# EDGAR Filing Document

**Accession Number:** 0001753673
**File Stem:** 0001213900-26-047123
**Filing Date:** 2026-4
**Character Count:** 963328
**Document Hash:** f68e2e0c8094788e7e94ab415fe82e00
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-047123.hdr.sgml**: 20260423

**ACCESSION NUMBER**: 0001213900-26-047123

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 115

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260423

**DATE AS OF CHANGE**: 20260423

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Scienjoy Holding Corp
- **CENTRAL INDEX KEY:** 0001753673
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 000000000
- **STATE OF INCORPORATION:** D8
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38799
- **FILM NUMBER:** 26889494

**BUSINESS ADDRESS:**
- **STREET 1:** RM 1118, 11TH FLOOR, BUILDING 3, NO. 99
- **STREET 2:** WANGZHOU RD.,LIANGZHU ST.YUHANG DISTRICT
- **CITY:** HANGZHOU, ZHEJIANG PROVINCE
- **STATE:** F4
- **ZIP:** 311113
- **BUSINESS PHONE:** (86)0571-88586668

**MAIL ADDRESS:**
- **STREET 1:** RM 1118, 11TH FLOOR, BUILDING 3, NO. 99
- **STREET 2:** WANGZHOU RD.,LIANGZHU ST.YUHANG DISTRICT
- **CITY:** HANGZHOU, ZHEJIANG PROVINCE
- **STATE:** F4
- **ZIP:** 311113

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Wealthbridge Acquisition Ltd
- **DATE OF NAME CHANGE:** 20180919

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

**(Mark One)**

☐ **STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the fiscal year ended December 31, 2025.

**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 &nbsp;&nbsp;&nbsp;&nbsp; to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Commission File Number: 001-38799**

**SCIENJOY HOLDING CORPORATION**

(Exact name of Registrant as specified in its charter)

**N/A**

(Translation of Registrant's name into English)

**British Virgin Islands**

(Jurisdiction of incorporation or organization)

**RM 1118, 11<sup>th</sup> Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St.**

**Yuhang District, Hangzhou, Zhejiang Province, 311113, China**

**(86) 0571 8858 6668**

(Address of principal executive offices)

**Xiaowu He**

**Chief Executive Officer**

**RM 1118, 11<sup>th</sup> Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St.**

**Yuhang District, Hangzhou, Zhejiang Province, 311113, China**

**(86) 0571 8858 6668**

**Email: xiaowu.he@scienjoy.com**

(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** | **Trading Symbol** | **Name of each exchange on which registered** |
| Class A Ordinary shares, no par value | SJ | Nasdaq Capital Market |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act:

**None**

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Indicate the number of outstanding shares of each of the issuer's classes of capital stock or common stock as of the close of business covered by the annual report.

**39,537,710 Class A ordinary shares and 2,925,058 Class B ordinary shares were issued and outstanding as of December 31, 2025.**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

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 the Securities Exchange Act of 1934.

☐ Yes ☒ No

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 1934 during 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 filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ 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 definition of "accelerated filer and large accelerated filer" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer Accelerated file Non-accelerated filer Emerging growth company <br> ☐ ☐ ☒ ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board Other <br> ☒ ☐ ☐

If "other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ 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-2of the Exchange Act).

☐ Yes ☒ No

(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 Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐ Yes ☐ No

**Table of Contents**

---

| | | |
|:---|:---|:---|
| **[INTRODUCTION](#a_001)** | **[INTRODUCTION](#a_001)** | iii |
| **[FORWARD-LOOKING INFORMATION](#a_002)** | **[FORWARD-LOOKING INFORMATION](#a_002)** | vii |
| **[PART I](#a_003)** | **[PART I](#a_003)** | 1 |
| &nbsp;&nbsp;&nbsp;**ITEM 1.** | **[IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_004)** | 1 |
| &nbsp;&nbsp;&nbsp;**ITEM 2.** | [**OFFER STATISTICS AND EXPECTED TIMETABLE**](#a_005) | 1 |
| &nbsp;&nbsp;&nbsp;**ITEM 3.** | [**KEY INFORMATION**](#a_006) | 1 |
| **A.** | [**\[Reserved\]**](#a_007) | 1 |
| **B.** | [**Capitalization and Indebtedness**](#a_008) | 1 |
| **C.** | [**Reasons for the Offer and Use of Proceeds**](#a_009) | 1 |
| **D.** | [**Risk Factors**](#a_010) | 1 |
| &nbsp;&nbsp;&nbsp;**ITEM 4.** | **[INFORMATION ON THE COMPANY](#a_011)** | 45 |
| **A.** | **[History and Development of the Company](#a_012)** | 45 |
| **B.** | [**Business Overview**](#a_013) | 48 |
| **C.** | [**Organizational Structure**](#a_078) | 82 |
| **D.** | [**Property, Plants and Equipment**](#a_014) | 86 |
| &nbsp;&nbsp;&nbsp;**ITEM 4A.** | [**UNRESOLVED STAFF COMMENTS**](#a_015) | 86 |
| &nbsp;&nbsp;&nbsp;**ITEM 5.** | [**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**](#a_016) | 86 |
| **A.** | [**Operating Results**](#a_017) | 86 |
| **B.** | **[Liquidity and Capital Resources](#a_079)** | 94 |
| **C.** | [**Research and Development, Patents and Licenses, etc.**](#a_018) | 96 |
| **D.** | [**Trend Information**](#a_019) | 96 |
| **E.** | [**Critical Accounting Estimates**](#a_020) | 96 |
| &nbsp;&nbsp;&nbsp;**ITEM 6.** | [**DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**](#a_021) | 97 |
| **A.** | [**Directors and Executive Officers**](#a_022) | 97 |
| **B.** | **[Compensation of Directors and Executive Officers](#a_080)** | 99 |
| **C.** | [**Board Practices**](#a_023) | 100 |
| **D.** | [**Employees**](#a_024) | 101 |
| **E.** | [**Share Ownership**](#a_025) | 102 |
| **F.** | [**Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation**](#a_026) | 103 |
| &nbsp;&nbsp;&nbsp;**ITEM 7.** | [**MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**](#a_027) | 103 |
| **A.** | [**Major Shareholders**](#a_028) | 103 |
| **B.** | [**Related Party Transactions**](#a_029) | 103 |
| **C.** | [**Interests of Experts and Counsel**](#a_030) | 104 |
| &nbsp;&nbsp;&nbsp;**ITEM 8.** | [**FINANCIAL INFORMATION**](#a_031) | 104 |
| **A.** | [**Consolidated Statements and Other Financial Information**](#a_032) | 104 |
| **B.** | [**Significant Changes**](#a_033) | 105 |
| &nbsp;&nbsp;&nbsp;**ITEM 9.** | [**THE OFFER AND LISTING**](#a_034) | 105 |
| **A.** | [**Offer and Listing Details**](#a_035) | 105 |
| **B.** | [**Plan of Distribution**](#a_036) | 105 |
| **C.** | [**Markets**](#a_037) | 105 |
| **D.** | [**Selling Shareholders**](#a_038) | 105 |
| **E.** | [**Dilution**](#a_039) | 105 |
| **F.** | [**Expenses of the Issue**](#a_040) | 105 |

---

i

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**ITEM 10.** | **[ADDITIONAL INFORMATION](#a_041)** | 105 |
| **A.** | [**Share Capital**](#a_042) | 105 |
| **B.** | [**Memorandum and Articles of Association**](#a_043) | 106 |
| **C.** | [**Material Contracts**](#a_044) | 115 |
| **D.** | [**Exchange Controls**](#a_045) | 115 |
| **E.** | [**Taxation**](#a_046) | 115 |
| **F.** | [**Dividends and Paying Agents**](#a_047) | 120 |
| **G.** | [**Statement by Experts**](#a_048) | 120 |
| **H.** | [**Documents on Display**](#a_049) | 120 |
| **I.** | [**Subsidiary Information**](#a_050) | 121 |
| **J.** | [**Annual Report to Security Holders**](#a_051) | 121 |
| &nbsp;&nbsp;&nbsp;**ITEM 11.** | [**QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**](#a_052) | 121 |
| &nbsp;&nbsp;&nbsp;**ITEM 12.** | [**DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**](#a_053) | 121 |
| **A.** | [**Debt Securities**](#a_054) | 121 |
| **B.** | [**Warrants and Rights**](#a_055) | 121 |
| **C.** | [**Other Securities**](#a_056) | 121 |
| **D.** | [**American Depositary Shares**](#a_057) | 121 |
| **[PART II](#a_058)** | **[PART II](#a_058)** | 122 |
| &nbsp;&nbsp;&nbsp;**ITEM 13.** | **[DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#a_059)** | 122 |
| &nbsp;&nbsp;&nbsp;**ITEM 14.** | **[MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#a_060)** | 122 |
| &nbsp;&nbsp;&nbsp;**ITEM 15.** | [**CONTROLS AND PROCEDURES**](#a_061) | 122 |
| &nbsp;&nbsp;&nbsp;**ITEM 16.** | [**Reserved**](#a_062) | 123 |
| &nbsp;&nbsp;&nbsp;**ITEM 16A.** | [**AUDIT COMMITTEE FINANCIAL EXPERT**](#a_063) | 123 |
| &nbsp;&nbsp;&nbsp;**ITEM 16B.** | [**CODE OF ETHICS**](#a_064) | 123 |
| &nbsp;&nbsp;&nbsp;**ITEM 16C.** | [**PRINCIPAL ACCOUNTANT FEES AND SERVICES**](#a_065) | 124 |
| &nbsp;&nbsp;&nbsp;**ITEM 16D.** | [**EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**](#a_066) | 124 |
| &nbsp;&nbsp;&nbsp;**ITEM 16E.** | [**PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**](#a_067) | 124 |
| &nbsp;&nbsp;&nbsp;**ITEM 16F.** | [**CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT**](#a_068) | 125 |
| &nbsp;&nbsp;&nbsp;**ITEM 16G.** | [**CORPORATE GOVERNANCE**](#a_069) | 125 |
| &nbsp;&nbsp;&nbsp;**ITEM 16H.** | [**MINE SAFETY DISCLOSURE**](#a_070) | 126 |
| &nbsp;&nbsp;&nbsp;**ITEM 16I.** | [**DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**](#a_071) | 126 |
| &nbsp;&nbsp;&nbsp;**ITEM 16J** | [**INSIDER TRADING POLICIES**](#a_072) | 126 |
| &nbsp;&nbsp;&nbsp;**ITEM 16K** | [**CYBERSECURITY**](#a_073) | 126 |
| **[PART III](#a_074)** | **[PART III](#a_074)** | 127 |
| &nbsp;&nbsp;&nbsp;**ITEM 17.** | **[FINANCIAL STATEMENTS](#a_075)** | 127 |
| &nbsp;&nbsp;&nbsp;**ITEM 18.** | [**FINANCIAL STATEMENTS**](#a_076) | 127 |
| &nbsp;&nbsp;&nbsp;**ITEM 19.** | [**EXHIBITS**](#a_077) | 127 |

---

ii

**INTRODUCTION**

On May 7, 2020, Scienjoy Holding Corporation, formerly known as Wealthbridge Acquisition Limited ("Wealthbridge"), consummated the transactions contemplated by the Share Exchange Agreement (the "Share Exchange Agreement"), dated as of October 28, 2019, by and among Wealthbridge, Scienjoy Inc., Lavacano Holdings Limited ("Lavacano"), and WBY Entertainment Holdings Ltd. ("WBY", together with Lavacano, the "Sellers"), pursuant to which Wealthbridge acquired 100% the issued and outstanding equity interests of Scienjoy Inc. from the Sellers and changed its name to Scienjoy Holding Corporation.

Scienjoy Holding Corporation is not a Chinese operating company but a British Virgin Islands holding company with operations conducted by its subsidiaries and through contractual arrangements with the variable interest entities, or "VIEs," based in China. Scienjoy Holding Corporation currently operates majority of the businesses in China through Zhihui Qiyuan (Beijing) Technology, Co. Ltd. ("Zhihui Qiyuan"), Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. ("Sixiang Qiyuan") and their respective subsidiaries. Zhihui Qiyuan and its subsidiaries are referred to as Zhihui Qiyuan VIEs in this annual report. Sixiang Qiyuan and its subsidiaries are referred to as Sixiang Qiyuan VIEs in this annual report. Zhihui Qiyuan VIEs and Sixiang Qiyuan VIEs are collectively referred to as the "VIEs" in this annual report.

The VIE structure is used to provide investors with exposure to foreign investment in China-based companies where PRC law prohibits direct foreign investment in the operating companies in China. This structure involves unique risks to investors. There are contractual arrangements among our PRC subsidiaries, the VIEs and their nominee shareholders. We have evaluated the guidance in FASB ASC 810 and concluded that we are the primary beneficiary of the VIEs because of these contractual arrangements. Accordingly, under U.S. GAAP, the financial statements of the VIEs are consolidated as part of our financial statements.

Investors in our Class A Ordinary Shares thus are not purchasing equity interest in our operating entities in China but instead are purchasing equity interest in a British Virgin Islands holding company. As used in this annual report, "SHC" refers to Scienjoy Holding Corporation; "we," "us," "our company," "our," or "the Company" refer to Scienjoy Holding Corporation and its subsidiaries; "our PRC subsidiaries" refer to our wholly foreign owned entities (the "WFOEs"), Sixiang Wuxian (Beijing) Technology Co., Ltd. ("WXBJ"), Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd. ("WXZJ") Scienjoy International Limited, and Scienjoy BeeLive Limited and their respective subsidiaries. The "VIEs" refer to the PRC variable interest entities, including Zhihui Qiyuan VIEs and Sixiang Qiyuan VIEs. Zhihui Qiyuan VIEs include Zhihui Qiyuan (Beijing) Technology, Co. Ltd. or Zhihui Qiyuan, a limited liability company organized and existing under the laws of the PRC, and Zhihui Qiyuan's subsidiaries, including Hai Xiu (Beijing) Technology Company Co. Ltd., Beijing Le Hai Technology Co. Ltd., Beijing Sixiang Shiguang Technology Co. Ltd., Sixiang Mifeng (Tianjin) Technology Co., Ltd (formerly known as Tianjin Guangju Dingfei Technology Co., Ltd.), Changxiang Infinite Technology (Beijing) Co., Ltd., ZhiHui QiYuan (HaiNan) Investment Co., Ltd., Beijing Weiliantong Technology Co., Ltd. Chuangda Zhihui (Beijing) Technology Co., Ltd ("CDZH"), Beijing Huayi Dongchen Technology Co., Ltd. ("HYDC"), Hongcheng Huiying (Zhejiang)Technology Industry Development Co., Ltd. ("HCHY") and Hangzhou Sixiang Fengjing Culture Technology Co., Ltd. ("SXFJ"), each such company formed under PRC Law. Sixiang Qiyuan VIEs include Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. and its subsidiaries, including Xiuli (Zhejiang) Culture Technology Co., Ltd., Leku (Zhejiang) Culture Technology Co., Haifan (Zhejiang) Culture Technology Co., Ltd., Xiangfeng (Zhejiang) Culture Technology Co., Ltd., and Hongren (Zhejiang) Culture Technology Co., Ltd., each such company formed under PRC Law.

Our corporate structure is subject to risks associated with our contractual arrangements with the VIEs. The Company and its shareholders may never directly hold equity interests in the businesses that are conducted by the VIEs. Uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements, and these contractual arrangements have not been tested in a court of law. Because we do not hold equity interests in the VIEs, we are subject to risks due to the uncertainty of the interpretation and application of the PRC laws and regulations regarding VIEs and the VIE structure, including but not limited to regulatory review of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangements with the VIEs. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and as a result the value of our securities may depreciate significantly or become worthless. See "*Risk Factors - Risks Related to Our Corporate Structure*" in "Item 3. Key Information-3.D. Risk Factors" in this annual report.

iii

**USE OF CERTAIN TERMS**

Unless otherwise indicated and except where the context otherwise requires, references in this annual report to:

● "Active broadcasters" refers to the hosts perform live music, dancing and other entertaining performance in front of the audience through the screens on the mobile platform;

● "active users" refers to users who visited our platforms at least once in a given period;

● "ARPPU" refers to average live streaming revenue per paying user in a given period;

● "BeeLive Acquisition" refers to the Company's acquisition of the BeeLive businesses and related transactions;

● "Business Combination" refers to the Company's acquisition of Scienjoy Inc. on May 7, 2020 and related transactions;

● "CDN" refers to content delivery network;

● "CDZH" refers to Chuangda Zhihui (Beijing) Technology Co., Ltd.;

● "CAGR" refers to compound annual growth rate;

● "China" and the "PRC" refer to the People's Republic of China, including Hong Kong and Macau;

● "Golden Shield" refers to Golden Shield Enterprises Limited;

● "Heshine" refers to Heshine Holdings Limited;

● "HCHY" refers to Hongcheng Huiying (Zhejiang)Technology Industry Development Co., Ltd

● "HZFJ" refers to Haifan (Zhejiang) Culture Technology Co.

● "HKD" refers to Hong Kong Dollar, the official currency of the Hong Kong Special Administrative Region;

● "Holgus X" refers to Holgus Sixiang Information Technology Co., Ltd.;

● "Holgus H" refers to Holgus Sixiang Haohan Internet Technology Co., Ltd.;

● "Hong Kong" refers to the Hong Kong Special Administrative Region of the People's Republic of China;

● "HX" refers to Hai Xiu (Beijing) Technology Co., Ltd.;

● "HYDC" refers to Beijing Huayi Dongchen Technology Co., Ltd.;

● "ZH" refers to Sixiang Zhihui (Beijing) Technology Culture Co., Ltd.;

● "Kashgar Times" refers to Kashgar Sixiang Times Internet Technology Co., Ltd.;

● "Kashgar Lehong" refers to Kashgar Sixiang Lehong Information Technology Co., Ltd.;

● "Lavacano" refers to Lavacano Holdings Limited;

● "LH" refers to Beijing Le Hai Technology Co., Ltd.;

● "Macau" refers to the Macau Special Administrative Region of the People's Republic of China;

iv

● "MF" refers to Sixiang Mifeng (Tianjin) Technology Co., Ltd. (formerly known as Tianjin Guangju Dingfei Technology Co., Ltd.);

● "our PRC subsidiaries" refer to our WFOEs, i.e. Sixiang Wuxian (Beijing) Technology Co., Ltd., ("WXBJ"), Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd. ("WXZJ"), Scienjoy International Limited, and Scienjoy BeeLive Limited and their respective subsidiaries. WXBJ's subsidiaries include Sixiang Zhihui (Beijing) Technology Co., Ltd. ("ZH"), Sixiang Yingyue (Shanghai) Technology Co., Ltd. ("SXYY"), Holgus Sixiang Information Technology Co., Ltd. ("Holgus X"), Kashgar Sixiang LeHong Information Technology Co., Ltd. ("Kashgar Lehong"), Sixiang ZhiHui (HaiNan) Investment ("ZHHN"), and Holgus Sixiang Haohan Internet Technology Co., Ltd. ("Holgus H"), WXZJ's subsidiary includes Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd. ("ZHZJ");

● "paying user" refers to a registered user that has purchased virtual currency on our platforms at least once during the relevant period;

● "paying ratio" for a given period is calculated by dividing (i) the sum of paying users in such period, by(ii) the total active users in such period;

● "Purchase Agreement" refers to Common Stock Purchase Agreement, entered between the Company and White Lion Capital on February 23, 2021;

● "QAU" refers to the number of active users in a given quarter;

● "QY" or "Zhihui Qiyuan" refers to Zhihui Qiyuan (Beijing) Technology Co., Ltd.;

● "QYHN" refers to ZhiHui Qiyuan (Hainan) Investment Co., Ltd.;

● "QYHZ" or "Sixiang Qiyuan" refers to Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd.;

● "registered user" refers to a user that has registered and logged onto our platform at least once since registration;

● "RMB" or "Renminbi" refers to the legal currency of the People's Republic of China;

● "Scienjoy HK" refers to Scienjoy International Limited;

● "SG" refers to Beijing Sixiang Shiguang Technology Co., Ltd.;

● "Share Exchange Agreement" refers to the Share Exchanged Agreement, dated October 28, 2019, by and among Scienjoy Inc., the Company, Lavacano Holdings Limited, and WBY Entertainment Holdings Ltd.;

● "SH" refers to ShiHuai (Beijing) Technology Co. Ltd.;

● "SHC" refers to Scienjoy Holding Corporation, a British Virgin Islands holding company;

● "SHWL" refers to ShanHaiWeiLan (Beijing) Technology Co., Ltd.;

● "Sixiang Qiyuan VIEs" refer to Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. ("QYHZ") and its subsidiaries, including Xiuli (Zhejiang) Culture Technology Co., Ltd. ("XLZJ"), Leku (Zhejiang) Culture Technology Co., Ltd. ("LKZJ"), Haifan (Zhejiang) Culture Technology Co., Ltd. ("HFZJ"), Xiangfeng (Zhejiang) Culture Technology Co., Ltd. ("XFZJ") and Hongren (Zhejiang) Culture Technology Co., Ltd. ("HRZJ"), each such company formed under PRC Laws;

● "SXFJ" refers to Hangzhou Sixiang Fengjing Culture Technology Co., Ltd.

v

● "SY" refers to Tianjin Sihui Peiying Technology Co., Ltd.;

● "TF" refers to Tongfang Investment Fund Series SPC;

● "US$", "USD" "dollars" or "U.S. dollars" refers to the legal currency of the United States;

● "U.S. GAAP" are to accounting principles generally accepted in the United States;

● "variable interest entity," "VIEs" or "VIE entities" refer to the variable interest entities, including Zhihui Qiyuan VIEs and Sixiang Qiyuan VIEs. Each of the VIEs is consolidated into our consolidated financial statements in accordance with U.S. GAAP as if they were its wholly-owned subsidiaries;

● "WBY" refers to WBY Entertainment Holdings Ltd.;

● "Wealthbridge" refers to Wealthbridge Acquisition Limited;

● "White Lion Capital" refers to White Lion Capital LLC;

● "WLT" or "Weiliantong" refers to Beijing Weiliantong Technology Co., Ltd.;

● "WXBJ" refers to Sixiang Wuxian (Beijing) Technology Co., Ltd.;

● "WXZJ" refers to Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd.;

● "WFOEs" or "our WFOEs" refer to our wholly foreign owned entities in China, which include WXBJ and WXZJ;

● "ZH" refers to Sixiang Zhihui (Beijing) Technology Co., Ltd.;

● "ZHHN" refers to Sixiang Zhihui (Hainan) Technology Co., Ltd.;

● "ZHZJ" refers to Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd; and

● "Zhihui Qiyuan VIEs" refer to Zhihui Qiyuan (Beijing) Technology, Co., Ltd. and its subsidiaries, including Zhihui Qiyuan (Beijing) Technology, Co. Ltd. or Zhihui Qiyuan, a limited liability company organized and existing under the laws of the PRC, and Zhihui Qiyuan's subsidiaries, including HX, LH, SG, MF, Changxiang Infinite Technology (Beijing) Co., Ltd. ("CX"), QYHN, WLT, CDZH, Hongcheng Huiying (Zhejiang) Technology Industry Development Co., Ltd. ("HCHY"), and HYDC, each such company formed under PRC Law.

Translations of balances in our consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD (or "US$") as of and for the year ended December 31, 2025 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.9931, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on the last trading day of December 31, 2025.

No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate.

vi

**FORWARD-LOOKING INFORMATION**

Certain statements in this annual report may constitute "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this annual report may include, for example, statements about:

● the goals and strategies of the VIEs and the Company as a whole;

● the VIEs' ability to attract new users and talent to our platform;

● the future business development, financial condition and results of operations of the VIEs and the Company as a whole;

● the expected growth in, and market size of, the mobile live streaming platforms;

● expected changes in our revenue, costs or expenditures of the VIEs and the Company as a whole;

● the VIEs' ability to continue to source and offer new and attractive products and services;

● the expectations regarding demand for and market acceptance of our brands, platforms and services;

● the expectations regarding growth in our user base and level of user engagement;

● the VIEs' ability to attract, retain and monetize users;

● the VIEs' ability to continue to develop new technologies and/or upgrade our existing technologies;

● growth of and trends of competition in mobile live streaming industry;

● government policies and regulations relating to mobile live streaming industry; and

● general economic and business conditions in the markets the VIEs have businesses.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. In particular, for additional information regarding known material factors that could affect our operating results and performance, please read the section entitled "Risk Factors" in this annual report. Should one or more of the risks or uncertainties described in this annual report made in connection therewith occur, or should underlying assumptions prove incorrect, actual results and plans could different materially from those expressed in any forward-looking statements.

vii

**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.** **[Reserved]** 

**B.** **Capitalization and Indebtedness** 

Not applicable.

**C.** **Reasons for the Offer and Use of Proceeds** 

Not applicable.

**D.** **Risk Factors.** 

**Summary of Risk Factors**

An investment in our securities involves significant risks. Below is a summary of material risks that we face, organized under relevant headings. These risks are discussed fully in Risk Factors, which you should read in its entirety starting from page 1, and elsewhere in this annual report.

***Risks Factors Relating to Our Business and Industry***

● We may fail to retain our existing users, keep them engaged or further grow our user base.

● Our revenue growth is primarily dependent on paying users and revenue per paying user. If we fail to continue to grow or maintain our paying user base or fail to continue to increase revenue per paying user, our live streaming revenue may not increase, which may materially and adversely affect our results of operations and financial condition.

● We rely on a single monetization model.

● We may fail to offer attractive content on our platforms.

● Failure to attract, cultivate, and retain top broadcasters may materially and negatively affect our user engagement and thus our business and operations.

● If we fail to implement an effective revenue sharing fee policy, we may lose our broadcasters and our results of operations and financial condition may be materially and negatively affected.

● We partner with various talent agencies to manage our broadcasters. If we are not able to maintain our relationship with talent agencies, our operations may be materially and adversely affected.

● Failure to effectively manage our growth and control our periodic spending to maintain such growth may materially and adversely affect our brand, and our business and results of operations may be materially and adversely affected.

● We may fail to successfully implement our monetization strategies.

● Our business depends on a strong brand, and any failure to maintain, protect, and enhance our brand would hurt our ability to retain or expand our user base, or our ability to increase their level of engagement.

● If the SEC or a court were to determine, or if the staff of the SEC were to take a position, that the current, or any future, mix of our assets, where a majority of our assets are deemed as long term external equity investments, could cause us to be an "investment company" under the Investment Company Act of 1940, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, results of operations and financial condition.

● Our core values of focusing on user experience and user satisfaction first and acting for the long-term may conflict with the short-term operating results of our business.

● If we fail to obtain or maintain the required licenses and approvals or if we fail to comply with laws and regulations applicable to our industry, our business, results of operations, and financial condition may be materially and adversely affected.

● We may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users, or for proprietary information appropriated by former employees, which may materially and adversely affect our business, financial condition and prospects.

● Unauthorized use of our intellectual property and the expenses incurred in protecting our intellectual property rights may materially and adversely affect our business.

● Our content monitoring system may not be effective in preventing misconduct by our users and misuse of our platforms.

● We may be held liable for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users if such content is deemed to violate any PRC laws or regulations, and PRC authorities may impose legal sanctions on us.

● The complexity, uncertainties, and changes in PRC regulation of the Internet industry and companies may materially and adversely affect our business and financial condition.

● Concerns about the collection, use, and disclosure of personal data and other privacy-related and security matters could deter customers and users from using our services and adversely affect our reputation and business.

● Continuing efforts of our executive officers, key employees, and qualified personnel are essential to our business and the loss of their services may adversely and negatively impact our business and results of operations.

● We are subject to risks relating to litigation.

● The appointed Temporary Receiver of Link Motion Inc. (f/k/a NQ Mobile Inc.) may bring an action to restore Link Motion Inc.'s senior position in the Showself businesses, which may result in claims against us.

● The ongoing military conflict involving the United States, Israel, and Iran may negatively impact the Gulf states and affect our subsidiary operating in Dubai, UAE. These factors could have a material adverse effect on our overseas expansion and Middle Eastern business segments, thereby affecting our results of operations and financial condition.

● Contractual disputes with our talent agencies may harm our reputation, and may be costly or time-consuming to resolve.

● Key performance metrics used by us, such as QAUs, paying users, ARPPU and paying ratio, may overstate the number of our active and paying users, which may lead to an inaccurate interpretation of our revenue metrics and our business operations by our management and by investors, and may even misleadingly affect management's business judgment of our operations.

● Restrictions on virtual currency may adversely affect our revenues.

● Our results of operations are subject to quarterly fluctuations due to seasonality.

● We do not currently have business insurance to cover our main assets and business. Any uninsured occurrence of business disruption, litigation, or natural disaster could expose us to significant costs, which could have an adverse effect on our results of operations.

● Failure to achieve and maintain effective internal and disclosure controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and share price.

● Our balance sheet includes a significant amount of goodwill and intangible assets. An impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and total assets.

● We have significant credit exposure to our virtual currency distributors, and negative trends in their businesses could cause us significant credit loss and negatively impact our cash flow and liquidity position

***Risks Related to Our Corporate Structure***

We and the VIEs are also subject to risks and uncertainties related to our corporate structure, including, but not limited to, the following:

● We conduct our business through the VIEs by means of contractual arrangements. PRC laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain. If the PRC courts or administrative authorities determine that these contractual arrangements do not comply with applicable regulations, we could be subject to severe penalties and our business could be adversely affected. In addition, changes in such PRC laws and regulations may materially and adversely affect our business.

● Substantial uncertainties exist with respect to whether the foreign investor's controlling PRC onshore variable interest entities via contractual arrangements will be recognized as "foreign investment" and how it may impact the viability of our current corporate structure and operations. Also, our VIE structure may be inquired or challenged by relevant PRC governmental authorities when SHC issues additional securities for future financing in a public market under certain PRC laws and rules.

● We depend upon the contractual arrangements in conducting our business in China, which may not be as effective as direct ownership in providing operational control.

● We may lose the ability to use and enjoy assets held by the VIEs that are important to our business if the VIEs declare bankruptcy or become subject to a dissolution or liquidation proceeding.

● Contractual arrangements may be subject to scrutiny by the PRC tax authorities. A finding that we owe additional taxes could negatively affect our financial condition and the value of your investment.

● We may rely on dividends paid by our PRC subsidiaries to fund cash and financing requirements. Any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of our Class A ordinary shares.

***Risks Related to Doing Business in China***

Our PRC subsidiaries and the VIEs are based in China and have the majority of the operations in China, so we and the VIEs face risks and uncertainties related to doing business in China in general, including, but not limited to, the following:

● Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.

● Regulation and censorship of information disseminated over the mobile and Internet in China may adversely affect our business and subject us to liability for streaming content or content posted on our platforms.

● Adverse changes in global or China's economic, political or social conditions or government policies could have a material adverse effect on our business, results of operations and financial condition.

● The PRC government's significant oversight over our business operation could result in a material adverse change in the operations of the VIEs and our company as a whole and the value of our Class A ordinary shares.

● Rules and regulations in China can change quickly with little or no advance notice and their interpretation and the implementation involve uncertainty, which could materially and adversely affect the operations of the VIEs and our company as a whole and the value of our securities.

● Our shares may be delisted and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for two consecutive years. The delisting and the cessation of trading of our shares, or the threat of their being delisted and prohibited from being traded, may materially and adversely affect the value of your investment.

● The filing requirements of the CSRC will be required in connection with an offering under PRC rules, regulations or policies, and, if required, we shall further obtain approval or confirmation from other PRC governmental authorities with respect to future offering, and we cannot predict how soon we will be able to complete such filings in CSRC or whether obtain such approvals from other PRC governmental authorities.

● The VIEs may be subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on the business, financial condition and results of operations of the VIEs and our company, and future offerings in a public market as a whole.

● It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.

● Failure to comply with laws and regulations applicable to our business in China could subject us to fines and penalties and could also cause us to lose customers or otherwise harm our business.

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

● Uncertainties exist with respect to the interpretation and implementation of Anti-Monopoly Guidelines for Internet Platforms and how it may impact the business operations of the VIEs.

● The recent joint statement by the SEC, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate and the U.S. House of Representatives, all call for additional and more stringent criteria to be applied to emerging market companies. These developments could add uncertainties to our future offerings, business operations share price and reputation.

● Currently, there is no law or regulation specifically governing virtual asset property rights and therefore it is not clear what liabilities, if any, live streaming platform operators may have for virtual assets.

● Under the PRC enterprise income tax law, we may be classified as a PRC "resident enterprise," which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.

● Our business, financial condition and results of operations could be materially and adversely affected by changes in PRC laws, regulations and policies relating to taxation, data reporting and platform compliance, particularly the new tax regulatory regime for internet platforms and live streaming content creators that became effective on October 1, 2025.

● PRC regulations relating to offshore investment activities by PRC residents may limit the ability of WXBJ and WXZJ (our indirect wholly-owned subsidiaries in China) to increase our registered capital or distribute profits to us or otherwise expose us to liability and penalties under PRC law.

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

***Risks related to Investment in our Class A Ordinary Shares***

● Our failure to meet the continuing listing requirements of The Nasdaq Capital Market could result in a delisting of our securities.

● Heshine will control the outcome of our shareholder actions.

● We are a "controlled company" within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

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

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

● Nasdaq may apply additional and more stringent criteria for our continued listing.

● Our failure to meet the continuing listing requirements of The Nasdaq Capital Market could result in a delisting of our securities.

● Certain provisions of the Fourth Amended and Restated Memorandum and Articles of Association may be deemed to have an antitakeover effect.

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

***Risks Factors Relating to Our Business and Industry***

***We may fail to retain our existing users, keep them engaged or further grow our user base.***

Our revenue primarily derives from live streaming services, and therefore our ability to maintain and increase the size of our user base and user engagement level is critical to our success. If our user base becomes smaller or our users become less active, it is possible that there would be less spending on the virtual gifts on our platforms. Smaller user base or lower user engagement would make it difficult to retain top broadcasters. Consequently, our financial condition would suffer a decline in revenue, and our business and results of operations will be materially and adversely impacted.

To continue to maintain and improve our existing user base and user engagement, we must ensure that we adequately and timely identify and respond to changes in user preferences, attract and retain enough popular broadcasters, and offer new and attractive features and content. There is no guarantee that we could meet all of these goals. A number of factors could negatively affect user growth, and engagement, including if:

● we fail to deliver our services or address users' requests in a rapid and reliable manner and therefore the user experience is adversely affected;

● we fail to innovate the content on our platforms that keeps users interested and engaged;

● we fail to retain popular broadcasters who are able to keep users engaged;

● we are unable to combat spam on or inappropriate or abusive use of our platforms, which may lead to negative public perception of us and our brand;

● we fail to address users' concerns related to privacy and communication, safety, security or other factors;

● there are adverse changes in our services; and

● the growth of the number of mobile users in China does not continue to increase.

***Our revenue growth is primarily dependent on paying users and revenue per paying user. If we fail to continue to grow or maintain our paying user base or fail to continue to increase revenue per paying user, our live streaming revenue may not increase, which may materially and adversely affect our results of operations and financial condition.***

Whether we can continue to increase our paying ratio amongst our users or revenue per paying user depends on many factors, and many of them are out of our control. We expect that our business will continue to be heavily dependent on revenue collected from paying users in the near future. Any decline in the number of paying users or revenue per paying user may materially and adversely affect our results of operations and financial condition.

***We rely on a single monetization model.***

Mobile live streaming platforms use three basic categories of revenue sharing models to monetize their live streaming operations: gift model, advertise model, and shopping model. We currently mainly use the gift model, generating our revenue from virtual gifts purchased by our users. Although we intend to diversify our revenue sharing models, such as by generating revenue from advertising, there is no guarantee we will succeed on any new revenue model. Therefore, any decreases in revenues generated from the gift model will materially and adversely affect our business, results of operations and financial condition.

***We may fail to offer attractive content on our platforms.***

High quality live streaming content is important for us to attract, maintain and increase our user base and user engagement. Our content library is constantly evolving and growing. However, if we fail to expand and diversify our content offerings, identify trending and popular genres, or maintain the quality of our content, we may experience decreasing viewership and user engagement, which may materially and adversely affect our financial conditions and results of operations.

In addition, we largely rely on our broadcasters to create high-quality and entertaining live streaming content. We have in place a comprehensive incentive mechanism to encourage broadcasters and talent agencies to supply content that is attractive to audiences. Also, talent agencies that co-operate with us may guide or influence broadcasters to develop content that is well received by viewers. However, if we fail to identify the latest trends and timely guide broadcasters and talent agencies accordingly, our viewer numbers may decline and our results of operations and financial condition may be materially and adversely affected.

***Failure to attract, cultivate, and retain top broadcasters may materially and negatively affect our user engagement and thus our business and operations.***

The majority of our revenue is from the sale of virtual gifts to users. The charisma and the high-quality content of top broadcasters are primary contributors to user stickiness and are difficult to be replicated by other less popular broadcasters.

Although we have made efforts to support top broadcasters in order to retain them, there is no guarantee that they will choose to remain on our platforms. Top broadcasters tend to receive more offers with attractive terms than the other broadcasters and some of them may choose to move to other platforms. Their departure may cause a corresponding decline in our user base.

In addition, we may face legal disputes with competing platforms from which we attract some top broadcasters. Although we are not the primary target of these legal disputes, broadcasters involved may be subject to fines or even injunctions, which may render our investment in recruiting them meaningless. Conversely, some of our top broadcasters have left our platforms for competing platforms despite still being in a contractual relationship with us which have subsequently raised legal disputes. Even if we prevail in all such legal disputes, the departures of any top broadcaster may still have a negative impact on our user engagement and reputation. To retain top broadcasters, we must devise better compensation schemes, improve our monetization capabilities, and help the top broadcasters reach a wider audience. Although we strive to improve in these respects, there is no guarantee that the broadcasters will not leave our platforms.

In terms of broadcaster cultivation, we cannot guarantee that the performance metrics we use to track promising broadcasters will enable us to identify future top broadcasters. Some of the broadcasters we identify as promising may turn out to be underperforming, and we may also fail to spot truly promising broadcasters in the early stages of their career. Either one of these scenarios could prevent us from cultivating top broadcasters, which could weaken our core competitive strength against competing platforms and thus cause an outflow of users to those platforms.

***If we fail to implement an effective revenue sharing fee policy, we may lose our broadcasters and our results of operations and financial condition may be materially and negatively affected.***

We pay revenue sharing fees to the broadcasters and talent agencies as compensation, which are determined based on a percentage of revenue from virtual gift sales that are attributed to the broadcasters' live streaming performance. Failure to implement a satisfactory revenue sharing fee policy may result in undesired departures of broadcasters. For example, in 2018 we lowered our revenue sharing percentage for our broadcasters, resulting in departures of a large number of our broadcasters from our platforms. As a result, our revenue was adversely affected. Since then, we adjusted our revenue sharing fee policy to increase the sharing percentage for broadcasters. However, there is no guarantee that our current and future revenue sharing fee policy will keep our broadcasters satisfied over an extended period of time.

***We partner with various talent agencies to manage our broadcasters. If we are not able to maintain our relationship with talent agencies, our operations may be materially and adversely affected.***

We work with talent agencies to manage and organize broadcasters on our platforms. Cooperation with talent agencies increases our operational efficiency in terms of discovering, supporting, and managing broadcasters in a more organized and structured manner, and turning amateur broadcasters into full-time broadcasters. If we fail to maintain our relationship with many of the talent agencies we are currently working with, we may not be able to retain or attract broadcasters.

***Failure to effectively manage our growth and control our periodic spending to maintain such growth may materially and adversely affect our brand, and our business and results of operations may be materially and adversely affected.***

Our rapid growth has placed, and continues to place, a significant strain on our management and resources. We may need to establish and expand our capacities in all aspects of our business, such as operations, research and development, sales and marketing, and general administration, in order to meet the increasing needs from a rapidly evolving market. We cannot assure you that our current level of growth will be sustainable. We believe that our continued growth will depend on our ability to attract and retain viewers and top broadcasters, to develop an infrastructure to service and support an expanding body of viewers and broadcasters, to explore new monetization avenues, and to convert non-paying users to paying users and increase user engagement levels. We cannot assure you that we will be successful in any of the above.

We expect our costs and expenses to continue to increase in the future as we anticipate that we will need to continue to implement, from time to time, a variety of new and upgraded operational, informational and financial systems, procedures and controls on an as-needed basis, including the continued improvement of our accounting and other internal management systems. We will also need to expand, train, manage and motivate our workforce and manage our relationships with viewers, talent agencies, broadcasters, and other business partners. All of these endeavors involve risks and will require substantial management efforts and skills and significant additional expenditures. We expect to continue to invest in our infrastructure in order to provide our services rapidly and reliably to viewers and broadcasters. Continued growth could end up straining our ability to maintain reliable service levels for all of our viewers and broadcasters, to develop and improve our operational, financial, legal and management controls, and to enhance our reporting systems and procedures. Managing our growth will require significant expenditures and the allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as we grow, our business, results of operations, and financial condition could be harmed.

***We may fail to successfully implement our monetization strategies.***

Our streaming platforms are free to access, and we generate revenues primarily from live streaming and sales of virtual gifts. As a result, our revenue is affected by our ability to increase user engagement and convert non-paying users into paying users, which in turn depends on our ability to retain quality broadcasters, innovate attractive content, and offer virtual gifts and other services. If we are not successful in enhancing our ability to monetize our existing services or developing new approaches to monetization, we may not be able to maintain or increase our revenues and profits or recover any associated costs. We monitor market developments and may adjust our monetization strategies accordingly from time to time, which may result in decreases of our overall revenue or revenue contributions from some monetization channels. In addition, we may in the future introduce new services to diversify our revenue streams, including services with which we have little or no prior development or operating experience. If these new or enhanced services fail to engage customers or platform partners, we may fail to generate sufficient revenues to justify our investments, and our business and operating results and financial condition may suffer as a result.

***Our past growth may not be indicative of our future performance due to our limited operation history with a relatively new business model in a relatively new market.***

We commenced business operations in 2012 and has experienced growth in the number of active and paying users and total revenue from 2014 to 2022 (despite a decline in 2018 due to our lowering our revenue sharing percentage for our broadcasters). In the fiscal year ended December 31, 2024, our total revenues decreased by 7% compared to the fiscal year ended December 31, 2023, and our total revenues further decreased by 9% in the fiscal year ended December 31, 2025 compared to the fiscal year ended December 31, 2024, primarily caused by decrease of the number of paying users due to competitive landscape of China's mobile live streaming market. However, our past growth may not be indicative of our future performance, as the markets for our live streaming platforms and the related products and services are relatively new and rapidly developing. We must adapt ourselves to overcome challenges in a constantly evolving new market, especially in terms of converting non-paying users to paying users, maintaining a stable paying user base and attracting new paying users. Our business plan relies heavily upon an expanding user base and the resulting increased revenue from live streaming, as well as our ability to explore other monetization avenues. However, our past experience and performance would not guarantee any future success if we are not able to adapt rapidly to the evolving market.

As live streaming industry in China is relatively young, there are few proven methods of projecting user demand or available industry standards on which we can rely. Currently we derive our revenue primarily from sales of virtual gifts on our platforms. Although we intend to expand our monetization avenue, we cannot assure you that our efforts to monetize our viewers and broadcasters will continue to be successful, profitable or accepted, and therefore the income potential of our business is difficult to gauge.

Our growth prospects should be considered in light of the risks and uncertainties that fast-growing early-stage companies with limited operating histories in evolving industries may encounter, including, among others, risks and uncertainties regarding our ability to:

● develop new virtual gifts that are appealing to users;

● attract, retain, and cultivate quality broadcasters;

● maintain stable relationships with talent agencies; and

● expand to new geographic markets with a suitable environment for the development of live-streaming business.

Addressing these risks and uncertainties will require significant capital expenditures and allocation of valuable management and employee resources. If we fail to successfully address any of the above risks and uncertainties, the size of our user base, our revenue and operating margin may decline.

***We mainly compete with other established entertainment live streaming platforms. If we are unable to compete effectively, our business and operating results may be materially and adversely affected.***

Since running a successful live streaming platform requires capital outlay and a large team of quality broadcasters who remain in short supply due to the fact that most have signed contracts with existing platforms, there are high entry barriers for the entertainment live streaming industry. As a result, our major competitors are streaming platforms with an established presence in the industry. We must compete with these established players for user traffic and quality broadcasters and the competition remains intense.

In order to remain competitive, we may be required to spend additional resources which may adversely affect our profitability. We believe that our ability to compete effectively depends upon many factors both within and beyond our control, including:

● the popularity, usefulness, ease of use, performance and reliability of our services compared to those of our competitors, and our research and development abilities compared to our competitors;

● our ability to timely respond to and adapt to industry trends, market development and users' preferences;

● our brand recognition in the market;

● changes mandated by legislation, regulations or government policies, some of which may have a disproportionate effect on us; and

● acquisitions or consolidation within the industry, which may result in more formidable competitors.

Furthermore, if we are involved in disputes with any of our competitors that result in negative publicity to us, such disputes, regardless of their veracity or outcome, may harm our reputation or brand image and in turn lead to reduced number of viewers and broadcasters. Our competitors may unilaterally decide to adopt a wide range of measures targeted at us, including recruiting our top broadcasters or use other means to degrade the reputation of our platforms. Any legal proceedings or measures we take in response to competition and disputes with our competitors may be expensive, time-consuming, and disruptive to our operations and divert our management's attention.

***If we fail to compete effectively against other entertainment medium, our results of operations and financial condition may be materially and adversely affected.***

Our users have a vast array of entertainment choices. Other forms of entertainment, such as traditional PC and console games, online video services, social media, as well as more traditional mediums such as television, movies, and sports events, are much more well-established in mature markets and may be perceived by users to offer greater variety, affordability, interactivity, and enjoyment. Our platforms compete against these other forms of entertainment for discretionary time and spending of our users. If we are unable to sustain sufficient interest of users in our platforms in comparison to other forms of entertainment, including new forms of entertainment that may emerge in the future, our business model may no longer be viable.

***We may fail to expand our business into overseas markets successfully.***

Our business objective includes expanding our business into overseas markets in Southeast Asia and the Middle East. In September 2023, we formed a subsidiary, Scienjoy Verse Tech Ltd ("Scienjoy Verse"), in Dubai and its wholly owned subsidiary Scienjoy Meta Technology LLC to provide a non-stop elegant metaverse lifestyle platform for users globally. In April, 2024, we formed a 51% owned subsidiary Scenovo Pte. Ltd. and its 70% owned subsidiary Techjoy Pte. Ltd. in Singapore, which are engaged in developing multi-channel network business in Singapore and other international markets. In April, 2025, we acquired 70% equity interest in Star Home Global Media FZ-LL ("Star Home"). Star Home is a Dubai-based multi-channel network ("MCN") company. In April, 2025, we formed a 51% owned subsidiary Fashionfly Limited, which is engaged in developing multi-channel network business. In October, 2025, we acquired 70% equity interest in SH Entertainment Co., Ltd. ("SH Entertainment"), SH Entertainment is a South Korea-based MCN company. As we continue to expand our international footprint, it will be increasingly susceptible to the risks associated with international operations. We have a limited operating history outside of China and the ability to manage our international operations successfully requires significant resources and management attention and is subject to particular challenges of supporting a rapidly growing business in an environment of diverse cultures, languages, customs, legal systems, alternative dispute systems and economic, political and regulatory systems. In addition, we expect to incur significant costs associated with expanding our international operations, including hiring personnel internationally. The risks and challenges associated with doing business internationally and our international expansion include:

● uncertain political and economic climates;

● lack of familiarity and burdens of complying with foreign laws, accounting and legal standards, regulatory requirements, tariffs and other barriers;

● unexpected changes in regulatory requirements, taxes, tariffs, export quotas, custom duties or other trade restrictions;

● lack of experience in connection with the localization of our applications, including translation into foreign languages and adaptation for local practices, and associated expenses and regulatory requirements;

● difficulties in adapting to differing technology standards;

● difficulties in managing and staffing international operations, including differing legal and cultural expectations for employee relationships and increased travel, infrastructure and legal compliance costs associated with international operations;

● fluctuations in exchange rates that may increase the volatility of our foreign-based revenue and expenses;

● potentially adverse tax consequences, including the complexities of foreign value-added tax, goods and services tax and other transactional taxes;

● difficulties in managing and adapting to differing cultures and customs;

● data privacy laws which require that customer data be stored and processed in a designated territory subject to laws different than China;

● new and different sources of competition as well as laws and business practices favoring local competitors and local employees;

● increased financial accounting and reporting burdens and complexities; and

● restrictions on the repatriation of earnings.

***Our business depends on a strong brand, and any failure to maintain, protect, and enhance our brand would hurt our ability to retain or expand our user base, or our ability to increase their level of engagement.***

We operate six platforms under the brands "Showself" (秀色直播), "Lehai"(乐嗨) and "Haixiu" (嗨秀), BeeLive Chinese ("MiFeng" 蜜疯直播), BeeLive International and Hongle.tv("Hongle"红人直播). Our business and financial performance is highly dependent on the strength and the market perception of our brands and services. A well-recognized brand is critical to increasing our user base and, in turn, facilitating our efforts to monetize our services and enhancing our attractiveness to users. From time to time, we conduct marketing activities across various media to enhance our brand image and to guide public perception of our brands and services. In order to create and maintain brand awareness and brand loyalty, to influence public perception and to retain existing and attract new mobile users, customers and platform partners, we may need to substantially increase our marketing expenditures. Since we operate in a highly competitive market, brand maintenance and enhancement directly affect our ability to maintain our market position. In addition, we must exercise strict quality control of our platforms to ensure that our integrated brand image is not tarnished by substandard products or services. Any misuse of our platforms and any governmental adverse actions against our platforms may harm our brand and reputation.

We must also find ways to distinguish our platforms from those of our competitors. If for any reason we are unable to maintain and enhance our brand recognition, or if we incur excessive expenses in this effort, our business, results of operations, and prospects may be materially and adversely affected.

***If the SEC or a court were to determine, or if the staff of the SEC were to take a position, that the current, or any future, mix of our assets, where a majority of our assets are deemed as long term external equity investments, could cause us to be an "investment company" under the Investment Company Act of 1940, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, results of operations and financial condition.***

From time to time we have held, and as of December 31, 2025 and as of the date of the filing of this Annual Report we hold, assets consisting of significant amounts of investments in long term external equity investments. We hold these long term external equity investments for the sole purposes of future use in our operating businesses.

Section 3(a)(1) of the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"), defines "investment company," in relevant part, as an issuer which "(A) [i]s or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities . . " For the reasons noted below, we believe that we are not an investment company under either Section 3(a)(1)(A), because (i) we are not now engaged, do not propose to engage, and have never since our been engaged, either primarily or at all, in the business of "investing, reinvesting, or trading in securities". In addition, even if we were found to meet the definition of investment company under the provisions of Section 3(a)(1)(C), we believe that we are entitled to rely on the exclusion from investment company status afforded by Section 3(b)(1) of the Investment Company Act, for the reasons discussed below.

Notwithstanding that a majority of our assets are deemed as long-term external equity investments which are deemed securities for the purposes of Section 3(a)(1)(C) of the Investment Company Act, we believe the level of present assets we hold as of December 31, 2025 is not dipositive that we are an investment company. Rather, pursuant to case law which historically has examined the business and operations of the company as a whole, the Company is primarily engaged, through its subsidiaries and VIEs, in providing live streaming platforms and related infrastructure and operational services. Further, (i) as is evidenced by our periodic filings, press releases, and earnings release conference calls, we have never held ourselves out as, and do not propose to be, primarily engaged in, "the business of investing, reinvesting, or trading in securities;" (ii) our management is focused almost exclusively on the performance and growth of the businesses of our operating subsidiaries; and (iii) the Company's revenue was mostly from the sale of virtual items used in the Company's live streaming business which supports the conclusions that the Company should not be deemed as an investment company.

We believe that, even if we were found to be an investment company under the provisions of Section 3(a)(1)(C), we clearly are entitled to rely on the exclusion from investment company status afforded by Section 3(b)(1) of the Investment Company Act. Section 3(b)(1) provides, in relevant part, that, notwithstanding Section 3(a)(1)(C) of the Investment Company Act, an "issuer primarily engaged, directly or through . . . wholly-owned . . . subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities" is not an investment company. We are indeed engaged primarily, and solely, and have always since our founding, engaged, through our direct and indirect wholly-owned subsidiaries in businesses, including the businesses that are conducted through contracts between our direct and indirect wholly-owned subsidiaries and the consolidated VIEs, other than investing, reinvesting, or trading in securities (namely as a platform for livestreaming and the sale of virtual items in connection therewith).

Notwithstanding our view that we are not an investment company pursuant to Section 3(a)(1)(C) of the Investment Company Act and that, in any event, we fit clearly within the exclusion from the definition of "investment company" afforded by Section 3(b)(1) of the Investment Company Act, it is possible, in view of the fact that the availability of the exclusion from investment company status afforded by Section 3(b)(1) of the Investment Company Act is based in part on subjective judgments as to a given registrant's particular facts and circumstances, that the SEC, a court, or the SEC Staff would determine or take a position that we are indeed an investment company under the Investment Company Act. If anything were to happen which would cause the Company to be deemed to be an investment company under the Investment Company Act, we may lose our ability to raise money in the U.S. capital markets and from U.S. lenders, and additional restrictions under the Investment Company Act could apply to us, all of which could make it impractical for us to continue our business as currently conducted. This would materially and adversely affect the value of your Class A ordinary shares.

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***Our core values of focusing on user experience and user satisfaction first and acting for the long-term may conflict with the short-term operating results of our business.***

At this time, we are mainly focusing on user experience and satisfaction, which we believe is essential to our success and serves the best, long-term interests of our company and our shareholders. We may adopt strategies that we think will benefit our users, even if such strategies may negatively impact our operating results in the short-term. We believe that a high-quality user experience on our platforms helps us expand and maintain our current user base and create better monetizing potential in the long-term.

***If we fail to obtain or maintain the required licenses and approvals or if we fail to comply with laws and regulations applicable to our industry, our business, results of operations, and financial condition may be materially and adversely affected.***

In order to conduct and develop business in China, we have obtained the following valid licenses through our PRC variable interest entities: ICP License for provision of Internet information services, Internet Culture Operation License for online performance and music, entertainment and game product provision, Commercial Performance License for providing streamer agency services and License for producing radio and television program.

However, the Internet industry is highly regulated in China. Due to the uncertainties of interpretation and implementation of existing and future laws and regulations, the licenses we currently hold may be deemed insufficient by governmental authorities. In addition, as all licenses are subject to periodic renewal, even though we have successfully renewed such licenses in the past, there is no guarantee that we will be able to continue to do so in the future. These uncertainties may in the future restrain our ability to expand our business scope and may subject us to fines or other regulatory actions by relevant regulators if our practice is deemed as violating relevant laws and regulations. As we develop and expand our business scope, we may need to obtain additional qualifications, permits, approvals, or licenses. Moreover, we may be required to obtain additional licenses or approvals if the PRC government adopts more stringent policies or regulations for our industry. If we fail to obtain, hold, or maintain any of the required licenses or permits or fail to make the necessary filings on time or at all, we may be subject to various penalties, such as confiscation of the net revenues that have been generated through the deemed unlicensed activities, the imposition of fines, and the discontinuation or restriction of our operations. Any such penalties may disrupt our operations and materially and adversely affect our results of operations and financial condition.

***We may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users, or for proprietary information appropriated by former employees, which may materially and adversely affect our business, financial condition and prospects.***

Companies in the Internet, technology, and media industries are frequently involved in intellectual property infringement litigation. In China, the validity, enforceability, and scope of protection of intellectual property rights in Internet-related industries, especially in the evolving live streaming industry, are uncertain. We have been and may in the future be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to, recorded, stored or make accessible on our platforms, or otherwise distributed to our users, including in connection with the music, movies, video and games played, recorded or make accessible on our platforms during streaming. For example, we face, from time to time, allegations that we have featured pirated or illegally downloaded music and movies on our platforms, and that we have infringed on the trademarks and copyrights of third parties, including our competitors, or allegations that we are involved in unfair trade practices. As we face increasing competition and as litigation becomes a more common method for resolving commercial disputes in China, we face a higher risk of being the subject of intellectual property infringement claims or other legal proceedings.

We permit broadcasters to upload text and graphics to our platforms and permit our users to share them. Our platforms also permit broadcasters or users to choose their username and profile photo. Under relevant PRC laws and regulations, online service providers, which provide storage space for users to upload content or links to other services or content, could be held liable for copyright infringement under various circumstances, including situations where the online service provider knows or should reasonably have known that the relevant content uploaded or linked to on our platforms infringes upon the copyright of others and the online service provider failed to take necessary actions to prevent such infringement.

We have implemented internal control measures to ensure that the design of our platforms and the content that is streamed on our platforms does not infringe on valid intellectual properties, such as patents and copyrights held by third parties. We also license certain intellectual properties from third parties to implement certain functions available on our platforms.

Some of our employees were previously employed at other competing companies, including our current and potential competitors. To the extent that these employees are involved in the development of content or technology similar to ours at their former employers, we may become subject to claims that such employees or we may have appropriated proprietary information or intellectual properties of the former employers of our employees. If we fail to successfully defend such claims, our results of operations may be materially and adversely affected.

Defending claims is costly and can impose a significant burden on our management and employees, and there can be no assurances that favorable final outcomes will be obtained in all cases. Such claims, even if they do not result in liability, may harm our reputation. Any resulting liability or expenses, or changes required to our platforms to reduce the risk of future liability, may have a material adverse effect on our business, financial condition and prospects.

***Unauthorized use of our intellectual property and the expenses incurred in protecting our intellectual property rights may materially and adversely affect our business.***

We consider our copyrights, trademarks, and other intellectual properties to be critical to our success, and rely on a combination of trademark and copyright laws, trade secrets protection, restrictions on disclosure and other agreements that restrict the use of our intellectual property to protect these rights. Although we enter into confidentiality agreements and intellectual property ownership agreements with our employees, these confidentiality agreements could be breached and we might not have adequate remedies for any breach. As a result, our proprietary technology, know-how or other intellectual property could otherwise become known to third parties. In addition, third parties may independently discover trade secrets and proprietary information, limiting our ability to assert any trade secret rights against such parties.

The measures we use to protect our proprietary rights may not be adequate to prevent the infringement or misappropriation of our intellectual property. In addition, we cannot assure you that any of our trademark applications will ultimately proceed to registration or will result in registration with adequate scope for our business. Some of our pending applications or registrations may be successfully challenged or invalidated by others. If our trademark applications are not successful, we may have to use different marks for affected products or services, or seek to enter into arrangements with any third parties who may have prior registrations, applications, or rights, which might not be available on commercially reasonable terms, if at all.

Enforcement of intellectual property laws in China has historically been lacking, primarily because of ambiguities in the laws and difficulties in enforcement. Accordingly, intellectual property rights protection in China may not be as effective as in other jurisdictions with a more developed legal framework regulating intellectual property rights. Policing unauthorized use of our proprietary technology, trademarks, and other intellectual property is difficult and expensive, and litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business, as well as materially adversely affect our results of operations and financial condition.

***Some of our products and services contain open source software, which may pose a particular risk to our proprietary software, products, and services in a manner that negatively affects our business.***

We use open source software in some of our products and services and will continue to use open source software in the future. There is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally, we may face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we have developed using such software. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license, or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources, and we may not be able to complete it successfully.

Furthermore, because any software source code we contribute to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such software source code may be limited or lost entirely. As a result, we may be unable to prevent our competitors or others from using such software source code contributed by us.

***Our content monitoring system may not be effective in preventing misconduct by our users and misuse of our platforms.***

We operate entertainment live streaming platforms that provide real-time streaming and interactions. Because we do not have full control over how and what broadcasters or viewers will use our platforms to communicate, our platforms may be misused by individuals or groups of individuals to engage in immoral, disrespectful, fraudulent or illegal activities. We have implemented control procedures to detect and block illegal or inappropriate content and illegal or fraudulent activities conducted through the misuse of our platforms, but such procedures may not prevent all such content from being broadcasted or posted or activities from being carried out. Moreover, real time streaming renders it harder for us to filter illegal or inappropriate speeches, conduct, and behavior from our platforms prior to airing. As a result, we may face civil lawsuits or other actions initiated by the affected viewer, or governmental or regulatory actions against us. In response to allegations of illegal or inappropriate activities conducted through our platforms, PRC government authorities may intervene and hold us liable for non-compliance with PRC laws and regulations concerning the dissemination of information on the Internet and subject us to administrative penalties or other sanctions, such as requiring us to restrict or discontinue some of the features and services provided on our websites and mobile applications, or even revoke our licenses or permits to provide Internet content services. We endeavor to ensure all broadcasters are in compliance with relevant regulations, but we cannot guarantee that all broadcasters will comply with all PRC laws and regulations. Therefore, our live streaming service may be subject to investigations or subsequent penalties if content displayed on our platforms is deemed to be illegal or inappropriate under PRC laws and regulations.

As of the date of this annual report, our platform "Showself" (秀色直播) has, since our operation commencement in 2014, received 7 administrative penalties from Beijing Cultural Market Administrative Enforcement Department, all of which are minor penalties of fine, for the inappropriate conducts of broadcasters. The other two platforms of our, "Haixiu" (嗨秀秀场) and "Lehai" (乐嗨秀场), received 3 and 2 administrative penalties, respectively, from the same Department for the same reason. Beelive Chinese version ("Mifeng" 蜜疯直播) received 2 administrative penalties from Beijing Cultural Market Administrative Enforcement Department and 1 administrative penalty from Beijing Haidian Security Bureau. Hongle.tv ("Hongle" 红人直播) received 2 administrative penalties from Beijing Cultural Market Administrative Enforcement Department and 1 administrative penalty from Beijing Municipal Tax Bureau. All above mentioned defects have been timely remedied by the platforms and all remedial measures have been reported to the Department for its review and approval.

***We may be held liable for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users if such content is deemed to violate any PRC laws or regulations, and PRC authorities may impose legal sanctions on us.***

Our users are able to exchange information, generate content and engage in various other online activities on our live streaming platforms. We require our broadcasters and users to agree to our terms of use upon account registration. The terms of use set out types of content strictly prohibited on our platforms. However, signing the terms of use does not guarantee the broadcasters and users will comply with these terms.

In addition, because a majority of the video and audio communications on our platforms is conducted in real time, the content generated by our broadcasters and users on air cannot be filtered before they are streamed on our platforms. Therefore, users may engage in illegal conversations or activities, including the publishing of inappropriate or illegal content on our platforms that may be unlawful under PRC laws and regulations.

Although we have also developed a robust content monitoring system and use our best efforts to monitor content on our platforms, we cannot detect every incident of inappropriate content on our platforms due to the immense quantity of user-generated content. As such, government authorities may hold us liable for inappropriate or illegal content on our platforms and may subject us to fines or other disciplinary actions, including in serious cases suspension or revocation of the licenses necessary to operate our platforms, if we are deemed to have facilitated the appearance of inappropriate content placed by third parties on our platforms under PRC laws and regulations.

Application stores may temporarily take down our applications if the content was deemed to violate relevant PRC laws or regulations.

Meanwhile, we may face claims for defamation, libel, negligence, copyright, patent or trademark infringement, other unlawful activities or other theories and claims based on the nature and content of the information delivered on or otherwise accessed through our platforms. Defending any such actions could be costly and require significant time and attention of the management and other resources, which would materially and adversely affect our business.

***Our success depends in part on our relationship with and the performance of our independent third-party distributors. Any disruption to the operations of these relationships could cause material adverse impact on our business operation and financial performance.***

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Our success depends in part on the uninterrupted and reliable cooperation between the Company and our independent third-party distributors. We use independent third-party distributors to sell virtual currency through annual distribution agreements with these distributors. Third-party distributors purchase virtual currency from the Company with no refund provision according to the annual distribution agreements, and they are responsible for selling the virtual currency to end users. The third-party distributors may engage their own sales representatives, which are referred to as "sales agents" to directly sell to individual end users. The Company has no control over such "sales agents". The Company has discretion to determine the price of the virtual currency sold to its third-party distributors, but has no discretion as to the price at which virtual currency is sold by its third-party distributors to the sales agents. Three independent third-party distributors accounted for 30.3%, 24.8% and 12.1% of the Company's accounts receivable as of December 31, 2023, respectively. Four independent third-party distributors accounted for 33.2%, 26.5%, 18.3% and 10.3% of the Company's accounts receivable as of December 31, 2024, respectively. Three unrelated distributors accounted for 42.5%, 25.5% and 19.0% of the Company's accounts receivable as of December 31, 2025, respectively. As a result, our business is dependent on the performance of our distributors. Should any of these distributors decide not to renew their distribution agreements with us or fail to perform their obligations under their distribution agreements with us, our operation and financial performance could be materially adverse affected.

In addition, our dependence on our relationship with our third-party distributors may be affected by changes in governmental policies, taxation, rising inflation or interest rates, social instability, geopolitical conflicts and tensions, and diplomatic and social developments which are outside of our control. The occurrence of such events may have a material adverse impact on our business operation and financial performance.

***The complexity, uncertainties, and changes in PRC regulation of the Internet industry and companies may materially and adversely affect our business and financial condition.***

The Internet industry is highly regulated in China, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the Internet industry. These Internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, sometimes it may be difficult to evaluate the legal risks involved in certain actions or omissions. Issues, risks, and uncertainties relating to PRC regulation of the Internet business include, but are not limited to, the following:

● There are uncertainties relating to the regulation of the Internet business in China, including evolving licensing practices and the requirement for real-name registrations. Permits, licenses, or operations at some of our subsidiaries and PRC variable interest entity levels may be subject to challenge. We may not be able to timely obtain or maintain all the required licenses or approvals, permits, or to complete filing, registration or other formalities necessary for our present or future operations, and we may not be able to renew certain permits or licenses or renew certain filing or registration or other formalities. In addition, although we are not currently required by PRC law to ask all users for their real name and personal information when they register for a user account, PRC regulators could require us to implement compulsory real-name registration for all users on our platforms in the future. In late 2011, for example, the Beijing municipal government required micro bloggers in China to implement real-name registration for all of their registered users. If we are required to implement real-name registration for users on our platforms, we may lose a large number of registered user accounts for various reasons, including, for example, because users may not be able to maintain multiple accounts and some users may dislike giving out their private information.

● New regulatory agencies may be established under the evolving PRC regulatory system for the Internet industry. Such new agencies may issue new policies or new interpretations of existing laws and regulations. We are unable to determine what policies may be issued by any such new agencies in the future or how existing laws, regulations, and policies will be interpreted by such new agencies.

● New laws, regulations or policies may be promulgated or announced that will regulate Internet activities, including online video and online advertising businesses. If these new laws, regulations, or policies are promulgated, additional licenses may be required for our operations.

● The interpretation and application of existing PRC laws, regulations, and policies and possible new laws, regulations, or policies relating to the Internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, Internet businesses in China. There are also risks that we may be found to violate the existing or future laws and regulations given the uncertainty and complexity of China's regulation of Internet business.

***Increases in the costs of content on our platforms may have an adverse effect on our business, results of operations, and financial condition.***

To maintain and increase user base and user paying ratio, we must continue offering attractive and engaging content on our platforms. We provide such content mainly through our broadcasters. In order to attract and retain top broadcasters, we need to have an attractive revenue sharing policy and provide marketing resources to support them. If competitor platforms offer higher compensation, our costs to retain our broadcasters may increase. As our business and user base further expand, we also need to continue updating and producing content and activities to meet the more diversified interest of a larger user group. We also need to innovate the content on our platforms to capture and follow the market trends, resulting in higher costs of the contents on our platforms. If we are not able to continue to retain our broadcasters and produce high quality content on our platforms at commercially acceptable costs, our business, financial condition, and results of operations would be adversely impacted.

***Our failure to anticipate or successfully implement new technologies could render our proprietary technologies or platforms unattractive or obsolete, and reduce our revenues and market share.***

Our technological capabilities and infrastructure underlying our live streaming platforms are critical to our success. The Internet industry is subject to rapid technological changes and innovation. We need to anticipate the emergence of new technologies and assess their market acceptance. We also need to invest significant resources, including financial resources, in research and development to keep pace with technological advances in order to make our development capabilities, our platforms and our services competitive in the market. However, development activities are inherently uncertain, and we might encounter practical difficulties in commercializing our development results. Our significant expenditures on research and development may not generate corresponding benefits. Given the fast pace with which the Internet technology has been and will continue to be developed, we may not be able to timely upgrade our streaming technology, our engines or the software framework for our platforms' development in an efficient and cost-effective manner, or at all. New technologies in programming or operations could render our technologies, our platforms or products or services that we are developing or expect to develop in the future obsolete or unattractive, thereby limiting our ability to recover related product development costs, outsourcing costs and licensing fees, which could result in a decline in our revenues and market share.

***The proper functioning of our platforms is essential to our business. Any disruption to our IT systems could materially affect our ability to maintain the satisfactory performance of our platforms.***

Disruptive and malfunctioned platforms will drive away frustrated users of ours and reduce our user base. Smooth and proper functioning of our platforms relies on our IT systems. However, our technology or infrastructure may not function properly at all times. Any system interruptions caused by telecommunications failures, computer viruses, hacking or other attempts to harm our systems could result in the unavailability or slowdown of our platforms and limit the attractiveness of content provided on our platforms. Our servers may also be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to system interruptions, website or mobile app slowdown or unavailability or loss of data. Any of such occurrences could cause severe disruption to our daily operations. As a result, our business and results of operations may be materially and adversely affected and our market share could decline.

***Any compromise to the cyber security of our platforms could materially and adversely affect our business, reputation, and results of operations.***

On November 7, 2016, the Standing Committee of the National People's Congress released the PRC Cyber Security Law, which took effect on June 1, 2017. The PRC Cyber Security Law requires network operators to fulfill certain obligations to safeguard security in the cyberspace and enhance network information management.

Our products and services are generally provided through the Internet and involve the storage and transmission of users' information. Any security breach would expose us to a risk of loss of information and result in litigation and potential liability. As the techniques used to obtain unauthorized access, disable or degrade Internet services or sabotage operating systems change frequently and often are not recognized until launched against a target, we may not be able to anticipate such techniques or implement adequate preventative measures. Upon a security breach, our technical team will be notified immediately and coordinate with the local support staff to diagnose and solve the technical problems. As of the date of this annual report, we have not experienced any material incidents of security breach.

Despite the security measures we have implemented, our facilities, systems, procedures, and those of our third-party providers, may be vulnerable to security breaches, act of vandalism, software viruses, misplaced or lost data, programming or human errors or other similar events which may disrupt our delivery of services or expose the confidential information of our users and others. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, and we may lose current and potential users and be exposed to legal and financial risks, including legal claims, regulatory fines and penalties, which in turn could adversely affect our business, reputation, and results of operations.

***Concerns about the collection, use, and disclosure of personal data and other privacy-related and security matters could deter customers and users from using our services and adversely affect our reputation and business.***

Concerns about our practices with regard to the collection, use, or disclosure of personal information or other privacy-related and security matters, even if unfounded, could damage our reputation and operations. The PRC Constitution, the PRC Criminal Law, the General Principles of the PRC Civil Law and the PRC Cyber Security Law protect individual privacy in general, which require certain authorization or consent from Internet users prior to collection, use, or disclosure of their personal data and also protection of the security of the personal data of such users. In particular, Amendment 7 to the PRC Criminal Law prohibits institutions, companies, and their employees in the telecommunications and other industries from selling or otherwise illegally disclosing a citizen's personal information obtained during the course of performing duties or providing services. Our internal policy requires our employees to protect the personal data of our users, and employees who violate such policy are subject to disciplinary actions, including dismissal. While we strive to comply with all applicable data protection laws and regulations, as well as our own privacy policies, any failure or perceived failure to comply may result in proceedings or actions against us by government entities or private individuals, which could have an adverse effect on our business. Moreover, failure or perceived failure to comply with applicable laws and regulations related to the collection, use, or sharing of personal information or other privacy-related and security matters could result in a loss of confidence in us by customers and users, which could adversely affect our business, results of operations and financial condition.

***Our operations depend on the performance of the Internet infrastructure and fixed telecommunications networks in China, which may experience unexpected system failure, interruption, inadequacy, or security breaches.***

Almost all access to the Internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology, or the MIIT. Moreover, we primarily rely on a limited number of telecommunication service providers to provide us with data communications capacity through local telecommunications lines and Internet data centers to host our servers. We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China's Internet infrastructure or the fixed telecommunications networks provided by telecommunication service providers. Web traffic in China has experienced significant growth during the past few years. Effective bandwidth and server storage at Internet data centers in large cities such as Beijing are scarce. With the expansion of our business, we may be required to upgrade our technology and infrastructure to keep up with the increasing traffic on our platforms. We cannot assure you that the Internet infrastructure and the fixed telecommunications networks in China can support the demands associated with the continued growth in Internet usage. If we cannot increase our capacity to deliver our online services, we may not be able to satisfy the increases in traffic we anticipate from our expanding user base, and the adoption of our services may be hindered, which could adversely impact our business and profitability.

In addition, we have no control over the costs of the services provided by telecommunication service providers. If the prices we pay for telecommunications and Internet services rise significantly, our results of operations may be materially and adversely affected. Furthermore, if Internet access fees or other charges to Internet users increase, some users may be prevented from accessing the mobile Internet and thus cause the growth of mobile Internet users to decelerate. Such deceleration may adversely affect our ability to continue to expand our user base.

***We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in adverse publicity and a slowdown in the growth of our users, which could materially and adversely affect our business, results of operations, and financial condition.***

Our business depends upon services and software provided by third parties. For example, our user data is encrypted and saved on the storage cloud provided by a third-party cloud services company. We are relying on the security measures of such third party cloud services company for data protection, and our disaster recovery system to minimize the possibility of data loss or breach ability. If such third-party cloud services company has a system disruption and is not able to recover quickly, our business and operations may be adversely affected.

Our overall network relies on broadband connections provided by third-party operators and we expect this dependence on third parties to continue. The networks maintained and services provided by such third parties are vulnerable to damage or interruption, which could impact our results of operations. See "-Our operations depend on the performance of the Internet infrastructure and fixed telecommunications networks in China, which may experience unexpected system failure, interruption, inadequacy or security breaches."

We also sell a significant portion of our products and services through third-party online payment systems. If any of these third-party online payment systems suffers security breaches, users may lose confidence in such payment systems and refrain from purchasing our virtual gifts online, in which case our results of operations would be negatively impacted.

We exercise no control over the third parties with whom we have business arrangements. For some of services and technologies such as online payment systems, we rely on a limited number of third-party providers with limited access to alternative networks or services in the event of disruptions, failures, or other problems. If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements, or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, results of operations, and financial condition.

***User growth and engagement depend upon effective interoperation with operating systems, networks, mobile devices, and standards that we do not control.***

We offer access to our platforms across a variety of PC and mobile operating systems and devices. We are dependent on the interoperability of our services with popular mobile devices and mobile operating systems that we do not control, such as Windows, Android, and iOS. Any such operating systems or devices that decide to degrade the functionality of our services or give preferential treatment to competitive services could adversely affect usage of our services. In order to deliver high quality services, it is important that our services work well across a range of mobile operating systems, networks, mobile devices, and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing services that operate effectively with these operating systems, networks, devices and standards. Any difficulties for users and broadcasters in accessing and using our platforms would harm our user growth and user engagement and in turn would adversely affect our results of operations and financial condition.

***We rely on our mobile application and PC application to provide services to our users and broadcasters which, if inaccessible, may have material adverse impact on our business and results of operations.***

We rely on third-party mobile application and PC application distribution channels such as Apple's App Store, various Android application stores, and websites to distribute our applications to users and broadcasters. We expect a substantial number of downloads of our mobile applications and PC applications will continue to be derived from these distribution channels. The promotion, distribution, and operation of our applications are subject to such distribution platforms' standard terms and policies for application developers, and such distribution channels have discretion to determine whether we comply with their terms and policies. If any of such distribution channels determines to take down our applications or terminate the relationship with us, our business, results of operations, and financial condition may be materially and adversely affected.

***Continuing efforts of our executive officers, key employees, and qualified personnel are essential to our business and the loss of their services may adversely and negatively impact our business and results of operations.***

Our future success depends substantially on the continued efforts of our executive officers and key employees. If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all. Since the live streaming industry is characterized by high demand and intense competition for talent, we cannot assure you that we will be able to attract or retain qualified staffs or other highly skilled employees. In addition, as we are relatively in an early growth stage, our ability to train and integrate new employees into our operations may not meet the growing demands of our business, which may materially and adversely affect our ability to grow our business and hence our results of operations.

If any of our executive officers or key employees joins a competitor or forms a competing company, we may lose users, know-how and key professionals and staff members. Each of our executive officers and key employees has entered into an employment agreement and a non-compete agreement with us. However, certain provisions under the non-compete agreement may be deemed invalid or unenforceable under PRC law. If any dispute arises between our executive officers and key employees and us, we cannot assure you that we would be able to enforce these non-compete agreements in China, where these executive officers reside, in light of uncertainties with China's legal system.

***We are subject to risks relating to litigation.***

We have been involved in and may be subject to litigation and claims of various types, including litigation alleging infringement of intellectual property rights and unfair competition, claims and disputes involving broadcasters, customers, our employees and suppliers. Litigation is expensive, subjects us to the risk of significant damages, requires significant management time and attention and could have a material and adverse effect on our business, results of operations, and financial condition.

***We may be the subject of allegations, harassing, or other detrimental conduct by third parties, which could harm our reputation and cause us to lose market share, users, and customers.***

We have been subject to allegations by third parties, which included negative Internet postings and other adverse public exposure on our business, operations and staff compensation. We may also become the target of harassment or other detrimental conduct by third parties or disgruntled former or current employees. Such conduct may include complaints, anonymous or otherwise, to regulatory agencies, media or other organizations. We may be subject to government or regulatory investigation or other proceedings as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time or at a commercially reasonable cost, or at all. Additionally, allegations, directly or indirectly against us, may be posted on the Internet, including social media platforms by anyone, whether or not related to us, on an anonymous basis. Any negative publicity on us or our management can be quickly and widely disseminated. Social media platforms and devices immediately publish the content of their subscribers and participants post, often without filters or checks on the accuracy of the content posted. Information posted may be inaccurate and adverse to us, and it may harm our reputation, business or prospects. The harm may be immediate without affording us an opportunity for redress or correction. Our reputation may be negatively affected as a result of the public dissemination of negative and potentially false information about our business and operations, which in turn may cause us to lose market share, users or customers.

***The appointed Temporary Receiver of Link Motion Inc. (f/k/a NQ Mobile Inc.) may bring an action to restore Link Motion Inc.'s senior position in the Showself businesses, which may result in claims against us.***

On December 13, 2018, a shareholder plaintiff filed a derivative lawsuit on behalf of, and against Link Motion Inc. ("LKM") and three individual defendants, including the chairman of the board of directors of LKM, in the United States District Court for Southern District of New York. In this lawsuit, the shareholder plaintiff alleged certain wrongdoing by the individual defendants in connection with the sales of LKM's corporation assets, including the sale of a 65% equity interest in the Showself businesses (currently is conducted via Zhihui Qiyuan) to Tongfang Investment Fund Series SPC ("TF") pursuant to a share purchase agreement dated as of March 30, 2017. On February 1, 2019, the court issued a Preliminary Injunction Order which preliminarily enjoins the defendants to take corrective action as necessary to restore LKM's senior position in the underlying assets of the Showself businesses and appointed a temporary receiver for LKM during the pendency of this action. The temporary receiver has certain statutory powers and specified delineated powers, including but not limited to, commence, continue and/or control any action on behalf of LKM in the U.S., the PRC, or elsewhere. It is possible that we could be sued in connection with these ongoing proceedings, which could be costly to defend, and a judgment against us could result in significant damages. As of the date of this annual report and to our knowledge, the temporary receiver has yet brought any claims in any jurisdiction to restore LKM's 65% equity interest in the Showself businesses. However, we cannot guarantee that such claims will not be brought in the future.

***Negative publicity may materially and adversely affect our brand, reputation, business, and growth prospects.***

Negative publicity involving us, our broadcasters, our users, our management, our live streaming platforms, or our business model may materially and adversely harm our brand and our business. We cannot assure you that we will be able to defuse negative publicity about us, our management and/or our services to the satisfaction of our investors, users and broadcasters, customers and platform partners. There has been negative publicity about us and the misuse of our services, which has adversely affected our brand, public image, and reputation. Such negative publicity, especially when it is directly addressed against us, may also require us to engage in defensive media campaigns. This may cause us to increase our marketing expenses and divert our management's attention and may adversely impact our business and results of operations.

***The ongoing military conflict involving the United States, Israel, and Iran may negatively impact the Gulf states and affect our subsidiary operating in Dubai, UAE. These factors could have a material adverse effect on our overseas expansion and Middle Eastern business segments, thereby affecting our results of operations and financial condition.***

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On February 28, 2026, the geopolitical situation escalated severely when the United States and Israel launched "Operation Epic Fury," a massive joint military campaign against Iran. This escalation has resulted in direct retaliatory strikes by Iran against Israel and neighboring Gulf states. As we operate in Dubai through our subsidiary Star Home, a MCN company, the large-scale missile and drone warfare in early 2026 has significantly increased the physical danger to our employees there. Iranian retaliatory strikes have reached certain areas in downtown Dubai. As such, our employees face ongoing trauma and potential injury. It is possible that any injury or loss of personnel may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows.

Furthermore, it is currently not possible to predict the future of conflicts between the United States, Iran, Israel or other regional terrorist groups or their effects on our business, operations and financial conditions. The heightened geopolitical tension and the resulting macroeconomic uncertainty within the Gulf region may lead to a shift in consumer behavior. Such instability often results in a decrease in discretionary spending on mobile entertainment and interactive social platforms. We may experience slower user acquisition, diminished user engagement levels, and a potential decline in Virtual Gifting revenue and Average Revenue Per User (ARPU) within our localized apps. If the conflict persists, the diversion of consumer attention toward crisis-related information could further reduce the time spent on our entertainment platforms. In addition, our regional operations depend on the continuous availability of third-party payment processing services, mobile billing aggregators, and stable banking relationships in the Middle East. The conflict has heightened the risk of disruptions to local financial infrastructures and international clearing systems (such as SWIFT). Any suspension of payment services, increased transaction fees, or delays in the settlement of funds from users in the UAE and surrounding markets could severely impact our cash flow and liquidity. Any occurrence of the foregoing factors could have a material adverse effect on our overseas expansion and Middle Eastern business segments, thereby affecting our results of operations and financial condition.

***Contractual disputes with our talent agencies may harm our reputation, and may be costly or time-consuming to resolve.***

We enter into contractual arrangements with talent agencies. Pursuant to these contracts, talent agencies are responsible for recruiting and training broadcasters and providing content for our platforms. We share with the talent agencies a certain percentage of the revenue generated by the broadcasters they manage. Talent agencies will in turn enter into compensation arrangement with the broadcasters they manage. From time to time, there may be contractual disputes between broadcasters and talent agencies, and/or between talent agencies and us. Any such disputes may not only be costly and time-consuming to solve, but may also be detrimental to the quality of the content produced by the broadcasters, or even causing broadcasters to leave our platforms.

We enter into exclusivity agreements with certain of our top broadcasters, pursuant to which such top broadcasters agree not to work for other live streaming platforms in exchange for additional support and resources from us. Although these top broadcasters are required to pay a certain amount of fees if they breach the exclusivity agreements, we cannot guarantee that such exclusivity agreements will be an effective measure to deter these top broadcasters from leaving our platforms.

***Key performance metrics used by us, such as QAUs, paying users, ARPPU and paying ratio, may overstate the number of our active and paying users, which may lead to an inaccurate interpretation of our revenue metrics and our business operations by our management and by investors, and may even misleadingly affect management's business judgment of our operations.***

If the tracked growth in the number of our registered users, active users, and paying users is higher than the actual growth in the number of individuals registered, active, or paying users, our user engagement level, sales, and business may not grow as quickly as we expect. In addition, such overstatement may cause inaccurate evaluation of our operations by our management and by investors, which may also materially and adversely affect our business and results of operations.

***The security of operations of, and fees charged by, third-party online payment platforms may have a material adverse effect on our business and results of operations.***

Currently, we use third-party online payment platforms, such as China UnionPay, WeChat Pay, Alipay and TikTok pay, to receive a large part of the cash proceeds from sales of our products and services through direct purchases on our platforms. Any scheduled or unscheduled interruption in the ability of our users to use these and other online payment platforms could adversely affect our payment collection, and in turn, our revenue. In addition, in online payment transactions, secure transmission of user information, such as debit and credit card numbers and expiration dates, personal information and billing addresses, over public networks, is essential to user privacy protection and maintaining their confidence in our platforms.

We do not have control over the security measures of our third-party payment platforms, and their security measures may not be adequate at present or may not be adequate with the expected increased usage of online payment platforms. We could be exposed to litigation and possible liability if online transaction safety of our users is compromised in transactions involving payments for our products and services, which could harm our reputation and our ability to attract users and may materially adversely affect our business. We also rely on the stability of such payment transmissions to ensure the continued payment services provided to our users. If any of these third-party online payment platforms fails to process or ensure the security of users' payments for any reason, our reputation will be damaged and we may lose our paying users and discourage the potential purchases, which in turn, will materially and adversely affect our business, financial condition, and prospects.

***Our users may suffer third-party fraud when purchasing our virtual currency and we may suffer fraud when selling virtual currency to users.***

We offer our users multiple options to purchase our virtual currency. Users can purchase these virtual currencies directly on web streaming portal, or make in-app purchases using third-party payment channels including China Union Pay, WeChat pay, Alipay and Apple's App Store. Users can also purchase virtual currencies through third-party sales agencies officially authorized by us. Other than the above-mentioned purchase channels, there are no other means to purchase our virtual currency. However, from time to time, certain third parties fraudulently claim that they are sales agencies authorized by us and users can purchase our virtual currency through them. If our users choose to purchase our virtual currency from such unauthorized third parties, they may suffer losses from such fraudulent activities by third parties. Although we are not directly responsible for the losses in such case, our user experience may be adversely affected and users may choose to leave our platforms as a result. Such fraudulent activities by third parties might also generate negative publicity, disputes, or even legal claims. The measures we take in response to such negative publicity, disputes, or legal claims may be expensive, time consuming, and disruptive to our operations and divert our management's attention.

Additionally, there is a risk that even our duly authorized third-party sales agencies may fail to deliver virtual currencies to users after users make payment. In this case, we are responsible to deliver such virtual currencies to users. We may in turn demand payment from the authorized third-party sale agencies but there is no guarantee that we may recover the full payment.

***Restrictions on virtual currency may adversely affect our revenues.***

Due to the relatively short history of virtual currencies in China, the regulatory framework governing the industry is still under development. On June 4, 2009, the Ministry of Culture and the Ministry of Commerce jointly issued Notice on the Strengthening of the Administration of Online Game Virtual Currency (the "Virtual Currency Notice"), which defines what a virtual currency is and requires that entities obtain the approval from the competent culture administrative department before issuing virtual currency and engaging in transactions using virtual currencies in connection with online games. The Virtual Currency Notice regulates that virtual currency may only be used to purchase services and products provided by the online service provider that issues the virtual currency, and also prohibit businesses that issue online game virtual currency from issuing virtual currency to game players through means other than purchases with legal currency, and from setting game features that involve the direct payment of cash or virtual currency by players for the chance to win virtual gifts or virtual currency based on random selection through a lucky draw, wager, or lottery. These restrictions on virtual currency may result in lower sales of online virtual currency.

Currently, the PRC government has not promulgated any specific rules, laws, or regulations to directly regulate virtual currencies as used in live streaming industry, except for the above-mentioned Virtual Currency Notice. Although the term "virtual currency" is widely used in live streaming industry, we believe that the "virtual currency" used in our live streaming communities does not fall into a "virtual currency" as defined under the Virtual Currency Notice, and we are not subject to any online game virtual currency laws or regulations for our live streaming business. We have obtained the approval from the competent culture administrative department for issuing a virtual currency for online games (which is set forth in the Internet Culture Operation Licenses that we have acquired). So far, we have not issued any virtual currency for online games as defined under the Virtual Currency Notice. However, due to the uncertainties of the interpretation and implementation of the law and regulation, we cannot assure you that the PRC regulatory authorities will not take a different view, in which case we may be required to obtain additional approvals or licenses or change our current business model and may be subject to fines or other penalties, which could adversely affect our business.

***Our results of operations are subject to quarterly fluctuations due to seasonality.***

We experience seasonality in our business, reflecting seasonal fluctuations in Internet usage. For example, the number of active users tends to be higher during the last quarter of the year while lower near Chinese New Year season. Furthermore, the number of paying users of our online live streaming platforms correlate with our marketing campaigns and promotional activities, which may coincide with popular western or Chinese festivals. As a result, comparing our operating results on a period-to-period basis may not be meaningful.

***We do not currently have business insurance to cover our main assets and business. Any uninsured occurrence of business disruption, litigation, or natural disaster could expose us to significant costs, which could have an adverse effect on our results of operations.***

We currently do not have any business liability or disruption insurance to cover our operations. Any uninsured occurrence of business disruption, litigation, or natural disaster, or significant damages to our uninsured equipment or facilities could disrupt our business operations, requiring us to incur substantial costs and divert our resources, which could have an adverse effect on our results of operations and financial condition.

***Failure to achieve and maintain effective internal and disclosure controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and share price.***

Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. Our management has performed an evaluation of the effectiveness of our disclosure 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 by Rule 13a-15(b) under the Exchange Act.

The requirements of Section 404 of the Sarbanes-Oxley Act are ongoing and also apply to future years. We expect that our internal control over financial reporting will continue to evolve as we continue in our efforts to transform our business. Although we are committed to continue to improve our internal control processes and we will continue to diligently and vigorously review our internal control over financial reporting in order to ensure compliance with the Section 404 requirements, any control system, regardless of how well designed, operated and evaluated, can provide only reasonable, not absolute, assurance that its objectives will be met. Therefore, we cannot be certain that in the future additional material weakness or significant deficiencies will not exist or otherwise be discovered. See "*Item 15-Controls and Procedures.*"

Additionally, since our public float was not over $75 million as of June 30, 2025, we are exempted from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 for the assessment of our internal control over financial reporting for the year ended December 31, 2025. If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A ordinary shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

***Our balance sheet includes a significant amount of goodwill and intangible assets. An impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and total assets***

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Our balance sheet includes a significant amount of goodwill and intangible assets. Goodwill and intangible assets, net, together accounted for approximately 45% of total assets on our balance sheet before impairment as of December 31, 2025. For the year ended December 31, 2025, the Company recorded a full impairment of RMB186.2 million (US$26.6 million) on goodwill and a full impairment of RMB398.8 million (US$57.0 million) on intangible assets.

The impairment of a significant portion of these assets would negatively affect our financial condition or results of operations. We regularly evaluate whether events and circumstances have occurred indicating that any portion of our intangible assets and goodwill may not be recoverable. When factors indicate that intangible assets and goodwill should be evaluated for possible impairment, we may be required to reduce the carrying value of these assets. We cannot currently estimate the timing and amount of any future reductions in carrying value.

In evaluating the potential for impairment of goodwill, we make assumptions regarding future operating performance, business trends, and market and economic conditions. Such analyses further require us to make judgmental assumptions about operating margins, growth rates, and other business metrics. There are inherent uncertainties related to these factors and to management's judgment in applying these factors to the assessment of goodwill recoverability. We could be required to evaluate the recoverability of goodwill prior to the annual assessment if we experience disruptions to the business, significant unexpected declines in operating results or divestitures of a significant component of our business.

***We have significant credit exposure to our virtual currency distributors, and negative trends in their businesses could cause us significant credit loss and negatively impact our cash flow and liquidity position.***

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We extend credit to our virtual currency distributors for a significant portion of our sales proceeds and they have a period, generally 90-180 days, to make payment.

We are subject to the risk that our distributors will not pay on time or at all. Our credit exposure risk may increase due to financial difficulties or liquidity or solvency issues experienced by our distributors, resulting in their inability to repay us.

The liquidity or solvency issues may increase as a result of regulatory and tax policy changes for the livestreaming industry, an economic downturn, increases in costs including due to inflation or higher interest rates, or a decrease in spending by end-users. If we are unable to collect payments in a timely manner from our distributors due to changes in financial or economic conditions, or for other reasons, we may write-off the amount due from the distributors. These defaults under our accounts receivable could negatively impact our financial performance and cash flow as well as liquidity position.

For the year ended December 31, 2025, we recorded a provision of credit loss on accounts receivable of approximately RMB127.3 million (US$18.2 million) due to significant delay in collection from certain distributors.

***We continue to grant share-based awards in the future, which may result in increased share-based compensation expenses and have an adverse effect on our future profit. Exercise of the options or restricted shares granted will increase the number of our shares in circulation, which may adversely affect the market price of our shares.***

We adopted an equity incentive plan on February 8, 2021, or the "**2021 Plan**", which was further amended by our board of directors on July 19, 2025, for the purpose of providing additional incentives to employees, directors and consultants and to promote the success of the Company's business. The maximum aggregate number of Class A ordinary shares we are authorized to issue pursuant to all awards under the 2021 Plan is 6,000,000 Class A ordinary shares, effective as of July 19, 2025 and would increase, commencing on January 1, 2026, and continuing annually on each anniversary thereof through and including January 1, 2035, equal to the lesser of (i) 3% of the Class A ordinary shares outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of Class A ordinary shares as determined by our board of directors or a committee appointed to administer the 2021 Plan.

As of the date of this annual report, total of 3,111,149 restricted share units have been granted under the 2021 Plan. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations. Furthermore, exercise of the awards granted under the 2021 Plan by our employees will increase the number of our shares in circulation, which may have an adverse impact on our share price.

***Non-compliance on the part of our employees or third parties involved in our business could adversely affect our business.***

Our compliance controls, policies, and procedures may not protect us from acts committed by our employees, agents, contractors, or collaborators that violate the laws or regulations of the jurisdictions in which we operate, which may adversely affect our business.

In addition, our business partners or other third parties involved in our business through our business partners (such as contractors, talent agencies, or other third parties entered into business relationship with our third- party business partners) may be subject to regulatory penalties or punishments because of their regulatory compliance failures, which may, directly or indirectly, disrupt our business. When we enter into a business relationship with a third-party partner, we cannot be certain whether such third party business partner has infringed or will infringe any other third parties' legal rights or violate any regulatory requirements or rule out the likelihood of incurring any liabilities imposed on us due to any regulatory failures by such third party business partner. In addition, for those third parties actively involved in our business through our business partners, we cannot assure you that our business partners will be able to supervise and administrate those third parties. The legal liabilities and regulatory actions on our business partners or other third parties involved in our business may affect our business activities and reputation and in turn, our results of operations.

***We may not be able to ensure compliance with United States economic sanctions laws.***

The U.S. Department of the Treasury's Office of Foreign Assets Control, or OFAC, administers laws and regulations that generally prohibit U.S. persons and, in some instances, foreign entities owned or controlled by U.S. persons, from conducting activities or transacting business with certain countries, governments, entities or individuals that are targets of U.S. economic sanctions. We do not and will not use any of our funds for any activities or business with any country, government, entity, or individual in violation of U.S. economic sanctions.

While we believe that we have been, and that we continue to be, in compliance with applicable U.S. economic sanctions, our current safeguards may fail to prevent broadcasters and users located in countries that are targets of U.S. economic sanctions from accessing our platforms. Non-compliance with applicable U.S. economic sanctions could subject us to adverse media coverage, investigations, and severe administrative, civil and possibly criminal sanctions, expenses related to remedial measures, and legal expenses, which could materially adversely affect our business, results of operations, financial condition and reputation.

***Spammers and malicious software and applications may affect user experience, which could reduce our ability to attract users and materially and adversely affect our business, results of operations, and financial condition.***

Spammers may use our streaming platforms to send spam messages to users, which may affect user experience. As a result, users may reduce using our products and services or stop using them altogether. In spamming activities, spammers typically create multiple user accounts for the purpose of sending a high volume of repetitive messages. Although we attempt to identify and delete accounts created for spamming purposes, we may not be able to effectively eliminate all spam messages from our platforms in a timely fashion. Any spamming activities could have a material and adverse effect on our business, results of operations, and financial condition.

In addition, malicious software and applications may interrupt the operations of our websites, our PC clients or mobile apps and pass on such malware to our users which could adversely hinder user experience. Although we have been successfully blocking these attacks in the past, we cannot guarantee that this will always be the case, and in the incident if users experience a malware attack by using our platforms, users may associate the malware with our websites, our PC clients or mobile apps, and our reputation, business, and results of operations would be materially and adversely affected.

***Our leased property interests may be defective and our right to lease the properties affected by such defects may be challenged, which could adversely affect our business.***

Under PRC laws, all lease agreements are required to be registered with local housing authorities. We lease several premises in China. We cannot assure whether or not all landlords of these premises have registered the relevant lease agreements with the government authorities, or have completed registration of their ownership rights to the premises. Furthermore, we cannot assure that some of the premises do not have a defective title. We may be subject to monetary fines due to failure by the landlords to complete the required registrations.

We may also be forced to relocate our operations if the landlords do not obtain valid title to or complete the required registrations with local housing authorities in a timely manner or at all. We might not be able to locate desirable alternative sites for our operations in a timely and cost-effective manner which may adversely affect our business.

***Future strategic alliances or acquisitions may have a material and adverse effect on our business, reputation, and results of operations.***

We may enter into strategic alliances, including joint ventures or minority equity investments, with various third parties to further our business purpose from time to time. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.

In addition, when appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business. In addition to possible shareholders' approval, we may also have to complete filings and obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable PRC laws and regulations, including the filing with CSRC if we issue additional securities for the acquisitions, which could result in increased delay and costs, and may derail our business strategy if it fails to do so. Furthermore, past and future acquisitions and the subsequent integration of new assets and businesses into our own require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the expected financial results. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

**Risk Factors Relating to Our Corporate Structure**

***We conduct our business through the VIEs by means of contractual arrangements. PRC laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain*. *If the PRC courts or administrative authorities determine that these contractual arrangements do not comply with applicable regulations, we could be subject to severe penalties and our business could be adversely affected. In addition, changes in such PRC laws and regulations may materially and adversely affect our business.***

Current PRC laws and regulations place certain restrictions and conditions on foreign ownership of certain areas of businesses and accordingly to comply with PRC laws and regulations, we conduct such business activities through the VIEs in China. For more detailed discussions, see *"--Substantial uncertainties exist with respect to whether the foreign investor's controlling PRC onshore variable interest entities via contractual arrangements will be recognized as foreign investment and how it may impact the viability of our current corporate structure and operations."* 

WXBJ has entered into contractual arrangements with the Zhihui Qiyuan VIEs and their respective shareholders, and WXZJ has entered into contractual arrangements with the Sixiang Qiyuan VIEs and their respective shareholders. Such contractual arrangements enable us to exercise effective control over, receive substantially all of the economic benefits of, and have an exclusive option to purchase all or part of the equity interest and assets in the VIEs when and to the extent permitted by PRC law. We have evaluated the guidance in FASB ASC 810 and concluded that we are the primary beneficiary of the VIEs because of these contractual arrangements. Accordingly, under U.S. GAAP, the financial statements of the VIEs are consolidated as part of our financial statements.

However, Scienjoy Holding Corporation is a British Virgin Islands holding company with no equity ownership in the VIEs and we conduct our operations in China through (i) our PRC subsidiaries and (ii) the VIEs with which we have maintained contractual arrangements. Investors in our Class A Ordinary Shares thus are not purchasing equity interest in our consolidated affiliated entities in China but instead are purchasing equity interest in a British Virgin Islands holding company. If the PRC government deems that our contractual arrangements with the VIEs do 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 and the VIEs could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company in the British Virgin Islands, the VIEs, and investors of Scienjoy Holding Corporation face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs and our company as a group.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which has become effective as of March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC's official website. The Trial Measures, together with the Guidance Rules and Notice, impose related requirements for the overseas securities offering and listing by domestic enterprises. The Trial Measures grant the CSRC the authority to regulate the overseas offering and listing of PRC companies with VIE structures and allow filings by VIE-structured companies insofar as they comply with the relevant regulations. PRC companies that are already listed on overseas exchanges by or before March 31, 2023 are not required to make any filings with CSRC unless they raise additional equity financing, in which case CSRC may also consult with certain PRC governmental authorities that regulate the PRC companies' business operations, or ask the Company to obtain approvals or confirmation from such authorities in advance.

There still remain substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our and the VIEs' business, or the enforcement and performance of our contractual arrangements with the VIEs and their shareholders. These laws and regulations may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. Due to the uncertainty and complexity of the regulatory environment, we cannot assure you that we and the VIEs would always be in full compliance with applicable laws and regulations, the violation of which may have adverse effect on our and the VIEs' business and our reputation.

Although we believe we, our PRC subsidiaries and the VIEs are not in violation of current PRC laws and regulations, we cannot assure you that the PRC government would agree that our 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. If the PRC government determines that we or the VIEs do not comply with applicable law, it could revoke the VIEs' business and operating licenses, require the VIEs to discontinue or restrict the VIEs' operations, restrict the VIEs' right to collect revenues, block the VIEs' websites, require the VIEs to restructure our operations, impose additional conditions or requirements with which the VIEs may not be able to comply, impose restrictions on the VIEs' business operations or on their customers, or take other regulatory or enforcement actions against the VIEs that could be harmful to their business. Any of these or similar occurrences could significantly disrupt our or the VIEs' business operations or restrict the VIEs from conducting a substantial portion of their business operations, which could materially and adversely affect the VIEs' business, financial condition and results of operations. If any of these occurrences results in our inability to direct the activities of any of the VIEs that most significantly impact its economic performance, and/or our failure to receive the economic benefits from any of the VIEs, we may not be able to consolidate these entities in our consolidated financial statements in accordance with U.S. GAAP. In addition, our shares may decline in value or become worthless if we are unable to assert our contractual control rights over the assets of our PRC subsidiaries that conduct a significant part of our operations.

***Substantial uncertainties exist with respect to whether the foreign investor's controlling PRC onshore variable interest entities via contractual arrangements will be recognized as "foreign investment" and how it may impact the viability of our current corporate structure and operations.***

On March 15, 2019, the National People's Congress of the PRC adopted the PRC Foreign Investment Law, which took force on January 1, 2020, and replaced three existing laws regulating foreign investment in China, namely the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. The PRC Foreign Investment Law defines the "foreign investment" as the investment activities in China conducted directly or indirectly by foreign investors in the following manners: (i) the foreign investor, by itself or together with other investors establishes a foreign-invested enterprise in China; (ii) the foreign investor acquires shares, equities, asset tranches, or similar rights and interests of enterprises in China; (iii) the foreign investor, by itself or together with other investors, invests and establishes new projects in China; (iv) the foreign investor invests through other approaches as stipulated by laws, administrative regulations or otherwise regulated by the State Council. The PRC Foreign Investment Law keeps silent on how to define and regulate the "variable interest entities," while adding a catch-all clause that "other approaches as stipulated by laws, administrative regulations or otherwise regulated by the State Council" can fall into the concept of "foreign investment," which leaves uncertainty as to whether the foreign investor's controlling PRC onshore variable interest entities via contractual arrangements will be recognized as "foreign investment." Pursuant to the PRC Foreign Investment Law, PRC governmental authorities will regulate foreign investment by applying the principle of pre-entry national treatment together with a "negative list," which will be promulgated by or promulgated with approval by the State Council or its authorized governmental department such as Ministry of Commerce. Foreign investors are prohibited from making any investments in the industries which are listed as "prohibited" in such negative list; and, after satisfying certain additional requirements and conditions as set forth in the "negative list," are allowed to make investments in the industries which are listed as "restricted" in such negative list. For any foreign investor that fails to comply with the negative list, the competent authorities are entitled to ban its investment activities, require such investor to take measures to correct its non-compliance and impose other penalties.

The latest version of the "negative list," namely, the Special Management Measures (Negative List) for the Access of Foreign Investment (2021), which became effective on January 1, 2022, provides that foreign investment is prohibited in providing the Internet content service, Internet audio-visual program services and online culture activities that we conduct through our consolidated variable interest entities. These operations are subject to foreign investment restrictions/prohibitions set forth in the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2021) issued by the Ministry of Commerce.

The PRC Foreign Investment Law leaves leeway for future laws, administrative regulations or provisions of the State Council and its departments to provide for contractual arrangements as a form of foreign investment. It is therefore uncertain whether our corporate structure will be seen as violating foreign investment rules as we are currently using the contractual arrangements to operate certain businesses in which foreign investors are currently prohibited from or restricted to investing. Furthermore, if future laws, administrative regulations or provisions of the State Council and its departments mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. If we fail to take appropriate and timely measures to comply with any of these or similar regulatory compliance requirements, our current corporate structure, corporate governance and business operations could be materially and adversely affected.

***We depend upon the contractual arrangements in conducting our business in China, which may not be as effective as direct ownership in providing operational control.***

We are a holding company incorporated in the British Virgin Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through the VIEs in China. We entered into the VIE agreements with Zhihui Qiyuan VIEs on January 29, 2019 and entered into the VIE agreements with Sixiang Qiyuan VIEs on June 1, 2022. We generate most of our revenue from operations of the VIEs. Our shares (include Class A ordinary shares and Class A Preferred shares) are shares of our offshore holding company instead of shares of the VIEs or our PRC subsidiaries. we rely on contractual arrangements by and among WXBJ, the Zhihui Qiyuan VIEs and their shareholders and the contractual arrangements by and among WXZJ, the Sixiang Qiyuan VIEs and their shareholders for our business operations, and these contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs. We rely on the performance by the VIEs and their shareholders of their obligations under the contracts to receive substantially all of the economic benefits from the VIEs' operations and be the primary beneficiary of the VIEs for accounting purposes. The shareholders of the VIEs may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portion of our business through the contractual arrangements with the VIEs.

Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business. If the VIEs or their shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages. The legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability, as a British Virgin Islands holding company, to enforce these contractual arrangements and doing so may be quite costly, and these contractual arrangements have not been tested in a court of law.

The shareholders of the VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition. The shareholders of the VIEs may breach, or cause the VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIEs, which would have a material adverse effect on our ability to effectively control the VIEs and receive economic benefits from them. If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

***If the PRC government deems that the agreements that establish the structure for operating our businesses in China do not comply with PRC regulations on foreign investment in Internet and other related businesses, or if these regulations or their interpretation change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, and may need to reorganize our current corporate structure to comply with PRC laws and regulations. In addition, if SHC issues new securities for future financing, the Company shall disclose the whole corporate structure including VIEs to CSRC and may be inquired by CSRC about the background of such structure.***

PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in Internet and other related businesses (usually defined as "value-added telecommunication business" under relevant PRC authorities), including the provision of Internet content and online service operations, which fell under the catalogue of negative list published and updated by PRC Ministry of Commerce from time to time. Specifically, foreign ownership is prohibited in industries of online audio and video program services and Internet cultural business (excluding music), foreign ownership of an Internet content provider may not exceed 50%, and the major foreign investor is required to have a record of good performance and operating experience in managing value-added telecommunications business. We are a company registered in the British Virgin Islands and WXBJ and WXZJ (our indirect wholly-owned subsidiaries in China) are foreign-invested enterprises (or called "wholly foreign-owned enterprises", the "WFOEs") under PRC laws and regulations. To comply with PRC laws and regulations, we have to conduct our business in China mainly through WXBJ, WXZJ, Zhihui Qiyuan VIEs, and Sixiang Qiyuan VIEs and their respective subsidiaries, based on a series of contractual arrangements by and among WXBJ, Zhihui Qiyuan, and its registered shareholders and a series of contractual arrangements by and among WXZJ, Sixiang Qiyuan, and their respective subsidiaries. As a result of these contractual arrangements, we exert control over the VIEs (namely, Zhihui Qiyuan VIEs and Sixiang Qiyuan VIEs) and consolidate their financial results in our financial statements under U.S. GAAP. The VIEs (namely, Zhihui Qiyuan VIEs and Sixiang Qiyuan VIEs) hold the licenses, approvals, and key assets that are essential for our operations.

In the opinion of our PRC counsel, Beijing Feng Yu Law Firm (北京锋昱律师事务所) ("Feng Yu Law Firm"), based on its understanding of the relevant PRC laws and regulations, each of the contracts among WXBJ, Zhihui Qiyuan and its registered shareholders is valid, binding, and enforceable in accordance with its terms, each of the contracts among WXZJ, Sixiang Qiyuan and its registered shareholders is valid, binding, and enforceable in accordance with its terms. However, we have been further advised by our PRC counsel that there are substantial uncertainties regarding the interpretation and application of current or future relevant PRC laws and regulations. Thus, the PRC government may ultimately take a view contrary to the opinion of our PRC counsel. In addition, PRC government authorities may deem that foreign ownership is directly or indirectly involved in each of the VIEs' shareholding structure. If the WFOEs and its subsidiaries and the VIEs are found in violation of any PRC laws or regulations, or if the contractual arrangements among WXBJ, Zhihui Qiyuan and its registered shareholders or the contractual arrangements among WXZJ, Sixiang Qiyuan and its registered shareholders are determined as illegal or invalid by the PRC court, arbitral tribunal or regulatory authorities, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without limitation:

● revoking the business licenses and/or operating licenses of such entities;

● levying fines on our related PRC companies;

● confiscating any of our income that they deem to be obtained through illegal operations;

● discontinuing or placing restrictions or onerous conditions on our operations conducted by our related PRC companies;

● placing restrictions on our right to collect revenues;

● shutting down our servers or blocking our app/websites;

● requiring us to change our corporate structure and contractual arrangements;

● rejecting our future offerings in the public market;

● imposing additional conditions or requirements with which we may not be able to comply; or

● taking other regulatory or enforcement actions against us that could be harmful to our business.

The imposition of any of these penalties may result in a material and adverse effect on our ability to conduct our business operations and future financing. In addition, if the imposition of any of these penalties causes us to lose the rights to direct the activities of our consolidated affiliated entities or the right to receive their economic benefits, we would no longer be able to consolidate their financial results.

***We may lose the ability to use and enjoy assets held by the VIEs that are important to our business if the VIEs declare bankruptcy or become subject to a dissolution or liquidation proceeding.***

The VIEs hold certain assets that are important to our operations, including the ICP License, SP License, the Internet Culture Operation Permit, the Commercial Performance License, and Radio and Television Program Production and Operating Permit. Under our contractual arrangements, the shareholders of the VIEs may not voluntarily liquidate the VIEs or approve them to sell, transfer, mortgage, or dispose of their assets or legal or beneficial interests in the business in any manner without our prior consent. However, in the event that the shareholders breach this obligation and voluntarily liquidate the VIEs, or the VIEs declare bankruptcy, or all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, results of operations, and financial condition. Furthermore, if the VIEs undergo a voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of its assets, hindering our ability to operate our business, which could materially and adversely affect our business, financial condition, and results of operations.

***Contractual arrangements may be subject to scrutiny by the PRC tax authorities. A finding that we owe additional taxes could negatively affect our financial condition and the value of your investment.***

Pursuant to applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by PRC tax authorities. We may be subject to adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among WXBJ, Zhihui Qiyuan, and its registered shareholders or the contractual arrangements among WXZJ, Sixiang Qiyuan, and its registered shareholders are not on an arm's length basis and therefore constitute favorable transfer pricing. As a result, the PRC tax authorities could require that VIEs adjust their taxable income upward for PRC tax purposes. Such an adjustment could increase VIEs' tax expenses without reducing the tax expenses of WXBJ and/or WXZJ, subject the VIEs to late payment fees and other penalties for under-payment of taxes, and result in the loss of any preferential tax treatment WXBJ and/or WXZJ may have. As a result, our consolidated results of operations may be adversely affected.

***We may rely on dividends paid by our PRC subsidiaries to fund cash and financing requirements. Any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of our ordinary shares.***

We and our Hong Kong subsidiary are holding companies, and we may rely on dividends to be paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to the holders of the ordinary shares and pay back any debt it may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Under PRC laws and regulations, a wholly foreign-owned enterprise in China, such as WXBJ or WXZJ, may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, according to current effective PRC laws and regulations regarding foreign investment which may be updated following the effectiveness of PRC Foreign Investment Law, a wholly foreign-owned enterprise is required to set aside at least 10% of its after-tax profits each year, after making up previous years' accumulated losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital. At the discretion of the board of directors of the wholly foreign-owned enterprise, it may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

***If the custodians or authorized persons of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected.***

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiaries and the VIEs are generally held securely by the personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safe, are stolen, or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so. If any of our authorized personnel obtains, misuses, or misappropriates our chops for whatever reason, we could experience disruptions in our operations. We may also have to take corporate or legal action, which could require significant time and resources to resolve while distracting management from our operations. Any of the foregoing could adversely affect our business and results of operations.

**Risk Factors Relating to Doing Business in China**

***Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.***

The PRC legal system is based on written statutes where prior court decisions have limited value as precedents. Our PRC subsidiaries and the VIEs, in particular WXBJ and WXZJ, two wholly foreign-owned enterprises, are subject to laws and regulations applicable to foreign-invested enterprises as well as various Chinese laws and regulations generally applicable to companies incorporated in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations, and rules are not always uniform, and enforcement of these laws, regulations, and rules involves uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we may receive. Furthermore, the PRC legal system is based in part on government policies and internal rules that may have retroactive 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 and adversely affect our business and impede our ability to continue our operations.

***Regulation and censorship of information disseminated over the mobile and Internet in China may adversely affect our business and subject us to liability for streaming content or content posted on our platforms.***

Internet companies in China are subject to a variety of existing and new rules, regulations, policies, and license and permit requirements. In connection with enforcing these rules, regulations, policies, and requirements, relevant government authorities may suspend services by, or revoke licenses of, any Internet or mobile content service provider that is deemed to provide illicit content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online. For example, in 2016, the Office of the Anti-Pornography and Illegal Publications Working Group, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Culture and the Ministry of Public Security jointly launched a "Clean Up the Internet" campaign in 2016, 2021 and 2024. Based on publicly available information, these campaigns aim to eliminate pornographic information and content in the Internet information services industry by, among other things, holding liable individuals and corporate entities that facilitate the distribution of pornographic information and content. Publicly traded Chinese Internet companies voluntarily initiated self-investigations to filter and remove content from their websites and cloud servers.

We endeavor to eliminate illicit content from our platforms. We have made substantial investments in resources to monitor content that broadcasters generate on our platforms and the way in which our users engage with each other through our platforms. We use a variety of methods to ensure our platforms remain a healthy and positive experience for our users. Although we employ these methods to filter content posted on our platforms, we cannot be sure that our internal content control efforts will be sufficient to remove all content that may be viewed as indecent or otherwise non-compliant with PRC law and regulations. Government standards and interpretations as to what constitutes illicit online content or behavior are subject to interpretation and may change in a manner that could render our current monitoring efforts insufficient. The Chinese government has wide discretion in regulating online activities and, irrespective of our efforts to control the content on our platforms, government campaigns and other actions to reduce illicit content and activities could subject us to negative press or regulatory challenges and sanctions, including fines, suspension or revocation of our licenses to operate in China or a suspension or ban on our mobile or online platform, including suspension or closure of one or more parts of or our entire business. Further, our senior management could be held criminally liable if we are deemed to be profiting from illicit content on our platforms. Although our business and operations have not been materially and adversely affected by government campaigns or any other regulatory actions in the past, there is no assurance that our business and operations will be immune from government actions or sanctions in the future. If government actions or sanctions are brought against us, or if there are widespread rumors that government actions or sanctions have been brought against us, our reputation could be harmed and we may lose users and customers. As a result, our revenues and results of operations may be materially and adversely affected and the value of our Class A Ordinary Shares could be dramatically reduced.

***Adverse Changes in China's political, economic social conditions or government policies could have a material adverse effect on the overall economic growth of China, which could materially and adversely affect the growth of the business and operations of the VIES and our PRC subsidiaries.***

 

The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies.

The Chinese government also exercises significant control over China's economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect the future business and operating results and the competitive position of the VIEs and our PRC subsidiaries. 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 the VIEs and our PRC subsidiaries. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect the future business and operating results of the VIEs and our PRC subsidiaries.

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***The PRC government's significant oversight over our business operation could result in a material adverse change in the operations of the VIEs and our company as a whole and the value of our Class A ordinary shares.***

We conduct our business in China primarily through our PRC subsidiaries (including WFOEs) and the VIEs, which are subject to Chinese government's significant oversight and discretion. The Chinese government may intervene or influence the current and future operations of our PRC subsidiaries and the VIEs at any time, or may exert more control over offerings conducted overseas and/or foreign investment in issuers likes ourselves, which could result in a material change in our operations and the value of our securities.

In the event that the Chinese government exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, relevant Chinese regulatory authorities could disallow contractual arrangement under the VIE agreements and hinder our ability to exert contractual control over or consolidate the VIEs under US. GAAP. the VIEs, which would likely result in a material change in operations and/or value of the Company's securities, including that it could cause the value of such securities to significantly decline or become worthless.

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***Rules and regulations in China can change quickly with little or no advance notice and their interpretation and the implementation involve uncertainty, which could materially and adversely affect the operations of the VIEs and our company as a whole and the value of our securities.***

The PRC government may take a series of regulatory actions and statements to regulate business operations in China from time to time with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structures which has been implemented by CSRC, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On December 28, 2021, the Cyberspace Administration of China ("CAC") and certain other governmental authorities issued the Measures of Cybersecurity Review (effective as of February 15, 2022), requiring that cyberspace operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. Furthermore, on February 17, 2023, the CSRC issued Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (effective as of March 31, 2023), requiring the company that directly or indirectly go to public offering overseas shall make filing with the CSRC within three days after its completion of offering. These new laws and regulations can be complex and stringent, and many are subject to change and uncertain interpretation, which could result in claims, change to the data and other business practices of the VIEs and our company, regulatory investigations, penalties, increased cost of operations, or declines in user growth or engagement, or otherwise affect the business of the VIEs. As of the date of this annual report, we have not received any inquiry or notice or any objections to this annual report from CSRC, the CAC or any other PRC governmental authorities that have jurisdiction over our operations. However, given the current regulatory environment in China, there remains uncertainty regarding the interpretation and enforcement of the laws of China. Any future quick changes of the laws and rules with little or no advice notice and the uncertainty resulted therefrom could materially and adversely disrupt and affect the operation and future financing of our PRC subsidiaries, the VIEs and our company.

***Our shares may be delisted and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for two consecutive years. The delisting and the cessation of trading of our shares, or the threat of their being delisted and prohibited from being traded, may materially and adversely affect the value of your investment.***

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above.

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

On November 5, 2021, the SEC approved Rule 6100 adopted by the PCAOB to establish a framework for the PCAOB's determinations under the HFCA Act that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction.

On December 2, 2021, the SEC issued amendments to finalize the interim final rules previously adopted in March 2021 to implement the submission and disclosure requirements in the HFCA Act, which require us to identify in our annual report on Form 20-F, (1) the auditors that provided opinions to the financial statements presented in the annual report, (2) the location where the auditors' report was issued, and (3) the PCAOB ID number of the audit firm or branch that performed the audit work. If the SEC determines that we have three consecutive non-inspection years, the SEC will issue stop order to prohibit the trading of our shares.

On December 16, 2021, the PCAOB issued a Determination Report which reported that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People's Republic of China, because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region of the PRC, because of a position taken by one or more authorities in Hong Kong.

On August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People's Republic of China, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. The Statement of Protocol gives the PCAOB sole discretion to select the firms, audit engagements and potential violations it inspects and investigates and puts in place procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed. In addition, the Statement of Protocol grants the PCAOB direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates. While significant, the Statement of Protocol is only a first step. Uncertainties still exist as to whether and how this new Statement of Protocol will be implemented. The PCAOB is required to reassess its determinations by the end of 2022 and there are uncertainties whether the PCAOB will determine it is still unable to inspect or investigate completely registered public accounting firms in mainland China and Hong Kong.

On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.

On December 29, 2022, the Consolidated Appropriations Act, 2023 was signed into law, which, among other things, amended the HFCAA to reduce the number of consecutive years an issuer can be identified as a Commission-Identified Issuer before the Securities and Exchange Commission must impose an initial trading prohibition on the issuer's securities from three years to two years. Therefore, once an issuer is identified as a Commission-Identified Issuer for two consecutive years, the Securities and Exchange Commission is required under the HCFAA to prohibit the trading of the issuer's securities on a national securities exchange and in the over-the-counter market.

Our former auditor, Friedman LLP, as a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess their compliance with the applicable professional standards. Friedman LLP is headquartered in New York. We are not aware of any reasons to believe or conclude that Friedman LLP would not permit an inspection by the PCAOB or that it may not be subject to such inspection. However, given the recent developments, we cannot assure you whether PCAOB or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. Our shares could still be delisted and prohibited from being traded over-the-counter under the HFCA Act PCAOB determines in the future that it is unable to fully inspect or investigate our auditor which has a presence in China.

Our current auditor, OneStop Assurance PAC, as a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess their compliance with the applicable professional standards. OneStop Assurance PAC is headquartered in Singapore. We are not aware of any reasons to believe or conclude that OneStop Assurance PAC would not permit an inspection by the PCAOB or that it may not be subject to such inspection. However, given the recent developments, we cannot assure you whether PCAOB or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. Our shares could still be delisted and prohibited from being traded over-the-counter under the HFCA Act PCAOB determines in the future that it is unable to fully inspect or investigate our auditor which has a presence in China.

Furthermore, there is no guarantee that future audit reports will be prepared by auditors that are completely inspected by the PCAOB, and, as such, future investors may be deprived of such inspections, which could result in limitations or restrictions to SHC's access of the U.S. capital markets.

***The filing of the CSRC will be required and approval and/or other requirements from other PRC governmental authorities may be required in connection with an offering under PRC rules, regulations or policies, and, if required, we cannot predict whether or how soon we will be able to complete such filing or obtain such approval.***

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which has become effective as of March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC's official website. The Trial Measures, together with the Guidance Rules and Notice, impose related requirements for the overseas securities offering and listing by domestic enterprises. Under the Trial Measures and the Guidance Rules and Notice, domestic enterprises conducting overseas securities offering and listing, either directly or indirectly, shall complete filings with the CSRC pursuant to the Trial Measures' requirements within three working days following the submission of an application for initial public offering or listing. Starting from March 31, 2023, enterprises that have been listed overseas or satisfy all of the following conditions shall be deemed as "Grandfathered Issuers" and are not required to complete the overseas listing filing immediately, but shall complete filings as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC: (i) the application for indirect overseas offering or listing shall have been approved by the relevant overseas regulatory authority or stock exchange prior to March 31, 2023, (ii) the enterprise is not required to reapply for the approval of the relevant overseas regulatory authority or stock exchange, and (iii) such overseas securities offering or listing shall be completed before September 30, 2023. Starting from March 31, 2023, domestic enterprises that have submitted valid applications for overseas offerings and listing but have not obtained the approval from relevant overseas regulatory authority or overseas stock exchange shall complete filings with the CSRC prior to their overseas offering and listings.

Our PRC counsel, has advised us that, we will not be required to submit an application to the CSRC for the approval regarding the Company's listing shares on Nasdaq because the Company has already been listed before March 31, 2023. However, if the Company issues additional securities for refinancing or acquisition of domestic assets, or go listing in other public markets, it shall make filing with the CSRC within three days after completion of such offering, and may be subject to pre-examination, confirmation or approval from the competent PRC authorities governing our business operation in China, such as MIIT and CAC.

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In addition, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and whether such M&A Rules will be abolished entirely by the authorities, or particularly, replaced partially by new regulations such as the Trial Measures. If a governmental approval is still required, it is uncertain how long it will take for us to obtain such approval, and, even if we obtain such approval, the approval could be rescinded. Any failure to obtain or a delay in obtaining the requisite governmental approval or filings for an offering, or a rescission of such CSRC approval or filing if obtained by us, may subject us to sanctions imposed by the relevant PRC regulatory authority, which could include fines and penalties on our and the VIEs' operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.

Our PRC counsel, has advised us that, based on its understanding of the M&A Rules, we will not be required to submit an additional application to the CSRC for the approval under the M&A Rules for an offering. However, our PRC counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, especially by such governmental authorities other than CSRC, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules, if any. We cannot assure you that relevant PRC governmental authorities, including the CSRC, would reach the same conclusion as our PRC counsel, and hence, we may face regulatory actions or other sanctions from them. Furthermore, relevant PRC governmental authorities promulgated the Opinions on Strictly Cracking Down Illegal Securities Activities, which provided that the administration and supervision of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities of domestic industry competent authorities and regulatory authorities. However, the Opinions on Strictly Cracking Down Illegal Securities Activities only provides principle rules, leaving uncertainties regarding the interpretation and implementation of these opinions. It is possible that any new rules or regulations may impose additional requirements on us. In addition, on December 28, 2021, the Cyberspace Administration of China ("CAC") and certain other governmental authorities issued the Measures of Cybersecurity Review (effective as of February 15, 2022), according to which, among others, operators of "critical information infrastructure" or data processors holding over one million users' personal information shall apply to the Cybersecurity Review Office for a cybersecurity review before any listing on a foreign stock exchange. If it is determined in the future that CAC approval or other procedural requirements from any other governmental authorities are required to be met for and prior to an additional offering, it is uncertain whether we can or how long it will take us to obtain such approval or complete such procedures and any such approval could be rescinded. Any failure to obtain or delay in obtaining such approval or completing such procedures for an offering, or a rescission of any such approval, could subject us to sanctions by the relevant PRC governmental authorities. The governmental authorities may impose restrictions and penalties on our operations in China, such as the suspension of our apps and services, revocation of our licenses, or shutting down part or all of our operations, limit our ability to pay dividends outside of China, delay or restrict the repatriation of the proceeds from an offering into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our Class A ordinary shares. The PRC governmental authorities may also take actions requiring us, or making it advisable for us, to halt an offering before settlement and delivery of the Class A ordinary shares offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the PRC governmental authorities later promulgate new rules or explanations requiring that we obtain their approvals for filings, registrations or other kinds of authorizations for an offering, we cannot assure you that we can obtain the approval, authorizations, or complete required procedures or other requirements in a timely manner, or at all, or obtain a waiver of the requisite requirements if and when procedures are established to obtain such a waiver.

***The VIEs may be subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on the business, financial condition and results of operations of the VIEs and our company as a whole.***

The VIEs are subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations. We may be subject to various risks and costs associated with the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. This data is wide ranging and relates to our employees, users, anchors, contractors and other counterparties and third parties.

On June 10, 2021, the Standing Committee of the National People's Congress of China promulgated the Data Security Law which shall take effect on September 1, 2021. The Data Security Law provides for data security and privacy obligations of entities and individuals carrying out data activities, prohibits entities and individuals in China from providing any foreign judicial or law enforcement authority with any data stored in China without approval from the competent PRC authority, and sets forth the legal liabilities of entities and individuals found to be in violation of their data protection obligations, including rectification order, warning, fines of up to RMB10 million, suspension of relevant business, and revocation of business permits or licenses.

On August 20, 2021, the Standing Committee of the National People's Congress adopted the Personal Information Security Law, which shall come into force as of November 1, 2021. The Personal Information Protection Law includes the basic rules for personal information processing, the rules for cross-border provision of personal information, the rights of individuals in personal information processing activities, the obligations of personal information processors, and the legal responsibilities for illegal collection, processing, and use of personal information.

On December 28, 2021, the CAC and twelve other PRC regulatory authorities jointly revised and issued the Cyber Security Review Measures ("the Review Measures"), which became effective on February 15, 2022. The Review Measures provides, among others, (i) the purchase of cyber products and services by critical information infrastructure operators (the "CIIOs") and the network platform operators (the "Network Platform Operators") which engage in data processing activities that affects or may affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office, the department which is responsible for the implementation of cybersecurity review under the CAC; and (ii) the Network Platform Operators with personal information data of more than one million users that seek for listing in a foreign country are obliged to apply for a cybersecurity review by the Cybersecurity Review Office. On November 14, 2021, the CAC published the Regulations on the Administration of Network Data Security (Draft for Comment) to open for public consultation, which stipulates that if a data processor proposes to be listed abroad or provide personal information outside the territory of PRC, it shall be subject to certain security assessment and filing requirements in CAC or competent authorities. As advised by our PRC legal counsel, we believe that we and our PRC subsidiaries and the VIEs are not required to apply for a cyber security review with CAC, since we listed our Ordinary Shares on the Nasdaq before the effective date of the Review Measures, and our PRC subsidiaries and the VIEs as the "network platform operators" will not be subject to CAC's review or approval regarding data cyber security under other current-effective CAC rules, since that, (A) all of collection and processing of any personal information or other data in the ordinary course of business are conducted by our PRC subsidiaries and the VIEs within the territory of PRC, (B) none of our PRC subsidiaries or the VIEs provides any personal information or operational data outside the territory of PRC, (C) such personal information or operational data handled by our PRC subsidiaries and the VIEs will not be construed as important data threatening China's national security, and (D) none of our PRC subsidiaries or the VIEs will fell under the "critical information infrastructure operators", which are subject to direct and more strict regulatory supervision under CAC rules. However, the Review Measures do not provide any explanation or interpretation of "overseas listing" or "affect or may affect national security," and Chinese government may have broad discretion in interpreting and enforcing these laws and regulations, which may also require the Company to make filings or obtain approval from CAC or other competent authorities with respect to its further offerings in overseas public markets. We cannot predict the impact of the review measures, if any, at this stage, and we will closely monitor and assess the statutory developments in this regard.

On July 7, 2022, the CAC promulgated the Measures on Security Assessment of Cross-border Data Transfer, which became effective on September 1, 2022. The data export measures require that any data processor who processes or exports personal information exceeding a certain volume threshold pursuant to the measures shall apply for a security assessment by the CAC before transferring any personal information abroad, including the following circumstances: (i) important data will be provided overseas by any data processor; (ii) personal information will be provided overseas by any operator of critical information infrastructure or any data processor who processes the personal information of more than 1,000,000 individuals; (iii) personal information will be provided overseas by any data processor who has provided the personal information of more than 100,000 individuals in aggregate or has provided the sensitive personal information of more than 10,000 individuals in aggregate since January 1, 2021; and (iv) other circumstances where the security assessment is required as prescribed by the CAC. A data processor shall, before applying for the security assessment of an outbound data transfer, conduct a self-assessment of the risks involved in the outbound data transfer. The security assessment of a cross-border data transfer shall focus on assessing the risks that may be brought about by the cross-border data transfer concerning national security, public interests, or the lawful rights and interests of individuals or organizations.

The VIEs do not collect, process or use personal information of entities or individuals other than what is necessary for our business and do not disseminate such information. Although we believe the VIEs currently are not required to obtain clearance from the Cyberspace Administration of China under the Measures for Cybersecurity Review or the Opinions on Strictly Cracking Down on Illegal Securities Activities, we face uncertainties as to the interpretation or implementation of such regulations or rules, and if required, whether such clearance can be timely obtained, or at all.

Compliance with the PRC Cybersecurity Law, the PRC National Security Law, the Data Security Law, the Personal Information Protection Law, the Cybersecurity Review Measures, as well as additional laws and regulations that PRC regulatory bodies may enact in the future, including data security and personal information protection laws, may result in additional expenses to us and subject us to negative publicity, which could harm our reputation among users and negatively affect the trading price of our shares in the future. There are also uncertainties with respect to how the PRC Cybersecurity Law, the PRC National Security Law and the Data Security Law will be implemented and interpreted in practice. PRC regulators, including the Ministry of Public Security, the MIIT, the SAMR and the Cyberspace Administration of China, have been increasingly focused on regulation in the areas of data security and data protection, including for mobile apps, and are enhancing the protection of privacy and data security by rule-making and enforcement actions at central and local levels. We expect that these areas will receive greater and continued attention and scrutiny from regulators and the public going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, including fines, suspension of business, prohibition against new user registration (even for a short period of time) and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected.

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***It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.***

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator, such as the Department of Justice, the SEC, the PCAOB and other authorities, to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

In the event that the U.S. regulators carry out investigation on us and there is a need to conduct investigation or collect evidence within the territory of the PRC, the U.S. regulators may not be able to carry out such investigation or evidence collection directly in the PRC under the PRC laws. The U.S. regulators may consider cross-border cooperation with securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or regulatory cooperation mechanism established with the securities regulatory authority of the PRC.

***Failure to comply with laws and regulations applicable to our business in China could subject us to fines and penalties and could also cause us to lose customers or otherwise harm our business.***

Our PRC subsidiaries and the VIEs in China are subject to regulation by various governmental agencies in China, including agencies responsible for monitoring and enforcing compliance with various legal obligations, such as value-added telecommunication laws and regulations, privacy and data protection-related laws and regulations, intellectual property laws, employment and labor laws, workplace safety, consumer protection laws, governmental trade laws, import and export controls, anti-corruption and anti-bribery laws, and tax laws and regulations. These laws and regulations impose added costs on our business. Noncompliance with applicable regulations or requirements could subject our PRC subsidiaries and the VIEs to:

● investigations, enforcement actions, and sanctions;

● mandatory changes to our network and products;

● disgorgement of profits, fines, and damages;

● civil and criminal penalties or injunctions;

● claims for damages by our customers or channel partners;

● termination of contracts;

● loss of intellectual property rights;

● failure to obtain, maintain or renew certain licenses, approvals, permits, registrations or filings

● necessary to conduct our operations; and

● temporary or permanent debarment from sales to public service organizations.

If any governmental sanctions are imposed, or if our PRC subsidiaries or the VIEs do not prevail in any possible civil or criminal litigation, the business, results of operations, and financial condition of our PRC subsidiaries and the VIEs could be adversely affected. In addition, responding to any action will likely result in a significant diversion of our management's attention and resources and an increase in professional fees. Enforcement actions and sanctions could materially harm the business, results of operations, and financial condition of our PRC subsidiaries and the VIEs.

Additionally, companies in the technology industry have recently experienced increased regulatory scrutiny. Any similar reviews by regulatory agencies or legislatures may result in substantial regulatory fines, changes to the business practices of our PRC subsidiaries and the VIEs, and other penalties, which could negatively affect the business and results of operations of our PRC subsidiaries and the VIEs.

Changes in social, political, and regulatory conditions or in laws and policies governing a wide range of topics may cause our PRC subsidiaries and the VIEs to change their business practices. Further, the expansion by our PRC subsidiaries and the VIEs into a variety of new fields also could raise a number of new regulatory issues. These factors could negatively affect the business and results of operations of our PRC subsidiaries and the VIEs in material ways.

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

Scienjoy Holding Corporation, the British Virgin Islands holding company, may rely on dividend payments from our PRC subsidiaries for cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. Our WFOEs receive payments from the VIEs pursuant to the VIE agreements. Our WFOEs also receive payments from their PRC operating subsidiaries. WFOEs may make distribution of such payments to Scienjoy International Limited, our Hong Kong subsidiary, then further distribute the funds to Scienjoy Holding Corporation through its fully owned subsidiary, Scienjoy Inc. If any of our PRC subsidiaries or the VIEs incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

According to the Foreign Investment Law of the People's Republic of China and its implementing rules, which jointly established the legal framework for the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to the Company Law of the People's Republic of China (as amended) and other Chinese laws and regulations, our PRC subsidiaries may pay dividends only out of their respective accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve fund is insufficient to cover any loss a PRC subsidiary incurred in the previous financial year, its current financial year's accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At their discretion, our PRC subsidiaries may allocate a portion of their after-tax profits based on Chinese accounting standards to a discretionary reserve fund.

Our PRC subsidiaries and the VIEs receive substantially all of their revenue in Renminbi. Renminbi is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use their potential future Renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The Renminbi is currently convertible under the "current account," which includes dividends, trade and service-related foreign exchange transactions, but not under the "capital account," which includes foreign direct investment and foreign currency debt. Currently, our PRC subsidiaries may purchase foreign currency for settlement of "current account transactions," including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in renminbi to fund our business activities outside of China or pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

In response to the persistent capital outflow in China and renminbi's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of China ("PBOC") and the SAFE have promulgated a series of capital controls in early 2017, including stricter vetting procedures for domestic companies to remit foreign currency for overseas investments, dividends payments and shareholder loan repayments.

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

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***Uncertainties exist with respect to the interpretation and implementation of Anti-Monopoly Guidelines for Internet Platforms and how it may impact the business operations of the VIEs.***

In February 2021, the Anti-Monopoly Guidelines for Internet Platforms was promulgated by the Anti-monopoly Commission of the PRC State Council. The Anti-Monopoly Guidelines for Internet Platforms is consistent with the Anti-Monopoly Law of PRC and prohibits monopoly agreements, abuse of dominant position and concentration of undertakings that may have the effect of eliminating or restricting competitions in the field of platform economy. More specifically, the Anti-Monopoly Guidelines for Internet Platforms outlines certain practices that may, if without justifiable reasons, constitute abuse of dominant position, including without limitation, tailored pricing using big data and analytics, actions or arrangements seen as exclusivity arrangements, using technology means to block competitors' interface, using bundled services to sell services or products, and compulsory collection of user data. Besides, Anti-Monopoly Guidelines for Internet Platforms expressly states that concentration involving VIEs will also be subject to antitrust filing requirements.

In April 2021, the State Administration for Market Regulation (the "SAMR"), together with certain other PRC government authorities convened an administrative guidance meeting, focusing on unfair competition acts in community group buying, self-inspection and rectification by major internet companies of possible violations of anti-monopoly, anti-unfair competition, tax and other related laws and regulations, and requesting such companies to comply with relevant laws and regulations strictly and be subject to public supervision. In addition, many internet companies, including the over 30 companies which attended such administrative guidance meeting, are required to conduct a comprehensive self-inspection and make necessary rectification accordingly. The SAMR has stated it will organize and conduct inspections on the companies' rectification results. If the companies are found to conduct illegal activities, more severe penalties are expected to be imposed on them in accordance with the laws.

On June 24, 2022, the Standing Committee of the National People's Congress promulgated the Decision on Revising the Anti-monopoly Law, which took effect on August 1, 2022. The revised Anti-Monopoly Law provides, among others, that business operators shall not abuse data, algorithms, technology, capital advantages and platform rules to conduct monopoly activities. The revised Anti-Monopoly Law also requires relevant government authorities to strengthen the examination of undertaking concentration in important areas and establish the hierarchical review system of undertaking concentration, and enhances penalties for the violation of the regulations regarding undertaking concentration and other monopoly activities.

Since the Anti-Monopoly Guidelines for Internet Platforms are relatively new, uncertainties still exist in relation to its interpretation and implementation, although we and the VIEs do not believe we or the VIEs engage in any foregoing situations, we cannot assure you that our business operations will comply with such regulation in all respects, and any failure or perceived failure by us to comply with such regulation may result in governmental investigations, fines and/or other sanctions on us.

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***The joint statement by the SEC, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate and the U.S. House of Representatives, all call for additional and more stringent criteria to be applied to emerging market companies. These developments could add uncertainties to our future offerings, business operations share price and reputation.***

U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.

On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. On April 21, 2020, the then SEC Chairman Jay Clayton and the then PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China, reiterating past SEC and PCAOB statements on matters including the difficulty associated with inspecting accounting firms and audit work papers in China and higher risks of fraud in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U.S. regulatory actions, including in instances of fraud, in emerging markets generally.

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company's auditors for three consecutive years, the issuer's securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies Accountable Act.

On May 18, 2021, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in a "Restrictive Market," (ii) prohibit Restrictive Market companies from directly listing on Nasdaq Capital Market, and only permit them to list on Nasdaq Global Select or Nasdaq Global Market in connection with a direct listing and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company's auditors.

On October 4, 2021, the SEC approved Nasdaq's revised proposals for the rule changes. As a result of such scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us, our business and our share price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company. This situation will be costly and time consuming and distract our management from developing our growth. If such allegations are not proven to be groundless, we and our operating subsidiary's business operations will be severely affected and you could sustain a significant decline in the value of our Class A ordinary share.

***You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management named in the prospectus based on foreign laws, and therefore you may not be afforded the same protection as provided to investors in U.S. domestic companies.***

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We are an exempted company incorporated under the laws of the British Virgin Islands and conduct most of our revenue-generating operations in mainland China. In addition, certain of our executive officers and directors are PRC nationals and reside within China for a significant portion of the time. All or a substantial portion of the assets of these persons are also located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the British Virgin Islands and of China may render you unable to enforce a judgment against us, our assets, our directors and officers or their assets. Therefore, you may not be able to enjoy the same protection provided by various U.S. authorities as it is provided to investors in U.S. domestic companies. For more information regarding the relevant laws of the British Virgin Islands and China.

***Currently, there is no law or regulation specifically governing virtual asset property rights and therefore it is not clear what liabilities, if any, live streaming platform operators may have for virtual assets.***

While participating on our platforms, our users acquire, purchase, and accumulate some virtual assets, such as gifts or certain status. Such virtual assets can be important to users and have monetary value and, in some cases, are sold for actual money. In practice, virtual assets can be lost for various reasons, often through other users' unauthorized use of another user account and occasionally through data loss caused by delay of network service, network crash, or hacking activities. Currently, except for a general term as provided in the Article 127 of Civil Code, there is no PRC law or regulation specifically governing virtual asset property rights. As a result, there is uncertainty as to who the legal owner of virtual assets is, whether and how the ownership of virtual assets is protected by law, and whether an operator of live streaming platform such as us would have any liability, whether in contract, tort or otherwise, to users or other interested parties, for loss of such virtual assets. Based on recent PRC court judgments, the courts have typically held online platform operators liable for losses of virtual assets by platform users and ordered online platform operators to return the lost virtual items to users or pay damages and losses. In case of a loss of virtual assets, we may be sued by our users and held liable for damages, which may negatively affect our reputation and business, results of operations, and financial condition.

***Under the PRC enterprise income tax law, we may be classified as a PRC "resident enterprise," which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.***

Under the PRC enterprise income tax law that became effective on January 1, 2008 and other related rules and regulations published by PRC State Taxation Administration, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on our worldwide income. On April 22, 2009, the State Taxation Administration, or the SAT, issued the Circular Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, on August 3, 2011, the State Taxation Administration issued the Administrative Measures of Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, which became effective on September 1, 2011, to provide more guidance on the implementation of SAT Circular 82.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC tax resident enterprise by virtue of having our "de facto management body" in China and will be subject to PRC enterprise income tax on our worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of our daily operations function have their presence mainly in the PRC; (b) our financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) our major assets, accounting books, company seals, and minutes and files of our board and shareholders' meetings are located or kept in the PRC; and (d) not less than half of the enterprise's directors or senior management with voting rights habitually reside in the PRC. SAT Bulletin 45 provides further rules on residence status determination, post-determination administration as well as competent tax authorities procedures.

Although SAT Circular 82 and SAT Bulletin 45 apply only to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise group and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect SAT's general position on how the term "de facto management body" could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals, or foreigners.

We do not meet all of the conditions set forth in SAT Circular 82. Therefore, we believe that we should not be treated as a "resident enterprise" for PRC tax purposes even if the standards for "de facto management body" prescribed in the SAT Circular 82 applied to us. For example, our minutes and files of the resolutions of our board of directors and the resolutions of our shareholders are maintained outside the PRC.

However, it is possible that the PRC tax authorities may take a different view. If the PRC tax authorities determine that we or any Hong Kong subsidiary is a PRC resident enterprise for PRC enterprise income tax purposes, our world-wide income could be subject to PRC tax at a rate of 25%, which could reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Although dividends paid by one PRC tax resident to another PRC tax resident should qualify as "tax-exempt income" under the enterprise income tax law, we cannot assure you that dividends paid by our PRC subsidiary to us or any of our Hong Kong subsidiaries will not be subject to a 10% withholding tax if we or our Hong Kong subsidiary were treated as a PRC resident enterprise. The PRC foreign exchange control authorities, which enforce the withholding tax on dividends, and the PRC tax authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes.

If we are treated as a resident enterprise, non-PRC resident shareholders may also be subject to PRC withholding tax on dividends paid by us and PRC tax on gains realized on the sale or other disposition of our Class A ordinary shares, if such income is sourced from within the PRC. The tax would be imposed at the rate of 10% in the case of non-PRC resident enterprise shareholders and 20% in the case of non-PRC resident individual holders. In the case of dividends, we would be required to withhold the tax at source. Any PRC tax liability may be reduced under applicable tax treaties or similar arrangements, but it is unclear whether a non-PRC shareholders company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Although we are incorporated in the British Virgin Islands, it remains unclear whether dividends received and gains realized by our non-PRC resident shareholders will be regarded as income from sources within the PRC if we are classified as a PRC resident enterprise. Any such tax will reduce the returns on your investment in us.

***There are uncertainties with respect to indirect transfers of PRC taxable properties outside a public stock exchange.***

We face uncertainties on the reporting and consequences on private equity financing transactions, private share transfers and share exchange involving the transfer of shares in our company by non-resident investors. According to the Notice on Several Issues Concerning Enterprise Income Tax for Indirect Share Transfer by Non-PRC Resident Enterprises, issued by the State Taxation Administration on February 3, 2015, or SAT Circular 7, an "indirect transfer" of assets of a PRC resident enterprise, including a transfer of equity interests in a non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable properties, if such transaction lacks reasonable commercial purpose and was undertaken for the purpose of reducing, avoiding or deferring PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and tax filing or withholding obligations may be triggered, depending on the nature of the PRC taxable properties being transferred. According to SAT Circular 7, "PRC taxable properties" include assets of a PRC establishment or place of business, real properties in the PRC, and equity investments in PRC resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. When determining if there is a "reasonable commercial purpose" of the transaction arrangement, features to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable properties; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income mainly derives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable properties have a real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRC taxable properties; and the tax situation of such indirect transfer outside China and its applicable tax treaties or similar arrangements. In respect of an indirect offshore transfer of assets of a PRC establishment or place of business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing of the PRC establishment or place of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to PRC real properties 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 at 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Where the payer fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the competent tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. Currently, SAT Circular 7 does not apply to the sale of shares by investors through a public stock exchange where such shares were acquired in a transaction on a public stock exchange.

We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing and withholding or tax payment obligations and associated penalties with respect to any internal restructuring, and our PRC subsidiary may be requested to assist in the filing. Any PRC tax imposed on a transfer of our Class A ordinary shares not through a public stock exchange, or any adjustment of such gains would cause us to incur additional costs and may have a negative impact on the value of your investment in us.

***Implementation of the labor laws and regulations in China may adversely affect our business and results of operations.***

Pursuant to the labor contract law that took effect in January 2008, its implementation rules that took effect in September 2008 and its amendment that took effect in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees' probation and unilaterally terminating labor contracts. Due to lack of detailed interpretative rules and uniform implementation practices and broad discretion of the local competent authorities, it is uncertain as to how the labor contract law and its implementation rules will affect our current employment policies and practices. Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus be subject to related penalties, fines, or legal fees. Compliance with the labor contract law and its implementation rules may increase our operating expenses, in particular its personnel expenses. In the event that we decide to terminate some of its employees or otherwise change its employment or labor practices, the labor contract law and its implementation rules may limit its ability to affect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. On October 28, 2010, the Standing Committee of the National People's Congress promulgated the PRC Social Insurance Law, or the Social Insurance Law, which became effective on July 1, 2011. According to the Social Insurance Law and related rules and regulations, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, and maternity insurance and the employers must, together with their employees or separately, pay the social insurance premiums for their employees. If the company has not fully paid such social insurance based on employee's actual salaries, it may face relevant authorities' investigation and examination, and subject to penalties or fines.

We expect our labor costs to increase due to the implementation of these laws and regulations, as updated from time to time. As the interpretation and implementation of these laws and regulations are still evolving and become stricter, PRC tax authorities, for example, may become the governmental agencies for collection and examination of each company's withholding and payment of social insurance after 2019 according to related rules and policies. We cannot assure you that our employment practice will at all times be deemed in full compliance with labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. If our PRC subsidiaries are deemed to have violated relevant labor laws and regulations, they can be required to provide additional compensation to their employees and our business, results of operations, and financial condition could be materially and adversely affected.

Further, labor disputes, work stoppages or slowdowns at our company or any of our third-party service providers could significantly disrupt our daily operation or our expansion plans and have a material adverse effect on our business.

***Our business, financial condition and results of operations could be materially and adversely affected by changes in PRC laws, regulations and policies relating to taxation, data reporting and platform compliance, particularly the new tax regulatory regime for internet platforms and live streaming content creators that became effective on October 1, 2025.***

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On June 20, 2025, the State Council of the People's Republic of China promulgated the Regulations on Tax-Related Information Reporting by Internet Platform Enterprises (State Council Decree No. 810), and the State Taxation Administration issued Announcement (2025) No. 15 and Announcement (2025) No. 16, which together impose comprehensive new tax compliance obligations on our live streaming platform business.

These regulations require us to withhold individual income tax on all income of live streamers and content creators on our platform, which include and are not limited to virtual gifts, tips, commissions and sponsorships. The aforementioned income is reclassified as labor service income which is subject to progressive tax rates up to 45%, using a cumulative withholding method similar to payroll. The regulations obligate us to regularly report detailed tax-related data to the PRC tax authorities, including the identities, income types, amounts, transaction records and agency relationships of streamers and MCNs, and implement significant system upgrades to track, calculate, withhold, report and remit taxes for creators, which may result in substantial additional costs and operational disruptions.

Failure to comply with these new regulations may result in administrative fines of up to RMB 500,000 (approximately USD $72,800) and joint liability for unpaid taxes. Higher effective tax rates for creators may reduce their net earnings, leading to lower engagement, reduced content output or migration to competing platforms, which could materially lower our user base, revenue and market share.

We cannot guarantee we will successfully adapt to the new regulatory environment as described herein. We have expanded significant resources in upgrading our systems and processes to meet the new requirements, which has increased our operating expenses and reduced our margins, and any failure to comply with these new regulations, or any material adverse impact on streamer behavior or platform activity arising from these rules, could materially and adversely affect our business, financial condition and results of operations.

***PRC regulations relating to offshore investment activities by PRC residents may limit the ability of WXBJ and WXZJ (our indirect wholly-owned subsidiaries in China) to increase our registered capital or distribute profits to us or otherwise expose us to liability and penalties under PRC law.***

The State Administration of Foreign Exchange (SAFE) promulgated the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 and related rules and regulations that require PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities 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 citizens or residents, name, and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 and amended on December 30, 2019 by the SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015.

If our shareholders or beneficial owners who are PRC residents or entities (as applicable) do not complete their registration with the local SAFE branches, our PRC subsidiaries (in particular, the WFOEs) may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries (in particular, the WFOEs). Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. However, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we cannot compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you 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 any applicable registrations or approvals required by SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries (in particular, the WFOEs), could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries' ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

***PRC regulation of direct investment and loans by offshore holding companies to PRC entities may delay or limit us to make additional capital contributions or loans to our PRC subsidiaries.***

We are an offshore holding company conducting our operations in China through our PRC subsidiaries and the VIEs. We may make loans to our PRC subsidiary and the VIEs or it may make additional capital contributions to our PRC subsidiaries.

Any capital contributions or loans that we, as an offshore entity, make to our PRC subsidiaries (in particular, the WFOEs), are subject to PRC regulations. For example, none of our loans to a PRC subsidiary (in particular, the WFOEs) can exceed the difference between our total amount of investment and our registered capital approved under relevant PRC laws, or certain amount calculated based on elements including capital or net assets and the cross-border financing leverage ratio and the loans must be registered with the local branch of SAFE and the competent departments of State Development and Reform Commission in case of any external debts of more than one year. Our capital contributions to our PRC subsidiaries (in particular, the WFOEs) must be approved by or filed with the MOFCOM, SAFE, or their respective local counterpart.

On March 30, 2015, SAFE issued the Circular on the Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect on June 1, 2015 and was amended on December 30, 2019. Under SAFE Circular 19, a foreign-invested enterprise, within the scope of business, may choose to convert its registered capital from foreign currency to RMB on a discretionary basis, and the RMB capital so converted can be used for equity investments within PRC, provided that such usage shall fall into the scope of business of the foreign-invested enterprise, which will be regarded as the reinvestment of foreign-invested enterprise.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary registration or obtain the necessary approval on a timely basis, or at all. If we fail to complete the necessary registration or obtain the necessary approval, our ability to make loans or equity contributions to our PRC subsidiaries (in particular, the WFOEs) may be negatively affected, which could adversely affect the liquidity of our PRC subsidiaries and their ability to fund their working capital and expansion projects and meet their obligations and commitments.

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

The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval by complying with certain procedural requirements, but may be subject to internal rules of related PRC subsidiary's bank (in particular, the WFOEs' capital funds account open in bank), which is also under the monitor of SAFE. Therefore, our PRC subsidiaries (in particular, the WFOEs) is able to pay dividends in foreign currencies to us without prior approval from SAFE, but should still comply with bank's related rules. However, approval from or registration with appropriate government authorities (including formalities in the bank) is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

***Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the PRC plan participants 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 submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. In the meantime, our directors, executive officers, and other employees who are PRC citizens or who are non-PRC residents residing in PRC for a continuous period of not less than one year, subject to limited exceptions, and who have been granted incentive share awards by us, may follow the Circular on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or the SAFE Circular 7, promulgated by the SAFE in 2012. Pursuant to the SAFE Circular 7, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options will be subject to these regulations upon consummation of the Business Combination. Failure to complete the SAFE registrations may subject them to fines and legal sanctions, and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries' ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers, and employees under PRC law.

***A slowdown of the Chinese economy or adverse changes in the economic and political policies of the PRC could negatively impact China's overall economic growth, which could materially adversely affect our business.***

We are a holding company and substantially all of our operations are conducted in the PRC. Although the PRC economy has grown in recent years, the pace of growth has slowed, and even that rate of growth may not continue. The annual rate of growth in the PRC declined from 6.9% in 2015 to 6.7% in 2016, 6.8% in 2017 and 6.6% in 2018. The annual rate of growth further declined to 6.1% in 2019, the lowest since 1990. The annual rate of growth was 8.1% in 2021, 3.0% in 2022, 5.2% in 2023, 5.0% in 2024 and 5.0% in 2025. A slowdown in overall economic growth, an economic downturn or recession, or other adverse economic developments in the PRC may materially reduce the demand for the Group's products and may have a material and adverse effect on its business.

China's economy differs from the economies of most other countries in many respects, including the amount of government involvement in the economy, the general level of economic development, growth rates and government control of foreign exchange and the allocation of resources. While the PRC economy has grown significantly over the past few decades, this growth has remained uneven across different periods, regions and economic sectors.

The PRC government also exercises significant control over China's economic growth by allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Any actions and policies adopted by the PRC government could negatively impact the Chinese economy or the economy of the region our serves, which could materially adversely affect our business.

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***Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business we may be able to conduct in the PRC and accordingly on the results of its operations and financial condition.***

Our business operations may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the current government leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activities and greater economic decentralization. However, the government of the PRC may not continue to pursue these policies, or may significantly alter these policies from time to time without notice. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 40 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. Consequently, we cannot predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to foreign investors.

***Fluctuations in the foreign currency exchange rate between U.S. Dollars and Renminbi could adversely affect our financial condition.***

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Our business is conducted in the PRC, our books and records are maintained in RMB, which is the currency of the PRC, and the financial statements that we file with the SEC and provide to our shareholders are presented in U.S. Dollars. Changes in the exchange rate between the RMB and dollar affect the value of our assets and the results of our operations in U.S. Dollars. The value of the RMB against the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue and financial condition. Further, our shares offered by this prospectus are offered in U.S. Dollars, and we will need to convert the net proceeds we receive into RMB in order to use the funds for our business. Changes in the conversion rate between the U.S. Dollar and the RMB will affect that amount of proceeds we will have available for our business.

***Future inflation in China may inhibit economic activity and adversely affect our operations.***

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The Chinese economy has experienced periods of rapid expansion in recent years which can lead to high rates of inflation or deflation. This has caused the PRC government to, from time to time, enact various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the PRC government to once again impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China. Any action on the part of the PRC government that seeks to control credit and/or prices may adversely affect our business operations.

***Risks Relating to Investment in our Class A Ordinary Shares.***

***Heshine will control the outcome of our shareholder actions.***

As of March 27, 2026, Heshine holds 5,032,208 shares of Class A ordinary shares and 2,925,058 shares of Class B shares, representing 49.84% of our aggregate voting power. Heshine's voting power gives it the power to control actions that require shareholder approval under British Virgin Islands law, our memorandum and articles of association and Nasdaq requirements, including the election and removal of a majority of our board of directors, approval of significant mergers and acquisitions and other business combinations, and changes to our memorandum and articles of association.

Heshine's control may cause transactions to occur that might not be beneficial to direct or indirect holders of our Class A ordinary shares and may prevent transactions that would be beneficial to you. For example, Heshine's voting control may prevent a transaction involving a change of control of us, including transactions in which you as a holder of our Class A ordinary shares might otherwise receive a premium for your securities over the then-current market price. In addition, Heshine is not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a purchase of your Class A ordinary shares. If Heshine is acquired or otherwise undergoes a change of control, any acquirer or successor will be entitled to exercise the voting control and contractual rights of Heshine, and may do so in a manner that could vary significantly from that of Heshine.

***We are a "controlled company" within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.***

We are a "controlled company'' as defined under the Nasdaq Stock Market Rules because Heshine controls more than 50% of our voting rights. 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 from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and

● an exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

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

We are a Foreign Private Issuer and we have adopted a dual-class share structure, which includes Class A ordinary shares with one vote per share and Class B ordinary shares with ten votes per share. Currently, Heshine holds 5,032,208 Class A ordinary shares and 2,925,058 Class B ordinary shares, which accounts for 49.84% voting power of all issued and outstanding ordinary shares. Consequently, Heshine 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. Heshine may also take actions that are not in the best interest of the Company or the Company's other shareholders. In addition to limiting your ability to influence corporate matters, this concentration of ownership may discourage, delay or prevent a change in control of our Company, which could have the effect of depriving tour Company's other shareholders of the opportunity to receive a premium for their shares as part of a sale of our Company and may reduce the price of our Class A ordinary shares.

***Our dual-class structure of ordinary shares may adversely affect the trading market for our Class A ordinary shares.***

In 2017, S&P Dow Jones and FTSE Russell have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of our ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our Class A ordinary shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A ordinary shares.

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

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

There remains significant international pressure on the Chinese government to adopt a flexible currency policy to allow the RMB to appreciate against the U.S. dollar, especially under the current circumstance of the Sino-US trade conflicts. Significant revaluation of the RMB may have a material adverse effect on your investment. Substantially all of our revenues and costs are denominated in RMB. Any significant revaluation of RMB may materially and adversely affect our revenues, earnings, and financial position. To the extent that we need to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings or the US dollar amount available to us.

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

***Nasdaq may apply additional and more stringent criteria for our continued listing.***

Nasdaq Listing Rule 5101 provides Nasdaq with broad discretionary authority over the continued listing of securities in Nasdaq and Nasdaq may use such discretion to deny apply additional or more stringent criteria for the continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for continued listing on Nasdaq. In addition, Nasdaq has used its discretion to deny continued listing or to apply additional and more stringent criteria in the instances, including but not limited to where the company engaged an auditor that has not been subject to an inspection by PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company's audit. For the aforementioned concerns, we may be subject to the additional and more stringent criteria of Nasdaq for our continued listing.

***Our failure to meet the continuing listing requirements of The Nasdaq Capital Market could result in a delisting of our securities.***

If we fail to satisfy the continuing listing requirements of Nasdaq, such as the corporate governance, stockholders equity or minimum closing bid price requirements, Nasdaq may take steps to delist our Class A ordinary shares. Such a delisting would likely have a negative effect on the price of our Class A ordinary shares and would impair your ability to sell or purchase our Class A ordinary shares when you wish to do so. In the event of a delisting, we would likely take actions to restore our compliance with Nasdaq's listing requirements, but we can provide no assurance that any such action taken by us would allow our Class A ordinary shares to become listed again, stabilize the market price or improve the liquidity of our Class A ordinary shares, prevent our listed securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq's listing requirements.

On July 10, 2025, we received a letter from the Listings Qualifications Department of Nasdaq notifying us that the closing bid price per share for our Class A ordinary shares was below $1.00 for a period of 30 consecutive business days and that the Company did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2)(the "Bid Price Rule"). The Nasdaq notification letter does not result in the immediate delisting of our Class A ordinary shares and our Class A ordinary shares continued to trade uninterrupted under the symbol "SJ."

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we had a compliance period of one hundred eighty (180) calendar days, or until January 6, 2026 (the "Compliance Period"), to regain compliance with the Bid Price Rule. If at any time during the Compliance Period, the closing bid price per share of our Class A ordinary shares is at least $1.00 for a minimum of ten (10) consecutive business days, Nasdaq will provide us with a written confirmation of compliance and the matter will be closed.

On January 7, 2026, we received notification from Nasdaq that Nasdaq approved our request for an additional 180-calendar day extension of the Compliance Period to regain compliance with the Bid Price Rule. On February 3, 2026, we received formal notice from Nasdaq that we have evidenced full compliance with the Bid Price Rule. As a result, the listing matter has been closed.

We are working diligently to ensure continued compliance with the Nasdaq continuing listing standards, including the Bid Price Rule. We believe that our corporate strategy can positively impact our revenue growth and the price of our Class A ordinary Shares in upcoming fiscal quarters. However, there is a risk that we will be unable to raise sufficient capital or generate sufficient revenue or positive operating results to maintain compliance with the Bid Price Rule or other applicable continuing listing standards. If we fail to achieve ongoing compliance and our Class A ordinary shares are delisted by Nasdaq, such delisting would likely have a material adverse effect on our stock price, the ability of our shareholders to buy or sell their Class A ordinary shares, our ability to raise capital and on our reputation, all of which could make it significantly more difficult to operate.

***Certain provisions of the Fourth Amended and Restated Memorandum and Articles of Association may be deemed to have an antitakeover effect.***

The Fourth Amended and Restated Memorandum and Articles of Association may have the effect of delaying, deferring or preventing or rendering more difficult a change in control of the Company that a shareholder might consider in his or her best interest, including the following:

● Poison Pill Defenses. Under the Companies Law of British Virgin Islands there are no provisions that specifically prevent the issuance of preferred shares or any such other 'poison pill' measures. Our Fourth Amended and Restated Memorandum and Articles of Association also do not contain any express prohibitions on the issuance of any preferred shares. Therefore, the directors without the approval of the holders of Class A ordinary shares may issue preferred shares that have characteristics that may be deemed to be anti-takeover. Additionally, such a designation of shares may be used in connection with plans that are poison pill plans.

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

On June 30, 2020, we have made the determination that we qualify as a foreign private issuer under the Exchange Act and filed Form 8-K on July 1, 2020 to announce our determination. Effective immediately after the filing of this Form 8-K, we began reporting under the Exchange Act as a foreign private issuer. As a foreign private issuer, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● 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 the Exchange Act; 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. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

***We may be subject to additional reporting requirements if we lose our status as a foreign private issuer.***

If we lose our status as a foreign private issuer at some future time, then we will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if we were a company incorporated in the United States. The costs incurred in fulfilling these additional regulatory requirements could be substantial.

***As a company incorporated in the British Virgin Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.***

As a BVI company listed on Nasdaq, we are subject to Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the British Virgin Islands, which is our home country, may differ significantly from Nasdaq corporate governance listing standards. For example, neither the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands nor our memorandum and articles of association requires a majority of our directors to be independent and we could include non-independent directors as members of our compensation committee and nominating committee, and our independent directors would not necessarily hold regularly scheduled meetings at which only independent directors are present. To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.

***U.S. holders of Class A ordinary shares may suffer adverse tax consequences if we were characterized as a passive foreign investment company.***

 ****

Based on the current composition of our gross income and assets and on reasonable assumptions and projections, we believe we should not be treated as a passive foreign investment company (a "PFIC"), for U.S. federal income tax purposes for our current taxable year. However, there can be no assurance that this will be the case in our current taxable year or in future taxable years. If we were characterized as a PFIC, U.S. holders of the Class A ordinary shares may suffer adverse tax consequences such as (i) having gains realized on the sale of the Class A ordinary shares treated as ordinary income rather than capital gain, (ii) not qualifying for the preferential rate otherwise applicable to dividends received in respect of the Class A ordinary shares by individuals who are U.S. holders, and (iii) having interest charges apply to certain distributions by us and upon certain sales of the Class A ordinary shares.

**ITEM 4. INFORMATION ON THE COMPANY**

**A.** **History and Development of the Company** 

We were originally a blank check company, known as Wealthbridge Acquisition Limited ("Wealthbridge"), incorporated in the British Virgin Islands on May 2, 2018 with limited liability (meaning our public shareholders have no liability, as shareholders of the Company, for the liabilities of the Company over and above the amount paid for their shares) to serve as a vehicle to effect a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses. On May 7, 2020, we consummated the Business Combination contemplated by the Share Exchange Agreement with Lavacano and WBY, pursuant to which we acquired 100% the issued and outstanding equity interests of Scienjoy Inc. and changed our name to Scienjoy Holding Corporation.

Our principal executive offices are located at RM 1118, 11th Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St, Yuhang District, Hangzhou, Zhejiang Province, China, 311113. Our telephone number at this address is (86) 571 8858 6668. Our registered office in the British Virgin Islands is located at Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42<sup>nd</sup> Street, 18<sup>th</sup> Floor, New York. Our website is *http://www.scienjoy.com*. The information on our websites should not be deemed to be part of this annual report. The SEC also maintains a website at *http://www.sec.gov* that contains reports, proxy, and information statements, and other information regarding registration that make electronic filings with the SEC using the EDGAR system.

**History of Scienjoy Inc.**

Scienjoy Inc. is a holding company incorporated under the laws of the Cayman Islands on February 23, 2017 with authorized shares of 500,000,000 shares at a par value of $0.0001.

Scienjoy Inc., through its subsidiaries and variable interest entities, is principally engaged in operating its own live streaming platforms in the PRC. In 2014, Scienjoy Inc.'s first live streaming APP Showself Live Streaming was launched. Scienjoy Inc. subsequently launched "Lehai" in 2015 and "Haixiu" in 2016.

**Reorganization of Scienjoy Inc.**

On January 1, 2018, Tongfang Investment Fund Series SPC ("TF") completed the acquisition of a 65% equity interest in Sixiang Times (Beijing) Technology Co., Ltd ("Sixiang Times") from NQ Mobile Inc., Ltd. Through the acquisition of Sixiang Times, TF acquired a controlling position in Holgus Sixiang Information Technology Co., Ltd ("Holgus X"), Kashgar Sixiang Times Internet Technology Co., Ltd ("Kashgar Times"), Beijing Sixiang Shiguang Technology Co., Ltd. ("SG"), Hai Xiu (Beijing) Technology Co., Ltd ("HX") and Beijing Le Hai Technology Co., Ltd ("LH").

On May 18, 2017, Scienjoy Inc. established its wholly owned subsidiary in Hong Kong, Scienjoy International Limited ("Scienjoy HK"), as a holding company holding all of the outstanding shares of Sixiang Wuxian (Beijing) Technology Co., Ltd ("WXBJ") which was established in PRC on October 17, 2017 under the laws of the People's Republic of China as a holding company holding all of the equity interest of Sixiang Zhihui (Beijing) Technology Co., Ltd. ("ZH"), which was incorporated on July 5, 2018.

Scienjoy Inc. established ZH (through WXBJ), as a holding company for purpose of holding all of the outstanding equity interest of Holgus X and Kashgar Times, as follows:

On July 18, 2018, Sixiang Times and ZH executed an equity transfer agreement with Sixiang Times. Pursuant to the agreement, 100% equity interest in Holgus X was transferred to ZH.

On July 24, 2018, Sixiang Times and ZH executed an equity transfer agreement. Pursuant to the agreement, 100% equity interest in Kashgar Times was transferred to ZH. In consideration of the transfer, Scienjoy Inc. paid RMB10,000,000 to the former shareholders of Kashgar Times.

On November 16, 2018, Sixiang Times and other minority shareholders respectively entered into certain equity transfer agreements with Sixiang Huizhi (Beijing) Technology Culture Co., Ltd. ("HZ") and Tianjin Sihui Peiying Technology Co., Ltd. ("SY"), and transferred 100% of the equity interest in SG to HZ, and transferred 100% of the equity interest in HX and LH to HZ and SY. Both HZ and SY were ultimately controlled by TF.

On January 28, 2019, HZ and SY executed equity transfer agreement with Zhihui Qiyuan. Pursuant to the agreement, 100% of the equity interest in SG, HX and LH was transferred to Zhihui Qiyuan, which is ultimately controlled by TF. In consideration of the transfer, Scienjoy Inc. paid RMB 32,000,000 to HZ and SY.

On January 29, 2019, Scienjoy Inc., through WXBJ, entered into a series of contractual arrangements ("VIE Agreements") with Zhihui Qiyuan and its registered shareholders, and in substance obtained control over all equity shares, risks and rewards of SG, HX and LH through Zhihui Qiyuan. For a description of the VIE agreements pursuant to which Scienjoy Inc. and its subsidiaries were established as a primary beneficiary of Zhihui Qiyuan, see "*Item 4. Information on the Company-C. Organizational Structure-Contracts that give the Company effective control of the VIEs."*

On January 10, 2020, SG consummated the acquisition of the 100% equity interest in Lixiaozhi (Chongqing) Internet Technology Co., Ltd. ("LXZ") from its original shareholder for a cash consideration of RMB200 (US$28). We believe the acquisition of LXZ helps to enrich our product line, expand our user base and capitalize on the growth potential in the live streaming market.

On May 7, 2020, the Business Combination was consummated. Following our Business Combination, we changed our name from "Wealthbridge Acquisition Limited" to "Scienjoy Holding Corporation" and continued the listing of our Ordinary Shares on Nasdaq under the symbol "SJ". Our public warrants were traded on over the counter market under the symbol "SJOYW".

On July 23, 2020, we established Kashgar Sixiang Lehong Information Technology Co., Ltd. ("Kashgar Lehong") through ZH whose purpose is to analyze the possibility of tax planning in such region.

On August 10, 2020, we signed an Equity Acquisition Framework Agreement (the "BeeLive Acquisition Agreement") with Sciscape International Limited, Tianjin Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology Co., Ltd. Pursuant to the BeeLive Acquisition Agreement, we, through Scienjoy Inc., acquired 100% of the equity interest in Sciscape International Limited which holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity), acquired 100% of the equity interest in Tianjin Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant to the BeeLive Acquisition Agreement, we are required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in Class A ordinary shares (approximately 5.4 million Class A ordinary shares) to be issued by us. 30% of share consideration payments are subject to certain performance conditions and requirements over the following three years. On August 21, 2020, all target shares were transferred to the parties designated in BeeLive Acquisition Agreement. On September 10, 2020, we paid a cash consideration of RMB50.0 million to Tianjin Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Class A Ordinary Shares to Cosmic Soar Limited. Tianjin Guangju Dingfei Technology Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin) Technology Co. and Sciscape International Limited changed its name to Scienjoy BeeLive Limited. BeeLive is a global live streaming platform that initially launched in China in November 2016. Since the second half of 2019, BeeLive began expanding into international markets. To date, BeeLive International offers Arabic language live streaming product in the Middle East and Thai language live streaming product in Southeast Asia.

In December 2020, we set up two new subsidiary companies, Holgus Sixiang HaoHan Internet Technology Co.,Ltd. and Sixiang ZhiHui (HaiNan) Technology Co,. Ltd., and in March 2021, QY has set up a new subsidiary named ZhiHui QiYuan (HaiNan) Investment Co., Ltd. for general corporate purposes.

On March 2, 2021, QY established a wholly owned subsidiary Zhihui QiYuan(HaiNan) Investment Co,. Ltd ("QYHN") in Hainan, PRC to provide information technology service.

In September 2021, SG had set up three subsidiaries, SH, SHWL and HYHF in an effort to enrich the product lines and expand the user base.

On December 29, 2021, SHC entered into an Equity Acquisition Framework Agreement (the "Framework Agreement") with Golden Shield Enterprises Limited ("Golden Shield"), Beijing Weiliantong Technology Co., Ltd. ("Weiliantong", together with Golden Shield, the "Target Companies", and each a "Target Company"), Tianjin Yieryi Technology Co., Ltd. ("Yieryi"), Wolter Global Investment Limited ("Wolter Global", together with Yieryi, the "Sellers", and each a "Seller") and Qingdao Weilaijin Industry Investment Fund Partnership (Limited Partnership) ("Weilaijin"), which is one of the shareholders of Yieryi. Pursuant to the Framework Agreement, SHC, or its affiliates designated by SHC, acquired all of the outstanding equity interests of (i) Weiliantong from Yieryi and (ii) Golden Shield from Wolter Global (the "Hongle Acquisition"). Yieryi and Wolter Global are under common control. The transactions contemplated under the Framework Agreement have closed on January 1, 2022 (the "Closing").

Upon the closing of transactions contemplated in the Framework Agreement, SHC acquired 100% of the issued and outstanding securities of Weiliantong and Golden Shield for an aggregate consideration of RMB280 million (approximately US$43.8 million), including RMB100 million (approximately US$15.6 million) in cash and RMB180 million (approximately US$28.2 million) in our Class A ordinary shares. The cash consideration includes RMB13.8 million (approximately US$2.2 million) cash to Yieryi and repayment of (i) the outstanding loans of Yieryi in an aggregate amount of RMB77.4 million (approximately US$12.1 million) and (ii) a third-party loan incurred by Weiliantong in an amount of RMB8.8 million (approximately US$1.4 million). The shares consideration consists of RMB20.8 million (approximately US$3.3 million) in our Class A ordinary shares to be issued to Weilaijin (the "Weilaijin Share Consideration"), a shareholder of Yieryi, and RMB159.2 million (approximately US$24.9 million) in our Class A ordinary shares to be issued to Wolter Global (the "Wolter Global Share Consideration").

In January 2022, we have set up a new subsidiary company, Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd. ("ZHZJ") for general corporate purposes.

In January 2022, SG consummated the acquisition of the 100% equity interest in Chuangda Zhihui (Beijing) Technology Co., Ltd. ("CDZH") and its wholly owned subsidiary, Beijing Huayi Dongchen Technology Co., Ltd. ("HYDC") from its original shareholders for a cash consideration of RMB100,000 (US$15,692). We believe the acquisition of CDZH and HYDC will help to enrich the product lines, expand the user base and commercialize the growth potential in the live streaming market.

On April 7, 2022, Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. ("QYHZ") and its several wholly owned subsidiaries were set up in Zhejiang, PRC to provide information technology services.

On April 28, 2022, we have set up a new subsidiary company, Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd. ("WXZJ") for general corporate purpose.

On June 1, 2022, we through our wholly-owned subsidiary, WXZJ, entered into a series of contractual arrangements with Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. and its shareholders, thereby in substance obtained control over all equity shares, risks and economic benefits of Xiuli (Zhejiang) Culture Technology Co., Ltd., Leku (Zhejiang) Culture Technology Co., Ltd., Haifan (Zhejiang) Culture Technology Co., Ltd., Xiangfeng (Zhejiang) Culture Technology Co., Ltd. and Hongren (Zhejiang) Culture Technology Co., Ltd. The Company will commence its operations in Hangzhou after effecting the agreements under VIE contractual arrangement.

On May 23, 2022, we changed our address of principal place of business to RM 1118, 11th Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St., Yuhang District, Hangzhou, Zhejiang Province, 311113, China.

On June 30, 2022, WXBJ incorporated a wholly owned subsidiary Sixiang Yingyue (Shanghai) Technology Co., Ltd. ("SXYY"), in Shanghai, PRC to provide information technology service.

In July 2022, LXZ was deregistered for general corporate purposes.

On December 31, 2022, SHWL and SH were sold to certain third parties for a nominal consideration because SHWL and SH have not commenced any operation since their incorporation.

On July 25, 2023, we formed a wholly owned subsidiary, Scienjoy Pte. Ltd., in Singapore for the purpose of developing business in Singapore and other international markets.

On September 18, 2023, we, through a trust agreement with Mr Xiaowu He, Chief Executive Officer and Chairman of the Board, formed a 51% owned subsidiary Scienjoy Verse Tech Ltd ("Scienjoy Verse") in Dubai and its wholly owned subsidiary Scienjoy Meta Technology LLC to provide a non-stop metaverse lifestyle platform for users globally. On October 7, 2023, Scienjoy Verse entered into a share acquisition agreement with a third party to purchase 90% equity interests in SJ Verse Global Media LLC (formerly known as "Nujoom Almashareq Media L.L.C"). The transaction was completed on October 7, 2023. On July 1, 2024, we terminated the trust agreement between Scienjoy Pte. Ltd and Mr Xiaowu He, resulting in Scienjoy Pte. Ltd directly owns 51% equity interest of Scienjoy Verse.

On April 11, 2024, we formed a 51% owned subsidiary Scenovo Pte. Ltd. and its 70% owned subsidiary Techjoy Pte. Ltd. in Singapore, which is engaged in developing multi-channel network business in Singapore and other international markets.

On May 30, 2024, we formed a 51% owned subsidiary Hangzhou Sixiang Fengjing Culture Technology Co., Ltd. in Zhejiang province, PRC, as an investment holding company.

On July 1, 2024, Scienjoy Verse sold its 90% equity interest of SJ Verse Global Media LLC to Scenovo Pte. Ltd.

On April 1, 2025, we acquired 70% equity interest in Star Home Global Media FZ-LLC Star Home is a Dubai-based multi-channel network ("MCN") company.

On April 14, 2025, we formed a 51% owned subsidiary Fashionfly Limited, which is engaged in developing multi-channel network business.

On October 1, 2025, we acquired 70% equity interest in SH Entertainment Co., Ltd. SH Entertainment is a South Korea-based multi-channel network (MCN) company.

Kashgar Sixiang Times Internet Technology Co., Ltd. ("Kashgar Times") was deregistered on March 17, 2026 and Huayu Hefeng (Qingdao) Technology Co., Ltd. ("HYHF") was deregistered on July 7, 2025 due to inactivity for the year ended December 31, 2025.

**Adoption of Dual-class Structure and Authorization of Class A Preferred Shares**

On November 8, 2021, at 10:00 a.m. local time in Beijing, China we held our 2021 annual general meeting of shareholders (the "AGM") at which the shareholders' resolutions approved: (i) the adoption of a dual-class share structure, pursuant to which our authorized share capital shall be re-classified and re-designed into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one (1) vote and each Class B ordinary share being entitled to ten (10) votes at a meeting of the shareholders or on any resolution of shareholders; and (ii) the authorization to our Company to issue up to 50,000,000 Class A Preferred Shares with such designations, powers, preferences and relative, participation, optional and other rights, if any, and such qualifications, limitations and restrictions as the directors may determine among other matters.

**B.** **Business Overview** 

**Mission**

We are committed to establishing a mobile entertainment social community where users can enjoy interactive mobile live streaming and asynchronous social connection.

**Overview**

We are a provider of mobile live streaming platforms in China and focuses on interactive show live streaming from broadcasters to users. We had 96,653 active show broadcasters for the year ended December 31, 2025. We had over 332.3 million registered users by the end of December 31, 2025. For the year ended December 31, 2025, the number of paying users was 383,695, which represents a decrease of 22.4% from 494,652 paying users in fiscal year ended December 31, 2024. Before the BeeLive Acquisition, we operated primarily on three platforms (Showself Live Streaming, Lehai Live Streaming and Haixiu Live Streaming). Through the BeeLive Acquisition, we added two additional platforms (BeeLive Chinese (MiFeng) and BeeLive International) to our businesses. Through the Hongle Acquisition, we added one additional platform (Hongle.tv) to our businesses. All our platforms are using our own mobile applications, and have created a vibrant, interactive, and close community.

We operate a mobile live streaming business which provides live streaming entertainment from professional "broadcasters" to the end-users, allowing for operation of live social video communities. Using our mobile applications, users can select broadcasters and enter real time video rooms to interact with them. In addition to real-time interaction, users can also view photos posted by broadcasters in their personal pages, leave comments, and engage in private chats with broadcasters when such broadcasters are not streaming. In addition, users can also play simple and fun games using virtual currencies within the video rooms while watching live streaming of a broadcaster.

While users have free access to all real time video rooms, revenue is primarily generated through sales of our virtual currency. Users can purchase virtual currency on our platforms and can use such virtual currency to buy virtual items for broadcasters to show their support. We share revenues generated on the platforms with talents agencies, which in turn share revenues with broadcasters. Under the leadership of our experienced management team, we continue to invest in technology advancement and industry collaboration to expand its user base and improve its content. We are dedicated to achieving sustainable development and transforming the industry through its bold and creative live streaming philosophy.

We believe we have achieved significant growth since our inception. The number of registered users of the Company's platforms at year end has increased from 170.7 million in 2018 to over 330 million in 2025. The platforms' annual ARPPU was RMB2,714 and RMB3,138 for the years ended December 31, 2024 and 2025, respectively.

**Our Competitive Strengths**

We believe the following competitive strengths contribute to our success and differentiate us from our competitors:

***Multi-Platform Live Streaming***

Starting in 2014 with the launch of the Showself Live Streaming platform, our user base has grown into one of the largest in China. We believe our show live streaming products satisfy users' psychological needs and decrease users' stress, loneliness, depression, frustration etc. in real life.

Our user traffic and revenue spread across multiple products supported by multiple mobile applications. We believe this multi-product approach increases our competitiveness by allowing us to target different sections of the population simultaneously more effectively, achieve better traffic matching between users and broadcasters, extend the retention of broadcasters and users on our platforms, and benefit from user traffic acquisition while mitigating risks of focusing on a single platform. We believe that our already established position across multiple platforms provides us with the ability to compete effectively for users and a base from which we can expand, either into additional show live streaming platforms or into other sections of the live streaming market.

As a pioneer in the live streaming market, we developed our own set of end-to-end (broadcaster-to-user) mobile video solutions. Many of the systems and technologies we have developed, including, among others, our mobile-compatible animation engine technology, event-driven asynchronous business processing mechanism, linearly expanding deployment of our servers, modular service development and assembly, high-throughput parallel messaging service clusters and spam filtering based on machine learning, provide us with competitive advantages. We believe our existing systems and technologies, supported by our continuing efforts in technology innovation, including with regard to augmented reality/virtual reality ("AR/VR"), artificial intelligence ("AI"), big data technology, machine learning and physics engine technology, provide us with the necessary technical skills to compete and expand in this rapidly changing industry.

***Innovative Product Features and Operating Philosophy***

Our product offerings include numerous innovative features designed to improve user experience, increase user-stickiness, and enhance its monetization ability. These include, among others:

● gamified product and operating philosophy that enable users to enjoy an exciting alternative life in the mobile live streaming virtual world. In this virtual world, users can enjoy the real interactive activities with broadcasters and also build their own virtual life.

● a range of online games for users to play while watching streaming. These include simple, fun games like pet run, crazy racing and gold egg smashing. Users pay virtual currency to play games for a chance to hit a virtual currency jackpot or win virtual goods that they can then send to broadcasters who can then monetize the goods. These games enhance user engagement during live streaming and encourage and facilitate the use of virtual currency and virtual goods.

● both real-time streaming and asynchronous social functions. Users of our platforms can communicate with broadcasters and other users not only when broadcasters are streaming, but also afterwards through sending private texts and photos, and commenting on photos posted on the personal pages of specific broadcasters. This allows users to interact with broadcasters and their communities any time they wish.

***Strong Data Analytics Capabilities***

The ability to understand market traffic and pair users with suitable broadcasters and activities is key to driving user stickiness and monetization in the mobile live streaming industry. We are able to use analytics-driven operational capabilities to understand individual user behavior and larger industry trends. This allows us to better guide individual users to appropriate broadcasters, adjust the platform interface to guide user traffic throughout the broadcasters while maintaining user experience, and analyze traffic on other sites such as network alliances to select the best methods and targets for traffic acquisition. Our data insights and strong technological capabilities enable us to innovate and optimize products on an ongoing basis and allow us to precisely operate our platforms based on large quantities of statistics collected and analyzed.

***Experienced Management Team and Professional Staff with Strong Operational Capabilities***

Our senior management team has extensive experience working with the mobile Internet, in related computer-technology industries, big data analysis, and cutting-edge technologies. Members of our senior management team have experience of over 20 years in various segments in technology, business operation, and Internet industries. Under the leadership of its senior management members, we have successfully identified trends in mobile streaming and timely seized opportunities for growth and innovation.

Our management team has extensive experience and skill in research and development, quality control, and Internet infrastructure and operations. We believe that as mobile streaming matures, strong operational and execution capabilities will become increasingly important to remaining competitive and our strong team with years of relevant experience will provide us with a competitive advantage.

**Our Strategies**

Our business objective is to further strengthen our position in the mobile show live streaming industry and to leverage our existing position to expand its business into other related industries in China and oversea markets. Looking forward, we will seek to make use of "live+", explore entertainment online-merge-offline ("OMO") models, integrate resources across the industry value chain, and build an ecosystem of mobile live streaming in order to meet the diverse needs of our users. We intend to implement the following strategies:

***Provide More Engaging and Professional Content***

We will keep introducing more engaging content to retain users and further boost users' willingness to purchase virtual goods. Although most broadcasters working in the live streaming industry provide various forms of entertainment for users, the content provided is generally not as professional as traditional performers. Therefore, there is still an opportunity for us to cooperate with more traditional artists and to train our broadcasters to produce a more professional product.

***Further Expand Our Mobile Live Streaming Business in China and Overseas***

We intend to update our mobile applications to allow for easier content creation and sharing by our users. We believe that the convenience offered by our services will continue to improve user stickiness and develop into a destination for social interactions. Meanwhile, our multiple platforms can serve a broad range of potential end markets. We plan to integrate our registered user accounts across multiple mobile applications into a unified account system. We believe this will lead to a virtuous cycle: an expected higher user engagement level would provide us with more opportunities to cross-promote its products and gather incremental user data for further product optimization and development.

We have plans to expand our business globally. We have obtained considerable experience in mobile live streaming industry and plans to promote its mobile live streaming platform in Southeast Asia, Middle East and South America. On August 10, 2020, we signed an Equity Acquisition Framework Agreement (the "BeeLive Acquisition Agreement") with Sciscape International Limited, Tianjin Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology Co., Ltd. Pursuant to the BeeLive Acquisition Agreement, we, through Scienjoy Inc., acquired 100% of the equity interest in Sciscape International Limited which holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity), acquired 100% of the equity interest in Tianjin Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant to the BeeLive Acquisition Agreement, we are required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in Class A ordinary shares (approximately 5.4 million Class A ordinary shares) to be issued by us. 30% of share consideration payments are subject to certain performance conditions and requirements over the following three years. On August 21, 2020, all target shares were transferred to the parties designated in BeeLive Acquisition Agreement. On September 10, 2020, we paid a cash consideration of RMB50.0 million to Tianjin Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Class A Ordinary Shares to Cosmic Soar Limited. Tianjin Guangju Dingfei Technology Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin) Technology Co. and Sciscape International Limited changed its name to Scienjoy BeeLive Limited. BeeLive is a global live streaming platform that initially launched in China in November 2016. Since the second half of 2019, BeeLive began expanding into international markets. To date, BeeLive International offers Arabic language live streaming product in the Middle East and Thai language live streaming product in Southeast Asia.

On December 29, 2021, SHC entered into an Equity Acquisition Framework Agreement (the "Framework Agreement") with Golden Shield Enterprises Limited ("Golden Shield"), Beijing Weiliantong Technology Co., Ltd. ("Weiliantong", together with Golden Shield, the "Target Companies", and each a "Target Company"), Tianjin Yieryi Technology Co., Ltd. ("Yieryi"), Wolter Global Investment Limited ("Wolter Global", together with Yieryi, the "Sellers", and each a "Seller") and Qingdao Weilaijin Industry Investment Fund Partnership (Limited Partnership) ("Weilaijin"), which is one of the shareholders of Yieryi. Pursuant to the Framework Agreement, SHC, or its affiliates designated by SHC, acquired all of the outstanding equity interests of (i) Weiliantong from Yieryi and (ii) Golden Shield from Wolter Global (the "Hongle Acquisition"). Yieryi and Wolter Global are under common control. The transactions contemplated under the Framework Agreement have closed on January 1, 2022 (the "Closing").

Upon the closing of transactions contemplated in the Framework Agreement, SHC acquired 100% of the issued and outstanding securities of Weiliantong and Golden Shield for an aggregate consideration of RMB280 million (approximately US$43.8 million), including RMB100 million (approximately US$15.6 million) in cash and RMB180 million (approximately US$28.2 million) in our Class A ordinary shares. The cash consideration includes RMB13.8 million (approximately US$2.2 million) cash to Yieryi and repayment of (i) the outstanding loans of Yieryi in an aggregate amount of RMB77.4 million (approximately US$12.1 million) and (ii) a third-party loan incurred by Weiliantong in an amount of RMB8.8 million (approximately US$1.4 million). The shares consideration consists of RMB20.8 million (approximately US$3.3 million) in our Class A ordinary shares to be issued to Weilaijin (the "Weilaijin Share Consideration"), a shareholder of Yieryi, and RMB159.2 million (approximately US$24.9 million) in our Class A ordinary shares to be issued to Wolter Global (the "Wolter Global Share Consideration").

Hongle.tv is a similar mobile application to our existing four platforms, "Showself" (秀色直播), "Lehai"(乐嗨), "Haixiu" (嗨秀), and BeeLive Chinese ("MiFeng" 蜜疯直播). Such platforms are launched in China in the Chinese language. The only differences as compared to the four said platforms are that 1) The said four platform are viewed on the mobile apps with broadcasters occupying half of the screen at the top while comments and social chat at the bottom while in Hongle.tv, broadcasters occupy the full page of the screen; 2) The said four platforms are targeted at general public while Hongle.tv is focused on younger generations especially university students.

On September 6, 2023, we announced our strategic investment of US$3 million to acquire a 30% equity interest in DVCC TECHNOLOGY L.L.C, a Dubai-based metaverse company dedicated to transforming entertainment through innovation. This pivotal move signifies our unwavering commitment to metamorphosing its business transformation strategy from mobile entertainment to metaverse lifestyle, catalyzed by global expansion starting from the dynamic Middle East and North Africa ("MENA") region. In April, 2024, we formed a 51% owned subsidiary Scenovo Pte. Ltd. and its 70% owned subsidiary Techjoy Pte. Ltd.in Singapore for the purpose of developing business in Singapore and other international markets.

On August 26, 2025, Scenovo SG entered into a share acquisition agreement with a third party to purchase 70% equity in SH Entertainment for a consideration of RMB7.9 million. The transaction was completed on October 1, 2025. SH Entertainment is a South Korea -based multi-channel network ("MCN") company.

***Explore Other Technological Services Businesses***

Our income has historically come from sales of virtual currency to users. Almost 100% of our total revenue has derived from the sale of virtual items and virtual currency with respect to its live streaming business. Going forward, we plan to leverage our expertise and user base to expand its revenue sources. In particular, we plan to enter into cooperative arrangements with smaller live-streaming team, through which we will provide such platforms with technology, operation and maintenance and promotional support services in return of revenue sharing.

***Continue to Invest in and Develop Technologies Such as Virtual Reality ("VR")/Augmented Reality ("AR") and Artificial Intelligence ("AI")***

We intend to continue to invest in our data analytics capabilities and cutting-edge technologies. We also plan to further develop our technology stacks, including, but not limited to, machine learning, physics engine, AR/VR, and AI technologies to better understand and anticipate user behavioral trends, which in turn can be used to develop our applications.

***Tap into the Next Phase of Significant Industry Potential through M&A***

Mergers & Acquisitions will be one of crucial strategies to expand our business swiftly and support rapid execution of each element of our business growth. The targeted sectors include related high-tech companies, data analysis companies, live streaming companies (especially oversea targets), new media advertising companies, and beauty industry related companies. We have consummated the BeeLive Acquisition in 2020 and the Hongle Acquisition recently.

**Our Platforms**

We operate our live streaming communities through multiple platforms, each with our own mobile applications. After the recent acquisition of Beelive, we currently operate primarily six platforms: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming Chinese (MiFeng), BeeLive International, and Hongle Live Streaming. We believe these platforms together make us the leading provider of mobile show live streaming.

***Showself Live Streaming***

Showself Live Streaming is our first live streaming platform and remains the most popular of our platforms in terms of registered users and revenue. The platform was first launched in April 2014. Showself Live Streaming is widely accessible to most mobile internet users in China because our live streaming-enabled features only require minimal bandwidth. The following is the typical screenshot for the mobile application of Showself Live Streaming.

***Lehai Live Streaming***

Lehai Live Streaming was launched in July 2015 and adheres to the concept of "having fun together." The following is the typical screenshot for the mobile application of Lehai Live Streaming (the corresponding iOS version may vary).

![](ea028451001_img2.jpg)

***Haixiu Live Streaming***

Haixiu Live Streaming was launched in April 2016 and is our third platform. The following is the typical screenshot for the mobile application of Haixiu Live Streaming (the corresponding iOS version may vary).

***BeeLive Chinese (MiFeng)***

BeeLive Chinese (MiFeng) was launched in mainland China in November 2016. The following is the typical screenshot for the mobile application of BeeLive Chinese (MiFeng) (the corresponding iOS version may vary).

![](ea028451001_img4.jpg)

***BeeLive International***

BeeLive International was launched in second half of 2019 and provides Arabic language service covering the Middle East and Thai language service covering Southeast Asia and Thai speakers in the Middle East. The following are two typical screenshots for the mobile application of BeeLive International in Arabic and Thai, respectively (the corresponding iOS version may vary).

![](ea028451001_img5.jpg)

![](ea028451001_img6.jpg)

**Hongle Live Streaming**

Hongle Live Streaming was launched in mainland China in 2016. We acquired such platform in January 2022. The following is the typical screenshot for the mobile application of Hongle Live Streaming (Hongle). (the corresponding iOS version may vary).

![](ea028451001_img7.jpg)

***Key Differences among the Platforms***

All six platforms are categorized as "show live streaming" in which professional broadcasters provide live streaming entertainment for users primarily in the form of performances, such as singing, dancing, talk shows, etc. Broadcasters on all six platforms have been trained by broadcaster agents to provide content more professional than that of average amateur broadcasters. Due to a variety broadcasters, user and geographical bases, the six platforms differ in their operation strategies, including the following:

● Showself and Lehai are two of our largest platforms. Because of their large number of broadcasters and users base, Showself and Lehai have capacity to organize different talent shows and events, such as singing, poem writing and traditional Chinese opera.

● As compared to Showself, Lehai and Haixiu have less users but who are likely to spend money on live streaming shows. As such, in addition to live streaming shows, Lehai and Haixiu offers more free games or games that do not require much spending.

● BeeLive Chinese (MiFeng), compare to other Chinese platforms, focus more on the need of social communications of our users, therefore its users tend to use them more often as a tool of communication with friends and peers.

● On BeeLive International, more users choose to become broadcasters where they can perform talent show themselves in front of other users and in turn receive revenue in the form of sharing fees.

● Hongle Live Streaming, in comparison with our other domestic platforms, focuses more on enabling ordinary people to broadcast timely with their mobile phones. As a result, comparably, it has a broader mobile broadcaster base and its broadcasters tend to be much younger.

***Layout and functions of the mobile application of our Platforms***

The layout and functions of the mobile applications of our platforms are substantially the same. The above screenshots and descriptions illustrate the layout and some of the basic functions of the Showself Live Streaming application:

●  ***Square.*** This page serves as a menu for currently streaming broadcasters. Users can search this page for broadcasters they would like to to watch. For users who do not already know any broadcasters or have no existing preference as to which broadcasters they want to watch, several groupings of broadcasters who are conducting ongoing live streaming are presented in the square under different headings to help viewers find a broadcaster they will enjoy. These groupings are organized under different labels, such as recommended broadcasters (based on comprehensive analysis and mining of user-specific data such as user's location, login time, retention, daily activity, and consumer behavior), broadcasters located in the same city as the users, broadcasters currently followed by the user, broadcasters recently viewed by the user, and broadcaster "PK" (broadcasters currently competing against each other in terms of value of gifts received within ten minutes), and other labels. Broadcasters' names, number of current online viewers, and grade based on the value of gifts received by such broadcaster along with a snapshot of the current stream are provided on the pages for viewers' use in selecting a broadcaster. These pages are updated with a new batch of broadcasters with every refresh by users, presenting them with a wider range of broadcasters to choose from. For new users, this interface provides them with an easy way to start exploring the platform. For existing users, broadcasters with closest relationship in terms of chat frequency and value of gifts sent are always presented in the first page of the square if the broadcaster is online and this makes it easier for users to closely watch live streaming of broadcasters they have followed. In all cases, clicking on a broadcaster's picture will take users to a real time video room from which they can view and interact with the broadcaster.

●  ***Ranking Lists.*** This page presents lists of top broadcasters by various criteria, including highest value of gifts received by the broadcasters (on a daily, weekly, monthly and all-time basis) and greatest number of virtual flowers or the specially designated weekly "star gifts." Received by broadcasters. These ranking lists provide further information to viewers about broadcasters' popularity to help them identify top broadcasters and can also motivate users to support their favorite broadcasters on the list. This also promotes positive competition between broadcasters. The page also contains lists of viewers (by account name) that have spent the highest amount of virtual currency in the last day, week, month and all-time.

●  ***Guardian Teams.*** Guardian teams are small groups of users organized by users with sufficient high user grades and which other users can join. This function allows small groups of like-minded users to interact online, form friendships, and support their favorite broadcasters as a group. This encourages user engagement and active participation. This also helps to improve user experience and enhance users' propensity to spend their virtual currency. The guardian team page shows rankings of guardian teams by various criteria, including highest value of virtual currencies spent by guardian teams (on a daily and all-time basis) and the value of gifts received by the broadcasters from top guardian teams (on a weekly and bi-weekly basis).

●  ***Discovery.*** This page allows users to follow photos posted by broadcasters and activities organized by the platform. It is also the page through which users can purchase virtual items using "Xiu Bi," the virtual currency used on the platform.

●  ***Me.*** Users can check and manage their personal accounts through this page. Personal account information displayed mainly includes the broadcasters by such users, current virtual currency balance, virtual items purchased, guardian teams to which the users belong and intimate broadcasters list.

**Content on Our Platforms**

We have a number of live broadcasting platforms. They provide entertainment content for users and have actively explored new entertainment, new agency, and other fields in the upstream and downstream industry, combining entertainment, agents, and mobile Internet to create online entertainment online-merge-offline ("OMO"). For the agents, the platforms provide support for product activities, brand building, management empowerment, data support, and technical tools, and help it clarify its development path and strategy from the perspective of industry analysis. For the broadcasters, the platforms have provided training through agents for items such as stage decoration, lighting, music, attire, makeup, costumes, talent skills (such as singing, dancing, talk show and musical instruments), communication skills, and service awareness. The platforms, agents, and broadcasters rely on each other and bridge the path for each other to build a healthy and stable entertainment ecology.

For us, the establishment of a content security system is not only a means of defense but also a strong strategic offense. Through AI technology, image recognition, big data analysis, combination of artificial audit, the platforms have a vertical monitoring system to monitor all live streaming content 24/7 to ensure that the content is legal and in compliance. Our AI technology also ensures the best service is provided to every user at every possible instance, thus creating a refreshing and delightful user experience to increase our revenue.

Quality and engaging content is the core of our development. One way for us to offer engaging content is to organize a variety of original shows on our platforms, such as "Singer Alliance," "Run Ms. Cang Run" and "King of Brain PK." Secondly, our platforms make efforts to support talented broadcasters by organizing special shows for these broadcasters such as "Crown of Weekly Star" and "The Showself Voice." Thirdly, our platforms continue to expand their shows to new areas such as traditional opera and intangible cultural heritages. These shows include the live streaming series of "Revisiting the Intangible Cultural Heritage," "Beauty of Quintessential Chinese Culture," and "I Write a Love Poem for My Hometown."

**Our Users**

We have an active and well-structured user base. In 2014, we transformed ourselves from a social network platform to a show live streaming platform. Since then, we have experienced increased broadcasting competition and refined our operations. We have also accumulated a diversified user group through constant innovation and promotion. Throughout December 31, 2023 up to December 31, 2025, the number of registered users on our platforms have reached over 330 million.

We do not limit ourselves to acquiring users solely through self-growth fission or third-party marketing. Instead, we adopt the model of win-win game to achieve stable and mutually beneficial expansion of our user base. In 2025, the number of paying users for our platforms was 383,695 and their average revenue per paid user (ARPPU) for fiscal 2025 was RMB3,138.

To mitigate any concentration risks from a single user group structure, we have been working on to develop a diversified base of user groups, which include young active users with short interest span as well as users in their thirties with high spending power. In addition, a considerable number of our users are located in economically developed areas with more lifestyles devoted to lesiure. These users have relatively high disposable income and more leisure time. They tend to appreciate online entertainment more and accordingly are willing to spend money on online entertainment.

**Our Broadcasters**

The supply of talented and popular broadcasters is essential to us, particularly given our focus on developing professionally generated content. Broadcasters serve as the primary interface with users and, therefore, the success of our platforms depend largely on the talent and popularity of the broadcasters.

***Engagement of Broadcasters***

We primarily cooperate with online and offline broadcaster agents, or the talent agents, to recruit and manage broadcasters on an ongoing basis. Each of the platforms also has an online application process for registered users to become broadcasters and we will select certain applicants and refer them to the appropriate talent agents. As such, we enter into all contracts with the talent agents as opposed to with each broadcaster on an individual basis.

Before broadcasting on the platform, all broadcasters must agree to the terms and conditions of our platforms, which includes the rules of the platforms that the broadcasters must abide by while live streaming and also the legal consequences for violating any rules. If any such violations occur, we will hold the broadcasters directly liable.

For selected broadcasters we identify as popular or having great potential or offering high-quality content, in addition to the above two agreements, we will separately enter into an exclusivity agreement with such broadcasters, which requires that the broadcasters to be able to stream on our platforms exclusively for a certain period of time. In return, we provide more resources and support to such broadcasters by recommending their contents to potential interested users, increasing user traffic, and improving their popularity. We will be entitled to liquidated damages if any broadcasters breach their exclusivity agreements.

***Cooperation with the Talent Agencies***

Talent agencies recruit broadcasters and provide live streaming content to us. We share revenue with the talent agencies, who pay salaries to or share fees with their broadcasters. Talent agencies are also responsible for educating and training the broadcasters on live streaming skills and techniques, such as dress codes, room settings and communication skills. As a result, talent agencies help broadcasters to better present their live streaming content. The use of talent agencies also frees us from direct dealings with the broadcasters.

***Monitoring and Management of Broadcasters***

We set out rules with which broadcasters must comply with while using our platforms, including compliance with laws and regulations of the PRC, which includes and are not limited to the following: no performances involving guns, knives or threats to livelihoods, no infringement of legal rights of others and no pornography.

We have the right to monitor and manage the performances of any broadcasters on our platforms. Appropriate measures are taken with respect to any broadcasters that fail to comply with the above mentioned rules. Such measures range from warnings and fines to temporary or permanent suspension from our platforms. Such actions can be taken unilaterally by us as we deem fit. Since broadcasters are represented by agents, notice of any illegal behavior or violations of platform rules will also be made to the relevant agent. The relevant agent is required to correct any such violation upon receipt of the notification. If the violation is not corrected during the applicable grace period, we have the right to terminate our cooperation with the relevant agent.

**Marketing**

Our marketing and promotional strategy includes, among others, the use of third-party marketing channels to both promote our platforms and acquire users. These marketing channels primarily include advertising agencies which provide us with market visibility and numerous opportunities to attract new users. We typically enter into one-year framework agreements with such advertising agencies which require us to purchase a minimum aggregate amount of advertising during the terms of the agreements. The advertisements are either display-based or performance-based, and are priced primarily based on cost-per-download, cost-per-time, cost-per-activation or cost-per-click. We are generally able to monitor the performance and effectiveness of the advertisements directly or through the advertising agencies.

We use mobile application platforms, such as the Apple App Store and Android App Download Centers, to dispense and showcases our mobile platforms to a wide audience as well as to advertise the positive customer feedback which our platforms have received. Users can download the apps from these application platforms for free. Users are also able to review and rate our applications through these platforms.

**Quality Control and Content Monitoring**

We have programmers with extensive application testing experience who systematically test our platforms to ensure that they conform to our standards. We are also required under PRC laws and regulations, such as the Administrative Provisions on Mobile Internet Applications Information Services, to monitor content on our platforms.

We have developed a comprehensive system to screen content on our applications against a filter list, item by item. The filter list compiles content and behaviors that we have determined, taking into account relevant PRC laws and regulations, to be likely to be indicative of inappropriate, politically-sensitive, provocative or inflammatory language, sexually-suggestive language and body movements, full or partial nudity or illegal content or activities, abusive language or actions towards other users, spam, scams, or acts and threats of violence. Content identified as falling into the filter list would be blocked or removed from our platforms. In addition, we regularly review any complaints alleging the inappropriate nature of content on our platforms and remove such content promptly.

Broadcasters are also responsible for monitoring the content in their rooms and ensuring that their rooms comply with applicable laws and regulations and terms of our service. Broadcasters can block users who transmit inappropriate information from posting comments in their rooms or exclude users from their rooms. Broadcasters can also delegate certain users to act as moderators to help manage rooms in this way. We also monitor and take measures to deal with any infringements of our content policies by broadcasters.

**Payment**

Users are able to purchase virtual items we sell on our platforms by using virtual currency. Generally, users purchase virtual currency from third-party distributors with which we have entered agreements. Users are also able to purchase virtual currency directly from our platforms using various payment channels such as Alipay and WeChat Pay. Once users have purchased such virtual currency, they are able to purchase virtual items. Once purchased, such virtual currency or virtual items cannot be returned in exchange for cash and we do not provide users with a right of refund of any kind.

**Our Technology**

We possess technological infrastructure and capacity that supports increasing operational efficiency, enabling innovations, and outperforming our competitors.

●  ***AI And Big Data Analysis*** : By using data science and AI technology, we analyze user behavioral data. Through the results of such data analysis, we can better understand users' needs and know how to better match content with users. These operations help us improve our user experience as well as paying ratio and ARPPU.

●  ***Live Streaming Technology*** : We have a complete peer to peer, where the host starts to stream video for the user to play, live mobile video solution with independent intellectual property rights under constant optimization. On the user end, we have made special optimization for video streaming playback processing in combination with CDN service providers, which supports fast video download and opening, reasonable buffering to reduce the Caton rate, so as to ensure a smooth experience for users.

●  ***Video Monitoring Technology*** : This specially developed monitoring program can carry out real-time video monitoring for all video streams in combination with AI technology, and create a three-dimensional content monitoring system in combination with 24-hour continuous manual audit to discover potential violations and block applicable content.

●  ***Server and Infrastructure*** : By using the situation awareness security service provided by Alibaba cloud and combined with the self-built monitoring platform, we can alert our system of abnormal phenomena and prevent virus and hacker intrusion.

**Intellectual Property**

We regard our software copyrights, domain names, trademarks and other intellectual property as critical to our success. As of December 31, 2025, we had registered 390 copyrights in China, 15 domain names, 11 patents for live streaming technology, and 106 trademarks.

We rely on trademark and copyright law, trade secret protection, non-competition and confidentiality and/or license agreements with our employees, customers, partners and others to protect our intellectual property rights. In general, our employees must enter into a standard intellectual property and confidential agreement which acknowledges that (1) all inventions, trade secrets, developments and other processes generated by such employees on our behalf are our property, and such employees are assigning to us any ownership rights they may claim in those work; and (2) such employees undertake to keep confidential all information related to our methods, business and trade secrets during and for a reasonable time after their employment with us.

**Competition**

Our focus is on livestreaming and in this area we face significant competition from providers of similar online streaming services. Our competitors in the mobile live streaming market in China include Hello Group and JOYY, as well as other pan-entertainment streaming platforms such as Inke, Huafang, and gaming streaming platforms such as DOYU and HUYA. We compete to promote our products and gain users, to attract and hire management personnel with operational experiences, and to secure diversified marketing channels.

**Legal Proceedings**

In March 2022, Beijing Weiliantong Technology Co., Ltd. ("Weiliantong"), one of our PRC subsidiaries was sued in a litigation brought by certain individual ("WLT Litigation") in Wuyuan County People's Court, Inner Mongolia Autonomous Region, China. In the WLT Litigation, Weiliantong was named as a joint defendant together with a broadcaster of the Hongle.tv live streaming platform, which was operated by Weiliantong. In this case, one of the reliefs demanded by the plaintiff was a refund in the amount of RMB 2,113,879 and accrued interest to the plaintiff. On November 25, 2022, in the judgment made by the first instance trial court, the court ruled in favor of the plaintiff and determined that Weiliantong should refund such amount of RMB 2,113,879 and accrued interest to the plaintiff. Weiliantong subsequently appealed on December 9, 2022 in Bayannur City Intermediate People's Court, Inner Mongolia Autonomous Region, China. In the second instance trial, Weiliantong was successful in its appeal. However, the plaintiff applied for a retrial, and the Higher People's Court of Inner Mongolia Autonomous Region decided to hear the case. On August 13, 2024, the WLT Litigation was reheard in the Intermediate People's Court of Bayannur City, Inner Mongolia Autonomous Region. Upon retrial, on April 25, 2025, the Intermediate People's Court of Bayannur City, Inner Mongolia Autonomous Region upheld the judgment issued on December 9, 2022 by the Bayannur City Intermediate People's Court The case number is (2024) Nei 08 Min Zai No. 38.

We are currently not a party to any material legal or administrative proceedings. We have been and may become a party to a various legal or administrative proceedings arising in the ordinary course of our business, including matters relating to contractual disputes. 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. See "Item 3. Key Information-D. Risk Factors-Risk Factors Relating to Our Business and Industry-We may be held liable for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users if such content is deemed to violate any PRC laws or regulations, and PRC authorities may impose legal sanctions on us," and "Item 3. Key Information-D. Risk Factors-Risk Factors Relating to Our Business and Industry-We may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users, or for proprietary information appropriated by former employees, which may materially and adversely affect our business, financial condition and prospects."

**REGULATIONS IN THE PRC**

*This section summarizes the principal current PRC laws and regulations relevant to our business and operations*.

As the live streaming industry is still at an early stage of development in China, new laws and regulations may be promulgated from time to time to introduce new regulatory requirements, including but not limited to, requirements of obtaining new licenses and permits in addition to those we currently have. There are substantial uncertainties with respect to the interpretation and implementation of current and future PRC laws and regulations, including those applicable to live streaming industries and our business. This section sets forth a summary of the most significant laws and regulations that are applicable to our current business activities in China and that affect the dividends payment to our shareholders.

**Regulations Relating to Telecommunications Services**

In September 2000, the State Council issued the Regulations on Telecommunications of China, or the Telecommunications Regulations, as amended on July 29, 2014, February 6, 2016 and March 29, 2022, to regulate telecommunications activities in China. The Telecommunications Regulations set out basic guidelines on different types of telecommunications business activities in China. According to the Catalog of Telecommunications Business (2015 Amendment) implemented on March 1, 2016 (as amended on June 6, 2019), Internet information services constitute a type of value-added telecommunications service. The Telecommunications Regulations require operators of value-added telecommunications services to obtain value-added telecommunications business operation licenses from Ministry of Industry and Information Technology (the "MIIT"), or its provincial branches prior to the commencement of such services.

The Regulations for the Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, which took effect on January 1, 2002 and were amended on September 10, 2008 and February 6, 2016, regulate foreign direct investment in telecommunications companies in China. The FITE Regulations stipulate that foreign investors are generally prohibited from holding ultimately more than 50% of equity interest in a foreign-invested enterprise that provides value-added telecommunications services, including, among others, provisions of Internet content. In addition, foreign investors are required to have sufficient experience operating value-added telecommunications business when applying for the MIIT's value-added telecommunications business operation license.

On July 13, 2006, the Ministry of Information Industry (which is the predecessor of MIIT) issued the Circular on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services, or the MIIT Circular 2006, which provides that (a) foreign investors can only operate a telecommunications business in China through telecommunications enterprises with a valid telecommunications business operation license; (b) domestic license holders may not rent, transfer or sell telecommunications business operation licenses to foreign investors in any form or provide any foreign investors with resources, venues or facilities to promote unlicensed operations of telecommunications businesses in China; (c) value-added telecommunications service providers or their shareholders must directly own the domain names and registered trademarks that are used in their daily operations; (d) each value-added telecommunications service provider must have necessary facilities for its approved business operations and maintain such facilities in the geographic regions specified in its license; and I all value-added telecommunications service providers should improve their network and information security, establish a relevant information safety system and set up emergency plans to ensure network and information safety.

According to the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2024 version) (the "Negative List") promulgated jointly by the MOFCOM and the National Development and Reform Commission (the "NDRC") on November 1, 2024, the Foreign investors are prohibited from making any investments in the industries which are listed as "prohibited" in the Negative List; and, after satisfying certain additional requirements and conditions as set forth in the Negative List, are allowed to make investments in the industries which are listed as "restricted" in the Negative List. For any foreign investor that fails to comply with the Negative List, the competent authorities are entitled to ban its investment activities, require such investor to take measures to correct its non-compliance and impose other penalties. The internet content service, internet audio-visual program services and online culture activities are subject to foreign investment restrictions/prohibitions set forth in the Negative List.

**Regulations Relating to Internet Information Services**

The Administrative Measures on Internet Information Services (the "ICP Measures") issued by the State Council on September 25, 2000 and amended on January 8, 2011, regulate provisions of Internet information services in the PRC. According to the ICP Measures, Internet information services refers to provisions of information through the Internet to online subscribers, including commercial and non-commercial services. Pursuant to the ICP Measures, commercial Internet information service providers shall obtain ICP Licenses from relevant PRC local authorities before engaging in commercial Internet information services in China. The Measures for the Administration of Telecommunications Business Licensing issued by Ministry of Information Industry on June 21, 2017 and effective on September 1, 2017 further provides the requirements and formalities regarding application for value-added telecommunications business operation licenses, which is also regarded as the guideline for application for ICP License in local competent authorities. In addition, according to relevant PRC laws, administrative regulations or rules, providers of Internet information services in respect of news, publishing, education, medical treatment, health, pharmaceuticals or medical apparatuses shall obtain consent of the relevant PRC competent authority before applying for an operating permit or carrying out record-filing procedures.

Additionally, the ICP Measures and other relevant measures also prohibit publication of any content that propagates, among others, obscenity, pornography, gambling and violence, incite the commission of crimes or infringe upon the lawful rights and interests of third parties. If an Internet information services provider detects that information transmitted on its system falls under the specified prohibition, such provider must immediately terminate the transmission and delete the information and report it to the government authorities. Any provider's violation of these prohibitions, in serious cases, will lead to revocation of its ICP License and shutdown of its Internet systems.

According to the Online Live Streaming Regulations published by on November 06, 2016 and effective on December 01, 2016, online live streaming service providers and online live streaming publishers that provide internet news information services without licenses, or exceeding the scope of their licenses, are subject to punishment by the CAC and the internet information offices at the level of provinces, autonomous regions, or municipalities directly under the Central Government in accordance with the Regulations for the Administration of Internet News Information Services which may include an order to cease such services. Other violations of the Online Live Streaming Regulations are subject to punishment by the national and local internet information offices in accordance with PRC laws; if such violations constitute crime, criminal liability shall be investigated in accordance with relevant PRC law.

**Regulations Relating to Mobile Internet Applications Information Services**

In addition to the Telecommunications Regulations and other regulations above, mobile applications (the "APPs") and the Internet application store (the "APP Store") are specially regulated by the Regulations for the Administration of Mobile Internet Applications Information Services (the "APP Provisions"), which were promulgated by the Cyberspace Administration of China ("CAC") on June 28, 2016 and became effective on August 1, 2016, as amened on August 1, 2022.

Pursuant to the APP Provisions, the APP information service providers shall satisfy relevant qualifications required by laws and regulations, strictly carry out the information security management responsibilities and fulfill their obligations in various aspects relating to the real-name system, protection of users' information and the examination and management of information content. The APP Store service providers shall file with the local cyberspace administration authorities within thirty (30) days after its APP Store services have launched, and such APP Store service providers are responsible for overseeing APP providers operated on their stores.

On November 28, 2019, the Secretary Bureau of the CAC, the General Office of the MIIT, the General Office of the Ministry of Public Security and the General Office of the SAMR promulgated the Identification Method of Illegal Collection and Use of Personal Information Through App, which provides guidance for the regulatory authorities to identify the illegal collection and use of personal information through mobile apps, and for the app operators to conduct self-examination and self-correction and for other participants to voluntarily monitor compliance.

On July 22, 2020, the MIIT issued the Notice on Carrying out Special Rectification Actions in Depth against the Infringement on Users' Rights and Interests by Apps to urge app service providers, among others, to enhance the protection of users' personal information in relation to the download, installing and upgrade of apps.

**Regulations Relating to Online Transmission of Audio-Visual Programs and Online Living Streaming Business**

On April 13, 2005, the State Council promulgated the Certain Decisions on the Entry of the Non-public-owned Capital into the Cultural Industry, according to which private capital shall not use information network to engage in audio-visual programs service. On July 6, 2005, five PRC governmental authorities, including the Ministry of Culture ("MOC"), the State Administration of Radio, Film and Television ("SARFT"), the General Administration of Press and Publication ("GAPP"), the National Development and Reform Commission ("NDRC") and the Ministry of Commerce ("MOFCOM"), jointly adopted the Several Opinions on Canvassing Foreign Investment into the Cultural Sector. On December 20, 2007, the SARFT and the MIIT jointly promulgated the Provisions on the Administration of Internet Audio-Visual Program Service, which took effect on January 31, 2008 and were subsequently amended on August 28, 2015, according to which, the entities engaged in business of online audio-visual programs shall obtain the "License for Online Transmission of Audio/Visual Program". Under these provisions, foreign-invested companies are actually prohibited from engaging in the business of distributing audio-visual programs and service through Internet.

Providers of audio-visual program services through the Internet (including through mobile networks), in general, must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for Internet audio-visual program service determined by SARFT; and such providers are required to obtain the License for Online Transmission of Audio/Video Program issued by National Radio and Television Administration ("NRTA"), or complete certain registration procedures with NRTA.

On April 28, 2008, SARFT issued a Notice on Relevant Issues Concerning Application and Approval of License for the Online Transmission of Audio-Visual Programs, as amended on August 28, 2015, which further sets out detailed provisions concerning the application and approval process regarding the License for Online Transmission of Audio/Video Program. The notice also stipulates that the qualified entities for application of such license shall include the companies absolutely controlled by multiple state-owned shareholders and enterprises relatively controlled by state-owned capital (there shall be no affiliation between non-state-owned shareholders), and exclude foreign-invested enterprises. Further, on March 30, 2009, SARFT promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-Visual Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted through the Internet, including through mobile networks, where applicable, and prohibits certain types of Internet audio-visual programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.

On March 17, 2010, the SARFT issued the Internet Audio-Visual Program Services Categories (Provisional), or the Provisional Categories, as adjusted on April 7, 2017, which classified Internet audio/visual program services into four categories. In addition, the "Notice concerning Strengthening the Administration of the Streaming Service of Online Audio/Visual Programs" promulgated by the State Administration of Press, Publication, Radio, Film and Television (or the SAPPRFT, which is the predecessor of NRTA) on September 2, 2016 emphasizes that, unless a specific license is granted under the Provisional Categories, the audio/visual programs service provider is forbidden from engaging in live streaming on major political, military, economic, social, cultural and sports events.

On July 6, 2012, the SARFT and the CAC issued the Notice Regarding Further Enhancement of Management of Online Audio and Video Programs such as Online Drama Series and Microfilms, pursuant to which providers of Internet audio-visual program services which are engaged in the production of online audio-visual programs such as online drama series and microfilms and broadcast such programs on their own websites shall lawfully obtain the Radio and Television Program Production and Operating Permit issued by local branches of the NRTA and corresponding License for Online Transmission of Audio/Video Program at the same time. Providers of Internet audio-visual program services shall report the information on online audio-visual programs such as online drama series and microfilms which have been reviewed and approved to the provincial branches of the NRTA in their domiciles for filing.

On April 25, 2016, the SAPPRFT promulgated the Provisions on the Administration of Private Network and Targeted Communication Audio-visual Program Services, amended on Mar 23, 2021, which apply to the provision of radio, television programs and other audio-visual programs to a targeted audience on television and all types of handheld electronic equipment. This provision covers the Internet and other information networks as targeted transmission channels, including the provision of content, integrated broadcast control, transmission and distribution and other activities conducted in such forms as Internet protocol television, private network mobile television and Internet television. Anyone who provides private network and targeted transmission audio-visual program services must obtain a License for Online Transmission of Audio/Video Program issued by the SARFT and operate its business pursuant to the scope as provided in such license. Foreign-invested enterprises are not allowed to engage in the above referenced businesses.

On July 1, 2016, the MOC promulgated the Notice on Strengthening the Administration of Network Performance, which regulates the behavior of entities conducting businesses related to network performance and performers. Entities operating network performances shall be responsible for the services and content posted on their website by performers. They must refine their content management mechanism and shut down the channel and stop the dissemination of any network performance as soon as they realize that such network performance is in violation of relevant laws and regulations. Network performers shall be responsible for their performances and shall not perform any program containing violence, pornography, or other similarly prohibited elements.

In addition, the SAPPRFT issued the Notice Concerning Strengthening the Administration the Streaming Service of Online Audio-Visual Programs in September 2016, pursuant to which an Internet live-streaming service provider shall (i) equip personnel to review the content of the live-stream; (ii) establish the technical methods and work mechanisms in order to replace the unlawful content by using the backup program; and (iii) record the live-streaming program and keep the records for at least sixty (60) days to fulfill the inspections requirements from the competent administrative authorities. The CAC promulgated the Regulations for the Administration of Online Live-Streaming Services, or Internet Live-Streaming Services Provisions, on November 4, 2016, effect as of December 1, 2016, according to which, an Internet live-streaming service provider shall (a) establish a live-streaming content review platform; (b) conduct authentication registration of Internet live-streaming issuers based on their identity certificates, business licenses and organization code certificates; and (c) enter into a service agreement with Internet live-streaming services user to specify both parties' rights and obligations.

On March 16, 2018, the SAPPRFT issued the Notice on Further Regulating the Communication Order of Internet Audio-Visual Programs, which requires that, among others, audio-visual platforms shall: (i) not produce or transmit programs intended to parody or denigrate classic works, (ii) not re-edit, re-dub, re-caption or otherwise ridicule classic works, radio and television programs, or original Internet audio-visual programs without authorization, (iii) not transmit re-edited programs, which unfairly distort the original content, (iv) strictly monitor the adapted content uploaded by platform users and not provide transmission channels for illicit content, (v) immediately take down unauthorized content upon receipt of complaints from copyright owners, radio and television stations, or film and television production institutions, (vi) strengthen the administration of movie trailers and prevent improper broadcasting of movie clips and trailers prior to authorized release, and (vii) strengthen the administration of sponsorship and endorsement for Internet audio-visual programs. Pursuant to this notice, the provincial branches of the NRTA shall have the authority to supervise radio and television stations and websites that offer audio-visual programs within its jurisdiction and require them to further improve their content management systems and implement relevant management requirements.

On November 18, 2019, the CAC, the Ministry of Culture and Tourism and the National Radio and Television Administration jointly issued the Administrative Provisions on Internet Audio-Video Information Services, or the Internet Audio-Video Information Services Provisions, which became effective on January 1, 2020. The Internet Audio-Video Information Services Provisions define "Internet audio-video information services" as providing audio and video information production, uploading and transmission to the public via Internet platforms such as websites and applications. Entities providing Internet audio-video information services must obtain relevant licenses subject to applicable PRC laws and regulations and are required to authenticate users' identities based on their organizational codes, PRC ID numbers or mobile phone numbers, etc.

In November 2020, the National Radio and Television Administration issued the Notice on Strengthening the Management of Network Live-performance Streaming and E-Commerce Streaming, which requires a live-performance streaming platform to adopt and practically implement the real-name registration system for the streamers and the viewers who purchase virtual gifts for streamers by taking measures including real-name verification, face recognition and human review. Viewers who fail to pass the real-name registration shall not be allowed to purchase virtual gifts. Live-performance streaming platforms shall block any mechanism that allows minors to purchase any virtual gifts for the streamers. A platform shall set the limitations of maximum amount for purchasing virtual gifts for each time, each day and each month. If a viewer making virtual gift purchases that aggregately reach the half of the daily or monthly limitations, the platform shall notify such viewer and allow such viewer to make further purchase only when he or she confirms the payment through SMS verification or other methods. If a viewer making virtual gift purchases that aggregately reach the full daily or monthly limitations, the platform shall suspend purchase services to such viewer. A platform shall also adopt a delayed-fund-transfer system such that if a streamer commits illegal activities, the purchase of virtual gifts shall be refunded to viewers. In addition, the live-performance streaming platform shall not adopt operational strategies that encourage viewers to purchase virtual gifts irrationally. If the platform finds that any streamer or his or her agent implies, solicits or encourages viewers to make large amount purchases by means of disseminating vulgar information, engaging in organized publicity stunt or engaging a "water army" to purchase virtual gifts in large volumes, the platform shall take measures against such streamer and such agent, list him or her on a watch list and report him or her to the radio and television administration authorities. In addition, it requires live-performance streaming platforms and e-commerce streaming platforms to complete filing with the National Information Registration Administration System of Online Audio/Video Platforms prior to November 30, 2020.

On April 12, 2022, the Online Audio-visual Program Management Department of NRTA and the Publishing Bureau of the Central Propaganda Department issued the Notice on Strengthening the Management of Livestreaming of Online Games on the Online Audio-visual Program Platforms. The Notice provides that online audio-visual program platforms, including live streaming platforms shall not (i) disseminate illegal games on audio-visual program platforms; (ii) stream online games that have not been approved by the competent authorities; and (iii) use live broadcast rooms and other forms to drive traffic for the illegal game content on various platforms. Further, the Notice requires live streaming platforms to strengthen the management of game livestreaming content. For example, livestreaming platforms, in particular, online game livestreaming platforms, shall strictly control the content setting, publicity and interactions of users and take effective measures to strengthen the management of livestreaming of online games, such as establishing and improving the management system of information release, follow-up comments and emergency response related to living game programs and improving the program monitoring and public opinion monitoring mechanism. In addition, livestreaming platforms are also required to strengthen the guidance of the game anchor's code of conduct and establish and implement the protection mechanism for minors. The platforms that conduct livestreaming of online games shall set up anti-addiction mechanisms for minors, take effective measures to ensure that the "teenager model" is effective, implement the requirements of real-name system, prohibit minors from recharging and rewarding, and set up special channels for refund of rewards given by minors. The Notice also provides that those who violate the law should not use livestreaming to make sound appearances. In addition, online audio-visual platforms (including various domestic and overseas individual and institutional accounts opened on relevant platforms) should not live broadcast overseas game programs or competitions with obtaining approval from relevant authorities.

On December 18, 2025, the State Administration for Market Regulation ("SAMR") and the Cyberspace Administration of China ("CAC") jointly promulgated the Administrative Measures on Live-Streaming E-Commerce (the "Live-Streaming E-Commerce Measures"), which became effective on February 1, 2026. The Live-Streaming E-Commerce Measures establish a comprehensive regulatory framework governing all participants in the live-streaming e-commerce sector, including live-streaming e-commerce platforms, live-streaming room operators, and live-streaming marketing personnel. Key obligations under the Live-Streaming E-Commerce Measures include: (i) live-streaming e-commerce platforms are required to implement real-name registration systems for live-streaming room operators and live-streaming marketing personnel, verify their qualifications, and maintain records of their live-streaming activities; (ii) live-streaming room operators and live-streaming marketing personnel are prohibited from selling or providing goods or services that fail to meet personal and property safety requirements, that are adulterated or counterfeit, or that are prohibited from trading under applicable laws and regulations; (iii) live-streaming room operators and live-streaming marketing personnel are prohibited from making false or misleading commercial representations regarding the business entity, performance, functionality, quality, sales conditions, user reviews, honors, or qualifications of any goods or services, and are specifically prohibited from using artificial intelligence or other technologies to fabricate or disseminate false or misleading commercial information or to impersonate others for commercial promotion; (iv) where the content published by live-streaming room operators or live-streaming marketing personnel constitutes commercial advertising, they are required to fulfill the obligations of advertising publishers, advertising operators, or advertising endorsers in accordance with the PRC Advertisement Law; (v) live-streaming room operators that use artificial intelligence technologies to generate human images or videos for live-streaming e-commerce activities are required to comply with applicable laws, regulations, and mandatory national standards, and to make prominent disclosures to consumers; and (vi) live-streaming e-commerce platforms are required to establish mechanisms to monitor and manage the content of live-streaming activities and to take prompt corrective measures upon discovering any violations of applicable laws and regulations.

**Regulations Relating to Online Cultural Activities**

The Ministry of Culture promulgated the Provisional Measures on Administration of Internet Culture firstly in 2011, as most recently amended on December 15, 2017, and the Notice on Issues Relating to Implementing the Newly Revised Provisional Measures on Administration of Internet Culture promulgated by the Ministry of Culture in 2011, which apply to entities that engage in activities related to "online cultural products." "Online cultural products" are classified as cultural products developed, published and disseminated through the Internet which mainly include: (i) online cultural products particularly developed for publishing through the Internet, such as, among other things, online music and video files, network games and online animation features and cartoons (including flash animation); and (ii) online cultural products converted from audio and visual products, games, performing arts, artworks and animation features and cartoons, and published on the Internet. Pursuant to this legislation, entities are required to obtain the Internet Culture Operation Licenses from the applicable provincial level counterpart of the Ministry of Culture and Tourism ("MCT", which is the predecessor of MOC) if they intend to commercially engage in any of the following types of activities:

● production, duplication, import, release or broadcasting of online cultural products;

● publishing of online cultural products on the Internet or transmission thereof to computers, fixed-line or mobile phones, radios, television sets or game consoles for the purpose of browsing, reading, reviewing, using or downloading such products by online users; or

● exhibitions or contests related to online cultural products.

On August 12, 2013, the MOC issued the Administrative Measures for Content Self-Review by Internet Culture Business Entities, effective as of December 1, 2013, which requires Internet culture business entities to review the content of products and services to be provided prior to providing such content and services to the public. The content management system of an Internet culture business entity is required to specify the responsibilities, standards and processes for content review as well as accountability measures, and is required be filed with the provincial level counterpart of the MCT.

The Regulations for the Administration of Audio and Video Products, as released by the State Council in December 2001 and last amended in November 2020, require that the publication, production, duplication, importation, wholesale, retail and renting of audio and video products are subject to a license issued by competent authorities.

In September 2021, the State Council released the Opinions on Improvement of Internet Civilization, which reiterates the necessity of strengthening the order in cyberspace and requires Internet platforms to strengthen the responsibility of network platform, strengthen the website platform community rules, user agreement construction, and enhance national security awareness.

On September 15, 2021, the CAC released the Opinions on Further Intensifying Responsibilities of Website Platform for Information Content, which provides specific requirements for website platforms from various aspects, such as community rules, accounts, content moderation, content quality management, key functions, platform operation, minors' online protection and personnel management. Pursuant to the Opinions, website platforms shall create a positive and healthy cyberspace and steer public opinion in the correct direction. Website platform are also required to strengthen the management of pop-ups, accurately handle the procedures of sending out push notifications to users and strictly control the frequency of push notifications.

**Regulations Relating to Virtual Currency**

On January 25, 2007, the Ministry of Public Security, the MOC, the Ministry of Information Industry and the GAPP jointly issued a circular regarding online gambling which has implications on the issuance and use of virtual currency. It basically bans the conversion of virtual currency into real currency or property and prohibits transfer of virtual currency among game players.

On February 15, 2007, fourteen PRC regulatory authorities jointly issued a circular to further strengthen the oversight of Internet cafes and online games. In accordance with the circular, the People's Bank of China, or PBOC, has the authority to regulate virtual currency, including: (a) setting limits on the aggregate amount of virtual currency that can be issued by online game operators and the amount of virtual currency that can be purchased by an individual; (b) stipulating that virtual currency issued by online game operators can only be used for purchasing virtual products and services within the online games and not for purchasing tangible or physical products; (c) requiring that the price for redemption of virtual currency shall not exceed the respective original purchase price; and (d) banning the trading of virtual currency.

On June 4, 2009, the MOC and the MOFCOM jointly issued a notice to strengthen the administration of online game virtual currency. The Virtual Currency Notice requires businesses that (a) issue online game virtual currency (in the form of prepaid cards and/or pre-payment or prepaid card points), or (b) offer online game virtual currency transaction services to apply for approval from the MCT through its provincial branches within three (3) months after the issuance of the notice. The Virtual Currency Notice businesses that issue virtual currency for online games are prohibited from offering services that can trade virtual currency. Any company that fails to file the necessary application will be subject to sanctions, including but not limited to, mandatory corrective actions and fines. Based on the Virtual Currency Notice, the MOC further promogulated a filing guideline for the "online game virtual currency distribution enterprises" and "online game virtual currency trading enterprises" on July 20, 2009 to regulate the entities involving such virtual currency businesses.

Currently, the PRC government has not promulgated any specific rules, laws or regulations to directly regulate virtual currency as used in live streaming industry, except for the above-mentioned online game virtual currency. To comply with the principle of above-mentioned regulations, in relation to online streaming business, our virtual currency currently can only be used by viewers to exchange for virtual items/gifts to be used to show support for performers or gain access to privileges and special features in the channels which are services in nature instead of "real currency or property." Once the virtual currency is exchanged by viewers for virtual items/gifts or the relevant privileged services, the conversion transaction is completed and we will immediately cancel the virtual properties in our internal system. See "Item 3. Key Information-D. Risk Factors-Risk Factors Relating to Doing Business in China-Restrictions on virtual currency may adversely affect our revenues."

Under the Virtual Currency Notice, "online games virtual currency trading service provider" refers to the business that provides platform services related to virtual trading in online games among game users. The Virtual Currency Notice further requires an online game virtual currency transaction service provider to comply with relevant e-commerce regulations issued by the Ministry of Commerce. According to the Guiding Opinions on Online Trading (Interim) issued by the Ministry of Commerce on March 6, 2007, online platform services are trading services provided to online buyers and sellers through a computer information system operated by the service provider.

On August 31, 2018, the SCNPC promulgated the E-commerce Law, or the PRC E-commerce Law, which became effective on January 1, 2019. The E-commerce Law clarifies on the obligations of the e-commerce platform operators. On March 15, 2021, the SAMR issued the Measures for the Supervision and Administration of Online Transactions, or the Online Transaction Measures, which became effective on May 1, 2021 and replaced the Administrative Measures for the Online Trading promulgated on January 24, 2016. The Online Transaction Measures further emphasize, among others, that e-commerce platform operators are required to establish a mechanism to inspect and monitor products and services provided by the merchants, and shall submit the identity information of those merchants to the local branches of the SAMR.

**Regulations Relating to Commercial Performances**

The Administrative Regulations on Commercial Performances was firstly promulgated by the State Council in 2005 and most recently amended on November 29, 2020. According to these regulations, to legally engage in commercial performances, a culture and arts performance group shall have full-time performers and equipment in line with its performing business, and file an application with the culture administrative department of the people's government at the county level for approval; while a performance brokerage agency shall have three or more full-time performance brokers and funds suitable for the relevant business, and file an application with the culture administrative department at the provincial level. The culture administrative department shall make a decision within twenty (20) days from the receipt of the application whether to approve the application, and upon approval, will issue a commercial performance license. Currently, there is no related regulations or governmental interpretation to specify if above regulations apply to live streaming business.

**Regulations Relating to Production of Radio and Television Programs**

On July 19, 2004, the SARFT issued the Regulations on the Administration of Production and Operation of Radio and Television Programs, or the Radio and TV Programs Regulations, which took effect on August 20, 2004 and was amended on August 28, 2015. The Radio and TV Programs Regulations require any entities engaging in the production and operation of radio and television programs to obtain a license for such businesses from the NRTA or its provincial branches. Entities with the Radio and Television Program Production and Operating Permit must conduct their business operations strictly in compliance with the approved scope of production and operations and these entities (except radio and TV stations) must not produce radio and TV programs regarding current political news or similar subjects.

**Regulations Relating to Intellectual Property Rights**

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***Copyright***

China has enacted various laws and regulations relating to the protection of copyright. China is a signatory to some major international conventions on protection of copyright and became a member of the Berne Convention for the Protection of Literary and Artistic Works in October 1992, the Universal Copyright Convention in October 1992 and the Agreement on Trade-Related Aspects of Intellectual Property Rights upon its accession to the World Trade Organization in December 2001.

The PRC Copyright Law, promulgated in 1990 and amended in 2001, 2010 and 2020, or the Copyright Law, and its related implementing regulations, promulgated in 2002 and amended in 2013, are the principal laws and regulations governing copyright related matters. The Copyright Law provides that Chinese citizens, legal persons, or other organizations shall, whether published or not, enjoy copyright of their works, which include, among others, works of literature, art, natural science, social science, engineering technology and computer software.

The State Council and the National Copyright Administration have promulgated various rules and regulations relating to the protection of software in China. According to these rules and regulations, software owners, licensees and transferees may register their rights in software with the Copyright Protection Center of China and obtain software copyright registration certificates. Although such registration is not mandatory under PRC law, software owners, licensees and transferees are encouraged to go through the registration process and registered software rights may be entitled to better protection. For the number of software programs for which we had registered software copyrights as of the date of this statement.

The amended Copyright law covers Internet activities, products disseminated over the Internet and software products, among the subjects entitled to copyright protection. Registration of copyright is voluntary, and it is administrated by the Copyright Protection Center of China. To further clarify some key Internet copyright issues, on December 17, 2012, the PRC Supreme People's Court promulgated the Regulation on Several Issues Concerning Applicable Laws on Trial of Civil Disputes over the Infringement of Information Network Transmission Right, or the 2013 Regulation. The 2013 Regulation took effect on January 1, 2013, and replaced the Interpretations on Some Issues Concerning Applicable Laws for Trial of Disputes over Internet Copyright that was initially adopted in 2000 and subsequently amended in 2004 and 2006. On Jan. 1, 2021, 2013 Regulation was amended (2021 Regulation). Under the 2021 Regulation, where an Internet information service provider works in cooperation with others to jointly provide works, performances, audio and video products of which the right holders have information network transmission right, such behavior will constitute joint infringement of third parties' information network transmission right, and the PRC court shall order such Internet information service provider to assume joint liability for such infringement.

To address the problem of copyright infringement related to content posted or transmitted on the Internet, the National Copyright Administration and Ministry of Information Industry jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005. These measures, which became effective on May 30, 2005, apply to acts of automatically providing services such as uploading, storing, linking or searching works, audio or video products, or other content through the Internet based on the instructions of Internet users who publish content on the Internet, or the Internet Content Providers, without editing, amending or selecting any stored or transmitted content. When imposing administrative penalties upon the act which infringes upon any user's right of communication through information networks, the Measures for Imposing Copyright Administrative Penalties, promulgated in 2009, shall be applied.

Where a copyright holder finds that certain Internet content infringes upon its copyright and sends a notice to the relevant Internet information service operator, the relevant Internet information service operator is required to (i) immediately take measures to remove the relevant content and (ii) retain all infringement notices for six months and to record the content, display time and IP addresses or the domain names related to the infringement for 60 days. If the content is removed by an Internet information service operator according to the notice of a copyright holder, the content provider may deliver a counter-notice to both the Internet information service operator and the copyright holder, stating that the removed content does not infringe upon the copyright of other parties. After the delivery of such counter-notice, the Internet information service operator may immediately reinstate the removed content and shall not bear administrative legal liability for such reinstatement.

An Internet information service operator may be subject to cease-and-desist orders and other administrative penalties such as confiscation of illegal income and fines, if it is clearly aware of a copyright infringement through the Internet or, although not aware of such infringement, it fails to take measures to remove relevant content upon receipt of the copyright owner's notice of infringement and, as a result, damages public interests. Where there is no evidence to indicate that an Internet information service operator is clearly aware of the existence of copyright infringement, or the Internet information service operator has taken measures to remove relevant content upon receipt of the copyright owner's notice, the Internet information service provider shall not bear the relevant administrative legal liabilities.

On May 18, 2006, the State Council issued the Protection of the Right of Communication through Information Network, which took effect on July 1, 2006 and amended on January 30, 2013. Under this regulation, an internet information service provider may be exempt from indemnification liabilities under the certain circumstances.

***Patent***

The National People's Congress adopted the PRC Patent Law in 1984 and amended it in 1992, 2000, 2008 and 2020, respectively. A patentable invention, utility model or design must meet three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances obtained by means of nuclear transformation. The Patent Office under the State Intellectual Property Office is responsible for receiving, examining and approving patent applications. A patent is valid for a twenty-year term for an invention and a ten-year term for a utility model or design. Except under certain specific circumstances provided by law, any third-party user must obtain consent or a proper license from the patent owner to use the patent, or else the use will constitute an infringement of the rights of the patent holder.

According to the PRC Patent Law, if the Patent Office finds the application of an invention conforms to the legal requirements after its preliminary examination of such application documents, it shall publish the application promptly within eighteen (18) full months after the filing date. According to the Guidelines of Patent Examination, the examination of a patent shall include the preliminary examination, the substantive examination, examination of international applications entering the national phase and review. However, the above-mentioned regulations do not explicitly state how long it takes for a patent application to be approved or denied. In practice, it generally may take up to one year for the Patent Office to review and approve or deny applications of patents in the category of utility model or design and two to five years in the category of invention.

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***Trademark***

The PRC Trademark Law, adopted in 1982 and amended in 1993, 2001, 2013 and 2019, with its implementation rules adopted in 2014, protects registered trademarks. The Trademark Office of National Intellectual Property Administration, or the Trademark Office handles trademark registrations and grants a protection term of ten years to registered trademarks, which may be extended for another ten years upon request. Trademark license agreements must be filed with the Trademark Office for record.

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***Domain name***

On November 27, 2017, the MIIT promulgated the Notice of the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Providing Internet-based Information Services, which became effective on January 1, 2018. Pursuant to the notice, the domain name used by an internet-based information service provider in providing internet-based information services must be registered and owned by such provider in accordance with the law. If the internet-based information service provider is an entity, the domain name registrant must be the entity (or any of the entity's shareholders), or the entity's principal or senior manager.

On June 18, 2019, China Internet Network Information Center ("CNNIC") issued the Implementing Rules for country code Top-Level Domain, ccTLDs. On June 18, 2019 the CNNIC issued, pursuant to which the CNNIC can authorize a domain name dispute resolution institution to decide disputes. On August 24, 2017, the MIIT promulgated the Measures for Administration of Internet Domain Names, which regulates the registration of domain names.

**Regulations Relating to Internet Infringement**

On May 28, 2020 the National People's Congress promulgated the Civil Code of the People's Republic of China, or the Civil Law, which became effective on January 1, 2021. Under the Civil Law, an Internet user or an Internet service provider that infringes upon the civil rights or interests of others through using the Internet assumes tort liability. If an Internet user infringes upon the civil rights or interests of another through using the Internet, the person being infringed upon has the right to notify and request the Internet service provider whose Internet services are facilitating the infringement to take necessary measures including the deletion, blocking or disconnection of an Internet link. If, after being notified, the Internet service provider fails to take necessary measures in a timely manner to end the infringement, it will be jointly and severally liable for any additional harm caused by its failure to act.

**Regulations Relating to Internet Content and Information/Data Security**

The Administrative Measures on Internet Information Services (effective as of January 8, 2011 and amended on January 8, 2011) specify that Internet information services regarding news, publications, education, medical and health care, pharmaceutical and medical appliances, among other things, are to be examined, approved and regulated by the relevant authorities. Internet information providers are prohibited from providing services beyond those included in the scope of their ICP Licenses or filings. The PRC government has promulgated measures relating to Internet content through a number of governmental agencies, including the MIIT, the Ministry of Culture and the General Administration of Press and Publication. These measures specifically prohibit Internet activities, that result in the publication of any content which is found to propagate obscenity, gambling or violence, instigate crimes, undermine public morality or the cultural traditions of the PRC or compromise state security or secrets. Internet information providers must monitor and control the information posted on their websites. If any prohibited content is found, they must remove the offensive content immediately, keep a record of it and report it to the relevant authorities.

On December 13, 2005, the Ministry of Public Security promulgated Provisions on Technological Measures for Internet Security Protection, or the Internet Protection Measures, which took effect on March 1, 2006. The Internet Protection Measures requires all Internet information services operators to take proper measures including anti-virus, data back-up and other related measures, and keep records of certain information about their users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least sixty (60) days and submit the above information as required by laws and regulations.

The Standing Committee of National People's Congress, China's national legislative body, enacted the Decisions on the Maintenance of Internet Security on December 28, 2000 and subsequently amended on August 27, 2009, that may subject any persons to criminal liabilities in China for any attempt to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; leak state secrets; (iv) spread false commercial information; or (v) infringe on intellectual property rights. The Ministry of Public Security has promulgated measures that prohibit the use of the Internet in ways which, among other things, results in a leakage of state secrets or a spread of socially destabilizing content.

In 1997, the Ministry of Public Security issued the Administration Measures on the Security Protection of Computer Information Network with International Connections (amended by the State Council of PRC. in 2011), which prohibit using the Internet in ways which, among others, result in a leak of state secrets or a spread of socially destabilizing content. The Ministry of Public Security has supervision and inspection powers in this regard, and relevant local security bureaus may also have jurisdiction. If an ICP License holder violates these measures, the PRC government may revoke its ICP License and shut down its website.

On June 22, 2007, the Ministry of Public Security, the State Secrecy Bureau, the State Cipher Code Administration and the Information Office of the State Council jointly promulgated the Circular on Printing and Distributing the Administrative Measures for the Graded Protection of Information Security. According to the Circular, the security protection grade of an information system may be classified into five grades. To newly build an information system of Grade II or above, its operator or user shall, within 30 days after it is put into operation, handle the record- filing procedures at the local public security organ at the level of municipality divided into districts or above of its locality.

On December 28, 2012, the Standing Committee of the National People's Congress reiterated relevant rules on the protection of Internet information by issuing the Decision on Strengthening the Protection of Network Information, or the 2012 Decision. The 2012 Decision distinctly clarified certain relevant obligations of Internet information service providers. Once it discovers any transmission or disclosure of information prohibited by the relevant laws and regulations, the Internet information service provider shall stop transmission of such information, take measures such as elimination, keeping relevant records and reporting to relevant authorities. To comply with the above laws and regulations, we have developed the following mechanisms to monitor the content on our platforms as AI-backed automatic detection process, manual review, self-regulation system by streamers and room managers and report by users.

On December 15, 2019, the CAC promulgated the Provisions on the Ecological Governance of Network Information Contents, which became effective on March 1, 2020. It requires network platform operators like us not to disseminate illegal content, nor to present exaggerated, sexually suggestive, discriminative or otherwise inappropriate contents in eye-catching areas such as home page, popup and hot search list.

On July 1, 2015, the SCNPC issued the PRC National Security Law, which came into effect on the same day. The National Security Law provides that the state shall safeguard the sovereignty, security and cybersecurity development interests of the state, and that the state shall establish a national security review and supervision system to review, among other things, foreign investment, key technologies, internet and information technology products and services, and other important activities that are likely to impact national security of China.

On July 30, 2021, the State Council promulgated the Regulations on Protection of Security of Critical Information Infrastructure, effective on September 1, 2021, pursuant to which, a "critical information infrastructure" refers to critical network facilities and information systems involved in important industries and sectors, such as public communication and information services, energy, transportation, water conservancy, finance, public services, governmental digital services, science and technology related to national defense industry, as well as those which may seriously endanger national security, the national economy and citizens' livelihoods or public interests if damaged or malfunctioned, or if any leakage of data in relation thereto occurs. The appropriate governmental departments and supervision and management departments of the aforementioned important industries will be responsible for (i) organizing the identification of critical information infrastructures in their respective industries in accordance with relevant identification rules, and (ii) promptly notifying the identified operators and the public security department of the State Council of the identification results. In the event of occurrence of any major cybersecurity incident or discovery of any major cybersecurity threat for the critical information infrastructure, the operator shall report to the protection authorities and the public security authorities as required.

On September 30, 2024, the State Council promulgated the Regulations on Network Data Security Management (the "Network Data Security Regulations"), which became effective on January 1, 2025, superseding the draft measures previously published by the CAC for public comment in November 2021. The Network Data Security Regulations establish a comprehensive framework for the classification and protection of network data and introduce the concept of "important data," defined as data that, once tampered with, destroyed, leaked, or illegally obtained or used, may directly endanger national security, economic operations, social stability, or public health and safety in specific fields, regions or at certain scales of precision or volume. Key obligations under the Network Data Security Regulations include: (i) data processors are required to establish data security management systems, appoint a person responsible for data security and, where applicable, set up a dedicated data security management organization; (ii) data processors handling important data must file with the competent authority within 15 working days of identifying such data as important, conduct annual data security assessments, and submit the assessment reports to the local branch of the CAC before January 31 of each year; (iii) data processors conducting the following activities are required to apply for cybersecurity review: mergers, reorganizations or separations of Internet platform operators holding large amounts of data resources related to national security, economic development or public interests; overseas listings by data processors processing personal information of more than one million users; and Hong Kong listings that affect or may affect national security; (iv) Internet platform operators are required to establish platform rules and privacy policies related to data, solicit public comments for no less than 30 working days when formulating or materially amending such rules or policies, and platform rules and privacy policies of large Internet platforms with more than 100 million daily active users shall be reviewed by a CAC-designated third-party organization and reported to the local branch of the CAC for approval; and (v) data processors processing important data or seeking overseas listings shall conduct annual data security assessments either independently or through a qualified data security service institution.

On November 14, 2021, the CAC published Measures on Network Data Security Management (Draft for Comment), or the Draft Measures for Internet Data Security, which provides that data processors conducting the following activities shall must for cybersecurity review: (i) merger, reorganization or separation of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests affecting or possibly affecting national security; (ii) listing abroad of data processors processing over one million users' personal information; (iii) listing in Hong Kong that affects or may affect national security; and (iv) other data processing activities that affect or may affect national security. The Draft Measures for Internet Data Security also requires data processors processing over one million users' personal information to comply with the regulations on important data processors, including, among others, appointing a person in charge of data security and establishing a data security management organization, filing with the competent authority within 15 working days after identifying its important data, formulating data security training plans and organizing data security education and training for all staff every year, and that the education and training time of data security related technical and management personnel shall not be less than 20 hours per year. The Draft Measures for Internet Data Security also provides that data processors processing important data or going public overseas shall conduct an annual data security assessment by themselves or entrust a data security service institution to do so, and submit the data security assessment report of the previous year to the local branch of CAC before January 31 of each year. Further, the Draft Measures for Internet Data Security also require Internet platform operators to establish platform rules, privacy policies and algorithm strategies related to data, and solicit public comments on their official websites and personal information protection-related sections for no less than 30 working days when they formulate platform rules or privacy policies or makes any amendments that may have significant impacts on users' rights and interests. Platform rules and privacy policies formulated by operators of large Internet platforms with more than 100 million daily active users, or amendments to such rules or policies by operators of large Internet platforms with more than 100 million daily active users that may have significant impacts on users' rights and interests shall be evaluated by a third-party organization designated by the CAC and reported to local branch of the CAC for approval.

On September 17, 2021, the CAC and other eight government authorities jointly issued the Guiding Opinions on Strengthening the Comprehensive Governance of Network Information Service Algorithms with the aim to, within three years, gradually establish a comprehensive governance pattern for algorithm security with a complete governance mechanism, a refined regulatory system and a standardized algorithm ecosystem. According to the Guiding Opinions on Strengthening the Comprehensive Governance of Network Information Service Algorithms, enterprises shall establish an algorithm security accountability system and a system for the review of scientific and technological ethics, enhance the organizational structure for algorithm security, intensify efforts in the prevention of risks and the handling of hidden dangers, and increase the capacity and level in handling algorithm security emergencies. Enterprises shall raise their awareness of responsibility and assume primary responsibilities for outcomes caused by the application of algorithms.

On December 28, 2021, the CAC and twelve other PRC regulatory authorities jointly revised and issued the Cyber Security Review Measures ("the Review Measures"), which became effective on February 15, 2022. The Review Measures provides, among others, (i) the purchase of cyber products and services by critical information infrastructure operators (the "CIIOs") and the network platform operators (the "Network Platform Operators") which engage in data processing activities that affects or may affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office, the department which is responsible for the implementation of cybersecurity review under the CAC; and (ii) the Network Platform Operators with personal information data of more than one million users that seek for listing in a foreign country are obliged to apply for a cybersecurity review by the Cybersecurity Review Office.

Internet companies in China are required to complete security filing procedures and regularly update information security and censorship systems for their websites with local public security bureau. The PRC Law on Preservation of State Secrets, which became effective on October 1, 2010 requires an internet information services providers to discontinue disseminating any information that may be deemed to be leaked state secrets and to report such incidents in a timely manner to the state security and public security authorities. Failure to do so in a timely and adequate manner may subject the internet information services providers to liability and certain penalties given by the Ministry of State Security, the Ministry of Public Security and/or the MIIT or their respective local branches.

**Regulations Relating to Privacy Protection**

Under the Several Provisions on Regulating the Market Order of Internet Information Services, issued by the Ministry of Industry and Information Technology in 2011, an ICP service operator may not collect any user personal information or provide such information to third parties without the consent of a user. An ICP service operator must expressly inform the users of the method, content and purpose for the collection and processing of such user personal information and may only collect such information necessary for the provision of its services. PRC laws and regulations prohibit Internet content providers from disclosing any information transmitted by users through their networks to any third parties without their authorization unless otherwise permitted by law. An ICP service operator is also required to properly keep the user personal information, and in case of any leak or likely leak of the user personal information, the ICP service operator must take immediate remedial measures and, in severe circumstances, make an immediate report to the telecommunication's regulatory authority. In addition, pursuant to the 2012 Decision and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the Ministry of Industry and Information Technology in July 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scope. An ICP service operator must also keep such information strictly confidential, and is further prohibited from divulging, tampering or destroying of any such information, or selling or providing such information to other parties. If an Internet content provider violates these regulations, the MIIT or its local bureaus may impose penalties and the Internet content provider may be liable for damages caused to its users.

The Personal Information Protection Law of the People's Republic of China ("PIPL") was passed on August 20, 2021 and went into effect November 1, 2021. The PIPL generally covers all organizations operating in China processing personal information and applies to the activities of handling the personal information of natural persons within the borders of China. Moreover, PIPL will require compliance initiatives on the part of Chinese organizations and foreign companies operating in China. According the PIPL, Information handlers have several responsibilities, including adopting the certain measures to ensure personal information handling conforms to the provisions of laws and administrative regulations, and prevent unauthorized access as well as personal information leaks, distortion, or loss. The PIPL has several enforcement mechanisms, including warnings, orders to stop illegal activity, fines, and confiscation of unlawful income. Illegal acts may also be recorded in China's Social Credit System. In addition, individuals can also sue handlers for violation of their rights.

On November 1, 2021, the MIIT published the Notice on the Implementation of Actions to Improve the Perception of Information and Communication Services, which stipulates that enterprises shall provide a list of personal information collected and a list of personal information shared with third parties, and shall display such lists in the second-level menu of the APP for users' access ("Dual Lists Obligation"). Furthermore, the Notice on the Implementation of Actions to Improve the Perception of Information and Communication Services requires certain enterprises as enumerated in its schedule to fulfill the Dual Lists Obligation by the end of 2021, but it does not provide a clear deadline for other enterprises.

On October 1, 2019, the Office of the Central Cyberspace Affairs Commission issued the Provisions on the Cyber Protection of Children's Personal Information, which requires, among others, that network operators who collect, store, use, transfer and disclose personal information of children under the age of 14 shall establish special rules and user agreements for the protection of children's personal information, inform the children's guardians in a noticeable and clear manner and shall obtain the consent of the children's guardians. Furthermore, the authorities issuing the circular vow to initiate a campaign to correct unlawful collection and usage of personal information via Apps from January 2019 through December 2019. The PRC Civil Code further provides in a stand-alone chapter of right of personality and reiterates that the personal information of a natural person shall be protected by the law. Any organization or individual shall legitimately obtain such personal information of others in due course on a need-to-know basis and ensure the safety and privacy of such information, and refrain from excessively handling or using such information.

Pursuant to the Ninth Amendment to the Criminal Law of the PRC issued by the SCNPC on August 29, 2015, effective on November 1, 2015, any Internet service provider that fails to fulfill the obligations related to Internet information security as required by applicable laws and refuses to take corrective measures, will be subject to criminal liability for: (i) any large-scale dissemination of illegal information; (ii) any severe effect due to the leakage of users' personal information; (iii) any serious loss of evidence of criminal activities; or (iv) other severe situations, and any individual or entity that (a) sells or provides personal information to others unlawfully or (b) steals or illegally obtains any personal information will be subject to criminal liability in severe situations.

On November 7, 2016, the SCNPC promulgated the PRC Cybersecurity Law, which came into effect on June 1, 2017. Pursuant to the Cybersecurity Law, network operators shall follow their cybersecurity obligations according to the requirements of the classified protection system for cybersecurity, including: (i) formulating internal security management systems and operating instructions, determining the persons responsible for cybersecurity and implementing the responsibility for cybersecurity protection; (ii) taking technological measures to prevent computer viruses, network attacks, network intrusions and other actions endangering cybersecurity; (iii) taking technological measures to monitor and record the network operation status and cybersecurity incidents; (iv) taking measures such as data classification, and back-up and encryption of important data; and (v) other obligations stipulated by laws and administrative regulations. In addition, network operators shall follow the principles of legitimacy to collect and use personal information and disclose their rules of data collection and use, clearly express the purposes, means and scope of collecting and using the information and obtain the consent of the persons whose data is gathered.

On January 23, 2019, the Office of the Central Cyberspace Affairs Commission and other three authorities jointly issued the Circular on the Special Campaign of Correcting Unlawful Collection and Usage of Personal Information via Apps. Pursuant to this 2019 circular: (i) App operators are prohibited from collecting any personal information irrelevant to the services provided by such operator; (ii) information collection and usage policy should be presented in a simple and clear way, and such policy should be consented by the users voluntarily; (iii) authorization from users should not be obtained by coercing users with default or bundling clauses or making consent a condition of a service. App operators violating such rules can be ordered by authorities to correct its incompliance within a given period, be reported in public; or even quit its operation or cancel its business license or operational permits.

On April 26, 2021, the MIIT issued the Interim Administrative Provisions on Personal Information Protection in Internet Mobile Applications (Draft for Comment), which sets forth two principles of collection and utilization of personal information, namely "explicit consent" and "minimum necessity."

**Regulations Relating to Internet Publication and Cultural Products**

On February 4, 2016, State Administration of Press, Publication, Radio, Film and Television (or the SAPPRFT, which is the predecessor of NRTA), and the MIIT issued the Administrative Provisions on Online Publishing Services, or the Online Publishing Provisions, which took effect on March 10, 2016. According to the Online Publishing Provisions, all online publishing services provided within the territory of China are subject to the Online Publishing Provisions, and an online publishing services permit shall be obtained in order to provide online publishing services. Pursuant to the Online Publishing Provisions, "online publishing services" refer to providing online publications to the public through information networks; and "online publications" refer to digital works with publishing features such as having been edited, produced or processed and are made available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio-visual reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, periodical, audio-visual product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.

**Regulations Relating to Foreign Currency Exchange and Dividend Distribution**

***Foreign currency exchange***

The core regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as amended in August 2008, or the FEA Regulations. Certain organizations in the PRC, including foreign invested enterprises, may purchase, sell and/or remit foreign currencies at certain banks authorized to conduct foreign exchange business upon providing valid commercial documents. However, approval of the State Administration of Foreign Exchange, or SAFE, is required for capital account transactions.

In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Direct Investment, as amended, which substantially amends and simplifies the foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds by foreign investors in the PRC and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, as amended, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.

After a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals will be required to apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, directly examine the applications and conduct the registration.

On March 30, 2015, the SAFE issued the Circular on the Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 19, effective on June 1, 2015 and amended on December 30, 2019. Under SAFE Circular 19, a foreign-invested enterprise, within the scope of business, may also choose to convert its registered capital from foreign currency to Renminbi on a discretionary basis, and the Renminbi capital so converted can be used for equity investments within the PRC, which will be regarded as the reinvestment of foreign-invested enterprise. Nevertheless, Circular 19 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Further, in June 2016, the SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or Circular 16, which took effect on the same day. Compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding Renminbi obtained from foreign exchange settlement are not restricted from extending loans to related parties or repaying the intercompany loans (including advances by third parties).

In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years' losses before remitting the profits. Moreover, pursuant to Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound invest.

On October 23, 2019, SAFE issued the Circular on Further Promoting Cross-border Trade and Investment Facilitation, or SAFE Circular 28. Among others, SAFE Circular 28 relaxes the prior restrictions and allows the foreign-invested enterprises without equity investment as in their approved business scope to use their capital obtained from foreign exchange settlement to make domestic equity investment as long as the investments are real and in compliance with the foreign investment-related laws and regulations. In addition, SAFE Circular 28 stipulates that qualified enterprises in certain pilot areas may use their capital income from registered capital, foreign debt and overseas listing, for the purpose of domestic payments without providing authenticity certifications to the relevant banks in advance for those domestic payments. According to the Circular on Optimizing the Administration of Foreign Exchange to Support the Development of Foreign-related Business issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments using the income under their capital accounts generated from their capital, foreign debt and overseas listing, without providing materials for each transaction evidencing the authenticity in advance, provided that the capital usage is authentic and compliant with the current capital account income usage management regulations.

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***Dividend distribution***

The principal regulations governing distribution of dividends paid by wholly foreign-invested enterprises include the PRC Company Law, promulgated in 1993 and amended in 2004, 2005, 2013, 2018 and 2023, and the Foreign Investment Law and its Implementation Rules.

Under these regulations, a wholly foreign-invested enterprise in China, or a WFOE, may pay dividends only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a WFOE is required to allocate at least 10% of its accumulated profits each year, if any, to statutory reserve funds unless its reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends. The proportional ratio for withdrawal of rewards and welfare funds for employees shall be determined at the discretion of the WFOE. Profits of a WFOE shall not be distributed before the losses thereof before the previous accounting years have been made up. Any undistributed profit for the previous accounting years may be distributed together with the distributable profit for the current accounting year.

Pursuant to the SAFE's Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, issued and effective on July 4, 2014, and its appendices, PRC residents, including PRC institutions and individuals, must register with local branches of the SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interest in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a "special purpose vehicle." SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, including but not limited to increases or decreases of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.

In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making distributions of profit to the offshore parent and from carrying out subsequent cross-border foreign exchange activities and the special purpose vehicle may be restricted in their ability to contribute additional capital into its PRC subsidiary. And, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion, including (i) up to 30% of the total amount of foreign exchange remitted overseas and deemed to have been evasive and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount of remitted foreign exchange deemed evasive. Furthermore, the persons-in-charge and other persons at our PRC subsidiaries who are held directly liable for the violations may be subject to criminal sanctions. These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions and share transfer that we make in the future if our shares are issued to PRC residents.

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***Stock Option Rules***

Pursuant to the Circular on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company issued by the SAFE on February 15, 2012, or the SAFE Circular 7, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with the SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit their ability to contribute additional capital into their wholly foreign-owned subsidiaries in China and limit these subsidiaries' ability to distribute dividends to their overseas parent company. The PRC agents shall, on behalf of the PRC residents who have the right to exercise the employee share options, apply to the SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents' exercise of the employee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution to such PRC residents. In addition, the PRC agents shall file each quarter the form for record-filing of information of the Domestic Individuals Participating in the Stock Incentive Plans of Overseas Listed Companies with the SAFE or its local branches. We and our PRC citizen employees who are granted share options, or PRC option holders, will be subject to the SAFE Circular 7 after we have become an overseas listed company. If PRC option holders fail to comply with the SAFE Circular 7, we and PRC option holders may be subject to fines and other legal sanctions.

In addition, the State Administration for Taxation has issued circulars concerning employee share options, under which employees working in the PRC who exercise share options will be subject to PRC individual income tax. our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or if Scienjoy Inc. fail to withhold their income taxes as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities or other PRC government authorities.

The Administration Measures on Individual Foreign Exchange Control were promulgated by the PBOC on December 25, 2006, and their Implementation Rules, issued by the SAFE on January 5, 2007, became effective on February 1, 2007 and amended on May 29, 2016. Under these regulations, all foreign exchange matters involved in employee stock ownership plans and stock option plans participated in by onshore individuals, among others, require approval from the SAFE or its authorized branch.

**Regulations Relating to Foreign Investment**

The Foreign Investment Law of the PRC, adopted by the National People's Congress on March 15, 2019 and its Implementing Regulation adopted by the State Council on December 12, 2019 became effective on January 1, 2020. Pursuant to the Foreign Investment Law of the PRC, China will grant national treatment to foreign invested entities, except for those foreign-invested entities that operate in industries that fall within "restricted" or "prohibited" categories as prescribed in the "negative list" to be released or approved by the State Council. On December 31, 2019, the Ministry of Commerce and the SAMR jointly promulgated the Measures for Information Reporting on Foreign Investment, which became effective on January 1, 2020. Pursuant to the measures, where a foreign investor directly or indirectly carries out investment activities in the PRC, the foreign investor or the foreign-invested enterprise must submit the investment information to the competent commerce department for further handling.

On December 27, 2021, the Ministry of Commerce and the NDRC promulgated the Special Administrative Measures for Entrance of Foreign Investment, or the Negative List, which came into effect on January 1, 2022. Pursuant to the Negative List, foreign investors should refrain from making investment in any of prohibited sectors specified in the Negative List, and foreign investors are required to obtain the permit for access to other sectors that are listed in the Negative List but not classified as "prohibited."

In December 2020, the NDRC and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. The NDRC and the Ministry of Commerce will establish a working mechanism office in charge of the security review of foreign investment. Such measures define foreign investment as direct or indirect investment by foreign investors in the PRC, which include:

&nbsp;&nbsp;&nbsp;&nbsp;(i) investment in new onshore projects
or establishment of wholly foreign owned onshore companies or joint ventures with foreign investors;

&nbsp;&nbsp;&nbsp;&nbsp;(ii) acquiring equity or asset of
onshore companies by merger and acquisition; and (iii) onshore investment by and through any other means. Foreign investment in certain
key areas with national security concerns, such as important cultural products and services, important information technology and Internet
products and services, key technologies and others which results in the acquisition of de facto control of invested companies, shall
be filed with a specifically established office before such investment is carried out. What may constitute "onshore investment
by and through any other means" or "de facto control" is not clearly defined under such measures, and could be broadly
interpreted. It is likely that control through contractual arrangement be regarded as de facto control based on provisions applied to
security review of foreign investment. Failure to make such filing may subject such foreign investor to rectification within a prescribed
period, and the foreign investor will be negatively recorded in the relevant national credit information system, which would then subject
such investor to joint punishment as provided by relevant rules. If such investor fails to or refuses to undertake such rectification,
it would be ordered to dispose of the equity or asset and to take any other necessary measures so as to return to the status quo and
to erase the impact to national security.

**Regulations Relating to Protection of Minors and Real-Name Registration System**

Pursuant to the PRC Minors Protection Law (2020 Revision) which became effective on June 1, 2021, providers of network products and services may not provide minors with products or services that induce addictive usage. Providers of network services such as online games, network livestreaming, network audio and video, and social networking shall set up corresponding time management, authority management, consumption management and other functions for minors who use their services.

In addition, pursuant to the Internet Livestreaming Services Provisions, livestreaming service providers should verify the identity of users on a livestreaming platform with their information such as through their mobile phone number. Also, according to the Administrative Measures for Business Activities of Online Performances issued by Ministry of Culture on December 2, 2016 and in effect as of January 1, 2017, livestreaming service providers must require streamers on a livestreaming platform to make real-name registration.

On November 29, 2021, the Ministry of Culture and Tourism issued the Opinions of the General Office of the Ministry of Culture and Tourism on Strengthening the Protection of Minors in Online Cultural Markets, which reiterates the necessity of comprehensive governance in the field of culture and entertainment and the importance of network protection of minors. Pursuant to the opinions, (i) online cultural service provider shall improve the ability to identify the accounts of users who are minors; (ii) online cultural service providers shall not provide registration services for livestreaming publisher accounts for minors under the age of 16 and shall obtain prior consent from the guardians of the users under age of 16-18 before providing account registration services to them; (iii) online cultural service providers shall strictly protect personal information and take necessary measures in a timely manner to stop the cyberbullying and prevent the spread of relevant information upon receiving notification from a minor who has been cyberbullying or his/her parents or other guardians; (iv) online cultural service providers shall block harmful content to minors and prohibit live broadcast rooms from luring minors to access harmful contents by displaying vulgar pictures, suggestive messages and private contact information such as phone numbers, WeChat numbers and QR codes; (v) solo appearances of minors or appearances by adults of more than a certain duration and recognized as using minors to accumulate popularity and profit by live rooms or short video accounts, or accounts that take the use of child models to attract attention or profit from goods shall be seriously punished; (iv) online cultural service providers shall set up protection mechanisms such as password lock, time lock, consumption limit, behavior tracking and uninstall and reinstall inheritance (anti-bypass) for minor-aged users, to prevent loopholes such as theft, fraudulent use and borrowed accounts in time.

**Regulations on Online Music**

On November 20, 2006, the Ministry of Culture issued the Several Opinions of the Ministry of Culture on the Development and Administration of Online Music, or the Online Music Opinions, which became effective on the same date. The Online Music Opinions provide that, among other things, an Internet music service provider must obtain an Internet Culture Operation License. On October 23, 2015, the Ministry of Culture promulgated the Circular on Further Strengthening and Improving the Content Administration of Online Music, effective as of January 1, 2016, which provides that Internet culture operating entities shall report to a nationwide administrative platform the details of its self-monitoring activities on a quarterly basis.

On November 20, 2006, the Ministry of Culture issued the Several Opinions of the Ministry of Culture on the Development and Administration of Online Music, or the Online Music Opinions, which became effective on the same date. The Online Music Opinions provide that, among other things, an Internet music service provider must obtain an Internet Culture Operation License. On October 23, 2015, the Ministry of Culture promulgated the Circular on Further Strengthening and Improving the Content Administration of Online Music, effective as of January 1, 2016, which provides that Internet culture operating entities shall report to a nationwide administrative platform the details of its self-monitoring activities on a quarterly basis.

In 2010 and 2011, the Ministry of Culture greatly intensified its regulations on online music products by issuing a series of circulars regarding online music industry, such as the Circular on Regulating the Market Order of Online Music Products and Renovating Illegal Conducts of Online Music Websites and the Circular on Investigating Illegal Online Music Websites in 2010. In addition, the Ministry of Culture issued the Circular on Clearing Illegal Online Music Products, which clarified that entities engaging in any of the following conducts will be subject to relevant penalties or sanctions imposed by the Ministry of Culture: (i) providing online music products or relevant services without obtaining corresponding qualifications; importing online music products that have not been reviewed by the Ministry of Culture; or (iii) providing domestically developed online music products that have not been filed with the Ministry of Culture.

On July 8, 2015, the National Copyright Administration issued the Circular regarding Ceasing Transmitting Unauthorized Music Products by Online Music Service Providers, which requires that (i) all unauthorized music products on the platforms of online music services providers shall be removed prior to July 31, 2015, and (ii) the National Copyright Administration investigate and punish the online music services providers who continue to transmit unauthorized music products following July 31, 2015.

**Regulations Relating to Advertising Business**

The SAMR (formerly known as State Administration of Industry and Commerce) is the primary governmental authority regulating advertising activities in China. Regulations that apply to the advertising business primarily include (i) the PRC Advertisement Law, promulgated by the SCNPC on October 27, 1994 and most recently amended on April 29, 2021, and (ii) the Administrative Regulations for Advertising, promulgated by the State Council on October 26, 1987 and which has been effective since December 1, 1987.

According to the above regulations, companies that engage in advertising activities must obtain, from the SAMR or its local branches, a business license, which specifically includes operating an advertising business in its business scope. Enterprises engaged in the advertising business with such advertising business in its business scope do not need to apply for an advertising operation license, but such enterprise cannot be a radio station, a television station, a newspaper and magazine publishing house or any entity otherwise specified in the relevant laws or administrative regulations. The business license of an advertising company is valid for the duration of its existence, unless the license is suspended or revoked due to a violation of any relevant laws or regulations.

PRC advertising laws and regulations set certain content requirements for advertisements in China, including, among other things, prohibitions on false or misleading content, misleading wording, (or) excess wordiness, socially destabilizing content or content involving obscenities, superstition, violence, discrimination or infringement of the public interest. Advertisers, advertising agencies and advertising distributors are required to ensure that the content of the advertisements they prepare or distribute is true and in complete compliance with applicable laws. In providing advertising services, advertising operators and advertising distributors must review supporting documents provided by advertisers for advertisements and verify that the content of the advertisements complies with applicable PRC laws and regulations. Prior to distributing advertisements that are subject to government censorship and approval, advertising distributors are obligated to confirm that such censorship has been performed and approval has been obtained. Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. Where serious violations occur, the SAMR or its local branches may revoke such offenders' licenses or permits for their advertising business operations.

On July 4, 2016, the SAMR issued the Interim Measures for the Administration of Internet Advertising, or the Internet Advertising Measures, which became effective on September 1, 2016. According to the Internet Advertising Measures, Internet Advertising refers to commercial advertising for direct or indirect marketing goods or services in the form of text, image, audio, video, or other means through websites, web pages, Internet apps, or other Internet media. The Internet Advertising Measures specifically set out the following requirements: (i) advertisements must be identifiable and marked with the word "advertisement" enabling consumers to distinguish them from non-advertisement information; (ii) sponsored search results must be clearly distinguished from organic search results; (iii) it is forbidden to send advertisements or advertisement links by email without the recipient's permission or induce Internet users to click on an advertisement in a deceptive manner; and (iv) Internet information service providers that do not participate in the operation of Internet advertisements must stop publishing illegal advertisements if they have known or should know that the advertisements are illegal.

On March 9, 2020, the SAMR promulgated the Notice on the issuance of the "Key Points of the Inter-Ministry Joint Conference on Rectifying False and Illegal Advertising in 2020" and the "Work System of the Inter-Ministry Joint Conference on Rectifying False and Illegal Advertising." According to the above regulations, the SAMR will study and strengthen the supervision of emerging advertising formats, especially key platforms and key media, and supervise Internet platforms to consciously fulfill their legal obligations and responsibilities to verify relevant certification documents and advertising contents, as well as avoiding publishing false and illegal advertisements.

On February 25, 2023, the SAMR published the Administrative Measures on Internet Advertising, which became effective on May 1, 2023 (the "Measures on Internet Advertising"), which requires that users should be able to close pop-up advertisements using one button and provide that the pop-up advertisements shall not contain a countdown timer or require more than one click to close and shall not pop up more than once on the same page. In addition, the Measures on Internet Advertising provides that internet advertising operators and distributers shall establish a system for registering and reviewing advertisers and advertisements and verify and update such system on a regular basis. Platform operators that provide internet information services are required to inspect the content of advertisements displayed and published by using their information services and cooperate with market supervision administration authorities to inspect advertisements and provide information and evidence on alleged illegal advertisements requested by such authorities. The Measures on Internet Advertising also provides that advertising via livestreaming is subject to the new rules. Further, the Measures prohibits internet operators from publishing advertisement on after-school training for primary school and middle school students and kindergarteners and prohibits advertisements for certain items on internet media that targets minors, including, among others, advertisements related to online games that are harmful to the physical or mental health of minors, cosmetics, alcohol or beauty.

**Regulation on Tax**

On March 23, 2016, the Ministry of Finance and the SAT issued the Notice of Taxation on Implementing the Pilot Program of Replacing Business Tax with Value-Added Tax in an All-round Manner, pursuant to which the pilot plan for the replacement of business tax with VAT was expanded to all regions and industries as of May 1, 2016. December 25, 2024, the Standing Committee of the National People's Congress enacted the Value-Added Tax Law of the People's Republic of China (the "VAT Law"), which will become effective on January 1, 2026, replacing the existing Interim Regulations on Value-Added Tax. The VAT Law elevates the VAT regime from an interim administrative regulation to a formal national statute, codifying the outcomes of VAT reform over recent years. The VAT Law maintains the existing three-tier VAT rate structure of 13%, 9% and 6%, and retains a simplified levy rate of 3% for taxpayers applying the simplified calculation method. On December 25, 2025, the State Council promulgated the Implementation Regulations for the Value-Added Tax Law of the People's Republic of China, which will also take effect on January 1, 2026 concurrently with the VAT Law.

The PRC enterprise income tax is calculated based on the taxable income determined under the PRC Enterprise Income Tax Law and its implementation rules. On March 16, 2007, the National People's Congress of China enacted the PRC Enterprise Income Tax Law, which became effective on January 1, 2008 and was subsequently amended on February 24, 2017 and December 29, 2018. On December 6, 2007, the State Council promulgated the implementation rules to the PRC Enterprise Income Tax Law, which was effective in 2008 and was amended in 2019 and further amended on January 20, 2025.

Under the PRC Enterprise Income Tax Law, an enterprise established outside China with "de facto management bodies" within China is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. A circular issued by the State Taxation Administration in April 2009 and amended in 2017 regarding the standards used to classify certain Chinese invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as "resident enterprises," or the SAT Circular 82, clarified that dividends and other income paid by such PRC "resident enterprises" will be considered PRC source income and subject to PRC withholding tax, currently at a rate of 10% when paid to non PRC enterprise shareholders. This circular also subjects such PRC "resident enterprises" to various reporting requirements with the PRC tax authorities. Under the implementation regulations to the PRC Enterprise Income Tax Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. On July 27, 2011, the SAT issued the Administrative Measures of Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, which became effective on September 1, 2011. Such administrative measures further provide guidance on residence status determination and post-determination administration as well as the relevant procedures for competent tax authorities.

According to the SAT Circular 82 and SAT Bulletin 45, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC tax resident by virtue of having its "de facto management body" in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions set forth in Circular 82 are met: (i) the primary location of 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 are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's primary assets, accounting books and records, company seals and board and shareholder resolutions are located or maintained in the PRC; and (iv) 50% or more of voting board members or senior executives habitually reside in the PRC.

We do not meet all of the conditions set forth in SAT Circular 82. Therefore, we believe that we should not be treated as a "resident enterprise" for PRC tax purposes even if the standards for "de facto management body" prescribed in the SAT Circular 82 are applied to us. For example, certain of our minutes and files of the resolutions of our board of directors and the resolutions of our shareholders are maintained outside the PRC. However, it is possible that the PRC tax authorities may take a different view. See "Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-Under the PRC enterprise income tax law, we may be classified as a PRC "resident enterprise," which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment."

On February 3, 2015, the SAT issued the Notice on Several Issues Concerning Enterprise Income Tax for Indirect Assets Transfer by Non-PRC Resident Enterprises, as amended in 2017, or SAT Circular 7. Pursuant to SAT Circular 7, an "indirect transfer" of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a "reasonable commercial purpose" of the transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consist of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure. According to SAT Circular 7, where the payor fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. SAT Circular 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired on a public stock exchange. On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding of Income Tax of Non-resident Enterprise at Source, or SAT Circular 37, which further elaborates the relevant implemental rules regarding the calculation, reporting and payment obligations of the withholding tax by the non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation and application of SAT Circular 7. SAT Circular 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, were involved.

A PRC resident enterprise which distributes dividends to its non-PRC shareholders should withhold PRC income tax at a rate of 10% according to PRC law. However, pursuant to the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, if the beneficial owner of the dividends is a Hong Kong resident enterprise, which directly holds at least 25% of the equity interest of the aforesaid enterprise (i.e., the dividend distributor), the tax levied shall be 5% of the distributed dividends. Meanwhile, the Announcement of the State Administration of Taxation on Issues Relating to "Beneficial Owner" in Tax Treaties has stipulated some factors that are unfavorable to the determination of "beneficial owner," particularly in the case of holding companies.

In addition, pursuant to the Circular of the State Taxation Administration on Relevant Issues Relating to the Implementation of Dividend Clauses in Tax Treaties, which was issued by the SAT on February 20, 2009, for a tax resident of the counterparty to the tax treaty to be entitled to such tax treatment specified in the tax treaty for with respect to the dividends paid to it by a Chinese resident company, all of the following requirements should be satisfied: (i) the tax resident who obtains dividends should be a company as provided in the tax treaty; (ii) the equity interests and the voting shares of the Chinese resident company directly owned by such tax resident is at least a specified percentage; and (iii) the capital ratio of the Chinese resident company directly owned by such tax resident is at least the percentage specified in the tax treaty at any time within 12 months prior to acquiring the dividends.

**Regulations Relating to Labor and Social Insurance**

The principal laws that govern employment include (i) the PRC Labor Law, promulgated by the SCNPC on July 5, 1994, which has been effective since January 1, 1995 and most recently amended on December 29, 2018, and (ii) the PRC Labor Contract Law, promulgated by the SCNPC on June 29, 2007 and amended on December 28, 2012.

According to the PRC Labor Law and the PRC Labor Contract Law, employers must execute written labor contracts with full-time employees. All employers must compensate their employees with wages equal to at least the local minimum wage standards. All employers are required to establish a system for labor safety and sanitation, strictly comply with state rules and standards and provide employees with workplace safety training. Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative penalties. For serious violations, criminal liability may arise.

In addition, an employer is obligated to sign an indefinite term labor contract with an employee if the employer continues to employ the employee after two consecutive fixed term labor contracts. The employer also has to pay compensation to the employee if the employer terminates an indefinite term labor contract. Moreover, employers in China are required to provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance and housing funds.

According to the PRC Social Insurance Law promulgated by the National People's Congress of the PRC on October 28, 2010, effective since July 1, 2011 and amended on December 29, 2018, together with other relevant laws and regulations, an employer that fails to make social insurance contributions may be ordered to pay the required contributions within a stipulated deadline and be subject to a late fee. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from one to three times the amount overdue. According to the Regulations on Administration of Housing Fund promulgated by the State Council on April 3, 1999 and amended in 2002 and 2019 respectively, an enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline; otherwise, an application may be made to a local court for compulsory enforcement.

**Regulations Relating to Anti-monopoly Matters related to Internet Platform Companies**

The PRC Anti-monopoly Law, which took effect on August 1, 2008 (as amended on June 24, 2022), prohibits monopolistic conduct such as entering into monopoly agreements, abusing market dominance and concentration of undertakings that may have the effect of eliminating or restricting competition. The PRC Anti-monopoly Law requires that the anti-monopoly law enforcement agency be notified in advance of any transaction where the parties' turnover in the China market and/or global market exceed certain thresholds and the buyer would obtain control of, or decisive influence over, the target as a result of the business combination. As further clarified by the Provisions of the State Council on the Threshold of Filings for Undertaking Concentrations issued by the State Council in 2008 and amended in September 2018, such thresholds include (i) the total global turnover of all operators participating in the transaction exceeds RMB10 billion in the preceding fiscal year and at least two of these operators each had a turnover of more than RMB400 million within China in the preceding fiscal year, or (ii) the total turnover within China of all the operators participating in the transaction exceeded.

RMB2 billion in the preceding fiscal year, and at least two of those operators that had a turnover of more than RMB400 million within China in the preceding fiscal year. There are numerous factors the Anti-monopoly law enforcement agency considers in determining "control" or "decisive influence," and, depending on certain criteria, the Anti-monopoly law enforcement agency may conduct Anti-monopoly review of transactions in respect of which it was notified.

The PRC Anti-monopoly Law also requires that the relevant authority shall investigate a transaction where there is any evidence that the concentration has or may have the effect of eliminating or restricting competitions, even if such concentration does not reach the filing threshold.

On September 11, 2020, the SAMR issued the Anti-monopoly Compliance Guideline for Operators, which requires, under the PRC Anti-monopoly Law, operators to establish Anti-monopoly compliance management systems to prevent Anti-monopoly compliance risks.

On February 7, 2021, the Anti-monopoly Bureau of the State Council officially promulgated the Guidelines to Anti-monopoly in the Field of Internet Platforms, or the Anti-monopoly Guidelines on Platform Economies. Pursuant to an official interpretation from the Anti-monopoly Bureau of the State Council, the Anti-monopoly Guidelines on Platform Economies mainly covers five aspects, including general provisions, monopoly agreements, abusing market dominance, concentration of undertakings, and abusing of administrative powers eliminating or restricting competition. The Anti-monopoly Guidelines on Platform Economies prohibits certain monopolistic acts of Internet platforms so as to protect market competition and safeguard interests of users and undertakings participating in Internet platform economy, including without limitation, prohibiting platforms with dominant position from abusing their market dominance (such as discriminating customers in terms of pricing and other transactional conditions using big data and analytics, coercing counterparties into exclusivity arrangements, using technology means to block competitors' interface, favorable positioning in search results of goods displays, using bundle services to sell services or products, compulsory collection of users' unnecessary data). In addition, the Anti-monopoly Guidelines on Platform Economies also reinforces antitrust merger review for Internet platform related transactions to safeguard market competition.

On August 17, 2021, the SAMR issued the Provisions on Preventing Online Unfair Competition (Draft for Public Comments), or the Draft Provisions on Preventing Online Unfair Competition, which aims to regulate the unfair competition behaviors of business operators through Internet and other information networks. The Draft Provisions on Preventing Online Unfair Competition provides, among others, business operators should not use any technical means to impede, interfere or conduct unfair competition behaviors.

**Regulations Relating to M&A and Overseas Listings**

On August 8, 2006, six PRC governmental agencies jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006, and were amended on June 22, 2009. The M&A Rules require offshore special purpose vehicles formed to pursue overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to the listing and trading of such special purpose vehicle's securities on any stock exchange overseas. The M&A Rules also establish procedures and requirements that could make some acquisitions of PRC companies by foreign investors more time consuming and complex, including requirements in some instances that the Anti-monopoly law enforcement agency be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise.

In addition, the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the Ministry of Commerce in 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 domestic enterprises and that raise "national security" concerns are subject to strict review by the Ministry of Commerce, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

On July 6, 2021, the General Office of the State Council and General Office of the Central Committee of the Communist Party of China issued Opinions on Strictly Cracking Down Illegal Securities Activities in accordance with the Law. The opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which will become effective on March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC's official website. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic principles of the Draft Administrative Provisions and Draft Filing Measures and impose substantially the same requirements for the overseas securities offering and listing by domestic enterprises. Under the Trial Measures and the Guidance Rules and Notice, domestic enterprises conducting overseas securities offering and listing, either directly or indirectly, shall complete filings with the CSRC pursuant to the Trial Measures' requirements within three working days following the submission of an application for initial public offering or listing. Starting from March 31, 2023, enterprises that have been listed overseas or satisfy all of the following conditions shall be deemed as "Grandfathered Issuers" and are not required to complete the overseas listing filing immediately, but shall complete filings as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC: (i) the application for indirect overseas offering or listing shall have been approved by the relevant overseas regulatory authority or stock exchange prior to March 31, 2023, (ii) the enterprise is not required to reapply for the approval of the relevant overseas regulatory authority or stock exchange, and (iii) such overseas securities offering or listing shall be completed before September 30, 2023. Starting from March 31, 2023, domestic enterprises that have submitted valid applications for overseas offerings and listing but have not obtained the approval from relevant overseas regulatory authority or overseas stock exchange shall complete filings with the CSRC prior to their overseas offering and listings. The Company shall be subject to filing in CSRC for its issuance of new securities in the same overseas public market or being listed in other public markets for its offerings. The Trial Measures and other relevant regulations or rules may be published by CSRC and other governmental authorities subsequently, if any, may also ask for high requirements or put restrictions and even prohibitions against the Company's further financing and actions for issuance of new securities.

**C.** **Organizational Structure** 

We are a British Virgin Islands holding company and conduct our operations in the PRC through contractual arrangements with the VIEs, including Zhihui Qiyuan and Sixiang Qiyuan and their subsidiaries, and through our WFOEs and the wholly owned subsidiaries of WFOEs. Through our Hong Kong subsidiary Scienjoy International Limited, we own a direct equity interest in our WFOEs, including WXBJ and WXZJ. WXBJ, Zhihui Qiyuan and Zhihui Qiyuan's registered shareholders are parties to the VIE agreements, pursuant to which the profits of Zhihui Qiyuan and its subsidiaries, each such company formed under PRC Laws, are directly or indirectly payable to WXBJ. WXZJ, Sixiang Qiyuan and Sixiang Qiyuan's registered shareholders are parties to the VIE agreements, pursuant to which the profits of Sixiang Qiyuan and its subsidiaries, each such company formed under PRC Laws, are directly or indirectly payable to WXZJ. Any failure by any of the VIEs or their respective shareholders to perform their obligations under these contractual arrangements, would have a material adverse effect on our business. *See "Risk Factors-Risks Related to Our Corporate Structure."*

The following diagram depicts our current organizational structure. Unless otherwise indicated, equity interests depicted in this diagram are held 100%. The relationship between WXBJ, Zhihui Qiyuan, and the relationship between WXZJ and Sixiang Qiyuan is each governed by contractual arrangements and does not constitute equity ownership.

The Company's current organizational structure and the VIEs' current organizational structure are as follows:

**Contractual Arrangements among WFOEs, the VIEs and the Shareholders of the VIEs**

Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services, and certain other business. We are a company registered in the British Virgin Islands. To comply with PRC laws and regulations, we primarily conduct our business in China through (i) our PRC subsidiaries and (ii) the VIEs based on a series of contractual arrangements by and among the WFOEs, the VIEs and the shareholders of the VIEs. We have evaluated the guidance in FASB ASC 810 and concluded that we are the primary beneficiary of the VIEs because of these contractual arrangements. Accordingly, under U.S. GAAP, the financial statements of the VIEs are consolidated as part of our financial statements. The following is a summary of all the VIE arrangements that enable us to receive substantially all of the economic benefits from the VIEs' operations and be the primary beneficiary of the VIEs for accounting purposes.

***Contracts between the Company and the Zhihui Qiyuan VIEs***

***Exclusive Option Agreement.***

Pursuant to the exclusive option agreement (including its amendment or supplementary agreements, if any) amongst WXBJ (our WFOE), Zhihui Qiyuan and the registered shareholders who collectively owned all of Zhihui Qiyuan, the registered shareholders irrevocably granted WXBJ or its designated party, an exclusive option to purchase all or part of the equity interests held by the registered shareholders in Zhihui Qiyuan, when and to the extent permitted under PRC law, at an amount equal to the lowest permissible purchase price as set by PRC law. Zhihui Qiyuan cannot declare any profit distributions, or create any encumbrances in any form without the prior written consent of WXBJ. The registered shareholders must remit in full any funds received from Zhihui Qiyuan to WXBJ, in the event any distributions are made by the VIE pursuant to any written consents of WXBJ.

The Exclusive Option Agreement shall remain effective for twenty (20) years and shall be automatically extended for an additional period of one (1) year. The additional period automatically enters the renewal extension of one (1) year at the end of each extended additional period. WXBJ has the right to terminate this agreement at any time after giving a thirty (30) days' prior termination notice.

***Power of Attorney Agreements.***

Each registered shareholders of Zhihui Qiyuan entered into a power of attorney agreement (including its amendment or supplementary agreements, if any) whereby such registered shareholders granted an irrevocable proxy of the voting rights underlying their respective equity interests in Zhihui Qiyuan to WXBJ, which includes, but are not limited to, all the shareholders' rights and voting rights empowered to such registered shareholders by the PRC company law and Zhihui Qiyuan's Article of Association. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each such shareholder remains as a shareholder of Zhihui Qiyuan.

***Share Pledge Agreement.***

Pursuant to the share pledge agreement (including its amendment or supplementary agreements, if any) among WXBJ, Zhihui Qiyuan and the registered shareholders of Zhihui Qiyuan, such registered shareholders have pledged all their equity interests in Zhihui Qiyuan to guarantee the respective performance of Zhihui Qiyuan and such shareholders obligations under the Exclusive Option Agreement, Exclusive Business Cooperation Agreement and Power of Attorney Agreement, as applicable.

If Zhihui Qiyuan or any of its shareholders breaches its contractual obligations under any of other VIE agreements, WXBJ, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The registered shareholders of Zhihui Qiyuan agreed not to transfer, sell, pledge, dispose of or otherwise create any new encumbrance on their equity interests in Zhihui Qiyuan without the prior written consent of WXBJ. The Share Pledge Agreement shall be continuously valid until all obligations under the VIE agreements have been fulfilled, or the VIE agreements are terminated, or the secured debts has been fully executed.

***Contracts that enable us to receive substantially all of the economic benefits from the Zhihui Qiyuan VIEs***

***Exclusive Business Cooperation Agreements***

Pursuant to the exclusive business cooperation agreement (including its amendment or supplementary agreements, if any) between WXBJ and Zhihui Qiyuan, WXBJ is to provide exclusive business support, technical and consulting services related to all technologies needed for its business in return for fees. The service fees may be adjusted by WXBJ based on the following factors:

● complexity and difficulty of the services pursuant to the business cooperation agreement to Zhihui Qiyuan during the month (the "Monthly Services");

● the number of WXBJ's employees who provided the Monthly Services and the qualifications of the employees;

● the number of hours WXBJ's employees spent to provide the Monthly Services;

● nature and value of the Monthly Services;

● market reference price; and

● Zhihui Qiyuan's operating conditions for the month.

The term of the Exclusive Business Cooperation Agreement is twenty (20) years and shall be automatically extended for an additional period of one (1) year. The additional period automatically enters the renewal extension of one (1) year at the end of each extended additional period. Besides, WXBJ has the right to terminate this agreement at any time after giving a thirty (30) days' prior termination notice.

Based on the foregoing VIE arrangements, which obligate WXBJ to absorb all of the risk of loss from their activities and enable WXBJ to receive all of their expected residual returns, the Company accounts for Zhihui Qiyuan as a VIE. Accordingly, the Company consolidates the accounts of Zhihui Qiyuan for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission ("SEC") and Accounting Standards Codification ("ASC") 810-10, Consolidation.

***Contractual Arrangements among WXZJ, Sixiang Qiyuan, and the Shareholders of Sixiang Qiyuan.***

***Exclusive Option Agreement.***

Pursuant to the exclusive option agreement (including any supplementary agreement thereto, if any) entered into by and among WXZJ, Sixiang Qiyuan and all the shareholders of Sixiang Qiyuan, the shareholders of Sixiang Qiyuan hereby irrevocably grant to WXZJ or its designee, to the extent permitted by the laws of the People's Republic of China, the exclusive right to purchase all or part of the equity interest held by such shareholders at the lowest purchase price permitted by the laws of the People's Republic of China. Without the written consent of WXZJ, Sixiang Qiyuan may not distribute any profits or create any encumbrance in any manner. If Sixiang Qiyuan makes the profit distribution with WXZJ's written consent, Sixiang Qiyuan's shareholders shall pay all of any funds received by them to WXZJ.

The term of the exclusive option agreement is twenty years and will be automatically renewed for one year. Upon the expiration of each renewed term, the exclusive option agreement will be automatically renewed for one year. In the meantime, WXZJ shall have the right to terminate the exclusive option agreement at any time by giving a three days' prior notice.

***Power of Attorney Agreements.***

WXZJ has entered into a power of attorney agreement (the "Power of Attorney," including any supplementary agreements, if any) with each shareholder of Sixiang Qiyuan, pursuant to which each such shareholder grants the proxy rights to WXZJ in connection with his equity interest in Sixiang Qiyuan, including, without limitation, all the shareholders' beneficial rights and voting rights conferred by the Company Law of the People's Republic of China and the Articles of Association of Sixiang Qiyuan. Each power of attorney agreement shall be irrevocable from the date of execution and shall continue to be valid until the relevant shareholder no longer holds Sixiang Qiyuan's equity interest.

***Share Pledge Agreement.***

Pursuant to the share pledge contract (including any supplementary agreement thereto, if any) entered into by and among WXZJ, Sixiang Qiyuan and each of the shareholders of Sixiang Qiyuan, each shareholder of Sixiang Qiyuan has pledged all of Sixiang Qiyuan's equity interest held by such shareholder to guarantee the respective performance of Sixiang Qiyuan and such shareholder under the exclusive option contract, the exclusive business cooperation agreement and the power of attorney agreement, as applicable.

If Sixiang Qiyuan or any of its shareholders breaches its contractual obligations under any VIE agreements, WXZJ, as the pledgee, will have certain rights, including the sale of the pledged equity interest. The shareholders agree that, without the prior written consent of WXZJ, they shall not transfer, sell, pledge, dispose of or in any other manner create any new encumbrance upon their equity interest in Sixiang Qiyuan. The share pledge agreement shall remain effective until all obligations under the VIE agreements have been performed, or the VIE agreements have been terminated, or all obligations under the VIE agreements have been fully performed.

***Contracts that enable us to receive substantially all of the economic benefits from the Sixiang Qiyuan VIEs***

 ****

***Exclusive Business Cooperation Agreement***

In accordance with the exclusive business cooperation agreement between WXZJ and Sixiang Qiyuan (including supplementary agreements thereto, if any), WXZJ will provide Sixiang Qiyuan with exclusive business support and all business-related technologies and consulting services in order to obtain the fees equal to the consolidated net income of Xiuli (Zhejiang) Culture Tech Co., Ltd., Leku (Zhejiang) Culture Tech Co., Ltd., Haifan (Zhejiang) Culture Tech Co., Ltd., Xiangfeng (Zhejiang) Culture Tech Co., Ltd. and Hongren (Zhejiang) Culture Tech Co., Ltd. after deducting losses of the previous year (if any). WXZJ may adjust the service fees according to the following factors:

● Quarterly based on the complexity and difficulty of the services provided pursuant to the exclusive business cooperation agreement during such quarter ("Quarterly Services");

● the number of WXZJ's employees who provided the Quarterly Services and the qualifications of these employees;

● The number of hours WXZJ's employees spent to provide the Quarterly Services;

● The nature and value of the Quarterly Services;

● market reference price; and

● Sixiang Qiyuan's operating conditions.

The term of the exclusive business cooperation agreement is twenty years and is automatically renewable for one year. Upon the expiration of each renewal term, the agreement can be automatically renewed for one year. In addition, WXZJ shall have the right to terminate this agreement at any time by giving a three-day notice on the termination of this Agreement.

We have been advised by Beijing Feng Yu Law Firm (北京锋昱律师事务所) ("Feng Yu Law Firm"), our PRC legal counsel:

● based on its understanding of the relevant laws and regulations, is of the opinion that, subject to the judicial interpretations of the PRC laws or legislative interpretation of the PRC laws by PRC government authority, each of the VIE contracts among WXBJ, Zhihui Qiyuan and its registered shareholders is valid, binding and enforceable in accordance with its terms and does not violate current effective applicable PRC Laws.

● based on its understanding of the relevant laws and regulations, is of the opinion that, subject to the judicial interpretations of the PRC laws or legislative interpretation of the PRC laws by PRC government authority, each of the VIE contracts among WXZJ, Sixiang Qiyuan and its registered shareholders is valid, binding and enforceable in accordance with its terms and does not violate current effective applicable PRC Laws.

However, our PRC legal counsel has advised that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, rules and regulations. Accordingly, the PRC regulatory authorities may in the future take a view that is contrary to the opinion of our PRC legal counsel. Our PRC legal counsel has further advised that if the PRC government finds that the agreements that establish the structure for operating our Internet related value-added business do not comply with PRC government restrictions on foreign investment in the aforesaid business we and the VIEs engage in, we and the VIEs could be subject to severe penalties including being prohibited from continuing operations. See *"Risk Factors-Risks Factors Related to Our Corporate Structure." See "Risk Factors-Risk Factors Related to Doing Business in China."*

**D.** **Property, Plants and Equipment** 

Our principal executive offices are located at RM 1118, 11<sup>th</sup> Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St., Yuhang District, Hangzhou, Zhejiang Province, 311113, China, where we lease approximately 6,764 square meters of office space as of the date of this report. We and our subsidiaries also lease an additional approximately 2,425 square meters of office space in Beijing and Xinjiang Uyghur Autonomous Region, P.R. China.

**ITEM 4A. UNRESOLVED STAFF COMMENTS**

Not Applicable

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS** 

*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our combined financial statements and consolidated financial statements and the related notes included in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this annual report.*

**A.** **Operating Results** 

**Overview**

Scienjoy Holding Corporation ("we" or the "Company") was originally incorporated on May 2, 2018 as a British Virgin Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On May 7, 2020, we consummated the acquisition of Scienjoy Inc. As a result of the business combination, we became the holding company of Scienjoy Inc. and we changed our name from "Wealthbridge Acquisition Limited" to "Scienjoy Holding Corporation."

We are an interactive entertainment leader in the Chinese market and operates platforms on both PC and mobile apps, through which users can enjoy immersive and interactive entertainment live streaming. We had approximately 332.3 million registered users by the end of December 31, 2025, increased from 329.8 million registered users for the year ended December 31, 2024.

Our most recent annual impairment test of goodwill and intangible assets was a quantitative analysis conducted during the last quarter of year ended December 31, 2025 that indicated an impairment of goodwill and intangible assets. Considering all available evidence in the evaluation of goodwill and intangible impairment indicators including but not limited to regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025, the Group assessed and recorded impairment charges of approximately RMB186.2 million and RMB398.8 million on goodwill and intangible assets for the year ended December 31, 2025, respectively. The fair value of that reporting unit was estimated using the income valuation approach with assistance of third-party valuation firm. The income approach applies a fair value methodology to the single reporting unit based on discounted cash flows. The Company bases fair value estimates on assumptions the Company believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

We adopt a multi-platform strategy and all platforms are categorized as "SHOW live streaming" in which professional broadcasters provide live streaming entertainment for users primarily in the form of performances (such as singing, dancing, and talk shows). Broadcasters on all platforms have been professionally trained by relevant broadcaster agents to provide more professional content. Despite the similarity in contents, the different platforms adopt different operation strategies, such as, to name a few, different broadcaster policy, events, promotion, and games. We provide a technological infrastructure to enable broadcasters, online users and viewers to interact with each other during live streaming. All platforms can be accessed for free. We mainly derive our revenue from sales of virtual items on the platforms. Users can purchase virtual currency to purchase virtual items for use on the platforms. Users can recharge their virtual currency on the platforms through various online third-party payment platforms, such as WeChat Pay or AliPay.

**Key Factors Affecting Our Results of Operations**

***General Factors***

Development of the mobile live streaming market in China over the past decade has been influenced by a number of macroeconomic and technological factors and trends, including increasing disposable income and demand for cultural and entertainment activities and increased use of the mobile internet. Our business and operating results are affected by general factors affecting China's entertainment live streaming industry, which may include the following:

● China's overall macroeconomic landscape;

● China's overall entertainment and mobile entertainment growth;

● Usage and penetration rate of mobile Internet and mobile payment;

● Growth and competitive landscape of China's mobile live streaming market, especially entertainment SHOW live streaming; and

● Governmental policies affecting China's live streaming industry;

Unfavorable changes in any of these general industry conditions could negatively affect demand for our services and materially and adversely affect its results of operations.

***Specific Factors***

While our business is influenced by general factors affecting the mobile live streaming industry in China, we believe our results of operations are more directly affected by company specific factors, including the following major factors:

*Our ability to retain broadcasters and enhance user experience*

We continue to improve our operational capability with more attractive contents, such as music, dancing, talk shows, traditional drama, online competitions and offline events, to further enhance user experience. We are offering different content and games to incentivize users to pay for our services. Therefore, quality broadcasters and interesting content are essential to our operations. In order to retain quality broadcasters, we have developed a revenue sharing policy, pursuant to which we share revenue generated on the platforms with talents agencies, which in turn share revenue with broadcasters. Additionally, in order to maintain the quality of broadcasters and service, we are conservative in hiring broadcasters and has adopted strict operation procedures for screening broadcasters before hiring. We primarily work with professional agents to identify and retain new broadcasters. The increasing number of trained broadcasters, who provide better quality performance, also contributes to improved average live streaming revenue per paying user ("ARPPU") and our paying ratio.

*Our ability to maintain and expand our user base*

User base is another key factor for success in the mobile live streaming industry. We endeavor to provide attractive content to keep users on our platforms as long as possible. Our multi-platform strategy attempt to retain users by providing diversified content, promotions and an enhanced user experience.

With respect to user base, our mobile live show streaming sector differs from other mobile live streaming sectors such as the pan-entertainment live streaming and game live streaming sector. In live show streaming, each broadcaster interacts in real time with users and therefore the number of users that each broadcaster can entertain at the same period in his/her video room is limited, which provides for a more unique user experience than those found in other live streaming sectors.

We continue to seek opportunities to grow our user base and enhance our user engagement. Our ability to do so largely depends on our ability to recruit, train, and retain high quality broadcasters and on our ability to produce high quality content. We also intend to continue to invest in our brand recognition.

*Our ability to improve innovative technologies*

The ability to understand market traffic and pair users with suitable broadcasters and associated activities is key for user stickiness and monetization in the mobile show live streaming industry. By using big data analytics to understand individual user behavior and industry trends, we intend to continually adjust our platform to better guide users to appropriate broadcasters as well as to analyze traffic on other sites to select the best methods and targets for user acquisition.

**Summary Consolidated Statements of Operations and Comprehensive Income**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**Amounts in thousands of RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| **Total revenue** | 1464871 | 1363384 | 1241621 | 177549 |
| Cost of revenues | (1272145) | (1117942) | (1014455) | (145065) |
| **Gross profit** | **192726** | **245442** | **227166** | **32484** |
| Sales and marketing expenses | (1355) | (7049) | (6357) | (909) |
| General and administrative expenses | (75582) | (76629) | (88977) | (12724) |
| Research and development expenses | (75116) | (90461) | (83426) | (11930) |
| Provision for credit losses | (17865) | (30584) | (127290) | (18202) |
| **Income (loss) from operations** | **22808** | **40719** | **(78884)** | **(11281)** |
| Change in fair value of contingent consideration | (5624) |  |  |  |
| Change in fair value of warrant liabilities | 170 |  |  |  |
| Change in fair value of investment in marketable security | (9023) | 6103 | (29067) | (4157) |
| Investments (loss) income | (31328) | (5742) | 8712 | 1246 |
| Impairment for goodwill |  |  | (186170) | (26622) |
| Impairment for intangible assets |  |  | (398835) | (57033) |
| Impairment of long-term investments | (11800) | (10425) |  |  |
| Interest income, net | 2739 | 3211 | 1712 | 245 |
| Other income, net | 7449 | 1609 | 8732 | 1249 |
| Foreign exchange (loss) gain, net | (1887) | 3805 | (1569) | (224) |
| **Income (loss) before income taxes** | **(26496)** | **39280** | **(675369)** | **(96577)** |
| Income tax (expense) benefit | (8480) | (12597) | 80369 | 11493 |
| **Net (loss) income** | **(34976)** | **26683** | **(595000)** | **(85084)** |
| **Less: net loss attributable to noncontrolling interest** | **(4188)** | **(13002)** | **(7911)** | **(1131)** |
| **Net (loss) income attributable to the Company's shareholders** | **(30788)** | **39685** | **(587089)** | **(83953)** |

---

***Revenues***

Our revenues consist of live streaming revenue and technical services revenue. We generate technical services revenue from providing technical development and advisory services, however, we deem the technical services revenue as not material. Our revenue is mostly from the sales of virtual items used in our live streaming business.

Virtual items are categorized as consumable and time-based items. Consumable items, as virtual gift service, are consumed and used by users upon purchase, while time-based virtual items, such as privilege titles, could be used for a fixed period of time. Accordingly, revenue is recognized at the time when the virtual item is delivered and consumed if the virtual item is a consumable item or, in the case of time-based virtual item, recognized ratably over the period each virtual item is made available to the user, which is usually over one to multiple months and does not exceed one year. For the years ended December 31, 2023, 2024 and 2025, revenue from consumable virtual items represented over 96% of the total net revenue.

As we continue to grow our live streaming business, and enhance our user engagement and expand virtual gifting scenarios to increase users' willingness to pay, we expect our revenue from the sales of virtual items in our live streaming business to increase.

The following table sets forth types of our revenue for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**Amounts in thousands of RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| Live streaming - consumable virtual items revenue | 1420258 | 1317601 | 1187033 | 169743 |
| Live streaming - time based virtual item revenue | 25004 | 24935 | 16951 | 2424 |
| Technical services and others | 19609 | 20848 | 37637 | 5382 |
| **Total revenue** | **1464871** | **1363384** | **1241621** | **177549** |

---

As of December 31, 2025, we operated five brands of live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming (including BeeLive Chinese version – Mifeng) and Hongle Live Streaming. The following table sets forth our revenue by platforms for the years indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**Amounts in thousands of RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| Showself | 334186 | 330271 | 319672 | 45712 |
| Lehai | 263517 | 330279 | 288809 | 41299 |
| Haixiu | 245049 | 271809 | 214460 | 30667 |
| Beelive | 304730 | 212035 | 214066 | 30611 |
| Hongle | 297780 | 198142 | 166977 | 23878 |
| Technical services and others | 19609 | 20848 | 37637 | 5382 |
| **TOTAL** | **1464871** | **1363384** | **1241621** | **177549** |

---

The total number of paying users at Showself Live, Lehai Live, Haixiu Live, Beelive Live and Hongle Live for the years indicated is as following:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** |
| Showself | 143515 | 85693 | 67440 |
| Lehai | 147900 | 152586 | 111416 |
| Haixiu | 108576 | 119617 | 89571 |
| Beelive | 84998 | 64342 | 51364 |
| Hongle | 72703 | 72414 | 63904 |
| **TOTAL** | 557692 | 494652 | 383695 |

---

The ARPPU by Showself Live, Lehai Live, Haixiu Live, Beelive Live and Hongle Live is as following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**In RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| Showself | 2329 | 3854 | 4740 | 678 |
| Lehai | 1782 | 2165 | 2592 | 371 |
| Haixiu | 2257 | 2272 | 2394 | 342 |
| Beelive | 3585 | 3295 | 4168 | 596 |
| Hongle | 4096 | 2736 | 2613 | 374 |
| Overall average | 2592 | 2714 | 3138 | 449 |

---

Among our five brands of live streaming platforms, Lehai Live streaming contributed at least 27% of the paying users for the all the periods indicated. Our ARPPU in each platform may fluctuate from period to period due to the mix of live streaming services purchased by the paying users. The overall ARPPU for the years ended December 31, 2023, 2024 and 2025 was RMB2,592, RMB2,714 and RMB3,138, respectively.

***Cost of Revenues***

Our cost of revenues primarily consists of (i) revenue sharing fees, including payments to various broadcasters and content providers, (ii) user acquisition costs, (iii) bandwidth related costs, and (iv) other costs.

The table below shows the cost of revenues for the periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**Amounts in thousands of RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| Revenue sharing fees | (1158959) | (1035233) | (906969) | (129695) |
| User acquisition costs | (63116) | (36592) | (59971) | (8576) |
| Bandwidth related costs | (12684) | (9245) | (5224) | (747) |
| Others | (37386) | (36872) | (42291) | (6047) |
| TOTAL | (1272145) | (1117942) | (1014455) | (145065) |

---

*Revenue sharing fees cost:* Our revenue sharing fees represent our payment to broadcasters based on a percentage of revenue from sales of virtual items, including virtual gifts and other subscription-based privileges. Revenue sharing fees were 79%, 76% and 73% of revenues for the years ended December 31, 2023, 2024 and 2025, respectively.

 

*User acquisition costs:* We acquire users primarily through viral marketing, or word-of-mouth marketing, and online download. We provide online downloads of our apps via various third-party websites, including online advertising networks, internet portals and mobile application stores. We pay such third parties a fee for each registered user account acquired through them.

*Bandwidth related cost:* Bandwidth related cost consists of fees that we pay to telecommunication service providers for server hosting, bandwidth and content delivery-related services such as CDN (content delivery network).

Others: Other costs include (i) fees that we pay to third-party payment processing platforms through which our users purchase our virtual currencies, technology service costs, and content producing costs, (ii) personnel fees directly related to the revenue such as operation employees' salary and benefits, and (iii) depreciation and amortization expense for servers and other equipment, and intangibles directly related to operating the platforms. For the years ended December 31, 2023, 2024 and 2025, other cost represented approximately 3% of total revenue.

***Operating Expenses***

Our operating expenses consists of (i) sales and marketing expenses, (ii) research and development expenses, (iii) general and administrative expenses, and (iv) provision for credit losses.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**Amounts in thousands of RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| Sales and marketing expenses | (1355) | (7049) | (6357) | (909) |
| General and administrative expenses | (75582) | (76629) | (88977) | (12724) |
| Research and development expenses | (75116) | (90461) | (83426) | (11930) |
| Provision for credit losses | (17865) | (30584) | (127290) | (18202) |

---

*Sales and marketing expenses:* Our sales and marketing expenses mainly consist of (i) salaries and benefits for sales and marketing employees, and (ii) branding and advertisement expenses, including advertisements, holding promotional events and developing and designing marketing campaigns. We expect to target sales and marketing expenditures to attract targeted paying users.

*General and administrative expenses*: Our general and administrative expenses primarily consist of (i) salaries and benefits for our general and administrative staff, (ii) consulting fees, (iii) other expenses primarily including general office expenses, and (iv) office rental expenses. As a public company, we incur additional costs to comply with reporting obligations under the U.S. securities laws.

*Research and development expenses:* Our research and development expenses primarily consist of (i) salaries and benefits for our research and development employees, and (ii) other expenses primarily including depreciation related to research use. We expect our research and development expenses to continue to grow as we continue to invest in innovative technologies to offer users a better experience.

*Provision for credit losses:* We maintain an allowance for credit losses which reflects our best estimate of amounts that potentially will not be collected. When we determine the allowance for credit losses, we take into consideration various factors including but not limited to collection history and credit-worthiness of the debtors as well as the age of the individual receivables account.

***Results of Operations***

 ****

***Year Ended December 31, 2025 Compared to Year Ended December 31, 2024***

**Revenue:** Our revenues decreased to RMB1,241.6 million for the year ended December 31, 2025 from RMB1,363.4 million for the year ended December 31, 2024, primarily caused by the decrease in the number of paying users due to competitive landscape of China's mobile live streaming market, partially offset by an increase of RMB424 in overall ARPPU from RMB2714 for the year ended December 31, 2024 to RMB3,138 for the year ended December 31, 2025. Total paying users were 383,695 for the year ended December 31, 2025, decreased by approximately 22% as compared to 494,652 for the year ended December 31, 2024.

**Cost of revenues:** Our cost of revenues decreased to RMB1,014.5 million for the year ended December 31, 2025 from RMB1,117.9 million for the year ended December 31, 2024. The decrease was primarily attributable to a decrease of RMB128.3 million in our revenue sharing fees, offset by an increase of RMB23.4 million in our user acquisition costs.

**Gross profit:** Our gross profit decreased to RMB227.2 million for the year ended December 31, 2025 from RMB245.4 million for the year ended December 31, 2024. The gross margin increased to 18.3% for the year ended December 31, 2025 from 18.0% in the year ended December 31, 2024 due to higher ARPPU during the year ended December 31, 2025, showing our effectiveness in converting high-quality paying user to its profit growth.

**Total operating expenses:** Total operating expenses increased by 49.5% to RMB306.1 million for the year ended December 31, 2025 from RMB204.7 million for the year ended December 31, 2024.

● *Sales and marketing expenses* **:** Our sales and marketing expenses decreased to RMB6.4 million for the year ended December 31, 2025 from RMB7.0 million for the year ended December 31, 2024, primarily attributable to fewer sales and marketing activities.

● *General and administrative expenses* **:** Our general and administrative expenses increased by 16.1% to RMB89.0 million for the year ended December 31, 2025 from RMB76.6 million for the year ended December 31, 2024. The increase was primarily due to an increase of RMB12.4 million in professional consulting fees.

● *Research and development expense* s **:** Our research and development expenses decreased to RMB83.4 million for the year ended December 31, 2025 from RMB90.5 million for the year ended December 31, 2024, due to a decrease of RMB9.0 million in employee salary and welfare and a decrease of RMB1.3 million in share-based compensation, offset by an increase of RMB4.1 million in technical service fee.

● *Provision for credit losses:* Our provision for credit losses increased by 316.2% to RMB127.3 million for the year ended December 31, 2025 from RMB30.6 million for the year ended December 31, 2024. Given the regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly increasing credit risk of our debtors in the livestreaming industry, we provided additional allowance for credit loss for debtors with high risk and delinquent accounts. As a result, our provision for credit loss increased to RMB127.3 million for the year ended December 31, 2025 from RMB30.6 million for the year ended December 31, 2024. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. The Company will continue to periodically review the allowance and make necessary adjustments accordingly.

**Change in fair value of investment in marketable security:** Change in fair value of investment in marketable security was a loss of RMB29.1 million for the year ended December 31, 2025, as compared to a gain of RMB6.1 million for the year ended December 31, 2024. The change was attributable to the fair value changes in investments in publicly traded company.

**Investment income (loss):** Investment income was RMB8.7 million for the year ended December 31, 2025, as compared to investment loss of RMB5.7 million for the year ended December 31, 2024. The investment income was attributable to share of unrealized gain in long-term investments.

**Impairment of long-term investments:** Impairment of long-term investments was nil for the year ended December 31, 2025, as compared to RMB10.4 million for the year ended December 31, 2024.

**Interest income:** Interest income decreased to RMB1.7 million for the year ended December 31, 2025 from RMB3.2 million for the year ended December 31, 2024. The decrease was primarily due to lower interest rate.

**Impairment for goodwill**: During the fourth quarter of 2025, as a part of its annual impairment assessment, the Company assessed its internal forecast along with several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting unit, including the significance of the amount, if any, of excess carrying value over fair value, consistency of the Company's current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of the Company's strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to our risk-adjusted discount rates and earnings quality and sustainability. After considering all available evidence in the evaluation of goodwill impairment indicators including but not limited to regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025, and accordingly the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025, the Company determined it appropriate to perform the quantitative assessment of the Company as of December 31, 2025. The quantitative impairment test involves the use of significant estimates and assumptions to evaluate the impact of operational and economic changes on each reporting unit. The Company estimate the fair value using the income valuation approach with assistance of third-party valuation firm. The income approach applies a fair value methodology to the single reporting unit based on discounted cash flows. This analysis requires significant estimates and judgments, including (i) the estimation of future revenue, projected gross profit margins, projected operating costs, projected operating income margins, and projected capital expenditures, which are dependent on internal cash flow forecasts; and (ii) determination of the risk-adjusted discount rates. As a result of goodwill impairment test, the Group recorded a full impairment of RMB186.2 million on goodwill for the year ended December 31, 2025. The Company bases fair value estimates on assumptions the Company believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

**Impairment for intangible assets**: During annual impairment test performed in the fourth quarter of 2025, the Company identified several triggering events indicating that the carrying value of its intangible assets may exceed their fair value. These indicators included regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025. The Company performed a quantitative assessment as of December 31, 2025, using an income approach. The income approach utilized a discounted cash flow model based on the assumptions including management's best estimates of the expected future cash flows, risk-adjusted discount rate, and the estimated useful life of the asset group with assistance of a third-party valuation firm. Based on this analysis, the Company determined that the carrying values of its intangible assets were no longer recoverable. As a result of the fair value test, the Group recorded a full impairment of RMB398.8 million on intangible assets for the year ended December 31, 2025.

**Other income, net**: Other income, net increased by 442.7% to RMB8.7 million for the year ended December 31, 2025 from RMB1.6 million for the year ended December 31, 2024. The increase was primarily due to increased government subsidies and one-time compensation income. There is no assurance that we will continue to receive these subsidies in the future.

**Foreign exchange (loss) gain**: Foreign exchange loss was RMB1.6 million for the year ended December 31, 2025, as compared to foreign exchange gain of RMB3.8 million for the year ended December 31, 2024.

**Income tax (expense) benefit**: Income tax benefit was RMB80.4 million for the year ended December 31, 2025, as compared to income tax expenses of RMB12.6 million for the year ended December 31, 2024.

**Net income (loss):** As a result of the foregoing, net loss was RMB595.0 million for the year ended December 31, 2025, as compared to an net income of RMB26.7 million for the year ended December 31, 2024.

***Year Ended December 31, 2024 Compared to Year Ended December 31, 2023***

**Revenue:** Total revenues decreased to RMB1,363.4 million for the year ended December 31, 2024 from RMB1,464.9 million for the year ended December 31, 2023, primarily caused by decrease of paying users due to competitive landscape of China's mobile live streaming market. Total paying users were 494,652 for the year ended December 31, 2024, compared to 557,692 for the year ended December 31, 2023.

**Cost of revenues:** Our cost of revenues decreased to RMB1,117.9 million for the year ended December 31, 2024 from RMB1,272.1 million for the year ended December 31, 2023. The decrease was primarily attributable to a decrease of RMB123.7 million, in the Company's revenue sharing fees and a decrease of RMB26.5 million in the Company's user acquisition costs due to the fact that the Company already had a stable market share.

**Gross profit:** Our gross profit increased by 27.4% to RMB245.4 million for the year ended December 31, 2024 from RMB192.7 million for the year ended December 31, 2023. The gross margin increased to 18.0% for the year ended December 31, 2024 from 13.2% in the year ended December 31, 2023 due to higher ARPPU during the year ended December 31, 2024, showing the Company's effectiveness in converting high-quality paying user to its profit growth.

**Total operating expenses:** Total operating expenses increased by 20.5% to RMB204.7 million for the year ended December 31, 2024 from RMB169.9 million for the year ended December 31, 2023.

● *Sales and marketing expenses* **:** Our sales and marketing expenses increased by 420.2% to RMB7.0 million for the year ended December 31, 2024 from RMB1.4 million for the year ended December 31, 2023, primarily attributable to sales and marketing activities in our new subsidiaries in Dubai. The Company is taking initiative in Dubai market, aiming at global expansion starting from the dynamic MENA region.

● *General and administrative expenses* **:** Our general and administrative expenses increased by 1.4% to RMB76.6 million for the year ended December 31, 2024 from RMB75.6 million for the year ended December 31, 2023. The increase was primarily due to an increase of RMB5.9 million in employee salary and welfare, offset by a decrease of RMB2.5 million in office renovation expenses and a decrease of RMB2.4 million in share-based compensation.

● *Research and development expense* s **:** Our research and development expenses increased by 20.4% to RMB90.5 million for the year ended December 31, 2024 from RMB75.1 million for the year ended December 31, 2023, due to an increase of RMB14.7 million in technical service fee and an increase of RMB1.1 million in employee salary and welfare.

● *Provision for credit losses:* Our provision for credit losses increased by 71.2% to RMB30.6 million for the year ended December 31, 2024 from RMB17.9 million for the year ended December 31, 2023, primary due to a one-time write-off of a RMB30.0 million investment buyback receivable.

**Change in fair value of contingent consideration:** Change in fair value of contingent consideration was nil for the year ended December 31, 2024, as compared to a loss of RMB5.6 million for the year ended December 31, 2023. Change in fair value of contingent consideration is derived from earn out liabilities resulted from historical acquisitions. The fair value of the contingent consideration is re-measured at each reporting period, and the change in fair value is recognized as either income or expense.

**Change in fair value of warrant liabilities:** Change in fair value of warrant liabilities was nil for the year ended December 31, 2024, as compared to a gain of RMB0.2 million for the year ended December 31, 2023. The fair value of the Company's warrants derivative liability assumed from the SPAC acquisition is re-measured to its fair value at the end of each reporting period, with the change being recorded as other expense or gain. In February 2024, the Company's warrants expired according to the terms of the warrant agreement.

**Change in fair value of investment in marketable security:** Change in fair value of investment in marketable security was a gain of RMB6.1 million for the year ended December 31, 2024, as compared to a loss of RMB9.0 million for the year ended December 31, 2023. The change was primarily attributable to the fair value changes in investments in publicly traded company.

**Investment loss:** Investment loss decreased to RMB5.7 million for the year ended December 31, 2024 from RMB31.3 million for the year ended December 31, 2023. The investment loss was primarily attributable to share of unrealized loss in long-term investments.

**Impairment of long-term investments:** Impairment of long-term investments decreased to RMB10.4 million for the year ended December 31, 2024, from RMB11.8 million for the year ended December 31, 2023.

**Net (loss) income:** As a result of the foregoing, net income was RMB26.7 million for the year ended December 31, 2024, as compared to a net loss of RMB35.0 million for the year ended December 31, 2023.

**B.** **Liquidity and Capital Resources** 

*Cash Flows and Working Capital*

The Company's sources of liquidity are primarily from the cash earned from its operating activities and proceeds from financing activities. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company's cash and cash equivalents consist of cash on hand and demand deposits placed with banks or other financial institutions which are unrestricted as to withdrawal and use and have original maturities less than three months. Cash and cash equivalents also consist of funds earned from the operating revenues which were held at the third-party platform fund accounts which are unrestricted as to immediate use or withdraw.

As of December 31, 2024 and 2025, RMB242,359 and RMB301,095, respectively, were deposited with major financial institutions located in the PRC. Management believes that these financial institutions are of high credit quality and continually monitor the credit worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors' interests. The Company has no short-term investments as of December 31, 2024 and 2025.

A majority of the Company's expense transactions are denominated in RMB and a significant portion of assets and liabilities of the Company and its subsidiaries (including the VIEs) are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than RMB by the Companies in China must be processed through the PBOC or other PRC foreign exchange regulatory bodies which require certain supporting documentation in order to effect the remittance.

The Company intends to finance its future working capital requirements and capital expenditures from cash generated from operating activities and funds raised from financing activities. The Company believes that its current cash and cash equivalents, together with its cash generated from operating activities and financing activities, will be sufficient to meet its present anticipated working capital requirements and capital expenditures for at least the next 12 months. However, the Company may decide to enhance its liquidity position or increase its cash reserve for future investments or operations through additional capital and finance funding. Issuance of additional equity securities, including convertible debt securities, would dilute the Company earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict the Company's operations and its ability to pay dividends to its shareholders.

As a holding company with no material operations of its own, the Company conducts its operations primarily through its PRC subsidiaries and its variable interest entity (VIE) and the VIE's subsidiaries. The Company is permitted under PRC laws and regulations to provide funding to its PRC subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans.

The following table presents the summary of the Company's cash flow data.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
| | **2023** | **2024** | **2025** | **2025** |
| <br>**Amounts in thousands of RMB and US$** | **RMB** | **RMB** | **RMB** | **US$** |
| Net cash provided by operating activities | 102694 | 68716 | 70516 | 10083 |
| Net cash used in investing activities | (67190) | (20044) | (6068) | (868) |
| Net cash used in financing activities | (5223) | (136) | (100) | (14) |
| Effect of foreign exchange rate changes on cash | (108) | (1461) | (9238) | (1321) |
| Net increase in cash and cash equivalents | 30173 | 47075 | 55110 | 7880 |
| Cash and cash equivalents at beginning of the year | 175292 | 205465 | 252540 | 36113 |
| Cash and cash equivalents at end of the year | 205465 | 252540 | 307650 | 43993 |

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*Operating Activities*

Net cash provided by or used in operating activities consisted primarily of the Company's net income/loss adjusted by non-cash adjustments, such as provision for doubtful accounts, and adjusted by changes in operating assets and liabilities, such as accounts receivable.

Net cash provided by operating activities was RMB70.5 million for the year ended December 31, 2025. The difference between the net cash provided by operating activities and net loss of RMB595.0 million was primarily attributable to non-cash adjustment of RMB666.2 million, a decrease in accounts receivable of RMB55.5 million due to declining revenue, a decrease in prepaid expense and other current assets of RMB6.2 million, an increase in accrued expenses and other current payables of RMB1.6 million, partially offset by a decrease in deferred revenue of RMB29.7 million, a decrease in accounts payable of RMB19.3 million, a decrease in employee salary and welfare of RMB7.3 million and a decrease in lease liabilities of RMB7.2 million.

Net cash provided by operating activities was RMB68.7 million for the year ended December 31, 2024. The difference between the net cash provided by operating activities and net income of RMB26.7 million was primarily attributable to non-cash adjustment of RMB65.1 million, a decrease in accounts receivable of RMB34.3 million due to declining revenue and a decrease in prepaid expense and other current assets of RMB20.2 million, partially offset by a decrease in accrued expenses and other current payables of RMB20.8 million, a decrease in accounts payable of RMB37.2 million and a decrease in deferred revenue of RMB17.4 million.

Net cash provided by operating activities was RMB102.7 million for the year ended December 31, 2023. The difference between the net cash provided by operating activities and net loss of RMB35.0 million was primarily attributable to non-cash adjustment of RMB99.9 million, a decrease in accounts receivable of RMB54.1 million due to declining revenue, a decrease in prepaid expense and other current assets of RMB20.3 million, an increase in accrued expenses and other current payables of RMB7.3 million, partially offset by a decrease in accounts payable of RMB43.1 million.

*Investing Activities*

Net cash used in investing activities was primarily due to (a) purchases of property and equipment such as electronic equipment, and intangible assets such as trademark, software copyrights, and patents; (b) payment for long term investment.

Net cash used in investing activities was RMB6.1 million for the year ended December 31, 2025, primarily consisted of RMB5.8 million cash paid for long-term investments, RMB1.2 million cash paid for acquisition and RMB0.8 million paid for property and equipment, partially offset by RMB1.8 million cash acquired from acquisitions.

Net cash used in investing activities was RMB20.0 million for the year ended December 31, 2024, primarily consisted of RMB19.1 million paid for long term investments and RMB1.0 million paid for property and equipment.

Net cash used in investing activities was RMB67.2 million for the year ended December 31, 2023, primarily consisted of RMB63.4 million paid for long term investments and RMB3.5 million cash paid for acquisition of SJ Verse (formerly known as Nujoom Almashreq Media LLC).

*Financing Activities*

Net cash used in financing activities was RMB0.1 million for the year ended December 31, 2025, consisted of RMB0.1 million advance to a related party.

Net cash used in financing activities was RMB0.1 million for the year ended December 31, 2024, primarily consisted of payment of RMB0.7 million for treasure stocks, partially offset by RMB0.4 million proceeds from related parties and RMB0.2 million contribution from non-controlling shareholders.

Net cash used in financing activities was RMB5.2 million for the year ended December 31, 2023, primarily consisted of payment of RMB2.7 million for treasure stocks and RMB10.0 million for bank loan, partially offset by RMB5.0 million proceed from bank loan and RMB1.8 million contributed from non-controlling shareholders.

*Capital Expenditures.*

For the years ended December 31, 2023, 2024 and 2025, the Company's capital expenditure amounted to RMB0.5 million, RMB1.0 million and RMB0.8 million, respectively. The Company intends to fund its future capital expenditures with the existing cash balance and other financing alternatives. The Company will continue to make capital expenditures to support the growth of its business.

**C.** **Research and Development, Patents and Licenses, etc.** 

See "Item 4. Information on the Company—B. Business Overview—Our Technology" and "Item 4. Information on the Company—B. Business Overview—Intellectual Property."

**D.** **Trend Information** 

Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operating results or financial condition.

**E.** **Critical Accounting Estimates** 

In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are deemed critical if they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. The following critical accounting estimate was identified in the year ended December 31, 2025:

**Impairment of good will and intangible assets**

During the fourth quarter of 2025, as a part of its annual impairment assessment, the Company assessed its internal forecast along with several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting unit, including the significance of the amount, if any, of excess carrying value over fair value, consistency of the Company's current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of the Company's strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to our risk-adjusted discount rates and earnings quality and sustainability. After considering all available evidence in the evaluation of goodwill impairment indicators including but not limited to regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025, the Company determined it appropriate to perform the quantitative assessment of the Company as of December 31, 2025.

The quantitative impairment test involves the use of significant estimates and assumptions to evaluate the impact of operational and economic changes on each reporting unit. The Company estimate the fair value using the income valuation approach with assistance of third-party valuation firm. The income approach applies a fair value methodology to the single reporting unit based on discounted cash flows. This analysis requires significant estimates and judgments, including (i) the estimation of future revenue, projected gross profit margins, projected operating costs, projected operating income margins, and projected capital expenditures, which are dependent on internal cash flow forecasts; and (ii) determination of the risk-adjusted discount rates. The weighted average cost of capital used in the Company's impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and was estimated at 27% and management's forecasted revenue growth rate was nil. As a result of goodwill impairment test, the Group recorded a full impairment of RMB186.2 million (US$26.6 million) on goodwill for the year ended December 31, 2025.

During annual impairment test performed in the fourth quarter of 2025, the Company identified several triggering events indicating that the carrying value of its intangible assets may exceed their fair value. These indicators included regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025. The Company performed a quantitative assessment as of December 31, 2025, using an income approach. The income approach utilized a discounted cash flow model based on the assumptions including management's best estimates of the expected future cash flows, risk-adjusted discount rate, and the estimated useful life of the asset group with assistance of a third-party valuation firm. The weighted average cost of capital used in the Company's impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and was estimated at 27% and management's forecasted revenue growth rate was nil. Based on this analysis, the Company determined that the carrying values of its intangible assets were no longer recoverable. As a result of the fair value test, the Group recorded a full impairment of RMB398.8 million on intangible assets for the year ended December 31, 2025.

The Company bases fair value estimates on assumptions the Company believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

**Provision for credit losses:** 

The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. The Company performs ongoing credit evaluations of the debtors, and assesses allowance for credit loss on a portfolio basis. When specific debtors are identified as no longer sharing the same risk profile as the current pool, they are removed from the pool and evaluated separately. Accounts receivable is written off when there is no reasonable expectation of recovery. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. Given the regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly increasing credit risk of our debtors in the livestreaming industry, we provided additional allowance for credit loss for debtors with high risk and delinquent accounts. As a result, our provision for credit loss was RMB127.3 million for the year ended December 31, 2025, significantly increased from RMB30.6 million for the year ended December 31, 2024. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. The Company will continue to periodically review the allowance and make necessary adjustments accordingly.

**Impairment of long term investments**

The Company evaluates these investments for other-than-temporary impairment by considering factors including current economic and market conditions, the operating performance of the investees, including earnings trends and cash flow expectations, and other entity-specific information and observable price changes in orderly transactions for the identical or similar investment of the same investee. The fair value determination, particularly for investments in a privately held entity, requires judgment to determine appropriate estimates and assumptions. These judgments are inherently subjective and may be affected by assumptions regarding the investee's financial performance, future cash flows, and overall market conditions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investment and determination of whether any identified impairment is other-than-temporary. For the years ended December 31, 2023, 2024, and 2025, the Company recognized impairment on long term investments in the amount of approximately RMB11.8 million, RMB10.4 million and nil, respectively.

A summary of our significant accounting policies which are important to the portrayal of our financial condition and results of operations is set forth in Note 2 to our consolidated financial statements included elsewhere in this filing.

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

**A.** **Directors and Executive Officers** 

The following table sets forth information of our senior management and directors, and their ages as of the date of this report.

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| | | |
|:---|:---|:---|
| **Names** | **Age** | **Position** |
| Xiaowu He | 50 | Director, Chief Executive Officer, and Chairman of the Board |
| Bo Wan | 50 | Director, Chief Operating Officer |
| Denny Tang | 56 | Chief Financial Officer |
| Yongsheng Liu | 56 | Director, Vice Chairman of the Board |
| Hucheng Zhou | 45 | Independent Director |
| Huifeng Chang | 60 | Independent Director |
| Jian Sun | 44 | Independent Director |
| Jun Lu | 49 | Independent Director |

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***Xiaowu He.*** Mr. He has been our Chief Executive Officer, Director and Chairman of the Board since May 2020. He is one of the three co-founders of Scienjoy Inc. and has served as the chief executive officer of Scienjoy Inc. since October 2011. Mr. He has been mainly responsible for Scienjoy's overall business, including business strategies, company operations and financings. Mr. He has also been the 100% shareholder and director of Enmoli Inc. since December 2018 and the 100% shareholder and director of Heshine Holdings Limited since January 2019. Prior to founding Scienjoy Inc. in 2011, between 2008 and 2011, Mr. He served as the East Asia Regional Director of Business Development of Tyco International, a Fortune 500 Company, where he was responsible for commercial cooperation and development of the entire Sensormatic product line in East Asia. From 2006 to 2007, Mr. He worked at NCR/Teradata Toronto, Canada and provided technical and customer support for its DCM program. From 2004 to 2006, Mr. He was a manager at M&L Export and Import Company in Toronto, Canada. Prior to working in Canada, Mr. He worked in Fujian, China, and assumed various positions in UTStarcom, Shida System Integration Company, and Fujian Posts and Telecommunications. Mr. He received his MBA degree from the University of New Brunswick and his Doctor degree in business administration from EU Business School in 2024. We believe that Mr. He's qualifications to sit on the board include his deep understanding of our business model and strong leadership in the capacity of an executive and a director, along with his expertise in strategic planning, corporate financing and business development, and extensive experience in the information technology industry.

***Bo Wan.*** Mr. Wan has been our Chief Operating Officer and Director since May 2020. He is one of the three Co-founders of Scienjoy Inc. and has served as the chief operating officer of Scienjoy Inc. since October 2011. Mr. Wan has been mainly responsible for Scienjoy's business operation, marketing and human resources. Mr. Wan has also been the 100% shareholder and director of WBY Holdings Limited since December 2019. Prior to founding Scienjoy Inc., Mr. Wan managed a team of over thirty people in the software department at NCR/Teradata in Beijing, China, a global leading company in financial products, data warehouse, and IT service from 2006 to 2012. He took the lead in designing and developing multiple BI products, the company's first cloud-based solution and other programs. From 2001 to 2006, Mr. Wan assumed various positions including project director, project manager, senior pre-sale/post-sale consultant at NCR in Toronto, Canada. Mr. Wan also served as Huawei's senior test development engineer in Beijing between 2000 and 2001 and worked as a project manager and software engineer at China Unicom in Tianjin between 1997 and 2000. Mr. Wan received his MBA degree from Lawrence Technological University. We believe that Mr. Wan is qualified to sit on the board due to his in-depth knowledge of Scienjoy Inc., outstanding company management skills, and years of experience in supply chain, data analysis, customer development and human resources in the information technology, Internet and Mobile Internet industry.

***Denny Tang.*** Mr. Tang has been our Chief Financial Officer since May 2020. Mr. Tang has extensive experience working in a multi-cultural and complex matrix reporting hierarchy and has served as the Chief Financial Officer of Scienjoy Inc. since February 2020. Since March 2025, Mr. Tang has served as an independent non-executive director of Greatview Aseptic Packaging Company Limited, an aseptic processing company listed on the Hong Kong Stock Exchange. From 2007 to 2017, Mr. Tang served as the Group Finance Director at Ogilvy Beijing, a 4A agency that offers a broad range of marketing communication service. While at Ogilvy Beijing, Mr. Tang led 4 directors and set up direct procurement function that is first in kind in the PRC advertising industry. He also assumed board of directorship in more than 20 subsidiaries and was the point of contact of JV partners. From 1999 to 2007, Mr. Tang was the business planning & developing manager (head of finance) at PCCW-NOW TV, where he was in charge of the whole finance of a pay TV operator. From 1996 to 1999, Mr. Tang worked as the business development manager at New World Infrastructure, where he participated in due diligence, project finance pre & post acquisition and assisted in IPO listing of China.com, the first PRC internet company listed in the U.S. From 1992 to 1994, Mr. Tang was a senior associate at KPMG's Beijing office and involved in advisory and reconstruction projects of pre-listing of A/B shares of PRC state owned enterprise. Mr. Tang graduated from Hong Kong Polytechnic University with Honors in Accountancy and earned his MBA degree from the Chinese University of Hong Kong while gaining exchange experience at Columbia Business School. We believe that Mr. Tang is qualified to serve as the Chief Financial Officer because he has extensive experience in accounting, finance, and business management at leading companies in the media and internet industry.

***Yongsheng Liu.*** Mr. Liu was our Chief Executive Officer and Chairman of our Board since our inception through the closing of the Business Combination and is currently a Director and Vice Chairman of the Board. Throughout the past 20 years, Mr. Liu has assumed various corporate leadership positions and demonstrated his strong execution ability and in-depth knowledge in private equity and corporate M&A transactions across a wide range of sectors including aviation, consumer, financial institutions, and technology. Since 2023, Mr. Liu has served as an independent director at Suncar Technology Group Inc., a company in the business of providing digitalized automotive after-sales service and online insurance services. Since August 2020, Mr. Liu has been chief executive officer and chairman of the board of Goldenbridge Acquisition Limited. From March 2017 to April 2018, Mr. Liu served as Chairman and CEO of Royal China Holdings Limited (HKEx: 01683), during which he spearheaded the company's international growth strategy focused at acquiring targets in aviation industry and finance sector. From the beginning of 2013 to March 2017, Mr. Liu was the Chairman of Joy Air General Aviation, Chairman of Cambodia Bayon Airlines, Vice Chairman of Everbright and Joy International Leasing Company, and President of General Aviation Investment Company (Shanghai). From April 2004 to August 2008, Mr. Liu also served as Chief Strategy Officer of United Eagle Airlines (subsequently renamed to Chengdu Airlines). From December 1994 to June 2000, Mr. Liu was a manager of China Southern Airlines responsible for ground staff training. Mr. Liu received his master degree from University of Ottawa in 2003 and his bachelor's degree from Civil Aviation University of China in 1992.We believe that Mr. Liu is qualified to sit on our board due to his many years of public company management and director experience, along with his expertise in strategic planning, corporate financing and business development.

***Hucheng Zhou.*** Mr. Zhou has served as an Independent Director of our Board since August 2021. Mr. Zhou has extensive experience in board governance. From November 2025, Mr. Zhou serves as the Vice Chairman of Guangzhou Jineng Solid-State Battery Co., Ltd. Previously, Mr. Zhou served as an independent director of Soling Co Ltd. from December 2019 until December 2022 where the supervised the operation of Soling Co Ltd. on behalf of small and medium-sized shareholders, was responsible for convening the nomination committee and the strategic committee, and participated in the supervision of Soling Co Ltd.'s strategic remuneration and audit-related business. Mr. Zhou has also served as the vice president, deputy secretary general, and senior researcher at the Charhar Institute since April 2018. Moreover, from July 2025, Mr. Zhou was appointed as the Vice President and Director of the Expert Committee of the South East Asia and South Asia Sub Region of Western Returned Scholars Association. In addition, Mr. Zhou has served as the vice president of Guangdong Health China Society since March 2021, the vice president of Southeast and South Asia Branch of Europe-America Alumni Club since January 2020, the vice president of Guangdong Alumni Association of Nanyang Technological University since November 2018, the executive director of China Association for International Public Relations since May 2017, and a visiting professor at Visiting Professor of Seoul Communication University in Korea since March 2017. From March 2017 to April 2018, Mr. Zhou served as the executive director and executive vice president of Royal China International Holdings Limited. From December 2015 to March 2017, Mr. Zhou served as the press spokesperson of LeTV Holding Group. From February 2012 to November 2015, Mr. Zhou served as the deputy director of the Theory and Commentary Department of Nanfang Daily. Mr. Zhou obtained his Master of Public Administration from Nanyang Technological University in Singapore in 2014 and his Bachelor of Arts degree from Huazhong University of Science and Technology in Hubei, China in 2004.

***Huifeng Chang***. Dr. Chang has served as an Independent Director of our Board since May 2020. He has extensive experience in business supervision and management. Since 2024, Dr. Chang has served as Chief Strategy Officer at Canadian Solar Inc. From 2016-2024, he was Chief Financial Officer at Canadian Solar overseeing a finance/accounting/tax/auditing staff of 200 employees. From 2010 to 2015, Dr. Chang was the head of trading at CICC's Equity Trading department in New York. From 2008 to 2010, Dr. Chang was the CEO at CSOP Asset Management based in Hong Kong. From 2000 to 2008, Dr. Chang was a Vice President at Citigroup Global Capital Markets. Before that, he worked as a risk modeler at Kamakura Corporation in Honolulu. From 1995 to 1999, he served as a marketing manager at Philip Services Corporation in Honolulu. Dr. Chang graduated from Nanjing Agricultural University with a Bachelor of Science in Soil Science and Agrochemistry and from the Chinese Academy of Science with a Master of Science in Soil Physics. He earned his Ph.D. in Soil Physics in 1991 and MBA in 1995 from the University of Hawaii. We believe Dr. Chang is qualified to serve as an independent director because he is experienced in company management and business development.

***Jian Sun***. Mr. Sun has served as an Independent Director of our Board since May 2020. He has extensive experience in the accounting field, both in academia and in practice. Mr. Sun is a Certified Public Accountant and has published articles in the field of accounting, business finance, and corporate governance. He has been serving as an independent director at MGI Tech Co. Ltd, a company focusing on life science and biotechnology, since 2023, at China Resources Sanjiu Medical & Pharmaceutical Co., Ltd, a pharmaceutical company, since 2023, and at Innovita Biological Technology Co., Ltd, a biopharmaceutical company, since 2020. He served as an independent director at Beijing CTID Industry Operation & Management Co., Ltd., a company focusing on operation, management, and services of industrial parks, from 2022 to 2023. From September 2016 until October 2025, Mr. Sun was a professor in the School of Accountancy at Central University of Finance and Economics in China (the "CUFE") and also served as its Vice Dean at CUFE in the same period. From 2009 to 2017, Mr. Sun taught at the CUFE, first as an assistant professor and then as an associate professor. From 2017 to 2023, he has served as an independent director at Founder Financing Services Company Limited and at Huadian Energy Company Limited from 2017 to 2020. From 2015 to 2019, he served as an independent director at Panda Financial Company Limited. He also holds part-time academic positions at the Accounting Information Committee of Accounting Society of China and Accounting Information Standardization Committee of the China Ministry of Finance. Mr. Sun earned his bachelor's degree and master's degree in accounting from Southeast University's Economic and Management School in 2003 and 2006, respectively. He obtained his Ph.D. in accounting from Renmin University in 2009. From 2015 to 2016, he was a visiting scholar at Eli Broad Business School, Michigan State University. We believe Mr. Sun is qualified to serve as an independent director because he has a deep understanding of accounting and has also served as an independent director at various companies before.

***Jun Lu***. Dr. Lu has extensive experience in technology research and development. In August 2021, he co-founded Version X LLC, a startup company focusing on software creation services for product scaling on the Internet (the "**Version X**"). Version X developed a pioneering expert system that applied the latest DNA science developments and hands-on clinical research to effectively improve everyday health and well-being of sub-health individuals. Version X also developed a cloud-based exchange system for freight forwarders and shippers to trade ocean container space and improve the utilization of idle container capacity. From October 2019 to February 2022, Dr. Lu acted as a Site Tech Lead at Houzz Inc., where he led, managed, and expanded the Santa Monica engineering team to operate a major product line. From October 2007 to October 2019, Dr. Lu was with Google, supervising the Site Reliability Engineering (the "**SRE**") team in Los Angeles. The SRE team assumed responsibility for keeping Google's vital services and infrastructures running reliably. Dr. Lu had designed several patented systems that were used in various Google products, such as Google Ads, Google Photos, and YouTube. Dr. Lu's expertise was in large-scale system design, development, and monitoring. Dr. Lu performed research in self-organizing ad hoc networks at the University of California, Irvine, carrying out research projects supported by various government agencies or programs including National Science Foundation, Defense Advanced Research Projects Agency, and California MICRO and CoRe programs. Dr. Lu had published research papers in top conferences and journals and authored book chapters on ad-hoc and peer-to-peer networks. Dr. Lu obtained his Doctor of Philosophy and Master of Science degrees in Computer Science from the University of California, Irvine in 2008 and 2003 respectively. Dr. Lu also received his Master's and Bachelor's degrees in Computer Engineering from the Beijing University of Post and Telecommunications in Beijing, China in 2000 and 1997 respectively.

***Voting Agreement***

Upon the closing the Business Combination, we, Oriental Holdings Limited (the "Sponsor"), Lavacano and WBY entered into a six-year Voting Agreement, which, among others, provides (i) Lavacano and WBY have the right to designate (A) 2 directors before the third anniversary of the closing date and 3 directors thereafter and (B) 3 independent directors throughout the six-year term, and (ii) Sponsor has the right to designate (A) 1 director until the third anniversary of the closing date and (B) 1 independent director throughout the six-year term. The parties to the Voting Agreement agreed to vote in favor of election of the foregoing designees. For additional information about such arrangement, please see "Item 7. Major Shareholders and Related Party Transaction-B. Related Party Transactions."

**B.** **Compensation of Directors and Executive Officers** 

***Executive Officers Compensation for the Last Full Financial Year***

For the fiscal year ended December 31, 2025, we paid an aggregate of RMB 5.2 million (US$0.7 million) in cash to our directors and executive officers, and we paid an aggregate of RMB 0.8 million cash compensation to certain of our non-executive directors. For share incentive grants to our directors and executive officers, see "-Equity Incentive Plan."

**Equity Incentive Plan**

On February 8, 2021, the Board of the Company approved the 2021 Plan, which was further amended by our board of directors on July 19, 2025, for the purpose of providing additional incentives to employees, directors and consultants and to promote the success of the Company's business. The 2021 Plan authorized the Board, any committee appointed by Board, or any such person authorized by the Board or such committee, to grant equity incentive awards, including options, restricted shares, and restricted share units to directors, employees and consultants of the Company for a number of Class A ordinary shares up to an aggregate amount equal to 6,000,000 shares, effective as of July 19, 2025 and would increase, commencing on January 1, 2026, and continuing annually on each anniversary thereof through and including January 1, 2035, equal to the lesser of (i) 3% of the Class A ordinary shares outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of Class A ordinary shares as determined by our board of directors or a committee appointed to administer the 2021 Plan. The vested portion of equity awards will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. The maximum exercisable term is ten years from the date of a grant. In 2023, 2024 and 2025, the Company repurchased 119,725, 134,333 and nil shares respectively. As of the date of this annual report, a total of 3,111,149 restricted share units has been granted under the 2021 Plan.

The following paragraphs summarize the terms of the 2021 Plan.

*Types of Awards*. The 2021 Plan permits the awards of options, restricted shares and restricted share units.

*Plan Administration*. The 2021 Plan is administered by our Board or committee or individuals authorized by our Board. The plan administrator is entitled to determine the participants who are to receive awards, the number of awards to be granted, and the terms and conditions of each award grant.

*Eligibility*. Employees, directors and the consultants of our company and any Related Entity (as defined in the 2021 Plan) are eligible to participate pursuant to the terms of the 2021 Plan.

*Conditions of Award*. Subject to the terms of the Plan, the plan administrator shall determine the provisions, terms, and conditions of each award including, but not limited to, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, shares, or other consideration) upon settlement of the award, payment contingencies, and satisfaction of any performance criteria.

*Term of Award*. The term of each award shall be fixed by the administrator and is stated in the award agreement between recipient of an award and us. No award shall be granted under the 2021 Plan after ten years from the date the 2021 Plan was approved by the board.

*Vesting Schedule*. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.

*Termination and Amendment*. Unless terminated earlier, the 2021 Plan has a term of 10 years. The plan administrator has the authority to amend or terminate the 2021 Plan, provided that, such termination or amendment shall not adversely affect in any material way any awards previously granted unless agreed by the relevant grantee.

**C.** **Board Practices** 

We are managed by a Board which currently consists of seven directors. Our Fourth Amended and Restated Memorandum and Articles of Association provides that the minimum number of directors shall be two and there shall be no maximum number of directors. Subject to the Voting Agreement, the directors shall be elected by Resolution of Shareholders or, where permitted by our Fourth Amended and Restated Memorandum and Articles of Association, by Resolution of Directors. Pursuant to the respective director service agreement, the current directorship term of each of our current non-executive directors (including the independent directors) shall expire on the earlier of the date of the next annual stockholders meeting and the earliest of the following to occur: (a) the death of the director; (b) the termination of the director from his membership on the Board by the mutual agreement of us and the director; (c) the removal of the director from the Board in accordance with our governing documents; and (d) the resignation by the director from the Board.

***Employment Agreements***

Prior to the closing of the Business Combination, we had not entered into any employment agreements with our executive officers, and had not made any agreements to provide benefits upon termination of employment. Our current executive officers have entered into employment agreements with certain of our operating subsidiaries. These agreements each contain customary terms, including each executive officer's salary, bonus, duties, employment benefits, noncompetition, non-solicitation, confidentiality of information, assignment of inventions and intellectual property, and termination. Either party may terminate these employment agreements with either thirty days' written notice to the other party as specified in the respective agreements, or we may elect to terminate any of these service agreements and make a one-month payment in lieu of notice. We may also terminate an executive officer's employment for certain causes, at any time, without prior notice or compensation. The foregoing description of the terms of the employment agreements is qualified in its entirety by reference to the provisions of the Employment Agreements filed as Exhibit 4.9 to 4.12 to this annual report on Form 20-F, which is incorporated herein by reference.

***Director Service Agreements***

In connection with their election as our directors, each of our current non-executive directors (including the independent directors) has entered into a standard director service agreement (the "Form Director Service Agreement") with us, pursuant to which (a) such director will be entitled to annual cash retainers and/or equity incentive plans (which have yet to be established), (b) we agreed to indemnify its directors to the fullest extent authorized in our governing documents and applicable law, and such indemnity only applies if the director acted honestly and in good faith with a view to our best interests and, in the case of criminal proceedings, we had no reasonable cause to believe that the director's conduct was unlawful; and (c) the directorship term will expire at the next annual stockholders meeting, subject to earlier extraordinary events. The foregoing description of the terms of the Form Director Service Agreement is qualified in its entirety by reference to the provisions of the Form Director Service Agreement filed as Exhibit 4.8 to this annual report, which is incorporated herein by reference.

**Committees of the Board of Directors**

There are four standing committee of our Board: the Audit Committee, the Nominating Committee, the Compensation Committee and the Cybersecurity Committee. The composition of each committee are described below:

● Audit Committee: Jian Sun (Chairperson), Huifeng Chang, and Jun Lu;

● Nominating Committee: Huifeng Chang (Chairperson), Jian Sun, and Jun Lu;

● Compensation Committee: Jun Lu (Chairperson), Huifeng Chang, and Jian Sun; and

● Cybersecurity Committee: Jun Lu, Xiaowu He, and Bo Wan.

The members of each of the Audit Committee, the Nominating Committee and the Compensation Committee are all "independent" under the Nasdaq's listing standards. Mr. Chang is also a "financial expert" under the listing requirements of Nasdaq.

The Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Exchange Act, engages our independent accountants, reviewing their independence and performance; reviews our accounting and financial reporting processes and the integrity of its financial statements; the audits of our financial statements and the appointment, compensation, qualifications, independence and performance of our independent auditors; our compliance with legal and regulatory requirements; and the performance of our internal audit function and internal control over financial reporting.

The Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on our Board. Specifically, the Nominating Committee makes recommendations to the Board regarding the size and composition of the Board, establishes procedures for the director nomination process and screens and recommends candidates for election to the Board. On an annual basis, the Nominating Committee recommends for approval by the Board certain desired qualifications and characteristics for board membership. Additionally, the Nominating Committee establishes and administers a periodic assessment procedure relating to the performance of the Board as a whole and its individual members. The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person's candidacy for membership on the Board. The Nominating Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.

The Compensation Committee reviews annually our corporate goals and objectives relevant to the officers' compensation, evaluates the officers' performance in light of such goals and objectives, determines and approves the officers' compensation level based on this evaluation; makes recommendations to the Board regarding approval, disapproval, modification, or termination of existing or proposed employee benefit plans, makes recommendations to the Board with respect to non-CEO and non-CFO compensation and administers our incentive-compensation plans and equity-based plans. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. Our chief executive officer of may not be present during voting or deliberations of the Compensation Committee with respect to his compensation. our executive officers do not play a role in suggesting their own salaries. Neither we nor the Compensation Committee has engaged any compensation consultant who has a role in determining or recommending the amount or form of executive or director compensation.

The Cybersecurity Committee is responsible for the oversight of risks from cybersecurity threats. The Cybersecurity Committee reviews and discusses with the management and the Board the (i) Company's cybersecurity risks, including network security, information security, data privacy and protection, and third-party cybersecurity risks, (ii) results of internal cybersecurity audits, if any, (iii) steps management has taken to identify, assess, monitor, manage, and mitigate cybersecurity risks, and (iv) emerging technology risks.

**D.** **Employees** 

We had 303 employees as of December 31, 2025, of which 256 employees were based in China, 5 employees were based in the Republic of Korea and 42 employees were located in the United Arab Emirates. The following table sets forth a breakdown of our employees by function as of December 31, 2025 and as of December 31, 2024.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Number** | **%** | **Number** | **%** |
| Functions: |  |  |  |  |
| &nbsp;&nbsp;General Operations | 92 | 30.4% | 78 | 27.9% |
| &nbsp;&nbsp;Research and Development | 112 | 37% | 106 | 37.9% |
| &nbsp;&nbsp;Sales and Marketing | 14 | 4.6% | 11 | 3.9% |
| &nbsp;&nbsp;Legal and Internal Audit | 4 | 1.2% | 5 | 1.7% |
| &nbsp;&nbsp;General Administration | 42 | 13.9% | 47 | 16.8% |
| &nbsp;&nbsp;Product | 39 | 12.9% | 33 | 11.8% |
| Total number of employees | 303 | 100% | 280 | 100% |

---

**E.** **Share Ownership** 

The following tables sets forth information regarding the beneficial ownership of the Company's ordinary shares:

● each person known to the Company who is the beneficial owner of more than 5% of any class of its stock;

● each of its officers and directors; and

● all of its officers and directors as a group.

Unless otherwise indicated, the Company believes that all persons named in the table have, immediately prior to the date of the report, sole voting and investment power with respect to all of the Company's securities beneficially owned by them.

Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, we believe, based on the information furnished to it, that the persons and entities named in the table below have, immediately prior to the date of this report, sole voting and investment power with respect to all stock that they beneficially own, subject to applicable community property laws. All Company stock subject to options exercisable within 60 days of the consummation of this report are deemed to be outstanding and beneficially owned by the persons holding those options for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person.

The percentages in the table are based on 39,537,710 shares of Class A Ordinary Shares and 2,925,058 shares of Class B Ordinary Shares outstanding as of March 27, 2026.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** |
|  | **Class A<br> Ordinary Shares**<br>**Number** | **Class B<br> Ordinary Shares**<br>**Number** | **Total Ordinary Shares<br> on an As-<br> converted Basis**<br>**Number** | **% of<br> Beneficial<br> Ownership %** | **% of<br> Aggregate<br> Voting<br> Power %** |
| **Director and Executive Officers: (1)** | | | | | |
| Xiaowu He (2) | 5032208 | 2925058 | 7957266 | 18.74% | 49.84% |
| Bo Wan (3) | 1968308 |  | 1968308 | 4.64% | 2.86% |
| Yongsheng Liu | \* |  | \* | \* | \* |
| Hucheng Zhou | \* |  | \* | \* | \* |
| Huifeng Chang | \* |  | \* | \* | \* |
| Jian Sun | \* |  | \* | \* | \* |
| Jun Lu | \* |  | \* | \* | \* |
| Denny Tang |  |  |  |  |  |
| All Directors and Executive Officers as a Group (8 individuals) | 7289016 | 2925058 | 10214074 | 24.05% | 53.12% |
| **Principal Shareholders:** |  |  |  |  |  |
| Wolter Global Investment Limited (4) | 4661476 |  | 4661476 | 10.98% | 6.78% |
| WBY Entertainment Holdings Ltd. (3) (5)\*\* | 1968308 |  | 1968308 | 4.64% | 2.86% |
| Heshine Holdings Limited (2)\*\* | 5032208 | 2925058 | 7957266 | 18.74% | 49.84% |
| Tongfang Stable Fund (6)\*\* | 12113334 |  | 12113334 | 28.53% | 17.61% |

---

\* Less than 1%

\*\* The share numbers of each of these shareholders are based on the most recent Schedule 13D filed by such shareholder.

(1) Unless otherwise indicated, the business address of each of the individuals is c/o Scienjoy Holding Corporation RM1118, 11th Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St., Yuhang District, Hangzhou, Zhejiang Province, P.R. China.

(2) Mr. Xiaowu He owns 100% equity interest in Heshine Holdings Limited. He has the sole voting and dispositive power over the securities held by Heshine Holdings Limited.

(3) Mr. Bo Wan has sole voting and dispositive power over the shares owned by WBY Entertainment Holdings Ltd.

(4) Mr. Junpeng Guo owns 100% equity interest in Wolter Global Investment Limited. The address of Wolter Global Investment Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Island.

(5) The address of WBY Entertainment Holdings Ltd. is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.

(6) Viva Plan Limited owns 100% equity interest in Tongfang Stable Fund. The address of Tongfang Stable Fund is. Unit 2301, 23/F, 308 Central Des Voeux 308 Des Voeux Road Central, Sheung Wan, HK

As of March 27, 2026, 23,038,876 of our Class A Ordinary Shares are held by record holders in the United States.

**F.** **Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation** 

Not applicable.

**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

**A.** **Major Shareholders** 

Please refer to "Item 6. Directors, Senior Management and Employees-E. Directors, Senior Management and Employees-Share Ownership."

**B.** **Related Party Transactions** 

The following discussion is a brief summary of certain material arrangements, agreements and transactions we have with related parties that occurred since the beginning of the last fiscal year up to the date of this annual report.

The principal related parties with which the Company had transactions during the years presented are as follows:

---

| | |
|:---|:---|
| **Name of Related Parties** | **Relationship with the Company** |
| Mr. He Xiaowu | Chief Executive Officer and Chairman of the Board |
| Beijing Junwei Technology Co., Ltd. | Controlling shareholder of QY |
| Sixiang Zhuohong Private Equity LP | Equity investee of the Company |

---

***Purchases from related parties***

For the years ended December 31, 2023, 2024 and 2025, significant related party transactions were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  |  | **2023** | **2024** | **2025** | **2025** |
| **(All amounts in thousands)** |  | **RMB** | **RMB** | **RMB** | **US$** |
| Sixiang Zhuohong Private Equity LP | Sold 11.5385% equity interest of Banyou to the Company | 37500 |  |  |  |
| Sixiang Zhuohong Private Equity LP | Acquired 6% of Hangzhou Zhan Ge's shares through Sixiang Zhuohong | &nbsp;&nbsp;&nbsp;&nbsp; - | 13500 |  |  |

---

**Balances with related parties**

As of December 31, 2024 and 2025, the amounts due from/to related parties are as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **2024** | **2025** | **2025** |
| <br>**(All amounts in thousands)** | **RMB** | **RMB** | **US$** |
| **Amount due from related parties** |  |  |  |
| Beijing Junwei Technology Co., Ltd. (i) |  | 100 | 14 |
| Total |  | 100 | 14 |

---

(1) represents the business advance payments made to Beijing Junwei
 Technology Co., Ltd. for administration and registration service.

**Related Party Policy**

Our Code of Ethics, requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

Our audit committee, pursuant to its written charter, is responsible for reviewing any conflicts of interest and related-party transactions to assess an impact on the Company's internal controls on financial reporting and disclosure.

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

**C.** **Interests of Experts and Counsel** 

Not Applicable.

**ITEM 8. FINANCIAL INFORMATION**

**A.** **Consolidated Statements and Other Financial Information** 

Please refer to Item 18 "Financial Statements" for our audited consolidated financial statements filed as part of this annual report.

**Legal Proceedings**

We are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various 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. See "Item 3. Key Information-D. Risk Factors-Risk Factors Relating to Our Business and Industry-We may be held liable for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users if such content is deemed to violate any PRC laws or regulations, and PRC authorities may impose legal sanctions on us," and "Item 3. Key Information-D. Risk Factors-Risk Factors Relating to Our Business and Industry-We may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platforms, or distributed to our users, or for proprietary information appropriated by former employees, which may materially and adversely affect our business, financial condition and prospects."

**Dividend Policy**

Since inception, we have not declared or paid any dividends on our Class A ordinary shares. We do not have any present plans to pay any dividends on our Class A ordinary shares in the foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

The determination to pay dividends will be made at the discretion of our board of directors and may be based on a number of factors, including our future operations and earnings, capital requirements and surplus, general financial condition, contractual and legal restrictions and other factors that the board of directors may deem relevant.

We are a company formed under the laws of the British Virgin Islands and all of operations are currently in the PRC.

Under British Virgin Islands law, we may only pay dividends from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account, and our capital.

In order for us to distribute any dividends to our shareholders, we currently would have to on dividends distributed by our PRC subsidiaries. Certain payments from our PRC subsidiaries to us may be subject to PRC withholding income tax. In addition, regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations in China. Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profit based on PRC accounting standards every year to a statutory common reserve fund until the aggregate amount of such reserve fund reaches 50% of the registered capital of such subsidiary. Such statutory reserves are not distributable as loans, advances or cash dividends.

**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 financial statements included in this annual report.

**ITEM 9. THE OFFER AND LISTING**

**A.** **Offer and Listing Details** 

See "-C. Markets."

**B.** **Plan of Distribution** 

Not Applicable.

**C.** **Markets** 

Our Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol "SJ".

**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 company incorporated in the British Virgin Islands as a BVI business company (with company number 1977965) whose registered office is at Clarence Thomas Building, Road Town, Tortola, British Virgin Islands, and our affairs are governed by our Memorandum and Articles of Association and the laws of the British Virgin Islands. For the purposes of the BVI Act, there are no limitations on the business that we may carry on.

Pursuant to our Memorandum and Articles of Association, we shall issue registered shares only. We are not authorized to issue bearer shares, convert registered shares to bearer shares or exchange registered shares for bearer shares. We are currently authorized to issue an unlimited number of shares of Class A ordinary shares, 2,925,058 Class B ordinary shares and 50,000,000 Class A preferred shares, each with no par value. Shares may be issued in one or more series of shares as the directors may by Resolution of Directors determine from time to time As of March 27, 2025, 39,537,710 Class A ordinary shares and 2,925,058 shares of Class B ordinary shares are issued and outstanding.

**Class A Ordinary Shares**

Pursuant to our Memorandum and Articles of Association, holders of Class A ordinary shares do not have any conversion, preemptive or other subscription rights and there will be no sinking fund provisions applicable to the Class A ordinary shares.

Each Class A ordinary share confers upon the shareholder:

● the right to one vote at a meeting of the Shareholders or on any resolution of shareholders;

● the right to an equal share in any dividend paid by us; and

● the right to an equal share in the distribution of our surplus assets on our liquidation.

**Class B Ordinary Shares**

Pursuant to our Memorandum and Articles of Association, holders of Class B ordinary shares do not have any conversion, preemptive or other subscription rights and there will be no sinking fund provisions applicable to the Class B ordinary shares.

Each Class B ordinary share confers upon the shareholder:

● the right to ten vote at a meeting of the Shareholders or on any resolution of shareholders;

● the right to an equal share in any dividend paid by us; and

● the right to an equal share in the distribution of our surplus assets on our liquidation.

**Class A Preferred Shares**

Our Memorandum and Articles of Association authorizes our board of directors to establish from time to time one or more series of Class A preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:

● the designation of the series;

● the number of shares of the series;

● the dividend rights, dividend rates, conversion rights, and voting rights; and

● the rights and terms of redemption and liquidation preferences.

Our board of directors may issue Class A preferred shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of Class A ordinary shares.

You should refer to the prospectus supplement relating to the series of Class A preferred shares being offered for the specific terms of that series, including:

● title of the series and the number of shares in the series;

● the price at which the preferred shares will be offered;

● the dividend rate or rates or method of calculating the rates, the dates on which the dividends will be payable, whether or not dividends will be cumulative or noncumulative, and, if cumulative, the dates from which dividends on the preferred shares being offered will cumulate;

● the voting rights, if any, of the holders of preferred shares being offered;

● the provisions for a sinking fund, if any, and the provisions for redemption, if applicable, of the preferred shares being offered, including any restrictions on the foregoing as a result of arrearage in the payment of dividends or sinking fund installments;

● the liquidation preference per share;

● the terms and conditions, if applicable, upon which the preferred shares being offered will be convertible into our Class A ordinary shares, including the conversion price, or the manner of calculating the conversion price, and the conversion period;

● the terms and conditions, if applicable, upon which the preferred shares being offered will be exchangeable for debt securities, including the exchange price, or the manner of calculating the exchange price, and the exchange period;

● any listing of the preferred shares being offered on any securities exchange;

● a discussion of any material federal income tax considerations applicable to the preferred shares being offered;

● any preemptive rights;

● the relative ranking and preferences of the preferred shares being offered as to dividend rights and rights upon liquidation, dissolution, or the winding up of our affairs;

● any limitations on the issuance of any class or series of preferred shares ranking senior or equal to the series of preferred shares being offered as to dividend rights and rights upon liquidation, dissolution, or the winding up of our affairs; and

● any additional rights, preferences, qualifications, limitations, and restrictions of the series.

Issuance of Class A preferred shares may dilute the voting power of holders of ordinary shares.

**Warrants**

As of February 6, 2024, we had no warrants issued and outstanding. On February 5, 2024, the fifth year anniversary of the effectiveness of Wealthbridge's registration statement relating to its initial public offering, all the warrants issued as part of the units issued in Wealthbridge's initial public offering and the private placement consummated simultaneously with the initial public offering expired and were cancelled pursuant to the terms of the Warrant Agreement by and between Wealthbridge and Continental Stock Transfer & Trust Company, dated February 5, 2019.

**Key Provisions of Our Memorandum and Articles of Association and British Virgin Islands Laws Affecting Our Ordinary Shares or Corporate Governance**

The following are summaries of material terms and provisions of our Memorandum and Articles of Association and the BVI Act, insofar as they relate to the material terms of our Class A and Class B ordinary shares or corporate governance. This summary is not intended to be complete, and you should read our Memorandum and Articles of Association.

*Voting Rights*

We have two classes of ordinary shares, namely, Class A ordinary shares and Class B ordinary shares. Both the Class A ordinary shares and the Class B ordinary shares will have the same rights except that the Class B ordinary shares will have weighted voting rights. Each Class B ordinary share shall have ten votes at a meeting of the shareholders or on any resolution of shareholders whereas each Class A ordinary share shall only have one vote. Each outstanding Class B ordinary share is convertible at any time at the option of the holder into one Class A ordinary share.

Under the BVI Act, the ordinary shares are deemed to be issued when the name of the shareholder is entered in our register of members. Our register of members is maintained by our transfer agent, Continental Stock Transfer & Trust Company, which will enter the name of our shareholders in our register of members. If (a) information that is required to be entered in the register of shareholders is omitted from the register or is inaccurately entered in the register, or (b) there is unreasonable delay in entering information in the register, a shareholder of ours, or any person who is aggrieved by the omission, inaccuracy or delay, may apply to the British Virgin Islands courts for an order that the register be rectified, and the court may either refuse the application or order the rectification of the register, and may direct us to pay all costs of the application and any damages the applicant may have sustained.

Subject to any rights or restrictions attached to any shares, at any general meeting on a show of hands every Class A ordinary shareholder who is present in person (or, in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy will have one vote for each Class A ordinary share held on all matters to be voted on by shareholders. Subject to any rights or restrictions attached to any shares, at any general meeting on a show of hands every Class B ordinary shareholder who is present in person (or, in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy will have ten votes for each Class B ordinary share held on all matters to be voted on by shareholders. Voting at any meeting of the ordinary shareholders is by show of hands unless a poll is demanded. A poll may be demanded by shareholders present in person or by proxy if the shareholder disputes the outcome of the vote on a proposed resolution and the chairman shall cause a poll to be taken.

There is nothing under the laws of the British Virgin Islands, which specifically prohibits or restricts the creation of cumulative voting rights for the election of our directors, but cumulative voting for the election of directors is permitted only if expressly provided for in a BVI company's memorandum or articles of association. We have not made provisions in our Memorandum and Articles of Association for cumulative voting for such elections.

Under British Virgin Islands laws, the voting rights of shareholders are regulated by our Memorandum and Articles of Association and, in certain circumstances, the BVI Act. Our Memorandum and Articles of Association govern matters such as quorum for the transaction of business, rights of shares, and majority votes required to approve any action or resolution at a meeting of the shareholders or board of directors. Unless our Memorandum and Articles of Association otherwise provide, the requisite majority is usually a simple majority of votes cast.

 

*Dividend Rights*

Each ordinary share (including both Class A ordinary shares and Class B ordinary shares) is entitled to an equal share in any dividend paid by the Company. The Articles of Association provide that the directors of the Company may authorize a distribution (including a dividend) at a time and of an amount they think fit if they are satisfied that immediately after the distribution (or dividend) the value of the Company's assets will exceed its liabilities and the Company will be able to pay its debts as they fall due.

 

*Preemption Rights*

British Virgin Islands laws do not make a distinction between public and private companies and some of the protections and safeguards (such as statutory preemption rights, save to the extent that they are expressly provided for in our Memorandum and Articles of Association) that investors may expect to find in relation to a public company are not provided for under British Virgin Islands laws. There are no preemption rights applicable to the issuance of new shares under either British Virgin Islands laws or our Memorandum and Articles of Association.

 

*Liquidation Rights*

We may by resolution of shareholders or, subject to section 199(2) of the BVI Act, by resolution of directors appoint a voluntary liquidator.

 

*Transfer of Shares*

Any shareholder may transfer all or any of his shares by an instrument of transfer provided that such transfer complies with applicable rules of the SEC and federal and state securities laws of the United States. The instrument of transfer of any share shall be in writing in the usual or common form or in a form prescribed by the Designated Stock Exchange (such as Nasdaq Capital Market) or in any other form approved by the directors.

*Share Repurchases and Redemptions* 

As permitted by the BVI Act and our Memorandum and Articles of Association, shares may be repurchased, redeemed or otherwise acquired by us. In addition, our directors must determine that, immediately following the redemption or repurchase, we will be able to pay our debts as they fall due and that the value of our assets will exceed our liabilities.

 

*Share Redesignation, Reclassification or Conversion*

As permitted by the BVI Act and our Memorandum and Articles of Association, a Shareholder holding Class B Ordinary Shares may at any time require the Company to convert all or a portion of the Class B Ordinary Shares held by that Shareholder for Class A Ordinary Shares. The Company may redesignate, reclassify or convert all or a portion of: (a) the Ordinary Shares held by a Shareholder into Class A Ordinary Shares; and (b) the Ordinary Shares held by a Shareholder into Class B Ordinary Shares with the consent of that Shareholder by Resolution of Shareholders.

 

*Board of Directors*

We are managed by a Board which currently consists of seven directors. Our Memorandum and Articles of Association provide that the minimum number of directors shall be two and there shall be no maximum number of directors. The term of the directors are two years.

The directors may by Resolution of Directors exercise all the powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party. There are no share ownership qualifications for directors.

Meetings of our Board may be convened at any time deemed necessary by any of our directors.

A meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one-half of the total number of directors, unless there are only 2 directors in which case the quorum is 2.

The directors may, by Resolution of Directors, fix the emoluments of directors with respect to services to be rendered in any capacity to the Company.

We do not have any age limitations for our directors, nor do we have mandatory retirement as a result of reaching a certain age.

 

*Meetings of Shareholders*

Any of our directors of may convene meetings of the shareholders at such times and in such manner and places within or outside the British Virgin Islands as the director considers necessary or desirable.

Upon the written request of shareholders entitled to exercise 30 percent or more of the voting rights in respect of the matter for which the meeting is requested the directors shall convene a meeting of shareholders.

Subject to our Memorandum and Articles of Association, the director convening a meeting of members shall give not less than 7 days' written notice of such meeting to: (a) those members whose names on the date the notice is given appear as members in the share register of the Company and are entitled to vote at the meeting; and (b) the other directors.

A meeting of shareholders held in contravention of the requirement to give notice is valid if shareholders holding at least 90% of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall constitute a waiver in relation to all the shares which that shareholder holds.

A meeting of shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than 50% of the votes of the shares entitled to vote at the meeting. A quorum may be comprised of a single shareholder or proxy and then such person may pass a resolution of shareholders and a certificate signed by such person accompanied where such person is a proxy by a copy of the proxy instrument shall constitute a valid resolution of shareholders.

**Differences in Corporate Law**

We were incorporated under, and are governed by, the laws of the British Virgin Islands. The corporate statutes of the State of Delaware and the British Virgin Islands are similar, and the flexibility available under British Virgin Islands law has enabled us to adopt a memorandum and articles of association that will provide shareholders with rights that do not vary in any material respect from those they would enjoy if we were incorporated under Delaware law. Set forth below is a summary of some of the differences between provisions of the BVI Act applicable to us and the laws applicable to companies incorporated in Delaware and their shareholders.

 

*Director's 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 two components: 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 person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling 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 by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

British Virgin Islands law provides that every director of a British Virgin Islands company in exercising his powers or performing his duties, shall act honestly and in good faith and in what the director believes to be in the best interests of the company. Additionally, the director shall exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances taking into account the nature of the company, the nature of the decision and the position of the director and his responsibilities. In addition, British Virgin Islands law provides that a director shall exercise his powers as a director for a proper purpose and shall not act, or agree to the company acting, in a manner that contravenes British Virgin Islands law or the memorandum and articles of association of the company.

 

*Amendment of Governing Documents*

Under Delaware corporate law, with very limited exceptions, a vote of the shareholders of a corporation is required to amend the certificate of incorporation. In addition, Delaware corporate law provides that shareholders have the right to amend the corporation's bylaws, but the certificate of incorporation may confer such right on the directors of the corporation.

Our Memorandum and Articles of Association can generally be amended by with the approval of the holders of a majority of our outstanding ordinary shares or by a resolution of the board of directors. In addition, pursuant to our Memorandum and Articles of Association, our board of directors may amend our Memorandum and Articles of Association by a resolution of directors without a requirement for a resolution of shareholders so long as the amendment does not:

● restrict the rights or powers of the shareholders to amend our Memorandum and Articles of Association;

● change the percentage of shareholders required to pass a resolution of shareholders to amend our Memorandum and Articles of Association; or

● amend our Memorandum and Articles of Association in circumstances where it cannot be amended by the shareholders;

● certain provisions that our Memorandum and Articles of Association specifies cannot be amended.

 

*Written Consent of Directors*

Under Delaware corporate law, a written consent of the directors must be unanimous to take effect. Under British Virgin Islands law and our Memorandum and Articles of Association, only a majority of the directors are required to sign a written consent.

 

*Written Consent of Shareholders*

Under Delaware corporate law, unless otherwise provided in the certificate of incorporation, any action to be taken at any annual or special meeting of shareholders of a corporation may be taken by written consent of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to take that action at a meeting at which all shareholders entitled to vote were present and voted. As permitted by British Virgin Islands law, our Memorandum and Articles of Association provides that a resolution of shareholders can be consented to in writing by a majority of in excess of 50 percent of the votes of ordinary shares entitled to vote thereon.

 

*Shareholder Proposals*

Under Delaware corporate law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. British Virgin Islands law and our Memorandum and Articles of Association provide that our directors shall call a meeting of the shareholders if requested in writing to do so by shareholders entitled to exercise at least 30% of the voting rights in respect of the matter for which the meeting is requested.

 

*Dissolution; Winding Up*

Under Delaware corporate law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders 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 a simple majority of the corporation's outstanding shares. Delaware corporate law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. As permitted by British Virgin Islands law and our Memorandum and Articles of Association, we may by resolution of shareholders or, subject to section 199(2) of the BVI Act, by resolution of directors appoint a voluntary liquidator.

 

*Redemption of Shares*

Under Delaware corporate law, any stock may be made subject to redemption by the corporation at its option, at the option of the holders of that stock or upon the happening of a specified event, provided shares with full voting power remain outstanding. The stock may be made redeemable for cash, property or rights, as specified in the certificate of incorporation or in the resolution of the board of directors providing for the issue of the stock. As permitted by British Virgin Islands law and our Memorandum and Articles of Association, shares may be repurchased, redeemed or otherwise acquired by us. However, the consent of the shareholder whose shares are to be repurchased, redeemed or otherwise acquired must be obtained, except as specified in the terms of the applicable class or series of shares or as described under "-Compulsory Acquisition" below. In addition, our directors must determine that, immediately following the redemption or repurchase, we will be able to pay our debts as they fall due and that the value of our assets will exceed our liabilities.

*Compulsory Acquisition*

Under Delaware General Corporation Law § 253, in a process known as a "short form" merger, a corporation that owns at least 90% of the outstanding shares of each class of stock of another corporation may either merge the other corporation into itself and assume all of its obligations or merge itself into the other corporation by executing, acknowledging and filing with the Delaware Secretary of State a certificate of such ownership and merger setting forth a copy of the resolution of its board of directors authorizing such merger. If the parent corporation is a Delaware corporation that is not the surviving corporation, the merger also must be approved by a majority of the outstanding stock of the parent corporation. If the parent corporation does not own all of the stock of the subsidiary corporation immediately prior to the merger, the minority shareholders of the subsidiary corporation party to the merger may have appraisal rights as set forth in § 262 of the Delaware General Corporation Law.

Under the BVI Act, subject to any limitations in a company's memorandum and articles of association, members holding 90% of the votes of the outstanding shares entitled to vote, and members holding 90% of the votes of the outstanding shares of each class of shares entitled to vote, may give a written instruction to the company directing the company to redeem the shares held by the remaining members. Upon receipt of such written instruction, the company shall redeem the shares specified in the written instruction, irrespective of whether or not the shares are by their terms redeemable. The company shall give written notice to each member whose shares are to be redeemed stating the redemption price and the manner in which the redemption is to be effected. A member whose shares are to be so redeemed is entitled to dissent from such redemption and to be paid the fair value of his shares, as described under "-Shareholders' Rights under British Virgin Islands Law Generally" below.

 

*Variation of Rights of Shares*

Under Delaware corporate law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of that class, unless the certificate of incorporation provides otherwise. As permitted by British Virgin Islands law and our Memorandum and Articles of Association, if at any time the Shares are divided into different classes, the rights attached to any class may only be varied, whether or not the Company is in liquidation, with the consent in writing of or by a resolution passed at a meeting by the holders of not less than 50 percent of the voting rights in that class.

 

*Election of Directors*

Under Delaware corporate law, unless otherwise specified in the certificate of incorporation or bylaws of a corporation, directors are elected by a plurality of the votes of the shares entitled to vote on the election of directors. As permitted by British Virgin Islands law, and pursuant to our Memorandum and Articles of Association, our first directors shall be appointed by the first registered agent within 6 months of the date of incorporation; and thereafter, the directors shall be elected by resolution of shareholders or, where permitted by our Memorandum and Articles of Association, by resolution of directors.

 

*Removal of Directors*

Under Delaware corporate law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Similarly, as permitted by British Virgin Islands law, our Memorandum and Articles of Association provides that directors may be removed from office, (a) with or without cause, by resolution of shareholders passed at a meeting of shareholders called for the purposes of removing the director or for purposes including the removal of the director or by a written resolution passed by at least 50 percent of the votes of the shareholders of the Company entitled to vote, or (b) with cause, by Resolution of Directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the director.

*Mergers*

Under Delaware corporate law, one or more constituent corporations may merge into and become part of another constituent corporation in a process known as a merger. A Delaware corporation may merge with a foreign corporation as long as the law of the foreign jurisdiction permits such a merger. To effect a merger under Delaware General Corporation Law § 251, an agreement of merger must be properly adopted and the agreement of merger or a certificate of merger must be filed with the Delaware Secretary of State. In order to be properly adopted, the agreement of merger must be adopted by the board of directors of each constituent corporation by a resolution or unanimous written consent. In addition, the agreement of merger generally must be approved at a meeting of shareholders of each constituent corporation by a majority of the outstanding stock of the corporation entitled to vote, unless the certificate of incorporation provides for a supermajority vote. In general, the surviving corporation assumes all of the assets and liabilities of the disappearing corporation or corporations as a result of the merger.

Under the BVI Act, two or more companies may merge or consolidate in accordance with the statutory provisions. A merger means the merging of two or more constituent companies into one of the constituent companies, and a consolidation means the uniting of two or more constituent companies into a new company. In order to merge or consolidate, the directors of each constituent company must approve a written plan of merger or consolidation, which must be authorized by a resolution of shareholders. One or more companies may also merge or consolidate with one or more companies incorporated under the laws of jurisdictions outside the British Virgin Islands if the merger or consolidation is permitted by the laws of the jurisdictions in which the companies incorporated outside the British Virgin Islands are incorporated. In respect of such a merger or consolidation, a British Virgin Islands company is required to comply with the provisions of the BVI Act, and a company incorporated outside the British Virgin Islands is required to comply with the laws of its jurisdiction of incorporation.

Shareholders not otherwise entitled to vote on the merger or consolidation may still acquire the right to vote if the plan of merger or consolidation contains any provision that, if proposed as an amendment to the memorandum and articles of association, would entitle them to vote as a class or series on the proposed amendment. In any event, all shareholders must be given a copy of the plan of merger or consolidation irrespective of whether they are entitled to vote at the meeting or consent to the written resolution to approve the plan of merger or consolidation.

 

*Inspection of Books and Records*

Under Delaware corporate law, any shareholder of a corporation may for any proper purpose inspect or make copies of the corporation's stock ledger, list of shareholders and other books and records. Under British Virgin Islands law, members of the general public, on payment of a nominal fee, can obtain copies of the public records of a company available at the office of the British Virgin Islands Registrar of Corporate Affairs, including the company's certificate of incorporation, its memorandum and articles of association (with any amendments), records of license fees paid to date, any articles of dissolution, any articles of merger and a register of charges if the company has elected to file such a register.

A shareholder of a company is entitled, on giving written notice to the company, to inspect:

&nbsp;&nbsp;&nbsp;&nbsp;a) the memorandum and articles
of association;

&nbsp;&nbsp;&nbsp;&nbsp;b) the register of members;

&nbsp;&nbsp;&nbsp;&nbsp;c) the register of directors;
and

&nbsp;&nbsp;&nbsp;&nbsp;d) the minutes of meetings and
resolutions of shareholders and of those classes of shares of which he is a shareholder.

In addition, a shareholder may make copies of or take extracts from the documents and records referred to in (a) through (d) above. However, subject to the memorandum and articles of association of the company, the directors may, if they are satisfied that it would be contrary to the company's interests to allow a shareholder to inspect any document, or part of any document, specified in (b), (c) or (d) above, refuse to permit the shareholder to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts from the records. Where a company fails or refuses to permit a shareholder to inspect a document or permits a shareholder to inspect a document subject to limitations, that shareholder may apply to the court for an order that he should be permitted to inspect the document or to inspect the document without limitation.

Where a company keeps a copy of the register of members or the register of directors at the office of its registered agent, it is required to notify the registered agent of any changes to the originals of such registers, in writing, within 15 days of any change; and to provide the registered agent with a written record of the physical address of the place or places at which the original register of members or the original register of directors is kept. Where the place at which the original register of members or the original register of directors is changed, the company is required to provide the registered agent with the physical address of the new location of the records within 14 days of the change of location.

A company is also required to keep at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors determine the minutes of meetings and resolutions of shareholders and of classes of shareholders, and the minutes of meetings and resolutions of directors and committees of directors. If such records are kept at a place other than at the office of the company's registered agent, the company is required to provide the registered agent with a written record of the physical address of the place or places at which the records are kept and to notify the registered agent, within 14 days, of the physical address of any new location where such records may be kept.

 

*Conflict of Interest*

Under Delaware corporate law, a contract between a corporation and a director or officer, or between a corporation and any other organization in which a director or officer has a financial interest, is not void as long as (i) the material facts as to the director's or officer's relationship or interest are disclosed or known and (ii) either a majority of the disinterested directors authorizes the contract in good faith or the shareholders vote in good faith to approve the contract. Nor will any such contract be void if it is fair to the corporation when it is authorized, approved or ratified by the board of directors, a committee or the shareholders.

The BVI Act provides that a director shall, forthwith after becoming aware that he is interested in a transaction entered into or to be entered into by the company, disclose that interest to the board of directors of the company. The failure of a director to disclose that interest does not affect the validity of a transaction entered into by the director or the company, so long as the director's interest was disclosed to the board prior to the company's entry into the transaction or was not required to be disclosed because the transaction is between the company and the director himself and is otherwise in the ordinary course of business and on usual terms and conditions. As permitted by British Virgin Islands laws and our Memorandum and Articles of Association, a director interested in a particular transaction may vote on it, attend meetings at which it is considered, and sign documents on our behalf which relate to the transaction, and subject to compliance with the BVI Act shall not, by reason of his office be accountable to us for any benefit which he derives from such transaction and no such transaction shall be liable to be avoided on the grounds of any such interest or benefit.

 

*Transactions with Interested Shareholders*

Delaware corporate law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by that statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an "interested shareholder" for three years following the date that the person becomes an interested shareholder. An interested shareholder generally is a person or group that owns or owned 15% or more of the company's outstanding voting stock within the past three years. This statute has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the company in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which the shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction that resulted in the person becoming an interested shareholder.

British Virgin Islands law has no comparable provision. However, although British Virgin Islands law does not regulate transactions between a company and its significant shareholders, it does provide that these transactions must be entered into in the bona fide best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

*Independent Directors*

There are no provisions under Delaware corporate law or under the BVI Act that require a majority of our directors to be independent.

 

*Cumulative Voting*

Under Delaware corporate law, cumulative voting for elections of directors is not permitted unless the company's certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder's voting power with respect to electing such director. There are no prohibitions on cumulative voting under the laws of the British Virgin Islands, but our Memorandum and Articles of Association does not provide for cumulative voting.

 

*Shareholders' Rights under British Virgin Islands Law Generally*

The BVI Act provides for certain remedies that may be available to shareholders. Where a company incorporated under the BVI Act or any of its directors engages in, or proposes to engage in, conduct that contravenes the BVI Act or the company's memorandum and articles of association, British Virgin Islands courts can issue a restraining or compliance order. However, shareholders can also bring derivative, personal and representative actions under certain circumstances. The traditional English basis for members' remedies has also been incorporated into the BVI Act: where a shareholder of a company considers that the affairs of the company have been, are being or are likely to be conducted in a manner likely to be oppressive, unfairly discriminating or unfairly prejudicial to him, he may apply to the court for an order based on such conduct. In addition, any shareholder of a company may apply to the courts for the appointment of a liquidator of the company and the court may appoint a liquidator of the company if it is of the opinion that it is just and equitable to do so.

The BVI Act also provides that any shareholder of a company is entitled to payment of the fair value of his shares upon dissenting from any of the following: (i) a merger, if the company is a constituent company, unless the company is the surviving company and the member continues to hold the same or similar shares; (ii) a consolidation, if the company is a constituent company; (iii) any sale, transfer, lease, exchange or other disposition of more than 50% in value of the assets or business of the company if not made in the usual or regular course of the business carried on by the company but not including (a) a disposition pursuant to an order of the court having jurisdiction in the matter, (b) a disposition for money on terms requiring all or substantially all net proceeds to be distributed to the shareholders in accordance with their respective interest within one year after the date of disposition, or (c) a transfer pursuant to the power of the directors to transfer assets for the protection thereof; (iv) a redemption of 10% or fewer of the issued shares of the company required by the holders of 90% or more of the shares of the company pursuant to the terms of the BVI Act; and (v) an arrangement, if permitted by the court.

Generally, any other claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the British Virgin Islands or their individual rights as shareholders as established by a company's memorandum and articles of association.

 

*Rights of Non-resident or Foreign Shareholders and Disclosure of Substantial Shareholdings*

There are no limitations imposed by our amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

 

 

*Anti-Money Laundering - British Virgin Islands*

In order to comply with legislation or regulations aimed at the prevention of money laundering we are required to adopt and maintain anti-money laundering procedures, and may require subscribers or transferees to provide evidence to verify their identity. Where permitted, and subject to certain conditions, we also may delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.

We reserve the right to request such information as is necessary to verify the identity of a subscriber or transferee. In the event of delay or failure on the part of the subscriber or transferee in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited or refuse to amend the register of members to reflect the transferee's ownership of the relevant shares.

If any person resident in the British Virgin Islands knows or suspects that another person is engaged in money laundering or terrorist financing and the information for that knowledge or suspicion came to their attention in the course of their business the person will be required to report his belief or suspicion to the Financial Investigation Agency of the British Virgin Islands, pursuant to the Proceeds of Criminal Conduct Act 1997 (as amended). Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.

 

*Exchange Controls*

No laws of the British Virgin Islands, decrees, regulations or other legislation that limit the import or export of capital or the payment of dividends to shareholders who do not reside in the British Virgin Islands.

**Our Transfer Agent**

The transfer agent for our securities is Continental Stock Transfer & Trust Company.

**Listing**

Our Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol "SJ".

**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 on the 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** 

No laws of the British Virgin Islands, decrees, regulations or other legislation that limit the import or export of capital or the payment of dividends to shareholders who do not reside in the British Virgin Islands.

**E.** **Taxation** 

The following discussion of material British Virgin Islands, PRC, and United States federal income tax consequences of an investment in our Class A ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our Class A ordinary shares, such as the tax consequences under state, local, and other tax laws.

WE URGE POTENTIAL PURCHASERS OF OUR CLASS A ORDINARY SHARES TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR CLASS A ORDINARY SHARES.

**People's Republic of China Taxation**

We are a holding company incorporated in the British Virgin Islands and we gain substantial income by way of dividends paid to us from our PRC subsidiaries. The PRC Enterprise Income Tax Law and its implementation rules (the "EIT Law") provide that PRC-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.

Under the EIT Law, an enterprise established outside of China with a "de facto management body" within China is considered a "resident enterprise," which means that it is treated in a manner similar to a PRC domestic enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define "de facto management body" as a managing body that actually, comprehensively manage and control the production and operation, staff, accounting, property and other aspects of an enterprise, the only official guidance for this definition currently available is set forth in SAT Circular 82, which provides guidance on the determination of the tax residence status of a PRC-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although the Company does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a PRC-controlled offshore incorporated enterprise within the meaning of SAT Circular 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Circular 82 to evaluate the tax residence status of the Company and its subsidiaries organized outside of China.

According to SAT Circular 82, a PRC-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a "de facto management body" in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders' meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.

We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, the key assets and records of the Company, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside China. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC "resident enterprise" by the PRC tax authorities. Accordingly, we believe that the Company and its offshore subsidiary should not be treated as a "resident enterprise" for PRC tax purposes if the criteria for "de facto management body" as set forth in SAT Circular 82 were deemed applicable to us. As the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body" as applicable to our offshore entities, however, we will continue to monitor our tax status.

If the PRC tax authorities determine that the Company is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from any dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of our Class A Ordinary Shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to dividends or gains realized by non-PRC individuals, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. It is also unclear, however, whether non-PRC shareholders of the Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that the Company is treated as a PRC resident enterprise. There is no guidance from the PRC government to indicate whether or not any tax treaties between the PRC and other countries would apply in circumstances where a non-PRC company was deemed to be a PRC tax resident, and thus there is no basis for expecting how tax treaty between the PRC and other countries may impact non-resident enterprises.

Provided that the Company is not deemed to be a PRC resident enterprise, holders of our Class A Ordinary Shares who 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 our shares. However, under SAT Bulletin 7, where a non-resident enterprise conducts an "indirect transfer" by transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding, or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Bulletin 7, and we may be required to expend valuable resources to comply with SAT Bulletin 7, or to establish that we should not be taxed under this Bulletin.

**British Virgin Islands Taxation**

The British Virgin Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the British Virgin Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the British Virgin Islands. No stamp duty is payable in the British Virgin Islands on the issue of shares by, or any transfers of shares of, British Virgin Islands companies (except those which hold interests in land in the British Virgin Islands). The British Virgin Islands is not party to any double tax treaties that are applicable to any payments made to or by the Company. There are no exchange control regulations or currency restrictions in the British Virgin Islands.

Payments of dividends and capital in respect of our Class A Ordinary Shares will not be subject to taxation in the British Virgin Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Class A Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Class A Ordinary Shares be subject to British Virgin Islands income or corporation tax.

**United States Federal Income Taxation**

The following sets forth the material U.S. federal income tax consequences related to the ownership and disposition of our Class A Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Class A Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This description does not deal with all possible tax consequences relating to ownership and disposition of our Class A Ordinary Shares or U.S. tax laws, other than the U.S. federal income tax laws, such as the tax consequences under non-U.S. tax laws, estate and gift and state, local and other tax laws.

The following brief description applies only to U.S. Holders (defined below) that hold Class A Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the federal income tax laws of the United States in effect as of the date of this report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

The following does not address the tax consequences to investors that may be subject to special tax rules, including, without limitation, the following:

● banks,

● financial institutions;

● insurance companies;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders that elect to mark their securities to market;

● U.S. expatriates;

● governments or agencies or instrumentalities thereof;

● tax-exempt entities;

● persons liable for alternative minimum tax or the corporate alternative minimum tax;

● persons holding our Class A Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction;

● persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our Class A Ordinary Shares);

● persons who acquired our Class A Ordinary Shares pursuant to the exercise of any employee share option or otherwise as compensation;

● persons holding our Class A Ordinary Shares through partnerships or other pass-through entities; or

● beneficiaries of a Trust holding our Class A Ordinary Shares.

For purposes of this discussion, a "U.S. Holder" is a beneficial owner of Class A Ordinary Shares that is, for U.S. federal income tax purposes,

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia;

● an estate whose income is subject to U.S. federal income taxation regardless of its source; or

● a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

*Taxation of Dividends and Other Distributions on Our Class A Ordinary Shares*

Subject to the PFIC (defined below) rules discussed below, the gross amount of distributions made by us to you with respect to the Class A Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.

With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the preferential rate applicable to qualified dividend income, provided that we are not a PFIC (defined below) for either our taxable year in which the dividend is paid or the preceding taxable year, and certain holding period requirements are met. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Class A Ordinary Shares, including the effects of any change in law after the date of this report.

Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be adjusted pursuant to a formula provided in applicable Treasury regulations. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our Class A Ordinary Shares will constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Class A Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

*Taxation of Dispositions of Class A Ordinary Shares*

Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange, or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Class A Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Class A Ordinary Shares for more than one year, you will generally be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes which will generally limit the availability of foreign tax credits.

*Passive Foreign Investment Company ("PFIC")*

A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year if either:

● at least 75% of its gross income for such taxable year is passive income; or

● at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the "asset test").

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.

Based on our operations and the composition of our assets we do not expect to be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC, however, and there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year. Depending on the amount of our cash and other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. In addition, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Class A Ordinary Shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Class A Ordinary Shares. Accordingly, fluctuations in the market price of the Class A Ordinary Shares may cause us to become a PFIC. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Class A Ordinary Shares from time to time) that may not be within our control. If we are a PFIC for any year during which you hold Class A Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Class A Ordinary Shares. If we cease to be a PFIC and you did not previously make a timely "mark-to-market" election as described below, however, you may avoid some of the adverse effects of the PFIC regime by making a "purging election" (as described below) with respect to the Class A Ordinary Shares.

If we are a PFIC for your taxable year(s) during which you hold Class A Ordinary Shares, you will be subject to special tax rules with respect to any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Class A Ordinary Shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Class A Ordinary Shares will be treated as an excess distribution. Under these special tax rules:

● the excess distribution or gain will be allocated ratably over your holding period for the Class A Ordinary Shares;

● the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and

● the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or "excess distribution" cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Class A Ordinary Shares cannot be treated as capital, even if you hold the Class A Ordinary Shares as capital assets.

A U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the US Internal Revenue Code for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the first taxable year in which you hold (or are deemed to hold) Class A Ordinary Shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the Class A Ordinary Shares as of the close of such taxable year over your adjusted basis in such Class A Ordinary Shares, and such excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Class A Ordinary Shares over their fair market value as of the close of the taxable year. Such ordinary loss, however, is allowable only to the extent of any net mark-to-market gains on the Class A Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Class A Ordinary Shares, are treated as ordinary income. Class A Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the Class A Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Class A Ordinary Shares. Your basis in the Class A Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under "-Taxation of Dividends and Other Distributions on our Class A Ordinary Shares" generally would not apply.

The mark-to-market election is available only for "marketable stock", which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including Nasdaq Stock Market. If the Class A Ordinary Shares are regularly traded on Nasdaq Stock Market and if you are a holder of Class A Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election under Section 1295(b) of the US Internal Revenue Code with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder's pro rata share of the corporation's earnings and profits for the taxable year. The qualified electing fund election, however, is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Class A Ordinary Shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Class A Ordinary Shares, including regarding distributions received on the Class A Ordinary Shares and any gain realized on the disposition of the Class A Ordinary Shares.

If you do not make a timely "mark-to-market" election (as described above), and if we were a PFIC at any time during the period you hold our Class A Ordinary Shares, then such Class A Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a "purging election" for the year we cease to be a PFIC. A "purging election" creates a deemed sale of such Class A Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Class A Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Class A Ordinary Shares for tax purposes.

You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Class A Ordinary Shares and the elections discussed above.

*Information Reporting and Backup Withholding*

Dividend payments with respect to our Class A Ordinary Shares and proceeds from the sale, exchange or redemption of our Class A Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding under Section 3406 of the US Internal Revenue Code at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. Transactions effected through certain brokers or other intermediaries, however, may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.

Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our Class A ordinary shares, subject to certain exceptions (including an exception for shares held in accounts maintained by certain financial institutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Class A ordinary shares.

**EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF AN INVESTMENT IN OUR CLASS A ORDINARY SHARES IN LIGHT OF SUCH INVESTOR'S PARTICULAR CIRCUMSTANCES.**

**F.** **Dividends and Paying Agents** 

Not Applicable.

**G.** **Statement by Experts** 

Not Applicable.

**H.** **Documents on Display** 

We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are not subject to the insider short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act.

All information that we have filed with the SEC can be accessed through the SEC's website at www.sec.gov. This information can also be 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 these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.

In accordance with Nasdaq Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at ir.scienjoy.com. In addition, we will provide hard copies of our annual report free of charge to shareholders upon request.

**I.** **Subsidiary Information** 

Not Applicable.

**J.** **Annual Report to Security Holders** 

Not Applicable.

**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**Interest Rate Risk**

The Company's exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest bearing bank deposits. The Company has not used derivative financial instruments to manage its interest risk exposure. Interest earning instruments carry a degree of interest rate risk. The Company has not been exposed to, nor does the Company anticipate being exposed to, material risks due to changes in market interest rates.

**Credit Risk**

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses, other current assets, and amounts due from related parties. As of December 31, 2024 and 2025, RMB242,359 and RMB301,095, respectively, were deposited with major financial institutions located in the PRC. Management believes that these financial institutions are of high credit quality and continually monitor the credit worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors' interests.

For the credit risk related to accounts receivable, the Company performs ongoing credit evaluations of its customers. The Company establishes an allowance for doubtful accounts based upon estimates, factors surrounding the credit risk of specific customers and other information. The allowance amounts were immaterial for all periods presented.

**Foreign Currency Exchange Rate Risk**

Substantially all of the Company's businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People's Bank of China. However, the unification of the exchange rates does not imply the convertibility of RMB into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. Approval of foreign currency payments by the People's Bank of China or other institutions requires submitting a payment application form together with suppliers' invoices, shipping documents and signed contracts.

**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** 

Not Applicable.

**PART II**

**ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES**

None.

**ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

Not Applicable.

**ITEM 15. CONTROLS AND PROCEDURES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Disclosure Controls and Procedures**

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) under the Exchange Act. Based upon this evaluation, our management, with the participation of our chief executive officer and chief financial officer, has concluded that, as of December 31, 2025, our disclosure controls and procedures were effective.

Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in SEC's rule and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Management's Annual Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Exchange Act. As required by Rule 13a-15(c) of the U.S. Exchange Act.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our company's assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As required by Rule 13a-15(c) of the Exchange Act, our management conducted an evaluation of our company's internal control over financial reporting as of December 31, 2025 based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Attestation Report of the Registered Public Accounting Firm**

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Changes in Internal Control over Financial Reporting**

There were no changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**ITEM 16. [Reserved]**

**ITEM 16. A. AUDIT COMMITTEE FINANCIAL EXPERT**

Our board of directors has determined that each of Jian Sun, Jun Lu and Huifeng Chang, independent directors (under the standards set forth in Nasdaq Stock Market Rule 5605(a)(2) and Rule 10A-3 under the Exchange Act) and members of our audit committee, is an audit committee financial expert.

**ITEM 16. B. CODE OF ETHICS**

On May 12, 2020, our Board adopted (a) an Amended and Restated Code of Conduct and Ethics (the "Ethics Code"), which amended and restated our then existing code of conduct and ethics (the "Previous Code") in its entirety and applies to all officers, directors, and employees of us and our subsidiaries, and (b) an Insider Trading Policy (the "Policy").

The Previous Code was refreshed and updated in connection with the Business Combination to conform the Ethics Code to reflect current best practices and enhance the personnel's understanding of our standards of ethical business practices, promote awareness of ethical issues that may be encountered in carrying out an employee's or director's responsibilities, and improve its clarity as to how to address ethical issues that may arise. The updates include clarifications and enhancements to the purposes of the Ethics Code, compliance with law matters, policies regarding maintenance of our corporate records, and compliance standards and procedures of the Ethics Code. The adoption of the Ethics Code did not relate to or result in any waiver, whether explicit or implicit, of any provision of the Previous Code.

The Policy provides guidelines to employees, officers and directors of us and our subsidiaries with respect to transactions in our securities and the procedures set forth therein is intended to help prevent insider trading and to assist the employees, officers and directors of us and our subsidiaries in complying with their obligations under the federal securities laws.

**ITEM 16. C. 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 OneStop Assurance PAC.

---

| | |
|:---|:---|
|  | **For the <br> Year<br> Ended<br> December 31, <br> 2025** |
| Audit Fees (1) | 477750 |
| Audit-related Fees (2) | 8000 |
| Total | 485750 |

---

(1) "Audit Fees" represent
the aggregate fees billed for professional services rendered by our principal accountants for the audit of our consolidated financial
statements and assistance with and review of documents filed with the SEC.

(2) "Audit-Related Fees" represent the aggregate fees billed for professional services rendered by our principal accountants for the assurance and related services, which are not included under "Audit Fees" above

**Pre-approval Policies**

The Company's audit committee approves all auditing services and permitted non-audit services performed for the Company by its independent auditor in advance of an engagement. All auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor must be approved by the audit committee in advance, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the committee prior to the completion of the audit.

**ITEM 16. D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**

Not Applicable

**ITEM 16. E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**

Not Applicable

**ITEM 16. F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT** 

None.

**ITEM 16. G. CORPORATE GOVERNANCE**

**Foreign Private Issuer**

As a British Virgin Islands company listed on the Nasdaq Capital Market, we are subject to the Nasdaq Stock Market Rules corporate governance listing standards. However, Nasdaq Stock Market Rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in British Virgin Island, which is our home country, may differ significantly from the Nasdaq Stock Market Rules. While we voluntarily follow most Nasdaq corporate governance rules, we may choose to take advantage of the following exemptions afforded to foreign private issuers:

● exemption from the requirement to obtain shareholder approval for certain issuances of securities, including shareholder approval of stock option plans; and

● exemption from the requirement that our board of directors shall have regularly scheduled meetings at which only independent directors are present as set forth in Nasdaq Rule 5605(b)(2).

We intend to follow our home country practices in lieu of the foregoing requirements. Although we may rely on home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), we must comply with Nasdaq's Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640), the Diverse Board representation requirement (Rule 5605(f)), the Board Diversity disclosure rule (Rule 5606), have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii), and Rule 5000 series. Although we currently intend to comply with the Nasdaq corporate governance rules applicable other than as noted above, we may in the future decide to use the foreign private issuer exemption with respect to some or all the other Nasdaq corporate governance rules. As a result, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. We may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.

**Controlled Company**

We are "controlled company'' as defined under the Nasdaq Stock Market Rules as a result of our directors and officers and their affiliated entity, Heshine, controlling more than 50% of our voting rights. 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 from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and

● an exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

**ITEM 16. H. MINE SAFETY DISCLOSURE**

Not Applicable.

**ITEM 16. I. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS**

Not Applicable.

**ITEM 16J. INSIDER TRADING POLICIES.**

The Company adopted an Insider Trading Policy governing the purchase, sale, and other dispositions of the Company's securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and applicable Nasdaq listing standards (the "Insider Trading Policy").

The foregoing description of the Insider Trading Policy does not purport to be complete and is qualified in its entirety by the terms and conditions of the Insider Trading Policy, a copy of which is attached hereto as Exhibit 11 and is incorporated herein by reference.

**ITEM 16K. Cybersecurity.**

The Board established a Cybersecurity Committee that is responsible for the oversight of risks from cybersecurity threats. The Cybersecurity Committee reviews and discusses with the management and the Board the (i) Company's cybersecurity risks, including network security, information security, data privacy and protection, and third-party cybersecurity risks, (ii) results of internal cybersecurity audits, if any, (iii) steps management has taken to identify, assess, monitor, manage, and mitigate cybersecurity risks, and (iv) emerging technology risks. As of the date of this annual report, there are no significant cybersecurity threats known to materially affect or are reasonably likely to materially affect the Company, including its business strategy, financial condition, or operational 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**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1 | [Fourth Amended and Restated Memorandum and Articles of Association of Scienjoy Holding Corporation, as adopted by a special resolution on November 8, 2021 (incorporated by reference to Annex A to the Current Report on Form 6-K filed with the Securities & Exchange Commission on October 7, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021051872/ea148412ex99-1_scienjoyhold.htm#a_033) |
| 2.1 | [Specimen Class A Ordinary Share Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form F-3 filed with the Securities and Exchange Commission on November 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021062275/ea151002ex4-1_scienjoyhold.htm) |
| 2.2 | [Description of Securities (incorporated by reference to Exhibit 2.4 to the Annual Report on Form 20-F filed with the SEC on April 26, 2024).](https://www.sec.gov/Archives/edgar/data/1753673/000121390024036648/ea020376401ex2-4_scien.htm) |
| 4.1 | [Share Exchange Agreement dated October 28, 2019 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on November 01, 2019).](http://www.sec.gov/Archives/edgar/data/1753673/000121390019021733/f8k102819ex2-1_wealth.htm) |
| 4.2 | [Form of Unit Purchase Option between the Registrant and Chardan Capital Markets, LLC (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on February 11, 2019).](http://www.sec.gov/Archives/edgar/data/1753673/000161577419002270/s116025_ex4-3.htm) |
| 4.3 | [Letter Agreements by and between the Registrant and each of the initial shareholders, officers and directors of the Registrant (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on February 11, 2019).](http://www.sec.gov/Archives/edgar/data/1753673/000161577419002270/s116025_ex10-1.htm) |
| 4.4 | [Stock Escrow Agreement, dated February 5, 2019, among the Registrant, Continental Stock Transfer & Trust Company, LLC, and the initial shareholders (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on February 11, 2019).](http://www.sec.gov/Archives/edgar/data/1753673/000161577419002270/s116025_ex10-3.htm) |
| 4.5 | [Registration Rights Agreement, dated February 5, 2019, among the Registrant, Continental Stock Transfer & Trust Company, LLC and the initial shareholders (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on February 11, 2019).](http://www.sec.gov/Archives/edgar/data/1753673/000161577419002270/s116025_ex10-4.htm) |
| 4.6 | [Form of Subscription Agreement among the Registrant, the Initial Shareholders and Chardan Capital Markets, LLC (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 filed with the Securities & Exchange Commission on December 21, 2018)](http://www.sec.gov/Archives/edgar/data/1753673/000161577418014783/s114842_ex10-5.htm) |
| 4.7 | [Investment Management Trust Account Agreement, dated February 5, 2019, by and between Continental Stock Transfer & Trust Company, LLC and the Registrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on February 11, 2019).](http://www.sec.gov/Archives/edgar/data/1753673/000161577419002270/s116025_ex10-2.htm) |
| 4.8 | [Form of Director Service Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-1_scienjoyhold.htm) |
| 4.9 | [Employment Agreement between Beijing Sixiang Shiguang Technology Co., Ltd and Xiaowu He, dated May 1, 2019 (English Translation) (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-2_scienjoyhold.htm) |
| 4.10 | [Employment Agreement between Hongren (Zhejiang) Culture Technology Co., Ltd. and Bo Wan, dated April 1, 2024 (English Translation) (incorporated by reference to Exhibit 4.10 to the Annual Report on Form 20-F filed with the SEC on April 26, 2024).](https://www.sec.gov/Archives/edgar/data/1753673/000121390024036648/ea020376401ex4-10_scienjoy.htm) |

---

4.11 [Employment Agreement between Beijing Le Hai Technology Co. Ltd. and Bentong Deng. (Denny Tang), dated April 1, 2024 (English Translation). (incorporated by reference to Exhibit 4.11 to the Annual Report on Form 20-F filed with the SEC on April 26, 2024).](https://www.sec.gov/Archives/edgar/data/1753673/000121390024036648/ea020376401ex4-11_scienjoy.htm)

4.12 [Loan Agreement between Zhihui Qiyuan (Beijing) Technology Co., Ltd. and Changxiang Infinite (Beijing) Technology Co. Ltd., dated April 2, 2020 (English Translation) (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-6_scienjoyhold.htm)

4.13 [Exclusive Option Agreement among Sixiang Wuxian (Beijing) Technology Co., Ltd., Xiaoke Yin, Beijing Junwei Technology Co., Ltd., and Zhihui Qiyuan (Beijing) Technology Co., Ltd., dated January 29, 2019 (English Translation) (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-7_scienjoyhold.htm)

4.14 [The Supplement Agreement of Exclusive Option Agreement among Sixiang Wuxian (Beijing) Technology Co., Ltd., Xiaoke Yin, Beijing Junwei Technology Co., Ltd., and Zhihui Qiyuan (Beijing) Technology Co., Ltd. dated August 30, 2019 (English Translation) (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-8_scienjoyhold.htm)

4.15 [Power of Attorney Agreement between Sixiang Wuxian (Beijing) Technology Co., Ltd., and Xiaoke Yin, dated January 29, 2019 (English Translation) (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-9_scienjoyhold.htm)

4.16 [Share Pledge Agreement among Sixiang Wuxian (Beijing) Technology Co., Ltd., Xiaoke Yin, Beijing Junwei Technology Co., Ltd., and Zhihui Qiyuan (Beijing) Technology Co., Ltd., dated January 29, 2019 (English Translation) (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-10_scienjoyhold.htm)

4.17 [Exclusive Business Cooperation Agreements between Sixiang Wuxian (Beijing) Technology Co., Ltd. and Zhihui Qiyuan (Beijing) Technology Co., Ltd., dated January 29, 2019 (English Translation) (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-11_scienjoyhold.htm)

4.18 [The Supplement Agreement of Exclusive Business Cooperation Agreement between Sixiang Wuxian (Beijing) Technology Co., Ltd. and Zhihui Qiyuan (Beijing) Technology Co., Ltd., dated August 30, 2019 (English Translation) (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-12_scienjoyhold.htm)

4.19 [Form of Indemnification Agreement (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-13_scienjoyhold.htm)

4.20 [Registration Rights Agreement among Wealthbridge Acquisition Limited, Lavacano Holdings Limited, and WBY Entertainment Holdings Ltd., dated May 7, 2020 (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-14_scienjoyhold.htm)

4.21 [Escrow Agreement among Loeb & Loeb LLP, Wealthbridge Acquisition Limited, Lavacano Holdings Limited, and WBY Entertainment Holdings Ltd., dated May 7, 2020 (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-15_scienjoyhold.htm)

4.22 [Resale Lock-up Agreement between Wealthbridge Acquisition Limited and Lavacano Holdings Limited, dated May 7, 2020 (incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-16_scienjoyhold.htm)

4.23 [Resale Lock-up Agreement between Wealthbridge Acquisition Limited and WBY Entertainment Holdings Ltd., dated May 7, 2020 (incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](https://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-17_scienjoyhold.htm)

4.24 [Voting Agreement among Wealthbridge Acquisition Limited, Oriental Holdings Limited, Lavacano Holdings Limited, WBY Entertainment Holdings Ltd. and Yongsheng Liu, dated May 7, 2020 (incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K filed with the SEC on May 13, 2020).](https://www.sec.gov/Archives/edgar/data/1753673/000121390020011974/ea121622ex10-18_scienjoyhold.htm)

4.25 [Equity Acquisition Framework Agreement (English Translation), dated August 10, 2020 (incorporated by reference to Exhibit 10.19 to the Registration Statement Amendment on Form F-1 filed with the SEC on October 16, 2020).](https://www.sec.gov/Archives/edgar/data/1753673/000121390020031690/ea126694ex10-19_scienjoy.htm)

4.26 [Resale Lock-up Agreement with Cosmic Soar Limited, dated September 10, 2020 (incorporated by reference to Exhibit 10.20 to the Registration Statement Amendment on Form F-1 filed with the SEC on October 16, 2020).](https://www.sec.gov/Archives/edgar/data/1753673/000121390020031690/ea126694ex10-20_scienjoy.htm)

4.27 [Share Transfer Agreement between Cosmic Soar Limited and Scienjoy Inc., dated August 10, 2020 (incorporated by reference to Exhibit 10.21 to the Registration Statement Amendment on Form F-1 filed with the SEC on October 16, 2020).](https://www.sec.gov/Archives/edgar/data/1753673/000121390020031690/ea126694ex10-21_scienjoy.htm)

4.28 [Equity Interest Transfer Agreement between Tianjin Guangju Dingsheng Technology Co., Ltd. and Zhihui Qiyuan Technology Co., Ltd., dated August 10, 2020 (incorporated by reference to Exhibit 10.22 to the Registration Statement Amendment on Form F-1 filed with the SEC on October 16, 2020).](http://www.sec.gov/Archives/edgar/data/1753673/000121390020031690/ea126694ex10-22_scienjoy.htm)

---

| | |
|:---|:---|
| 4.29 | [Common Stock Purchase Agreement between Scienjoy Holding Corporation and White Lion Capital LLC, dated February 23, 2021 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 6-K filed with the SEC on February 23, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021011084/ea136227ex99-1_scienjoy.htm) |
| 4.30 | [Registration Rights Agreement between Scienjoy Holding Corporation and White Lion Capital LLC, dated February 23, 2021 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 6-K filed with the SEC on February 23, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021011084/ea136227ex99-2_scienjoy.htm) |
| 4.31 | [Escrow Agreement among Scienjoy Holding Corporation, White Lion Capital LLC, and Indeglia PC, dated February 23, 2021 (incorporated by reference to Exhibit 99.3 to the Current Report on Form 6-K filed with the SEC on February 23, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021011084/ea136227ex99-3_scienjoy.htm) |
| 4.32 | [Termination and Release Agreement by and between Scienjoy Holding Corporation and White Lion Capital LLC, dated June 24, 2021 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 6-K filed with the SEC on June 28, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021034446/ea143407ex99-1_scienjoyhold.htm) |
| 4.33 | [Equity Acquisition Framework Agreement by and among Scienjoy Holding Corporation, Golden Shield Enterprises Limited, Beijing Weiliantong Technology Co., Ltd., Tianjin Yieryi Technology Co., Ltd., Wolter Global Investment Limited and Qingdao Weilaijin Industry Investment Fund Partnership (Limited Partnership) dated December 29, 2021. (incorporated by reference to Exhibit 99.2 to the Current Report on Form 6-K filed with the SEC on December 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021067890/ea153166ex99-2_scienjoy.htm) |
| 4.34 | [Form of Equity Interest Transfer Agreement between Zhihui Qiyuan (Beijing) Science and Technology Co., Ltd. and Tianjin Yieryi Technology Co., Ltd. (incorporated by reference to Exhibit 99.3 to the Current Report on Form 6-K filed with the SEC on December 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021067890/ea153166ex99-3_scienjoy.htm) |
| 4.35 | [Form of Share Transfer Agreement between Scienjoy Inc. and Wolter Global Investment Limited. (incorporated by reference to Exhibit 99.4 to the Current Report on Form 6-K filed with the SEC on December 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021067890/ea153166ex99-4_scienjoy.htm) |
| 4.36 | [Equity Repurchase Agreement by and among Tianjin Yieryi Technology Co., Ltd., Qingdao Weilaijin Industry Investment Fund Partnership (Limited Partnership), Zhihui Qiyuan (Hainan) Investment Co., Ltd, Junpeng Guo and Ting Zhao dated December 29, 2021. (incorporated by reference to Exhibit 99.5 to the Current Report on Form 6-K filed with the SEC on December 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021067890/ea153166ex99-5_scienjoy.htm) |
| 4.37 | [Equity Interest Purchase and Sale Agreement by and among Zhihui Qiyuan (Hainan) Investment Co., Ltd. Junpeng Guo, Qingdao Weilaijin Industry Investment Fund Partnership (Limited Partnership), Ting Zhao and Tianjin Yieryi Technology Co., Ltd dated December 29, 2021. (incorporated by reference to Exhibit 99.6 to the Current Report on Form 6-K filed with the SEC on December 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021067890/ea153166ex99-6_scienjoy.htm) |
| 4.38 | [Form of Resale Lock-up Agreement between Qingdao Weilaijin Industry Investment Fund Partnership (Limited Partnership) and Scienjoy Holding Corporation. 99.8 Form of Resale Lock-up Agreement between Wolter Global Investment Limited and Scienjoy Holding Corporation. (incorporated by reference to Exhibit 99.7 to the Current Report on Form 6-K filed with the SEC on December 29, 2021).](http://www.sec.gov/Archives/edgar/data/1753673/000121390021067890/ea153166ex99-7_scienjoy.htm) |
| 4.39 | [Exclusive Option Agreement by and among Sixiang Infinite (Zhejiang) Culture Technology Co., Ltd., Sheng Hou, and Yong Xie. dated June 1, 2022. (incorporated by reference to Exhibit 99.2 to the Current Report on Form 6-K filed with the SEC on June 17, 2022).](http://www.sec.gov/Archives/edgar/data/1753673/000121390022033439/ea161733ex99-2_scienjoyhold.htm) |
| 4.40 | [Power of Attorney Agreement by and between Sixiang Infinite (Zhejiang) Culture Technology Co., Ltd., and Sheng Hou. dated June 1, 2022. (incorporated by reference to Exhibit 99.3 to the Current Report on Form 6-K filed with the SEC on June 17, 2022).](http://www.sec.gov/Archives/edgar/data/1753673/000121390022033439/ea161733ex99-3_scienjoyhold.htm) |
| 4.41 | [Power of Attorney Agreement by and between Sixiang Infinite (Zhejiang) Culture Technology Co., Ltd., and Yong Xie, dated June 1, 2022. (incorporated by reference to Exhibit 99.4 to the Current Report on Form 6-K filed with the SEC on June 17, 2022).](http://www.sec.gov/Archives/edgar/data/1753673/000121390022033439/ea161733ex99-4_scienjoyhold.htm) |
| 4.42 | [Share Pledge Agreement by and among Sixiang Infinite (Zhejiang) Culture Technology Co., Ltd., Sheng Hou, Yong Xie, and Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd., dated June 1, 2022. (incorporated by reference to Exhibit 99.5 to the Current Report on Form 6-K filed with the SEC on June 17, 2022).](http://www.sec.gov/Archives/edgar/data/1753673/000121390022033439/ea161733ex99-5_scienjoyhold.htm) |
| 4.43 | [Exclusive Business Cooperation Agreement by and between Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd. and Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. dated June 1, 2022. (incorporated by reference to Exhibit 99.6 to the Current Report on Form 6-K filed with the SEC on June 17, 2022).](http://www.sec.gov/Archives/edgar/data/1753673/000121390022033439/ea161733ex99-6_scienjoyhold.htm) |
| 4.44\* | [Share Transfer Agreement between Dan Liu and SCENOVO Pte. LTD dated February 18, 2025](ea028451001ex4-44.htm) |
| 4.45\* | [Capital Increase Agreement between SH Entertainment Co., Ltd, Han Shuyong and SCENOVO Pte. Ltd., dated July 1, 2025](ea028451001ex4-45.htm) |
| 8.1\* | [Subsidiaries of the Registrant](ea028451001ex8-1.htm) |
| 11.1 | [Insider Trading Policy (incorporated by reference to Exhibit 11.1 to the Annual Report on Form 20-F filed with the SEC on April 22, 2025)](http://www.sec.gov/Archives/edgar/data/1753673/000121390025033951/ea023766401ex11-1_scienjoy.htm) |
| 12.1\* | [CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ea028451001ex12-1.htm) |
| 12.2\* | [CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ea028451001ex12-2.htm) |
| 13.1\* | [CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea028451001ex13-1.htm) |
| 13.2\* | [CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea028451001ex13-2.htm) |
| 15.1\* | [Consent of OneStop Assurance PAC](ea028451001ex15-1.htm) |
| 15.2\* | [Consent of Beijing Feng Yu Law Firm](ea028451001ex15-2.htm) |
| 97.1 | [Policy Related to Recovery of Erroneously Awarded Compensation, adopted November 29, 2023 (incorporated by reference to Exhibit 97 to the Annual Report on Form 20-F filed with the SEC on April 26, 2024).](https://www.sec.gov/Archives/edgar/data/1753673/000121390024036648/ea020376401ex97_scienjoy.htm) |
| 99.1 | [Amended and Restated Audit Committee Charter (incorporated by reference to Exhibit 99.1 to the Annual Report on Form 20-F filed with the SEC on April 26, 2024).](https://www.sec.gov/Archives/edgar/data/1753673/000121390024036648/ea020376401ex99-1_scienjoy.htm) |
| 99.2 | [Amended and Restated Compensation Committee Charter (incorporated by reference to Exhibit 99.2 to the Annual Report on Form 20-F filed with the SEC on April 26, 2024).](https://www.sec.gov/Archives/edgar/data/1753673/000121390024036648/ea020376401ex99-2_scienjoy.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

\* Filed herewith.

# Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified information marked with [\*\*\*\*\*] has been excluded from the exhibit because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.

**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 the undersigned to sign this annual report on its behalf.

---

| | |
|:---|:---|
| **Scienjoy Holding Corporation** | **Scienjoy Holding Corporation** |
| By: | /s/ Xiaowu He |
| Name: | Xiaowu He |
| Title: | Chief Executive Officer |

---

Date: April 23, 2026

**SCIENJOY HOLDING CORPORATION**

**INDEX TO CONSOLIDATED FINANCIAL INFORMATION**

---

| | |
|:---|:---|
|  | **Page** |
| [Report of Independent Registered Public Accounting Firm (PCAOB ID: 6732)](#fin_001) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2024 and 2025](#fin_002) | F-4 |
| [Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2023, 2024 and 2025](#fin_003) | F-5 |
| [Consolidated Statements of Changes in Equity for the Years Ended December 31, 2023, 2024 and 2025](#fin_004) | F-6 |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2024 and 2025](#fin_005) | F-7 |
| [Notes to the Consolidated Financial Statements](#fin_006) | F-8 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Shareholders of Scienjoy Holding Corporation

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Scienjoy Holding Corporation and Subsidiaries (collectively, the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial positions of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**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 financial statements 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 U.S. federal securities laws and the applicable rules and regulations of the 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were 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 of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial 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, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matter communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the account or disclosure to which it relates.

Evaluation of impairment assessment of intangible assets and goodwill

*Description of the Matter*

As discussed in Note 2(k) and Note 8 to the financial statements, the Company has $432.0 million and $182.6 million of intangible assets and goodwill, respectively. During 2025, management performed a quantitative impairment assessment by estimating the fair value using the income valuation approach, with the assistance of a third-party valuation firm. The fair value estimates were based on a discounted cash flow model that required management to make significant assumptions, including forecasted revenues, earnings before interest, taxes, depreciation and amortization ("EBITDA") margins, terminal growth rate, and discount rate. These assumptions are sensitive to change and were affected by the reporting unit's historical performance relative to projections, as well as expected future market and economic conditions.

We identified the evaluation of the impairment assessment of intangible assets and goodwill of the Company as a critical audit matter because evaluating the significant assumptions used by management involved a high degree of auditor judgment and effort.

*How We Addressed the Matter in Our Audit*

These procedures included, among others:

&nbsp;&nbsp;&nbsp;&nbsp;(i) evaluated
management's process for developing the fair value estimates of the intangible assets and goodwill;

&nbsp;&nbsp;&nbsp;&nbsp;(ii) assessed
the appropriateness of the valuation methodologies applied by management;

&nbsp;&nbsp;&nbsp;&nbsp;(iii) tested
the completeness and accuracy of underlying data used in the valuation model; and

&nbsp;&nbsp;&nbsp;&nbsp;(iv) evaluated
the reasonableness of the significant assumptions used by management related to forecasted revenues, EBITDA margins, terminal growth rate, and
discount rate used in the valuation model, by comparing them to historical results, third-party economic data research, and industry
performance.

&nbsp;&nbsp;&nbsp;&nbsp;(v) tested the mathematical accuracy of the discounted cash flow model.

Evaluation of impairment assessment of long term investments

*Description of the Matter*

As discussed in Note 9 to the financial statements, the Company has $271.3 million of long term investments. The Company evaluates these investments for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In performing this assessment, management is required to make significant judgment in considering the qualitative and quantitative factors, including current economic and market conditions, the operating performance of the investees, including earnings trends and cash flow expectations, and other entity-specific information.

We identified the evaluation of impairment assessment of long term investments as a critical audit matter because the assessment involves a high degree of auditor judgment in (i) identifying whether events or changes in circumstances indicate potential impairment, and (ii) evaluating whether any decline in value is other-than-temporary. These judgments are inherently subjective and may be affected by assumptions regarding the investee's financial performance, future cash flows, and overall market conditions.

*How We Addressed the Matter in Our Audit*

These procedures included, among others:

&nbsp;&nbsp;&nbsp;&nbsp;(i) e valuated
management's process for impairment assessment on long term investments, including the identification and consideration of impairment
indicators and the evaluation of whether any decline in value is other-than-temporary.

&nbsp;&nbsp;&nbsp;&nbsp;(ii) p erformed
independent assessment to assess whether additional impairment conditions existed that were not identified by management by reviewing
and corroborating the financial condition, operating performance of the investees and other relevant available information.

/s/ OneStop Assurance PAC

We have served as the Company's auditor since 2022.

Singapore

April 23, 2026

**SCIENJOY HOLDING CORPORATION**

**CONSOLIDATED BALANCE SHEETS**

(All amounts in thousands, except share and per share data or otherwise stated)

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| **ASSETS** |  |  |  |
| **Current assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 252540 | 307650 | 43993 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 226060 | 43290 | 6190 |
| &nbsp;&nbsp;&nbsp;Due from a related party | - | 100 | 14 |
| &nbsp;&nbsp;&nbsp;Investment in marketable security | 37629 | 8561 | 1224 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 28415 | 23607 | 3376 |
| **Total current assets** | **544644** | **383208** | **54797** |
| **Non-current assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 1981 | 2244 | 321 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 405256 | - | - |
| &nbsp;&nbsp;&nbsp;Goodwill | 182661 | - | - |
| &nbsp;&nbsp;&nbsp;Long term investments | 257387 | 271261 | 38790 |
| &nbsp;&nbsp;&nbsp;Long term deposits and other assets | 906 | 1741 | 249 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets-operating lease | 4845 | 14695 | 2101 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | 7505 | 37288 | 5332 |
| **Total non-current assets** | **860541** | **327229** | **46793** |
| **TOTAL ASSETS** | **1405185** | **710437** | **101590** |
| **LIABILITIES AND EQUITY** |  |  |  |
| **Current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | 36015 | 16665 | 2381 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 80186 | 50464 | 7216 |
| &nbsp;&nbsp;&nbsp;Accrued salary and employee benefits | 22346 | 15184 | 2171 |
| &nbsp;&nbsp;&nbsp;Income tax payable | 11284 | 10899 | 1559 |
| &nbsp;&nbsp;&nbsp;Lease liabilities-operating lease - current | 4098 | 3641 | 521 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 6840 | 9728 | 1391 |
| **Total current liabilities** | **160769** | **106581** | **15239** |
| **Non-current liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Deferred tax liabilities | 58400 |  |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities-operating lease - non-current | 700 | 10399 | 1487 |
| **Total non-current liabilities** | **59100** | **10399** | **1487** |
| **TOTAL LIABILITIES** | **219869** | **116980** | **16726** |
| **Commitments and contingencies** |  |  |  |
| **EQUITY** |  |  |  |
| &nbsp;&nbsp;&nbsp;Ordinary share, no par value, unlimited Class A ordinary shares and Class B ordinary shares authorized, 38,922,726 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding as of December 31, 2024, respectively; 39,537,710 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding as of December 31, 2025, respectively. |  |  |  |
| &nbsp;&nbsp;&nbsp;Class A ordinary shares | 444162 | 451666 | 64588 |
| &nbsp;&nbsp;&nbsp;Class B ordinary shares | 23896 | 23896 | 3417 |
| &nbsp;&nbsp;&nbsp;Shares to be issued | 20817 | 20817 | 2977 |
| &nbsp;&nbsp;&nbsp;Treasury stocks | (19952) | (19952) | (2853) |
| &nbsp;&nbsp;&nbsp;Statutory reserves | 50705 | 34091 | 4875 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 662499 | 92024 | 13159 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | 16967 | 12867 | 1840 |
| **Total shareholders' equity** | **1199094** | **615409** | **88003** |
| Non-controlling interests | (13778) | (21952) | (3139) |
| **Total equity** | **1185316** | **593457** | **84864** |
| **TOTAL LIABILITIES AND EQUITY** | **1405185** | **710437** | **101590** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**SCIENJOY HOLDING CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME**

(All amounts in thousands, except share and per share data or otherwise stated)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Live streaming - consumable virtual items revenue | 1420258 | 1317601 | 1187033 | 169743 |
| Live streaming - time based virtual item revenue | 25004 | 24935 | 16951 | 2424 |
| Technical services and others | 19609 | 20848 | 37637 | 5382 |
| **Total revenue** | 1464871 | 1363384 | 1241621 | 177549 |
| Cost of revenues | (1272145) | (1117942) | (1014455) | (145065) |
| **Gross profit** | **192726** | **245442** | **227166** | **32484** |
| Sales and marketing expenses | (1355) | (7049) | (6357) | (909) |
| General and administrative expenses | (75582) | (76629) | (88977) | (12724) |
| Research and development expenses | (75116) | (90461) | (83426) | (11930) |
| Provision for credit losses | (17865) | (30584) | (127290) | (18202) |
| **Income (loss) from operations** | **22808** | **40719** | **(78884)** | **(11281)** |
| Change in fair value of contingent consideration | (5624) | - | - | - |
| Change in fair value of warrant liabilities | 170 | - | - | - |
| Change in fair value of investment in marketable security | (9023) | 6103 | (29067) | (4157) |
| Impairment for goodwill | - | - | (186170) | (26622) |
| Impairment for intangible assets | - | - | (398835) | (57033) |
| Investments income (loss) | (31328) | (5742) | 8712 | 1246 |
| Impairment of long-term investments | (11800) | (10425) | - | - |
| Interest income, net | 2739 | 3211 | 1712 | 245 |
| Other income, net | 7449 | 1609 | 8732 | 1249 |
| Foreign exchange (loss) gain, net | (1887) | 3805 | (1569) | (224) |
| **(Loss) income before income taxes** | **(26496)** | **39280** | **(675369)** | **(96577)** |
| Income tax (expense) benefit | (8480) | (12597) | 80369 | 11493 |
| **Net (loss) income** | **(34976)** | **26683** | **(595000)** | **(85084)** |
| **Less: net loss attributable to noncontrolling interest** | **(4188)** | **(13002)** | **(7911)** | **(1131)** |
| **Net (loss) income attributable to the Company's shareholders** | **(30788)** | **39685** | **(587089)** | **(83953)** |
| **Other comprehensive income (loss):** |  |  |  |  |
| Other comprehensive loss - foreign currency translation adjustment | (105) | (998) | (3494) | (500) |
| **Comprehensive (loss) income** | (35081) | 25685 | (598494) | (85584) |
| **Less: comprehensive loss attributable to non-controlling interests** | (4188) | (13002) | (7305) | (1045) |
| **Comprehensive (loss) income attributable to the Company's shareholders** | (30893) | 38687 | (591189) | (84539) |
| **Weighted average number of shares** |  |  |  |  |
| **Basic** | 40649414 | 41367946 | 41776414 | 41776414 |
| **Diluted** | 40649414 | 41564237 | 41776414 | 41776414 |
| **(Loss) earnings per share** |  |  |  |  |
| **Basic** | (0.76) | 0.96 | (14.05) | (2.01) |
| **Diluted** | (0.76) | 0.95 | (14.05) | (2.01) |

---

The accompanying notes are an integral part of these consolidated financial statements.

**SCIENJOY HOLDING CORPORATION**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

(All amounts in thousands, except share and per share data or otherwise stated)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary shares** | **Ordinary shares** | **Treasury stocks** | **Treasury stocks** | | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares to be**<br>**issued** | **Statutory**<br>**reserves** | **Retained**<br>**earnings** | **Accumulated<br> other<br> comprehensive**<br>**income** | **Non-controlling**<br>**interests** | **Total'**<br>**equity** |
|  | | **RMB** | | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
| **Balance as of January 1, 2023** | 39609726 | 420776 | (794120) | (16482) | 33923 | 39208 | 665099 | 18070 | 1892 | 1162486 |
| Issuance of shares for achievement of earnout target | 995118 | 13106 |  | - | (13106) | - | - | - | - | - |
| Share-based compensation | 434093 | 13637 |  | - | - | - | - | - | - | 13637 |
| Shares to be issued for achievement of earnout target |  | - |  | - | 9960 | - | - | - | - | 9960 |
| Acquisition of SJ Verse Global Media LLC |  | - |  | - | - | - | - | - | (288) | (288) |
| Capital contribution by non-controlling shareholders |  | - |  | - | - | - | - | - | 1751 | 1751 |
| Treasury stocks |  | - | (119725) | (2734) | - | - | - | - | - | (2734) |
| Appropriation to statutory reserves |  | - |  | - | - | 5490 | (5490) | - | - | - |
| Foreign currency translation adjustments |  | - |  | - | - | - | - | (105) | (4) | (109) |
| Net loss | - | - | - | - | - | - | (30788) | - | (4188) | (34976) |
| **Balance as of December 31, 2023** | 41038937 | 447519 | (913845) | (19216) | 30777 | 44698 | 628821 | 17965 | (837) | 1149727 |
| Issuance of shares for achievement of earnout target | 403089 | 9960 |  | - | (9960) | - | - | - | - | - |
| Share-based compensation | 405758 | 10579 |  | - | - | - | - | - | - | 10579 |
| Capital contribution by non-controlling shareholders |  | - |  | - | - | - | - | - | 245 | 245 |
| Treasury stocks |  | - | (134333) | (736) | - | - | - | - | - | (736) |
| Appropriation to statutory reserves |  | - |  | - | - | 6007 | (6007) | - | - | - |
| Foreign currency translation adjustments |  | - |  | - | - | - | - | (998) | (184) | (1182) |
| &nbsp;&nbsp;&nbsp;Net income (loss) | - | - | - | - | - | - | 39685 | - | (13002) | 26683 |
| **Balance as of December 31, 2024** | 41847784 | 468058 | (1048178) | (19952) | 20817 | 50705 | 662499 | 16967 | (13778) | 1185316 |
| Share-based compensation | 614984 | 7504 |  | - | - | - | - | - | - | 7504 |
| Net loss |  |  |  | - | - | - | (587089) | - | (7911) | (595000) |
| Reallocation and appropriation of statutory reserve |  |  |  | - | - | (16614) | 16614 | - | - | - |
| Non-controlling shareholder from acquisitions |  | - |  | - | - | - | - | - | (869) | (869) |
| Foreign currency translation adjustments | - | - | - | - | - | - | - | (4100) | 606 | (3494) |
| **Balance as of December 31, 2025** | 42462768 | 475562 | (1048178) | (19952) | 20817 | 34091 | 92024 | 12867 | (21952) | 593457 |
| **Balance as of December 31, 2025(US$)** | 42462768 | 68005 | (1048178) | (2853) | 2977 | 4875 | 13159 | 1840 | (3139) | 84864 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**SCIENJOY HOLDING CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

(All amounts in thousands, except share and per share data or otherwise stated)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| **Cash flows from operating activities** |  |  |  |  |
| Net (loss) income | (34976) | 26683 | (595000) | (85084) |
| ***Adjustments to reconcile net (loss) income to net cash provided by operating activities*** |  |  |  |  |
| Depreciation of property and equipment | 1237 | 1127 | 1198 | 171 |
| Amortization of intangible assets | 6964 | 6969 | 6455 | 923 |
| Loss from disposal of property and equipment | 5 | 2 | - | - |
| Provision for credit losses | 17865 | 30584 | 127290 | 18202 |
| Deferred tax benefit | (4460) | (1545) | (88214) | (12615) |
| Change in fair value of contingent consideration | 5624 | - | - | - |
| Change in fair value of warrant liabilities | (170) | - | - | - |
| Change in fair value of investment in marketable security | 9023 | (6103) | 29067 | 4157 |
| Impairment for goodwill | - | - | 186170 | 26622 |
| Impairment for intangible assets | - | - | 398835 | 57033 |
| Investments loss (income) | 31328 | 5742 | (8712) | (1246) |
| Impairment of long-term investments | 11800 | 10425 | - | - |
| Share-based compensation | 13637 | 10579 | 7504 | 1073 |
| Amortization of right-of-use assets-operating lease | 7052 | 7312 | 6592 | 943 |
| ***Changes in operating assets and liabilities*** |  |  |  |  |
| Accounts receivable | 54148 | 34335 | 55480 | 7934 |
| Prepaid expense and other current assets | 20284 | 20239 | 6150 | 879 |
| Long term deposits and other assets | 227 | (180) | 125 | 18 |
| Accounts payable | (43065) | (37171) | (19348) | (2767) |
| Deferred revenue | 4203 | (17400) | (29722) | (4250) |
| Accrued salary and employee benefits | 2335 | 7583 | (7330) | (1048) |
| Lease liabilities-operating lease | (7175) | (7974) | (7200) | (1030) |
| Income tax payable | (526) | (1720) | (386) | (55) |
| Accrued expenses and other current liabilities | 7334 | (20771) | 1562 | 223 |
| Net cash provided by operating activities | 102694 | 68716 | 70516 | 10083 |
| **Cash flows from investing activities** |  |  |  |  |
| Cash acquired from acquisitions | 212 | - | 1787 | 256 |
| Payment for acquisition | (3546) | - | (1224) | (175) |
| Proceeds from long term investments | 521 | 444 | 150206 | 21479 |
| Payment for long term investments | (63884) | (19500) | (156000) | (22308) |
| Purchase of property and equipment and intangible assets | (493) | (988) | (837) | (120) |
| Net cash used in investing activities | (67190) | (20044) | (6068) | (868) |
| **Cash flows from financing activities** |  |  |  |  |
| Capital contribution by non-controlling shareholders | 1751 | 245 | - | - |
| Proceeds from (advance to) related parties | 760 | 355 | (100) | (14) |
| Proceeds from bank loan | 5000 | - | - | - |
| Repayment of bank loan | (10000) | - | - | - |
| Share repurchase | (2734) | (736) | - | - |
| Net cash used in financing activities | (5223) | (136) | (100) | (14) |
| Effect of foreign exchange rate changes on cash | (108) | (1461) | (9238) | (1321) |
| Net increase in cash and cash equivalents | 30173 | 47075 | 55110 | 7880 |
| Cash and cash equivalents at beginning of the year | 175292 | 205465 | 252540 | 36113 |
| Cash and cash equivalents at end of the year | 205465 | 252540 | 307650 | 43993 |
| **Supplemental disclosures of cash flow information:** |  |  |  |  |
| Income taxes paid | 13447 | 15842 | 8231 | 1177 |
| **Supplemental non-cash investing and financing information:** |  |  |  |  |
| Issuance of Class A ordinary shares for achievement of earnout target | 13106 | 9960 | - | - |
| Shares to be issued for achievement of earnout target | 9960 | - | - | - |
| Right-of-assets obtained in exchange for operating lease obligations | - | - | 16442 | 2351 |
| Non-controlling interests from acquisitions | (288) | - | (869) | (124) |

---

The accompanying notes are an integral part of these consolidated financial statements.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES**

Scienjoy Holding Corporation (the "Company" or "Scienjoy") through its subsidiaries, and variable interest entities("VIE") and its subsidiaries (collectively the "Group") are principally engaged in operating its own live streaming platforms in the People's Republic of China (the "PRC"), which enable users to view and interact with broadcasters through online chat, virtual items and playing games. The primary theme of the Company's platform is entertainment live streaming.

***(a) Recent developments***

On April 1, 2025, the Company acquired 70% equity interest in Star Home Global Media FZ-LL ("Star Home") for no consideration, Star Home is a Dubai-based multi-channel network (MCN) company.

On April 14, 2025, the Company formed a 51% owned subsidiary Fashionfly Limited, which is engaged in developing multi-channel network business.

On October 1, 2025, the Company acquired 70% equity interest in SH Entertainment Co., Ltd. ("SH Entertainment", details see Note 4), SH Entertainment is a South Korea-based multi-channel network (MCN) company.

***(b) Organization***

 ****

Subsidiaries and VIEs include the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Subsidiaries** | **Date of<br> incorporation** | **Place of<br> incorporation** | **Percentage of<br> direct/indirect<br> ownership** | **Principal<br> activities** |
| Scienjoy Inc. | February 23, 2017 | Cayman Islands | 100% | Holding Company |
| Scienjoy Pte. Ltd. ("Scienjoy SG") | July 25, 2023 | Singapore | 100% | Holding Company |
| Scienjoy International Limited ("Scienjoy HK") | May 18, 2017 | Hong Kong | 100% | Holding Company |
| Scienjoy BeeLive Limited ("SIL") | December 18, 2017 | Hong Kong | 100% | Live streaming platform |
| Golden Shield Enterprises Limited ("Golden Shield") | September 28, 2021 | British Virgin Islands | 100% | Holding Company |
| Scienjoy Verse Tech Ltd. ("Scienjoy Verse") (a 51% owned subsidiary of Scienjoy SG) | September 18, 2023 | Dubai | 51% | Holding Company |
| Scienjoy Meta Technology LLC ("Scienjoy Meta") (a wholly owned subsidiary of Scienjoy Verse) | October 3, 2023 | Dubai | 51% | Metaverse business |
| Scenovo Pte. Ltd. ("Scenovo SG") (a 51% owned subsidiary of Scienjoy SG) | April 11, 2024 | Singapore | 51% | Holding Company |
| SJ Verse Global Media LLC ("SJ Verse") (a 90% owned subsidiary of Scenovo SG) | May 20, 2020 | Dubai | 45.9% | Multi-channel network business |
| Techjoy Pte. Ltd. ("Techjoy SG") (a 70% owned subsidiary of Scenovo SG) | May 31, 2024 | Singapore | 35.7% | Multi-channel network business |
| Fashionfly Limited (a wholly owned subsidiary of Scenovo SG) | April 14, 2025 | Hong Kong | 51% | Multi-channel network business |
| Star Home Global Media FZ-LLC (a 70% owned subsidiary of Scenovo SG) | December 05, 2024 | Dubai | 35.7% | Multi-channel network business |
| SH Entertainment Co., Ltd. ("SH Entertainment") (a 70% owned subsidiary of Scenovo SG) | April 18, 2024 | South Korea | 35.7% | Multi-channel |
| Sixiang Wuxian (Beijing) Technology Co., Ltd. ("WXBJ") (a wholly owned subsidiary of Scienjoy HK) | October 17, 2017 | The PRC | 100% | Holding Company |
| Sixiang Zhihui (Beijing) Technology Co., Ltd. ("ZH") (a wholly owned subsidiary of WXBJ) | July 5, 2018 | The PRC | 100% | Holding Company |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

 ****

***(b) Organization (continued)***

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Subsidiaries** | **Date of<br> incorporation** | **Place of<br> incorporation** | **Percentage of<br> direct/indirect<br> ownership** | **Principal<br> activities** |
| Sixiang Yingyue (Shanghai) Technology Co., Ltd. ("SXYY") (a wholly owned subsidiary of WXBJ) | June 30, 2022 | The PRC | 100% | Information technology |
| Holgus Sixiang Information Technology Co., Ltd. ("Holgus X") (a wholly owned subsidiary of ZH) | May 9, 2017 | The PRC | 100% | Live streaming platform |
| Kashgar Sixiang Times Internet Technology Co., Ltd. ("Kashgar Times") (a wholly owned subsidiary of ZH) (1) | March 2, 2016 | The PRC | 100% | Live streaming platform |
| Kashgar Sixiang Lehong Information Technology Co., Ltd. ("Kashgar Lehong") (a wholly owned subsidiary of ZH) | July 23, 2020 | The PRC | 100% | Information technology |
| Holgus Sixiang Haohan Internet Technology Co., Ltd. ("Holgus H") (a wholly owned subsidiary of ZH) | December 11, 2020 | The PRC | 100% | Information technology |
| Sixiang ZhiHui (Hainan) Technology Co., Ltd. ("ZHHN") (a wholly owned subsidiary of ZH) | December 23, 2020 | The PRC | 100% | Live streaming platform |
| Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd. ("WXZJ") (a wholly owned subsidiary of Scienjoy HK) | April 28, 2022 | The PRC | 100% | Information technology |
| Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd. ("ZHZJ") (a wholly owned subsidiary of WXZJ) | January 4, 2022 | The PRC | 100% | Information technology |
| **VIEs** |  |  |  |  |
| Zhihui Qiyuan (Beijing) Technology Co., Ltd. ("QY") (Controlled through contractual agreements by WXBJ) | January 22, 2019 | The PRC | 100% | Holding Company |
| Beijing Sixiang Shiguang Technology Co., Ltd. ("SG") (a wholly owned subsidiary of QY) | October 28, 2011 | The PRC | 100% | Live streaming platform |
| Hai Xiu (Beijing) Technology Co., Ltd. ("HX") (a wholly owned subsidiary of QY) | April 18, 2016 | The PRC | 100% | Live streaming platform |
| Beijing Le Hai Technology Co., Ltd. ("LH") (a wholly owned subsidiary of QY) | June 16, 2015 | The PRC | 100% | Live streaming platform |
| Sixiang Mifeng (Tianjin) Technology Co., Ltd. ("MF") (a wholly owned subsidiary of QY) | August 8, 2016 | The PRC | 100% | Live streaming platform |
| Changxiang Infinite Technology (Beijing) Co., Ltd. ("CX") (a wholly owned subsidiary of MF) | September 22, 2016 | The PRC | 100% | Live streaming platform |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

 ****

***(b) Organization (continued)***

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Subsidiaries** | **Date of<br> incorporation** | **Place of<br> incorporation** | **Percentage of<br> direct/indirect<br> ownership** | **Principal<br> activities** |
| Zhihui QiYuan (Hainan) Investment Co., Ltd. ("QYHN") (an 80% owned subsidiary of QY and a 20% owned subsidiary of MF) (2) | March 2, 2021 | The PRC | 100% | Live streaming platform |
| Huayu Hefeng (Qingdao) Technology Co., Ltd. ("HYHF") (a wholly owned subsidiary of SG) (3) | September 29, 2021 | The PRC | 100% | Live streaming platform |
| Beijing Weiliantong Technology Co., Ltd. ("WLT") (a wholly owned subsidiary of QY) | July 28, 2015 | The PRC | 100% | Live streaming platform |
| Chuangda Zhihui (Beijing) Technology Co., Ltd. ("CDZH") (a wholly owned subsidiary of SG) | November 30, 2015 | The PRC | 100% | Live streaming platform |
| Beijing Huayi Dongchen Technology Co., Ltd. ("HYDC") (a wholly owned subsidiary of CDZH) | February 6, 2015 | The PRC | 100% | Live streaming platform |
| Hongcheng Huiying (Zhejiang)Technology Industry Development Co., Ltd. ("HCHY") (a 51% owned subsidiary of QYHN) | February 15, 2022 | The PRC | 51% | Live streaming platform |
| Hangzhou Sixiang Fengjing Culture Technology Co., Ltd. ("SXFJ") (a 51% owned subsidiary of QYHN) | May 30, 2024 | The PRC | 51% | Holding Company |
| Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. ("QYHZ") (Controlled through contractual agreements by WXZJ) | March 30, 2022 | The PRC | 100% | Holding Company |
| Xiuli (Zhejiang) Culture Technology Co., Ltd. ("XLZJ") (a wholly owned subsidiary of QYHZ) | April 7, 2022 | The PRC | 100% | Live streaming platform |
| Leku (Zhejiang) Culture Technology Co., Ltd. ("LKZJ") (a wholly owned subsidiary of QYHZ) | April 7, 2022 | The PRC | 100% | Live streaming platform |
| Haifan (Zhejiang) Culture Technology Co., Ltd. ("HFZJ") (a wholly owned subsidiary of QYHZ) | April 7, 2022 | The PRC | 100% | Live streaming platform |
| Xiangfeng (Zhejiang) Culture Technology Co., Ltd. ("XFZJ") (a wholly owned subsidiary of QYHZ) | April 7, 2022 | The PRC | 100% | Live streaming platform |
| Hongren (Zhejiang) Culture Technology Co., Ltd. ("HRZJ") (a wholly owned subsidiary of QYHZ) | April 7, 2022 | The PRC | 100% | Live streaming platform |

---

(1) Kashgar Times was deregistered on March 17, 2026.

(2) On March 1, 2025, MF acquired a 20% equity interest in QYHN from QY by contributing RMB5,000 in registered capital to QYHN.

(3) HYHF was deregistered on July 7, 2025.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

 ****

***(b) Organization (continued)***

On January 29, 2019, the Company completed its reorganization of entities under the common control of the founders. Scienjoy, Scienjoy HK, WXBJ and ZH were established as holding Companies. WXBJ holds 100% of equity interests of ZH which holds 100% of equity interest in Kashgar Times and Holgus X. WXBJ is the primary beneficiary of QY which holds 100% equity interest in SG, HX and LH (collectively "QY VIEs"). All of these entities included in the Company are under common control, which results in the consolidation of QY and ZH which have been accounted for as a reorganization of entities under common control at carry value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of the Company.

***Contracts between the Company and the QY VIEs***

Foreign ownership of Internet-based businesses, including distribution of online information (such as game content provider), is subject to restrictions under current PRC laws, regulations, and other applicable laws and regulations. The Company is a Cayman Island company and WXBJ and WXZJ (its PRC subsidiaries) are considered foreign invested enterprises. To comply with these regulations, the Company operates the live streaming platforms through SG, HX and LH in PRC (its consolidated VIE). As such, QY is controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Such contractual arrangements consist of a series of three agreements and a shareholder power of attorney (collectively the "Contractual Arrangements", which were signed on January 29, 2019).

The following is a summary of the various VIE agreements:

*Exclusive Option Agreements*

Pursuant to the exclusive option agreement (including its amendment or supplementary agreements, if any, the "Exclusive Option Agreement") amongst WXBJ, QY and the nominee shareholders who collectively owned all of QY, the nominee shareholders irrevocably granted WXBJ or its designated party, an exclusive option to purchase all or part of the equity interests held by the nominee shareholders in QY, when and to the extent permitted under PRC law, at an amount equal to the lowest permissible purchase price as set by PRC law. QY cannot declare any profit distributions, or create any encumbrances in any form without the prior written consent of WXBJ. The nominee shareholders must remit in full any funds received from QY to WXBJ, in the event any distributions are made by the VIE pursuant to any written consents of WXBJ.

The Exclusive Option Agreement shall remain effective for twenty (20) years and shall be automatically extended for an additional period of one (1) year. The additional period automatically enters the renewal extension of one (1) year at the end of each extended additional period. WXBJ has the right to terminate this agreement at any time after giving a thirty (30) days' prior termination notice.

*Exclusive Business Cooperation Agreements*

Pursuant to the exclusive business cooperation agreement (including its amendment or supplementary agreements, if any, the "Exclusive Business Cooperation Agreement") between WXBJ and the VIE, WXBJ is to provide exclusive business support, technical and consulting services related to all technologies needed for its business in return for fees that equals to all of the consolidated net income after offsetting previous year's loss (if any) of SG, HX and LH.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

***(b) Organization (continued)***

The service fees may be adjusted by WXBJ based on the following factors:

● complexity and difficulty of the services pursuant to the business cooperation agreement to the VIE during the month (the "Monthly Services")

● the number of WXBJ's employees who provided the Monthly Services and the qualifications of the employees;

● the number of hours WXBJ's employees spent to provide the Monthly Services;

● nature and value of the Monthly Services;

● market reference price; and

● the VIE' operating conditions for the month.

The term of the Exclusive Business Cooperation Agreement is twenty (20) years and shall be automatically extended for an additional period of one (1) year. The additional period automatically enters the renewal extension of one (1) year at the end of each extended additional period. Besides, WXBJ has the right to terminate this agreement at any time after giving a thirty (30) days' prior termination notice.

*Power of Attorney Agreements*

The nominee shareholders entered into the power of attorney agreement (including its amendment or supplementary agreements, if any, the "Power of Attorney Agreement") whereby they granted an irrevocable proxy of the voting rights underlying their respective equity interests in the VIE to WXBJ, which includes, but are not limited to, all the shareholders' rights and voting rights empowered to the nominee shareholders by the PRC company law and the VIE's Article of Association. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each shareholder remains as a shareholder of QY.

*Share Pledge Agreements*

Pursuant to the share pledge agreement (including its amendment or supplementary agreements, if any, the "Share Pledge Agreement") between WXBJ, QY and the nominee shareholders, the nominee shareholders have pledged all their equity interests in the VIE to guarantee the performance of the VIE' obligations under the Exclusive Option Agreement, Exclusive Business Cooperation Agreement and Power of Attorney Agreement.

If the VIE breaches their respective contractual obligations under those agreements, WXBJ, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The nominee shareholders agreed not to transfer, sell, pledge, dispose of or otherwise create any new encumbrance on their equity interests in the VIE without the prior written consent of WXBJ. The Share Pledge Agreement shall be continuously valid until all the its obligations under the VIE Agreements have been fulfilled, or the VIE Agreements are terminated, or the secured debts has been fully executed.

Based on the foregoing contractual arrangements, which grant WXBJ effective control of QY and its subsidiaries and obligate WXBJ to absorb all of the risk of loss from their activities and enable WXBJ to receive all of their expected residual returns, the Company accounts for QY as a VIE. Accordingly, the Company consolidates the accounts of QY for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission ("SEC") and Accounting Standards Codification ("ASC") 810-10, Consolidation.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

***(b) Organization (continued)***

***Contractual Arrangements among WXZJ, QYHZ, and the Shareholders of QYHZ.***

On June 1, 2022, the Company through its wholly-owned subsidiary, Sixiang Infinite (Zhejiang) Culture Technology Co., Ltd. (WXZJ), entered into a series of contractual arrangements with QYHZ (Hangzhou) Culture Technology Co., Ltd. ("QYHZ") and its shareholders, thereby in substance obtained control over all equity shares, risks and economic benefits of Xiuli (Zhejiang) Culture Technology Co., Ltd., Leku (Zhejiang) Culture Technology Co., Ltd., Haifan (Zhejiang) Culture Technology Co., Ltd., Xiangfeng (Zhejiang) Culture Technology Co., Ltd. and Hongren (Zhejiang) Culture Technology Co., Ltd. The Company will commence its operations in Hangzhou after effecting the agreements under such contractual arrangements (the "VIE Agreements") as described below. The Company intends to integrate its supply chain resources, local resources, and geographical advantages to achieve rapid growth in livestreaming commerce, Multi-Channel Network development, and new technology development, as well as accelerating the development of a Metaverse eco-system.

Materials terms and conditions of the VIE Agreements, including an Exclusive Option Agreement, the Power of Attorney Agreement, a Share Pledge Agreement and an Exclusive Business Cooperation Agreement, are described as follows:

Exclusive Option Agreement.

Pursuant to the Exclusive Option Agreement (including any supplementary agreement thereto, if any) entered into by and among WXZJ, QYHZ and all the shareholders of QYHZ, the shareholders of QYHZ hereby irrevocably grant to WXZJ or its designee, to the extent permitted by the laws of the People's Republic of China, the exclusive right to purchase all or part of the equity interest held by such shareholders at the lowest purchase price permitted by the laws of the People's Republic of China. Without the written consent of WXZJ, QYHZ may not distribute any profits or create any encumbrance in any manner. If QYHZ makes the profit distribution with WXZJ's written consent, QYHZ's shareholders shall pay all of any funds received by them to WXZJ.

The term of the Exclusive Option Agreement is twenty years and will be automatically renewed for one year. Upon the expiration of each renewed term, the Exclusive Option Agreement will be automatically renewed for one year. In the meantime, WXZJ shall have the right to terminate the Exclusive Option Agreement at any time by giving a three days' prior notice.

Power of Attorney Agreements.

WXZJ has entered into a Power of Attorney Agreement (the "Power of Attorney," including any supplementary agreements, if any) with each shareholder of QYHZ, pursuant to which each such shareholder grants the proxy rights to Zhejiang WFOE in connection with his equity interest in QYHZ, including, without limitation, all the shareholders' beneficial rights and voting rights conferred by the Company Law of the People's Republic of China and the Articles of Association of QYHZ. Each Power of Attorney Agreement shall be irrevocable from the date of execution and shall continue to be valid until the relevant shareholder no longer holds QYHZ's equity interest.

Share Pledge Agreement.

In accordance with the Share Pledge Contract (including any supplementary agreement thereto, if any) entered into by and among Zhejiang WFOE, QYHZ and each of the shareholders of QYHZ, each shareholder of QYHZ has pledged all of QYHZ's equity interest held by such shareholder to guarantee the respective performance of QYHZ and such shareholder under the Exclusive Option Contract, the Exclusive Business Cooperation Agreement and the Power of Attorney Agreement, as applicable.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

***(b) Organization (continued)***

If QYHZ or any of its shareholders breaches its contractual obligations under any VIE Agreements, Zhejiang WFOE, as the pledgee, will have certain rights, including the sale of the pledged equity interest. The shareholders agree that, without the prior written consent of Zhejiang WFOE, they shall not transfer, sell, pledge, dispose of or in any other manner create any new encumbrance upon their equity interest in QYHZ. The Share Pledge Agreement shall remain effective until all obligations under the VIE Agreements have been performed, or the VIE Agreements have been terminated, or all obligations under the VIE Agreements have been fully performed.

Exclusive Business Cooperation Agreement

In accordance with the Exclusive Business Cooperation Agreement between WXZJ and QYHZ (including supplementary agreements thereto, if any), WXZJ will provide QYHZ with exclusive business support and all business-related technologies and consulting services in order to obtain the fees equal to the consolidated net income of Xiuli (Zhejiang) Culture Tech Co., Ltd., Leku (Zhejiang) Culture Tech Co., Ltd., Haifan (Zhejiang) Culture Tech Co., Ltd., Xiangfeng (Zhejiang) Culture Tech Co., Ltd. and Hongren (Zhejiang) Culture Tech Co., Ltd. after deducting losses of the previous year (if any). WXZJ may adjust the service fees according to the following factors:

● Quarterly based on the complexity and difficulty of the services provided pursuant to the Exclusive Business Cooperation Agreement during such quarter ("Quarterly Services"); the number of WXZJ's employees who provided the Quarterly Services and the qualifications of these employees;

● The number of hours Zhejiang WFOE's employees spent to provide the Quarterly Services;

● The nature and value of the Quarterly Services;

● market reference price; and

● QYHZ's operating conditions.

The term of the Exclusive Business Cooperation Agreement is twenty years and is automatically renewable for one year. Upon the expiration of each renewal term, the Exclusive Business Cooperation Agreement can be automatically renewed for one year. In addition, WXZJ shall have the right to terminate this agreement at any time by giving a three-day notice on the termination of this Agreement.

Based on the foregoing contractual arrangements, which grant WXZJ effective control of QYHZ and its subsidiaries and obligate WXZJ to absorb all of the risk of loss from their activities and enable WXZJ to receive all of their expected residual returns, the Company accounts for QYHZ as a VIE. Accordingly, the Company consolidates the accounts of QYHZ for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission ("SEC") and Accounting Standards Codification ("ASC") 810-10, Consolidation.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

***(b) Organization (continued)***

The following tables represent the financial information of the consolidated VIE and its subsidiaries as of December 31, 2024 and 2025 before eliminating the intercompany balances and transactions between the VIE and other entities within the Company:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| **ASSETS** |  |  |  |
| **Current assets** |  |  |  |
| Cash and cash equivalents | 196421 | 85216 | 12186 |
| Accounts receivable, net | 195202 | 44344 | 6341 |
| Prepaid expenses and other current assets | 7359 | 6192 | 885 |
| Due from a related party | - | 100 | 14 |
| Amounts due from inter-companies<sup>(1)</sup> | 181317 | 23819 | 3406 |
| **Total current assets** | **580299** | **159671** | **22832** |
| **Non-current assets** |  |  |  |
| Property and equipment, net | 1157 | 1129 | 161 |
| Intangible assets, net | 405084 | - | - |
| Goodwill | 172781 | - | - |
| Deferred tax assets | 6716 | 31562 | 4513 |
| Long term deposits and other assets | 686 | 635 | 91 |
| Long term investments | 241227 | 256158 | 36630 |
| Right of use assets-operating lease | 4845 | 14695 | 2101 |
| **Total non-current assets** | **832496** | **304179** | **43496** |
| **TOTAL ASSETS** | **1412795** | **463850** | **66328** |
| **LIABILITIES** |  |  |  |
| **Current liabilities** |  |  |  |
| Accounts payable | 34300 | 19429 | 2776 |
| Deferred revenue | 61891 | 44854 | 6414 |
| Accrued salary and employee benefits | 15345 | 11237 | 1607 |
| Income tax payable | 11285 | 10899 | 1559 |
| Lease liability-operating lease - current | 4098 | 3641 | 521 |
| Accrued expenses and other current liabilities | 14621 | 18058 | 2582 |
| Amounts due to inter-companies<sup>(1)</sup> | 417184 | 192623 | 27545 |
| **Total current liabilities** | **558724** | **300741** | **43004** |
| **Non-current liabilities** |  |  |  |
| Deferred tax liabilities | 58400 | - | - |
| Lease liabilities-operating lease - non-current | 700 | 10399 | 1487 |
| **Total non-current liabilities** | 59100 | 10399 | 1487 |
| **TOTAL LIABILITIES** | **617824** | **311140** | **44491** |

---

(1) Amount due from/to inter-companies consist of intercompany receivables/payables to other entities within the Group.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)**

***(b) Organization (continued)***

All revenue-producing assets recognized by the Company, including trademarks, patents, copyrights and software, are held by the VIEs, please refer to Note 8. There are no unrecognized revenue-producing assets.

Summarized below is the information related to the financial performance of the VIEs reported in the Company's consolidated statements of income for the years ended December 31, 2023, 2024 and 2025, respectively:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| **Net revenues** | **1215582** | **1281734** | **1013948** | **144993** |
| Third party customers | 1215582 | 1276090 | 1013948 | 144993 |
| Inter-companies | - | 5644 | - | - |
| **Net income (loss)** | **(14991)** | **71271** | **(642262)** | **(91842)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Net cash provided by operating activities | 42562 | 100323 | (104573) | (14954) |
| Net cash used in investing activities | (42554) | (19440) | (6532) | (934) |
| Net cash (used in) provided by financing activities | 836 | 216 | (100) | (14) |

---

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***(a) Basis of presentation and principles of consolidation***

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and pursuant to the rules and regulation of the Securities and Exchange Commission (the "SEC")

The consolidated financial statements include the financial statements of the Company and its subsidiaries, and its VIE and VIE's subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE are eliminated upon consolidation.

***(b) Business combinations***

The Company accounts for all business combinations under 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 net assets including separately identifiable assets and liabilities the Company acquired, based on their estimated fair value. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all 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 any non-controlling interests. The excess of (i) the total of the cost of the acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously 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 of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings. The determination and allocation of fair values to the identifiable net assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable judgment from management. Although the Company believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(c) Use of estimates***

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to those applied in the Company's forecasted results of operations and cash flows, which are used in the determination of fair value for goodwill and indefinite-lived intangible asset impairment testing; revenue recognition, estimating the useful lives of long-lived assets and intangible assets, valuation assumptions in performing asset impairment tests of long-lived assets, allowance for credit losses, and impairment of long-term investments.

***(d) Foreign currency***

The functional currency of the Company is in US dollars and the functional currency of the Company's subsidiaries and VIEs are local currencies, as determined based on the criteria of Accounting Standards Codification ("ASC") 830 ("ASC 830") "Foreign Currency Matters". The reporting currency of the Company is Renminbi ("RMB").

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange in place at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of operations.

Assets and liabilities of the Company translated from their respective functional currencies to the reporting currency at the exchange rates at the balance sheet dates, equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period. The resulting foreign currency translation adjustment are recorded in other comprehensive income (loss).

***(e) Convenience translation***

Translations of balances in the consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows from RMB into USD (or "US$") as of and for the year ended December 31, 2025 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.9931, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on the last trading day of December 31, 2025. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate.

***(f) Cash and cash equivalents***

Cash and cash equivalents consist of cash on hand and demand deposits placed with banks which are unrestricted as to withdrawal or use and have original maturities less than three months. All highly liquid investments with a stated maturity of 90 days or less from the date of purchase are classified as cash equivalents.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

 ****

***(g) Accounts receivable and allowance for credit losses***

Accounts receivable is stated at the historical carrying amount net of allowance for credit losses.

The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. The Company performs ongoing credit evaluations of the debtors, and assesses allowance for credit loss on a portfolio basis. When specific debtors are identified as no longer sharing the same risk profile as the current pool, they are removed from the pool and evaluated separately. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable.

***(h) Investment in marketable security***

Marketable securities consist of investments in equity securities with readily determinable fair values. Marketable equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities, in accordance with ASC 320. The Company accounts for investments in marketable equity securities with readily determinable fair values in accordance with ASC Topic 321, Investments - Equity Securities ("ASC 321"). These investments are measured at fair value with the related gains and losses, including unrealized, recognized in investment income (loss).

***(i) Property and equipment***

Property and equipment are stated at cost, net of accumulated depreciation using the straight-line method over their estimated useful lives, once the asset is placed in service.

The estimated useful lives are as follows:

Computer and transmission equipment 3 years <br> Furniture, fixtures and office equipment 5 years

Repair and maintenance costs are charged to expense when incurred, whereas the cost of betterments that extend the useful life of property and equipment are capitalized as additions to the related assets. Retirement, sale and disposals of assets are recorded by removing the cost and related accumulated depreciation with any resulting gain or loss reflected in the consolidated statements of income. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

 ****

***(j) Intangible assets***

Intangible assets are carried at cost less accumulated amortization and any impairment. Certain licenses for platforms are determined to have an infinite useful life and are not subject to amortization and tested for impairment at least annually. Intangible assets with a finite useful life are amortized using the straight-line method over the estimated economic life of the intangible assets as follows:

---

| | |
|:---|:---|
| Trademark | 10 years |
| Patent | 10 years |
| Copyright | 10 years |
| Software | 3 to 10 years |
| Licenses acquired | 3 years |

---

 ****

***(k) Goodwill***

Goodwill represents the excess of cost over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is not subject to amortization but is monitored annually for impairment or more frequently if there are indicators of impairment. Management considers the following potential indicators of impairment: significant underperformance relative to historical or projected future operating results, significant changes in the Company's use of acquired assets or the strategy of the Company's overall business, significant negative industry or economic trends and a significant decline in the Company's stock price for a sustained period. The Company performs its impairment test on annual basis. Currently, the Company's goodwill is evaluated at the entity level as it has been determined there is one operating segment comprised of one reporting unit. When assessing goodwill for impairment the Company first performs a qualitative assessment to determine whether it is necessary to perform a quantitative analysis. If the Company determines it is unlikely that the reporting unit fair value is less than its carrying value then no quantitative assessment is performed. If the Company cannot determine that it is likely that the reporting unit fair value is more than its carrying value, then the Company performs a quantitative assessment. For the years ended December 31, 2023 and 2024, the Company performed the impairment test and determined that the fair value of goodwill was more than carrying value, therefore the Company did not recognize any impairment loss on goodwill.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***<u>Impairment test in 2025</u>***

 ****

During the fourth quarter of 2025, as part of management's assessment of it operating plan, the Company updated its internal forecasts to consider the year-to-date operating performance, current operating data and revised expectations based on actuals, current paying user trend, revisions to the timing of the expected effects of the Company's strategic initiatives and overall related risks, including macroeconomic factors, to achieving our forecasts. As a part of its annual impairment assessment, the Company assessed its internal forecast along with several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting unit, including the significance of the amount, if any, of excess carrying value over fair value, consistency of the Company's current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of the Company's strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to our risk-adjusted discount rates and earnings quality and sustainability. After considering all available evidence in the evaluation of goodwill impairment indicators including but not limited to regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025, the Company determined it appropriate to perform the quantitative assessment of the Company as of December 31, 2025.

The quantitative impairment test involves the use of significant estimates and assumptions to evaluate the impact of operational and economic changes on each reporting unit. The Company estimate the fair value using the income valuation approach with assistance of third-party valuation firm. The income approach applies a fair value methodology to the single reporting unit based on discounted cash flows. This analysis requires significant estimates and judgments, including (i) the estimation of future revenue, projected gross profit margins, projected operating costs, projected operating income margins, and projected capital expenditures, which are dependent on internal cash flow forecasts; and (ii) determination of the risk-adjusted discount rates. The weighted average cost of capital used in the Company's impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and was estimated at 27% and management's forecasted revenue growth rate was nil. As a result of goodwill impairment test, the Group recorded a full impairment of RMB186,170 (US$26,622) on goodwill for the year ended December 31, 2025. The Company bases fair value estimates on assumptions the Company believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

 ****

***(l) Impairment of long-lived assets***

The Company evaluates its long-lived assets or asset group, including property and equipment, operating lease assets and intangible assets including license that has an infinite useful life, for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset or a group of long-lived assets may not be recoverable. When these events occur, the Company evaluates for impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the excess of the carrying amount of the asset group over its fair value. Recoverability of assets is measured at the asset group level. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available for the long-lived assets. No impairment of long-lived assets was recognized for the years ended December 31, 2023 and 2024.

During annual impairment test performed in the fourth quarter of 2025, the Company identified several triggering events indicating that the carrying value of its intangible assets may exceed their fair value. These indicators included regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025. The Company performed a quantitative assessment as of December 31, 2025, using an income approach. The income approach utilized a discounted cash flow model based on the assumptions including management's best estimates of the expected future cash flows, risk-adjusted discount rate, and the estimated useful life of the asset group with assistance of a third-party valuation firm. Based on this analysis, the Company determined that the carrying values of its intangible assets were no longer recoverable. As a result of the fair value test, the Group recorded a full impairment of RMB398,835(US$57,033) on intangible assets for the year ended December 31, 2025.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

 ****

***(m) Long term investment***

ASU 2016-01 ("ASU 2016-01"), Recognition and Measurement of Financial Assets and Financial Liabilities amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The main provisions require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value through earnings, unless they qualify for a measurement alternative.

*Equity Investments with readily determinable fair values*

Equity investments with readily determinable fair values are measured and recorded at fair value using the market approach based on the quoted prices in active markets at the reporting date.

*Equity investments without readily determinable fair values*

After the adoption of this new accounting standard, the Company elected to record equity investments without readily determinable fair values and not accounted for under the equity method at cost, less impairment, adjusted for subsequent observable price changes on a nonrecurring basis, and report changes in the carrying value of the equity investment in current earnings. Changes in the carrying value of the equity investment are required to be made whenever there are observable price changes in orderly transactions for the identical or similar investment of the same issuer. Reasonable efforts shall be made to identify price changes that are known or that can reasonably be known.

*Equity investments accounted for using the equity method*

The Company accounts for its equity investment over which it has significant influence but does not own a majority equity interest or otherwise control, using the equity method. The Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings or loss of the investee after the date of investment. The Company assesses its equity investment for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, operating performance of the entity, including current earnings trends and undiscounted cash flows, and other entity-specific information. The fair value determination, particularly for investments in a privately held entity, requires judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investment and determination of whether any identified impairment is other-than-temporary.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(n) Fair value of financial instruments***

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses and other current assets, accounts payables, balances with related parties and other current liabilities, approximate their fair values because of the short-term maturity of these instruments.

***Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis***

The following tables represent the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** |
|  | **Quoted<br> price in<br> active<br> markets <br> for identical<br> assets <br> Level 1** | **Significant<br> other<br> observable<br> inputs <br> Level 2** | **Significant<br> unobservable<br> inputs <br> Level 3** | **Total** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
| **Financial assets:** |  | | | |
| Investment in marketable equity security | 37629 |  |  | 37629 |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** |
|  | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** |
|  | **Quoted<br> price in<br> active<br> markets <br> for identical<br> assets <br> Level 1** | **Significant<br> other<br> observable<br> inputs <br> Level 2** | **Significant<br> unobservable<br> inputs <br> Level 3** | **Total** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
| **Financial assets:** | | | | |
| Investment in marketable equity security | 8561 |  |  | 8561 |

---

***Assets measured at fair value on a nonrecurring basis***

In addition to assets that are recorded at fair value on a recurring basis, the impairment tests may subject our reporting unit with goodwill and other intangible assets to nonrecurring fair value measurement.

For the 2025 goodwill impairment test during the last quarter of year ended December 31, 2025, the fair value of the reporting unit was estimated using the income approach. The various inputs to these fair value models are considered Level 3. As a result of the test, goodwill with a carrying value of RMB186,170 was fully impaired and the related impairment charge was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2025.

For the 2025 intangible asset impairment test performed during the last quarter of the year ended December 31, 2025, the fair values was estimated utilizing the income approach. The various inputs to this fair value model are considered Level 3. As a result of the test, intangible assets with a carrying value of RMB398,835 was fully impaired and the related impairment charge was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2025.

For the years ended December 31, 2024 and 2023, there were no goodwill or intangible asset impairment charges recorded.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(o) Revenue recognition***

The Company applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. Revenues are recognized when control of the promised virtual items or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those virtual items or services. Revenue is recorded, net of sales related taxes and surcharges.

*Live streaming*

The Company is principally engaged in operating its own live streaming platforms, which enable broadcasters and viewers to interact with each other during live streaming. The Company is responsible for providing a technological infrastructure to enable the broadcasters, online users and viewers to interact through live streaming platforms. All the platforms can be accessed for free. The Company mainly derives the revenue from sales of virtual items in the platforms. The Company has a recharge system for users to purchase the Company's virtual currency then purchase virtual items for use. Users can recharge via various online third-party payment platforms, including WeChat Pay, AliPay and other payment platforms. Virtual currency is non-refundable and often consumed soon after it is purchased.

The Company designs, creates and offers various virtual items for sales to users with pre-determined stand-alone selling price. Virtual items are categorized as consumable and time-based items. Consumable items are consumed upon purchase and use while time-based items could be used for a fixed period of time. Users can purchase and present consumable items to broadcasters to show support for their favorite broadcasters, or purchase time-based virtual items for one or multiple months for a monthly fee, which provide users with recognized status, such as priority speaking rights or special symbols over a period of time.

The Company shares a portion of the sales proceeds of virtual items ("revenue sharing fee") with broadcasters and talent agencies in accordance with their revenue sharing arrangements. Broadcasters, who do not have revenue sharing arrangements with the Company, are not entitled to any revenue sharing fee. The Company also utilizes third-party payment collection channels, which charges the payment handling cost for users to purchase the virtual currency directly from it. The payment handling costs are recorded in cost of sales.

The Company evaluates and determines that it is the principal and views users to be its customers, because the Company controls the virtual items before they are transferred to users. Its control is evidenced by the Company's sole ability to monetize the virtual items before they are transferred to users, and is further supported by the Company being primarily responsible to the users for the delivery of the virtual items as well as having full discretion in establishing pricing for the virtual items. Accordingly, the Company reports live streaming revenues on a gross basis with the amounts billed to users recorded as revenues and revenue sharing fee paid to broadcasters and related agencies recorded as cost of revenues.

Sales proceeds are initially recorded as deferred revenue and recognized as revenue based on the consumption of the virtual items. The Company has determined that each individual virtual item represents a distinct performance obligation. Accordingly, live streaming revenue is recognized immediately when the consumable virtual item is used, or in the case of time-based virtual items, revenue is recognized over the fixed period on a straight-line basis. The Company does not have further obligations to the user after the virtual items are consumed. The Company's live streaming virtual items are generally sold without right of return and the Company does not provide any other credit and incentive to its users. Unconsumed virtual currency is recorded as deferred revenue.

The Company also cooperates with independent third-party distributors to sell virtual currency through annual distribution agreements with these distributors. Third-party distributors purchase virtual currency from the Company with no refund provision according to the annual distribution agreements, and they are responsible for selling the virtual currency to end users. They may engage their own sales representatives, which are referred to as "sales agents" to directly sell to individual end users. The Company has no control over such "sales agents". The Company has discretion to determine the price of the virtual currency sold to its third-party distributors, but has no discretion as to the price at which virtual currency is sold by its third-party distributors to the sales agents.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(o) Revenue recognition (continued)***

 

*Technical services and others*

The Company generated technical and other revenues from providing multi-channel network ("MCN") agency service, technical development, advisory and others, which accounts for only approximately 3% or less of revenue for the years ended December 31, 2023, 2024 and 2025. As the amount was immaterial, and short-term in nature, which is usually less than six months, the Company recognizes revenue when service is rendered and accepted by customers.

*Practical expedients and exemptions*

The Company's contracts have an original duration of one year or less. Accordingly, the Company does not disclose the value of unsatisfied performance obligations.

*Revenue by types and platforms*

The following table sets forth types of our revenue for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Live streaming - consumable virtual items revenue | 1420258 | 1317601 | 1187033 | 169743 |
| Live streaming - time based virtual item revenue | 25004 | 24935 | 16951 | 2424 |
| Technical services and others | 19609 | 20848 | 37637 | 5382 |
| **Total revenue** | **1464871** | **1363384** | **1241621** | **177549** |

---

As of December 31, 2025, the Company operated five brands of live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming (including BeeLive Chinese version – Mifeng) and Hongle Live Streaming. The following table sets forth our revenue by platforms for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Showself | 334186 | 330271 | 319672 | 45712 |
| Lehai | 263517 | 330279 | 288809 | 41299 |
| Haixiu | 245049 | 271809 | 214460 | 30667 |
| Beelive | 304730 | 212035 | 214066 | 30611 |
| Hongle | 297780 | 198142 | 166977 | 23878 |
| Technical services and others | 19609 | 20848 | 37637 | 5382 |
| **TOTAL** | **1464871** | **1363384** | **1241621** | **177549** |

---

*Contract balances*

Contract balances include accounts receivable and deferred revenue. Accounts receivable primarily represent cash due from distributors and are recorded when the right to consideration is unconditional. The allowance for credit losses reflects the best estimate of probable losses inherent to the account receivable balance. Deferred revenue primarily includes unconsumed virtual currency and unamortized revenue from time-based virtual items in the Company's platforms, where there is still an obligation to be provided by the Company, which will be recognized as revenue when all of the revenue recognition criteria are met. Due to the generally short-term duration of the relevant contracts, all performance obligations are satisfied within one year.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

 ****

***(p) Government subsidies***

Government subsidies are primarily referred to the amounts received from various levels of local governments from time to time which are granted for general corporate purposes and to support its ongoing operations in the region. The grants are determined at the discretion of the relevant government authority and there are no restrictions on their use. The government subsidies amounted to RMB6,853, RMB1,588, RMB8,446 (US$1,208) for the years ended December 31, 2023, 2024 and 2025 are recorded as other income.

***(q) Cost of revenues***

Amounts recorded as cost of revenue relate to direct expenses incurred in order to generate revenue. Such costs are recorded as incurred. Cost of revenues consists primarily of (i) revenue sharing fees and content costs, including payments to various broadcasters, and content providers, (ii) bandwidth costs, (iii) salaries and welfare, (iv) depreciation and amortization expense for servers and other equipment, and intangibles directly related to operating the platform, (v) user acquisition costs (vi) payment handling costs, and (vii) other costs.

***(r) Research and development expenses***

Research and development expenses primarily consist of (1) salaries and benefits expenses incurred for research and development personnel, and (2) rental, general expenses and depreciation expenses associated with the research and development activities. Expenditures incurred during the research phase are expensed as incurred and no research and development expenses were capitalized for the years December 31, 2023, 2024 and 2025.

***(s) Sales and marketing expenses***

Sales and marketing expenses consist primarily of advertising and market promotion expenses. The advertising and market promotion expenses amounted to RMB1,350, RMB6,916 and RMB6,163 (US$881) for the years ended December 31, 2023, 2024 and 2025, respectively.

***(t) Employee benefits***

The full-time employees of the Company's PRC subsidiaries are entitled to staff welfare benefits including medical care, housing fund, unemployment insurance, injury insurance and pension benefits, which are government mandated defined contribution plans. These entities are required to accrue for these benefits based on certain percentages of the employees' respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. The total amounts for such employee benefits were RMB18,181, RMB20,060 and RMB21,358 (US$3,054) for the years ended December 31, 2023, 2024 and 2025, respectively.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(u) Leases***

The Company has lease contracts office space under operating leases. The Company determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at lease commencement. The Company measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Company estimates its incremental borrowing rate based on an analysis of weighted average interest rate of its own bank loans. The Company measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense when the lessor makes the underlying asset available to the Company.

For leases with lease term less than one year (short-term leases), the Company records operating lease expense in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred.

***(v) Income taxes***

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The Company follows the liability method in accounting for income taxes in accordance to ASC topic 740 ("ASC 740"), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. A valuation allowance would be recorded against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.

The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive loss. The Company did not recognize any interest and penalties associated with uncertain tax positions as of December 31, 2024 and 2025. As of December 31, 2024 and 2025 the Company did not have any significant unrecognized uncertain tax positions.

***(w) Value added tax ("VAT")***

Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company's subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(x) Statutory reserves***

The Company's PRC entities are required to make appropriations to certain non-distributable reserve funds.

In accordance with the laws applicable to China's Foreign Investment Enterprises, the Company's subsidiaries registered as WFOEs have to make appropriations from its after-tax profit (as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People's Republic of China ("PRC GAAP") to reserve funds including general reserve fund and staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the Company. Appropriation to the staff bonus and welfare fund is at the Company's discretion.

In addition, in accordance with the Company Laws of the PRC, the Company's entities registered as PRC domestic companies must take appropriations from its after-tax profit as determined under the PRC GAAP to non-distributable reserve funds including a statutory surplus fund and a discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of after-tax profits as determined under the PRC GAAP. Appropriation is not required if the surplus fund has reached 50% of the registered capital of the Company. Appropriation to the discretionary surplus fund is made at the discretion of the Company.

The use of the general reserve fund, statutory surplus fund and discretionary surplus fund are restricted to the off-setting of losses or increasing capital of the respective company. The staff bonus and welfare fund is liability in nature and is restricted to fund payments of special bonus to staff and for the collective welfare of employees. All these reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor can they be distributed except under liquidation.

***(y) Earnings (loss) per share***

The Company uses the two-class method to calculate basic and diluted earnings (loss) per share ("EPS") in accordance with ASC 260, "Earnings per Share". Under the two-class method, earnings of the Company are allocated between ordinary stockholders and these participating securities based on the weighted-average number of shares of ordinary shares and participating securities outstanding during the relevant period. Class A ordinary shares and Class B ordinary shares have the same rights in dividend. Therefore, basic and diluted loss per share is the same for both classes of ordinary shares.

Basic EPS is computed by dividing net income attributable to the Company's ordinary stockholders by the weighted-average number of shares of ordinary shares outstanding during the relevant period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Contingently issuable shares were not included in the computation of diluted shares outstanding if they were not issuable should the end of the reporting period have been the end of the contingency period. For the year ended December 31, 2023, there was 403,089 contractual issuable shares related to Weiliantong Earn-out Target 2023 achieved as of December 31, 2023 and 636,691 contractual issuable shares related to Weiliantong acquisition. 403,089 shares related to Weiliantong Earn-out Target 2023 was issued in the year ended December 31, 2024. For the year ended December 31, 2024, there was 636,691 issuable shares related to Weiliantong acquisition. For the year ended December 31, 2025, there was 636,691 contractual issuable shares related to Weiliantong acquisition.

***(z) Non-controlling interests***

As of December 31, 2025, non-controlling interests represent 49% non-controlling shareholders' interests in HCHY, 49% non-controlling shareholders' interests in SXFJ, 49% non-controlling shareholders' interests in Scienjoy Verse and its fully owned subsidiary Scienjoy Meta, 10% non-controlling shareholders' interests in SJ Verse, 49% non-controlling shareholders' interests in Scenovo SG and its fully owned subsidiary Fashionfly Limited, 30% non-controlling shareholders' interests in Star Home, 30% non-controlling shareholders' interests in Techjoy SG and 30% non-controlling shareholders' interests in SH Entertainment. The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the operating results of the Company are presented on the face of the consolidated statements of comprehensive income (loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders of the Company.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

 ****

***(aa) Segment reporting***

ASC 280, "Segment Reporting", establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. The Company's long-lived assets are substantially all located in the PRC and majority of the Company's revenues are derived from the PRC. Therefore, no geographical segments are presented. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group's the chief operating decision maker (CODM) for making operating decisions and assessing performance as the source for determining the Company's reportable segments. The Company's chief operating decision-maker ("CODM") has been identified as its Chief Executive Officer. The Company's CODM relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing the performance of the Company. As a result of the assessment made by CODM, the Company has only one reportable segment as defined by ASC 280. The Company has concluded that consolidated net income is the measure of segment profitability. The Company does not distinguish between markets or segments for the purpose of internal reporting.

***(bb) Recent accounting pronouncements***

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is effected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity ("VIE") that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently assessing the impact this standard will have on the Company's consolidated financial statements.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***(bb) Recent accounting pronouncements (continued)***

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of the term performance condition for share-based consideration payable to a customer to incorporate conditions that are based on the volume or monetary amount of a customer's purchases or potential purchases. ASU 2025-04 also eliminates the policy election to account for forfeitures as they occur for awards with service conditions. ASU 2025-04 also clarifies that ASC 606 variable consideration guidance does not apply to share-based payments to customers; instead, vesting probability should be assessed solely under ASC 718, Compensation—Stock Compensation. ASU 2025-04 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-04 may be applied on either a modified retrospective basis or on a retrospective basis. The Company is currently assessing the impact this standard will have on the Company's consolidated financial statements.

In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company's periods beginning after December 15, 2025. , and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently assessing the impact this standard will have on the Company's consolidated financial statements.

ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. In September 2025, the FASB issued this ASU to modernize the accounting for internal-use software costs, primarily by simplifying the requirements to capitalize software development costs. This update is effective beginning with the Company's 2028 fiscal year annual reporting period, with early adoption permitted. The Company is currently assessing the impact this standard will have on the Company's consolidated financial statements.

ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. In December 2025, the FASB issued this ASU to establish authoritative guidance on the accounting for government grants received by business entities. This update is effective beginning with the Company's 2029 fiscal year annual reporting period, with early adoption permitted. The Company is currently assessing the impact this standard will have on the Company's consolidated financial statements.

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements of operations and cash flows.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**3. CONCENTRATION OF RISK**

***(a) Credit risk***

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses, other current assets, and amounts due from related parties. As of December 31, 2024 and 2025, RMB242,359 and RMB301,095(US$43,056), respectively, were deposited with major financial institutions located in the PRC. There is a RMB500,000 deposit insurance limit for a legal entity's aggregated balance at each mainland PRC bank, and the bank deposits with financial institutions in the Hong Kong Special Administrative Region are insured by the government authority up to HKD500,000. Management believes that these financial institutions are of high credit quality and continually monitor the credit worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors' interests.

For the credit risk related to accounts receivable, the Company adopted Credit Losses (Topic 326) effective January 1, 2023. The Company performs ongoing credit evaluations of its debtors and assesses allowance for credit loss on a portfolio basis. When specific debtors are identified as no longer sharing the same risk profile as the current pool, they are removed from the pool and evaluated separately. The Company makes specific bad debt provisions based on management's best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. In estimating expected credit losses, the Company considered the uncertainties associated with regulatory policy changes in the industry and recent and expected market trends. The Company's exposure to credit losses may increase if its debtors are adversely affected by changes, such as economic pressures or uncertainty associated with local and industry, or other customer-specific factors. Given the regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and increasing credit risk of the Company's debtors in the livestreaming industry, the Company provided additional allowance for credit loss for debtors with high risk and delinquent accounts by assistance from third party valuation firm. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. The Company will continue to periodically review the allowance and make necessary adjustments accordingly.

***(b) Currency convertibility risk***

Majority of the Company's businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People's Bank of China. However, the unification of the exchange rates does not imply the convertibility of RMB (¥) into US$($) or other foreign currencies. All foreign exchange transactions continue to take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. Approval of foreign currency payments by the People's Bank of China or other institutions requires submitting a payment application form together with suppliers' invoices, shipping documents and signed contracts.

***(c) Significant customers***

For the year ended December 31, 2023, 2024 and 2025, no customer individually represents greater than 10% of the total revenue.

***(d) Significant suppliers***

For the year ended December 31, 2023, one vendor accounted for 10.0% of the Company's total purchases and one vendor accounted for 11.1% of the Company's accounts payable as of December 31, 2023. For the year ended December 31, 2024, no vendor accounted more than 10.0% of the Company's total purchases and no vendor accounted for greater than 10% of the Company's accounts payable as of December 31, 2024. For the year ended December 31, 2025, no vendor accounted more than 10% of the Company's total purchases and one vendor accounted for 11.5% of the Company's accounts payable as of December 31, 2025.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**4. ACQUISITION**

<u>Acquisition of Star Home</u>

On April 1, 2025, Scenovo SG entered into a share acquisition agreement with a third party to purchase 70% equity in Star Home for a consideration of nil. The transaction was completed on April 1, 2025. Star Home is a Dubai-based multi-channel network (MCN) company. The historical operating results of Star Home were not significant to the Company. The Company believes the Star Home acquisition will help to explore overseas market. The Star Home acquisition was accounted for as business combination in accordance with ASC 805. Acquisition-related costs incurred for the acquisitions are not material. The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition based on a valuation performed by an independent valuation firm engaged by the Company.

---

| | | |
|:---|:---|:---|
|  | **RMB** | **US$** |
| Total consideration | - | - |
| Assets acquired and liabilities assumed: |  |  |
| Cash acquired | 28 | 4 |
| Prepaid expenses and other current assets | 662 | 95 |
| Current liabilities | (1268) | (181) |
| Total net assets acquired | (578) | (82) |
| 30% Equity Value with non-controlling interests | - | - |
| Goodwill | 578 | 82 |

---

<u>Acquisition of SH Entertainment</u> 

On August 26, 2025, Scenovo SG entered into a share acquisition agreement with a third party to purchase 70% equity in SH Entertainment for a consideration of RMB7,930 (US$1,134) (including a cash consideration of RMB 1,224 and a settlement of RMB 6,706 due from SH Entertainment). The transaction was completed on October 1, 2025. SH Entertainment is a South Korea -based multi-channel network (MCN) company. The historical operating results of SH Entertainment were not significant to the Company. The Company believes the SH Entertainment acquisition will help to explore oversea market. The SH Entertainment acquisition was accounted for as business combination in accordance with ASC 805. Acquisition-related costs incurred for the acquisitions are not material. The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition based on a valuation performed by an independent valuation firm engaged by the Company.

---

| | | |
|:---|:---|:---|
|  | **RMB** | **US$** |
| Total consideration | 7930 | 1134 |
| Assets acquired and liabilities assumed: |  |  |
| Cash acquired | 1759 | 252 |
| Prepaid expenses and other current assets | 679 | 97 |
| Property and equipment, net | 662 | 95 |
| Long term deposits and other assets | 960 | 137 |
| Current liabilities | (251) | (36) |
| Total net assets acquired | 3809 | 545 |
| 30% Equity Value with non-controlling interests | 869 | 124 |
| Goodwill | 3252 | 465 |

---

Pro forma financial information is not presented for this business acquisition as it is immaterial to the reported results.

The goodwill was mainly attributable to intangible assets that cannot be recognized separately as identifiable assets and comprise (a) the assembled work force and (b) the expected but unidentifiable business growth because of the synergy resulting from the acquisition. None of the goodwill recognized is expected to be deductible for income tax purposes.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**5. ACCOUNTS RECEIVABLE, NET**

Accounts receivable and allowance for credit losses consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| Accounts receivable | 231742 | 176261 | 25205 |
| Less: allowance for credit losses | (5682) | (132971) | (19015) |
| Accounts receivable, net | 226060 | 43290 | 6190 |

---

An analysis of the allowance for credit losses is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Balance, beginning of year | 3546 | 5097 | 5682 | 813 |
| Additions | 1530 | 584 | 127290 | 18202 |
| Exchange difference | 21 | 1 | (1) | - |
| Balance, end of year | 5097 | 5682 | 132971 | 19015 |

---

The Company's provision for credit losses amounted to RMB1,530 and RMB584 for the years ended December 31, 2023 and 2024, respectively, and the provision for credit losses increased to RMB127,290 (US$18,202) for the year ended December 31, 2025. In estimating expected credit losses, the Company considered the uncertainties associated with regulatory policy changes in the industry and recent and expected market trends. The Company's exposure to credit losses may increase if its debtors are adversely affected by changes, such as economic pressures or uncertainty associated with local and industry, or other customer-specific factors. Given the regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and increasing credit risk of debtors in the livestreaming industry, the Company provided additional allowance for credit loss for debtors with high risk and delinquent accounts by assistance from third party valuation firm. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. The Company will continue to periodically review the allowance and make necessary adjustments accordingly.

Three unrelated distributors accounted for 30.3%, 24.8% and 12.1% of the Company's accounts receivable as of December 31, 2023, respectively. Four unrelated distributors accounted for 33.2%, 26.5%, 18.3% and 10.3% of the Company's accounts receivable as of December 31, 2024, respectively. Three unrelated distributors accounted for 42.5%, 25.5% and 19.0% of the Company's accounts receivable as of December 31, 2025, respectively.

**6. PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET**

Prepaid expenses and other current assets and allowance for credit losses consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| VAT recoverable | 15134 | 9740 | 1356 |
| Prepaid expense | 5607 | 4641 | 698 |
| Investment buyback receivable (1) | 30000 | 30000 | 4290 |
| Loans receivable (2) | 21700 | 18335 | 2622 |
| Other receivables | 2309 | 7226 | 1036 |
| Total | 74750 | 69942 | 10002 |
| Less: allowance for credit losses | (46335) | (46335) | (6626) |
| Prepaid expenses and other current assets, net | 28415 | 23607 | 3376 |

---

(1) The
Company invested RMB30,000 in Yieryi for its 12% equity interest on August 17, 2021. As part of the Framework Agreement signed
on December 29, 2021, one of the shareholders of Yieryi bought such equity interest back from the Company for RMB30,000. On August 25,
2023, such shareholder and his related party pledged their ownership of 1.3 million ordinary shares of the Company to ensure the recoverability
of the receivable balance. On March 22, 2024, such shareholder and his related party further pledged their ownership of 2,969,114 ordinary
shares of the Company to ensure the recoverability of the receivable balance. The Company made full allowance of RMB30,000 in the year
ended December 31, 2024, due to uncertainty of collectability.

(2) The balance represents amount lent to several third parties with various interest rate for working capital purpose. The Company made an allowance of RMB16,335 in the year ended December 31, 2023, due to uncertainly collectability.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**6. PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET (CONTINUED)**

An analysis of the allowance for credit losses is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Balance, beginning of year | - | 16335 | 46335 | 6626 |
| Additions | 16335 | 30000 | - | - |
| Balance, end of year | 16335 | 46335 | 46335 | 6626 |

---

**7. PROPERTY AND EQUIPMENT, NET**

Property and equipment, net consists of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| At cost: |  |  |  |
| Computer and transmission equipment | 9839 | 9753 | 1394 |
| Furniture, fixtures and office equipment | 2342 | 3075 | 440 |
| Total | 12181 | 12828 | 1834 |
| Less: accumulated depreciation | (10200) | (10584) | (1513) |
| Property and equipment, net | 1981 | 2244 | 321 |

---

For the years ended December 31, 2023, 2024 and 2025, depreciation expense was RMB1,237, RMB1,127 and RMB1,198 (US$171), respectively.

The Company reviews its property and equipment for potential impairment whenever events or circumstances indicate that the carrying value of the property and equipment may not be recoverable. The Company performed the impairment analyses for these assets which have an aggregated carrying value of RMB2,244 (US$321) and determined, based on expectations regarding the future use of these assets, that the carrying value of property and equipment are recoverable. As a result, the Company did not recognize any impairment on property and equipment for the year ended December 31, 2025. The Company did not identify any events or conditions that make it more likely than not that an impairment of property and equipment may have occurred for the years ended December 31, 2024 and 2023.

**8. INTANGIBLE ASSETS, NET**

Intangible assets, net consists of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| At cost: |  |  |  |
| Trademark | 49924 | 49924 | 7140 |
| Patent | 122 | 122 | 17 |
| Copyright | 238 | 271 | 39 |
| Software | 9993 | 9993 | 1429 |
| License acquired | 371700 | 371700 | 53152 |
| Total | 431977 | 432010 | 61777 |
| Less: accumulated amortization | (26721) | (33176) | (4744) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment | - | (398834) | (57033) |
| Intangible assets, net | 405256 | - | - |

---

For the years ended December 31, 2023, 2024 and 2025, amortization expense was RMB6,964, RMB6,969 and RMB 6,455 (US$923), respectively.

During annual impairment test performed in the fourth quarter of 2025, the Company identified several triggering events indicating that the carrying value of its intangible assets may exceed their fair value. These indicators included regulatory and tax policy changes for the livestreaming industry starting in the second half of 2025 and accordingly the significant decrease in paying users and a continuous decline in the Company's operating income during the second half of 2025. The Company performed a quantitative assessment as of December 31, 2025 using an income approach. The income approach utilized a discounted cash flow model based on the assumptions including management's best estimates of the expected future cash flows, risk-adjusted discount rate, and the estimated useful life of the asset group with assistance of a third party valuation firm. The weighted average cost of capital used in the Company's impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and was estimated at 27% and management's forecasted revenue growth rate was nil. Based on this analysis, the Company determined that the carrying values of its intangible assets were no longer recoverable. As a result of the fair value test, the Group recorded a full impairment of RMB398,835 (US$57,033) on intangible assets for the year ended December 31, 2025.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**9. LONG TERM INVESTMENTS**

---

| | | | |
|:---|:---|:---|:---|
|  | **Equity<br> investments<br> accounted<br> for using the<br> equity<br> method(ii)** | **Equity<br> investments<br> without<br> readily<br> determinable<br> fair value(i)** | **Total** |
|  | **RMB** | **RMB** | **RMB** |
| **Balance as of January 1, 2024** | **162430** | **91981** | **254411** |
| Additions | - | 19500 | 19500 |
| Decrease | - | (444) | (444) |
| Share of loss in equity method investees | (5742) | - | (5742) |
| Impairment | - | (10425) | (10425) |
| Exchange difference | 87 | - | 87 |
| **Balance as of December 31, 2024** | **156775** | **100612** | **257387** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Equity<br> investments<br> accounted<br> for using the<br> equity<br> method(ii)** | **Equity<br> investments<br> without<br> readily<br> determinable<br> fair value(i)** | **Total** | **Total** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| **Balance as of January 1, 2025** | **156775** | **100612** | **257387** | 36806 |
| Additions | 150000 | 6000 | 156000 | 22308 |
| Decrease | (149972) | (234) | (150206) | (21479) |
| Share of gain in equity method investees | 8712 | - | 8712 | 1246 |
| Exchange difference | (632) | - | (632) | (91) |
| **Balance as of December 31, 2025** | **164883** | **106378** | **271261** | **38790** |

---

(i) Cost-method investments include the following items: In 2020, the Company invested RMB5,000 for 1.70% equity interest in the privately-held entity ("Zhejiang Qusu Technology Co., Ltd" or "QS"), in which the Company does not have significant influence and such investment do not have readily determinable fair values. On May 27, 2021, the Company invested RMB10,000 for 4.44%
equity interest in Qingdao Weilai JingChanye Investment Fund LP ("QD"), in which the Company does not have significant influence
and such investment do not have readily determinable fair values. During the year ended December 31, 2023, the Company received principal
refund of RMB444 and share of gain of RMB77, respectively. During the year ended December 31, 2024, the Company received principal refund
of RMB444. On December 8, 2021, the Company invested RMB2,925 for 19.50% equity interest in Liujiaoshou Drink Co., Ltd.("Liujiaoshou"), in which the Company does not have significant influence and such investment do not have readily determinable fair values. In the year ended December 31, 2024, based on the financial conditions and operating performances in Liujiaoshou, a full impairment loss of RMB2,925 was applied against the investment. On May 6, 2022, the Company signed an investment
agreement to invest up to RMB5,000 into Valley Hongyuan (Hangzhou) Technology Partnership LP ("Valley Hongyuan") for its
14.28% equity interest, in which the Company does not have significant influence and such investment do not have readily determinable
fair values. For the year ended December 31, 2022, the Company invested RMB2,000 into Valley Hongyuan (Hangzhou) Technology Partnership
LP. In the year ended December 31, 2024, based on the financial conditions and operating performances in Valley Hongyuan, a full impairment
loss of RMB2,000 was applied against the investment.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**9. LONG TERM INVESTMENTS (CONTINUED)**

On December 9, 2022, the Company invested RMB5,000 for 1.12% equity interest in Chengdu Tianfu Yuanhe Jingu Venture Capital Center LP ("Chengdu Tianfu"), in which the Company does not have significant influence and such investment do not have readily determinable fair values. After a series of capital change, the Company's equity interest in Chengdu Tianfu was changed to 0.9823% as of December 31, 2025. During the year ended December 31, 2025, the Company received principal refund of RMB7.<br>On December 19, 2022, the Company invested RMB25,000 in Banyou Century (Hangzhou) Technology Co., Ltd.("Banyou") for its 7.6923% equity interest. On July 3, 2023, the Company signed a purchase agreement with Qingdao Sixiang Zhuohong Private Equity LP ("Qingdao LP") to purchase 11.5385% equity interest of Banyou for a consideration of RMB37,500. Together with the newly acquired equity interest, the Company holds in total of 19.2308% equity interest in Banyou, in which the Company does not have significant influence and such investment do not have readily determinable fair values. On July 19, 2023, the Company fully paid RMB37,500 to Qingdao LP.<br>On October 9, 2021, the Company signed an investment agreement to invest up to RMB8,500 into Hainan Jiuhe Huiyuan No.1 Fund Partnership (Limited partnership) ("Hainan Jiuhe") for its 3.26% equity interest, in which the Company does not have significant influence and such investment do not have readily determinable fair values. On January 17, 2023 and April 21, 2025, the Company invested RMB3,500 and RMB5,000 in Hainan Jiuhe, respectively. After a series of capital change, the Company's equity interest in Hainan Jiuhe was change to 5.296% in Hainan Jiuhe. During the year ended December 31, 2025, the Company received principal refund of RMB227.<br>On June 19, 2023, the Company invested RMB1,000 in Zhejiang Mengxiang Zhixing Cultural Technology Co., Ltd. ("Mengxiang Zhixing") for its 5% equity interest. On March 6, 2024, the Company entered into an agreement to further invest RMB4,000 in Mengxiang Zhixing and after this investment, the Company holds total 14.5% equity interest in Mengxiang, in which the Company does not have significant influence and such investment do not have readily determinable fair values. On March 20, 2024, the Company paid RMB4,000 to Mengxiang Zhixing. In the year ended December 31, 2024, based on the financial conditions and operating performances in Mengxiang Zhixing, a full impairment loss of RMB5,000 was applied against the investment.<br>On August 15, 2023, the Company invested RMB500 in Zhejiang Yuanlai Spacetime Cultural Technology Co., Ltd. ("Yuanlai Spacetime") for its 5% equity interest, in which the Company does not have significant influence and such investment do not have readily determinable fair values. In the year ended December 31, 2024, based on the financial conditions and operating performances in Yuanlai Spacetime, a full impairment loss of RMB500 was applied against the investment.<br>On March 12, 2024, the Company entered into an equity purchase agreement with Qingdao LP for a consideration of RMB13,500 to purchase 6% equity interest of Hangzhou Zhange Culture Technology Co., Ltd ("Zhange"), in which the Company does not have significant influence and such investment do not have readily determinable fair values. On March 14, 2024, the Company paid RMB13,500 to Qingdao LP.<br>On December 23, 2024, the Company invested RMB2,000 in Shenzhen Leyishang E-commerce Co., Ltd ("Shenzhen Leyishang") for its 10% equity interest. On June 18, 2025, the Company further invested RMB1,000 in Shenzhen Leyishang for its 2.25% equity interest and after this investment, the Company holds total 12.25% equity interest in Shenzhen Leyishang. The Company does not have significant influence and such investment do not have readily determinable fair values.<br>

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**9. LONG TERM INVESTMENTS (CONTINUED)**

(ii) Equity investments include the following items: On October 9, 2021, the Company signed an investment agreement to invest up to RMB150,000 into Qingdao LP, which further invests in broadcaster, IT, Big Data, Artificial Intelligence and logistic industry. The Qingdao LP is managed by two unrelated general partners (GPs). The Company, as a Limited partner, neither participate in the daily operation of Qingdao LP, nor has the exclusive rights to control the partnership meeting and investment decisions. As a result, the Company considers it has significant influence on this investment based on its voting power. The Company recorded shares of (loss) gain of RMB (30,666), RMB (1,169) and RMB 9,356 (US$1,338) for the year ended December 31, 2023, 2024 and 2025, respectively. Qingdao LP entered liquidation and refunded RMB149,972 to the Company for the year ended December 31, 2025. On September 6, 2023, the Company signed a share purchase agreement to invest up to US$3,000 (RMB21,384) into DVCC TECHNOLOGY L.L.C ("DVCC") for its 30% equity interest, the investment will be paid in two tranches (a) US$1,000 will be paid in five days after the completion of the corresponding condition is completed; (b)US$2,000 no later than ten days after the completion of the corresponding condition. As a result, the Company considers it has significant influence on this investment based on its voting power. The Company recorded shares of loss of RMB739, RMB4,573 and RMB425 (US$61) for the year ended December 31, 2023, 2024 and 2025, respectively. On July 8, 2025, the Company signed a share purchase agreement to invest up to RMB150,000 for 83.28% equity interest of Nanjing Haihonghui Venture Capital Investment Fund Partnership (Limited Partnership) ("Nanjing Haihonghui"). For the year ended December 31, 2025, the Company have paid RMB150,000. The Company owns 83.28% equity interest of Nanjing Haihonghui, but the executive general partner is the one who controls daily operation in Nanjing Haihonghui. The Company considers that it has significant influence but not control over Nanjing Haihonghui. The Company recorded shares of loss RMB219 (US$31) for the year ended December 31, 2025.

Other than the disclosed impairment loss, the Company believes there was no material market environment change or impairment indicator for other long-term investments.

**10. LONG TERM DEPOSITS AND OTHER ASSETS**

Long term deposits and other assets consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| Rent deposits | 269 | 1467 | 210 |
| Advertising deposits | 637 | 274 | 39 |
| Long term deposits and other assets | 906 | 1741 | 249 |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**11. RIGHT OF USE ASSETS**

The Company has several operating leases for offices. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental balance sheet information related to operating leases was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| Right-of-use assets, net | 4845 | 14695 | 2101 |
| Operating lease liabilities - current | 4098 | 3641 | 521 |
| Operating lease liabilities - non-current | 700 | 10399 | 1487 |
| Total operating lease liabilities | 4798 | 14040 | 2008 |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2024 and 2025:

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** |
| Remaining lease term and discount rate: |  |  |
| Weighted average remaining lease term (years) | 1.25 | 3.92 |
| Weighted average discount rate (%) | 4.75 | 4.70 |

---

Information related to operating lease activities for the year ended December 31, 2023, 2024 and 2025 is set forth below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Operating lease right-of-use assets obtained in exchange for lease liabilities | - | - | 16442 | 2351 |
| Operating lease expense |  |  |  |  |
| Amortization of right-of-use assets | 7052 | 7312 | 6592 | 943 |
| Interest of lease liabilities | 738 | 386 | 558 | 80 |
| Total operating lease expense | 7790 | 7698 | 7150 | 1023 |

---

The following is a schedule of maturities of lease liabilities as of December 31, 2025:

---

| | | |
|:---|:---|:---|
| Twelve months ending December 31, | **RMB** | **US$** |
| 2026 | 4061 | 581 |
| 2027 | 3577 | 512 |
| 2028 | 3650 | 522 |
| 2029 | 3722 | 532 |
| Total future minimum lease payments | 15010 | 2147 |
| Less: imputed interest | (970) | (139) |
| Present value of lease liabilities | 14040 | 2008 |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**12. INCOME TAXES**

***Enterprise income tax***

*British Virgin Islands*

Under the current laws of the British Virgin Islands, the Company incorporated in the British Virgin Islands is not subject to tax on income or capital gain. Additionally, the British Virgin Islands does not impose a withholding tax on payments of dividends to shareholders.

*Cayman Islands*

Under the current laws of the Cayman Islands, the subsidiary of the Company incorporated in the Cayman Islands is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

*Singapore*

 

Under Singapore tax laws, subsidiaries in Singapore are subject to statutory income tax rate at 17.0% if revenue is generated in Singapore and there are no withholding taxes in Singapore on remittance of dividends.

*Dubai*

 

Subsidiaries in Dubai are subject to statutory income tax rate at 9% above the threshold of 375,000 AED.

 

*Hong Kong*

Under the current Hong Kong Inland Revenue Ordinance, the subsidiary of the Company in Hong Kong is subject to 16.5% Hong Kong profit tax on its taxable income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.

*South Korea*

Under South Korea tax laws, subsidiaries incorporated in South Korea are subject to graduate rates ranging from 9% to 24%, depending on the level of taxable income, and is subject to an additional local income surtax of 10% of the corporate income tax liability.

*The PRC*

The Company's subsidiaries and the VIE that are each incorporated in the PRC are subject to Corporate Income Tax ("CIT") on the taxable income as reported in their respective statutory financial statements adjusted in accordance with the new PRC Enterprise Income Tax Laws ("PRC Income Tax Laws") effective from January 1, 2008. Pursuant to the PRC Income Tax Laws, the Company's PRC subsidiaries and the VIE are subject to a CIT statutory rate of 25%.

Under the PRC Income Tax Laws, an enterprise which qualifies as a High and New Technology Enterprise ("the HNTE") is entitled to a preferential tax rate of 15% provided it continues to meet HNTE qualification standards on an annual basis. SG qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2018 to 2026. HX qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2017 to 2026. LH qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2016 to 2027. WLT qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2017 to 2026.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**12. INCOME TAXES (CONTINUED)**

Under the PRC Income Tax Laws, during the period from January 1, 2010 to December 31, 2030, an enterprise which established in region of Holgus and Kashgar is entitled to a preferential tax rate of 0% in five consecutive years and a preferential tax rate of 9% for the next five years since the first-year income generated from operations provided it continues to meet the conditions within the required scope.

Holgus X qualifies for the conditions and entitled for a preferential tax rate of 0% from 2017 to 2021 and a preferential tax rate of 9% from 2022 to 2026. Kashgar Times qualifies for the conditions and entitled for a preferential tax rate of 0% from 2016 to 2020 and a preferential tax rate of 9% from 2021 to 2025. Holgus H qualifies for the conditions and entitled for a preferential tax rate of 0% from 2020 to 2025 and a preferential tax rate of 9% from 2026 to 2030. Kashgar Lehong qualifies for the conditions and entitled for a preferential tax rate of 0% from 2020 to 2025 and a preferential tax rate of 9% from 2026 to 2030. For the years ended December 31, 2023, 2024 and 2025, total tax saving for the preferential tax rate were RMB3,245, RMB6,697 and RMB3,641 (US$521), respectively, the impacts on basic EPS were RMB0.1, RMB0.2 and RMB0.1 (US$0.0), respectively, and the impacts on dilutive EPS were RMB0.1, RMB0.2 and RMB0.1 (US$0.0), respectively.

***Uncertain tax positions***

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2024 and 2025, the Company did not have any significant unrecognized uncertain tax positions.

The Company did not incur any interest or penalty related to potential underpaid income tax expenses for the years ended December 31, 2023, 2024 and 2025, and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2025.

The income tax expenses comprise:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Current income tax expense | 12940 | 14142 | 7845 | 1122 |
| Deferred income tax benefit | (4460) | (1545) | (88214) | (12615) |
| Income tax expenses (benefit) | 8480 | 12597 | (80369) | (11493) |

---

A reconciliation of the differences between the statutory tax rate and the effective tax rate for CIT for the years ended December 31, 2023, 2024 and 2025 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** |
| Income tax computed at PRC statutory tax rate | 25.0% | 25.0% | 25.0% |
| Effect of tax-preferential entities | (23.0)% | (17.0)% | (0.5)% |
| Non-deductible expenses and others | (34.0)% | 24.1% | (12.6)% |
| Effective income tax rate | (32.0)% | 32.1% | 11.9% |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**12. INCOME TAXES (CONTINUED)**

The components of deferred taxes are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| Deferred tax assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for credit losses | 3870 | 33941 | 4854 |
| &nbsp;&nbsp;&nbsp;Net operating losses carried forward | 3635 | 3347 | 478 |
|  | 7505 | 37288 | 5332 |

---

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets for the Company. Thus, there were no valuation allowances as of December 31, 2024 and 2025 for the deferred tax assets.

The components of deferred tax liabilities are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| Deferred tax liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets acquired through acquisition | 58400 |  |  |
|  | 58400 |  |  |

---

**13. RELATED PARTY BALANCES AND TRANSACTIONS**

In addition to the information disclosed elsewhere in the financial statements, the principal related parties with which the Company had transactions during the years presented are as follows:

---

| | |
|:---|:---|
| **Name of Related Parties** | **Relationship with the Company** |
| Mr. He Xiaowu | Chief Executive Officer and Chairman of the Board |
| Beijing Junwei Technology Co., Ltd. | Controlling shareholder of QY |
| Sixiang Zhuohong Private Equity LP | Equity investee of the Company |

---

For the years ended December 31, 2023, 2024 and 2025, significant related party transactions were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  |  | **2023** | **2024** | **2025** | **2025** |
|  |  | **RMB** | **RMB** | **RMB** | **US$** |
| Sixiang Zhuohong Private Equity LP | Sold 11.5385% equity interest of Banyou to the Company | 37500 | - |  |  |
| Sixiang Zhuohong Private Equity LP | Acquires 6% of Hangzhou Zhan Ge's shares through Sixiang Zhuohong | - | 13500 |  |  |

---

As of December 31, 2024 and 2025, the amounts due from related parties are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| **Amount due from related parties** |  |  |  |
| Beijing Junwei Technology Co., Ltd. (i) |  | 100 | 14 |
| Total |  | 100 | 14 |

---

(i) represents the business advance payments made to Beijing Junwei Technology Co., Ltd. for administration and registration service.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**14. SHAREHOLDERS' EQUITY**

***Ordinary Shares***

The Company is authorized to issue an unlimited number of no par value Class A ordinary shares and Class B ordinary shares.

As of December 31, 2025, the Company had 39,537,710 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding.

***Shares issued for acquisitions' earn-out target***

 ****

On April 7, 2023, the Company issued 507,804 Class A ordinary shares for Beelive's earn-out target 2022.

 ****

On April 7, 2023, the Company issued 487,314 Class A ordinary shares for achieving Weiliantong's earn-out target 2022. On April 8, 2024, the Company issued 403,089 Class A ordinary shares for achieving Weiliantong's earn-out target 2023.

***Treasury Shares***

In October 2022, the Company repurchased an aggregate of 794,120 Class A ordinary shares at price of US$3.01 per share, which was recorded as treasury shares.

In October 2023, the Company repurchased an aggregate of 119,725 Class A ordinary shares at price of US$3.2 per share, which was recorded as treasury shares.

In December 2024, the Company repurchased an aggregate of 134,333 Class A ordinary shares at price of US$0.76 per share, which was recorded as treasury shares.

As of December 31, 2024 and 2025, all these shares were held in an escrow account as reserve solely for potential need.

***Warrants***

As of December 31, 2025, there were no warrants outstanding and exercisable, and no warrants have been exercised for the year ended December 31, 2025.

The Public Warrants became exercisable upon the completion of the SPAC Transaction on May 7, 2020 with exercise price of US$11.5 per full share. The Public Warrants will expire five years from February 5, 2019 (or February 5, 2024).

The Company may call the warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of US$0.01 per warrant:

● at any time while the Public Warrants are exercisable,

● upon not less than 30 days' prior written notice of redemption to each Public Warrant holder,

● if, and only if, the reported last sale price of the Class A ordinary shares equals or exceeds US$16.50 per share, for any 20 trading days within a 30-trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and

● if, and only if, there is a current registration statement in effect with respect to the issuance of the Class A ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**14. SHAREHOLDERS' EQUITY (CONTINUED)**

***Warrants (continued)***

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a "cashless basis". The exercise price and number of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. The Public Warrants may only be exercised for a whole number of shares, meaning that the Public Warrants must be exercised in multiples of two. However, the warrants will not be adjusted for issuances of Class A ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.

The private warrants are identical to the public warrants with the exercise price of US$11.5 per full share and expiration by February 5, 2024, except that the private warrants and the Class A ordinary shares issuable upon the exercise of the private warrants will not be transferable, assignable or salable until after the completion of the SPAC Transaction, subject to certain limited exceptions. The private warrants may only be exercised for a whole number of shares, meaning that the private warrants must be exercised in multiples of two. Additionally, the private warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than the initial purchasers or their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.

A summary of warrants activity for the years ended December 31, 2023, 2024 and 2025 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> warrants** | **Weighted<br> average <br> life** | **Expiration<br> dates** |
| Balance of warrants outstanding as of December 31, 2022 | 6023700 | 1.1 years | February 5, 2024 |
| Balance of warrants outstanding as of December 31, 2023 | 6023700 | 0.1 years | February 5, 2024 |
| Balance of warrants outstanding as of December 31, 2024 and 2025 | - | - | - |
| Balance of warrants exercisable as of December 31, 2024 and 2025 | - | - | - |

---

**Unit Purchase Option**

On February 8, 2019, the Company sold to Chardan, for $100, an option to purchase up to 375,000 Units exercisable at $11.50 per Unit (or an aggregate exercise price of $4,312,500) exercisable on the completion of the SPAC Transaction on May 7, 2020. On February 20, 2019, in connection with the underwriters' election to exercise the over-allotment option in full, the Company issued Chardan an option to purchase up to an additional 56,250 Units exercisable at $11.50 per Unit for no additional consideration. Each Unit consists of one ordinary share, one redeemable warrant and one right (together "UPO"). The unit purchase option may be exercised for cash or on a cashless basis, at the holder's option, and expires February 5, 2024. For the year ended December 31, 2021, 100,000 UPO have been exercised for 100,000 warrants and 110,000 shares. As of December 31, 2025, the Company had no exercisable UPO units.

**Shares to be issued**

 

As of December 31, 2023, Weiliantong achieved 82.72% of Weiliantong's earn-out target 2023 and the Company was obligated to issue 403,089 Class A ordinary shares to the original shareholders of Weiliantong. As a result, the Company classified the Weiliantong 2023 earn-out shares with fair value of RMB9,960 as shares to be issued in the Company's equity as of December 31, 2023. 403,089 Class A ordinary shares were issued on April 8, 2024 and excluded from shares to be issued account as of December 31, 2024.

As of December 31, 2023, 2024 and 2025, shares to be issued represented the Company's obligation to issue 636,691 Class A ordinary shares to Weilaijin with fair value of RMB20,817 in connection with the acquisition of Weiliantong in 2022. The Company is required to issue the related shares upon receipt of exercise notice from Weilaijin.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**14. SHAREHOLDERS' EQUITY (CONTINUED)**

**2021 Equity Incentive Plan**

On August 3, 2021, the Employee Share Option Committee (the "ESOP Committee") of the Company approved a resolution which appointed the Chief Executive Officer and Chief Operating Officer as Authorized Officer of ESOP Committee to grant share options to employees, directors, advisors, consultants and service providers of the Company. In 2021, the ESOP Committee approved the granting Restricted Share Units ("RSU") under the 2021 Equity Incentive Plan. On July 19, 2025, the board of directors (the "Board") adopted resolutions by written consent to approve the Amendment of the 2021 Equity Incentive Plan (the "Amended Plan") solely to (i) increase the number of Ordinary Shares available for issuance under the Original Plan from 3,000,000 shares to 6,000,000 shares, effective as of July 19, 2025 and (ii) include an evergreen provision that would increase, commencing on January 1, 2026, and continuing annually on each anniversary thereof through and including January 1, 2035, equal to the lesser of (i) 3% of the Ordinary Shares outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of Shares as determined by the Board or the Committee.

As of December 31, 2022, the Company had 716,956 RSUs outstanding. For the year ended December 31, 2023, the ESOP Committee approved the granting of 512,217 RSUs under the 2021 Equity Incentive Plan. For the year ended December 31, 2023, 21,206 RSUs was forfeited and 434,093 RSUs was vested. As of December 31, 2023, the Company had 773,874 RSUs outstanding. For the year ended December 31, 2024, the ESOP Committee approved the granting of 272,999 RSUs under the 2021 Equity Incentive Plan. For the year ended December 31, 2024, 31,714 RSUs were forfeited and 405,758 RSUs were vested. As of December 31, 2024, the Company had 608,874 RSUs outstanding. For the year ended December 31, 2025, the ESOP Committee approved the granting of 282,543 RSUs under the 2021 Equity Incentive Plan. For the year ended December 31, 2025, 27,122 RSUs were forfeited and 614,984 RSUs were vested. As of December 31, 2025, the Company had 249,311 RSUs outstanding.

**15. STATUTORY RESERVES AND RESTRICTED NET ASSETS**

The Company's ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company's PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company's subsidiaries.

In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company's PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise's PRC statutory accounts. A foreign-invested enterprise is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise's PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign-invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. WXBJ and WXZJ was established as a foreign-invested enterprise and, therefore, is subject to the above mandated restrictions on distributable profits. As of December 31, 2024 and 2025, the Company had appointed RMB50,705 and RMB34,091 (US$4,875), respectively in its statutory reserves.

Foreign exchange and other regulations in the PRC may further restrict the Company's VIE from transferring funds to the Company in the form of dividends, loans and advances. Amounts restricted include paid-in capital, additional paid-in capital and statutory reserves of the Company's PRC Subsidiaries and the equity of VIE, as determined pursuant to PRC generally accepted accounting principles. As of December 31, 2024 and 2025, restricted net assets of the Company's PRC subsidiaries and VIE were RMB429,085 and RMB412,471 (US$58,983).

**16. COMMITMENTS AND CONTINGENCIES**

***(a) Capital and Other Commitments***

The Company did not have significant capital and other commitments as of December 31, 2024 and 2025.

***(b) Contingencies***

From time to time, the Company is party to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**17. SUBSEQUENT EVENTS**

In January 2026, the Company repurchased an aggregate of 89,952 Class A ordinary shares at price of US$0.74 per share, which was recorded as treasury shares.

The Company evaluated all events and transactions that occurred after December 31, 2025 up through the date the Company issued these consolidated financial statements. Other than the event disclosed above, no other subsequent events have occurred that would require recognition or disclosure in the Company's consolidated financial statements.

**18. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY**

The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), "General Notes to Financial Statements" and concluded that it was applicable for the Company to disclose the financial statements for the parent company.

The subsidiaries did not pay any dividend to the Company for the years presented. For the purpose of presenting parent only financial information, the Company records its investment in its subsidiary under the equity method of accounting. Such investment is presented on the separate condensed balance sheets of the Company as "Investment in subsidiaries and consolidated VIEs" and the income (loss) of the subsidiary and consolidated VIEs is presented as "share of income (loss) of subsidiaries and consolidated VIEs". Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted.

The Company did not have other commitments or guarantees as of December 31, 2024 and 2025.

PARENT COMPANY BALANCE SHEETS

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **US$** |
| **ASSETS** |  |  |  |
| **Current assets** |  |  |  |
| Cash and cash equivalents | 1081 | 2216 | 317 |
| Prepaid expenses and other current assets | 1086 | 630 | 90 |
| **Total current assets** | 2167 | 2846 | 407 |
| **Non-current assets** |  |  |  |
| Investments in subsidiaries and consolidated VIEs | 1219246 | 636348 | 90997 |
| **TOTAL ASSETS** | **1221413** | **639194** | **91404** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |  |
| **Current liabilities** |  |  |  |
| Accrued expenses and other current liabilities | 2078 | 2005 | 287 |
| Amounts due to subsidiaries | 20241 | 21780 | 3114 |
| Total current liabilities | 22319 | 23785 | 3401 |
| **Total liabilities** | **22319** | **23785** | **3401** |
| **Shareholders' equity** |  |  |  |
| Ordinary share, no par value, unlimited Class A ordinary shares and Class B ordinary shares authorized, 38,922,726 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding as of December 31, 2024, respectively; 39,537,710 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding as of December 31, 2025, respectively. |  |  |  |
| Class A ordinary shares | 444162 | 451666 | 64588 |
| Class B ordinary shares | 23896 | 23896 | 3417 |
| Treasury stocks | (19952) | (19952) | (2853) |
| Shares to be issued | 20817 | 20817 | 2977 |
| Statutory reserves | 50705 | 34091 | 4875 |
| Retained earnings | 662499 | 92024 | 13159 |
| Accumulated other comprehensive income | 16967 | 12867 | 1840 |
| **Total shareholder's equity** | **1199094** | **615409** | **88003** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | **1221413** | **639194** | **91404** |

---

**SCIENJOY HOLDING CORPORATION**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(All amounts in thousands, except share and per share data or otherwise stated)

**18. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED)**

PARENT COMPANY STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| Share of income (loss) of subsidiaries and consolidated VIEs | (4915) | 54431 | (577911) | (82640) |
| General administrative expense and others | (14923) | (9567) | (5255) | (752) |
| Research and development expenses | (5496) | (5179) | (3923) | (561) |
| Change in fair value of warrant liabilities | 170 | - | - | - |
| Change in fair value of contingent consideration | (5624) | - | - | - |
| **Net income (loss)** | (30788) | 39685 | (587089) | (83953) |
| Other comprehensive income (loss) - foreign currency translation adjustment | (105) | (998) | (4100) | (586) |
| **Comprehensive income (loss) attributable to the Company's shareholders** | **(30893)** | **38687** | **(591189)** | **(84539)** |

---

PARENT COMPANY STATEMENT OF CASH FLOWS

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2023** | **2024** | **2025** | **2025** |
|  | **RMB** | **RMB** | **RMB** | **US$** |
| **Cash flows from operating activities** |  |  |  |  |
| Net (loss) income | (30788) | 39685 | (587089) | (83953) |
| Equity in loss (earning) of subsidiaries | 4915 | (54431) | 577911 | 82640 |
| Change in fair value of warrant liabilities | (170) | - | - | - |
| Change in fair value of contingent consideration | 5624 | - | - | - |
| Share based compensation | 13637 | 10579 | 7504 | 1073 |
| ***Changes in operating assets and liabilities*** |  |  |  |  |
| Prepaid expense and other current assets | 425 | (266) | 456 | 65 |
| Accrued expenses and other current liabilities | 254 | 72 | (73) | (10) |
| Net cash used in operating activities | (6103) | (4361) | (1291) | (185) |
| **Cash flows from financing activities** |  |  |  |  |
| Due to subsidiaries | 29294 | (17406) | 2426 | 347 |
| Share repurchase | (2734) | (736) | - | - |
| Net cash provided by (used in) financing activities | 26560 | (18142) | 2426 | 347 |
| Net increase (decrease) in cash and cash equivalents | 20457 | (22503) | 1135 | 162 |
| Cash and cash equivalents at beginning of the year | 3127 | 23584 | 1081 | 155 |
| Cash and cash equivalents at end of the year | 23584 | 1081 | 2216 | 317 |

---

## Exhibit 4.44

**Exhibit 4.44**

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified information marked with [\*\*\*\*\*] has been excluded from the exhibit because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.

**SHARE TRANSFER AGREEMENT**

THlS SHARE TRANSFER AGREEMENT (this **"Agreement")** is made as of 18 Feb, 2025, by and between Dan Liu (the **"Transferor"),** a Chinese citizen with her passport number of [\*\*\*\*\*], and SCENOVO PTE. LTD., a company organized under the laws of the Republic of Singapore (the **"Transferee").**

Each of the parties to this Agreement is referred to herein individually as a **"Party"**and collectively as the **"Parties".**

**WHEREAS,** the Transferor holds I 00 outstanding shares of Star Home Global Media FZ-LLC , a company incorporated under the laws of Dubai (the **"Company"),** which represent I 00% of the total issued and outstanding share capital of the Company on a fully-diluted and as-converted basis.

**WHEREAS,** the Transferor desires to transfer and sell 70 outstanding shares (the **"Target Shares")** to the Transferee, and the Transferee desires to purchase the Target Shares from the Transferor, pursuant to the terms and conditions of this Agreement (the **"Transfer").**

**NOW, THREEFORE,** in consideration of the mutual covenants and representations set forth below, the Transferor and the Transferee hereby agree as follows:

1. TRANSFER OF TARGET SHARES

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>Transfer of the Target Shares.</u> Subject to the terms and conditions set forth herein, the Transferee hereby purchases from the Transferor, and the Transferor hereby sells and transfers to the Transferee the Target Shares at a total purchase price of AED 1 (the **"Purchase Price").**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <u>Closing</u>. The closing of the Transfer (the **"Closing")** shall take place upon the execution and delivery of this Agreement.

After the Closing, the Transferee shall pay the Purchase Price to the Transferor by wire transfer of immediately available funds in the same legal currency as that of the Purchase Price (being Dirham) to the bank account designated by the Transferor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 <u>Registration</u>. Within 3 business days following the Closing, each Party hereby agrees to assist and cooperate in completing the registration of the sale and purchase of the Target Shares with competent registration authorities under the applicable laws of Dubai. For such purpose, the Parties shall execute and deliver all documents and take or cause to be taken any other action or actions for such registration as they may consider necessary or appropriate.

2. MISCELLANEOUS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Entire Agreement.</u> This Agreement constitutes the entire contract between the Parties with regard to the subject matter of this Agreement and supersedes all other agreements between the Parties with respect to the subject matter hereof and thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>Severability.</u> If one or more provisions of this Agreement are held to be invalid and unenforceable under applicable law, such provision will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>Successors and Assigns</u>. The provisions of this Agreement will inure to the benefit of, and be binding upon the Parties and their respective legal representatives, heirs, legatees, distributees, assigns and purchasers by operation of law, under the condition that any such person will have agreed to be bound by the terms and conditions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <u>Governing Law.</u> This Agreement will be governed by and construed in accordance with the laws of [Dubai], without regard to its conflicts of law provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 <u>Dispute Resolution</u>. Any dispute controversy or claim arising out of or relating to this Agreement shall be settled by arbitration by the Dubai International Arbitration Centre in accordance with its arbitration rules then in force. The language to be used in the arbitration shall be English. The arbitration award is final and legally binding on the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 <u>Counterparts</u>. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile and e-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Agreement.

 

*[Remainder of Page Intentionally Left Blank]*

 

 

**IN WITNESS WHEREOF,** the Parties have executed or caused their respective authorized representatives to executive this Agreement on the day first indicated above.

---

| | |
|:---|:---|
| **THE TRANSFEROR:** | **THE TRANSFEROR:** |
| Dan Liu | Dan Liu |
| By: | */s/Dan Liu* |

---

**IN WITNESS WHEREOF,** the Parties have executed or caused their respective authorized representatives to executive this Agreement on the day first indicated above.

---

| | |
|:---|:---|
| **THE TRANSFEREE:** | **THE TRANSFEREE:** |
| SCENOVO PTE LTD. | SCENOVO PTE LTD. |
| By: | */s/Authorized Signatory* |
|  | Authorized Signatory |

---

## Exhibit 4.45

**Exhibit 4.45**

Capital Increase Agreement - SH Entertainment Co., Ltd.

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified information marked with [\*\*\*\*\*] has been excluded from the exhibit because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.

**CAPITAL INCREASE AGREEMENT**

**Relating to**

**SH Entertainment Co., Ltd.**

December 2024

Capital Increase Agreement - SH Entertainment Co., Ltd.

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **Article 1 Definitions** | **2** |
| **Article 2 Transaction Arrangement** | **4** |
| **Article 3 Payment of Capital Increase** | **5** |
| **Article 4 Pre-Closing Obligations** | **7** |
| **Article 5 Representations and Warranties** | **9** |
| **Article 6 Conditions Precedent** | **15** |
| **Article 7 Post-Closing Obligations** | **16** |
| **Article 8 Transaction Expenses** | **24** |
| **Article 9 Full-time Service and Non-compete** | **24** |
| **Article 10 Effectiveness, Amendment and Termination** | **25** |
| **Article 11 Liability for Breach** | **26** |
| **Article 12 Force Majeure** | **27** |
| **Article 13 Governing Law and Dispute Resolution** | **27** |
| **Article 14 Notices** | **28** |
| **Article 15 Confidentiality** | **29** |
| **Article 16 General Provisions** | **30** |

---

1 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

This Capital Increase Agreement (this "Agreement") is entered into on December 4, 2024 (the "Execution Date") by and among the following parties:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) SH Entertainment Co., Ltd., a limited liability company duly
established and validly existing under the laws of the Republic of Korea (hereinafter referred to as "SH", "Company"
or "Target Company");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Han Shuyong, a Chinese citizen, ID No.: [\*\*\*\*\*] (hereinafter
referred to as the "Existing Shareholder");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) SCENOVO PTE. Ltd., a limited liability company duly established
and validly existing under the laws of Singapore (hereinafter referred to as the "Investor" or "Series Investor").

("Han Shuyong" is also referred to as the "Founder.")

Each of the above parties is individually referred to as a "Party" and collectively as the "Parties."

**RECITALS**

1 SH is a limited liability company established under the laws of the Republic of Korea, incorporated on April 23, 2024, and is principally engaged in global MCN business and related supply chain development and operation;

2 The Investor desires to make a package investment in the Company in accordance with the terms and conditions of this Agreement, and the Existing Shareholder and the Company are each willing to accept the investment from the Investor on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties hereby agree as follows:

**Article 1 Definitions**

1.1 Unless otherwise defined in this Agreement, the following
terms shall have the meanings set forth below:

---

| | |
|:---|:---|
| &nbsp;&nbsp; <br> **Key Employees** | &nbsp;&nbsp;Means the key employees of the Company listed in Schedule 1. |
| &nbsp;&nbsp;**Affiliate** | &nbsp;&nbsp;With respect to any Person: (i) when such Person is not a natural person, means any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person; or (ii) when such Person is a natural person, means any other Person that is a close relative of such Person or is directly or indirectly Controlled by such Person or his/her close relatives. |
| &nbsp;&nbsp;**Member** | &nbsp;&nbsp;Means any member of the Company. |

---

2 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Business Day** | &nbsp;&nbsp;Means any day other than Saturday, Sunday or any day designated as a holiday by law. |
| &nbsp;&nbsp;**Control** | &nbsp;&nbsp;With respect to any Person: (i) holding more than fifty percent (50%) of the issued share capital or equity interest of such Person; (ii) having the ability to control the management or decision-making of such Person through ownership of more than fifty percent (50%) of the voting rights or voting proxies, or through the right to appoint a majority of the members of the board of directors or similar body of such Person, or through contractual arrangements or other means; or (iii) having the ability to control the decisions of a natural person through any means. |
| &nbsp;&nbsp;**Intellectual Property** | &nbsp;&nbsp;Means all patents, trademarks, service marks, registered designs, domain names and utility models, copyrights, inventions, confidential information, trade secrets, know-how and production processes, brand names, data usage rights, database rights, trade names and any similar rights in any country, and any interest in any of the foregoing (whether registered or unregistered, and including applications for any of the foregoing and the right to apply for any of the foregoing anywhere in the world). |
| &nbsp;&nbsp;**Material Adverse Effect** | &nbsp;&nbsp;Unless otherwise provided in this Agreement, with respect to any Party, means: (i) any monetary or non-monetary loss that may cause damage to such Party in an amount exceeding RMB 1,000,000; (ii) any event that may materially and adversely affect the legitimate existence, lawful operation, property, prospects, reputation or operations of such Party; or (iii) any event that may affect the legality, validity, binding nature or enforceability of this Agreement. |
| &nbsp;&nbsp;**Material Contract** | &nbsp;&nbsp;Means any contract, agreement or other document or arrangement that meets the following requirements: (i) contract amount exceeding RMB 1,000,000; (ii) contract performance period exceeding six (6) months after the Execution Date; (iii) contains exclusivity provisions, non-compete provisions or other restrictions on the Company's product sales, business operations or business expansion; (iv) any contract with any current or former director, senior officer, shareholder, employee or long-term advisor of the Company that affects or may affect their normal performance of duties; (v) any contract for the sale or purchase of Company assets (except in the ordinary course of business); (vi) any agreement relating to bonuses, pensions, retirement benefits, share options, commercial insurance or similar matters; (vii) investment contracts, agreements, letters of intent or other arrangements; (viii) intellectual property transfer and license agreements; (ix) contracts outside the scope of the Company's normal business operations; and (x) other contracts that may have a material adverse effect on the Company's assets and business. |

---

3 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

**Article 2 Transaction Arrangement**

2.1 Transaction Arrangement

**2.1.1** **Capital Increase** 

The Company shall issue an aggregate of **23,334** new shares, at a par value of **₩10,000** (Ten Thousand Won) per share.

The Investor agrees to subscribe for all of the new shares issued by the Company for an aggregate consideration of **₩233,340,000** (Two Hundred Thirty-Three Million Three Hundred Forty Thousand Won) (the "**Investor Capital Increase Amount**" or "**Capital Increase Amount**"), subject to the terms and conditions of this Agreement.

Prior to the Capital Increase, the registered capital of the Company was **₩100,000,000** (One Hundred Million Won). Upon completion of the Capital Increase, the registered capital of the Company shall be **₩333,340,000** (Three Hundred Thirty-Three Million Three Hundred Forty Thousand Won).

**2.1.2** **Waiver of Preemptive Rights** 

Each Existing Shareholder has waived any preemptive rights and any other rights that may exist under applicable law, the Company's articles of association or any other matter with respect to the transactions contemplated by this Agreement.

**2.2** **Pre-Capital Increase Shareholding Structure** 

As of the Execution Date, the registered shareholding structure of the Company is as follows:

---

| | | |
|:---|:---|:---|
| **Shareholder Name** | **Pre-Capital Increase Contribution (KRW)** | **Pre-Capital Increase Shareholding %** |
| Han Shuyong | 100000000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;100% |
| Total | 100000000 | 100% |

---

**2.3** **Post-Capital Increase Shareholding Structure** 

**As of the Closing Date**, the registered capital of the Company shall be **₩333,340,000** (Three Hundred Thirty-Three Million Three Hundred Forty Thousand Won). The capital contributions and number of shares held by each shareholder of the Company in the registered capital shall be changed as follows. **As of the Closing Date**, the Investor shall be entitled to the corresponding shareholder rights in the Company in accordance with the share capital structure set forth below:

---

| | | |
|:---|:---|:---|
| **Shareholder Name** | **Post-Capital Increase Contribution (KRW)** | **Post-Capital Increase Shareholding (Shares)** |
| Han Shuyong | 100000000 | 10000 |
| SCENOVO PTE. Ltd. | 233333333 | 23334 |
| Total | 333333333 | 33334 |

---

4 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

**2.4** **Document Execution and Registration Process** 

**2.4.1** The Existing Shareholder and the Company agree to execute simultaneously with this Agreement or at such
other time as designated or approved by the Investor such ancillary agreements, resolutions and other documents as are required or requested
by the Investor to complete the transactions contemplated hereby (collectively with this Agreement, the "Transaction Documents").

**2.4.2** Matters relating to the transactions contemplated hereby that are not provided for in this Agreement shall
be governed by and subject to this Agreement, the Shareholders Agreement, the Company's articles of association and other Transaction
Documents.

**Article 3 Payment of Capital Increase**

**3.1 Payment of Capital Increase**

**3.1.1** Unless otherwise expressly provided in this Agreement, the transactions contemplated hereby shall be closed in a single closing, and the Investor Capital Contribution shall be paid in a single installment.

Subject to the satisfaction of all conditions precedent to the Closing set forth in Section 6.1 of this Agreement, the Investor shall pay to the Company the Investor Capital Increase Amount of Two Hundred Thirty-Three Million Three Hundred Forty Thousand Won (₩233,340,000) within fifteen (15) Business Days from the date on which all such conditions are satisfied; provided that the Capital Increase Amount shall be paid in U.S. Dollars in an amount equivalent to such Won amount.

If the conditions precedent set forth in Article 6 are not fully satisfied, the Series Investor shall have the right to correspondingly delay the payment of the Capital Increase Proceeds.

Payment of the Capital Increase Proceeds shall not be deemed as completion of the investment contemplated by this Agreement, shall not be deemed as substantive completion of the equity change, and shall not be deemed as the Investor's substantive acquisition of the Company's equity.

5 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

**3.1.2 Confirmation and Capital Contribution Certificate**

The Company shall provide written confirmation to the Investor on the date of receipt of the Capital Increase Proceeds, and shall issue a capital contribution certificate to the Investor within five (5) Business Days.

3.2 Registration of Changes

3.2.1 The Company shall, commencing on the next Business Day following receipt of the Capital Increase Amount
paid by the Investor pursuant to Section 3.1 above, proceed with the registration of the new shares issued to the Investor in connection
with the Transaction. Upon completion of such new share registration, the capital contributions and shareholdings of each shareholder
in the Company shall be as set forth in Section 2.3. The Company shall thereafter complete the new share registration as soon as practicable
(but in no event later than six (6) months following the payment of the Capital Increase Amount by the Investor pursuant to Section 3.1)
(the "New Share Registration Completion Date").The Company shall maintain and preserve the register of shareholders, which shall
be signed by each shareholder and sealed with the Company's seal and kept by the Company's independent director, and provide an original
copy to each Existing Shareholder and the Investor.

3.2.2 The Company shall prepare and maintain a register of shareholders, which shall, upon being signed by all
shareholders and affixed with the Company seal, be retained by the independent director(s) of the Company, and the Company shall provide
an original thereof to each of the Existing Shareholders and the Investor.

3.2.3 The date of new share registration shall be deemed to be the date of completion of the Capital Increase
and the Closing Date under this Agreement, and shall also be deemed to be the date on which the Investor completed the Investment.

6 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

**Article 4 Pre-Closing Obligations of the Company and Founder**

**4.1** From the Execution Date to the Registration Completion Date, the Company
shall, and the Founder shall ensure that the Company, conduct its business in the ordinary course of business, and shall use its best
efforts to maintain the integrity of the business organization, maintain relationships with third parties and retain existing management
and employees, and maintain the status quo of all assets and properties owned or used by the Company (ordinary wear and tear excepted).

**4.2** From the Execution Date to the Registration Completion Date and the
Closing Date, during the Company's normal business hours, the Founder and the Company shall provide the Series Investor and its representatives
with such information relating to the Company as they may reasonably request, including but not limited to providing full access to all
accounts, records, contracts, technical materials, personnel materials, management information and other documents to the lawyers, accountants
and other representatives appointed by the Series Investor. Without affecting the Company's normal operations, the Founder and the Company
agree that the Series Investor shall have the right to conduct due diligence review of the Company's financial, asset and operational
status at any time prior to the Closing Date. In addition, the Founder and the Company shall promptly notify the Series Investor in writing
of any breach of this Agreement by any Existing Shareholder or the Company that has occurred or is expected to occur.

**4.3** From the Execution Date to the Registration Completion Date and the
Closing Date, the Company and the Founder shall promptly inform the Series Investor of the following matters and discuss with the Series
Investor the impact of such matters on the Company, thereby ensuring that the Company will operate in a stable manner in a reasonable
manner:

4.3.1 Any change in the share capital structure, financial condition
(including but not limited to cash dividends, if any), assets, liabilities, business, prospects or operations of the Company that has
had or may have a Material Adverse Effect on the Company;

4.3.2 Execution of agreements containing abnormal terms (including any financing arrangements or any long-term,
onerous terms) and any agreements or proposals, intentions relating to the foregoing; and

4.3.3 Progress of government approvals/registrations (if applicable).

7 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

**4.4** From the Execution Date to the Registration Completion Date, except as disclosed to the Series Investor,
the Company and the Founder shall ensure that their Affiliates and advisors and their respective directors, officers and representatives
(i) deal with matters relating to the transactions contemplated hereby on an exclusive basis together with the Series Investor and its
Affiliates; (ii) shall not engage in any transaction similar to the transactions contemplated hereby or any other transaction that conflicts
with the transactions contemplated by the Transaction Documents (any of the foregoing transactions referred to as a "Third Party
Transaction"); (iii) immediately terminate any discussions or negotiations with any person regarding any Third Party Transaction,
and thereafter shall not engage in or conduct discussions or negotiations with any person regarding any Third Party Transaction, and shall
not provide any information to any person regarding any Third Party Transaction; and (iv) shall not encourage any inquiries or proposals
regarding possible Third Party Transactions, or take any other action to facilitate such inquiries or proposals. If the Founder receives
any inquiry relating to a possible Third Party Transaction from any other party, the Founder shall promptly notify the Series Investor.
If the final closing fails to be completed due to the Founder or the Company's breach of this provision, the Founder and the Company shall
bear all losses of the Series Investor.

**4.5** Without limiting the generality of Section 4.1, unless with the prior written consent of the Series Investor,
from the date of execution of this Agreement to the Closing Date, the Founder shall ensure that the Company does not, and the Company
shall not, take any of the following actions (except actions relating to the transactions contemplated hereby):

4.5.1 Increase, decrease, distribute, issue, acquire, repay, transfer, pledge or redeem any registered capital
or equity;

4.5.2 Take any action that may result in dilution of the equity held by the Series Investor in the Company after
the Closing, or dilution of the value of such equity, by amending its articles of association or through reorganization, merger, sale
of share capital, consolidation or sale of assets or otherwise;

4.5.3 Sell, lease, transfer, license or assign any assets, except in the ordinary course of business;

4.5.4 Incur or assume any liability, obligation or expense in a single transaction exceeding RMB 1,000,000 (or
equivalent in other currencies), except in the ordinary course of business;

4.5.5 Make any capital expenditure exceeding RMB 1,000,000 (or equivalent in other currencies) in a single transaction,
except in the ordinary course of business;

4.5.6 Create any security interest or encumbrance on any asset;

4.5.7 Declare, pay or make any dividend distribution;

4.5.8 Enter into or implement any transaction with the Company's Affiliates, any Existing Shareholder or their
respective Affiliates exceeding RMB 1,000,000 in a single transaction, except in the ordinary course of business;

4.5.9 Implement any acquisition or become a party to any acquisition;

4.5.10 Establish any subsidiary or acquire any equity or other interest in any other entity;

4.5.11 Unless expressly provided in this Agreement, formulate or adopt any employee equity incentive plan, or
distribute options to employees or enter into any agreement to distribute options; or

4.5.12 Agree or commit to take any of the foregoing actions, including but not limited to signing commitment
letters or consent letters.

8 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

**Article 5 Representations and Warranties of the Company and Existing Shareholders**

5.1 The Company and the Founder (collectively, the "Warrantors") shall each and jointly make the following representations and warranties, and ensure that each of the following representations and warranties is true, complete and accurate on the Execution Date, each Closing Date and the Registration Completion Date:

5.1.1 Legal Existence and Capacity. The Company is duly established and validly existing. The Existing Shareholder
and the Company have the civil right capacity and full civil conduct capacity to execute and perform this Agreement and other related
transaction agreements.

5.1.2 Authorization. The execution by the Company and the Existing Shareholder of each Transaction Document,
the performance of all obligations under the Transaction Documents and the completion of the transactions contemplated by the Transaction
Documents have been or will be duly authorized; the Company and the Existing Shareholder have full right and authority to execute each
Transaction Document and perform their obligations thereunder. Each Transaction Document, once executed, shall be legally binding on them.

5.1.3 No Conflict. The execution and performance of each Transaction Document do not violate or conflict with
any provision of the articles of association, partnership agreement or other organizational documents of the Company and the Existing
Shareholder, or any applicable laws, regulations, government orders, or any other group contracts or laws to which the Company and the
Existing Shareholder are a party; the Company and the Existing Shareholder have obtained all necessary third-party consents or authorizations
required to carry out the transactions contemplated by the Transaction Documents.

5.1.4 Consents and Approvals. Except for the registration of changes required for the capital increase as provided
in this Agreement, the Company and the Existing Shareholder or their related Affiliates do not need to obtain any other prior consent,
approval, authorization or registration from any government authority or third party for the execution or performance of this Agreement
and other Transaction Documents, or for the protection of the rights of the Parties under such agreements.

5.2 Representations and Warranties of the Company

5.2.1 The Company has the full and independent legal status and legal capacity to execute, deliver and perform
this Agreement, and may independently act as a party to litigation. The execution of this Agreement and the performance of the Company's
obligations hereunder will not violate any applicable laws or government orders.

5.2.2 The Company undertakes to obtain all necessary internal authorizations and approvals required for the
execution and delivery of this Agreement, the performance of its obligations hereunder and the completion of the transactions contemplated
hereby, and this Agreement, once established, shall be legally binding on the Company.

9 / 31

Capital Increase Agreement - SH Entertainment Co., Ltd.

5.3 Representations and Warranties of the Company and Founder

5.3.1 Authorization. The execution by the Company and the Existing
Shareholder of each Transaction Document, the performance of all obligations under the Transaction Documents and the completion of the
transactions contemplated by the Transaction Documents have been or will be duly authorized; each Existing Shareholder has full civil
conduct capacity and civil right capacity to execute each Transaction Document and perform their obligations thereunder. Each Transaction
Document, once executed, shall be legally binding on the Company and the Existing Shareholder.

5.3.2 No Conflict. The execution and performance of each Transaction Document do not violate or conflict with
any provision of the Company's articles of association or other organizational documents; the Company and the Existing Shareholder have
each obtained all necessary third-party consents or authorizations required to carry out the transactions contemplated by the Transaction
Documents. No material agreement or material contract between the Company and the Existing Shareholder and any other entity will be terminated
or materially affected by the execution or performance of the Transaction Documents.

5.3.3 Valid Existence. The Company is a duly established and validly existing entity. As of the Registration
Completion Date, the Company's registered capital has been contributed in accordance with the subscription period stipulated in its articles
of association and complies with legal requirements, and there is no situation of non-contribution, delayed contribution, false registration
or withdrawal of registered capital. All articles of association of the Company have been legally and validly registered (if required)
and are valid and enforceable. The business scope of the Company as set forth in its articles of association complies with legal requirements.
The Company strictly carries out its business activities in accordance with the business scope stipulated in its articles of association
and the requirements of law. All licenses, approvals and permits required for the Company to carry out its business activities under the
law have been applied for and obtained in accordance with the law; and all such permits are validly existing. The Company has passed the
annual inspection (if any) of its licenses and permits by the relevant government authorities. The Company's documents, including board
minutes, shareholders' meeting minutes and register of shareholders, have been properly maintained and completely and accurately record
matters that should be recorded in such documents.

5.3.4 Capital Structure. Except as disclosed in the Disclosure Schedule, the registered capital equity structure
of the Company as set forth in the articles of association and amendments thereto filed with the commercial administration authority is
completely consistent with the records in the articles of association and amendments provided by the Company to the Series Investor, and
truly, completely and accurately reflects the Company's capital structure, and there is no false capital contribution. Except as disclosed
in the Disclosure Schedule and the transactions contemplated by the Transaction Documents, the Company has never promised or actually
issued any equity, shares, bonds, warrants, options or similar rights to any person in any form (except for the establishment of an employee
option pool for employee equity incentives). Except as disclosed in the Disclosure Schedule, there is no nominee holding or similar arrangement
on the Company's equity, nor any pledge, mortgage or other security interest or any kind of encumbrance (including but not limited to
any conditional sale or other title retention agreement, any lease with the foregoing nature, any agreement granting any security interest
and any document designating a third party as loss payee), or any other third-party rights (with respect to any person's equity, including
but not limited to any option or any conversion right or preference of any nature).

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Capital Increase Agreement - SH Entertainment Co., Ltd.

5.3.5 Employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company handles employee matters in material compliance
with applicable laws and regulations, and the treatment of the Company's employees is true and complete. In addition, there are no existing
or pending disputes between the Company and its employees regarding social insurance premiums or employee benefits that are known or
should be known to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) As of the Registration Completion Date, there are no pending
labor disputes or controversies between the Company and its existing or former employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) As of the Registration Completion Date, the Company has no
obligation to pay any severance compensation or other similar compensation or indemnification payments related to employment relationships
that are due but unpaid.

5.3.6 Financial Reports. All audited accounts and management accounts of the Company (including transfer accounts)
materially truly, completely and accurately reflect the financial and operating conditions of the Company as of the relevant account dates.
The Company's financial records and materials comply with legal requirements and Chinese Accounting Standards. All documents, including
account books, records of changes in equity, financial statements and all other Company records, are maintained in accordance with legal
requirements and commercial practices and are fully controlled by the Company, and major transactions related to the Company's business
are accurately and properly recorded. The Company does not have off-book cash sales revenue, off-book liabilities, management personnel
misappropriation of Company funds, or major internal control deficiencies.

The financial reports provided by the Company to the Series Investor materially truly, completely and accurately reflect the operating results and financial condition of the Company during the relevant periods or as of the relevant reference dates. (i) Except for the Company's ordinary business activities, no event has occurred that would trigger early maturity of the Company's debts; (ii) no Company property has been disposed of or removed from the Company's control, the Company has not entered into any document that would cause the Company to incur non-ordinary financial expenses, nor has any such liability been incurred.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

5.3.7 Undisclosed Liabilities. Except as disclosed to the Series Investor in the due diligence, the Company
does not have any other material debts (meaning debts with a total amount exceeding RMB 200,000) not reflected in the balance sheet, except
for debts belonging to the Company's ordinary business that are not prohibited by this Agreement and will not have a Material Adverse
Effect on any shareholder of the Company or the Company itself; the Company does not have any other material debts that have not been
disclosed to the Series Investor and may have a Material Adverse Effect on the Company or the transactions contemplated hereby or the
Series Investor's rights under this Agreement; the Company has never provided guarantee for any other person, nor has it established any
mortgage, pledge or other security interest on its property.

5.3.8 No Changes. Except as disclosed in the Disclosure Schedule, except with the written approval of the Series
Investor or as otherwise provided in this Agreement, the Company has not :

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Prepaid any debts (except within the scope required for ordinary operations);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Provided guarantee for any other person, established mortgage, pledge or other security interest on its
property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Waived any claims against others or abandoned any right of recourse;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Made any amendments to any existing contracts or agreements that are unfavorable to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Suffered any loss, or experienced any change in relationships with suppliers, customers or employees,
which loss or change would have a Material Adverse Effect on the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Transferred or licensed any third party to use the Company's intellectual property, except for the Company's
ordinary business activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Experienced any Material Adverse Change in its financial condition, or any transaction, act or conduct
outside the Company's ordinary business that has a Material Adverse Effect on the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Produced any shareholders' meeting resolution or board resolution different from the Company's ordinary
matters, except for resolutions formed to implement matters approved by the Series Investor under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Declared, paid, prepared to declare or prepared to pay any dividends, bonuses or other forms of shareholder
distributions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) (i) the sale, mortgage, pledge, lease, transfer or other disposition of assets with an aggregate transaction
amount exceeding Forty Million Won (₩40,000,000); (ii) the disposal of any fixed assets with an original value exceeding Forty Million
Won (₩40,000,000), or consenting to the disposal or acquisition of any fixed assets with an original value exceeding Forty Million
Won (₩40,000,000), relinquishing control over any Company assets, or entering into any contract resulting in fixed asset expenditure;
(iii) any expenditure or acquisition of tangible or intangible assets (including equity investments in any entity) with an aggregate amount
exceeding Forty Million Won (₩40,000,000) outside the ordinary course of business of the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) Split, merged with a third party, acquired third-party equity, assets or business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Violated any representations and warranties under this Agreement by act or omission; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) Any act or omission that may cause any of the foregoing circumstances

5.3.9 Taxation. The Company has completed all tax registrations required by law, has paid taxes payable, and
to the Company's knowledge is not required to pay any fines, surcharges, penalties or interest related to such taxes. The Company has
no tax violations or irregularities that would have a Material Adverse Effect on the Company, and is not involved in any disputes or litigation
related to taxes. The Company has submitted information required by any tax authority upon request, and there are no disputes between
the Company and tax authorities regarding the Company's tax liability or to the Company's knowledge potential tax liability or tax benefits.
The Company maintains financial materials for normal tax accounting and payment.

5.3.10 Assets. The Company legally owns or uses all its fixed and intangible assets, and no mortgage, pledge,
third-party purchase right or co-ownership right or other encumbrance has been established on such assets.

5.3.11 Intellectual Property. The Company has legal ownership or right to use all intellectual property required
for its business operations (including but not limited to patents, trademarks, copyrights, know-how, domain names and trade secrets),
such intellectual property is valid and legally enforceable, and to the Company's and Founder's knowledge, there is no matter that may
cause any intellectual property to be invalid or unenforceable. The Company has not infringed or illegally used any intellectual property
in which any third party has any right, ownership or interest, nor has it licensed or permitted any third party to use any of the Company's
intellectual property; the Company has not infringed any other person's intellectual property, trade secrets, proprietary information
or other similar rights, there are no pending or foreseeable claims, disputes or litigation proceedings requiring the Company to compensate
for infringement of any third party's intellectual property, trade secrets, proprietary information or other similar rights, and there
is no known situation of any third party infringing the intellectual property legally owned by the Company. The Founder's acceptance of
employment with the Company does not violate any agreement (including but not limited to confidentiality and non-compete agreements) still
binding on them with any former employer or other third party, nor does it constitute infringement by the Founder of any former employer
or other third party's intellectual property or trade secrets.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

5.3.12 Litigation and Other Legal Proceedings. There is no circumstance that may have a Material Adverse Effect
on the Company, or materially and adversely affect the conclusion, validity and enforceability of each Transaction Document and the transactions
contemplated thereby, whether completed, pending or reasonably foreseeable, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Government penalties, prohibitions or orders against the Founder or the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Civil, criminal or administrative litigation, arbitration or other proceedings or disputes, claims against
the Founder or the Company.

5.3.13 Compliance with Laws. The Company's various activities have at all times materially complied with effective
laws and requirements of relevant government departments, and there is no violation of any law that constitutes a Material Adverse Effect
on the Company.

5.3.14 Non-compete. The Founder and the core members listed in Schedule 1 have not engaged in the conduct described
in Section 9.2 of this Agreement.

5.3.15 Information Provided. All documents, materials and information provided by the Company and the Founder
to the Investor before and after the execution of this Agreement are materially true, accurate, complete and non-misleading.

5.3.16 Liability. The Company and the Founder shall be jointly and severally liable for the truth, completeness
and accuracy of the contents of this Article 5.

5.4 From the execution of this Agreement to the completion of the Registration and all closings, unless with the written consent of the Series Investor, the Company and the Founder shall not engage in or facilitate any conduct or activity that would cause them to violate Articles 5.2 and 5.3, nor shall they cause any representation to be untrue, inaccurate or misleading. If the Company or the Founder violates the foregoing, they shall immediately notify the Series Investor.

5.5 The Company and the Founder shall be jointly and severally liable for the truth, completeness and accuracy of the contents of this Article 5. The Company and the Founder shall each and jointly guarantee that the Series Investor shall not be responsible for any and all losses, liabilities, costs or expenses arising from the Company or Founder's breach of the representations and warranties under this Article 5. The foregoing liability of the Company and the Founder shall be continuous and perpetual, effective both before and after the Closing.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**Article 6 Conditions Precedent**

6.1 Conditions Precedent to Closing

Unless waived in writing by the Investor, the Investor's obligation to pay the Capital Increase Proceeds (i.e., the Closing) shall be subject to the satisfaction of all of the following conditions precedent:

6.1.1 There is no litigation, arbitration, judgment or injunction by any law, court, arbitration institution
or relevant government authority that restricts, prohibits or cancels the transactions contemplated hereby, and there is no pending or
potential litigation, arbitration, judgment or injunction against the Company that has had or will have a Material Adverse Effect on the
transactions contemplated hereby;

6.1.2 The Company has made shareholders' meeting resolutions and board resolutions or executive director decisions
approving the execution of the Transaction Documents and the transactions contemplated hereby, and each Existing Shareholder has waived
in such shareholders' meeting resolutions their respective preemptive rights and any other rights that may exist under applicable law,
the Company's articles of association or any other matter with respect to the transactions contemplated hereby;

6.1.3 The Company has obtained all third-party permits required for the execution and performance of the Transaction
Documents, and the execution and performance will not cause the Company to violate any applicable law;

6.1.4 There is no event, fact, condition, change or other circumstance that has occurred or is reasonably foreseeable
that has had or may have a Material Adverse Effect on the Company's business, assets, financial structure, liabilities, technology, profit
prospects and normal operations;

6.1.5 The Parties have successfully completed the execution and delivery of each Transaction Document, including
this Agreement, the Capital Increase Agreement Supplement, the articles of association and other ancillary agreements, resolutions and
documents required or requested by the Series Investor to complete the transactions contemplated hereby;

6.1.6 The Company's Key Employees have entered into Employment Contracts with the Company in form and substance
satisfactory to the Series Investor, and such contracts contain detailed provisions regarding intellectual property assignment (if applicable),
confidentiality, non-compete and non-solicitation;

6.1.7 The representations and warranties made by the Company and the Existing Shareholder under Article 5 of
this Agreement continue to be true, complete and accurate in all material respects, and the Company and the Existing Shareholder have
performed their commitments required to be performed on or before the Closing Date under the Transaction Documents, and have not violated
any provisions of the Transaction Documents.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

6.2 The Company and the Founder shall each use their best reasonable efforts to cause the conditions precedent to Closing set forth in Article 6.1 to be satisfied as soon as possible and in any event no later than thirty (30) days from the Execution Date.

6.3 If any condition precedent set forth in Article 6.1 is waived in writing by the Series Investor, such waiver shall not constitute a waiver of such condition precedent by the Series Investor, and such condition precedent shall automatically become a commitment of the Company and the Founder under Article 7.1, which they shall continue to be responsible for, and shall cause such obligations to be fulfilled within a period separately agreed in writing by the Series Investor.

**Article 7 Post-Closing Obligations and Commitments**

**7.1** After the Closing, the Company and the Founder (as applicable) commit to complete the following matters:

7.1.1 The Company shall, and the Founder shall ensure that the Company, complete the matters described in Articles
3.1.2 and 3.2 within the time limits specified in the relevant provisions.

7.1.2 The Company shall, and the Founder shall ensure that the Company, immediately after the Closing establish
a sound financial system, including but not limited to internal financial control systems, to ensure clear internal financial authorization,
accurate financial data and records, and financial treatment in compliance with laws and internal management regulations. The Company
shall establish and maintain accounting policies and financial systems that comply with applicable laws and regulations and are satisfactory
to the Series Investor (including but not limited to making payments only after receiving contracts signed by the counterparty in subsequent
financial operations), so that the Company's financial systems, account books, vouchers and invoice management, tax filings, etc. comply
with the requirements of Chinese laws and regulations regarding financial and accounting matters and internal management regulations.

7.1.3 The Company and the Founder commit that, without the prior consent of the Series Investor and unless otherwise
expressly provided in this Agreement, the Company shall not make any changes to its shareholding structure.

7.1.4 Unless based on acts conducted in accordance with this Agreement and its annexes or with the written consent
of the Series Investor, the Company commits that the Company shall, and the Founder shall ensure that the Company, always and continuously ：

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Operate in the normal manner, continue to maintain its normal business relationships with customers, to
ensure that the Company's goodwill and operations are not materially and adversely affected after the Closing;

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Capital Increase Agreement - SH Entertainment Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Use best efforts to maintain and ensure that the Company is always and continuously a duly established
and validly existing entity. The equity held by the Existing Shareholder in the Company is not subject to non-contribution, delayed contribution,
false registration or withdrawal of registered capital. The business scope of the Company as set forth in its articles of association
complies with legal requirements. The Company strictly carries out its business activities in accordance with the business scope stipulated
in its articles of association and the requirements of law. All licenses, approvals and permits required for the Company to carry out
its business activities under the law have been applied for and obtained in accordance with the law; and all such permits are validly
existing. The Company has passed the annual inspection (if any) of its licenses and permits by the relevant government authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Except where relevant parties exercise their respective shareholder rights in accordance with this Agreement
or other transaction documents relating to this investment, will not repurchase equity, nor conduct any abnormal transactions or incur
abnormal debts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Timely perform signed contracts, agreements or other documents relating to the Company's assets and business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Ensure the Company's continued lawful operation, including but not limited to obtaining and maintaining
all government approvals and other permits and consents required for its operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Promptly notify the Series Investor in writing of any event, fact, condition, change or other circumstance
that has caused or may cause a Material Adverse Effect on the Company

7.1.5 After the Closing, the Founder shall avoid any related party transactions between his/her Affiliates and
the Company. If such related party transactions are indeed necessary for business purposes, the Company shall obtain the prior written
consent of the Series Investor in advance, conduct them in accordance with the procedures stipulated in laws and regulations, the Shareholders
Agreement and the articles of association, and the price of related party transactions should refer to market fair prices.

7.1.6 The Company and the Founder jointly commit to the Series Investor that, regardless of whether the Company
and the Founder have disclosed to the Series Investor, and whether occurring before or after the Closing, if any Group Member suffers
administrative penalties or economic losses due to illegal or non-compliant business operations or business models, or if any Group Member
suffers administrative penalties or economic losses due to non-standard business operations or lax management and thereby affects and
causes losses to the Company's business operations and asset situation, or if the Company or the Founder fails to fully perform their
commitments under Article 7 of this Agreement, such circumstances shall constitute a breach by the Founder, and the liability and losses
arising therefrom shall be borne entirely by the Founder jointly and severally, and the Founder shall compensate the Company and the Series
Investor for all losses arising therefrom. Any fees, supplementary payments of various amounts, and fines that arise from matters not
disclosed by the Company to the Series Investor, or that the Company is required to pay or contribute due to non-compliance with relevant
Chinese laws and regulations, or that are required due to the Company's initial public offering, shall be borne by the Company and the
Founder. The Series Investor shall not bear any responsibility for this, and if this causes any loss to the Series Investor or the Company,
the Founder shall provide corresponding compensation to the Series Investor and/or the Company.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**7.2** The Founder and the Company commit and guarantee that all intellectual property and licenses related to
the Company's business operations as of the Execution Date, the Closing Date and in the future shall be owned solely by the Company. For
the avoidance of doubt, the intellectual property and licenses currently and in the future controlled by the Founder and Key Employees
shall only be used through the Company or subsidiaries and registered with government authorities, and shall not be transferred or licensed
to third parties without the written consent of the Series Investor.

**7.3** The Founder hereby irrevocably commits: (a) before the first anniversary of the Company's qualified initial
public offering, personal work time and energy shall be dedicated to serving the Company; as long as the Series Investor holds equity
in the Company, the Founder shall not directly or indirectly participate in or invest in any business competing with the Company, except
for positions and investments existing and disclosed at the time of execution of this Agreement; (b) the Founder shall ensure that all
patents, domain names and other intellectual property (if any) under his/her name shall be irrevocably authorized to the Company for use
indefinitely and without charge.

**7.4** After the Closing, with the written consent of all investors, if the Company is restructured in the future
or the controlling shareholder and the Series Investor will hold shares in an offshore company (which offshore company will control the
operation of Zhange Culture within the territory), the Company and the Founder shall assist the Series Investor, at the Series Investor's
request, to convert their equity in the Company into preferred shares of the offshore entity (i.e., issue, transfer or distribute such
preferred shares to the Series Investor or its Affiliate free of charge through any other method agreed by the Series Investor), and the
relevant parties holding such preferred shares shall enjoy all preferential rights no less favorable than those enjoyed by the Series
Investor under this Agreement and the Shareholders Agreement, with all taxes and fees borne by the Company, and ensuring that the Series
Investor's investment cost is not adversely affected.

**7.5** According to the confirmation of the Company and the Founder, the Company has no liabilities or debts
(excluding receivables and payables arising from normal business operations), and all existing and contingent debts of the Company prior
to the Closing Date of this transaction shall be borne by the Founder. The Series Investor shall not bear any existing or contingent debts
of the Company prior to the Closing Date of this transaction, such debts shall be borne by the Founder and the Founder shall bear the
obligation to pay such debts, the Founder shall directly pay such debts to the creditors or the Founder shall compensate the Company for
the corresponding amounts. The Founder commits to the Series Investor that, after completion of this capital increase, if the Company
suffers any economic loss due to any undisclosed Material Adverse Matter, such losses shall be borne entirely by the Founder and the Founder
shall compensate the Company and the Series Investor for all losses arising therefrom.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**7.6** The Company and the Existing Shareholder commit that, prior to submission of the initial public offering
application materials or within one (1) year after the Closing Date of this transaction (whichever date occurs earlier), the Company will
complete the integration of business resources to achieve operational and management independence and personnel independence, and will
not negatively affect the initial public offering due to lack of operational, management or personnel independence.

**7.7** The Company and the Existing Shareholder agree that the Series Investor shall at all times enjoy preferential
rights and interests no less favorable than those of all Existing Shareholders; the Company and the Existing Shareholder further agree
that, if at any time after the execution of this Agreement, the Company promises to grant any other Existing Shareholder or new investor
any preferential rights, interests or arrangements more favorable than those of the Series Investor ("More Favorable Terms")
in connection with any issuance of new shares or transfer of shares, the Series Investor shall automatically enjoy terms no less favorable
than such More Favorable Terms; provided, however, that the fact that such other Existing Shareholder or new investor obtains a more preferred
priority for liquidation preference distribution and repurchase rights due to investing at a valuation higher than the post-transaction
Company valuation at which the Series Investor acquired the corresponding equity shall not be deemed More Favorable Terms.

**7.8** The Existing Shareholder commits that, prior to the Company's initial public offering of shares, without
the prior written consent of the Series Investor, regardless of the Founder's employment status with the Company at that time, the Existing
Shareholder shall not transfer, pledge or otherwise dispose of the equity held by them in the Company, directly or indirectly. However,
the Series Investor shall have the right to decide to transfer all or part of the equity held by it in the Company to its Affiliate or
a third party, which shall be approved by all members of the shareholders' meeting, and other shareholders and the Company shall cooperate
in signing necessary legal documents or implementing necessary legal acts to complete such transfer, and such transfer shall not be subject
to preemptive rights, tag-along rights or any other conditions or restrictions.

**7.9** From the Execution Date to the Company's initial public offering of shares, if any Existing Shareholder
other than the Series Investor (the "Transferor") intends to sell all or part of the equity held by them in the Company to any
third party (the "Transferee"), the Transferor shall give written notice to the Series Investor and other shareholders (the
"Transfer Notice") regarding such equity sale, which notice shall specify: (i) the names of the Transferor and the Transferee;
(ii) the amount of capital contribution intended to be transferred; (iii) the transfer price of the equity to be sold; and (iv) other
terms and conditions of the equity to be sold.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

Within thirty (30) Business Days (the "Offer Period") after the Transfer Notice is given, the Series Investor shall have the right but not the obligation to purchase all or part of the equity to be sold on the same terms and conditions and at the same price specified in the Transfer Notice (the "Right of First Refusal").

If multiple Series Investors wish to exercise their Right of First Refusal with respect to all or part of the equity to be sold, each Series Investor wishing to purchase shall have the right to purchase the corresponding equity to be sold based on the percentage (the "Purchase Ratio") of the registered capital of the Company held by such Series Investor to the sum of the registered capital of the Company held by all Series Investors wishing to purchase.

If any Series Investor elects to purchase less than the amount of equity to be sold calculated based on its Purchase Ratio, the amount of equity to be sold that such Series Investor does not purchase (the "Available Equity") shall be allocated among the Series Investors who have fully exercised their Right of First Refusal and are willing to purchase excess equity to be sold on a pro rata basis. The Transferor shall send a written notice (the "Second Transfer Notice") to the Series Investors who have fully exercised their Right of First Refusal within five (5) Business Days after the expiration of the Right of First Refusal exercise period. Each Series Investor who has fully exercised the Right of First Refusal and is willing to purchase excess equity to be sold shall notify the Transferor in writing within five (5) Business Days after receiving the Second Transfer Notice. At this time, the ratio that each Series Investor willing to purchase excess equity to be sold may purchase is the percentage obtained by dividing the registered capital of the Company held by each Series Investor willing to purchase excess equity to be sold by the sum of the registered capital of the Company held by all Series Investors willing to purchase excess equity to be sold.

If the Series Investor gives notice of its election to purchase all or part of the equity to be sold in accordance with the requirements of Section 2 of this Article, the Transferor shall be obligated to transfer to the Series Investor, and the Series Investor must purchase from the Transferor, all or part of the equity to be sold. Such transfer shall be completed at the time, date and place agreed upon by the Transferor and the Series Investor.

If the Series Investor does not send a written notice to the Transferor within the Offer Period or gives notice of its election not to purchase the equity to be sold in accordance with the requirements of Section 2 of this Article, subject to Article 7.9, the Transferor may transfer all equity to be sold specified in the Transfer Notice to the intended purchaser within ninety (90) days after the expiration of the Offer Period, provided that the transfer conditions shall not be more favorable than those stated in the Transfer Notice, and the transfer price shall not be lower than that stated in the Transfer Notice.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**7.10** If the Series Investor sends prior written notice waiving its Right of First Refusal or does not respond
within the Right of First Refusal exercise period, the Series Investor shall have the right but not the obligation to require the Transferee
to purchase from the Series Investor a certain percentage of equity at the terms and price set forth in the Transfer Notice (the "Tag-Along
Right"), the maximum value of which shall be calculated according to the following formula: S=P\*A/B, where:

S is the percentage of equity that the Series Investor exercising the Tag-Along Right may sell;

P is the amount of equity to be transferred by the Transferor remaining after the Series Investor exercising the Right of First Refusal exercises such right;

A is the registered capital of the Company held by each Series Investor wishing to exercise the Tag-Along Right;

B is the sum of the registered capital of the Company held by the Transferor and all Series Investors wishing to exercise the Tag-Along Right.

In the event that the transfer of equity to be sold by the Transferor to the Transferee would result in a Change of Control of the Company, the Series Investor shall have the right to sell all equity held by them to such Transferee, provided that the total amount shall not exceed the amount of equity to be sold agreed upon in the Transfer Notice.

If the Series Investor elects to exercise its Tag-Along Right, it shall send a written notice within thirty (30) Business Days from the date it sends the written notice waiving the Right of First Refusal or from the expiration of the Right of First Refusal exercise period, specifying the percentage of equity involved in its election to exercise the Tag-Along Right. Such notice shall be irrevocable and binding on the transfer parties in accordance with the terms and conditions specified in the written notice.

If the Series Investor elects to exercise its Tag-Along Right, the Transferor shall take measures including correspondingly reducing the percentage of equity sold by them to facilitate the realization of the Tag-Along Right.

If the Series Investor has properly elected to exercise its Tag-Along Right and the Transferee fails to purchase the relevant equity from the Series Investor, the Transferor shall not proceed with such equity transfer, and if the Transferor makes such equity transfer without the Series Investor's written consent, such transfer shall be invalid.

**7.11** Any equity transfer conducted by the Transferor in violation of Articles 7.8, 7.9 or 7.10 (including but
not limited to the obligation to submit written notice to the Series Investor) shall be deemed invalid from the beginning, and the Series
Investor shall have the right to require the Company, and the Company shall, take all reasonable and necessary actions to impose prohibitive
or restrictive measures on equity transfers that violate this Article, and shall not file for commercial registration of equity transfers
conducted in violation of the above provisions.

**7.12** If the Company enters into dissolution, bankruptcy liquidation proceedings or overall sale resulting
in a Change of Control for any reason in the future, for assets or interests distributable to shareholders in accordance with the law,
after paying liquidation expenses, employee wages, social insurance premiums and statutory compensation, taxes owed and settling Company
debts, the remaining distributable property or proceeds shall be distributed as follows:

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Capital Increase Agreement - SH Entertainment Co., Ltd.

7.13.1 First, pay to the Series Investor an amount equal to one times the investment amount plus any confirmed
but unpaid dividends due to the Series Investor (if any) as liquidation proceeds (the "Preferred Liquidation Amount"), which
shall be distributed among the Series Investors in proportion to their respective Capital Increase Proceeds;

7.13.2 Second, all remaining assets or proceeds of the Company that can be legally distributed to shareholders
other than the Preferred Liquidation Amount shall be distributed among all shareholders (including the Series Investors) according to
their shareholding percentages.

For purposes of this Agreement, "Change of Control" means (i) the sale or transfer by the Company of all or substantially all of its assets (including the sale or exclusive license to a third party of all or substantially all of the Company's intellectual property) or (ii) the merger, reorganization or consolidation of the Company into any company or entity, such that the shareholders of the Company prior to such merger, reorganization or consolidation hold less than 50% of the equity after completion of such transaction.

**7.13** After the Closing, the Company shall distribute distributable profits confirmed by the shareholders' meeting
annually, and the Series Investor shall enjoy preferential dividend rights, that is, the Company's distributable profits shall be distributed
first according to the Series Investor's actual investment amount ratio until the amount of proceeds obtained by the Series Investor from
the Company through dividends, transfer and all other means reaches their respective initial investment amounts, after which other shareholders
may participate in profit distribution.

**7.14** Unless previously approved by the shareholders' meeting (including the approval of the Series Investor),
the Company shall not agree to any person subscribing for the Company's increased registered capital. At the same time, the Series Investor
shall have the right but not the obligation to subscribe for the increased registered capital on a pro rata basis according to the shareholding
percentage held by them in the Company, under the same conditions.

When the Company plans to increase its registered capital, it shall first send a notice to all shareholders to subscribe for the increased registered capital. The Company shall deliver a written notice (the "Capital Increase Notice") to all shareholders of the Company at least fifteen (15) days prior to any planned capital increase (the "Planned Capital Increase"), which notice shall include: (1) the amount and terms of the proposed capital increase; (2) the consideration to be received by the Company for the Planned Capital Increase; and (3) the third party to receive the new equity of the Planned Capital Increase (the "Planned Recipient") (if any).

Within fifteen (15) days after the Capital Increase Notice is given (the "Subscription Period"), the Series Investor shall deliver a written notice to the Company indicating its willingness to subscribe for the increased equity under the same conditions. If the Series Investor does not deliver such written notice to the Company within the Subscription Period, it shall be deemed to have waived its rights under this Article with respect to the Planned Capital Increase, but if the Series Investor fails to send such written subscription notice solely because the Company has not complied with the notice requirements in this Article, the Company shall not increase its capital in accordance with this provision, and if it insists on doing so, such capital increase shall be invalid.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

If any Series Investor waives its Preemptive Right in writing or does not respond within the Subscription Period, the Company shall send a written notice (the "Second Subscription Notice") to other Series Investors who have fully exercised their Preemptive Right. Each Series Investor who has fully exercised the Preemptive Right and is willing to subscribe for excess increased registered capital shall notify the Company in writing within five (5) Business Days after receiving the Second Subscription Notice, indicating the amount of increased registered capital they are willing to subscribe for.

If the total excess subscription exceeds the amount of increased registered capital available for subscription, the amount of increased registered capital that each Series Investor willing to subscribe for excess may subscribe for is the lesser of: (1) the amount of increased registered capital they are willing to subscribe for; or (2) the amount of increased registered capital available for subscription, multiplied by the percentage obtained by dividing the registered capital of the Company held by each Series Investor willing to subscribe for excess increased registered capital by the sum of the registered capital of the Company held by all Series Investors willing to subscribe for excess increased registered capital.

**7.15** The Company may agree to other shareholders and/or the Planned Recipient (if other shareholders also elect
not to subscribe for the remaining capital increase) subscribing for the increased shares in accordance with the terms and conditions
(including the price of the new shares) set forth in the issuance notice for the remaining proposed new shares that the Series Investor
has not subscribed for, provided that the Planned Capital Increase must be completed within ninety (90) days after the Capital Increase
Notice is given. If the Planned Capital Increase is not completed within such ninety (90) days for any reason, the restrictions under
this Article shall reapply, and the Company shall not increase any registered capital without complying with the provisions of this Article.

**7.16** If the Existing Shareholder abandons the operation of the Company and establishes a new company for any
reason in the future, the Existing Shareholder shall promptly inform the Series Investor, and the Series Investor shall have the right
but not the obligation to require the Existing Shareholder to cause the Series Investor to hold the corresponding percentage of shares
in the new company calculated based on the investment amount invested by them in the Company through equity transfer, capital increase
or other methods permitted by law at RMB 1 or the minimum consideration permitted by law.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**Article 8 Transaction Expenses**

**8.1** Following the execution of the Transaction Documents and completion of the Closing, the Company shall
bear the expenses incurred by the Investor in connection with the Transaction (including financial and legal due diligence expenses, and
expenses for drafting, negotiating and executing all legal documents, hereinafter referred to as the "Investor Transaction Expenses").
The Transaction Expenses include audit fees, financial and legal due diligence expenses, and expenses for drafting, negotiating and executing
all legal documents relating to the Transaction ("Transaction Expenses"). Except for the foregoing, the Investor and the Company
shall each bear its own costs and expenses incurred.

**8.2** Except as otherwise provided in this Agreement or other Transaction Documents, the Company, the Existing
Shareholder and the Series Investor shall each bear all tax costs arising from the transactions contemplated by this Agreement in accordance
with the law.

**Article 9 Full-time Service and Non-compete Obligations**

**9.1** During the period that the Founder maintains an employment relationship with the Company or holds any
direct or indirect interest in the Company (whichever is later), and for a period of two (2) years following the expiration of such period
(or such longer period as expressly specified for the specific matters below if a longer time limit is required), without the consent
of the Investor, the Founder shall not directly or indirectly engage in any business competitive with any business conducted or contemplated
to be conducted by any Company (as may be adjusted based on the Company's actual business direction at the relevant time, "Competing
Business"), nor shall the Founder directly or indirectly hold any interest in any entity engaged in any Competing Business with any
Company, or engage in any other conduct detrimental to the interests of the Company, including without limitation.

9.1.1 Controlling, holding shares in or indirectly controlling any company or other organization engaged in
a Competitive Business;

9.1.2 Providing loans, customer information or any other form of assistance to any company or organization engaged
in a Competitive Business, including but not limited to support for funds, product development, human resources, business resources, etc.;

9.1.3 Directly or indirectly obtaining benefits from a Competitive Business or a company or other organization
engaged in a Competitive Business;

9.1.4 Soliciting in any form customers related to the Company's business, or conducting or attempting to conduct
transactions with customers related to the Company's production and sales business, whether such customers were the Company's customers
before or after the Closing Date;

9.1.5 During the period when they directly or indirectly hold equity in the Company and for three years after
their complete exit from the Company, they shall not directly or indirectly instruct, induce, encourage or otherwise cause any other employee
of the Company to terminate their employment relationship with the Company;

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Capital Increase Agreement - SH Entertainment Co., Ltd.

9.1.6 Employing in any form through any individual or organization directly or indirectly controlled by them
or in which they have an interest any person who has left the Company from the Closing Date;

9.1.7 Soliciting in any form to employ any employee then employed by the Company; and

9.1.8 They shall not engage in the above conduct through their Affiliates, and shall not instruct, induce, encourage
or otherwise cause any other employee of the Company to engage in the above conduct.

**Article 10 Effectiveness, Supplement, Amendment, Modification and Termination**

**10.1** The annexes to this Agreement are an integral part of this Agreement, are supplementary to the body of
this Agreement and have the same legal effect. In the event of any conflict between the annexes and the body of this Agreement, the provisions
of the body of this Agreement shall prevail and corresponding amendments shall be made.

**10.2** This Agreement shall become effective upon execution by the Parties (natural persons signing, non-natural
persons signing or sealing by their legal representatives/executive partners or authorized representatives and affixing their official
seals).

**10.3** The Parties may amend or modify this Agreement by mutual agreement. Any amendment or modification must
be made in writing and shall become effective upon execution by the Parties.

**10.4** his Agreement may be terminated by the following means:

10.4.1 The Parties jointly terminate this Agreement in writing and determine the effective date of termination;

10.4.2 Prior to the completion of the registration of changes, if any of the following circumstances occurs,
the Series Investor shall have the right to terminate this Agreement by giving at least ten (10) Business Days' prior written notice to
the other Parties, specifying the effective date of termination in the notice:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The representations or warranties of the Company or the Existing Shareholder contain materially untrue
circumstances or material omissions, or there is a violation of the provisions, commitments or obligations under this Agreement, and effective
remedial measures have not been taken within ten (10) Business Days after the Series Investor sends a written demand; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The final closing of this transaction is not completed within one hundred and twenty (120) days from the
Execution Date or on another date agreed upon by the Parties through consultation, except for delays caused by the Series Investor's own
reasons.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**10.5** **Effect of Termination** 

10.5.1 When this Agreement is terminated in accordance with Section 10.4.1 above, unless otherwise agreed by
the Parties at that time, the Parties shall, in accordance with the principles of fairness, reasonableness and good faith, return the
consideration received from other relevant parties under this Agreement and endeavor to restore the status quo prior to the execution
of this Agreement.

10.5.2 If the Series Investor terminates this Agreement in accordance with Section 10.4.2 above and has paid
all/part of the Capital Increase Proceeds to the Company at that time, the Company shall return all paid Capital Increase Proceeds to
the Series Investor, and pay interest to the Series Investor at an annual rate of 10% (calculated on a simple interest basis). Such interest
shall be calculated from the date when such investment amount was actually paid until the date when the Series Investor receives the full
return of the Capital Increase Proceeds and interest. If such interest cannot fully compensate for all losses caused to the Series Investor
thereby, the Company shall make up the difference to the Series Investor, and the Founder shall bear unlimited joint and several guarantee
liability for the repayment of such Capital Increase Proceeds and interest and the make-up of losses.

10.5.3 If at that time, due to legal restrictions or other reasons, the Series Investor's rights under Sections
10.5.1 and 10.5.2 cannot be realized, the Company and the Existing Shareholder shall be obligated to use their best efforts to seek alternative
solutions to realize such rights in compliance with the law.

10.5.4 After this Agreement is terminated for other reasons, all rights and obligations of the Parties under
this Agreement shall terminate. One Party shall have no other claim rights against other Parties under this Agreement or for the termination
of this Agreement, except for the liabilities that should be borne in accordance with Articles 10 and 11.

**Article 11 Liability for Breach of Contract**

**11.1** The Company and the Founder each and jointly agree that, for any damages, losses, claims, litigation,
payment demands, judgments, settlements, taxes, interest, expenses and costs (including but not limited to reasonable attorneys' fees)
actually suffered, incurred or sustained by the Series Investor directly related to or arising from the following matters, or brought
against the Series Investor or its Affiliates, directors, partners, shareholders, employees, agents and representatives (the "Indemnified
Parties") (whether third-party claims, claims between the Parties to this Agreement or other claims), the Company and the Founder
shall jointly indemnify the Series Investor, defend the Series Investor and hold the Series Investor harmless, with the Series Investor
acting on behalf of itself or each other Indemnified Party, so that the Series Investor and each other Indemnified Party may obtain indemnification,
regardless of whether they are a party to this Agreement:

11.1.1 Breach by the Company or the Existing Shareholder of any representation, warranty, commitment, agreement
or obligation made by them under this Agreement; or

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Capital Increase Agreement - SH Entertainment Co., Ltd.

11.1.2 The Company being subject to administrative penalties or suffering losses due to operation of relevant
business without obtaining relevant business qualifications or timely completing relevant filing procedures; or

11.1.3 The Company being subject to administrative penalties or suffering other losses due to tax, labor or business
qualification non-compliance matters prior to the Closing Date (whether investigated before or after the Closing Date).

For the avoidance of doubt, the Series Investor's right to claim compensation for the matters listed in Sections 11.1.2 to 11.1.3 above shall not be affected by disclosure

**11.2** If the Company or the Founder breaches the contract, the Company and the Founder shall jointly compensate
the Series Investor for all losses suffered by the Series Investor due to such breach.

The Company and the Founder mutually guarantee joint and several liability for the performance of their obligations and responsibilities under this Agreement

**Article 12 Force Majeure**

**12.1** If any unforeseeable force majeure event that a Party cannot reasonably control occurs, such as earthquake,
typhoon, flood, fire, military action, strike, riot, war, or other events (each referred to as a "Force Majeure Event"), which
prevents such Party from performing this Agreement, such Party shall immediately notify the other Parties without delay, and shall provide
detailed information and supporting documents regarding such event within fifteen (15) days after the notice, explaining the reasons for
inability or delay in performing all or part of its obligations under this Agreement. The Parties shall seek to find and implement solutions
acceptable to all Parties through consultation.

**12.2** If a Force Majeure Event occurs, the Party affected by the Force Majeure shall not be responsible to any
other Party for any damage, increased cost or loss suffered by such other Party due to such Party's failure or delay in performing its
obligations under this Agreement as a result of the Force Majeure Event, and such failure or delay in performing this Agreement shall
not be deemed a breach of this Agreement. The Party claiming the occurrence of a Force Majeure Event shall take appropriate measures to
reduce or eliminate the impact of the Force Majeure Event, and shall endeavor to resume performance of obligations delayed or prevented
by the Force Majeure Event as soon as possible.

**Article 13 Governing Law and Dispute Resolution**

**13.1** The conclusion, validity, interpretation, performance and dispute resolution of this Agreement shall be
governed by the laws of the People's Republic of China and interpreted in accordance therewith.

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Capital Increase Agreement - SH Entertainment Co., Ltd.

**13.2** Any dispute arising from the execution of this Agreement or relating to this Agreement shall first be
resolved through friendly consultation among the Parties. If any dispute cannot be resolved through consultation within fifteen (15) days
after its occurrence, any Party shall have the right to submit such dispute to the China International Economic and Trade Arbitration
Commission for arbitration in Beijing in accordance with the arbitration rules then in effect of such commission. The arbitration language
shall be Chinese. The arbitration award shall be final and binding on all Parties.

**13.3** During the period of dispute resolution, the Parties shall continue to enjoy their other rights under
this Agreement and shall continue to perform their corresponding obligations under this Agreement.

**Article 14 Notices**

Any Notice shall be in writing and delivered to:

**To: SH Entertainment Co., Ltd.**

Contact: [Authorized Contact]

Address: [\*\*\*\*\*]

Tel: [\*\*\*\*\*]

Email: [\*\*\*\*\*]

**To: Han Shuyong**

Address: [\*\*\*\*\*]

Tel: [\*\*\*\*\*]

Email: [\*\*\*\*\*]

**To: SCENOVO PTE. Ltd.**

Contact: [Authorized Contact]

Address: [\*\*\*\*\*]

Tel: [\*\*\*\*\*]

Email: [\*\*\*\*\*]

**14.1** The various communication methods specified above shall determine their delivery time in the following
manner:

14.1.1 If delivered in person, a notice shall be deemed delivered when signed for by the notified party;

14.1.2 Notices that can be sent by mail shall be sent by registered express or courier service, with registered
mail deemed delivered on the seventh (7th) day after posting, and courier service deemed delivered when signed for by the notified party;

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Capital Increase Agreement - SH Entertainment Co., Ltd.

14.1.3 3. Notices sent by email shall be deemed delivered when the email system shows actual receipt by the notified
party.

**14.2** If any Party's above address or notification method changes (the "Changing Party"), the Changing
Party shall notify the other Parties within seven (7) days after such change occurs. If the Changing Party fails to notify in a timely
manner as agreed, the Changing Party shall bear the losses arising therefrom.

**Article 15 Confidentiality**

**15.1** The terms and conditions of this Agreement and its annexes (including all provisions and even the existence
of this Agreement and any related investment documents) are confidential information, and the Parties to this Agreement shall not disclose
them to any third party unless otherwise provided.

**15.2** After the Closing of this transaction, if any Party intends to disclose this transaction to the public
through press conferences, industry or professional media, marketing materials or other means, it shall consult with the Company and the
Series Investor in advance to confirm a unified external publicity plan (including but not limited to the scope of information that can
be disclosed, press release content, etc.). Without the prior written consent of the Company and the Series Investor, no Party shall disclose
to the public beyond the publicity plan confirmed by the Company and the Series Investor.

**15.3** Each Party shall keep confidential any proprietary or secret or confidential data and information relating
to the Company, its business or belonging to other Parties, or disclosed to it by other Parties at any time or for the negotiation of
this Agreement or for the establishment or operation of the Company, and the contents of this Agreement ("Confidential Information"),
and shall not disclose them to any third party or person other than the Parties to this Agreement, the Company, professional advisors
and relevant government departments.

**15.4** Notwithstanding the foregoing, the Parties shall have the right to disclose this transaction to their
respective shareholders, the Series Investor, fund management companies, investment banks, lenders, accountants, legal advisors, bona
fide potential investors, and employees, provided that the individual or institution receiving the information has agreed to assume confidentiality
obligations regarding such Confidential Information, as if it were a party to this Agreement.

**15.5** The information disclosed in the following circumstances shall not be subject to the restrictions described
above in this Article 15:

15.5.1 Required to be disclosed or used by law or any regulatory authority (including stock exchanges);

15.5.2 Required to be disclosed or used in any judicial proceedings arising from this Agreement or any other
agreement entered into pursuant to this Agreement, or reasonably disclosed to tax authorities in relation to relevant matters;

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Capital Increase Agreement - SH Entertainment Co., Ltd.

15.5.3 Disclosed to the Parties' professional advisors, provided that the Parties shall require such professional
advisors to comply with the provisions of this Article 15 regarding such Confidential Information, as if they were a party to this Agreement;

15.5.4 Information that has entered the public domain for reasons not attributable to the Parties to this Agreement;

15.5.5 Disclosure or use previously approved in writing by all other Parties

**Article 16 General Provisions**

**16.1** This Capital Increase Agreement, other Transaction Documents and their annexes constitute the entire agreement
among the Parties regarding this transaction, and supersede any prior agreements, investment letters of intent, memoranda of understanding,
representations or other obligations (whether in written or oral form, including all forms of communication) among the Parties regarding
this transaction, and this Capital Increase Agreement (including its amendments or modifications, and other Transaction Documents) contains
the sole and entire agreement among the Parties regarding the transactions contemplated by this Agreement.

**16.2** If any provision of this Capital Increase Agreement is invalid or unenforceable due to Chinese law applicable
to it, such provision shall be deemed not to exist from the beginning without affecting the validity of other provisions of this Agreement,
and the Parties to this Capital Increase Agreement shall consult to determine new provisions within the legal scope to ensure the maximum
realization of the original provisions' intent.

**16.3** This Capital Increase Agreement is binding on the successors and assigns of the Parties, and such successors
and assigns may enjoy the rights under this Capital Increase Agreement. The Series Investor shall have the right to assign and transfer
its rights, interests and obligations under this Capital Increase Agreement to a third party. Except as provided above, without the prior
written consent of the other Parties, no Party may assign or transfer any of its rights or obligations under this Agreement.

**16.4** Unless otherwise provided in this Capital Increase Agreement, the failure or delay by a Party to exercise
any right, power or privilege under this Capital Increase Agreement shall not constitute a waiver of such right, power or privilege, and
the single or partial exercise of such right, power or privilege shall not preclude the exercise of any other right, power or privilege.

**16.5** This Capital Increase Agreement is made in five (5) copies, with the Founder, the Company and the Series
Investor each holding one copy, and the remaining copies for industrial and commercial registration purposes, each having equal legal
effect.

**[SIGNATURE PAGE FOLLOWS]**

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Capital Increase Agreement - SH Entertainment Co., Ltd.

[The remainder of this page is intentionally left blank. This is the signature page to the Capital Increase Agreement]

---

| | |
|:---|:---|
| **SH Entertainment Co., Ltd. (Seal)** | **SH Entertainment Co., Ltd. (Seal)** |
| Signature: | |
| Name: |  |
| Title: |  |
| **SCENOVO PTE. Ltd. (Seal)** | **SCENOVO PTE. Ltd. (Seal)** |
| Signature: | |
| Name: |  |
| Title: |  |
| **Han Shuyong** | **Han Shuyong** |
| Signature: | */s/Han Shuyong* |

---

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## Exhibit 8.1

**Exhibit 8.1**

**PRINCIPAL SUBSIDIARIES AND VARIABLE INTEREST ENTITIES OF SCIENJOY HOLDING CORPORATION**

**<u>Subsidiaries</u>**

---

| | | |
|:---|:---|:---|
| **Name** | **Place of<br> Incorporation or<br> Organization** | **Proportion of<br> Ownership<br> Interest** |
| Scienjoy Inc. | Cayman Islands | 100% |
| Scienjoy Pte. Ltd. | Singapore | 100% |
| Scenovo Pte. Ltd. | Singapore | 51% |
| Techjoy Pte. Ltd. | Singapore | 35.7% |
| Scienjoy BeeLive Limited | Hong Kong SAR | 100% |
| Scienjoy International Limited | Hong Kong SAR | 100% |
| Fashionfly Limited | Hong Kong SAR | 51% |
| Golden Shield Enterprises Limited | British Virgin Islands | 100% |
| Scienjoy Verse Tech Ltd | Dubai | 51% |
| Scienjoy Meta Technology LLC | Dubai | 51% |
| SJ Verse Global Media LLC | Dubai | 45.9% |
| Star Home Global Media FZ-LLC | Dubai | 35.7% |
| SH Entertainment Co., Ltd. | South Korea | 35.7% |
| Sixiang Wuxian (Beijing) Technology Co., Ltd. | PRC | 100% |
| Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |
| Sixiang Zhihui (Beijing) Technology Co., Ltd. | PRC | 100% |
| Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |
| Holgus Sixiang Information Technology Co., Ltd. | PRC | 100% |
| Holgus Sixiang Haohan Internet Technology Co., Ltd.; | PRC | 100% |
| Kashgar Sixiang Times Internet Technology Co., Ltd.; | PRC | 100% |
| Kashgar Sixiang Lehong Information Technology Co., Ltd. | PRC | 100% |
| Sixiang Zhihui (Hainan) Technology Co., Ltd. | PRC | 100% |
| Sixiang Yingyue (Shanghai) Technology Co., Ltd. | PRC | 100% |

---

**<u>Variable Interest Entities</u>**

---

| | | |
|:---|:---|:---|
| **Name** | **Place of<br> Incorporation or<br> Organization** | **Proportion of<br> Ownership<br> Interest** |
| Zhihui Qiyuan (Beijing) Technology, Co. Ltd. | PRC | 100% |
| Hai Xiu (Beijing) Technology Company Co. Ltd. | PRC | 100% |
| Beijing Le Hai Technology Co. Ltd. | PRC | 100% |
| Beijing Sixiang Shiguang Technology Co. Ltd. | PRC | 100% |
| Sixiang Mifeng (Tianjin) Technology Co., Ltd | PRC | 100% |
| Changxiang Infinite Technology (Beijing) Co., Ltd. | PRC | 100% |
| ZhiHui QiYuan (HaiNan) Investment Co., Ltd. | PRC | 100% |
| Beijing Weiliantong Technology Co., Ltd. | PRC | 100% |
| HuaYuHeFeng (QingDao) Technology Co., Ltd. | PRC | 100% |
| Chuangda Zhihui (Beijing) Technology Co., Ltd. | PRC | 100% |
| Beijing Huayi Dongchen Technology Co., Ltd. | PRC | 100% |
| HongCheng Huiying (Zhejiang) Technology Industry Development Co., Ltd. | PRC | 51% |
| Hangzhou Sixiang Fengjing Culture Technology Co., Ltd. | PRC | 51% |
| Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd. | PRC | 100% |
| Xiuli (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |
| HaiFan (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |
| Leku (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |
| Hongren (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |
| Xiangfeng (Zhejiang) Culture Technology Co., Ltd. | PRC | 100% |

---

## Exhibit 12.1

**Exhibit 12.1**

**Certification by the Chief Executive Officer**

**Pursuant to Section 302 Of the Sarbanes-Oxley Act 2002**

I, Xiaowu He, Chief Executive Officer of Scienjoy Holding Corporation, certify that:

1. I have reviewed this annual report on Form 20-F of Scienjoy
Holding Corporation;

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 the statements 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 the financial 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(s) and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to ensure that 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;

&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the company's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the company's
internal control over financial reporting that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the
audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's
ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the company's internal control over financial reporting.

Date: April 23, 2026

---

| | |
|:---|:---|
| By: | /s/ Xiaowu He |
| Name: | Xiaowu He |
| Title: | Chief Executive Officer |

---

## Exhibit 12.2

**Exhibit 12.2**

**Certification by the Chief Financial Officer**

**Pursuant to Section 302 Of the Sarbanes-Oxley Act 2002**

I, Denny Tang, Chief Financial Officer of Scienjoy Holding Corporation, certify that:

1. I have reviewed this annual report on Form 20-F of Scienjoy
Holding Corporation;

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 the statements 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 the financial 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(s) and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to ensure that 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;

&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the company's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the company's
internal control over financial reporting that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the
audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's
ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the company's internal control over financial reporting.

Date: April 23, 2026

---

| | |
|:---|:---|
| By: | /s/ Denny Tang |
| Name: | Denny Tang |
| Title: | Chief Financial Officer |

---

## Exhibit 13.1

**Exhibit 13.1**

**Certification by the Chief Executive Officer**

**Pursuant to Section 906 Of the Sarbanes-Oxley Act 2002**

In connection with the Annual Report of Scienjoy Holding Corporation (the "Company) on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Xiaowu He, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the Company.

Date: April 23, 2026

---

| | |
|:---|:---|
| By: | /s/ Xiaowu He |
| Name: | Xiaowu He |
| Title: | Chief Executive Officer |

---

## Exhibit 13.2

**Exhibit 13.2**

**Certification by the Chief Financial Officer**

**Pursuant to Section 906 Of the Sarbanes-Oxley Act 2002**

In connection with the Annual Report of Scienjoy Holding Corporation (the "Company) on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Denny Tang, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the Company.

Date: April 23, 2026

---

| | |
|:---|:---|
| By: | /s/ Denny Tang |
| Name: | Denny Tang |
| Title: | Chief Financial Officer |

---

## Exhibit 15.1

**Exhibit 15.1**

**<u>Consent of Independent Registered Public Accounting Firm</u>**

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-256373 and 333-289804), and Form F-3 (Nos. 333-256714, 333-254818, 333-259951, and 333-280628) of our report dated April 23, 2026, relating to the consolidated financial statements of Scienjoy Holding Corporation, appearing in this Annual Report on Form 20-F for the year ended December 31, 2025.

We also consent to the reference to our firm under the heading "Experts" in such Registration Statements.

Onestop Assurance PAC

Singapore

April 23, 2026

## Exhibit 15.2

**Exhibit 15.2**

Beijing Feng Yu Law Firm

Room 606, Jingtai Building, No. Bin-24 Jianwaidajie,

Chaoyang District, Beijing 100022 China

Date: April 20, 2026

**To:**

SCIENJOY HOLDING CORPORATION

RM 1118, 11th Floor, Building 3, No. 99 Wangzhou Rd., Liangzhu St.

Yuhang District, Hangzhou, Zhejiang Province, 311113, China

Dear Sir/Madam:

We consent to the references to our firm under the caption "Item 3. Key Information—D. Risk Factors—Risks Related to our Corporate Structure—***If the PRC government deems that the agreements that establish the structure for operating our businesses in China do not comply with PRC regulations on foreign investment in Internet and other related businesses, or if these regulations or their interpretation change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, and may need to reorganize our current corporate structure to comply with PRC laws and regulations. In addition, if SHC issues new securities for future financing, the Company shall disclose the whole corporate structure including VIEs to CSRC and may be inquired by CSRC about the background of such structure***", "Risks Related to Doing Business in China—***The filing of the CSRC will be required and approval and/or other requirements from other PRC governmental authorities may be required in connection with an offering under PRC rules, regulations or policies, and, if required, we cannot predict whether or how soon we will be able to complete such filing or obtain such approval***" and "Item 4. Information on the Company—C. Organizational Structure—Contracts that enable us to receive substantially all of the economic benefits from the VIEs" in SCIENJOY HOLDING CORPORATION's Annual Report on Form 20-F for the year ended December 31, 2025 (the "Annual Report"), which is filed with the Securities and Exchange Commission (the "SEC") on April 20, 2026. We also consent to the filing with the SEC of this consent letter 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 Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.

Very truly yours,

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| | |
|:---|:---|
| /s/ YAN, Xuan | /s/ YAN, Xuan |
| Name: | YAN, Xuan |
| Title: | Executive Partner on behalf of :-<br> Beijing Feng Yu Law Firm |

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