SecProbe.io

CORRESP
1
filename1.htm

    Unit
                           2901, 29F, Tower C

    Beijing
    Yintai Centre

    No.
    2 Jianguomenwai Avenue

    Chaoyang
    District, Beijing 100022

    People’s
    Republic of China

    Phone:
    86-10-6529-8300

    Fax:
    86-10-6529-8399

    Website:
    www.wsgr.com

    中国北京市朝阳区建国门外大街2号

    银泰中心写字楼C座29层2901室

    邮政编码:
    100022

    电话:
    86-10-6529-8300

    传真:
    86-10-6529-8399

    网站:
    www.wsgr.com

Via
EDGAR 

October
18, 2024

Division
of Corporation Finance

Office
of Trade & Services

U.S.
Securities and Exchange Commission

100
F Street, N.E.

Washington,
D.C. 20549

    Re:
    AirNet
    Technology Inc.

    Response
    to the Staff’s Comments on the Annual Report on Form 20-F for the Fiscal Year ended

December 31, 2023 (File No. 001-33765)

Ladies
and Gentlemen,

On
behalf of AirNet Technology Inc. (the “Company”), we are hereby submitting this letter in response to a comment letter
from the staff (the “Staff”) of the Securities and Exchange Commission dated September 19, 2024 on the Company’s
annual report on Form 20-F for the fiscal year ended December 31, 2023 filed on April 26, 2024 (the “2023 Form 20-F”).

The
Staff’s comments are repeated below in bold and are followed by the Company’s responses. Capitalized terms used but not otherwise
defined herein have the meanings set forth in the 2023 Form 20-F.

Form
20-F for the Fiscal Year Ended December 31, 2023

Introduction,
page 2

 1. Please
                                            disclose prominently that you are not a Chinese operating company but a Cayman Islands holding
                                            company with operations conducted by your subsidiaries and through contractual arrangements
                                            with variable interest entities (VIEs) based in China, and that this structure involves unique
                                            risks to investors. If true, disclose that these contracts have not been tested in court.
                                            We note your statement on page 2 that the VIE structure is used to provide investors with
                                            exposure to foreign investment in China-based companies where Chinese law prohibits direct
                                            foreign investment in the operating companies. Revise to disclose that investors may never
                                            hold equity interests in the Chinese operating company. Your disclosure should acknowledge
                                            that Chinese regulatory authorities could disallow this structure, which would likely result
                                            in a material change in your operations and/or a material change in the value of your securities,
                                            including that it could cause the value of such securities to significantly decline or become
                                            worthless. We note your cross-reference on page 4 to your detailed discussion of risks facing
                                            the company and the offering as a result of this structure.

RESPONSE:
In response to the Staff’s comment, the Company undertakes to revise the relevant disclosure in its future Form 20-F filings as
follows (with deletions shown in strikethrough and additions in underline showing the changes against the disclosure in the 2023 Form
20-F), subject to such updates and adjustments to be made in connection with any material developments of the subject matter being disclosed.

Wilson
Sonsini Goodrich & Rosati, Professional Corporation

威尔逊
● 桑西尼 ● 古奇
● 罗沙迪律师事务所

austin   beijing   boston   BOULDER   brussels   hong
kong   london   los angeles   new york   palo alto

SALT LAKE CITY   san diego   san francisco   seattle   shanghai   washington,
dc   wilmington, de

Page
2

INTRODUCTION

…

Holding
Company Structure and the VIE Structure

Although
AirNet does not directly or indirectly own any equity interests in its VIEs or their respective subsidiaries, AirNet is the primary beneficiary
of and effectively controls these entities through a series of contractual arrangements with these entities and their record owners.
We have consolidated the financial results of these VIEs and their respective subsidiaries in our consolidated financial statements in
accordance with the Generally Accepted Accounting Principles in the United States, or U.S. GAAP. See “Item 4. Information on the
Company—C. Organizational Structure,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions” and “Item 3. Key Information—D. Risk Factors” for further information on our contractual arrangements
with these parties.

…

AirNet
Technology Inc. is not a Chinese operating company but a Cayman Islands holding company. AirNet Technology Inc., our ultimate
Cayman Islands holding company, does not have any substantive operations other than directly controlling (1) Chuangyi Technology,
our wholly-owned subsidiary in China that controls and holds the VIEs and their respective subsidiaries through certain contractual arrangements,
which conduct our air travel media network business, and (2) Shenzhen Yuehang Information Technology Co., Ltd. and Xi’an Shengshi
Dinghong Information Technology Co., Ltd., our wholly-owned subsidiaries in China that conduct our air travel media network business
operations.

Investors
in the ADSs are purchasing equity securities of our ultimate Cayman Islands holding company rather than purchasing equity securities
of the consolidated affiliated entities. AirNet Technology Inc. is an investment holding company without substantive operations on its
own, and we conduct our business operations through both our subsidiaries and the consolidated affiliated entities, which we
effectively control through based on certain contractual arrangements. We, together with our PRC subsidiaries and the
consolidated affiliated entities, are subject to PRC laws relating to, among others, restrictions over foreign investments in advertising
services companies set out in the Negative List (2021 Version) promulgated by the Ministry of Commerce, or the MOFCOM, and the National
Development and Reform Commission of the PRC, or the NDRC. As a result, we have to control over the consolidated affiliated entities
through contractual arrangements. Such structure is used to replicate foreign investment in China-based companies where the PRC law prohibits
direct foreign investment in the operating companies. Neither we nor our subsidiaries own any share in the consolidated affiliated entities,
and investors may never hold equity interests in the Chinese operating companies. Instead, we control and receive the economic
benefits of the consolidated affiliated entities’ business operation through a series of contractual agreements with the VIEs.
The contractual agreements with the VIEs are designed to provide Chuangyi Technology with the power, rights, and obligations equivalent
in all material respects to those it would possess as the principal equity holder of the consolidated affiliated entities, including
absolute control rights and the rights to the assets, property, and revenue of the consolidated affiliated entities. Aas
a result of our direct ownership in Chuangyi Technology and the contractual agreements with the consolidated affiliated entities, we
are regarded as the primary beneficiary of the consolidated affiliated entities for accounting purposes. Accordingly, we have
consolidated the financial results of the consolidated affiliated entities in our consolidated financial statements in accordance with
the Generally Accepted Accounting Principles in the United States, or U.S. GAAP. See “Item 4. Information on the Company—C.
Organizational Structure” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Contractual
Arrangements” for a description of these arrangements. Neither AirNet Technology Inc. nor its investors have had an equity ownership
in, direct foreign investment in, or control, other than as defined under U.S. GAAP, through contractual arrangements with, the VIEs.
The contractual arrangements are not equivalent to an equity ownership in the business of the VIEs and their respective subsidiaries
in China. Because of our corporate structure, we are subject to risks due to uncertainty of the interpretation and the application
of the PRC laws and regulations, including but not limited to limitation on foreign ownership of PRC companies, and regulatory review
of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual agreements.
We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard. Our contractual agreements
may not be effective in providing control over the consolidated affiliated entities. We may also subject to sanctions imposed by PRC
regulatory agencies including China Securities Regulatory Commission, or the CSRC, if we fail to comply with their rules and regulations.

Page
3

…

The
VIE structure and its associated risks

…

Our
corporate structure is subject to unique risks associated with the VIE structure. The contractual arrangements with the VIEs have not
been tested in court. If the PRC government deems that our contractual arrangements with the VIEs did not comply with PRC regulatory
restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations
change or are interpreted differently in the future, we could be subject to severe penalties. The PRC regulatory authorities could disallow
our holding company structure, which could lead to a material change in our operations and/or a material change in the value of the ADSs,
and could cause the value of the ADSs to significantly decline or become worthless. Our holding company, our PRC subsidiaries, and investors
of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual
arrangements with the VIEs and, consequently, may affect the financial performance of the VIEs and our company as a whole.

 2. Provide
                                            prominent disclosure about the legal and operational risks associated with being based in
                                            or having the majority of the company’s operations in China. Your disclosure should
                                            make clear whether these risks could result in a material change in your operations and/or
                                            the value of your securities or could significantly limit or completely hinder your ability
                                            to offer or continue to offer securities to investors and cause the value of such securities
                                            to significantly decline or be worthless. We note your current disclosure in the second paragraph
                                            of page 3. Your disclosure should also address how recent statements and regulatory actions
                                            by China’s government, such as those related to the use of variable interest entities
                                            and data security or anti-monopoly concerns, have or may impact the company’s ability
                                            to conduct its business, accept foreign investments, or list on a U.S. or other foreign exchange.
                                            Further, we note that your auditors are headquartered in Singapore. Last, please provide,
                                            as necessary, to include appropriate cross-references to the individual risk factors associated
                                            with the discussion here.

RESPONSE:
In response to the Staff’s comment, the Company undertakes to revise the relevant disclosure in its future Form 20-F filings as
follows (with deletions shown in strikethrough and additions in underline showing the changes against the disclosure in the 2023 Form
20-F), subject to such updates and adjustments to be made in connection with any material developments of the subject matter being disclosed.

Page
4

INTRODUCTION

…

Holding
Company Structure and the VIE Structure

…

We,
our PRC subsidiaries and the consolidated affiliated entities face various legal and operational risks and uncertainties related to being
based in and having significant operations in China. The PRC government has significant authority to exert influence on the ability of
a China-based company, such as us and the consolidated affiliated entities, to conduct its business, accept foreign investments or list
on U.S. or other foreign exchanges. The PRC government has recently issued statements and regulatory actions relating to areas such
as For example, we and the consolidated affiliated entities face risks associated with regulatory approvals of offshore
offerings, oversight on cybersecurity and data privacy, anti-monopoly regulatory actions, as well as the uncertainty of the inspection
on our auditors by the Public Company Accounting Oversight Board, or the PCAOB. For example, on February 17, 2023, the China Securities
Regulatory Commission, or the CSRC, promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic
Companies, or the Overseas Listing Trial Measures, and the related guidelines, which became effective on March 31, 2023. According to
the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct
or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. In addition, an overseas-listed
company must also submit the filing with respect to its follow-on offerings, issuance of convertible corporate bonds and exchangeable
bonds, and other equivalent offering activities, within the time frame specified by the Overseas Listing Trial Measures. We believe we
are not required to obtain such approval for our initial public offering on November 7, 2007 because such offering made was before the
enactment of the Overseas Listing Trial Measures; however, we will be obligated to obtain approvals with the CSRC for our future offerings.
If we cannot obtain such approvals or the CSRC rescind our approvals, we may not continue to offer securities to investors and cause
the value of our securities to significantly decline or, in extreme cases, become worthless. See “ Item 3. Key Information—D.
Risk Factors—Risks Related to Doing Business in China—The filing procedure with the CSRC shall be fulfilled and the approval
of other PRC government authorities may be required in connection with our future offshore offering under PRC law, and, we cannot predict
whether or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete such filing,
if required.” In addition, if future regulatory updates mandate clearance of cybersecurity review or other specific actions to
be completed by China-based companies listed on foreign stock exchanges or traded in foreign over the counter trading markets, such as
us, we face uncertainties as to whether such clearance can be timely obtained, or at all. See “Item 3. Key Information—D.
Risk Factors—Risks Related to Doing Business in China—Failure to comply with governmental regulations and other legal obligations
concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use
data during the conduct of our business.” Furthermore, the PRC anti-monopoly and competit