercise price of US$11.50 per Class A ordinary share, (ii) US$23.0 million from the exercise of the New Warrants if they are all exercised for cash at an exercise price of US$4.05 per Class A ordinary share and (iii) US$1.5 million from the exercise of the UPOs and UPO Warrants if they are all exercised for cash at the exercise price of US$3.05. We intend to use any such proceeds for working capital and general corporate purposes. We will not receive any of the proceeds from the resale of the Class A ordinary shares by the Selling Shareholders or the sale of the Class A ordinary shares underlying the Warrants, UPOs, UPO Warrants and UPO Rights.

Trading market and symbol

 

Our Class A ordinary shares and Prior Warrants are listed on The Nasdaq Capital Market under the symbols “UK” and “UKOMW,” respectively. Our New Warrants are not listed on Nasdaq or any national securities exchange or market.

Transfer Agent, Registrar and Warrant Agent

 


The transfer agent and registrar for our Class A ordinary shares is American Stock Transfer & Trust Company LLC. Its address is 6201, 15th Ave, Brooklyn, NY 11219, and its telephone number is 718-921-8380.

10

Table of Contents

Our Summary Combined and Consolidated Financial Data and Operating Data

Summary Pro Forma Financial Information

The following pro forma selected financial data for the year ended December 31, 2019 and the nine months ended September 30, 2020 and is derived from the Ucommune International Ltd’s unaudited combined condensed pro forma financial statements and related notes included elsewhere in this prospectus.

The unaudited combined condensed pro forma financial information for the year ended December 31, 2019 are based on the historical financial statements of Orisun Acquisition Corp included in its Annual Report on Form 10-K for the year ended December 31, 2019, and on the historical financial statements of Ucommune Group Holdings Limited also included elsewhere in this prospectus.

The unaudited combined condensed pro forma financial information for the nine months ended September 30, 2020 has been prepared based on the historical statement of operations of Orisun Acquisition Corp for the nine months ended September 30, 2020, and on the historical financial statements of Ucommune Group Holdings Limited for the nine months ended September 30, 2020 included elsewhere in this prospectus.

The following pro forma financial data are being presented to illustrate the effects of the business combination that was completed in November 2020. The information is being presented for informational purposes only and does not purport to be indicative of the financial condition that would have resulted if the acquisition had been consummated at December 31, 2019 or at September 30, 2020.

The pro forma financial data are prepared based upon available information and assumptions that are believed to be reasonable. However, future results of operations and financial position may vary significantly from the results reflected in the following unaudited combined condensed pro forma financial data due to the factors described in “Risk Factors” included elsewhere herein.

Ucommune International Ltd Pro Forma

 

Nine Months Ended September 30, 2020

 

Year Ended December 31, 2019

Net revenues

 

$

88,145

 

 

$

167,334

 

Formation and operating costs

 

 

(328

)

 

 

(335

)

Cost of revenues

 

 

(100,569

)

 

 

(196,295

)

Sales and marketing expenses

 

 

(3,366

)

 

 

(10,871

)

General and administrative expenses

 

 

(12,542

)

 

 

(26,029

)

Pre-operating expenses

 

 

 

 

 

(2,168

)

Impairment loss on long-lived assets

 

 

(4,928

)

 

 

(7,458

)

Remeasurement gain of previously held equity interests in connection with step acquisition

 

 

 

 

 

55

 

Change in fair value of liabilities to be settled in share

 

 

 

 

 

(25,727

)

Operating loss

 

 

(33,588

)

 

 

(101,494

)

   

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

623

 

 

 

852

 

Interest expense

 

 

(2,204

)

 

 

(2,343

)

Other expense, net

 

 

(17,382

)

 

 

(12,063

)

Loss before income taxes

 

 

(52,551

)

 

 

(115,048

)

(Provision) Benefit for income taxes

 

 

(469

)

 

 

(622

)

Loss from equity method investment

 

 

21

 

 

 

(222

)

Net Loss

 

 

(52,999

)

 

 

(115,892

)

Less: net loss attributable to non-controlling interests

 

 

(2,282

)

 

 

(2,225

)

Net loss attributable to Company

 

$

(50,717

)

 

$

(113,667

)

   

 

 

 

 

 

 

 

Weighted average shares outstanding, basic and diluted

 

 

80,451,843

 

 

 

80,451,843

 

Basic and diluted net (loss) income per share

 

$

(0.63

)

 

$

(1.41

)

11

Table of Contents

Summary Financial Information

The following summary combined and consolidated statements of operations data for the years ended December 31, 2018 and 2019, summary combined and consolidated balance sheet data as of December 31, 2018 and 2019 and summary combined and consolidated cash flow data for the years ended December 31, 2018 and 2019 have been derived from our audited combined and consolidated financial statements included elsewhere in this prospectus.

The following summary combined and consolidated statements of operations data for the nine months ended September 30, 2019 and 2020, summary combined and consolidated balance sheet data as of September 30, 2020 and summary combined and consolidated cash flow data for the nine months ended September 30, 2019 and 2020 have been derived from our unaudited combined and consolidated interim financial statements included elsewhere in this prospectus and have been prepared on the same basis as our audited combined and consolidated financial statements and include all adjustments, consisting of normal and recurring adjustments, that we consider necessary for a fair statement of our financial position and operating results for the periods presented.

Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Combined and Consolidated Financial Data and Operating Data section together with our combined and consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

 

For the Year Ended
December 31,

 

For the Nine Months Ended
September 30,

   

2018

 

2019

 

2019

 

2020

   

RMB

 

%

 

RMB

 

US$

 

%

 

RMB

 

%

 

RMB

 

US$

 

%

   

(in thousands, except for percentages, shares and per share data)

Summary Combined and Consolidated Statements of Operation:

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Revenue:

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Workspace membership revenue

 

394,356

 

 

87.9

 

 

557,994

 

 

79,985

 

 

47.8

 

 

419,634

 

 

48.0

 

 

346,162

 

 

50,984

 

 

57.9

 

Marketing and branding service revenue

 

24,617

 

 

5.5

 

 

534,826

 

 

76,664

 

 

45.8

 

 

403,484

 

 

46.1

 

 

207,357

 

 

30,540

 

 

34.6

 

Other service revenue

 

29,535

 

 

6.6

 

 

74,538

 

 

10,685

 

 

6.4

 

 

51,451

 

 

5.9

 

 

44,957

 

 

6,621

 

 

7.5

 

Total revenue

 

448,508

 

 

100.0

 

 

1,167,358

 

 

167,334

 

 

100.0

 

 

874,569

 

 

100.0

 

 

598,476

 

 

88,145

 

 

100.0

 

Cost of revenue:

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Workspace membership

 

(624,844

)

 

(139.3

)

 

(814,002

)

 

(116,683

)

 

(69.7

)

 

(605,190

)

 

(69.2

)

 

(446,526

)

 

(65,766

)

 

(74.6

)

Marketing and branding
services

 

(22,481

)

 

(5.0

)

 

(485,473

)

 

(69,590

)

 

(41.6

)

 

(364,442

)

 

(41.7

)

 

(189,077

)

 

(27,848

)

 

(31.6

)

Other services

 

(16,284

)

 

(3.6

)

 

(69,917

)

 

(10,022

)

 

(6.0

)

 

(47,722

)

 

(5.5

)

 

(47,222

)

 

(6,955

)

 

(7.9

)

Total cost of revenue (excluding impairment loss)

 

(663,609

)

 

(148.0

)

 

(1,369,392

)

 

(196,295

)

 

(117.3

)

 

(1,017,354

)

 

(116.4

)

 

(682,825

)

 

(100,569

)

 

(114.1

)

Impairment loss on long-lived assets

 

(111,203

)

 

(24.8

)

 

(52,030

)

 

(7,458

)

 

(4.5

)

 

(46,122

)

 

(5.3

)

 

(33,457

)

 

(4,928

)

 

(5.6

)

Pre-opening expenses

 

(20,165

)

 

(4.5

)

 

(15,124

)

 

(2,168

)

 

(1.3

)

 

(14,148

)

 

(1.6

)

 

 

 

 

 

 

Sales and marketing expenses

 

(44,783

)

 

(10.0

)

 

(75,841

)

 

(10,871

)

 

(6.5

)

 

(48,344

)

 

(5.5

)

 

(22,853

)

 

(3,366

)

 

(3.8

)

General and administrative expenses

 

(118,798

)

 

(26.5

)

 

(181,582

)

 

(26,029

)

 

(15.6

)

 

(128,836

)

 

(14.7

)

 

(87,220

)

 

(12,846

)

 

(14.6

)

12

Table of Contents

 

For the Year Ended
December 31,

 

For the Nine Months Ended
September 30,

   

2018

 

2019

 

2019

 

2020

   

RMB

 

%

 

RMB

 

US$

 

%

 

RMB

 

%

 

RMB

 

US$

 

%

   

(in thousands, except for percentages, shares and per share data)

Remeasurement gain of previously held equity interests in connection with step acquisitions

 

27,543

 

 

6.1

 

 

386

 

 

55

 

 

0.0

 

 

386

 

 

 

 

 

 

 

 

 

Change in fair value of liabilities to be settled in shares

 

25,607

 

 

5.7

 

 

(179,475

)

 

(25,727

)

 

(15.4

)

 

(179,475

)

 

(20.5

)

 

 

 

 

 

 

Loss from
operations

 

(456,900

)

 

(102.0

)

 

(705,700

)

 

(101,159

)

 

(60.5

)

 

(559,324

)

 

(64.0

)

 

(227,879

)

 

(33,564

)

 

(38.1

Interest income

 

21,574

 

 

4.8

 

 

5,944

 

 

852

 

 

0.5

 

 

4,901

 

 

0.6

 

 

4,233

 

 

623

 

 

0.7

 

Interest expense

 

(9,902

)

 

(2.2

)

 

(16,346

)

 

(2,343

)

 

(1.4

)

 

(7,960

)

 

(0.9

)

 

(14,962

)

 

(2,204

)

 

(2.5

)

Subsidy income

 

31,783

 

 

7.1

 

 

16,782

 

 

2,406

 

 

1.4

 

 

20,521

 

 

2.3

 

 

12,706

 

 

1,871

 

 

2.1

 

Impairment loss on long-term investments

 

(18,990

)

 

(4.2

)

 

(37,453

)

 

(5,369

)

 

(3.2

)

 

(2,000

)

 

(0.2

)

 

(3,507

)

 

(517

)

 

(0.6

)

Gain/loss on disposal of long-term investments

 

2,030

 

 

0.5

 

 

 

 

 

 

 

 

 

 

 

 

(43,032

)

 

(6,338

)

 

(7.2

)

Other income (expense), net

 

(11,715

)

 

(2.6

)

 

(63,480

)

 

(9,100

)

 

(5.4

)

 

(20,469

)

 

(2.3

)

 

(84,176

)

 

(12,398

)

 

(14.1

)

Loss before income taxes and loss from equity method investments

 

(442,120

)

 

(98.6

)

 

(800,253

)

 

(114,713

)

 

(68.6

)

 

(564,331

)

 

(64.5

)

 

(356,617

)

 

(52,527

)

 

(59.7

)

Provision for income taxes

 

(2,087

)

 

(0.5

)

 

(4,872

)

 

(698

)

 

(0.4

)

 

(4,780

)

 

(0.5

)

 

(2,330

)

 

(343

)

 

(0.4

)

Loss from equity method investments

 

(948

)

 

(0.2

)

 

(1,548

)

 

(222

)

 

(0.1

)

 

(1,600

)

 

(0.2

)

 

144

 

 

21

 

 

 

Net loss

 

(445,155

)

 

(99.3

)

 

(806,673

)

 

(115,633

)

 

(69.1

)

 

(570,711

)

 

(65.2

)

 

(358,803

)

 

(52,849

)

 

(60.1

)

Less: net loss attributable to
non-controlling interests

 

(15,563

)

 

(3.5

)

 

(15,523

)

 

(2,225

)

 

(1.3

)

 

(18,763

)

 

(2.1

)

 

(15,497

)

 

(2,282

)

 

(2.6

)

Net loss attributable to Ucommune Group Holdings Limited

 

(429,592

)

 

(95.8

)

 

(791,150

)

 

(113,408

)

 

(67.8

)

 

(551,948

)

 

(63.1

)

 

(343,306

)

 

(50,567

)

 

(57.5

)

Net loss per share attributable to ordinary shareholders of Ucommune Group Holdings Limited

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Basic

 

(4.74

)

 

N/A

 

 

(7.56

)

 

(1.08

)

 

N/A