Weidai Ltd.
Annual Report 2018

Plain-text annual report

Morningstar® Document Research℠ FORM 20-FWeidai Ltd. - WEIFiled: April 16, 2019 (period: December 31, 2018)Annual and transition report of foreign private issuers under sections 13 or 15(d)The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ¨REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ¨SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report For the transition period from to Commission file number: 001-38734 Weidai Ltd. (Exact name of Registrant as specified in its charter) Cayman Islands (Jurisdiction of incorporation or organization) 50/F, West Building, Fortune Finance CenterNo. 33 Jiefang East RoadJianggan District, HangzhouZhejiang ProvinceThe People’s Republic of China (Address of principal executive offices) Leo Li, Chief Financial OfficerPhone: +86 185 0164 1666Email: leoli@wdai.com50/F, West Building, Fortune Finance CenterNo. 33 Jiefang East RoadJianggan District, HangzhouZhejiang ProvinceThe People’s Republic of China (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act. Title of each class Name of each exchange on which registeredAmerican depositary shares (one American depositaryshare representing one Class A ordinary share, par valueUS$0.000002 per share) New York Stock ExchangeClass A ordinary shares, par value US$0.000002 pershare* New York Stock Exchange Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.*Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares. Securities registered or to be registered pursuant to Section 12(g) of the Act. Not Applicable (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. Not Applicable (Title of Class) Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As of December 31, 2018, there were 70,447,177 ordinary shares outstanding, consisting of 35,375,777 Class A ordinary shares and 35,071,400 outstandingClass B ordinary shares, both with a par value of US$0.000002 per share. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934. Yes ¨ No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No ¨ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ¨ No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See thedefinitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨Accelerated filer ¨Non-accelerated filer xEmerging growth company x 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 notto use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of theExchange Act. ¨ † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012. Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issuedby the International Accounting Standards Board ¨ Other ¨ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. Item 17 ¨ Item 18 ¨ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨ Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. TABLE OF CONTENTS INTRODUCTION1 FORWARD-LOOKING STATEMENTS3 PART I ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS4 ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE4 ITEM 3.KEY INFORMATION4 ITEM 4.INFORMATION ON THE COMPANY55 ITEM 4A.UNRESOLVED STAFF COMMENTS100 ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS100 ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES128 ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS137 ITEM 8.FINANCIAL INFORMATION139 ITEM 9.THE OFFER AND LISTING140 ITEM 10.ADDITIONAL INFORMATION141 ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK155 ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES156 PART II ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES159 ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS159 ITEM 15.CONTROLS AND PROCEDURES159 ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT160 ITEM 16B.CODE OF ETHICS161 ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES161 ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES161 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS161 ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT161 ITEM 16G.CORPORATE GOVERNANCE161 ITEM 16H.MINE SAFETY DISCLOSURE162 PART III ITEM 17.FINANCIAL STATEMENTS163 ITEM 18.FINANCIAL STATEMENTS163 ITEM 19.EXHIBITS163 SIGNATURES165 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. INTRODUCTION Unless otherwise indicated or the context otherwise requires in this annual report on Form 20-F: ·“active borrower” refers to borrowers who have borrowed at least once on our platform during a specific period of time; ·“active online investor” refers to online investors who have invested at least once on our platform during a specific period of time; ·“ADSs” refers to our American depositary shares, each of which represents one Class A ordinary share; ·“APRs” or “annual percentage rate” represents the annualized cost of borrowing over the term of a loan, which equals to the annualized amountof finance charges (including interest and service and other fees) generated from a loan, divided by the principal amount of the loan; ·“auto-backed loan” refers to secured loans using automobiles already owned by borrowers as collateral; ·“China” or the “PRC” refers to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau andTaiwan; ·“Class A ordinary shares” are to our Class A ordinary shares, par value US$0.000002 per share; ·“Class B ordinary shares” are to our Class B ordinary shares, par value US$0.000002 per share; ·“delinquency rate” refers to the loan principal and interest that were 15 to 30, 31 to 60, 61 to 90 and over 90 calendar days past due as apercentage of the total outstanding principal balance of loans on our platform as of a specific date. Loans that are charged-off and loan productsthat have been discontinued prior to the date of this annual report (including home equity loans, certain types of consumption loans andunsecured auto-financing loans offered to those who have taken out auto-financing loans from certain commercial banks) are not included inthe delinquency rate calculation; ·“investors” refers to both online investors and institutional funding partners; ·“LTV ratio” refers to loan-to-value ratio; ·“M3+ Delinquency Rate by Vintage” refers to the total balance of outstanding principal of a vintage for which any payment of principal orinterest is over 90 calendar days past due as of a particular date (adjusted to reflect total amount of past due payments for principal and interestthat have been subsequently collected), divided by the total initial principal in such vintage. For purpose of this annual report, loans facilitatedor originated during a specified time period are referred to as a vintage. Loan products that have been discontinued prior to the date of thisannual report (including home equity loans, certain types of consumption loans and unsecured auto-financing loans offered to those who havetaken out auto-financing loans from certain commercial banks) are not included in the calculation of M3+ Delinquency Rate by Vintage; ·“online investors” includes both individual investors and corporate investors, who invest in loans using our smart investing tools or throughour investment programs. The term “online investors” does not include institutional funding partners; ·“ordinary shares” refers to our Class A and Class B ordinary shares, par value US$0.000002 per share; 1 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·“repeat borrowers” refers to borrowers who have borrowed at least twice on our platform since our inception; ·“repeat online investors” refers to online investors who have invested at least twice on our platform since our inception; ·“RMB” and “Renminbi” refer to the legal currency of China; ·“small and micro enterprises” refers to businesses with annual revenues less than RMB20 million; ·“take rate” refers to the period end loan balance divided by the net revenue of a certain period.” ·“US$,” “U.S. dollars,” “$,” and “dollars” refer to the legal currency of the United States; and ·“we,” “us,” “our company,” “our” and “Weidai” refer to Weidai Ltd., its subsidiaries, variable interest entity and its subsidiaries. Our reporting currency is the Renminbi. This annual report on Form 20-F also contains translations of certain foreign currency amounts into U.S. dollarsfor the convenience of the reader. Unless otherwise stated, all translations from Renminbi to U.S. dollars were made at RMB6.8755 to US$1.00, the noonbuying rate on December 31, 2018 set forth in the H.10 statistical release of the U.S. Federal Reserve Board. We make no representation that the Renminbi orU.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particularrate or at all. The PRC government restricts or prohibits the conversion of Renminbi into foreign currency and foreign currency into Renminbi for certaintypes of transactions. On April 12, 2019, the noon buying rate set forth in the H.10 statistical release of the Federal Reserve Board was RMB6.7039 toUS$1.00. All of our share related numbers contained in this annual report, including but not limited to the numbers of authorized, issued and outstanding shares,have retroactively reflected the 50-for-1 share split that we effected in September 2018. 2 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. FORWARD-LOOKING STATEMENTS This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. Known andunknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information—D. Risk Factors,” may cause our actual results,performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements are made underthe “safe harbor” provisions of the U.S. Private Securities Litigations Reform Act of 1995. 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 largelyon our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy andfinancial needs. These forward-looking statements include statements relating to: ·our mission and strategies; ·our future business development, financial condition and results of operations; ·the expected growth of the auto-backed loan market and the marketplace lending industry in China; ·our expectations regarding demand for and market acceptance of our products and services; ·our expectations regarding our relationships with borrowers and investors; ·competition in the auto-backed loan market and the marketplace lending industry in China; ·general economic and business condition in China and elsewhere; and ·relevant government policies and regulations relating to the marketplace lending industry in China. These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-lookingstatements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Youshould thoroughly read this annual report and the documents that we refer to with the understanding that our actual future results may be materially differentfrom and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements. This annual report contains certain data and information that we obtained from various government and private publications. Statistical data in thesepublications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure ofthis market to grow at the projected rate may have material and adverse effect on our business and the market price of our ADSs. In addition, the rapidlychanging nature of the marketplace lending industry results in significant uncertainties for any projections or estimates relating to the growth prospects orfuture condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual resultsmay 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 annual report relate only to events or information as of the date on which the statements are made in thisannual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of newinformation, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. 3 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable. ITEM 3. KEY INFORMATION A. Selected Financial Data The following selected consolidated statements of comprehensive income data and selected consolidated cash flows data for the years ended December31, 2016, 2017 and 2018, and selected consolidated balance sheets data as of December 31, 2017 and 2018 have been derived from our audited consolidatedfinancial statements included elsewhere in this annual report beginning on page F-1. Our selected consolidated balance sheets data as of December 31, 2016has been derived from our audited consolidated financial statements not included in this annual report. Our consolidated financial statements are preparedand presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate results expected for any future periods. You should read thisSelected Financial Data section together with our consolidated financial statements and the related notes and “Item 5. Operating and Financial Review andProspects” below. The following table presents our selected consolidated statements of comprehensive income data for the years ended December 31, 2016, 2017 and2018. Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands, except for share, per share and per ADS data) Selected Consolidated Statements of Comprehensive Income Data: Net revenues: Loan facilitation service fees: Auto-backed loans 1,396,102 2,529,980 2,857,298 415,577 Other secured loans(1) 9,791 107,564 115,140 16,746 Unsecured loans(2) 4,353 54,409 183,283 26,658 1,410,246 2,691,953 3,155,721 458,981 Post facilitation service fees: Auto-backed loans 144,524 283,182 308,011 44,798 Other secured loan(1) 1,044 10,958 12,793 1,861 Unsecured loans(2) 483 6,045 21,248 3,090 146,051 300,185 342,052 49,749 Other revenues 204,953 305,037 189,712 27,592 Financing income 9,053 303,292 402,750 58,578 Less: Funding costs (2,439) (39,056) (156,138) (22,709)Net financing income 6,614 264,236 246,612 35,869 Total net revenues 1,761,380 3,545,430 3,913,474 569,192 Provision for loans and advances (144,617) (484,063) (751,572) (109,312)Net revenues after provision for loans and advances 1,616,763 3,061,367 3,161,902 459,880 Operating costs and expenses: Provision for financial guarantee liabilities — — (21,712) (3,158)Origination and servicing expenses (993,623) (1,784,914) (1,757,935) (255,681)Sales and marketing expenses (71,139) (273,838) (221,117) (32,160)General and administrative expenses (117,004) (316,772) (379,415) (55,184)Research and development expenses (56,142) (100,966) (139,318) (20,263)Total operation costs and expenses (1,237,908) (2,476,490) (2,519,497) (366,446) Income from operations 378,855 584,877 642,405 93,434 Net income before income taxes 396,159 668,024 764,259 111,156 Income tax expenses (105,130) (193,203) (159,629) (23,217)Net income 291,029 474,821 604,630 87,939 Net income attributable to noncontrolling interests — — (3,011) (438)Net income attributable to Weidai Ltd.’s shareholders 291,029 474,821 601,619 87,501 Dividends declared to preferred shareholders — (8,604) — — Modification of Series A, A+ and B preferred shares (861) — — — Accretion to redemption value of Series C redeemable convertiblepreferred shares (120,000) — — — Reversal of accretion on Series C preferred shares — — 120,000 17,453 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Net income attributable to ordinary shareholders 170,168 466,217 721,619 104,954 Earnings per share(3): Basic 2.60 7.25 10.93 1.59 Diluted 2.60 7.25 10.93 1.59 Shares used in earnings per share computation(3): Basic 48,392,050 48,392,050 50,954,061 50,954,061 Diluted 48,392,050 51,466,450 50,954,061 50,954,061 Other comprehensive loss Foreign currency translation adjustment — — (2,700) (393)Comprehensive income 291,029 474,821 601,930 87,546 Comprehensive income attributable to noncontrolling interests — — (3,011) (438)Comprehensive income attributable to Weidai Ltd.’s shareholders 291,029 474,821 598,919 87,108 Dividends declared to preferred shareholders — (8,604) — — Modification of Series A, A+ and B preferred shares (861) — — — Accretion to redemption value of Series C redeemable convertible preferredshares (120,000) — — — Reversal of accretion on Series C preferred shares — — 120,000 17,453 Comprehensive income attributable to ordinary shareholders 170,168 466,217 718,919 104,561 (1) Primarily including home equity loans and construction machinery loans. We ceased to offer home equity loans to new borrowers in the fourth quarter of2017, the loan volume of which totaled RMB2.0 billion, RMB8.8 billion and RMB2.7 billion (US$0.4 billion) in 2016, 2017 and 2018, respectively. 4 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (2) Primarily including professional credit loans and consumption loans. We ceased to offer certain types of consumption loans and unsecured auto-financingloans offered to those who have taken out auto-financing loans from certain commercial banks to new borrowers in the fourth quarter of 2017, the loanvolume of which totaled RMB20.4 million, RMB3.8 billion and RMB1.2 billion (US$0.2 billion) in 2016, 2017 and 2018, respectively. (3) In September 2018, we effected a 50-for-1 share split, pursuant to which our authorized share capital of US$50,000 was divided into 25,000,000,000shares with a par value of US$0.000002 each. For the purpose of calculating earnings per share and shares used in earnings per share computation, such sharesplit has been retroactively reflected for all periods presented herein. The following table presents our selected consolidated balance sheet data as of December 31, 2016, 2017 and 2018. As of December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands) Selected Consolidated Balance Sheets Data: Cash and cash equivalents 1,314,814 1,765,572 1,741,911 253,350 Restricted cash — 1,092,921 1,619,937 235,610 Loans and advances, net (net of allowance of RMB67.5 million, RMB404.9million and RMB764.3 million (US$111.1 million) as of December 31,2016, 2017 and 2018, respectively) 293,158 1,938,492 1,482,368 215,602 Prepaid expenses and other assets 328,853 433,597 560,165 81,474 Total current assets 2,011,025 5,248,250 5,430,278 789,802 Restricted cash — 4,000 19,368 2,817 Loans and advances, net (net of allowance of nil, RMB1.4 million andRMB6.0 million (US$0.9 million) as of December 31, 2016, 2017 and2018, respectively) — 390,171 13,333 1,939 Total non-current assets 94,465 1,019,551 886,210 128,893 Total assets 2,105,490 6,267,801 6,316,488 918,695 Payable to institutional funding partners and online investors 94,663 1,770,681 1,005,236 146,206 Current account with online investors and borrowers 890,192 1,883,446 2,005,605 291,703 Deferred revenue 13,196 12,330 11,962 1,740 Total current liabilities 1,360,563 4,633,990 3,623,649 527,039 Payable to institutional funding partners and online investors — 416,118 450,160 65,473 Deferred revenue 1,100 887 11,343 1,650 Total non-current liabilities 9,433 457,724 475,613 69,175 Total liabilities 1,369,996 5,091,714 4,099,262 596,214 Total mezzanine equity 388,910 388,910 - - Total shareholders’ equity 346,584 787,177 2,217,226 322,481 5 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following table presents our selected consolidated cash flow data for the years ended December 31, 2016, 2017 and 2018. Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands) Selected Consolidated Cash Flow Data: Net cash provided by operating activities 924,388 2,284,077 1,214,774 176,679 Net cash used in investing activities (337,051) (2,941,921) (6,468) (938)Net cash provided by (used in) financing activities 458,614 2,205,523 (686,883) (99,903)Net increase in cash, cash equivalents and restricted cash 1,045,951 1,547,679 518,723 75,445 Cash, cash equivalents and restricted cash at the beginning of the year 268,863 1,314,814 2,862,493 416,332 Cash, cash equivalents and restricted cash at the end of the year 1,314,814 2,862,493 3,381,216 491,777 Non-GAAP Financial Measures In evaluating our business, we consider and use adjusted net income, a non-GAAP measure, as supplemental measure to review and assess our operatingperformance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial informationprepared and presented in accordance with U.S. GAAP. We define adjusted net income as net income excluding share-based compensation expenses. We present this non-GAAP financial measure because it is used by our management to evaluate our operating performance and formulate business plans.Adjusted net income enables our management to assess our operating results without considering the impact of share-based compensation expenses. We alsobelieve that the use of this non-GAAP financial measure facilitates investors’ assessment of our operating performance. This non-GAAP financial measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measurehas limitations as an analytical tool. One of the key limitations of using adjusted net income is that they do not reflect all items of income and expense thataffect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentationof adjusted net income. Further, this non-GAAP financial measure may differ from the non-GAAP financial information used by other companies, includingpeer companies, and therefore their comparability may be limited. We compensate for these limitations by reconciling the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure,which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a singlefinancial measure. Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands) Reconciliation of Net Income to Adjusted Net Income: Net income 291,029 474,821 604,630 87,939 Add: Share-based compensation expenses 32,326 40,719 106,571 15,500 Adjusted net income before related taxes 323,355 515,540 711,201 103,439 Income tax expenses (8,082) (10,180) (19,457) (2,830)Adjusted net income, net of taxes 315,273 505,360 691,744 100,609 B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 6 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. D. Risk Factors Risks Related to Our Business and Our Industry We operate in China’s marketplace lending industry, an emerging and evolving industry, which makes it difficult to evaluate our future prospects. China’s marketplace lending industry is in a preliminary stage of development and evolving. The PRC regulatory regime governing the industry maychange in ways that do not favor development of the industry and this may negatively affect our business. Prospective borrowers and investors may not befamiliar with the industry and may have difficulty to distinguish our services from those of our competitors. In addition, borrowers may not view a default ofcredit obligation under the loans we facilitate as having the same consequences as a default of credit obligation under more traditional loans provided bybanks or other financial institutions. Any default on borrowers’ payment obligations may adversely affect investors’ confidence in the loans we facilitate,which may lead to a reduction of capital available for loans and materially and adversely affect our business. Our ability to retain and attract investors iscritical to us for maintaining and increasing the volume of loans we facilitate. In addition, our business has grown substantially in recent years; however, ourpast growth rates may not be indicative of our future growth. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in this developing and rapidlyevolving industry. These risks and challenges include our ability to, among others: ·navigate an evolving regulatory environment; ·expand the base of borrowers and investors served on our platform; ·broaden our loan and investment product offerings; ·efficiently operate our nationwide network of service centers; ·enhance our data analytical and risk management capabilities; ·continue to scale our technology infrastructure to support the growth of our platform and loan volume; ·operate without being adversely affected by the negative publicity about the industry in general and our company in particular; ·maintain the security of our platform and the confidentiality of the information provided and utilized across our platform; ·anticipate and adapt to changing market conditions, including government restrictions on automobile purchases and ownership and changes inthe competitive landscape; ·attract, retain and motivate talent; and ·defend ourselves from any potential litigations, regulatory proceedings, or any other claims. If China’s marketplace lending industry does not develop as we expect, or if we fail to educate prospective borrowers and investors about the value ofour platform, products and services or address their needs, our reputation, business, financial condition and results of operations may be materially andadversely affected. If any of our business practices is deemed to violate any laws or regulations governing the marketplace lending industry in China, our business,financial condition and results of operations will be materially and adversely affected. 7 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The marketplace lending industry in China has a relatively short history and relevant laws and regulations are developing and evolving. Since mid-2015, the PRC government and relevant regulatory authorities have issued various laws and regulations governing the marketplace lending industry, whichregulate the activities of online lending intermediaries, online microcredit companies and those who collaborate with these entities in operating marketplacelending platforms. See “Item 4. Information on the Company — B. Business Overview —Regulations — Regulations on Online Lending InformationIntermediaries” and “— Regulations on Microcredit Companies” for more details. There are uncertainties as to the interpretation of these PRC laws andregulations and their applicability to our business. If any aspect of our operations is deemed to have violated these laws or regulations, we may be required tomodify or even suspend relevant operations and/or be subject to administrative penalties. As of the date of this annual report, we have not been subject to any material fines or other penalties under any PRC laws or regulations, including thosegoverning the marketplace lending industry. However, the growth in the popularity of the marketplace lending industry increases the likelihood that the PRCgovernment will seek to further regulate this industry. We are unable to predict with certainty the impact, if any, that future laws or regulations governing themarketplace lending industry will have on our business, financial condition and results of operations. In addition, recently-issued laws and regulations have imposed additional requirements and restrictions on the operations of marketplace lendingplatforms, which have adversely affected our business operations in 2018. Our total loan volume decreased from RMB24.6 billion for the three months endedMarch 31, 2018 to RMB20.0 billion for the three months ended June 30, 2018, to RMB17.0 billion for the three months ended September 30, 2018, andrelatively stabled atRMB17.1 billion for the fourth months ended December 31, 2018; our total outstanding balance of loans decreased from RMB22.1billion as of June 30, 2018 to RMB20.4 billion as of September 30, 2018, and further to RMB19.9 billion as of the fourth months ended December 31, 2018.These regulatory requirements and restrictions may continue to adversely affect our business and results of operations in the future. If we fail to complete record-filing for our online lending information services and obtain telecommunication service license, we may be forced toterminate our online lending information intermediary business. The Interim Measures on Administration of Business Activities of Online Lending Information Intermediaries, or the Interim Measures, introduced arecord-filing and licensing regime, which requires online lending information intermediaries to (i) make relevant record-filing with local financial regulatoryauthorities for their online lending information services; (ii) apply for relevant telecommunication service license after the completion of record-filing withlocal financial regulatory authorities; and (iii) specify online lending information services in their business scope. In addition, the Notice on the Rectificationand Inspection Acceptance of Risk of Online Lending Intermediaries, or Circular 57, requires online lending information intermediaries to complete theirrecord-filing with the local authorities by the end of June 2018 at the latest. The Notice on Launching Compliance Inspection on Peer-to-Peer OnlineLending Information Intermediaries, or the Inspection Notice, requires online lending information intermediaries to complete compliance inspections(including self-inspection, inspection conducted by local and national Internet Finance Association and verification conducted by the rectification office incharge of online lending) by December 2018 pursuant to the Inspection Notice and the Compliance Checklist for Online Lending Information Intermediariesas specified in the Inspection Notice, or the Checklist. Based on the results of the compliance inspections, systems of online lending informationintermediaries who are in compliance with the applicable rules and regulations can be integrated to the industry-wide information disclosure systems andproduct registration systems. Upon completion of such integration, the online lending information intermediaries will be able to submit filing applicationsfor record-filings pursuant to detailed procedures to be issued by the competent regulatory authorities. However, it remains unclear when the detailedprocedures for such system integrations and filing applications will be issued. As of the date of this annual report, we have submitted a self-inspection reportas requested under the Inspection Notice and the Checklist, and competent authority of Shangcheng District, Hangzhou, conducted administrative onsiteinspections on us in late October 2018, but we have not received any feedback from the competent authority, and there can be no assurance that we willultimately be successful in passing these inspections. 8 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, we were and may continue to be subject to additional requirements throughout the inspection process. For example, in December 2018,Hangzhou Internet Finance Association published the Notice on Actively Cooperating with Risk Management Rectification on Online Lending InformationIntermediaries of Hangzhou, or the Cooperating Notice. The Cooperation Notice sets forth specific requirements online information intermediaries inHangzhou, including us, should adhere to, including, among others, (1) to ensure that their outstanding loan balance and number of borrowers do notincrease, and will gradually decrease as requested by competent authorities; and (2) to gradually reduce the outstanding balance of non-compliant loanproducts and eliminate such balance before June 2019; and (3) stop establishing new branches. The Shenzhen Internet Finance Association published asimilar notice on the same day, implying a regulatory trend to restrain the business scale and growth of online lending information intermediaries which inturn may have materially and adversely affect our operational and financial results. To our knowledge, none of the online lending information intermediaries in Zhejiang Province, including us, have been permitted to submit filingapplications as of the date of this annual report. It has been reported since April 2019 that the draft of the Pilot Work Plan for Conditional Record Filing ofOnline Lending Information intermediaries, or Pilot Plan, has been finalized. According to the Pilot Plan, the record-filing process will start in the secondhalf of 2019 in certain pilot cities and provinces, and the record-filing process for all online lending information intermediaries will be completed by 2020.The above summaries of the Pilot Plan are based on certain media reports. If the Pilot Plan is published, we might be required to (1) stop any new businessbefore we complete such compliance inspections or record filing; (2) increase our registered capital to no less than RMB500 million within six months; (3)establish a fully-paid risk reserve fund and risk compensation fund within twelve months; (4) limit the times of transfer of loans on our platform; and (5) limitthe aggregate investment amount of an individual investor to RMB50,000 in order to complete the record-filing. If we were required to amend our businessaccordingly, our business, financial condition and results of operation might be materially and adversely affected. We cannot assure you when we will beable to submit our filing application, and once submitted, whether such application will be accepted by the local financial regulatory authorities or any othercompetent regulatory authorities as relevant laws and regulations continue to develop and evolve. The delay in completing such record filing has had, andmay continue to have, adverse impacts on our business growth. If we fail to complete such compliance inspections or record-filing, we will not be able toobtain the relevant telecommunication service license, in which event we may be forced to terminate our online lending information intermediary business. Increasing restrictions on our custodian bank arrangement may require us to amend our custody account agreement with Xiamen Bank or seek analternative qualified custodian bank. We have entered into a custody account arrangement with Xiamen Bank, under which investors’ and borrowers’ funds are deposited directly into andsettled by their designated custody accounts at Xiamen Bank. Circular 57 requires online lending information intermediaries to set up custody accounts atqualified banks that have passed the National Online Lending Rectification Office’s tests and evaluations. According to the website of national InternetFinance Association, Xiamen Bank has passed such tests and evaluations. If Xiamen Bank fails to maintain such status, we may need to seek an alternativecustodian bank to satisfy the relevant regulatory requirement, which may delay our rectification progress and record-filing with local financial regulatoryauthorities. In addition, in the event that any new laws, regulations or rules impose additional restrictions on our custody account arrangement with XiamenBank, we may need to amend our agreement with Xiamen Bank or seek an alternative qualified custodian bank, which may materially and adversely affectour business. The aggregate amount extended to any borrower through our platform and other online lending information intermediaries may exceed theapplicable borrowing limits. The Interim Measures require that the aggregate amount of loans extended to any individual must not exceed RMB200,000 through a single onlinelending information intermediary or RMB1 million in aggregate through all online lending information intermediaries in the PRC. Furthermore, theaggregate amount of loans extended to any entity must not exceed RMB1 million through a single online lending information intermediary orRMB5 million in aggregate through all online lending information intermediaries in the PRC. We currently do not facilitate loans to any individual in aggregate amount exceeding RMB200,000 or to any entity in aggregate amount exceedingRMB1 million. In addition, when assessing the creditworthiness of a prospective borrower, we determine whether he has outstanding loans through othermarketplace lending platforms using proprietary and third-party databases. However, due to the lack of industry-wide information sharing arrangement, therecan be no assurance that the aggregate amount extended to any borrower through our platform and other online lending information intermediaries does notexceed the applicable borrowing limits set out by the Interim Measures. 9 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our purchase of delinquent loans and provision of guarantees may be prohibited under the Interim Measures and Circular 57. If we are unable toprocure alternative means of investor protection in a timely and cost-effective manner, our business and results of operations may be materially andadversely affected. The Interim Measures prohibit online lending information intermediaries from providing any security interest or guarantee to investors as to the return ofloan principal or interest. We have been voluntarily purchasing delinquent loans from online investors in order to timely compensate them for default losses;we provide guarantees for certain of our consumption loan products (the loan volume of which totaled RMB2.2 billion and RMB2.6 billion (US$0.4 billion)in 2017 and 2018, respectively, accounting for 2.3% and 3.3% of our total loan volume in 2017 and 2018, respectively). We have ceased to offerconsumption loans involving smaller loan amounts and shorter tenures starting from the fourth quarter of 2017; we provide guarantees to a portion ofinstitutional funding partners and corporate investors in case of borrower defaults (the loan volume of which totaled RMB4.0 billion and RMB4.8 billion(US$0.7 billion) in 2017 and 2018, respectively, accounting for 4.1% and 6.1% of our total loan volume in 2017 and 2018, respectively). We ceased tofacilitate any new investment made by such corporate investors through our platform or provide guarantee to new corporate investors starting from the fourthquarter of 2017. However, these historical and current practices may be deemed as providing guarantees to investors as to the return of loan principal orinterest, which is prohibited under the Interim Measures and Circular 57. We are in ongoing discussion with third-party insurance companies, asset management companies and other financial institutions to provide alternativemeans of investor protection. In June 2018, we entered into a framework agreement with an insurance company to explore cooperation opportunities in thisarea. In July 2018, we entered into a collaboration agreement with a new institutional funding partner and an insurance company, under which we engagedthe insurance company to provide insurance coverage for the institutional funding partner’s default losses. However, if we are unable to procure alternativemeans of investor protection in a timely and cost-effective manner, investors may reduce their investment on our platform and our business operations may bematerially and adversely affected. The operations of our online microcredit company are exposed to regulatory uncertainties. We, through Fuzhou Weidai Online Microcredit Co., Ltd, or Fuzhou Online Microcredit, a subsidiary of our variable interest entity incorporated inFuzhou, Jiangxi Province, offered borrowers advances once their loan applications on our platform were approved and the loans were listed for investors tosubscribe to. Borrowers typically took such advances and subsequently used loan proceeds received from investors to repay the advances. We cannot assureyou that such historical practice will not be deemed by PRC authorities as “self-financing through our platform”, which is prohibited under the InterimMeasures and the Inspection Notice. Fuzhou Online Microcredit has obtained the establishment approval and business license as an online microcredit company to provide up to three timesof its registered capital, or RMB600 million, in loans; however, it has not obtained the operating certificate as of the date of this annual report. FuzhouOnline Microcredit was in the process of applying for the operating certificate when the approval process for all online microcredit companies’ applicationsfor licenses, permits and certificates was suspended as a result of a number of regulations issued by the RPC regulatory authorities in November andDecember 2017. This industry-wide suspension of regulatory approval was implemented with an aim to strengthen the regulatory compliance of the onlinemicrocredit industry, which is relatively new and rapidly developing. We cannot assure you that Fuzhou Online Microcredit is able to obtain the operating certificate in due course. It remains unclear when the regulatoryauthorities will resume the approval process and whether they will conduct any onsite inspections of Fuzhou Online Microcredit. As advised by CM LawFirm, our PRC counsel, Fuzhou Online Microcredit may continue its current operations (including making advances) before the approval process is resumed.However, in the event that an inspection is conducted by the relevant authorities and Fuzhou Online Microcredit fails to rectify any non-complianceidentified during such inspection, its future application for the operating certificate could be denied and its business operations could be suspended. As ofthe date of this annual report, Fuzhou Online Microcredit has not been subject to any administrative or other penalties due to the lack of operating certificate.We believe that Fuzhou Online Microcredit is in compliance with the applicable requirements for the issuance of operating certificate, and plan to re-applyfor such certificate as soon as the regulatory approval process is resumed. 10 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fuzhou Online Microcredit has not been, and is not expected to be, our major funding source, and we have acquired a financial leasing company whichwill allow us to provide funding to borrowers in the form of financial leasing. However, if Fuzhou Online Microcredit is unable to obtain the operatingcertificate or obtain, maintain or renew any other requisite approvals applicable to its business, we may not be able to provide advances to borrowers throughFuzhou Online Microcredit in the future, and borrower experience on our platform may be adversely affected. Our X Investment Program may be deemed to violate Circular 57, the Inspection Notice and the Pilot Plan, in which case we may be required tomodify our business practice or be subject to fines or other penalties. Even though Circular 57 permits online lending information intermediaries to provide infrequent loan transfers between investors for liquidity purposes,it expressly prohibits certain transfers, including transfer of loans that will result in the investment period to be inconsistent with the tenures of underlyingindividual loans. Circular 57 also prohibits online lending information intermediaries from facilitating investors to pledge their creditors’ rights to borrowloans. In addition, pursuant to the Checklist, loan transfers at the end of the investment period may be deemed as splitting the terms of the loans which isprohibited under the Interim Measures, unless the investor has been informed about the liquidity risk and has provided prior written confirmation, and thename of the loan product has indicated that such loan is transferrable after a certain period of time. The duration of our X Investment Program may be different from the tenures of the underlying individual loans, and we allow online investors thatparticipate in our X Investment Program to transfer the underlying individual loans that have tenures different from the duration of the program to otheronline investors on our platform at the end of such program. We have informed investors about the liquidity risk associated with our X Investment Program,however, due to the lack of detailed implementations to Circular 57 and the Inspection Notice, we cannot assure you that such practice will be deemed to bein full compliance with Circular 57 and the Inspection Notice. If such practice is deemed to violate Circular 57, the Inspection Notice or other applicablePRC laws or regulations, we may be required to modify our business practice or be subject to fines or other penalties. In addition, according to the Pilot Plan, a single loan should not be transferred for more than three times during its tenure, and all types of automatic andpre-authorized subscription are prohibited. If the Pilot Plan were officially issued as reported, we may need to make adjustment to our business model,including our offering of X Investment Program, which will materially affect our online investors’ user experience. If this happens, our financial conditionand results of operation might be materially and adversely affected. Some of the loans we facilitate may be deemed as loans with no designated purposes and we may be required to track the actual use of these loans orcease facilitating these loans and our business, financial condition and results of operations may be materially and adversely affected. The Notice on Regulating and Rectifying “Cash Loan” Business, or Circular 141, prohibits online lending information intermediaries from facilitatingloans with no designated purpose. It is unclear whether some of the loans we facilitate, such as professional credit loans and consumption loans, would bedeemed as loans with no designated purpose, and if they were, we would need to take necessary measures to track the actual use of these loans, which couldcause us to incur substantial additional expenses. If we were unable to effectively implement the foregoing or other rectification measures, we might need toreduce or even cease facilitating these loans, and our business, financial condition and results of operations may be materially and adversely affected. 11 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our historical practice of deducting interests and fees upfront may be deemed to have violated Circular 141, Circular 56 or the Inspection Notice andwe may be subject to fines, penalties or other liabilities. Circular 141 and the Inspection Notice prohibit online lending information intermediaries from deducting interests, commissions, management fees ormargins from investors’ loan disbursements to borrowers. In addition, pursuant to the Notice on Specific Rectification Implementation Measures for Risk ofOnline Microcredit Businesses of Microcredit Companies, or Circular 56, third-party institutions cooperating with microcredit companies are prohibited fromcollecting any interests or fees from borrowers. Historically, we deducted service fees payable to us from online investors’ loan disbursements to borrowers.We have ceased such practice since early 2017. From early 2017 to late October 2018, we, through Fuzhou Online Microcredit, offered borrowers advanceswhile their loans were being listed for investors to subscribe to. Borrowers typically took such advances, and subsequently repaid such advances using theloan proceeds received from online investors. Fuzhou Online Microcredit ceased to offer such advances in late October 2018. Historically, Fuzhou OnlineMicrocredit, pursuant to the borrowers’ authorization, deducted relevant fees payable to us directly from the advances. Starting in the first half of 2018, wehave implemented a new fee structure for loans facilitated through our platform and stopped deducting relevant fees payable to us from the advances. Underthe current fee structure, borrowers receive full amounts of the loan proceeds for loans facilitated through our platform, and pay service fees to us andprincipal and interest to online investors on a monthly basis, with the first payment due one month from the time of loan disbursement. See “Item 4.Information on the Company — B. Business Overview — Our Borrowers and Loan Products — Loan Products and Services Offered to Borrowers” and “—Our Transaction Process” for more details. However, we cannot assure you that our historical practices will not be deemed by the PRC authorities to haveviolated Circular 141, Circular 56 or other PRC laws and regulations, in which case we may be subject to fines, penalties or other liabilities. Our cooperation with institutional funding partners exposes us to regulatory uncertainties faced by those partners, and we may be required to obtaingovernment approval or license due to our cooperating with those partners, which requirement will impose negative impacts on our business and results ofoperations. Our cooperation with institutional funding partners (who funded 1.5% and 4.1% of our total loan volume in 2017 and 2018, respectively) has exposed usto, and may continue to expose us to, regulatory uncertainties faced by such institutional funding partners. We are obligated to compensate a portion of ourinstitutional funding partners for delinquent principal and interest payments in the event of borrower defaults. We cannot assure you that the businessoperations of our institutional funding partners or our cooperation with these institutional funding partners are, or will continue to be in compliance with therelevant laws and regulations. For instance, Circular 141 requires that financial institutions cooperating with third parties to engage in lending businesses(i) not to outsource any core lending business (including credit assessment and risk control), (ii) not to accept any credit enhancement provided by thirdparties with no guarantee approval or license, whether or not in a disguised form (including commitment to absorbing default risks), and (iii) to ensure that nointerests or fees are collected from borrowers by such third parties. Furthermore, Circular 141 prohibits online lending information intermediaries fromfacilitating financial institutions’ participation in online lending services. Our cooperation with institutional funding partners may need to be modified,suspended or terminated, which may be time consuming and lead to insufficient funding supply on our platform and materially or adversely affect ourbusiness. We have completed the rectification of our business to ensure that our collaboration with institutional partners is in full compliance with Circular141, including, among others, to collect service fees from institutional funding partners instead of from borrowers. Pursuant to the Regulations on the Administration of Financing Guarantee Companies promulgated by the State Council on August 2, 2017, or theFinancing Guarantee Rules, entities operating “financing guarantee business” are required to obtain approval from the local regulatory authorities. If anyentity operates financing guarantee business without an approval, it may be subject to penalties, including termination or suspension of business, finesranging from RMB500,000 to RMB1,000,000, confiscation of illegal gains, and if the violation constitutes a criminal offense, criminal liabilities. TheFinancing Guarantee Rules have not defined what constitutes as operating “financing guarantee business”. It is uncertain whether our cooperation withinstitutional funding partners would be deemed as operating financing guarantee business. As of the date of this annual report, we have not been subject toany fines or other penalties with regard to operating financing guarantee business. However, given the evolving regulatory environment of the financingguarantee business, we cannot assure you that we will not be required by the relevant governmental authorities to obtain approval or license for operatingfinancing guarantee business in the future. 12 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We have been and may continue to rectify our business to ensure full compliance with laws and regulations governing the marketplace lendingindustry. We have rectified certain aspects of our business operations to ensure full compliance with laws and regulations governing the marketplace lendingindustry and may need to do so continuously as laws and regulations develop. For instance, following an onsite inspection in May 2017 of our variable interest entity Weidai Financial Information conducted by the Hangzhoubranch of the Office of Leading Group on Special Rectification of Risks in the Internet Finance Sector, or the Hangzhou Rectification Office, and severalother regulatory authorities, and an onsite inspection in November 2017 of Weidai Financial Information conducted by the financial service office ofZhejiang province, the Hangzhou Rectification Office issued two rectification notices in August 2017 and December 2017, respectively, to Weidai FinancialInformation. These rectification notices identified certain issues in Weidai Financial Information’s business operations which were deemed not to be in fullcompliance with applicable laws and regulations governing online lending information intermediaries, which include, among others, (i) offering loans withinterest rates that exceed the statutory limit of 36%; (ii) holding investors’ funds; (iii) conducting offline marketing activities for its loan products; (iv) lackof anti-fraud mechanism; (v) lack of risk assessment and investor management; (vi) lack of periodic audits for key business segments, security evaluation andcompliance issues; (vii) insufficient risk disclosure to investors; (viii) insufficient information disclosure; and (ix) conducting misleading advertisements. We have implemented various measures in response to the above alleged non-compliance, including, (i) discontinuation of loan products with interestrates that exceeded the statutory limit. Since the first half of 2018, we have ceased offering new loans with APR exceeding 36%, the loan volume of whichtotaled RMB17.1 billion (US$1.6 billion) in 2017 and accounted for 17.7% of our total loan volume in 2017, and loan applications with APRs exceeding36% will be automatically rejected by our system; (ii) setting up custody accounts with a qualified bank and separating investors’ funds from our own funds;(iii) discontinuation of conducting offline marketing activities for our loan products; (iv) adoption of anti-fraud mechanism; (v) implementation of riskassessment and investor management; (vi) improving periodic audits for key business segments, security evaluation and compliance issues; (vii) improvingrisk disclosure to investors; (viii) improving information disclosure; and (ix) discontinuation of misleading advertisements. We have completed theserectifications as of the date of this annual report. However, it is uncertain whether our rectification measures will be sufficient to ensure full compliance withthe regulatory requirements due to the lack of detailed interpretation and implementation of these requirements. As of the date of this annual report, we havenot received final clearance from the local financial authorities that our rectification efforts were sufficient, and there can be no assurance that we will be ableto receive such final clearance. In addition, according to the Pilot Plan, the aggregate amount invested by any individual must not exceed RMB200,000 through a single online lendinginformation intermediary or RMB500,000 in aggregate through all online lending information intermediaries in the PRC. Currently, certain number of ouronline individual investors have investments over RMB200,000. If the Pilot Plan were officially issued as reported, these individual investors may need towithdraw their investments on our platform exceeding the investment limits, which may materially affect our operational results due to insufficient investorcommitments. Please see “— If we are unable to retain existing borrowers or investors or attract new ones, or maintain or increase the volume of loansfacilitated through our platform in a cost effective manner, our business and results of operations will be adversely affected.” for more information. As the PRC laws and regulations for online lending information intermediaries, including their interpretation and implementation, continue to evolve,further regulations regarding the marketplace lending industry may be implemented, which may require us to make further rectifications. 13 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we cannot be classified as normal marketplace in accordance with Circular 175, we will be ordered to exit the marketplace lending industry, whichwill materially and adversely affect our operational and financial results. It has been reported since January 2019 that the Head Office for Special Rectification of Peer-to-Peer Online Lending and the Head Office for SpecialRectification of Online Finance Risk jointly issued the Circular on the Classification and Disposal of Risks of Online Lending Institutions and RiskPrevention, or Circular 175. It has been reported that according to Circular 175, except for large-scale online lending intermediaries that have notdemonstrated any high-risk characteristics (which are referred to as normal marketplaces, or Normal Marketplaces), all other marketplaces, including shellcompanies with no substantive operation, small-scale marketplaces and large-scale marketplaces with high risks, should exit the peer-to-peer lendingindustry or cease operation. In accordance with Circular 175, marketplaces with high risks include, among others, marketplaces that engage in self-financingor facilitate fraudulent loans, marketplaces with suspicious fund flows, marketplaces whose proportion of overdue loan volume exceed 10% of the overallloan volume on the platform, marketplaces with extensive negative publicity and complaints and marketplaces that refuse to or are reluctant to rectify non-compliant operations. In addition, Normal Marketplaces should cease operating businesses that are not in compliance with the relevant laws and regulations.Circular 175 also encourages certain Normal Marketplaces to convert into other types of online financial institutions such as online microcredit companies.The overarching objective of Circular 175 is to effect orderly exits of non-compliant lending intermediaries without inducing systemic risks or financialturbulence while ensuring the remaining players in the marketplace lending industry to strictly comply with all relevant laws and regulations. See “Item 4.Information on the Company — B. Business Overview — Regulation — Regulations on Online Lending Information Intermediaries.” The above summaries of Circular 175 are based on certain media reports, including an alleged photocopy of Circular 175 presented in such reports. Based on our current understanding of Circular 175, by comparing the number of borrowers and the outstanding balance on our marketplace with ourcompetitors, we expect to be categorized as a large-scale marketplace instead of a small-scale one. In addition, as we have successful submitted self-inspection report, we believe we are not a marketplace with high risks as we do not possess any high-risk characteristic stipulated in Circular 175. As a result,we believe that we are a Normal Marketplace. We will continue to implement internal rectification measures to ensure full compliance with laws andregulations. As Circular 175 does not require Normal Marketplaces to exit the industry or imposes minimum restrictions on Normal Marketplaces, we believethat Circular 175, if officially issued, would not have a material adverse impact on our business and operations. We may, however, be encouraged bygovernment authorities to convert into other types of online financial institutions such as microcredit companies or funding institutions. If we were to changeour type of business, our financial condition and results of operation might be materially and adversely affected. Furthermore, regulatory authorities mayhave different interpretations of Circular 175. If we are deemed as a marketplace other than a Normal Marketplace under Circular 175 by governmentauthorities, our marketplace would be shut down and our business, financial condition and results of operations would be materially and adversely affected.Circular 175 may also have a material and adverse, or even destructive, effect on the entire marketplace lending industry. If we are unable to retain existing borrowers or investors or attract new ones, or maintain or increase the volume of loans facilitated through ourplatform in a cost-effective manner, our business and results of operations will be adversely affected. Our business involves matching borrowers and investors through our platform. The growth and success of our future operations depend on theavailability of adequate lending capital to meet borrowers’ demand for loans on our platform. In order to grow our business, we must continuously increasethe volume of loans facilitated through our platform by retaining existing and attracting new borrowers and investors. The volume of loans facilitated through our platform may be affected by a number of factors, including our brand recognition and reputation, interestrates offered and service rates charged to borrowers and investors, the effectiveness of our risk management, the default rate of borrowers on our platform, theoperating efficiency of our platform and the macroeconomic environment. We may not be able to attract a sufficient number of borrowers or investors orobtain sufficient investor commitments, in which case our business and results of operations may be adversely affected. 14 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Insufficient number of borrowers We may not be able to attract a sufficient number of qualified borrowers due to a variety of reasons. For example, we currently acquire borrowers throughour own channels as well as third-party online and offline sales channels. If any of our borrower acquisition channels become less effective, if we are unableto continue to use any of these channels or if we are not successful in developing new channels, we may not be able to attract new borrowers in a cost-effective manner and may even lose existing borrowers to our competitors. If there are insufficient number of borrowers, investors may not be able to deploytheir capital in a timely or efficient manner and may seek alternative investment options. In addition, in connection with the introduction of new loan products or in response to changing economic conditions, we have imposed, and maycontinue to impose more stringent requirements on borrowers. For example, as a result of our more stringent requirements, the average amount of auto-backedloans we facilitated was reduced to RMB61,389 in 2018 from RMB63,888 in 2017. More stringent requirements may negatively affect borrower experienceon our platform and growth of the volume of loans facilitated through our platform. If we do not increase the volume of loans facilitated through our platform,our business and results of operations may be adversely affected. ·Insufficient investor commitments Our platform may not be able to attract sufficient investor commitments due to a variety of reasons. For example, changes in market conditions ordecrease in investment returns may result in investors seeking other investment options such as equities, bonds and bank savings. In addition, as we continueto expand our investor base to include an increasing number of smaller investors, the average investment amounts of online investors on our platformdecreased from RMB157,728 in 2017 to RMB97,361 in 2018. If there are insufficient investor commitments, borrowers may not be able to obtain capitalthrough our platform and may turn to other sources for their borrowing needs, and the volume of loans facilitated through our platform may be significantlyimpacted. To the extent that it is necessary to obtain additional lending capital from investors, such lending capital may not be available to our platform onacceptable terms or at all. If our platform is unable to provide prospective borrowers with loans or fund the loans on a timely basis due to insufficient lendingcapital, we may experience a loss of market share or slower than expected growth, which would harm our business, financial condition and results ofoperations. Since 2017, we have expanded our funding sources to include institutional funding partners. In 2017 and 2018, RMB1.5 billion and RMB3.2 billion ofloans, or 1.5% and 4.1% of our total loan volume, was funded by institutional funding partners, respectively. These institutional funding partners agree toprovide funding to borrowers referred by us who meet their predetermined criteria and pass their internal loan approval. While our borrowers’ loans aregenerally approved by the institutional funding partners if they fall within such institutional funding partners’ predetermined criteria, the institutionalfunding partner may decline to fund the loans, which is outside of our control. There is no assurance that our institutional funding partners will continue toprovide reliable, sustainable and adequate funding to support borrowers’ financial needs. In addition, if PRC laws and regulations impose more restrictionsregarding cooperation with institutional funding partners, these institutional funding partners may become more selective in choosing cooperation partners,which may drive up the funding costs and increase competition. Any of the above reasons may materially increase our funding costs, which may adverselyaffect our results of operations and profitability. If our existing and new loan and investment products do not achieve sufficient market acceptance, our financial results and competitive position maybe harmed. We have devoted significant resources to, and will continue to place an emphasis on, upgrading and marketing our existing loan and investmentproducts and enhancing their market awareness. We also incur expenses and expend resources to develop and market new loan products and investmentproducts that may incorporate new features, improved functionalities or otherwise make our platform more desirable to borrowers and investors. New loanproducts and investment products must achieve high levels of market acceptance in order for us to recoup our development costs. 15 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our existing and new loan products and investment products could fail to attain sufficient market acceptance for many reasons, including: ·borrowers may not find terms of our products, such as costs and credit limit of our loan products, competitive or appealing; ·our failure to predict market demand accurately and offer products that meet borrowers’ demand in a timely fashion; ·borrowers and investors using our platform may not like, find useful or accept, any changes we make; ·there may be negative publicity about our loan products or our platform’s performance or effectiveness; and ·there may be competing products introduced by our competitors. If our existing and new loan and investment products do not achieve sufficient market acceptance, our competitive position, results of operations andfinancial condition may be harmed. We may not be able to effectively operate our service centers, which could harm our business, results of operations and growth potential. We have rapidly expanded our service center network over the past few years. As of December 31, 2018, we operate 470 service centers across 30 of the32 provinces, municipalities and autonomous regions in China. We cannot assure you that our managerial, financial, operational, technological and otherresources will be adequate to effectively operate this nationwide service center network. For example, we may not be able to continue to attract and retain asufficient number of qualified personnel at reasonable costs or to train these personnel to provide high-quality services in accordance with our operating andrisk management procedures and protocols. Moreover, if we fail to adequately predict borrower demand or otherwise optimize our service center network, itcould result in excess or insufficient service center capacity. We operate 112 service centers through service center operation partners as of December 31, 2018. If we are unable to effectively address risks associatedwith the partner-operated service center business model, our reputation and results of operations may be materially and adversely affected: ·Our control over our service center operation partners is based on cooperation agreements, which may not be as effective as direct ownership. Ifour service center operation partners fail to maintain service standards we have set up, our revenues may be negatively affected. In addition,deterioration in business operations of our partner-operated service centers can result in, among other things, delayed or reduced payments to us. ·Our service center operation partners are responsible for hiring and managing employees for the respective service centers. In the event of anyunsatisfactory performance or illegal actions by these employees or any incidents or operational issues at our partner-operated service centers,we may suffer reputational or financial damage. ·Our cooperation agreements with service center operation partners may be suspended or terminated for various reasons, including our servicecenter operation partners’ serious violation of our operating protocols, or our service center operation partners’ failure to maintain requisiteapprovals, licenses or permits or to comply with other governmental regulations, which may negatively impact our brand image. We may not beable to find replacement service center operation partners in a timely manner or at all. Any resulting service disruption could materially andadversely affect our brand image, reputation and financial performance. In addition, pursuant to the Regulation on the Administration of Commercial Franchises, companies that engage in franchise business shall make filingswith local regulatory authorities within 15 days after execution of the franchise agreements. Companies that fail to make such filings may be subject topenalties, including remedy measures, imposition of fines that range from RMB10,000 to RMB50,000, and companies that fail to make remedy measures in atimely manner may be subject to fines that range from RMB50,000 to RMB100,000 and public announcements. We intend to make filings with localregulatory authorities with respect to the cooperation agreements entered into as soon as practical. However, failure to make such filing may subject us tofines. 16 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our business, financial condition and results of operations may be negatively affected as a result of our management having to devote significant timeand attention to administrative inspections, thereby diverting management’s attention from our day-to-day operations. Recently we were notified by the competent authority that administrative inspections of online lending information intermediaries in Hangzhou havecommenced. To assist with the inspection process, the competent authority has set forth certain requirements for all online lending information intermediariesthat are subject to such inspections, including providing complete, detailed and accurate information as to the contents of the self-inspection report,reporting realistic near-term plans and operational objectives, retaining documents and records, refraining from shutting down websites or mobile appswithout prior authorization, refraining from making any changes to the company’s business address or major shareholders, and requiring the company’s legalrepresentative and controlling persons, as well as the company’s directors, executive officers and members of senior management in supervisory roles, todevote their full support to and cooperate with the inspections, and that the company’s chairman and legal representative must participate in person andonsite throughout the inspection process. Since our chairman cannot travel during this inspection process, we may suffer losses of business that could have anegative impact on our financial condition and results of operations. We may also become subject to additional requirements throughout the inspection process. There can be no assurance as to how long any of theforegoing or additional requirements will continue to be imposed, or when they will be lifted. Similar or more onerous inspection processes may be imposedat the provincial or national levels. We do not know if and when such further inspection processes may commence, or when they would be completed.Furthermore, there can be no assurance that our company ultimately will be successful in passing each inspection by competent authorities. Each suchadministrative inspection will cause our management to devote significant time and attention to the inspection process, thereby diverting management’sattention from our day-to-day operations, which could harm our business, financial condition and results of operations. Our current level of fee rates may decline in the future. Any material reduction in our fee rates could reduce our profitability. We generate revenues primarily from fees charged to borrowers for our services in matching them with investors and for other services that we provideover the life of the loans. We also charge fees to online investors for facilitating their investments via our platform and the transfer of their investments on oursecondary loan market. These fee rates may change over time due to competition in the marketplace lending industry, the different types of products andservices we may offer in the future, competition, regulatory environment and macroeconomic factors. Any material reduction in our fee rates could have amaterial adverse effect on our business, results of operations and financial condition. Changes in PRC regulations relating to interest rates and fees for marketplace lending platforms and microcredit lending could have a materialadverse effect on our business. The interest rate permitted to be charged on loans facilitated through our platform is subject to limitations set forth in the Provisions on Several IssuesConcerning Laws Applicable to Trials of Private Lending Cases issued by the Supreme People’s Court in August 2015 and effective in September 2015. ThePrivate Lending Judicial Interpretations provide that (i) when the interest rate agreed between the borrower and investor does not exceed an annual interestrate of 24%, the People’s Court will uphold the interest rate charged by the investor, and (ii) when the interest rate agreed between the borrower and investorexceeds an annual interest rate of 36%, the portion in excess of 36% is void and the People’s Court will uphold a borrower’s claim for return of the excessportion to the borrower. For loans with interest rates per annum between 24% and 36%, if the interest on the loans has already been paid to the fundingsources, and so long as such payment has not damaged the interest of the state, the community or any third parties, the courts will likely not enforce aborrower’s demand for the return of such interest payment. 17 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fuzhou Online Microcredit is subject to regulations applicable to microcredit companies. See “Item 4. Information on the Company — B. BusinessOverview — Regulations — Regulations on Microcredit Companies” for more details. These regulations provide that “integrated real interest” (namely theaggregated borrowing costs charged to borrowers in the forms of interest and various fees) shall be subject to the limit on interest rate of private lending setforth in the Private Lending Judicial Interpretations issued by the Supreme People’s Court. The loans facilitated through our platform and the advances madeby Fuzhou Online Microcredit will be subject to the aforementioned interest rate restrictions, which could affect our platform’s to facilitate loans for certainborrowers and may have a material adverse effect on our business. Certain Opinions Regarding Further Strengthening the Financial Judgment Work issued by the Supreme People’s Court in August 2017, or the Opinionsfor Financial Judgment Work, provide more detailed rules on the legal limits of interest and fees charged in connection with a loan and specify that theintermediary service fees charged by an online lending intermediary to circumvent the legal limit of interest of private lending shall be invalid. Circular 141further clarifies that the total amount of interest and fees charged to borrowers must be within the limit set forth in the Private Lending JudicialInterpretations. Moreover, the Checklist provides that interest and fees collected by third parties in collaboration with online lending informationintermediaries or charged offline shall also be included in the calculation of interest and fees charged to borrowers. See “Item 4. Information on the Company— B. Business Overview — Regulations — Regulations on Online Lending Information Services — Regulations on Online Lending InformationIntermediaries” and “— Regulations on Loans and Intermediation” for more details. As of the date of this annual report, loans facilitated through our platform do not have annual interest rate exceeding 36%, however, certain loansfacilitated through our platform have overall borrowing costs over 24% per annum. We may continue to facilitate loans at or above the borrowing costs of24% but no more than 36% per annum. In the event that any of such loans become delinquent, we may not be able to collect the part of borrowing costs thatexceed 24% per annum through PRC judicial enforcement. Furthermore, though we believe our current service fees and various other fees charged toborrowers are reasonable and in compliance with relevant requirements under the Opinions for Financial Judgment Work, if the method of calculation of thecosts used by the PRC governmental authorities or the PRC courts is different from us and thus the overall borrowing costs of some of our loan products aredeemed as exceeding 36% per annum, the parts of the borrowing costs exceeding 36% per annum may be ruled as invalid, and we may face, among others,regulatory warning, correction order, condemnation, fines and criminal liability and we may be required to reduce fees and annual interest rate we charge toour borrowers. If such situations were to occur, our business, financial condition, results of operations and prospects would be materially and adverselyaffected. We may need to adapt our business model as China’s auto-backed loan market develops. China’s auto-backed loan market is currently in a preliminary stage of development and features a small number of players. As the market continues todevelop and borrowers become increasingly inclined to secure funding using automobiles as collateral, our existing business model and product offeringsmay face increasing competition and challenges. For example, we currently facilitate auto-backed loans using automobiles with clean title as collateral.However, as auto-backed loans become more prevalent and an increasing number of auto-backed loan providers emerge, automobiles may become morecommonly used as collateral to secure funding and the same automobile may even be used as collateral to secure funding from multiple auto-backed loanproviders, which may potentially increase the default rate of auto-backed loans we facilitate. For example, a borrower of auto-backed loans facilitatedthrough our platform may take out auto-backed loans from other auto-backed loan providers using the same automobile as collateral, which will increasedefault risks to us. To reduce the default risks, we may need to modify our existing business practice to lower our loan-to-value ratio, or LTV ratio, or requireadditional collateral from borrowers, which could incur additional costs, reduce the attractiveness of our platform or otherwise materially and adversely affectour business, financial condition and results of operations. 18 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our risk management system may not be adequate and may adversely affect the reliability of our platform, and in turn damage our reputation,business and results of operations. We have adopted stringent risk management protocols to assess loan applicants’ creditworthiness and appraise the value of automobiles. Due to the lackof a nationwide centralized credit reporting system in China, we conduct credit assessment of loan applicants and appraise the value of automobiles usingdata aggregated from various data sources, including our own proprietary database and third-party data service providers and credit scoring service providers’databases. However, these risk management measures may not always be adequate or effective. For example, our risk management system may contain errorsor defects that prevent us from effectively identifying fraudulent information supplied by borrowers. When there is indication of fraud, our risk managementteam’s further diligence and verification, such as site visits, may not completely eliminate the risk of fraud. In addition, the information and data in our owndatabase or third-party databases may be inaccurate, incomplete or outdated. Any of these could prevent us from effectively detecting fraud, accuratelydetermining the creditworthiness of loan applicants or appraise the value of automobiles, and our platform’s default rate may significantly increase. As aresult, investors may lose confidence in our platform and our reputation, business and results of operations may be adversely affected. Significant decrease in value of automobile used as loan collateral may lower our recoverability upon any default, which may adversely affect ourresults of operations. We primarily facilitate auto-backed loans, which involves borrowers using their automobiles as collateral. We have implemented various measures inorder to accurately determine the value of automobiles used as collateral, including our proprietary automobile appraisal system, third-party automobileappraisal systems, our own automobile appraisers and qualified third-party automobile appraisers. However, we may not be able to capture all factors thatmay affect the value of automobiles used as collateral. Changes in the value of automobiles may affect the recoverability of any outstanding balance ifdefault incurs. The value of automobiles may fluctuate due to many reasons, including the market value of new and used automobiles. The historicalrestrictions on inter-city or inter-province transfer of used automobiles that were imposed by various local government authorities in China may also result inlower value of automobiles that are transferred to such cities with local transfer restrictions. Although the PRC government has recently issued several officialopinions and circulars to prohibit such local restrictions and market segregation, certain transfer restrictions are still in practice, such as different emissionstandards imposed by various local government authorities. The deterioration of the condition of automobiles and decrease in popularity of specificautomobile models may also decrease the value of the automobiles. Thus, if there is any significant decrease in value of borrowers’ automobiles used ascollateral, we may not be able to cash out all delinquent principal and interest when borrowers default, which may adversely affect our business, financialcondition and results of operations. We have obligations to verify information relating to borrowers and detecting fraud. If we fail to perform such obligations to meet the requirements ofrelevant laws and regulations, we may be subject to liabilities. Our business of connecting investors and borrowers constitutes an intermediary service, and our contracts with investors and borrowers areintermediation contracts under the PRC Contract Law. Under the PRC Contract Law, an intermediary that intentionally conceals any material information orprovides false information in connection with the conclusion of an intermediation contract, which results in harm to the client’s interests may not claim forany service fee for its intermediary services, and is liable for any damage incurred by the client. Therefore, if we fail to provide material information toinvestors and are found to be at fault, for failure to exercise proper care, or failure to conduct adequate information verification or supervision, we could besubject to liabilities as an intermediary under the PRC Contract Law. In addition, the Interim Measures and the Inspection Notice have imposed additionalobligations on online lending information intermediaries to verify the truthfulness of the information provided by or in relation to loan applicants, activelydetect fraud, conduct risk evaluation of lenders, make hierarchy management of lenders and disclose borrowers’ credit risk related information to lenders. Weleverage a large database of past fraud cases, which is updated regularly, and sophisticated rule-based technologies, in detecting loan applicants’ fraudulentbehaviors. As the Interim Measures and other applicable PRC laws and regulations are relatively new, it is still unclear to what extent online lendinginformation intermediaries should exercise the duty of care in detecting fraud. Although we believe that, as an information intermediary, we should not bearthe credit risk for investors as long as we take reasonable measures to detect fraudulent behaviors, we cannot assure you that we would not be subject to anyliabilities under the Interim Measures if we fail to detect any fraudulent behavior. If that were to occur, our results of operations and financial condition couldbe materially and adversely affected. 19 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Broader macro, political and socio-economic factors affecting market conditions can materially and adversely affect our business and operatingresults. General economic, macro, political and socio-economic factors beyond our control may deter borrowers’ from seeking loans through our platform orinvestors attempting to lend through our platform. Such factors include the general interest rate ecosystem, unemployment rates, residential home values andavailability of other investment opportunities. If any of these risk factors should materialize, the volume of loans facilitated through our platform may declineand our revenues and operating results may be adversely affected. For example, the fluctuation of interest rates may affect the demand for loan services on ourplatform, a decrease in interest rates may cause potential borrowers to seek lower-priced loans from other channels and a high interest rate environment maylead to an increase in competing investment options and dampen investors’ desire to invest on our platform. If we fail to respond to the fluctuations ininterest rates in a timely manner and adjust our loan product offerings, potential and existing investors may delay or reduce their investments through ourplatform, and potential and existing borrowers may show less interest in our loan products and platform. As a result, fluctuations in the interest rateenvironment may discourage investors and borrowers from participating on our platform, which may adversely affect our business. In addition, our business is subject to the credit cycle associated with the volatility of the general economy. If economic conditions deteriorate, we mayface increased risk of default, which will result in lower returns or losses to investors. In the event that the creditworthiness of our borrowers deteriorates or wecannot track the deterioration of their creditworthiness, the criteria we use for the analysis of borrower credit profiles may be rendered inaccurate, renderingour risk management system ineffective. This in turn may lead to higher default rates and adverse impacts on our reputation, business, results of operationsand financial positions. We cannot guarantee that economic conditions will remain favorable for our business or industry and that demand and supply for loans we facilitate willcontinue to be met at current levels. If demand or supply reduces, or if the default rate increases, our growth and revenue will be negatively impacted. We do not prohibit our borrowers from incurring other debt or impose financial covenants on borrowers during the term of a loan, which will increasethe risk of default. Subsequent to a loan disbursement, a borrower may: ·become delinquent in payment obligations; ·default on a pre-existing debt obligation; ·commit to further indebtedness; and/or ·experience events bringing about adverse financial effects. We do not prohibit our borrowers from incurring additional indebtedness, nor do we impose any financial covenants on borrowers during the term of aloan. Furthermore, we may not be able to ascertain whether a loan applicant has outstanding loans on other marketplace lending platforms. We are faced withthe risk that borrowers borrow money through our platform to pay off loans on other marketplace lending platforms, creating a snowball effect of debt. Anyadditional indebtedness may impair a borrower’s ability to observe his or her payment obligations on the loans we facilitated, and therefore adversely affectthe relevant investor’s returns. If a borrower becomes insolvent or bankrupt or otherwise runs into financial distress, any unsecured loan (including thoseobtained through our platform) will rank pari passu to each other and our investor may suffer losses. If we are unable to effectively maintain the quality of our loan portfolio, our business, financial conditions and results of operations may be materiallyand adversely affected. Our financial condition and results of operations are affected by our ability to effectively maintain the quality of our loan portfolio. If we are unable toeffectively maintain and manage the quality of our loan portfolio due to any reason, the delinquency rates of our loan portfolio may increase. As we havebeen voluntarily purchasing delinquent loans from online investors, and are obliged to compensate a portion of our institutional funding partners andcorporate investors for their default losses, any deterioration in the quality of our loan portfolio or increase in our delinquency rate may materially andadversely affect our results of operations. In addition, if we no longer voluntarily purchase delinquent loans from online investors in the future, onlineinvestors will bear the default risk and their confidence and loan volume on our platform may decrease. 20 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If our ability to collect delinquent loans is impaired, our business and results of operations might be materially and adversely affected. We rely on both our in-house collection team and third-party collection service providers to collect delinquent loans. Our existing collection methods,such as phone calls, in-person visits and taking automobiles into custody, may not be as effective in the future. Although we are under no obligation tocompensate online investors’ default losses (except that we provide guarantees for certain consumption loan products and to certain corporate investors), wehave been voluntarily compensating online investors for their default losses by purchasing their delinquent loans in the event of borrower defaults. As aresult, failure to collect these loans may have a material adverse effect on our business, financial condition and results of operations. In addition, as weprovide guarantees to a portion of our institutional funding partners and corporate investors, failure to collect these loans may also have a material adverseeffect on our business, financial condition and results of operations. We follow standardized procedures and protocols to collect delinquent loans and closely monitor our risk management personnel’s collection activitiesto ensure compliance with these procedures and protocols. Our post-loan risk management personnel are required to undertake, among others, (i) to strictlyadhere to our standardized procedures and protocols to collect delinquent loans, (ii) to speak in a well-mannered tone and act civil and polite toward theborrowers and avoid any conversations or interactions that may lead to heated arguments, (iii) to contact the borrowers at reasonable hours, and refrain frommaking constant collection calls or visits that may be seen as harassment, (iv) in the event of conflicts with borrowers, to take the initiative to contact thepolice, and (v) not to engage in any practice or take any action during loan collection in violation of any applicable laws or regulations. However, we cannotassure you that our risk management personnel will comply with such undertakings at all times. In addition, these collection methods may be viewed byborrowers or regulatory authorities as harassments, threats or even criminal conducts, and we may be subject to lawsuits initiated by borrowers or prohibitedby the regulatory authorities from using certain collection methods. If any of these were to happen and we fail to adopt alternative collection methods in atimely manner, or if the alternative collection methods are less effective, our ability in collecting delinquent loans may be impaired, and investors’confidence and loan volume on our platform may decrease. Our risk management personnel’s collection practices, if deemed improper or illegal, may alsocompromise our reputation and harm our business. See “— Any negative publicity with respect to us, our employees, the marketplace lending industry ingeneral or our business partners may materially and adversely affect our business and results of operations” for more details. In addition, we place the automobiles we have taken into custody in parking lots or parking spaces we rent from third parties in close proximity to ourservice centers. We may not be able to properly store these automobiles before they are redeemed by borrowers or disposed of. For example, the automobileswe have taken into custody may be stolen, vandalized or suffer weather related damages. Even if the automobiles were stored properly, we cannot assure youthat disposal value of the automobiles can fully cover the delinquent principal and interest. Furthermore, borrowers may dispute how we take into custody ordispose of the collaterals and our handling of proceeds from such disposal. If any of these were to occur, we may suffer losses and our brand image andrelationship with borrowers may be harmed. For certain auto-backed loans facilitated through our platform, investors’ rights to the automobile collateral have not been registered with the localautomobile administrative offices. In the event that an automobile collateral for such loans is also used as collateral to secure another loan elsewhere and athird-party lender’s right to such automobile was registered with the local automobile administrative offices, the third-party lender will have priority to claimhis rights to the automobile collateral over the investor on our platform if the borrower fails to repay the loans. As a result, the rights of investors on ourplatform may be negatively affected and our business and results of operations could be materially and adversely affected. 21 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our failure to compete effectively could adversely affect our results of operations and market share. We face competition in auto-backed loan market in China. We compete directly with other auto-backed loan providers for both borrowers and investors,such as touna.cn and rrjc.com. As we focus on providing financial solutions to small and micro enterprise owners, we also compete with traditional financingchannels and other marketplace lending platforms which provide loans to small and micro enterprise owners. In addition, we compete with other marketplacelending platforms for investors. Our competitors may operate with different business models, have different cost structures or participate selectively indifferent market segments. They may be more successful or more adaptable to new regulatory, technological and other developments. Some of our current andpotential competitors have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources tothe development, promotion, sale and support of their business. Our competitors may also have more extensive borrower or investor bases, greater brandrecognition and brand loyalty and broader partner relationships than us. Additionally, our current or potential competitors may acquire or form strategicalliances with one or more of our competitors, which could adversely affect our business, results of operations, financial condition and future growth. In addition, our competitors may be better at developing new products, responding faster to new technologies and undertaking more extensive marketingcampaigns. When new competitors seek to enter our target market, or when existing market participants seek to increase their market share, they sometimesundercut the pricing and/or terms prevalent in that market, which could adversely affect our market share or our ability to exploit new market opportunities.Our pricing and terms could deteriorate if we fail to act to meet these competitive challenges. If we are unable to compete with such companies and meet theneed for innovation in our industry, the demand for our platform could stagnate or substantially decline, we could experience reduced revenues or ourplatform could fail to achieve or maintain more widespread market acceptance, any of which could harm our business and results of operations. Any failure to manage our growth or execute our strategies effectively may materially and adversely affect our business and prospects. We have achieved rapid growth in our revenues and net income in the past few years, but such growth rates slowed down in 2018. Our net revenuesincreased by 101.3% from RMB1,761.4 million in 2016 to RMB3,545.4 million in 2017, and further increased by 10.4% to RMB3,913.5 million(US$569.2million) in 2018, and our net income increased by 63.2% from RMB291.0 million in 2016 to RMB474.8 million in 2017, and further increased by 27.3% toRMB604.6 million (US$87.9 million) in 2018. The slower growth rate was primarily due to (i) a general downturn of China’s marketplace lending industry in2018 due to various regulatory and economic factors, which caused a slow-down in the growth of our loan balance and loan volume, and (ii) a decrease inauto-backed loans’ fee rates, as we adjusted the fee rates of auto-backed loans downward in the first half of 2018 to improve the competitiveness of our loanproducts. If we are not successful in managing our growth or executing our strategies effectively, our business, results of operations, financial condition andfuture growth may be materially and adversely affected. Any negative publicity with respect to us, our employees, the marketplace lending industry in general or our business partners may materially andadversely affect our business and results of operations. The reputation of our brand is critical to our business and competitiveness. Factors that are vital to our reputation include, but are not limited to, ourability to: ·maintain the quality and reliability of our platform; ·provide borrowers and investors with a superior experience on our platform; ·enhance and improve our risk management system; ·effectively manage and resolve borrower and investor complaints; and ·effectively protect personal information and privacy of borrowers and investors. 22 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Any malicious or negative allegation made by the media or other parties about the foregoing or other aspects of our company, including, but not limitedto, our management, employees, business, compliance with law, financial condition or prospects, whether with merit or not, could severely compromise ourreputation and harm our business and operating results. As China’s marketplace lending industry is new and the regulatory framework for this industry is also evolving, negative publicity about this industrymay arise from time to time. Negative publicity about China’s marketplace lending industry in general may also have a negative impact on our reputation,regardless of whether we have engaged in any inappropriate activities. The PRC government has recently instituted specific rules to develop a moretransparent regulatory environment for the marketplace lending industry. See “Item 4. Information on the Company — B. Business Overview — Regulations — Regulations on Online Lending Information Services” and “— Regulations on Microcredit Companies” for more details. Any players in China’smarketplace lending industry who do not comply with these regulations may adversely impact the reputation of the industry as a whole. Furthermore, anynegative development in, or negative perception of, the marketplace lending industry as a whole, even if factually incorrect or based on isolated incidents,could compromise our image, undermine the trust and credibility we have established and imposed a negative impact on our ability to attract new borrowersand investors. Negative developments in the marketplace lending industry, such as widespread borrower defaults, fraudulent behavior and/or the closure ofother marketplace lending platforms, may also lead to tightened regulatory scrutiny of the sector and limit the scope of permissible business activities thatmay be conducted by marketplace lending platforms like us. For instance, since the second quarter of 2018, there has been an increasing number of businessfailures of, or accusations of fraud and unfair dealing against, companies in the marketplace lending industry in China. In late 2018, there were increasedmedia coverage of marketplace lending platforms’ business failures. If borrowers and investors associate us with these failed companies, our reputation maybe harmed and investor confidence on our platform may be adversely affected. If this were to happen, we may be forced to offer more favorable terms toinvestors, such as higher investment return, in order to ensure that there is sufficient investment commitment on our platform, which in turn may adverselyaffect our business and results of operations and impair our ability to grow our business. In addition, negative publicity about our business partners, such as negative publicity about their loan collection practices, any failure by them toadequately protect the information of our borrowers and investors, or to otherwise meet required quality and service standards, could harm our reputation andmaterially and adversely affect our business and results of operations. If we fail to promote and maintain our brand in a cost-efficient way, our business and results of operations may be harmed. We believe that effectively developing and maintaining awareness of our brand is critical to attracting and retaining borrowers and investors on ourplatform. This depends largely on the effectiveness of our marketing efforts and the success of the channels we use to promote our platform. If any of ourcurrent marketing channels become less effective, if we are unable to continue to use any of these channels, if the cost of using these channels were tosignificantly increase or if we are not successful in generating new channels, we may not be able to attract new borrowers and investors in a cost-effectivemanner or convert prospective borrowers and investors into active borrowers and investors on our platform. Our efforts to build our brand have caused us to incur significant expenses, and it is likely that our future marketing efforts will require us to incursignificant additional expenses. These efforts may not result in increased revenues in the immediate future or at all and, any increases in revenues may notoffset the expenses incurred. If we fail to successfully promote and maintain our brand while incurring substantial expenses, our results of operations andfinancial condition would be adversely affected, which may impair our ability to grow our business. Loss of or failure to maintain the relationship with our business partners may materially and adversely affect our business and results of operations. We currently rely on a range of business partners in various aspects of our business. We work with online and offline channel partners, such as third-partymobile apps, websites and financial service providers for borrower and investor acquisition. We rely on our service center operation partners in operating ourpartner-operated service centers. Furthermore, we collaborate with a variety of third-party service providers to conduct our business, including data serviceproviders and credit scoring service providers for data aggregation, collection service providers for post-loan collections and payment service providers forthe transfer of funds between borrowers and investors. 23 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Pursuing, establishing and maintaining relationships with our business partners requires significant time and resources. If we cannot successfully pursue,establish or maintain relationships with our business partners, our business operations may be adversely affected. In addition, our agreements with ourbusiness partners generally do not prohibit them from working with our competitors or offering competing services. Our competitors may be more effective inproviding incentives to our business partners, which may cause our business partners to favor business relationship with them over their relationship with usand devote more resources toward our competitors. Moreover, our business partners may devote more resources to support their own competing businesses,which may compete with our business and adversely affect our business relationship with these business partners. Furthermore, if our business partners fail toperform their obligations under our agreements with them, we may have disagreements or disputes with them or suspend or terminate our businessrelationship, which could adversely affect our business operations and brand image. If our relationship with any of our existing business partners issuspended or terminated, we may not be able to find replacement business partners in a timely and cost-effective manner or at all, which could negativelyimpact our business, financial condition and results of operations. Misconduct, errors and failure to comply with applicable laws and regulations by our employees or business partners could harm our business andreputation. We are exposed to many types of operational risks, including the risk of misconduct and errors by our employees and our business partners. Our businessdepends on our employees and our business partners to interact with borrowers and investors, process large amounts of data and transactions and support theloan collection process. We may not be able to identify and deter misconduct or errors by our employees or our business partners at all times, and theprecautions we take to detect and prevent these activities may not be effective. If transactions are redirected, misappropriated or otherwise improperlyexecuted, if personal information are disclosed to unintended recipients or if an operational breakdown or failure during the process of transactions occurs,whether as a result of human error, or purposeful sabotage or fraudulent manipulation of our operations or systems, our business operations and reputationcould be materially adversely affected. For example: ·The manner in which we interact with borrowers and investors and store and use their personal information through our platform is governed byvarious PRC laws. If any of our employees or business partners fails to follow our protocols when interacting with borrowers and investors, ortakes, converts or misuses borrowers’ or investors’ funds, documents or personal information, we could be liable for damages suffered byborrowers or investors and become subject to regulatory actions and penalties. We could also be perceived to have facilitated or participated inthe illegal misappropriation of funds, documents or personal information, and therefore be subject to civil or criminal liability. For instance, ourthird-party data service providers may provide us with personal information of borrowers that is illegally obtained, which may subject us toliabilities; ·We rely on both our in-house collection team and third-party collection service providers for loan collection. Any aggressive practice ormisconduct by our employees or third-party service providers during loan collection process could damage our reputation; and ·Although we have formulated policies and procedures aimed at preventing money laundering and terrorism financing, we cannot assure youthat these policies and procedures will be effective to prevent our employees from engaging in money laundering or terrorism financingactivities. In addition, third-party payment service providers are required to have in place appropriate anti-money laundering policies andprocedures under applicable anti-money laundering laws and regulations issued by the PBOC. If any of our third-party service providers fails tocomply with the applicable anti-money laundering laws and regulations, our reputation could suffer and we could become subject to regulatoryintervention. 24 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Any of these occurrences could result in our diminished ability to operate our business, potential liability to borrowers and investors, inability to attractborrowers and investors, reputational damage, regulatory intervention and financial harm, which could negatively impact our reputation, business, financialcondition and results of operations. If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately and timelyreport our results of operations, meet our reporting obligations or prevent fraud, and investor confidence, and the market price of our ADSs may bematerially and adversely affected. We are not required to provide a report of management on our internal control over financial reporting and our independent registered public accountingfirm is not required to conduct an audit of our internal control over financial reporting due to a transition period established by the rules of the SEC for newlypublic companies. However, in the course of auditing our consolidated financial statements as of December 31, 2018 and for the year ended December 31,2018, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting and othercontrol deficiencies. As defined in standards established by the United States Public Company Accounting Oversight Board, or the PCAOB, a “materialweakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that amaterial misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknessidentified is the insufficient number of financial reporting personnel with appropriate level of knowledge and experience in application of U.S. GAAP andSEC rules and regulations commensurate with our reporting requirements. Following the identification of the material weakness and other controldeficiencies, we have taken measures and plan to continue to take measures to remediate timely these deficiencies. For details about remediation, refer to“Item 15. Controls and Procedures” for more details. However, the implementation of these measures may not fully address the material weakness anddeficiencies in our internal control over financial reporting, and we will be unable to conclude that they have been remediated. Our failure to correct thematerial weakness and control deficiencies or our failure to discover and address any other material weakness or control deficiencies could result ininaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatoryfilings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may bematerially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud. We are a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, requiresus to include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F beginning withour annual report for the fiscal year ending December 31, 2019. In addition, once we cease to be an “emerging growth company” as such term is defined inthe JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting.Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that ourinternal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, mayissue an adverse opinion if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or ifit interprets the relevant requirements differently from us. In addition, 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 requiredremediation. During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify otherweaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control overfinancial 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 wehave effective internal control over financial reporting in accordance with Section 404. Moreover, our internal control over financial reporting may notprevent or detect all errors and fraud. A control system, no matter how well it is designed and operated, it cannot provide absolute assurance thatmisstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. If we fail to achieve and maintain aneffective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, whichwould likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our resultsof operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us toincreased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigationsand civil or criminal sanctions. We may also be required to restate our financial statements from prior periods. 25 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Any significant service disruptions or outages on our platform, in our computer systems or our business partners’ computer systems could prevent usfrom facilitating loans through our platform, reduce the attractiveness of our platform or result in a loss of borrowers or investors. The satisfactory performance, reliability and availability of our platform and computer systems are critical to our operations, customer service, reputationand our ability to retain existing and attract new borrowers and investors. There is no assurance that we will be able to protect our platform andcomputer systems against, among others, damage or interruption from natural disasters, power or telecommunications failures, air quality issues,environmental conditions, software errors, bugs or defects, configuration errors, computer viruses, security breaches, hacking attempts or criminal acts at alltimes. Our business partners’ computer systems may also be vulnerable to such errors, bugs, defects or breaches. In the event of any service disruption oroutage of the computer systems of our company or those of our business partners, our ability to facilitate loans may be adversely affected. For example, wemay experience temporary service disruptions or data losses during data migrations between old and new systems or system upgrades. We may not be able torecover all data and services in the event of a service disruption or outage. Additionally, our insurance policies may not adequately compensate us for anylosses that we may incur during service disruptions or outages. Any interruption or delays in our services, whether as a result of third-party or our error, natural disasters or security breaches, whether accidental orwillful, could harm our relationships with our borrowers and investors and our reputation, subject us to liabilities and cause borrowers and investors toabandon our platform, any of which could adversely affect our business, financial condition and results of operations. Cyber-attacks, computer viruses, physical or electronic break-ins or other unauthorized access to our or our business partners’ computer systems couldresult in misuse of confidential information and misappropriation of funds of our borrowers and investors, subject us to liabilities, cause reputationalharm and adversely impact our results of operations and financial condition. Our platform collects, stores and processes certain personal information and other sensitive data from our borrowers and investors. The massive data thatwe have processed and stored makes us and our server hosting service providers the targets of, and potentially vulnerable to, cyber-attacks, computer viruses,physical or electronic break-ins or other unauthorized access. While we have not experienced any material business or reputational harm as a result of suchbreach in the past, there can be no assurance that our security measures to protect borrowers and investors’ confidential information and funds will not bebreached in the future. Because techniques used to sabotage or obtain unauthorized access into systems change frequently and generally are not recognizeduntil they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any accidental orwillful security breaches or other unauthorized access to our or our server hosting service providers’ systems could cause confidential borrower and investorinformation to be stolen and used for criminal purposes. As personally identifiable and other confidential information is subject to legislation and regulationsin numerous domestic and international jurisdictions, inability to protect confidential information of our borrowers and investors could result in additionalcost and liability for us, damage our reputation, inhibit the use of our platform and harm our business. The Administrative Measures for the Security of theInternational Network of Computer Information Network, issued in December 1997 and amended in January 2011, requires us to report any data or securitybreaches to the local offices of the PRC Ministry of Public Security within 24 hours of any such breach. The Cyber Security Law of the PRC, issued inJune 2017, requires us to take immediate remedial measures when we discover that our products or services are subject to risks, such as security defects orbugs. Such remedial measures include, informing our borrowers and investors of the specific risks and reporting such risks to the relevant competentdepartments. 26 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We also face indirect technology and cybersecurity risks relating to our business partners, including our third-party payment service providers whichmanage the transfer of borrower and investor funds and our custodian bank which provides custodian services for our borrowers’ and investors’ funds. As aresult of increasing consolidation and interdependence of computer systems, a technology failure, cyber-attack or other information or security breach thatsignificantly compromises the systems of one entity could have a material impact on its business partners. Although our agreements with third-party paymentservice providers and custodian bank provide that each party is responsible for the cybersecurity of its own systems, any cyber-attacks, computer viruses,physical or electronic break-ins or similar disruptions of such third-party payment service providers and custodian bank could, among other things, adverselyaffect our ability to serve our borrowers and investors, and could even result in misappropriation of funds of our borrowers and investors. If that were to occur,our third-party payment service providers, custodian bank and us could be held liable to borrowers and investors who suffer losses from the misappropriation. Our future growth depends on the acceptance of the internet as an effective platform for financial products and content. The internet, including the mobile internet, has gained increased popularity in China as a platform for financial products and content in recent years.However, certain borrowers and investors have limited experience in handling financial products and content online and may have reservations about usingonline platforms. For example, borrowers may not find online content to be a reliable source of financial product information and investors may not believeonline platforms are secure for risk assessment. If we fail to educate prospective borrowers and investors about the value of our platform and our products andservices, our growth will be limited and our business, financial performance and prospects may be materially and adversely affected. The further acceptanceof the internet as an effective and efficient platform for financial products and content is also affected by factors beyond our control, including negativepublicity around online and mobile lending and restrictive regulatory measures taken by the PRC government. If we do not achieve adequate acceptance inthe market, our growth prospects, results of operations and financial condition could be harmed. We may be held liable for information or content displayed on, retrieved from or linked to our website or mobile apps, which may materially andadversely affect our business and operating results. The PRC government has adopted regulations governing internet access and distribution of information over the internet. Under these regulations,internet content providers and internet publishers are prohibited from posting on the internet content that, violates PRC laws and regulations, impairs thenational dignity of China, contains terrorism, extremism, content of force or brutality, or is reactionary, obscene, superstitious, fraudulent or defamatory.Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses, the closure of the concernedwebsites and criminal liabilities. In the past, failure to comply with these requirements has resulted in the closure of certain websites. The website operatormay also be held liable for the censored information displayed on or linked to the website. In particular, the Ministry of Industry and Information Technology, or the MIIT, has published regulations that place website operators with liability forcontent displayed on their websites and actions of users of their systems, that are deemed to be socially destabilizing. The Ministry of Public Security has theauthority to order any local internet service provider to block any internet website at its sole discretion. From time to time, the Ministry of Public Security hasstopped the dissemination over the internet of information which it believes to be socially destabilizing. The State Secrecy Bureau is also authorized to blockany website it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets. Furthermore, we arerequired to report any suspicious content to relevant governmental authorities, and to undergo computer security inspections. If we fail to implement therelevant safeguards against security breaches, our websites may be shut down and our business and ICP licenses may be revoked. In addition to our website, we also facilitate loans through our mobile apps, which are regulated by the Regulations for Administration on MobileInternet Applications Information Services, or the MIAIS Regulations, promulgated by the Cyberspace Administration of China, or the CAC, in June 2016and became effective on in August 2016. According to the MIAIS Regulations, the providers of mobile apps shall not create, copy, publish or distributeinformation and content that is prohibited by laws and regulations. We have implemented internal control procedures screening the information and contenton our mobile apps to ensure their compliance with the MIAIS Regulations. However, we cannot assure that all the information or content displayed on,retrieved from or linked to our mobile apps complies with the requirements of the MIAIS Regulations at all times. If our mobile apps were found to beviolating the MIAIS Regulations, we may be subject to administrative penalties, including warning, service suspension or removal of our mobile apps fromthe relevant app stores, which may materially and adversely affect our business and operating results. 27 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may from time to time be subject to claims, controversies, lawsuits and legal proceedings, which could have a material adverse effect on ourfinancial condition, results of operations, cash flows and reputation. We have been, and may from time to time in the future, become subject to or involved in various claims, controversies, lawsuits, and legal proceedings.Lawsuits and litigations may cause us to incur defense costs, utilize a significant portion of our resources and divert management’s attention from our day-to-day operations, any of which could harm our business. Any settlements or judgments against us could have a material adverse impact on our financialcondition, results of operations and cash flows. In addition, negative publicity regarding claims or judgments made against us may damage our reputationand may result in material adverse impact on us. We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We regard our trademarks, domain names, know how, proprietary technologies and similar intellectual property as critical to our success, and we rely ona combination of intellectual property laws and contractual arrangements, including confidentiality, invention assignment and non-compete agreements withour employees and others to protect our proprietary rights. See also “Item 4. Information on the Company — B. Business Overview — — IntellectualProperty.” Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, preempted or misappropriated, orsuch intellectual property may not be sufficient to provide us with competitive advantages. We cannot assure you that the measures we have taken will besufficient to prevent any misappropriation of our intellectual properties. It is often difficult to maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation andenforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment andnon-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, wemay not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. Preventing any unauthorized use of ourintellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the eventthat we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial andfinancial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise becomeavailable to, or be independently discovered by, our competitors. To the extent that our employees or business partners use intellectual property owned byothers in their work for us, disputes may arise as to the rights in related know how and inventions. Any failure in protecting or enforcing our intellectualproperty rights could have a material adverse effect on our business, financial condition and results of operations. We rely on licensing arrangements with our affiliate, Hangzhou Ruituo, to use the trademark “” and any failure to protect these trademark rightscould adversely affect our business and financial condition. Our rights to our trade names and trademarks are among the most important factor in marketing our services and operating our business. The trademark “”, is owned by our affiliate, Hangzhou Ruituo, and we have obtained the exclusive right to use this trademark under a licensing agreement withHangzhou Ruituo, so long as the trademark is valid. We have paid nominal fees to Hangzhou Ruituo for this trademark license. If we are no longer able to use the “” trademark due to any dispute with Hangzhou Ruituo or for any other reasons, our reputation, business andresults of operations could be materially and adversely affected. In addition, Hangzhou Ruituo may be subject to infringement claims with regard to thesetrademarks and any failure in defending themselves against such claims could have a material adverse effect on our business, financial condition and resultsof operations. 28 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations. We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents,copyrights, know-how or other intellectual property rights held by third parties. We may be from time to time, in the future, become subject to legalproceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-howor other intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness. Holders of suchintellectual property rights may seek to enforce such intellectual property rights against us in China, the United States or other jurisdictions. If any third-partyinfringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defendagainst these claims, regardless of their merits. Additionally, the application and interpretation of China’s intellectual property right laws and the procedures and standards for granting trademarks,patents, copyrights, know-how or other intellectual property rights in China are still evolving and are uncertain, and we cannot assure you that PRC courts orregulatory authorities would agree with our analysis. If we were found to have violated the intellectual property rights of others, we may be subject toliability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to developalternatives of our own. As a result, our business and results of operations may be materially and adversely affected. We may not be able to obtain additional capital on favorable terms or at all. We anticipate that our current cash and cash equivalents and anticipated cash flows from operating activities will be sufficient to meet our current andanticipated needs for general corporate purposes for at least the next 12 months. However, we need to make continued investments in various aspects of ourbusiness operations in order to remain competitive. Due to the unpredictable nature of the capital markets and our industry, we cannot assure you that we willbe able to raise additional capital on terms favorable to us, or at all, if and when required, especially if we experience disappointing operating results. Ifadequate capital is not available to us as required, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance ourinfrastructure or respond to competitive pressures could be significantly limited, which would adversely affect our business, financial condition and results ofoperations. If we do raise additional funds through the issuance of equity or convertible debt securities, the ownership interests of our shareholders could besignificantly diluted. These newly issued securities may have rights, preferences or privileges senior to those of existing shareholders. Our business is subject to the risks associated with international operations. As part of our business development plan, we have expanded and will continue to expand our business to the overseas markets. Expanding our businessinternationally exposes us to a number of risks, including: ·fluctuations in currency exchange rates; ·our ability to select the appropriate geographical regions for international expansion; ·difficulty in identifying appropriate partners and establishing and maintaining good cooperative relationships with them; ·difficulty in understanding local markets and culture; ·challenges due to our unfamiliarity with local laws, regulations and policies, ·increased costs associated with doing business in foreign jurisdictions; 29 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·lack of significant operating experience in local market, ·increased cost associated with establishment of overseas operations and maintaining a multi-national organizational structure; and ·various other risks that are beyond our control. The industry we operate in is heavily regulated, and our overseas operations need to comply with different local laws and regulations governingmarketplace lending platforms. Due to our limited experience in doing business in the overseas markets, we are unfamiliar with those local laws, regulationand policies. Our failure to obtain the required approvals, permits, licenses or filings, to comply with the conditions associated therewith, or otherwisecomply with local laws and regulations could result in fines, sanctions, suspension, revocation or non-renewal of approvals, permits or licenses, or evencriminal penalties, which could have a material adverse effect on our business, financial condition and results of operations. As we enter into new markets in different jurisdictions, we will also face different business environments and industry conditions, and we may spendsubstantial resources familiarizing ourselves with the new environment and conditions. To the extent that our business operations are affected by unexpectedand adverse economic, regulatory, social and political conditions in the new markets we are expanding into, we may experience operation disruptions, loss ofcustomers, reputation harm and other indirect losses that could adversely affect our business, financial condition and results of operations. We cannotguarantee that our overseas expansion will be successful and profitable, if not, our financial condition and operating results also could be significantlyaffected and we may not be able to recover those investments. Furthermore, we have implemented policies and procedures designed to facilitate compliance with laws and regulations in foreign jurisdictionsapplicable to us, but there can be no assurance that our employees or business partners will not violate such laws and regulations or our policies. Any suchviolations could individually or in the aggregate materially and adversely affect our financial condition or operating results. From time to time we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant managementattention, disrupt our business and adversely affect our financial results. We may evaluate and consider strategic investments, combinations, acquisitions or alliances to further increase the value of our platform and better serveborrowers and investors. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify anappropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we maybe unable to obtain the benefits or avoid the difficulties and risks of such transaction. Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including difficulties in integrating theoperations, systems, data, technologies and products and services of the acquired business, difficulties in retaining, training, motivating and integrating keypersonnel and retaining relationships with customers, employees and suppliers of the acquired business, difficulties in maintaining uniform standards,controls, procedures and policies within the combined organizations, assumption of hidden liabilities for activities of the acquired business before theacquisition, diversion of our management’s time and resources and potential disruptions to our business operations. We may not make any investments oracquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenues tooffset the associated acquisition costs or may not otherwise result in the intended benefits. Our business depends on the continued efforts of our senior management. If one or more of our key executives were unable or unwilling to continue intheir present positions, our business may be severely disrupted. Our business operations depend on the continued services of our senior management, particularly the executive officers named in this annual report.While we have provided different incentives to our management, we cannot assure you that we can continue to retain their services. If one or more of our keyexecutives were unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, our future growth may beconstrained, our business may be severely disrupted and our financial condition and results of operations may be materially and adversely affected. We mayincur additional expenses to recruit, train and retain qualified personnel. In addition, although we have entered into confidentiality and non-competitionagreements with our management, there is no assurance that any member of our management team will not join our competitors or form a competing business.If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements inChina or we may be unable to enforce them at all. 30 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. We believe our success depends on the efforts and talent of our employees, including our operations, risk management, sales and marketing, technologyand other personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees.Competition for skilled and experienced personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levelsconsistent with our existing compensation and salary structure. Some of our competitors may have greater resources and may be able to offer more attractiveterms of employment. In addition, we invest significant time and expenses in training our employees, which increases their value to our competitors, who may seek to recruitthem. If we fail to retain our employees, we could incur significant expenses in hiring and training new employees, and the quality of our services and ourability to serve borrowers and investors could diminish, resulting in a material adverse effect to our business. Increases in labor costs in the PRC may adversely affect our business and results of operations. The economy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected tocontinue to increase. In addition, we are required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing fund,medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of ouremployees. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs orpass on these increased labor costs to our borrowers and investors by increasing the fees of our services, our financial condition and results of operations maybe adversely affected. We have limited insurance coverage which could expose us to significant costs and business disruption. The insurance industry in China is still in an early stage of development, and insurance companies in China currently offer limited business-relatedinsurance products. We do not maintain any business interruption insurance or general third-party liability insurance. We consider our insurance coverage tobe reasonable in light of the nature of our business and the insurance products that are available in China and in line with the practices of other companies inthe same industry of similar size in China, but we cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we will beable to successfully claim our losses under our current insurance policies on a timely basis, or at all. If we incur any loss that is not covered by our insurancepolicies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materiallyand adversely affected. Risks Related to Our Corporate Structure If the PRC government deems that the contractual arrangements in relation to our variable interest entities do not comply with PRC regulatoryrestrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, wecould be subject to severe penalties or be forced to relinquish our interests in those operations. 31 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Foreign ownership of internet-based businesses, such as distribution of online information and other value-added telecommunication services, aresubject to restrictions under current PRC laws and regulations. For example, foreign investors are generally not allowed to own more than 50% of the equityinterests in a value-added telecommunication service provider and any such foreign investor must have experience in providing value-addedtelecommunications services overseas and maintain a good track record in accordance with the Guidance Catalog of Industries for Foreign Investmentpromulgated in 2007, as amended in 2011, 2015 and 2017, and other applicable laws and regulations. We are a Cayman Islands company and Weidai Co., Ltd., our PRC subsidiary, is considered a foreign invested enterprise. To comply with PRC laws andregulations, we conduct our operations in China through a series of contractual arrangements entered into among Weidai Co., Ltd., Weidai FinancialInformation, and the shareholders of Weidai Financial Information. In addition, another series of contractual arrangements have been entered into amongWeidai Co., Ltd., Hangzhou Yuntuo Group Co., Ltd., or Yuntuo, and the shareholders of Yuntuo. As a result of these contractual arrangements, we exertcontrol over Weidai Financial Information and Yuntuo and consolidate their operating results in our financial statements under U.S. GAAP. Weidai FinancialInformation has been operating our business, including, among others, operations of our www.weidai.com.cn website since its incorporation. See “Item 4.Information on the Company—C. Organizational Structure —  Contractual Arrangements with Our Variable Interest Entities — Contractual Arrangementswith Weidai Financial Information” for more details. Weidai Financial Information has obtained a value-added telecommunications service license foroperations of internet content service from the Zhejiang Administration of Telecommunications in August 2016, which will remain valid until August 2021,and a value-added telecommunications service license for operation of domestic call center service from MIIT in August 2017, which will remain valid untilAugust 2022. We believe that our corporate structure and contractual arrangements comply with the current applicable PRC laws and regulations. Our PRC legalcounsel, CM Law Firm, based on its understanding of the relevant laws and regulations, is of the opinion that each of the contracts among Weidai Co., Ltd.,Weidai Financial Information and its shareholders, and each of the contracts among Weidai Co., Ltd., Yuntuo and its shareholders are valid, binding andenforceable in accordance with their terms. However, as there are substantial uncertainties regarding the interpretation and application of PRC laws andregulations, including the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, and theTelecommunications Regulations and the relevant regulatory measures concerning the telecommunications industry, there can be no assurance that the PRCgovernment authorities, such as the Ministry of Commerce, or the MOC, the MIIT, or other authorities that regulate the telecommunications industry, wouldagree that our corporate structure or any of the above contractual arrangements comply with PRC licensing, registration or other regulatory requirements,with existing policies or with requirements or policies that may be adopted in the future. PRC laws and regulations governing the validity of thesecontractual arrangements are uncertain and the relevant government authorities have broad discretion in interpreting these laws and regulations. If our corporate structure and contractual arrangements are deemed by the MIIT or the MOC or other regulators having competent authority as illegal,either in whole or in part, we may lose control of our variable interest entity and have to modify such structure to comply with regulatory requirements.However, there can be no assurance that we can achieve this without material disruption to our business. Further, if our corporate structure and contractualarrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion indealing with such violations, including: ·revoking our business and operating licenses; ·levying fines on us; ·confiscating any of our income that they deem to be obtained through illegal operations; ·shutting down our services; ·discontinuing or restricting our operations in China; 32 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·imposing conditions or requirements with which we may not be able to comply; ·requiring us to change our corporate structure and contractual arrangements; ·restricting or prohibiting our use of the proceeds from our initial public offering to finance our variable interest entity’s business and operations;and ·taking other regulatory or enforcement actions that could be harmful to our business. It is uncertain whether any new PRC laws, regulations or rules relating to the “variable interest entity” structure will be adopted or if adopted, what theywould provide. In particular, on March 15, 2019, the National People’s Congress promulgated the PRC Foreign Investment Law, which will take effect onJanuary 1, 2020 and replace the existing laws regulating foreign investment in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative JointVenture Law and the Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. The approved ForeignInvestment Law does not touch upon the relevant concepts and regulatory regimes that were historically suggested relating to the regulating of VIEstructures, and thus whether variable interest entities are foreign invested enterprises remains unclear under the PRC Foreign Investment Law. Since the PRCForeign Investment Law is newly published, there is still uncertainties in relation to its interpretation and implementation and it is still possibility thatvariable interest entities will be deemed as foreign invested enterprises and be subject to restrictions in the future. If the ownership structure, contractualarrangements and business of our company, our PRC subsidiary or our variable interest entities are found to be in violation of any existing or future PRC lawsor regulations, or we fail to obtain or maintain any of the required permits or approvals, the relevant governmental authorities would have broad discretion indealing with such violation, including levying fines, confiscating our income or the income of our PRC subsidiary, Weidai Financial Information or Yuntuo,revoking the business licenses or operating licenses of our PRC subsidiary, Weidai Financial Information or Yuntuo, shutting down our servers or blockingour online platform, discontinuing or placing restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptiverestructuring, restricting or prohibiting our use of proceeds from our initial public offering to finance our business and operations in China, and taking otherregulatory or enforcement actions that could be harmful to our business. Any of these actions could cause significant disruption to our business operationsand severely damage our reputation, which would in turn materially and adversely affect our business, financial condition and results of operations. If any ofthese occurrences results in our inability to direct the activities of Weidai Financial Information and Yuntuo, and/or our failure to receive economic benefitsfrom Weidai Financial Information and Yuntuo, we may not be able to consolidate their results into our consolidated financial statements in accordance withU.S. GAAP. We rely on contractual arrangements with our variable interest entities and their respective shareholders for a significant portion of our businessoperations, which may not be as effective as direct ownership in providing operational control. We have relied and expect to continue to rely on contractual arrangements with Weidai Financial Information and its shareholders to operate ourwebsite, www.weidai.com.cn, as well as certain other complementary businesses. See “Item 4. Information on the Company—C. Organizational Structure — Contractual Arrangements with Our Variable Interest Entities — Contractual Arrangements with Weidai Financial Information” for more details. In addition,in January 2019, we entered into another set of contractual agreements between Weidai Co., Ltd., Yuntuo, and the shareholders of Yuntuo. These contractualarrangements may not be as effective as direct ownership in providing us with control over Weidai Financial Information and Yuntuo. For example, WeidaiFinancial Information, Yuntuo and their respective shareholders may fail to fulfill their contractual obligations with us, such as failure to maintain ourwebsite and use the domain names and trademarks in a manner as stipulated in the contractual arrangements, or taking other actions that are detrimental toour interests. 33 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we had direct ownership of Weidai Financial Information and Yuntuo, we would be able to exercise our rights as a shareholder to effect changes in theboard of directors of Weidai Financial Information and Yuntuo, which in turn could implement changes, subject to any applicable fiduciary obligations, atthe management and operational level. However, under the current contractual arrangements, we rely on the performance by Weidai Financial Information,Yuntuo and their respective shareholders of their obligations under these contracts. The shareholders of Weidai Financial Information or Yuntuo may not actin 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 tooperate our business through the contractual arrangements with Weidai Financial Information and Yuntuo. Although we have the right to replace anyshareholder of Weidai Financial Information or Yuntuo under the contractual arrangements, if any shareholder is uncooperative or any dispute relating tothese contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC laws and arbitration, litigation andother legal proceedings, the outcome of which will be subject to uncertainties. See “— Any failure by our variable interest entities or their respectiveshareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.” Therefore, ourcontractual arrangements with Weidai Financial Information and Yuntuo may not be as effective in ensuring our control over the relevant portion of ourbusiness operations as direct ownership would be. Any failure by our variable interest entities or their respective shareholders to perform their obligations under our contractual arrangements withthem would have a material adverse effect on our business. If Weidai Financial Information, Yuntuo or their respective 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 PRClaws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective under PRC laws. Forexample, if the shareholders of Weidai Financial Information or Yuntuo were to refuse to transfer their equity interest in Weidai Financial Information orYuntuo to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faithtoward us, then we may have to take legal actions to compel them to perform their contractual obligations. All 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 legalprocedures, although these disputes do not include claims arising under the United States federal securities laws and thus do not prevent you from pursuingclaims under the United States federal securities laws. The legal system in the PRC is not as developed as in some other jurisdictions, such as the UnitedStates. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very fewprecedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced underPRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, underPRC laws, rulings by arbitrators are final and parties cannot appeal arbitration results in court unless such rulings are revoked or determined unenforceable bya competent court. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce thearbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event that weare unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractualarrangements, we may not be able to exert effective control over Weidai Financial Information or Yuntuo and our ability to conduct our business may benegatively affected. See “— Risks Related to Doing Business in China — Uncertainties in the interpretation and enforcement of PRC laws and regulationscould limit the legal protections available to you and us.” The respective shareholders of our variable interest entities may have potential conflicts of interest with us, which may materially and adversely affectour business and financial condition. The respective shareholders of Weidai Financial Information or Yuntuo may have potential conflicts of interest with us. These shareholders may breach,or cause Weidai Financial Information or Yuntuo to breach, the existing contractual arrangements we have with them and Weidai Financial Information orYuntuo, which would have a material adverse effect on our ability to effectively control Weidai Financial Information and Yuntuo and receive economicbenefits from them. For example, the shareholders may be able to cause our agreements with Weidai Financial Information and Yuntuo to be performed in amanner 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 youthat 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. 34 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we couldexercise our purchase option under the exclusive call option agreement with these shareholders to request them to transfer all of their equity interests inWeidai Financial Information and Yuntuo to a PRC entity or individual designated by us, to the extent permitted by PRC laws. If we cannot resolve anyconflict of interest or dispute between us and the shareholders of Weidai Financial Information or the shareholders of Yuntuo, we would have to rely on legalproceedings, which could result in the disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings. Contractual arrangements in relation to our variable interest entities may be subject to scrutiny by the PRC tax authorities and they may determinethat we or our PRC variable interest entities owe additional taxes, which could negatively affect our financial condition and the price of our ADSs. Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC taxauthorities within ten years after the taxable year when the transactions are conducted. The PRC Enterprise Income Tax Law requires every enterprise inChina to submit its annual enterprise income tax return together with a report on transactions with its related parties to the relevant tax authorities. The taxauthorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent with arm’s lengthprinciples. We may face material and adverse tax consequences if the PRC tax authorities determine that (i) the contractual arrangements between WeidaiCo., Ltd., our wholly owned subsidiary in China, Weidai Financial Information, our variable interest entity in China, and the shareholders of WeidaiFinancial Information, or (ii) the contractual arrangements between Weidai Co., Ltd., our wholly owned subsidiary in China, Yuntuo, our variable interestentity in China and the shareholders of Yuntuo were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxesunder applicable PRC laws, rules and regulations, and adjust Weidai Co., Ltd.’s and our variable interest entities’ income in the form of a transfer pricingadjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by Weidai Financial Information orYuntuo for PRC tax purposes, which could in turn increase their tax liabilities without reducing Weidai Co., Ltd.’s tax expenses. In addition, if Weidai Co.,Ltd. requests the respective shareholders of Weidai Financial Information and Yuntuo to transfer their equity interests in Weidai Financial Information orYuntuo at nominal or no value pursuant to these contractual arrangements, such transfer could be viewed as a gift and subject Weidai Co., Ltd. to PRCincome tax. Furthermore, the PRC tax authorities may impose late payment fees and other penalties on Weidai Financial Information and Yuntuo for theadjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if our variable interestentity’s tax liabilities increase or if it is required to pay late payment fees and other penalties. We may lose the ability to use and enjoy assets held by our variable interest entities that are material to the operation of our business if the entities gobankrupt or become subject to a dissolution or liquidation proceeding. Our variable interest entities, Weidai Financial Information and Yuntuo, hold certain assets that are material to the operation of our business, includingdomain names and an ICP license. Under the contractual arrangements, Weidai Financial Information and Yuntuo may not and their respective shareholdersmay not cause them to, in any manner, sell, transfer, mortgage or dispose of their assets or their legal or beneficial interests in the business without our priorconsent. However, in the event that the shareholders of Weidai Financial Information or Yuntuo breach these contractual arrangements and voluntarilyliquidate Weidai Financial Information or Yuntuo, or if Weidai Financial Information or Yuntuo declares bankruptcy and all or part of their assets becomesubject to liens or rights of third-party creditors, or are otherwise disposed of without our consent, we may be unable to continue some or all of our businessactivities, which could materially and adversely affect our business, financial condition and results of operations. If Weidai Financial Information or Yuntuoundergoes a voluntary or involuntary liquidation proceeding, independent third-party creditors may claim rights to some or all of these assets, therebyhindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 35 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Risks Related to Doing Business in China Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and results ofoperations. Substantially all of our operations are located in China and all of our revenue is sourced from China. Accordingly, our business, prospects, financialcondition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and bycontinued economic growth in China as a whole. The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, levelof development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measuresemphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improvedcorporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinesegovernment continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercisessignificant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, settingmonetary 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 varioussectors of the economy. 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 ofoperations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinesegovernment has implemented certain measures, including interest rate increases, to control the pace of economic growth. These measures may causedecreased economic activity in China, and since 2012, the Chinese economy has slowed down. Any prolonged slowdown in the Chinese economy mayreduce the demand for our products and services and materially and adversely affect our business and results of operations. A downturn in the Chinese or global economy could reduce the demand for consumer loans and investments, which could materially and adverselyaffect our business and financial condition. The global financial markets have experienced significant disruptions since 2008 and the United States, Europe and other economies have experiencedperiods of recession. The recovery from the lows of 2008 and 2009 has been uneven and is facing new challenges, including the escalation of the Europeansovereign debt crisis from 2011 and the slowdown of the Chinese economy since 2012. It is unclear whether the Chinese economy will resume its highgrowth rate. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks andfinancial authorities of some of the world’s leading economies, including the United States and China. There have also been concerns over unrest in Ukraine,the Middle East and Africa, which have resulted in volatility in financial and other markets. There have also been concerns about the economic effect of thetensions in the relationship between China and surrounding Asian countries. Economic conditions in China are sensitive to global economic conditions. Anyprolonged slowdown in the global or Chinese economy may reduce the demand for consumer loans and investments and have a negative impact on ourbusiness, results of operations and financial condition. Additionally, continued turbulence in the international markets may adversely affect our ability toaccess the capital markets to meet liquidity needs. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us. The PRC legal system is based on written statutes and prior court decisions have limited value as precedents. Since these laws and regulations arerelatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform andenforcement of these laws, regulations and rules involves uncertainties. 36 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In particular, PRC laws and regulations concerning the marketplace lending industry are developing and evolving. Although we have taken measures tocomply with the laws and regulations that are applicable to our business operations, including the regulatory principles raised by the CBRC, and avoidconducting any non-compliant activities under the applicable laws and regulations, such as illegal fund-raising, forming capital pool or providing guaranteeto investors, the PRC government authority may promulgate new laws and regulations regulating the marketplace lending industry in the future. We cannotassure you that our practice would not be deemed to violate any new PRC laws or regulations relating to the marketplace lending industry. Moreover,developments in the marketplace lending industry may lead to changes in PRC laws, regulations and policies or in the interpretation and application ofexisting laws, regulations and policies that may limit or restrict s like us, which could materially and adversely affect our business and operations.Furthermore, we cannot rule out the possibility that the PRC government will institute a licensing regime covering our industry at some point in the future. Ifsuch a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, whichcould materially and adversely affect our business and impede our ability to continue our operations. From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative andcourt authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate theoutcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRClegal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may haveretroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties,including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially andadversely affect our business and impede our ability to continue our operations. Uncertainties exist with respect to the interpretation and implementation of PRC Foreign Investment Law and how it may impact the viability of ourcurrent corporate structure, corporate governance and business operations. On March 15, 2019, the National People’s Congress promulgated the PRC Foreign Investment Law, which will take effect on January 1, 2020 andreplace the existing laws regulating foreign investment in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law andthe Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. The approved Foreign Investment Law does not touch upon the relevant concepts and regulatory regimes that were historically suggested relating to theregulating of VIE structures, and thus whether variable interest entities are foreign invested enterprises remains unclear under the PRC Foreign InvestmentLaw. For instance, though the PRC Foreign Investment Law has revised the definition of "foreign investment" and removed all references to the definitions of"actual control" or "variable interest entity structure" under the 2015 Draft Foreign Investment Law, the PRC Foreign Investment Law stipulates that foreigninvestment includes “foreign investors invest in China through other methods under laws, administrative regulations, or provisions prescribed by the StateCouncil”. Therefore, there are still possibilities that future laws, administrative regulations or provisions of the State Council may deem contractualarrangements as a way of foreign investment. There can be no assurance that our contractual arrangements will not be deemed to be in violation of the marketaccess requirements for foreign investment under the PRC laws and regulations. If future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect toexisting contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Anycompany found to be non-compliant with any of these or similar regulatory compliance challenges may potentially be subject to fines and/or administrativeor criminal liabilities, and the persons directly responsible may be subject to criminal liabilities. We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and anylack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations. The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertainingto, companies in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcementinvolve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be inviolation of applicable laws and regulations. 37 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We only have contractual control over our website or mobile apps. We do not directly own the website or mobile apps due to the restriction of foreigninvestment in businesses providing value-added telecommunication services in China, including internet information provision services. This maysignificantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us. The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, theState Council announced the establishment of a new department, the State Internet Information Office (with the involvement of the State Council InformationOffice, the MIIT, and the Ministry of Public Security). The primary role of this new agency is to facilitate the policy-making and legislative development inthis field, to direct and coordinate with the relevant departments in connection with online content administration and to deal with cross-ministry regulatorymatters in relation to the internet industry. Our online platform, operated by Weidai Financial Information, may be deemed to be providing value-added telecommunication services, which wouldrequire Weidai Financial Information to obtain certain value-added telecommunications business licenses. See “Item 4. Information on the Company — B.Business Overview —Regulations — Regulations on Internet Companies — Regulations on Value-Added Telecommunication Services” for more details.Weidai Financial Information has obtained a value-added telecommunications service license for operations of internet content service from the ZhejiangAdministration of Telecommunications in August 2016, which will remain valid until August 2021, and a value-added telecommunications service licensefor operation of domestic call center service from MIIT in August 2017, which will remain valid until August 2022. However, given the evolving regulatoryenvironment of the value-added telecommunications business, we cannot assure you that we will not be required in the future by the relevant governmentalauthorities to obtain any other approval or license to continue our business. If such approval or license were required, we cannot assure you that we will beable to obtain such approval or license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability tocontinue our operations. We facilitate certain auto-financing loans through our platform under both direct lease and sale-and-lease back models for the purchase of new and usedautomobiles. According to the Administrative Measures of Supervision on Financing Lease Enterprises, or the Financing Lease Measures promulgated by theMinistry of Commerce on September 18, 2013, entities operating “financing lease business” shall be subject to approval by Ministry of Commerce or itslocal branches. The Financing Lease Measures has not defined what constitutes operating “financing lease business”. It is uncertain whether our businessoperations would be deemed as operating “financing lease business” due to the auto-financing loans we facilitate. As of the date of this annual report, wehave not been subject to any fines or other penalties under any PRC laws or regulations related to financing lease business. However, given the evolvingregulatory environment of the financing lease business, we cannot assure you that we will not be required in the future by the relevant governmentalauthorities to obtain approval or license for financing lease business. If we were required to obtain such approval or license, we cannot assure you that wewould be able to obtain such approval or license in a timely manner, or at all, which could materially and adversely affect our business and impede ourability to continue our operations. According to the Measures for the Administration of Auctions, a company that conducts auction activities is required to have the word “auction” in itslegal name, obtain approval from the local regulatory authorities, and obtain an auction business permit. Any company that engages in commercial auctionactivities without an auction permit shall terminate its business operations. The business conducted through our mobile app Weichepai, operated by HorgosWeichepai Information Technology Co., Ltd., a wholly owned subsidiary of Weidai Financial Information, may be deemed as engaging in commercialauction business of second-hand automobiles. As of the date of this annual report, we have not obtained an auction business permit, nor have we been subjectto any fines or other penalties with regard to commercial auction business. Though we have stopped conducting auction activities through Weichepai sincethe end of 2018, however, given the evolving regulatory environment of the auction business, we cannot assure you that such practice will not be deemed bythe PRC authorities as violating relevant provisions of the Measures for the Administration of Auctions or any other applicable laws and regulations, nor canwe assure you that we will not be required by the relevant governmental authorities to obtain license or permit for auction business if we want to continueconducting our business through Weichepai in the future. We may not obtain such approval or license in a timely manner, or at all, which could materiallyand adversely affect our business and impede our ability to continue our operations. 38 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the internetindustry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of,internet businesses in China, including our business. We cannot assure you that we have obtained all the permits or licenses required for conducting ourbusiness in China or will be able to maintain our existing licenses or obtain new ones. If the PRC government considers that we were operating without theproper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictionson the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, andrequire us to discontinue our relevant business or impose restrictions on the affected portion of our business. Any of these actions by the PRC governmentmay have a material adverse effect on our business and results of operations. The facilitation of loans on our platform could give rise to liabilities under PRC laws and regulations that prohibit illegal fundraising andunauthorized public offerings. PRC laws and regulations prohibit persons and companies from raising funds by advertising to the public a promise to repay premium or interestpayments over time through payments in cash or in kind except with the prior approval of the applicable government authorities. Failure to comply withthese laws and regulations may result in penalties imposed by the PBOC, the State Administration for Market Regulation, formerly known as the StateIndustry and Commerce, or the SAIC, and other governmental authorities, and can lead to civil or criminal lawsuits. We have taken measures to avoid conducting any activities that are prohibited under the illegal-funding related laws and regulations. We act asintermediaries for borrowers and online investors. In addition, we do not directly receive any funds from online investors in our own accounts as funds fromonline investors are deposited into and settled by a third-party custody account managed by Xiamen Bank. To date, our platform has not been subject to anyfines or other penalties under any PRC laws and regulations that prohibit illegal fundraising. Nevertheless, considerable uncertainties exist with respect to thePBOC, the SAIC and other governmental authorities’ interpretations of the fundraising-related laws and regulations. Therefore, we cannot guarantee you thatour current services provided to investors will not be deemed to violate illegal fundraising laws and regulations in the future. The PRC Securities Law prohibits the issuance of securities for public offering without obtaining prior approval in accordance with the provisions of thelaw. The following offerings are deemed to be public offerings under the PRC Securities Law: (i) offering of securities to non-specific targets; (ii) offering ofsecurities to more than 200 specific targets; and (iii) other offerings provided by the laws and administrative regulations. Additionally, private offerings ofsecurities may not be carried out through advertising, open solicitation and disguised publicity campaigns. If any transaction between a borrower andmultiple online investors is identified as a public offering by PRC government authorities, we may be subject to sanctions under PRC laws and our businessmay be adversely affected. We rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and anylimitation on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business. We are a holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiary for our cash and financingrequirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRCsubsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make otherdistributions to us. In addition, the PRC tax authorities may require our PRC subsidiary to adjust its taxable income under the contractual arrangements itcurrently has in place with Weidai Financial Information and its shareholders in a manner that would materially and adversely affect their ability to paydividends and other distributions to us. See “— Risks Related to Our Corporate Structure — Contractual arrangements in relation to our variable interestentity may be subject to scrutiny by the PRC tax authorities and they may determine that we or our variable interest entity owe additional taxes, which couldnegatively affect our financial condition and the value of your investment.” 39 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Under PRC laws and regulations, our PRC subsidiary, as a wholly foreign-owned enterprise in China, may pay dividends only out of its accumulatedafter-tax profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to setaside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such fundsreaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRCaccounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends. In response to the persistent capital outflow and RMB’s depreciation against U.S. dollar in the fourth quarter of 2016, the PBOC and the StateAdministration of Foreign Exchange, or SAFE, have implemented a series of capital control measures over recent months, including stricter vettingprocedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance,the PBOC issued the Circular on Further Clarification of Relevant Matters Relating to Offshore RMB Loans Provided by Domestic Enterprises, or the PBOCCircular 306, on November 22, 2016, which provides that offshore RMB loans provided by a domestic enterprise to offshore enterprises that it holds equityinterests in shall not exceed 30% of such equity interests. The PBOC Circular 306 may constrain our PRC subsidiary’s ability to provide offshore loans to us.The PRC government may continue to strengthen its capital controls and our PRC subsidiary’s dividends and other distributions may be subjected to tighterscrutiny in the future. Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adverselylimit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct ourbusiness. See also “— If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable taxconsequences to us and our non-PRC shareholders or ADS holders.” PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversionmay delay or prevent us from using the proceeds of our initial public offering to make loans to or make additional capital contributions to our PRCsubsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business. Any funds we transfer to our PRC subsidiary, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registrationwith relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions toour PRC subsidiary are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System, orFICMIS, and registration with other governmental authorities in China. In addition, (a) any foreign loan procured by our PRC subsidiary is required to beregistered with SAFE, or its local branches, and (b) our PRC subsidiary may not procure loans which exceed the statutory limitation. Any medium or longterm loan to be provided by us to a variable interest entity of our company must be recorded and registered by the National Development and ReformCommittee and the SAFE or its local branches. We may not complete such recording or registrations on a timely basis, if at all, with respect to future capitalcontributions or foreign loans by us to our PRC subsidiary. If we fail to complete such recording or registration, our ability to use the proceeds of our initialpublic offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund andexpand our business. In 2008, the SAFE promulgated the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment andSettlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, which used to regulate the conversion by foreign-investedenterprises of foreign currency into Renminbi by restricting the usage of converted Renminbi. On March 30, 2015, the SAFE promulgated the Circular onReforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19. SAFECircular 19 took effect as of June 1, 2015 and superseded SAFE Circular 142 on the same date. SAFE Circular 19 launched a nationwide reform of theadministration of the settlement of the foreign exchange capitals of foreign-invested enterprises and allows foreign-invested enterprises to settle their foreignexchange capital at their discretion, but continues to prohibit foreign-invested enterprises from using the Renminbi fund converted from their foreignexchange capitals for expenditures beyond their business scopes. On June 9, 2016, the SAFE promulgated the Circular on Reforming and Standardizing theAdministrative Provisions on Capital Account Foreign Exchange, or SAFE Circular 16. SAFE Circular 19 and SAFE Circular 16 continue to prohibit foreign-invested enterprises from, among other things, using RMB fund converted from its foreign exchange capitals for expenditure beyond its business scope,investment and financing (except for security investment or guarantee products issued by bank), providing loans to non-affiliated enterprises or constructingor purchasing real estate not for self-use. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer to and use in China theproceeds we receive from our offshore financing activities, which may adversely affect our business, financial condition and results of operations. 40 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fluctuations in exchange rates could have a material adverse effect on our results of operations and the price of our ADSs. 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 andeconomic conditions in China and by China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of peggingthe 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. BetweenJuly 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. SinceJune 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of theInternational 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 fifthcurrency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016 and second half of 2018, the RMBdepreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China, while in the second half of 2017, Renminbiappreciated against U.S. dollar significantly. With the development of the foreign exchange market and progress towards interest rate liberalization andRenminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you thatthe 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 orU.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future. All of our revenue and substantially all of our costs are denominated in Renminbi. We are a holding company and we rely on dividends paid by ouroperating subsidiaries in China for our cash needs. Any 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 our initial public offering into Renminbi for our operations, appreciation ofthe Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decideto 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. Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs. The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out ofChina. We receive substantially all of our net revenues in RMB. Under our current corporate structure, our company in the Cayman Islands relies on dividendpayments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, paymentsof current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies withoutprior approval from the SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiary is able to pay dividends in foreigncurrencies to us without prior approval from the SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies withcertain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by the beneficial owners of our company who arePRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency andremitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. In light of the flood of capital outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreignexchange policies and stepped up scrutiny of major outbound capital movement. More restrictions and substantial vetting process are put in place by SAFEto regulate cross-border transactions falling under the capital account. The PRC government may at its discretion further restrict access in the future to foreigncurrencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy ourforeign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs. 41 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required byPRC regulations may subject us to penalties. Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance,housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, includingbonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate ourbusinesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levelsof economic development in different locations. Companies operating in China are also required to withhold individual income tax on employees’ salariesbased on the actual salary of each employee upon payment. We have not made adequate employee benefit payments. Neither have we fully withheld theindividual income tax in accordance with the relevant PRC laws and regulations. With respect to the underpaid employee benefits, we may be required tomake up the contributions for these plans as well as to pay late fees and fines; with respect to the underwithheld individual income tax, we may be required tomake up sufficient withholding and pay late fees and fines. If we are subject to late fees or fines in relation to the underpaid employee benefits andunderwithheld individual income tax, our financial condition and results of operations may be adversely affected. The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors,which could make it more difficult for us to pursue growth through acquisitions in China. The M&A Rules discussed in the preceding risk factor and some other regulations and rules concerning mergers and acquisitions established additionalprocedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. includingrequirements in some instances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRCdomestic enterprise. For example, the M&A rules require that the MOC be notified in advance of any change-of-control transaction in which a foreigninvestor takes control of a PRC domestic enterprise if  (i) any important industry is concerned, (ii) such transaction involves factors that have or may haveimpact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark orPRC time-honored brand. The approval from the MOC shall be obtained in circumstances where overseas companies established or controlled by PRCenterprises or residents acquire affiliated domestic companies. Mergers, acquisitions or contractual arrangements that allow one market player to take controlof or to exert decisive impact on another market player must also be notified in advance to the MOC when the threshold under the Provisions on Thresholdsfor Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by the State Council in August 2008 is triggered. In addition,the security review rules issued by the MOC that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise“national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domesticenterprises that raise “national security” concerns are subject to strict review by the MOC, and the rules prohibit any activities attempting to bypass a securityreview, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiringcomplementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactionscould be time consuming, and any required approval processes, including obtaining approval from the MOC or its local counterparts may delay or inhibit ourability to complete such transactions, which could affect our ability to expand our business or maintain our market share. PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiary’s ability to increase their registered capitalor distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law. The SAFE promulgated the Circular on Relevant Issues Relating to PRC Resident’s Investment and Financing and Roundtrip Investment throughSpecial Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connectionwith their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents orentities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information(including change of such PRC residents or entities, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares,or mergers or divisions. 42 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SAFE Circular 37 is issued to replace the Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging inFinancing and Roundtrip Investments through Overseas Special Purpose Vehicles, or SAFE Circular 75. If our shareholders who are PRC residents or entities do not complete their registration with the local SAFE branches, our PRC subsidiary may beprohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our abilityto contribute additional capital to our PRC subsidiary. Moreover, failure to comply with the SAFE registration described above could result in liability underPRC laws for evasion of applicable foreign exchange restrictions. Our founder, Mr. Hong Yao, and a number of our directors, officers and shareholders who we know are PRC residents, have completed the foreignexchange registrations in 2018 in accordance with SAFE Circular 37. However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest in our company, nor can wecompel our beneficial owners to comply with the requirements of SAFE Circular 37 or other applicable laws and regulations. As a result, we cannot assureyou that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain anyapplicable registrations or approvals required by, SAFE Circular 37 or other applicable laws and regulations. Failure by such shareholders or beneficialowners to comply with SAFE Circular 37, other related regulations or failure by us to amend the foreign exchange registrations of our PRC subsidiary, couldsubject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiary’s ability to make distributions or paydividends to us or affect our ownership structure, which could adversely affect our business and prospects. Any failure to comply with PRC regulations regarding the registration requirements for employee share incentive plans may subject the PRC planparticipants or us to fines and other legal or administrative sanctions. Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submitapplications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose vehicles. In the meantime, ourdirectors, executive officers and other employees who are PRC citizens, subject to limited exceptions, and who have been granted share incentive awards byus, may follow the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Share Incentive Plan ofCompanies Listed Overseas, promulgated by the SAFE in 2012, or the 2012 SAFE Notice. Pursuant to the 2012 SAFE Notice, PRC citizens and non-PRCcitizens who reside in China for a continuous period of not less than one year who participate in any share incentive plan of an overseas publicly listedcompany, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of suchoverseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters inconnection with the exercise or sale of share incentive awards and the purchase or sale of shares and interests. As a public company listed on NYSE, we andgrantees of our share incentive awards who are PRC citizens or who reside in the PRC for a continuous period of no less than one year will be subject to theseregulations. Failure to complete the SAFE registrations may subject the grantees of share incentive awards to fines and legal sanctions, and may also limit ourability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to us. We also face regulatoryuncertainties that could restrict our ability to adopt additional share incentive plans for our directors, executive officers and employees under PRC law. See“Item 4. Information on the Company — B. Business Overview — Regulations — Regulations on Employee Share Incentive Plans of Overseas PubliclyListed Company” for more details. 43 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to usand 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 a “de facto managementbody” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax on its global income at the rate of 25%. Theimplementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall management of thebusiness, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation (“SAT”) issued a circular,known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that isincorporated 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 like us, the criteria set forth in the circular may reflect the SAT’s general position on how the “de factomanagement body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporatedenterprise 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 managementbody” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary locationof the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or aresubject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and boardand shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in thePRC. We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. See “Item 10. Additional Information — Taxation — People’s Republic of China Taxation” for more details. However, the tax resident status of an enterprise is subject to determination by the PRC tax authoritiesand uncertainties remain with respect to the interpretation of the term “de facto management body.” As substantially all of our management members arebased in China, it remains unclear how the tax residency rule will apply to our case. If the PRC tax authorities determine that Weidai Ltd. or any of oursubsidiaries outside of China is a PRC resident enterprise for PRC enterprise income tax purposes, then Weidai Ltd. or such subsidiary could be subject toPRC tax at a rate of 25% on its worldwide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterpriseincome tax reporting obligations. Furthermore, as described in the risk factor immediately below, if the PRC tax authorities determine that we are a PRCresident enterprise for enterprise income tax purposes, gains realized on the sale or other disposition of our ADSs or ordinary shares may be subject to PRCtax, and it is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of taxresidence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on the investment in our ADSs orordinary shares. Dividends payable to our foreign investors and gains on the sale of our ADSs or ordinary shares by our foreign investors may become subject to PRCtax. Under the PRC Enterprise Income Tax Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable todividends payable to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have suchestablishment or place of business but the dividends are not effectively connected with such establishment or place of business, subject to any reduction orexemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions, to the extent such dividends are derived fromsources within the PRC. Similarly, any gain realized on the transfer of ADSs or ordinary shares by such investors is also subject to PRC tax at a current rate of10%, subject to any reduction or exemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions, if such gain isregarded as income derived from sources within the PRC. If we are deemed a PRC resident enterprise, dividends paid on our ordinary shares or ADSs, and anygain realized from the transfer of our ordinary shares or ADSs, may be treated as income derived from sources within the PRC and may as a result be subject toPRC taxation. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents and any gainrealized on the transfer of ADSs or ordinary shares by such investors may be subject to PRC tax at a current rate of 20%, subject to any reduction orexemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions, if such dividends or gains are deemed to be fromPRC sources. If we or any of our subsidiaries established outside China are considered a PRC resident enterprise, it is unclear whether holders of our ADSs orordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. If dividendspayable to our non-PRC investors, or gains from the transfer of our ADSs or ordinary shares by such investors, are deemed as income derived from sourceswithin the PRC and thus are subject to PRC tax, the value of your investment in our ADSs or ordinary shares may decline significantly. 44 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed toa Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies. On February 3, 2015, the SAT issued the Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-ResidentEnterprises, or Circular 7, which partially replaced and supplemented previous rules under the Notice on Strengthening Administration of Enterprise IncomeTax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the SAT on December 10, 2009. Pursuant to this Circular 7, an“indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as adirect transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoidingpayment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According toCircular 7, “PRC taxable assets” include assets attributed to an establishment in China, immovable properties located in China, and equity investments inPRC resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRCenterprise income taxes. When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, features to be taken intoconsideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets ofthe relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income mainly derives from China; whether the offshoreenterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function andrisk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRCtaxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements. In respect of an indirect offshore transfer ofassets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business beingtransferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immovableproperties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similararrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Where the payor fails to withhold any orsufficient tax, the transferor is required to declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicabletax will subject the transferor to default interest. Circular 7 does not apply to transactions of sale of shares by investors through a public stock exchangewhere such shares were acquired from a transaction through a public stock exchange. On October 17, 2017, the SAT promulgated the Bulletin of SAT onIssues Concerning the Withholding of Non-resident Enterprise Income Tax at Source (“Bulletin 37”), which became effective on December 1, 2017, and SATCircular 698 then was repealed with effect from December 1, 2017. Bulletin 37, among other things, simplified procedures of withholding and payment ofincome tax levied on non-resident enterprises. There is uncertainty as to the application of Circular 7 and Bulletin 37. We face uncertainties as to the reporting and other implications of certain pastand future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries or investments.Our company may be subject to filing obligations or taxed if our company is transferor in such transactions, and may be subject to withholding obligations ifour company is transferee in such transactions under Circular 7 or Bulletin 37. For transfer of shares in our company by investors that are non-PRC residententerprises, our PRC subsidiary may be requested to assist in the filing under Circular 7 or Bulletin 37. As a result, we may be required to expend valuableresources to comply with Circular 7 or Bulletin 37 or to request the relevant transferors from whom we purchase taxable assets to comply with Circular 7 andBulletin 37, or to establish that our company should not be taxed under Circular 7 and Bulletin 37, which may have a material adverse effect on our financialcondition and results of operations. 45 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Boardand, as such, our investors are deprived of the benefits of such inspection. Our independent registered public accounting firm that issues the audit report included in our annual report filed with the U.S. Securities and ExchangeCommission, or the SEC, as auditors of companies that are traded publicly in the United States and a firm registered with the U.S. Public CompanyAccounting Oversight Board, or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess itscompliance with the laws of the United States and professional standards. Because our auditors are located in the PRC, a jurisdiction where the PCAOB iscurrently unable to conduct inspections without the approval of the Chinese authorities, our auditors are not currently inspected by the PCAOB. OnDecember 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight offinancial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a heightened interest in an issue that hasvexed 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 China have identified deficiencies in those firms’ audit procedures and quality controlprocedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China prevents thePCAOB from regularly evaluating our auditor’s audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOBinspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s auditprocedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence inour reported financial information and procedures and the quality of our financial statements. Proceedings instituted by the SEC against the “big four” PRC-based accounting firms, including our independent registered public accounting firm,could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act. Starting in 2011, the Chinese affiliates of the “big four” accounting firms, including our independent registered public accounting firm, were affected bya conflict between U.S. and PRC law. Specifically, for certain U.S.-listed companies operating and audited in mainland China, the SEC and the PCAOBsought to obtain from the Chinese firms access to their audit work papers and related documents. The firms were, however, advised and directed that underPRC 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 Chinahad to be channeled through the China Securities Regulatory Commission, or 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 theproceedings in July 2013 in the SEC’s internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposedpenalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pendingreview 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 theSEC. 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 firmswill receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests, which in substance requirethem to facilitate production via the CSRC. If they fail to meet specified criteria, the SEC retains authority to impose a variety of additional remedialmeasures on the firms depending on the nature of the failure. Remedies for any future noncompliance could include, as appropriate, an automatic six-monthbar 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 currentproceeding against all four firms. If additional remedial measures are imposed on the Chinese affiliates of the "big four" accounting firms, including ourindependent registered public accounting firm, and if any administrative proceedings were brought by the SEC alleging our failure to meet specific criteriaset by the SEC with respect to the requests for the production of documents, we could be unable to timely file financial statements in compliance with therequirements of the Exchange Act in the future. 46 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with majorPRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements beingdetermined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about any suchfuture proceedings against these audit firms may cause investor uncertainty regarding China-based, U.S.-listed companies and the market price of our ADSsmay 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 timelyfind another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not tobe in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of our ADSs from the New YorkStock Exchange or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the UnitedStates. Risks Related to our American Depositary Shares The market price for our ADSs may be volatile. Since our ADSs became listed on NYSE on November 15, 2018 to the date of this annual report, the trading price of our ADSs has ranged from US$9.95to US$12.07 per ADS. The trading prices of our ADSs are likely to be volatile and could fluctuate widely due to factors beyond our control. This may happenbecause of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance or deteriorating financialresults of other listed internet or other companies based in China that have listed their securities in the United States in recent years. The securities of some ofthese companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in theirtrading prices. The trading performances of other Chinese companies’ securities after their offerings, including internet and e-commerce companies, mayaffect the attitudes of investors toward Chinese companies listed in the United States, which consequently may impact the trading performance of our ADSs,regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulentaccounting, corporate structure or other matters of other Chinese companies may also negatively affect the attitudes of investors towards Chinese companiesin general, including us, regardless of whether we have conducted any inappropriate activities. In addition, securities markets may from time to timeexperience significant price and volume fluctuations that are not related to our operating performance, which may have a material adverse effect on themarket price of our ADSs. In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, including, among others,(i) regulatory developments affecting us, our borrowers, our investors, or our industry, (ii) market conditions in the marketplace lending industry, (iii) changesin the performance or market valuations of other marketplace lending platforms, (iv) announcements by us or our competitors of new product and serviceofferings, acquisitions, strategic relationships, joint ventures or capital commitments, (v) actual or anticipated fluctuations in our quarterly results ofoperations and changes or revisions of our expected results, changes in financial estimates by securities research analysts, (vi) negative publicity about us,our management or our industry, and (vii) sales or perceived potential sales of additional ordinary shares or ADSs. Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others frompursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial. We have created a dual-class share structure. Mr. Hong Yao, our founder, chairman and chief executive officer, beneficially owns all of our issued Class Bordinary shares, and our other shareholders hold Class A ordinary shares. In respect of matters requiring the votes of shareholders, holders of Class A ordinaryshares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to five votes per share based on our proposed dual-class sharestructure. 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 notconvertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entitywhich is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equal number of Class Aordinary shares. 47 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Due to the disparate voting powers associated with our two classes of ordinary shares, Mr. Hong Yao beneficially owns 83.2% of the aggregate votingpower of our company as of March 31, 2019. See “Principal Shareholders.” As a result of the dual-class share structure and the concentration of ownership,Mr. Hong Yao has 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. He may take actions that are not in the best interest of us or our other shareholders. Thisconcentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our othershareholders 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 concentratedcontrol limits your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of controltransactions that holders of Class A ordinary shares and ADSs may view as beneficial. In addition, the significant concentration of share ownership mayadversely affect the trading price of the ADSs due to investors’ perception that conflicts of interest may exist or arise. For more information regarding ourprincipal shareholders and their affiliated entities, see “Item 6. Directors, Senior Management and Employees — E. Share Ownership.” We are a “controlled company” within the meaning of the NYSE Listed Company Manual and, as a result, rely and will rely on exemptions fromcertain corporate governance requirements that provide protection to shareholders of other companies. We are a “controlled company” as defined under the NYSE Listed Company Manual because Mr. Hong Yao beneficially owns a majority of theaggregate voting power of our company. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and will rely,on certain exemptions from corporate governance rules, including: ·an exemption from the rule that a majority of our board of directors must be independent directors; ·an exemption that we have a nominating committee and a compensation committee that is composed entirely of independent directors with awritten charter addressing the committee’s purpose and responsibilities; ·an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independentdirectors; and ·an exemption from the rule that our director nominees must be selected or recommended solely by independent directors. We are not required to and will not voluntarily meet these requirements. If we are no longer a “controlled company,” we may in the future invoke “homecountry” exceptions available to foreign private issuers, such as us, under the New York Stock Exchange Listed Company Manual which are similar to theexemptions for controlled companies, and also include the possibility of additional exceptions from the New York Stock Exchange Listed Company Manual.As a result of our use of the “controlled company” exemptions, and any future use by us of the “home country” exceptions, holders of our ADSs will not havethe same protection afforded to shareholders of companies that are subject to all of NYSE corporate governance requirements. As a result, our ADS holderswill not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for ourADSs and trading volume could decline. The trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. Ifresearch analysts do not establish and maintain adequate research coverage or if one or more of the analysts who cover us downgrade our ADSs or publishinaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts cease coverage ofour company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or tradingvolume for our ADSs to decline. 48 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return on your investment. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As aresult, 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 anyfuture dividend income. Our board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that ourcompany 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 resultin our company being unable to pay its debts at they fall due in the ordinary course of business. In addition, our shareholders may by ordinary resolutiondeclare 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 paydividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, ourcapital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions andother factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any futureprice appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which our ADS holders purchasedthe ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline. Sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. As of March31, 2019, we had 35,375,777 Class A ordinary shares and 35,071,400 Class B ordinary shares outstanding. Among these Class A ordinary shares, 4,956,427Class A ordinary shares are represented by ADS. All our ADSs are freely transferable without restriction or additional registration under the Securities Act.The remaining ordinary shares outstanding will be available for sale, upon the expiration of the 180-day lock-up period beginning from the date of our initialpublic offering, subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities Act. Any or all of these shares may bereleased prior to the expiration of the lock-up period at the discretion of the representatives of the underwriters of this offering. To the extent shares arereleased before the expiration of the lock-up period and sold into the market, the market price of our ADSs could decline. Certain holders of our ordinary shares may cause us to register under the Securities Act the sale of their shares, subject to the 180-day lock-up period inconnection with our initial public offering. Registration of these shares under the Securities Act would result in ADSs representing these shares becomingfreely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the formof ADSs in the public market could cause the price of our ADSs to decline. We adopted a share incentive plan in August 2018, under which we have the discretion to grant a range of equity-based awards to eligible participants.As of the date of this annual report, we have granted a total of 1,490,951 awards under the 2018 Plan. See “Item 6. Directors, Senior Management andEmployees—B. Compensation — Management — Share Incentive Plans.” We have registered all ordinary shares that we may issue under this share incentiveplan. Once we register these ordinary shares, they can be freely sold in the public market in the form of ADSs upon issuance, subject to volume limitationsapplicable to affiliates and the lock-up agreements described in the “Underwriting” section of the registration statement for our initial public offering. If alarge number of our ordinary shares or securities convertible into our ordinary shares are sold in the public market in the form of ADSs after they becomeeligible for sale, the sales could reduce the trading price of our ADSs and impede our ability to raise future capital. In addition, any ordinary shares that weissue under our share incentive plan would dilute the percentage ownership held by investors who purchase ADSs in our initial public offering. 49 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 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 thevoting of the underlying Class A ordinary shares which are represented by your ADSs. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You willonly be able to exercise the voting rights which attach to the underlying Class A ordinary shares which are represented by your ADSs indirectly by givingvoting instructions to the depositary in accordance with the provisions of the deposit agreement. Under the deposit agreement, you may vote only by givingvoting instructions to the depositary, as the holder of the underlying Class A ordinary shares which are represented by your ADSs. Upon receipt of yourvoting instructions, the depositary will endeavor to vote the underlying Class A ordinary shares in accordance with your instructions in the event voting isby poll, and in accordance with instructions received from a majority of holders of ADSs who provide instructions in the event voting is by show of hands.The depositary will not join in demanding a vote by poll. You will not be able to directly exercise any right to vote with respect to the underlying Class Aordinary shares unless you withdraw the shares and become the registered holder of such shares prior to the record date for the general meeting. Under ourthird amended and restated memorandum and articles of association that is currently effective, the minimum notice period required to be given by ourcompany to our registered shareholders for convening a general meeting is seven (7) days. When a general meeting is convened, you may not receivesufficient advance notice to enable you to withdraw the underlying shares which are represented by your ADSs and become the registered holder of suchshares prior to the record date for the general meeting to allow you to attend the general meeting or to vote directly with respect to any specific matter orresolution which is to be considered and voted upon at the general meeting. In addition, under our third amended and restated memorandum and articles ofassociation that is currently in effective, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, ourdirectors 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 ofsuch a record date may prevent you from withdrawing the underlying shares which are represented by your ADSs and becoming the registered holder of suchshares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. Where any matter is to be put to a vote at ageneral meeting, the depositary will, if we request, and subject to the terms of the deposit agreement, endeavor to provide notice of the upcoming vote and todeliver our voting materials in accordance with the deposit agreement. We cannot assure you that you will receive the voting materials in time to ensure thatyou can instruct the depositary to vote the underlying shares which are represented by your ADSs. In addition, the depositary and its agents are notresponsible 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 toexercise your right to direct the voting of the underlying shares which are represented by your ADSs, and you may have no legal remedy if the underlyingshares are not voted as you requested. Your rights to pursue claims against the depositary as a holder of ADSs are limited by the terms of the deposit agreement and the deposit agreementmay be amended or terminated without your consent. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the depositagreement, you agree to be bound by the deposit agreement as amended. See “Item 12. Description of Securities Other Than Equity Securities —D. AmericanDepositary Shares” for more details. Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings. We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make such rights availableto you in the United States unless we register both the rights and the securities to which the rights relate under the Securities Act or an exemption from theregistration requirements is available. Under the deposit agreement, the depositary will not make rights available to you unless both the rights and theunderlying securities to be distributed to ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act. Weare under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to bedeclared effective and we may not be able to establish a necessary exemption from registration under the Securities Act. Accordingly, you may be unable toparticipate in our rights offerings in the future and may experience dilution in your holdings. 50 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impracticalto make them available to you. The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or otherdeposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinaryshares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to anyholders 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 theSecurities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it isnot feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In thesecases, the depositary may determine not to distribute such property. Neither we nor the depositary has any obligation to register under U.S. securities laws anyADSs, ordinary shares, rights or other securities received through such distributions. Neither we nor the depositary has any obligation to take any other actionto 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 onour 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 inthe value of our ADSs. You may be subject to limitations on transfer of your ADSs. Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when itdeems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSsgenerally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of anyrequirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason. Certain judgments obtained against us by our shareholders may not be enforceable. We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. We conduct substantially all of our operations inChina and substantially all of our assets are located in China. In addition, a majority of our directors and executive officers reside within China, and most ofthe assets of these persons are located within China. As a result, it may be difficult or impossible for you to effect service of process within the United Statesupon these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have beeninfringed 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 andof the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islandsare not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognizedand enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an actioncommenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a foreign court of competentjurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect oftaxes, a fine or a penalty, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policyof the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisionsof the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that arepenal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liabilityjudgments from U.S. courts would be enforceable in the Cayman Islands. 51 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforceforeign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where thejudgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of reciprocity with the United Statesthat provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courtswill not enforce a foreign judgment against us or our director and officers if they decide that the judgment violates the basic principles of PRC laws ornational 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 acourt in the United States. You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we areincorporated under Cayman Islands law. We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by ourmemorandum and articles of association, the Companies Law (2018 Revision) (the “Companies Law”) of the Cayman Islands and the common law of theCayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to usunder 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 inpart from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are ofpersuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors underCayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. Inparticular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fullydeveloped and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing toinitiate 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 or to obtaincopies of lists of shareholders of these companies. Our directors have discretion under our current amended and restated memorandum and articles ofassociation, to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to makethem available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholderresolution or to solicit proxies from other shareholders in connection with a proxy contest. 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 management,members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. Our memorandum and articles of association contain anti-takeover provisions that could discourage a third party from acquiring us and adverselyaffect the rights of holders of our Class A ordinary shares and ADSs. Our memorandum and articles of association contains certain provisions that could limit the ability of others to acquire control of our company,including a dual-class share structure that gives greater voting power to the Class B ordinary shares beneficially owned by our founder, a provision thatgrants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders andto determine, with respect to any series of preferred shares, the terms and rights of that series. These provisions could have the effect of depriving ourshareholders and ADS holders of the opportunity to sell their shares or ADSs at a premium over the prevailing market price by discouraging third parties fromseeking to obtain control of our company in a tender offer or similar transactions. We are an emerging growth company 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 various requirementsapplicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditorattestation requirements of Section 404 of Sarbanes-Oxley Act of 2002 for so long as we are an emerging growth company. As a result, if we elect not tocomply with such auditor attestation requirements, our investors may not have access to certain information they may deem important. 52 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards untilsuch date that a private company is otherwise required to comply with such new or revised accounting standards. In other words, an “emerging growthcompany” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to takeadvantage of the extended transition period. As a result of this election, our future financial statements may not be comparable to other public companies thatcomply with the public company effective dates for these new or revised accounting standards. 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 applicableto U.S. domestic public companies. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations inthe United States that are applicable to U.S. domestic issuers, including: ·the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ·the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under theExchange Act; ·the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiderswho profit from trades made in a short period of time; and ·the selective disclosure rules by issuers of material nonpublic information under Regulation FD. We are 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 aquarterly basis as press releases, distributed pursuant to the rules and regulations of the New York Stock Exchange. Press releases relating to financial resultsand 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 lessextensive 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 sameprotections or information that would be made available to you were you investing in a U.S. domestic issuer. As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governancematters that differ significantly from the New York Stock Exchange corporate governance listing standards; these practices may afford less protection toshareholders than they would enjoy if we complied fully with the New York Stock Exchange corporate governance listing standards. As a Cayman Islands company listed on the New York Stock Exchange, we are subject to the New York Stock Exchange corporate governance listingstandards. 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 Exchangecorporate governance listing standards. Currently, we do not plan to rely on home country practice with respect to our corporate governance. However, if wechoose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would enjoy under the New YorkStock Exchange corporate governance listing standards applicable to U.S. domestic issuers. 53 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. There is a significant risk that we may become a passive foreign investment company, or PFIC, for U.S. federal income tax purposes in the current or afuture taxable year. PFIC status could subject U.S. investors in our ADSs or ordinary shares to significant adverse U.S. federal income tax consequences. A non-U.S. corporation will be a “passive foreign investment company,” or “PFIC,” if, in any particular taxable year, either (a) 75% or more of its grossincome for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of its assets (as determined on the basisof fair market value) during such year produce or are held for the production of passive income (the “asset test”). Based on the current composition of ourincome and assets and the value of our assets, there is a significant risk that we may become a PFIC in the current or a future taxable year. The PFIC tests mustbe applied each year, taking into account our income and assets throughout the entire year, with such assets measured at the end of each quarter. Accordingly,it is possible that we may be treated as a PFIC in the current or a future taxable year due to changes in the composition of our income and assets and the valueof our assets. In particular, because the value of our assets will be determined by reference to the market value of our ADS, a decrease in the market value ofour ADSs may cause us to be a PFIC. If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information —Taxation — United States Federal Income TaxConsiderations”) may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the ADSs or ordinaryshares and on the receipt of distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under theUnited States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year duringwhich a U.S. Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S.Holder holds our ADSs or ordinary shares unless we cease to be a PFIC and the U.S. Holder makes a special election. See “Item 10. Additional Information —Taxation — United States Federal Income Tax Considerations — Passive Foreign Investment Company Rules” for more details. We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.” As a public company, we 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 corporategovernance practices of public companies. As a company with less than US$1.07 billion in net revenues for our last fiscal year, we qualify as an “emerginggrowth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements thatare otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 ofthe Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delayadopting new or revised accounting standards until such time as those standards apply to private companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consumingand costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort towardensuring 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, asa result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls anddisclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtaindirector and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain thesame or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficultfor us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments withrespect 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 thetiming of such costs. In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in themarket price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention andother resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit.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 issuccessfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition andresults of operations. 54 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company We commenced our marketplace lending business in July 2011 through Hangzhou Ruituo. Since March 2012, we have commenced facilitating auto-backed loans. In October 2015, we transferred all of our assets in Hangzhou Ruituo to Weidai (Hangzhou) Financial Information Service Ltd., or WeidaiFinancial Information, and have since then operated our marketplace lending business through Weidai Financial Information. In January 2018, Weidai Ltd. was incorporated under the laws of the Cayman Islands as our offshore holding company, to facilitate our initial publicoffering in the United States. Shortly following its incorporation, Weidai Ltd. established a wholly owned subsidiary in Hong Kong, Weidai HK Limited, orWeidai HK, to be our intermediate holding company in February 2018. In March 2018, Weidai HK established a wholly owned subsidiary in China, WeidaiCo., Ltd. In April 2018, Weidai Co., Ltd. entered into a series of contractual arrangements with Weidai Financial Information and its shareholders, including theshare pledge agreements, exclusive business cooperation agreement, exclusive call option agreement and shareholders’ power of attorney. Our contractualarrangements with Weidai Financial Information and its shareholders allow us to exercise effective control over Weidai Financial Information and receivesubstantially all of its economic benefits, and provide us an exclusive option to purchase all or part of its equity interests when and to the extent permitted byPRC law. See “Item 4. Information on the Company—C. Organizational Structure — Contractual Arrangements with Weidai Financial Information” for moredetails. As a result of our direct ownership in Weidai Co., Ltd. and the contractual arrangements with Weidai Financial Information and its shareholders, wetreat Weidai Financial Information as our variable interest entity and consolidate its financial results in our consolidated financial statements in accordancewith U.S. GAAP. In addition, pursuant to board and shareholder resolutions of Weidai Ltd. passed in April 2018, the board of directors of Weidai Ltd. or an authorizedofficer of the board shall cause Weidai Co., Ltd. to exercise (i) Weidai Co., Ltd.’s rights under the shareholders’ power of attorney, and (ii) Weidai Co., Ltd.’srights under the exclusive call option agreement, when the board of directors of Weidai Ltd. or the authorized officer determines that such exercise is in thebest interest of Weidai Ltd. and Weidai Co., Ltd. As a result of these resolutions and the provision of unlimited financial support from Weidai Ltd. to WeidaiFinancial Information pursuant to a financial support undertaking letter, Weidai Ltd. is determined to be most closely associated with Weidai FinancialInformation within the group of related parties and is considered the primary beneficiary of Weidai Financial Information. See “Item 4. Information on theCompany—C. Organizational Structure — Financial Support Undertaking Letter” for more details. On November 15, 2018, our ADSs commenced trading on the NYSE under the symbol “WEI.” We raised from our initial public offering (afterunderwriters exercised their over-allotment option) approximately US$45.1 million in net proceeds after deducting underwriting discounts and the estimatedoffering expenses payable by us. In January 2019, Weidai Co., Ltd. entered into a series of contractual arrangements with Yuntuo and its shareholders, including the share pledgeagreements, exclusive business cooperation agreement, exclusive call option agreement and shareholders’ power of attorney. Our contractual arrangementswith Yuntuo and its shareholders allow us to exercise effective control over Yuntuo and receive substantially all of its economic benefits, and provide us anexclusive option to purchase all or part of its equity interests when and to the extent permitted by PRC law. See “Item 4. Information on the Company—C.Organizational Structure —  Contractual Arrangements with Our Variable Interest Entities — Contractual Arrangements with Yuntuo” for more details. As aresult of our direct ownership in Weidai Co., Ltd. and the contractual arrangements with Yuntuo and its shareholders, we treat Yuntuo as our variable interestentity and consolidate its financial results in our consolidated financial statements in accordance with U.S. GAAP. 55 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our principal executive offices are located at 50/F, West Building, Fortune Finance Center, No. 33 Jiefang East Road, Jianggan District, Hangzhou,Zhejiang Province, People’s Republic of China. Our telephone number at this address is +86-571-5697-9013. Our registered office in the Cayman Islands islocated at the offices of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, CaymanIslands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.weidai.com.cn.The information contained on our website is not a part of this annual report. SEC maintains an internet site (http://www.sec.gov), which contains reports, proxy and information statements, and other information regarding us thatfile electronically with the SEC. B. Business Overview We are the largest auto-backed financing solution provider in China in terms of loan volume in each of 2015, 2016 and 2017, with a market share ofapproximately 35% in 2017, according to the Oliver Wyman Report. Our platform connects borrowers, the majority of which are small and micro enterpriseowners, with both online investors and institutional funding partners. Established in 2011 by a group of entrepreneurs with backgrounds in small and microenterprises, we are dedicated to providing small and micro enterprise owners with accessible credit. We pioneered auto-backed financing in China in the formof title loans. We believe our products and services create exceptional value for both borrowers and investors. Small and micro enterprises are vital to China’s economic growth, contributing 32% of the country’s GDP in 2017 and creating significant jobopportunities. However, they have substantial and growing unmet financing needs for daily operation and business expansion. Small and micro enterprisesoften have financing needs that are frequent, unpredictable and time-sensitive. Due to fast-evolving business nature, limited planning abilities and the lack ofa nationwide credit rating system in China, small and micro enterprises face difficulties including limited access to banks and other traditional financingchannels, high costs of alternative lending channels, and the uncertainty of funding from families and friends. Auto-backed financing represents an attractivesolution for small and micro enterprise owners, as automobiles are their most commonly held valuable assets and proper collaterals which enhance their creditprofiles and enable them to obtain higher credit limit at lower cost. In addition, auto-backed loans currently have a low penetration rate of 1.1% in 2017 inChina and the loan volume is expected to grow at a CAGR of 48.6% from 2017 to 2022, according to the Oliver Wyman Report. We were the first in China to introduce auto-backed financing product in the form of title loan with “collateral registration + GPS system” features in2011, which has replaced the traditional model of lenders keeping automobiles in custody and has since become the industry standard, according to theOliver Wyman Report. Our auto-backed loans generally have principal amounts between RMB30,000 and RMB200,000, tenures from one to 36 months andAPRs from 20% to 36%. In 2018, the auto-backed loans we facilitated had an average amount of RMB61,389 and an average tenure of five months. In 2018,62.0% of borrowers who took out auto-backed loans through our platform were repeat borrowers. 56 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following chart sets forth the outstanding loan balance of auto-backed loans we facilitated as of the dates indicated: As of December 31, 2018, we have built a nationwide network of 470 service centers across approximately 300 cities over the past seven years, which webelieve presents significant barriers to entry. This extensive offline network, seamlessly integrated with our centralized technology platform and riskmanagement system, has enabled a fast and highly automated transaction process. Our lending decisions are generally made within 30 minutes of applicationafter information collection and automobile appraisal, and loans are generally disbursed within the same day, including weekends, delivering superior userexperience. In addition, through this geographically dispersed network, we have gained a large and increasing volume of transaction data and local know-how. The breadth and depth of these transaction data have enabled us to make accurate credit assessments, effectively preventing fraud and enhancingcollection efforts. We believe our auto-backed loan products, which transform used automobiles, a type of “non-standard” collateral, into investable assets, represent ahigh-quality and low-risk asset class that is hard for investors to access elsewhere. We primarily serve online investors who can choose to invest in individualloans using our smart investing tools or a portfolio of loans through our investment programs. Both in 2017 and 2018, the average net annualized rate ofreturn for our online investors was 8.0%. We also collaborate with institutional funding partners. We maintain a sophisticated and effective risk management system spanning across our entire transaction process, from borrower acquisition to loancollection. We adopt a multi-dimensional risk management approach from both “borrower” and “automobile” perspectives, and gain further insights from ourproprietary data and a broad spectrum of third-party data sources, which result in our best-in-class automobile appraisal capabilities. Our advancedGPS tracking system and dedicated post-loan management mobile app serve as powerful tools for detecting fraud and taking automobiles into custody. As aresult, we have achieved robust credit performance, with the lowest delinquency ratio as of December 31, 2017 among the top five marketplace lendingplatforms in terms of loan volume in 2017, according to the Oliver Wyman Report. As of December 31, 2018, the M3+ delinquency rate by vintage for loanswe facilitated in 2015, 2016 and 2017 (excluding the loan products we have discontinued prior to the date of this annual report) remained at a level between0.5% and 0.7%. We have achieved significant growth in the past few years. We generate revenues primarily from service fees charged to borrowers for our facilitation andmanagement of loans. We also charge fees to online investors for facilitating their investments via our platform, and the transfer of their investments on oursecondary loan market. Our net revenues increased by 101.3% from RMB1,761.4 million in 2016 to RMB3,545.4 million in 2017, and further increased by10.4% to RMB3,913.5 million(US$569.2 million) in 2018. Our net income increased by 63.2% from RMB291.0 million in 2016 to RMB474.8 million in2017, and further increased by by 27.3% to RMB604.6 million (US$87.9 million) in 2018. Our adjusted net income, net of taxes, increased by 60.3% fromRMB315.3 million in 2016 to RMB505.4 million in 2017, and further increased by 36.9% to RMB691.7 million (US$100.6 million) in 2018. 57 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our Value Proposition to Borrowers ·Accessible: make credit available for China’s small and micro enterprise owners who have limited or no access to traditional financingchannels; we provide 24/7 accessibility through mobile app, website and call center ·Timely: fast, highly-automated process; loans are typically approved within 30 minutes and funded within the same day, including weekends ·Affordable: significantly higher credit limit at a reasonable cost compared with alternative lending channels ·Flexible: various duration and repayment options to choose from ·Superior experience: seamlessly integrated online + offline and one-stop experience supported by 470 service centers across approximately300 cities and centralized online operations as of December 31, 2018 Our Value Proposition to Investors We provide our investors access to a unique asset class with attractive risk-adjusted returns. Our Borrowers and Loan Products Our Borrowers Borrower Profile and Demographics We primarily facilitate auto-backed loans targeting small and micro enterprise owners. According to the Oliver Wyman Report, small and microenterprise owners in China have a large and expanding demand for loans with higher credit limit and fast approval process, which creates substantial growthopportunity for auto-backed loans. According to a borrower survey we conducted in the first quarter of 2018, among the over 3,400 borrowers who took out auto-backed loans during thesurvey period: ·95.5% were small and micro enterprise owners, ·59.4% owned businesses with fewer than 30 employees, ·54.5% had annual revenue of less than RMB5 million, ·89.5% took out loans to cover short-term working capital requirements, ·89.7% had overdue receivables from their customers, and ·automobiles is the most commonly held valuable asset for the small and micro enterprise owners surveyed. Our borrower base has experienced fast growth since our inception in 2011. The number of active borrowers of auto-backed loans on our platform was216,423, 315,211 and 253,596 in 2016, 2017 and 2018, respectively. As of December 31, 2017 and 2018, we facilitated RMB148.1 billion and RMB203.7billion auto-backed loans cumulatively, respectively. We believe we have a well-engaged and loyal borrower base. In 2016, 2017 and 2018, 53.4%, 66.6% and 62.0% of borrowers who took out auto-backedloans through our platform were repeat borrowers, respectively. 58 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Borrower Acquisition We attract borrowers through (i) word-of-mouth referrals, (ii) our online channels, including our mobile app, WeChat account, website and call center,(iii) performance-based advertisements placed on websites of our online channel partners, including autohome.com.cn, toutiao.com and other web portalswhere our target borrowers frequently visit, which direct traffic to our call center and (iv) referrals from our offline channel partners, such as financial leasingcompanies, used automobile dealers and other financial service providers. We plan to increasingly acquire borrowers through our online channels by enhancing the scope and quality of services provided through these channelsand launching a variety of marketing campaigns and initiatives through these channels. Loan Products and Services Offered to Borrowers We provide borrowers convenient and quick access to credit with a number of loan products based on their specific financing needs and risk profiles. Thefollowing table sets forth a breakdown of loan volume facilitated and originated through our platform by type of products for the periods indicated: For the Years ended December 31, 2016 2017 2018 RMB’000 % of totalloanvolume RMB’000 % of totalloanvolume RMB’000 USD’000 % of totalloanvolume Auto-backed loans 45,428,526 94.7 80,201,041 82.7 62,423,360 9,079,101 79.3 Other secured loans(1) 2,124,032 4.4 10,934,115 11.3 8,143,759 1,184,461 10.3 Unsecured loans(2) 440,554 0.9 5,801,381 6.0 8,218,795 1,195,374 10.4 Total loan volume 47,993,112 100.0 96,936,537 100.0 78,785,914 11,458,936 100.0 (1) Primarily including home equity loans and construction machinery loans. We ceased to offer home equity loans to new borrowers in the fourth quarter of2017, the loan volume of which totaled RMB2.0 billion, RMB8.8 billion and RMB2.7 billion (US$0.4 billion) in 2016, 2017 and 2018, respectively. (2) Primarily including professional credit loans and consumption loans. We ceased to offer certain types of consumption loans and unsecured auto-financingloans offered to those who have taken out auto-financing loans from certain commercial banks to new borrowers in the fourth quarter of 2017, the loanvolume of which totaled RMB20.4 million, RMB3.8 billion and RMB1.2 billion (US$0.2 billion) in 2016, 2017 and 2018, respectively. Borrowers repay principal and interest to investors, and pay service fees to us. The rate of return to investors is generally determined based on the typeand tenure of the loan and market conditions. ·Principal and interest. Loans with tenures ranging from one to six months are repaid with monthly payments of interest over the life of theloan, followed by a repayment of principal at maturity. Loans longer than six months are repaid in fixed monthly installments (consisting ofboth principal and interest) over the life of the loan; and ·Service fees. Borrowers pay us service fees for our platform’s facilitation and management of their loans on a monthly basis. We allow borrowers to hold multiple loans at the same time on our platform, and a borrower’s total credit limit for all such loans on our platform isdetermined based on his respective Weidai Credit score on our platform. See “— Technology and Risk Management — Risk Management — CreditAssessment System” for more details. 59 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Auto-backed Loans Auto-backed loans refer to loans secured by an automobile registered in the borrower’s name. A borrower who owns an automobile that is less than tenyears old is eligible to apply for auto-backed loans on our platform. We generally facilitate auto-backed loans with principal amounts between RMB30,000 and RMB200,000 and tenures ranging from one to 36 months. In2016, 2017 and 2018, the total volume of auto-backed loans facilitated and originated through our platform totaled RMB45.4 billion, RMB80.2 billion andRMB62.4 billion (US$9.1 billion), respectively, representing 94.7%, 82.7% and 79.3% of the total loan volume facilitated and originated through ourplatform for the same periods, respectively. In 2016, 2017 and 2018, the average amount of auto-backed loans facilitated and originated through our platformwas RMB64,126, RMB63,888 and RMB61,389, respectively. In 2017 and 2018, the APR for our auto-backed loans typically ranged from 20% to 36%. A borrower’s loan-to-value ratio, or LTV ratio, for our auto-backed loan products generally ranges between 40% to 120% based on his Weidai Creditscore. We maintain a whitelist of existing auto-backed loan borrowers based on their post-loan performance, such as repayment status and behavior datacollected by our GPS tracking system. The whitelisted borrowers are offered the option to go through another credit review to increase their LTV ratio by10% to 30% (provided that the increased LTV ratio does not exceed 120%) and receive another loan disbursement according to the increased LTV ratio andthe latest appraised value of their automobiles. The weighted average LTV ratio for our auto-backed loan borrowers was 63.6%, 63.4% and 62.3% in 2016,2017 and 2018, respectively. In 2016, 2017 and 2018, 82.7%, 84.3% and 86.4% of our auto-backed loan borrowers were granted LTV ratio below 80%,respectively. The following diagram illustrates the loan volume breakdown of auto-backed loans facilitated through our platform in 2016, 2017 and 2018 by LTVratio: Auto-backed loan borrowers typically provide investors the title of their automobiles as collaterals by registering such automobile collaterals at localautomobile administrative offices, and are not required to hand over their automobiles. For borrowers with higher credit risks or under certain other limitedcircumstances, we require the automobiles to be pledged and kept at our leased parking lots or parking spaces over the life of the loan. In 2016, 2017 and2018, the volume of auto-backed loans with automobiles pledged to us and the relevant automobiles kept at our leased parking lots or parking spaces totaledRMB5.9 billion, RMB9.8 billion and RMB4.8 billion (US$0.7 billion), and accounted for 12.2%, 10.1% and 6.0% of our total loan volume, respectively. 60 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We believe that our platform enables a fast auto-backed loan application process, a credit assessment that accurately determines an auto-backed loanapplicant’s creditworthiness and his automobile’s value, and a superior overall user experience. After a prospective borrower of auto-backed loans submits allrequired information and materials, he will typically receive a credit decision within 30 minutes. See “— Our Transaction Process” for more details. Other Loans We offer a number of other loans to meet the varied financial needs of our borrowers. In 2016, 2017 and 2018, the volume of other loans facilitated andoriginated through our platform totaled RMB2.6 billion, RMB16.7 billion and RMB16.4 billion (US$2.4 billion), respectively, representing 5.3%, 17.3%and 20.8% of the total loan volume facilitated through our platform for the same periods, respectively. ·Professional credit loans. Professional credit loans are unsecured loans offered to professionals in selected industries with good credit andmid- to high-income. We require these borrowers to demonstrate, among others, job stability and a continuous record of pension fundcontributions. These loans generally have principal amounts between RMB50,000 and RMB200,000 and a tenure up to 24 months. In 2017 and2018, the APR for our professional credit loans typically ranged from 12% to 18%. ·Construction machinery loans. Construction machinery loans include loans for the purchase of construction machinery. These loans generallyhave principal amounts between RMB50,000 to RMB1,000,000 and tenures ranging from six to 24 months. ·Home equity loans. Home equity loans refer to loans secured by the residential property owned by the borrower. We ceased to offer homeequity loans to new borrowers in the fourth quarter of 2017, since home equity products are more standardized and providers of home equityloans primarily compete on cost of capital, where we do not have a significant competitive advantage. ·Others. We currently also facilitate a number of other loans through our platform, including, among others, (i) consumption loans offeredexclusively through our mobile apps, which generally have principal amounts between RMB1,000 and RMB50,000 with tenures of three to 12months, and (ii) auto-financing loans under both direct lease and sale-and-leaseback models for the purchase of new and used automobiles fromauto dealers and financial leasing companies, which generally have principal amounts between RMB20,000 and RMB200,000 with tenures of24 or 36 months. We have ceased to offer consumption loans involving smaller loan amounts and shorter tenures, and unsecured auto-financingloans offered to those who have taken out auto-financing loans from certain commercial banks starting from the fourth quarter of 2017. Our Transaction Process Our platform enables a fast and streamlined transaction process, from initial consultation and credit assessment, automobile appraisal and inspection,GPS tracking device installation and collateral registration to post-loan monitoring and servicing, delivering a superior user experience. 61 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following diagram illustrates our platform’s facilitation of auto-backed loans: (a) Each borrower and investor has an individual custody account with Xiamen Bank, our custodian bank. (b) If a borrower meets one of our institutional funding partners’ predetermined investment criteria, we may refer the borrower to the institutional fundingpartner instead of listing the loan on our platform. Subject to the institutional funding partner’s own credit assessment and loan approval procedures, the loanmay be funded by the institutional funding partner. (c) For loans funded by online investors, borrowers pay service fees to us and repay principal and interest to online investors on a monthly basis over the lifeof the loan, with the first payment due one month from the time of loan disbursement. For loans funded by institutional funding partners, the institutionalfunding partners pay service fees to us and the borrowers repay principal and interest to institutional funding partners. Step 1: Initial Consultation and Credit Assessment Our loan application process begins with the prospective borrower’s submission of his basic information including name, PRC ID card number andmobile phone number through one of the following channels: (i) our website, www.weidai.com.cn, which features a fast and user-friendly loan applicationprocess and provides the prospective borrower with access to live support and online tools throughout the loan application process and over the life of theloan, (ii) our dedicated mobile app for borrowers, enabling prospective borrowers to access our loan products and services anytime, anywhere and to track thestatus of their loans and payment schedules using mobile phones or tablet computers, (iii) our WeChat account, (iv) our call center, which providescomprehensive pre-loan consultation to potential borrowers, or (v) one of our service centers across China. Once we receive the prospective borrower’s name, PRC ID card number and mobile phone number, we conduct an initial credit assessment using ourproprietary credit assessment system, Weidai Credit, to generate a Weidai Credit score that ranges from I to VIII for the prospective borrower (with Irepresenting the lowest risk and VIII representing the highest risk). This round of credit assessment is focused on assessing a prospective borrower’s overallcreditworthiness by analyzing information retrieved from various data sources using his name, PRC ID card number and mobile phone number, including theprospective borrower’s track records on our platform and other marketplace lending platforms, whether he is blacklisted in any third-party databases, andwhether he has any suspicious connection with any existing borrowers. If the prospective borrower’s Weidai Credit score falls between I and VII, he will beassigned a corresponding LTV ratio. If the prospective borrower receives a Weidai Credit score of VIII, his loan application will be rejected. See “—Technology and Risk Management — Risk Management — Credit Assessment System” for more details. 62 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. For prospective borrowers who visit our service centers for initial consultation, the entire loan application process can be completed at our servicecenters. For prospective borrowers submitting information through our mobile app, WeChat account or website, our call center agents will follow up with himto assess individual financing needs and collect additional information, such as his location and desired loan amount and intended use of loan proceeds. Oursystem then intelligently assigns the prospective borrower to the most suitable customer service representative at one of our service centers near theprospective borrower. The customer service representative will invite the prospective borrower to bring his automobile and all the required materials to theservice center to complete loan application. Step 2: Information Collection and Automobile Appraisal At our service center, our customer service representative helps the prospective borrower complete loan application forms and collects the requiredinformation and materials related to both the prospective borrower and the automobile, including employment information, income proof  (such as bankstatements) and photocopies of driver’s license and vehicle registration documents. The prospective borrower also authorizes us to obtain a wide array ofpersonal information from various data sources, including phone call records from telecom operators and credit reports from third-party credit scoring serviceproviders. Once all the automobile related information is uploaded to our system, we determine the value of the automobile through both our proprietaryautomobile appraisal system and third-party automobile appraisal systems, which generally takes less than one minute. Under certain circumstances, theautomobile will be re-appraised by our service center’s automobile appraisers or qualified third-party automobile appraisers. See “— Technology and RiskManagement — Risk Management — Automobile Appraisal” for more details. Step 3: Further Credit Assessment and Credit Limit Approval Once all the information and materials related to the prospective borrowers are collected (including those obtained from third-party sources with hisauthorization), we conduct another round of credit assessment. This round of credit assessment collects and analyzes a wider range of information related toboth the loan applicant and the automobile with a focus on detecting fraud, such as the prospective borrower’s mobile carrier records and mobile Internetbehaviors, and the automobile’s owner information and insurance records. Applicants with high risk of fraud will be rejected. See “— Technology and RiskManagement — Risk Management — Fraud Detection” for more details. Once the automobile appraisal and further credit assessment are completed, our service center’s risk management personnel reviews the loan applicationto verify the authenticity of the application materials and conduct a face-to-face interview with the prospective borrower. Based on the review of applicationmaterials and the face-to-face interview, and subject to the approval of the head of the service center, our risk management personnel may increase or decreasethe prospective borrower’s initial LTV ratio by 10% to 20%. Once the prospective borrower’s final LTV ratio is determined, our system generates details of the loan, including the credit limit, interest rate and ourservice fees. Our customer service representative will explain the detailed loan terms with the prospective borrower and assist him in choosing the loan tenurethat suits his financing needs and preferences. Separately, if the credit limit of the prospective borrower exceeds specified thresholds or if a fraud alert is triggered, we will initiate further due diligenceand verification, including contacting the prospective borrower’s references to verify the information he provided and visit his home or workplace.Depending on the results of such further due diligence and verification, we may reject the loan application or reduce the credit limit. See “— Technology andRisk Management — Risk Management — Post-Loan Management and Collection of Delinquent Loans” for more details. 63 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Step 4: Automobile Inspection and GPS Tracking Device Installation If the loan terms are agreeable to the prospective borrower, our automobile appraisers will conduct comprehensive inspection of the automobile usingspecialized equipment following our automobile inspection procedures and standards (including inspection of the automobile’s interior and exterior, engine,transmission, circulatory system and electrical system) to detect damages or other issues that cannot be identified by analyzing online data, such as majordamages sustained from flood, bad weather or accidents. If damages are identified during the automobile inspection, we may reject the loan application or approve a lower credit limit. Once the automobilepasses the automobile inspection, the loan application will be approved, and our automobile appraisers will install GPS tracking devices on the automobileand collect the spare key from the borrower. Step 5: Collateral Registration and Loan Listing and Funding Once the loan application is approved, our service center will register the borrower’s automobile at the local automobile administrative office ascollateral. After collateral registration, the loan will be listed on our online platform for online investors to subscribe to. Alternatively, if a borrower meets one of our institutional funding partners’ predetermined investment criteria, we may refer the borrower to the relevantinstitutional funding partner instead of listing his loan on our platform. The institutional funding partner, after completing its own credit assessment and loanapproval procedures, may choose to enter into a loan agreement with the borrower and fund the borrower’s loan. If the institutional funding partner declinesto fund the borrower’s loan, the borrower’s loan will be listed on our online platform for online investors to subscribe to. See “— Our Investors andInvestment Products —  Institutional Funding Partners.” Once the loan is subscribed to by an online investor, a loan agreement will be entered into among the borrower, the online investor and our platform andfunds will be transferred from the investor’s account to the borrower’s account, both of which are opened at and managed by Xiamen Bank, our custodianbank. Step 6: Post-Loan Monitoring and Servicing After the loan is disbursed, the borrower follows a detailed loan payment schedule to repay principal and interest to the online investor and pay servicefees to us on a monthly basis, with the first payment due one month from the time of loan disbursement. See “— Our Borrowers and Loan Products — LoanProducts and Services Offered to Borrowers” for more details. Reminder text messages and phone calls are scheduled a few days in advance of every paymentdue date. The borrower may schedule automatic monthly payments on the payment due date, or make payments each month using our mobile app. In addition to payment reminders, our advanced, rule-based GPS tracking system closely monitors the automobile’s movements 24/7 to analyze theborrower’s post-loan behavior to prevent delinquency, and triggers notification alarms if there are strong indication of abnormal activities. See “—Technology and Risk Management — Risk Management — Post-Loan Management and Collection of Delinquent Loans” for more details. We maintain a whitelist of existing auto-backed loan borrowers based on their post-loan performance, such as repayment status and behavior datacollected by our GPS tracking system. The whitelisted borrowers are offered the option to go through another credit review to increase their LTV ratio by10% to 30% and receive another loan disbursement according to the increased LTV ratio and the latest appraised value of their automobiles. See “— OurBorrowers and Loan Products — Auto-backed Loans” for more details. After the loan is fully repaid, we will de-register the collateral on the automobile, remove the GPS tracking devices from the automobile and return thespare key to the borrower. 64 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If a non-payment occurs, our service center and provincial branch offices’ risk management personnel will follow our standardized collection guidelinesand protocols to collect payment. We determine whether and when to take automobiles into custody on a case-by-case basis after assessing a borrower’sability and willingness to repay, default risks as well as the feasibility and cost of taking the automobiles into custody. See “— Technology and RiskManagement — Risk Management — Post-Loan Management and Collection of Delinquent Loans” for more details. In order to timely compensate the online investors for default losses, we have been voluntarily purchasing delinquent loans from online investors. See“— Our Investors and Investment Products — Our Online Investors — Investment Products and Services Offered to Online Investors” for more details. The transaction process of other loan products on our platform generally involves initial consultation, credit assessment, information collection, on-sitevisit and verification (if applicable), loan listing, signing of loan agreement and post-loan monitoring and servicing. Our Service Centers As of December 31, 2018, we had 470 service centers across 30 of 32 provinces, municipalities and autonomous regions in China, including 358directly-operated service centers and 112 partner-operated service centers. Our service centers span across major first- to third-tier cities nationwide. We believe our existing service center infrastructure will be sufficient tosupport our business growth in the near future. As the market demand for auto-backed loans increases, we may selectively expand the geographic coverage ofthis network to cover additional cities and strengthen our positioning in certain existing markets. The following map illustrates the locations of our service centers across China as of December 31, 2018: 65 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Each service center is staffed with a dedicated team of customer service and risk management personnel (including those responsible for pre-loan riskmanagement, automobile appraisal and post-loan risk management), and provides comprehensive services over the life of the loans to borrowers, including: ·Borrower engagement. Our service centers provide prospective borrowers convenient access to loan products and services available on ourplatform across China. A prospective borrower can easily locate a nearby service center to complete the entire application process. Aprospective borrower who completed initial consultation online will be invited by our customer service representatives to a nearby servicecenter to complete the remaining application process. ·Pre-loan services. Our service centers provide comprehensive pre-loan services that are designed to deliver a fast loan application process anda superior user experience, ranging from information collection, automobile appraisal and inspection, face-to-face interview and applicationmaterial authentication and installation of GPS tracking devices to collateral registration. If we suspect that a loan application may involvefraud, the relevant service center’s risk management personnel will initiate further due diligence and verification. See “— Technology and RiskManagement — Risk Management — Fraud Detection” for more details. ·Post-loan services. Our service centers are also responsible for monitoring borrowers’ loan repayment status to prevent delinquency. Ourservice centers’ risk management personnel send payment reminders to borrowers prior to every payment due date, including text messages andphone calls. If abnormal activities are detected by our GPS tracking system, the relevant service centers’ risk management personnel will followup with the borrower according to our risk management procedures and protocols. In the event of overdue payments, our service centers workclosely with our provincial branch offices to collect payment following our standardized collection guidelines and protocols. See “—Technology and Risk Management — Risk Management — Post-Loan Management and Collection of Delinquent Loans” for more details. 66 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We commenced building our service center network under the partner-operated service center business model in 2011. As our operational capabilitiesdevelop, we have since 2014 focused on opening directly-operated service centers and stopped engaging new service center operation partners. As ofDecember 31, 2018, 112 out of 470 service centers were partner-operated service centers, which were located in Zhejiang province, Jiangsu province, Anhuiprovince, Jiangxi province and Shanghai. Our service center operation partners are responsible for the daily operations of the partner-operated service centers,including hiring their own employees, under our supervision. We collaborate with our service center operation partners for the operation of partner-operatedservice centers under a revenue sharing model. Pursuant to our one-year cooperation agreements with our service center operation partners, we record 100%of each partner-operated service center’s loan facilitation service fee and post facilitation service fee as revenue, and subsequently pay the service centeroperation partners an agreed percentage of 60% of such amounts as the partner-operated service center’s operating costs and expenses. These operating costsand expenses include costs and expenses paid to service center operation partners controlled by related parties. See “Item. 7 – Major Shareholders andRelated Party Transactions – Related Party Transactions” for more details. If loans facilitated by the partner-operated service centers become delinquent andare subsequently purchased by us, the relevant service center operation partners are obligated to compensate us in the amount equal to 70% of the purchaseprice of the delinquent loans. To ensure a consistent, high-quality service experience and effective risk management, we require all of our service centers, including our partner-operated service centers, to follow our standardized operating and financial reporting procedures, including our loan approval process and post-loanmanagement. Our headquarters and provincial branch offices closely monitor the daily operations of our service centers and provide comprehensive trainingand ongoing support. For example, our service centers closely work with the relevant provincial branch offices for the collection of delinquent loans: once apayment is past due, our service centers’ risk management personnel actively follow up with the borrower with phone calls during the first three days ofdelinquency, followed by the relevant provincial branch offices’ risk management personal contacting the borrower in accordance with our standardized riskmanagement procedures and protocols. Technology and Risk Management The success of our business is dependent on our strong data analytics and risk management capabilities, which have enabled us to efficiently operate ourplatform, accurately determine loan applicants’ creditworthiness and consistently deliver a superior user experience. Our Technology Since our inception, we have focused on accumulating massive data assets from various data sources and developing our data analytics capabilities,which we believe forms a solid foundation for the efficient operation of our credit assessment, anti-fraud, automobile appraisal and other risk managementsystems. As of December 31, 2018, we had a dedicated team of 348 technology personnel. Data Aggregation We aggregate massive amount of data from various data sources to verify both the prospective borrower’s creditworthiness and assess the automobile’scondition and value, presenting a 360-degree profile of the prospective borrower and the automobile. Our data sources primarily include: ·Proprietary database. We have established a proprietary database with over 594 terabytes of data, including borrower related data (such asborrowers’ social media behavior) from 2.1 million cumulative borrowers on our platform as of December 31, 2018. These data are (i)accumulated from the large number of transactions we have facilitated from seven years of operations, or (ii) from public sources, which arecontinually updated on a weekly or monthly basis. ·Third-party databases. We collaborate with third-party data service providers specialized in, among others, facial recognition, identityverification and automobile data solutions, who grant us access to their databases to search for the loan applicant or automobile related data(such as access to an industry-leading automobile database where we are able to search detailed information of automobiles by vehicleidentification numbers). We also work with third-party credit scoring service providers who provide us credit reports of the loan applicants,which help us determine, among others, which of the loan applicants have outstanding loans or have defaulted on other online lendingplatforms. 67 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We are able to aggregate a wide array of information on the borrower and the automobile that is pertinent to our risk management and assessment efforts.The following are loan applicant and automobile related information we typically collect for each loan application using our proprietary and third-partydatabases: Loan applicant related information Automobile related information· track records on our platform· track records on other online lending platforms· whether the applicant is blacklisted in any third-party databases· behavioral data of applicants (such as behavioral data as they apply forloans through our platform)· background information (such as address and lawsuit records)· contact information, such as key contacts and telephone records· personal credit scoring information· online and offline transaction records and payment information· phone call records from telecom operators · automobile identification number· owner information· make, model, year and color· manual/automatic transmission· historical transaction information· retail prices and second-hand market prices· popularity· date of first vehicle registration· date of last vehicle registration· date of last annual inspection· collateral/pledge record· traffic violation records· maintenance records· insurance records· engine number and capacity After the relevant information is aggregated, our system converts the originally unstructured data into structured data using machine learning techniques,enabling further analysis of such data. Data Analytics Capabilities Data analytics technologies are extensively used in various aspects of our operations. Applying data mining, multi-dimensional real-time analytics anduser behavior analytics technologies, we have developed various models and algorithms that are capable of processing massive amount of data from variousdata sources in a short period of time and presenting a 360-degree profile for each borrower and automobile. We have also jointly developed models andalgorithms with third-party data providers for credit assessment, borrower behavioral data and borrower segmentation leveraging their extensive borrower andautomobile related data and our advanced data analytics capabilities. These models and algorithms are executed using our proprietary, big-data enabled rule-based engine, and are applied throughout our loan application and risk management process to enable a fast loan application process and a credit assessmentthat more accurately determines an applicant’s creditworthiness. In addition, all of our models and algorithms are continuously enhanced and updated using data-based machine learning technologies to be moretailored to specific tasks and different business scenarios and to deliver the most accurate results. In addition to our in-house research and development efforts, we conduct joint researches projects with leading universities, including Peking Universityand Zhejiang University, in China, to increase the application of emerging technologies, including artificial intelligence, machine learning and Internet ofThings in our operations in order to more effectively analyze borrower and automobile related data, assess risks and enhance our product offerings. We arealso an executive council member of the National Internet Finance Association of China, a national self-regulatory organization for Internet Finance, and amember of various industry associations such as the Auto-backed Loan Association. Risk Management We have implemented a robust risk management system, which is comprised of our credit assessment system, automobile appraisal system, anti-fraudsystem and GPS tracking system. We continuously enhance the sophistication and reliability of our risk management system as our business evolves. Forexample, we have been increasing the number of variables analyzed for each transaction while evaluating the effectiveness of the variables to moreaccurately evaluate the credit characteristics of borrowers, appraise the value of automobile, prevent fraud and reduce delinquency. Our risk managementsystem currently uses over 1,500 variables with respect to loan applicants and 90 variables with respect to automobiles for each transaction. 68 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The effectiveness of our risk management system is evidenced by our consistently low delinquency rate while our business continues to grow. As ofDecember 31, 2018, the M3+ delinquency rate by vintage for loans we facilitated in 2015, 2016 and 2017 (excluding the loan products we havediscontinued prior to the date of this annual report) remained at a level between 0.5% and 0.7%. See “Item. 5 — Operating and Financial Review andProspects — A. Operating Results  — Loan Performance Data” for more details. Credit Assessment Our credit assessment system is powered by our proprietary, big-data enabled rule engine, models and algorithms, and is continually optimized usingmachine learning technologies. Once a prospective borrower submits his name, PRC ID card number and mobile phone number, we conduct a credit review using our credit assessmentsystem, Weidai Credit, whereby data with respect to the loan applicant are aggregated from our proprietary database as well as third-party databases anddifferent models are applied to the prospective borrower with different features in assessing the potential risks associated with them. A Weidai Credit scorewill be assigned to the prospective borrower. A new Weidai Credit score will be assigned every time a borrower reapplies for a loan on our platform. Prior to March 13, 2018, our credit assessment system assigned six credit scores to loan applicants, with I representing the lowest risk level and VIrepresenting the highest risk level. Loan applicants receiving a credit score of VI were rejected. For auto-backed loans, loan applicants receiving credit scoresin the range of I to V were assigned an LTV ratio between 40% and 110% (which is subject to adjustments on a case by case basis). For other loans, weconducted another round of credit review before approving any loans. The following table sets forth a breakdown our auto-backed loan borrowers by Weidai Credit score in 2017 and from January 1, 2018 to March 12, 2018: As we gain more industry expertise and an increasing volume of transactional and borrower behavioral data, we have implemented various measures tocontinuously enhance and upgrade our credit assessment system, with an aim to assign credit scores and LTV ratios that more accurately reflect the loanapplicants’ creditworthiness. These measures include, among others, changing our credit scoring from I to VI to I to VIII in March 2018. 69 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our current credit assessment system assigns eight credit scores to loan applicants, with I representing the lowest risk level and VIII representing thehighest risk level. Loan applicants receiving a credit score of VIII are rejected. For auto-backed loans, loan applicants receiving credit scores in the range of Ito VII are assigned an LTV ratio between 40% and 120% (which is subject to adjustments on a case by case basis). For other loans, we conduct another roundof credit review before approving any loans. The following table sets forth a breakdown of our auto-backed loan borrowers by Weidai Credit score from March 13, 2018 to December 31, 2018: Automobile Appraisal We have adopted detailed automobile appraisal procedures to appraise the value of the prospective borrowers’ automobiles. Our automobile appraisalprocess involves: ·our proprietary automobile appraisal system, which is supported by the massive amount of automobile transaction data from our proprietary andthird-party databases and powered by various machine learning algorithms and intelligent information processing and analysis technology; ·third-party automobile appraisal systems; and ·our service centers’ automobile appraisers, all of whom have completed our internal training programs and qualified third-party automobileappraisers, including licensed automobile appraisers and automobile appraisers with extensive industry experience who we engage on an asneeded basis, all of whom have passed our internal risk management tests. Each automobile is appraised by our proprietary automobile appraisal system and third-party automobile systems. This appraisal generally takes lessthan one minute. Under certain circumstances (for example, if there is a significant difference between the appraised value of the automobile generatedamong these systems or has an appraised value of over RMB200,000), the automobile will be re-appraised by our service centers’ automobile appraisers orqualified third-party automobile appraisers. 70 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fraud Detection We collect and analyze a wide variety of information related to the loan applicant and the automobile to detect fraud. We maintain and continuallyupdate a blacklist of borrowers who have defaulted on loans facilitated through our platform, whose future loan applications will be rejected. We have alsobuilt an anti-fraud database focusing on identifying suspicious connections among loan applicants and existing borrowers, and actively work with third-party data service providers and credit scoring service providers to identify fraudulent activities and organized crimes. In addition, our system is configuredwith target risk levels and tolerance thresholds, and will issue fraud alerts if the level of fraud risk is higher than these preset thresholds. We have adopted a multifaceted fraud detection approach which is embedded in our loan application process: ·once we receive the loan applicant’s name, PRC ID card number and mobile phone number, our system conducts fraud screening and rejectsapplicants that are blacklisted by our platform or, according to data from public sources, are associated with fraud cases; ·upon receipt of additional information from the loan applicant and obtaining his authorization, we aggregate a wide array of data related to theloan applicant from various data sources including phone call records from telecom operators and credit reports from third-party credit scoringservice providers. Our system analyzes such data using machine learning techniques to uncover abnormal patterns and potential fraudulentbehavior (such as suspicious social connections), and reject applicants who have high risk of fraud; and ·if a fraud alert is triggered indicating that there are signs of fraud, but available information is insufficient for our system to reach a conclusion,we will conduct further due diligence and verification, which involves, among others, running searches in our anti-fraud database, inquiring theapplicant about any inconsistencies in his loan application, calling the applicant’s references to verify information and visiting his home orwork place. Depending on the results of such further due diligence and verification, we may reject the loan application or approve a lower loanamount. Post-Loan Management and Collection of Delinquent Loans After a loan is disbursed, we continuously monitor the performance of the loan to uncover fraudulent behavior and minimize default risk. We sendpayment reminders to borrowers prior to every payment due date. For example, we send reminder text messages and make phone calls to the borrower a fewdays ahead of the payment due dates. We also analyze the borrower’s post-loan behavior data collected by our advanced, rule-based GPS tracking system to prevent delinquency. Our GPStracking system closely monitors, among others, the real-time location and movement of all automobiles that are used as auto-backed loan collaterals 24/7,and have accumulated 8.4 terabytes of compressed GPS data as of December 31, 2018. Such system is configured with over 100 alarm rules that trigger GPSnotification alarms when there is a strong indication of abnormal activities (for example, if a GPS tracking device has been switched off). If a GPS notificationalarm is triggered, we will immediately deploy the relevant service centers’ risk management personnel to follow up with the borrower according to our riskmanagement procedures and protocols. We have developed a standardized process to collect delinquent loans. Once a payment is past due, our service centers’ risk management personnelactively follow up with the borrower with phone calls during the first three days of delinquency. Upon being four days delinquent, a loan enters into ourcollection process, and the relevant provincial branch office’s risk management personnel will follow-up with the borrower in accordance with ourstandardized procedures and protocols and take automobiles into custody if needed, sometimes in collaboration with third-party collection service providers.Our post-loan risk management personnel are required to undertake, among others, (i) to strictly adhere to our standardized procedures and protocols tocollect delinquent loans, (ii) to speak in a well-mannered tone and act civil and polite toward the borrowers and avoid any conversations or interactions thatmay lead to heated arguments, (iii) to contact the borrowers at reasonable hours, and refrain from making constant collection calls or visits that may be seenas harassment, (iv) in the event of conflicts with borrowers, to take the initiative to contact the police, and (v) not to engage in any practice or take any actionduring loan collection in violation of any applicable laws or regulations. 71 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In a majority of cases, we are able to collect overdue payments by following up with borrowers by phone without taking automobiles into custody. Wedetermine whether and when to take automobiles into custody on a case-by-case basis after assessing a borrower’s ability and willingness to repay, defaultrisks as well as the feasibility and cost. We may take automobiles into custody when (i) a borrower or his emergency contact fail to answer or return phonecalls or have their phones switched off for an extended period of time, (ii) the GPS tracking devices attached to the borrower’s automobile could not bedetected for an extended period of time, or (iii) we determine that taking automobiles into custody is the only effective way to recover overdue payments. Ourrisk management personnel follow standardized procedures and protocols for taking automobiles into custody, and contact the borrower by phone, text-messages, emails or in-person visits and obtain his written consent before taking any automobile into custody (in addition to the explicit authorization theborrower has provided us in the loan agreement). Under certain circumstances, we also collect overdue payments through legal proceedings and courtjudgment and enforcement. Any amount recovered will be applied first to repay the defaulted principal, followed by payment to investor as to the defaultedinterest and late payment penalties before ultimately our collection expenses. In August 2018, regulatory authorities issued the Notice on Submitting Information of Borrowers Evading Overdue Loans on P2P Platform to focus onmonitoring overdue loans. We have provided a list of borrowers with overdue loans on our platform to relevant regulatory authorities pursuant to such notice.In August 2018, we and a number of other marketplace lending platforms formed a strategic alliance with China Justice Big Data Research Institute China’s judicial database designated by the Supreme People’s Court, with an aim to supervise and discipline borrower defaults. Our Investors and Investment Products We offer a variety of investment options to both online investors and institutional funding partners. We believe that our variety of investment productsthat offer attractive, risk-adjusted returns, as well as our effective risk management lead to strong word-of-mouth promotion, which drives awareness of ourbrand among investors. Our Online Investors Investor Profile and Demographics We accept investments primarily from online investors, which primarily include individual investors, as well as corporate investors. We have been able to rapidly grow our investor base and increase the average investment amount of online investors on our platform. The number ofactive online investors on our platform increased by 86.8% from 300,081 in 2016 to 560,658 in 2017, and further increased by 12.8% to 632,262 in 2018.According to information provided by individual investors when they register on our platform and an investor survey we conducted in December 2017 withover 2,000 individual investors: (i) 34% were born in the 1980s, 29% in the 1970s, 17% in the 1960s, (ii) 80% were married, and (iii) 82% were white-collarworkers and/or high-net-worth individuals. In 2016, 2017 and 2018, the average investment amounts of online investors were RMB153,404, RMB157,728and RMB97,361, respectively. We believe we have a loyal and well-engaged investor base. Investor Acquisition We attract online investors by conducting comprehensive marketing campaigns and promotional activities through our online sales channels, includingour mobile app, website and accounts on social media (such as WeChat and Weibo), and placing performance-based advertisements on our online channelpartners’ mobile apps and web portals where our target investors frequently visit. To increase the visibility of our brand and enhance investor confidence, weplace advertisements in subway stations and airports and hold investor meetings from time to time where members of our senior management team interactwith our investors and address their queries and concerns. We also offer cash rewards to existing online investors upon successful referral of new onlineinvestors under our investor referral program. Our investor acquisition efforts are primarily directed towards enhancing our brand name and building investortrust. 72 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We offer a number of incentives to encourage investor referrals and enhance the engagement and participation of online investors on our platform,including: ·Investor referral program. We have introduced an investor referral program offering daily cash rewards to an existing online investor uponsuccessful referral of each new online investor. ·New investor privileges. In order to incentivize online investors to make investments on our platform, we offer them cash coupons which canbe redeemed when purchasing our investment products. ·VIP investor loyalty program. We offer a range of special privileges to our VIP online investors, including higher investment returns, cashcoupons and designated investment consultants. VIP Investor Loyalty Program We have launched a VIP investor loyalty program with six VIP membership levels. An online investor’s VIP membership level is based on his latestbalance of investment made through our platform and the amount of funds in his account with us, which is adjusted in real time. Our VIP investor loyalty program offers investors various privileges based on their VIP membership levels, primarily including: ·Cash coupons. We offer cash coupons to investors which can be redeemed when purchasing our investment products; and ·Designated investment consultants. VIP investors are entitled to 24/7 complementary investment consulting services from their designatedinvestment consultants via phone calls, SMS and WeChat. Higher level investors generally receive more comprehensive investment consultingservices that are tailored to their investment objectives and risk profiles. As of December 31, 2018, we had approximately 70 designatedinvestment consultants. Investment Products and Services Offered to Online Investors We provide investment options that cater to the needs of both online investors who prefer to proactively manage their investments using our investingtools as well as those who want to rely on our investment programs to allocate and manage their investments. Loans listed on our platform are typicallysubscribed to within 12 hours. In 2016, 2017 and 2018, substantially all of the loans facilitated through our platform were funded by online investors. RMB48.0 billion, RMB95.4billion and RMB75.6 billion loans were funded by online investors in 2016, 2017 and 2018, respectively. Current annualized rate of return of our investment products to online investors generally ranges from 4.5% to 10.0% of the principal amount of theloans, which are higher than those offered by traditional investment channels such as bank deposits, bonds and wealth management products. We chargeonline investors service fees for facilitating their investments through our platform, which equal to a fixed percentage of the interests they receive fromborrowers. We also charge a one-time fee for online investors’ transfer of their investments on our secondary loan market. In both 2017 and 2018, the averagenet annualized rate of return to our online investors (after applying cash coupons) was 8.0%. Investment Tools Online investors can invest in individual loans on our platform using our self-discretionary investing tool and automated investing tool. The minimuminvestment amount for individual loans is RMB500. 73 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Self-Discretionary Investing Tool Our self-discretionary investing tool provides online investors with various filters that help them browse and directly subscribe to individual loans listedon our platform based on, among others, their tenure, principal amounts and interest rates. ·Automated Investing Tool Our automated investing tool is designed for online investors who prefer to invest according to their preset investment criteria, such as tenure andinterest rate, instead of browsing and subscribing to individual loans manually. Once an online investor invests a specified amount of funds through ourautomated investing tool, his funds are automatically allocated among individual loans meeting his preset investment criteria. Our automated investing toolautomatically reinvests online investors’ funds as soon as a loan is repaid, enabling online investors to accelerate the reinvestment of funds without having torevisit our mobile app or website. Investment Programs We offer investment programs that enable online investors to enjoy investment returns while minimizing the time needed to manage their investments.Upon subscription of the investment program, an online investor’s committed fund will be automatically invested by our system into individual loans on ourplatform. We currently offer two types of investment programs with different terms and estimated rates of return: Investment Programs Key Features Premier Investment Program · Minimum investment amount of RMB500. · Programs available in one, two, three, six, 12, 24 and 36 months, among which one-, three- and six-monthprograms are the most popular. · Investors subscribe into this program by specifying preset investment criteria for the underlying individualloans, such as investment amounts and loan, and investors’ funds are locked in their accounts upon suchsubscription. Funds will be invested when the desired amount of individual loans meeting the presetinvestment criteria become available and upon the online investors’ approval. · Principal and interest are collected at the end of the investing period. · Investors have the option to automatically subscribe to a new cycle of the investment program at the end ofeach investing period. X Investment Program · Minimum investment amount of RMB1,000. · Programs available in three, six, 12 and 24 months, among which three- and six-month programs are the mostpopular. · Underlying loans also include individual loans that have been transferred. · Investors subscribe into this program by specifying preset investment criteria for the underlying individualloans, such as investment amounts and investment returns, and investors’ funds are locked in their accountsupon such subscription. Funds will be invested when the desired amount of individual loans meeting thepreset investment criteria become available and upon the online investors’ approval. · If a loan is repaid within the investment period, principal and interest gained during the investment periodwill be automatically reinvested in other loans as soon as the loan is repaid. · Investors have the option to automatically subscribe to a new cycle of the investment program at the end ofeach investing period. 74 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In 2017, RMB55.9 billion and RMB10.0 billion were invested through our Premiere Investment Program and X Investment Program, respectively,representing 61.3% and 11.0% of funds invested through our platform during the period, respectively. In 2018, RMB27.5 billion and RMB28.4 billion wereinvested through our Premiere Investment Program and X Investment Program, respectively, representing 44.7% and 46.1% of funds invested through ourplatform during the period, respectively. Secondary Loan Market We have established a secondary loan market on our platform to provide more flexibility and liquidity to online investors. Except for the X InvestmentProgram, loans held by online investors for no less than 24 hours and with outstanding principal amount of no less than RMB500 may be transferred in oursecondary loan market. To facilitate loan transfer, our system automatically generates a proposed transfer price taking into consideration the outstandingprincipal amount and the remaining tenure of the loan. Such transfer prices are for online investors’ reference only and online investors may elect any otherprices that they think appropriate and post their offers on our secondary loan market. Online investors may withdraw the offers to transfer at any time beforesuch offers are accepted by transferees. Once an offer to transfer is accepted by a transferee, our system will automatically debit the transferee’s account andcredit the transferor’s account the transfer price, and the transferee will become the creditor of the transferred loan at the same time. In 2017 and 2018, most ofthe loan transfer on our secondary loan market are completed within the same day. We charge the transferor a one-time transfer fee up to 1% of the transferprice for each loan transferred on our secondary loan market. Institutional Funding Partners Beginning in 2017, we expanded our funding sources to include those provided by institutional funding partners. We have entered into cooperationagreements with a number of institutional funding partners all of whom were licensed financial institutions, including commercial banks such as ChinaEverbright Bank, a financial leasing company and a trust company, and Sichuan Xinwang Bank, an Internet bank. We refer qualified borrowers meeting ourinstitutional funding partners’ predetermined investment criteria to our institutional funding partners. Our institutional funding partners, after completingtheir internal risk management and loan approval procedures, will fund borrowers’ loans. In 2017 and 2018, RMB1.5 billion and RMB3.2 billion, or 1.5%and 4.1% of our total loan volume, was funded by institutional funding partners, respectively. Online Microcredit Company We, through a subsidiary of our variable interest entity, Fuzhou Online Microcredit, offered borrowers advances to meet their imminent financing needsbefore their loans were subscribed by investors. As of December 31, 2018, all the outstanding balance of advances extended to borrowers by Fuzhou OnlineMicrocredit had been settled. Our Financial Leasing Company In June 2018, we acquired Shanghai Zaohui Financial Lease Co., Ltd., which holds a financial leasing license. The acquisition of Shanghai ZaohuiFinancial Lease Co., Ltd. will allow us to provide funding to borrowers in the form of financial leasing. 75 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Investor Protection Online investors on our platform are exposed to default risks, and we are under no obligation to compensate online investors’ default losses, except thatwe provide guarantees for certain consumption loan products. However, in the event of borrower defaults, we have been voluntarily compensating onlineinvestors for their default losses by purchasing their delinquent loans. We are obligated to compensate a portion of our institutional funding partners for delinquent principal and interest payments in the event of borrowerdefaults. We cannot assure you that our collaboration with such institutional funding partners will not violate the Interim Measures or any other PRC lawsand regulations. See “Item 3. Key Information—D. Risk Factors — Risks Related to Our Business and Our Industry — Our cooperation with institutionalfunding partners exposes us to regulatory uncertainties faced by those partners, and we may be required to obtain government approval or license due to ourcooperating with those partners, which requirement will impose negative impacts on our business and results of operations.” We also provide guarantee to aportion of our corporate investors. We ceased to facilitate any new investment made by such corporate investors through our platform or provide guarantee tonew corporate investors starting from the fourth quarter of 2017. We are in ongoing discussions with third-party insurance companies, asset management companies and other financial institutions to provide alternativemeans of investor protection. In June 2018, we entered into a framework agreement with an insurance company to explore cooperation opportunities in thisarea. In July 2018, we entered into a collaboration agreement with a new institutional funding partner and an insurance company, under which we engagedthe insurance company to provide insurance coverage for the institutional funding partner’s default losses. As of the date of this annual report, we have notcollaborated with these insurance companies extensively pursuant to these agreements. Competition We face competition in auto-backed loan market in China. We compete directly with other auto-backed loan providers for both borrowers and investors,such as touna.cn and rrjc.com. As we focus on providing financial solutions to small and micro enterprise owners, we also compete with traditional financingchannels and other marketplace lending platforms which provide loans to small and micro enterprise owners. In addition, we compete with other marketplacelending platforms for investors. Some of our competitors may have significantly more financial, technical, marketing and other resources than we do. Ourcompetitors may also have more extensive borrower or investor bases, greater brand recognition and brand loyalty and broader partner relationships than us.We believe that our ability to compete effectively for borrowers and investors depends on many factors, including the variety of our products, user experienceon our platform, effectiveness of our risk management, the return offered to investors, our partnership with third parties, our sales and marketing efforts andthe strength and reputation of our brand. In addition, as our business continues to grow rapidly, we face significant competition for highly skilled personnel, including management, engineers,product managers and risk management personnel. The success of our growth strategy depends in part on our ability to retain existing personnel and addadditional highly skilled employees. Intellectual Property We rely on a combination of copyright, trademark and trade secret laws and confidentiality agreements and provisions to protect our intellectualproperty rights. We have registered more than thirty software copyrights in China. We have 19 registered domain names, including www.weidai.com.cn, fiveof which have each obtained a ICP license. As of December 31, 2018, we had registered more than thirty trademarks, including “weidai,” “”, “”and “”. Hangzhou Ruituo transferred the ownership of trademark “” to us in January 2019. We have also obtained the exclusive right to usetrademark “” from our affiliate Hangzhou Ruituo so long as it is valid. We are also applying for an invention patent for our proprietary GPS trackingsystem. 76 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. Monitoringunauthorized use of our technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of ourtechnology. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs anddiversion of our resources. In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of ourintellectual property rights. In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology or license theinfringed or similar technology on a timely basis, our business could be harmed. Even if we are able to license the infringed or similar technology, licensefees could be substantial and may adversely affect our results of operations. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business and Our Industry — We may not be able to prevent others fromunauthorized use of our intellectual property, which could harm our business and competitive position” and “— We may be subject to intellectual propertyinfringement claims, which may be expensive to defend and may disrupt our business and operations.” Seasonality We experience seasonality in our business, reflecting seasonal fluctuations in internet usage and small and micro business operation patterns, as ourborrowers typically use their borrowing proceeds to finance their business operation. Regulation This section sets forth a summary of the most significant laws, rules and regulations that affect our business activities in the PRC and our shareholders’rights to receive dividends and other distributions from us. Regulations on Online Lending Information Services Due to the relatively brief history of the marketplace lending industry in China, a comprehensive regulatory framework governing our industry has yet tobe established. Even though a number of specific regulations on online lending information services have been enacted in the past few years, detailedguidance and interpretation have yet to be promulgated by regulators. Regulations on Online Lending Information Intermediaries On July 18, 2015, the Guidelines on Promoting the Healthy Development of Online Finance Industry, or the Guidelines, were promulgated by ten PRCregulatory agencies, including the PBOC, the MIIT and the CBRC. The Guidelines define online peer-to-peer lending as direct loans between individualsthrough an online platform, which is under the supervision of the CBRC, and governed by the PRC Contract Law, the PRC General Principles of the CivilLaw, and related judicial interpretations promulgated by the Supreme People’s Court. Pursuant to the Guidelines, online lending information intermediariesshall specify online lending information services in their business scope, and avoid conducting any activities that may be deemed as illegal fund-raising. TheGuidelines further require online lending information intermediaries to separate their own capital from funds received from investors and borrowers throughtheir platforms. On April 13, 2016, the CBRC issued the Notice on the Implementation Plan of the Special Rectification of Peer-to-peer Online Lending Risk by theGeneral Office of the State Council. This notice categorizes market players of the peer-to-peer lending service industry based on their different compliancelevels. 77 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On August 17, 2016, the CBRC, the MIIT, the Ministry of Public Security and the State Internet Information Office, jointly issued the Interim Measureson Administration of Business Activities of Online Lending Information Intermediaries, or the Interim Measures. The Interim Measures are intended toregulate the business activities of online lending information intermediaries and define online lending information intermediaries as financial informationintermediaries. The Interim Measures require online lending information intermediaries to (i) make relevant record-filing with local financial regulatory authorities fortheir online lending information services; (ii) apply for relevant telecommunication service license after completion of the record-filing with local financialregulatory authorities; and (iii) specify online lending information services in its business scope. Pursuant to the Interim Measures, online lending information intermediaries shall not engage in certain activities, including, among others, (i) self-financing through online platforms directly or in a disguised form; (ii) setting up capital pools with investors’ funds, (iii) providing guarantees to investors asto the return of loan principal and interest, (iv) promoting financial services on physical premises, (v) extending loans, unless otherwise as stipulated by lawsand regulations; (vi) splitting the terms of loan products; (vii) offering wealth management products to raise funds or selling bank wealth managementproducts, asset management products from securities traders, funds, insurance, trust products or other financial products on a commission basis; (viii) carryingout business similar to asset-backed securities or transfer of creditors’ rights in the form of packaged assets, asset-backed securities, trust assets, and fundunits; (ix) engaging in equity crowdfunding; (x) engaging in any form of mixture, bundling or agency relationship with other institutions in investment, saleon a commission basis, brokerage business and other businesses, unless otherwise permitted by laws, regulations and relevant regulatory provisions on onlinelending information intermediaries; (xi) overstating the authenticity of financing projects and the prospect of profits, concealing the flaws and risks infinancing projects, publicizing or promoting in biased language or by other fraudulent means in a false and one-sided way, fabricating or spreading false orincomplete information to damage others’ business reputation, or misleading lenders or borrowers; (xii) providing information intermediary services for high-risk financing projects which uses funds to invest in the stock market, over-the-counter financial market, futures contracts, structured funds and otherderivative products; (xiii) engaging in equity-crowd-funding in equity; and (xiv) undertaking other activities prohibited by laws, regulations and regulatoryprovisions on online lending information intermediaries. In addition, the Interim Measures stipulate that online lending intermediaries are not allowed to operate businesses in offline physical locations otherthan, risk management and necessary business processes, such as, information collection and confirmation, post-loan tracking and pledge management.Furthermore, the Interim Measures require that the aggregate amount of loans extended to any individual must not exceed RMB200,000 through a singleonline lending information intermediary or RMB1 million in aggregate through all online lending information intermediaries in the PRC. Furthermore, theaggregate amount of loans extended to any entity must not exceed RMB1 million through a single online lending information intermediary or RMB5million in aggregate through all online lending information intermediaries in the PRC. Online lending information intermediaries established prior to the effectiveness of the Interim Measures have a transition period of 12 months to rectifyactivities that are not in compliance with the Interim Measures. For platforms that fail to make such rectification, sanctions could be imposed by the relevantregulatory authorities, including, among others, supervisory interviews, administrative warnings, administrative orders to make rectifications, taintedintegrity record, monetary penalties up to RMB30,000, and criminal liabilities if the act constitutes a criminal offense. On February 22, 2017, the CBRC issued the Guidelines on Online Lending Funds Custodian Business, or the Custodian Guidelines, which providedetailed requirements for setting up a custodian account with a qualified bank and depositing online lending funds. The Custodian Guidelines specify thateach online lending information intermediary may only enter into fund custodian agreement with one qualified commercial bank to provide custodianservices, and further clarifies detailed requirements and procedures for setting up custodian accounts with qualified commercial banks. Online lendinginformation intermediaries and commercial banks that conducted custodian services prior to the effectiveness of the Custodian Guidance have a six-monthgrace period to rectify activities that are not in compliance with the Custodian Guidance. 78 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On August 23, 2017, the CBRC issued the Guidelines on Information Disclosure of the Business Activities of Online Lending InformationIntermediaries, or the Disclosure Guidelines, which clarified disclosure requirements for online lending information intermediaries. Pursuant to the DisclosureGuidelines, online lending information intermediaries shall disclose certain information on their websites and other internet channels (such as mobile apps,WeChat official accounts or Weibo), which include, among others, (i) record-filing information, organization information, examination and verificationinformation, and transaction related information, including transactions matched through the online lending information intermediaries for the previousmonth; and (ii) basic information of borrowers and loan products, risk assessment of the loan products, and information of the outstanding transactions, all ofwhich shall be disclosed to investors. The Disclosure Guidelines further require that any event that would result in a material adverse effect to the operationsof online lending information services shall be disclosed to the public within 48 hours upon its occurrence. The Disclosure Guidelines require online lendinginformation intermediaries to record all disclosed information and retain such records for no less than five years from the date of the disclosure. Onlinelending information intermediaries that conducted online lending services prior to the effectiveness of the Disclosure Guidelines have a six-month graceperiod to rectify activities that are not in compliance with the Disclosure Guidelines. In December 2017, the Internet Finance Rectification Office and the Online Lending Rectification Office jointly issued the Notice on Regulating andRectifying “Cash Loan” Business, or Circular 141, which sets out the principles and requirements of  “cash loan” businesses conducted by online microcreditcompanies, financial institutions and online lending information intermediaries. Circular 141 does not define what constitutes “cash loans”; however, itspecifies certain features as loans as “cash loans”, such as, loans with no designated purpose and loans that lack selected customer base. Circular 141 imposesgeneral requirements with respect to “cash loan” business, which include, among others, (i) each funding provider of cash loans must have applicable licenseto conduct lending business; (ii) the loans must be priced fairly to ensure that the total borrowing cost does not exceed the limit of the private lendinginterest rate provided by the PRC Supreme People’s Court; (iii) each funding provider of cash loans shall follow the “know-your-customer” principle andprudentially assess and determine the eligibility and credit limit of borrowers, and loans to borrowers without income sources are prohibited; and (iv) eachfunding provider of cash loans shall enhance its internal risk control and prudentially use a “data-driven” risk management model. In August 2018, to provide further clarification on certain provisions in the Interim Measures, the Custodian Guidelines, the Disclosure Guidelines,Circular 141 and Circular 57, the Leading Group for the Rectification and Inspection Acceptance of Risk of Peer-to-Peer Online Lending Intermediariesissued the Notice on Launching Compliance Inspection on Peer-to-Peer Online Lending Information Intermediaries, or the Inspection Notice, and theCompliance Checklist for Online Lending Information Intermediaries as specified in the Inspection Notice, or the Checklist. The Inspection Notice requireseach online lending information intermediary to complete the following compliance inspections by the end of December 2018: self-inspection, inspectionconducted by local and national Internet Finance Association and verification conducted by the rectification office in charge of online lending. Thecompliance inspections will mainly focus on whether online lending information intermediaries (1) conduct any business other than as an informationintermediary, such as a credit intermediary; (2) form any capital pool or make any payment on behalf of users; (3) conduct any self-financing directly orindirectly; (4) provide any guarantee to lenders; (5) provide any “rigid payment” to lenders; (6) conduct risk evaluation of lenders and make hierarchymanagement of such lenders; (7) fully disclose borrowers’ credit risk related information to lenders; (8) strictly follow the small-amount and scattered mannerwhen participating in network-based lending; (9) raise funds by issuing financial products as wealth management products on their own or through theiraffiliates; and (10) attract borrowers or lenders by means of high profits or other methods. 79 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Inspection Notice requires each online lending information intermediary to conduct self-inspection and deliver a self-inspection report to thecompetent online lending rectification office, which will appoint a local internet finance association to conduct internet finance association inspection. Inaddition, on August 22, 2018, the National Internet Finance Association of China, or the NIFAC, issued the Circular on Conducting the Self-Discipline andInspection by the Peer-to-Peer Online Lending Information Intermediaries, or the Self-Discipline and Inspection Circular, which provides that the NIFAC willorganize the internet finance association inspection on members of the NIFAC. Members of the NIFAC, including us, shall accurately fill out and submit self-inspection and self-rectification reports according to the Self-inspection and Self-rectification Issue List regarding the Member of the Peer-to-Peer OnlineLending Information Intermediaries, or the Issue List, which is released by the NIFAC on August 29, 2018, to report the status of their systems and businessoperations to the NIFAC and its local counterparts no later than October 31, 2018. The Self-Discipline and Inspection Circular and the Issue List provide anumber of other clarifications on the internet finance association inspection, including, among others, that members of the NIFAC shall connect their systemsto the NIFAC Online Finance Inspection Platform and duly report statistics and information as required. The reports for the self-inspection and internetfinance association inspection shall be delivered to the provincial online lending rectification office, which will conduct ultimate verification. Based on theresults of the compliance inspections, systems of online lending information intermediaries that are in compliance with the applicable rules and regulationscan be integrated to industry-wide information disclosure systems and product registration systems. Upon completion of such integration, the online lendinginformation intermediaries will be able to submit filing applications pursuant to detailed standards and procedures for record-filings. However, it remainsunclear when the detailed standards and procedures for the system integrations and filing applications will be issued. We submitted our self-inspection report pursuant to the Inspection Notice and the Self-Discipline and Inspection Circular on September 14, 2018 and arein the process of completing subsequent inspections, among which the competent authority of Shangcheng District, Hangzhou, conducted administrativeonsite inspections on us in late October, 2018. To assist with the inspection process, the competent authority has set forth certain requirements for all onlinelending information intermediaries that are subject to such inspections, including providing complete, detailed and accurate information as to the contents ofthe self-inspection report, reporting realistic near-term plans and operational objectives, retaining documents and records, refraining from shutting downwebsites or mobile apps without prior authorization, refraining from making any changes to the company’s business address or major shareholders, andrequiring the company’s legal representative and controlling persons, as well as the company’s directors, executive officers and members of seniormanagement in supervisory roles, to devote their full support to and cooperate with the inspections, and that the company’s chairman and legalrepresentative must participate in person and onsite throughout the inspection process. We do not know, and there can be no assurance, as to how long theforegoing requirements will be imposed. We may also become subject to additional requirements throughout the inspection process. Furthermore, there canbe no assurance that our company ultimately will be successful in passing the inspections by the competent authority. In December 2018, Hangzhou Internet Finance Association published the Notice on Actively Cooperating with Risk Management Rectification onOnline Lending Information Intermediaries of Hangzhou, or the Cooperating Notice. The Cooperation Notice sets forth specific requirements onlineinformation intermediaries should adhere to, including, among others, (1) to ensure that their outstanding loan balance and number of borrowers do notincrease, and will gradually decrease as requested by competent authorities; (2) to gradually reduce the outstanding balance of non-compliant loan productsand eliminate such balance before June 2019; and (3) to stop establishing new branches. It has been reported since January 2019 that the Head Office for Special Rectification of Peer-to-Peer Online Lending and the Head Office for SpecialRectification of Online Finance Risk jointly issued Circular 175,. in which the regulatory authorities, for the first time, classified the online lendinginformation intermediaries into six categories: (i) marketplaces on which investors are not fully repaid, or are otherwise unable to operate their businesses andunder investigation of the public security department, (ii) marketplaces that are unable to operate their businesses but are not yet under investigation of thepublic security department, (iii) shell companies with no loan balance or loan origination for more than three months, and marketplaces that no longerfacilitate loan applications and investments, or are otherwise not in operation, (iv) small-scale marketplaces, (v) marketplaces with high risks, includingamong others, marketplaces that engage in self-financing or facilitate fraudulent loans, marketplaces with suspicious fund flows, marketplaces whoseproportion of overdue loan volume exceed 10% of the overall loan volume of the platform, marketplaces with extensive negative publicities and complaints,and marketplaces that refuse to or are reluctant to rectify non-compliant operations, and (vi) Normal Marketplaces. Pursuant to Circular 175, rectification ofonline lending institution shall be limited to institutions which have entered into to the Data Submission System of Online Security Centre, and anyinstitutions out of this scope shall be treated as illegal fund raising. We has entered into the Data Submission System of Online Security Centre. According toCircular 175, for the institutions in the Data Submission System of Online Security Centre, only Normal Marketplaces are allowed to continue to operate inthe marketplace lending industry. As of the date of this annual report, we have not received any notice that we have been classified as high-riskcharacteristics and we do not believe we would fall into categories (i) to (v) above. However, due to the un-clarification of Circular 175, there is a risk thatapplicable regulatory authorities interpret the regulations differently than we do. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to OurBusiness and Our Industry—If we cannot be classified as normal marketplace in accordance with Circular 175, we will be ordered to exit the marketplacelending industry, which will materially and adversely affect our operational and financial results.” 80 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Regulations on Record-filings of Online Lending Information Intermediaries In October 2016, the CBRC, the MIIT, and the SAIC, the predecessor of the State Administration of Market Regulation, jointly issued the Guidelines onthe Administration of Record-filings of Online Lending Information Intermediaries, or the Record-filings Guidelines, to establish and improve the record-filing mechanisms for online lending intermediaries. Pursuant to the Record-filings Guidelines, newly established online lending information intermediaries shall make the record-filings with the localfinancial authorities after obtaining their business licenses. For online lending intermediaries that were established prior to the effectiveness of the Record-filings Guidelines, the local financial regulatory authorities may accept the record-filings applications submitted by qualified online lending informationintermediaries, or online lending intermediaries that have received final clearance from the local financial authorities that their rectification measures weresufficient. On December 8, 2017, the Online Lending Rectification Office issued the Notice on the Rectification and Inspection Acceptance of Risk of OnlineLending Intermediaries, or Circular 57, which provides further clarification on several matters in connection with the rectification and record-filing of onlinelending information intermediaries, including, among other things: ·Requirements relating to risk reserve funds. The online lending information intermediaries shall cease obtaining risk reserve funds or settingup new risk reserve funds. In addition, the outstanding balance of risk reserve funds shall be gradually reduced. Online lending informationintermediaries are prohibited from promoting their risk reserve funds, and authorities shall encourage online lending information intermediariesto seek third parties to provide lenders with alternate means of investors protection, including third-party guarantee arrangements. ·Requirements to qualify for record-filing. Circular 57 sets forth certain requirements which an online lending intermediary prior to its therecord-filing application, including: (i) online lending intermediaries may not conduct the “thirteen prohibited actions” or exceed the limit foraggregate amount of loans borrowed by an individual after August 24, 2016, and shall gradually reduce the balance of loans that exceed suchlimit; (ii) online lending intermediaries that have offered real estate down payment loans, campus loans or “cash loans,” are required to suspendsuch loan products and the outstanding balance of the such loans shall be gradually reduced within a certain period as required under the Noticeon Further Strengthening the Regulation and Management Work of Campus Online Lending Business and Circular 141; and (iii) the onlinelending intermediaries are required to set up custodian accounts with commercial banks that have passed certain testing and evaluationprocedures, as required by the Online Lending Rectification Office, to hold customers’ funds. For the online lending intermediaries that areunable to received final clearance of their rectification measures and complete record-filings but continue to provide online lending informationservices, relevant authorities may impose administrative sanctions, including but not limited to, revoking their telecommunications businessoperation license, shutting down their business websites and requesting financial institutions not to provide any financial services to suchonline lending information intermediaries. ·Requirements relating to the timing of record-filing. Local governmental authorities shall conduct and complete final clearance inspection ofthe rectification measures in accordance with the following timetable: (i) for most of the online lending information intermediaries, record-filingwith the local authorities shall be completed by the end of April 2018; (ii) with respect to online lending information intermediaries withsubstantial outstanding balance of loans prohibited under relevant laws and regulations, and reduction of the outstanding balance of such loanson a timely basis will be difficult, such prohibited loans and outstanding balance shall be disposed and/or carved out, and record-filings withthe local authorities shall be completed by the end of May 2018; (iii) with respect to online lending information intermediaries with complexand extraordinary circumstances and substantial difficulties to rectify their businesses, the record-filings with the local authorities shall becompleted by the end of June 2018. 81 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Regulations on Loans and Intermediation The PRC Contract Law, which became effective in October 1999, requires that the interest rates charged under a loan agreement must not violateapplicable provisions of the PRC laws and regulations. In accordance with the Provisions on Several Issues Concerning Laws Applicable to Trials of Private Lending Cases issued by the Supreme People’sCourt on August 6, 2015, or the Private Lending Judicial Interpretations, which came into effect on September 1, 2015, in the event that loans are madethrough an online lending information intermediary platform that provides only intermediary services, courts shall dismiss any claim against the platform asguarantor for repayment of the loans. The Private Lending Judicial Interpretations also provide that agreements between lenders and borrowers on loans with interest rates below 24% perannum are valid and enforceable. With respect to the loans with interest rates between 24% and 36% per annum, if the interest on the loans has already beenpaid to the lender, and so long as such payment does not conflict with the interests of the state, the community and any third parties, the courts will dismissthe borrower’s request to demand the return of the interest payment above 24% per annum. If the annual interest rate of a private loan is higher than 36%, theagreement on the portion of the interest exceeding the maximum interest rate is invalid, and if the borrower requests the lender to return the part of interestexceeding 36% per annum that has been paid, the courts will support such requests. In addition, on August 4, 2017, the Supreme People’s Court issued theCertain Opinions Regarding Further Strengthening the Financial Judgment Work, which provides, among others, that (i) if the total amount of interest,compounded interest, default interest and other fees charged by a lender under a loan contract substantially exceeds the actual loss of such lender, the requestby the debtor under such loan contract to reduce or to adjust the part of the aforementioned fees exceeding the amount accrued at an annual rate of 24% willbe upheld; and (ii) in the context of Internet finance disputes, if the online lending information intermediaries and lenders circumvent the statutory limit ofthe interest rate by charging intermediary fees, such fees shall be deemed invalid. Pursuant to the PRC Contract Law, a creditor may assign its rights under an agreement to a third party, provided that the debtor is notified. Upon dueassignment of creditor’s rights, the assignee is entitled to the creditor’s rights and the debtor must perform the relevant obligations under the agreement forthe benefit of the assignee. The PRC Contract Law defines an intermediation contract as a contract whereby an intermediary presents to its client anopportunity for entering into a contract or provides the client with other intermediary services in connection with the conclusion of a contract, and the clientpays the intermediary service fees. Pursuant to the PRC Contract Law, an intermediary must provide true information relating to the proposed contract. If anintermediary conceals any material fact intentionally or provides false information in connection with the conclusion of the proposed contract, which resultsin harm to the client’s interests, the intermediary may not claim for service fees and shall be held liable for damages incurred by the client. Certain OpinionsRegarding Further Strengthening the Financial Judgment Work further specify that the relationship between an online lending intermediary and each otherparty of an online lending loan agreement shall be defined as an intermediary contractual relationship, and the intermediary service fees charged by an onlinelending intermediary to circumvent the statutory limit of the interest rate shall be invalid. Our services offered through our platform constitute intermediary service, and the agreements with borrowers and investors on our platform may bedeemed as intermediation contracts under the PRC Contract Law. Regulations on Illegal Fund-Raising The Measures for the Banning of Illegal Financial Institutions and Illegal Financial Business Operations, promulgated by the State Council in July 1998,and amended on January 2011, and the Notice on Relevant Issues Concerning the Penalty on Illegal Fund-Raising, issued by the General Office of the StateCouncil in July 2007, explicitly prohibit illegal public fund-raising. The main features of illegal public fund-raising include: (i) illegally soliciting andraising funds from the general public by means of issuing stocks, bonds, lotteries or other securities without obtaining the approval of relevant authorities,(ii) promising a return of interest or profits or investment returns in cash, properties or other forms within a specified period of time, and (iii) using a legitimateform to disguise the unlawful purpose. 82 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Supreme People’s Court promulgated the Judicial Interpretations to Issues Concerning Applications of Laws for Trial of Criminal Cases on IllegalFund-Raising, or the Illegal Fund-Raising Judicial Interpretations, which became effective in January 2011, to clarify the criminal charges and punishmentsregarding illegal public fund-raising. The Illegal Fund-Raising Judicial Interpretations provide that a public fund-raising will constitute a criminal offense of “illegally soliciting deposits from the public” under the PRC Criminal Law, if it meets all of the following criteria: (i) the fund-raising has not been approvedby relevant authorities or is concealed under the disguise of legitimate acts; (ii) the fund-raising employs general solicitation or advertising such as socialmedia, promotion meetings, leafleting and short messaging service advertising; (iii) the fundraiser promises to repay, after a specified period of time, thecapital and interests, or investment returns in cash, properties in kind or other payment forms; and (iv) the fund-raising targets the general public as opposedto specific individuals. An illegal fund-raising activity will be fined or prosecuted in the event that it constitutes a criminal offense. Pursuant to the IllegalFund-Raising Judicial Interpretations, an offender that is an entity will be subject to criminal liabilities, if it illegally solicits deposits from the general publicor illegally solicits deposits in disguised form (i) with the amount of deposits involved exceeding RMB1,000,000, (ii) with over 150 fund-raising targetsinvolved, or (iii) with the direct economic loss caused to fund-raising targets exceeding RMB500,000, or (iv) the illegal fund-raising activities have causedbaneful influences to the public or have led to other severe consequences. An individual offender is also subject to criminal liabilities but with lowerthresholds. The Measures for the Banning of Illegal Financial Institutions and Illegal Financial Business Operations also prohibits facilitating loans to thepublic without the approval of the PBOC. We act as a platform for borrowers and investors and are not a party to the loans facilitated through our platform. We rely on third-party paymentplatforms in handling funds transfer and settlement. We have entered into an agreement with Xiamen Bank, under which the bank provides custodian servicesfor funds of borrowers and investors through our platform. Regulations on Microcredit Companies Pursuant to the Guiding Opinions on the Pilot Operation of Microcredit Companies, which was jointly promulgated by the CBRC and the PBOC in May2008, if a provincial government determines a competent department to be responsible for the supervision and administration of microcredit companies andthe regulation of risks associated with microcredit companies, such provincial government may carry out the pilot operation of microcredit companies withinsuch province. Government authorities in Jiangxi Province, where Fuzhou Online Microcredit is incorporated, have issued a series of rules on theadministration of microcredit companies incorporated within Jiangxi Province. The Notice on Issuing Implementation Opinions on and Interim Measures of the Pilot Establishment of Microcredit Companies, issued by the JiangxiProvincial Government in February 2009, require (i) the source of funds of microcredit companies must be limited to the capital contributions paid byshareholders, donated capital, and capital borrowed from no more than two financial institutions, and such borrowed capital financial institutions shall notexceed 50% of the net capital; (ii) for 70% of the loans granted to borrowers, the aggregate amount of loans borrowed by any individual must not exceedRMB0.5 million, and for the remaining 30% of loans granted to borrowers, the aggregate amount of loans borrowed by any individual must not exceed 5% ofthe net capital of the microcredit company; and (iii) microcredit companies are permitted to conduct business only in the county where it is incorporated. In March 2012, Jiangxi Financial Service Office, the regulatory authority for microcredit companies in Jiangxi Province, promulgated Measures for theSupervision and Administration of Microcredit Companies in Jiangxi Province (Pilot Scheme), to impose the management duties upon the relevantregulatory authorities and to specify detailed requirements on the microcredit companies, which include, among others, (i) microcredit companies areprohibited from engaging in custodian services and illegal fund-raising; (ii) modification of certain company registration issues shall be subject to theapproval of relevant regulatory authorities; and (iii) microcredit company shall engage in the loan business in the place of registration and surroundingcounties within the corresponding municipality, and the loan balance for borrowers in the county of registration shall not be less than 60% of the loanbalance in aggregate. 83 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Jiangxi Financial Service Office, the regulatory authority for microcredit companies in Jiangxi Province, issued the Guidelines for the Supervision andAdministration of Online Microcredit Companies of Jiangxi Province (Pilot Scheme), or Jiangxi Online Microcredit Companies Guidelines, in September2016, to provide specific rules on the supervision and administration of online microcredit companies in Jiangxi Province, which include, among others, (i)apart from capital contributions paid by shareholders and capital borrowed from no more than two financial institutions, online microcredit companies mayalso raise funds through transferring credit asset and asset-backed securities with the approval from local regulatory authorities; (ii) online microcreditcompanies shall primarily conduct its microcredit loan business via online platform, and that the operation capital used in such business shall be no less than70% the total operating capital, and (ii) the aggregate loan balance within the municipality where such online microcredit company is incorporated shall beno less than 30% of the total loan balance. In November 2017, the Internet Finance Rectification Office issued the Notice on the Immediate Suspension of Approvals for the Establishment ofOnline Microcredit Companies, which requires all relevant regulatory authorities of microcredit companies to suspend the approval of the establishment ofany online microcredit companies and the approval of any microcredit business conducted across provinces. On December 1, 2017, the Internet Finance Rectification Office and the Online Lending Rectification Office jointly issued Circular 141, which requiresthe relevant regulatory authorities to suspend the approval of the establishment of online microcredit companies and the approval of any microcreditbusiness across provinces. Circular 141 also specifies that online microcredit companies shall not provide campus loans, shall suspend the funding of onlinemicro-loans with no specific scenario or no designated purpose, and gradually reduce the outstanding amount of such loans and take rectification measures. On December 8, 2017, the Notice on Specific Rectification Implementation Measures for Risk of Online Microcredit Businesses of MicrocreditCompanies, or Circular 56, which defines “online micro-loans” as micro-loans provided through the internet by online microcredit companies. The featuresof online micro-loans include online borrower acquisition, credit assessment based on the online information collected from business operation and internetconsumption, as well as loan application, approval and funding made through online procedures. Consistent with the Guidance on the Pilot Establishment of Microcredit Companies and the Circular 141, the Rectification Implementation Plans ofOnline Microcredit Companies emphasize several aspects where inspection and rectification measures must be carried out for the online micro-loans industry,which include, among others, (i) the online microcredit companies shall be approved by the local authorities in accordance with the applicable regulationspromulgated by the State Council, and the approved online microcredit companies in violation of any regulatory requirements shall be re-examined; (ii)qualification requirements to conduct online micro-loan business (including the qualification of shareholders, sources of borrowers, internet scenario and thedigital risk-management technology); (iii) whether the qualification and funding source of the shareholders of online microcredit companies are incompliance with the applicable laws and regulations; (iv) whether the online microcredit companies primarily fund loans with their own funds and whetherthe funding sources of online microcredit companies include online lending intermediaries; (v) whether the financing activities of online microcreditcompanies, including credit assets transfer and asset securitization, are in compliance with the applicable regulations; (vi) whether the “integrated realinterest” (namely the aggregated borrowing costs charged to borrowers in the form of interest and various fees) are annualized and subject to the limit oninterest rate of private lending set forth in the Private Lending Judicial Interpretations issued by the Supreme People’s Court and, whether any interest,handling fee, management fee or deposit are deducted from the principal of loans provided to the borrowers in advance; (vii) whether a relativelycomprehensive risk control system has been established and whether the loans are collected with violence; (viii) whether campus loans, or online micro-loanswith no specific scenario or designated purpose are granted; (ix) whether online microcredit companies cooperate with internet platforms without relevantwebsite registration or telecommunication business license to offer micro-loans and whether online microcredit companies cooperate with institutions withno lending qualification to offer loans or provide funds to such institutions for them to offer loans, and with respect to the loan business conducted incooperation with third-party institutions, whether the online microcredit companies outsource their core business (including the credit assessment and riskcontrol), or accept any credit enhancement services provided by any third-party institutions with no guarantee qualification; or whether any applicable third-party institution collects any interests or fees from the borrowers; (x) whether an online information security management system has been established andwhether online microcredit companies properly store client data and transaction information and protect client privacy; and (xi) whether entities that conductonline micro-loans business have obtained relevant approval or license for lending business. 84 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Rectification Implementation Plans of Online Microcredit Companies also sets forth that all related institutions shall be subject to inspection andinvestigation before the end of January 2018. Depending on the results, different measures will be taken before the end of March 2018, including: (i) forinstitutions that hold online microcredit licenses but do not meet the qualification requirements to conduct online micro-loan business, their onlinemicrocredit licenses shall be revoked and such institutions will be prohibited from conducting loan business outside the administrative jurisdiction of theirrespective approved authorities; (ii) for institutions holding online microcredit licenses that meet the qualification requirements to conduct online micro-loan business but were found not in compliance with other requirements, such as the requirements on the integrated actual interest rate, the scope of loans andcooperation with third-party institutions, such institutions shall take rectification measures within a certain period specified by the local authorities, and inthe event that the rectification measures do not meet the local authorities’ requirements, such institutions shall be subject to several sanctions, includingrevocation of their online microcredit licenses and to cease their business operations. Fuzhou Online Microcredit has obtained the approval to operate microcredit businesses as issued by the competent supervising authority, which allowsFuzhou Online Microcredit to conduct nationwide microcredit businesses through the Internet and other kinds of offline small credit business as indicated inthe approval to operate microcredit business. Regulations on Anti-money Laundering The PRC Anti-money Laundering Law, which became effective in January 2007, sets forth the principal anti-money laundering requirements applicableto financial institutions as well as non-financial institutions. Furthermore, the Guidelines, the Interim Measures and the Custodian Guidelines require onlinelending information intermediaries to comply with certain anti-money laundering requirements, including establishment of a customer identificationprogram, monitoring and reporting of suspicious transactions, preservation of customer information and transaction records, and provision of assistance to thepublic security department and judicial authority in investigations and proceedings in relation to anti-money laundering matters. Regulations on Guarantee In June 1995, the Standing Committee of the National People’s Congress, or the SCNPC, promulgated the PRC Guarantee Law, and in March 2007, theNational People’s Congress, or the NPC, promulgated the PRC Property Law, which took effective in October 2007. According to such applicable laws, amortgage refers to where a debtor or a third party, mortgages property to a creditor instead of transferring of the possession of such property, for guaranteeingpayment of debts. If the debtor defaults or if any condition for enforcement of creditor’s rights arises, the creditor shall have preemptive rights to the property.With respect to real estates used for mortgages, the mortgage shall be registered with the local regulatory authority and the mortgage shall come into effect asof the date of registration. With respect to vehicles used for mortgages, the mortgage shall come into effect as of the effective date of the mortgage contract,however, the creditor may not enforce his or her creditor’s right in such mortgage to any bone fide third party if the mortgage has not been registered with thelocal regulatory authority. Prior to the maturity of debt, a mortgagee shall not stipulate with the mortgagor that the ownership the mortgaged property will betransferred to a third party if the debtor defaults his or her payment. In cases where the debtor fails to pay the debts, the mortgagee may, by concluding anagreement with the mortgagor, convert the property under mortgage into market value or seek payments from auction or sale of the mortgaged property. Incases where an agreement has damaged the interests of any other third party, the third party may request the PRC court to discharge the agreement. In caseswhere the mortgagee and the mortgagor fail to agree on the method taken for determining the value of the mortgaged property, the mortgagee may request thePRC court to auction or sell the mortgaged property. 85 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, a debtor or a third party may pledge personal property to a creditor to be held in possession of the creditor, if the debtor defaults or if anycondition for enforcement of creditor’s rights arises, the creditor shall have preemptive rights to pledged personal property. A contract for pledge of propertygenerally includes the following: (i) the amount of the debt for the pledged property; (ii) the term for the debtor to repay his debts; (iii) the name, quantity,quality and conditions of the pledged property; (iv) the scope of the secured interest; and (v) the time for delivery of the pledged property. The interest of apledge is established upon delivery of the pledged property by the pledgor to the pledgee. Prior to maturity of debt, the pledgee shall not enter into anagreement with the pledgor to claim the pledgor’s ownership of the pledged property if the debtor defaults. In cases where the debtor repays the debts prior tomaturity of the debt, the pledgee shall return the pledged property to the pledgor. If the debtor defaults or if any condition for enforcement of pledgor’s rightsarises, the pledgee may enter into an agreement with the pledgor that the pledged property be converted into market value, or the pledgee may enjoypreemptive rights to the proceeds obtained from auction or sale of the pledged property. In cases where the pledgee fails to cooperate, the pledgor mayrequest the PRC court to auction or sell the mortgaged property. Regulations on Foreign Investment Investment activities in the PRC by foreign investors are governed by the Guidance Catalog of Industries for Foreign Investment, or the Catalog, whichwas promulgated and is amended from time to time by the MOC and the National Development and Reform Commission. The Catalog divides industries intothree categories in terms of foreign investment, which are “encouraged”, “restricted” and “prohibited”, and industries not listed under one of these categoriesare generally deemed to be permitted. Foreign investment in telecommunications companies in the PRC are governed by the Provisions for the Administration of Foreign-InvestedTelecommunications Enterprises, or the Foreign-Invested Telecommunications Enterprises Provisions, which was promulgated by the State Council onDecember 11, 2001, and amended on September 10, 2008 and February 6, 2016, respectively. The Foreign-Invested Telecommunications EnterprisesProvisions prohibit a foreign investor from holding over 50% of the total equity interest in any value-added telecommunications service business in China.In addition, the primary foreign investor in a foreign-invested value-added telecommunications enterprise in China must demonstrate a good track record andoperational experience of value-added telecommunications business. The Catalog (2017 Revision) and Circular of the Ministry of Industry and InformationTechnology on Liberalizing the Restrictions on Foreign Shareholding Percentages in Online Data Processing and Transaction Processing Business,promulgated by the MIIT in June 2015, or Circular 196, allow a foreign investor to hold more than 50% of the total equity interest in an e-commercebusiness. In addition, in June 2018, the Ministry of Commerce of the PRC, or the MOFCOM and the National Development and Reform Commissionpromulgated the Special Management Measures (Negative List) for the Access of Foreign Investment, or the Negative List, which became effective on July28, 2018, where foreign investment in value-added telecommunications services (except for e-commerce) falls within the Negative List. On March 15, 2019, the National People’s Congress promulgated the PRC Foreign Investment Law, which will take effect on January 1, 2020 andreplace the existing laws regulating foreign investment in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law andthe Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. The organization form, organization andactivities of foreign-invested enterprises shall be governed, among others, by the PRC Company Law and the PRC Partnership Enterprise Law. Foreign-invested enterprises established before the implementation of the Foreign Investment Law may retain the original business organization and so on within fiveyears after the implementation of this Law. The Foreign Investment Law is formulated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights andinterests of foreign investors. According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conductedby one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China,and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other similar rights and interests of anenterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investmentsin other means as provided by laws, administrative regulations, or the State Council. 86 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Pursuant to the Foreign Investment Law, the State Council will publish or approve to publish a catalogue for special administrative measures, or the“negative list.” Once an entity falls within the definition of foreign investment entity, it may be subject to foreign investment “restrictions” or “prohibitions”set forth in a “negative list” to be separately issued by the State Council later. If a foreign investment entity proposes to conduct business in an industrysubject to foreign investment “restrictions” in the “negative list,” it must go through a pre-approval process. Because the “negative list” has yet to bepublished, it is unclear whether it will differ from the Negative List. Among others, the state guarantees that foreign invested enterprises participate in the formulation of standards in an equal manner and that foreign-invested enterprises participate in government procurement activities through fair competition in accordance with the law. Further, the state shall notexpropriate any foreign investment except under special circumstances. In special circumstances, the state may levy or expropriate the investment of foreigninvestors in accordance with the law for the needs of the public interest. The expropriation and requisition shall be conducted in accordance with legalprocedures and timely and reasonable compensation shall be given. Regulations on Internet Companies Regulations on Value-Added Telecommunication Services The Telecommunications Regulations of the PRC, or the Telecommunications Regulations, promulgated by the State Council on September 25, 2000and amended on July 29, 2014 and February 6, 2016, respectively, sets forth a general framework for telecommunications services providers in the PRC.Pursuant to the Telecommunications Regulations, telecommunications services providers are required to obtain an operating license prior to thecommencement of their operations. The Telecommunications Regulations categorize various types of telecommunications services into basictelecommunication services and value-added telecommunications services. The Catalog of Telecommunications Business was issued as an attachment to theTelecommunications Regulations to categorize telecommunications services, which categorized information services provided via fixed network, mobilenetwork and Internet, and call center services, as value-added telecommunications services. In September 2000, the State Council issued the Administrative Measures on Internet Information Services, which was amended in January 2011.Pursuant to these measures, “internet information services” refer to provision of internet information to online users, and are divided into “commercialinternet information services” and “non-commercial internet information services.” A commercial internet information services operator must obtain a value-added telecommunications services license, or VATS license, for internet information services from the relevant government authorities before engaging inany commercial internet information services operations in China. In July 2017, the MIIT promulgated the Administrative Measures on Telecommunications Business Operating Licenses. Under these regulations, acommercial operator of value-added telecommunications services must first obtain a VATS license from the MIIT or its local branches and update the VATSlicense if there is any change to the shareholding structure of such commercial operator. In July 2006, the Ministry of Information Industry, the predecessor ofthe MIIT, issued the Circular on Strengthening the Administration of Foreign Investment in the Operation of Value-added Telecommunications Business,which prohibits holders of these services licenses from leasing, transferring or selling their licenses in any form, or providing any resource, sites or facilities,to any foreign investors intending to conduct such businesses in China. Prior to the issuance of the Interim Measures in August 2016, there was no clear or official regulation or guidance from the PRC government as towhether online lending information services was a type of value-added telecommunication services and whether its provider should be subject to value-added telecommunication regulations. The Interim Measures require that online lending information intermediaries must apply for applicabletelecommunication business licenses in accordance with the relevant provisions of telecommunications authorities after record-filing with a local financialregulatory authority. However, PRC telecommunication authorities have not explicitly stipulated which kind of telecommunications service license isrequired for online lending intermediaries (including in the form of a website or mobile app) engaged in telecommunication services. 87 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our platform, operated by Weidai Financial Information, has obtained a VATS license, for the operations of internet content service from the HangzhouAdministration of Telecommunications in August 2016, which will remain valid until August 2021, and a VATS license for the operations of our domesticcall center service from the MIIT in August 2017, which will remain valid until August 2022. As these VATS licenses do not reflect the latest shareholdingstructure of Weidai Financial Information, we plan to update these VATS licenses to address this issue. Furthermore, since we operate mobile apps to reach mobile device users, it is uncertain whether Weidai Financial Information and its subsidiaries will berequired to obtain a separate operating license in addition to the VATS License. Regulation on Mobile Internet Applications Information Services Administration of mobile internet application information services is strengthened through Regulations for Administration on Mobile InternetApplications Information Services, or the MIAIS Regulations, which was promulgated by the Cyberspace Administration of China, or the CAC, on June 28,2016 and became effective on August 1, 2016. The MIAIS Regulations were enacted to regulate mobile app information service providers. Pursuant to theMIAIS Regulations, the CAC and local offices of cyberspace administration shall be responsible for the supervision and administration of nationwide or localmobile app information, respectively. Under the MIAIS Regulations, mobile app information service providers are required to obtain relevant qualifications and are responsible for thesupervision and administration of mobile app information. Mobile app information service providers are required to strictly implement information securitymanagement responsibilities, including, but not limited to: (i) authenticate the identity of the registered users, (ii) protect user information and obtain users’consents for collecting and using their personal information in a lawful manner, (iii) establish information content audit and management mechanism, andprohibit any content in violation of laws or regulations, and (iv) record and keep users’ logged information for 60 days. Regulations on Internet Security Internet information in China is regulated and restricted from a national security standpoint. The SCNPC, has enacted the Decisions on MaintainingInternet Security on December 28, 2000, amended on August 27, 2009, which may subject violators to criminal punishment in China for any effort to: (i) gainimproper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread falsecommercial information; or (v) infringe intellectual property rights. In 1997, the Ministry of Public Security has promulgated measures that prohibit use ofthe internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content. If an internet informationservice provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down itswebsites. On November 7, 2016, the SCNPC promulgated the Network Security Law of the PRC, or the Network Security Law, which became effective on June 1,2017. The Network Security Law requires network operators, including online lending information intermediaries, to comply with laws and regulations andfulfill their obligations to safeguard security of the network when conducting business and providing services. The Network Security Law further requiresnetwork operators to take all necessary measures in accordance with applicable laws, regulations and compulsory national requirements to safeguard the safeand stable operation of the networks, respond to network security incidents effectively, prevent illegal and criminal activities, and maintain the integrity,confidentiality and usability of network data. Regulations on Privacy Protection In December 2011, the MIIT issued The Several Provisions on Regulating the Market Order of Internet Information Services, which provides that aninternet information service provider may not collect any user’s personal information or provide any such information to third parties without such user’sconsent. Pursuant to The Several Provisions on Regulating the Market Order of Internet Information Services, internet information service providers arerequired to, among others, (i) expressly inform the users of the method, content and purpose of the collection and processing of such users’ personalinformation and may only collect such information necessary for the provision of its services; and (ii) properly maintain the users’ personal information, andin case of any leak or possible leak of a user’s personal information, online lending service providers must take immediate remedial measures and, in severecircumstances, make an immediate report to the telecommunications regulatory authority. 88 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, pursuant to the Decision on Strengthening the Protection of Online Information, issued by the SCNPC in December 2012, and the Order forthe Protection of Telecommunication and Internet User Personal Information, issued by the MIIT in July 2013, any collection and use of any user personalinformation must be subject to the consent of the user, and abide to the applicable law, rationality and necessity of the business and fall within the specifiedpurposes, methods and scopes in the applicable law. Pursuant to the Ninth Amendment to the Criminal Law, issued by the SCNPC in August 2015, which became effective in November, 2015, any internetservice provider that fails to fulfill its obligations related to internet information security administration as required under applicable laws and refuses torectify upon orders, shall be subject to criminal penalty. In addition, Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate onSeveral Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Personal Information, issued on May 8, 2017and became effective on June 1, 2017, clarified certain standards for the conviction and sentencing of the criminals in relation to personal informationinfringement. In addition, the PRC General Provisions of the Civil Law, promulgated on March 15, 2017, which became effective on October 1, 2017, require personalinformation of individuals to be protected. Any organization or individual requiring personal information of others shall obtain such information legally andensure the security of such information, and shall not illegally collect, use, process, or transmit such personal information, or illegally buy, sell, provide, orpublish such personal information. Furthermore, the Interim Measures require online lending information intermediaries to reinforce the management of lenders’ and borrowers’ information,so as to ensure the legitimacy and security regarding the collection, processing and use of lenders’ and borrowers’ information. Also, online lendinginformation intermediaries are required to keep information of lenders and borrowers collected during the course of their business confidential, and areprohibited to use such information for any other purpose without approval of lenders or borrowers, other than for the services online lending informationintermediaries provide. While we have taken measures to protect the confidentiality of information that we have access to, our security measures could be breached. Anyaccidental or willful security breaches or other unauthorized access to our platform could cause confidential information of borrowers and investors to bestolen and used for criminal purposes. Any security breaches or unauthorized access to confidential information could also expose us to liability for loss ofinformation and negative publicity. Regulations on Foreign Exchange Regulations on Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, which was most recentlyamended in August 2008. Under the PRC Foreign Exchange Administration Regulations, Renminbi is freely convertible for payments of current accountitems, such as distribution of dividends, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencieswithout prior approval from SAFE. On the contrast, approval from or registration with appropriate government authorities is required where Renminbi is toconvert into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominatedloans, repatriation of investments and investments in securities outside of China. In November 2012, SAFE promulgated the Circular on Improving and Adjusting Foreign Exchange Administration Policies on Foreign DirectInvestment, or Circular on Improving and Adjusting Foreign Exchange Policies, which substantially amends and simplifies the foreign exchange procedure.Pursuant to Circular on Improving and Adjusting Foreign Exchange Policies, the opening of various foreign exchange accounts for designated purposes,such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds derived byforeign investors in the PRC, and remittance of foreign exchange profits and dividends by foreign-invested enterprises to their foreign shareholders, nolonger require approval or verification from SAFE, and the same entity may open multiple capital accounts in different provinces. In May 2013, SAFE alsopromulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by ForeignInvestors and the Supporting Documents, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors inthe PRC shall be conducted by way of registration and banks shall process foreign exchange business for direct investment in the PRC based on theregistration information provided by SAFE and its local branches. 89 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange ConcerningDirect Investment, or SAFE Notice 13, which became effective on June 1, 2015. Pursuant to SAFE Notice 13, instead of applying for approvals regardingforeign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals will be required to apply forsuch foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, will directly examine the applications andconduct the registration. On March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement ofForeign Invested Enterprises, or SAFE Circular 19. SAFE Circular 19 allows foreign-invested enterprises to make equity investments by using Renminbi fundconverted from foreign exchange capital. SAFE Circular 19 allows foreign-invested enterprises to settle their foreign exchange capital at banks based on theoperation needs of the enterprises upon the confirmation of rights and interests of capital contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks). The proportion of discretionary settlement of foreign exchange capital of foreign-investedenterprises is currently 100%. SAFE can adjust such proportion based on the international balance of payments. SAFE promulgated the Notice of the StateAdministration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFECircular 16, which became effective in June 2016. SAFE Circular 19 and SAFE Circular 16 prohibit foreign-invested enterprises from using Renminbi fundconverted from their foreign exchange capitals for expenditure beyond their business scopes, providing entrusted loans or repaying loans between non-financial enterprises. On January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance tofurther Promote Foreign Exchange Control, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance ofprofit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks must check board resolutions regarding profitdistribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities must hold income to account for previousyears’ losses before remitting the profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capitaland utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with anoutbound investment. Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents On July 4, 2014, SAFE issued the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment andFinancing and Round-trip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaced the former circular commonly known as “SAFECircular 75”. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirectcontrol of an offshore entity or entities for the purpose of seeking offshore investment or making offshore financing. SAFE Circular 37 refer to the PRCresidents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests as a “special purpose vehicle”. SAFE Circular 37further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decreaseof investment amount, share transfers or exchanges, mergers or divisions, or any other material event. In the event that a PRC shareholder holding interests ina special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of such special purpose vehicle may be prohibited from makingprofit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and such special purpose vehicle may berestricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registrationrequirements described above may result in liability under PRC law for evasion of foreign exchange controls. All beneficial owners of our ordinary shareswho we know are PRC residents, including Mr. Hong Yao, have completed the foreign exchange registrations in 2018 in accordance with SAFE Circular 37. 90 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SAFE Notice 13 has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branchesin connection with their establishment or control of an offshore entity established for the purpose of seeking offshore investment or making offshorefinancing. Regulations on Employee Share Incentive Plans of Overseas Publicly-Listed Company In February 2012, SAFE promulgated the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participation inShare Incentive Plan of Companies Listed Overseas, or the 2012 SAFE Notice. Under such notice and other relevant rules and regulations, PRC residents,including PRC citizens or non-PRC citizens who reside in China for a continuous period of not less than one year, that participate in any share incentive planof any overseas publicly-listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a shareincentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly listed company or anotherqualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the share incentive plan on behalfof the participants. We and our executive officers and other employees who are PRC residents that have been granted share incentive awards are now subjectto these regulations. Failure by these individuals to complete their SAFE registrations may subject such individuals and us to fines and other legal sanctions. The SAT has issued certain circulars concerning employee share incentive awards. Under these circulars, our employees working in China who exerciseshare incentive awards will be subject to PRC individual income tax. Our PRC subsidiary has the obligation to make filings related to employee shareincentive awards with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share incentive awards. If ouremployees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the taxauthorities or other PRC governmental authorities. Regulations on Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks and domain names. Copyright. The SCNPC adopted the PRC Copyright Law in September 1990 and amended it in October 2001 and February 2010, respectively.Copyright protection in the PRC, including copyright protection to software, is primarily regulated under the PRC Copyright Law and related rules andregulations. Under the PRC Copyright Law, the term of copyright protection for software is 50 years. Patent. The Patent Law of the PRC promulgated in December 2008 and which became effective in October 2009, or the Patent Law, protect patentableinventions, utility models and designs. Any invention or utility model for which patents may be granted must meet three conditions: novelty, inventivenessand practical applicability. The State Intellectual Property Office under the State Council is responsible for examining and approving patent applications.The term of a patent right is either 10 years or 20 years from the date of application, depending on the type of patent right. Trademark. The Trademark Law of the PRC promulgated in August 2013 which took effect in May 2014, or the Trademark Law, and itsimplementation rules protect registered trademarks. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registrations.The State Intellectual Property Office, formerly the Trademark Office under the SAIC is responsible for the registration and administration of trademarks andgrants a term of 10 years to registered trademarks and another 10 years if requested upon expiry of the initial or any renewed 10-year term. Trademark licenseagreements must be filed with the State Intellectual Property Office for record. 91 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Domain Name. Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the MIIT, whichbecame effective on November 1, 2017. The MIIT is the primary regulatory authority responsible for the administration of the PRC Internet domain names.The registration of domain names in PRC has adopted a “first-to-file” principle. A domain name applicant will become the domain name holder upon thecompletion of its application procedure. Our domain name weidai.com.cn has been registered. Regulations on Dividend Distribution Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from Weidai Co., Ltd., which is a whollyforeign-owned enterprise incorporated in China, to fund any cash and financing requirements we may have. The principal regulations governing distributionof dividends of foreign-invested enterprises include the Foreign-Invested Enterprise Law, issued in 1986 and amended in September 2016, and itsimplementation rules. Under these regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated after-tax profits,if any, which is determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises in China arerequired to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50%of the registered capital of the enterprises. Wholly foreign-owned enterprises may, at their discretion, allocate a portion of their after-tax profits based on PRCaccounting standards to staff welfare and bonus funds. These reserves are not distributable as cash dividends. Regulations on Employment Pursuant to the PRC Labor Law, promulgated by the NPC in July 1994 and revised in August 2009, and the PRC Labor Contract Law, promulgated byStanding Committee of the NPC in June 2007 and amended in December 2012, employers must execute written employment contracts with full-timeemployees. All employers must compensate their employees with wages equal to at least the local minimum wage. Violations of the PRC Labor Law and thePRC Labor Contract Law may result in the imposition of fines and other administrative sanctions, and serious violations may result in criminal liabilities. Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namelya pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and ahousing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of theemployees as specified by the local government from time to time at locations where they operate their businesses or where they are located. According to theSocial Insurance Law, an employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the requiredcontributions within a stipulated deadline and be subject to a late fee of up to 0.05% or 0.2% per day, as the case may be. If the employer still fails to rectifythe failure to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from one to three times the amountoverdue. In addition, the PRC Individual Income Tax Law requires companies operating in China to withhold individual income tax on employees’ salariesbased on the actual salary of each employee upon payment. We have not made adequate contributions to employee benefit plans, as required by applicablePRC laws and regulations. Regulations Relating to Tax Dividend Withholding Tax Pursuant to the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment inthe PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will besubject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the Arrangement between Mainland China and the Hong Kong SpecialAdministrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the withholding tax ratein respect of the payment of dividends by a PRC enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kongenterprise directly holds at least 25% of the PRC enterprise. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning theApplication of the Dividend Clauses of Tax Agreements, or Circular 81, a Hong Kong resident enterprise must meet the following conditions, among others,in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC residententerprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. In August 2015, the SATpromulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or Circular 60, which became effective onNovember 1, 2015. Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoythe reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that theprescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documentswhen performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. Accordingly, Weidai HK Limited, our HongKong subsidiary, may be able to enjoy the 5% withholding tax rate for the dividends it receives from our 92 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PRC subsidiary, if it satisfies the conditions prescribed under Circular 81 and other relevant tax rules and regulations. However, according to Circular 81and Circular 60, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable taxtreatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Enterprise Income Tax PRC enterprise income tax is calculated based on taxable income, which is determined under (i) the PRC Enterprise Income Tax Law, or the EIT Law,promulgated by the NPC and implemented in January 2008, and (ii) the implementation rules to the EIT Law promulgated by the State Council andimplemented in January 2008. The EIT Law imposes a uniform enterprise income tax rate of 25% on all resident enterprises in the PRC, including foreign-invested enterprises and domestic enterprises, unless they qualify for certain exceptions. In addition, according to the EIT Law, enterprises registered in countries or regions outside the PRC with “de facto management bodies” located withinChina may be considered as PRC resident enterprises and will be subject to PRC enterprise income tax at the rate of 25% on their worldwide income. Theimplementation rules of the EIT Law define “de facto management bodies” as establishments that exercise full and substantial control over and overallmanagement of the business, productions, personnel, accounts and properties of an enterprise. The only detailed guidance currently available for thedefinition of  “de facto management body” as well as the determination and administration of tax residency status of offshore-incorporated enterprises are setforth in the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis ofDe Facto Management Bodies issued by the SAT in April 2009, or Circular 82, and the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version) issued by the SAT in July 2011, or Bulletin No. 45, which provides guidance on theadministration as well as the determination of the tax residency status of a Chinese-controlled offshore-incorporated enterprise, defined as an enterprise that isincorporated under the law of a foreign country or territory and that has a PRC company or PRC corporate group as its primary controlling shareholder. According to Circular 82, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC resident enterprise by virtue of having its “defacto 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: ·the primary location of the day-to-day operational management and the places where they perform their duties are in the PRC; ·decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval of organizations or personnel inthe PRC; ·the enterprise’s primary assets, accounting books and records, company seals and board and shareholder resolutions are located or maintained inthe PRC; and ·50% or more of voting board members or senior executives habitually reside in the PRC. 93 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Bulletin No. 45 further clarifies certain issues related to the determination of tax resident status and competent tax authorities. It also specifies that whenprovided with a copy of Recognition of Residential Status from a resident Chinese-controlled offshore-incorporated enterprise, a payer does not need towithhold income tax when paying certain PRC-sourced income such as dividends, interest and royalties to such Chinese-controlled offshore-incorporatedenterprise. Income Tax for Share Transfers According to the Announcement of the SAT on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-ResidentEnterprises, or Circular 7, promulgated by the SAT in February 2015, if a non-resident enterprise transfers the equity interests of a PRC resident enterpriseindirectly through transfer of the equity interests of an offshore holding company (other than a purchase and sale of shares issued by a PRC resident enterprisethrough or in a public securities market) without a reasonable commercial purpose, the PRC tax authorities have the power to reassess the nature of the transaction and the indirect equity transfer will be treated as a direct transfer. As a result, the gain derived from such transfer, which means the equitytransfer price less the cost of equity, will be subject to PRC withholding tax at a rate of up to 10%. Under the terms of Circular 7, the transfer which meets allof the following circumstances shall be directly deemed as having no reasonable commercial purposes: (i) over 75% of the value of the equity interests of theoffshore holding company are directly or indirectly derived from PRC taxable properties; (ii) at any time during the year before the indirect transfer, over90% of the total properties of the offshore holding company are investments within PRC territory, or in the year before the indirect transfer, over 90% of theoffshore holding company’s revenue is directly or indirectly derived from PRC territory; (iii) the function performed and risks assumed by the offshoreholding company are insufficient to substantiate its corporate existence; and (iv) the foreign income tax imposed on the indirect transfer is lower than thePRC tax imposed on the direct transfer of the PRC taxable properties. In October, 2017, the SAT issued the Bulletin of SAT on Issues Concerning theWithholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which, among others, repeals certain rules stipulated in Circular 7. Bulletin 37further details and clarifies the tax withholding methods in respect of income of non-resident enterprises. PRC Value-Added Tax Pursuant to applicable PRC regulations promulgated by the Ministry of Finance of China and the SAT, entities or individuals conducting business in theservice industry are required to pay a valued-added tax, or VAT, at a rate of 6% with respect to revenues derived from the provision of online informationservices. A taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against the output VAT chargeable on the revenue from servicesprovided. C. Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and our principalvariable interest entities and their principal subsidiaries. 94 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (1) Shareholders of Weidai Financial Information include (i) Mr. Hong Yao, our founder, chairman and chief executive officer, who holds 73.3% of equityinterest in Weidai Financial Information (60.1% of which is directly held by him and 13.2% of which is held by Deqing Partnership, an entity wholly ownedby him and his wife), (ii) Zhejiang Hakim Unique Finance Service Co., Ltd., or Zhejiang Hakim, affiliate of Hakim Unique Technology Limited, who holds15.5% of equity interest in Weidai Financial Information, and (iii) seven affiliates of our minority shareholders, who in aggregate hold 11.2% of equityinterest in Weidai Financial Information. (2) Mr. Hong Yao, our founder, chairman and chief executive officer, holds 100% of equity interest in Yuntuo (86.8% of which is directly held by him and13.2% of which is held by Deqing Partnership, an entity wholly owned by him and his wife). We are a “controlled company” as defined under the NYSE Listed Company Manual because Mr. Hong Yao will beneficially own a majority of theaggregate voting power of our company as of the date of this annual report. 95 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Contractual Arrangements with Our Variable Interest Entities Due to PRC legal restrictions on foreign ownership and investment in value-added telecommunications services, and Internet content provision servicesin particular, we currently conduct our business through Weidai Financial Information and expect to conduct a portion of our business through Yuntuo,which we effectively control through a series of contractual arrangements respectively. These contractual arrangements allow us to exercise effective controlover Weidai Financial Information and Yuntuo, and receive substantially all of their economic benefits, and provide us an exclusive option to purchase all orpart of their equity interests when and to the extent permitted by PRC law. Contractual Arrangements with Weidai Financial Information The following is a summary of the currently effective contractual arrangements by and among Weidai Co., Ltd., Weidai Financial Information and theshareholders of Weidai Financial Information. Agreements that Provide Us with Effective Control over Weidai Financial Information Exclusive Call Option Agreement Weidai Co., Ltd., Weidai Financial Information and the shareholders of Weidai Financial Information entered into an exclusive call option agreement inApril 2018. Pursuant to the exclusive call option agreement, each of the shareholders of Weidai Financial Information irrevocably grants Weidai Co., Ltd. anexclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permitted under PRC law, all or part of theshareholders’ equity interests in Weidai Financial Information at the lowest price permitted by applicable PRC law. We currently have no plan to exercisethis exclusive call option to purchase Weidai Financial Information’s equity interest. We will consider all relevant factors, including our operational needsand the regulatory environment to decide whether and when to exercise this exclusive call option. As PRC laws continue to evolve, the “lowest price aspermitted by the PRC laws” can only be determined at the time of such purchase. However, the Exclusive Call Option Agreement provides that once theexclusive call option is exercised, the shareholders of Weidai Financial Information and/or Weidai Financial Information shall return the purchase price theyhave received to Weidai Co., Ltd. or its designated party. Therefore, the exercise of the exclusive call option is not expected to have any material impact onus. In addition, Weidai Financial Information grants Weidai Co., Ltd. an exclusive option to purchase, or have its designated person to purchase, at itsdiscretion, to the extent permitted under PRC law, all or part of Weidai Financial Information’s assets at the price of the net book value of such assets, or thelowest price permitted by applicable PRC law, whichever is higher. Without the prior written consent of Weidai Co., Ltd., Weidai Financial Information maynot increase or decrease the registered capital, dispose of its assets, enter into any material contract with a value exceeding a specific amount except for thoseexecuted in the ordinary course of business, appoint or remove any directors, distribute dividends to the shareholders, guarantee its continuance, amend itsarticles of association and provide any loans to any third parties. The shareholders of Weidai Financial Information agree that, without the prior writtenconsent of Weidai Co., Ltd., they will not transfer or otherwise dispose of their equity interests in Weidai Financial Information or create or allow anyencumbrance on the equity interests. The exclusive call option agreement will remain effective until all equity interests in Weidai Financial Information heldby its shareholders and all assets owned by Weidai Financial Information are transferred or assigned to Weidai Co., Ltd. or its designated representatives. Noconsideration was paid for the exclusive call option agreement. Share Pledge Agreements Weidai Co., Ltd., Weidai Financial Information and each of the shareholders of Weidai Financial Information has entered into a share pledge agreementin April 2018. Pursuant to the share pledge agreements, the shareholders of Weidai Financial Information has pledged all of their equity interests in WeidaiFinancial Information to Weidai Co., Ltd. to guarantee their and Weidai Financial Information’s performance of their obligations under the contractualarrangements, including, but not limited to, the exclusive business cooperation agreement, exclusive call option agreement and shareholders’ power ofattorney. If Weidai Financial Information or any of its shareholders breaches any obligations under these agreements, Weidai Co., Ltd., as pledgee, will beentitled to dispose of the pledged equity interests. The shareholders of Weidai Financial Information agree that, during the term of the share pledgeagreements, they will not dispose of the pledged equity interest, impose any encumbrance on the pledged equity interest without the prior written consent ofWeidai Co., Ltd., except for the performance of the exclusive call option agreement, and Weidai Financial Information will not take any action or allow anyaction which may adversely impact the pledged equity interest or the pledgee’s rights under the contractual arrangements. During the term of the sharepledge agreements, Weidai Co., Ltd. has the right to receive all of the dividends and profits distributed on the pledged equity interest. The share pledgeagreements will remain effective until Weidai Financial Information and its shareholders discharge all their obligations under the contractual arrangements.We have completed the registration of the equity interest pledges with the relevant office of the State Administration for Market Regulation, in accordancewith the PRC Property Rights Law. No consideration was paid for the share pledge agreements. 96 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Power of Attorney Through a power of attorney dated April 10, 2018, each of the shareholders of Weidai Financial Information irrevocably authorizes Weidai Co., Ltd. astheir attorney-in-fact to exercise all shareholder rights, including, but not limited to, attending shareholders’ meeting, voting on all matters of WeidaiFinancial Information requiring shareholder approval, appointing directors and senior management members, and disposing of all or part of the shareholder’sequity interests in Weidai Financial Information. The shareholders’ power of attorney will remain in force for an unlimited term, unless Weidai Co., Ltd.issues a contrary instruction in writing otherwise. Spouse Consent Letter Pursuant to the spouse consent letter dated April 10, 2018, Mr. Hong Yao’s wife confirmed that Mr. Hong Yao can perform the obligations under thecontractual arrangements and has sole discretion to amend and terminate the contractual arrangements. Mr. Hong Yao’s wife agreed that the equity interest inWeidai Financial Information held by and registered in the name of Mr. Hong Yao will be disposed of pursuant to the share pledge agreement, the exclusivecall option agreement and the power of attorney. In addition, in the event that Mr. Hong Yao’s wife obtains any equity interest in Weidai FinancialInformation held by her for any reason, she agreed to be bound by the contractual arrangements. Agreement that Allows Us to Receive Economic Benefits from Weidai Financial Information Exclusive Business Cooperation Agreement Weidai Co., Ltd., and Weidai Financial Information entered into an exclusive business cooperation agreement in April 2018. Under the exclusivebusiness cooperation agreement, Weidai Co., Ltd. has the exclusive right to provide Weidai Financial Information with business support, technical andconsulting services. In return, Weidai Co., Ltd. is entitled to receive a service fee from Weidai Financial Information on a monthly basis and at an amountequivalent to all of Weidai Financial Information ‘s net income as confirmed by and adjustable at the sole discretion of Weidai Co., Ltd. Weidai Co., Ltd.owns the exclusive intellectual property rights created as a result of the performance of this agreement. Except with Weidai Co., Ltd.’s prior written consent,Weidai Financial Information may not accept any consultation or services provided by any third party and may not cooperate with any third party regardingthe matters contemplated by the exclusive business cooperation agreement, unless it is a third party appointed by Weidai Co., Ltd. This agreement willremain effective unless terminated unilaterally by Weidai Co., Ltd. Financial Support Undertaking Letter with Weidai Ltd. Weidai Ltd. executed a financial support undertaking letter addressed to Weidai Financial Information, pursuant to which Weidai Ltd. irrevocablyundertakes to provide unlimited financial support to Weidai Financial Information to the extent permissible under the applicable PRC laws and regulations,regardless of whether Weidai Financial Information has incurred an operational loss. The form of financial support includes but is not limited to cash,entrusted loans and borrowings. Weidai Ltd. will not request repayment of any outstanding loans or borrowings from Weidai Financial Information if it or itsshareholders do not have sufficient funds or are unable to repay such loans or borrowings. The letter is effective until the earlier of  (i) the date on which all ofthe equity interests of Weidai Financial Information have been acquired by Weidai Ltd. or its designee, and (ii) the date on which Weidai Ltd. in its sole andabsolute discretion unilaterally terminates the applicable financial support undertaking letter. 97 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Contractual Arrangements with Yuntuo The following is a summary of the currently effective contractual arrangements by and among Weidai Co., Ltd., Yuntuo and the shareholders of Yuntuo. Agreements that Provide Us with Effective Control over Yuntuo Exclusive Call Option Agreement Weidai Co., Ltd., Yuntuo and the shareholders of Yuntuo entered into an exclusive call option agreement in January 2019. Pursuant to the exclusive calloption agreement, each of the shareholders of Yuntuo irrevocably grants Weidai Co., Ltd. an exclusive option to purchase, or have its designated person topurchase, at its discretion, to the extent permitted under PRC law, all or part of the shareholders’ equity interests in Yuntuo at the lowest price permitted byapplicable PRC law. We currently have no plan to exercise this exclusive call option to purchase Yuntuo’s equity interest. We will consider all relevantfactors, including our operational needs and the regulatory environment to decide whether and when to exercise this exclusive call option. As PRC lawscontinue to evolve, the “lowest price as permitted by the PRC laws” can only be determined at the time of such purchase. However, the Exclusive Call OptionAgreement provides that once the exclusive call option is exercised, the shareholders of Yuntuo and/or Yuntuo shall return the purchase price they havereceived to Weidai Co., Ltd. or its designated party. Therefore, the exercise of the exclusive call option is not expected to have any material impact on us. Inaddition, Yuntuo grants Weidai Co., Ltd. an exclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permittedunder PRC law, all or part of Yuntuo’s assets at the price of the net book value of such assets, or the lowest price permitted by applicable PRC law, whicheveris higher. Without the prior written consent of Weidai Co., Ltd., Yuntuo may not increase or decrease the registered capital, dispose of its assets, enter intoany material contract with a value exceeding a specific amount except for those executed in the ordinary course of business, appoint or remove any directors,distribute dividends to the shareholders, guarantee its continuance, amend its articles of association and provide any loans to any third parties. Theshareholders of Yuntuo agree that, without the prior written consent of Weidai Co., Ltd., they will not transfer or otherwise dispose of their equity interests inYuntuo or create or allow any encumbrance on the equity interests. The exclusive call option agreement will remain effective until all equity interests inYuntuo held by its shareholders and all assets owned by Yuntuo are transferred or assigned to Weidai Co., Ltd. or its designated representatives. Noconsideration was paid for the exclusive call option agreement. Share Pledge Agreements Weidai Co., Ltd., Yuntuo and each of the shareholders of Yuntuo has entered into a share pledge agreement in January 2019. Pursuant to the share pledgeagreements, the shareholders of Yuntuo has pledged all of their equity interests in Yuntuo to Weidai Co., Ltd. to guarantee their and Yuntuo’s performance oftheir obligations under the contractual arrangements, including, but not limited to, the exclusive business cooperation agreement, exclusive call optionagreement and shareholders’ power of attorney. If Yuntuo or any of its shareholders breaches any obligations under these agreements, Weidai Co., Ltd., aspledgee, will be entitled to dispose of the pledged equity interests. The shareholders of Yuntuo agree that, during the term of the share pledge agreements,they will not dispose of the pledged equity interest, impose any encumbrance on the pledged equity interest without the prior written consent of Weidai Co.,Ltd., except for the performance of the exclusive call option agreement, and Yuntuo will not take any action or allow any action which may adversely impactthe pledged equity interest or the pledgee’s rights under the contractual arrangements. During the term of the share pledge agreements, Weidai Co., Ltd. hasthe right to receive all of the dividends and profits distributed on the pledged equity interest. The share pledge agreements will remain effective until Yuntuoand its shareholders discharge all their obligations under the contractual arrangements. We have completed the registration of the equity interest pledges withthe relevant office of the State Administration for Market Regulation, in accordance with the PRC Property Rights Law. No consideration was paid for theshare pledge agreements. 98 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Power of Attorney Through a power of attorney dated January 2019, each of the shareholders of Yuntuo irrevocably authorizes Weidai Co., Ltd. as their attorney-in-fact toexercise all shareholder rights, including, but not limited to, attending shareholders’ meeting, voting on all matters of Yuntuo requiring shareholder approval,appointing directors and senior management members, and disposing of all or part of the shareholder’s equity interests in Yuntuo. The shareholders’ power ofattorney will remain in force for an unlimited term, unless Weidai Co., Ltd. issues a contrary instruction in writing otherwise. Spouse Consent Letter Pursuant to the spouse consent letter dated January 2019, Mr. Hong Yao’s wife confirmed that Mr. Hong Yao can perform the obligations under thecontractual arrangements and has sole discretion to amend and terminate the contractual arrangements. Mr. Hong Yao’s wife agreed that the equity interest inYuntuo held by and registered in the name of Mr. Hong Yao will be disposed of pursuant to the share pledge agreement, the exclusive call option agreementand the power of attorney. In addition, in the event that Mr. Hong Yao’s wife obtains any equity interest in Yuntuo held by her for any reason, she agreed tobe bound by the contractual arrangements. Agreement that Allows Us to Receive Economic Benefits from Yuntuo Exclusive Business Cooperation Agreement Weidai Co., Ltd., and Yuntuo entered into an exclusive business cooperation agreement in January 2019. Under the exclusive business cooperationagreement, Weidai Co., Ltd. has the exclusive right to provide Yuntuo with business support, technical and consulting services. In return, Weidai Co., Ltd. isentitled to receive a service fee from Yuntuo on a monthly basis and at an amount equivalent to all of Yuntuo ‘s net income as confirmed by and adjustable atthe sole discretion of Weidai Co., Ltd. Weidai Co., Ltd. owns the exclusive intellectual property rights created as a result of the performance of thisagreement. Except with Weidai Co., Ltd.’s prior written consent, Yuntuo may not accept any consultation or services provided by any third party and maynot cooperate with any third party regarding the matters contemplated by the exclusive business cooperation agreement, unless it is a third party appointedby Weidai Co., Ltd. This agreement will remain effective unless terminated unilaterally by Weidai Co., Ltd. In the opinion of CM Law Firm, our PRC counsel: ·the ownership structure of Weidai Financial Information and our wholly foreign owned subsidiary in China does not violate any applicablePRC laws or regulations currently in effect; and ·the ownership structure of Yuntuo and our wholly foreign owned subsidiary in China does not violate any applicable PRC laws or regulationscurrently in effect; ·the contractual arrangements among our wholly foreign owned subsidiary, Weidai Financial Information and the shareholders of WeidaiFinancial Information governed by PRC law are valid, binding and enforceable in accordance with their terms and applicable PRC laws orregulations currently in effect and do not and will not violate any applicable PRC laws or regulations currently in effect; and ·the contractual arrangements among our wholly foreign owned subsidiary, Yuntuo and the shareholders of Yuntuo governed by PRC law arevalid, binding and enforceable in accordance with their terms and applicable PRC laws or regulations currently in effect and do not and will notviolate any applicable PRC laws or regulations currently in effect. 99 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules.Accordingly, the PRC regulatory authorities may in the future take a view that is contrary to or otherwise different from the above opinion of our PRC legalcounsel. See “Item 3. – Key information – D. Risk Factors — Risks Related to Our Corporate Structure — If the PRC government deems that the contractualarrangements in relation to our variable interest entity do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or ifthese regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish ourinterests in those operations” and “ — Risks Related to Doing Business in China —  Uncertainties in the interpretation and enforcement of PRC laws andregulations could limit the legal protections available to us” for more details. D. Property, Plants and Equipment Our corporate headquarters is located in Hangzhou, Zhejiang Province where we leased office space with a floor area of approximately 19,000 squaremeters as of December 31, 2018. The lease for our corporate headquarters has a term of five years and will expire in 2022. As of the same date, we had alsoleased office space, parking lots and parking space with an aggregate floor area of over 220,900 square meters across China, with leases generally rangingfrom one to five years. Our servers are hosted at Internet data centers owned by major domestic Internet data center providers. We believe that we will be ableto obtain adequate facilities, principally through leasing, to accommodate our future expansion plans. ITEM 4A. UNRESOLVED STAFF COMMENTS None. ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our auditedconsolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See“Forward-Looking Statements” on page 1 of this annual report. In evaluating our business, you should carefully consider the information provided under thecaption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance aresubject to substantial risks and uncertainties. A. Operating Results Overview We are the largest auto-backed financing solution provider in China in terms of loan volume in each of 2015, 2016 and 2017, according to the OliverWyman Report. Our platform connects borrowers, the majority of which are small and micro enterprise owners, with both online investors and theinstitutional funding partners. We provide borrowers convenient and ready access to credit and a variety of loan products based on their specific financing needs and risk profiles.Since our inception in 2011, we have strategically focused on auto-backed loans with innovative “collateral registration + GPS system” features, which arespecifically designed to serve the credit needs of small and micro enterprise owners, and have since become the industry standard. In 2018, we facilitated andoriginated RMB78.8 billion (US$11.5 billion) loans through our platform, representing an 18.7% decrease from 2017. In 2017, we facilitated and originatedRMB96.9 billion loans through our platform, representing an 102.0% increase from 2016. In 2016, 2017 and 2018, 94.7%, 82.7% and 79.3% of the total loanvolume facilitated and originated through our platform were auto-backed loans, respectively. We also offer a number of other loans to meet the variedfinancial needs of our borrowers such as professional credit loans, construction machinery loans and consumption loans. We provide investors with attractive, risk-adjusted returns. We offer online investors a wide range of investment options, from individual loans of variedamounts, interest rates and payment terms to investment programs, and collaborate with institutional funding partners. The number of active online investorson our platform increased by 86.8% from 300,081 in 2016 to 560,658 in 2017, and further increased by 12.8% to 632,262 in 2018. 100 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We generate revenues primarily from fees charged to borrowers for our services in matching them with investors and for other services that we provideover the life of the loans. We also charge fees to online investors for facilitating their investments via our platform, and the transfer of their investments onour secondary loan market. We have experienced rapid growth in recent years. Our net revenues increased by 101.3% from RMB1,761.4 million in 2016 to RMB3,545.4 million in2017, and further increased by 10.4% to RMB3,913.5 million (US$569.2 million) in 2018. Our net income increased by 63.2% from RMB291.0 million in2016 to RMB474.8 million in 2017, and further increased by 27.3% to RMB604.6 million (US$87.9 million) in 2018 Our adjusted net income, net of taxes,increased by 60.3% from RMB315.3 million in 2016 to RMB505.4 million in 2017, and further increased by 36.9% to RMB691.7 million (US$100.6million) in 2018. Key Factors Affecting Our Results of Operations Major factors affecting our results of operations include the following: ·our ability to maintain and expand our borrower and investor base and attract sufficient investor commitments; ·the effectiveness of our risk management; ·our ability to integrate and expand our online and offline operations in a cost-effective manner; and ·regulatory environments and economic and market conditions in China. Our Ability to Maintain and Expand Our Borrower and Investor Base and Attract Sufficient Investor Commitments Our revenues are dependent on our ability to maintain and expand borrower and investor base and attract sufficient investor commitments. Maintainingand expanding our borrower and investor base and attract sufficient investor commitments efficiently will depend, in part, on the effectiveness of our salesand marketing efforts. We intend to enhance the efficiency of our sales and marketing efforts by utilizing our own online channels going forward to acquiremore borrowers and investors, including launching a wide range of marketing campaigns and initiatives through these channels to improve borrower andinvestor conversions. Amount of incentive payments to online investors will similarly affect the growth of our investor base and our results of operations. Our results of operations are also dependent on our ability to retain and increase the engagement and participation of existing borrowers and investors. In2018, 62.0% of borrowers of auto-backed loans through our platform were repeat borrowers. The extent to which we facilitate borrowings to repeat borrowersand investments to repeat online investors is an important factor in our future growth and results of operations. Our ability to attract sufficient investor commitments depends on a variety of factors. Changes in market conditions or decrease in investment returnsmay also result in investors seeking other investment options. If there are insufficient investor commitments, borrowers may not be able to obtain capitalthrough our platform and may turn to other sources for their borrowing needs, and the volume of loans we facilitate may be significantly impacted. As wecontinue to expand our investor base to include an increasing number of smaller investors, the number of active online investors on our platform increasedfrom 560,658 in 2017 to 632,262 in 2018, while the average investment amount of online investors decreased from RMB157,728 in 2017 to RMB97,361 in2018. As a result, the total investment amounts of online investors decreased from RMB88.4 billion in 2017 to RMB61.6 billion (US$9.0 billion) in 2018. 101 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our ability to attract new borrowers and investors and retain existing ones also depends on our efforts to continuously enhance and optimize productsand services we offer, our fee rates, as well as user experience on our platform in a changing market environment. Changes in our product mix and the launchof new products with different fee rates will affect our results of operations and profitability. The Effectiveness of Our Risk Management Our ability to accurately determine loan applicants’ creditworthiness and appraise the value of automobiles used as loan collaterals affects our ability tofacilitate loans to borrowers as well as our ability to offer attractive, risk-adjusted returns to investors, both of which directly relate to the level of userconfidence in our platform. As of December 31, 2018, the M3+ delinquency rate by vintage for loans we facilitated in 2015, 2016 and 2017 (excluding theloan products we have discontinued prior to the date of this annual report) remained at a level between 0.5% and 0.7%. We have been voluntarily compensating online investors for their default losses by purchasing their delinquent loans. We provide guarantees for certainof our consumption loan products. We have been obligated to compensate a portion of our institutional funding partners and corporate investors for theirdefault losses. We therefore record a provision for the potential losses of these acquired delinquent loans and loans we originate, which is periodicallyadjusted based on past loan loss history, known and inherent risks in the loan portfolio, adverse situations that may affect the borrowers’ ability to repay,composition of the loan portfolio and other factors. We recognize any increase in this allowance as provision for loans and advances for the relevant period.As such, any increase in the delinquency rates of loans we acquired or originated will adversely affect our results of operations. Our Ability to Integrate and Expand Our Online and Offline Operations in a Cost-Effective Manner Our omni-channel operational capability and the seamless integration between our online and offline operations have contributed to the growth of ourborrower base and the number of transactions on our platform, effectively differentiating us from our competitors. Such approach has enabled a fast, highly-automated loan application process and enhanced our ability to manage outstanding loans efficiently and prevent delinquency. Our continued ability to efficiently operate, expand and further integrate our online and offline operations in a cost-efficient manner will affect ourborrower base, financial performance and profitability. We plan to continuously improve our online and offline integration to further enable a fast and highlystreamlined transaction process and superior user experience. We may selectively expand the geographic coverage of our service center network to coveradditional cities or strengthen our positioning in existing markets. Regulatory Environments and Economic and Market Conditions in China The regulatory environment for the marketplace lending industry in China is developing and evolving, creating both challenges and opportunities thatcould affect our financial performance. Since mid-2015, multiple PRC governmental authorities have promulgated various laws, regulations and rules toregulate the marketplace lending industry in China, imposing, among others, restrictions on the facilitation of  “cash loans”, the maximum amount of loansthat can be extended to each individual and entity borrower, as well as the maximum interest rates and fees permitted to be charged on loans facilitated bymarketplace lending platforms, or the upper limits for APRs. The growth in the popularity of the marketplace lending industry increases the likelihood thatthe PRC government will seek to further regulate this industry, and we may need to invest significant financial and other resources to comply with evolvinglaws, regulations and rules. However, while new laws and regulations, changes to existing laws and regulations or regulatory uncertainties could imposechallenges on our future growth, including the growth of our loan balance and loan volume, they could also provide new market opportunities. The demand for our platform is dependent upon the overall economic conditions in China. General economic factors, including the interest rateenvironment and unemployment rates, may affect borrowers’ willingness to seek loans and investors’ ability and desire to invest in loans. As we primarilytarget small and micro enterprise owners, our future growth also depends on small and micro enterprise owners’ overall demand on financing products and thecompetitive landscape in China’s small and micro enterprise financing market. Our business may be adversely affected if small and micro enterprise owners’financing needs fluctuate or if our competitors introduce financing products that more effectively address their financing needs. 102 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Loan Performance Data Delinquency Rates by Balance We define delinquency rate as the loan principal and interest that was 1 to 30, 31 to 60, 61 to 90 and over 90 calendar days past due as a percentage ofthe total outstanding principal balance of loans on our platform as of a specific date. The following table sets forth the delinquency rates for all outstandingloans as of December 31, 2016, 2017 and 2018 (excluding (i) loans that were charged off, which totaled RMB96.1 million, RMB164.2 million andRMB415.8 million (US$60.5 million) in 2016, 2017 and 2018, respectively, and (ii) loan products that were discontinued prior to the date of this annualreport, including home equity loans, certain types of consumption loans and unsecured auto-financing loans offered to those who have taken out auto-financing loans from certain commercial banks, the balance of which was RMB1.2 billion, RMB2.0 billion and RMB36.5 million (US$5.3 million) as ofDecember 31, 2016, 2017 and 2018, respectively; in 2017 and 2018, these discontinued loan products contributed 8.1% and 1.9% of our revenues,respectively): Delinquent for 1-30 days 31-60 days 61-90 days Over 90 days Total As of December 31, 2016 0.71% 0.53% 0.42% 0.96% 2.62%As of December 31, 2017 0.45% 0.27% 0.23% 1.56% 2.51%As of December 31, 2018 0.85% 0.62% 0.65% 2.45% 4.57% The following table sets forth the delinquency rates for all outstanding loans as of December 31, 2016, 2017 and 2018 (including loan products that werediscontinued prior to the date of this annual report): Delinquent for 1-30 days 31-60 days 61-90 days Over 90 days Total As of December 31, 2016 0.63% 0.47% 0.37% 0.85% 2.32%As of December 31, 2017 0.83% 0.49% 0.28% 1.49% 3.09%As of December 31, 2018 0.94% 0.83% 0.86% 3.83% 6.45% Delinquency Rates by Vintage We focus on repayment performance of loans for which any payment of principal or interest was more than 90 calendar days (“M3+”) past due. Weclosely monitor the credit performance measured by the M3+ Delinquency Rates by Vintage, which track the lifetime performance of the loans facilitated ororiginated in a certain vintage. M3+ Delinquency Rates by Vintage We define “M3+ Delinquency Rate by Vintage” as the total balance of outstanding principal of a vintage for whichany payment of principal or interest is over 90 calendar days past due as of a particular date (adjusted to reflect total amount of past due payments forprincipal and interest that have been subsequently collected), divided by the total initial principal in such vintage. Loan products that have beendiscontinued prior to the date of this annual report (including home equity loans, certain types of consumption loans and unsecured auto-financing loansoffered to those who have taken out auto-financing loans from certain commercial banks) are not included in the calculation of M3+ Delinquency Rate byVintage. 103 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Critical Accounting Policies, Judgments and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements as of and forthe years ended December 31, 2016, 2017 and 2018, which have been prepared in accordance with U.S. GAAP. Our management is required to makeestimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The application of our accounting policies is impacted significantly by judgments, assumptions and estimates used in the preparation of ourconsolidated financial statements, and actual results could differ materially from these estimates. For further information on our significant accountingpolicies, see note 2 to our consolidated financial statements included elsewhere in this annual report. We consider the policies discussed below to be criticalto an understanding of our financial statements as their application places the most significant demands on the judgment of our management. Revenue Recognition We operate an online platform which matches borrowers with investors. Our platform enables investors to directly invest in individual loans or subscribeto our investment programs which provide them with pre-specified investment returns while minimizing the time needed to manage their investments. Foreach successful loan facilitation, we earn a loan facilitation fee and a recurring service fee for post facilitation services, including provision of GPSautomobile tracking services, collection services and sending payment reminder SMSs to borrowers, throughout the term of the loans. Borrowers makerepayments through us, and we will then remit the requisite returns to investors on a periodic basis. Our arrangements with investors can be broadlycategorized into three types of arrangements. In the first type of arrangement, we may advance funds to borrowers while the loan is being listed on our online platform for online investors to subscribeto. However, we do not provide a guarantee to these investors and are not the legal title holder of the underlying collateral. We determined that we are not thelegal lender and legal borrower in the loan origination and repayment process, respectively, because when the loan is fully subscribed by investors, investors’funds will be used to settle the advance made by us to borrowers. Therefore, we do not record loan receivables and payables arising from the loans betweenborrowers and investors on our consolidated balance sheets. In the second type of arrangement, we do not advance funds to borrowers prior to a loan subscribed by the institutional funding partners and onlineinvestors. Furthermore, we may provide a guarantee to the institutional funding partners and online investors which guarantees the contractual payments ofthe loan when borrowers default. We determined that we are not the legal lender and legal borrower in the loan origination and repayment process,respectively. Therefore, we do not record loan receivables and payables arising from the loans between borrowers and the institutional funding partners andonline investors on our consolidated balance sheets. 104 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In the third type of arrangement, we advance funds to borrowers prior to a loan is subscribed by the investors, and provide a guarantee which guaranteesthe contractual payments of the loan in the event of borrowers default. As the transaction does not represent a transfer of an entire financial asset or aparticipating interest and is not legally isolated from us, the arrangement is accounted for as loan origination by us and a secured borrowing in accordancewith ASC 860, Transfers and Servicing. We also generate revenue from other contingent fees, such as late payment penalties and loan collection fees. Multiple Element Revenue Recognition In accordance with ASC 605, Revenue recognition, or ASC 605, for arrangements we do not originate loans to borrowers, we recognize loan facilitationservices and post facilitation services when the following four revenue recognition criteria are met: (i)Persuasive evidence of an arrangement exists; (ii)Services have been provided; (iii)The fee is fixed and determinable; and (iv)Collectability is reasonably assured.The two deliverables provided by us are loan facilitation and post facilitation services. We consider the loan facilitation services and the post facilitation services as a multiple element revenue arrangement. We do not have vendor specific objective evidence (“VSOE”) of selling price for the loan facilitationservices or post facilitation services because we do not provide loan facilitation services or post facilitation services on a standalone basis. There is also nothird-party evidence of the prices charged by third-party service providers when such services are sold separately. As a result, we use our best estimate ofselling prices of loan facilitation services and post facilitation services as the basis of revenue allocation. The fee allocated to loan facilitation is recognized as revenue upon each successful loan facilitation, while the fee allocated to post facilitation servicesare deferred and amortized over the period of the loan on a straight line method as the post facilitation services are performed. In instances where the fee is notcollected entirely upfront, the amount allocated to the delivered loan facilitation services is limited to the amount that is not contingent on the delivery ofthe undelivered post facilitation services and the borrower’s timely installment repayment in accordance with ASC 605-25. The remaining loan facilitationservice income is recorded when the contingency is resolved which is when we receive cash from borrowers. The loan facilitation services and postfacilitation services fees are recorded as revenues in our consolidated statements of comprehensive income. For certain arrangements, we provide an additional deliverable in the form of guarantee to institutional funding partners and online investors, whichrequires us to make either delinquent installment repayments and/or purchase the loans after a specified period on an individual loan basis. In accordancewith ASC 605-25-30-4, we first allocate the consideration to the guarantee equaling to the fair value of the guarantee. The remaining consideration is thenallocated to loan facilitation services and post facilitation services. Customer Incentives For certain transactions with investors, we, at our sole discretion, may provide various incentives to investors when a loan is successfully matched duringthe relevant incentive program period. The cash incentive from us is either provided upfront or on a monthly basis over the term of the loan as additionalinterest. For arrangements where we do not originate loans to borrowers, these cash incentives are accounted for as reduction of revenue in accordance with ASC605-50. Cash incentives accounted for as reduction of revenue amounted to RMB52.4 million, RMB65.9 million and RMB268.8 million (US$39.1 million)in 2016, 2017 and 2018, respectively. For arrangements where we originate loans to the borrowers and related loan payables to investors are recorded on thebalance sheet, cash incentives paid upfront will reduce loan payables to investors and loan payables are effectively issued at a discount. If cash incentives arepaid to investors over the loan period, the cash incentives are included as repayment to investors for the loan and considered in the effective interest rate ofthe loan payable to investors. Cash incentives accounted for as reduction of loan payables amounted to RMB7 thousand, RMB7.5 million and RMB10.7million (US$1.6 million) in 2016, 2017 and 2018, respectively. 105 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net Financing Income We earn interest income arising from loans originated by us. We record interest income net of funding costs (i.e. interest paid to investors) over the life ofthe underlying loan principal using the effective interest method on unpaid principal amounts in accordance with ASC 310, Receivables. Customerincentives provided to certain investors are recorded as a reduction in loans receivable using the effective interest method. Other Revenues We also receive various services fees which are contingent on future events, such as borrower late payment penalties, loan collection fees, and netrevenues from sale of collateral. These contingent fees are not recognized until the contingencies are resolved and the fees become fixed and determined,which also coincide with when the services are performed and collectability is reasonably assured. These fees are classified within other revenues in ourconsolidated statements of comprehensive income. Other revenues consist of: Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands) Late payment penalties and loan collection fees 158,154 218,675 113,313 16,481 Others 46,799 86,362 76,399 11,111 Total 204,953 305,037 189,712 27,592 Revenue through Service Center Operation Partners We collaborate with service center operation partners for the operation of partner-operated service centers under a revenue sharing model. We are actingas the primary obligor in the arrangement in accordance with ASC 605-45 and recognize revenue on a gross basis when all the revenue recognition criteria setforth in ASC 605 are met. Pursuant to the one-year cooperation agreements with the service center operation partners, we record all of each partner-operatedservice center’s loan facilitation service fee and post facilitation service fee as revenue, and subsequently pay the service center operation partners anagreed percentage of such amounts as the partner-operated service center’s operating costs and expenses, which are recorded as origination and servicingexpenses. If loans facilitated by the partner-operated service centers become delinquent and are subsequently purchased by us, the relevant service centeroperation partners are obligated to compensate us for an agreed percentage of the purchase price of the delinquent loans. VAT, Business Related Tax and Surcharges We are subject to VAT at the rate of 17%, 6% or 3%, depending on whether the entity is a general taxpayer or small-scale taxpayer, and relatedsurcharges on revenue are generated from providing services. The Notice of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates, or theNotice, was promulgated on April 4, 2018 and came into effect on May 1, 2018. According to the Notice, the VAT tax rate of 17% and 11% were changedinto 16% and 10%, respectively. 106 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. VAT is reported as a deduction to revenue when incurred, and amounted to RMB119.0 million, RMB268.0 million and RMB330.1 million (US$48.0million) in 2016, 2017 and 2018, respectively. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers againsttheir output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in accrued expenses and other liabilities on our consolidatedbalance sheets. We are also subject to certain government surcharges on the VAT payable in the PRC. In our consolidated statements of comprehensive income, thesesurcharges are included in business related tax and surcharges, which are deducted from gross revenues to arrive at net revenues. Deferred Revenue Deferred revenue mainly consists of post facilitation service fees which are non-contingent service fees collected at the inception of the loan, anddeferred and amortized over the period of the loan. Loans and Advances, Net Loans and advances represent payments due from borrowers. Loans and advances are recorded at amortized cost (i.e. unpaid principal and deferredorigination costs), net of allowance for loans and advances. Deferred origination costs are netted against net financing income and amortized over thefinancing term using the effective interest method. We do not accrue interest income on loan principals that are considered impaired or past due. A corresponding allowance is determined under ASC 450-20 and allocated accordingly. After an impaired loan has been placed on nonaccrual status, interest receivable will be recognized when cash is received byapplying first to reduce loan principal and then to interest income thereafter. Interest income accrued but not received is generally reversed against interestincome. Interest receivables may be returned to accrual status after all of the borrower’s delinquent balances of loan principal and interest have been settledand the borrower remains current for an appropriate period. Allowance for Loans and Advances We segregate loans into secured and unsecured, and then into various portfolios, such as automobile and home equity, and apply our credit riskmanagement framework to the various portfolio of loans in accordance with ASC 450-20, Loss Contingencies. The allowance for loans and advances is calculated based on historical loss experience using a roll rate-based model. The roll rate-based model stratifiesthe loan principal and interest receivables by delinquency stages (i.e., current, 1 – 30 days past due, and 31 – 60 days past due etc.) and projected forward inone-month increments using historical roll rates. In each month of the simulation, losses on the loans and advances types are captured, and the endingdelinquency stratification serves as the beginning point of the next iteration. This process is repeated on a monthly rolling basis. The loss rate calculated foreach delinquency stage is then applied to the respective loans and advances balance. We adjust the allowance that is determined by the roll rate-based modelfor various Chinese macroeconomic factors, including gross-domestic product rates, per capita disposable income, interest rates and consumer price indexes.Each of these macroeconomic factors are equally weighted, and a score is applied to each factor based on year-on-year increases and decreases in thatrespective factor. Loans will be charged off when a settlement is reached for an amount that is less than the outstanding balance or when we have determined the balance isuncollectable. In general, unsecured loans are charged off when outstanding loans are 180 days past due. Secured loans may be charged off upon the death ofthe borrower, significant damage to the collateral, and when we consider the balance to be uncollectable. In 2016 and 2017, the volume of loans that werecharged off totaled RMB96.1 million and RMB164.2 million, respectively, primarily consisting of auto-backed loans. In 2018, the volume of loans that werecharged off totaled RMB415.8 million (US$60.5 million), primarily consisting of the consumption loans involving smaller loan amounts and shorter tenures,which we have ceased to offer since the fourth quarter of 2017, and to a lesser extent, auto-backed loans that have been delinquent over 180 days. As therespective loans in 2016, 2017 and 2018 were fully offset by the allowance for loans and advances before charge off, the subsequent charge-offs only resultedin a net off of the balance of loans and advances and allowance for loans and advances. 107 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The following table sets forth the movement of our allowance for loans and advances for the periods indicated: Year ended December 31, 2016 Loans receivable Acquired non-performing loans Auto-backedloans Othersecuredloans Unsecuredloans Auto-backedloans Othersecuredloans Unsecuredloans Total RMB RMB RMB RMB RMB RMB RMB (in thousands) Beginning balance - - - (9,705) - - (9,705)Current year provision - - - (142,715) (1,530) (372) (144,617)Recoveries of loans previouslywritten off - - - (9,268) - - (9,268)Write-offs - - - 94,532 1,530 - 96,062 Ending balance - - - (67,156) - (372) (67,528) Year ended December 31, 2017 Loans receivable Acquired non-performing loans Auto-backedloans Othersecuredloans Unsecuredloans Auto-backedloans Othersecuredloans Unsecuredloans Total RMB RMB RMB RMB RMB RMB RMB (in thousands) Beginning balance - - - (67,156) - (372) (67,528)Current year provision (5,149) (913) (64,515) (327,453) (4,832) (81,201) (484,063)Recoveries of loans previouslywritten off - - - (18,943) - - (18,943)Write-offs - - - 161,378 1,077 1,789 164,244 Ending balance (5,149) (913) (64,515) (252,174) (3,755) (79,784) (406,290) Year ended December 31, 2018 Loans receivable Acquired non-performing loans Auto-backedloans Othersecuredloans Unsecuredloans Auto-backedloans Othersecuredloans Unsecuredloans Total Total RMB RMB RMB RMB RMB RMB RMB US$ (in thousands) Beginning balance (5,149) (913) (64,515) (252,174) (3,755) (79,784) (406,290) (59,092)Current year provision (7,864) (4,427) 4,106 (430,213) (53,245) (259,929) (751,572) (109,312)Recoveries of loans previouslywritten off - - - (27,879) (24) (355) (28,258) (4,110)Write-offs - - - 242,492 18,323 154,955 415,770 60,471 Ending balance (13,013) (5,340) (60,409) (467,774) (38,701) (185,113) (770,350) (112,043) 108 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Acquired Non-Performing Loans We record acquired non-performing loans in accordance with ASC 310-30, Loan and Debt Securities Acquired with Deteriorated Credit Quality, whenwe voluntarily purchase a delinquent loan. Such acquired non-performing loans are expected to be recovered either through the sale of the loan collateralupon foreclosure or from the subsequent payments made by the borrowers and are initially recorded at their purchase price. As the cash flows expected to becollected cannot be estimated because the timing of the collection and the condition of the collateral are indeterminable, the acquired non-performing loansare placed on non-accrual status and impairment is measured based on the fair value of the collateral less the estimated selling costs. We derecognize the acquired non-performing loans when the non-performing loans are settled through foreclosure or repayment by borrowers. Anydifference between the proceeds from sale of the collateral or subsequent payments made by the borrowers, and the acquired non-performing loan balance isrecognized in other revenues in our consolidated statements of comprehensive income. Borrowings For certain transactions with borrowers, we may provide a loan to borrowers and then transfer the loan to investors at varying rates and tenures. Althoughthe loan is transferred to the investors, the loan principal is not derecognized upon transfer, as the transaction does not represent a transfer of an entirefinancial asset or a participating interest and the loan is not legally isolated from us. Additionally, the terms of the transfer require us to guarantee theprincipal and interest in case of borrower defaults. As a result, the arrangement is accounted for as a secured borrowing in accordance with ASC 860, Transfersand Servicing. The loan remains on our consolidated balance sheets and the funds received from investors are recorded as payable to institutional fundingpartners and online investors in our consolidated balance sheets. Borrowings are initially recognized at fair value, which is cash received from investors, andmeasured subsequently at amortized cost using the effective interest method. Guarantee Liabilities We provide guarantee to various institutional funding partners and online investors. The guarantee requires us to either make delinquent installmentrepayments or purchase the loans after a specified period on an individual loan basis. The guarantee liability is exempted from being accounted for as aderivative in accordance with ASC 815-10-15-58. The guarantee liability consists of two components. Our obligation to stand ready to make delinquent payments or to purchase the loan over the term ofthe arrangement (the non-contingent aspect) is accounted for in accordance with ASC 460, Guarantees (“ASC 460”). The contingent obligation relating tothe contingent loss arising from the arrangement is accounted for in accordance with ASC 450, Contingencies (“ASC 450”). At inception, we recognize thenon-contingent aspect of the guarantee liability at fair value, which considers the premium required by a third-party market participant to issue the same riskassurance in a standalone transaction. Subsequent to the initial recognition, the non-contingent aspect of the risk assurance liability is reduced over the term of the arrangement as we arereleased from our stand ready obligation on a loan-by-loan basis based on the borrower’s repayment of the loan principal. The contingent loss arising fromthe obligation to make future payments is recognized when borrower default is probable and the amount of loss is estimable. We consider the underlying riskprofile including delinquency status, overdue period, and historical loss experience when assessing the probability of contingent loss. Borrowers are groupedbased on common risk characteristics, such as product type. We measure contingent loss based on the future payout of the arrangement estimated using thehistorical default rates of a portfolio of similar loans less the fair value of the recoverable collateral. The amount of provision for financial guaranteeliabilities was nil, nil and RMB21.7 million (US$3.2 million) in 2016, 2017 and 2018. The maximum potential undiscounted future payment which wewould be required to make under our guarantee obligation is RMB551.2 million and RMB2,938.7 million (US$427.4 million) as of December 31, 2017 and2018, respectively. 109 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Restricted Cash Our restricted cash mainly represents (i) cash received but has not yet been disbursed, including idle funds due to investors whom recharge to theaccounts on our platform but have not yet invested or fully funded the loans and funds due to borrowers that investors lend to borrowers but borrowers havenot yet withdrawn. Such funds were processed through a designated bank account, and (ii) cash held by banks, as guaranteed deposits paid on contracts andother restrictions. As of December 31, 2017 and 2018, the restricted cash related to cash not yet disbursed amounted to RMB1.1 billion and RMB1.6 billion(US$0.2 billion), respectively. The restricted cash balance as of December 31, 2017 related to cash not yet disbursed was related to our custody accountarrangement with our custodian bank. Starting in early 2017, the transfer and settlement of funds between borrowers and investors are handled by ourcustodian bank. As a result, investors’ idle funds and funds due to borrowers that have not yet been withdrawn, which were recorded as cash as of December31, 2016, were recorded as restricted cash as of December 31, 2017 and 2018. Restricted cash related to cash held by banks amounted to nil,RMB13.5 million and RMB56.1 million (US$8.2 million) as of December 31, 2016, 2017 and 2018, respectively. Such cash balance was related to ourcollaboration with institutional funding partners. We started to collaborate with institutional funding partners in 2017 and some of our institutional fundingpartners require refundable deposits from us to ensure that their default losses can be timely compensated. Such refundable deposits were recorded asguarantee deposits on our balance sheet. In November 2016, the Financial Accounting Standard Board, or the FASB, issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): RestrictedCash, which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement ofcash flows. As a result, the statement of cash flows will be required to present restricted cash and restricted cash equivalents as a part of the beginning andending balances of cash and cash equivalents. We early adopted the updated guidance retrospectively and presented restricted cash within the ending cash,cash equivalents and restricted cash balance on our consolidated statements of cash flows for the years ended December 31, 2016, 2017 and 2018. Income Taxes We account for income taxes using the liability method in accordance with ASC 740, Income Taxes, or ASC 740. Under this method, deferred tax assetsand liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates that willbe in effect when the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in earnings. Deferred tax assets are reducedby a valuation allowance through a charge to income tax expense when, in the opinion of management, it is more-likely-than-not that a portion of or all ofthe deferred tax assets will not be realized. We early adopted ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, on January 1, 2016 andclassify the components of the deferred tax assets and liabilities as non-current. We evaluate our uncertain tax positions using the provisions of ASC 740, which prescribes a recognition threshold that a tax position is required to meetbefore being recognized in the consolidated financial statements. We recognize in the consolidated financial statements the benefit of a tax position which is“more likely than not” to be sustained under examination based solely on the technical merits of the position assuming a review by tax authorities having allrelevant information. Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of taxbenefit that has a greater than fifty percent likelihood of being realized upon settlement. It is our policy to recognize interest and penalties related tounrecognized tax benefits, if any, as a component of income tax expense. Share-based Compensation We apply ASC 718, Compensation — Stock Compensation, or ASC 718, to account for restricted shares and stock appreciation right granted to certaindirectors, executives and employees. In accordance with ASC 718, we determine whether the restricted shares and the stock appreciation rights should beclassified and accounted for as an equity award or liability award. Grants of restricted shares to directors and executives are classified as equity awards and aremeasured at fair value on grant date and are recognized as an expense, net of forfeitures, over the requisite service period. The cash-settled stock appreciationrights granted to employees are classified as liability awards and are remeasured to fair value at the end of each reporting period until the date of settlementwith an adjustment for fair value recorded to the current period expenses. We have elected to recognize share-based compensation for all awards with gradedvesting using the accelerated method. We early adopted ASU 2016-09, Compensation Stock Compensation (Topic 718): Improvement to Employee ShareBased Payment Accounting, on January 1, 2016 using full retrospective method, and account for forfeitures in the period they occur as a reduction toexpense. 110 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. A change in any of the terms or conditions of share-based payment awards is accounted for as a modification of awards. We measure the incrementalcompensation cost of a modification as the excess of the fair value of the modified awards over the fair value of the original awards immediately before itsterms are modified, based on the share price and other pertinent factors at the modification date. For vested awards, we recognize incremental compensationcost in the period the modification occurred. For unvested awards, we recognize, over the remaining requisite service period, the sum of the incrementalcompensation cost and the remaining unrecognized compensation cost for the original award on the modification date. Key Components of Results of Operations Our revenues are primarily derived from loan facilitation service fees and post facilitation service fees. To a lesser extent, we generate revenues fromother contingent fees, such as late payment penalties and loan collection fees for the collection of overdue payments. Net Revenues Our primary sources of revenues consist of loan facilitation service fees and post facilitation service fees charged to borrowers and investors for theservices our platform provides over the life of loans we facilitate. The following table sets forth the breakdown of our net revenues, both in absolute amount and as a percentage of our net revenues, for the periodsindicated: Year Ended December 31, 2016 2017 2018 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues: Loan facilitation service fees: Auto-backed loans 1,396,102 79.3 2,529,980 71.4 2,857,298 415,577 73.0 Other secured loans(1) 9,791 0.6 107,564 3.0 115,140 16,746 2.9 Unsecured loans(2) 4,353 0.2 54,409 1.5 183,283 26,658 4.8 1,410,246 80.1 2,691,953 75.9 3,155,721 458,981 80.7 Post facilitation service fees: Auto-backed loans 144,524 8.2 283,182 8.0 308,011 44,798 7.9 Other secured loan(1) 1,044 0.1 10,958 0.3 12,793 1,861 0.3 Unsecured loans(2) 483 0.0 6,045 0.2 21,248 3,090 0.5 146,051 8.3 300,185 8.5 342,052 49,749 8.7 Other revenues 204,953 11.6 305,037 8.6 189,712 27,592 4.8 Financing income 9,053 0.5 303,292 8.6 402,750 58,578 10.3 Less: Funding costs (2,439) (0.1) (39,056) (1.1) (156,138) (22,709) (4.0)Net financing income 6,614 0.4 264,236 7.5 246,612 35,869 6.3 Business related taxes andsurcharges (6,484) (0.4) (15,981) (0.5) (20,623) (2,999) (0.5)Total net revenues 1,761,380 100.0 3,545,430 100.0 3,913,474 569,192 100.0 Provision for loans and advances (144,617) (8.2) (484,063) (13.7) (751,572) (109,312) (19.2)Net revenues after provision forloans and advances 1,616,763 91.8 3,061,367 86.3 3,161,902 459,880 80.8 (1) Primarily including home equity loans and construction machinery loans. We ceased to offer home equity loans to new borrowers in the fourth quarter of2017, the loan volume of which totaled RMB2.0 billion, RMB8.8 billion and RMB2.7 billion (US$0.2 billion) in 2016, 2017 and 2018, respectively. 111 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (2) Primarily including professional credit loans and consumption loans. We ceased to offer certain types of consumption loans and unsecured auto-financingloans offered to those who have taken out auto-financing loans from certain commercial banks to new borrowers in the fourth quarter of 2017, the loanvolume of which totaled RMB20.4 million, RMB3.8 billion and RMB1.2 billion (US$0.2 billion) in 2016, 2017 and 2018, respectively. Loan Facilitation Service Fees and Post Facilitation Service Fees For each loan we facilitate, we charge fees for the services our platform provides over the life of the loans and allocate such fees between loan facilitationservice and post facilitation service. Loan facilitation service fees primarily comprise fees charged to borrowers in relation to the work we perform in connecting them with investors andfacilitating the origination of loans. The amount of loan facilitation service fees charged to borrowers is based upon the amount, tenure and other terms of theloans. We also charge loan facilitation service fees to online investors for our facilitation of their investments, which equal to a fixed percentage of theinterest they receive from borrowers. Post facilitation service fees are the portion of non-contingent service fees charged to borrowers and online investors in relation to services we provideafter loan origination, such as repayment facilitation. Other Revenues Other revenues mainly include (i) late payment penalties, (ii) loan collection fees, and (iii) net revenue from sale of collateral. Net Financing Income We earn interest income from loans originated by us. Interest income, net of the funding costs of such loans, is recorded as net financing income. See “—Critical Accounting Policies, Judgements and Estimates — Revenue Recognition — Net Financing Income” for more details. Business Related Taxes and Surcharges Business related taxes and surcharges are mainly VAT related surcharges. Provision for Loans and Advances We record an allowance for the potential losses of loans and advances recorded on our balance sheet. This allowance is calculated using a roll rate-basedmodel based on past loan loss history, known and inherent risks in the loan portfolio, adverse situations that may affect borrowers’ ability to repay,composition of the loan portfolio and other factors. See “— Critical Accounting Policies, Judgements and Estimates — Loans and Advances, Net — Allowance for Loans and Advances” for more details. We recognize any increase in this allowance as provision for loans and advances for the relevant period. Operating Costs and Expenses Our operating costs and expenses consist of provision for financial guarantee liabilities, origination and servicing expenses, sales and marketingexpenses, general and administrative expenses and research and development expenses. We expect our operating expenses to increase in absolute amount inthe foreseeable future as our business grows. The following table sets forth our operating costs and expenses, both in absolute amount and as a percentage ofour net revenues, for the periods presented: 112 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Year Ended December 31, 2016 2017 2018 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating costs and expenses: Provision for financial guaranteeliabilities - - - - 21,712 3,158 0.5 Origination and servicing 993,623 56.5 1,784,914 50.5 1,757,935 255,681 44.9 Sales and marketing 71,139 4.0 273,838 7.7 221,117 32,160 5.7 General and administrative 117,004 6.6 316,772 8.9 379,415 55,184 9.7 Research and development 56,142 3.2 100,966 2.8 139,318 20,263 3.6 Total operating costs and expenses 1,237,908 70.3 2,476,490 69.9 2,519,497 369,446 64.4 Provision for Financial Guarantee Liabilities We record provision for financial guarantee liabilities for our off-balance sheet loan facilitations where we provided financial guarantees. Origination and Servicing Expenses Origination and servicing expenses consist primarily of  (i) salaries and benefits for our directly-operated service centers and provincial branch offices’employees, who are responsible for pre-loan customer service and risk management and post-loan management and servicing, among others, (ii) partner-operated service centers’ operating costs and expenses paid to our service center operation partners, including related parties. See “Item 7. MajorShareholders and Related Party Transactions — Related Party Transactions” for more details, (iii) costs related to operation of our GPS tracking system andpurchase of GPS tracking devices, and (iv) others, primarily including rental costs for our directly-operated service centers. Sales and Marketing Expenses Sales and marketing expenses consist primarily of advertising expenses, primarily online marketing and promotion expenses and advertising expensesfor building brand awareness. General and Administrative Expenses General and administrative expenses consist primarily of  (i) salaries and benefits for our management, finance and administrative personnel, and (ii)other expenses, primarily related to travel expenses and professional service fees. Research and Development Expenses Research and development expenses consist primarily of  (i) salaries and benefits for our technology personnel, and (ii) costs related to the developmentand upgrade of our technology infrastructure and data analytics capabilities, including costs related to servers, other research and development equipmentand data centers. We expense all research and development expenses as incurred. Taxation Cayman Islands We are incorporated in the Cayman Islands. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty,inheritance tax or gift tax. The Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. Hong Kong Weidai HK and Rymo Technology Industry Limited, or Rymo, our subsidiaries incorporated in Hong Kong, are subject to Hong Kong profit tax at a rateof 16.5%. No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary duringthe periods presented. Hong Kong does not impose a withholding tax on dividends. Under the Hong Kong tax law, Weidai HK and Rymo are exempted fromincome tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. China Generally, our PRC subsidiary, variable interest entity and subsidiaries of our variable interest entity, which are considered PRC resident enterprisesunder PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at arate of 25%. 113 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In addition, under the PRC Enterprise Income Tax Law, qualified enterprises can enjoy a 150% super deduction for eligible research and developmentexpenses in 2016 and 2017, and 175% in 2018. In 2016, 2017 and 2018, RMB40.3 million, RMB95.3 million, and RMB86.7 million (US$12.6 million) ofour research and development expenses were eligible for the super deduction, which account for an RMB5.0 million and RMB11.9 million and RMB16.3million (US$2.4 million) decrease in tax expense, respectively. We are subject to value added tax, or VAT, at a rate of 6% on the services we provide to borrowers and investors, less any deductible VAT we havealready paid or borne. We are also subject to surcharges on VAT payments in accordance with PRC law. VAT has been phased in since May 2012 to replacethe business tax that was previously applicable to the services we provide. During the periods presented, we were not subject to business tax on the serviceswe provide. Dividends paid by our wholly foreign-owned subsidiary in China to our intermediary holding company in Hong Kong will be subject to a withholdingtax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between Mainland China and the Hong KongSpecial Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and receivesapproval from the relevant tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from therelevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. See “Item 3. KeyInformation — D. Risk Factors — Risks Related to Doing Business in China — We rely on dividends and other distributions on equity paid by our PRCsubsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us couldhave a material 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 PRCEnterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information — D. RiskFactors — Risks Related to Doing Business in China — If we are classified as a PRC resident enterprise for PRC income tax purposes, such classificationcould result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” Despite the present uncertainties resulting from limitedPRC tax guidance on the issue, we do not believe that the legal entities organized outside the PRC should be characterized as PRC residents for enterpriseincome tax purposes. Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentageof our net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annualreport. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 114 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Year Ended December 31, 2016 2017 2018 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues: Loan facilitation service fees: Auto-backed loans 1,396,102 79.3 2,529,980 71.4 2,857,298 415,577 73.0 Other secured loans(1) 9,791 0.6 107,564 3.0 115,140 16,746 2.9 Unsecured loans(2) 4,353 0.2 54,409 1.5 183,283 26,658 4.8 1,410,246 80.1 2,691,953 75.9 3,155,721 458,981 80.7 Post facilitation service fees: Auto-backed loans 144,524 8.2 283,182 8.0 308,011 44,798 7.9 Other secured loan(1) 1,044 0.1 10,958 0.3 12,793 1,861 0.3 Unsecured loans(2) 483 0.0 6,045 0.2 21,248 3,090 0.5 146,051 8.3 300,185 8.5 342,052 49,749 8.7 Other revenues 204,953 11.6 305,037 8.6 189,712 27,592 4.8 Financing income 9,053 0.5 303,292 8.6 402,750 58,578 10.3 Less: Funding costs (2,439) (0.1) (39,056) (1.1) (156,138) (22,709) (4.0)Net financing income 6,614 0.4 264,236 7.5 246,612 35,869 6.3 Business related taxes andsurcharges (6,484) (0.4) (15,981) (0.5) (20,623) (2,999) (0.5)Total net revenues 1,761,380 100.0 3,545,430 100.0 3,913,474 569,192 100.0 Provision for loans and advances (144,617) (8.2) (484,063) (13.7) (751,572) (109,312) (19.2)Net revenues after provision forloans and advances 1,616,763 91.8 3,061,367 86.3 3,161,902 459,880 80.8 Operating costs and expenses: Provision for financial guaranteeliabilities - - - - 21,712 3,158 0.5 Origination and servicing 993,623 56.5 1,784,914 50.5 1,757,935 255,681 44.9 Sales and marketing 71,139 4.0 273,838 7.7 221,117 32,160 5.7 General and administrative 117,004 6.6 316,772 8.9 379,415 55,184 9.7 Research and development 56,142 3.2 100,966 2.8 139,318 20,263 3.6 Total operating costs and expenses 1,237,908 70.3 2,476,490 69.9 2,519,497 366,446 64.4 Income from operations 378,855 21.5 584,877 16.4 642,405 93,434 16.4 Interest income, net 13,648 0.8 30,303 0.9 66,791 9,714 1.7 Government subsidies 4,653 0.3 53,616 1.5 70,351 10,232 1.8 Other expense, net (997) (0.1) (772) 0.0 (15,288) (2,224) (0.4)Net income before income taxes 396,159 22.5 668,024 18.8 764,259 111,156 19.5 Income tax expenses (105,130) (6.0) (193,203) (5.4) (159,629) (23,217) (4.1)Net income 291,029 16.5 474,821 13.4 604,630 87,939 15.4 (1) Primarily including home equity loans and construction machinery loans. We ceased to offer home equity loans to new borrowers in the fourth quarter of2017, the loan volume of which totaled RMB2.0 billion, RMB8.8 billion and RMB2.7 billion (US$0.4 billion) in 2016, 2017 and 2018, respectively. (2) Primarily including professional credit loans and consumption loans. We ceased to offer certain types of consumption loans and unsecured auto-financingloans offered to those who have taken out auto-financing loans from certain commercial banks to new borrowers in the fourth quarter of 2017, the loanvolume of which totaled RMB20.4 million, RMB3.8 billion and RMB1.2 billion (US$0.2 billion) in 2016, 2017 and 2018, respectively. Year Ended December 31, 2018 Compared to Year Ended December 31, 2017 Net Revenues Our net revenues increased by 10.4% from RMB3,545.4 million in 2017 to RMB3,913.5 million (US$569.2 million) in 2018. This increase wasprimarily due to to an increase in loan facilitation service fees and post facilitation service fees. Loan Facilitation Service Fees and Post Facilitation Service Fees Loan facilitation service fees increased by 17.2% from RMB2,692.0 million in 2017 to RMB3,155.7 million (US$459.0 million) in 2018; postfacilitation service fees increased by 14.0% from RMB300.2 million in 2017 to RMB342.1 million (US$49.7 million) in 2018. The increases in loan facilitation service fees and post facilitation service fees were primarily attributable to product mix changes that resulted in ahigher blended take rate, which increased from 17.7% in 2017 to 19.6% in 2018. Other Revenues Other revenues decreased by 37.8% from RMB305.0 million in 2017 to RMB189.7 million (US$27.6 million) in 2018, primarily due to a decrease inloan collection fees, as we continued to optimize our collection policies.Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 115 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net Financing Income Net financing income decreased by 6.7% from RMB264.2 million in 2017 to RMB246.6 million (US$35.9 million) in 2018, mainly attributable toreduced take rate of on-balance sheet loans. Provision for Loans and Advances Provision for loans and advances increased by 55.3% from RMB484.1 million in 2017 to RMB751.6 million (US$109.3 million) in 2018, primarily dueto (i) increase in delinquency rates as a result of industry-wide turmoil, and macroeconomic headwinds that negatively impacted small and micro enterprises,and (ii) the significant deterioration of the general macroeconomic environment in China which resulted in the Company recording additional allowance forloans and advances after taking into consideration current economic factors. Provision for loans and advances as a percentage of net revenues increased to19.2% in 2018 from 13.7% in 2017. Operating Costs and Expenses Operating costs and expenses increased by 1.7% from RMB2,476.5 million in 2017 to RMB2,519.5 million (US$366.4 million) in 2018. Operating costsand expenses as a percentage of our net revenues decreased from 69.9% in 2017 to 64.4% in 2018. Provision for Financial Guarantee Liabilities Provision for financial guarantee liabilities provision for financial guarantee liabilities was RMB21.7 million (US$3.2 million) in 2018. Origination and Servicing Expenses Origination and servicing expenses as a percentage of net revenues decreased from 50.5% in 2017 to 44.9% in 2018, primarily due to our improvedoperating efficiency and greater economies of scale. Origination and servicing expenses decreased by 1.5% from RMB1,784.9 million in 2017 toRMB1,757.9 million (US$255.7 million) in 2018, which was primarily attributable to continued cost optimization efforts, including closing of certainunderperforming service centers and termination of certain employees. Sales and Marketing Expenses Sales and marketing expenses decreased by 19.3% from RMB273.8 million in 2017 to RMB221.1 million (US$32.2 million) in 2018, which wasprimarily due to our enhanced brand awareness and profile as a public company, which has enabled us to engage in fewer marketing activities andincreasingly leverage word-of-mouth marketing to attract investors. Sales and marketing expenses as a percentage of net revenues decreased from 7.7% in2017 to 5.6% in 2018. General and Administrative Expenses General and administrative expenses increased by 19.8% from RMB316.8 million in 2017 to RMB379.4 million (US$55.2 million) in 2018, which wasprimarily attributable to (i) increases in salaries and benefits for our headquarters’ management, finance and administrative personnel primarily due to salaryincreases and increase in headcounts, (ii) IPO-related expenses. General and administrative expenses as a percentage of net revenues increased from 8.9% in2017 to 9.7% in 2018. Research and Development Expenses Research and development expenses increased by 38.0% from RMB101.0 million in 2017 to RMB139.3 million (US$20.3 million) in 2018, which wasprimarily attributable to (i) an increase in staff salaries and benefits, and an increase in the number of technology personnel, and (ii) costs related to thedevelopment and upgrading of our technology infrastructure. 116 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Interest Income, Net Interest income, net increased by 120.5% from RMB30.3 million in 2017 to RMB66.8 million (US$9.7 million) in 2018, primarily due to an increase inloans we originated. Government Subsidies Government subsidies increased by 31.3% from RMB53.6 million in 2017 to RMB70.4 million (US$10.2 million) in 2018. Other Expense, Net Other expense, net increased significantly from RMB0.8 million in 2017 to RMB15.3 million (US$2.2 million) in 2018, as we made certain charitabledonations in 2018. Income Tax Expenses Our income tax expenses decreased by 17.4% from RMB193.2 million in 2017 to RMB159.6 million (US$23.2 million) in 2018. Net Income As a result of the foregoing, our net income increased by 27.3% from RMB474.8 million in 2017 to RMB604.6 million (US$87.9 million) in 2018. Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 Net Revenues Our net revenues increased by 101.3% from RMB1,761.4 million in 2016 to RMB3,545.4 million in 2017. This increase was primarily due to increasesin loan facilitation service fees and post facilitation service fees. Loan Facilitation Service Fees and Post Facilitation Service Fees Loan facilitation service fees increased by 90.9% from RMB1,410.2 million in 2016 to RMB2,692.0 million in 2017; post facilitation service feesincreased by 105.5% from RMB146.1 million in 2016 to RMB300.2 million in 2017. The increases in loan facilitation service fees and post facilitation service fees were in line with the continued growth of our business. The volume ofloans we facilitated and originated increased from RMB48.0 billion in 2016 to RMB96.9 billion in 2017, among which, (i) the volume of auto-backed loansfacilitated and originated through our platform increased from RMB45.4 billion in 2016 to RMB80.2 billion in 2017, which was mainly driven by a 45.6%increase in the number of active borrowers of auto-backed loans from 216,423 in 2016 to 315,211 in 2017; and (ii) the volume of other loans facilitated andoriginated through our platform increased from RMB2.6 billion in 2016 to RMB16.7 billion in 2017, primarily attributable to the increased volume ofconsumption loans we facilitated. The total outstanding balance of loans we facilitated and originated increased from RMB11.1 billion as of December 31,2016 to RMB20.0 billion as of December 31, 2017, among which, the outstanding balance of auto-backed loans we facilitated and originated increased fromRMB9.6 billion as of December 31, 2016 to RMB15.2 billion as of December 31, 2017. Other Revenues Other revenues increased by 48.8% from RMB205.0 million in 2016 to RMB305.0 million in 2017, primarily attributable to an increase in loancollection fees and late payment penalties. The increase in loan collection fees and late payment penalties was due to increased volume of delinquent loans,which was the result of the substantial increase in the volume of loans we facilitated. The increase in other revenues was partially offset by a decrease in theaverage rates of late payment penalties and loan collection fees we charge as we continued to optimize our collection policies. 117 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net Financing Income Net financing income increased significantly from RMB6.6 million in 2016 to RMB264.2 million in 2017, mainly attributable to an increase in thevolume of loans we originated. Provision for Loans and Advances Provision for loans and advances increased significantly from RMB144.6 million in 2016 to RMB484.1 million in 2017, primarily due to (i) provisionfor certain consumption loans we originated, and (ii) an increase in provision for acquired non-performing loans, which was primarily due to a significantincrease in the volume of auto-backed loans we facilitated in 2017, which resulted in an increase in the volume of loans that were charged off. Operating Costs and Expenses Operating costs and expenses increased by 100.1% from RMB1,237.9 million in 2016 to RMB2,476.5 million in 2017. Operating costs and expenses asa percentage of our net revenues decreased from 70.3% in 2016 to 69.9% in 2017. Origination and Servicing Expenses Origination and servicing expenses as a percentage of net revenues decreased from 56.5% in 2016 to 50.5% in 2017, primarily due to our improvedoperating efficiency and greater economies of scale. Origination and servicing expenses increased by 79.6% from RMB993.6 million in 2016 toRMB1,784.9 million in 2017, which was primarily attributable to (i) a 139.2% increase in salaries and benefits for our directly-operated service centers’employees from RMB341.0 million in 2016 to RMB815.6 million in 2017, primarily due to increased headcounts as we continued to expand our servicecenter network; (ii) a 20.8% increase in partner-operated service centers’ operating costs and expenses from RMB418.3 million in 2016 to RMB505.4 millionin 2017, primarily due to an increase in loan volume generated by partner-operated service centers; and (iii) a 44.6% increase in GPS related costs fromRMB102.7 million to RMB148.5 million, primarily due to a larger number of auto-backed loan transactions facilitated through our platform in 2017. Sales and Marketing Expenses Sales and marketing expenses increased significantly from RMB71.1 million in 2016 to RMB273.8 million in 2017, which was primarily due to asignificant increase in advertising expenses from RMB38.0 million in 2016 to RMB204.0 million in 2017, as we collaborated with an increasing number ofonline channel partners by placing performance-based advertisements on their mobile apps and websites, launched additional marketing projects, and placedmore advertisements in subway stations and airports to enhance brand awareness. Sales and marketing expenses as a percentage of net revenues increasedfrom 4.0% in 2016 to 7.7% in 2017. General and Administrative Expenses General and administrative expenses increased significantly from RMB117.0 million in 2016 to RMB316.8 million in 2017, which was primarilyattributable to: (i) a significant increase from RMB60.6 million in 2016 to RMB213.9 million in 2017, attributable to increases in salaries and benefits forour headquarters’ management, finance and administrative personnel primarily due to increased headcounts as our business continued to grow, and expensesrelated to our newly-established call center, and (ii) a 35.3% increase in office rental expenses from RMB18.4 million in 2016 to RMB24.8 million in 2017,as we rented more office space for our headquarters and provincial branch offices as our business continued to grow. General and administrative expenses asa percentage of net revenues increased from 6.6% in 2016 to 8.9% in 2017. 118 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Research and Development Expenses Research and development expenses increased by 79.8% from RMB56.1 million in 2016 to RMB101.0 million in 2017, which was primarilyattributable to increase in the number of our technology personnel as we continue to focus on upgrading our technology infrastructure and enhancing ourdata analytics capabilities. Interest Income, Net Interest income, net increased by 122.8% from RMB13.6 million in 2016 to RMB30.3 million in 2017, primarily due to increased interest income frombank deposits and increased investment income from available-for-sale debt securities. The increase was partially offset by increased interest expenses inrelation to an RMB200 million bank loan we borrowed in 2017. Government Subsidies Government subsidies increased significantly from RMB4.7 million in 2016 to RMB53.6 million in 2017. We received a higher amount of governmentgrants awarded by local government authorities in 2017 in relation to our tax contributions. Other Expense, Net Other expense, net decreased by 22.6% from RMB1.0 million in 2016 to RMB0.8 million in 2017. Income Tax Expenses Our income tax expenses increased by 83.8% from RMB105.1 million in 2016 to RMB193.2 million in 2017, which was primarily due to the increase inour taxable income. Net Income As a result of the foregoing, our net income increased by 63.2% from RMB291.0 million in 2016 to RMB474.8 million in 2017. Share-based Compensation Restricted Shares On June 1, 2016 and September 1, 2016, Mr. Hong Yao granted 458,400 restricted shares for nil consideration to certain of its directors and executives.On January 16, 2018, Mr. Hong Yao granted 131,000 restricted shares for nil consideration to certain of its directors and executives. The restricted sharesgranted were immediately vested. We calculated the estimated fair value of the shares on the respective grant dates using the income approach with assistancefrom an independent valuation firm. The fair value of the granted shares was RMB70.52 per share on both June 1, 2016 and September 1, 2016, and wasRMB134.42 per share on January 16, 2018. Share-based compensation of RMB32.3 million and RMB17.6 million (US$2.6 million), respectively, wascharged to our consolidated statements of comprehensive income in 2016 and 2018, respectively. Stock Appreciation Rights On December 18, 2015, Weidai Financial Information approved a plan to issue options for virtual shares, or the Virtual Share Plan, for the purpose ofproviding incentives and rewards to certain employees and executives. In 2016, 2017 and 2018, Weidai Financial Information issued a total of nil, 2.72%and 2.13%, respectively, of the equity interest under the Virtual Share Plan. These virtual share options have no exercise price and will be settled in cash atthe amount equal to the differences between the fair value on the exercise date and the fair value on the grant date. 33%, 33% and 34% of these options arevested on the second, third and fourth anniversary of the grant date, respectively. The vested virtual share options are exercisable within five years from thegrant date. These virtual share options are in substance stock appreciation rights, which are classified as liability awards. At our discretion, each grantee mayreceive certain percentage of annual attributable net profit as annual dividend, which is also settled in cash. In addition, each grantee has an option topurchase Weidai Financial Information’s shares when the grantee’s accumulated number of virtual shares granted exceeds 0.1% of Weidai FinancialInformation’s total paid-in-capital. The purchase price will be determined by us. 119 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In 2016, 2017 and 2018, no dividend was declared to the grantees and none of the grantees’ accumulated number of virtual shares granted exceeded0.1% of Weidai Financial Information’s total paid-in-capital. On October 1, 2018, we modified the stock appreciation rights by replacing the cash-settlement feature with a net share settlement feature, whichconverted the award from a liability award to an equity award because we no longer has an obligation to transfer cash to settle the arrangement. All of theoutstanding virtual share options were exchanged for 1,349,367 restricted shares of our company with no other terms or conditions changed. The Virtual Share Plan was terminated upon October 1, 2018. We compared the fair value of the instrument immediately before the modification to the fair value of the modified equity award. As the modificationaffected no other terms or conditions, the fair value was unchanged by the modification and, therefore, no incremental compensation cost was recognized.The modified award would be accounted for as an equity award from the date of modification with a fair value of RMB216.4 (US$31.5) per share. Therefore,at the modification date, we reclassified the liability of RMB106,465 (US$15,485) recognized on September 30, 2018, as additional paid-in capital. We recognized total share-based compensation expenses of nil, RMB40.7 million and RMB106.6 million (US$15.5 million) in 2016, 2017 and 2018,respectively. 2018 Share Incentive Plan In August 2018, our board of directors approved our 2018 share incentive plan, or the 2018 Plan, to provide incentives to employees, directors andconsultants and promote the success of our business. The maximum number of ordinary shares that may be issued under the 2018 Plan is 3,300,000 aftergiving effect to the 50-for-1 share split effected by us in September 2018. We granted 181,390, 1,248,561, 14,000, 47,000 share awards on January 1, 2019,February 1, 2019, March 1, 2019, April 1, 2019, respectively, under the 2018 Plan, including 1,419,561 options and 71,390 restricted share units. Non-GAAP Financial Measure In evaluating our business, we consider and use adjusted net income, a non-GAAP measure, as supplemental measure to review and assess our operatingperformance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial informationprepared and presented in accordance with U.S. GAAP. We define adjusted net income as net income excluding share-based compensation expenses. We present this non-GAAP financial measure because it is used by our management to evaluate our operating performance and formulate business plans.Adjusted net income enables our management to assess our operating results without considering the impact of share-based compensation expenses. We alsobelieve that the use of this non-GAAP financial measure facilitates investors’ assessment of our operating performance. This non-GAAP financial measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measurehas limitations as an analytical tool. One of the key limitations of using adjusted net income is that they do not reflect all items of income and expense thataffect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentationof adjusted net income. Further, this non-GAAP financial measure may differ from the non-GAAP financial information used by other companies, includingpeer companies, and therefore their comparability may be limited. 120 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We compensate for these limitations by reconciling the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure,which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a singlefinancial measure. The following tables reconcile our adjusted net income, respectively, in 2016, 2017 and 2018 to the most directly comparable financial measurecalculated and presented in accordance with U.S. GAAP: Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands) Reconciliation of Net Income to Adjusted Net Income: Net income 291,029 474,821 604,630 87,939 Add: Share-based compensation expenses 32,326 40,719 106,571 15,500 Adjusted net income before related taxes 323,355 515,540 711,201 103,439 Income tax expenses (8,082) (10,180) (19,457) (2,830)Adjusted net income, net of taxes 315,273 505,360 691,744 100,609 Discussion of Certain Balance Sheet Items Loans and Advances, Net Loans and advances, net is comprised of loans receivable, acquired non-performing loans and advances to borrowers, partially offsets by allowance forloans and advances. Loans and advances, net decreased from RMB2,328.7 million as of December 31, 2017 to RMB1,903.9 million (US$276.9 million) as of December 31,2018. The decrease was primarily due to a decrease in loans receivable from RMB2,113.6 million as of December 31, 2017 to RMB1,388.6 million(US$202.0 million) as of December, 2018. The decrease in loans receivable was primarily due to reduced take rate of on-balance sheet loans as a result of ourchange of cooperation arrangements with institutional funding partners. Loans and advances, net increased significantly from RMB293.2 million as of December 31, 2016 to RMB2,328.7 million as of December 31, 2017. Theincrease was primarily due to a significant increase in loans receivable from RMB94.7 million in 2016 to RMB2,113.6 million in 2017, primarily because ofan increase in the volume of loans we originated. The increase in net loans and advances was also attributable to an increase in acquired non-performingloans, from RMB257.3 million as of December 31, 2016 to RMB618.9 million as of December 31, 2017, which was in line with the significant growth in thevolume of loans we facilitated. The increase in net loans and advances was partially offset by a significant increase in allowance for loans and advances fromRMB67.5 million as of December 31, 2016 to RMB406.3 million as of December 31, 2017, which was primarily due to the substantial increase in the volumeof loans we originated and acquired non-performing loans as of December 31, 2017. Payable to Institutional Funding Partners and Online Investors Payable to institutional funding partners increased from nil as of December 31, 2016 to RMB939.4 million as of December 31, 2017. Payable toinstitutional funding partners decreased from RMB939.4 million to RMB786.8 million (US$114.4 million) as of December 31, 2018, primarily due to thedecrease of on-balance sheet loans. Payable to online investors increased from RMB94.7 million as of December 31, 2016 to RMB1,247.4 million as ofDecember 31, 2017, due to an increase in the volume of loans we originated. Payable to online investors decreased from RMB1,247.4 million as of December31, 2017 to RMB668.6 million (US$97.2 million) as of December 31, 2018, as we ceased to facilitate any new investment made by corporate investors towhom we provided guarantees since the fourth quarter of 2017. 121 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Current Account with Online Investors and Borrowers Current account with online investors represents idle funds in online investors’ accounts that have not yet been invested, withdrawn or funded toborrowers; current account with online borrowers on our platform represents loan proceeds in borrowers’ accounts that have not yet been withdrawn anddeposits we receive from borrowers. Current account with online investors and borrowers increased significantly from RMB890.2 million as of December 31,2016 to RMB1,883.4 million as of December 31, 2017. The increase was primarily due to the increase in the number of our online investors and borrowersand their increased investment and borrowing, respectively, through our platform. Current account with online investors and borrowers increased fromRMB1,883.4 million as of December 31, 2017 to RMB2,005.6 million (US$291.7 million) as of December 31, 2018. The increase was due to an increase inidle funds in our online investors’ accounts which were not invested. Recent Accounting Pronouncements As a company with less than US$1.07 billion in revenue for the last fiscal year, we qualify as an “emerging growth company” pursuant to the JumpstartOur Business Startups Act of 2012, the “JOBS Act”. An emerging growth company may take advantage of specified reduced reporting and other requirementsthat are otherwise applicable generally to public companies. These provisions include a provision that an emerging growth company does not need tocomply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new orrevised accounting standards. We will take advantage of the extended transition period. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance substantially converges finalstandards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenuerecognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in currentU.S. GAAP. The core principle of the guidance is that an entity should recognize revenues to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, anentity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued its final standard formally amending the effective date of the new revenue recognition guidance. As an “emerginggrowth company,” or EGC, the Company has elected to take advantage of the extended transition period provided in the Securities Act Section 7(a)(2)(B) forcomplying with new or revised accounting standards applicable to private companies. The amendments in this ASU are effective for annual reporting periodsbeginning after December 15, 2018, including interim periods beginning after December 15, 2019. On January 1, 2019, we adopted ASC 606 – Revenue from Contracts with Customers and elected to apply the modified retrospective approach only tocontracts that had not been completed as of this date. Our management has been performing assessments of major impacts of ASC 606 on our net revenuesand the assessments are still ongoing. The impacts of transitioning to the new accounting policy will primarily arise from the change in the timing of therecognition of revenue as service fees. Under ASC 605, service fees collected in monthly installments are considered contingent and therefore are notallocable to different deliverables nor recognized until the contingency is resolved, for example, upon receipt of the monthly installment. Under ASC 606,revenue recognized upon the successful facilitation of the loans will be the transaction price allocated to the different performance obligations based on theirrelative standalone selling price. The transaction price includes variable consideration estimated to be received (including future monthly installments) tothe extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated withthe variable considerations subsequently resolved. 122 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10). The amendments require all equityinvestments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity methodof accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensiveincome the portion of the total change in the fair value of a liability resulting from a change in the instruments-specific credit risk when the entity has electedto measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this ASU eliminate therequirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities. The amendments inthis ASU are effective for annual reporting periods beginning after December 15, 2018, including interim periods after December 15, 2019. We are in theprocess of evaluating the impact of the adoption of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU modifies existing guidance for off-balance sheet treatment of alessees’ operating leases by requiring lessees to recognize lease assets and lease liabilities, whilst, lessor accounting is largely unchanged. The amendmentsin this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Weare in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments heldby financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reportingdate based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investorsand other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality andunderwriting standards of the Company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional informationabout the amounts recorded in the financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020,including interim periods within fiscal years beginning after December 15, 2021. In November 2018, the FASB issued ASU No. 2018-19, CodificationImprovements to Topic 326, Financial Instruments—Credit Losses, which clarifies that receivables arising from operating leases should be accounted for inaccordance with ASC Topic 842, Leases instead of ASC Subtopic 326-20. We are in the process of evaluating the impact of adoption of this guidance on ourconsolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.This ASU reduces the existing diversity in practice in financial reporting across all industries by clarifying certain existing principles in ASC 230, Statementof Cash Flows, ASC 230, including providing additional guidance on how and what an entity should consider in determining the classification of certaincash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginningafter December 15, 2019. We have early adopted this guidance. In February 2017, the FASB issued ASU No. 2017-05, Other income — Gains and Losses from the Derecognition of Nonfinancial Assets, which clarifiesthat a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments in this updatealso clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty.This standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning afterDecember 15, 2019. We are in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. 123 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income, ASU 2018-02, which amends ASC 220 to allow a reclassification from accumulated othercomprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and requires entities to provide certaindisclosures regarding stranded tax effects. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December15, 2018. We are in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments provide targeted improvements to address certain aspects ofrecognition, measurement, presentation, and disclosure of financial instruments. Specifically, the amendments include clarifications related to: measurementelections, transition requirements, and adjustments associated with equity securities without readily determinable fair values; fair value measurementrequirements for forward contracts and purchased options on equity securities; presentation requirements for hybrid financial liabilities for which the fairvalue option has been elected; and measurement requirements for liabilities denominated in a foreign currency for which the fair value option has beenelected. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December15, 2019. Early adoption is not permitted unless the entity has early adopted the amendments in ASU 2016-01. We are in the process of evaluating the impactof adoption of this guidance on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based PaymentAccounting, which aligns the measurement and classification guidance for share based payments to nonemployees with that for employees, with certainexceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumedin the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities torecognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) as if they paid cash for thegoods or services, but it moves the guidance to ASC 718. This standard is effective for fiscal years beginning after December 15, 2019, and interim periodswithin fiscal years beginning after December 15, 2020. Early adoption is permitted, including in an interim period for which financial statements have notbeen issued (or made available for issuance), but not before an entity adopts ASC 606. We are in the process of evaluating the impact of adoption of thisguidance on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the DisclosureRequirements for Fair Value Measurement which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The guidance iseffective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, but entities are permitted to earlyadopt either the entire standard or only the provisions that eliminate or modify the requirements. We are in the process of evaluating the impact of adoptionof this guidance on our consolidated financial statements. B.Liquidity and Capital Resources Cash Flows and Working Capital To date, we have financed our operations primarily through cash generated by our operating activities. As of December 31, 2016, 2017 and 2018, we hadRMB1,314.8 million, RMB1,765.6 million and RMB1,741.9 million (US$253.4 million), respectively, in cash and cash equivalents. Our cash and cashequivalents primarily consist of cash and bank deposits. We believe that our current cash and cash equivalents and anticipated cash flows from operatingactivities will be sufficient to meet our anticipated working capital requirements and capital expenditures for the 12 months following this annual report. Wemay, however, need additional capital in the future to fund our continued operations. If we determine that our cash requirements exceed the amount of cashand cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additionalequity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result inoperating covenants that might restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. 124 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Although we consolidate the results of Weidai Financial Information, we only have access to the assets or earnings of Weidai Financial Informationthrough our contractual arrangements with Weidai Financial Information and its shareholders. See “Item 4. Information on the Company—C. OrganizationalStructure .” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “— Holding Company Structure.” Substantially all of our future revenues are likely to continue to be in the form of Renminbi. Under existing PRC foreign exchange regulations, paymentsof current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreigncurrencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiary is allowed to paydividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulationspermit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standardsand regulations. Our PRC subsidiary is required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses each year,if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cashdividends. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFEand its local branches. See “Item 3. Key Information—D. Risk Factors — Risks Relating to Doing Business in China — Governmental control of currencyconversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs.” The following table sets forth a summary of our cash flows for the periods presented: Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ (in thousands) Net cash provided by operating activities 924,388 2,284,077 1,214,774 176,679 Net cash used in investing activities (337,051) (2,941,921) (6,468) (938)Net cash provided (used in) by financing activities 458,614 2,205,523 (686,883) (99,903)Net increase in cash, cash equivalents and restricted cash 1,045,951 1,547,679 518,723 75,445 Cash, cash equivalents and restricted cash at the beginning of the year 268,863 1,314,814 2,862,493 416,332 Cash, cash equivalents and restricted cash at the end of the year 1,314,814 2,862,493 3,381,216 491,777 Operating Activities Net cash provided by operating activities was RMB1,214.8 million (US$176.7 million) in 2018, which was primarily due to net income of RMB604.3million (US$87.9 million), adjusted for (i) provision for loans and advances of RMB751.6 million (US$109.3 million), (ii) share-based compensationexpenses of RMB106.6 million (US$15.5 million), and (iii) depreciation and amortization of RMB42.4 million (US$6.2 million), partially offset by changesin working capital. Changes in working capital primarily consisted of  (i) a decrease in income tax payable of RMB172.7 million (US$25.1 million), (ii) anincrease in deferred tax asset of RMB171.2 million (US$24.9 million), and (iii) an increase in current account with online investors and borrowers ofRMB122.2 million (US$17.8 million). 125 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net cash provided by operating activities was RMB2,284.1 million in 2017, which was primarily due to net income of RMB474.8 million, adjusted for(i) provision for loans and advances of RMB484.1 million, (ii) share-based compensation expenses of RMB40.7 million, (iii) depreciation and amortizationof RMB12.7 million, and (iv) changes in working capital. Adjustments for changes in working capital primarily consisted of  (i) an increase in currentaccount with online investors and borrowers of RMB993.3 million, (ii) an increase in accrued expenses and other liabilities of RMB231.1 million, and (iii)an increase in income tax payable of RMB131.9 million. These increases were partially offset by an increase in deferred tax assets of RMB124.9 million. Net cash provided by operating activities was RMB924.4 million in 2016, which was primarily due to net income of RMB291.0 million, adjusted for(i) provision for loans and advances of RMB144.6 million, (ii) share-based compensation expenses of RMB32.3 million, (iii) depreciation and amortizationof RMB3.3 million, and (iii) changes in working capital. Adjustments for changes in working capital primarily consisted of  (i) an increase in current accountwith online investors and borrowers of RMB635.9 million, (ii) an increase in accrued expenses and other liabilities of RMB148.2 million, and (iii) anincrease in income tax payable of RMB94.5 million. These increases were partially offset by (i) an increase in prepaid expenses and other assets ofRMB311.1 million, and (ii) an increase in amounts due from related parties of RMB73.7 million. Investing Activities Net cash used in investing activities was RMB6.5 million (US$0.9 million) in 2018, which was primarily attributable to (i) RMB7.4 billion (US$1.1billion) in payments to originate loans and advances, (ii) RMB3.7 billion (US$536.3 million) in purchase of short-term investments, and (iii) RMB1.5 billion(US$220.1 million) in addition of long-term investments, which was partially offset by (i) RMB7.1 billion (US$1.0 billion) in proceeds from collection ofloans and advances, (ii) RMB3.7 billion (US$536.9 million) in redemption of short-term investments, and (iii) RMB1.6 billion (US$227.3 million) inredemption of long-term investments. Net cash used in investing activities was RMB2,941.9 million in 2017, which was primarily attributable to (i) RMB11,423.8 million in purchase ofshort-term investments, and (ii) RMB6,885.3 million in payments to originate loans and advances, which was partially offset by (i) RMB11,415.3 million inredemption of short-term investments, and (ii) RMB4,360.3 million in proceeds from collection of loans and advances. Net cash used in investing activities was RMB337.1 million in 2016, which was primarily attributable to (i) RMB5,658.2 million in purchase of short-term investments, and (ii) RMB1,268.6 million in payments to originate loans and advances, which was partially offset by (i) RMB5,742.2 million inredemption of short-term investments, and (ii) RMB913.2 million in proceeds from collection of loans and advances. Financing Activities Net cash used in financing activities was RMB686.9 million (US$99.9 million) in 2018, which was primarily attributable to RMB4.2 billion (US$610.0million) in payments to institutional funding partners and online investors, which was partially offset by RMB3.4 billion (US$494.4 million) in proceedsfrom institutional funding partners and online investors. Net cash provided by financing activities was RMB2,205.5 million in 2017, which was primarily attributable to (i) RMB4,627.1 million in proceedsfrom institutional funding partners and online investors and (ii) RMB200.0 million in proceeds from short-term borrowings, which was partially offset by(i) RMB2,587.3 million in payments to institutional funding partners and online investors, and (ii) RMB32.2 million in payments of dividends to ourshareholders. Net cash provided by financing activities was RMB458.6 million in 2016, which was attributable to (i) RMB362.0 million in proceeds from issuance ofordinary shares and preferred shares and (ii) RMB165.2 million in proceeds from institutional funding partners and online investors, which was partiallyoffset by RMB70.5 million in payments to institutional funding partners and online investors. 126 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Capital Expenditures We made capital expenditures of RMB52.3 million, RMB62.4 million and RMB32.6 million (US$4.7 million) in 2016, 2017 and 2018, respectively. Inthese periods, our capital expenditures were mainly used for the purchase of equipment, automobiles and software. We will continue to make capitalexpenditures to meet the expected growth of our business. Holding Company Structure Weidai Ltd. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiary, variableinterest entity and variable interest entity’s subsidiaries in China. As a result, Weidai Ltd.’s ability to pay dividends depends upon dividends paid by ourPRC subsidiary. If our existing PRC subsidiary or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debtmay restrict their ability to pay dividends to us. In addition, our PRC subsidiary is permitted to pay dividends to us only out of its retained earnings, if any, asdetermined in accordance with PRC accounting standards and regulations. Under PRC law, each of our PRC subsidiary and variable interest entity is requiredto set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registeredcapital. In addition, our PRC subsidiary may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds andstaff bonus and welfare funds at its discretion, and our variable interest entity may allocate a portion of its after-tax profits based on PRC accountingstandards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiaryhas not paid any dividends and will not be able to pay dividends until it generates accumulated profits and meet the requirements for statutory reserve funds. C.Research and Development, Patents, and Licenses, etc. See “Item 4. Information On the Company—B. Business Overview—Technology and Risk Management” and “Item 4. Information On the Company—B.Business Overview—Intellectual Property.” D.Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year endedDecember 31, 2018 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, orthat would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions. E.Off-Balance Sheet Commitments and Arrangements We have not entered into any material financial guarantees or other commitments to guarantee the payment obligations of any third parties and do notassume credit risk in loans facilitated through our platform. We have not entered into any derivative contracts that are indexed to our shares and classified asshareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest inassets 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 anyunconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development serviceswith us. F.Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2018: Total Less than one year 1-3 years 3-5 years More than fiveyear RMB US$ RMB US$ RMB US$ RMB US$ RMB US$ (in thousands) Operating Lease Obligations 107,950 15,701 64,986 9,452 41,965 6,104 744 108 255 37 127 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our operating lease obligations relate to our leases of office premises. We lease certain office premises under non-cancelable operating leasearrangements. Rental expenses under operating leases for 2016, 2017 and 2018 were RMB23.4 million, RMB107.9 million and RMB131.8 million (US$19.2million), respectively. Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31,2018. G. Safe Harbor See “Forward-Looking Statements” on page 1 of this annual report. ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A.Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/TitleHong Yao 39 Founder, chairman of the board of directors and chief executive officerFeng Chen 43 Director and vice president of sales operationsYuqun Sun 38 Director and vice president of human resourcesDesheng Ding 37 Director and vice president of finance and risk managementWei Ye 34 Director and vice president of online operationsMenma Huang 51 DirectorYan Wang 40 DirectorTony Cai 52 Independent DirectorPoi Lam William Yuen 51 Independent DirectorPengfei Wang 37 Vice president of brand development, strategy and complianceJianzhong Zhu 40 Vice president of technology, research and developmentLeo Li 34 Chief financial officerQuanlin Gu 38 Chief risk officer Mr. Hong Yao is our founder and the chairman of our board of directors and has served as our chief executive officer since our inception in 2011. Mr. Yaohas over 12 years of experience in China’s small and micro enterprise sector. Mr. Yao has received various industry awards and accolades, including the“2014 New Zhejiang Merchants Award”, from Zhejiang Youth Entrepreneurs’ Association, Youth Times and Xinhua News Agency and the “2017 Top TenFinance Innovation Award” from Zhejiang Online News Network. Mr. Yao received his bachelor’s degree in computer applications and maintenance fromZhejiang Business College in 2000 and his EMBA degree from China Europe International Business School in 2015. Mr. Feng Chen has served as our director since March 2018, our vice president of finance and risk management from 2015 to January 2018 and ourpresident since October 2018. Prior to joining us, Mr. Chen served as chief financial officer and vice president of Greentown E-commerce, an online platformfor construction materials, from 2014 to 2015 and as chief financial officer and vice president of Fullerton Investment & Credit Guarantee Co. Ltd. from 2013to 2014. Mr. Chen was special assistant to vice-chairman of Bank of Chengdu from 2012 to 2013 and financial controller of Tianjin Rural Commercial BankCo., Ltd. from 2010 to 2012. Prior to 2010, Mr. Chen served as a senior manager of Deloitte Consulting LLP, a director of SAS Institute Inc., a manager ofBearingPoint, Inc. and a manager of Ernst & Young LLP. Mr. Chen received his bachelor’s degree in economics from Shenzhen University in 1998. Mr. Chenis a certified public accountant in China and Australia and a certified tax agent in China. 128 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Ms. Yuqun Sun has served as our director since March 2018 and our vice president of human resources since 2014. Prior to joining us, Ms. Sun served asdirector of executive office and chief operating officer of Greentown E-commerce from 2011 to 2014. From 2009 to 2011, Ms. Sun worked as branch managerand senior product manager of the China division of Best Buy Co., Inc., a consumer electronics corporation listed on the New York Stock Exchange (NYSE:BBY). From 2001 to 2008, Ms. Sun served as general manager and senior manager of public affairs of the China branch of Tesco, a grocery and generalmerchandise retailer listed on the London Stock Exchange (LSE: TSCO). Ms. Sun received her bachelor’s degree in business administration from ZhejiangGongshang University in 2006. Mr. Desheng Ding has served as our director since March 2018 and has been our vice president of sales operations from 2015 to January 2018 and ourvice president of finance and risk management since January 2018. Prior to joining us, Mr. Ding served as a department manager of Bank of Ningbo’sHangzhou branch from 2008 to 2015, a business director of Industrial Bank, Co., Ltd.’s cardholder center from 2005 to 2008 and a client manager of ChinaMerchants Bank’s Shenzhen Branch from 2004 to 2005. Mr. Ding received his bachelor’s degree in business administration from Beijing MingyuanUniversity in 2004 and his master’s degree in software engineering from East China Normal University in 2011. Mr. Wei Ye has served as our director since March 2018 and has been our vice president of online operations since July 2017. Prior to joining us, Mr. Yeserved as a general manager of Ping An Financial Technology Co., Ltd., a subsidiary of Ping An Insurance (Group) Company of China, Ltd. (SSE: 601318),from 2013 to 2016. Mr. Ye was a marketing director of Alisoft Co., Ltd., a subsidiary of Alibaba Group Holding Limited (NYSE:BABA), from 2009 to 2010and a deputy business director of Tencent Holdings Limited, an investment corporation listed on the Hong Kong Stock Exchange (HKSE: 0700), from 2007to 2009. Mr. Ye received his bachelor’s degree in software engineering from Zhejiang University in 2007. Mr. Menma Huang has served as our director since March 2018. Mr. Huang has been the general manager of Hakim Unique Internet Co., Ltd., or Hakim, acompany listed on the on the Shenzhen Stock Exchange (SZ: 300300), since 2017. Mr. Huang was the deputy general manager of Hakim from 2015 to 2017and the general manager of the Hakim’s Western Branch from 2012 to 2015. Prior to this, Mr. Huang was the chairman of the board of directors of SichuanYuyoutongpu System Engineering Co., Ltd. from 1998 to 2012. Mr. Huang received his bachelor’s degree in marketing from Sichuan University in 1988. Ms. Yan Wang has served as our director since November 2018. Ms. Wang has been a director of Hakim Unique Group Co., Ltd., or Hakim Group, sinceJanuary 2018, a director of Hakim Unique Caroline Asset Management Co., Ltd. and an assistant to the chairman of board of directors of Hakim since May2018. Ms. Wang served as an assistant to the chairman of board of directors of Hakim Group from 2016 to 2018. From 2003 to 2016, Ms. Wang successivelyserved as an executive director, a general manager of finance department and secretary of the board of directors of Hakim. Ms. Wang received her bachelor’sdegree in accounting from Hangzhou Electronic Science and Technology University in 2013. Ms. Wang received her certificate of secretary of the board ofdirectors from the Shenzhen Stock Exchange. Prof. Tony Cai has served as our independent director since November 14, 2018. Professor Cai is a Vice Dean and a Dorothy Silberberg Professor ofStatistics at the Wharton School of the University of Pennsylvania, where he focuses his research on big data analytics, including high-dimensional dataanalysis, statistical machine learning, large-scale multiple testing, functional data analysis, statistical decision theory, as well as applications to genomics,and financial engineering. Professor Cai is a member of the editorial board of the journal of Annals of Statistics and has served on the editorial boards ofmany other academic journals. He received the COPSS Presidents’ Award from the Committee of Presidents of Statistical Societies in 2008 and was elected tothe presidency of International Chinese Statistical Association (ICSA) in 2017. Professor Cai has received numerous research grants, including consecutiveresearch grants from National Science Foundation (NSF) since 2000, multi-year research grants from National Institutes of Health (NIH) in 2012 and 2017 anda grant from Wharton School Global Initiatives in 2016. Professor Cai received his bachelor’s degree in science from Shanghai Jiao Tong University in 1989and his Ph.D. degree in statistics from Cornell University in 1996. 129 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Mr. Poi Lam William Yuen has served as our independent director since November 14, 2018. Mr. Yuen has been the chief financial officer and thecompany secretary of Neo Telemedia Limited (“NTL”), an information and communication technology company listed on the Hong Kong Stock Exchange(HKSE: 8167), since 2016 and 2017, respectively. Mr. Yuen also served as NTL’s company secretary from 2011 to 2014 and consultant from 2014 to 2016.From 2016 to 2017, Mr. Yuen was an independent non-executive director of Ever Smart International Holdings Limited, a footwear design and developmentcompany listed on the Hong Kong Stock Exchange (HKSE: 8187). From 2015 to 2016, Mr. Yuen served as the company secretary of Kong Shum UnionProperty Management Holdings Limited, a property management company listed on the Hong Kong Stock Exchange (HKSE: 8181). From 2010 to 2012, Mr.Yuen served as the chief financial officer of Superb Summit International Group Limited, a timber resources exploitation and management company listed onthe Hong Kong Stock Exchange (HKSE: 1228). From 2008 to 2010, Mr. Yuen served as the chief financial officer of China E-Learning Group Limited, anonline-training provider listed on the Hong Kong Stock Exchange (HKSE: 8055). Prior to that, Mr. Yuen served in various capacities in leading internationalaccounting firms, including senior manager — global capital markets group of Ernst & Young in Hong Kong, audit senior manager of Ernst & Young in LosAngeles, audit senior manager of Deloitte & Touche in Los Angeles and audit manager of KPMG in Hong Kong. Mr. Yuen received his bachelor’s degree inaccounting from the University of Southern California in 1990. He is a member of the American Institute of Certified Public Accountants and the Hong KongInstitute of Certified Public Accountants. He is a certified public accountant in the state of California and a Chartered Global Management Accountant. Mr. Pengfei Wang has served as our vice president of brand development, strategy and compliance since 2015. Prior to joining us, Mr. Wang was thegeneral manager of Hangzhou’s Gongbei branch of Bank of China from 2012 to 2014 and the general manager of Hangzhou’s Hushu branch of Bank ofChina from 2008 to 2012. Mr. Wang received his bachelor’s degree in chemical science from Nanjing Tech University in 2004 and his master’s degree inbusiness administration from Zhejiang University in 2011. Mr. Jianzhong Zhu has served as our vice president of technology, research and development since 2016. Prior to joining us, Mr. Zhu was a systemarchitect at IBM Global Business Services from 2012 to 2014, Taobao from 2008 to 2012 and Alibaba Group Holding Limited (NYSE:BABA) from 2006 to2007. Mr. Zhu is a member of the National Committee of Experts on the Internet Financial Security Technology. Mr. Zhu received his bachelor’s degree insoftware engineering from Zhejiang University in 2007. Mr. Leo Li has served as our chief financial officer since January 2018. Prior to joining us, Mr. Li served as an investment director and later an executivedirector of Vision Knight Capital, or VKC, a private equity fund focusing on China’s internet-driven sectors from 2015 to January 2018; VKC led our PRCoperating company’s series C round of financing in 2016. Prior to VKC, Mr. Li worked at Morgan Stanley Asia Ltd from 2013 to 2015 and at HSBC Markets(Asia) Ltd. from 2010 to 2013, where he focused on capital market transactions of Asian issuers in the United States and Hong Kong. From 2008 to 2010, Mr.Li worked as a management and corporate strategy consultant at Monitor Group in London. Mr. Li attended University of Oxford from 2004 to 2008 andreceived a four-year Master of Physics degree. Mr. Li is a Chartered Financial Analyst. Dr. Quanlin Gu has served as our chief risk officer since 2017. Prior to joining us, Dr. Gu worked in the risk management team of the headquarters ofBank of China from 2008 to 2016. From 2004 to 2008, Dr. Gu was an assistant research fellow for the Institute of Business Administration at PekingUniversity. Dr. Gu received his bachelor’s degree in finance from Peking University in 2003, his master’s degree in economics from McMaster University in2004 and his Ph.D. degree in industrial economics from Peking University in 2015. B.Compensation In 2018, we paid an aggregate of approximately RMB23.3 million (US$3.4 million) in cash to our executive officers, and we did not pay anycompensation to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to ourexecutive officers and directors. Our PRC subsidiary and our variable interest entity are required by law to make contributions equal to certain percentages ofeach employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing providentfund. 130 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed fora specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executiveofficer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct ora failure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In suchcase of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where theexecutive officer is based. The executive officer may resign at any time with a three-month advance written notice. Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence andnot to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidentialinformation or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information ofany third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us allinventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign allright, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and tradesecrets. In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employmentand typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our suppliers, clients,customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doingbusiness with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide servicesto any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seekdirectly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in theyear preceding such termination, without our express consent. We have entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we may agree to indemnifyour directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their beinga director or officer of our company. Share Incentive Plans Share Incentive Plan of Weidai Financial Information On December 18, 2015, the board of Weidai Financial Information approved the Virtual Share Plan for the purpose of providing incentives and rewardsto certain of its employees and executives. In 2016, 2017 and 2018, Weidai Financial Information issued a total of nil, 2.72% and 2.13%, respectively, of theequity interest under the Virtual Share Plan. These virtual share options have no exercise price and will be cash settled at the amount equal to the differencesbetween the fair value on the exercise date and the fair value on the grant date. 33%, 33% and 34% of these options are vested on the second, third and fourthanniversary of the vesting commencement date, respectively. The vested virtual share options are exercisable within five years from the grant date. Thesevirtual share options are in substance stock appreciation rights, which are classified as liability awards. At our discretion, each grantee may receivecertain percentage of annual attributable net profit as annual dividend, which is also settled in cash. In addition, each grantee has an option to purchaseWeidai Financial Information’s shares when the grantee’s accumulated number of virtual shares granted exceed 0.1% of Weidai Financial Information’s totalpaid-in-capital. The purchase price will be determined by us. On October 1, 2018, we modified the stock appreciation rights by replacing the cash-settlementfeature with a net share settlement feature, which converted the award from a liability award to an equity award because we no longer had an obligation totransfer cash to settle the arrangement. All of the outstanding virtual share options were exchanged for 1,349,367 restricted shares of our company with noother terms or conditions changed. The Virtual Share Plan was terminated upon October 1, 2018. See “Item 5. — Operating and Financial Review andProspects — A. Operating Results — Share-based Compensation” for more detail. 131 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Share Incentive Plan of Our Company In August 2018, our board of directors approved our 2018 share incentive plan, or the 2018 Plan, to provide incentives to employees, directors andconsultants and promote the success of our business. The maximum number of ordinary shares that may be issued under the 2018 Plan is 3,300,000 aftergiving effect to the 50-for-1 share split effected by us in September 2018. As of the date of this annual report, we have granted 1,490,951 awards under the2018 Plan. The following paragraphs describe the principal terms of the 2018 Plan: Type of Awards. The 2018 Plan permits the awards of options, restricted shares, restricted share units or any other type of awards that the planadministrator decides. Plan Administration. Our board of directors or the chairman of the board of directors will administer the 2018 Plan. The chairman or the board ofdirectors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms andconditions of each award grant. Award Agreement. Awards granted under the 2018 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for eachaward, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authorityto unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. Eligibility. We may grant awards to directors, officers, employees and consultants of our company or any of our subsidiaries. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion ofoption will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term isten years from the date of a grant. Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, except asotherwise provided by the plan administrator. Termination and Amendment. Unless terminated earlier, the 2018 Plan has a term of ten years. Our board of directors has the authority to amend orterminate the 2018 Plan. However, no such action may adversely affect in any material way any awards previously granted unless agreed by the recipient. The following table summarizes options and restricted share units that we have granted to our directors, officers and employees under our 2018 shareincentive plan as of the date of this annual report. Name Ordinary SharesUnderlying OptionsAwarded Exercise Price(US$/Share) Date of Grant Date of ExpirationFeng Chen * 1 February 1, 2019 January 31, 2029Yuqun Sun * 1 February 1, 2019 January 31, 2029Desheng Ding * 1 February 1, 2019 January 31, 2029Wei Ye * 1 February 1, 2019 January 31, 2029Jianzhong Zhu * 1 February 1, 2019 January 31, 2029Quanlin Gu * 1 February 1, 2019 January 31, 2029Other individuals as a group 1,215,737 1 January 1, February 1,March 1, and April 1, 2019, December 31, 2028,January 31, February 28,and March 31, 2029 132 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Name Ordinary SharesUnderlying RestrictedStocks Awarded Date of GrantTony Cai * January 1, 2019Poi Lam William Yuen * January 1, 2019 *Upon exercise of all options granted and vesting restricted share units granted, would beneficially own less than 1% of our outstanding ordinary shares. C.Board Practices Our board of directors consists of nine directors. A director is not required to hold any shares in our company to qualify to serve as a director. A directormay vote with respect to any contract, proposed contract or arrangement notwithstanding that he may be interested therein, and if he does so his vote shall becounted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered,provided (a) such director, if his interest (whether direct or indirect) in such contract or arrangement is material, has declared the nature of his interest at theearliest meeting of the board at which it is practicable for him to do so, either specifically or by way of a general notice and (b) if such contract or arrangementis a transaction with a related party, such transaction has been approved by the audit committee. The directors may exercise all the powers of the company toborrow money, to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures or other securities whenever money is borrowedor as security for any debt, liability or obligation of the company or of any third party. None of our non-executive directors has a service contract with us thatprovides for benefits upon termination of service. A company of which more than 50% of the voting power is held by a single entity is considered a “controlled company” under the New York StockExchange Listed Company Manual. A controlled company need not comply with the applicable NYSE corporate governance rules requiring its board ofdirectors to have a majority of independent directors and independent compensation and nominating committees. Because more than 50% of the votingpower in the election of directors of our company is held by Mr. Hong Yao, we qualify as a controlled company under the New York Stock Exchange ListedCompany Manual and avail ourselves of the controlled company exception provided under those rules. In the event that we are no longer a controlledcompany, a majority of our board of directors will be required to be independent and it will be necessary for us to have compensation and nominatingcommittees that are composed entirely of independent directors, subject to a phase-in period during the first year we cease to be a controlled company, unlesswe invoke the home country exception to such requirement available to foreign private issuers, such as us, under the New York Stock Exchange ListedCompany Manual. Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporategovernance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Poi Lam William Yuen, Feng Chen and Tony Cai. Poi Lam William Yuen is the chairman of our auditcommittee. We have determined that each of Poi Lam William Yuen and Tony Cai satisfies the “independence” requirements of Section 303A of theCorporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determinedthat each of Poi Lam William Yuen and Feng Chen qualifies as an “audit committee financial expert.” The audit committee oversees our accounting andfinancial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things: ·appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independentauditors; 133 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·reviewing with the independent auditors any audit problems or difficulties and management’s response; ·discussing the annual audited financial statements with management and the independent auditors; ·reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor andcontrol major financial risk exposures; ·reviewing and approving all proposed related party transactions; ·meeting separately and periodically with management and the independent auditors; and ·monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures toensure proper compliance. Compensation Committee. Our compensation committee consists of Hong Yao, Yuqun Sun and Tony Cai. Hong Yao is the chairman of ourcompensation committee. We have determined that Tony Cai satisfies the “independence” requirements of Section 303A of the Corporate Governance Rulesof the New York Stock Exchange. The compensation committee assists the board in reviewing and approving the compensation structure, including all formsof compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which hiscompensation is deliberated. The compensation committee is responsible for, among other things: ·reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executiveofficers; ·reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ·reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ·selecting compensation consultant, legal counsel or other advisers only after taking into consideration all factors relevant to that person’sindependence from management. Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Hong Yao, Yuqun Sun and TonyCai. Hong Yao is the chairman of our nominating and corporate governance committee. Tony Cai satisfies the “independence” requirements of Section 303Aof the Corporate Governance Rules of the New York Stock Exchange. The nominating and corporate governance committee assists the board of directors inselecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporategovernance committee is responsible for, among other things: ·selecting and recommending nominees for election by the shareholders or appointment by the board; ·reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills,experience and diversity; ·making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ·advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as ourcompliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on anyremedial action to be taken. 134 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act inwhat they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. A director must exercisethe skill and care of a reasonably diligent person having both – (a) the general knowledge, skill and experience that may reasonably be expected of a personin the same position (an objective test), and (b) if greater, the general knowledge, skill and experience that that director actually possesses (a subjective test).In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated fromtime to time, and the class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by our directors isbreached. A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by the directors isbreached. Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of ourboard of directors include, among others: ·convening shareholders’ annual and extraordinary general meetings; ·declaring dividends and distributions; ·appointing officers and determining the term of office of the officers; ·exercising the borrowing powers of our company and mortgaging the property of our company; and ·approving the transfer of shares in our company, including the registration of such shares in our register of members. Terms of Directors and Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders. Our directors are not subject to aterm of office and hold office until such time as they are removed from office by ordinary resolution of the shareholders. A director will cease to be a directorif, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company tobe or becomes of unsound mind, (iii) resigns his office by notice in writing to the company, or (iv) without special leave of absence from our board, is absentfrom three consecutive board meetings and our directors resolve that his office be vacated. Our officers are elected by and serve at the discretion of the boardof directors. D.Employees We had 10,301, 11,847 and 9,919 full-time employees as of December 31, 2016, December 31, 2017 and December 31, 2018, respectively. All of ouremployees are located in China. The following table sets forth the numbers of our full-time employees categorized by function as of December 31, 2018: As of December 31, 2018 Number % of Total Employees Functions: Operations 6,610 66.6 Risk Management 2,584 26.1 Online Investor Operations 157 1.6 Technology 348 3.5 General and Administration 220 2.2 Total number of employees 9,919 100.0 135 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincialgovernments, including, among other things, housing, pension, medical insurance and unemployment insurance. We are required under PRC laws to makecontributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amountspecified by the local government from time to time. We enter into standard employment, confidentiality and non-compete agreements with our senior management and key personnel. These contractsinclude a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his employment and for twoyears after the termination of his employment, provided that we pay compensation equal to a certain percentage of the employee’s salary during therestriction period. We believe that we maintain a good working relationship with our employees. We also engage certain dispatched workers from independent third-party professional employment agencies, who primarily provide collection and callcenter services. As of the date of this annual report, we have not experienced any business interruption due to this arrangement, and we do not foresee anydifficulty in finding any replacement employment agencies. E.Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31,2019 by: ·each of our directors and executive officers; and ·each of our principal shareholders who beneficially own more than 5% of our total outstanding ordinary shares. We have adopted a dual class ordinary share structure. The calculations in the table below are based on 70,447,177 ordinary shares outstanding as ofDecember 31, 2018, consisting of 35,375,777 Class A ordinary shares and 35,071,400 Class B ordinary shares. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by aperson and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through theexercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation ofthe percentage ownership of any other person. Ordinary Shares Beneficially Owned as of December 31, 2018 Class A ordinary shares Class B ordinary shares Total ordinaryshares on an as-convertedbasis % of aggregate voting power† Directors and Executive Officers**: Hong Yao (1) — 35,071,400 35,071,400 83.2%Feng Chen * — * * Yuqun Sun * — * * Desheng Ding * — * * Wei Ye * — * * Menma Huang (2) — — — — Yan Wang(3) — — — — Tony Cai — — — — Poi Lam William Yuen — — — — Pengfei Wang * — * * Jianzhong Zhu * — * * Leo Li * — * * Quanlin Gu — — — — All Directors and Executive Officers as a Group 1,702,700 35,071,400 36,774,100 84.0% Principal Shareholders: YAOH WDAI LTD (1) — 35,071,400 35,071,400 83.2%Hakim Unique Technology Limited (4) 9,953,300 — 9,953,300 4.7% 136 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. * Less than 1% of our total outstanding shares. ** Except as indicated otherwise below, the business address of our directors and executive officers is 50/F, West Building, Fortune Finance Center, No. 33Jiefang East Road, Jianggan District, Hangzhou, Zhejiang Province, People’s Republic of China. † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by suchperson or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled toone vote per share and each holder of our Class B ordinary shares is entitled to five votes per share on all matters submitted to them for a vote. Our Class Aordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise berequired by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. (1) Represents 35,071,400 Class B ordinary shares held by YAOH WDAI LTD, a British Virgin Islands company. YAOH WDAI LTD is indirectly whollyowned by a family trust, of which Mr. Hong Yao is the sole beneficiary. The registered address of YAOH WDAI LTD is Sertus Chambers, P.O. Box 905,Quastisky Building, Road Town, Tortola, British Virgin Islands. (2) The business address of Mr. Huang is 12/F, Handing Building, No. 5 Yongfuqiao Road, Xiacheng District, Hangzhou, Zhejiang Province, People’sRepublic of China. (3) The business address of Ms. Wang is 12/F, Handing Building, No. 5 Yongfuqiao Road, Xiacheng District, Hangzhou, Zhejiang Province, People’sRepublic of China. (4) The registered address of Hakim Unique Technology Limited is Craigmuir Chamers, Road Town, Tortola, VG 1110, British Virgin Islands. Hakim UniqueTechnology Limited is wholly owned by Hakim Unique internet Co., Ltd., a public company listed on the Shenzhen Stock Exchange. As of March 31, 2018, a total of 4,956,427 Class A ordinary shares are held by one of our shareholders in the United States, representing approximately7.0% of our total outstanding shares. None of our outstanding Class B ordinary shares are held by record holders in the United States. We are not aware of anyarrangement that may, at a subsequent date, result in a change of control of our company. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A.Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.Related Party Transactions Transactions with Mr. Hong Yao, Companies Controlled by Mr. Yao or His Immediate Family Members As of December 31, 2016, 2017 and 2018, we had RMB64.7 million, RMB0.2 million and nil due from Mr. Hong Yao, respectively. Such amountsmainly represented advances Mr. Yao made in relation to our daily operations, and were settled in 2018. As of December 31, 2016, 2017 and 2018, we had RMB21.3 million, RMB4.3 million and RMB1.0 million (US$0.1 million), due to Mr. Hong Yao,respectively. Such amounts mainly represented Mr. Yao’s investment balance on our platform. 137 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We incurred RMB2.2 million, RMB3.7 million and RMB 13.4 million of revenues from Beijing Lezhihui Technology Co., Ltd., or Beijing Lezhihui, acompany controlled by Mr. Hong Yao, related to our collaboration with Beijing Lezhihui for the facilitation of home equity loans in 2016, 2017 and 2018,respectively. As of December 31, 2016, 2017 and 2018, we had RMB5.3 million, nil and nil due from Beijing Lezhihui, respectively. Such amounts mainlyrepresented a short-term loan to Beijing Lezhihui and service fees collected by Beijing Lezhihui payable to us in relation to such collaboration on thefacilitation of home equity loans. The loan was repaid in the second quarter of 2017. We incurred RMB5.6 million, RMB49.4 million and RMB22.7million (US$3.3 million) of service fees to Beijing Lezhihui related to our collaborationwith Beijing Lezhihui for the facilitation of home equity loans in 2016, 2017 and 2018, respectively. As of December 31, 2016, 2017 and 2018, we hadRMB5.6 million, RMB2.9 million and RMB275 thousand (US$40 thousand) due to Beijing Lezhihui in relation to such collaboration, respectively. In 2016, 2017 and 2018, we incurred service fees in the amounts of nil, nil and RMB5.0 million (US$0.7 million) to Zhejiang Ruituo InformationTechnology Co., Ltd., a company controlled by Mr. Hong Yao, respectively. Such amount represented service fees for collection of delinquent loans. We incurred RMB87.4 million, RMB99.6 million and nil of partner-operated service centers’ operating costs and expenses to Chunan WencaiInformation Advisory Services Company, or Chunan Wencai, our service center operation partner controlled by an immediate family member of Mr. HongYao, in 2016, 2017 and 2018, respectively. As of December 31, 2016, 2017 and 2018, we had RMB8.4 million, RMB5.7 million and nil due to ChunanWencai, respectively. We incurred nil, nil and RMB84.6 million (US$12.3 million) of partner-operated service centers’ operating costs and expenses tocertain other companies, which are also our service centers operation partners controlled by immediate family members of Mr. Hong Yao, in 2016, 2017 and2018, respectively. As of December 31, 2016, 2017 and 2018, we had nil, nil and RMB4,306.8 million (US$626.4 million) due to these companies,respectively. In 2016, 2017 and 2018, we incurred service fees in the amounts of RMB13.2 million, RMB20.5 million and RMB6.3 million (US$0.9 million) toZhejiang Hongrui Investment Management Co., Ltd., or Zhejiang Hongrui, a company controlled by an immediate family member of Mr. Hong Yao,respectively. Such amounts represented service fees for collection of delinquent loans. As of December 31, 2016, 2017 and 2018, we had RMB3.1 million, RMB4.5 million and RMB7.1 million (US$1.0 million) due from Hangzhou Ruituo,a company controlled by Mr. Hong Yao, respectively. Such amounts mainly represented loans provided to Hangzhou Ruituo and receivable from thedisposal of automobile collaterals of overdue loans. As of December 31, 2016, 2017 and 2018, we had RMB0.9 million, RMB10.1 million and RMB0.7 million (US$0.1 million) due to Hangzhou Ruituo,respectively. Such amounts mainly represented Hangzhou Ruituo’s investment balance on our platform. We incurred RMB10.1 million, RMB25.3 million and nil of GPS costs to Zhejiang Qunshuo Electronics Co., Ltd. in 2016, 2017 and 2018, respectively,in which Mr. Yao held a minority interest prior to October 10, 2017. We incurred RMB3.3 million, RMB7.9 million and RMB9.6 million (US$1.4 million) of promotion expenses from Weiyi (Hangzhou) Internet FinancialInformation Service Co., Ltd., a company controlled by Mr. Yao in 2016, 2017 and 2018, respectively. Transactions with Certain Other Members of Our Management, Companies Controlled by Them or Their Immediate Families In addition to our transactions with Mr. Hong Yao, we have engaged in transactions with certain other members of our key management and theirimmediate families. We incurred RMB0.8 million, RMB0.9 million and RMB0.7 million (US$0.1 thousand) of loan facilitation service fee from our key management andtheir immediate family members in 2016, 2017 and 2018, respectively. As of December 31, 2016, 2017 and 2018, we had RMB15.0 million,RMB30.7 million and RMB7.6 million (US$1.1 million) due to our key management and their immediate families, respectively. Such amounts mainlyrepresented their investment balance on our platform. 138 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We incurred RMB57.8 million, RMB62.5 million and nil of partner-operated service centers’ operating costs and expenses to Chunan WangcaiInformation Advisory Services Company, or Chunan Wangcai, our service center operation partner controlled by an immediate family member of Mr. YuqunSun, in 2016, 2017 and 2018, respectively. As of December 31, 2016, 2017 and 2018, we had RMB9.5 million, RMB6.2 million and nil due to ChunanWangcai, respectively. We incurred nil, nil and RMB44.2 million (US$6.4 million) of partner-operated service centers’ operating costs and expenses tocertain other companies, which are our service centers operation partners controlled by immediate family members of Mr. Yunqun Sun, in 2016, 2017 and2018, respectively. As of December 31, 2016, 2017 and 2018, we had nil, nil and RMB4,678.0 million (US$680.4 million) due to these companies,respectively. As of December 31, 2016, 2017 and 2018, we had nil, RMB10 thousand and RMB10.0 million (US1.5 million) due from Zhejiang Zhongbo FinanceLease Co., Ltd., or Zhongbo, a company controlled by Mr. Desheng Ding, respectively. Such amount presents loans we provided to Zhongbo to advance toborrowers a certain type of loan product. As of December 31, 2016, 2017 and 2018, we had nil, nil and RMB9.5 million (US1.4 million) due to Zhongbo,respectively, which represent its custodian account balance on our platform. As of December 31, 2016, 2017 and 2018, we had RMB0.3 million, RMB4.0 million and nil due from Shanghai Zaohui Finance Lease Co., Ltd., orShanghai Zaohui, a financial leasing company then controlled by Mr. Desheng Ding, respectively. Such amounts mainly represented excess advancepayments we made to Shanghai Zaohui for the procurement of automobiles. In June 2018, we, through our wholly owned subsidiary Weidai Hong KongLimited, acquired all equity interest in Rymo, Shanghai Zaohui’s parent company, for a total consideration of HK$1. The transaction was conducted pursuantto an equity transfer agreement among Weidai Hong Kong Limited. Rymo, Mr. Desheng Ding and Rymo’s other two shareholders. Rymo’s sole operation isto hold equity interests in Shanghai Zaohui. Contractual Arrangements with Weidai Financial Information and Its Shareholders PRC laws and regulations currently restrict foreign ownership and investment in value added telecommunications services in China. As a result, weoperate our relevant business through Weidai Financial Information, our variable interest entity, based on a series of contractual arrangements. For adescription of these contractual arrangements, see “Item 4. Information on the Company — C. Organizational Structure — Contractual Arrangements withWeidai Financial Information.” Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” C.Interest of Experts and Counsel Not applicable. ITEM 8. FINANCIAL INFORMATION A.Consolidated Statements and Other Financial Information We have appended consolidated financial statements filed as part of this annual report. 139 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Legal Proceedings We are currently not a party to any material legal or administrative proceedings. We have been, and may from time to time in the future, be subject tovarious legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding,regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. Dividend Policy Our board of directors has discretion on whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that ourcompany 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 resultin 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 resolutiondeclare a dividend, but no dividend may exceed the amount recommended by our board of directors. Even if our board of directors decides 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. In 2017, we declared and paid dividends of RMB32.2 million to holders of ordinary shares and preferred shares outstanding as of December 31, 2016. We currently do not have any plan to pay any cash dividends on our ordinary shares in the foreseeable future and intend to retain most, if not all, of ouravailable 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 subsidiary to pay dividends to us. See “Item 4.Information on the Company — B. Business Overview — Regulations —  Regulations on Dividend Distribution” and “Item 10. Additional Information —Taxation — People’s Republic of China Taxation.” If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the ordinary shares underlying our ADSs tothe depositary, as the registered holder of such ordinary shares, and the depositary then will pay such amounts to our ADS holders in proportion to theordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payablethereunder. See “Item 12. Description of Securities Other Than Equity Securities — Description of American Depositary Shares.” Cash dividends on ourordinary shares, if any, will be paid in U.S. dollars. B.Significant Changes Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financialstatements included in this annual report. ITEM 9. THE OFFER AND LISTING A.Offering and Listing Details Our ADSs, each representing one of our Class A ordinary shares, have been listed on the NYSE since November 15, 2018. Our ADSs trade under thesymbol “WEI.” In 2016, 2017 and 2018, no significant trading suspensions occurred. B.Plan of Distribution Not applicable. 140 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. C.Markets The principal trading market for our ADSs is the NYSE. D.Selling Shareholders Not applicable. E.Dilution Not applicable. F.Expenses of the Issue Not applicable. ITEM 10. ADDITIONAL INFORMATION A.Share Capital Not applicable. B.Memorandum and Articles of Association We are a Cayman Islands exempted company with limited liability and our corporate affairs are governed by our memorandum and articles ofassociation, as amended from time to time and the Companies Law of the Cayman Islands, and the common law of the Cayman Islands. The following are summaries of material provisions of our third amended and restated memorandum and articles of association and the Companies Lawinsofar as they relate to the material terms of our Class A and Class B ordinary shares. General. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. All of ouroutstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in registered form. Our shareholderswho are non-residents of the Cayman Islands may freely hold and transfer their ordinary shares. Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Our third amended andrestated articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside fromprofits which our board of directors determine is no longer needed. Dividends may also be declared and paid out of share premium account or any other fundor account which can be authorized for this purpose in accordance with the Companies Law. Holders of Class A ordinary shares and Class B ordinary shareswill be entitled to the same amount of dividends, if declared. Voting Rights. In respect of all matters subject to a shareholders’ vote, each Class A ordinary share is entitled to one vote, and each Class B ordinaryshare is entitled to five (5) votes, voting together as one class. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A pollmay be demanded by the chairman of such meeting or any one or more shareholders who together hold not less than 10% of the nominal value of the totalissued voting shares of our company present in person or by proxy. An ordinary resolution to be passed at a meeting by the shareholders requires theaffirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote ofno less than two-thirds of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution will be required for important matterssuch as a change of name or making changes to our third amended and restated memorandum and articles of association. 141 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Conversion. Each Class B ordinary share is convertible into one Class A ordinary share at any time at the option of the holder thereof. Class A ordinaryshares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person orentity which is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equivalent number ofClass A ordinary shares. Transfer of Ordinary Shares. Subject to the restrictions contained in our third amended and restated articles of association, any of our shareholders maytransfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors. Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we havea lien. Our board of directors may also decline to register any transfer of any ordinary share unless: ·the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as ourboard of directors may reasonably require to show the right of the transferor to make the transfer; ·the instrument of transfer is in respect of only one class of ordinary shares; ·the instrument of transfer is properly stamped, if required; ·in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and ·a fee of such maximum sum as the NYSE may determine to be payable or such lesser sum as our directors may from time to time require is paid to usin respect thereof. If our directors refuse to register a transfer, they shall, within three months after the date on which the instrument of transfer was lodged, send to each ofthe transferor and the transferee notice of such refusal. The registration of transfers may, after compliance with any notice required of the NYSE, be suspended and the register of members closed at such timesand for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended northe register of members closed for more than 30 days in any year as our board may determine. Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets availablefor distribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis. If our assets availablefor distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholdersproportionately. Any distribution of assets or capital to a holder of a Class A ordinary share and a holder of a Class B ordinary share will be the same in anyliquidation event. Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our board of directors may from time to time make calls upon shareholders for anyamounts unpaid on their ordinary shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment. The ordinaryshares that have been called upon and remain unpaid are subject to forfeiture. Redemption of Ordinary Shares. The Companies Law and our third amended and restated articles of association permit us to purchase our own shares. Inaccordance with our third amended and restated articles of association and provided the necessary shareholders or board approval have been obtained, wemay issue shares on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner,including out of capital, as may be determined by our board of directors. 142 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Variations of Rights of Shares. All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, bevaried with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class. The rights conferred upon the holders ofthe shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by thecreation or issue of further shares ranking pari passu with such existing class of shares. General Meetings of Shareholders Shareholders’ meetings may be convened by a majority of our board of directors or our chairman. Advance notice of at least ten clear days is required forthe convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum required for and throughout ameeting of shareholders consists of at least one shareholder entitled to vote and present in person or by proxy or (in the case of a shareholder being acorporation) by its duly authorized representative representing not less than one-third of all voting power of our share capital in issue. Inspection of Books and Records Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporaterecords. However, we will in our articles provide our shareholders with the right to inspect our list of shareholders and to receive annual audited financialstatements. See “Where You Can Find Additional Information.” Changes in Capital We may from time to time by ordinary resolution: ·increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; ·consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; ·sub-divide our existing shares, or any of them into shares of a smaller amount; or ·cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish theamount of our share capital by the amount of the shares so cancelled. However, no alteration contemplated above, or otherwise, may be made to the par value of the Class A ordinary shares or Class B ordinary shares unlessan identical alteration is made to the par value of the Class B ordinary shares and Class A ordinary shares, as the case may be. We may by special resolution, subject to any confirmation or consent required by the Companies Law, reduce our share capital or any capital redemptionreserve in any manner permitted by law. Exempted Company We are an exempted company with limited liability incorporated under the Companies Law. The Companies Law in the Cayman Islands distinguishesbetween ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outsideof the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for anordinary company except for the exemptions and privileges listed below: ·an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies; ·an exempted company’s register of members is not open to inspection; 143 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·an exempted company does not have to hold an annual general meeting; ·an exempted company may issue no par value shares; ·an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for20 years in the first instance); ·an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; ·an exempted company may register as a limited duration company; and ·an exempted company may register as a segregated portfolio company. “Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company. We aresubject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. We currently intend to comply withthe NYSE rules in lieu of following home country practice. The NYSE rules require that every company listed on the NYSE hold an annual general meetingof shareholders. In addition, our third amended and restated articles of association allow directors to call special meeting of shareholders pursuant to theprocedures set forth in our articles. Differences in Corporate Law The Companies Law is modelled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the CompaniesLaw differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between theprovisions of the Companies Law applicable to us and the laws applicable to companies incorporated in the State of Delaware. Mergers and Similar Arrangements A merger or consolidation of two or more constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved bythe directors of each constituent company and authorization by a special resolution of the members of each constituent company. A merger or consolidation between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolutionof shareholders. For this purpose a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are held by orregistered in the name of the parent company. The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court inthe Cayman Islands. Save in certain circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares upondissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for the right to seek relief on thegrounds that the merger or consolidation is void or unlawful. In addition, there are statutory provisions applicable to a scheme of arrangement that facilitate the takeover of companies or the reconstruction andamalgamation of companies, provided that the scheme of the arrangement is approved by a majority in number of each class of shareholders or creditors withwhom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the casemay be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings andsubsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to thecourt the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that: 144 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·the statutory provisions as to the required majority vote have been met; ·the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of theminority shareholders or creditors to promote interests adverse to those of the class; ·the scheme of arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of hisinterest; and ·the scheme of arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law. When a takeover offer is made and accepted by holders of 90% of the shares within four months, the offeror may, within a two-month period commencingon the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can bemade to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence offraud, bad faith or collusion. If a scheme of arrangement, takeover offer and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisalrights, which would otherwise ordinarily be available to dissenting shareholders in a merger or consolidation or to dissenting shareholders of Delawarecorporations, providing rights to receive payment in cash for the judicially determined value of the shares. Shareholders’ Suits In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However,based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle,including when: ·a company acts or proposes to act illegally or ultra vires; ·the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not beenobtained; and ·those who control the company are perpetrating a “fraud on the minority.” Indemnification of Directors and Executive Officers and Limitation of Liability Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors,except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification againstcivil fraud or the consequences of committing a crime. Our third amended and restated memorandum and articles of association permit indemnification ofofficers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraudwhich may attach to such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for aDelaware corporation. In addition, we intend to enter into indemnification agreements with our directors and senior executive officers that will provide suchpersons with additional indemnification beyond that provided in our third amended and restated memorandum and articles of association. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under theforegoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Actand is therefore unenforceable. 145 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Anti-Takeover Provisions in the Memorandum and Articles of Association Some provisions of our third amended and restated memorandum and articles of association may discourage, delay or prevent a change in control of ourcompany or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in oneor more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by ourshareholders. However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our third amended and restatedmemorandum and articles of association, as amended and restated from time to time, for what they believe in good faith to be in the best interests of ourcompany. Directors’ Fiduciary Duties Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has twocomponents: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent personwould exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material informationreasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in thebest interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by adirector and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer orcontrolling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis,in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted byevidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove theprocedural fairness of the transaction, and that the transaction was of fair value to the corporation. As a matter of Cayman Islands law, a director of a Cayman Islands company owes the following duties to the company — a duty to act bona fide in thebest interests of the company and for a proper purpose, a duty not to make a person profit based on his or her position as director (unless the company permitshim to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to athird party. A director must exercise the skill and care of a reasonably diligent person having both – (a) the general knowledge, skill and experience that mayreasonably be expected of a person in the same position (an objective test), and (b) if greater, the general knowledge, skill and experience that that directoractually possesses (a subjective test). Shareholder Action by Written Consent Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to itscertificate of incorporation. Our third amended and restated articles of association provide that shareholders may not approve corporate matters by way of aunanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without ameeting being held. Shareholder Proposals Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided itcomplies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized todo so in the governing documents, but shareholders may be precluded from calling special meetings. Neither Cayman Islands law nor our third amended and restated articles of association allow our shareholders to requisition a shareholders’ meeting. Asan exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings. 146 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Cumulative Voting Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate ofincorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since itpermits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting powerwith respect to electing such director. As permitted under Cayman Islands law, our third amended and restated articles of association do not provide forcumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation. Removal of Directors Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of amajority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our third amended and restated articles ofassociation, directors may be removed by an ordinary resolution of shareholders. Transactions with Interested Shareholders The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation hasspecifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain businesscombinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interestedshareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock within the past three years.This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally.The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directorsapproves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potentialacquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors. Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware businesscombination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it doesprovide that such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose and not with the effect ofconstituting a fraud on the minority shareholders. Dissolution; Winding Up Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved byshareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by asimple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation asupermajority voting requirement in connection with dissolutions initiated by the board. Under the Companies Law of the Cayman Islands, a company maybe wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts asthey fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where itis, in the opinion of the court, just and equitable to do so. Under the Companies Law and our third amended and restated articles of association, our company may be dissolved, liquidated or wound up by thevote of holders of two-thirds of our shares voting at a meeting. 147 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Variation of Rights of Shares Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstandingshares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our third amended and restated articles ofassociation, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the sanction of a specialresolution passed at a general meeting of the holders of the shares of that class. Amendment of Governing Documents Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstandingshares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our third amended and restatedmemorandum and articles of association may only be amended by a special resolution of shareholders. Rights of Non-Resident or Foreign Shareholders There are no limitations imposed by our second amended and restated memorandum and articles of association on the rights of non-resident or foreignshareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our third amended and restated memorandum and articlesof association governing the ownership threshold above which shareholder ownership must be disclosed. Directors’ Power to Issue Shares Subject to applicable law, our board of directors is empowered to issue or allot shares or grant options and warrants with or without preferred, deferred,qualified or other special rights or restrictions. C.Material Contracts We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information onthe Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions,” or elsewhere in this annual report on Form 20-F. D.Exchange Controls See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Foreign Exchange.” E.Taxation The following summary of the material Cayman Islands, PRC and United States federal income tax consequences of an investment in our ADSs orordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. Thissummary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under U.S.state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, the People’s Republic of China and the United States. Cayman Islands Taxation The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation inthe 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 forstamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The CaymanIslands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations orcurrency restrictions in the Cayman Islands. 148 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Payments of dividends and capital in respect of the ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will berequired on the payment of a dividend or capital to any holder of the ordinary shares, nor will gains derived from the disposal of the ordinary shares besubject to Cayman Islands income or corporation tax. No stamp duty is payable in respect of the issue of the shares or on an instrument of transfer in respect of a share. People’s Republic of China Taxation Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto managementbody” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. Theimplementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall management of thebusiness, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued a circular, known asCircular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that isincorporated 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 State Administration of Taxation’s general positionon how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, anoffshore 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 “defacto management body” in China only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in thePRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in thePRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained inthe PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. We do not believe that Weidai Ltd. meets all of the conditions above. Weidai Ltd. is a company incorporated outside the PRC. As a holding company, itskey assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors andthe resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC residententerprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain withrespect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that isconsistent with ours. However, if the PRC tax authorities determine that Weidai Ltd. is a PRC resident enterprise for enterprise income tax purposes, we may be required towithhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs. Such 10%tax rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, forshareholders eligible for the benefits of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for dividends if relevant conditions aremet. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to a 10% PRC tax on gains realized on the sale or otherdisposition of ADSs or ordinary shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders(including our ADS holders) would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we aredetermined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless areduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of Weidai Ltd. would be able to claim thebenefits of any tax treaties between their country of tax residence and the PRC in the event that Weidai Ltd. is treated as a PRC resident enterprise. 149 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Provided that our Cayman Islands holding company, Weidai Ltd., is not deemed to be a PRC resident enterprise, holders of our ADSs and ordinary shareswho are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of ourshares or ADSs. However, under Circular 7, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, inparticular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-residententerprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority suchindirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks areasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirecttransfer may be subject to PRC enterprise income tax, and the transferee would be obligated to withhold the applicable taxes, currently at a rate of 10% forthe transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and beingtaxed under Circular 7, and we may be required to expend valuable resources to comply with Bulletin 37, or to establish that we should not be taxed underCircular 7 and Bulletin 37. See “Item 3. Key Information—D.Risk Factors — Risks Related to Doing Business in China — We and our shareholders faceuncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.” United States Federal Income Tax Considerations The following is a summary of material U.S. federal income tax considerations that are likely to be relevant to the purchase, ownership and disposition ofour ordinary shares or ADSs by a U.S. Holder (as defined below). This summary is based on provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicialinterpretations thereof, in force as of the date hereof. Those authorities may be changed at any time, perhaps retroactively, so as to result in U.S. federalincome tax consequences different from those summarized below. This summary is not a comprehensive discussion of all of the tax considerations that may be relevant to a particular investor’s decision to purchase, hold,or dispose of ordinary shares or ADSs. In particular, this summary is directed only to U.S. Holders that hold ordinary shares or ADSs as capital assets and doesnot address all of the tax consequences to U.S. Holders who may be subject to special tax rules, such as banks, brokers or dealers in securities or currencies,traders in securities electing to mark to market, financial institutions, insurance companies, tax exempt entities, partnerships (including any entities treated aspartnerships for U.S. federal income tax purposes) and the partners therein, holders that own or are treated as owning 10% or more of our shares (measured byvote or value), persons holding ordinary shares or ADSs as part of a hedging or conversion transaction or a straddle, or persons whose functional currency isnot the U.S. dollar. Moreover, this summary does not address state, local or non-U.S. taxes, the U.S. federal estate and gift taxes, or the Medicare contributiontax applicable to net investment income of certain non-corporate U.S. Holders, or alternative minimum tax consequences of acquiring, holding or disposingof ordinary shares or ADSs. For purposes of this summary, a “U.S. Holder” is a beneficial owner of ordinary shares or ADSs that is a citizen or resident of the United States or a U.S.domestic corporation or that otherwise is subject to U.S. federal income taxation on a net income basis in respect of such ordinary shares or ADSs. You should consult your own tax advisors about the consequences of the acquisition, ownership and disposition of the ordinary shares or ADSs,including the relevance to your particular situation of the considerations discussed below and any consequences arising under non-U.S., state, local orother tax laws. ADSs In general, if you are a U.S. Holder of ADSs, you will be treated, for U.S. federal income tax purposes, as the beneficial owner of the underlying ordinaryshares that are represented by those ADSs. 150 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Taxation of Dividends Subject to the discussion below under “Passive Foreign Investment Company Rules,” the gross amount of any distribution of cash or property withrespect to our ordinary shares or ADSs (including amounts, if any, withheld to reflect PRC taxes) that is paid out of our current or accumulated earnings andprofits (as determined for U.S. federal income tax purposes) will generally be includible in your taxable income as ordinary dividend income on the day onwhich you receive the dividend, in the case of ordinary shares, or the date the depositary receives the dividends, in the case of ADSs, and will not be eligiblefor the dividends-received deduction allowed to U.S. corporations under the Code. We do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders thereforeshould expect that distributions generally will be treated as dividends for U.S. federal income tax purposes. Subject to certain exceptions for short-term and hedged positions, the dividends received by a non-corporate U.S. Holder with respect to the ordinaryshares or ADSs will be subject to taxation at a preferential rate if the dividends are “qualified dividends.” Dividends paid on the ordinary shares or ADSs willbe treated as qualified dividends if: ·the ordinary shares or ADSs on which the dividend is paid are readily tradable on an established securities market in the United States or we areeligible for the benefits of a comprehensive tax treaty with the United States that the U.S. Treasury determines is satisfactory for purposes ofthese rules and that includes an exchange of information program; and ·we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a PFIC. Our ADSs are listed on the New York Stock Exchange, and the ADSs qualify as readily tradable on an established securities market in the United Statesso long as they are so listed. We believe that we were not a PFIC for our taxable year ending December 31, 2018. However, as discussed under “PassiveForeign Investment Company Rules,” there is significant risk that we may be treated as a PFIC during the current or a future taxable year. Because the ordinary shares are not themselves listed on a U.S. exchange, dividends received with respect to the ordinary shares that are not representedby ADSs may not be treated as qualified dividends. U.S. Holders of ordinary shares or ADSs should consult their own tax advisors regarding the potentialavailability of the reduced dividend tax rate in light of their own particular circumstances. In the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see “Taxation — People’s Republic of ChinaTaxation”), a U.S. Holder may be subject to PRC withholding taxes on dividends paid on our ADSs or ordinary shares. In that case, we may, however, beeligible for the benefits of the Agreement Between the Government of the United States of America and the Government of the People’s Republic of China forthe Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income (the “Treaty”). If we are eligible for such benefits,dividends we pay on our ordinary shares, regardless of whether such shares are represented by the ADSs, would be eligible for the reduced rates of taxationdescribed above (assuming we are not a PFIC in the year the dividend is paid or the prior year). Dividend distributions with respect to our ordinary shares orADSs generally will be treated as “passive category” income from sources outside the United States for purposes of determining a U.S. Holder’s U.S. foreigntax credit limitation. Subject to the limitations and conditions provided in the Code and the applicable U.S. Treasury Regulations, a U.S. Holder may be ableto claim a foreign tax credit against its U.S. federal income tax liability in respect of any PRC income taxes withheld at the appropriate rate applicable to theU.S. Holder from a dividend paid to such U.S. Holder. Alternatively, the U.S. Holder may deduct such PRC income taxes from its U.S. federal taxable income,provided that the U.S. Holder elects to deduct rather than credit all foreign income taxes for the relevant taxable year. The rules with respect to foreign taxcredits are complex and involve the application of rules that depend on a U.S. Holder’s particular circumstances. Accordingly, U.S. Holders are urged toconsult their tax advisors regarding the availability of the foreign tax credit or the deductibility of foreign taxes under their particular circumstances. 151 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. U.S. Holders that receive distributions of additional ADSs or ordinary shares or rights to subscribe for ADSs or ordinary shares as part of a pro ratadistribution to all our shareholders generally will not be subject to U.S. federal income tax in respect of the distributions. Taxation of Dispositions of ADSs or Ordinary Shares Subject to the discussion below under “Passive Foreign Investment Company Rules,” if a U.S. Holder realizes gain or loss on the sale, exchange or otherdisposition of ADSs or ordinary shares, that gain or loss will be capital gain or loss and generally will be long-term capital gain or loss if the ADS or ordinaryshares have been held for more than one year. Long-term capital gain realized by a non-corporate U.S. Holder generally is subject to taxation at a preferentialrate. The deductibility of capital losses is subject to limitations. Gain, if any, realized by a U.S. Holder on the sale or other disposition of the ADSs or ordinary shares generally will be treated as U.S. source income forU.S. foreign tax credit purposes. Consequently, if a PRC tax is imposed on the sale or other disposition, a U.S. Holder that does not receive significant foreignsource income from other sources may not be able to derive effective U.S. foreign tax credit benefits in respect of such PRC tax. However, in the event thatgain from the disposition of the ADSs or ordinary shares is subject to tax in the PRC, and a U.S. Holder is eligible for the benefits of the Treaty, such holdermay elect to treat such gain as PRC source gain under the Treaty. U.S. Holders should consult their own tax advisors regarding the application of the foreigntax credit rules to their investment in, and disposition of, the ADSs or ordinary shares. Deposits and withdrawals of ordinary shares by U.S. Holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal incometax purposes. Passive Foreign Investment Company Rules. Special U.S. tax rules apply to companies that are considered to be PFICs. We will be classified as a PFIC in a particular taxable year if either ·75 percent or more of our gross income for the taxable year is passive income; or ·the average percentage of the value of our assets that produce or are held for the production of passive income is at least 50 percent. For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct ofa trade or business and not derived from a related person). If we own at least 25% (by value) of the stock of another corporation, for purposes of determiningwhether we are a PFIC, we will be treated as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of theother corporation’s income. Although the law in this regard is not entirely clear, we treat our VIE as being owned by us for U.S. federal income tax purposesbecause we control its management decisions and are entitled to substantially all of the economic benefits associated with it. We believe that we were not a PFIC for our taxable year ending December 31, 2018. Based on the current composition of our income and assets and thevalue of our assets, there is a significant risk that we may be a PFIC for the current or a future taxable year. The PFIC tests must be applied each year, takinginto account our income and assets throughout the entire year, with such assets measured at the end of each quarter. Accordingly, it is possible that we may betreated as a PFIC in the current or a future taxable year due to changes in the composition of our income and assets and the value of our assets. In particular,because the value of our assets will be determined by reference to the market value of our ADS, a decrease in the market value of our ADSs may cause us to bea PFIC. 152 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In the event that we are classified as a PFIC in any year during which a U.S. Holder holds our ordinary shares or ADSs and such U.S. Holder does notmake a mark-to-market election, as described below, the holder will be subject to a special tax at ordinary income tax rates on “excess distributions,”including certain distributions by us (generally, distributions that are greater than 125% of the average annual distributions received during the shorter of thethree preceding taxable years or the Holder’s holding period for the ordinary shares or ADSs) and gain that the holder recognizes on the sale of our ordinaryshares or ADSs. The amount of income tax on any excess distributions will be increased by an interest charge to compensate for tax deferral, calculated as ifthe excess distributions were earned ratably over the period that the U.S. Holder holds its ordinary shares or ADSs. Classification as a PFIC may also haveother adverse tax consequences, including, in the case of individuals, the denial of a step-up in the basis of his or her ordinary shares or ADSs at death. Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year during which a U.S. Holder holds ourordinary shares or ADSs, such holder will generally be subject to the unfavorable rules described above for that year and for each subsequent year in whichsuch holder holds the ordinary shares or ADSs (even if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, a U.S. Holdercan avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if such holder’s ordinary shares or ADSs had been soldon the last day of the last taxable year during which we were a PFIC. U.S. Holders should consult their own tax advisor about this election. A U.S. Holder may be able to avoid the unfavorable rules described above by electing to mark its ADSs to market, provided the ADSs are treated as“marketable stock.” The ADSs generally will be treated as marketable stock if the ADSs are “regularly traded” on a “qualified exchange or other market”(which includes the New York Stock Exchange). It should also be noted that it is intended that only the ADSs and not the ordinary shares will be listed on theNew York Stock Exchange. Consequently, a U.S. Holder that holds ordinary shares that are not represented by ADSs may not be eligible to make a mark-to-market election. If the U.S. Holder makes a mark-to-market election, the holder will be required in any year in which we are a PFIC to include as ordinaryincome the excess of the fair market value of its ADSs at year-end over the holder’s basis in those ADSs. A U.S. Holder’s adjusted tax basis in the ADSs will beincreased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. In addition, any gain theU.S. Holder recognizes upon the sale of the holder’s ADSs in a year in which we are PFIC will be taxed as ordinary income in the year of sale. If a U.S. Holdermakes a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ADSs areno longer regularly traded on a “qualified exchange or other market” or the Internal Revenue Service (“IRS”) consents to the revocation of the election. U.S.Holders are urged to consult their own tax advisors about the availability of the mark- to-market election, the consequences of not making a mark-to-marketelection for the first year during which a U.S. Holder holds interests in our ADSs or ordinary shares and we are a PFIC, and whether making the election wouldbe advisable in their particular circumstances. Although a U.S. Holder can avoid the unfavorable PFIC rules described above by electing to treat its ADSs or ordinary shares as interests in a qualifiedelecting fund (“QEF”), we do not intend to provide the information that would allow a U.S. Holder to make such an election. Accordingly, in the event thatwe are treated as a PFIC, a U.S. Holder will not be able to make a “QEF election.” A U.S. Holder that owns an equity interest in a PFIC must annually file IRS Form 8621. A failure to file one or more of these forms as required may tollthe running of the statute of limitations in respect of each of the U.S. Holder’s taxable years for which such form is required to be filed. As a result, thetaxable years with respect to which the U.S. Holder fails to file the form may remain open to assessment by the IRS indefinitely, until the form is filed. If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares and any of our non-U.S. subsidiaries is also a PFIC,such holder will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of the PFIC rules.U.S. Holders should consult their own tax advisors about the possible application of the PFIC rules to any of our subsidiaries. U.S. Holders should consult their own tax advisors regarding the U.S. federal income tax considerations discussed above and the desirability of making amark-to-market election. 153 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Foreign Financial Asset Reporting Certain U.S. Holders who are individuals that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 are generallyrequired to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financialassets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include theordinary shares and the ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individualsliving abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of tohold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders that fail to report the required informationcould be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospectiveinvestors should consult their own tax advisors concerning the application of these rules to their investment in the ordinary shares or the ADSs, including theapplication of the rules to their particular circumstances. Backup Withholding and Information Reporting Dividends paid on, and proceeds from the sale or other disposition of, the ADSs or ordinary shares that are paid to a U.S. Holder generally may be subjectto the information reporting requirements of the Code and may be subject to backup withholding unless the U.S. Holder provides an accurate taxpayeridentification number and makes any other required certification or otherwise establishes an exemption. Backup withholding is not an additional tax. Theamount of any backup withholding from a payment to a U.S. Holder will be allowed as a refund or credit against the U.S. Holder’s U.S. federal income taxliability, provided the required information is furnished to the IRS in a timely manner. A holder that is a foreign corporation or a non-resident alien individual may be required to comply with certification and identification procedures inorder to establish its exemption from information reporting and backup withholding. F.Dividends and Paying Agents Not applicable. G.Statement by Experts Not applicable. H.Documents on Display We have filed a registration statement, including relevant exhibits, with the SEC on Form F-1 (Registration No. 333-226790) under the Securities Act toregister the issuance and sale of our ordinary shares represented by ADSs in relation to our initial public offering. We have also filed a related registrationstatement on Form F-6 (Registration No. 333-227701) with the SEC to register the ADSs. We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, weare required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC can be obtainedover the internet at the SEC’s website at www.sec.gov or inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E.,Washington, D.C. 20549. You can request copies of documents, upon payment of a duplicating fee, by writing to the SEC. 154 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxystatements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisionscontained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statementswith the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to furnish Citibank,N.A., the depositary of our ADSs, with our annual reports, which will include a review of operations and annual audited consolidated combined financialstatements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generallyavailable to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, if we so request, willmail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us. I.Subsidiary Information Not applicable. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Inflation Since our inception, inflation in China has not materially affected our results of operations. According to the National Bureau of Statistics of China, theyear-over-year percent changes in the consumer price index for December 2016, 2017 and 2018 were increases of 2.1%, 1.8% and 2.1 respectively. Althoughwe have not been materially affected by inflation in the past, we may be affected if China experiences higher rates of inflation in the future. Foreign Exchange Risk Our exposure to foreign exchange risk primarily relates to cash and cash equivalent denominated in U.S. dollars. As substantially all of our revenues andexpenses are denominated in Renminbi, we do not believe that we currently have any significant direct foreign exchange risk, and have not used anyderivative financial instruments to hedge exposure to such risk. Although our exposure to foreign exchange risks should be limited in general, the value ofyour investment in our ADSs will be affected by the exchange rate between U.S. dollar and Renminbi because the value of our business is effectivelydenominated in Renminbi, while our ADSs will be traded in U.S. dollars. The value of the Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions and byChina’s foreign exchange policies, among other things. In July 2005, the PRC government changed its decades-old policy of pegging the value of theRenminbi 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 andJune 2010, this appreciation subsided and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, theRenminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. For Renminbi against U.S. dollar, there was depreciation ofapproximately 6.4% in 2016, appreciation of approximately 5.8% in 2017 and deppreciation of approximately 5.4% in 2018. It is difficult to predict howmarket forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have anadverse effect on the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose ofmaking payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi wouldhave a negative effect on the U.S. dollar amounts available to us. As of December 31, 2018, we had Renminbi-denominated cash balance of RMB1,432.6 million. Assuming we had converted RMB1,432.6 million intoU.S. dollars at the exchange rate of RMB6.8755 for US$1.00 as of December 31, 2018, our U.S. dollar cash balance, including US$45.1 million U.S dollar weheld, would have been US$253.4 million. If the Renminbi had depreciated by 10% against the U.S. dollar, our U.S. dollar cash balance would have beenUS$228.1 million instead. 155 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Interest Rate Risk We have not been exposed to material risks due to changes in market interest rates, and we have not used any derivative financial instruments to manageour interest risk exposure. The fluctuation of interest rates may affect the demand for loan products and services on our platform. For example, a decrease in interest rates may causepotential borrowers to seek lower-priced loans from other channels. A high interest rate environment may lead to an increase in competing investmentoptions and dampen investors’ desire to invest on our platform. We do not expect that the fluctuation of interest rates will have a material impact on ourfinancial condition. However, we cannot provide assurance that we will not be exposed to material risks due to changes in market interest rate in the future.See “Item 3. Key Information—D.Risk Factors — Risks Related to Our Business and Our Industry — Fluctuations in exchange rates could have a materialadverse effect on our results of operations and the price of our ADSs.” After completion of this offering, we may invest net proceeds we receive from the offering in interest-earning instruments. Investments in both fixed rateand floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted dueto a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A.Debt Securities Not applicable. B.Warrants and Rights Not applicable. C.Other Securities Not applicable. D.American Depositary Shares Fees and Charges Our ADS holders May Have to Pay As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement: Service Fees • Issuance of ADSs (e.g., an issuance of ADS upon a deposit of Class Aordinary shares, upon a change in the ADS(s)-to-Class A ordinary share(s)ratio, or for any other reason), excluding ADS issuances as a result ofdistributions of Class A ordinary shares Up to U.S. 5¢ per ADS (or fraction thereof) issued • Cancelation of ADSs (e.g., a cancelation of ADSs for delivery of depositedproperty, upon a change in the ADS(s)-to-Class A ordinary share(s) ratio,or for any other reason) Up to U.S. 5¢ per ADS (or fraction thereof) canceled • Distribution of cash dividends or other cash distributions (e.g., upon a saleof rights and other entitlements) Up to U.S. 5¢ per ADS (or fraction thereof) held • Distribution of ADSs pursuant to (i) stock dividends or other free stockdistributions, or (ii) exercise of rights to purchase additional ADSs Up to U.S. 5¢ per ADS (or fraction thereof) held • Distribution of securities other than ADSs or rights to purchase additionalADSs (e.g., upon a spin-off) Up to U.S. 5¢ per ADS (or fraction thereof) held • ADS Services Up to U.S. 5¢ per ADS (or fraction thereof) held on the applicable recorddate(s) established by the depositary bank 156 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. As an ADS holder you will also be responsible to pay certain charges such as: ·taxes (including applicable interest and penalties) and other governmental charges; ·such registration fees as may from time to time be in effect for the registration of deposited shares or other securities on the share register andapplicable to transfers of deposited shares or other securities to or from the name of the custodian, the depositary or any nominees upon themaking of deposits and withdrawals, respectively; ·such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the deposit agreement to be at the expense of theperson depositing shares or withdrawing deposited shares and other deposited property or of the holders and beneficial owners of ADSs; ·the expenses and charges incurred by the depositary in the conversion of foreign currency (including transaction spreads); ·such fees and expenses as are incurred by the depositary in connection with compliance with exchange control regulations and other regulatoryrequirements applicable to deposited shares or other securities, ADSs and ADRs; and ·the fees and expenses incurred by the depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited sharesor other securities. ADS fees and charges payable upon (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person to or for whom the ADSs areissued (in the case of ADS issuances) and to the person whose ADSs are canceled (in the case of ADS cancellations). In the case of ADSs issued by thedepositary into DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and may be charged to theDTC participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being canceled, as the case may be, on behalf of thebeneficial owner(s) and will be charged by the DTC participant(s) to the account of the applicable beneficial owner(s) in accordance with the procedures andpractices of the DTC participants as in effect at the time. ADS fees and charges in respect of distributions and the ADS services fee are charged to the holdersas of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds beingdistributed. In the case of  (i) distributions other than cash and (ii) the ADS services fee, holders as of the ADS record date will be invoiced for the amount ofthe ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADSfees and charges for distributions other than cash and the ADS services fee may be deducted from distributions made through DTC, and may be charged to theDTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS feesand charges to the beneficial owners for whom they hold ADSs. In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until paymentis received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. CERTAIN OF THE DEPOSITARY FEES ANDCHARGES (SUCH AS THE ADS SERVICES FEE) MAY BECOME PAYABLE SHORTLY AFTER THE CLOSING OF THE ADS OFFERING. Note that thefees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of suchchanges. The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS feescharged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary agree from time to time. 157 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fees and Other Payments Made by the Depositary to Us The depositary bank may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS feescharged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time. For the yearended December 31, 2018, we received reimbursement totaled US$58,000 from the depositary. 158 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Material Modifications to the Rights of Security Holders See “Item 10. Additional Information—B. Memorandum and Articles of Association” for a description of the rights of securities holders, which remainunchanged. Use of Proceeds The following “Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File No. 333-226790) in relation to ourinitial public offering, which was declared effective by the SEC on November 7, 2018. In November 2018, we completed our initial public offering in whichwe issued and sold an aggregate of 4,500,000 ADSs, representing 4,500,000 Class A ordinary shares. In December 2018, the underwriters for our initial publicoffering exercised a portion of their over-allotment options to purchase an addition of 456,427 ADSs. The net proceeds we received from the initial publicoffering and the exercise of over-allotment options totaled US$45.1 million. Morgan Stanley & Co. LLC and Citigroup Global Markets Inc. were therepresentatives of the underwriters for our initial public offering. For the period from November 7, 2018, the date that the registration statement on Form F-1 was declared effective by the SEC, to December 31, 2018, thetotal expenses incurred for our company’s account in connection with our initial public offering was approximately US$4.1 million, which included US$3.5million in underwriting discounts and commissions for the initial public offering and approximately US$0.6 million in other costs and expenses for ourinitial public offering. None of the transaction expenses included payments to directors or officers of our company or their associates, persons owning morethan 10% or more of our equity securities or our affiliates. None of the net proceeds from the initial public offering were paid, directly or indirectly, to any ofour directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates. For the period from November 7, 2018, the date that the registration statement on Form F-1 was declared effective by the SEC, to December 31, 2018, wedid not use any of the net proceeds from our initial public offering. We still intend to use the remainder of the proceeds from our initial public offering as disclosed in our registration statements on Form F-1. ITEM 15. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of ourdisclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required byRule 13a-15(b) under the Exchange Act. Based upon that evaluation, our management has concluded that, due to the outstanding material weakness described below, as of December 31, 2018,our disclosure controls and procedures were not effective in ensuring that the information required to be disclosed by us in the reports that we file and furnishunder the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that theinformation required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to ourmanagement, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. 159 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Management’s Annual Report on Internal Control over Financial Reporting This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report byour independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Internal Control Over Financial Reporting In connection with the audits of our consolidated financial statements as of December 31, 2016 and 2017 and for the years ended December 31, 2016 and2017, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting. As defined inthe standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, ininternal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statementswill not be prevented or detected on a timely basis. The material weakness that has been identified is related to our insufficient number of financial reporting personnel with appropriate level of knowledgeand experience in application of U.S. GAAP and SEC rules and regulations commensurate with our reporting requirements Since the material weakness was identified, we have implemented certain remediation measures to improve our internal control over financial reporting,including the following: (i) hiring two additional accounting staff familiar with U.S. GAAP and SEC reporting requirements to lead the accounting andfinancial reporting matters; (ii) setting up a financial reporting team for U.S. GAAP and SEC reporting under financial department. In addition, we have started to take a number of other measures to strengthen our internal control over financial reporting, including (i) continuing toupgrade our financial system to enhance its effectiveness and enhance control of financial analysis; (ii) continuing to organize regular training for ouraccounting staffs, especially the trainings related to U.S. GAAP and SEC reporting requirements; and (iii) continuing to establish effective oversight andclarifying reporting requirements for non-recurring and complex transactions to ensure consolidated financial statements and related disclosures are accurate,complete and in compliance with U.S. GAAP and SEC reporting requirements. Because such remediation measures had not been fully implemented, our management concluded that the material weakness still existed as of December31, 2018. We expect to complete the measures discussed above by the end of 2019 and will continue to implement measures to remediate our internal controldeficiencies in order to meet the deadline imposed by Section 404 of the Sarbanes Oxley Act. Changes in Internal Control over Financial Reporting Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by thisannual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT Our board of directors has determined that each of Poi Lam Yuen, our independent director (under the standards set forth under Section 303A of theCorporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act), and Feng Chen , is an “audit committee financialexpert.” 160 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 16B. CODE OF ETHICS Our board of directors adopted a code of business conduct and ethics that applies to our directors, officers and employees in August 2018. We haveposted a copy of our code of business conduct and ethics on our website at https://weidai.investorroom.com/. ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Ernst &Young Hua Ming LLP, our principal external auditors, for the periods indicated. Year Ended December 31, 2017 2018 RMB US$ RMB US$ (in thousands) Audit fees(1) 5,070 737 7,316 1,064 (1) Audit fees include the aggregate fees billed in each of the fiscal period listed for professional services rendered by our independent public accountant inrelation to the audit of our annual financial statements, review of our quarterly financial statements and services related to our initial public offering. The policy of our audit committee is to pre-approve all audit and non-audit services provided by Ernst & Young Hua Ming LLP , including auditservices, audit-related services, tax services and other services as described above, other than those for de minimis services which are approved by the auditcommittee prior to the completion of the audit. ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable. ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Not applicable. ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM 16G. CORPORATE GOVERNANCE We are a “controlled company” under the New York Stock Exchange Listed Company Manual because Mr. Hong Yao beneficially owns a majority ofthe aggregate voting power of our company. We opt to rely on certain exemptions that are available to controlled companies from NYSE corporategovernance requirements, including the following, which we do not intend to meet voluntarily: ·that we have a majority of independent directors on our board; ·that we have a nominating committee and a compensation committee that is composed entirely of independent directors with a written charteraddressing the committee’s purpose and responsibilities; ·an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independentdirectors; and 161 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·an exemption from the rule that our director nominees must be selected or recommended solely by independent directors. We are not required to and will not voluntarily meet these requirements. If we are no longer a “controlled company,” we may in the future invoke “homecountry” exceptions available to foreign private issuers, such as us, under the New York Stock Exchange Listed Company Manual which are similar to theexemptions for controlled companies, and also include the possibility of additional exceptions from the New York Stock Exchange Listed Company Manual.As a result of our use of the “controlled company” exemptions, and any future use by us of the “home country” exceptions, holders of our ADSs will not havethe same protection afforded to shareholders of companies that are subject to all of NYSE corporate governance requirements. ITEM 16H. MINE SAFETY DISCLOSURE Not applicable. 162 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART III ITEM 17. FINANCIAL STATEMENTS We have elected to provide financial statements pursuant to Item 18. ITEM 18. FINANCIAL STATEMENTS Our consolidated financial statements are included at the end of this annual report. ITEM 19. EXHIBITS ExhibitNumber Description of Document 1.1 Third Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein by reference to Exhibit 3.2to the registration statement on Form F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commissionon August 10, 2018) 2.1 Registrant’s Specimen American Depositary Receipt (included in exhibit 2.3) 2.2 Registrant’s Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.2 to the registration statement onForm F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission on November 7, 2018) 2.3 Form of Deposit Agreement, among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated herein byreference to Exhibit (a) to the registration statement on Form F-6 (File No. 333-227701), as amended, initially filed with the Securities andExchange Commission on October 4, 2018) 4.1 2018 Share Incentive Plan of the Registrant (incorporated herein by reference to Exhibit 10.9 to the registration statement on Form F-1(File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission on August 10, 2018) 4.2 Form of Employment Agreement between the Registrant and its executive officers (incorporated herein by reference to Exhibit 10.2 to theregistration statement on Form F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission onSeptember 7, 2018) 4.3 Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated herein by reference toExhibit 10.1 to the registration statement on Form F-1 (File No. 333-226790), as amended, initially filed with the Securities and ExchangeCommission on August 10, 2018) 4.4 English translation of the form Share Pledge Agreement among Weidai Co., Ltd., Weidai Financial Information and each shareholder ofWeidai Financial Information dated April 10, 2018 (incorporated herein by reference to Exhibit 10.4 to the registration statement onForm F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission on August 10, 2018) 4.5 English translation of the Exclusive Business Cooperation Agreement among Weidai Co., Ltd. and Weidai Financial Information datedApril 10, 2018 (incorporated herein by reference to Exhibit 10.5 to the registration statement on Form F-1 (File No. 333-226790), asamended, initially filed with the Securities and Exchange Commission on August 10, 2018) 4.6 English translation of the Power of Attorney executed by shareholders of Weidai Financial Information dated April 10, 2018 (incorporatedherein by reference to Exhibit 10.3 to the registration statement on Form F-1 (File No. 333-226790), as amended, initially filed with theSecurities and Exchange Commission on August 10, 2018) 163 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ExhibitNumber Description of Document 4.7 English translation of the Exclusive Call Option Agreement among Weidai Co., Ltd., Weidai Financial Information and shareholders ofWeidai Financial Information dated April 10, 2018 (incorporated herein by reference to Exhibit 10.6 to the registration statement onForm F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission on August 10, 2018) 4.8 English translation of the Spouse Consent Letter signed by the spouse of Mr. Hong Yao dated April 10, 2018 (incorporated herein byreference to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-226790), as amended, initially filed with the Securitiesand Exchange Commission on August 10, 2018) 4.9 Financial Support Undertaking Letter issued by the Registrant to Weidai Financial Information, dated April 10, 2018 (incorporated hereinby reference to Exhibit 10.8 to the registration statement on Form F-1 (File No. 333-226790), as amended, initially filed with theSecurities and Exchange Commission on August 10, 2018) 4.10 Equity Transfer Agreement among Weidai Hong Kong Limited, the shareholders of Rymo Technology Industry Limited and RymoTechnology Industry Limited dated June 6, 2018 (incorporated herein by reference to Exhibit 10.10 to the registration statement onForm F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission on August 10, 2018) 4.11* Form Share Pledge Agreement among Weidai Co., Ltd., Yuntuo and each shareholder of Yuntuo dated January 28, 2019 4.12* Exclusive Business Cooperation Agreement among Weidai Co., Ltd. and Yuntuo dated January 28, 2019 4.13* Power of Attorney executed by shareholders of Yuntuo dated January 28, 2019 4.14* Exclusive Call Option Agreement among Weidai Co., Ltd., Yuntuo and shareholders of Yuntuo dated January 28, 2019 4.15* Spouse Consent Letter signed by the spouse of Mr. Hong Yao dated January 28, 2019 8.1* Principal Subsidiaries and Consolidated Affiliated Entities of the Registrant 11.1 Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the registration statement onForm F-1 (File No. 333-226790), as amended, initially filed with the Securities and Exchange Commission on August 10, 2018) 12.1* Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2* Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1** Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 13.2** Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1* Consent of Ernst & Young Hua Ming LLP, an independent registered public accounting firm 15.2* Consent of CM Law Firm 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document *Filed herewith **Furnished herewith 164 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized theundersigned to sign this annual report on its behalf. Weidai Ltd. By:/s/ Leo Li Name:Leo Li Title:Chief Financial Officer Date: April 16, 2019 165 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of December 31, 2017 and 2018F-3 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, 2017 and 2018F-7 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2016, 2017 and 2018F-10 Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2017 and 2018F-12 Notes to Consolidated Financial Statements for the Years Ended December 31, 2016, 2017 and 2018F-14 F-1 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Weidai Ltd. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Weidai Ltd. (the "Company") as of December 31, 2017 and 2018, the related consolidatedstatements of comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2018, andthe related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, inall material respects, the financial position of the Company at December 31, 2017 and 2018, and the results of its operations and its cash flows for each of thethree years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young Hua Ming LLPWe have served as the Company’s auditor since 2018.Guangzhou, The People’s Republic of ChinaApril 16, 2019 F-2 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) As of December 31, Note 2017 2018 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 1,765,572 1,741,911 253,350 Restricted cash 1,092,921 1,619,937 235,610 Loans and advances, net (net of allowance of RMB404,930 and RMB764,323(US$111,166) as of December 31, 2017 and 2018, respectively) 4 1,938,492 1,482,368 215,602 Short-term investments 5 8,500 4,100 596 Prepaid expenses and other assets 6 433,597 560,165 81,474 Amounts due from related parties 17 9,168 21,797 3,170 Total current assets 5,248,250 5,430,278 789,802 Non-current assets: Restricted cash 4,000 19,368 2,817 Long-term investments 7 359,333 13,333 1,939 Loans and advances, net (net of allowance of RMB1,360 and RMB6,027(US$877) as of December 31, 2017 and 2018, respectively) 4 390,171 421,564 61,314 Prepaid expenses and other assets 6 8,048 7,606 1,106 Property, equipment and software, net 8 99,433 88,731 12,905 Goodwill 22 - 5,812 845 Deferred tax assets 14 158,566 329,796 47,967 Total non-current assets 1,019,551 886,210 128,893 TOTAL ASSETS 6,267,801 6,316,488 918,695 The accompanying notes are an integral part of the consolidated financial statements. F-3 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED BALANCE SHEETS (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) As of December 31, Note 2017 2018 RMB RMB US$ LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY Current liabilities (including current liabilities of the consolidated VIE andsubsidiaries without recourse to the primary beneficiary of RMB4,633,990and RMB3,570,407 (US$519,294) as of December 31, 2017 and 2018,respectively): Short-term borrowings 9 200,000 - - Payable to institutional funding partners and online investors 10 1,770,681 1,005,236 146,206 Current account with online investors and borrowers 11 1,883,446 2,005,605 291,703 Income tax payable 243,338 70,679 10,280 Accrued expenses and other liabilities 12 461,295 501,439 72,931 Amounts due to related parties 17 62,900 28,728 4,179 Deferred revenue 12,330 11,962 1,740 Total current liabilities 4,633,990 3,623,649 527,039 Non-current liabilities (including non-current liabilities of the consolidatedVIE and subsidiaries without recourse to the primary beneficiary ofRMB457,724 and RMB475,613 (US$69,175) as of December 31, 2017 and2018, respectively): Payable to institutional funding partners and online investors 10 416,118 450,160 65,473 Deferred revenue 887 11,343 1,650 Other non-current liabilities 40,719 14,110 2,052 Total non-current liabilities 457,724 475,613 69,175 Total liabilities 5,091,714 4,099,262 596,214 Commitments and contingencies 20 The accompanying notes are an integral part of the consolidated financial statements. F-4 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED BALANCE SHEETS (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) As of December 31, Note 2017 2018 RMB RMB US$ Mezzanine equity: 21 Series A preferred shares (par value of US$0.000002 per share; 9,146,250 andnil shares authorized, issued and outstanding as of December 31, 2017 and2018, respectively) 18,856 - - Series A+ preferred shares (par value of US$0.000002 per share; 1,829,250 andnil shares authorized, issued and outstanding as of December 31, 2017 and2018, respectively) 3,771 - - Series B preferred shares (par value of US$0.000002 per share; 3,048,800 andnil shares authorized, issued and outstanding as of December 31, 2017 and2018, respectively) 6,283 - - Series C redeemable convertible preferred shares (par value of US$0.000002per share; 3,074,400 and nil shares authorized, issued and outstanding as ofDecember 31, 2017 and 2018, respectively) 360,000 - - Total mezzanine equity 388,910 - - The accompanying notes are an integral part of the consolidated financial statements. F-5 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED BALANCE SHEETS (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) As of December 31, Note 2017 2018 RMB RMB US$ Shareholders’ equity: Ordinary shares (par value of US$0.000002 per share; 24,982,901,300 and nilshares authorized as of December 31, 2017 and 2018, respectively,48,392,050 and nil shares issued and outstanding as of December 31, 2017and 2018, respectively) 16 1 - - Class A ordinary shares (par value of US$0.000002 per share; nil and35,375,777 shares issued and outstanding as of December 31, 2017 and2018, respectively) 16 - - - Class B ordinary shares (par value of US$0.000002 per share; nil and35,071,400 shares issued and outstanding as of December 31, 2017 and2018, respectively) 16 - 1 - Additional paid-in capital 468,352 1,170,956 170,308 Accumulated other comprehensive loss 19 - (2,700) (393)Retained earnings 318,824 1,040,443 151,326 Total Weidai Ltd. shareholders’ equity 787,177 2,208,700 321,241 Noncontrolling interests - 8,526 1,240 Total shareholders’ equity 787,177 2,217,226 322,481 TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’EQUITY 6,267,801 6,316,488 918,695 The accompanying notes are an integral part of the consolidated financial statements. F-6 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Year ended December 31, Note 2016 2017 2018 RMB RMB RMB US$ Net revenues: Loan facilitation services (including related partyamounts of RMB833, RMB851 and RMB781 (US$114)for the years ended December 31, 2016, 2017 and 2018,respectively) 1,410,246 2,691,953 3,155,721 458,981 Post facilitation services 146,051 300,185 342,052 49,749 Other revenues (including related party amounts ofRMB2,179, RMB3,740 and RMB13,362 (US$1,943)for the years ended December 31, 2016, 2017 and 2018,respectively) 204,953 305,037 189,712 27,592 Financing income 9,053 303,292 402,750 58,578 Less: Funding costs (2,439) (39,056) (156,138) (22,709)Net financing income 6,614 264,236 246,612 35,869 Business related taxes and surcharges (6,484) (15,981) (20,623) (2,999)Total net revenues 1,761,380 3,545,430 3,913,474 569,192 Provision for loans and advances (144,617) (484,063) (751,572) (109,312)Net revenues after provision for loans and advances 1,616,763 3,061,367 3,161,902 459,880 Operating costs and expenses: Provision for financial guarantee liabilities - - (21,712) (3,158)Origination and servicing (including related partyamounts of RMB177,210, RMB260,026 andRMB162,853 (US$23,686) for the years endedDecember 31, 2016, 2017 and 2018, respectively) (993,623) (1,784,914) (1,757,935) (255,681)Sales and marketing (including related party amounts ofRMB3,264, RMB7,978 and RMB9,631 (US$1,401) forthe years ended December 31, 2016, 2017 and 2018,respectively) (71,139) (273,838) (221,117) (32,160)General and administrative (including related partyamounts of RMB179, RMB21,387 and RMB276(US$40) for the years ended December 31, 2016, 2017and 2018, respectively) (117,004) (316,772) (379,415) (55,184)Research and development (56,142) (100,966) (139,318) (20,263)Total operating costs and expenses (1,237,908) (2,476,490) (2,519,497) (366,446) The accompanying notes are an integral part of the consolidated financial statements. F-7 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Year ended December 31, Note 2016 2017 2018 RMB RMB RMB US$ Income from operations 378,855 584,877 642,405 93,434 Interest income, net 13 13,648 30,303 66,791 9,714 Government subsidies 4,653 53,616 70,351 10,232 Other expense, net (997) (772) (15,288) (2,224)Net income before income taxes 396,159 668,024 764,259 111,156 Income tax expenses 14 (105,130) (193,203) (159,629) (23,217)Net income 291,029 474,821 604,630 87,939 Net income attributable to noncontrolling interests - - (3,011) (438)Net income attributable to Weidai Ltd.’s shareholders 291,029 474,821 601,619 87,501 Dividends declared to preferred shareholders - (8,604) - - Modification of Series A, A+ and B preferred shares (861) - - - Accretion to redemption value of Series C redeemableconvertible preferred shares (120,000) - - - Reversal of accretion on Series C preferred shares - - 120,000 17,453 Net income attributable to ordinary shareholders 170,168 466,217 721,619 104,954 Earnings per share: Basic 15 2.60 7.25 10.93 1.59 Diluted 15 2.60 7.25 10.93 1.59 Shares used in earnings per share computation: Basic 15 48,392,050 48,392,050 50,954,061 50,954,061 Diluted 15 48,392,050 51,466,450 50,954,061 50,954,061 Other comprehensive loss Foreign currency translation adjustment - - (2,700) (393)Comprehensive income 291,029 474,821 601,930 87,546 Comprehensive income attributable to noncontrollinginterests - - (3,011) (438)Comprehensive income attributable to Weidai Ltd.’sshareholders 291,029 474,821 598,919 87,108 Dividends declared to preferred shareholders - (8,604) - - Modification of Series A, A+ and B preferred shares (861) - - - The accompanying notes are an integral part of the consolidated financial statements. F-8 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Year ended December 31, Note 2016 2017 2018 RMB RMB RMB US$ Accretion to redemption value of Series C redeemableconvertible preferred shares (120,000) - - - Reversal of accretion on Series C preferred shares - - 120,000 17,453 Comprehensive income attributable to ordinaryshareholders 170,168 466,217 718,919 104,561 The accompanying notes are an integral part of the consolidated financial statements. F-9 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Attributable to Weidai Ltd. OrdinaryShares Preferred Shares Note Number ofShares Amount Number ofShares Amount Additionalpaid-incapital Subscriptionreceivables (Accumulated deficit)/Retainedearnings TotalWeidaiLtd.shareholders’equity Noncontrollinginterests Totalshareholders’equity RMB RMB RMB RMB RMB RMB RMB RMBBalance as of January 1, 2016 48,392,050 1 14,024,300 - 464,075 (121,951) (293,937) 48,188 - 48,188 Capital injection by shareholders - - - - - 121,951 - 121,951 2,000 123,951 Modification of Series A, A+ and Bpreferred shares 21 - - (14,024,300) - (28,049) - (861) (28,910) - (28,910)Accretion of Series C redeemableconvertible preferred shares - - - - - - (120,000) (120,000) - (120,000)Share-based compensation 18 - - - - 32,326 - - 32,326 - 32,326 Net income - - - - - - 291,029 291,029 - 291,029 Balance as of December 31, 2016 48,392,050 1 - - 468,352 - (123,769) 344,584 2,000 346,584 Dividends declared 16 - - - - - - (32,228) (32,228) - (32,228)Acquisition of noncontrolling interests - - - - - - - - (2,000) (2,000)Net income - - - - - - 474,821 474,821 - 474,821 Balance as of December 31, 2017 48,392,050 1 - - 468,352 - 318,824 781,177 - 781,177 The accompanying notes are an integral part of the consolidated financial statements. F-10 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Attributable to Weidai Ltd. Ordinary Shares Preferred Shares Class A ordinaryshares Class B ordinaryshares Additional Accumulatedother Total WeidaiLtd. Total Number of Number of Number of Number of paid-in comprehensive Retained shareholders’ Noncontrolling shareholders’ Note Shares Amount Shares Amount shares Amount shares Amount capital loss earnings equity interests equity RMB RMB RMB RMB RMB RMB RMB RMB RMB RMBBalance as ofDecember 31, 2017 48,392,050 1 - - - - - - 468,352 - 318,824 787,177 - 787,177 Modification of SeriesA preferred shares 21 - - 9,146,250 18,856 - - - - - - - 18,856 - 18,856 Conversion of ordinaryshares to Class Bordinary shares 16 (35,071,400) (1) - - - - 35,071,400 1 - - - - - - Conversion of ordinaryshares to Class Aordinary shares 16 (13,320,650) - - - 13,320,650 - - - - - - - - - Conversion of preferredshares to Class Aordinary shares 16 - - (9,146,250) (18,856) 17,098,700 - - - 268,910 - - 250,054 - 250,054 Issuance of ordinaryshares upon InitialPublic Offering("IPO") andunderwriters’exercise of over-allotment, net ofissuance costs 16 - - - - 4,956,427 - - - 286,403 - - 286,403 - 286,403 Share-basedcompensation 18 - - - - - - - - 147,291 - - 147,291 - 147,291 Establishment of asubsidiary - - - - - - - - - - - - 4,900 4,900 Acquisition of asubsidiary - - - - - - - - - - - - 615 615 Other comprehensiveloss 19 - - - - - - - - - (2,700) - (2,700) - (2,700)Net income - - - - - - - - - - 601,619 601,619 3,011 604,630 Reversal of accretionon Series C preferredshares - - - - - - - - - - 120,000 120,000 - 120,000 Balance as ofDecember 31, 2018 - - - - 35,375,777 - 35,071,400 1 1,170,956 (2,700) 1,040,443 2,208,700 8,526 2,217,226 Balances as ofDecember 31, 2018,in US$ - - - - 170,308 (393) 151,326 321,241 1,240 322,481 The accompanying notes are an integral part of the consolidated financial statements. F-11 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Cash flows from operating activities: Net income 291,029 474,821 604,630 87,939 Adjustments to reconcile net income to net cash provided by operatingactivities: Provision for loans and advances 144,617 484,063 751,572 109,312 Depreciation and amortization 3,294 12,747 42,431 6,171 Loss on disposal of property and equipment - - 7,305 1,062 Share-based compensation expenses 32,326 40,719 106,571 15,500 Loss on disposals of cost method investments - - 963 140 Changes in operating assets and liabilities: Prepaid expenses and other assets (311,126) (24,895) (67,408) (9,804)Amounts due from related parties (73,687) 65,032 (12,629) (1,837)Deferred tax assets (31,271) (124,887) (171,230) (24,905)Current account with online investors and borrowers 635,863 993,254 122,159 17,767 Income tax payable 94,461 131,888 (172,659) (25,112)Accrued expenses and other liabilities 148,169 231,062 30,514 4,438 Amounts due to related parties (19,930) 1,352 (34,172) (4,970)Deferred revenue 10,643 (1,079) 6,727 978 Net cash provided by operating activities 924,388 2,284,077 1,214,774 176,679 Cash flows from investing activities: Purchase of short-term investments (5,658,220) (11,423,820) (3,687,100) (536,266)Redemption of short-term investments 5,742,220 11,415,320 3,691,500 536,906 Payments to originate loans and advances (1,268,593) (6,885,314) (7,430,624) (1,080,736)Proceeds from collection of loans and advances 913,204 4,360,261 7,103,783 1,033,202 Addition of long-term investments (74,733) (346,000) (1,513,040) (220,063)Redemption of long-term investments 61,400 - 1,563,040 227,335 Disposals of cost method investments - - 295,037 42,911 Cash paid for business combinations - - (4,500) (654)Cash and cash equivalents acquired from business combinations - - 8,045 1,170 Purchase of property, equipment and software (52,329) (62,368) (32,609) (4,743)Net cash used in investing activities (337,051) (2,941,921) (6,468) (938) Cash flows from financing activities: Proceeds from short-term borrowings - 200,000 (200,000) (29,089)Proceeds from institutional funding partners and online investors 165,212 4,627,087 3,399,266 494,403 Payments to institutional funding partners and online investors (70,549) (2,587,336) (4,193,719) (609,951)Proceeds from IPO and underwriters’ exercise of over-allotment, net ofissuance costs 361,951 - 302,670 44,021 Contribution from noncontrolling interests 2,000 - 4,900 713 Distribution to noncontrolling interests - (2,000) - - Payments of dividends to shareholders - (32,228) - - Net cash provided by (used in) financing activities 458,614 2,205,523 (686,883) (99,903) The accompanying notes are an integral part of the consolidated financial statements. F-12 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Effect of exchange rate changes on cash, cash equivalents and restrictedcash - -　 (2,700) (393)Net increase in cash, cash equivalents and restricted cash 1,045,951 1,547,679 518,723 75,445 Cash, cash equivalents and restricted cash at the beginning of the year 268,863 1,314,814 2,862,493 416,332 Cash, cash equivalents and restricted cash at the end of the year 1,314,814 2,862,493 3,381,216 491,777 Supplemental disclosure of cash flow information: Interest paid 2,438 43,524 161,735 23,523 Income taxes paid 41,935 219,988 494,928 71,984 Non-cash activities: Modification of Series A, A+ and B preferred shares (861) - - - Accretion on Series C convertible redeemable preferred shares toredemption value (120,000) - 120,000 17,453 Deferred IPO costs included in accrued expenses and other liabilities - - 16,267 2,366 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents 1,314,814 1,765,572 1,741,911 253,350 Restricted cash – current - 1,092,921 1,619,937 235,610 Restricted cash – non-current - 4,000 19,368 2,817 Total cash, cash equivalents and restricted cash shown in thestatements of cash flows 1,314,814 2,862,493 3,381,216 491,777 The accompanying notes are an integral part of the consolidated financial statements. F-13 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization Weidai Ltd. (the “Company”) was incorporated as a limited company under the law of Cayman Islands on January 26, 2018. The Company does notconduct any substantive operations on its own but instead conducts its business operations through its subsidiaries, variable interest entity (“VIE”) andsubsidiaries of the VIE. The Company, its subsidiaries, VIE and subsidiaries of the VIE are hereinafter collectively referred to as the “Group”. The Company isprincipally engaged in the online finance marketplace business in the People’s Republic of China (the “PRC”). As described below, the Company, through aseries of transactions which is accounted for as a reorganization of entities under common control (the “Reorganization”), became the ultimate parent entityof its subsidiaries, VIE and subsidiaries of VIE. Accordingly, these consolidated financial statements reflect the historical operations of the company as if thecurrent organization structure had been in existence throughout the periods presented. Reorganization transactions In preparation of its IPO in the United States, the following transactions were undertaken to reorganize the legal structure of the Company. On February5, 2018, the Company set up a wholly-owned subsidiary, Weidai HK Limited (“Weidai HK”) in Hong Kong. On March 15, 2018, Weidai HK set up a wholly-owned subsidiary, Weidai Co., Ltd. (“Weidai Co.”) in the PRC. On April 10, 2018, the Company, through Weidai Co., entered into a series of contractualagreements with Weidai (Hangzhou) Financial Information Service Ltd. (“Weidai (Hangzhou), or the “VIE”) and its shareholders (the “VIE Agreements”) totransfer the business operations of the VIE to the Company. In return, the Company issued 48,392,050 of ordinary shares to YAOH WDAI LTD, an entitycontrolled by Mr. Yao Hong (“the Founder”) and the other ordinary shareholders of the VIE, as well as 9,146,250 of Series A preferred shares, 1,829,250 ofSeries A+ preferred shares, 3,048,800 of Series B preferred shares, 3,074,400 of Series C preferred shares to the respective series of preferred shareholders ofthe VIE. As all the entities involved in the process of the Reorganization are under common control before and after the Reorganization, the Reorganization isaccounted for in a manner similar to a pooling-of-interest with the assets and liabilities of the parties to the Reorganization carried over at their historicalamounts. On November 15, 2018, the Company completed its IPO on the New York Stock Exchange (Note 16). As of December 31, 2018, the Company’s subsidiaries, VIE and primary subsidiaries of VIE are as follows: Percentage of legal ownership Date of Place of by the PrincipalEntity incorporation incorporation Company activitiesSubsidiaries Weidai HK February 5, 2018 Hong Kong 100% Investment holdingWeidai Co. March 15, 2018 PRC 100% Investment holdingRymo Technology Industry Limited September 22, 2009 Hong Kong 100% Investment holding VIE Weidai (Hangzhou) December 25, 2014 PRC Nil Online finance marketplacebusiness F-14 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) Entity Date ofincorporation Place ofincorporation Percentageof legalownershipby theCompany Principal activitiesSubsidiaries of the VIE Qianwei (Hangzhou) Technology Co., Ltd. September 29, 2015 PRC Nil Asset managementRuituo (Hangzhou) Internet Financial Information ServicesCo., Ltd. July 30, 2015 PRC Nil Asset managementYiwu Weirui Internet Technology Co., Ltd. September 29, 2015 PRC Nil Asset managementHangzhou Yiqitou Investment Advisory Co., Ltd. October 28, 2016 PRC Nil ConsultingLiangche (Hangzhou) Internet Technology Co., Ltd. February 21, 2017 PRC Nil Internet technologyHangzhou Jingwei Assets Management Co., Ltd. August 9, 2016 PRC Nil Assets managementFuzhou Weidai Online Microcredit Co., Ltd. June 23, 2017 PRC Nil Micro-loan businessKhorgos Micro-car Auction Information Technology Co., Ltd. May 18, 2017 PRC Nil Second-hand car operationKhorgos Micron Internet Technology Co., Ltd. August 23, 2017 PRC Nil Technology development and serviceKhorgos Weiyi Internet Technology Co., Ltd. August 23, 2017 PRC Nil Technology development and serviceHangzhou Yaowei Technology Co., Ltd. January 24, 2018 PRC Nil Technology development and serviceHangzhou Jiujiu Financial Information Services Co., Ltd. August 25, 2015 PRC Nil Finance information serviceHangzhou Micro-car Auction Co., Ltd. June 21, 2018 PRC Nil Second-hand car operation F-15 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) As PRC laws and regulations prohibit and restrict foreign ownership of internet value-added businesses, the Company operates its websites and primarilyconducts its business in PRC through the VIE and the subsidiaries of the VIE. On April 10, 2018, the Company entered into share pledge agreements with thenominee shareholders of the VIE through its wholly-owned subsidiary in the PRC, for the equity interests in the VIE held by the shareholders of the VIE. Inaddition, the Company entered into a power of attorney and an exclusive call option agreement with the VIE and nominee shareholders of the VIE through itswholly-owned subsidiaries in the PRC, which provide its wholly-owned subsidiary the power to direct the activities that most significantly affect theeconomic performance of the VIE and to acquire the equity interests in the VIE when permitted by the PRC laws, respectively. The Company agreed toprovide unlimited financial support to the VIE for its operations which obligated the Company to absorb losses of the VIE that could potentially besignificant to the VIE. In addition, pursuant to the resolution of all shareholders of the Company and the resolution of the board of directors of the Companyon April 10, 2018 (the “Resolutions”), the rights under the aforementioned power of attorney and the exclusive call option agreement were assigned to theboard of directors of the Company (the “Board”) or any officer authorized by the Board, which entitle the Company or its wholly-owned subsidiary to receiveeconomic benefits from the VIE that potentially could be significant to the VIE. Despite the lack of technical majority ownership, the Company has effective control of the VIE through a series of VIE Agreements and a parent-subsidiary relationship exists between the Company and the VIE. Through the VIE Arrangements, the shareholders of the VIE effectively assigned all of theirvoting rights underlying their equity interest in the VIE to the Company. In addition, through the exclusive business operation agreement, the Company,through its wholly-owned subsidiary in the PRC, have the right to receive economic benefits from the VIE that potentially could be significant to the VIE.Lastly, through the financial support undertaking letter, the Company has the obligation to absorb losses of the VIE that could potentially be significant tothe VIE. Therefore, the Company is considered the primary beneficiary of the VIE and consolidates the VIE and its subsidiaries as required by SECRegulation S-X Rule 3A-02 and ASC topic 810 (“ASC 810”), Consolidation. The principal terms of the VIE Agreements are further described below: (1)Power of Attorney: Pursuant to the power of attorney signed between Weidai (Hangzhou)’s nominee shareholders and Weidai Co., each nominee shareholderirrevocably appointed Weidai Co. as its attorney-in-fact to exercise on such shareholder’s behalf any and all rights that such shareholder has in respect ofits equity interest in Weidai (Hangzhou) (including but not limited to executing the exclusive right to purchase agreements, the voting rights and theright to appoint directors and executive officers of Weidai (Hangzhou). This agreement is effective and irrevocable as long as the nominee shareholderremains a shareholder of Weidai (Hangzhou). F-16 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) (2)Exclusive Call Option Agreement: Pursuant to the exclusive call option agreement entered into amongst the Company, Weidai (Hangzhou)’s nominee shareholders and Weidai Co., thenominee shareholders irrevocably granted Weidai Co. a call option to request the nominee shareholders to transfer or sell any part or all of its equityinterests in the VIE, or any or all of the assets of VIE, to Weidai Co., or its designees. The purchase price of the equity interests in the VIE is equal to theminimum price required by PRC law. The purchase price of the VIE’s assets is equal to the book value of the assets or the minimum price as permitted byapplicable PRC law, whichever is higher. Without Weidai Co.’s prior written consent, the VIE and its nominee shareholders may not amend its articles ofassociation, increase or decrease the registered capital, sell or otherwise dispose of its assets or beneficial interest, create or allow any encumbrance on itsassets or other beneficial interests and provide any loans or guarantees, etc. The nominee shareholders cannot request any dividends or other form ofassets. If dividends or other form of assets are distributed, the nominee shareholders are required to transfer all distribution received to Weidai Co. or theirdesignees. This agreement is not terminated until all of the equity interest of the VIE has been transferred to Weidai Co. or the person(s) designated byWeidai Co. None of the nominee shareholders have the right to terminate or revoke the agreement under any circumstance unless otherwise regulated bylaw. (3)Exclusive Business Cooperation Agreement: Pursuant to the exclusive business cooperation agreement entered into amongst Weidai Co. and Weidai (Hangzhou), Weidai Co. provides exclusivetechnical support and consulting services in return for fees based on 100% of Weidai (Hangzhou)’s net income, which is adjustable at the sole discretionof Weidai Co.. Without Weidai Co.’s consent, the VIE and its subsidiaries cannot procure services from any third party or enter into similar servicearrangements with any other third party, except for the ones appointed by Weidai Co.. This agreement is irrevocable or can only be unilaterally revokedor amended by Weidai Co. (4)Share Pledge Agreement: Pursuant to the share pledge agreements amongst the Company and Weidai (Hangzhou)’s nominee shareholders, each nominee shareholder of theVIE pledged all of their respective equity interests in the VIE to Weidai Co. as continuing first priority security interest to guarantee the performance ofthese nominee shareholders and the VIE’s obligations under the shareholder voting rights proxy agreement, the exclusive call option agreement and theexclusive business cooperation agreement. Weidai Co. is entitled to all dividends during the effective period of the share pledge except as it agreesotherwise in writing. If Weidai (Hangzhou) or any of the nominee shareholder breaches its contractual obligations, Weidai Co. is entitled to certain rightsregarding the pledged equity interests, including the right to receive proceeds from the auction or sale of all or part of the pledged equity interests ofWeidai (Hangzhou) in accordance with PRC law. None of the nominee shareholders may, without the prior written consent of Weidai Co., assign ortransfer to any third party, distribute dividends and create or cause any security interest and any liability in whatsoever form to be created on, all or anypart of the equity interests it holds in the VIE. This agreement is not terminated until all of the technical support and consulting and service fees are fullypaid under the exclusive business cooperation agreement and all of Weidai (Hangzhou)’s obligations have been terminated under the other controllingagreements. As of May 23, 2018, the Company completed the registration of all the equity pledges with the relevant office of the administration forindustry and commerce in accordance with the PRC Property Rights Law. F-17 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) (5)Financial support undertaking letter: Pursuant to the financial support undertaking letter, the Company is obligated to provide unlimited financial support to the VIE, to the extentpermissible under the applicable PRC laws and regulations. The Company will not request repayment of the loans or borrowings if the VIE or itsshareholders do not have sufficient funds or are unable to repay. (6)Resolutions of all shareholders and resolution of the board of directors of Weidai Ltd.: The shareholders and the Company’s Board resolved that the rights under the shareholder voting rights proxy agreements and the exclusive calloption agreements were assigned to the board of directors of the Company or any officer authorized by the Board. In the opinion of the Company’s legal counsel, (i) the ownership structure of the Company and its VIE is in compliance with PRC laws andregulations; (ii) the contractual arrangements with the VIE and their shareholders are valid and binding, and not in violation of current PRC laws orregulations; (iii) the resolutions are valid in accordance with the articles of association of the Company and Cayman Islands law. However, uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found in violation of existing and/orfuture PRC laws or regulations and could limit the Company’s ability to enforce its rights under these contractual arrangements. Furthermore, thenominee shareholders of the VIE may have interests that are different from those of the Company, which could potentially increase the risk that theywould seek to act contrary to the terms of the contractual agreements with the VIE. In addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC laws orregulations, the Company may be subject to penalties, including but not be limited to, revocation of business and operating licenses, discontinuing orrestricting business operations, restricting the Company’s right to collect revenues, temporary or permanent blocking of the Company’s internet financialservices platforms, restructuring of the Company’s operations, imposition of additional conditions or requirements with which the Company may not beable to comply, or other regulatory or enforcement actions against the Company that could be harmful to its business. The imposition of any of these orother penalties could have a material adverse effect on the Company’s ability to conduct its business. F-18 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) The table sets forth the assets and liabilities of the VIE and subsidiaries of VIE included in the Company’s consolidated balance sheets: As of December 31, 2017 2018 RMB RMB US$ Current assets: Cash and cash equivalents 1,765,572 1,419,293 206,428 Restricted cash 1,092,921 1,619,937 235,610 Loans and advances, net 1,938,492 1,482,368 215,602 Short-term investments 8,500 4,100 596 Prepaid expenses and other assets 433,597 553,251 80,466 Amounts due from related parties 9,168 42,680 6,208 Total current assets 5,248,250 5,121,629 744,910 Non-current assets: Restricted cash 4,000 19,368 2,817 Long-term investments 359,333 13,333 1,939 Loans and advances, net 390,171 421,564 61,314 Prepaid expenses and other assets 8,048 7,606 1,106 Property, equipment and software, net 99,433 88,684 12,899 Goodwill - 3,067 446 Deferred tax assets 158,566 329,796 47,967 Total non-current assets 1,019,551 883,418 128,488 Total assets 6,267,801 6,005,047 873,398 F-19 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) As of December 31, 2017 2018 RMB RMB US$ Current liabilities: Short-term borrowings 200,000 - - Payable to institutional funding partners and online investors 1,770,681 1,005,236 146,206 Current account with online investors and borrowers 1,883,446 2,005,605 291,703 Income tax payable 243,338 59,461 8,648 Accrued expenses and other liabilities 461,295 459,415 66,820 Amounts due to related parties 62,900 452,518 65,816 Deferred revenue 12,330 11,962 1,740 Total current liabilities 4,633,990 3,994,197 580,933 Non-current liabilities: Payable to institutional funding partners and online investors 416,118 450,160 65,473 Deferred revenue 887 11,343 1,650 Other non-current liabilities 40,719 14,110 2,052 Total non-current liabilities 457,724 475,613 69,175 Total liabilities 5,091,714 4,469,810 650,108 F-20 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 1.Organization (continued) The table sets forth the results of operations of the VIE and subsidiaries of VIE included in the Company’s consolidated statements of comprehensiveincome: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Net revenues 1,761,380 3,545,430 3,917,701 569,806 Net income 291,029 474,821 231,872 33,724 The table sets forth the cash flows of the VIE and subsidiaries of VIE included in the Company’s consolidated statements of cash flows: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Net cash provided by operating activities 924,388 2,284,077 1,204,835 175,236 Net cash used in investing activities (337,051) (2,941,921) (9,916) (1,442)Net cash provided by (used in) financing activities 458,614 2,205,523 (998,814) (145,271) As of December 31, 2017 and 2018, there was no pledge or collateralization of the assets of the VIE and its subsidiaries. The amount of the net assets ofthe VIE and subsidiaries of VIE was RMB1,176,087 and RMB1,535,237 (US$223,290) as of December 31, 2017 and 2018, respectively. The creditors of theVIE and subsidiaries of VIE’s third-party liabilities did not have recourse to the general credit of the primary beneficiary in the normal course of business. TheCompany did not provide nor intended to provide additional financial or other support not previously contractually required to the VIE and subsidiaries ofVIE during the years presented. F-21 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies Basis of presentation The consolidated financial statements of the company have been prepared in accordance with United States generally accepted accounting principles(“U.S. GAAP”). Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, VIE and VIE’s subsidiaries for which theCompany is the primary beneficiary. All significant inter-company balances and transactions between the Company, its subsidiaries, VIE and VIE’ssubsidiaries are eliminated upon consolidation. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company's consolidated financial statements include,but are not limited to, allowance for loans and advances, identification of separate accounting units and estimating the best estimate selling price of eachdeliverable in the Company’s revenue arrangements, guarantee liabilities, useful life of long-lived assets, share-based compensation, valuation allowance fordeferred tax assets, uncertain tax positions and fair value of preferred shares and short-term investments, the purchase price allocation with respect to businesscombinations and impairment of goodwill. Management bases these estimates on its historical experience and on various other assumptions that are believedto be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ fromthese estimates. Foreign currency translation and transactions The Company uses Renminbi (“RMB”) as its reporting currency. The functional currencies of the Company’s entities incorporated in Cayman Islandsand Hong Kong are US$. The functional currencies of the Company’s PRC subsidiary, VIE and VIE’s subsidiaries are the RMB. The determination of therespective functional currency is based on the criteria stated in ASC 830, Foreign Currency Matters. The financial statements of the Company and Weidai HK are translated from the functional currency to the reporting currency, RMB. Monetary assetsand liabilities of the subsidiaries are translated into RMB using the exchange rate in effect at each balance sheet date. Income and expenses items aretranslated at the average exchange rate prevailing during the fiscal year. Translation gains and losses are accumulated in other comprehensive income, as acomponent of shareholders’ equity on the consolidated financial statements. Transactions denominated in other than the functional currencies are remeasured into the functional currency of the entity at the exchange ratesprevailing on the transaction dates. Financial assets and liabilities denominated in other than the functional currency are re-measured into the functionalcurrency at the exchange rates prevailing at the balance sheet date. The foreign exchange differences are recorded in the consolidated statements ofcomprehensive income. F-22 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Convenience translation Translations of amounts from RMB into US$ for the convenience of the readers have been calculated at the exchange rate of RMB6.8755 per US$1.00 onDecember 31, 2018, the last business day in fiscal year 2018, representing the noon buying rate set forth in the H.10 statistical release of the U.S. FederalReserve Board. No representation is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at anyother rate. Cash and cash equivalents Cash and cash equivalents primarily consist of cash and bank deposits, which are unrestricted as to withdrawal and use. The Company considers allhighly liquid investments that are readily convertible to known amounts of cash and with original maturities from the date of purchase of three months or lessto be cash equivalents. Restricted cash The Company’s restricted cash mainly represents (i) cash received but has not yet been disbursed, including idle funds due to investors whom recharge tothe accounts on the platform but have not yet invested or fully funded the loans and funds due to borrowers that investors lend to borrowers but borrowershave not yet withdrawn. Such funds were processed through a designated bank account. As of December 31, 2017, and 2018, the restricted cash related tocash not yet disbursed amounted to RMB1,083,421 and RMB1,583,178 (US$230,264), respectively; and (ii) cash held by banks as guarantee deposits paidon contracts and other restrictions amounted to RMB13,500 and RMB56,127 (US$8,163) as of December 31, 2017 and 2018, respectively. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires entities to present theaggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cashflows will be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents.The Company early adopted the updated guidance retrospectively and presented restricted cash within the ending cash, cash equivalents and restricted cashbalance on the Company’s consolidated statements of cash flows for the years ended December 31, 2016, 2017 and 2018. Short-term investments All highly liquid investments with original maturities of greater than three months, but less than twelve months, are classified as short-term investments. Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments. The Company accountsfor short-term investments in accordance with ASC topic 320, Investments—Debt and Equity Securities (“ASC 320”). The Company classifies the short-terminvestments as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated by ASC320. The securities that the Company has the positive intent and the ability to hold to maturity are classified as held-to-maturity securities and stated atamortized cost. The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities.Unrealized holding gains and losses for trading securities are included in earnings. Investments not classified as trading or as held-to-maturity are classifiedas available-for-sale securities. Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated othercomprehensive income. Realized gains or losses are included in earnings during the period in which the gain or loss is realized. An impairment loss on theavailable-for-sale securities is recognized in the consolidated statements of comprehensive income when the decline in value is determined to be other-than-temporary. F-23 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Loans and advances, net Loans and advances represent payments due from borrowers. Loans and advances are recorded at amortized cost (i.e. unpaid principal and deferredorigination costs), net of allowance for loans and advances. Deferred origination costs are netted against net financing income and amortized over thefinancing term using the effective interest method. The Company does not accrue interest income on loan principals that are considered impaired or past due. A corresponding allowance is determinedunder ASC 450-20 and allocated accordingly. After an impaired loan has been placed on nonaccrual status, interest receivable will be recognized when cashis received by applying first to reduce loan principal and then to interest income thereafter. Interest income accrued but not received is generally reversedagainst interest income. Interest receivables may be returned to accrual status after all of the borrower’s delinquent balances of loan principal and interesthave been settled and the borrower remains current for an appropriate period. Allowance for loans and advances The Company segregates the loans into secured and unsecured, and then into various portfolios, i.e. automobile and home equity, etc. and applies itscredit risk management framework to the various portfolio of loans in accordance with ASC 450-20, Loss Contingencies. The allowance for loans and advances is calculated based on the Company’s historical loss experience using a roll rate-based model. The roll rate-basedmodel stratifies the loan principal and interest receivables by delinquency stages (i.e., current, 1-30 days past due, and 31-60 days past due etc.) and projectedforward in one-month increments using historical roll rates. In each month of the simulation, losses on the loans and advances types are captured, and theending delinquency stratification serves as the beginning point of the next iteration. This process is repeated on a monthly rolling basis. The loss ratecalculated for each delinquency stage is then applied to the respective loans and advances balance. The Company adjusts the allowance that is determinedby the roll rate-based model for various Chinese macroeconomic factors i.e. gross-domestic product rates, per capita disposable income, interest rates andconsumer price indexes. Each of these macroeconomic factors are equally weighted, and a score is applied to each factor based on year-on-year increases anddecreases in that respective factor. F-24 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Loans and advances, net (continued) Loans are charged off when a settlement is reached for an amount that is less than the outstanding balance or when the Company has determined thebalance is uncollectable. In general, unsecured loans are charged off when outstanding loans are 180 days past due. Secured loans may be charged off uponthe death of the borrower, significant damage to the collateral, and when the Company considers the balance to be uncollectable. Acquired non-performing loans The Company records acquired non-performing loans in accordance with ASC310-30, Loan and Debt Securities with Deteriorated Credit Quality, whenit voluntarily purchases a delinquent loan. Such acquired non-performing loans are expected to be recovered either through the sale of the loan collateralupon foreclosure or from the subsequent payments made by the borrowers and are initially recorded at their purchase price. As the cash flows expected to becollected cannot be estimated because the timing of the collection and the condition of the collateral are indeterminable, the acquired non-performing loansare placed on non-accrual status and impairment is measured based on the fair value of the collateral less the estimated selling costs. The Company derecognizes the acquired non-performing loans when the non-performing loans are settled through foreclosure or repayment by theborrower. Any difference between the proceeds from sale of the collateral or subsequent payments made by the borrowers, and the acquired non-performingloan balance is recognized in other revenues in the consolidated statements of comprehensive income. Borrowings For certain transactions with the borrowers, the Company may provide a loan to borrowers and then transfers the loan to investors at varying rates andtenures. Although the loan is transferred to the investors, the loan principal is not derecognized upon transfer, as the transaction does not represent a transferof an entire financial asset or a participating interest and the loan is not legally isolated from the Company. Additionally, the terms of the transfer require theCompany to guarantee the principal and interest in case of default by the borrowers. As a result, the arrangement is accounted for as a secured borrowing inaccordance with ASC 860, Transfers and Servicing. The loan remains on the Company’s consolidated balance sheets and the funds received from theinvestors are recorded as payable to institutional funding partners and online investors in the Company’s consolidated balance sheets. Borrowings areinitially recognized at fair value which is the cash received from investors, and measured subsequently at amortized cost using the effective interest method. Guarantee liabilities The Company provides guarantee to various institutional funding partners and online investors. The guarantee requires the Company to either makedelinquent installment repayments or purchase the loans after a specified period on an individual loan basis. The guarantee liability is exempted from beingaccounted for as a derivative in accordance with ASC 815-10-15-58. F-25 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Guarantee liabilities (continued) The guarantee liability consists of two components. The Company’s obligation to stand ready to make delinquent payments or to purchase the loan overthe term of the arrangement (the non-contingent aspect) is accounted for in accordance with ASC 460, Guarantees (“ASC 460”). The contingent obligationrelating to the contingent loss arising from the arrangement is accounted for in accordance with ASC 450, Contingencies (“ASC 450”). At inception, theCompany recognizes the non-contingent aspect of the guarantee liability at fair value, which considers the premium required by a third party marketparticipant to issue the same risk assurance in a standalone transaction. Subsequent to the initial recognition, the non-contingent aspect of the risk assurance liability is reduced over the term of the arrangement as the Companyis released from its stand ready obligation on a loan-by-loan basis based on the borrower’s repayment of the loan principal. The contingent loss arising fromthe obligation to make future payments is recognized when borrower default is probable and the amount of loss is estimable. The Company considers theunderlying risk profile including delinquency status, overdue period, and historical loss experience when assessing the probability of contingent loss.Borrowers are grouped based on common risk characteristics, such as product type. The Company measured contingent loss based on the future payout of thearrangement estimated using the historical default rates of a portfolio of similar loans less the fair value of the recoverable collateral. The amount of provisionfor financial guarantee liabilities was nil, nil and RMB21,712 (US$3,158) for the years ended December 31, 2016, 2017 and 2018. The maximum potentialundiscounted future payment which the Company would be required to make under its guarantee obligation is RMB551,170 and RMB2,938,661(US$427,411) as of December 31, 2017 and 2018, respectively. Long-term Investments The Company’s long-term investments consist of time deposits with stated maturities of greater than 365 days and cost method investments. Inaccordance with ASC subtopic 325-20 (“ASC 325-20”), Investments-Other: Cost Method Investments, for investments in an investee over which theCompany does not have control or significant influence and for which there is no readily determinable fair value, the Company carries the investment at costand only adjusts for other-than-temporary declines in fair value and distributions of earnings that exceed the Company’s share of earnings since itsinvestment. The Company regularly evaluates the impairment of the investment based on the performance and the financial position of the investee as well asother evidence of market value. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financing, projected andhistorical financial performance, cash flow forecasts and financing needs. An impairment loss recognized in earnings is equal to the excess of theinvestment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value would then become thenew cost basis of investment. No impairment loss on the cost method investments was recognized for the years ended December 31, 2016, 2017 and 2018. F-26 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Business combinations The Company accounts for its business combinations using the purchase method of accounting in accordance with ASC 805, Business Combinations(“ASC 805”). The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiableassets and liabilities the Company acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregateof the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations andall contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets,liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of anynon-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of anypreviously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost ofacquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings. The Company earlyadopted ASU No. 2017-01, Business Combinations (Topic 802): Clarifying the Definition of a Business, in determining whether it has acquired a business. The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on variousassumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations arediscount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine thecash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model andindustry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. Goodwill The Company assesses goodwill for impairment in accordance with ASC 350-20, Intangibles — Goodwill and Other: Goodwill (“ASC 350-20”), whichrequires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, asdefined by ASC 350-20. The Company has determined that it has one reporting unit. The Company has the option to assess qualitative factors first to determine whether it isnecessary to perform the quantitative impairment test in accordance with ASC 350-20. If the Company believes, as a result of the qualitative assessment, thatit is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, nofurther testing is required. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financialperformance of the reporting unit, and other specific information related to the operations. The Company early adopted ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairmentby eliminating Step two from the goodwill quantitative impairment test. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value,an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to thatreporting unit. Fair value is primarily determined by computing the future discounted cash flows expected to be generated by the reporting unit. F-27 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Fair value measurements of financial instruments Financial instruments of the Company primarily consist of cash and cash equivalents, restricted cash, available-for-sale debt securities, long-term timedeposits, amounts due from and due to related parties, loans and advances, cost method investments, short-term borrowings, payable to institutional fundingpartners and online investors and current account with online investors and borrowers. The carrying amounts of these financial instruments, except for long-term time deposit, long-term loans and advances, cost method investments and long-term payable to institutional funding partners and online investorsapproximate their fair values because of their generally short maturities. The Company applies ASC topic 820 (“ASC 820”), Fair Value Measurements and Disclosures, in measuring fair value. ASC 820 defines fair value,establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: ØLevel 1 - Observable inputs that reflect quoted prices in active markets for identical assets or liabilities.ØLevel 2 - Include other inputs that are directly or indirectly observable in the marketplace.ØLevel 3 - Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) costapproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets orliabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on thevalue indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required toreplace an asset. In accordance with ASC 820, the Company measures available-for-sale investments at fair value on a recurring basis. The fair value of the Company’savailable-for-sale debt securities are measured using the income approach, based on quoted market interest rates of similar instruments and other significantinputs derived from or corroborated by observable market data. The fair value of time deposits is determined based on the prevailing interest rates in themarket. The fair values of the Company’s long-term loans and advances and long-term payable to institutional funding partners as disclosed are determinedbased on the discounted cash flow model using the discount curve of market interest rates. The Company did not disclose the fair value of its cost methodinvestments since the fair value cannot be determined without undue cost and effort. F-28 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Fair value measurements of financial instruments (continued) Fair value measurement or disclosure atDecember 31, 2017 using Total fair value atDecember 31, 2017 Quoted prices inactive markets foridentical assets(Level 1) Significantotherobservableinputs (Level 2) Significantunobservableinputs(Level 3) RMB RMB RMB RMB Fair value disclosure Long-term time deposits 44,322 — 44,322 — Loans and advances, net – non-current 390,171 — 390,171 — Long-term payable to institutional funding partners andonline investors 383,043 — 383,043 — Fair value measurements Recurring Recurring short-term investments Available-for-sale debt securities 8,500 — 8,500 — Fair value measurement or disclosure atDecember 31, 2018 using Total fair value atDecember 31, 2018 Quoted prices inactive markets foridentical assets(Level 1) Significantotherobservableinputs (Level 2) Significantunobservableinputs(Level 3) RMB US$ RMB RMB RMB Fair value disclosure Loans and advances, net – non-current 421,564 61,314 — 421,564 — Long-term payable to institutionalfunding partners and onlineinvestors 419,039 60,947 — 419,039 — Fair value measurements Recurring Recurring short-term investments Available-for-sale debt securities 4,100 596 — 4,100 — F-29 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Fair value measurements of financial instruments (continued) The Company had no financial assets and liabilities measured and recorded at fair value on a non-recurring basis as of December 31, 2017 and 2018. Property, equipment and software, net Property, equipment and software are stated at cost less accumulated depreciation and amortization using the straight-line method with the residual valueover the estimated useful lives of the assets, as follows: Category: EstimatedUseful Life EstimatedResidual Value Computer and electronic equipment 3~5 years 5%Office furniture and equipment 3~5 years 5%Vehicles 3~4 years 5%Software 3~10 years 0%Leasehold improvement Lessor of useful life or lease term 0% Costs associated with the repair and maintenance of property and equipment are expensed as incurred. Impairment of long-lived assets The Company evaluates its long-lived assets or asset group, including intangible assets with finite lives, for impairment whenever events or changes incircumstances indicate that the carrying value of an asset or a group of long-lived assets may not be recoverable. When these events occur, the Companyevaluates for impairment by comparing the carrying amount of long-lived assets against the estimated undiscounted future cash flows associated with it.Impairment exists when the estimated undiscounted future cash flows are less than the carrying value of the asset being evaluated. Impairment loss iscalculated based on the excess of carrying value of the asset over its fair value. No impairment loss was recognized for the years ended December 31, 2016,2017 and 2018. F-30 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Research and development expenses Research and development expenses are primarily incurred in the development of new services, new features and general improvement of the Company’stechnology infrastructure to support its business operations. Research and development costs are expensed as incurred unless such costs qualify forcapitalization as software development costs. In order to qualify for capitalization, (i) the preliminary project should be completed, (ii) management hascommitted to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended, and (iii)it will result in significant additional functionality in the Company’s services. No research and development costs were capitalized during the years endedDecember 31, 2016, 2017 and 2018. The Company recognized research and development expenses amounted to RMB56,142, RMB100,966 andRMB139,318 (US$20,263) for the years ended December 31, 2016, 2017 and 2018, respectively. Government subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in theirjurisdictions and compliance with specific policies promoted by the local governments. There are no defined rules and regulations to govern the criterianecessary for companies to receive such benefits, and the amount of financial subsidy is determined at the discretion of the relevant government authorities.The government subsidies of non-operating nature with no further conditions to be met are recorded as non-operating income when received. Thegovernment subsidies with certain operating conditions are recorded as liabilities when received and will be recorded as operating income when theconditions are met. Modification of equity-classified preferred shares The Company assesses whether an amendment to the terms of its equity-classified preferred shares is an extinguishment or a modification based on thechange in the fair value of the preferred shares. If the change in fair value of equity-classified preferred shares immediately after the amendment exceeds 10%from the fair value of the equity-classified preferred shares immediately before the amendment, the amendment is considered an extinguishment. Anamendment that does not meet this criteria is a modification. When equity-classified preferred shares are extinguished, the difference between the fair value of the consideration transferred to the equity-classifiedpreferred shareholders and the carrying amount of the equity-classified preferred shares (net of issuance costs) is treated as a deemed dividend to the equity-classified preferred shareholders. When equity-classified preferred shares are modified, the increase of the fair value immediately after the amendment istreated as a deemed dividend to the equity-classified preferred shareholders. Modifications that result in a decrease in the fair value of the equity-classifiedpreferred shares are not recognized. F-31 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Revenue recognition The Company operates an online platform which matches borrowers with investors. The Company’s platform enables investors to directly invest inindividual loans or subscribe to the Company’s investment programs which provide them with pre-specified investment returns while minimizing the timeneeded to manage their investments. For each successful loan facilitation, the Company earns a loan facilitation fee and a recurring service fee for postfacilitation services, including provision of global positioning system (“GPS”) automobile tracking services, collection services and sending short-message-service (“SMS”) payment reminder to borrowers throughout the term of the loans. Borrowers make repayments through the Company, and the Company willthen remit the requisite returns to the investors on a periodic basis. The Company’s arrangements with investors can be broadly categorized into three typesof arrangements. In the first type of arrangement, the Company may advance funds to the borrowers while the loan is being listed on the online platform for onlineinvestors to subscribe to. However, the Company does not provide a guarantee to investors and is not the legal title holder of the underlying collateral. TheCompany determined that it is not the legal lender and legal borrower in the loan origination and repayment process, respectively, because when the loan isfully subscribed by investors, the investors’ funds will be used to settle the advance made by the Company to the borrowers. Therefore, the Company doesnot record loan receivables and payables arising from the loans between borrowers and investors on its consolidated balance sheets. In the second type of arrangement, the Company does not advance funds to the borrowers prior to a loan subscribed by the institutional funding partnersand online investors. Furthermore, the Company may provide a guarantee to the institutional funding partners and online investors which guarantees thecontractual payments of the loan in the event the borrower defaults. The Company determined it is not the legal lender and legal borrower in the loanorigination and repayment process, respectively. Therefore, the Company does not record loan receivables and payables arising from the loans betweenborrowers and the institutional funding partners and online investors on its consolidated balance sheets. In the third type of arrangement, the Company advances funds to the borrowers prior to a loan subscribed by the investors. The Company provides aguarantee which guarantees the contractual payments of the loan in the event the borrower defaults. As the transaction does not represent a transfer of anentire financial asset or a participating interest and is not legally isolated from the Company, the arrangement is accounted for as loan origination by theCompany and a secured borrowing in accordance with ASC 860, Transfers and Servicing. The Company also generates revenue from other contingent fees, such as late payment penalties and loan collection fees. Multiple element revenue recognition In accordance with ASC 605, Revenue recognition (“ASC 605”), for arrangements where the Company is not originating the loan to the borrower, theCompany recognizes loan facilitation services and post facilitation services, when the following four revenue recognition criteria are met: (i) Persuasive evidence of an arrangement exists;(ii) Services have been provided;(iii) The fee is fixed and determinable, and(iv) Collectability is reasonably assured. F-32 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Revenue recognition (continued) The two deliverables provided by the Company are loan facilitation and post facilitation services. The Company considers the loan facilitation servicesand the post facilitation services as a multiple element revenue arrangement. The Company does not have vendor specific objective evidence (“VSOE”) ofselling price for the loan facilitation services and post facilitation services because the Company does not provide loan facilitation services or postfacilitation services on a standalone basis. There is also no third-party evidence of the prices charged by third-party service providers when such services aresold separately. As a result, the Company uses its best estimate of selling prices of loan facilitation services and post facilitation services as the basis ofrevenue allocation. The fee allocated to loan facilitation is recognized as revenue upon each successful loan facilitation, while the fee allocated to post facilitation servicesare deferred and amortized over the period of the loan on a straight line method as the post facilitation services are performed. If the fee is not receivedentirely upfront, the amount allocated to the delivered loan facilitation services is limited to the amount that is not contingent on the delivery of theundelivered post facilitation services and the borrower’s timely installment repayment in accordance with ASC 605-25. The remaining loan facilitationservice income is recorded when the contingency is resolved when cash is received from the borrower. The loan facilitation services and post facilitationservices are recorded as revenues in the consolidated statements of comprehensive income. For certain arrangements, the Company provides an additional deliverable in the form of a guarantee to institutional funding partners and onlineinvestors which requires the Company to make either delinquent installment repayments and/or purchase the loans after a specified period on an individualloan basis. In accordance with ASC 605-25-30-4, the Company first allocates the consideration to the guarantee equaling to the fair value of the guarantee.The remaining consideration is then allocated to the loan facilitation services and the post facilitation services. Customer incentives For certain transactions with the investors, the Company, at its sole discretion may provide various incentives to investors when a loan is successfullymatched during the relevant incentive program period. The cash incentive from the Company is either provided upfront or on a monthly basis over the termof the loan as additional interest. For arrangements where the Company does not originate loans to borrowers, these cash incentives are accounted for as reduction of revenue inaccordance with ASC 605-50. Cash incentives accounted for as reduction of revenue amounted to RMB52,374, RMB65,915 and RMB268,813 (US$39,097)for the years ended December 31, 2016, 2017 and 2018, respectively. For arrangements where the Company originates loans to the borrowers and related loanpayables to investors are recorded on the balance sheet, cash incentives paid upfront will reduce loan payables to investors and loan payables are effectivelyissued at a discount. If cash incentives are paid to investors over the loan period, the cash incentives are included as repayment to investors for the loan andconsidered in the effective interest rate of the loan payable to investors. Cash incentives accounted for as reduction of loan payables amounted to RMB7,RMB7,453 and RMB10,746 (US$1,563) for the years ended December 31, 2016, 2017 and 2018, respectively. F-33 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Revenue recognition (continued) Net financing income The Company earns interest income arising from loans originated by the Company. The Company records interest income net of funding costs (i.e.interest paid to investors) over the life of the underlying loan principal using the effective interest method on unpaid principal amounts in accordance withASC 310, Receivables. Customer incentives provided to certain investors are recorded as a reduction in loans receivable using the effective interest method. Other revenues The Company also receives various services fees which are contingent on future events, such as borrower late payment penalties, loan collection fees,and net revenues from sale of collateral. These contingent fees are not recognized until the contingencies are resolved and the fees become fixed anddetermined, which also coincide with when the services are performed and collectability is reasonably assured. These fees are classified within other revenuesin the consolidated statements of comprehensive income. Other revenues consist of: Year Ended December 31, 2016 2017 2018 RMB RMB RMB US$ Late payment penalties and loan collection fees 158,154 218,675 113,313 16,481 Others 46,799 86,362 76,399 11,111 Total 204,953 305,037 189,712 27,592 Revenue through service center operation partners The Company collaborates with service center operation partners for the operation of partner-operated service centers under a revenue sharing model.The Company is acting as the primary obligor in the arrangement in accordance with ASC 605-45 and recognizes revenue on a gross basis when all therevenue recognition criteria set forth in ASC 605 are met. Pursuant to the one-year cooperation agreements with the service center operation partners, theCompany records all of each partner-operated service center’s loan facilitation service fee and post facilitation service fee as revenue, and subsequently paythe service center operation partners an agreed percentage of such amounts as the partner-operated service center’s operating costs and expenses which arerecorded as origination and servicing expenses. If loans facilitated by the partner-operated service centers become delinquent and are subsequently purchasedby the Company, the relevant service center operation partners are obligated to compensate the Company for an agreed percentage of the purchase price ofthe delinquent loans. F-34 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Deferred Revenue Deferred revenue mainly consists of post facilitation service fees which are non-contingent service fees collected at the inception of the loan, anddeferred and amortized over the period of the loan. Origination and servicing expense Origination and servicing expenses primarily consist of customer acquisition costs, employee salaries and benefits for facilitating the loan origination,risk assessment cost, debt-collection cost, customer service cost, data processing and data analysis expense. Advertising expenses Advertising costs are expensed as incurred in accordance with ASC 720-35, Other Expense-Advertising Costs. The Company recognized advertisingcosts of RMB38,017, RMB203,972 and RMB166,627 (US$24,235) for the years ended December 31, 2016, 2017 and 2018, respectively. Employee benefits Full-time employees of the Company in the PRC participate in a government mandated multi-employer defined contribution plan pursuant to whichcertain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese laborregulations require that the Company make contributions to the government for these benefits based on a certain percentage of the employee’s salaries. TheCompany has no legal obligation for the benefits beyond the contributions. The Company recognized expenses for employee benefits of RMB46,491,RMB137,902 and RMB181,798 (US$26,441) for the years ended December 31, 2016, 2017 and 2018, respectively. Income taxes The Company accounts for income taxes using the liability method in accordance with ASC 740, Income Taxes (“ASC 740”). Under this method,deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enactedtax rates that will be in effect when the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in earnings. Deferred taxassets are reduced by a valuation allowance through a charge to income tax expense when, in the opinion of management, it is more-likely-than-not that aportion of or all of the deferred tax assets will not be realized. The Company early adopted ASU No.2015-17, Balance Sheet Classification of deferred Taxes,on January 1, 2016 and classifies the components of the deferred tax assets and liabilities as non-current. F-35 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Income taxes (continued) The Company evaluates its uncertain tax positions using the provisions of ASC 740, which prescribes a recognition threshold that a tax position isrequired to meet before being recognized in the consolidated financial statements. The Company recognizes in the consolidated financial statements thebenefit of a tax position which is “more likely than not” to be sustained under examination based solely on the technical merits of the position assuming areview by tax authorities having all relevant information. Tax positions that meet the recognition threshold are measured using a cumulative probabilityapproach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. It is the Company’s policy torecognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. Segment information The Company’s chief operating decision maker, the Chief Executive Officer, reviews the consolidated results when making decisions about allocatingresources and assessing performance of the Company as a whole. In accordance with ASC 280, Segment Reporting, the Company has only one reportablesegment. As the Company generates substantially all of its revenues in the PRC and its long-lived assets are substantially located in PRC, no geographicalsegments are presented. Leases Leases are classified at the inception date as either a capital lease or an operating lease. The Company assesses a lease to be a capital lease if any of thefollowing conditions exist: (a) ownership is transferred to the lessee by the end of the lease term, (b) there is a bargain purchase option, (c) the lease term is atleast 75% of the property’s estimated remaining economic life or (d) the present value of the minimum lease payments at the beginning of the lease term is90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an assetand an incurrence of an obligation at the inception of the lease. The company had no capital leases for the years presented. All other leases are accounted for as operating leases wherein rental payments are expensed on a straight-line basis over the periods of their respectivelease terms. The Company leases office space under operating lease agreements. The lease term begins on the date of initial possession of the lease propertyfor purposes of recognizing lease expense on a straight-line basis over the term of the lease. F-36 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Value added taxes (“VAT”), business related tax and surcharges The Company is subject to VAT at the rate of 17%, 6% or 3%, depending on whether the entity is a general taxpayer or small-scale taxpayer, and relatedsurcharges on revenue generated from providing services. The Notice of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates, or theNotice, was promulgated on April 4, 2018 and came into effect on May 1, 2018. According to the Notice, the VAT tax rate of 17% and 11% are changed into16% and 10%, respectively. VAT is reported as a deduction to revenue when incurred and amounted to RMB118,987, RMB267,970 and RMB330,116 (US$48,013) for the yearsended December 31, 2016, 2017 and 2018, respectively. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliersagainst their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in accrued expenses and other liabilities on theconsolidated balance sheets. The Company is also subject to certain government surcharges on the VAT payable in the PRC. In the consolidated statements of comprehensiveincome, these surcharges are included in business related tax and surcharges, which are deducted from gross revenues to arrive at net revenues. Share-based compensation The Company applies ASC 718, Compensation—Stock Compensation (“ASC 718”), to account for restricted shares and stock appreciation right grantedto certain directors, executives and employees. In accordance with ASC 718, the Company determines whether the restricted shares and the stockappreciation rights should be classified and accounted for as an equity award or liability award. Restricted shares granted to directors and executives areclassified as equity awards and are measured at fair value on grant date and are recognized as an expense, net of forfeitures, over the requisite service period.The cash-settled stock appreciation rights granted to employees are classified as liability awards and are remeasured to fair value at the end of each reportingperiod until the date of settlement with an adjustment for fair value recorded to the current period expenses. The Company has elected to recognize share-based compensation for all awards with graded vesting using the accelerated method. The Company early adopted ASU 2016-09, Compensation StockCompensation (Topic 718): Improvement to Employee Share Based Payment Accounting, on January 1, 2016 using full retrospective method, and accountsfor forfeitures in the period they occur as a reduction to expense. F-37 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Share-based compensation (continued) A change in any of the terms or conditions of share-based payment awards is accounted for as a modification of awards. The Company measures theincremental compensation cost of a modification as the excess of the fair value of the modified awards over the fair value of the original awards immediatelybefore its terms are modified, based on the share price and other pertinent factors at the modification date. For vested awards, the Company recognizesincremental compensation cost in the period the modification occurred. For unvested awards, the Company recognizes, over the remaining requisite serviceperiod, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. Deferred IPO costs Direct and incremental costs incurred by the Company attributable to its proposed IPO of ordinary shares in the U.S. is deferred and recorded as deferredIPO costs in the consolidated balance sheets and charged against the gross proceeds received from such offering. Comprehensive income Comprehensive income is defined as the changes in equity of the Company during a period from transactions and other events and circumstancesexcluding transactions resulting from investments by owners and distributions to owners. For each of the periods presented, the Company’s comprehensiveincome includes only net income, and is presented in the consolidated statements of comprehensive income. Earnings per share In accordance with ASC topic 260, Earnings per Share, basic earnings per share is computed by dividing net income attributable to ordinaryshareholders by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two-class method, netincome is allocated between ordinary shares and participating securities based on dividends declared (or accumulated) and participating rights inundistributed earnings as if all the earnings for the reporting period had been distributed. The Company’s redeemable convertible preferred shares areparticipating securities because they are entitled to receive dividends or distributions on an as converted basis. Upon the completion of the Company’s IPOin November 2018, the two-class method is also applicable to the Company’s two classes of ordinary shares outstanding, Class A and Class B ordinary shares.The participating rights (liquidation and dividend rights) of the holders of the Company’s Class A and Class B ordinary shares are identical, except withrespect to voting and conversion (Note 16). Diluted earnings per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinaryequivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinaryequivalent shares include ordinary shares issuable upon the conversion of the redeemable convertible preferred shares using the if-converted method, andordinary shares issuable upon the exercise of share options, using the treasury stock method. Ordinary share equivalents are excluded from the computationof diluted earnings per share if their effects are anti-dilutive. F-38 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Share split On September 21, 2018, the Company’s board of directors and shareholders approved an amended and restated memorandum and articles of associationof the Company to effect a split of shares of its ordinary shares and preferred shares, as well as the post-IPO re-designated and re-classified Class A and Class Bordinary shares, on a 50-for-1 basis (the “Share Split”). The par values and the authorized shares of the ordinary shares, preferred shares and the post-IPO re-designated and re-classified Class A and Class B ordinary shares were adjusted as a result of the Share Split. The Share Split became effective on September21, 2018. All issued and outstanding ordinary shares, preferred shares and the post-IPO re-designated and re-classified Class A and Class B ordinary sharesand related per share amounts contained in the financial statements have been retroactively adjusted to reflect this Share Split for all periods presented. Recent accounting pronouncements As a company with less than US$1,070,000 in revenue for the last fiscal year, the Company qualifies as an “emerging growth company” pursuant to theJumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and otherrequirements that are otherwise applicable generally to public companies. These provisions include a provision that an emerging growth company does notneed to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such newor revised accounting standards. The Company will take advantage of the extended transition period. In May 2014, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Theguidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing aframework on addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, includingindustry-specific guidance, in current U.S. GAAP. The core principle of the guidance is that an entity should recognize revenues to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, anentity should apply the following steps: Step 1: Identify the contract(s) with a customer.Step 2: Identify the performance obligations in the contract.Step 3: Determine the transaction price.Step 4: Allocate the transaction price to the performance obligations in the contract.Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued its final standard formally amending the effective date of the new revenue recognition guidance. As an “emerginggrowth company,” or EGC, the Company has elected to take advantage of the extended transition period provided in the Securities Act Section 7(a)(2)(B) forcomplying with new or revised accounting standards applicable to private companies. The amendments in this ASU are effective for annual reporting periodsbeginning after December 15, 2018, including interim periods beginning after December 15, 2019. F-39 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Recent accounting pronouncements (continued) On January 1, 2019, the Company adopted ASC 606 – Revenue from Contracts with Customers and elected to apply the modified retrospective approachonly to contracts that are not completed as of this date. Management has been performing assessments of major impacts of ASC 606 on the Company’s netrevenues and the assessments are still ongoing. The impacts of transitioning to the new accounting policy will primarily arise from the change in the timingof service fee’s revenue recognition. Under ASC605, service fees collected in monthly installments are considered contingent and therefore are not allocableto different deliverables nor recognized until the contingency is resolved (i.e. upon receipt of the monthly installment). Under ASC 606, revenue recognizedupon the successful facilitation of the loans will be the transaction price allocated to the different performance obligations based on their relative standaloneselling price. The transaction price includes variable consideration estimated to be received (including future monthly installments) to the extent that it isprobable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variableconsiderations subsequently resolved. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10). The amendments require all equity investmentsto be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accountingor those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portionof the total change in the fair value of a liability resulting from a change in the instruments-specific credit risk when the entity has elected to measure theliability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this ASU eliminate the requirement todisclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities. The amendments in this ASU areeffective for annual reporting periods beginning after December 15, 2018, including interim periods after December 15, 2019. The Company is in the processof evaluating the impact of the adoption of this guidance on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU modifies existing guidance for off-balance sheet treatment of alessees’ operating leases by requiring lessees to recognize lease assets and lease liabilities, whilst, lessor accounting is largely unchanged. The amendmentsin this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. TheCompany is in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. F-40 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Recent accounting pronouncements (continued) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments heldby financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reportingdate based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investorsand other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality andunderwriting standards of the Company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional informationabout the amounts recorded in the financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020,including interim periods within fiscal years beginning after December 15, 2021. In November 2018, the FASB issued ASU No. 2018-19, CodificationImprovements to Topic 326, Financial Instruments—Credit Losses, which clarifies that receivables arising from operating leases should be accounted for inaccordance with ASC Topic 842, Leases instead of ASC Subtopic 326-20. The Company is in the process of evaluating the impact of adoption of thisguidance on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.This ASU reduces the existing diversity in practice in financial reporting across all industries by clarifying certain existing principles in ASC 230, Statementof Cash Flows (“ASC 230”), including providing additional guidance on how and what an entity should consider in determining the classification of certaincash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginningafter December 15, 2019. The Company has early adopted this guidance. In February 2017, the FASB issued ASU No. 2017-05, Other income—Gains and Losses from the Derecognition of Nonfinancial Assets, which clarifiesthat a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments in this updatealso clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty.This standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning afterDecember 15, 2019. The Company is in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which amends ASC 220 to allow a reclassification from accumulated othercomprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and requires entities to provide certaindisclosures regarding stranded tax effects. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December15, 2018. The Company is in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. F-41 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 2.Summary of Significant Accounting Policies (continued) Recent accounting pronouncements (continued) In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments provide targeted improvements to address certain aspects ofrecognition, measurement, presentation, and disclosure of financial instruments. Specifically, the amendments include clarifications related to: measurementelections, transition requirements, and adjustments associated with equity securities without readily determinable fair values; fair value measurementrequirements for forward contracts and purchased options on equity securities; presentation requirements for hybrid financial liabilities for which the fairvalue option has been elected; and measurement requirements for liabilities denominated in a foreign currency for which the fair value option has beenelected. The amendments are effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December2019. Early adoption is not permitted unless the entity has early adopted the amendments in ASU 2016-01. The Company is in the process of evaluating theimpact of adoption of this guidance on its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based PaymentAccounting, which aligns the measurement and classification guidance for share based payments to nonemployees with that for employees, with certainexceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumedin the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities torecognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) they would if they paid cash forthe goods or services, but it moves the guidance to ASC 718. This standard is effective for fiscal years beginning after 15 December 2019, and interim periodswithin fiscal years beginning after 15 December 2020. Early adoption is permitted, including in an interim period for which financial statements have notbeen issued (or made available for issuance), but not before an entity adopts ASC 606. The Company is in the process of evaluating the impact of adoption ofthis guidance on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the DisclosureRequirements for Fair Value Measurement which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The guidance iseffective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, but entities are permitted to earlyadopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is in the process of evaluating the impact ofadoption of this guidance on its consolidated financial statements. F-42 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 3.Concentration of risks Currency convertibility risk Substantially all of the Company’s business are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRCgovernment abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However,the unification of the exchange rates does not imply that the RMB may be readily convertible into United States dollars or other foreign currencies. Allforeign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institution at exchange ratesquoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application formtogether with suppliers' invoices and signed contracts.Concentration of credit risk Financial assets that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, loansand advances, guarantee deposits and short-term investment. The Company places its cash and cash equivalents, restricted cash and short-term investment, with reputable financial institutions that have high-creditratings and quality. There has been no recent history of default in relation to these financial institutions. The Company manages credit risk of loan principal by performing credit assessments on its borrowers and its ongoing monitoring of the outstandingbalances. No individual borrower represented 10% or more of total revenue, and loan and advances for the years ended December 31, 2016, 2017 and 2018. Interest rate risk The Company is exposed to interest rate risk on its interest-bearing assets and liabilities. As part of its asset and liability risk management, the Companyreviews and takes appropriate steps to manage its interest rate exposures on its interest-bearing assets and liabilities. The Company has not been exposed tomaterial risks due to changes in market interest rates, and the Company has not used any derivative financial instruments to manage the interest risk exposureduring years presented. Business and economic risk The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, resultsof operations or cash flows: changes in the overall demand for services and products; competitive pressures due to new entrants; advances and new trends innew technologies and industry standards; changes in certain strategic relationships; regulatory considerations and risks associated with the Company’sability to attract employees necessary to support its growth. The Company’s operations could also be adversely affected by significant political, economicand social uncertainties in the PRC. F-43 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 3.Concentration of risks (continued) Foreign currency exchange rate risk From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For RMBagainst U.S. dollar, there was depreciation of approximately 6.4% in the year ended December 31,2016, appreciation of 5.8% in the year ended December 31,2017 and depreciation of 5.4% in the year ended December 31, 2018. It is difficult to predict how market forces or PRC or U.S. government policy mayimpact the exchange rate between the RMB and the U.S. dollar in the future. To the extent that the Company needs to convert U.S. dollar into RMB for capital expenditures and working capital and other business purposes,appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, ifthe Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends on ordinary shares, strategic acquisitions orinvestments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to theCompany. In addition, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of the Company’searnings or losses. F-44 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 4.Loans and advances, net Loans and advances originated and retained by the Company consist of the following: As of December 31 2017 2018 RMB RMB US$ Current portion: Loans receivable (i) Auto-backed loans 1,105,169 233,893 34,020 Other secured loans 104,292 139,939 20,353 Unsecured loans 512,616 587,211 85,406 Sub-total 1,722,077 961,043 139,779 Acquired non-performing loans (ii) Auto-backed loans 438,942 723,404 105,215 Other secured loans 58,961 364,424 53,003 Unsecured loans 120,955 197,820 28,771 Sub-total 618,858 1,285,648 186,989 Advances to borrowers (iii) 2,487 - - Total current loans and advances 2,343,422 2,246,691 326,768 Allowance for loans and advances (404,930) (764,323) (111,166)Loans and advances, net 1,938,492 1,482,368 215,602 Non-current portion: Loans receivable (i) Auto-backed loans 230,634 176,923 25,732 Other secured loans 160,733 196,409 28,567 Unsecured loans 164 54,259 7,892 Total non-current loans and advances 391,531 427,591 62,191 Allowance for loans and advances (1,360) (6,027) (877)Loans and advances, net 390,171 421,564 61,314 (i) Loans receivable represent loans originated by the Company with an original term up to three years and annual interest rate primarily ranging between6%~36%; (ii) Acquired non-performing loans are overdue loans purchased by the Company from online investors and institutional funding partners; (iii) Advances to borrowers are advances provided to borrowers with urgent financing needs, before online investors fully fund the loans. F-45 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 4.Loans and advances, net (continued) The following table sets forth the activities in the allowance for loans and advances for the years ended December 31, 2016, 2017 and 2018: 2016 Loans receivable Acquired non-performing loans Auto- backedloans Othersecuredloans Unsecuredloans Auto- backedloans Othersecuredloans Unsecuredloans Total RMB RMB RMB RMB RMB RMB RMB Beginning balance - - - (9,705) - - (9,705)Current year provision - - - (142,715) (1,530) (372) (144,617)Recoveries of loans previously written off - - - (9,268) - - (9,268)Write-offs - - - 94,532 1,530 - 96,062 Ending balance - - - (67,156) - (372) (67,528) 2017 Loans receivable Acquired non-performing loans Auto-backedloans Othersecuredloans Unsecuredloans Auto-backedloans Othersecuredloans Unsecuredloans Total RMB RMB RMB RMB RMB RMB RMB Beginning balance - - - (67,156) - (372) (67,528)Current year provision (5,149) (913) (64,515) (327,453) (4,832) (81,201) (484,063)Recoveries of loans previously written off - - - (18,943) - - (18,943)Write-offs - - - 161,378 1,077 1,789 164,244 Ending balance (5,149) (913) (64,515) (252,174) (3,755) (79,784) (406,290) 2018 Loans receivable Acquired non-performing loans Auto-backedloans Othersecuredloans Unsecuredloans Auto-backedloans Othersecuredloans Unsecuredloans Total RMB RMB RMB RMB RMB RMB RMB US$ Beginning balance (5,149) (913) (64,515) (252,174) (3,755) (79,784) (406,290) (59,092)Current year provision (7,864) (4,427) 4,106 (430,213) (53,245) (259,929) (751,572) (109,312)Recoveries of loans previouslywritten off - - - (27,879) (24) (355) (28,258) (4,110)Write-offs - - - 242,492 18,323 154,955 415,770 60,471 Ending balance (13,013) (5,340) (60,409) (467,774) (38,701) (185,113) (770,350) (112,043) F-46 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 4.Loans and advances, net (continued) The following table sets forth the aging of loans receivable as of December 31, 2017 and 2018: As of December 31, 2017 Current 1-30days pastdue 31-60days pastdue 61-90days pastdue 91-120days pastdue 121-150days pastdue 151-180days pastdue 181-360days pastdue Over 360days pastdue Total RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB Auto-backed loans 1,331,760 3,015 813 50 165 - - - - 1,335,803 Other secured loans 265,025 - - - - - - - - 265,025 Unsecured loans 496,726 14,050 1,614 226 118 46 - - - 512,780 Total 2,093,511 17,065 2,427 276 283 46 - - - 2,113,608 As of December 31, 2018 Current 1-30days pastdue 31-60days pastdue 61-90days pastdue 91-120days pastdue 121-150days pastdue 151-180days pastdue 181-360days pastdue Over 360days pastdue Total RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB US$ Auto-backed loans 383,469 15,939 3,523 3,663 578 - 496 3,148 - 410,816 59,752 Other secured loans 324,102 7,929 3,168 1,149 - - - - - 336,348 48,920 Unsecured loans 557,229 53,294 8,749 5,287 4,619 3,895 2,629 5,768 - 641,470 93,298 Total 1,264,800 77,162 15,440 10,099 5,197 3,895 3,125 8,916 - 1,388,634 201,970 F-47 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 5.Short-term investments As of December 31, 2017 and 2018, the Company’s short-term investments consist of available-for-sale debt securities with maturities of less than oneyear purchased from commercial banks. During the years ended December 31, 2016, 2017 and 2018, the Company recorded interest income from short-terminvestments of RMB9,552, RMB17,202 and RMB11,685 (US$1,699) in the consolidated statements of comprehensive income, respectively. 6.Prepaid expenses and other assets As of December 31, 2017 2018 RMB RMB US$ Current: Guarantee deposits 52,385 116,535 16,949 Amounts due from third-party payment platforms (i) 204,231 85,127 12,381 Prepaid rental and deposits 72,186 49,893 7,257 Others 104,795 308,610 44,887 Total 433,597 560,165 81,474 Non-current: Guarantee deposits - 2,000 291 Prepaid rental and deposits 8,048 5,606 815 Total 8,048 7,606 1,106 (i) Amount due from third-party payment platforms are mainly restricted cash held by third-party payment platform that belong to the borrowers andonline investors as of December 31, 2017 and 2018. F-48 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 7.Long-term investments Long-term investments consist of the following: As of December 31, 2017 2018 RMB RMB US$ Cost method investments 309,333 13,333 1,939 Time deposits 50,000 - - 359,333 13,333 1,939 8.Property and equipment and software, net Property, equipment and software, net consist of the following: As of December 31, 2017 2018 RMB RMB US$ Computer and electronic equipment 38,298 55,523 8,075 Leasehold improvement 38,900 46,596 6,777 Vehicles 20,985 20,615 2,998 Office furniture and equipment 6,094 4,321 628 Software 11,053 18,089 2,632 Total 115,330 145,144 21,110 Less: Accumulated depreciation and amortization (15,897) (56,413) (8,205)Property, equipment and software, net 99,433 88,731 12,905 Depreciation and amortization expenses of the property, equipment and software were RMB3,294, RMB12,747 and RMB42,431 (US$6,171) for theyears ended December 31, 2016, 2017 and 2018, respectively. F-49 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 9.Short-term borrowings In July 2017, the subsidiaries of the VIE entered into loan agreements with Yangquan Commercial Bank Co. Ltd. (“Yangquan”), pursuant to which thesubsidiaries obtained loans with an aggregate amount of RMB200,000 denominated in RMB with a term of one year and fixed annual interest rate at 5.22%.The short-term borrowing has been repaid in July, 2018 upon maturity. 10.Payable to institutional funding partners and online investors The following table presents payable to institutional funding partners and online investors as of December 31, 2017 and 2018: Fixed annual Rate(%) Term As of December 31, 2017 2018 RMB RMB US$ Current: Institutional funding partners 3% to 11% 7 to 12 months 523,328 390,908 56,856 Online investors 3% to 11% 2 to 12 months 1,247,353 614,328 89,350 1,770,681 1,005,236 146,206 Non-current: Institutional funding partners 3% to 11% 13 to 36 months 416,118 395,901 57,581 Online investors 5% to 13% 13 to 24 months - 54,259 7,892 416,118 450,160 65,473 The following table sets forth the contractual obligations which has not included the impact of discount of time value as of December 31, 2017 and2018: Payment due by period Long-term borrowings andinterest payable: Less than 1 year 1-2 years Greater than 2years Total As of December 31, 2017 (RMB) 259,356 256,945 189,971 706,272 As of December 31, 2018 (RMB) 485,878 412,650 54,275 952,803 As of December 31, 2018 (US$) 70,668 60,017 7,894 138,579 11.Current account with online investors and borrowers As of December 31, 2017 2018 RMB RMB US$ Investor deposits 1,097,259 1,461,080 212,505 Undrawn borrower funds and deposits 786,187 544,525 79,198 Total 1,883,446 2,005,605 291,703 F-50 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 12.Accrued expenses and other liabilities Accrued expenses and other liabilities consist of the following: As of December 31, 2017 2018 RMB RMB US$ Payroll and welfare payable 254,509 264,600 38,484 Accrued marketing expense 50,163 38,536 5,605 Other taxes payable 25,862 24,399 3,549 Others 130,761 173,904 25,293 Total 461,295 501,439 72,931 13.Interest income, net Interest income, net consist of the following: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Interest income 13,793 35,742 73,729 10,723 Interest expenses - (4,949) (5,597) (814)Bank charges (145) (490) (1,341) (195)Total 13,648 30,303 66,791 9,714 14.Income taxes Enterprise income tax Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends bythe Company to its shareholders, no withholding tax is imposed. Hong Kong The subsidiaries incorporated in Hong Kong are subject to income tax at the rate of 16.5% on the estimated assessable profits arising in Hong Kong. Forthe years ended December 31, 2016, 2017 and 2018, the Company did not make any provisions for Hong Kong profit tax as there were no assessable profitsderived from or earned in Hong Kong for any of the periods presented. Under the Hong Kong tax law, Weidai HK is exempted from income tax on its foreign-derived income and there is no withholding taxes in Hong Kong on remittance of dividends. China The Company’s subsidiary, VIE and VIE’s subsidiaries domiciled in the PRC were subject to 25% statutory income tax rate in the periods presented. F-51 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 14.Income taxes (continued) The Enterprise Income Tax Law (the “EIT Law”) of the PRC includes a provision specifying that legal entities organized outside PRC will be consideredresidents for Chinese income tax purposes if their place of effective management or control is within the PRC. If legal entities organized outside PRC wereconsidered residents for Chinese income tax purpose, they would become subject to the EIT Law on their worldwide income. This would cause any incomefrom legal entities organized outside PRC earned to be subject to PRC’s 25% EIT. The Implementation Rules to the EIT Law provides that non-resident legalentities will be considered as PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel,accounting, and properties, etc. reside within PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Company does not believe that the legal entitiesorganized outside PRC should be characterized as PRC residents for EIT Law purposes. Withholding tax on undistributed dividends The EIT law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise (“FIE”) to its immediate holdingcompany outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China orif the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediateholding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. According to theArrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of FiscalEvasion with respect to Taxes on Income in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will besubject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). The Company did not provide for foreign withholding taxes on the undistributed earnings of foreign subsidiaries during the years presented on the basisof its intent to permanently reinvest its foreign subsidiaries’ earnings. As of December 31, 2018, the total amount of undistributed earnings from the PRCsubsidiaries for which no withholding tax has been accrued was RMB1,041,492 (US$151,479). Super deduction on research and development (“R&D”) expenses Under the EIT law of the PRC, qualified enterprises can enjoy a 150% super deduction for eligible R&D expenses in 2016 and 2017, and 175% in 2018.During the years ended December 31, 2016, 2017 and 2018, RMB40,271, RMB95,295 and RMB86,686 (US$12,608) of R&D expense was eligible for thesuper deduction, which accounts for an RMB5,034, RMB11,912 and RMB16,254 (US$2,364) decrease in tax expense, respectively. The Company generates substantially all of its profit before income tax in the PRC. The current and deferred components of income tax expensesappearing in the consolidated statements of comprehensive income are as follows: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Current income tax 136,400 318,090 330,859 48,122 Deferred income tax (31,270) (124,887) (171,230) (24,905) 105,130 193,203 159,629 23,217 F-52 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 14.Income taxes (continued) The principal components of the deferred tax assets are as follows: As of December 31, 2017 2018 RMB RMB US$ Deferred tax assets Allowance for loans and advances 128,885 235,415 34,240 Net operating loss carry forwards 41,875 46,550 6,770 Accruals for share-based compensation 10,180 29,637 4,311 Accruals for payroll and other costs 24,455 19,925 2,898 Less: valuation allowance (46,829) (1,731) (252)Balance at the end of the year 158,566 329,796 47,967 The Company operates through its subsidiaries, VIE and subsidiaries of the VIE. The valuation allowance is considered on an individual entity basis. Asof December 31, 2017 and 2018, valuation allowances on deferred tax assets are mainly arising from tax loss carry forwards because the Company believesthat it is more-likely-than-not that certain of the subsidiaries, VIE and subsidiaries of the VIE registered in the PRC will not be able to generate sufficienttaxable income in the near future, to utilize the tax loss carry forwards. A reconciliation of the differences between the PRC statutory tax rate is as follows: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Income before provision of income tax 396,159 668,024 764,259 111,156 PRC statutory income tax rate 25% 25% 25% 25%Income tax computed at statutory tax rate 99,039 167,006 191,065 27,790 Research and development super-deduction (5,034) (11,912) (16,254) (2,364)Non-deductible expenses 942 1,499 29,916 4,351 Changes in valuation allowance 10,183 36,610 (45,098) (6,560)Income tax expenses 105,130 193,203 159,629 23,217 The Company did not identify significant unrecognized tax benefits for the years ended December 31, 2016, 2017 and 2018. The Company did not incurany interest and penalties related to potential underpaid income tax expenses. In general, the PRC tax authority has up to five years to conduct examinations of the Company’s tax filings. Accordingly, the PRC subsidiaries’ and VIEand subsidiaries of the VIE’s tax years 2014 through 2018 remain open to examination by the taxing jurisdictions. F-53 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 15.Earnings per share Basic earnings per share for each of the years presented are calculated as follows: Year ended December 31, 2016 2017 2018 Ordinaryshares Ordinaryshares Class A Class B RMB RMB RMB US$ RMB US$ Numerator: Net income attributable to ordinaryshareholders 170,168 466,217 338,385 49,216 383,234 55,739 Allocation of net income attributable to preferred shares (44,428) (115,555) (164,830) (23,974) - - Numerator for computing basic earnings per share 125,740 350,662 173,555 25,242 383,234 55,739 Denominator: Weighted average number of ordinary shares outstanding - basic 48,392,050 48,392,050 15,882,661 15,882,661 35,071,400 35,071,400 Earnings per share - basic 2.60 7.25 10.93 1.59 10.93 1.59 Diluted earnings per share for each of the years presented are calculated as follows: Year ended December 31, 2016 2017 2018 Ordinaryshares Ordinaryshares Class A Class B RMB RMB RMB US$ RMB US$ Numerator: Numerator for computing basic earnings pershare 125,740 350,662 173,555 25,242 383,234 55,739 Allocation of net income attributable toSeries C redeemable convertible preferredshares - 22,324 - - - - Numerator for computing diluted earningsper share 125,740 372,986 173,555 25,242 383,234 55,739 Denominator: Weighted average number of ordinaryshares outstanding 48,392,050 48,392,050 15,882,661 15,882,661 35,071,400 35,071,400 Conversion of Series C redeemableconvertible preferred shares to ordinaryshares - 3,074,400 - - - - Weighted average number of ordinaryshares outstanding - diluted 48,392,050 51,466,450 15,882,661 15,882,661 35,071,400 35,071,400 Earnings per share - diluted 2.60 7.25 10.93 1.59 10.93 1.59 F-54 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 16.Share capital Ordinary shares On January 26, 2018, the Company issued 48,392,050 ordinary shares with par value of US$0.000002 to its shareholders in connection with theincorporation of the Company (Note 1). As of December 31, 2017, 24,982,901,300 ordinary shares were authorized and 48,392,050 ordinary shares wereissued and outstanding, on a retrospective basis. Pursuant to the Company’s memorandum and articles of association, upon the completion of the IPO, all the outstanding Preferred Shares willautomatically be converted into 17,098,700 Class A ordinary shares, and all the outstanding ordinary shares are re-designated into 13,320,650 Class Aordinary shares and 35,071,400 Class B ordinary shares, respectively. The rights of the holders of Class A and Class B ordinary shares are identical, exceptwith respect to voting and conversion rights. Each share of Class A ordinary shares is entitled to one vote per share and is not convertible into Class Bordinary shares under any circumstances. Each share of Class B ordinary shares is entitled to five votes per share and is convertible into one Class A ordinaryshare at any time by the holder thereof. Upon any transfer of Class B ordinary shares by the holder thereof to any person or entity which is not an affiliate ofsuch holder, such Class B ordinary shares would be automatically converted into equal number of Class A ordinary shares. On November 15, 2018, the Company completed its IPO on the New York Stock Exchange. The Company offered 4,500,000 Class A ordinary shares atUS$10.00 per ADS. Additionally, on December 14, 2018, the underwriters exercised their options to purchase an additional 456,427 ADS at US$10.00 perADS, representing 456,427 Class A ordinary shares, from the Company, respectively. Net proceeds from the IPO including the over-allotment option afterdeducting underwriting discount were RMB311,931 (US$45,368). Deferred IPO costs of RMB25,528 (US$3,713) were recorded as a reduction of theproceeds from the IPO in shareholders’ equity. As of December 31, 2018, there were 35,375,777 and 35,071,400 Class A and Class B ordinary shares outstanding respectively. Dividends On April 14, 2017, the VIE’s Board of Directors declared dividends of RMB32,228 which was 10% of distributable net income of the year endedDecember 31, 2016 to all the holders of ordinary shares and preferred shares outstanding as of December 31, 2016 proportionately. The dividends per sharewas RMB0.50 and the aggregate dividends declared for the ordinary shares, Series A, A+, B and C preferred shares was RMB23,624, RMB4,602, RMB920,RMB1,534 and RMB1,548, respectively. The dividends were paid in 2017. No dividend was declared for the years ended December 31, 2016 and 2018. F-55 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 17.Related party balances and transactions a)Related parties Name of related parties Relationship with the CompanyMr. Hong Yao Founder, chief executive officer and principal shareholder of the CompanyHangzhou Ruituo Information Technology Co., Ltd. Entity controlled by FounderZhejiang Ruituo Information Technology Co., Ltd. Entity controlled by FounderShanghai Zaohui Finance Lease Co., Ltd. Entity controlled by Director prior to June 6, 2018Zhejiang Qunshuo Electronics Co., Ltd. Entity significantly influenced by Founder prior to October 10, 2017Beijing Lezhihui Technology Co., Ltd. Entity significantly influenced by FounderHangzhou Qiandaohuyaodage Trading Co., Ltd. Entity controlled by immediate family members of FounderZhejiang Hongrui Investment Management Co., Ltd. Entity controlled by immediate family members of FounderWeiyi (Hangzhou) Internet Financial Information Service Co., Ltd. Entity controlled by immediate family members of FounderChunan Yunxiu Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Yuntong Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorChunan Wenbei Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenbin Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenhai Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenjun Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenkang Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of Founder F-56 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 17.Related party balances and transactions (continued) a)Related parties (continued) Name of related parties Relationship with the CompanyChunan Wenlin Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenrong Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenshe Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wensheng Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wenyang Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wencai Information Advisory ServicesCompany) Entity controlled by immediate family members of FounderChunan Wanglin Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wangcai Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorChunan Wangqi Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wangcai Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorChunan Wangqian Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wangcai Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorChunan Wangqun Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wangcai Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorChunan Wangxia Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wangcai Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorChunan Wanglan Financial Information Advisory Services Partnership (GP)(formerly known as Chunan Wangcai Information Advisory ServicesCompany) Entity controlled by immediate family members of DirectorSuzhou Weixin Zhonghua Venture Capital Partnership (LLP) The Company’s shareholderZhejiang Zhongbo Finance Lease Co., Ltd. Entity controlled by DirectorZhejiang Ruituo Non-financing Guarantee Co., Ltd. Entity controlled by FounderKey management and their immediate family members The Company’s key management and their immediate family members F-57 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 17.Related party balances and transactions (continued) b)The Company had the following related party transactions: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Loan facilitation service fee from: Key management and their immediate family members 833 851 742 108 Hangzhou Ruituo Technology Co., Ltd. - - 39 6 Total 833 851 781 114 Other revenues: Beijing Lezhihui Technology Co., Ltd. 2,179 3,740 13,362 1,943 Origination and servicing expenses: Beijing Lezhihui Technology Co., Ltd. 5,578 49,377 22,739 3,307 Chunan Wanglan Financial InformationAdvisory Services Partnership (GP) - - 18,077 2,629 Chunan Wenjun Financial Information Advisory Services Partnership (GP) - - 11,290 1,642 Chunan Wenkang Financial InformationAdvisory Services Partnership (GP) - - 9,103 1,324 Chunan Wenhai Financial InformationAdvisory Services Partnership (GP) - - 8,743 1,272 Chunan Wenbin Financial InformationAdvisory Services Partnership (GP) - - 8,455 1,230 Chunan Wenlin Financial InformationAdvisory Services Partnership (GP) - - 8,408 1,223 Chunan Wenrong Financial InformationAdvisory Services Partnership (GP) - - 8,357 1,215 Chunan Wenshe Financial InformationAdvisory Services Partnership (GP) - - 8,047 1,170 Chunan Wenbei Financial InformationAdvisory Services Partnership (GP) - - 7,717 1,122 Chunan Wensheng FinancialInformation Advisory ServicesPartnership (GP) - - 7,600 1,105 Chunan Wenyang Financial InformationAdvisory Services Partnership (GP) - - 6,924 1,007 Chunan Wangxia Financial InformationAdvisory Services Partnership (GP) - - 6,761 983 Chunan Wanglin Financial InformationAdvisory Services Partnership (GP) - - 5,133 747 Chunan Wangqi Financial InformationAdvisory Services Partnership (GP) - - 4,969 723 Chunan Wangqun Financial InformationAdvisory Services Partnership (GP) - - 4,948 720 Chunan Wangqian Financial InformationAdvisory Services Partnership (GP) - - 2,424 353 F-58 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 17.Related party balances and transactions (continued) b)The Company had the following related party transactions (continued): Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Chunan Yunxiu Financial Information Advisory Services Partnership(GP) - - 1,909 278 Chunan Wencai Information Advisory Services Company 87,356 99,601 - - Chunan Wangcai Information Advisory Services Company 57,833 62,496 - - Chunan Yuntong Information Advisory Services Company 3,155 2,793 - - Collecting costs to: Zhejiang Hongrui Investment Management Co., Ltd. 13,221 20,469 6,253 909 Zhejiang Ruituo Information Technology Co., Ltd. - - 4,996 727 GPS costs to: Zhejiang Qunshuo Electronics Co., Ltd 10,067 25,290 - - Total 177,210 260,026 162,853 23,686 General and administrative expenses: Consulting expenses to: Suzhou Weinxin Zhonghua Venture Capital Partnership (LLP) - 20,000 - - Welfare expenses to: Hangzhou Qiandaohuyaodage Trading Co., Ltd. 179 1,387 276 40 Total 179 21,387 276 40 Sales and marketing expenses: Promotion expenses to: Weiyi (Hangzhou) Internet Financial Information Service Co., Ltd 3,264 7,916 9,631 1,401 Trademark expenses to: Zhejiang Ruituo Information Technology Co., Ltd. - 62 - - Total 3,264 7,978 9,631 1,401 F-59 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 17.Related party balances and transactions (continued) c)The Company had the following related party balances: Amounts due from related parties As of December 31, 2017 2018 RMB RMB US$ Zhejiang Zhongbo Finance Lease Co., Ltd. (i) 10 10,010 1,456 Hangzhou Ruituo Technology Co., Ltd. (ii) 4,497 7,081 1,030 Zhejiang Ruituo Non-financing Guarantee Co., Ltd. 236 2,692 392 Shanghai Zaohui Finance Lease Co., Ltd. 3,993 - - Others 432 2,014 292 Total 9,168 21,797 3,170 (i)The balance represents loans provided to Zhejiang Zhongbo Finance Lease Co., Ltd. ("Zhongbo") for the advances to borrowers of certaintype of loan product of the Company.(ii)The balance mainly represents loans provided to Hangzhou Ruituo Technology Co., Ltd. and receivable from the disposal of vehiclecollaterals for overdue loans. Amounts due to related parties As of December 31, 2017 2018 RMB RMB US$ Key management and their immediate family members (iii) 30,701 7,626 1,109 Mr. Hong Yao (iii) 4,335 950 138 Zhejiang Zhongbo Finance Lease Co., Ltd. (iv) - 9,471 1,379 Chunan Wangqi Financial Information Advisory Services Partnership (GP) - 1,806 263 Chunan Wangzhi Financial Information Advisory Services Partnership (GP) - 1,290 188 Chunan Wangqun Financial Information Advisory Services Partnership (GP) - 1,110 161 Other related service center operation partners - 4,833 703 Hangzhou Ruituo Technology Co., Ltd. 10,139 714 104 Beijing Lezhihui Technology Co., Ltd. 2,921 275 40 Chunan Wangcai Information Advisory Services Company 6,233 - - Chunan Wencai Information Advisory Services Company 5,718 - - Others 2,853 653 94 Total 62,900 28,728 4,179 (iii)The balance mainly represents investment balance due to related parties who are also investors on the platform.(iv)The balance represents account balance of Zhongbo on the platform which is borrowed from the Company and used for the advances toborrowers of certain type of loan product of the Company. F-60 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 18.Share-based compensation Restricted shares On June 1, 2016 and September 1, 2016, the Founder granted 458,400 restricted shares in aggregate for nil consideration to certain directors andexecutives. The restricted shares granted are immediately vested. The Company calculated the estimated fair value of the shares on the respective grant datesusing the income approach with assistance from an independent valuation firm. The fair value of the granted shares was RMB70.52 per share on both June 1,2016 and September 1, 2016. The share-based compensation of RMB32,326 in total, which is the fair value of the total shares vested, was charged to theconsolidated statement of comprehensive income for the year ended December 31, 2016. On January 16, 2018, the Founder granted 131,000 restricted shares in aggregate for nil consideration to certain directors and executives. The restrictedshares granted are immediately vested. The Company calculated the estimated fair value of the shares on the respective grant dates using the incomeapproach with assistance from an independent valuation firm. The fair value of the granted shares was RMB134.42 per share as at the grant date. The share-based compensation of RMB17,610 (US$2,561) in total, which is the fair value of the total shares vested, was charged to the consolidated statement ofcomprehensive income for the year ended December 31, 2018. Stock appreciation rights On December 18, 2015, the Board of Directors of the Company approved the plan to issue stock appreciation rights (the “Weimi Share Plan”) for thepurpose of providing incentives and rewards to employees and executives who contribute to the success of VIE’s operations. During the years endedDecember 31, 2016, 2017 and 2018, the Company issued a total of nil, 2.72 % and 2.13% of the equity interest of the Company under the Weimi Share Plan.These stock appreciation rights have no exercise price and will be settled in cash at the amount of the fair value of the respective equity interest percentagesof the Company on the exercise date over their fair value at the grant date. These stock appreciation rights are exercisable prior to the Company’s successfulIPO and are classified as liability awards. Also, at the discretion of the Company, each grantee may receive a certain percentage of annual attributable netprofit as annual dividend which is settled in cash. In addition, the grantee has the option to purchase the Company’s shares when the grantee’s accumulatedstock appreciation rights granted exceed 0.1% of the Company’s total paid-in-capital (the purchase price will be determined by the Company at the timewhen such event occurs). These stock appreciation rights are subject to vesting of 33%, 33% and 34% on the second, third and fourth anniversary of the vest commencement date,respectively. The vested stock appreciation rights are exercisable within five years from the grant date. During the years ended December 31, 2016, 2017 and2018, no dividend was declared to the grantee and none of the grantee’s accumulated stock appreciation rights granted exceeded 0.1% of the Company’stotal paid-in-capital. F-61 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 18.Share-based compensation (continued) On October 1, 2018, the Company modified the stock appreciation rights by replacing the cash-settlement feature with a net share settlement feature,which converts the award from a liability award to an equity award because the Company no longer has an obligation to transfer cash to settle thearrangement. All of the outstanding virtual share options were exchanged for restricted shares of the Company with no other terms or conditions changed.These restricted shares are held by one of the Company’s ordinary shareholders on behalf of the grantees, and are considered outstanding as the shareholder isentitled to dividends if declared. The Company compared the fair value of the instrument immediately before the modification to the fair value of the modified equity award, noincremental compensation cost was noted and recognized. The modified award would be accounted for as an equity award from the date of modification witha fair value of RMB216.43 per share. Therefore, at the modification date, the Company reclassified the liability of RMB106,465 (US$15,485) recognized onSeptember 30, 2018, as additional paid-in capital. In addition, the Company also will recognize the remaining compensation expenses over the remainingservice requisite period using the accelerated method. The share-based compensation of nil, RMB40,719 and RMB88,961 (US$12,939) were charged to theconsolidated statements of comprehensive income for the years ended December 31, 2016, 2017 and 2018. The Company calculated the estimated fair value of the stock appreciation rights on December 31, 2017 and September 30, 2018 using the Black-Scholesoption pricing model with assistance from independent valuation firm. Assumptions used to determine the fair value of the virtual share options granted aresummarized as follows: December 31, 2017 September 30, 2018 Fair value per ordinary share (RMB) 134.42 148.37 Risk-free interest rate 4.35% 4.35%Dividend yield nil nil Expected volatility 61.00% 61.00%Weighted average expected life range (years) 2.92-3.75 2.17-3.75 The estimated fair value of the Company’s enterprise value, which was used in calculating the fair value per ordinary share, as of December 31, 2017 andSeptember 30, 2018 was determined with the assistance of an independent third party valuation firm using the Income Approach. The risk-free interest rate forperiods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant for a term consistent with thecontractual term of the awards. Expected volatility is estimated based on the historical volatility ordinary shares of serval comparable companies in the sameindustry. The dividend yield is estimated based on the Company’s expected dividend policy over the expected term of the options. The weighted averageexpected life was estimated using simplified method for “plain-vanilla” options as the Company considers the options granted to have “plain-vanilla”characteristics. 2018 share incentive plan In August 2018, the Company’s board of directors approved 2018 share incentive plan, or the 2018 Plan. The maximum number of ordinary shares thatmay be issued under the 2018 Plan is 3,300,000 after giving effect to the 50 for 1 share split effected by the Company in September 2018. The 2018 Planpermits the awards of options, restricted shares, restricted share units or any other type of awards that the board of directors or the chairman of the board ofdirectors (the plan administrator) decides, to directors, officers, employees and consultants of the company or any of the Company’s subsidiaries. Unlessterminated earlier, the 2018 Plan has a term of ten years. The terms and conditions of the awards, including vesting schedule and the exercise price for eachaward, will be determined by the plan administrator, and will be stipulated in the award agreement. As of December 31, 2018, the Company has not grantedany awards under the 2018 Plan. On January 1, 2019, February 1, 2019, March 1, 2019, April 1, 2019, the Company granted 181,390, 1,248,561, 14,000,47,000 share awards, respectively, under the 2018 Plan, including 1,419,561 options and 71,390 restricted share units. F-62 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 18.Share-based compensation (continued) Restricted shares activities The following table summarizes the Company’s Restricted Shares activity: Number of shares Weighted averagegrant-date fair value Outstanding, December 31, 2017 - - Granted 131,000 134.42 Vested (131,000) 134.42 Converted from stock appreciation rights 1,349,367 216.43 Forfeited - - Outstanding, December 31, 2018 1,349,367 216.43 The weighted average grant-date fair value of Restricted Shares granted during the year ended December 31, 2018 was RMB216.43 per share, which wasderived from the fair value of the underlying ordinary shares. As of December 31, 2018, there was RMB162,366 (US$23,615) of total unrecognized employeeshare-based compensation expenses related to unvested Restricted Shares expected to vest which are expected to be recognized over a weighted-averageperiod of 1.7 years. Total unrecognized compensation cost may be adjusted for actual forfeitures occurring in the future. Share-based compensation expenses For the years ended December 31, 2016, 2017 and 2018, the Company allocated share-based compensation expenses as follows: Year ended December 31, 2016 2017 2018 RMB RMB RMB US$ Origination and servicing 18,473 - 46,687 6,790 General and administrative - 35,223 45,104 6,560 Research and development 13,853 5,496 14,780 2,150 Total 32,326 40,719 106,571 15,500 F-63 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 19.Accumulated other comprehensive loss RMB Balance as of 1, 2018 - Foreign currency transaction adjustments, net of tax of nil (2,700)Balance as of December 31, 2018 (2,700)Balance as of December 31, 2018 (US$) (393) There has been no reclassification out of accumulated other comprehensive loss to net loss for all the years presented. 20.Commitments and contingencies Operating lease commitments The Company leases certain office premises under non-cancelable leases. Rental expenses under operating leases for the years ended December 31, 2016,2017 and 2018 were RMB23,401, RMB107,911 and RMB131,808 (US$19,171), respectively. Future minimum lease payments under non-cancelable operating leases agreements consist of the following as of December 31, 2018: RMB US$ 2019 64,986 9,452 2020 30,904 4,495 2021 11,061 1,609 2022 744 108 2023 and thereafter 255 37 Total 107,950 15,701 Capital and other commitments Future minimum capital commitments, mainly representing renovating expense under non-cancellable agreements, consist of the following as ofDecember 31, 2018: RMB US$ 2019 804 117 2020 and thereafter - - Total 804 117 F-64 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 21.Preferred shares On September 6, 2015, the Company issued 9,146,250 Series A preferred shares to Hangzhou Handing Yuyou Share Investment Partnership (LLP) at aper share purchase price of RMB1.00 for a total cash consideration of RMB18,293. On October 15, 2015, the Company issued 1,829,250 Series A+ preferred shares to Zhejiang Zheshang Lihai Venture Capital Partnership (LLP) andHangzhou Lihai Hulian Venture Capital Partnership (LLP) for a total cash consideration of RMB3,658. On March 16, 2016, 3,048,800 ordinary shares which were originally issued for a total cash consideration of RMB6,098 were transferred to ZhejiangHanding Yuyou Financial Service Co., Ltd. and redesignated as Series B preferred shares. On October 24, 2016, the Company issued a total of 3,074,400 Series C redeemable convertible preferred shares to Hefei Zhongan Runxin FundInvestment Partnership (LLP), Suzhou Weixin Zhonghua Investment Partnership (LLP) and Wenjing Yisheng Investment Co.,Ltd. for a total cashconsideration of RMB240,000. The Series A, A+, B and C preferred shares issued by the Company are collectively referred to as the “Preferred Shares”. The key terms of the Preferred Shares are summarized below: Dividends No dividends may be declared or paid on the ordinary shares or any future series of preferred shares, unless and until a dividend in like amount isdeclared and paid on each outstanding preferred share on an as-if converted basis. The holders of preferred shares is entitled to receive on a pari passu basis,when as and if declared at the sole discretion of the Board, but only out of funds that are legally available therefor, cash dividends at the rate or in the amountas the Board considers appropriate. For the year ended December 31, 2017, dividends of RMB8,604 have been declared for the Preferred Shares. For the years ended December 31, 2016 and2018, no dividend was declared for the Preferred Shares. Voting Rights Each preferred shareholder is entitled to the number of votes equal to the number of ordinary shares into which such holder's preferred shares could beconverted. Unless otherwise disclosed elsewhere, preferred shareholders will vote together with ordinary shareholders, and not as a separate class or series, onall matters put before the shareholders. Redemption The Series A, A+ and B preferred shares are not entitled to any redemption rights. The Series C redeemable convertible preferred shares become redeemable at the holders’ option if the following event is triggered: (i)the Company fails to complete a qualified IPO before a specified date;(ii)the Company fails to be acquired by a listed company with a price or valuation exceeding predetermined valuation amount;(iii)the occurrence of a material breach of the Transaction Documents by any of the Founder or the Company,(iv)the Company fails to meet certain performance target in the each year of 2015, 2016 and 2017;(v)the Company fails to follow the custody requirement as discussed in the investment agreement or misuses the proceeds. In the event that the Series C preferred shares are redeemable, the holders of Series C preferred shares can request the founder to purchase or redeem all orportion of its shares subscribed, or request the founder or the Company to redeem all or portion of its shares subscribed by deregistering the share capital atthe following redemption price, which is the greater of: F-65 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 21.Preferred shares (continued) (i)100% of Series C preferred shares original issuance price, together with a 15% annual simple return plus all declared but unpaid dividends, andminus all dividends that have been paid on such shares;(ii)Series C preferred shares original issuance price x (150%)N;(iii)Series C shareholders’ portion of the net assets of the VIE (as indicated in the audited financial statements ending on the last month immediatelyprior to the above redeemable trigger event). N = a fraction, the numerator of which is the number of calendar days between the date the holder of the preferred share acquired the preferred share andthe date on which such preferred share is redeemed and the denominator of which is 365. On March 23, 2018, the terms of Series C preferred shares were amended such that upon certain redemption trigger events, the Series C preferred shareswill be redeemable by the founder and will no longer be redeemable by the Company. The Series C preferred shares continued to be classified as mezzanineequity subsequent to the modification due to its deemed liquidation rights. However, the previously recorded accretion charge to the redemption value ofSeries C preferred shares of RMB 120,000 (US$17,453) was reversed during the year ended December 31, 2018 due to the amendments to the contingentredemption provisions. The amendment is accounted for as a modification as the fair value of Series C preferred share immediately after the amendment isdecreased, but not significantly different from its fair value immediately before the amendment. Modifications that result in a decrease in the fair value arenot recognized.Liquidation PreferenceThe holders of Series A, A+ and B preferred shares are not entitled to any liquidation preference upon the initial issuance and are subsequently modifiedto be entitled to liquidation preference upon the issuance of Series C preferred shares on September 9, 2016. In the event of liquidation, dissolution or winding up of the Company or any deemed liquidation event as defined in the preferred shares agreements, theassets of the Company available for distribution will be made as follows: The holders of Series C preferred shares are entitled to receive an amount equal to the greater of (a) original issuance price together with an annual simplereturn rate of fifteen percent (15%) plus all declared but unpaid dividends and distributions, (b) original issuance price x (150%)N, and (c) the holder of SeriesC preferred shares’ portion of net assets of the Company, in preference to all other classes or series of Preferred Shares and the ordinary shareholders of theCompany. N = a fraction, the numerator of which is the number of calendar days between the date the holder of the preferred share acquired the preferred share andthe date on which such preferred share is redeemed and the denominator of which is 365. After distribution or payment in full to the holders of Series C preferred shares, the holders of Series A, A+ and B shares are entitled to receive, on a paripassu basis, for each outstanding share held, an amount equal to each share’s original issuance price plus all declared but unpaid dividends and distributions,in preference to any distribution to the ordinary shareholders of the Company. After payment has been made to the holders of the Preferred Shares in accordance with the above, the remaining assets of the Company available fordistribution to shareholders shall be distributed ratably among the holders of ordinary shares and Preferred Shares based on the number of ordinary shares intowhich such Preferred Shares are convertible. The liquidation preference amount for Series A, A+, B and C preferred shares was RMB18,293, RMB3,658, RMB6,098 and RMB360,000, respectively,as of December 31, 2017. On April 10, 2018, holders of Series A are further modified to be not entitled to liquidation preference. After payment has beenmade to the holders of Series A+, B and C preferred shares in accordance with the liquidation preference amount mentioned above, the remaining asset of theCompany available for distribution to shareholders shall be distributed ratably among the holders of ordinary shares and the Preferred Shares (includingSeries A preferred shares) based on the number of ordinary shares into which such Preferred Shares are convertible. F-66 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 21.Preferred shares (continued) Conversion rights The Series A, A+ and B preferred shares are not entitled to any conversion rights at their initial issuance. The holders of Series C preferred shares have therights, at each holder’s discretion, to convert at any time and from time to time, all or any portion of the Series C preferred shares into ordinary shares. Theinitial conversion ratio shall be on a one for one basis, subject to certain anti-dilution adjustments. Starting April 10, 2018, the holders of the Series A, A+ and B preferred shares are given the rights, at each holder’s discretion, to convert at any time andfrom time to time, all or any portion of the Series A, A+ and B preferred shares into ordinary share, at the initial conversion ratio on a one for one basis,subject to certain general anti-dilution adjustments. In addition, all the Preferred Shares are automatically converted into ordinary shares on the then-effective conversion price applicable to such PreferredShares upon the earlier of (i) election in writing by the holders of at least a majority of the then issued and outstanding Preferred Shares with respect to theconversion of the respective class; or (ii) the closing of an initial public offering. Upon completion of the IPO on November 19, 2018, each convertible preferred share automatically converted into Class A ordinary share. 17,098,700Class A ordinary shares were issued upon conversion of all outstanding convertible preferred shares. Accounting for Preferred Shares Series A, A+ and B preferred shares The Series A, A+ and B preferred shares are initially classified as permanent equity and measured at fair value as they are not redeemable. On September9, 2016, when Series C preferred shares are issued, Series A, A+ and B preferred shareholders are entitled to the liquidation preference upon deemedliquidation events as mentioned above. The Company concluded that the amendment is accounted for as a modification as the fair value of each relatedseries of preferred share immediately after the amendment is not significantly different from its fair value immediately before the amendment and an RMB861was recorded as deemed dividend to the preferred shareholders for the year ended December 31, 2016. Upon the modification, Series A, A+ and B preferredshares are classified as mezzanine equity as they may be redeemed at the option of the holders upon a deemed liquidation event. Series C preferred shares The Series C preferred shares are classified as mezzanine equity as they may be redeemed at the option of the holders on or after an agreed upon dateoutside the sole control of the Company or upon a deemed liquidation event. The Series C preferred shares are initially measured at fair value. The holders ofthe Series C preferred shares have the ability to convert the instrument into the Company’s ordinary shares. The Company evaluated the embeddedconversion option in the Series C preferred shares to determine if there were any embedded derivatives requiring bifurcation and to determine if there wereany beneficial conversion features. There were no embedded derivatives that are required to be bifurcated. The conversion option of the Series C preferredshares is not bifurcated because the conversion option is clearly and closely related to the host equity instrument. The contingent redemption options of theSeries C preferred shares are not bifurcated because the underlying ordinary shares are not settable since they were neither publicly traded nor readilyconvertible into cash. Beneficial conversion features (“BCF”) exist when the conversion price of the Preferred Shares is lower than the fair value of the ordinary shares at thecommitment date, which is the issuance date of the respective series of Preferred Shares. When a BCF exists as of the commitment date, its intrinsic value isbifurcated from the carrying value of the Preferred Shares as a contribution to additional paid-in capital. On the commitment date of the Series C preferredshares, the most favorable conversion price used to measure the beneficial conversion feature was RMB79.12. No beneficial conversion feature wasrecognized for the Series C preferred shares as the fair value per ordinary share at the commitment date were RMB73.80, which was less than the mostfavorable conversion price. The Company determined the fair value of ordinary shares with the assistance of an independent third party valuation firm. F-67 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 21.Preferred shares (continued) The contingent conversion price adjustment is accounted for as a contingent BCF. In accordance with ASC paragraph 470-20-35-1, changes to theconversion terms that would be triggered by future events not controlled by the issuer should be accounted as contingent conversions, and the intrinsic valueof such conversion options would not be recognized until and unless a triggering event occurred. No contingent BCF was recognized for any of the PreferredShares for the years ended December 31, 2016 and 2017. The Company concluded that the Series C preferred shares are not currently redeemable, but it is probable that they will become redeemable. TheCompany chose to recognize changes in the redemption value immediately as they occur and adjusted the carrying value of the Series C preferred shares toequal the redemption value at the end of each reporting period. The Series A, A+ and B preferred shares amendments are accounted for as modifications as the fair values of Series A, A+, and B preferred sharesimmediately after the amendment are not significantly different from their respective fair values immediately before the amendment. The Series A preferredshares fair value decreased subsequent to the amendment and are not recognized. The incremental fair values of Series A+ and B preferred shares as a result ofthe modification are immaterial. The movement in the carrying value of the Preferred Shares is as follows: Series A Series A+ Series B Series C Total RMB RMB RMB RMB RMB Balance as of January 1, 2016 - - - - - Capital injection for Series A, A+ and B preferredshares 18,293 3,658 6,098 - 28,049 Issuance of Series C redeemable convertible preferredshares (net of nil issuance costs) - - - 240,000 240,000 Modification of Series A, A+ and B preferred shares 563 113 185 - 861 Accretion of Series C redeemable convertible preferredshares - - - 120,000 120,000 Balance as of December 31, 2016 18,856 3,711 6,283 360,000 388,910 Dividends declared 4,602 920 1,534 1,548 8,604 Dividends paid (4,602) (920) (1,534) (1,548) (8,604)Balance as of December 31, 2017 18,856 3,771 6,283 360,000 388,910 Reversal of accretion on Series C preferred shares - - - (120,000) (120,000)Conversion of preferred shares to Class A ordinaryshares (18,856) (3,771) (6,283) (240,000) (268,910)Balance as of December 31, 2018 - - - - - Balance as of December 31, 2018 (US$) - - - - - F-68 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 22.Business combination On May 24, 2018, the Company acquired a 70% equity interest in Hangzhou Jiujiu Financial Information Services Limited for the expansion into thefinance information service market for a total consideration of RMB4,500 (US$654). The acquisition was accounted for as a business combination. Goodwillrepresenting the expected synergies from the acquisition of RMB3,067 (US$446) was recognized which is not tax deductible. On June 6, 2018, the Company acquired 100% equity interest in Rymo Technology Industry Limited which is engaged in the provision of collateralregistration services through its wholly owned subsidiary, Shanghai Zaohui Finance Lease Co., Ltd., for nil consideration. The acquisition was accounted foras a business combination. Goodwill representing the expected synergies from the acquisition of RMB2,745 (US$399) was recognized which is not taxdeductible. The results of the purchase price allocation for these acquisitions are based on valuation determined by the Company with the assistance of anindependent third party valuation firm. The purchase price allocations and the actual results of operations after the acquisition date have not been presentedbecause the effects of these acquisitions were insignificant, either individually or in aggregate. The changes in carrying amount of goodwill were as follow: RMB Balance at January 1, 2018 - Goodwill acquired 5,812 Balance at December 31, 2018 5,812 Balance at December 31, 2018 (US$) 845 No impairment losses were recognized for the year ended December 31, 2018. F-69 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. WEIDAI LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands of Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data) 23.Restricted net assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRCstatutory laws and regulations permit payments of dividends by the VIE and subsidiaries of the VIE incorporated in PRC only out of their retained earnings, ifany, as determined in accordance with PRC accounting standards and regulations. The consolidated results of operations reflected in the consolidatedfinancial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries. Under PRC law, the Company’s subsidiaries, VIE and the subsidiaries of the VIE located in the PRC (collectively referred as the “PRC entities”) arerequired to provide for certain statutory reserves, namely a general reserve, an enterprise expansion fund and a staff welfare and bonus fund. The PRC entitiesare required to allocate at least 10% of their after tax profits on an individual company basis as determined under PRC accounting standards to the statutoryreserve and has the right to discontinue allocations to the statutory reserve if such reserve has reached 50% of registered capital on an individual companybasis. In addition, the registered capital of the PRC entities is also restricted. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the Board of Directors of the subsidiary. ThePRC entities are also subject to similar statutory reserve requirements. These reserves can only be used for specific purposes and are not transferable to theCompany in the form of loans, advances or cash dividends. Amounts restricted that include paid-in capital and statutory reserve funds, as determinedpursuant to PRC GAAP, were RMB202,588 and RMB246,236 (US$35,814) as of December 31, 2017 and 2018, respectively. F-70 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.11 Share Pledge Agreement This Share Pledge Agreement (this “Agreement”) has been executed by and among the following Parties on January 28, 2019 in Hangzhou: Party A:Weidai Co., Ltd. (hereinafter “Pledgee”) Address:Room A-B102-1102, No. 198 of Qidi Road, Xiaoshan Economic-technical Development Zone, Xiaoshan District, Hangzhou,Zhejiang Province Party B:[Name] (hereinafter “Pledgor”) ID Number:[ID number] Party C:Hangzhou Yuntuo group co., LTD. Address:Room A-B102-1237, No. 198 of Qidi Road, Xiaoshan Economic-technical Development Zone, Xiaoshan District, Hangzhou,Zhejiang ProvinceLegal Representative:*** In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the“Parties”. Whereas, 1.Pledgor is the citizen of the People's Republic of China (“China”), and holds % of the equity interest in Party C. Party C is a limited liabilitycompany registered in Hangzhou, China. Party C acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement,and agrees to provide any necessary assistance in registering the Pledge; 2.Pledgee is a Wholly Foreign Owned Enterprise registered in Hangzhou, China. Pledgee and Party C have executed an Exclusive BusinessCooperation Agreement on January 28, 2019 (the “Exclusive Business Cooperation Agreement”); Pledgee, Pledgor and Party C entered into theExclusive Call Option Contract on January 28, 2019 (the “Exclusive Call Option Contract”), and Pledgor executed the Power of Attorney toauthorize Pledgee on January 28, 2019 (the “Power of Attorney”; together with the Exclusive Business Cooperation Agreement, the Exclusive CallOption Contract and this Contract, the “Control Agreements”). 3.To ensure that Pledgee collects all payments due by Party C, including without limitation the consulting and service fees regularly from Party C, andguarantee the performance by Party C and Pledgor of other obligations under the Control Agreements, Pledgor hereby pledge all of the equityinterest he/she holds in Party C as security for the obligations under the Control Agreements. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.Definitions Unless otherwise provided herein, the terms below shall have the following meanings: 1.1“Pledge” shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to becompensated on a preferential basis with the conversion, auction or sales price of the Equity Interest. 1.2“Equity Interest” shall refer to all of the equity interest lawfully now held and hereafter acquired by Pledgor in Party C. 1.3“Term of Pledge” shall refer to the term set forth in Section 3 of this Agreement. 1.4“Contractual Obligations” shall mean all obligations of the Pledgor and Party C under the Exclusive Business Cooperation Agreement, theExclusive Call Option Contract, the Power of Attorney and this Contract (including, without limitation, the obligation to pay consulting and servicefees to the Pledgee when they fall due and payable (whether on the specified due date, by early repayment or otherwise) in accordance with theExclusive Business Cooperation Agreement). 1.5“Secured Indebtedness” shall mean all direct, indirect and consequential losses and loss of foreseeable profits suffered by the Pledgee due to anyEvent of Default of the Pledgor and/or Party C. The basis for the amounts of such losses includes, but is not limited to, reasonable business plans andprofit forecasts of the Pledgee, and all costs incurred by the Pledgee in connection with its enforcement of the Contractual Obligations against thePledgor and/or Party C. 1.5“Event of Default” shall refer to any of the circumstances set forth in Article 7 of this Agreement. 1.6“Notice of Default” shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default. 2.The Pledge 2.1As collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) ofany or all the payments due by Party C, including without limitation the consulting and services fees payable to the Pledgee under the ExclusiveBusiness Cooperation Agreement (collectively, the “Secured Obligations”), Pledgor hereby pledges to Pledgee a first security interest in the % (¥ .00) Equity Interest of Party C owned by the Pledgor (including the % registered capital (amount of capitalcontribution) currently owned by the Pledgor and all relevant equity interest, as well as other registered capital (amount of capital contribution) andall relevant equity interest, which may be obtained by the Pledgor in the future),the amount of secured creditor's rights is ¥ .00. 2.2The Parties understand and agree that the monetary valuation arising from, relating to or in connection with the Secured Obligations shall be avariable and floating valuation until the Settlement Date (as defined below). Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.3Upon the occurrence of any of the events below (each an “Event of Settlement”), the Secured Obligations shall be fixed at a value of the sum of allSecured Obligations that are due, outstanding and payable to the Pledgee on or immediately prior to the date of such occurrence (the “FixedObligations”):(a)any other Control Agreement expires or is terminated pursuant to the stipulations thereunder; (b)the occurrence of an Event of Default pursuant to Section 7 that is not resolved, which results in the Pledgee serving a Notice of Default tothe Pledgor pursuant to Section 7.3; (c)the Pledgee reasonably determines (having made due enquiries) that the Pledgor and/or Party C is insolvent or could potentially be madeinsolvent; or (d)any other event that requires the settlement of the Secured Obligations in accordance with relevant laws of the PRC. 2.4For the avoidance of doubt, the day of the occurrence of an Event of Settlement shall be the settlement date (the “Settlement Date”). On or after theSettlement Date, the Pledgee shall be entitled, at the election of the Pledgee, to enforce the Pledge in accordance with Section 8. 2.5The Pledgee is entitled to collect dividends or other distributions, if any, arising from the Equity Interest during the Term of the Pledge (as definedbelow). 2.6The Pledgor may increase the capital of Party C only with the prior written consent of the Pledgee. Any increase in the capital contributed by thePledgor to the registered capital of Party C as a result of any capital increase shall also be deemed as the Equity Interest pledged hereunder. 2.7If Party C is required to be dissolved or liquidated in accordance with the mandatory provisions of the laws of the PRC, after Party C completesdissolution or liquidation procedures in accordance with law, any interests distributed to the Pledgor by Party C in accordance with law shall be, asrequested by the Pledgee, (1) deposited into an account designated by the Pledgee, placed under the custody of the Pledgee, used to provide securityfor the Contractual Obligations and first applied towards the satisfaction of the Secured Indebtedness; or (2) unconditionally donated to the Pledgeeor the person designated by the Pledgee subject to the laws of the PRC. 3.Term of Pledge 3.1The Pledge shall become effective as of the date when the pledge of the Equity Interest is registered with the local administration of industry andcommerce (the “Registration Authority”). The Term of the Pledge (the “Term of Pledge Authority”) shall end when the Contractual Obligationsand the Secured Indebtedness secured by the Pledge are paid or fully fulfilled. The Parties agree that, promptly after the execution of this Agreement(but in no event later than 20 days from the execution date of this Agreement), Pledgor and Party A shall submit their application for pledgeregistration to the Registration Authority in accordance with the Measures on Share Pledge Registration with the Administration of Industry andCommerce. The Parties also agree that within fifteen (15) days as of the Registration Authority officially commences the acceptance of equity pledgeapplication, Pledgor and Party C shall complete the pledge registration procedure, obtain the pledge registration notice and completely andaccurately register the Pledge of Equity Interest on the Pledge Registration Book of the Registration Authority. The Parties jointly acknowledgethat, for the purpose of completing equity pledge registration formalities, the Parties shall submit this Contract or an equity pledge contract which isexecuted in the form requested by the administrative authority for industry and commerce in the locality of Party C and truly reflects the informationregarding the Pledge hereunder (the “Pledge Contract for Industrial and Commercial Registration”) to the administrative authority for industryand commerce. This Contract shall apply to the matters not mentioned in the Pledge Contract for Industrial and Commercial Registration. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 3.2During the Term of Pledge, in the event Party C fails to perform the Contractual Obligations or repay the Secured Indebtedness, Pledgee shall havethe right, but not the obligation, to dispose of the Pledge in accordance with the provisions of this Agreement. 4.Custody of Records for Equity Interest subject to Pledge 4.1During the Term of Pledge set forth in this Agreement, Pledgor shall deliver to Pledgee's custody the capital contribution certificate for the EquityInterest and the shareholders' register containing the Pledge (and other documents reasonably requested by the Pledgee, including without limitationthe notice of registration of the Pledge issued by relevant administration of industry and commerce) within one week from the date the Pledge isregistered. Pledgee shall have custody of such items during the entire Term of Pledge set forth in this Agreement. 5.Representations and Warranties of Pledgor and Party C The Pledgor Represent and Warrant to the Pledgee that: 5.1Pledgor is the sole legal and beneficial owners of the Equity Interest. Except for being subject to other agreements entered into by the Pledgor andthe Pledgee, the Pledgor enjoys legal and complete ownership of the Equity Interest. 5.2Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement. 5.3Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest. There are no controversies over theownership of the Equity Interest. The Equity Interest is not seized or subject to any other legal proceedings or similar threats, and is good for transferand pledging according to applicable laws. 5.4The Pledgor's execution of this Agreement and exercise of its rights under this Agreement (or fulfillment of its obligations under this Agreement)will not breach any laws, regulations, and agreements or contracts to which the Pledgor is a party, or any promise the Pledgor has made to any thirdparties. 5.5All documents, materials, statements and certificates provided by the Pledgor to the Pledgee are accurate, true, complete and valid. Party C Represent and Warrant to the Pledgee that: 5.6Party C is a limited liability company registered under the laws of China and legally exists. Party C has the qualification of an independent legalperson, enjoys complete and independent legal status and the legal capacity to sign, deliver and fulfill this Agreement. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 5.7Upon due execution of Party C, this Agreement constitute legal, effective and binding obligation on Party C. 5.8Party C has the complete internal right and authorization to sign and deliver this Agreement and all other documents relating to the transactionscontemplated under this Agreement. Party C has the complete right and authorization to complete the transactions contemplated under thisAgreement. 5.9Regarding the assets owned by Party C, there are not any guarantee interests or any other encumbrance on property rights that are substantial andmay impact the Pledgee's right and interests in the Equity Interest (including without limitation transfer of any of Party C's intellectual properties orany assets with an a value equaling or over RMB 100,000, or any encumbrance on the ownership or right to use of such assets). 5.10Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, except for (i) debts incurredin the ordinary course of business other than through loans; and (ii) debts disclosed to Party A for which Party A's written consent has been obtained; 5.11They shall always operate all of Party C's businesses during the ordinary course of business to maintain the asset value of Party C and refrain fromany action/omission that may affect Party C's operating status and asset value; 5.12In any court or arbitration tribunal, there are no pending (or, as far as Party knows, threatening) litigation, arbitration or other legal proceedingsagainst the Equity Interest, Party C or its assets, and in any governmental agencies or departments, there are no pending (or, as far as Party knows,threatening) administrative proceedings or penalties against the Equity Interest, Party C or its assets, which may substantially and adversely impactParty C's economic condition or the Pledgor's ability to fulfill their obligations and guarantee liabilities under this Agreement. 5.13Party C hereby agrees that it is jointly and severally liable to the Pledgee for all representations and warranties made by any and all of the Pledgorunder this Agreement. 5.14Party C hereby warrants to the Pledgee that, at any time and under any circumstances prior to complete fulfillment of the obligations under thisAgreement or the secured debts being fully repaid, the aforementioned representations and warranties are true and accurate and will be fullycomplied with. 6.Covenants and Further Agreements of Pledgor The covenants and further agreements of the Pledgor are set forth below.6.1Pledgor hereby covenants to the Pledgee, that during the term of this Agreement, Pledgor shall: Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6.1.1not transfer (or agree to others' transfer of) all or any part of the Equity Interest, place or permit the existence of any security interest or otherencumbrance that may affect the Pledgee's rights and interests in the Equity Interest, without the prior written consent of Pledgee, except forthe performance of the Exclusive Option Agreement executed by Pledgor, Pledgee and Party C on January 28, 2019; 6.1.2comply with the provisions of all laws and regulations applicable to the pledge of rights, and within 5 days of receipt of any notice, order orrecommendation issued or prepared by relevant competent authorities (or any other relevant parties) regarding the Pledge, shall present theaforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order or recommendation orsubmit objections and representations with respect to the aforementioned matters upon Pledgee's reasonable request or upon consent ofPledgee; 6.1.3promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on Pledgee's rights to the Equity Interest orany portion thereof, as well as any event or notice received by Pledgor that may have an impact on any guarantees and other obligations ofPledgor arising out of this Agreement. 6.2Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmedby Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings. 6.3To protect or perfect the security interest granted by this Agreement, Pledgor hereby undertakes to execute in good faith and to cause other partieswho have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes toperform and to cause other parties who have an interest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee ofits rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest withPledgee or designee(s) of Pledgee (natural/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, ordersand decisions regarding the Pledge that are required by Pledgee. 6.4Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement.In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shall indemnifyPledgee for all losses resulting therefrom. 6.5If the Equity Interest pledged under this Agreement is, for any reason, subject to mandatory measures imposed by the court of law or othergovernmental departments, the Pledgor shall try their best to release such mandatory measures imposed by the court of law or other governmentaldepartments, including without limitation providing to the court of law other kinds of security or other measures. 6.6If there is a possibility that the value of the Equity Interest will be decreased and such decrease is sufficient to harm the rights and interests of thePledgee, the Pledgee may request the Pledgor to provide additional collateral or security. If the Pledgor refuses to provide such security, the Pledgeemay, at any time, sell the Equity Interest or put it up for auction, and use the monies obtained from such sale or auction to settle the securedobligations in advance or put such monies under custody; all expenses therefore occurred shall be borne by the Pledgor. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6.7Without the prior written consent from the Pledgee, the Pledgor and/or Party C shall not (by themselves or assisting others to) increase, decrease ortransfer the registered capital of Party C (or their capital contribution to Party C) or impose any encumbrances on it, including the Equity Interest.Subject to the forgoing provision, any Equity Interest which is registered and obtained by the Pledgor subsequent to the date of this Agreement shallbe called "Additional Equity Interest". The Pledgor and Party C shall, immediately after the Pledgor obtains the Additional Equity Interest, enterwith the Pledgee supplemental share pledge agreement for the Additional Equity Interest, make the board of directors and shareholders meeting ofParty C approve the supplemental share pledge agreement, and deliver to the Pledgee all documents necessary for the supplemental share pledgeagreement, including without limitation (a) the original certificate issued by Party C about shareholders' capital contribution relating to theAdditional Equity Interest; and (b) the verified photocopy of the capital contribution verification report (issued by certified public accountant inChina) regarding the Additional Equity Interest. The Pledgor and Party C shall, according to Article 3.1 of this Agreement, handle the pledgeregistration procedures relating to the Additional Equity Interest. 6.8Unless otherwise instructed by the Pledgee in writing, the Pledgor and/or Party C agree that, if part of or all of the Equity Interest is transferredbetween the Pledgor and any third parties in violation of this Agreement ("Transferee of the Equity Interest"), then the Pledgor and/or Party C shallensure that the Transferee or the Equity Interest will unconditionally recognize the Pledge and follow necessary procedures for modification of theregistration of the Pledge (including without limitation signing relevant documents) so as to ensure the continued existence of the Pledge. 6.9If the Pledgee provides to Party C loan of monies, the Pledgor and/or the Party C agree to pledge the Equity Interest to the Pledgee for security ofsuch additional loan of monies, and to follow procedures as soon as possible according to relevant laws, regulations or local practice (if any),including without limitation executing relevant documents and completing registration procedures for setting up (or modification) of a pledge.The covenants and further agreements of Party C are set forth below.6.10If, for the execution of this Agreement and Pledge under this Agreement, it is necessary to obtain any third party consent, approval, waiver orauthorization, any governmental approval, license or waiver, or complete registration procedures in any governmental departments (as required bythe law), then Party C will try its best to assist in obtainning the same and cause it to remain in effect during the term of this Agreement. 6.11Without prior written consent of the Pledgee, Party C will not provide any person with any loan or credit or guarantee in any form; assist or allow thePledgor to set up any new pledges or grant other security over the Equity Interest, nor will Party C assist or allow the Pledgor to transfer the EquityInterest. 6.12Party C agrees to, jointly with the Pledgor, strictly comply with Article 6.7, Article 6.8 and Article 6.9 of this Agreement. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6.13Without prior written consent of the Pledgee, Party C shall not transfer its assets or set up (or allow the existence of) any security or encumbrances onproperty rights that may affect the Pledgee's rights and interests in the Equity Interest (including without limitation transfer of any of Party C'sintellectual properties or any assets with an a value equaling or over RMB 100,000, or any encumbrance on the ownership or right to use of suchassets). 6.14Where there are any litigations, arbitrations or any other claims, which may adversely impact party C, the Equity Interest, or the Pledgee's interestsunder the Control Agreements, Party C shall, as soon as possible, send timely notice to the Pledgee and according to reasonable requests of thePledgee take all necessary measures to protect the Pledgee's interests in the Equity Interest. 6.15Party C shall not conduct or allow any acts or actions that may adversely impact the Equity Interest or Pledgee's interest under the ControlAgreements. 6.16Party C shall, during the first month of each quarter, provide to the Pledgee its financial statements for the preceding quarter, including withoutlimitation its balance sheets, profit statements and cash flow statements. 6.17Party C shall, pursuant to the Pledgee's reasonable requests, take all necessary measures and sign all necessary documents so as to ensure and protectthe Pledgee's rights over the Equity Interest and realization of them. 6.18If the exercise of the Pledge under this Agreement results to any transfer of the Equity Interest, Party C agrees and warrants that it will take allmeasures to effect such transfer. 6.19Party B shall ensure and cause the other shareholders of Party C to ensure that Party C will complete the operation term extension registrationformalities within three (3) months prior to the expiration of its operation term so that the validity of this Contract shall be maintained. 7.Event of Default7.1The following circumstances shall be deemed Event of Default:7.1.1Party C fails to pay in full any of the consulting and service fees payable under the Exclusive Business Cooperation Agreement, or fail torepay its loan or breaches any other obligations of Party C under the Control Agreements; 7.1.2Any representation or warranty by Pledgor in Article 5 of this Agreement contains material misrepresentations or errors, and/or Pledgorviolates any of the warranties in Article 5 of this Agreement; 7.1.3Pledgor and Party C fail to complete the registration of the Pledge with Registration Authority; 7.1.4Pledgor and Party C breach any provisions of this Agreement; 7.1.5Except as expressly stipulated in Section 6.1.1, Pledgor transfers or purports to transfer or abandons the Equity Interest pledged or assignsthe Equity Interest pledged without the written consent of Pledgee; Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7.1.6Any of Pledgor's own loans, guarantees, indemnifications, promises or other debt liabilities to any third party or parties (1) become subjectto a demand of early repayment or performance due to default on the part of Pledgor; or (2) become due but are not capable of being repaidor performed in a timely manner; 7.1.7Any approval, license, permit or authorization of government agencies that makes this Agreement enforceable, legal and effective iswithdrawn, terminated, invalidated or substantively changed; 7.1.8The promulgation of applicable laws renders this Agreement illegal or renders it impossible for Pledgor to continue to perform itsobligations under this Agreement; 7.1.9Adverse changes in properties owned by Pledgor, which lead Pledgee to believe that that Pledgor's ability to perform its obligations underthis Agreement has been affected; 7.1.10The successor or custodian of Party C is capable of only partially performing or refuses to perform the payment obligations under theExclusive Business Cooperation Agreement; and 7.1.11Any other circumstances occur where Pledgee is or may become unable to exercise its right with respect to the Pledge.7.2Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section7.1, Pledgor shall immediately notify Pledgee in writing accordingly.7.3Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee's satisfaction within thirty (30) days of thePledgee’s notice, Pledgee may issue a Notice of Default to Pledgor in writing upon the occurrence of the Event of Default or at any time thereafterand demand that Pledgor immediately pays all outstanding payments due under the Control Agreements, and/or repays loans and all other paymentsdue to Pledgee, and/or disposes of the Pledge in accordance with the provisions of Article 8 of this Agreement.8.Exercise of Pledge8.1Pledgor shall not assign the Pledge or the Equity Interest in Party C without the Pledgee's written consent.8.2Pledgee may issue a Notice of Default to Pledgor when exercising the Pledge. 8.3Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge concurrently with the issuance of the Notice of Defaultin accordance with Section 7.2 or at any time after the issuance of the Notice of Default. Once Pledgee elects to enforce the Pledge, Pledgor shallcease to be entitled to any rights or interests associated with the Equity Interest. 8.4In the event of default, to the extent permitted, Pledgee is entitled to take possession of the Equity Interest pledged hereunder and to dispose of theEquity Interest pledged and exercise all of its remedies and rights for breach of contract in accordance with law; if, after satisfying all obligationssecured, there is any balance in the monies collected by the Pledgee by enforcing the Pledge, then such balance shall be, without calculation ofinterests, paid to the Pledgor or other parties entitled to receive such balance. The Pledgee shall not be liable for any loss caused by its reasonableexercise of its remedies and rights for breach of contract. The Pledgee shall have the right, at its option, to exercise any of its remedies for breach ofcontract simultaneously or successively. The Pledgee shall not be required to exercise other remedies for breach of contract before its exercise of theright to be repaid in priority out of the proceeds from the conversion, auction or sale of the Equity Interest pledged hereunder. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 8.5When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enable Pledgeeto enforce the Pledge in accordance with this Agreement. 8.6Unless otherwise provided by the law, all expenses, tax, charges and all legal fees relating to the establishment of the Pledge and enforcement of itshall be borne by the Pledgor.9.Assignment9.1Without Pledgee's prior written consent, Pledgor shall not have the right to assign or delegate its rights and obligations under this Agreement. 9.2This Agreement shall be binding on Pledgor and its successors and permitted assigns, and shall be valid with respect to Pledgee and each of itssuccessors and assigns. 9.3At any time, Pledgee may assign any and all of its rights and obligations under the Exclusive Business Cooperation Agreement to its designee(s)(natural/legal persons), in which case the assigns shall have the rights and obligations of Pledgee under this Agreement, as if it were the originalparty to this Agreement. When the Pledgee assigns the rights and obligations under the Exclusive Business Cooperation Agreement, upon Pledgee'srequest, Pledgor shall execute relevant agreements or other documents relating to such assignment. 9.4In the event of a change in Pledgee due to an assignment, Pledgor shall, at the request of Pledgee, execute a new pledge agreement with the newpledgee on the same terms and conditions as this Agreement. 9.5Pledgor shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any ofthem, including the Exclusive Option Agreement and the Power of Attorney granted to Pledgee, perform the obligations hereunder and thereunder,and refrain from any action/omission that may affect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to theEquity Interest pledged hereunder shall not be exercised by Pledgor except in accordance with the written instructions of Pledgee.10.TerminationUpon the full performance and payment of the consulting and service fees under the Exclusive Business Cooperation Agreement and upontermination of Party C's obligations under the Control Agreements, this Agreement shall be terminated, and Pledgee shall then cancel or terminatethis Agreement as soon as reasonably practicable. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Unless otherwise provided by laws, in no event shall the Pledgor or Party C have the right to terminate or rescind this Contract. 11.Handling Fees and Other ExpensesAll fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any othertaxes and fees, shall be borne by Party C. If Applicable Laws requires that Pledgee should bear some related taxes and fees, Pledgor shall cause PartyC to fully repay Pledgee the paid taxes and fees. 12.ConfidentialityThe Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidential information.Each Party shall maintain the confidentiality of all such information, and without obtaining the written consent of other Parties, it shall not discloseany relevant information to any third parties, except in the following circumstances: (a) such information is or will be in the public domain(provided that this is not the result of a public disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules orregulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal counsel or financial advisor regarding thetransaction contemplated hereunder, and such legal counsel or financial advisor are also bound by confidentiality duties similar to the duties in thissection. Disclosure of any confidential information by the staff members or agency hired by any Party shall be deemed disclosure of suchconfidential information by such Party, which Party shall be held liable for breach of this Agreement. This section shall survive the termination ofthis Agreement for any reason. 13.Governing Law and Resolution of Disputes 13.1The execution, effectiveness, construction, performance, and the resolution of disputes hereunder shall be governed by the formally published andpublicly available laws of China. Matters not covered by formally published and publicly available laws of China shall be governed byinternational legal principles and practices. 13.2In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in goodfaith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party'srequest for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and TradeArbitration Commission (“CIETAC”) for arbitration, in accordance with its then effective arbitration rules. The arbitration shall be conducted inBeijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on all Parties. 13.3Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of anydispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreementand perform their respective obligations under this Agreement. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 14.Notices14.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows:14.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the dateof delivery or refusal at the address specified for notices. 14.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of transmission).14.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Weidai Co., Ltd. Address:50/F, Fortune Financial Center, No. 37 Jiefang East Rd., Jiangan District, Hangzhou City, Zhejiang Province. Attn:*** Phone:*** Party B:[Name] Address:*** Attn:*** Phone:*** Party C:Hangzhou Yuntuo group co., LTD. Address:50/F, Fortune Financial Center, No. 37 Jiefang East Rd., Jiangan District, Hangzhou City, Zhejiang Province. Attn:*** Phone:*** 14.3Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.15.SeverabilityIn the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance withany laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised inany respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions thataccomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be asclose as possible to the economic effect of those invalid, illegal or unenforceable provisions. Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 16.AttachmentsThe attachments set forth herein shall be an integral part of this Agreement. 17.Effectiveness17.1Any amendments, changes and supplements to this Agreement shall be in writing and shall become effective after the affixation of the signatures orseals of the Parties. 17.2This Agreement is written in Chinese and English in four (4) copies. Each of the Pledgor, Pledgee and Party C shall hold one (1) copy, respectively;and one (1) copy shall be submitted to the Registration Authority. Each copy of this Agreement shall have equal validity. In case there is anyconflict between the Chinese version and the English version, the Chinese version shall prevail. 17.3With the execution of this Agreement on the date hereof, the Pledgor shall cause his/her spouse to execute and deliver to the Pledgee a spousalconsent letter.[The space below is intentionally left blank.] Share Pledge Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Share Pledge Agreement as of the date first written above. Party A: Weidai Co., Ltd. (Company Seal) By: Name: Share Pledge Agreement-Signature Page Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Share Pledge Agreement as of the date first written above. Party B: *** By: Share Pledge Agreement-Signature Page Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Share Pledge Agreement as of the date first written above. Party C: Hangzhou Yuntuo group co., LTD. (Company Seal) By: Name: Share Pledge Agreement-Signature Page Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.12 Exclusive Business Cooperation Agreement This Exclusive Business Cooperation Agreement (this “Agreement”) is made and entered into by and between the following Parties on January 28, 2019 inHangzhou, China. Party A:Weidai Co., Ltd., Address:Room A-B102-1102, No. 198 of Qidi Road, Xiaoshan Economic-technical Development Zone, Xiaoshan District, Hangzhou, ZhejiangProvince. Party B:Hangzhou Yuntuo group co., LTD. Address:Room A-B102-1237, No. 198 of Qidi Road, Xiaoshan Economic-technical Development Zone, Xiaoshan District, Hangzhou, ZhejiangProvince. Each of Party A and Party B shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively. Whereas, 1.Party A is a Wholly Foreign Owned Enterprise established in the People's Republic of China (“China”), and has the necessary resources to providetechnical services and business consulting services; 2.Party B is a company with exclusively domestic capital registered in China; 3.Party A is willing to provide Party B, on an exclusive basis, with technical, consulting and other services (the detailed scope set forth below) duringthe term of this Agreement, utilizing its own advantages in human resources, technology and information, and Party B is willing to accept suchservices provided by Party A or Party A's designee(s), each on the terms set forth herein. Now, therefore, through mutual discussion, Party A and Party B have reached the following agreements: 1.Services Provided by Party A 1.1Party B hereby appoints Party A as Party B's exclusive services provider to provide Party B with complete business support and technicaland consulting services during the term of this Agreement, in accordance with the terms and conditions of this Agreement, which mayinclude all or part of the services within the business scope of Party B as may be determined from time to time by Party A, including, but notlimited to, technical services, network support, business consultations, intellectual property licenses, equipment or leasing, marketingconsultancy, system integration, product research and development, and system maintenance(“Service”). Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.2Party B agrees to accept all the consultations and services provided by Party A. Party B further agrees that unless with Party A's prior writtenconsent, during the term of this Agreement, Party B shall not accept any consultations and/or services provided by any third party and shallnot cooperate with any third party regarding the matters contemplated by this Agreement. Party A may appoint other parties, who may enterinto certain agreements described in Section 1.4 with Party B, to provide Party B with the consultations and/or services under thisAgreement. 1.3To ensure that the cash flow requirements of Party B’s ordinary operations are met and/or to set off any loss accrued during such operations,Party A may elect to, only to the extent permissible under the laws of PRC, provide financing support for Party B, whether or not Party Bactually incurs any such operational loss. If Party A elects to provide financing support for Party B, Party B shall accept such financingsupport provided by Party A. Party A’s financing support for Party B may take the form of bank entrusted loans or borrowings. Contracts forany such entrusted loans or borrowings shall be executed separately. 1.4Service Providing Methodology 1.4.1Party A and Party B agree that during the term of this Agreement, both Parties, directly or through their respective affiliates, mayenter into further technical service agreements or consulting service agreements, which shall provide the specific contents, manner,personnel, and fees for the specific technical services and consulting services. 1.4.2To fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, both Parties, directly or through theirrespective affiliates, may enter into intellectual property (including, but not limited to, software, trademark, patent and know-how)license agreements, which shall permit Party B to use Party A's relevant intellectual property rights, at any time and from time totime based on the needs of the business of Party B. 1.4.3To fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, both Parties, directly or through theirrespective affiliates, may enter into equipment or property leases which shall permit Party B to use Party A's relevant equipment orproperty based on the needs of the business of Party B. 1.4.4Party A may, at its own discretion, subcontract to third parties part of the services Party A provides to Party B under thisAgreement. Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.4.5Party B hereby grants to Party A an irrevocable exclusive right, pursuant to which Party A may, at its sole discretion, within thelimits permitted by PRC laws and regulations, purchase any part or all of Party B’s assets and business at the lowest price permittedby PRC laws, and the Parties shall enter into a separate transfer agreement of asset or business at that time. 2.Calculation and Payment of the Service Fees, Financial Reports, Audit and Tax 2.1Both Parties agree that, in consideration of the services provided by Party A, subject to applicable laws of China, Party A is entitled toreceive fees (the “Service Fees”) from Party B equal to the total net income of Party B. The Service Fees shall be due and payable on amonthly basis. During the term of this Agreement, Party A shall have the right to adjust the above Service Fees at its sole discretion withoutthe consent of Party B. Party B shall (a) deliver to Party A the management accounts and operating statistics of Party B for such month,including the net income of Party B during such month (the “Monthly Net Income”), and (b) pay all of such Monthly Net Income or anyother amount as adjusted by Party A, to Party A (each such payment, a “Monthly Payment”). Within 7 days of receipt of such managementaccounts and operating statistics, Party A shall issue to Party B a corresponding technical service invoice, and Party B shall make paymentof the amount of such invoice within 7 days of receipt of the same. All payments shall be transferred into the bank accounts designated byParty A through remittance or in any other way acceptable by the Parties. The Parties agree that such payment instruction may be changedby a notice given by Party A to Party B from time to time. 2.2Within ninety (90) days after the end of each fiscal year, Party B shall (a) deliver to Party A audited financial statements of Party B for suchfiscal year, which shall be audited and certified by an independent certified public accountant approved by Party A, and (b) pay an amountto Party A equal to the shortfall, if any, of the net income of Party B for such fiscal year, as shown in such audited financial statements, ascompared to the aggregate amount of the Monthly Payments paid by Party B to Party A in such fiscal year. 2.3Party B shall prepare its financial statements in satisfaction of Party A's requirements and in accordance with law and commercial practices. 2.4Subject to a notice given by Party A 5 working days in advance, Party B shall allow Party A and/or its appointed auditor to review, andmake photocopies of, the relevant books and records of Party B at the principal office of Party B to verify the accuracy of the incomeamounts and statements of Party B. 2.5The Parties undertake to each file and pay, in accordance with law, the taxes involved in the transaction hereunder. Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 3.Intellectual Property Rights; Confidentiality Clauses; Non-competition 3.1Party A shall have exclusive and proprietary rights and interests in all rights, ownership, interests and intellectual properties arising out ofor created during the performance of this Agreement, including, but not limited to, copyrights, patents, patent applications, trademarks,software, technical secrets, trade secrets and others, regardless of whether they have been developed by Party A or Party B. 3.2The Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidentialinformation. Each Party shall maintain the confidentiality of all such information, and without obtaining the written consent of the otherParty, it shall not disclose any relevant information to any third parties, except in the following circumstances: (a) such information is orwill be in the public domain (provided that this is not the result of a public disclosure by the receiving Party); (b) information disclosed asrequired by applicable laws or rules or regulations of any stock exchange; or (c) information required to be disclosed by any Party to itslegal counsel or financial advisor regarding the transaction contemplated hereunder, and such legal counsel or financial advisor is alsobound by confidentiality duties similar to the duties in this Section. Disclosure of any confidential information by the staff members oragencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable forbreach of this Agreement. This Section shall survive the termination of this Agreement for any reason. 3.3Party B shall not engage in any business activities other than those falling within the scope permitted by its Business License and BusinessPermit, whether directly or indirectly. Unless approved in writing by Party A, Party B shall not engage in any businesses in China, whichcompete with the businesses of Party A, whether directly or indirectly, including investing in entities operating in businesses whichcompete with the businesses of Party A, or any other businesses beyond the scope approved in writing by Party A. 3.4The Parties agree that this Section shall survive changes to, and rescission or termination of, this Agreement. 4.Representations and Warranties 4.1Party A hereby represents and warrants as follows: 4.1.1Party A is a company legally registered and validly existing in accordance with the laws of China. 4.1.2Party A's execution and performance of this Agreement is within its corporate capacity and the scope of its business operations;Party A has taken necessary corporate actions and been given appropriate authorization and has obtained the consent and approvalfrom third parties and government agencies, and will not violate any restrictions in law or otherwise binding or having an impacton Party A. Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 4.1.3This Agreement constitutes Party A's legal, valid and binding obligations, enforceable in accordance with its terms. 4.2Party B hereby represents and warrants as follows: 4.2.1Party B is a company legally registered and validly existing in accordance with the laws of China; 4.2.2Party B's execution and performance of this Agreement is within its corporate capacity and the scope of its business operations;Party B has taken necessary corporate actions and given appropriate authorization and has obtained the consent and approval fromthird parties and government agencies, and will not violate any restrictions in law or otherwise binding or having an impact onParty B. 4.2.3This Agreement constitutes Party B's legal, valid and binding obligations, and shall be enforceable against it. 5.Effectiveness and Term 5.1This Agreement has been entered into as of the date first written above and shall come into force as from such date. This Agreement shall beperpetually valid unless early terminated upon written decision of Party A in accordance with this Agreement or otherwise required in thelaws of the PRC. 6.Termination 6.1If any Party’s term of operation expires within the term hereof, such Party shall promptly extend its term of operation to the greatest extentpermitted by the laws of the PRC in order for this Agreement to continue to be valid and performed. If a Party’s application for extension ofterm of operation is not approved or consented to by any competent authority, this Agreement shall terminate on the date when such Party’sterm of operation expires. 6.2The rights and obligations of the Parties under Articles 3, 7 and 8 shall survive the termination of this Agreement. 6.3In case of early termination, for whatever reason, or due expiration of this Agreement, payment obligations of either Party outstanding as ofthe date of such termination or expiration, including without limitation the Service Fees, shall not be waived, nor shall any default liabilityaccrued as of the termination of this Agreement be waived. The Service Fees accrued as of the termination of this Agreement shall be paid toParty A within 15 working days of the termination of this Agreement. Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7.Governing Law and Resolution of Disputes 7.1The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputeshereunder shall be governed by the laws of China. 7.2In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiatein good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 daysafter any Party's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the ChinaInternational Economic and Trade Arbitration Commission (“CIETAC”) for arbitration, in accordance with its then-effective arbitrationrules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shallbe final and binding on both Parties. 7.3Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration ofany dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under thisAgreement and perform their respective obligations under this Agreement. 7.4In case of promulgation or , or any change to or in any Chinese law, regulation or rule, or any change to or in the interpretation orapplication of the same any time after execution of this Agreement, the following agreement shall apply: (a) if any Party would enjoy morebenefits under any changed or new law than under the relevant law, regulation or rule in effect at the date of this Agreement, without anyadverse effect upon the other Party, the Parties shall promptly apply for such benefits. The Parties shall make best efforts to procure theapproval of such application; and (b) if the aforementioned law change or promulgation causes any direct or indirect material adverse effectto either Party, this Agreement shall be implemented in its original terms and conditions. However, the Parties shall try all lawful means toprocure exemption from compliance with such changed or new law provisions. In the event such adverse effect on the economic interest ofeither Party is unable to be resolved pursuant to this Agreement, the affected Party may give notice to other Party(s), and the Parties shallhold prompt discussion and make all necessary amendments to this Agreement so as to maintain the economic benefits otherwise enjoyedby the affected Party. Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 8.Indemnification Party B shall indemnify and hold harmless Party A from any losses, injuries, obligations or expenses caused by any lawsuit, claims or other demandsagainst Party A arising from or caused by the consultations and services provided by Party A at the request of Party B, except where such losses,injuries, obligations or expenses arise from the gross negligence or willful misconduct of Party A. 9.Notices 9.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively givenshall be determined as follows: 9.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given onthe date of delivery or refusal at the address specified for notices. 9.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced byan automatically generated confirmation of transmission). 9.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Weidai Co., Ltd. Address:50/F, Fortune Financial Center, No. 37 Jiefang East Rd., Jiangan District, Hangzhou City, Zhejiang Province. Attn:*** Phone:*** Party B:Hangzhou Yuntuo group co., LTD. Address:50/F, Fortune Financial Center, No. 37 Jiefang East Rd., Jiangan District, Hangzhou City, Zhejiang Province. Attn:*** Phone:*** 9.3Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms hereof. 10.Assignment 10.1Without Party A's prior written consent, Party B shall not assign its rights and obligations under this Agreement to any third party. Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 10.2Party B agrees that Party A may assign its obligations and rights under this Agreement to any third party upon a prior written notice to PartyB but without the consent of Party B. 11.Severability In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance withany laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised inany aspect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions thataccomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be asclose as possible to the economic effect of those invalid, illegal or unenforceable provisions. 12.Amendments and Supplements Any amendments and supplements to this Agreement shall be in writing. The amendment agreements and supplementary agreements that have beensigned by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as thisAgreement. 13.Language and Counterparts This Agreement is written in both Chinese and English language in two copies, each Party having one copy with equal legal validity; in case there isany conflict between the Chinese version and the English version, the Chinese version shall prevail. [The space below is intentionally left blank.] Exclusive Business Agreement Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Business Cooperation Agreement as of the datefirst written above. Party A: Weidai Co., Ltd. (Company Seal) By:/s/ Hong Yao Name: Hong Yao Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Business Cooperation Agreement as of the datefirst written above. Party B:Hangzhou Yuntuo group co., LTD. (Company Seal) By:/s/ Hong Yao Name: Hong Yao Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.13 Power of Attorney Date: January 28, 2019 We, Yao Hong (with Identification Card No.: ***), Deqing Jinxiu Management Consulting Partnership (Limited Partnership)(with Unified Social CreditCode No.: ***), a citizen of the People's Republic of China (“China”) or an entity established and existing under the laws of the PRC, and joint holders of100% of the entire registered capital in Hangzhou Yuntuo group co., LTD. (“Domestic Company”) (“Our Shareholding”), hereby irrevocably authorizeWeidai Co., Ltd. (the “WFOE”) to exercise the following rights relating to Our Shareholding during the term of this Power of Attorney: The WFOE is hereby authorized to act on behalf of ourselves as our exclusive agent and attorney with respect to all matters concerning ourShareholding, including without limitation to: 1) propose, convene and attend shareholders' meetings of Domestic Company; 2) exercise all the shareholder'srights and shareholder's voting rights we are entitled to under the laws of China and Domestic Company’ Articles of Association, including but not limited tothe sale or transfer or pledge or disposition of our Shareholding in part or in whole; 3) designate and appoint on behalf of ourselves the legal representative(chairperson), the director, supervisor, the chief executive officer (or general manager) and other senior management members of Domestic Company; and 4)obtain the information with respect to the operation, business, clients, finance, employees and other relevant information of Domestic Company and inspectrelated records and materials. Without limiting the generality of the powers granted hereunder, the WFOE shall have the power and authority under this Power of Attorney to executethe Transfer Contracts stipulated in Exclusive Option Agreement, to which we are required to be a party, on behalf of ourselves, and to effect the terms of theShare Pledge Agreement and Exclusive Option Agreement, both dated the date hereof, to which we are parties. All the actions associated with Our Shareholding conducted by the WFOE shall be deemed as our own actions, and all the documents related to OurShareholding executed by the WFOE shall be deemed to be executed by me. When acting in respect of any and all of the aforementioned matters, the WFOEmay act at its own discretion and does not need to seek our prior consent. We hereby acknowledge and ratify those actions and/or documents by the WFOE. The WFOE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and withoutgiving prior notice to we or obtaining our consent. So long as we are shareholders of Domestic Company, this Power of Attorney shall be irrevocably and continuously valid and effective from the date ofits execution, unless the WFOE issues adverse instructions in writing. Once the WFOE instructs me in writing to terminate this Power of Attorney in whole orin part, we will immediately withdraw the authorization herein granted to the WFOE and execute power(s) of attorney in the same format of this Power ofAttorney, granting to other persons nominated by the WFOE the same authorization under this Power of Attorney. Power of Attorney Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. During the term of this Power of Attorney, we hereby waive all the rights associated with Our Shareholding, which have been authorized to the WFOEthrough this Power of Attorney, and shall not exercise such rights by ourselves This Power of Attorney is written in Chinese and English with equal legal validity; in case there is any conflict between the Chinese version and theEnglish version, the Chinese version shall prevail. [The space below is intentionally left blank.] Power of Attorney Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Power of Attorney as of the date first written above. Yao Hong By: /s/ Hong Yao Power of Attorney-Signature Page Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Power of Attorney as of the date first written above. Deqing Jinxiu Management Consulting Partnership (Limited Partnership) (Company Seal) By: /s/ Qinqin He Name: Qinqin He Power of Attorney-Signature Page Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.14 Exclusive Call Option Contract This Exclusive Call Option Contract (this “Contract”) is entered into in Hangzhou, the People’s Republic of China (the “PRC” or “China”) on January 28,2019 by and among: Party A:Weidai Co., Ltd., a wholly foreign-owned limited liability company established and existing under the laws of the PRC, with its registeredaddress at Room A-B102-1102, No. 198 of Qidi Road, Xiaoshan Economic-technical Development Zone, Xiaoshan District, Hangzhou,Zhejiang Province. Party BYao Hong, a Chinese citizen, ID No. ***; Deqing Jinxiu Management Consulting Partnership (Limited Partnership), a limited partnership established and existing under the laws ofthe PRC, with its registered address at No.425 Zhiyuan South Road, Wukang Town, Deqing County; Party C:Hangzhou Yuntuo group co., LTD., a limited liability company established and existing under the laws of the PRC, with its registered addressat Room A-B102-1237, No. 198, Qidi Road, Xiaoshan Economic-technical Development Zone, Xiaoshan District, Hangzhou, ZhejiangProvince. In this Contract, Party A, Party B and Party C may be hereinafter referred to individually as a “Party” and collectively as the “Parties.” 1.The Persons of Party B are all the currently registered shareholders of Party C and hold 100% equity interest in Party C in the aggregate; 2.Subject to the laws of the PRC, Party B intends to transfer to Party A and/or any other entity or individual designated by it, and Party A intends to acceptsuch transfer of, all the equity interest in Party C held by Party B; 3.Subject to the laws of the PRC, Party C intends to transfer to Party A and/or any other entity or individual designated by it, and Party A intends to acceptsuch transfer of, the assets owned by Party C; 4.In order to consummate the aforesaid equity or asset transfer, Party B and Party C agree to grant, on an exclusive basis, respectively to Party A irrevocableEquity Call Option (as defined below) and Asset Purchase Option (as defined below), Party C agrees that Party B grants the Equity Call Option to Party Ain accordance with this Contract, and Party B agrees that Party C grants the Asset Purchase Option to Party A in accordance with this Contract. Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOW, THEREFORE, through mutual consultation, the Parties agree as follows: 1.Equity Call Option and Asset Purchase Option 1.1Grant of Options Party B hereby irrevocably grants to Party A an irrevocable and exclusive option to purchase, or cause one or more designated Persons (each, a“Designee”) to purchase, all or any part of equity interest in Party C held by any Person of Party B now or hereafter from such Person at any time, oneor more times, at the price set forth in Article 1.3 hereof according to the steps for exercise as determined by Party A in its sole discretion (the“Equity Call Option”). No third Person other than Party A and the Designees shall have the right to purchase equity interest in Party C held by PartyB or other rights related to equity interest in Party C held by Party B. Party C hereby agrees that Party B grants the Equity Call Option to Party A inaccordance with this Contract. “Person” referred to in this article and this Contract means individual, company, joint venture, partnership,enterprise, trust or unincorporated organization. Party C hereby irrevocably grants to Party A an irrevocable and exclusive option to purchase, or cause the Designee(s) to purchase, all or any part ofassets owned by Party C now or hereafter from Party C at any time, one or more times, at the price set forth in Article 1.3 hereof according to the stepsfor exercise as determined by Party A in its sole discretion (the “Asset Purchase Option”). No third Person other than Party A and the Designees shallhave the right to purchase assets of Party C or other rights related to assets of Party C. Party B hereby agrees that Party C grants the Asset PurchaseOption to Party A in accordance with this Contract. Party A agrees to accept the aforesaid Equity Call Option and the Asset Purchase Option. For the avoidance of doubt, Party A may exercise anyrights hereunder, including the Equity Call Option and/or the Asset Purchase Option, at any time after the execution and effectiveness of thisContract. To the fullest extent permitted by the laws of the PRC, Party A shall have the right to exercise the rights hereunder, including the EquityCall Option and/or the Asset Purchase Option, against Party B or its successor or successor entity and Party C and its successor entity in accordancewith the terms of this Contract. 1.2Steps for Exercise 1.2.1Subject to the terms and conditions of this Contract, to the extent permitted by the laws of the PRC, Party A shall determine the timing,method and times of its exercise of the Equity Call Option and the Asset Purchase Option in its absolute and sole discretion and shallhave the right to request at any time Party B to transfer all or any part of its equity interest in Party C, or Party C to transfer all or anypart of its assets, to it or the Designee(s). 1.2.2With respect to the Equity Call Option, Party A shall have the right to determine in its sole discretion the amount of equity interest tobe transferred by each Person of Party B to Party A and/or the Designee(s) in each exercise, and Party B shall transfer such amount ofthe Purchased Equity (as defined below) as requested by Party A to Party A and/or the Designee(s). Party A and/or the Designee(s) shallpay the transfer price to the transferring Person of Party B for the Purchased Equity acquired in each exercise. Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.2.3With respect to the Asset Purchase Option, Party A shall have the right to determine the specific assets of Party C to be transferred byParty C to Party A and/or the Designee(s) in each exercise, and Party C shall transfer the Purchased Assets (as defined below) asrequested by Party A to Party A and/or the Designee(s). Party A and/or the Designee(s) shall pay the transfer price to Party C for thePurchased Assets acquired in each exercise. 1.2.4When Party A exercises the Equity Call Option or the Asset Purchase Option, it shall give a written notice (the “Equity PurchaseNotice” or the “Asset Purchase Notice”) to Party B, specifying (a) decision made by Party A or the Designee(s) on exercise of theEquity Call Option/the Asset Purchase Option; (b) the percentage of equity interest proposed to be purchased by Party A or theDesignee(s) from Party B (the “Purchased Equity”), or the specific assets proposed to be purchased from Party C (the “PurchasedAssets”); and (c) the purchase date/transfer date of the purchased equity or assets. After the receipt of such notice, Party B or Party Cshall, pursuant to such notice, promptly transfer the Purchased Equity or the Purchased Assets to Party A and/or the Designee(s) in suchway as described in this Contract. 1.3Transfer Price 1.3.1With respect to the Equity Call Option hereunder, the transfer price corresponding to the Purchased Equity in each exercise by Party Ashall be the lowest price permitted by the laws of the PRC applicable at the time of exercise; with respect to the Asset Purchase Optionhereunder, the transfer price corresponding to the Purchased Assets in each exercise by Party A shall be the net book value of thePurchased Assets; if the lowest price permitted by the then applicable laws of the PRC is higher than the net book value of thePurchased Assets, the transfer price shall be the lowest price permitted by the laws of the PRC. 1.3.2The Parties hereby agree that, after Party A exercises the Equity Call Option and/or the Asset Purchase Option, Party B and/or Party Cshall pay all the transfer price collected thereby to Party A or another party designated by it without compensation. 1.4Transfer of the Purchased Equity/the Purchased Assets When Party A exercises the Equity Call Option and/or the Asset Purchase Option each time: 1.4.1Party C shall, and Party B shall cause Party C to, promptly hold a shareholders’ meeting, at which a resolution shall be adopted on theapproval of the transfer of the Purchased Equity by Party B, or the transfer of the Purchased Assets by Party C, to Party A and/or theDesignee(s); 1.4.2each Person of Party B shall obtain consent from its respective shareholders’ meeting, board of directors or other internal decision-making bodies having similar functions in connection with its transfer of the Purchased Equity to Party A and/or the Designee(s); Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 1.4.3with respect to the transfer of the Purchased Equity to Party A and/or the Designee(s), Party B shall obtain a written statement from theother shareholders of Party C, in which they approve such transfer and waive the right of first refusal; meantime, when Party A exercisesthe Equity Call Option to purchase equity interest in Party C held by several Persons of Party B, the other Persons of Party B shall issuea written statement, in which they approve such transfer and waive the right of first refusal; 1.4.4Party B shall enter into an equity transfer contract for each equity transfer with Party A and/or the Designee(s) (as applicable) inaccordance with this Contract and the Equity Purchase Notice, in the form and substance satisfactory to Party A; Party C shall enterinto an asset transfer contract for each asset transfer with Party A and/or the Designee(s) (as applicable) in accordance with this Contractand the Asset Purchase Notice, in the form and substance satisfactory to Party A; 1.4.5the relevant Parties shall execute all other necessary contracts, agreements or documents (including, without limitation, amendment tothe articles of association), obtain all necessary governmental licenses and permits (including, without limitation, business license) andtake all necessary actions to transfer the valid title of the Purchased Equity and/or the Purchased Assets to Party A and/or theDesignee(s), free and clear of any Security Interest, and cause Party A and/or the Designee(s) to become the registered owner(s) of thePurchased Equity and/or the Purchased Assets, if applicable. For the purpose of this article and this Contract, “Security Interest”includes security, mortgage, third party rights or interests, any call option, right to acquire, right of first refusal, right of set-off,ownership detainment or other security arrangements, for the sake of clarity, excluding any Security Interest created under thisContract, the Equity Pledge Contract of Party B and the Power of Attorney of Party B. The “Equity Pledge Contract of Party B”referred to in this article and this Contract means the Equity Pledge Contract entered into by Party A, Party B and Party C on the datehereof, as amended, modified or restated; the “Power of Attorney of Party B” referred to in this article and this Contract means thePower of Attorney executed by Party B to authorize Party A on the date hereof, as amended, modified or restated. 2Covenants 2.1Covenants Concerning Party C Party B (as the shareholders of Party C) and Party C hereby covenant that: 2.1.1without the prior written consent of Party A, they shall not supplement, modify or amend the articles of association or bylaws of Party Cin any form, increase or decrease its registered capital or otherwise change its registered capital structure; 2.1.2they shall maintain the corporate existence of Party C according to good financial and business standards and practices, conduct itsbusiness and transact its affairs prudently and effectively and cause Party C to perform its obligations under the Exclusive BusinessCooperation Agreement executed by it on the date hereof; Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.1.3without the prior written consent of Party A, they shall not sell, transfer, mortgage or otherwise dispose of lawful or beneficial interestin any assets, business or income of Party C or permit the encumbrance thereon of any Security Interest at any time from the date hereof(including without limitation transfer of any of Party C's intellectual properties, or any encumbrance on the ownership or right to use ofsuch assets); 2.1.4after the statutory liquidation described in Article 3.2.6, Party B will fully pay Party A any remaining residual value collected on thebasis of non-bidirectional payment or procure such payment; if such payment is prohibited by the laws of the PRC, Party B will paysuch income to Party A or the party designated by Party A to the extent permitted by the laws of the PRC; 2.1.5without the prior written consent of Party A, they shall not incur, inherit, guarantee or permit the existence of any debts, except for (i)debts incurred in the ordinary course of business other than through loans; and (ii) debts disclosed to and approved by Party A inwriting; 2.1.6they shall always conduct all the business of Party C in the ordinary course of business to maintain the asset value of Party C andrefrain from any act/omission that may affect the operation status and asset value of Party C; 2.1.7without the prior written consent of Party A, they shall not cause Party C to enter into any material contract, except for the contractsentered into in the ordinary course of business (for the purpose of this paragraph, a contract shall be deemed as a material contract if itsvalue exceeds RMB100,000); 2.1.8without the prior written consent of Party A, they shall not cause Party C to provide any Person with loan or credit or any form ofsecurity; 2.1.9upon request by Party A, they shall provide Party A with all information regarding the operation and financial status of Party C,including but without limitation, the balance sheet, profit statement and cash flow statement ; 2.1.10if requested by Party A, they shall procure and maintain insurance on assets and business of Party C, the amounts and types of whichshall be consistent with those of the companies operating similar business, with an insurer acceptable to Party A; 2.1.11without the prior written consent of Party A, they shall not cause or allow Party C to merge or consolidate with any Person or acquire orinvest in any Person, or cause or allow Party C to sell its assets with value of more than RMB100,000; Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.1.12they shall promptly notify Party A of any litigation, arbitration or administrative proceeding initiated or threatened in relation to theassets, business or income of Party C; 2.1.13to retain Party C’s title to all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriateactions and file all necessary or appropriate complaints or make necessary and appropriate defenses against all claims; 2.1.14without the prior written consent of Party A, they shall ensure that Party C shall not distribute dividends to its shareholders in any form;provided, however, that Party C shall promptly distribute all distributable profits to its shareholders upon written request by Party A; 2.1.15upon request by Party A, they shall appoint any Person designated by Party A as the director of Party C and/or remove the incumbentdirector of Party C; and 2.1.16without the written consent of Party A, Party C shall not be dissolved or liquidated, unless mandatorily required by the laws of thePRC. 2.2Acknowledgements and Covenants of Party B Party B hereby acknowledges that: 2.2.1to the fullest extent permitted by the laws of the PRC, any equity interest in Party C held by Party B now or hereafter shall not belongto community property of Party B (in the event that Party B is a natural Person) or hereditament and shall not be divided or inherited,nor shall Party B use its equity interest in Party C to assume debt repayment liability or security liability. If, due to any reason, suchequity interest is divided, transferred or inherited, successor(s) or transferee(s) shall execute all documents requested by Party A(including, without limitation, this Contract, the Equity Pledge Contract of Party B and the Power of Attorney of Party B). Party B hereby covenants that: 2.2.2without the prior written consent of Party A, it shall not sell, transfer, mortgage or otherwise dispose of any lawful or beneficial interestin its equity interest in Party C or permit the encumbrance thereon of any Security Interest, other than the pledge created on such equityinterest in accordance with the Equity Pledge Contract of Party B; 2.2.3it shall not request Party C to distribute dividends or make other forms of profit distribution in connection with its equity interest inParty C, propose a resolution thereon to the shareholders’ meeting or vote in favor of such resolution at the shareholders’ meeting. Inany event, if Party B receives any proceeds, profit distribution or dividends from Party C, to the extent permitted by the laws of thePRC, Party B shall promptly pay or transfer such proceeds, profit distribution or dividends to Party A or the party designated by Party Afor the benefit of Party C as the service fee payable by Party C to Party A under the Exclusive Business Cooperation Agreement; Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.2.4it shall cause the shareholders’ meeting and/or the board of directors of Party C not to approve the sale, transfer, mortgage or otherdisposal of any lawful or beneficial interest in its equity interest in Party C or permit the encumbrance thereon of any Security Interestwithout the prior written consent of Party A, other than the pledge created on such equity interest in accordance with the Equity PledgeContract of Party B; 2.2.5it shall cause the shareholders’ meeting or the board of directors of Party C not to approve merger or consolidation with any Person oracquisition of or investment in any Person without the prior written consent of Party A; 2.2.6it shall promptly notify Party A of any litigation, arbitration or administrative proceeding initiated or threatened in relation to itsequity interest in Party C; 2.2.7it shall cause the shareholders’ meeting or the board of directors of Party C to approve the transfer of the Purchased Equity hereunderand take any and all other actions that Party A may request; 2.2.8to retain its ownership of its equity interest in Party C, it shall execute all necessary or appropriate documents, take all necessary orappropriate actions and file all necessary or appropriate complaints or make necessary and appropriate defenses against all claims; 2.2.9upon request by Party A, it shall appoint any Person designated by Party A as the director of Party C; 2.2.10upon request by Party A at any time, it shall promptly and unconditionally transfer its equity interest in Party C to the Designee(s) ofParty A based on the Equity Call Option hereunder, and Party B hereby waives the right of first refusal, if any, with respect to the equitytransfer by another existing shareholder of Party C; and 2.2.11it shall strictly comply with this Contract and other contracts entered into by Party B, Party C and Party A jointly or severally, performits obligations hereunder and thereunder and refrain from any act/omission that may affect the validity and enforceability hereof andthereof. If Party B has any remaining rights with respect to the equity interest under this Contract or the Equity Pledge Contract amongthe Parties hereto or the Power of Attorney granted in favor of Party A, Party B shall not exercise such rights, unless according to thewritten instructions given by Party A. 2.2.12it shall make sure its structure and identity, and the structure and identity of any direct and indirect equity holder of Party B, will notcause any adverse effect on Party’s C’s capacity to obtain and maintain any license in connection with Party C’s business. If thestructure or identity of Party B or the direct and indirect equity holder of Party B has caused or is expected to cause such aforesaidadverse effect, as required by Party A, Party B shall take all necessary actions at its own cost to eliminate such adverse effect, includingbut not limited to conducting necessary internal reorganization. Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2.3Covenants of Party C Party C hereby covenants that: 2.3.1if the execution and performance of this Contract and the grant of the Equity Call Option or the Asset Purchase Option hereunderrequire consent, permit, waiver or authorization of any third party or approval, permit or exemption of any governmental authority orcompletion of registration or filing procedures with any governmental authority (if required in accordance with law), Party C will useits best efforts to assist the satisfaction of such conditions. 2.3.2without the prior written consent of Party A, Party C will not assist or permit Party B to transfer or otherwise dispose of, or create anySecurity Interest or other third party rights on, any equity interest in Party C held by Party B. 2.3.3without the prior written consent of Party A, Party C will not transfer or otherwise dispose of any material assets of Party C, or createany Security Interest or other third party rights on any assets of Party C. 2.3.4Party C will not do or permit to be done any act or action likely to have adverse effect on the interests of Party A hereunder; and 2.3.5Party C covenants that upon issuance of the Asset Purchase Notice by Party A for the exercise of the Asset Purchase Option: Party Cshall immediately cause Party B to hold a shareholders’ meeting and adopt a resolution of the shareholders’ meeting and take all othernecessary actions to approve the transfer by Party C of the Purchased Assets to Party A and/or the Designee(s) at the transfer price setforth herein; it shall immediately execute an asset transfer agreement with Party A and/or the Designee(s) to transfer all the PurchasedAssets to Party A and/or the Designee(s) at the transfer price set forth herein, and shall cause all shareholders of Party C to providenecessary supports to Party A in accordance with requirements of Party A, laws and regulations (including provision and execution ofall relevant legal documents, completion of all governmental approval and registration formalities and assumption of all relevantobligations), such that Party A and/or the Designee(s) shall obtain the ownership of the Purchased Assets, free and clear of any legaldefects and any Security Interest, third party rights or any other restrictions. 3Representations and Warranties 3.1Each Person of Party B hereby severally but not jointly represents and warrants that, as of the date hereof and each transfer date of the PurchasedEquity: 3.1.1with respect to a natural Person, he is a PRC citizen with full capacity to act, has full and independent legal status and capacity toexecute, deliver and perform this Contract and may sue or be sued as an independent party. With respect to a Person other than anatural Person, it is a legal entity validly established and lawfully existing under the laws of the PRC, has full and independent legalstatus and capacity to execute, deliver and perform this Contract and may sue or be sued as an independent party. Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 3.1.2he or it has full power and authority to execute, deliver and perform this Contract and all other documents to be executed by him or itin connection with the transactions contemplated hereby, and has full power and authority to consummate the transactionscontemplated hereby. 3.1.3this Contract has been lawfully and duly executed and delivered by him or it. This Contract constitutes his or its legal and bindingobligations enforceable against him or it in accordance with the terms hereof. 3.1.4he or it is the registered shareholder of the Purchased Equity; other than the pledge right created under the Equity Pledge Contract ofParty B and the proxy rights created under the Power of Attorney of Party B, the Purchased Equity held by him or it is free and clear ofany lien, pledge right, claim right and other Security Interest and third party rights. In accordance with this Contract, Party A and/or theDesignee(s) may, upon exercise of option, obtain good title to the Purchased Equity, free and clear of any lien, pledge right, claim rightand other Security Interest or third party rights. 3.2Party C hereby represents and warrants as follows: 3.2.1It is a limited liability company duly registered and lawfully existing under the laws of the PRC with independent legal person status.It has full and independent legal status and capacity to execute, deliver and perform this Contract and may sue or be sued as anindependent party. 3.2.2It has full internal power and authority to execute, deliver and perform this Contract and all other documents to be executed by it inconnection with the transactions contemplated hereby, and has full power and authority to consummate the transactions contemplatedhereby. 3.2.3This Contract has been lawfully and duly executed and delivered by it. This Contract constitutes its legal and binding obligations. 3.2.4The assets of Party C are free and clear of any lien, mortgage right, claim right and other Security Interest and third party rights. Inaccordance with this Contract, Party A and/or the Designee(s) may, upon exercise of option, obtain good title to the assets of Party C,free and clear of any lien, mortgage right, claim right and other Security Interest or third party rights. 3.2.5Party C does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed toParty A for which Party A's written consent has been obtained. 3.2.6If the laws of PRC requires it to be dissolved or liquidated, Party C shall sell all of its assets to the extent permitted by the laws of PRCto Party A or its Designee(s), at the lowest selling price permitted by applicable the laws of PRC. Any obligation for Party A to payParty C as a result of such transaction shall be forgiven by Party C or any proceeds from such transaction shall be paid to Party A or itsDesignee(s) in partial satisfaction of the service fees under the Exclusive Business Corporation Agreement, as applicable under then-current the laws of PRC. Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 4Effective Date 4.1This Contract shall become effective from the date on which it is duly executed by the Parties. This Contract shall be terminated after all assets ofParty C and all equity interest in Party C held by Party B have been lawfully transferred to Party A and/or another Person designated by it inaccordance with the provisions hereof. 4.2Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement by giving written notice to Party B at any time 30 days inadvance and Party A shall not be liable for any breach of contract in respect of its unilateral termination of this Agreement. 5Governing Law and Resolution of Disputes5.1Governing law The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereundershall be governed by the formally published and publicly available laws of China. Matters not covered by formally published and publiclyavailable laws of China shall be governed by international legal principles and practices. 5.2Methods of Resolution of Disputes In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute throughfriendly negotiations. In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party's request to the other Partiesfor resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and TradeArbitration Commission (“CIETAC”) for arbitration, in accordance with its then effective arbitration rules. The arbitration shall be conducted inBeijing, and the language used in arbitration shall be Chinese. The arbitration award shall be final and binding on all Parties. 6Taxes and Expenses Each Party shall pay any and all transfer and registration tax, expenses and fees incurred thereby or levied thereon in accordance with the laws ofChina in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of thetransactions contemplated under this Agreement and the Transfer Contracts. 7Notices7.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on thedate of delivery or refusal at the address specified for notices. 7.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of transmission). 7.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Weidai Co., Ltd. Address:50/F, Fortune Financial Center, No. 37 Jiefang East Rd., Jiangan District, Hangzhou City, Zhejiang Province. Attn :*** Phone:*** Party B:Yao Hong Address:50/F, Fortune Financial Center, No. 37 Jiefang East Rd., Jiangan District, Hangzhou City, Zhejiang Province. Attn :*** Phone:*** Party B:Deqing Jinxiu Management Consulting Partnership (Limited Partnership) Address:50F, FFC, No.37 of Jiefangdong Road, Jianggan District, Hangzhou, Zhejiang Province Attn:*** Phone:*** Party C:Hangzhou Yuntuo group co., LTD. Address:50F, FFC, No.37 of Jiefangdong Road, Jianggan District, Hangzhou, Zhejiang Province Attn ;*** Phone:*** Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7.3Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof. 8ConfidentialityThe Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidential information.Each Party shall maintain the confidentiality of all such information, and without obtaining the written consent of other Parties, it shall not discloseany relevant information to any third parties, except in the following circumstances: (a) such information is or will be in the public domain(provided that this is not the result of a public disclosure by the receiving Party); (b) information disclosed as required by applicable laws or rules orregulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal counsel or financial advisor regarding thetransaction contemplated hereunder, and such legal counsel or financial advisor are also bound by confidentiality duties similar to the duties in thisSection. Disclosure of any confidential information by the staff members or agency hired by any Party shall be deemed disclosure of suchconfidential information by such Party, which Party shall be held liable for breach of this Agreement. This Section shall survive the termination ofthis Agreement for any reason. 9Further WarrantiesThe Parties agree to promptly execute documents that are reasonably required for or are conducive to the implementation of the provisions andpurposes of this Agreement and take further actions that are reasonably required for or are conducive to the implementation of the provisions andpurposes of this Agreement. 10Liabilities for Breach of Contract 10.1If Party B or Party C materially violates any provision of this Contract, Party A shall have the right to terminate this Contract and/or claim damagesagainst Party B or Party C; this Article 10 shall not prejudice any other rights of Party A hereunder. 10.2Unless otherwise provided by laws, in no event shall Party B or Party C have the right to terminate or rescind this Contract.11Miscellaneous11.1Amendment, change and supplement Any amendment, change and supplement to this Agreement shall require the execution of a written agreement by all of the Parties. 11.2Entire agreement Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute theentire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and writtenconsultations, representations and contracts reached with respect to the subject matter of this Agreement. Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 11.3Headings The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of theprovisions of this Agreement. 11.4Language This Agreement is written in both Chinese and English language in four (4) copies, Party A, Party B and Party C having one (1) copy with equallegal validity; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail. 11.5Severability In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance withany laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised inany respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions thataccomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be asclose as possible to the economic effect of those invalid, illegal or unenforceable provisions. 11.6Successors This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties. 11.7Survival 11.7.1Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shallsurvive the expiration or early termination thereof. 11.7.2The provisions of Sections 5, 7, 8 and this Section 11.8 shall survive the termination of this Agreement. 11.8Waivers Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require thesignatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such aParty with respect to any similar breach in other circumstances. 11.9Spousal Consent With the execution of this Agreement on the date hereof, each of Party B shall cause his/her spouse to execute and deliver to Party A a spousalconsent letter (if applicable). Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. [The space below is intentionally left blank.] Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Call Option Contract as of the date first writtenabove. Party A: Weidai Co., Ltd. (Company Seal) By: /s/ Hong Yao Name: Hong Yao Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Call Option Contract as of the date first writtenabove. Party B: Yao Hong By: /s/ Hong Yao Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Call Option Contract as of the date first writtenabove. Party B: Deqing Jinxiu Management Consulting Partnership (LimitedPartnership) (Company Seal) By:/s/ Qinqin He Name: Qinqin He Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Call Option Contract as of the date first writtenabove. Party C: Hangzhou Yuntuo group co., LTD. (Company Seal) By : Name: Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 4.15 Spousal Consent Letter Date: January 28, 2019 Weidai Co., Ltd. Deqing Jinxiu Management Consulting Partnership (Limited Partnership) The undersigned, He Qinqin (ID card No. ***), is the lawful spouse of Yao Hong (ID card No. ***). I hereby unconditionally and irrevocably agreeto the execution of the following documents (hereinafter referred to as the “Transaction Documents”) by Yao Hong on January 28, 2019 and the disposal ofthe equity interests of Hangzhou Yuntuo group co., LTD. (hereinafter referred to as the “Yuntuo”) held by Yao Hong and registered in Yao Hong’s nameaccording to the following documents: •Share Pledge Agreement entered into with Weidai Co., Ltd. (hereinafter referred to as the “WFOE”) and Yuntuo; •Exclusive Call Option Contract entered into with WFOE and Yuntuo; •Power of Attorney executed by Yao Hong I hereby undertake not to make any assertions in connection with the equity interests of Yuntuo which are held by Yao Hong. I hereby furtherconfirm that Yao Hong can perform the Transaction Documents and further amend or terminate the Transaction Documents absent authorization or consentfrom me. I hereby undertake to execute all necessary documents and take all necessary actions to ensure appropriate performance of the TransactionDocuments (as amended from time to time). I hereby agree and undertake that if I obtain any equity interests of Yuntuo which are held by Yao Hong for any reasons, I shall be bound by theTransaction Documents and the Exclusive Business Cooperation Agreement entered into between the WFOE and Yuntuo as of January 28, 2019 (“ExclusiveBusiness Cooperation Agreement”) (as amended from time to time) and comply with the obligations thereunder as a shareholder of Yuntuo. For this purpose,upon the WFOE’s request, I shall sign a series of written documents in substantially the same format and content as the Transaction Documents and ExclusiveBusiness Cooperation Agreement (as amended from time to time). Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The execution, effectiveness, construction, performance, amendment and termination of this consent letter and the resolution of disputes hereundershall be governed by the laws of China. In the event of any dispute with respect to the construction and performance of this consent letter, the related partiesshall first resolve the dispute through friendly negotiations. In the event the related parties fail to reach an agreement on the dispute within 30 days aftereither party's request to the other parties for resolution of the dispute through negotiations, either party may submit the relevant dispute to the ShanghaiInternational Economic and Trade Arbitration Commission (Shanghai International Arbitration Center) for arbitration, in accordance with its ArbitrationRules. The arbitration shall be conducted in Shanghai, and the arbitration proceedings shall be conducted in Chinese. The arbitration award shall be final andbinding on all Parties. Upon the occurrence of any disputes arising from the construction and performance of this consent letter or during the pendingarbitration of any dispute, except for the matters under dispute, I shall continue to exercise my rights under this consent letter and perform my obligationsunder this consent letter. This consent letter is written in Chinese and English. In case there is any conflict between the Chinese version and the English version, the Chineseversion shall prevail. [The space below is intentionally left blank.] Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (There is no text on this page, but signature for Spousal Consent Letter) Qinqin He By: /s/ Qinqin He Name: Qinqin He Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 8.1 List of Principal Subsidiaries of the Registrant Principal Subsidiaries Name Place of Incorporation Weidai HK Limited Hong KongWeidai Singapore Pte Ltd SingaporeWeidai Co., Ltd. People’s Republic of ChinaQianwei (Hangzhou) Technology Co., Ltd. People’s Republic of ChinaRuituo (Hangzhou) Internet Financial Information Services Co., Ltd. People’s Republic of ChinaYiwu Weirui Internet Technology Co., Ltd. People’s Republic of ChinaHangzhou Yiqitou Investment advisory Co.,Ltd People’s Republic of ChinaLiangche (Hangzhou) Internet Technology Co., Ltd. People’s Republic of ChinaHangzhou Jingwei Assets Management Co., Ltd. People’s Republic of ChinaFuzhou Weidai Online Microcredit Co., Ltd. People’s Republic of ChinaKhorgos Micro-car Auction Information Technology Co., Ltd. People’s Republic of ChinaKhorgos Micron Internet Technology Co., Ltd. People’s Republic of ChinaKhorgos Weiyi Internet Technology Co., People’s Republic of ChinaRymo Technology Industry Limited Hong KongHangzhou Jiujiu Financial Information Services Limited People’s Republic of ChinaHangzhou Micro-car Auction Co., Ltd. People’s Republic of ChinaShanghai Zaohui Finance Lease Co., Ltd. People’s Republic of China Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Variable Interest Entities Name Place of Incorporation Weidai (Hangzhou) Financial Information Service Ltd. People’s Republic of ChinaHangzhou Yuntuo Group Co., Ltd. People’s Republic of China 2 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 12.1 Certification by the Principal Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Hong Yao, certify that: 1.I have reviewed this annual report on Form 20-F of Weidai Ltd.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) for the company and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b)[intentionally omitted] (c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by this annualreport that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; 5.The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control overfinancial reporting. Date: April 15, 2019 By:/s/ Hong YaoName: Hong Yao Title:Chief Executive Officer Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 12.2 Certification by the Principal Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Leo Li, certify that: 1.I have reviewed this annual report on Form 20-F of Weidai Ltd.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) for the company and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b)[intentionally omitted] (c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by this annualreport that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; 5.The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control overfinancial reporting. Date: April 15, 2019 By:/s/ Leo LiName: Leo Li Title:Chief Financial Officer Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 13.1 Certification by the Principal Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of Weidai Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2018 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Hong Yao, Chief Executive Officer of the Company, hereby certify, pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: April 15, 2019 By:/s/ Hong Yao Name: Hong Yao Title:Chief Executive Officer Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 13.2 Certification by the Principal Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of Weidai Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2018 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Leo Li, Chief Financial Officer of the Company, hereby certify, pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: April 15, 2019 By:/s/ Leo Li Name: Leo Li Title:Chief Financial Officer Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 15.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-230896) pertaining to the 2018 Share Incentive Plan ofWeidai Ltd. of our report dated April 16, 2019, with respect to the consolidated financial statements of Weidai Ltd., included in this Annual Report (onForm 20-F) for the year ended December 31, 2018. /s/ Ernst & Young Hua Ming LLPErnst & Young Hua Ming LLPGuangzhou, The People’s Republic of ChinaApril 16, 2019 Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 15.2 April 16, 201950/F, West Building, Fortune Finance CenterNo. 33 Jiefang East RoadJianggan District, HangzhouZhejiang ProvinceThe People’s Republic of China Dear Sir/Madam: We hereby consent to the reference of our name under the headings “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and OurIndustry”, “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure” and “Item 4. Information on the Company—C.Organizational Structure” in Weidai Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2018 (the “Annual Report”), which is filed with theSecurities and Exchange Commission (the “SEC”) on the date hereof. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Actof 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder. Very truly yours,/s/ CM Law FirmCM Law Firm Source: Weidai Ltd., 20-F, April 16, 2019Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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