About uCloudlink Group

uCloudlink Group Inc. engages in the pioneer of introducing the sharing economy business model into the telecommunications industry, creating a marketplace for mobile data traffic. Leveraging the company’s cloud SIM technology and architecture, the company redefines the mobile data connectivity experience, allowing users to gain access to mobile data traffic allowance shared by network operators on the company’s marketplace. The company has aggregated mobile data traffic allowances from 337 mobile network operators (MNOs) in 144 countries and regions in the company’s cloud SIM architecture as of December 31, 2022. The company’s cloud SIM technology sets the technological foundation of the company’s marketplace, which is built upon the company’s cloud SIM architecture. The company has developed its proprietary cloud SIM technology based on remote SIM connection, which means that SIM cards are not embedded in the mobile terminals but remotely connected on the cloud. The company’s cloud SIM technology allows dynamic selection of network services based on signal coverage and cost, and intelligent distribution of data traffic in the SIM card pool to terminals that may support multiple end devices through the company’s cloud SIM platform, to achieve better network quality, more reliable connection and lower cost. Leveraging the company’s cloud SIM technology and architecture, the company provides mobile data connectivity services with reliable connection, high speed and competitive price, allowing users to enjoy a smooth mobile connectivity experience. The company has transformed the traditional telecommunication business model, where users can only access the wireless network provided by their contracted MNOs and are not able to use the networks of other local MNOs. By giving users access to the company’s distributed SIM card pool, the company frees users from this exclusivity, and give them the freedom to access the mobile networks of other MNOs without physically changing SIM cards wherever they are in the world as long as it is one of the 144 countries and regions the company covers. In 2022, average daily active terminals connected to the company’s platform reached approximately 290,500 and each of the company’s active terminals on average used 1,745 megabytes of mobile data per day. In addition to mobile data users, the company also creates unique values to the other stakeholders in the telecommunications industry worldwide, including smartphone and smart-hardware companies, mobile virtual network operators (MVNOs), MNOs and more broadly to society. The company’s business partners can also utilize the company’s platform-as-a-service (PaaS) and software-as-a-service (SaaS) to manage their business operations, such as connectivity management, terminal management, customer relationship management (CRM) system and big data analysis, thereby improving end-users’ experience with their services. The company has developed proprietary algorithms to analyze historical data usage patterns and predict future data traffic demand. The company uses the insights gained from the data analytic results to efficiently procure data traffic allowances from MNOs and other sources globally, dynamically select network services based on signal coverage and cost, and intelligently allocate data traffic in the SIM card pool to terminals, then to end devices. As the first entrance for users to access mobile internet, the company may also leverage the data analytics to develop a number of value-added services, such as advertisement. The company’s uCloudlink cloud SIM platform is designed for shared mobile data connectivity services by allocating the SIM cards remotely and dynamically to users. All users can access and use the SIM card resources in the company’s distributed SIM card pool supplied by different network operators via the company’s platform. The company operates its business under what the company refers to as uCloudlink 1.0 and uCloudlink 2.0 models, and plans to launch uCloudlink 3.0 model in the future. The company supports various networks and technical systems in countries and regions around the globe. uCloudlink 1.0 model focuses on cross-border travelers that need mobile data connectivity services across different countries. The company started to conduct the company’s business under uCloudlink 1.0 model in 2014. When a terminal connects in a foreign country or region, a local SIM card in the company’s distributed SIM card pool will be allocated dynamically based on the terminal’s location to avoid roaming fees. The company operates Roamingman portable Wi-Fi services in China and Malaysia to provide global mobile data connectivity services. The company also offers GlocalMe portable Wi-Fi terminals and provides the company’s cloud SIM architecture to business partners, such as MVNOs, MNOs and portable Wi-Fi terminal rental companies to offer global mobile data connectivity services directly to their users. The company’s GlocalMe Inside implementation in smartphones and other smart terminals also supports cross-border mobile data connectivity within uCloudlink 1.0 model. The company’s uCloudlink 1.0 business such as rental business of Roamingman business of the company’s business partners were also negatively affected by the COVID-19 pandemic, which led the company and its global business partners to focus more on local data connectivity services. uCloudlink 2.0 model aims to provide mobile data connectivity services to local users across different MNOs in a single country or region. The company started to offer this service in 2018. The company allocates another SIM card to a terminal when its MNO does not have coverage in a certain location, or allocate a SIM card with cheaper data charges or better network quality when multiple MNOs offer coverage in that location. The company develops GlocalMe Inside implementation for smartphones and other smart hardware products, enabling them to obtain access to the company’s cloud SIM architecture and use the company’s distributed SIM card pool. Users with GlocalMe Inside embedded terminals can enjoy reliable and high-speed data connectivity experience at competitive cost. The company has launched the GlocalMe World Phones series, cooperated with third-party smartphone companies to implement GlocalMe Inside, and developed cloud SIM modules for smart hardware products. An MNO or MVNO may also leverage the company’s GlocalMe products under uCloudlink 2.0 model to provide local data connectivity in areas where it does not have strong network deployment. During the COVID-19 pandemic, due to the lock-down measures in many countries and regions, many people chose to work from home, held video meetings and conferences, and needed to access remote education, leading to an increase in demand for better and reliable data connectivity. This has created great opportunities for the company’s uCloudlink 2.0 model, which can scan for multiple mobile networks and provide better coverage, better speed and better connectivity service quality for users. The company has expanded the business scope of the company’s local data connectivity service. Apart from the mobile broadband (MBB) business opportunities, such as sales of mobile Wi-Fi terminals and services through online sales and offline distribution and through the company’s business partners, the company also enhanced its local service brand as the company expands its e-commerce exposure in key markets, such as the United States and Europe, optimize the company’s websites and streamline the company’s sales team. The company also invested in Beijing Huaxianglianxin Technology Co., Ltd., a licensed MVNO in China, and iQsim S.A based in France as a component of the company’s global investment strategy. uCloudlink 3.0 models features a full-blown marketplace of data traffic. The company anticipates that its proposed uCloudlink 3.0 model has the potential to further improve the efficiency of data connectivity services through the company’s cloud SIM architecture that is compatible with multiple technologies, including physical SIM, soft SIM and eSIM. The company plans to establish and expand its data traffic marketplace to promote mobile data transaction and sharing by integrating the company’s Cloud SIM technology and other technologies, such as blockchain technology. This business is in its trial. The success of the company’s uCloudlink 1.0 and uCloudlink 2.0 models will pave the path for the development of uCloudlink 3.0 model. To support the company’s business evolution from 1.0 model to 3.0 model, the company has strategized its cloud SIM business model in three key stages to fully capitalize the value of the company’s cloud SIM technology and architecture: Stage 1 - B2C Retail: The company started its business primarily by selling or leasing GlocalMe hardware and data packages directly to retail consumers in order to gain market recognition and to prove the company’s cloud SIM technology and architecture, as well as the scalability and profitability of the company’s business model. The company provides high quality data connectivity services to end-users backed up by the company’s PaaS and SaaS. Stage 2 - B2B2C Wholesale: Once the company has proved the concept of cloud SIM, and gained tractions from the market on the company’s product and services, the company is able to attract local business partners to collaborate with the company and distributes its hardware and data packages in their countries and regions. The company’s business partners tailor their marketing strategies to resell or lease the company’s hardware and data packages to their local audience, and these tailored operations have helped the company expedites its global expansion. The company’s business partners can also manage their business via the company’s PaaS and SaaS to provide better services to their end-users, including connectivity management, terminal management, terminal rental and sales, customer service systems (CRM), and big data analysis. Stage 3 - PaaS/SaaS Platform based connectivity ecosystem: With extensive experience at serving the company’s business partners across the globe, the company’s core cloud SIM technology, hyper-connectivity technology and architecture became more mature and comprehensive, and the company is able to open up the company’s proprietary platform and software to the company’s business partners to support their operations. The company’s business partners can rely on its PaaS and SaaS platform for SIM and connectivity management, and focus on sales and marketing, as well as procure customized ODM (Original Design Manufacture) hardware and data packages from their proprietary sources to fully exploit their edge in their local markets. Such specialization enables the company and its business partners to operate more efficiently. The company is gradually becoming more platform-centric and elevating the company’s data connectivity services via upgrading the company’s PaaS/SaaS Platform during stage 1, stage 2 and stage 3 going forward. The company continues to focus on developing and serving the company’s customers and business partners with the company’s core capabilities – cloud SIM technology, hyper-connectivity technology and architecture, and delegate other functions to the company’s local business partners. This model will allow the company to further expedite the company’s global expansion by forming a global partner ecosystem. Simultaneously, the company’s business partners will also further comprehend its mobile network offering by hosting their SIM cards on the company’s platform locally. The company constantly focuses on elevating user experience and one way the company is able to do it is via the company’s ‘Navigation + Electronic Toll Pass’ service over mobile network accomplished through the company’s hyper-connectivity technology through PaaS and SaaS platform. The company innovatively applies ‘Navigation + Electronic Toll Pass’ concept to data connectivity services market. Like installing ‘Navigation + Electronic Toll Pass’ for traffic, ‘Navigation’ can automatically identify network congestion and actively choose the better network and ‘Electronic Toll Pass’ allows users to avoid long queues in network when switching among mobile networks and intelligently elevate data connectivity user experience. Cloud SIM Technology and Architecture Relying on the company’s cloud SIM technology and architecture, the company provides users with mobile data connectivity service with reliable connectivity, high speed or competitive price. The cloud SIM technology enables compatible terminals to use local data network without changing SIM cards, whereas the cloud SIM architecture supports the operation of cloud SIM technology. Cloud SIM Technology The company has developed its cloud SIM technology based on remote SIM connection, which means that SIM cards are not located inside the mobile terminals but remotely connected. Because SIM cards are not locally hosted on the terminals, the company can easily switch the SIM card from one to another dynamically over the cloud. Cloud SIM technology requires two connections simultaneously, many chipsets in the market support the company’s cloud SIM technology through firmware upgrade. Cloud SIM Architecture The cloud SIM architecture mainly consists of a distributed SIM card pool with data traffic purchased by the company or provided by its business partners, hosted locally or remotely using SIM banks and other terminals; uCloudlink cloud SIM platform, including software and necessary infrastructures for users and business partners; and user-end terminals, such as GlocalMe portable Wi-Fi terminals and smartphones, and GlocalMe Inside implementations in third-party smartphones, as well as smart-hardware products. Network data supplied from the distributed SIM card pool are delivered to end terminals through uCloudlink cloud SIM platform using cloud SIM technology. The company’s cloud SIM architecture allows a broad range of business partners, such as mobile terminal brands, MVNOs, MNOs, mobile Wi-Fi terminal rental companies and distribution channels, to participate in the company’s fast-growing business. The company’s distributed SIM card pool includes distributed SIM banks operated by the company and its business partners, contributing to a data supply network with global coverage. The company’s cloud SIM platform supports its business partners so that they can offer reliable services and generate revenues efficiently. The end terminals allow users to enjoy mobile data connectivity services with reliable connectivity and high speed. Distributed SIM Card Pool—Supply for Mobile Data Connectivity Services The company’s distributed SIM card pool includes SIM cards purchased and managed by the company, and those hosted and managed by the company’s business partners using primarily SIM banks. SIM banks can be hosted by the company with SIM cards from the company or business partners, and business partners can purchase SIM banks and manage relevant business via the company’s PaaS and SaaS platform. The company’s SIM Banks. The company operates its own distributed SIM banks to host a large number of local data SIM cards, which altogether enable the company to provide global mobile data connectivity services in 144 countries and regions, including those countries traditionally renowned for high roaming cost. With cloud SIM technology, the company simply purchase and use local SIM cards locally, reducing the company’s data cost and eliminating the need to negotiate complicated roaming terms with MNOs. Business Partners’ SIM Banks. Local SIM banks can also host a large number of data SIM cards, which can be physical SIM cards, e-SIM or soft SIM cards, and may be managed by the company’s business partners directly. For example, a MNO or MVNO from whom the company procures data may operate a local SIM bank and manage the data plans and SIM cards more efficiently. A portable Wi-Fi rental service business partner may purchase data locally and host these SIM cards in local SIM banks to meet its data demand within its operating region. The company charges its business partners by the number of SIM cards hosted and the data volume provided through the company’s architecture. SIM Box and Other SIM Terminals. GlocalMe SIM box is the company’s cloud SIM technology solution for users who need to have multiple SIM cards standby. SIM box is designed to be placed at home instead of being carried around. Users of the company’s SIM box can remotely connect via their smartphones to the SIM cards in the box for data connectivity, calls and text messages. The company monetizes GlocalMe SIM box by selling the hardware products, and will add more features and provide services through SIM box in the future. uCloudlink Cloud SIM Platform—Dispatcher of Mobile Data Connectivity Services The company’s uCloudlink cloud SIM platform is the core of the company’s cloud SIM architecture. The cloud SIM platform manages terminal information and user accounts and intelligently allocates all the SIM cards hosted in the company’s cloud SIM architecture. It computes detailed scores for network performance of various mobile data networks in a given location. Such integrated knowledge allows the cloud SIM platform to detect and select the better local network or cost-efficient network available in the company’s distributed SIM card pool for each user, and automatically connect the associated SIM card to the terminal. The cloud SIM platform further includes portals and tools for users and business partners to track and manage the mobile data connectivity service and smart terminals. The company also provides open Application Programming Interface (API) to allow easy integration into business partners’ and enterprise customers’ existing management software. Platform-as-a-Service (PaaS)/Software-as-a-Service (SaaS). The company offers its uCloudlink cloud SIM platform as PaaS/SaaS to the company’s business partners and charge associated service fees. The company’s SIM card allocation algorithm increases the efficiency and utilization rate of the SIM cards, allowing business partners and the company to generate attractive usage economics and minimize data wastage. In addition, as SIM cards purchased by the company and those hosted by various business partners are incorporated in the architecture as an integrated SIM card pool, mobile data connectivity service providers, such as MNO and MVNO business partners can not only offer their own data connectivity service on the company’s platform, but also easily obtain access to data connectivity services from other service providers via the company’s PaaS and SaaS platform. The company’s business partners can also management their business via the company’s PaaS and SaaS platform to provide better services to their end-users, including connectivity management, terminal management, terminal rental and sales, customer service systems (CRM), and big data analysis. Big Data and Advanced Algorithms. As the company’s platform represents its users’ first entry-point to the mobile internet, the company is able to obtain timely and first-hand feedback from users of the company’s mobile data connectivity services, and gain access to a large volume of network coverage and performance related information. The company develops and leverages big data analytics to enhance the accuracy of the company’s data usage demand predictions, optimize the company’s operations, and deliver high-quality user experience. For example, insights into the network performance and user data traffic demand help the company react to network spikes and interruptions quickly. The company may provide such insights as business intelligence to the company’s business partners in the future to optimize their network infrastructure deployment and improve the service experience of their customers and to provide more advanced value-added services, such as advertisement. Cloud Infrastructure: The company has built a robust technology infrastructure to support the delivery of mobile data connectivity solutions globally. The company utilizes third-party clouds to host the company’s network infrastructure and cloud SIM platform servers. Cloud infrastructure allows elastic and distributed supply of computing power and bandwidths to accommodate traffic spikes, increasing the robustness of the company’s system. When the company experiences elevated demand from the company’s users, for example during summer holidays or other peak traveling seasons, the company may expand its cloud SIM platform efficiently in various countries and regions to address the increased demand. In the unlikely event that the company’s access to one of the company’s platform servers is interrupted, cloud technology allows immediate service supplement from servers in other places to fill in and provide continuous services. The company also back-ups its servers and data on a daily basis using cloud technology to minimize the risk of data loss, which enables instant system restoration and reliable service. Smart Terminals—Demand for Mobile Data Connectivity Services Terminals that are compatible with the company’s cloud SIM technology are a vital part of the company’s business. Empowered by the company’s cloud SIM technology, these terminals free users from physically changing SIM cards, ready to connect to global mobile networks with reliable connectivity, high speed and competitive prices. The company’s cloud SIM technology enables the terminals to communicate to the company’s cloud SIM platform the basic information regarding network selection and cloud SIM card matching, and provides the terminals with high-speed mobile data connectivity services. Terminals report information of network performance at their locations back to the cloud SIM platform so that it can dynamically improve its network allocation efficiency. Users may purchase local data packages and international data packages and manage their terminals through the company’s GlocalMe apps. Supported by the company’s broad network coverage and powerful cloud SIM platform, the company has introduced a range of compatible terminals, including portable Wi-Fi terminals, GlocalMe Inside embedded smartphones and other smart-hardware products, such as IoT terminals. Under uCloudlink 1.0 model, most of the smart terminals are portable Wi-Fi terminals for international roaming purposes. Under uCloudlink 2.0 model, most terminals are smartphones with GlocalMe Inside implementation, through which users can enjoy both local and international mobile data connectivity services. GlocalMe Connect and Other Apps. The GlocalMe Connect app enables seamless usage of the company’s mobile data connectivity services on compatible third-party terminals. The company’s app is adopted through either pre-installation or subsequent firmware update in third-party smartphones of leading global handset brands, or offered by the company’s business partners under the own brands. Users need to activate this app to enjoy the company’s mobile data connectivity services. Users may easily check balance of their data plans, renew their plans, purchase and top up other local and global data packages, maintain their accounts and obtain access to online customer support. For each country or region, users can choose from unlimited data pass in particular periods, normal data packages by data amounts, and packages for multiple countries in that region. Besides GlocalMe Connect app, the company also offer GlocalMe app that can be downloaded from app stores to manage portable Wi-Fi terminals, and GlocalMe Call app to manage voice calls and text messages that are remotely hosted on SIM boxes. Products and Services Leveraging on the company’s integral cloud SIM technology and architecture, the core of the company’s business is to provide reliable and high-speed mobile data connectivity services at competitive prices, which the company delivers through a range of hardware products and service solutions to the company’s business partners, retail and enterprise customers. The main hardware terminals the company offers include portable Wi-Fi terminals, smartphones and smart-hardware products for international and local mobile data connectivity services. The company also provides business solutions using multiple types of terminals to enterprise customers, as well as other value-added services to the company’s business partners. Since October 2019, the company’s cloud SIM platform is ready to support traffic from 5G networks. While MNOs globally are rolling out 5G networks and smartphone manufacturers are launching 5G-compatible models, smooth and reliable 5G experience outside of home country will not achieve in the near- to mid-term, as MNOs will probably require new 5G roaming agreements and tariff arrangements. Similarly, in local markets, 5G roaming agreements between MNOs are also required for wider 5G coverage by combining the 5G networks of multiple MNOs. The company’s 5G-ready cloud SIM platform offers a ready-to-use solution for MNOs and smartphone manufacturers that enables roaming-free inter-carrier 5G network access domestically and internationally. GlocalMe Portable Wi-Fi The company launched its GlocalMe portable Wi-Fi solutions in 2014 as a signature product under uCloudlink 1.0 model. Empowered by the company’s cloud SIM architecture, the company’s portable Wi-Fi solutions provide high-speed network connection in 144 countries and regions without physically changing SIM cards and supports simultaneous connection for up to five end devices. As the company allocates local data SIM cards in its distributed SIM card pool using the company’s cloud SIM technology, cross-border travelers using the company’s portable Wi-Fi solutions enjoy local mobile data connection just like local users, which is reliable and fast and at competitive rates. Although GlocalMe portable Wi-Fi solutions are primarily targeting users with international roaming needs, they can also be used locally under uCloudlink 2.0 model. As the mobile terminals incorporating the company’s portable Wi-Fi solutions can automatically choose the local mobile data network with better performance at the location, local users may enjoy greater mobile data coverage, more reliable network connection, and lower price, without being restricted to a particular MNO or MVNO. The company offers several models of hardware terminals incorporating the company’s portable Wi-Fi solutions, including those with or without screens. GlocalMe hardware terminals come with GlocalMe app, through which users may purchase global data using pay-as-you-go system, or choose from various local and international data packages. In February 2021, the company launched various models of mobile Wi-Fi products, such as First G, Duo Turbo and Tri Force of GlocalMe brands globally. Services through ‘Roamingman’ Brand Roamingman is the company’s brand of the global portable Wi-Fi service business, primarily targeting Chinese users who are traveling abroad under uCloudlink 1.0 model. Besides China, the company also operates Roamingman business in Malaysia. Empowered by the company’s cloud SIM architecture, Roamingman provides global data connection through using the company’s terminals. Users may obtain the company’s portable Wi-Fi through multiple channels, including multiple Roamingman e-commerce platforms, online travel agencies such as Ctrip and Fliggy, airlines and other travel related companies. The company offers flexible use periods, coverage regions and extension options to address the diverse needs from cross-border travelers. After reserving the terminals with deposits, users may pick up and return the terminals at airports, convenience stores, or via courier services. Direct Sales The company also directly sells its GlocalMe portable Wi-Fi solutions to enterprise and retail customers through online and offline channels in multiple countries and regions, such as China, Japan, Europe and the United States. Frequent cross-border travelers and enterprise customers may be better off by buying the company’s terminals with data plans instead of short-term leasing. The company’s customers also include local users who seek to access more reliable and less expensive mobile data network locally following uCloudlink 2.0 model. The company generates revenue by selling the solutions, including the hardware and data packages for future use. The company also generates revenue when users purchase additional data package through the company’s products. Users may purchase the company’s terminals on online e-commerce platforms, such as Amazon and T-mall. Since 2021, in order to further elevate the company’s local service brand GlocalMe, the company has enhanced its e-commerce exposure in key markets, such as the United States, Europe and Southeast Asia, optimized the company’s websites and streamlined the company’s sales team. Cooperation with Business Partners The company has collaborated with business partners to provide access to the company’s portable Wi-Fi solutions in other countries. The company’s business partners for GlocalMe portable Wi-Fi solutions include MNOs, MVNOs and portable Wi-Fi rental companies. Typically, the company generate revenue by selling the hardware terminals to the company’s business partners and providing mobile data connectivity services through the company’s cloud SIM architecture. The company’s uCloudlink cloud SIM platform offers customer management tools, back-end SIM card tracking and data billing system, and provides access to global mobile data networks. In addition to utilizing data traffic available on the company’s cloud SIM platform, business partners may also procure SIM cards and host the SIM cards in the company’s cloud SIM architecture to provide data connectivity services to their customers. Platform-as-a-Service (PaaS) / Software-as-a-Service (SaaS) The company offers uCloudlink cloud SIM platform as a service to the company’s business partners with a service charge. The company’s uCloudlink cloud SIM platform intelligently chooses better performing local network, supporting a massive number of terminals and users. The company’s PaaS and SaaS offering consists of modules such as customer relationship management, operations support system, business support system, and SIM card enterprise resource planning and management, which enable the company’s PaaS and SaaS customers to become over-the-top (OTT) operators. PaaS targets sophisticated business partners that have their own business operation software, such as MNOs and portable Wi-Fi rental companies, to improve their cooperation with the company. The cloud SIM platform includes APIs to allow easy integration into business partners’ and enterprise customers’ existing business management software. SaaS targets business partners that do not have their own business operation software. The company supports full business software solutions, such as customer management and billing, sales and purchase of data packages, data package design, traffic supply and demand analysis, and multiple payment methods. Leveraging on the network data the company collected through its operation, the company is able to provide insights to its business partners to boost their operation efficiency through advanced algorithms. Business partners may access to a dashboard through ucloudlink.com. The company’s distributed SIM card pool includes distributed SIM banks that may be operated by the company’s business partners locally to maintain and manage their SIM cards, which will be dispatched through the company’s cloud SIM platform. The company’s business partners include MNOs, MVNOs, portable Wi-Fi rental companies, and smartphone and smart-hardware companies. PaaS and SaaS related service fees typically include revenue derived from SIM card performance improvement, SIM card hosting fees and management fees, software license fees and data pool exchange service fees and other customer management services which are highly recurring monetization models. The company typically charges its business partners for service fees for PaaS and SaaS provided and based on the number of SIM cards hosted in the company’s distributed SIM card pool. As business partners realize the commercial benefits from leveraging uCloudlink’s PaaS and SaaS services, they will gradually migrate more of their SIM and data traffic management functions to uCloudlink. The company’s PaaS and SaaS services are complementary in nature and form a complete value cycle at serving the company’s business partners’ needs. GlocalMe Inside Implementations The company provides GlocalMe Inside implementation solutions for smartphones so that users can enjoy reliable network experience with the mobile phone itself using the respective GlocalMe Inside app, without physically changing SIM card or carrying an external portable Wi-Fi terminal. The company enables GlocalMe Inside services in existing mobile models with supporting chipsets by simply notifying the mobile terminal users to update their firmware. Alternatively, third-party mobile phone brands can also pre-install the company’s GlocalMe Inside solutions on their new mobile terminals, which can also become a unique selling feature of their new products. By having an embedded data solution, third-party mobile terminal brands will be able to diversify their product offerings and participate in telecommunication ecosystem. While GlocalMe Inside is capable of providing both local and international mobile data connectivity services, given the convenience that comes with an embedded data solution, GlocalMe Inside will further promote the company’s signature implementation of uCloudlink 2.0 model, targeting high-speed seeking reliable and fast local data connectivity. Collaboration with Mobile Terminal Business Partners The company partners with various smartphone manufacturers to provide GlocalMe Inside implementation in certain mobile phone models. The company sells data packages to mobile terminal users through GlocalMe Inside implementation ourselves or through the company’s mobile terminal brand business partners. The company collects user payment when they purchase data packages through the pre-installed app and will pay the smartphone company a pre-determined percentage of such payments the company received as commissions. The percentage depends on the nature of the collaborations and the countries where the mobile terminal users are using the company’s mobile data connectivity services. For GlocalMe Inside implementation, the company piggybacks its business partners’ sales efforts to sell their mobile terminals with the company’s data connectivity services embedded. Alternatively, the company can become distribution channels of its business partners by selling their terminals and its mobile data connectivity services. In September 2019, the company began this model whereby the company purchases handsets from its business partners, then implement GlocalMe Inside, and sell the handsets to wholesalers. GlocalMe World Phone Prior to the commercialization of GlocalMe Inside in third-party mobiles terminals, the company launched GlocalMe World Phones in 2018, mobile phones that come with GlocalMe Inside implementation and allow users to easily gain access to data network options through GlocalMe Connect app, showcasing the company’s GlocalMe Inside technology. GlocalMe World Phones can instantly connect to global and local mobile network without extra equipment or changing SIM card using the company’s cloud SIM technology. They monitor the network performance in real time and automatically switch to the better available network locally. At the same time, GlocalMe World Phones can serve as Wi-Fi hotspot for five simultaneous connections. The company generates revenue by selling the hardware products and offering data packages for the smartphones. The company has terminated the World Phones sales in 2022. GlocalMe Inside in Other Smart Hardware The company provides the firmware upgrade to third parties without additional hardware cost to enable global mobile data connectivity services on these terminals, including mobile Wi-Fi, intelligent translators, industrial routers, and smart speakers. Other Products and Services IoT Module In the new era of IoT, the company offers IoT modules with GlocalMe Inside implementation to meet the huge demand for mobile data from various terminals, and provides integrated network solutions to the company’s customers. IoT modules are primarily targeting enterprise customers seeking for cost-effective and reliable data connectivity with low network latency in their products, to be used locally and internationally. For example, the company provides data network solutions for translation terminals. The company also helps logistic companies to deploy their freight trucks using IoT modules installed on the vehicles. The company expects to generate revenue from IoT modules by selling hardware and data packages. As 5G becomes more available, IoT providers will be more dependent on the company’s cloud SIM architecture and hyper-connectivity technology. The company’s cloud SIM technology and hyper-connectivity technology, including the smart multi-network reselection technology, is compatible with and brings unique advantages to various IoT applications scenarios, such as Internet of Vehicles, augmented reality, virtual reality, autopilot, cargos, logistics and other car equipment. The company is cooperating with business partners in various aspects of IoT applications. SIM Cards As a complementary product, the company sells SIM cards with prepaid data packages that the company procures from various sources around the world to outbound travelers who prefer the traditional method of physically changing the SIM cards in their smartphones. Value-Added Services As users surf on internet through the mobile data connectivity services the company provides, the company is the first entrance for users and their information. Based on this advantage, the company provides a number of value-added services to the company’s business partners, such as advertisement. The company collaborates with its business partners and other third-party advertisement agencies to provide advertisements on the company’s products based on its big data analysis results. These advertisements are displayed on the screens of the company’s portable Wi-Fi terminals, GlocalMe World Phones and the company’s GlocalMe Connect app. The company also provides other value-added services to its users, especially cross-border travelers, such as map, translation, car reservation and itinerary planning. Mobile Data Procurement and Management The company provides mobile data connectivity services to its users, and collaborates with business partners by assisting them with servicing their users. Data Procurement The company’s data sources include MNOs and their sales channels, MVNOs, and other SIM-card trading companies. The company has aggregated mobile data traffic allowances from 337 MNOs in 144 countries and regions in the company’s cloud SIM architecture. When the company start to offer uCloudlink 3.0 model in the future, users will also become the company’s suppliers of mobile data. The company has a dedicated team of data procurement personnel to purchase global mobile data from various sources. The company’s data purchasing team covers 144 countries and regions, divided by geographic regions and languages. The company asks for quotations from MNOs and resellers in a region and specify the company’s technical requirements to support cloud SIM technology. As the company has aggregated mobile data traffic allowances from 337 MNOs, the company possesses bargaining power during the negotiation due to competition among MNOs and sometimes offer bidding process to purchase data with better price and terms. As the company’s user base grows, larger demand for data also drives up the company’s bargaining power with data suppliers. The company further increases its bargaining power from the company’s algorithm on pricing and user demand prediction. The company technically analyzes data packages across MNOs and other data suppliers and chooses the combination with lower price or better network coverage. As the company’s service maximizes network utilization, simplifies the cooperation among MNOs, improves network coverage and service quality of MNOs and fully utilizes network capacity, especially 5G, MNOs are more willing to offer the company leftover data with low price. The company’s operation under uCloudlink 2.0 model involves the purchase and use of local data, and some local regulator require additional telecommunication licenses and permits. The company makes efforts to obtain the requisite licenses and permits by collaborating with or forming joint venture with local business partners who possess such licenses and permits or by applying by ourselves. For example, in April 2019 and September 2020, the company made an investment in a licensed MVNO primarily engaged in telecommunications related business, which was successfully listed on the China National Equities Exchange and Quotations (‘NEEQ’) on January 12, 2023. The procured data, especially those from sources other than MNOs themselves, are subject to testing and validation before commercially loaded in the company’s distributed SIM card pool. This ensures that the data included in the SIM card has the volume and network performance parameters as the agreement specified. Data Demand Projection To ensure reliable mobile data connectivity services to the company’s users, the company has a planning team to predict mobile data demand through modeling. The model looks at seasonality, regions and countries, network performance and other features to predict users’ data demand at a specific time in a geographic area. In the rare event where mobile data demand spikes and the company’s normally procured data cannot fulfill that one-off demand, the company has set up procedures to ensure the company’s service quality. When the data usage reaches a threshold percentage of the company’s distributed SIM card pool, the company’s system will alert the company. The company may activate backup SIM cards, which often provide more expensive data package and do not incur cost before activation. For example, in the event that the data demand in Hong Kong spikes, the company may activate a backup SIM card in Hong Kong, and if no local backup SIM card is available, activate a Thailand SIM card using daily international roaming plan, to cover data demand in Hong Kong. Based on the prediction from modeling, if the company find that the company’s data traffic is not sufficient to cover the data demand, the company may utilize data traffic made available by the company’s business partners on the company’s platform or purchase SIM cards from MNOs. If these measures still cannot solve the demand, the company will temporarily stop service for new users or suspend new data package orders. In the worst situation, the company may pause service for users with low data demand. Marketing and Business Development The company promotes its products and services through a variety of online and offline marketing and promotional activities. The company primarily markets its Roamingman portable Wi-Fi service through online travel agencies, as well as through offline channels. The company also promotes its Roamingman brand with embedded advertisement in movies to reach broader consumer market. For GlocalMe portable Wi-Fi terminals, the company publishes advertisement on in-flight magazines with support from airlines. For GlocalMe Inside and other services based on the company’s cloud SIM architecture, the company establishes its brand recognition to reach more potential business partners by participating exhibitions in tourism, consumer electronics and telecommunications. To promote GlocalMe Inside, the company provides promotional data traffic allowance from time to time to acquire new users, and the company collaborates with smartphone companies that use GlocalMe Inside implementations to activate their existing users by pushing advertising messages to the handsets and conducting other targeted marketing. When holidays approach, the company also promotes data discount through WeChat accounts, email newsletters and short text messages. The company has a dedicated business development team in charge of the marketing of the company’s other products and services to potential business partners and enterprise customers. Research and Development The company’s research and development expenses were U.S.$8.4 million in 2022. Data Privacy and Security The company adopts security and data privacy practices in compliance with local cyber security law and data privacy regulations in the countries and regions that the company operates, including cyber security law of mainland China and GDPR. Intellectual Property As of December 31, 2022, the company owned 130 patents relating to the cloud SIM technology in mainland China, Japan, United States and other jurisdictions, and had 45 pending patent applications. The company also owns 109 registered trademarks, including GlocalMe, Roamingman and uCloudlink, copyrights to 43 software programs developed by the company relating to various aspects of the company’s operations, and 35 registered domain names, including www.ucloudlink.com, www.GlocalMe.com and www.roamingman.com. Regulation The company has obtained the Compulsory Product Certifications, the Radio Transmission Equipment Type Approval Certificates and the Network Access Permits for the company’s portable Wi-Fi terminals. History uCloudlink Group Inc. was founded in 2014. The company was incorporated in 2014.