Our Holding Company Structure and Contractual Arrangements with The Variable Interest Entity The9 Limited is not an operating company but a Cayman Islands holding company with no equity ownership in the consolidated variable interest entity, but maintains contractual arrangements with the consolidated variable interest entity and is considered the primary beneficiary of these entities, whose financial results are consolidated in The9 Limited’s consolidated financial statements under the U.S. GAAP for accounting purposes. The contractual arrangements may not be as effective as direct equity ownership in the consolidated variable interest entity, and the government authorities may challenge the enforceability of these contractual arrangements. Historically, we primarily operated online game business before we turned to blockchain business and conducted our operations then in mainland China through (i) our Chinese mainland subsidiaries, and (ii) the consolidated variable interest entity with which we have maintained contractual arrangements. Prior to 2025, we derived substantially all of our revenue from jurisdictions other than mainland China. Specifically, since February 2021, we have turned our business focus to global blockchain business and are primarily engaged in the operation of cryptocurrency mining. However in 2025, our Chinese mainland-related revenue has increased to 32.8% of the total revenues collected. In the second half of 2024, we have reentered the online gaming business in the Chinese mainland market and engaged in business cooperation with various gaming companies in mainland China. We currently conduct our operations in mainland China through (i) our Chinese mainland subsidiaries, and (ii) the consolidated variable interest entity with which we have maintained contractual arrangements. In May 2024, we entered into an exclusive publishing license agreement with Wemade Co. Ltd. (“Wemade”), a Korean company that owns the publishing rights to MIR M game, pursuant to which our wholly owned subsidiary incorporated in Hong Kong, China Crown Technology Limited, has the right to exclusively publish and service the new MIR M game in mainland China, in both mobile and PC version. However, the original publishing license agreement we entered into in May 2024 was terminated in October 2025 due to certain unstable factors in relation with MIR M Chinese trademark. The parties have reached settlements, including the refund of the license fee and the minimum payment fee that China Crown Technology Limited had already paid to Wemade under the original publishing license agreement. In August 2025, our wholly-owned Hong Kong subsidiary, Vast Ocean International Limited, launched the9bit, a next-generation gaming hub combining gameplay, top-ups, creator rewards, and community spaces. The proprietary the9bit gaming platform has surpassed 8 million users since its August 2025 launch. In September 2025, our variable interest entity Shanghai The9 Information Technology Co., Ltd. entered into a definitive agreement with Shanghai ZhongShun HengXin Network Technology Co., Ltd. (“ZhongShun”) to acquire 51% equity of ZhongShun’s wholly-owned subsidiary, Shanghai ZhongXinShun Network Technology Co., Ltd. (“ZhongXinShun”), the joint venture. ZhongShun contributed the exclusive rights of its two proprietary mobile games for zero consideration: (i) Glory All Stars (荣耀全明星) – an action RPG; and (ii) Ultraman: Hero Beyond Time (奥特曼:超时空英雄) – A newly developed action RPG title based on the globally renowned Ultraman IP, designed as an upgraded version of Glory All Stars with proven game play mechanics stability and strong IP-driven appeal. 3 Table of Contents ​ Additionally, in February 2026, our variable interest entity Shanghai The9 Information Technology Co., Ltd. (“Shanghai IT”) has entered into a definitive cooperation agreement with Chengdu Lumosi Network Technology Co., Ltd. (“Chengdu Lumosi”) to launch an AI-powered short drama and AI-assisted interactive movie game. Shanghai IT currently holds the exclusive mobile game development and publishing license for the classic TVB drama The Greed of Man (大时代). The original television series was produced and is owned by TVB. Building upon its licensed premium drama IP portfolio and recent breakthroughs in generative AI video technologies — including next-generation large-scale video generation models and AI-enabled production pipelines — Shanghai IT has initiated the development of AI-powered short drama formats and AI-assisted interactive movie game concepts inspired by The Greed of Man, within the scope of its existing authorized rights. Throughout 2025, we terminated our cooperation agreements with the joint venture partners, Huanyu, Tongze, JiTuo (each as defined below), due to their failure to meet annual operational targets. In December 2025, we terminated cooperation agreements with Zhejiang Huanyu Network Technology Co., Ltd. (“Zhejiang Huanyu”), including Share Purchase Agreement, Framework Cooperation Agreement and the Joint Venture Agreement, due to the failure of the joint venture company to achieve annual operational targets. In November 2025, we terminated cooperation agreements with Shao Xing TongZe Network Science and Technology Co., Ltd. (“Tongze”), including the Share Purchase Agreement, Framework Cooperation Agreement, and the Joint Venture Agreement, due to the failure of the joint venture company to achieve annual operational targets. In July 2025, we terminated cooperation agreements with Shenzhen gNetop Interactive Technology Co., Ltd. (“JiTuo”), including the Share Purchase Agreement, Framework Cooperation Agreement, and the Joint Venture Agreement, due to the re-negotiation and agreement on the remaining 49% acquisition of the joint venture, Shenzhen Shuzhi Technology Co., Ltd. (“Shuzhi”). In July 2025, immediately after the termination of joint venture agreement with JiTuo, we re-negotiated another agreement with JiTuo and acquired the remaining 49% of shares in Shenzhen Shuzhi for the total consideration price of RMB 75 million, and signed a share purchase agreement with JiTuo to reflect the acquisition. Pursuant to the agreement we will pay 1) RMB 30 million in cash, divided in two equal installments of RMB 15 million each and payable according to the terms thereof, i.e. cash consideration will be paid only when the targeted net profit before income tax is met, and 2) issue restricted Class A Ordinary shares for a total monetary value of RMB 45,000,000 in three batches, subject to the satisfaction of the operational targets. Shares issued not released are subject to cancellation and return to the Company. In February 2020, we extended several loans to NANYANG HERBS PTE. LTD. (the “NanYang Herbs”) and subsequently, we agreed with NanYang Herbs to convert all loans to NanYang Herbs into 50% shareholdings of NanYang Herbs. We entrusted a nominee to hold trust shares of 50% in NanYang Herbs, and the nominee had to exercise rights in accordance with the instructions of us. In February 2020, Nanyang Herbs entered into a research collaboration agreement with Nanyang Technological University (“NTU”) to jointly provide technology and financial support to fund the research project to embark on evidence-based study to illustrate the medicinal values and efficacies of certain herbs. We invested an amount of RMB3.3 million (US$0.5 million) to Nanyang Herbs in 2020 and RMB3.3 million (US$0.5 million) in 2021. In 2025, our subsidiary GameNow Limited, Nanyang Herbs and Nanyang Biologics Pte. Ltd (“NYB”), an affiliate of Nanyang Herbs, entered into an agreement, pursuant to which our investments in NanYang Herbs in 2020 and 2021, and our 50% shareholding in NanYang Herbs converted into 220,500 shares (14.54%) of Nanyang Biologics Pte. Ltd. In August 2025, we provided a convertible loan to NYB via entering into a Convertible Note Agreement with NYB with an aggregate principal amount of US$1,000,000 (the “Notes”), and the pre-money valuation of NYB of US$50,000,000 (the “First NYB CB Agreement”). The Maturity Date of the Notes is the date falling twenty-four (24) months from the closing date of each Note. Pursuant to the First NYB CB Agreement, the Notes shall be converted into a certain number of NYB shares at the agreed conversion price prior to filing of preliminary listing documents for public listing of NYB shares, which shall not be later than 31 March 2026 or such other date as NYB and we may mutually agree in writing (“the Listing Deadline”). If NYB is not listed on or before the Listing Deadline, we have the right to convert notes into equity or request repayment of the Notes together with accrued interest, at any time at our own discretion. As of the date of this annual report, this transaction has been closed, we have not exercised our right to convert. In November 2025, we signed another Convertible Note Agreement with an aggregate principal amount of US$1,000,000 with NYB, at the pre-money valuation of NYB of US$50,000,000, with substantially similar material commercial terms and conditions as the First NYB CB Agreement (the “Second NYB CB Agreement”). As of the date of this annual report, this transaction has been closed. 4 Table of Contents ​ For our operations in mainland China, laws and regulations of mainland China restrict and impose conditions on foreign investment in internet content, value-added telecommunication-based online marketing, audio and video services and mobile application distribution businesses. Accordingly, we had historically operated, and are currently operating our online game business in mainland China through the consolidated variable interest entity, and such structure is used to provide investors with exposure to foreign investment in PRC-based companies where laws and regulations of mainland China prohibit or restrict direct foreign investment in certain operating companies, and rely on contractual arrangements among our Chinese mainland subsidiaries, the consolidated variable interest entity and its shareholders to conduct business operations of the consolidated variable interest entity. The consolidated variable interest entity contributed an aggregate of 0.2%, 0.3% and 32.8% of the consolidated net revenues for the years ended December 31, 2023, 2024 and 2025, respectively. As used in this annual report, “we,” “us,” “our company” and “our” refers to The9 Limited, its subsidiaries, and, in the context of describing our operations and consolidated financial information, the variable interest entity in mainland China, Shanghai The9 Information Technology Co., Ltd., or Shanghai IT. Shanghai IT, established in September 2000, currently holds one Internet Content Provider License, operates our website and primarily engages in our gaming business. Investors in the ADSs are not purchasing equity interest in the consolidated variable interest entity in mainland China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands and may never directly hold equity interests in the consolidated variable interest entity in mainland China. A series of contractual agreements, including loan agreements, exclusive purchase option agreements, exclusive technology consulting and services agreements or exclusive business cooperation agreements, intellectual property rights license agreement, equity pledge agreements, powers of attorney, business cooperation agreement and business operations agreements, have been entered into by and among our subsidiaries, the consolidated variable interest entity and their respective shareholders. Despite the lack of legal majority ownership, we are able to direct the activities of and derive economic benefits from the consolidated variable interest entity pursuant to the contractual arrangements and therefore our Cayman Island holding company is considered the primary beneficiary of the consolidated variable interest entity for accounting purposes and consolidates the variable interest entity and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated variable interest entity as a consolidated entity under U.S. GAAP and we consolidate the financial results of the consolidated variable interest entity in our consolidated financial statements in accordance with U.S. GAAP. Neither The9 Limited nor its investors have an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the consolidated variable interest entity, and the contractual arrangements are not equivalent to an equity ownership in the business of the consolidated variable interest entity. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with The Variable Interest Entity,” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions Arrangements with Variable Interest Entity.” However, the contractual arrangements may not be as effective as direct ownership and we may incur substantial costs to enforce the terms of the arrangements. In addition, these agreements have not been tested in courts of mainland China. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements for our operations and operating licenses in mainland China, which may not be as effective as direct ownership” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The principal shareholders of the variable interest entity have potential conflicts of interest with us, which may adversely affect our business.” There are also substantial uncertainties regarding the interpretation and application of current and future laws, regulations and rules in mainland China regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the variable interest entity and its shareholders. It is uncertain whether any new laws or regulations of mainland China relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the variable interest entity is found to be in violation of any existing or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government determines that the contractual arrangements constituting part of the variable interest entity structure do not comply with laws and regulations of mainland China, or if these laws and regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” 5 Table of Contents ​ The following diagram illustrates our organizational structure, the place of formation, ownership interest of each of our significant subsidiaries and material variable interest entity as of the date of this annual report: Note: ​ The shareholders of Shanghai IT are Mr. Wei Ji and Mr. Qi Wang, each owning 64% and 36% of Shanghai IT’s equity interest, respectively. Mr. Wei Ji and Mr. Qi Wang are two of our employees. Current laws and regulations of mainland China impose substantial restrictions on foreign ownership of entities involved in internet content provision, or ICP, in mainland China. Therefore, we conduct part of our activities through a series of agreements with Shanghai IT, the variable interest entity. Shanghai IT holds the requisite licenses and approvals for conducting ICP-related businesses in mainland China. Shanghai IT is owned by our employees Wei Ji and Qi Wang. We have obtained the exclusive right to benefit from Shanghai IT’s licenses and approvals. In addition, through a series of contractual arrangements with Shanghai IT and its shareholders, we are able to direct and conduct business operations through contractual arrangements with Shanghai IT. We believe that the individual shareholders of Shanghai IT will not receive material personal benefits from these agreements except as shareholders or employees of The9 Limited. Despite the lack of legal majority ownership, we are able to direct the activities of and derive economic benefits from the consolidated variable interest entity through contractual arrangements and therefore our Cayman Island holding company is considered the primary beneficiary of the consolidated variable interest entity for accounting purposes and consolidates the variable interest entity and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated variable interest entity as a consolidated entity under U.S. GAAP and we consolidate the financial results of the consolidated variable interest entity in our consolidated financial statements in accordance with U.S. GAAP. Neither The9 Limited nor its investors have an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the consolidated variable interest entity, and the contractual arrangements are not equivalent to an equity ownership in the business of the consolidated variable interest entity. 6 Table of Contents ​ We do not believe we could have obtained these agreements, taken as a whole, from unrelated third parties. Because of the uncertainty relating to the legal and regulatory environment in China, the terms of most of the agreements were not defined unless terminated by the parties thereto. According to our PRC counsel, Grandall Law Firm, subject to the interpretation and implementation of the Circular and the Administrative Measures on Network Publication promulgated by the General Administration of Press and Publication, or the GAPP, the existing contractual arrangements are valid, binding and enforceable under the current laws and regulations of mainland China. The principal provisions of these agreements are described below. Exclusive Technical Service Agreement. We provide Shanghai IT with technical services for the operation of computer software and related businesses, including the provision of systematic solutions for the operation of internet websites, the rental of computer and internet facilities, daily maintenance of internet servers and databases, the development and update of computer software, and all other related technical and consulting services. Shanghai IT pays service fees equivalent to 90% of profits after deduction of validated costs by the contracting parties to us. We are the exclusive provider of these services to Shanghai IT. According to the rules and regulations of mainland China, related party transactions should be negotiated at the arm’s length basis and apply reasonable transfer pricing methods. However, the determination of service fees is under the sole discretion of us. This agreement shall remain in force indefinitely unless the parties agree in writing to terminate in advance. Shareholder Voting Proxy Agreement. Each of the shareholders of Shanghai IT has entered into a shareholder voting proxy agreement with us, under which each shareholder of Shanghai IT irrevocably grants any third party we designate the power to exercise all voting rights to which he/she is entitled as a shareholder of Shanghai IT, including the right to attend shareholders meetings, to exercise voting rights and to appoint directors, a general manager, and other senior management of Shanghai IT. The power of proxy is irrevocable and may only be terminated at our discretion. Call Option Agreement. We entered into a call option agreement with each of the shareholders of Shanghai IT, under which the parties irrevocably agreed that, at our sole discretion, we and/or any third party we designate will be entitled to acquire all or part of the equity interest in Shanghai IT, to the extent permitted by the then-effective laws and regulations of mainland China. The consideration for such acquisition will be the price equal to the lower of the amount of the registered capital of Shanghai IT and the minimum amount permissible by the then-applicable laws of mainland China. The shareholders of Shanghai IT have also agreed not to enter into any transaction, or fail to take any action, that would substantially affect the assets, liabilities, equity, operations or other legal rights of Shanghai IT without our prior written consent, including, without limitation, declaration and distribution of dividends and profits; sale, assignment, mortgage or disposition of, or encumbrances on, Shanghai IT’s equity; merger or consolidation; creation, assumption, guarantee or incurrence of any indebtedness; entering into other materials contracts. This agreement shall not expire until such time as we acquire all equity interests of Shanghai IT subject to applicable laws of mainland China. Loan Agreement. From 2002 to May 2005, we provided an aggregate of RMB23.0 million in loan to the then shareholders of Shanghai IT, namely Jun Zhu and Yong Wang, for the purposes of capitalizing and increasing the registered capital of Shanghai IT. Such loan agreement was assumed by the current shareholders of Shanghai IT when Jun Zhu transferred the equity interest in Shanghai IT to Wei Ji in 2011 and Yong Wang transferred the equity interests in Shanghai IT to Zhimin Lin in 2014. Zhimin Lin transferred the equity interests in Shanghai IT to Qi Wang in 2022. In May 2019, we terminated such loan agreement and entered into a new loan agreement among the shareholders of Shanghai IT and Shanghai Hui Ling, our subsidiary. Pursuant to the terms of this new loan agreement, we granted an interest-free loan to each shareholder of Shanghai IT for the explicit purpose of making a capital contribution to Shanghai IT. The loans have an unspecified term and will remain outstanding for the shorter of the duration of Shanghai Hui Ling or that of the Shanghai IT, or until such time that we elect to terminate the agreement (which is at our sole discretion) at which point the loans are payable on demand. Such loans shall only become immediately due and payable when we send a written notice to the borrowers requesting repayment. In December 2021, Zhimin Lin, Qi Wang, Wei Ji, Shanghai Hui Ling, and Shanghai IT entered into a Transfer Agreement of Contract Interest, where all contract interest of Zhimin Lin under the loan agreement has been transferred to Qi Wang. Currently, Qi Wang and Wei Ji have pledged all of their equity interests in Shanghai IT in favor of us under the equity pledge agreements. In the event of a breach of any term in the loan agreement or any other agreement by either Shanghai IT or its shareholders, we will be entitled to enforce our rights as a pledgee under the agreement. 7 Table of Contents ​ Equity Pledge Agreements. To secure the full performance by Shanghai IT or its shareholders of their respective obligations under the Shareholder Voting Proxy Agreement, the Call Option Agreement and the Loan Agreement, the shareholders of Shanghai IT have pledged all of their equity interests in Shanghai IT in favor of us under two equity pledge agreements. In addition, the dividend distributions to the shareholders of Shanghai IT, if any, will be deposited in an escrow account over which we have exclusive control. The pledge shall remain effective until all obligations under such agreements have been fully performed. The shareholders have the obligation to maintain ownership and conduct business operations with the pledged equity. Under no circumstances, without our prior written consent, may any shareholder transfer or otherwise encumber any equity interests in Shanghai IT. If any event of default as provided for therein occurs, Shanghai Hui Ling, as the pledgee, will be entitled to dispose of the pledged equity interests through transfer or assignment and use the proceeds to repay the loans or make other payments due under the above loan agreement up to the loan amounts. Each of the shareholders of Shanghai IT has registered the pledge of its equity interests with the local administration for market regulation pursuant to the Property Rights Law of mainland China. In the event of a breach of any term in the above agreements by either Shanghai IT or its shareholders, we will be entitled to enforce our pledge rights over such pledged equity interests to compensate for any and all losses suffered from such breach. Our corporate structure is subject to risks arising from the contractual arrangements with the consolidated variable interest entity. If the PRC government determines that the contractual arrangements constituting part of the variable interest entity structure do not comply with laws and regulations of mainland China, or if these laws and regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. The PRC regulatory authorities could disallow the variable interest entity structure, which would likely result in a material adverse change in our operations, and the ADSs or Class A ordinary shares may decline significantly in value or become worthless. Our holding company, our Chinese mainland subsidiaries and the consolidated variable interest entity, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the consolidated variable interest entity and, consequently, significantly affect the financial performance of the consolidated variable interest entity and our company as a whole. For a detailed description of the risks arising from our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” We face various risks and uncertainties related to doing business in China. For the business operations that are conducted in mainland China, we are subject to complex and evolving laws and regulations of mainland China. For example, we face risks arising from regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. These risks could result in a material adverse change in our operations and the value of the ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of risks related to doing business in China, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.” PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations, including data security related regulations, in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of the ADSs.” Risks and uncertainties arising from the PRC legal system, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations of mainland China, could result in a material adverse change in our operations and the value of the ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” and “—We may be adversely affected by the complexity, uncertainties and changes in regulation in mainland China of blockchain, and internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” 8 Table of Contents ​ Permissions Required from the PRC Authorities for Our Operations We conduct our business primarily through our subsidiaries and through the variable interest entity in mainland China. Our operations in mainland China are governed by laws and regulations of mainland China. As of the date of this annual report, for our operations in mainland China, our Chinese mainland subsidiaries, the variable interest entity and its subsidiaries have obtained the necessary licenses and permits from the PRC government authorities. In addition to the Business License issued by the department of the State Administration for Market Regulation for each of our Chinese mainland subsidiaries and the consolidated variable interest entity, mainland China subsidiaries and the variable interest entity are required to obtain, and have obtained the Internet Content Provider License, which covers all our business operations in mainland China. Given the uncertainties of interpretation and implementation of laws and regulations and the enforcement practice by government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in regulation in mainland China of blockchain, and internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” If (i) we do not receive or maintain any permissions or approvals, (ii) we inadvertently concluded that certain permissions or approvals have been acquired or are not required, or (iii) applicable laws, regulations or interpretations thereof change and we become subject to the requirement of additional permissions or approvals in the future, we cannot assure you that we will be able to obtain such permissions or approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations. Furthermore, as advised by Grandall Law Firm, our PRC legal counsel, under current laws, based solely on the facts as currently represented by us, regulations and regulatory rules in mainland China currently in effect, as of the date of this annual report, we, our Chinese mainland subsidiaries and the consolidated variable interest entity (i) are not required to fulfill filing procedures and obtain approval from the China Securities Regulatory Commission, or the CSRC, immediately as an offshore listing company, but need to file accordingly if we conduct further offshore offerings, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not been asked to obtain or have we been denied such permissions by the CSRC or the CAC, and (iv) have not been required to apply for, nor have we been denied, any permission or approval from any other PRC government authority. However, the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers in recent years. According to the Notice on the Management Arrangement of Domestic Enterprises’ Overseas Issuance and Listing Filing, existing enterprises are not required to fulfill filing procedures and obtain CSRC approval immediately, but should file as required when it comes to matters such as further offshore offerings. Existing enterprises refer to those whose applications for indirect overseas issuance and listing have been approved by overseas regulatory agencies or overseas stock exchanges before March 31, 2023. Our PRC legal counsel is of the opinion that we meet the definition of a domestic enterprise with indirect overseas listing. Therefore, we believe that as an existing enterprise, we are not required to fulfill filing procedures immediately, but shall file for CSRC approval accordingly if we plan to conduct further offshore offering in the future. If we fail to obtain the approval or complete other filing procedures for any future offshore offering or listing, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our Chinese mainland subsidiaries, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of the ADSs. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under laws of mainland China, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing” and “—Risks Related to Our Company and Our Industry—Our business is subject to complex and evolving Chinese and international laws and regulations regarding data privacy and cybersecurity. Failure to protect confidential information of our customers and network against security breaches could damage our reputation and brand and substantially harm our business and results of operations.” 9 Table of Contents ​ The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board (United States), or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report notifying the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. Our independent registered public accounting firm, RBSM LLP (‘RBSM”), whose audit report for the fiscal years 2023, 2024 and 2025 is included in this annual report on Form 20-F, is headquartered in New York, New York, and has been inspected by the PCAOB on a regular basis. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the trading prohibition under the HFCAA. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PCAOB may be unable to inspect or investigate completely our auditor in relation to their audit work performed for our financial statements. If the PCAOB is unable to conduct such inspection, our investors would be deprived of the benefits of such inspection” and “—The ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect or investigate completely auditors located in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” Cash and Asset Flows through Our Organization The9 Limited is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries incorporated under the laws of various jurisdictions where we have business presence. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries, which is subject to restrictions imposed by the applicable laws and regulations in these jurisdictions. In certain jurisdictions, there are currently no foreign exchange control regulations which restrict the ability of our subsidiaries in these jurisdictions to distribute dividends to us. However, the regulations may be changed and the ability of these subsidiaries to distribute dividends to us may be restricted in the future. As for our operation in mainland China, under the laws and regulations of mainland China, if our existing Chinese mainland subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned Chinese mainland subsidiaries are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under the laws and regulations of mainland China, each of our subsidiaries and the variable interest entity in mainland China is required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. Furthermore, there is no assurance the PRC government will not intervene in or impose restrictions on the ability of us, our subsidiaries, and the consolidated variable interest entity to transfer cash. To the extent cash in the business is in mainland China or an entity in mainland China, the funds may not be available to fund operations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the variable interest entity by the PRC government to transfer cash. We do not, however, expect cash transfer from our Chinese mainland subsidiaries and the variable interest entity and its subsidiaries to us, or the other way around. 10 Table of Contents ​ We have established stringent controls and procedures for cash flows within our organization. Each transfer of cash between our Cayman Islands holding company and a subsidiary, the variable interest entity or its subsidiaries is subject to internal approval. The cash inflows of the Cayman Islands holding company were primarily generated from the proceeds we received from our public offerings of securities, other financing activities and cash generated from operating activities. Our company has established a unified centralized cash management policy within our group companies to direct how funds are transferred between The9 Limited, our subsidiaries and the consolidated variable interest entity and its subsidiaries to improve the efficiency and ensure the security of cash management. Our management has established a series of manuals and policies, divided into five sub-processes, namely, bank account management, collection, payment, bank balance management, and physical cash management. They apply to all of our subsidiaries and the consolidated variable interest entity and its subsidiaries. We have complied with the applicable laws and regulations for the operation of such cash centralized management accounts and completed necessary registration and approval procedures with governmental authorities. Every fund transfer within our group goes through an appropriate review and approval process depending on the nature and amount of the transfer under our cash management policy. In each sub-process, we enforce different levels of checking and approval procedures, ranging from staff level employees, department heads, chief financial officer, to chief executive officer. In 2023, 2024 and 2025, our Cayman Islands holding company transferred cash in the total amount of RMB56.4 million, RMB33.4 million and nil to our subsidiaries, respectively, and transferred cash, through our offshore intermediate holding entities, in the total amount of nil, nil and nil to the variable interest entity and its subsidiaries, respectively, and received cash in the total amount of RMB49.7 million, RMB28.4 million and nil from our subsidiaries, respectively. In 2023, 2024 and 2025, the consolidated variable interest entity and its subsidiaries transferred cash in the total amount of RMB0.5 million, RMB4.4 million and RMB24.4 million (US$3.5 million) to our subsidiaries, respectively, and received cash in the total amount of RMB10.0 million, RMB45.5 million and RMB60.7 million (US$8.7 million) from our subsidiaries, respectively. The variable interest entity and its subsidiaries have received nil, nil and nil of service income from our subsidiaries in 2023, 2024 and 2025, respectively. In 2023, 2024 and 2025, apart from the aforementioned amount and transactions between our subsidiaries in the ordinary course of business, no cash were transferred between us, our subsidiaries, the variable interest entity or its subsidiaries. In 2023, 2024 and 2025, no assets other than cash were transferred between our Cayman Islands holding company and a subsidiary, a variable interest entity or its subsidiary, no subsidiaries paid dividends or made other distributions to the holding company, and no dividends or distributions were paid or made to U.S. investors. Pursuant to the Exclusive Technical Service Agreement between our wholly owned mainland China subsidiaries and the variable interest entity, the amount of service fee shall be calculated in such manner as determined by both the variable interest entity and our wholly owned mainland China subsidiaries from time to time based on the nature of service and paid monthly. Considering the future operating and cashflow needs of the variable interest entity, for the years ended December 31, 2023, 2024 and 2025, our wholly owned mainland China subsidiaries agreed not to charge any service fees from the variable interest entity. As a result, no payments were made by the variable interest entity under this agreement. For details of the financial position, cash flows, and results of operations of the consolidated variable interest entity, see “—Financial Information Related to the Consolidated Variable Interest Entity” and pages F-32 of this annual report on Form 20-F. 11 Table of Contents ​ As a Cayman Islands holding company, we may receive dividends from our Chinese mainland subsidiaries. Under the PRC Enterprise Income Tax Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our Chinese mainland subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with mainland China that provides for a reduced rate of withholding tax. The Cayman Islands, where The9 Limited, the direct parent company of our Chinese mainland subsidiaries, is incorporated, does not have such a tax treaty with mainland China. Hong Kong has a tax arrangement with mainland China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the enterprise in mainland China distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. If our Chinese mainland subsidiaries declare and distribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our company. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements in relation to the variable interest entity may be subject to scrutiny by the PRC tax authorities and they may determine that we or the variable interest entity owes additional taxes, which could negatively affect our financial condition and the value of your investment.” If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its global income at a rate of 25%. For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay dividends in the future. ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax calculation (1) Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25) % Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5) % Net distribution to Parent/Shareholders 67.5 % Notes: (1) For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in mainland China. (2) Under the terms of variable interest entity agreements, our Chinese mainland subsidiaries may charge the consolidated variable interest entity for services provided to the consolidated variable interest entity. These service fees shall be recognized as expenses of the consolidated variable interest entity, with a corresponding amount as service income by our Chinese mainland subsidiaries and eliminate in consolidation. For income tax purposes, our Chinese mainland subsidiaries and the consolidated variable interest entity file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the consolidated variable interest entity and as income by our Chinese mainland subsidiaries and are tax neutral. (3) Certain of our subsidiaries and the variable interest entity qualifies for a 15% preferential income tax rate in mainland China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. (4) The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of mainland China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainland China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied. The table above has been prepared under the assumption that all profits of the consolidated variable interest entity will be distributed as fees to our Chinese mainland subsidiaries under tax neutral contractual arrangements. If, in the future, the accumulated earnings of the consolidated variable interest entity exceed the service fees paid to our Chinese mainland subsidiaries (or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities), the consolidated variable interest entity could make a non-deductible transfer to our Chinese mainland subsidiaries for the amounts of the stranded cash in the consolidated variable interest entity. This would result in such transfer being non-deductible expenses for the consolidated variable interest entity but still taxable income for the Chinese mainland subsidiaries. 12 Table of Contents ​ Under laws and regulations of mainland China, our PRC subsidiaries and the variable interest entity are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Our subsidiaries’ ability to distribute dividends is based upon their distributable earnings. Current regulations of mainland China permit our Chinese mainland subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our Chinese mainland subsidiaries and the variable interest entity is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in mainland China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are not distributable as cash dividends. In the event that any of our Chinese mainland subsidiaries incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, our Chinese mainland subsidiaries, the variable interest entity and its subsidiaries generate revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our Chinese mainland subsidiaries to pay dividends to us. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our Chinese mainland subsidiaries to fund any cash and financing requirements we may have. Although currently substantially all of our revenue is generated from our subsidiaries outside of mainland China, any limitation on the ability of our Chinese mainland subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Regulation in mainland China of loans to and direct investment in entities in mainland China by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans or additional capital contributions to our Chinese mainland subsidiaries and the variable interest entity, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Financial Information Related to the Consolidated Variable Interest Entity The following table presents the condensed consolidating schedule of financial information for the consolidated variable interest entity and other entities as of the dates presented. In 2023, we sold NFTSTAR Singapore Pte. Ltd. and its subsidiaries to an unrelated third party. As a result of the disposal, we no longer consolidate the operating results of the NFT business. The historical financial results of the NFT business are reflected in our consolidated financial statements as discontinued operations accordingly. Selected Condensed Consolidating Statements of Income Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2025 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Other Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Net revenues ​ — ​ 72,467 ​ — ​ 35,431 ​ — ​ 107,898 Cost of Revenues ​ — (80,278) — ​ (25,811) — (106,089) Gross profit (loss) ​ — (7,811) — ​ 9,620 — 1,809 Operating (expenses) income: ​ (153,646) (93,189) (2,505) ​ (33,583) — (282,923) Loss from operations ​ (153,646) (101,000) (2,505) ​ (23,963) — (281,114) Income (loss) from continuing operations before income tax expense and share of loss in equity method investments ​ (235,436) (120,382) (2,480) ​ (49,937) — (408,235) Gain (loss) from discontinued operations, net ​ — ​ — ​ — ​ — ​ — ​ — Net income (loss) ​ (402,446) 46,628 (2,480) ​ (50,618) — (408,916) Net income (loss) attributable to The9 Limited ordinary shareholders ​ (402,446) 46,628 (2,480) ​ (44,148) — (402,446) Total comprehensive income (loss) ​ (402,446) 40,124 (2,480) ​ (44,148) — (408,950) ​ 13 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Other Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Net revenues ​ — ​ 111,396 ​ — ​ 318 ​ — ​ 111,714 Cost of Revenues ​ — (112,848) — ​ (470) — (113,318) Gross profit (loss) ​ — (1,452) — ​ (152) — (1,604) Operating (expenses) income: ​ (97,153) 64,248 (4,715) ​ (19,540) — (57,160) (Loss) Income from operations ​ (97,153) 62,796 (4,715) ​ (19,692) — (58,764) Income (loss) from continuing operations before income tax expense and share of loss in equity method investments ​ (60,046) 26,201 (4,657) ​ (34,018) — (72,520) Gain (loss) from discontinued operations, net ​ — ​ — ​ — ​ — ​ — ​ — Net income (loss) ​ (73,424) 39,028 (4,657) ​ (34,589) — (73,642) Net income (loss) attributable to The9 Limited ordinary shareholders ​ (73,424) 39,028 (4,657) ​ (34,371) — (73,424) Total comprehensive income (loss) ​ (73,424) 38,662 (4,657) ​ (34,371) — (73,790) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Other Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Net revenues ​ — ​ 173,617 ​ — ​ 428 ​ — ​ 174,045 Cost of Revenues ​ — (211,153) (1,808) ​ (218) — (213,179) Gross profit (loss) ​ — (37,536) (1,808) ​ 210 — (39,134) Operating (expenses) income: ​ (117,011) (130,417) (7,811) ​ (23,380) — (278,619) Loss from operations ​ (117,011) (167,953) (9,619) ​ (23,170) — (317,753) Income (loss) from continuing operations before income tax expense and share of loss in equity method investments ​ (96,446) (192,262) (9,590) ​ 154,021 — (144,277) Gain (loss) from discontinued operations, net ​ 158,809 ​ (1,956) ​ — ​ — ​ — ​ 156,853 Net income (loss) ​ 20,003 (151,858) (9,590) ​ 154,021 — 12,576 Net income (loss) attributable to The9 Limited ordinary shareholders ​ 20,003 (145,093) (9,590) ​ 154,683 — 20,003 Total comprehensive income (loss) ​ 20,003 (151,735) (9,590) ​ 154,683 — 13,361 ​ 14 Table of Contents ​ Selected Condensed Consolidating Balance Sheets Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2025 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Other Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Cash and cash equivalents ​ 485 50,133 110 ​ 7,761 — 58,489 Due from group companies ​ 486,796 ​ 5,466,863 ​ 24,999 ​ 447,496 ​ (6,426,154) ​ — Current assets ​ 491,210 5,752,874 48,274 ​ 476,235 (6,426,154) 342,439 Non-current assets ​ 139,432 109,025 83 ​ 2,769 — 251,309 Total assets ​ 630,642 5,861,899 48,357 ​ 479,004 (6,426,154) 593,748 Due to group companies ​ 285,978 ​ 4,642,395 ​ 51,418 ​ 1,446,363 ​ (6,426,154) ​ — Current liabilities ​ 367,063 4,804,095 51,565 ​ 1,546,828 (6,426,154) 343,397 Non-current liabilities ​ — 7,735 — ​ 80 — 7,815 Total liabilities ​ 367,063 4,811,830 51,565 ​ 1,546,908 (6,426,154) 351,212 Ordinary shares contingently redeemable ​ 72,699 — — ​ — — 72,699 Total equity (deficit) ​ 190,880 1,050,069 (3,208) ​ (1,067,904) — 169,837 Total liabilities and equity (deficit) ​ 630,642 5,861,899 48,357 ​ 479,004 (6,426,154) 593,748 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Cash and cash equivalents ​ 474 7,056 368 ​ 3,013 — 10,911 Due from group companies ​ 536,347 ​ 4,945,609 ​ 24,999 ​ 446,094 ​ (5,953,049) ​ — Current assets ​ 538,099 5,155,834 48,532 ​ 454,272 (5,953,049) 243,688 Non-current assets ​ 254,556 112,444 105 ​ 25,851 — 392,956 Total assets ​ 792,655 5,268,278 48,637 ​ 480,123 (5,953,049) 636,644 Due to group companies ​ 301,066 ​ 4,199,607 ​ 50,465 ​ 1,401,911 ​ (5,953,049) ​ — Current liabilities ​ 349,445 4,262,012 50,784 ​ 1,496,415 (5,953,049) 205,607 Non-current liabilities ​ 1,923 1,604 — ​ — — 3,527 Total liabilities ​ 351,368 4,263,616 50,784 ​ 1,496,415 (5,953,049) 209,134 Ordinary shares contingently redeemable ​ 102,638 — — ​ — — 102,638 Total equity (deficit) ​ 338,649 1,004,662 (2,147) ​ (1,016,292) — 324,872 Total liabilities and equity (deficit) ​ 792,655 5,268,278 48,637 ​ 480,123 (5,953,049) 636,644 ​ Selected Condensed Consolidating Cash Flows Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2025 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Net cash provided by (used in) operating activities ​ 11 ​ (37,880) ​ (1,677) ​ 7,790 ​ — ​ (31,756) Investment in group companies ​ — ​ (1,420) ​ — ​ — ​ 1,420 ​ — Net cash provided by (used in) investing activities ​ — ​ 3,437 ​ — ​ (3,742) ​ 1,420 ​ 1,115 Investment from group companies ​ — ​ — ​ 1,420 ​ — ​ (1,420) ​ — Net cash provided by (used in) financing activities ​ — 77,814 1,420 ​ 654 (1,420) 78,468 ​ 15 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ Consolidated ​ ​ ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ The9 Limited ​ Subsidiaries ​ Interest Entity ​ Interest Entity ​ Eliminations ​ Total ​ ​ RMB (in thousands) Net cash provided by (used in) operating activities ​ 4,936 ​ (66,783) ​ (5,045) ​ 22,695 ​ — ​ (44,197) Investment in group companies ​ — ​ (4,578) ​ — ​ — ​ 4,578 ​ — Net cash provided by (used in) investing activities ​ — ​ (40,252) ​ — ​ (21,344) ​ 4,578 ​ (57,018) Investment from group companies ​ — ​ — ​ 4,578 ​ — ​ (4,578) ​ — Net cash provided by (used in) financing activities ​ (16,602) 85,075 4,578 ​ 1,295 (4,578) 69,768 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beneficiaries of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Consolidated ​ Consolidated ​ ​ ​ ​ ​ ​ ​ ​ Company ​ Variable ​ Variable ​ ​ ​ Consolidated ​ ​ ​ ​ The9 Limited ​ ​ ​ Subsidiaries ​ ​ ​ Interest Entity ​ ​ ​ Interest Entity ​ ​ ​ Eliminations ​ ​ ​ Total ​ ​ RMB (in thousands) Net cash provided by (used in) operating activities ​ (54,377) ​ 26,020 ​ (9,878) ​ (8,085) ​ — ​ (46,320) Investment in group companies ​ — ​ (6,765) ​ — ​ — ​ 6,765 ​ — Net cash provided by (used in) investing activities ​ — (3,787) — ​ 1,492 6,765 4,470 Investment from group companies ​ — — 6,765 ​ — (6,765) — Net cash provided by (used in) financing activities ​ 47,609 (14,054) 6,765 ​ (1,090) (6,765) 32,465 ​ 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 Investing in the ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in the ADSs. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in this section titled “Item 3. Key Information—D. Risk Factors.” Risks Related to Our Company and Our Industry Risks and uncertainties related to our business include, but are not limited to, the following: ● We may incur losses, negative cash flows from operating activities and negative working capital position in the future; ● We have been transitioning our business focus and our results of operations may be materially and adversely affected; ● New lines of business or new products and services may subject us to additional risks; ● We may not be able to obtain additional financing to support our business and operations, and our equity or debt financings may have an adverse effect on our business operations and share price; 16 Table of Contents ​ ● Our gaming business is intensely competitive. We face the risks of changing consumer preferences and uncertainty about market acceptance of our new products and the IPs. If we do not deliver new products to the market, or if consumers prefer our competitors’ products or services over those we provide, our operating results will suffer; ● The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us; ● Because our miners are designed specifically to mine Bitcoin, our future success will depend in large part upon the value of Bitcoin, and any sustained decline in its value could adversely affect our business and results of operations; ● Regulatory changes or actions may restrict the use of Bitcoin or the operation of the Bitcoin network in a manner that adversely affects an investment in us; ● Our 9bit platform is exposed to impersonation risks, fraudulent accounts and token listings claiming affiliation with the platform; ● Our international business efforts could adversely affect us; ● Our business is subject to complex and evolving Chinese and international laws and regulations regarding data privacy and cybersecurity. Failure to protect confidential information of our customers and network against security breaches could damage our reputation and brand and substantially harm our business and results of operations. Risks Related to Our Corporate Structure Risks and uncertainties relating to our corporate structure include, but are not limited to, the following: ● We are a Cayman Islands holding company with no equity ownership in the consolidated variable interest entity and we conduct our operations in mainland China primarily through the consolidated variable interest entity with which we have maintained contractual arrangements. Investors in our Class A ordinary shares or the ADSs thus are not purchasing equity interest in the consolidated variable interest entity in mainland China but instead are purchasing equity interest in a Cayman Islands holding company. If the PRC government determines that the contractual arrangements constituting part of the variable interest entity structure do not comply with laws and regulations of mainland China, or if these laws and regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. The PRC regulatory authorities could disallow the variable interest entity structure, which would likely result in a material adverse change in our operations, and the ADSs or Class A ordinary shares may decline significantly in value or become worthless. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government determines that the contractual arrangements constituting part of the variable interest entity structure do not comply with laws and regulations of mainland China, or if these laws and regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” for details; and ● The principal shareholders of the variable interest entity have potential conflicts of interest with us, which may adversely affect our business. Risks Related to Doing Business in China We are also subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following: ● Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business; ● The PCAOB may be unable to inspect or investigate completely our auditor in relation to their audit work performed for our financial statements. If the PCAOB is unable to conduct such inspection, our investors would be deprived of the benefits of such inspection; 17 Table of Contents ​ ● The ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect or investigate completely auditors located in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment; ● Changes in international trade policies and rising political tensions, particularly between the U.S. and China, may adversely impact our business and operating results; ● We may be adversely affected by the complexity, uncertainties and changes in regulation in mainland China of blockchain, and internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations; ● PRC government has significant authority in regulating our operations and may influence our operations. It may exert more oversight and control over offerings conducted overseas by, and/or foreign investment in, China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or be worthless. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of the ADSs; ● There is no assurance the PRC government will not intervene in or impose restrictions on the ability of us, our subsidiaries, and the consolidated variable interest entity to transfer cash. To the extent cash in the business is in mainland China or an entity in mainland China, the funds may not be available to fund operations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the variable interest entity by the PRC government to transfer cash. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Restrictions on currency exchange in mainland China limit our ability to utilize our revenues effectively, make dividend payments and meet our foreign currency denominated obligations” for details; and ● Uncertainties with respect to the PRC legal system could adversely affect us. Certain laws and regulations of mainland China can evolve quickly, which bring risks and uncertainties to their interpretation and enforcement. Administrative and court proceedings in mainland China may be protracted. Some government policies and internal rules may not be published on a timely manner. These risks and uncertainties may make it difficult for us to meet or comply with requirements under the applicable laws and regulations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” General Risks Related to Our Shares, ADSs and Warrants In addition to the risks described above, we are subject to general risks relating to our Class A ordinary shares, ADSs and warrants, including, but not limited to, the following: ● The ADSs may be delisted from the Nasdaq Capital Market as a result of our failure of meeting the Nasdaq Capital Market continued listing requirements; ● The market price for the ADSs may be volatile; ● The warrants are speculative in nature; and ● If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline. 18 Table of Contents ​ Risks Related to Our Company and Our Industry We may incur losses, negative cash flows from operating activities and negative working capital position in the future. We recorded net income of RMB12.6 million for the year ended December 31, 2023, primarily due to a one-time non-cash gain on debt relief from the refund plan arising out of non-renewal of the license on World of Warcraft, or WoW, and a rebound in Bitcoin prices. We recorded net loss of and RMB73.6 million for the year ended December 31, 2024, primarily due to the decrease in revenue. We recorded net loss of RMB408.9 million (US$58.5 million) for the year ended December 31, 2025, primarily due to the increase of expense on share-based compensation and impairment on investments. Our product development, sales and marketing and general and administrative expenses may increase in the future as we continue to explore various opportunities of new product and services development and business expansion in order to grow our revenues. Our ability to achieve profitability depends on our ability to improve operational efficiency, control costs and provide new products and services to meet market demand and attract new customers. Due to the numerous risks and uncertainties arising from our business, we may not be able to achieve profitability in the short-term or long-term. We generated negative operating cash flows of RMB46.3 million, RMB44.2 million and RMB31.8 million (US$4.5 million) for the years ended December 31, 2023, 2024 and 2025, respectively. As of December 31, 2024 and 2025, we had cash and cash equivalents of RMB10.9 million and RMB58.5 million (US$8.4 million), respectively. As of December 31, 2023, we had a positive working capital of RMB60.0 million. As of December 31, 2024, we had a positive working capital of RMB38.1 million. As of December 31, 2025, we had a negative working capital of RMB1.0 million (US$0.1 million). Our positive working capital position as of December 31, 2023 was primarily due to operating activities of cryptocurrency mining. Our positive working capital position as of December 31, 2024 was primarily due to operating activities of cryptocurrency mining. Our negative working capital position as of December 31, 2025 was primarily due to the increased loans in 2025. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Results of Operations.” We cannot assure you that our liquidity position will continue to improve in the future. We may incur losses, negative cash flows from operating activities and negative working capital position in the future, which may materially and adversely affect our business, prospects, liquidity, financial condition and results of operations. We had an accumulated deficit of approximately RMB4,832.7 million (US$691.1 million) as of December 31, 2025. We generated negative cash flow from operating activities. If we are unable to achieve profitability, we will need to raise capital to cover our capital needs. There can be no assurance that we can obtain additional financing. Our ability to obtain additional financing is subject to a number of factors, which may be beyond our control. See “—We may not be able to obtain additional financing to support our business and operations, and our equity or debt financings may have an adverse effect on our business operations and share price.” We have been transitioning our business focus and our results of operations may be materially and adversely affected. Historically and prior to 2021, we primarily operated and developed proprietary and licensed online games. We previously made significant investment in developing our own proprietary games as well as offering games licensed from game licensors. In early 2021, we decided to launch a cryptocurrency mining business and started to devote resources and establish collaborative relationships with industry participants to develop our cryptocurrency mining business. We began cryptocurrency mining activities in February 2021 and the operation of an NFT platform, NFTSTAR, in late 2021. In January 2023, we ceased operations of the NFT business and its related blockchain-based online game, MetaGoal. The decision to cease operations of the NFT business was primarily a result of unfavorable financial performance. We sold NFTSTAR Singapore pte. Ltd. and its subsidiaries to an unrelated third party in 2023 and we no longer operate an NFT business. We do not believe that our past investment into and devotion to the cryptocurrency mining business will continuously contribute to our financial performance in the future. Therefore, since the end of 2024 and throughout 2025, we continued to refocus our strategy on the online game business and blend web2 and web3 business through our 9bit platform development. During this transition process, our results of operations and financial condition may not improve in a timely manner, or at all. Given the substantial uncertainties regarding the prospects of the online gaming business, there can be no assurance that we will not change our business focus again in the future. 19 Table of Contents ​ In 2024, we have pivoted to the online gaming business again. In May 2024, we entered into an exclusive publishing license agreement with Wemade Co. Ltd. (Wemade), a Korean company that owns the publishing rights to MIR M game, pursuant to which our wholly owned subsidiary incorporated in Hong Kong, China Crown Technology Limited, has the right to exclusively publish and service the new MIR M game in mainland China, in both mobile and PC version. However, the original publishing license agreement we entered into in May 2024 was terminated in October 2025 due to certain unstable factors in relation with MIR M Chinese trademark. The parties have reached settlements including the refund of license fee and the minimum payment fee that China Crown Technology Limited had already paid to Wemade under the original publishing license agreement. In August 2025, our wholly-owned Hong Kong subsidiary, Vast Ocean International Limited, operates the9bit, a next-generation gaming hub combining gameplay, top-ups, creator rewards, and community spaces. The proprietary the9bit gaming platform has surpassed 8 million users since its August 2025 launch. In September 2025, our variable interest entity Shanghai The9 Information Technology Co., Ltd. entered into a definitive agreement with Shanghai ZhongShun HengXin Network Technology Co., Ltd. (“ZhongShun”) to acquire 51% equity of ZhongShun’s wholly-owned subsidiary, Shanghai ZhongXinShun Network Technology Co., Ltd. (“ZhongXinShun”), the joint venture. ZhongShun contributed the exclusive rights of its two proprietary mobile games for zero consideration: (i) Glory All Stars (荣耀全明星) and (ii) Ultraman: Hero Beyond Time (奥特曼:超时空英雄). Additionally, in February 2026, our variable interest entity Shanghai The9 Information Technology Co., Ltd. (“Shanghai IT”) has entered into a definitive cooperation agreement with Chengdu Lumosi Network Technology Co., Ltd. (“Chengdu Lumosi”) to launch an AI-powered short drama and AI-assisted interactive movie game. Shanghai IT currently holds the exclusive mobile game development and publishing license for the classic TVB drama The Greed of Man (大时代). Throughout 2025, we terminated our cooperation agreements with the joint venture partners, Huanyu, Tongze, JiTuo (each as defined below), due to their failure to meet annual operational targets. In December 2025, we terminated cooperation agreements with Zhejiang Huanyu Network Technology Co., Ltd. (“Zhejiang Huanyu”), including Share Purchase Agreement, Framework Cooperation Agreement and the Joint Venture Agreement, due to the failure of the joint venture company to achieve annual operational targets. In November 2025, we terminated cooperation agreements with Shao Xing TongZe Network Science and Technology Co., Ltd. (“Tongze”), including the Share Purchase Agreement, Framework Cooperation Agreement, and the Joint Venture Agreement, due to the failure of the joint venture company to achieve annual operational targets. In July 2025, we terminated cooperation agreements with Shenzhen gNetop Interactive Technology Co., Ltd. (“JiTuo”), including the Share Purchase Agreement, Framework Cooperation Agreement, and the Joint Venture Agreement, due to the re-negotiation and agreement on the remaining 49% acquisition of the joint venture, Shenzhen Shuzhi Technology Co., Ltd. (“Shuzhi”). Upon termination, 9,946,200 Class A shares were released from the lock-up and retained by JiTuo’s designated holder, Bough Tech Inc. In July 2025, immediately after the termination of joint venture agreement with JiTuo, we re-negotiated another agreement with JiTuo and acquired the remaining 49% of shares in Shenzhen Shuzhi for the total consideration price of RMB 75 million, and signed a share purchase agreement with JiTuo to reflect the acquisition. Pursuant to the agreement we will 1) pay RMB 30 million in cash, divided in two equal installments of RMB 15 million each and payable according to the terms thereof, i.e. cash consideration will be paid only when the targeted net profit before income tax is met, and 2) issue restricted Class A Ordinary shares for a total monetary value of RMB 45,000,000 in three batches subject to the satisfaction of the operational targets. Shares issued not released are subject to cancellation and return to the Company. It is uncertain whether our current strategies operating in the gaming industry will generate the revenue required to succeed. If we fail to generate sufficient interests in the games we develop or publish, we may not grow revenue in line with the resources we invest in these new opportunities. Our operating results may also suffer if our investments are not responsive to the needs of consumers or businesses, inappropriately timed with market opportunities, or marketed ineffectively. We may continue to explore other business opportunities. However, we cannot assure you that we will successfully transition our business focus and it is possible that we remain in such status for a certain period of time. During such period, our revenue may be very limited and we may continue to experience material and adverse effect to our results of operations, financial condition and business prospects. New lines of business or new products and services may subject us to additional risks. From time to time, we may implement new lines of business or offer new products and services within our existing lines of business. For example, we downsized our cryptocurrency mining business, having begun cryptocurrency mining activities in February 2021. In 2024, we made four investments into the companies engaged in the AI industry and have been re-entering the online gaming business. In 2025, we continuously expanded our online gaming business. We may enter into new lines of business in the future. See “—We have been transitioning our business focus and our results of operations may be materially and adversely affected.” 20 Table of Contents ​ As a new entrant into new lines of business, we face significant challenges, uncertainties and risks, including, among other things, with respect to our ability to: ● build a well-recognized and respected brand; ● establish and expand our customer base; ● improve and maintain our operational efficiency for new lines of business; ● maintain a reliable, secure, high-performance and scalable technology infrastructure for our new lines of business; ● anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape; ● navigate an evolving and complex regulatory environment, such as licensing and compliance requirements; and ● manage the resources and attention of management between our current core business and new lines of business. Moreover, there can be no assurance that the introduction and development of new lines of business or new products and services would not encounter significant difficulties or delay or would achieve the profitability as we expect. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and prospects. For example, with respect to our plan to develop our cryptocurrency mining business, we may not be able to acquire cryptocurrency mining machines at a reasonable cost, or at all. Due to our limited experience with cryptocurrency and its mining activities, we also face challenges and uncertainties relating to the possibility of success of our business. We cannot assure you that our efforts in entry into new business sectors, such as our development of cryptocurrency mining business or online gaming, will succeed. There can be no assurance that such operations will succeed or revert satisfactory results and our business, financial condition, results of operations and prospects may be materially and adversely affected. As we enter into new business sectors, we are also subject to competition from such industry. For example, the cryptocurrency industry is highly competitive despite its relatively short history. There can be no assurance that we are able to compete effectively with respect to our new businesses. If we fail to establish our strengths or maintain our competitiveness in those industries, our business prospects, results of operations and financial condition may be materially and adversely affected. We may not be able to obtain additional financing to support our business and operations, and our equity or debt financings may have an adverse effect on our business operations and share price. We may continue to experience a material decrease in our cash and cash equivalents balance. We will require additional cash resources to fund our working capital and expenditure needs, such as product development expenses, payment of license fees and royalties, sales and marketing activities, and investment or acquisition transactions. If our internal financial resources are insufficient to satisfy our cash requirements, we may seek additional financing through the issuance of equity securities or through debt financing, such as borrowings from commercial banks or other financial institutions or lenders. However, we cannot assure you that such efforts may succeed. To meet our anticipated working capital needs, we are considering multiple alternatives. See “Item 5. Operating And Financial Review and Prospects—B. Liquidity and Capital Resources—Cash Flows and Working Capital.” There can be no assurance that we will be able to complete any such transaction on acceptable terms or at all. If we are unable to obtain the necessary capital, we may need to seek to be acquired by another entity or cease operations. Meanwhile, any equity or debt financing may result in dilution to our existing shareholders’ interests or an increase in our debt service obligations. We have entered into several equity and debt financing transactions that have such dilutive effect in the past few years and may continue to enter into such transactions from time to time. For details of our material equity and debt financing transactions, see “Item 4. Information on the Company—A. History and Development of the Company” and “Item 5. Operating And Financial Review And Prospects—B. Liquidity and Capital Resources—Cash Flows and Working Capital.” 21 Table of Contents ​ Our ability to make scheduled principal or interest payments or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as restructuring debt or obtaining additional equity capital. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. Incurrence of additional indebtedness could also result in operating and financing covenants restricting our business operations. In addition, we cannot assure you that any such future financing will be available to us in amounts or on terms acceptable to us, if at all. If we fail to obtain sufficient financing to fund our capital needs, our business, financial condition and results or operations could be materially and adversely affected. Our gaming business is intensely competitive. We face the risks of changing consumer preferences and uncertainty about market acceptance of our new products and the IPs. If we do not deliver new products to the market, or if consumers prefer our competitors’ products or services over those we provide, our operating results will suffer. Since 2024, we have pivoted to the online gaming business again. Our strategy is based on creating and operating joint ventures with various Chinese companies that have significant amounts of existing player/user bases and have AI-powered marketing capabilities to attract more users to play our licensed and proprietary games in mainland China. In 2024, we have entered into four joint venture agreements with Zhejiang Huanyu, Tongze, JiTuo, and Qing Cheng, under which we agreed to mutually operate various online game-related businesses with each respective joint venture partner. Each joint venture had its own operational and profit targets up to three years. However, we did not close the transaction of the joint venture agreement with Qing Cheng, and we have terminated the joint venture agreements with Zhejiang Huanyu, Tongze, JiTuo due to the failure to achieve operational targets. In September 2025, our variable interest entity Shanghai The9 Information Technology Co., Ltd. entered into a definitive agreement with Shanghai ZhongShun HengXin Network Technology Co., Ltd. (“ZhongShun”) to acquire 51% equity of ZhongShun’s wholly-owned subsidiary, Shanghai ZhongXinShun Network Technology Co., Ltd. (“ZhongXinShun”), the joint venture. ZhongShun contributed the exclusive rights of its two proprietary mobile games for zero consideration: (i) Glory All Stars (荣耀全明星) – an action RPG; and (ii) Ultraman: Hero Beyond Time (奥特曼:超时空英雄) – A newly developed action RPG title based on the globally renowned Ultraman IP, designed as an upgraded version of Glory All Stars with proven game play mechanics stability and strong IP-driven appeal. In July 2025, immediately after the termination of joint venture agreement with JiTuo, we re-negotiated another agreement with JiTuo and acquired the remaining 49% of shares in Shenzhen Shuzhi for the total consideration price of RMB 75 million, and signed a share purchase agreement with JiTuo to reflect the acquisition. Pursuant to the agreement we will 1) pay RMB 30 million in cash, divided in two equal installments of RMB 15 million each and payable according to the terms thereof, i.e. cash consideration will be paid only when the targeted net profit before income tax is met, and 2) issue restricted Class A Ordinary shares for a total monetary value of RMB 45,000,000 in three batches subject to the satisfaction of the operational targets. Shares issued not released are subject to cancellation and return to the Company. The online game industry is constantly evolving in China. Customer demand for and market acceptance of our online games is subject to a high degree of uncertainty. Our future operating results will depend on numerous factors beyond our control. These factors include, among others: ● the ability of our existing and potentially new online games to gain popularity; ● customer demand for PC, mobile, and web games; ● our ability to adopt and stay abreast of any new gaming technologies; ● competition against game developers and operators in and outside China; ● general economic conditions, particularly economic conditions affecting discretionary consumer spending; ● our ability to anticipate and timely and successfully adapt our product and service offerings constantly changing customer tastes and preferences ● the availability of other forms of entertainment; ● customer demand for our in-game items; and 22 Table of Contents ​ ● critical reviews and public reception of our new products. Our ability to plan for product development and distribution and promotional activities will be significantly affected by our ability to anticipate and adapt to relatively rapid changes in consumer tastes and preferences. A decline in the popularity of the types of games we offer or develop could adversely affect our business and prospects. In addition, the gaming industry is a highly competitive and dynamic market, and the future success of our online gaming business success depends not only on the popularity of our existing game but also on our ability to develop and introduce new games that are attractive to our customers. To achieve this, we need to anticipate and effectively adapt to rapidly changing consumer tastes and preferences and technological advances. The development of new games and the procurement of licenses from third-party developers can be very difficult and require high levels of innovation and significant investments. Even if we can secure the licenses from third-party developers, their game products may not meet our standards and we may decide not to do a commercial launch and lose initial minimum guarantee payments. Our competitors may develop more successful products, or offer similar products at lower price points or pursuant to payment models viewed as offering a better value than we do. Any such negative development may materially and adversely affect our business, financial condition and results of operations. Any change in the interpretive positions of the SEC or its staff with respect to digital asset mining firms could have a material adverse effect on us. Section 5(a) of the Securities Act provides that, unless a registration statement is in effect as to a security, it is unlawful for any person, directly or indirectly, to engage in the offer or sale of securities in interstate commerce. Section 5(c) of the Securities Act provides a similar prohibition against offers to sell, or offers to buy, unless a registration statement has been filed. On March 20, 2025, the SEC’s Division of Corporation Finance issued a statement expressing its view that certain proof-of-work crypto mining activities do not involve the offer and sale of securities, but such statement is non-binding interpretive guidance only. Although we do not believe our mining activities require registration for us to conduct such activities and accumulate digital assets, the SEC, the Commodity Futures Trading Commission, Nasdaq or other governmental or quasi-governmental agency or organization may conclude that our activities involve the offer or sale of “securities”, or ownership of “investment securities”, and we may face enhanced regulation under the Securities Act or the 1940 Act. Such regulation would have a material adverse effect on our business and operations. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us. Deterioration in economic condition and escalation of geopolitical conflicts may create increased uncertainty and price changes, and we may face further restrictions on our liquidity due to unique risks related to recent crypto asset market developments. We are subject to price volatility and uncertainty due to economic downturns and geopolitical conflicts. Such economic downturns and geopolitical conflicts may be a result of invasion, or possible invasion by one nation of another, leading to increased inflation and supply chain volatility. The Russia-Ukraine conflict, the Hamas-Israel conflict, the conflict in the Persian Gulf and surrounding areas as far west as Israel and Lebanon, and the restrictions at various times on shipping through the straits of Hormuz and the Red Sea have heightened geopolitical tensions across the world. The impact of the regional conflicts has contributed to increases in food and energy prices and thus to inflation more generally, with the potential for even more serious consequences if oil and gas facilities are destroyed or shipping is affected for an extended period of time. Announced trade tariffs on various countries by the Trump administration may further exacerbate inflation pressures in the U.S. and the globe. Such crises will likely continue to have an effect on our ability to do business in a cost-effective manner. Inflation has caused the price of materials to increase leading to increased expenses to our business. Economic downturns and geopolitical conflicts may also have the effect of discouraging investment in risk assets, including stocks and Bitcoin, as investors shift their investments to less volatile assets. Such shift could have a materially adverse effect on our business, operations and the value of the Bitcoin we mine. The risks to our liquidity and market outlook would include the following: ● Deteriorating macroeconomic conditions as a result of a potential recession, and trade tariff inflation pressure discussed in the media. ● U.S. government monetary policies and slower-than-expected interest rate cuts by the U.S. Federal Reserve Board may lead investors to rotate their investments out of the growth stocks, such as our stock, to the value stocks and fixed income instruments. 23 Table of Contents ​ ● Additional challenges arising from catastrophic events (such as the FTX collapse and multiple bankruptcies of Bitcoin mining companies in 2022 and 2023, and the biggest digital theft of Etherium worth 1.5 billion USD from Bybit crypto exchange in March 2025) that would adversely affect the credibility of, and therefore investor confidence in, companies engaged in the digital assets space. ● Additional declines in Bitcoin prices and/or production, and increases in electricity costs which could adversely impact both the value of our Bitcoin holdings and our ongoing profitability. ● US government’s restrictive and ever-evolving policies on outbound investments in Chinese companies developing certain national security technologies, that may directly or indirectly impact investments in us. ● Further instability in the banking system and the collapse of more banking institutions could put the liquidity and cash assets of third parties with which we do business, such as miner hosting entities and suppliers, and us, at risk if we bank in the future with an institution which subsequently collapses. The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us. Digital assets such as Bitcoin, that may be used, among other things, to buy and sell goods and services are a new and rapidly evolving industry of which the digital asset networks are prominent, but not unique, parts. The growth of the digital asset industry in general, and the digital asset networks of Bitcoin in particular, are subject to a high degree of uncertainty. The factors affecting the further development of the digital asset industry, as well as the digital asset networks, include: ● continued worldwide growth in the adoption and use of Bitcoin and other digital assets; ● government and quasi-government regulation of Bitcoin and other digital assets and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar digital assets systems ● the maintenance and development of the open-source software protocol of the Bitcoin network; ● future quantum computers, if successfully developed, pose a significant risk to Bitcoin by potentially breaking its elliptic curve cryptography, threatening coins that have exposed public keys; changes in consumer demographics and public tastes and preferences; ● the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; ● general economic conditions and the regulatory environment relating to digital assets; ● the impact of regulators focusing on digital assets and digital securities and the costs associated with such regulatory oversight; and ● a decline in the popularity or acceptance of the digital asset networks of Bitcoin, or similar digital asset systems, could adversely affect an investment in us. ​ 24 Table of Contents ​ In addition, we have entered into Bitcoin-collateralized loan arrangements, under which we have pledged Bitcoin as collateral to secure financing. Because digital asset prices, including Bitcoin, are highly volatile, a significant decline in the market price of Bitcoin could trigger margin calls or similar collateral maintenance requirements under these loan arrangements. In the event of a margin call, we may be required to pledge additional Bitcoin or other assets as collateral, repay a portion of the outstanding loan balance, or take other remedial action within a limited timeframe. If we are unable to satisfy such margin calls or collateral requirements in a timely manner, the lender may liquidate some or all of the Bitcoin we have pledged as collateral, potentially at depressed prices, resulting in a permanent loss of those assets. Any forced liquidation of our Bitcoin holdings could materially reduce the value of our digital asset portfolio, adversely affect our financial condition and results of operations, and limit our ability to participate in any subsequent recovery in Bitcoin prices. The risk of margin calls and forced liquidation is heightened during periods of extreme market volatility, broader economic stress, or adverse developments in the digital asset industry, and there can be no assurance that we will have sufficient liquidity or unencumbered assets available to meet such obligations when they arise. Additionally, various governmental and regulatory bodies, including legislative and executive bodies, in the United States and in other countries may adopt new laws and regulations, the direction and timing of which may be influenced by changes in the governing administrations and major events in the cryptoeconomy. For example, following the failure of several prominent crypto trading venues and lending platforms, such as FTX, Celsius Networks, Voyager and Three Arrows Capital in 2022, the U.S. Congress expressed the need for both greater federal oversight of the cryptoeconomy and comprehensive cryptocurrency legislation. In the near future, various governmental and regulatory bodies, including in the United States, may introduce new policies, laws, and regulations relating to crypto assets and the cryptoeconomy generally, and crypto asset platforms in particular. The failures of risk management and other control functions at other companies that played a role in the above-mentioned events happened in 2022 could accelerate an existing regulatory trend toward stricter oversight of crypto asset platforms and the cryptoeconomy. Furthermore, new interpretations of existing laws and regulations may be issued by such bodies or the judiciary, which may adversely impact the development of the cryptoeconomy as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new licensing requirements, or imposing a total ban on certain crypto asset transactions, as has occurred in certain jurisdictions in the past. If we acquire digital securities, even unintentionally, we may violate the Investment Company Act of 1940 and incur potential third-party liabilities. We intend to conduct our operations so that we are not required to register as an “investment company” pursuant to the 1940 Act. We are primarily engaged, through the Variable Interest Entity, in the operation of cryptocurrency mining and the online gaming business in mainland China market. Investment companies and their directors and management are subject to extensive regulation under the 1940 Act; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our cryptocurrency strategy, the manner in which our cryptocurrency is custodied, our ability to engage in transactions with affiliated parties and our operating activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies. Section 3(a) (1) (C) of the 1940 Act defines “investment company” to mean any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of Government securities and cash items) on an unconsolidated basis. Section 3(a) (2) of the 1940 Act defines “investment securities” to include all securities except (A) Government securities, (B) securities issued by employees’ securities companies, and (C) securities issued by majority-owned subsidiaries which (i) are not investment companies and (ii) are not relying on the exception from the definition of investment company in section 3(c) (1) or 3(c) (7) of the 1940 Act. If holdings of certain cryptocurrencies are determined to constitute investment securities, as defined under the 1940 Act, the volatility in digital asset markets may make it difficult to maintain a portfolio consisting of no more than 40% of digital assets that are investment securities or could result in sales of digital assets to avoid exceeding this threshold, including at times that may not be opportune. While senior SEC officials have stated their view that bitcoin is not a “security” for purposes of the federal securities laws, a contrary determination by the SEC could have a material adverse effect on our ability to execute on our cryptocurrency strategy and may require us to substantially change the manner in which we conduct our business. In addition, if bitcoin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of bitcoin and in turn adversely affect our business and the value of the ADSs. 25 Table of Contents ​ Significant contributors to all or any digital asset network could propose amendments to the respective network’s protocols and software that, if accepted and authorized by such network, could adversely affect an investment in us. For example, with respect to Bitcoin network, a small group of individuals contribute to the Bitcoin Core project on GitHub.com. This group of contributors is currently headed by Wladimir J. van der Laan, the current lead maintainer. These individuals can propose refinements or improvements to the Bitcoin network’s source code through one or more software upgrades that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoin, including the irreversibility of transactions and limitations on the mining of new Bitcoin. Proposals for upgrades and discussions relating thereto take place on online forums. For example, there is an ongoing debate regarding altering the blockchain by increasing the size of blocks to accommodate a larger volume of transactions. Although some proponents support an increase, other market participants oppose an increase to the block size as it may deter miners from confirming transactions and concentrate power into a smaller group of miners. To the extent that a significant majority of the users and miners on the Bitcoin network install such software upgrade(s), the Bitcoin network would be subject to new protocols and software that may adversely affect an investment in us. In the event a developer or group of developers proposes a modification to the Bitcoin network that is not accepted by a majority of miners and users, but that is nonetheless accepted by a substantial plurality of miners and users, two or more competing and incompatible blockchain implementations could result. This is known as a “hard fork.” In such a case, the “hard fork” in the blockchain could materially and adversely affect the perceived value of digital assets as reflected on one or both incompatible blockchains, which may adversely affect an investment in us. The open-source structure of the Bitcoin network protocol means that the contributors to the protocol are generally not directly compensated for their contributions in maintaining and developing the protocol. A failure to properly monitor and upgrade the protocol could damage the Bitcoin network and an investment in us. The Bitcoin network for example operates based on an open-source protocol maintained by contributors, largely on the Bitcoin Core project on GitHub. As an open-source project, Bitcoin is not represented by an official organization or authority. As the Bitcoin network protocol is not sold and its use does not generate revenues for contributors, contributors are generally not compensated for maintaining and updating the Bitcoin network protocol. Although the MIT Media Lab’s Digital Currency Initiative funds the current maintainer Wladimir J. van der Laan, among other things, this type of financial incentive is not typical. The lack of guaranteed financial incentive for contributors to maintain or develop the Bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the Bitcoin network may reduce incentives to address the issues adequately or in a timely manner. Changes to a digital asset network that we are mining on may adversely affect an investment in us. If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects an investment in us. If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on any digital asset network, including the Bitcoin network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks. In such alternate blocks, the malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new digital assets or transactions using such control. Using alternate blocks, the malicious actor could “double-spend” its own digital assets (i.e., spend the same digital assets in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control. To the extent that such malicious actor or botnet does not yield its majority control of the processing power or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Such changes could adversely affect an investment in us. The approach towards and possible crossing of the 50% threshold indicate a greater risk that a single mining pool could exert authority over the validation of digital asset transactions. To the extent that the digital assets ecosystems do not act to ensure greater decentralization of digital asset mining processing power, the feasibility of a malicious actor obtaining in excess of 50% of the processing power on any digital asset network (e.g., through control of a large mining pool or through hacking such a mining pool) will increase, which may adversely impact an investment in us. 26 Table of Contents ​ If the award of digital assets for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending hash rate to solve blocks and confirmations of transactions on the blockchain could be slowed temporarily. A reduction in the hash rate expended by miners on any digital asset network could increase the likelihood of a malicious actor obtaining control in excess of fifty percent (50)% of the aggregate hash rate active on such network or the blockchain, potentially permitting such actor to manipulate the blockchain in a manner that adversely affects an investment in us. Bitcoin miners record transactions when they solve for and add blocks of information to the blockchain. When a miner solves for a block, it creates that block, which includes data relating to (i) the solution to the block, (ii) a reference to the prior block in the blockchain to which the new block is being added and (iii) all transactions that have occurred but have not yet been added to the blockchain. The miner becomes aware of outstanding, unrecorded transactions through the data packet transmission and propagation discussed above. Typically, Bitcoin transactions will be recorded in the next chronological block if the spending party has an internet connection and at least one minute has passed between the transaction’s data packet transmission and the solution of the next block. If a transaction is not recorded in the next chronological block, it is usually recorded in the next block thereafter. As the award of new digital assets for solving blocks declines, and if transaction fees are not sufficiently high, miners may not have an adequate incentive to continue mining and may cease their mining operations. For example, the primary cryptocurrencies for which we mine, Bitcoin, are subject to “halving,” which is the process by which the cryptocurrency reward for solving a block is cut in half. The current fixed reward on the Bitcoin network for solving a new block is 3.125 Bitcoins per block, which is half of the previous reward of 6.25 Bitcoins. It is estimated that it will halve again in about three years. While Bitcoin prices have had a history of price fluctuations around the halving of their respective cryptocurrency rewards, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining reward. This reduction may result in a reduction in the aggregate hash rate of the Bitcoin network as the incentive for miners will decrease. If a corresponding and proportionate increase in the trading price of these cryptocurrencies does not follow these anticipated halving events, the revenue we earn from our mining operations would see a corresponding decrease, which would have a material adverse effect on our business and operations. Moreover, miners ceasing operations would reduce the aggregate hash rate on the Bitcoin network, which would adversely affect the confirmation process for transactions (i.e., temporarily decreasing the speed at which blocks are added to the blockchain until the next scheduled adjustment in difficulty for block solutions) and make the Bitcoin network more vulnerable to a malicious actor obtaining control in excess of 50% of the aggregate hash rate on the Bitcoin network. Periodically, the Bitcoin network has adjusted the difficulty for block solutions so that solution speeds remain in the vicinity of the expected ten-minute confirmation time targeted by the Bitcoin network protocol. We believe that from time to time there will be further considerations and adjustments to the Bitcoin network, and others regarding the difficulty for block solutions. More significant reductions in aggregate hash rate on digital asset networks could result in material, though temporary, delays in block solution confirmation time. Any reduction in confidence in the confirmation process or aggregate hash rate of any digital asset network may negatively impact the value of digital assets, which will adversely impact an investment in us. To the extent that the profit margins of digital asset mining operations are not high, operators of digital asset mining operations are more likely to immediately sell their digital assets earned by mining in the digital asset exchange market, resulting in a reduction in the price of digital assets that could adversely impact an investment in us. Over the past few years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation servers. Currently, new processing power brought onto the digital asset networks is predominantly added by incorporated and unincorporated “professionalized” mining operations. Professionalized mining operations may use proprietary hardware or sophisticated machines. They require the investment of significant capital for the acquisition of this hardware, the leasing of operating space (often in data centers or warehousing facilities), incurring of electricity costs and the employment of technicians to operate the mining farms. As a result, professionalized mining operations are of a greater scale than prior miners and have more defined, regular expenses and liabilities. These regular expenses and liabilities require professionalized mining operations to more immediately sell digital assets earned from mining operations on the digital asset exchange market, whereas it is believed that individual miners in past years were more likely to hold newly mined digital assets for more extended periods. The immediate selling of newly mined digital assets greatly increases the supply of digital assets on the digital asset exchange market, creating downward pressure on the price of each digital asset. 27 Table of Contents ​ The extent to which the value of digital assets mined by a professionalized mining operation exceeds the allocable capital and operating costs determines the profit margin of such operation. A professionalized mining operation may be more likely to sell a higher percentage of its newly mined digital assets rapidly if it is operating at a low profit margin—and it may partially or completely cease operations if its profit margin is negative. In a low profit margin environment, a higher percentage could be sold into the digital asset exchange market more rapidly, thereby potentially reducing digital asset prices. Lower digital asset prices could result in further tightening of profit margins, particularly for professionalized mining operations with higher costs and more limited capital reserves, creating a network effect that may further reduce the price of digital assets until mining operations with higher operating costs become unprofitable and remove mining power from the respective digital asset network. The network effect of reduced profit margins resulting in greater sales of newly mined digital assets could result in a reduction in the price of digital assets that could adversely impact an investment in us. The cost of obtaining new and replacement miners and parts has historically been capital intensive, and is likely to continue to be very capital intensive, which may have a material and adverse effect on our business and results of operations. Our mining operations can only be successful and ultimately profitable if the costs, including hardware and electricity costs, associated with mining cryptocurrencies are lower than the price of the cryptocurrencies we mine when we sell them. Our miners experience ordinary wear and tear from operation and may also face more significant malfunctions caused by factors which may be beyond our control. Additionally, as the technology evolves, we may acquire newer models of miners to remain competitive in the market. Over time, we replace those miners which are no longer functional with new miners purchased from third-party manufacturers, who are primarily based in Asia. The delivery times of the new miners are not guaranteed even if agreed upon in the purchase contracts. The manufacturers of mining equipment may not be able to produce and deliver on time due to the shortage of production materials, such as memory chips etc. For example, in March 2021, our wholly owned subsidiary NBTC Limited signed a Bitcoin mining machine purchase agreement with Bitmain Technologies Limited. Pursuant to the purchase agreement, we would purchase 24,000 Antminer S19j Bitcoin mining machines, which are scheduled to deliver starting from November 2021, for a total consideration of US$82.8 million payable in installments according to the agreed time schedule. As of the date of this annual report, all consideration has been paid. The miners will eventually become obsolete or will degrade due to ordinary wear and tear from usage, and may also be lost or damaged due to factors outside of our control. Once this happens, these new miners will need to be repaired or replaced along with other equipment from time to time for us to stay competitive. This upgrading process requires substantial capital investment, and we may face challenges in doing so on a timely and cost-effective basis based on availability of new miners and our access to adequate capital resources. If we are unable to obtain adequate numbers of new and replacement miners at scale, we may be unable to remain competitive in our highly competitive and evolving industry. If this happens, we may not be able to mine cryptocurrency as efficiently or in similar amounts as our competition and, as a result, our business and financial results could suffer. This could, in turn, materially and adversely affect the trading price of our securities and our investors could lose part or all of their investment. The price of new miners may be linked to the market price of Bitcoin and other cryptocurrencies, and, if the current relatively high market price of Bitcoin persists, our costs of obtaining new and replacement miners may increase, which may have a material and adverse effect on our financial condition and results of operations. Reports have been released that the prices of new miners are adjusted according to the price of Bitcoin. As a result, the cost of new machines can be unpredictable, and could also be significantly higher than our historical cost for new miners. Similarly, as Bitcoin prices have risen, we have observed significant increase in the demand for miners. As a result, at times, we may obtain Bitmain miners and other hardware from Bitmain or from third parties at higher prices, to the extent they are available. For example, in the first quarter of 2021, we have observed a significant appreciation in the market price of Bitcoin, as well as an increase in the per-unit price of the new Bitmain Antminer model S19j miners we purchased during this same period. While we cannot know definitively if these two phenomena are linked, we have seen a measurable increase in the prices for new miners offered by Bitmain. As disclosed in this annual report, our financial condition and results of operations are dependent on our ability to sell the Bitcoin we mine at a price greater than our costs to produce that Bitcoin. As the price for new miners we buy increases, our cost to produce a single Bitcoin also increases, therefore requiring a corresponding increase in the price of Bitcoin for us to maintain our results of operations. Market prices for Bitcoin have fluctuated greatly, to the extent that we are unable to reasonably predict future prices for the Bitcoin we mine. ​ 28 Table of Contents ​ We incur significant up-front capital costs each time we acquire new miners, and, if future prices of Bitcoin are not sufficiently high, we may not realize the benefit of these capital expenditures. If this occurs, our business, results of operations, and financial condition could be materially and adversely affected, which may have a negative impact on the trading price of our securities, which may have a materially adverse impact on investors’ investment in our Company. Our mining operating costs could outpace our mining revenues, which could seriously harm our business or increase our losses. Our mining operations are costly and our expenses may increase in the future. This expense increase may not be offset by a corresponding increase in revenue. Our expenses may be greater than we anticipate, and our investments to make our business more efficient may not succeed and may outpace monetization efforts. Increases in our costs without a corresponding increase in our revenue would increase our losses and could seriously harm our business and financial performance. There is a possibility of cryptocurrency mining algorithms transitioning to proof of stake validation and other mining related risks, which could make us less competitive and ultimately adversely affect our business and the value of our stock. Proof of stake is an alternative method in validating cryptocurrency transactions. Should the algorithm shift from a proof of work validation method to a proof of stake method, mining would likely require less energy, which may render any company that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate, or hosting) less competitive. We, as a result of our efforts to optimize and improve the efficiency of our cryptocurrency mining operations, may be exposed to the risk in the future of losing the benefit of our capital investments and the competitive advantage we hope to gain from this as a result, and may be negatively impacted if a switch to proof of stake validation were to occur. Such events could have a material adverse effect on our ability to pursue our new strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account. Because our miners are designed specifically to mine Bitcoin, our future success will depend in large part upon the value of Bitcoin, and any sustained decline in its value could adversely affect our business and results of operations. Our operating results will depend in large part upon the value of Bitcoin because it is the primary cryptocurrency we currently mine. Specifically, our revenues from our Bitcoin mining operations are based upon two factors: (1) the number of Bitcoin rewards we successfully mine and (2) the value of Bitcoin. In addition, our operating results are directly impacted by changes in the value of Bitcoin, because under the value measurement model, we measure at fair value on the date earned. Fair value of the cryptocurrency award earned and received is determined using the quoted price of the related cryptocurrency at the time the amount of reward in cryptocurrency we earned, which is determined by our mining pool operator based on our computing power contributed to the mining pool on a daily basis. Under the guidance of the Financial Accounting Standards Board, we may be required to change its policies, which could have an effect on our consolidated financial position and results from operations. This means that our operating results will be subject to daily increases or decreases in the value of Bitcoin. Furthermore, our business strategy focuses almost entirely on producing Bitcoin (as opposed to other cryptocurrencies), and our current application- specific integrated circuit miners principally utilize the “SHA-256 algorithm,” which is designed primarily for mining Bitcoin. We, therefore, cannot use these miners to mine other cryptocurrencies, such as ether, that are not mined utilizing this algorithm. If other cryptocurrencies overtake Bitcoin in terms of acceptance, the value of Bitcoin could decline. Further, if Bitcoin were to switch its proof of work algorithm from SHA-256 to another algorithm for which our miners would not be suited or if the value of Bitcoin were to decline for other reasons, particularly if such decline were significant or over an extended period of time, we would likely incur very significant costs in retooling or replacing our existing miners with miners better suited for the new protocols and our operating results could be adversely affected. This could result in a material adverse effect on our ability to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations, and thus harm investors. ​ 29 Table of Contents ​ Our mining operations, including the facilities in which our miners are operated, may experience damages, including damages that are not covered by insurance. Our current mining operation in various countries is and any future mines we establish will be, subject to a variety of risks relating to physical condition and operation, including, but not limited to: ● the presence of construction or repair defects or other structural or building damage; ● any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements; ● any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms; ● unreasonable detaining or seizure of the miners due to the data center provider’s breach or default; and ● claims by employees and others for injuries sustained at our properties. For example, our or our partners’ mining facilities could be rendered inoperable, temporarily or permanently, as a result of a fire or other natural disaster or by a terrorist or other attack on the mine. The security and other measures we take to protect against these risks may not be sufficient. Additionally, we may lose access to mining facilities due to various reasons, including unreasonable access restrictions by our partners, blackmailing or theft of our mining equipment. We could be materially and adversely affected by a power outage or loss of access to the electrical grid or loss by the grid of cost-effective sources of electrical power generating capacity. Given the power requirement, it would not be feasible to run miners on back-up power generators in the event of a power outage. Insurance which we may purchase from the market may not cover the replacement cost of any lost or damaged miners, or any interruption of our mining activities; therefore our insurance may not be adequate to cover the losses we suffer as a result of any of these events. In the event of an uninsured loss, including a loss in excess of insured limits, at any of the mining facilities in our network, such mining facilities may not be adequately repaired in a timely manner or at all and we may lose some or all of the future revenues anticipated to be derived from such mines. The potential impact on our business may be magnified as we further expand operations in various countries. We are subject to risks arising from our need for significant electrical power. Our Bitcoin mining operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet, we anticipate our demand for electrical power will continue to grow. If we are unable to continue to obtain sufficient electrical power to operate our miners on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments in new miners. Additionally, our mining operations could be materially and adversely affected by prolonged power outages. Although our miners may be powered by backup generators on a temporary basis, it would not be feasible or cost-effective to run miners on back-up power generators for extended periods of time. Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected, and investors in our securities could be harmed. To the extent that any miners cease to record transactions in solved blocks, transactions that do not include the payment of a transaction fee will not be recorded on the blockchain until a block is solved by a miner who does not require the payment of transaction fees. Any widespread delays in the recording of transactions could result in a loss of confidence in that digital asset network, which could adversely impact an investment in us. To the extent that any miners cease to record transaction in solved blocks, such transactions will not be recorded on the blockchain. Currently, there are no known incentives for miners to elect to exclude the recording of transactions in solved blocks; however, to the extent that any such incentives arise (e.g., a collective movement among miners or one or more mining pools forcing Bitcoin users to pay transaction fees as a substitute for or in addition to the award of new Bitcoin upon the solving of a block), actions of miners solving a significant number of blocks could delay the recording and confirmation of transactions on the blockchain. Any systemic delays in the recording and confirmation of transactions on the blockchain could result in greater exposure to double-spending transactions and a loss of confidence in certain or all digital asset networks, which could adversely impact an investment in us. 30 Table of Contents ​ The acceptance of digital asset network software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in any digital asset network could result in a “fork” in the respective blockchain, resulting in the operation of two separate networks until such time as the forked blockchains are merged. The temporary or permanent existence of forked blockchains could adversely impact an investment in us. Digital asset networks are open-source projects and, although there is an influential group of leaders in, for example, the Bitcoin network community known as the “Core Developers,” there is no official developer or group of developers that formally controls the Bitcoin network. Any individual can download the Bitcoin network software and make any desired modifications, which are proposed to users and miners on the Bitcoin network through software downloads and upgrades, typically posted to the Bitcoin development forum on GitHub.com. A substantial majority of miners and Bitcoin users must consent to those software modifications by downloading the altered software or upgrade that implements the changes; otherwise, the changes do not become a part of the Bitcoin network. Since the Bitcoin network’s inception, changes to the Bitcoin network have been accepted by the vast majority of users and miners, ensuring that the Bitcoin network remains a coherent economic system; however, a developer or group of developers could potentially propose a modification to the Bitcoin network that is not accepted by a vast majority of miners and users, but that is nonetheless accepted by a substantial population of participants in the Bitcoin network. In such a case, and if the modification is material and/or not backwards compatible with the prior version of Bitcoin network software, the consequence would be what is known as a “fork” of the network, resulting in two separate Bitcoin networks, one running the pre-modification software program and the other running the modified version (i.e., a second “Bitcoin” network). The effect of such a fork would be the existence of two versions of the cryptocurrency running in parallel, yet lacking interchangeability and necessitating exchange-type transaction to convert currencies between the two forks. Additionally, it may be unclear following a fork which fork represents the original asset and which is the new asset. Such a fork in the blockchain typically would be addressed by community-led efforts to merge the forked blockchains, and several prior forks have been so merged. Different metrics adopted by industry participants to determine which is the original asset include: referring to the wishes of the core developers of a cryptocurrency, blockchains with the greatest amount of hashing power contributed by miners or validators; or blockchains with the longest chain. This kind of split in the Bitcoin network could materially and adversely impact an investment in us and, in the worst-case scenario, harm the sustainability of the Bitcoin network’s economy. We may not be able to realize the economic benefit of a fork, either immediately or ever, which could adversely affect an investment in our securities. If we hold a cryptocurrency at the time of a hard fork into two cryptocurrencies, industry standards would dictate that we would be expected to hold an equivalent amount of the old and new assets following the fork. However, we may not be able, or it may not be practical, to secure or realize the economic benefit of the new asset for various reasons. For instance, we may determine that there is no safe or practical way to custody the new asset, that trying to do so may pose an unacceptable risk to our holdings in the old asset, or that the costs of taking possession and/or maintaining ownership of the new cryptocurrency exceed the benefits of owning the new cryptocurrency. Additionally, laws, regulation or other factors may prevent us from benefitting from the new asset even if there is a safe and practical way to custody and secure the new asset. The digital asset exchanges on which digital assets trade are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure than established, regulated exchanges for other products. To the extent that the digital asset exchanges representing a substantial portion of the volume in digital asset trading are involved in fraud or experience security failures or other operational issues, such digital asset exchanges’ failures may result in a reduction in the price of some or all digital assets and can adversely affect an investment in us. The digital asset exchanges on which the digital assets trade are new and, in most cases, largely unregulated. Furthermore, many digital asset exchanges (including several of the most prominent U.S. dollar denominated digital asset exchanges) do not provide the public with significant information regarding their ownership structure, management teams, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, digital asset exchanges, including prominent exchanges handling a significant portion of the volume of digital asset trading. In 2022, a number of digital asset exchanges filed for bankruptcy proceedings and/or became the subjects of investigation by various governmental agencies for, among other things, fraud, causing a loss of confidence and an increase in negative publicity for the digital asset ecosystem. As a result, many digital asset markets, including the market for Bitcoin, have experienced increased price volatility. The Bitcoin ecosystem may continue to be negatively impacted and experience long term volatility if public confidence decreases. 31 Table of Contents ​ These events are continuing to develop and it is not possible to predict, at this time, every risk that they may pose to us, our service providers, or the digital asset industry as a whole. A lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the digital asset networks and result in greater volatility in digital asset values. These potential consequences of a digital asset exchange’s failure could adversely affect an investment in us. The failure of financially troubled cryptocurrency-based companies impacts the broader crypto economy. The failure of several crypto platforms has impacted and may continue to impact the broader crypto economy; the full extent of these impacts may not yet be known. Bitcoin is part of the cryptocurrency environment and is subject to price volatility resulting from financial instability, poor business practices, and fraudulent activities of players in the cryptocurrency market. When investors in cryptocurrency and cryptocurrency-based companies experience financial difficulty as a result of price volatility, poor business practices, and/or fraud, it has, and may cause loss of confidence in the cryptocurrency space, reputational harm to cryptocurrency assets, heightened scrutiny by regulatory authorities and law makers, and a steep decline in the value of Bitcoin, among other material impacts. Such adverse effects have, and may in the future, affect the profitability of our Bitcoin mining operations. Deterioration in economic condition and escalation of geopolitical conflicts may motivate large-scale sales of digital assets, which could result in a reduction in some or all digital assets’ values and adversely affect an investment in us. As an alternative to fiat currencies that are backed by central governments, digital assets such as Bitcoin, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical conflicts. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of digital assets either globally or locally. Large-scale sales of digital assets would result in a reduction in their value and could adversely affect an investment in us. Further, deterioration in economic condition and escalation of geopolitical conflicts may create increased uncertainty and price changes. Inflation has caused the price of materials to increase leading to increased expenses to our business. Global crises and economic downturns may also have the effect of discouraging investment in Bitcoin as investors shift their investments to less volatile assets. Such shift could have a materially adverse effect on our business, operations and the value of the Bitcoin we mine or the institutional data center clients we host. Our ability to adopt technology in response to changing security needs or trends poses a challenge to the safekeeping of our digital assets. The history of digital asset exchanges has shown that exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard their digital assets. We largely rely on cold storage solution to safeguard our digital assets from theft, loss, destruction or other issues relating to hackers and technological attack. Our digital assets will also be moved to various exchanges in order to exchange them for fiat currency during which time we will be relying on the security of such exchanges to safeguard our digital assets. We believe that it may become a more appealing target of security threats as the size of our Bitcoin holdings grow. To the extent that either our designated custodian of crypto assets or we are unable to identify and mitigate or stop new security threats, our digital assets may be subject to theft, loss, destruction or other attack, which could adversely affect an investment in us. Security threats to us could result in, a loss of our digital assets, or damage to the reputation and our brand, each of which could adversely affect an investment in us. Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the digital asset exchange markets, for example since the launch of the Bitcoin network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm our business operations or result in loss of our digital assets. Any breach of our infrastructure could result in damage to our reputation which could adversely affect an investment in us. Furthermore, we believe that, as our assets grow, it may become a more appealing target for security threats such as hackers and malware. 32 Table of Contents ​ We primarily rely on cold self-storage to safeguard our digital assets from theft, loss, destruction or other issues relating to hackers and technological attack. Nevertheless, our designated self-custody security system may not be impenetrable and may not be free from defect or immune to acts of God, and we will bear any loss due to a security breach, software defect or act of God. The security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, or otherwise, and, as a result, an unauthorized party may obtain access to our, private keys, data or Bitcoin. Additionally, outside parties may attempt to fraudulently induce employees of ours to disclose sensitive information in order to gain access to our infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security system occurs, the market perception of the effectiveness of our security system could be harmed, which could adversely affect an investment in us. In the event of a security breach, we may be forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in us. A loss of confidence in our security system, or a breach of our security system, may adversely affect us and the value of an investment in us. We will take measures to protect us and our digital assets from unauthorized access, damage or theft; however, it is possible that the security system may not prevent the improper access to, or damage or theft of our digital assets. A security breach could harm our reputation or result in the loss of some or all of our digital assets. A resulting perception that our measures do not adequately protect our digital assets could result in a loss of current or potential shareholders, reducing demand for our Class A ordinary shares or the ADSs and causing our shares to decrease in value. Digital asset transactions are irrevocable and stolen or incorrectly transferred digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could adversely affect an investment in us. Digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, control or consent of a majority of the processing power on the respective digital asset network. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of digital assets or a theft of digital assets generally will not be reversible, and we may not be capable of seeking compensation for any such transfer or theft. Although our transfers of digital assets will regularly be made to or from vendors, consultants, services providers, among others, it is possible that, through computer or human error, or through theft or criminal action, our digital assets could be transferred from us in incorrect amounts or to unauthorized third parties. To the extent that we are unable to seek a corrective transaction with such third party or are incapable of identifying the third party which has received our digital assets through error or theft, we will be unable to revert or otherwise recover incorrectly transferred Company digital assets. To the extent that we are unable to seek redress for such error or theft, such loss could adversely affect an investment in us. Undetected programming errors or flaws in our games could harm our reputation or decrease market acceptance of our games, which would materially and adversely affect our results of operations. Our games may contain errors or flaws, which may only be discovered after their release, particularly as we launch new games or introduce new features to existing games under tight time constraints. If our games contain programming errors or other flaws, our customers may be less inclined to continue playing our games or to recommend our games to other potential customers, and may switch to our competitors’ games. Undetected programming errors and game defects can disrupt our operations, adversely affect the gaming experience of our users, harm our reputation, cause our customers to stop playing our games, divert our resources and delay market acceptance of our games, any of which could materially and adversely affect our results of operations. 33 Table of Contents ​ Any delay or failure by the online game platforms or distributors to successfully market or sell our products and services could adversely affect our business and results of operations. We primarily rely on game platforms and distributors to distribute, promote, market and sell our games in China. End users can purchase our virtual currencies and prepaid cards through such game platforms and distributors. A substantial portion of our sales are carried out via such game platforms and distributors. We do not have long-term agreements with any online game platforms or distributors. A delay or failure by the online game platforms or distributors to successfully market or sell our prepaid cards or products may adversely affect our business and results of operations. We cannot assure you that we will continue to maintain favorable relationships with the online game platforms and distributors, and any failure to do so could materially and adversely affect our business and results of operations could be materially and adversely affected. Illegal game servers, unauthorized character enhancements and other infringements of our intellectual property rights, as well as theft of in-game goods, could harm our business and reputation and materially and adversely affect our results of operation. We face the risks of illegal game servers, unauthorized character enhancements and other infringements of our intellectual property rights as well as the risk of theft of in-game goods purchased by our customers. Illegal server usage, misappropriation of our game server installation software and the establishment of illegal game servers could harm our business and reputation and materially and adversely affect our results of operations. We cannot assure you that we will be able to identify and eliminate new illegal game servers, unauthorized character enhancements or other infringements of our intellectual property rights in a timely manner, or at all. The deletion of unauthorized character enhancements requires the affected players to restart with a new character from the starting level, and this may cause some of these players to cease playing the game altogether. If we are unable to eliminate illegal servers, unauthorized character enhancements or suffer other infringements of our intellectual property rights, our players’ perception of the reliability of our games may be negatively impacted, which may reduce the number of players using our games, shorten the lifespan of our games and adversely affect our results of operations. Failure to obtain or renew approvals or filings for online games and mobile games we operate may adversely affect our operations or subject us to penalties. The Ministry of Culture has promulgated laws and regulations that require, among other things, (i) the review and prior approval of all new online games licensed from foreign game developers and related license agreements, (ii) the review of patches and updates with substantial changes of games which have already been approved, and (iii) the filing of domestically developed online games. Furthermore, online games, regardless of whether imported or domestic, will be subject to content review and approval by the General Administration of Press and Publication, Radio, Film and Television, or the GAPPRFT (formerly known as the General Administration of Press and Publication, or the GAPP) prior to the commencement of games operations in China. Failure to obtain or renew approvals or complete filings for online games, including mobile games, may materially delay or otherwise affect a game operator’s plan to launch new games, and the operator may be subject to fines, the restriction or suspension of operations of the related games or revocation of licenses in the event that the relevant governmental authority believes that the violation is severe. We cannot assure you that we are able to obtain and maintain requisite approvals or fulfill other requisite registration or filing procedures required by the relevant PRC governmental authorities in a timely manner, or at all. From time to time, we also rely on certain third-party licensors of domestically developed online games to obtain approvals and complete filings with the PRC regulatory authorities. If we or any such third-party licensors fail to obtain the required approvals or complete the filings, we may not be able to continue the operation of such games. If any such negative event occurs, our business, financial condition and results of operations may be materially and adversely affected. The limited rights of legal recourse against us, and our lack of insurance protection expose us and our shareholders to the risk of loss of our digital assets for which no person is liable. We have limited insurance coverage, including that covering our crypto assets which may be held in the custody accounts at custodians of the crypto assets, subject to the policy caps. A loss may be suffered with respect to our digital assets which is not covered by insurance and for which no person is liable in damages which could adversely affect our operations and, consequently, an investment in us. 34 Table of Contents ​ Digital assets we held are not subject to protections from the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. We do not hold our digital assets with a banking institution or a member of the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation and, therefore, our digital assets are not subject to the protections enjoyed by depositors with the member institutions of the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. We may not have adequate sources of recovery if our digital assets are lost, stolen or destroyed. If our digital assets are lost, stolen or destroyed under circumstances rendering a party liable to us, the responsible party may not have the financial resources sufficient to satisfy our claim. For example, as to a particular event of loss, the only source of recovery for us might be limited, to the extent identifiable, other responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of ours. The sale of our digital assets to pay expenses at a time of low digital asset prices could adversely affect an investment in us. We may sell our digital assets to pay expenses on an as-needed basis, irrespective of then-current prices. Consequently, our digital assets may be sold at a time when the prices on the respective digital asset exchange market are low, which could adversely affect an investment in us. Regulatory changes or actions may restrict the use of Bitcoin or the operation of the Bitcoin network in a manner that adversely affects an investment in us. As Bitcoin has grown in popularity and in market size, the Federal Reserve Board, U.S. Congress and certain U.S. agencies (e.g., the Commodity Futures Trading Commission, the SEC, the FinCEN and the Federal Bureau of Investigation) have begun to examine the operations of the Bitcoin network, Bitcoin users and the Bitcoin exchange market. Digital assets currently face an uncertain regulatory landscape in not only the United States but also in many foreign jurisdictions such as the European Union, China and Russia. While certain governments such as China, where PRC authorities have declared that virtual currencies do not have the same legal status as legal currency, most regulatory bodies have expressed intention to regulate crypto assets, although any determinations on regulation of Bitcoin, the Bitcoin network and Bitcoin users are not definite as of the date of this report. The effect of any future regulatory change on us, Bitcoin, or other digital assets is impossible to predict, but such change could be substantial and adverse to us and could adversely affect an investment in us. Our 9bit platform is exposed to impersonation risks, fraudulent accounts and token listings claiming affiliation with the platform. Our GameFi platform, the9bit, has been and may continue to be the target of impersonation, fraud, and unauthorized use of the the9bit brand. We have identified instances in which third parties have created fraudulent accounts and token listings on cryptocurrency platforms that falsely claim affiliation with or endorsement by the9bit. These unauthorized activities may include the creation of fake social media profiles, fraudulent token offerings, deceptive wallet addresses, and misleading communications designed to exploit users who associate such activities with the9bit brand. As of the date of this annual report, the9bit has not launched or endorsed any tokens on any cryptocurrency exchange, and any listings, messages, or wallets purporting to represent the9bit that are not verified through our official channels are unauthorized and fraudulent. Although we have taken steps to address these risks, including contacting the legal and support teams of affected cryptocurrency platforms to report impersonation, seeking the removal of fraudulent listings, and monitoring ongoing suspicious activity, there can be no assurance that these efforts will be successful or that similar incidents will not recur. The decentralized and often anonymous nature of cryptocurrency platforms and blockchain-based ecosystems makes it difficult to identify and hold accountable the individuals or entities responsible for impersonation and fraud, and the legal and regulatory frameworks governing such conduct remain uncertain and vary across jurisdictions If third parties successfully impersonate the9bit or create fraudulent accounts or token listings associated with our platform, users and investors may suffer financial losses, which could result in reputational harm to the9bit and The9, a loss of user trust and engagement, a decline in the growth of our registered user base, and potential legal or regulatory proceedings against us, even if we are not responsible for the fraudulent conduct. Any such proceedings could be costly, divert our management’s attention from our business operations, and may result in material adverse impact on us. There can be no assurance that we will be able to detect, prevent, or respond to all instances of impersonation or fraud in a timely manner, and the occurrence of any such incidents could have a material adverse effect on our business, financial condition, results of operations, and prospects. 35 Table of Contents ​ We currently have a limited U.S. presence and do not proactively offer services in the United States or to U.S. persons. Our subsidiary, NBTC US Ltd, has entered into a hosting agreement with a third-party data center by which the third party agreed to host our mining machines in its data center located in Texas. Under a 12-month hosting agreement, the third party provides electricity, hosting service, and other services to the Company mining operations. We may occasionally sell a portion of Bitcoin mined in Texas, including through third-party exchanges for our own account. Since January 2023, we no longer mint or offer NFTs, or provide any services related to previously minted NFTs. NFTs we previously issued may continue to be available on third-party trading sites that we do not operate or control. Before the sale of NFTSTAR to a third party in 2023, we received royalties from secondary sales of previously issued NFTs which only amounted to RMB26 thousand. We continue to evaluate its U.S. compliance obligations in light of its evolving business lines. Our operations may be subject to enhanced regulation by financial regulators. Cryptocurrencies, generally, may be subject to certain U.S. regulatory regimes. The application of any of these regimes could result in a materially adverse impact on our financial condition and operations. For example, the Commodity Futures Trading Commission has stated that cryptocurrencies fall within the definition of “commodities.” If cryptocurrencies were deemed to be commodities, transactions over cryptocurrencies could be subject to prohibitions on deceptive and manipulative trading or restrictions on manner of trading (e.g., on a registered derivatives exchange), depending on how the transaction is conducted. In addition, if regulatory changes or interpretations of our activities require registration as a money services business under the regulations promulgated by the FinCEN under the authority of the U.S. Bank Secrecy Act or as a money transmitter or a digital currency business under state regimes (e.g., New York) for the licensing of such businesses, we could suffer reputational harm and also extraordinary, recurring and/or nonrecurring expenses, which would adversely impact an investment in us. Certain of our operations are subject to U.S. economic sanctions programs, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC. As a result of doing business in foreign countries and with foreign partners, we may be exposed to a heightened risk of violating OFAC sanctions laws and regulations. Any failure to obtain or maintain necessary governmental licenses and authorizations could adversely affect our business and results of operations. We maintain necessary governmental licenses and authorizations in the jurisdictions in which we operate, where we understand they are required. Specifically, we have obtained the requisite licenses in certain jurisdictions to the extent that the laws and regulations of such jurisdictions clearly indicate that a license is required or where the regulators of such jurisdictions have advised us that we need a license to operate. We also operate in jurisdictions where we do not believe we are required, or where we have been informed by these jurisdictions that we are not required, to obtain certain licenses. To the extent that the laws and regulations of certain jurisdictions clearly indicate that a license is required or where the regulators of such jurisdictions have advised us that we need a license to operate, and we have not obtained such licenses or registrations, then we do not operate the jurisdictions. As noted above, our customers include persons who are located or reside in jurisdictions where we do not believe we are required, or where we have been informed by these jurisdictions that we are not required, to obtain certain licenses. It is possible that the authorities in those jurisdictions may take the position that we are required to obtain licenses or otherwise comply with local laws and regulations in order to conduct our business with persons located or who reside in those jurisdictions. Complying with such laws and regulations may require substantial expense, and any non-compliance may expose us to liabilities. In the event of non-compliance, we may have to incur significant expenses and divert substantial management time to rectify the incidents. In the future, if we fail to obtain all the necessary approvals, licenses, permits and certifications, we may be subject to fines or the suspension of operations that do not have all the requisite approvals, licenses, permits and certifications, which could materially and adversely affect our business and results of operations. We may also experience adverse publicity arising from non-compliance with government regulations, which would negatively impact our reputation. 36 Table of Contents ​ In any jurisdiction, if we fail to comply with the regulatory requirements, we may risk being disqualified for our existing businesses or being rejected for renewal of our qualifications and/or licenses upon expiry by the regulatory authorities as well as other penalties, fines, or sanctions. In respect of any new business that we may contemplate, we may not be able to obtain the approvals for developing such new business if we fail to comply with the regulations and regulatory requirements. As a result, we may fail to develop new business as planned, or we may fall behind our competitors in such businesses. In any jurisdiction in which we operate, to the extent that we are required to obtain government licenses or approvals, there is no assurance that we will be able to fulfill all the conditions necessary to obtain the required government approvals, or that government officials will always, if ever, exercise their discretion in our favor, or that we will be able to adapt to any new laws, regulations and policies. There may also be delays on the part of government authorities in reviewing our applications and granting approvals, whether due to the lack of human resources or the imposition of new rules, regulations, government policies or their implementation, interpretation and enforcement. If we are unable to obtain, or experiences material delays in obtaining, necessary government approvals, our operations may be substantially disrupted or discontinued, which could materially and adversely affect our business, financial condition and results of operations. As we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations and policies of a variety of jurisdictions will increase and we may be subject to investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities. As we expand and localize our international activities, we have become increasingly obligated to comply with the laws, rules, regulations, policies, and legal interpretations not only the jurisdictions in which we operate but also those into which we offer services on a cross-border basis. Laws regulating financial services, the internet, mobile technologies, crypto, and related technologies outside the United States often impose different, more specific, or even conflicting obligations on us, as well as broader liability. Regulators throughout the world frequently study each other’s approaches to the regulation of the crypto economy. Consequently, developments in any jurisdiction may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other jurisdictions. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place or involving another service. Conversely, if regulations diverge throughout the world, we may face difficulty adjusting our products, services, and other aspects of our business with the same effect. These risks are heightened as we face increased competitive pressure from other similarly situated businesses that engage in regulatory arbitrage to avoid the compliance costs associated with regulatory changes. The complexity of U.S. federal and state and international regulatory and enforcement regimes, coupled with the global scope of our operations and the evolving global regulatory environment, could result in a single event prompting a large number of overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions. Any of the foregoing could, individually or in the aggregate, harm our reputation, damage our brands and business, and adversely affect our operating results and financial condition. Due to the uncertain application of existing laws and regulations, certain of our products or services may become subject to financial regulation, licensing, or authorization obligations that we have not obtained or with which we have not complied. As a result, we are at a heightened risk of enforcement action, litigation, regulatory, and legal scrutiny which could lead to sanctions, cease, and desist orders, or other penalties and censures which could significantly and adversely affect our continued operations and financial condition. ​ 37 Table of Contents ​ It may be illegal now, or in the future, to acquire, own, hold, sell or use digital assets in one or more countries, and ownership of, holding or trading in our securities may also be considered illegal and subject to sanction. Currently, digital assets are not regulated or are lightly regulated in most countries, including the United States. In September 2021, PRC authorities issued the new regulations which made it clear that virtual currencies do not have the same legal status as legal currency, and virtual currency-related activities are illegal financial activities, strictly prohibiting new virtual currency mining projects, and accelerating the orderly withdrawal of the stock of projects. Provision of services by overseas virtual currency exchanges to mainland China residents via the internet is also considered to be an illegal financial activity. Subject to the new regulations, it is forbidden to invest in incremental projects and to develop virtual currency mining projects in any name. The virtual currency mining activities have been treated as the eliminated industry, and listed as the eliminated industries into Catalogue for Guiding Industry Restructuring (2024 version). In February 2026, Chinese authorities, led by the People’s Bank of China (PBOC), issued new regulations further clarifying the legal boundaries of digital asset activities. The regulations reaffirm that virtual currencies do not possess the same legal status as fiat currency and reiterate that related activities constitute illegal financial conduct. Significantly, the new rules introduced a regulatory framework for the tokenization of Real World Assets (RWA), imposing strict prohibitions on domestic issuance while permitting overseas offerings only upon obtaining requisite approvals. The regulations also explicitly prohibit the issuance of RMB-pegged stable coins outside of mainland China without prior authorization. Concurrently, the PBOC has advanced the development of the digital yuan (e-CNY) framework, allowing interest-bearing functionalities for real-name wallets, thereby integrating it more deeply into the formal financial system. This evolving regulatory landscape continues to classify most private-sector virtual currency activities as unlawful within China. One or more countries may take regulatory actions in the future that severely restricts the right to acquire, own, hold, sell or use digital assets or to exchange digital assets for fiat currency. Such an action may also result in the restriction of ownership, holding or trading in our securities. Such restrictions may adversely affect an investment in us. The loss or destruction of a private key required to access a digital asset may be irreversible. Our loss of access to our private keys or our experience of a data loss relating to our Company’s digital assets could adversely affect an investment in our Company. Digital assets are controllable only by the possessor of both the unique public key and private key relating to the local or online digital wallet in which the digital assets are held. We are required by the operation of digital asset networks to publish the public key relating to a digital wallet we use when it first verifies a spending transaction from that digital wallet and disseminates such information into the respective network. We safeguard and keep private the private keys relating to our digital assets; to the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, we will be unable to access the digital assets held by it and the private key will not be capable of being restored by the respective digital asset network. Any loss of private keys relating to digital wallets used to store our digital assets could adversely affect an investment in us. Because we may, from time to time, hold our digital assets at digital asset exchanges, we face heightened risks from cybersecurity attacks and financial stability of digital asset exchanges. We may transfer our digital asset from our wallet to digital asset exchanges prior to selling them. Digital assets not held in our wallet are subject to the risks encountered by digital asset exchanges including a dDoS Attack or other malicious hacking, a sale of the digital asset exchange, loss of the digital assets by the digital asset exchange and other risks similar to those described herein. While we may have a custodian agreement with various providers that hold our digital assets, these digital asset custodians provide only limited insurance over all crypto assets under their custody, and may lack the resources to protect against hacking and theft. If this were to occur, we may be materially and adversely affected. We hold mined Bitcoin as current assets. We may occasionally sell portion of mined Bitcoin to cover our operational costs. We may sell Bitcoin through various exchanges, including Binance. We received all previously pledged Bitcoins from Binance in 2024. We hold 9bit tokens in the hot wallet. Fluctuations in the price of Bitcoin may significantly influence the market price of our Class A ordinary shares or the ADSs To the extent investors view the value of our Class A ordinary shares or the ADSs as linked to the value or change in the value of our Bitcoin, fluctuations in the price of Bitcoin may significantly influence the market price of our Class A ordinary shares or the ADSs. 38 Table of Contents ​ We depend on third-party companies to perform functions critical to our business, and any failure or increased cost on their part could have a material adverse effect on our business. We depend on third-party companies to perform functions critical to our business. We depend on hosting service providers to conduct cryptocurrency mining. Difficulties with any of our significant partners or third parties involved in our business, regardless of the reason, could have a material adverse effect on our financial results, business and prospects. If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our Bitcoin, we may lose some or all of our Bitcoin and our financial condition and results of operations could be materially and adversely affected Security breaches and cyberattacks are of particular concern with respect to our Bitcoin. Bitcoin and other blockchain-based cryptocurrencies have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. A successful security breach or cyberattack could result in a partial or total loss of our Bitcoin in a manner that may not be covered by insurance or indemnity provisions of the custody agreement with a custodian who holds our Bitcoin. Such a loss could have a material adverse effect on our financial condition and results of operations. Our international business efforts could adversely affect us. We operate and conduct business in different countries and regions. International transactions are subject to inherent risks and challenges that could adversely affect us, including: ● the need to develop new supplier and manufacturer relationships; ● counter-party risks, theft of our properties, fraud, among others; ● the need to comply with additional U.S. and foreign laws and regulations; ● changes in international laws, regulatory requirements, taxes and tariffs; ● our limited experience with different local cultures and standards; ● geopolitical conflicts, such as war and terrorist attacks; and ● the additional resources and management attention required for such expansion. Our international business could expose us to penalties for non-compliance with laws applicable to international business and trade, which could have a material adverse effect on our business. Compliance with such laws and regulations will result in additional costs and may necessitate changes to our business practices, which may adversely affect our business. To the extent that we make purchases or sales denominated in foreign currencies, we would have foreign currency risks, which could have a material adverse effect on our financial results, business and prospects. Our international business may face uncertainty in the tax implications. We may be subject to various tax obligations associated with mining in countries where we have hosting agreements for our machines in the future, including the so-called tax on mining in Kazakhstan and Kyrgyzstan, effectively a surcharge on the electricity price per kW/h. Although crypto assets obtained through crypto mining operations are not currently taxed in some jurisdictions, we cannot guarantee the case will always be true in the future. If the governments promulgate new tax regimes that will subject our operation to additional tax liabilities, our business operations might be materially affected. 39 Table of Contents ​ There can be no assurance that the market for digital assets will be developed and sustained, which may materially adversely affect our business operations. The market for digital assets is still nascent. Accordingly, the market for digital assets may not develop, or if a market does develop, such value be maintained. If no market develops for digital assets in the future, it may be difficult or impossible for us to develop and maintain a platform where our users can trade, purchase and sell digital assets. If we could not receive transaction fees from secondary market due to these users being unable to trade, purchase and sell digital assets, our business operations and financial performance may be negatively affected. It is uncertain whether certain cryptocurrencies fall within the definition of a “security” under the U.S. federal, state or foreign securities laws. If one of the cryptocurrencies that we possess are deemed to be a security under any U.S. federal or state or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such cryptocurrency, and we could be subject to legal or regulatory action. Our risk-based assessments about whether certain cryptocurrencies are securities are not legal determinations. The classification of a cryptocurrency as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets. For example, a cryptocurrency that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration. Persons that effect transactions in cryptocurrencies that are securities in the United States may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade cryptocurrencies that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency. The SEC and its staff, as well as U.S. state securities regulators, have historically taken the position that certain cryptocurrencies fall within the definition of a “security” under the U.S. federal and state securities laws. U.S. Supreme Court case law and the SEC staff have indicated that the determination as to whether a cryptocurrency is a security or not depends on the characteristics and use of that particular asset. Numerous enforcement actions and regulatory proceedings have since been initiated against crypto assets and crypto asset products and their developers and proponents in recent years, as well as against trading platforms that support crypto assets. In addition, several foreign governments have also issued similar warnings cautioning that crypto assets may be deemed to be securities under the laws of their jurisdictions. A non-exhaustive list of cryptocurrencies declared as securities by the SEC includes FTX Token, Algorand, Filecoin, BNB and Binance USD. The SEC and the SEC Staff have taken positions that certain cryptocurrencies are “securities” in the context of settled or litigated enforcement actions. Otherwise, the SEC has not historically provided advance confirmation on the status of any particular cryptocurrency as a security and the current presidential administration and control of Congress in the U.S. present considerable uncertainty as to cryptocurrency regulations. While prior public statements by senior officials at the SEC indicated that the SEC does not intend to take the position that Bitcoin or Ethereum are securities (in their current forms), Bitcoin and Ethereum were the only specific cryptocurrencies as to which senior officials at the SEC had publicly expressed such a view. Moreover, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court, cannot be generalized to any other cryptocurrency, and might evolve. With respect to all other cryptocurrencies, there is currently no certainty under the applicable legal test that such assets are not securities, and U.S. regulators have expressed concerns about cryptocurrency platforms adding multiple new coins, some of which the regulators question might be unregistered securities. In January 2025, U.S. President Donald Trump issued an executive order forming a presidential working group to establish a clear regulatory framework for digital assets, and leaders in both houses of the U.S. Congress have announced a bicameral working group with the objective of passing legislation to provide regulatory clarity for the industry. Committees in both houses of the U.S. Congress have held hearings to ensure fair access to financial services, including for companies operating in the digital asset space. Additionally, in early March 2025, President Trump announced the creation of a U.S. strategic crypto reserve, which will include Bitcoin Ethereum, Solana, XRP, and Cardano. 40 Table of Contents ​ Also in January 2025, the SEC launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for digital assets led by Commissioner Hester Peirce. Subsequently, Commissioner Peirce announced a list of specific priorities to further that initiative, which included pursuing final rules related to a digital asset’s security status, a revised path to registered offerings and listings for digital asset-based investment vehicles, and clarity regarding digital asset custody, lending and staking. While the SEC has formed the Crypto Task Force to provide clarity on the application of the federal securities laws to the crypto asset market and to recommend practical policy measures that aim to foster innovation and protect investors, any permanent regulatory shift remains uncertain at this time, and there is no assurance a more favorable U.S. regulatory environment will emerge at the federal or state levels. To the extent that the SEC or a court determines that any cryptocurrency supported by a trading platform is a security, that determination could prevent the platform from continuing to facilitate the trading of that cryptocurrency. It could also result in regulatory enforcement penalties and financial losses to the platform if it was determined to have liability to its customers and thus had to compensate them for any losses or damages. Such a platform could also be subject to judicial or administrative sanctions for failing to offer or sell the cryptocurrency in compliance with securities registration requirements, or for acting as a securities broker or dealer without appropriate registration. Such an action could result in injunctions and cease and desist orders, as well as civil monetary penalties, fines, and disgorgement, criminal liability, and reputational harm. Customers that traded those cryptocurrencies and suffered trading losses might also seek to rescind the transactions facilitated by the platform on the basis that such trades were conducted in violation of applicable law, which could subject the trading platform operator to significant liability and losses. The SEC’s determination that Filecoin or any other cryptocurrency is a “security” may adversely affect the value of such cryptocurrency and could therefore adversely affect our business, prospects or operations. Depending on its characteristics, a cryptocurrency may be considered a “security” under the federal securities laws. The test for determining whether a particular cryptocurrency is a “security” is complex and difficult to apply, and the outcome is difficult to predict. Whether a cryptocurrency is a security under the federal securities laws depends on whether it is included in the lists of instruments making up the definition of “security” in the Securities Act, the Exchange Act, and the Investment Company Act. Cryptocurrencies as such do not appear in any of these lists, although each list includes the terms “investment contract” and “note,” and the SEC has typically analyzed whether a particular cryptocurrency is a security by reference to whether it meets the tests developed by the federal courts interpreting these terms, known as the Howey and Reves tests, respectively. For many cryptocurrencies, whether or not the Howey or Reves tests are met is difficult to resolve definitively, and substantial legal arguments can often be made both in favor of and against a particular digital asset qualifying as a security under one or both of the Howey and Reves tests. Adding to the complexity, the SEC staff has indicated that the security status of a particular digital asset can change over time as the facts evolve. Current and future legislation and SEC-rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which cryptocurrencies are viewed or treated for classification and clearing purposes. In particular, Bitcoin and other cryptocurrencies may not be excluded from the definition of “security” by SEC rulemaking or interpretation requiring registration of all transactions unless another exemption is available, including transacting in Bitcoin or other cryptocurrencies among owners and requiring registration of trading platforms as “exchanges.” Accordingly, a given cryptocurrency may currently be a security based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a security under the federal securities laws. The SEC has previously taken the view that Filecoin meets the definition of a security under the U.S. federal securities laws. We generated Filecoin mining income through provision of computing storage space to the main networks. Unlike our Bitcoin mining business, we relied on a Filecoin mining company to manage Filecoin mining instead of managing it by ourselves. We did not control the timing and quantity of Filecoin to be received and earned. Accordingly, we only recorded Filecoin mining income when we actually receive the Filecoin in our cryptocurrency wallet. As of December 31, 2023, 2024 and 2025, we had recognized RMB1.5 million, RMB2.0 million and RMB0.3 million (US$0.04 million) as non-operating income. We do not generate any Filecoin revenue anymore since 2025, we have generated minimal income from our mining of Filecoin. For example, if we were deemed an ‘investment company’ under the Investment Company Act of 1940, as amended, we would be required to meet burdensome compliance requirements and register as an investment company. Investment company registration is time consuming and would require a restructuring of our business. Moreover, the operation of an investment company is very costly and restrictive, as investment companies are subject to substantial regulation concerning management, operations, transactions with affiliated persons and portfolio composition, and the Investment Company Act filing requirements. The cost of such compliance would result in us incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact on its operations. 41 Table of Contents ​ Our equity investments or establishment of joint ventures and any material disputes with our investment or joint venture partners may have an adverse effect on our financial results, business prospects and our ability to manage our business. From time to time, subject to the availability of the necessary financial resources, we make equity investments into selected targets, such as online game developers, operators or application platforms, or establish joint ventures with business partners, to seek business growth opportunities. For example, in 2025, as we have pivoted to the online gaming business again, our variable interest entity Shanghai The9 Information Technology Co., Ltd. entered into a definitive agreement with ZhongShun to acquire 51% equity of ZhongShun’s wholly-owned subsidiary, ZhongXinShun, the joint venture. ZhongShun contributed the exclusive rights of its two proprietary mobile games, Glory All Stars and Ultraman: Hero Beyond Time into ZhongXinShun. The financial results of such joint venture shall be consolidated in our financial statement. However, we cannot assure you that we will successfully implement this strategy and that our joint venture partner will perform its obligations under the agreements. We also cannot assure that the joint venture partner will perform their obligations under the joint venture agreements and/or that operations of the games and other game businesses will lead to the achievement of the profit targets. We may have limited power to direct or otherwise participate in the management of operations and strategies of the companies in which we invest or the joint ventures we establish. The diversion of our management’s attention away from our business and any difficulties encountered in managing our interests in the respective investees or joint ventures could have an adverse effect on our ability to manage our business. Any material disputes with our investment or joint venture partners and existing shareholders may also require us to allocate significant corporate and other resources. Our investments may also be subject to market conditions and therefore are uncertain whether our resources and expenses devoted are able to be converted into revenue. In addition, we may not recover our equity investments if the companies in which we invest do not perform well and equity investments could result in the incurrence of operating or impairment losses, which could materially and adversely affect our results of operations. We may not be able to prevent others from infringing upon our intellectual property rights, which may harm our business and expose us to litigation. We regard our proprietary software, domain names, trade names, trademarks and similar intellectual properties as critical to our business. Intellectual property rights and confidentiality protection in China may not be as effective as in the United States or other countries. Monitoring and preventing the unauthorized use of proprietary technology is difficult and expensive. The steps we have taken may be inadequate to prevent the misappropriation of our proprietary technology. Any misappropriation could have a negative effect on our business and operating results. We may need to resort to court proceedings to enforce our intellectual property rights in the future. Litigation relating to our intellectual property might result in substantial costs and diversion of resources and management attention away from our business. See “—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” We rely on services and licenses from third parties to carry out our businesses, and if there is any negative development in these services or licenses, our end users may cease to use our products and services. We rely on third parties for certain services and licenses for our business, including game platforms and distributors for the distribution of our games, and other services and licenses for our operations. For example, we rely on third-party licenses for some of the software underlying our technology platform, and on China Telecom’s internet data centers for hosting our servers. See “Item 4. Information on the Company—B. Business Overview.” Any interruption or any other negative development in our ability to rely on these services and licenses, such as material deterioration of quality of the third-party services or the loss of intellectual property relating to licenses held by our licensors, could have a material and adverse impact on our business operations. In particular, our game licensors may be subject to intellectual property rights claims with respect to the games or software licensed to us. If such licensors cannot prevail on the legal proceedings brought against them, we could lose the right to use the licensed games or software. For example, in May 2024, we entered into an exclusive publishing license agreement with Wemade, a Korean company that owns the publishing rights to the MIR M game, pursuant to which our wholly owned subsidiary incorporated in Hong Kong, China Crown Technology Limited, obtained the right to exclusively publish and service the MIR M game in mainland China, in both mobile and PC versions. However, the original publishing license agreement was terminated in October 2025 due to certain unstable factors relating to the MIR M Chinese trademark. While the parties reached settlements, including the refund of the license fee and the minimum payment fee that China Crown Technology Limited had already paid to Wemade under the original publishing license agreement, the termination resulted in the loss of a game from our portfolio and the expenditure of management time and resources in negotiating and unwinding the arrangement. There can be no assurance that similar disruptions involving intellectual property rights or other issues will not arise with respect to our other licensing arrangements in the future. 42 Table of Contents ​ Furthermore, if our arrangements with any of these third parties are terminated or modified against our interest, we may not be able to find alternative solutions on a timely basis or on terms favorable to us. If any of these events occur, our end users may cease using our products and services, and our business, financial condition and results of operations may be materially and adversely affected. Unexpected network interruptions caused by system failures or other internal or external factors may lead to user attrition, revenue reductions and may harm our reputation. Any failure to maintain satisfactory performances, reliability, security and availability of our network infrastructure may cause significant harm to our reputation and our ability to attract and maintain users. The system hardware for our operations is located in several cities in China. We maintain our backup system hardware and operate our back-end infrastructure in Shanghai. Server interruptions, breakdowns or system failures in the cities where we maintain our servers and system hardware, including failures that may be attributable to sustained power shutdowns, or other events within or outside our control that could result in a sustained shutdown of all or a material portion of our services, could adversely impact our ability to service our users. Our network systems are also vulnerable to damage from computer viruses, fire, flood, earthquake, power loss, telecommunications failures, computer hacking and similar events. We maintain property insurance policies covering our servers, but do not have business interruption insurance. Our business may be harmed if our technology becomes obsolete or if our system infrastructure fails to operate effectively. The industries we operate in are subject to rapid technological change. We need to anticipate the emergence of new technologies in cryptocurrency mining and online games, assess their acceptance and make appropriate investments. If we are unable to do so, new technologies in cryptocurrency mining and online game programming or operations could render our cryptocurrency mining inefficient or our games obsolete or unattractive. In addition, our business may be harmed if we are unable to upgrade our systems fast enough to accommodate increasing computing power and fluctuations in future traffic levels, avoid obsolescence or successfully integrate any newly developed or acquired technology with our existing systems. Capacity constraints could cause unanticipated system disruptions and slower response and processing time, affecting data transmission and efficiency. These factors could, among other things, cause our cryptocurrency mining activities to become inefficient or cause us to lose existing or potential customers and existing or potential game development partners. We have been and may be subject to future intellectual property rights claims or other claims, which could result in substantial costs and diversion of our financial and management resources away from our business. There is no assurance that all aspects of our business operation do not or will not infringe upon patents, valid copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others. Some of our employees were previously employed at other companies, including our current and potential competitors. To the extent these employees have been involved in research at our company similar to research in which they had been involved at their former employers, we may become subject to claims that such employees have used or disclosed trade secrets or other proprietary information of their former employers. In addition, our competitors may file lawsuits against us in order to gain an unfair competitive advantage over us. If any such claim arises in the future, litigation or other dispute resolution proceedings may be necessary to retain our ability to offer our current and future games, which could result in substantial costs and diversion of our financial and management resources. Furthermore, if we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property, incur additional costs to license or develop alternative games and be forced to pay fines and damages, each of which may materially and adversely affect our business and results of operations. Variability in intellectual property laws may adversely affect our intellectual property position. Intellectual property laws, and patent laws and regulations in particular, have been subject to significant variability either through administrative or legislative changes to such laws or regulations or changes or differences in judicial interpretation, and it is expected that such variability will continue to occur. Additionally, intellectual property laws and regulations differ among states, and countries. Variations in the patent laws and regulations or in interpretations of patent laws and regulations in the United States and other countries may diminish the value of our intellectual property and may change the impact of third-party intellectual property on us. Accordingly, we cannot predict the scope of patents that may be granted to us, the extent to which we will be able to enforce our patents against third parties, or the extent to which third parties may be able to enforce their patents against us. 43 Table of Contents ​ Our business is subject to complex and evolving Chinese and international laws and regulations regarding data privacy and cybersecurity. Failure to protect confidential information of our customers and network against security breaches could damage our reputation and brand and substantially harm our business and results of operations. As the regulations regarding data privacy and cybersecurity are quickly evolving in China and globally, we may become subject to new laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information that could affect how we store, process and share data with our customers, suppliers and third-party merchants. On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. We update our privacy policies from time to time to meet the latest regulatory requirements of the CAC and other authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way. Nonetheless, the Personal Information Protection Law raises the protection requirements for processing personal information, and many specific requirements of the Personal Information Protection Law remain to be clarified by the CAC, other regulatory authorities, and courts in practice. We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations. See “Item 4. Information on the Company—B. Business Overview—Regulations.” On December 28, 2021, thirteen ministries and commissions, including the National Internet Information Office, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of National Security, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China, the State Administration for Market Regulation, the State Administration of Radio and Television, the China Securities Regulatory Commission, the State Secret Service, and the State Cryptography Administration, issued the Measures for Cybersecurity Review (2021), which emphasized that operators of “critical information infrastructure” or data processors holding over one million users’ personal information shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. The Measures for Cybersecurity Review that took effect on February 15, 2022 provide that the purchase of network products and services by critical information infrastructure operator and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review in accordance with the present Measures. In connection with offering and listing in an overseas market, an online platform operator who possesses the personal information of more than one million users shall declare to the Office of Cybersecurity Review for cybersecurity review. As of the date of this annual report, (i) we are not a critical information infrastructure operator, (ii) we collect less than one million users’ information through our internet platform in China, and (iii) our business does not affect national security. Thus, our PRC legal counsel does not expect that, as of the date of this annual report, we are required to file an application for the cybersecurity review by CAC. On February 22, 2023, the CAC issued the Measures on the Standard Contract for Outbound Transfer of Personal Information, or the Measures, which took effect on June 1, 2023, and the Standard Contract for Outbound Transfer of Personal Information. The Measures consist of 13 articles, clarifying the scope of application, applicable conditions, requirements for supporting personal information protection impact assessments, record-keeping requirements, and other related matters for the Standard Contract for Outbound Transfer of Personal Information. If a personal information processor provides personal information to overseas parties by entering into standard contracts, it shall meet the following conditions at the same time: (1) it shall not be an operator of critical information infrastructure; (2) the number of individuals whose personal information is processed shall be less than 1 million; (3) the cumulative number of individuals whose personal information has been provided to overseas parties shall be less than 100,000 since January 1 of the previous year; and (4) the cumulative number of individuals whose sensitive personal information has been provided to overseas parties shall be less than 10,000 since January 1 of the previous year. In October 2025, Chinese authorities issued the Measures for the Certification of Cross-Border Personal Information Transfer, effective January 1, 2026. According to the Measures for the Certification of Cross-Border Personal Information Transfer, a personal information handler shall apply for certification if, since January 1 of the current year, it has cumulatively transferred abroad the personal information of 100,000 or more but less than 1 million individuals, or the sensitive personal information of less than 10,000 individuals, provided that it is not a critical information infrastructure operator and the information transferred does not include “important data” as defined under Chinese law. Certification is valid for three years. This regulation further clarifies China’s evolving data compliance framework applicable to cross-border business operations. As of the date of this annual report, we had not provided personal information to overseas organizations, and there is no situation of providing personal information to overseas data processors. Based on the foregoing, our PRC legal counsel does not expect that, as of the date of this annual report, the current applicable laws of mainland China on personal information export would have a material adverse impact on our business. 44 Table of Contents ​ On September 24, 2024, the State Council promulgated the Regulation on Network Data Security Management, which took effect on January 1, 2025. This regulation applies to network data handling activities and the supervision and administration of security thereof carried out within the territory of the PRC. This Regulation also applies to the activities outside the territory of the PRC to handle the personal information of natural persons within the territory of the PRC, which conform to the following circumstances prescribed in the second paragraph of Article 3 of the Law of the PRC on the Protection of Personal Information, including: (i) where the purpose is to provide domestic natural persons with products or services; (ii) where the activities of domestic natural persons are analyzed and evaluated; and (iii) other circumstances as prescribed by laws and administrative regulations. Besides, where network data processors carry out network data processing activities that affect or may affect national security, they shall carry out a national security review in accordance with relevant national regulations. This regulation also stipulates network data processors may transmit personal information abroad if it meets any of the certain conditions, such as having passed the security assessment for data cross-border transmission organized by the state cyberspace administration, or having been certified by a specialized agency in respect of the protection of personal information in accordance with the provisions of the state cyberspace administration, or meeting the provisions on standard contract for cross-border transmission of personal information as developed by the state cyberspace administration. Therefore, we may be subject to review when conducting data processing activities and data security assessment and may face challenges in addressing its requirements and make necessary changes to our internal policies and practices in data processing. In addition, we may need to comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S., Europe and elsewhere. For example, the European Union adopted the General Data Protection Regulation, which became effective on May 25, 2018. The General Data Protection Regulation imposes additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enacted laws (including implementation of the privacy and process enhancements called for under the General Data Protection Regulation) and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and reputational risks. We generally comply with industry standards and are subject to the terms of our own privacy policies. Compliance with any additional laws could be expensive, and may place restrictions on the conduct of our business and the manner in which we interact with our customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental authorities or other authorities, damage to our reputation and credibility and could have a negative impact on revenues and profits. Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or failure we perceived in preventing information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of our business. Our operating results may fluctuate due to various factors, and therefore may not be indicative of our future results. Our operating results have experienced fluctuations from time to time and will likely continue to fluctuate in the future. These fluctuations in operating results depend on a variety of factors, including cryptocurrency price fluctuations, mining difficulty, market sentiment in the cryptocurrency space, the expiration or termination of our game licenses, and acquisition or disposal of subsidiaries. To a significant degree, our operating expenses are based on planned expenditures and our expectations regarding prospective customer usage. Failure to meet our expectations could disproportionately and adversely affect our operating results in any given period. As a result, our historical operating results may not necessarily be indicative of our future results. 45 Table of Contents ​ Our business depends substantially on the continuing efforts of our senior executives, and our business may be severely disrupted if we lose their services. Our business and prospect depend heavily upon the continued services of our senior executives. We rely on their expertise in business operations, technology support and sales and marketing and on their relationships with our shareholders and distributors. We do not maintain key-man life insurance for any of our key executives. If one or more of our key executives are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all. As a result, our business may be severely disrupted, our financial condition and results of operations may be materially and adversely affected, and we may incur additional expense to recruit and train personnel. Each of our executive officers has entered into an employment agreement with us, which contains confidentiality and non-competition provisions. If any disputes arise between our executive officers and us, we cannot assure you the extent to which any of these agreements could be enforced in China, where these executive officers reside and hold most of their assets, in light of uncertainties with the PRC legal system. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” If we are unable to attract, train and retain key individuals and highly skilled employees, our business may be adversely affected. Our business relies on our ability to hire and retain additional qualified employees, including skilled and experienced online game developers. Since our industry is characterized by high demand and intense competition for talent, we may need to offer higher compensation and other benefits in order to retain key personnel in the future. We cannot assure you that we will be able to attract or retain the qualified game developers or other key personnel that we will need to achieve our business objectives. We have limited business insurance coverage in China and other areas. The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products. Additionally, we cease to possess significant operating assets located in China. As a result, we do not have any business liability or disruption insurance coverage for our operations in China. Any business disruption, litigation or natural disaster might result in our incurring substantial costs and the diversion of our resources. Our mining machines are located in Kyrgyzstan. We did not obtain insurance on our mining machines. We currently rely on the data center operator to insure their data centers, including, among other things, our mining machines. Operators of data centers are holders of their own insurance policies. Data center operators do not provide commercial insurance specifically for our miners located at their facilities. Rather, they have insurance covering data center facilities and assets which belong to the data center operators. We are not privy to the specific terms of the insurance contracts of the data center operators. However, data center operators are contractually responsible for the safety of our miners. We cannot guarantee that the data center operators have fulfilled their obligations to comply with the insurance coverage requirements. As of the date of this annual report, we do not have insurance coverage for our crypto assets or miners. Some of our subsidiaries, the variable interest entity and its subsidiaries, and joint ventures in mainland China engaged in certain business activities beyond the authorized scope of their respective licenses, and if they are subject to administrative penalties or fines, our operating results may be adversely affected. Some of our subsidiaries, the variable interest entity and its subsidiaries, and joint ventures in mainland China engaged in business activities that were not within the authorized scope of their respective licenses in the past. The PRC authorities may impose administrative fines or other penalties for the non-compliance with the authorized scope of the business licenses, which may in turn adversely affect our operating results. 46 Table of Contents ​ Uncertainty and instability resulting from the conflict between Russia and Ukraine could negatively impact our business, financial condition and operations. In the past we conducted certain of our mining operations in Russia by entering into hosting agreements pursuant to which our machines are co-located and operated in data centers in Russia. As of the date of this annual report, in connection with the termination arrangements, all of our Russia-related operations have been wound up. The U.S. government and other governments in jurisdictions in which we operate may swiftly impose expansive economic sanctions that may have a material impact on our operations and require us to take, or refrain from taking, specific actions, including, but not limited to, ceasing agreements or mining operations involving Russia or transporting our mining machines out of Russia. Russia is considering a number of severe measures aimed at mitigating the effect of sanctions imposed against it by the U.S., EU, UK and other governments in connection with the Russia-Ukraine conflict, including nationalization and seizures of assets held by foreign businesses under certain circumstances. In addition, existing Russian legal frameworks may be unfairly or unevenly enforced, and courts may decline to enforce legal protections covering our investments and business partnerships in Russia altogether. In the future, the U.S. government or other governmental authorities may designate certain of our Russian partners as individuals or entities as subject to sanctions. The Russian government’s ability to raise funds, including cryptocurrency, has been restricted. If the Russia-Ukraine conflict continues, the value of cryptocurrency, such as Bitcoin, may be materially affected. On April 20, 2022, OFAC added to its list of Specially Designated Nationals, or the SDN List, certain companies operating in Russia’s virtual currency mining industry, including BitRiver AG, or BitRiver. In the past, we partnered with BitRiver to carry out our mining business in Russia. OFAC included BitRiver on the SDN List pursuant to Executive Order 14024, for operating or having operated in the technology sector of the Russian Federation’s economy. BitRiver’s Russia-based subsidiaries were put on the SDN List, also pursuant to Executive Order 14024, for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, BitRiver. Any entity in which BitRiver, or any of its designated subsidiaries, has a 50% or greater, direct or indirect, ownership interest is also subject to U.S. sanctions. Such sanctions may materially affect our mining operations in Russia, and we have decided to terminate our partnership with BitRiver. In response to the sanctions, we have (i) disposed of our mining machines, (ii) transferred our mining machines outside of Russia, and (iii) for those mining machines not transferred or disposed of, signed hosting agreements with entities located outside of Russia. As of the date of this annual report, in connection with the termination arrangements, all of our Russia-related operations have been wound up. If we are not able to successfully mitigate some or all disruptions due to our termination of such relationship and the disposal or relocation of our mining machines, there could be a material adverse impact on our business, financial condition and results of operations. We could be liable for breaches of security of third-party online payment channels, which may have a material adverse effect on our reputation and business. Currently, a portion of our online game operation revenues are generated from sales through third-party online payment platforms. In such transactions, secured transmission of confidential information, such as customers’ credit card numbers and expiration dates, personal information and billing addresses, over public networks, in some cases including our website, is essential to maintain consumer confidence. While we have not experienced any material breach of our security measures to date, we cannot assure you that our current security measures are adequate. We do not have control over the security measures of our third-party online payment vendors and we cannot assure you that these vendors’ security measures are adequate or will be adequate with the expected increased usage of online payment systems. Security breaches of the online payment systems that we use could expose us to litigation and possible liability for failing to secure confidential customer information and could harm our reputation, ability to attract customers and ability to encourage customers to purchase in-game items. Material weaknesses and significant deficiencies in our internal control over financial reporting has been identified, and if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, meet our reporting obligations or prevent fraud, which could have a material adverse effect on our business, results of operations and the trading price of the ADSs. We are subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, or the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring public companies to include a report of management in its annual report that contains management’s assessment of the effectiveness of a company’s disclosure controls and procedures and internal controls over financial reporting. 47 Table of Contents ​ In preparing our consolidated financial statements for the fiscal year ended December 31, 2025, we and our independent registered public accounting firms identified material weaknesses in our internal control over financial reporting, in accordance with the standards established by the PCAOB. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. For the year ended December 31, 2025, the material weaknesses identified were that (a) we failed to maintain and implement controls over our period-end closing and financial reporting process in a timely manner, and (b) we lacked accounting personnel with knowledge of U.S. generally accepted accounting principles and SEC financial reporting requirements, which resulted in a number of adjustments detected and or proposed by our auditor. We also noted the following deficiency that we believe to be significant deficiency. As defined in standards established by the PCAOB, a “significant deficiency” is deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. For the year ended December 31, 2025, the significant deficiency identified was that certain of the intercompany balances among the respective entities are not consistently reconciled and intercompany adjustments are made as topside entries. These entries are carried over from prior years without identifying the originating and receiving entities, and the explanations for these adjustments are not adequately documented. To remedy our identified material weakness and significant deficiency, we will prepare the period-end closing and financial reporting process earlier to ensure we have sufficient time on these. We will also strengthen our accounting personnel’s knowledge by training or additional hiring. We will improve on the reconciliation of intercompany balances by minimizing unnecessary intercompany transactions. In preparing our consolidated financial statements for the fiscal year ended December 31, 2024, we and our independent registered public accounting firms identified material weaknesses in our internal control over financial reporting, in accordance with the standards established by the PCAOB. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. For the year ended December 31, 2024, the material weaknesses identified were that (a) we failed to maintain and implement controls over our period-end closing and financial reporting process in a timely manner, and (b) we lacked accounting personnel with knowledge of U.S. GAAP and SEC financial reporting requirements, which resulted in a number of adjustments detected and or proposed by our auditor. We also noted the following deficiencies that we believe to be significant deficiencies. As defined in standards established by the PCAOB, a “significant deficiency” is deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. For the year ended December 31, 2024, the significant deficiency identified were that (a) certain of the intercompany balances in each respective entities are not reconciled and some intercompany adjustments are made as topside entries and most are carried over from prior years without identifying which entities they were pertaining to and from, and the explanations for these adjustments were not documented clearly, and (b) certain supporting documents for the mining pool are not obtained timely. To remedy our identified material weakness and significant deficiency, we will prepare the period-end closing and financial reporting process earlier to ensure we have sufficient time on these. We will also strengthen our accounting personnel’s knowledge by training or additional hiring. We will improve on the reconciliation of intercompany balances by minimizing unnecessary intercompany transactions. In additional, we will improve our communication with our mining pool partner to ensure supporting documents can be obtained earlier. ​ 48 Table of Contents ​ In preparing our consolidated financial statements for the fiscal year ended December 31, 2023, we and our independent registered public accounting firms identified material weaknesses in our internal control over financial reporting, in accordance with the standards established by the PCAOB. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. For the year ended December 31, 2023, the material weaknesses identified were that (a) we failed to maintain and implement controls over our period-end closing and financial reporting process in a timely manner, and (b) we lacked accounting personnel with knowledge of U.S. GAAP and SEC financial reporting requirements, which resulted in a number of adjustments detected and or proposed by our auditor. We also noted the following deficiencies that we believe to be significant deficiencies. As defined in standards established by the PCAOB, a “significant deficiency” is deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. For the year ended December 31, 2023, the significant deficiency identified were that (a) certain of the intercompany balances in each respective entities are not reconciled and some intercompany adjustments are made as topside entries and most are carried over from prior years without identifying which entities were pertaining to and from, and the explanations for these adjustments were not documented clearly, and (b) certain supporting documents for the mining pool are not obtained timely. To remedy our identified material weakness and significant deficiency, we will prepare the period-end closing and financial reporting process earlier to ensure we have sufficient time on these. We will also strengthen our accounting personnel’s knowledge by training or additional hiring. We will improve on the reconciliation of intercompany balances by minimizing unnecessary intercompany transactions. In additional, we will improve our communication with our mining pool partner to ensure supporting documents can be obtained earlier. In documenting our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. If we fail to maintain effective internal controls over financial reporting, as these standards are modified, supplemented or amended from time to time, our management and, if applicable, our independent registered public accounting firm may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the Nasdaq, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. We face risks related to natural disasters and health epidemics. Our business could be materially and adversely affected by natural disasters, health epidemics or other public safety concerns affecting the PRC, and particularly Shanghai. Historically, the COVID-19 pandemic adversely affected our business. Our employees in Shanghai were unable to go to our offices for an extended period, and COVID-19 caused delays in the development of the data centers where we planned to deploy our mining machines. Our foreign strategic partners faced similar delays in their respective countries. Natural disasters may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to operate our platforms and provide services and solutions. Our business could also be adversely affected if our employees are affected by health epidemics. In addition, our results of operations could be adversely affected to the extent that any health epidemic harms the Chinese economy in general. Our headquarters are located in Shanghai, where most of our directors and management and the majority of our employees currently reside. Most of our system hardware and back-up systems are hosted in facilities located in Shanghai. Consequently, if any natural disasters, health epidemics or other public safety concerns were to affect Shanghai, our operation may experience material disruptions, which may materially and adversely affect our business, financial condition and results of operations. ​ 49 Table of Contents ​ Risks Related to Our Corporate Structure If the PRC government determines that the contractual arrangements constituting part of the variable interest entity structure do not comply with laws and regulations of mainland China, or if these laws and regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Foreign ownership of certain of our businesses including value-added telecommunication services is subject to restrictions under current laws and regulations of mainland China. For example, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider (excluding e-commerce, domestic multi-party communications, data collection and transmission services and call centers) and the main foreign investor in the foreign-invested telecommunication enterprise must have experience in providing value-added telecommunications services overseas and maintain a good track record. We are a Cayman Islands company and our Chinese mainland subsidiaries are considered foreign-invested enterprises. To comply with laws and regulations of mainland China, we conduct our operations in mainland China through a series of contractual arrangements entered into the variable interest entity in mainland China and its Chinese mainland subsidiaries, including Shanghai IT. In the opinion of our PRC legal counsel, (i) the ownership structures of the variable interest entity in mainland China and the Chinese mainland subsidiaries that have entered into contractual arrangements with the variable interest entity, including Shanghai IT, comply with all existing laws and regulations of mainland China; and (ii) the contractual arrangements between the Chinese mainland subsidiaries, including Shanghai IT, the variable interest entity and its respective shareholders governed by laws of mainland China are valid, binding and enforceable, and will not result in any violation of laws or regulations of mainland China currently in effect. However, we are a Cayman Islands holding company with no equity ownership in the consolidated variable interest entity and we conduct our operations in mainland China primarily through the consolidated variable interest entity with which we have maintained contractual arrangements. Investors in our Class A ordinary shares or the ADSs thus are not purchasing equity interest in the consolidated variable interest entity in mainland China but instead are purchasing equity interest in a Cayman Islands holding company. If the PRC government determines that the contractual arrangements constituting part of the variable interest entity structure do not comply with laws and regulations of mainland China, or if these laws and regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. We may not be able to repay the notes and other indebtedness, and the securities we are registering may significantly decline in value or become worthless, if the determinations, changes, or interpretations result in our inability to conduct business operations of the consolidated variable interest entity. Our holding company in the Cayman Islands, the consolidated variable interest entity, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the consolidated variable interest entity and, consequently, significantly affect the financial performance of the consolidated variable interest entity and our company as a group. Our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future laws, regulations and rules in mainland China; accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any other new laws or regulations of mainland China relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the variable interest entity are found to be in violation of any existing or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including: ● revoking the business licenses of such entities; ● discontinuing or restricting the conduct of any transactions between certain of our Chinese mainland subsidiaries and the variable interest entity; ● imposing fines, confiscating the income from the variable interest entity, or imposing other requirements with which we or the variable interest entity may not be able to comply; ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the variable interest entity and deregistering the equity pledges of the variable interest entity, which in turn would affect our ability to consolidate, derive economic interests from, or conduct business operations through contractual arrangements with the consolidated variable interest entity; or 50 Table of Contents ​ ● restricting or prohibiting our use of the proceeds of any of our financing outside of mainland China to finance our business and operations in mainland China. The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of the variable interest entity in our consolidated financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violation of laws and regulations of mainland China. If the imposition of any of these government actions causes us to lose our right to direct the activities of the variable interest entity or our right to receive substantially all the economic benefits and residual returns from the variable interest entity and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the variable interest entity in our consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, would have a material adverse effect on our financial condition and results of operations. Although we believe we, our Chinese mainland subsidiaries and the variable interest entity comply with current laws and regulations of mainland China, we cannot assure you that the PRC government would agree that our contractual arrangements comply with licensing, registration or other regulatory requirements in mainland China, with existing policies or with requirements or policies that may be adopted in the future. The PRC government has broad discretion in determining rectifiable or punitive measures for non-compliance with or violations of laws and regulations of mainland China. If the PRC government determines that we or the variable interest entity do not comply with applicable law, it could revoke the variable interest entity’s business and operating licenses, require the variable interest entity to discontinue or restrict the variable interest entity’s operations, restrict the variable interest entity’s right to collect revenues, block the variable interest entity’s websites, require the variable interest entity to restructure our operations, impose additional conditions or requirements with which the variable interest entity may not be able to comply, impose restrictions on the variable interest entity’s business operations or on their customers, or take other regulatory or enforcement actions against the variable interest entity that could be harmful to their business. Any of these or similar occurrences could significantly disrupt our or the variable interest entity’s business operations or restrict the variable interest entity from conducting a substantial portion of their business operations, which could materially and adversely affect the variable interest entity’s business, financial condition and results of operations. If any of these occurrences results in our inability to direct the activities of any of the variable interest entity that most significantly impact its economic performance, and/or our failure to receive the economic benefits from any of the variable interest entity, we may not be able to consolidate these entities in our consolidated financial statements in accordance with U.S. GAAP. Contractual arrangements in relation to the variable interest entity may be subject to scrutiny by the PRC tax authorities and they may determine that we or the variable interest entity owes additional taxes, which could negatively affect our financial condition and the value of your investment. Under applicable laws and regulations of mainland China, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements in relation to the variable interest entity were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable laws, rules and regulations of mainland China, and adjust the taxable income of the variable interest entity in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by the variable interest entity for PRC tax purposes, which could in turn increase its tax liabilities without reducing tax expenses of our Chinese mainland subsidiaries. In addition, the PRC tax authorities may impose late payment fees and other penalties on the variable interest entity for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if the variable interest entity’s tax liabilities increase or if it is required to pay late payment fees and other penalties. Our current corporate structure and business operations may be affected by the Foreign Investment Law. On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which took effect on January 1, 2020 and replaced the existing laws regulating foreign investment in mainland China, namely, the Sino-Foreign Equity Joint Venture Law, the Sino-Foreign Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, or Existing FIE Laws, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expected regulatory trend in mainland China to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Foreign Investment.” ​ 51 Table of Contents ​ Uncertainties still exist in relation to interpretation and implementation of the Foreign Investment Law, especially with respect to, including, among other things, the nature of variable interest entity contractual arrangements and specific rules regulating the organization form of foreign-invested enterprises within the five-year transition period. While the Foreign Investment Law does not define contractual arrangements as a form of foreign investment explicitly, we cannot assure you that future laws and regulations will not provide for contractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our business operations conducted through contractual arrangements with the consolidated variable interest entity will not be deemed as foreign investment in the future. Despite the lack of legal majority ownership, we are able to direct the activities of and derive economic benefits from the consolidated variable interest entity and therefore our Cayman Island holding company is considered the primary beneficiary of the consolidated variable interest entity for accounting purposes and consolidates the variable interest entity and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated variable interest entity as a consolidated entity under U.S. GAAP and we consolidate the financial results of the consolidated variable interest entity in our consolidated financial statements in accordance with U.S. GAAP. Neither The9 Limited nor its investors have an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the consolidated variable interest entity, and the contractual arrangements are not equivalent to an equity ownership in the business of the consolidated variable interest entity. The Special Administrative Measures on Access of Foreign Investment (Negative List) (Edition 2024), or the 2024 Negative List, was jointly issued by the Ministry of Commerce, and the National Development and Reform Commission, on September 6, 2024, which took effect on November 1, 2024, the 2024 Negative List stipulate the special administrative measures on access of foreign investment. Industries not listed in the 2024 Negative List are generally deemed as falling into categories of “encouraged” or “permitted” unless specifically restricted by other laws of mainland China. Our current business operations in mainland China falls in the “prohibited” industry for foreign investment. However, even though the Foreign Investment Law does not define contractual arrangements as a form of foreign investment explicitly, there can be no assurance that our contractual arrangements will be valid and legal at all times. In the event that any possible implementing regulations of the Foreign Investment Law, any other future laws, administrative regulations or provisions deem contractual arrangements as a way of foreign investment, our contractual arrangements may be deemed as invalid and illegal, we may be required to unwind the variable interest entity contractual arrangements and/or dispose of any affected business. Also, if future laws, administrative regulations or provisions mandate further actions to be taken 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. Furthermore, under the Foreign Investment Law, foreign investors or the foreign investment enterprise should be imposed legal liabilities for failing to report investment information in accordance with the requirements. In addition, the Foreign Investment Law provides that foreign invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within a five-year transition period, which means that we may be required to adjust the structure and corporate governance of certain of our Chinese mainland subsidiaries in such transition period. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, corporate governance and business operations. Laws and regulations of mainland China restrict foreign ownership of internet content provision, internet culture operation and internet publishing licenses, and substantial uncertainties exist with respect to the application and implementation of laws and regulations of mainland China. We are a Cayman Islands exempted company and, as such, we are classified as a foreign enterprise under laws of mainland China. Various regulations of mainland China currently restrict foreign or foreign-owned entities from holding certain licenses required in mainland China to provide online game operation services over the internet, including ICP, and internet publishing licenses. In light of such restrictions, we primarily rely on Shanghai IT, the variable interest entity, to hold and maintain the licenses necessary for the operation of our online games in mainland China. In July 2006, the Ministry of Industry and Information Technology, or the MIIT, issued a notice entitled “Notice on Strengthening Management of Foreign Investment in Operating Value-Added Telecommunication Services,” or the MII Notice, which prohibits ICP license holders from leasing, transferring or selling a telecommunications business operating license to foreign investors in any form, or providing resources, sites or facilities to any foreign investors for their illegal operation of a telecommunications business in mainland China. The notice also requires that ICP license holders and their shareholders directly own the domain names and trademarks used by such ICP license holders in their daily operations. The notice further requires each ICP license holder to have the necessary facilities for its approved business operations and to maintain such facilities in the regions covered by its license. In addition, all value-added telecommunication service providers are required to maintain network and information security in accordance with the standards set forth under regulations of mainland China. The local authorities in charge of telecommunications services are required to ensure that existing ICP license holders conduct a self-assessment of their compliance with the MII Notice and submit status reports to the MIIT before November 1, 2006. Since the MII Notice was issued, we have transferred to Shanghai IT all of the domain names used in our daily operations and certain trademarks used in our daily operations, as required under the MII Notice. All necessary transfers have been completed and approvals have been obtained. 52 Table of Contents ​ In September 2009, the General Administration of Press and Publication, Radio, Film and Television, or the GAPPRFT (formerly known as the General Administration of Press and Publication, or the GAPP), promulgated the Circular Regarding the Implementation of the Department Reorganization Regulation by State Council and Relevant Interpretation by State Commission Office for Public Sector Reform to Further Strengthen the Administration of Pre-approval on Online Games and Approval on Import Online Games, or the GAPP Circular, which provides that foreign investors shall not control or participate in online game operation businesses in mainland China indirectly or in a disguised manner by establishing joint venture companies or entering into agreements with, or by providing technical supports to, such online game operation companies in mainland China, or by inputting the users’ registration, account management or game card consumption directly into the interconnected gaming platform or fighting platform controlled or owned by the foreign investor. In addition, on February 4, 2016, the GAPPRFT and the MIIT jointly issued the Administrative Measures on Network Publication, which took effect in March 2016. Pursuant to the Administrative Measures on Network Publication, wholly foreign-owned enterprises, Sino-foreign equity joint ventures and Sino-foreign cooperative enterprises shall not engage in the provision of web publishing services, including online game services. Project cooperation involving internet publishing services between an internet publishing service provider and a wholly foreign-owned enterprise, Sino-foreign equity joint venture, or Sino-foreign cooperative enterprise within mainland China or an overseas organization or individual shall be subject to prior examination and approval by the GAPPRFT. It is unclear whether the authorities will deem the variable interest entity structure as a kind of such “manners of cooperation” by foreign investors to gain control over or participate in domestic online game operators, and it is not clear whether the GAPPRFT and the MIIT have regulatory authority over the ownership structures of online game companies based in mainland China and online game operation in mainland China. Subject to the interpretation and implementation of the GAPP Circular and the Administrative Measures on Network Publication, the ownership structure and the business operation models of our Chinese mainland subsidiaries and variable interest entity comply with all applicable laws, rules and regulations of mainland China, and no consent, approval or license is required under any of the existing laws and regulations of mainland China for their ownership structure and business operation models except for those which we have already obtained or which would not have a material adverse effect on our business or operations as a whole. There are, however, substantial uncertainties regarding the interpretation and application of current or future laws and regulations of mainland China. Accordingly, we cannot assure you that PRC government authorities will ultimately take a view that is consistent with the opinion of our PRC legal counsel. For example, the Ministry of Commerce, promulgated the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors in August 2011, or the MOFCOM Security Review Rules, to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011, or Circular No. 6. According to these circulars and rules, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises having “national security” concerns. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to the security review, the Ministry of Commerce will look into the substance and actual impact of the transaction. The MOFCOM Security Review Rules further prohibit foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. There is no explicit provision or official interpretation stating that our online game operation services falls into the scope subject to the security review, and there is no requirement for foreign investors in those merger and acquisition transactions already completed prior to the promulgation of Circular No. 6 to submit such transactions to the Ministry of Commerce for security review. As we have already obtained the “de facto control” over the variable interest entity prior to the effectiveness of these circulars and rules, we do not believe we are required to submit our existing contractual arrangement to the Ministry of Commerce for security review. However, we are advised by our PRC legal counsel that, as there is a lack of clear statutory interpretation on the implementation of these circulars and rules, there is no assurance that the Ministry of Commerce will have the same view as we do when applying these national security review-related circulars and rules. We have been further advised by our PRC counsel, Grandall Law Firm, that if we, any of our Chinese mainland subsidiaries or variable interest entity are found to be in violation of any existing or future laws or regulations of mainland China, including the MII Notice, the GAPP Circular and the Administrative Measures on Network Publication, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities, would have broad discretion in dealing with such violations, including: ● revoking the business and operating licenses of Shanghai IT; ● confiscating our income or the income of Shanghai IT; 53 Table of Contents ​ ● discontinuing or restricting the operations of any related party transactions among us and Shanghai IT; ● limiting our business expansion in China by way of entering into contractual arrangements; ● imposing fines or other requirements with which we may not be able to comply; ● requiring Shanghai IT or us to restructure our corporate structure or operations; or ● requiring Shanghai IT or us to discontinue any portion or all of our operations related to online games. The imposition of any of these penalties could result in a material and adverse effect on our ability to conduct our business and on our results of operations. If any of these penalties results in our inability to direct the activities of Shanghai IT that most significantly impact its economic performance, and/or our failure to receive the economic benefits from Shanghai IT, we may not be able to consolidate Shanghai IT in our consolidated financial statements in accordance with U.S. GAAP. We rely on contractual arrangements for our operations and operating licenses in mainland China, which may not be as effective as direct ownership. Because the PRC government restricts our ownership of ICP, internet culture operation and internet publishing businesses in mainland China, we primarily depend on Shanghai IT, in which we have no ownership interest, and its subsidiary Shaoxing Jiuyu, to operate our online game business and other ICP related businesses, and hold and maintain the requisite licenses. We have relied and expect to continue to rely on contractual arrangements to conduct business operations through contractual arrangements with Shanghai IT. Such contractual arrangements may not be as effective as direct ownership. From the legal perspective, if Shanghai IT fails to perform its obligations under the contractual arrangements, we may have to incur substantial costs and spend other resources to enforce such arrangements, and rely on legal remedies under laws of mainland China, including seeking specific performance or injunctive relief and claiming damages. For example, if the shareholders of Shanghai IT were to refuse to transfer their equity interests in Shanghai IT to us or our designee when we exercise the call option pursuant to the Call Option Agreement, or if such shareholders otherwise act in bad faith toward us, we may have to take legal action to compel it to fulfill their contractual obligations, which could be time consuming and costly. Despite the lack of legal majority ownership, we are able to direct the activities of and derive economic benefits from the consolidated variable interest entity and therefore our Cayman Island holding company is considered the primary beneficiary of the consolidated variable interest entity for accounting purposes and consolidates the variable interest entity and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated variable interest entity as a consolidated entity under U.S. GAAP and we consolidate the financial results of the consolidated variable interest entity in our consolidated financial statements in accordance with U.S. GAAP. Neither The9 Limited nor its investors have an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the consolidated variable interest entity, and the contractual arrangements are not equivalent to an equity ownership in the business of the consolidated variable interest entity. These contractual arrangements are governed by laws of mainland China and provide for the resolution of disputes through arbitration in mainland China. We have historically derived significant revenues from Shanghai IT. For the year ended December 31, 2023, 2024 and 2025, Shanghai IT contributed 0.1%, 0.3% and 32.8%, respectively, of our total revenues. In the event we are unable to enforce the contractual arrangements, we may not be able to have the power to direct the activities that most significantly affect the economic performance of Shanghai IT, and our ability to conduct our business may be negatively affected, and we may not be able to consolidate the financial results of Shanghai IT into our consolidated financial statements in accordance with U.S. GAAP. We believe that our option to purchase all or part of the equity interests in Shanghai IT, when and to the extent permitted by laws of mainland China, or request any existing shareholder of Shanghai IT to transfer all or part of the equity interest in Shanghai IT to another person or entity of mainland China we designate at any time in our discretion, and the rights under the Shareholder Voting Proxy Agreement that the shareholders of Shanghai IT have granted to us, effectively enable us to have the ability to cause the related contractual arrangements to be renewed when needed. However, if we are not able to effectively enforce these agreements or otherwise renew the agreements when they expire, our ability to receive the economic benefits of Shanghai IT may be adversely affected. 54 Table of Contents ​ Our ability to enforce the Equity Pledge Agreements between us and the shareholders of Shanghai IT may be subject to limitations based on laws and regulations of mainland China. Pursuant to the Equity Pledge Agreements with the shareholders of Shanghai IT, such shareholders agreed to pledge their equity interests in Shanghai IT to secure their performance under the contractual arrangements. According to the PRC Civil Code, if the pledgee and the pledgor agree before the expiration of the debt performance period that the pledged property shall belong to the pledgee in the event that the obligor fails to perform the due debt, the pledgee may only have priority in compensation in accordance with the law over the pledged property. If the obligor fails to perform the due debt or if the circumstances agreed upon by the parties for realizing the pledge rights occur, the pledgee may reach an agreement with the pledgor to offset the pledged property at a discounted price, or may have priority in compensation from the proceeds obtained through auction or sale of the pledged property. Such an auction or private sale may not result in our receipt of the full value of the equity interests in Shanghai IT. We consider it very unlikely that the public auction process would be undertaken since, in an event of default, our preferred approach is to ask Hui Ling Computer Technology Consulting (Shanghai) Co., Ltd., or Shanghai Hui Ling, our wholly owned subsidiary in mainland China and a party to the Call Option Agreement, to replace or designate another person or entity in mainland China to replace the existing shareholders of Shanghai IT pursuant to the direct transfer option we have under the option agreement. In addition, in the registration forms of the local branch of State Administration for Market Regulation (formerly known as the State Administration for Industry and Commerce) for the pledges over the equity interests under the Equity Pledge Agreements, the amount of registered equity interests in Shanghai IT pledged to us was stated as RMB23.0 million, which represent 100% of the registered capital of Shanghai IT. The Equity Pledge Agreements with the shareholders of Shanghai IT provide that the pledged equity interest shall constitute continuing security for any and all of the indebtedness, obligations and liabilities under all of the contractual arrangements and the scope of pledge shall not be limited by the amount of the registered capital of Shanghai IT. However, it is possible that a court of mainland China may take the position that the amount listed on the equity pledge registration forms represents the full amount of the collateral that has been registered and perfected. If this is the case, the obligations that are supposed to be secured under the Equity Pledge Agreements in excess of the amount listed on the equity pledge registration forms could be determined by the court of mainland China as unsecured debt, which takes last priority among creditors and often does not have to be paid back at all. We do not have agreements that pledge the assets of Shanghai IT for the benefit of us. The principal shareholders of the variable interest entity have potential conflicts of interest with us, which may adversely affect our business. Qi Wang and Wei Ji, two of our employees, are the principal shareholders of Shanghai IT, the variable interest entity. Thus, there may be conflicts of interest between their respective duties to our company as employees and their respective shareholder interests in the variable interest entity. We cannot assure you that when conflicts of interest arise, these persons will act in our best interests or that conflicts of interests will be resolved in our favor. These persons could violate their legal duties, including duties under their non-competition or employment agreements with us, by engaging in activities that are not in the best interest in our company, such as diverting business opportunities from us. In any such event, we would have to rely on the PRC legal system to enforce these agreements. Any legal proceeding could result in the disruption of our business, diversion of our resources and the incurrence of substantial costs. See “—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” Our contractual arrangements with the variable interest entity may result in adverse tax consequences to us. We could face material and adverse tax consequences if the PRC tax authorities determine that our contractual arrangements with Shanghai IT were not made on reasonable or arm’s length commercial terms or otherwise. If this were to occur, they may adjust our income and expenses for PRC tax purposes in the form of a transfer pricing adjustment. A transfer pricing adjustment could result in a reduction, for PRC tax purposes, of costs and expenses recorded by the variable interest entity, which could adversely affect us by: (i) increasing the tax liability of the variable interest entity without reducing the tax liability of our other Chinese mainland subsidiaries, which could further result in late payment fees and other penalties to the variable interest entity for underpaid taxes; or (ii) limiting the abilities of the variable interest entity to maintain preferential tax treatments and other financial incentives. 55 Table of Contents ​ Risks Related to Doing Business in China Our business may be adversely affected by public opinion and government policies in China. In April 2007, various governmental authorities, including the GAPP, the MIIT, the Ministry of Education, the Ministry of Public Security, and other authorities jointly issued a circular concerning the mandatory implementation of an “anti-fatigue system” in online games, which aims to protect the physical and psychological health of minors. This circular required all online games to incorporate an “anti-fatigue system” and an identity verification system, both of which have limited the amount of time that a minor or other user may continually spend playing an online game. We have implemented such “anti-fatigue” and identification systems on all of our online games as required. Since March 2011, various governmental authorities, including the MIIT, the Ministry of Education, the Ministry of Public Security, and other authorities have jointly launched the “Online Game Parents Guardianship Project for Minors,” which allows parents to require online game operators to take measures to limit the time spent by the minors playing online games and the minors’ access to their online game accounts. On February 5, 2013, the Ministry of Culture, the MIIT, the GAPP and various other governmental authorities, jointly issued the Working Plan on the Comprehensive Prevention Scheme on Online Game Addiction of Minors, which further strengthens the administration of internet cafés, reinstates the importance of the “anti-fatigue system” and “Online Game Parents Guardianship Project for Minors” as prevention measures against the online game addiction of minors and orders the governmental authorities to take all necessary actions in implementing such measures. In August 2021, the GAPPRFT issued the Notice by the National Press and Publication Administration of Further Imposing Strict Administrative Measures to Prevent Minors from Becoming Addicted to Online Games, which imposed an array of restrictive measures to prevent underage users to indulge in online games. For example, all online game enterprises can only provide minors with one hour of online game services between 8 p.m. and 9 p.m. on Friday, weekends and statutory holidays, and are not allowed to provide online game services in any form to minors in any other time. Further strengthening of these systems, or enactment by the PRC government of any additional laws to further tighten its administration over the internet and online games may result in less time spent by customers or fewer customers playing our online games, which may materially and adversely affect our business results and prospects for future growth. Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business. As the gaming industry is highly sensitive to business and personal discretionary spending, it tends to decline during general economic downturns. Accordingly, our results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in China. China’s economy operates within a unique framework that differs from many developed economies in aspects such as the degree of government coordination, development stage, and resource allocation mechanisms. The PRC economy has experienced significant growth over the past several decades, and like many mature economies, its growth rate has moderated in recent years as it transitions toward a more sustainable development model. The PRC government from time to time implements various measures to encourage economic development, but some of these measures may not be fully applicable to our type of business. To the extent such measures are applicable, they may affect our business. For example, government controls over capital investment or changes in tax regulations applicable to us could affect our financial condition and results of operations. In addition, as the PRC economy becomes increasingly interconnected with the global economy, fluctuations in major economies around the world may also affect our business through various channels. The various economic measures the PRC government enacts in response to changes in the economic environment could also affect our business to the extent they are applicable to us. The PRC government coordinates economic growth through resource allocation, management of foreign currency-denominated obligations, monetary policy formulation, and support measures for specific industries or companies. Given this level of government coordination in the economy, these actions, as well as future actions and policies of the PRC government, could materially affect our liquidity, access to capital, and our ability to operate our business. The laws and regulations governing the online game industry in mainland China are developing and subject to future changes. If we fail to obtain or maintain all applicable permits and approvals, our business and operations could be materially and adversely affected. The online game industry in mainland China is highly regulated by the PRC government. Various regulatory authorities of the PRC central government, such as the State Council, the MIIT, the GAPPRFT, the Ministry of Culture and the Tourism (formerly known as the Ministry of Culture), the Ministry of Public Security, are empowered to issue and implement regulations governing various aspects of the online games industry. 56 Table of Contents ​ We are required to obtain applicable permits or approvals from different regulatory authorities in order to provide online games to our customers. For example, an internet content provider must obtain a value-added telecommunications business operating license for ICP, or ICP License, in order to engage in any commercial ICP operations within mainland China. In addition, an online games operator must also obtain a license from the Ministry of Culture and the Tourism and a license from the GAPPRFT in order to distribute games through the internet. Furthermore, an online game operator is required to obtain approval from the Ministry of Culture and the Tourism in order to distribute virtual currencies for online games such as prepaid value cards, prepaid money or game points. If we fail to obtain or maintain any of the required filings, permits or approvals in the future, we may be subject to various penalties, including fines and the discontinuation or restriction of our operations. Any such disruption in our business operations would materially and adversely affect our financial condition and results of operations. As the online game industry is at an early stage of development in mainland China, new laws and regulations may be adopted from time to time to require additional licenses and permits other than those we currently have, and may address new issues that arise from time to time. As a result, substantial uncertainties exist regarding the interpretation and implementation of current and any future laws and regulations of mainland China applicable to the online gaming industry. We cannot assure you that we will be able to timely obtain any new license required in the future, or at all. While we believe that we are in compliance in all material respects with all applicable laws and regulations of mainland China currently in effect, we cannot assure you that we will not be found in violation of any current or future laws and regulations of mainland China. Regulation and censorship of information disseminated over the internet in mainland China may adversely affect our business, and we may be liable for information displayed on, retrieved from, or linked to our internet websites. The PRC government has adopted certain regulations governing internet access and the distribution of news and other information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, violates laws and regulations of mainland China, impairs the national dignity of China, or is obscene, superstitious, fraudulent or defamatory. Failure to comply with these requirements could result in the revocation of ICP and other required licenses and the closure of the concerned websites. The website operator may also be held liable for such prohibited information displayed on, retrieved from or linked to such website. The Ministry of Culture and the Tourism has promulgated laws and regulations that reiterate the government’s policies to prohibit the distribution of games with violence, cruelty or other elements that are believed to have the potential effect of instigating crimes, and to prevent the influx of harmful cultural products from overseas. The Ministry of Culture and the Tourism has promulgated laws and regulations that require, among other things, (i) the review and prior approval of all new online games licensed from foreign game developers and related license agreements, (ii) the review of patches and updates with substantial changes of games which have already been approved, and (iii) the filing of domestically developed online games. Furthermore, online games, regardless of whether imported or domestic, will be subject to content review and approval by the GAPPRFT prior to the commencement of games operations in mainland China. Failure to obtain or renew approvals or to complete filings for online games, including mobile games, may materially delay or otherwise affect game operator’s plans to launch new games, and the operator may be subject to fines, restriction or suspension of operations of the related games or revocation of licenses in the event that the governmental authority believes that the violation is severe. We obtained the necessary approvals from and completed necessary filings with the Ministry of Culture and the GAPP for operations of our games as applicable. Consistent with the general practice of the mobile and TV game industry in mainland China, we have not yet completed filings with the Ministry of Culture and the GAPPRFT for our mobile and TV games before we commenced our operations. If any such negative event occurs, our business, financial condition and results of operations may be materially and adversely affected. In addition, the MIIT has published regulations that subject website operators to potential liability for content included on their websites and the actions of users and others using their websites, including liability for violations of laws of mainland China prohibiting the dissemination of content deemed to be socially destabilizing. The Ministry of Public Security has the authority to order any local internet service provider to block any internet website maintained outside of mainland China at its sole discretion. Periodically, the Ministry of Public Security has stopped the dissemination over the internet of information which it believes to be socially destabilizing. The State Secrecy Bureau, which is directly responsible for the protection of State secrets of the PRC government, is authorized to block any website it deems to be leaking state secrets or failing to meet the regulations relating to the protection of state secrets in the dissemination of online information. 57 Table of Contents ​ As these regulations are subject to interpretation by the authorities, it may not be possible for us to determine in all cases the type of content that could result in liability for us as a website operator. In addition, we may not be able to control or restrict the content of other internet content providers linked to or accessible through our websites, or content generated or placed on our websites by our users, despite our attempt to monitor such content. To the extent that regulatory authorities find any portion of our content objectionable, they may require us to limit or eliminate the dissemination of such information or otherwise curtail the nature of such content on our websites, which may reduce our user traffic and have a material adverse effect on our financial condition and results of operations. In addition, we may be subject to significant penalties for violations of those regulations arising from information displayed on, retrieved from or linked to our websites, including a suspension or shutdown of our operations. The PCAOB may be unable to inspect or investigate completely our auditor in relation to their audit work performed for our financial statements. If the PCAOB is unable to conduct such inspection, our investors would be deprived of the benefits of such inspection. Our auditor, the independent registered public accounting firm that issue the audit report included elsewhere in this annual report, as auditor of companies with securities that are traded publicly in the United States and firms registered with the PCAOB, are subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess their compliance with the applicable professional standards. The inability of the PCAOB to conduct inspections of auditors in mainland China and Hong Kong in the past has made it more difficult to evaluate the effectiveness of these auditors’ audit procedures or quality control procedures as compared to auditors outside of mainland China and Hong Kong that are subject to the PCAOB inspections. Our independent registered public accounting firm, RBSM LLP, or RBSM, is headquartered in New York, New York, and has been inspected by the PCAOB on a regular basis. The PCAOB currently has access to inspect the working papers of our auditor. Our auditor is not headquartered in mainland China or Hong Kong and was not identified as a firm subject to the PCAOB determinations announced on December 16, 2021 and as of the filing date of this annual report. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we and investors in the ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. The ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect or investigate completely auditors located in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by an independent registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. Our auditor is not headquartered in mainland China or Hong Kong and was not identified as a firm subject to the PCAOB determinations announced on December 16, 2021 and as of the filing date of this annual report. Our auditor has been inspected by the PCAOB on a regular basis. The PCAOB currently has access to inspect the working papers of our auditor. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2025. 58 Table of Contents ​ Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase the ADSs when you wish to do so, and the risk and uncertainty arising from delisting would have a negative impact on the price of the ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. Changes in international trade policies and rising political tensions, particularly between the U.S. and China, may adversely impact our business and operating results. There have been changes in international trade policies and rising political tensions, particularly between the U.S. and China, but also as a result of the conflict in Ukraine and sanctions on Russia. The U.S. government has made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies towards many countries, including China. For example, export controls, economic and trade sanctions have been threatened and/or imposed by the U.S. government on a number of Chinese technology companies. The United States has also threatened to impose further export controls, sanctions, trade embargoes, and other heightened regulatory requirements on China and Chinese companies for alleged activities both inside and outside of China. Against this backdrop, China has implemented, and may further implement, measures in response to the changing trade policies, treaties, tariffs and sanctions and restrictions against Chinese companies initiated by the U.S. government. For example, the Ministry of Commerce of China published Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures in January 2021 to counter restrictions imposed by foreign countries on Chinese citizens and companies. 59 Table of Contents ​ We are monitoring policies in the United States that are aimed at restricting U.S. persons from investing in certain Chinese companies and/or imposing sanctions on Chinese entities. The United States and various foreign governments have imposed controls, license requirements and restrictions on the import or export of or investing in technologies and products (or voiced the intention to do so). For instance, in October 2022, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce issued rules aimed at restricting China’s ability to obtain advanced computing chips, develop and maintain supercomputers and manufacture advanced semiconductors. On August 9, 2023, the Biden administration released an executive order directing the U.S. Department of the Treasury to create an outbound FDI review program that will require reporting on or (in more narrow circumstances) will prohibit investments by U.S. persons involving “covered national security technologies and products.” On June 21, 2024, the U.S. Department of the Treasury issued a notice of proposed rulemaking on outbound U.S. investment involving China that generally follows the advanced notice of proposed rulemaking. On October 28, 2024, the U.S. Department of the Treasury issued a final rule imposing restrictions on U.S. outbound investment in Chinese companies active in developing certain national security technologies. The final rule took effect on January 2, 2025. The final rule targets investments involving persons and entities associated with “countries of concern,” currently limited to China, and it imposes investment prohibition and notification requirements on a wide range of investments in companies engaged in activities relating to three sectors: (i) semiconductors and microelectronics, (ii) quantum information technologies, and (iii) artificial intelligence systems, with persons from countries of concern engaged in these technologies defined as “covered foreign persons.” Investments by U.S. persons subject to the final rule, which are defined as “covered transactions,” include acquisition of equity or a contingent equity interest, provision of certain debt financing, conversion of contingent equity interest into equity interest, involvement in greenfield or brownfield investment, entrance into a joint venture, and acquisition of a limited partner interest in non-U.S. pooled investment fund. The final rule excludes some investments from the scope of “covered transactions,” including those in publicly traded securities listed on a national stock exchange. The final rule is aimed at exerting greater U.S. government oversight over U.S. direct and indirect investments involving China, and may introduce new hurdles and uncertainties for cross-border collaborations, investments, and funding opportunities of China-based companies. We do not believe we would be defined as “covered foreign person” under the final rule, because we do not engage in a “covered activity” (as defined in the final rule) or otherwise meet the definition of “covered foreign person” provided in the final rule. However, there is no assurance that the U.S. Department of the Treasury will take the same view as ours. If we were to be deemed a “covered foreign person,” and if U.S. persons engaged in a “covered transaction” that involves the acquisition of our equity interests, such U.S. persons may be prohibited to do so or may need to make a notification, as applicable pursuant to the final rule. In addition, our ability to raise capital or contingent equity capital from U.S. investors may be limited due to the final rule and other similar laws, regulations and policies, given that relevant laws, regulations, and policies continue to evolve and we cannot rule out the possibility of being deemed a covered foreign person in the future due to different views taken by the U.S. Department of Treasury, potential amendments to the final rule or the introduction of similar regulations. If our ability to raise such capital is significantly and negatively affected, it could be detrimental to our business, financial condition and prospects. In addition, even though U.S. persons’ acquisitions of publicly traded securities (such as the ADSs) will be exempted from the scope of covered transactions under the final rule, the rule could still limit our ability to raise capital or contingent equity capital from U.S. investors given that the relevant laws, regulations, and policies continue to evolve and we cannot rule out the possibility of being deemed a Covered Foreign Person in the future due to different views taken by the U.S. Department of Treasury, potential amendments to the Outbound Investment Rule or the introduction of additional regulations. For example, on February 21, 2025, the White House released President Trump’s “America First Investment Policy” memorandum, outlining several initiatives to incentivize investment from U.S. allies and partners while restricting investments involving “foreign adversaries,” including China. Among other things, the policy aims to expand the industry sectors covered by the U.S. outbound investment regulations and supplement outbound restrictions through the imposition of sanctions. On December 18, 2025, the Comprehensive Outbound Investment National Security Act of 2025, or the COINS Act, was signed into law. The COINS Act will keep the core of the Outbound Investment Rules unchanged while expanding its scope and coverage in certain respects. The COINS Act will not take effect until the Treasury issues new regulations (subject to notice and comment), which it must do by March 13, 2027. As such, the Treasury may further amend or expand existing prohibitions and restrictions in accordance with the COINS Act. Any such expansion may further deepen the uncertainties for cross-border collaborations, investments, and funding opportunities for China-based issuers including us. If our ability to raise such capital is significantly and negatively affected, it could be detrimental to our business, financial condition and prospects, and the ADSs may significantly decline in value. Rising trade and political tensions could reduce levels of trade, investments, technological exchanges and other economic activities between China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets, and international trade policies. We may expand our business internationally in the future. Any unfavorable government policies on international trade or any restriction on Chinese companies may affect consumer demand for our products and service, impact our competitive position, or prevent us from being able to conduct business in certain countries. In addition, our results of operations could be adversely affected if any such tensions or unfavorable government trade policies harm the Chinese economy or the global economy in general. 60 Table of Contents ​ We may be adversely affected by the complexity, uncertainties and changes in regulation in mainland China of blockchain, and internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations. The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the internet industry. These internet-related laws and regulations are evolving, and their interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. We only have contractual control over our websites. We do not directly own the websites due to the restriction of foreign investment in businesses providing value-added telecommunication services in mainland China, including internet information provision services. This may significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us. The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office (with the involvement of the State Council Information Office, the MIIT, and the Ministry of Public Security). The primary role of this new agency is to facilitate the policy-making and legislative development in this field, to direct and coordinate with the departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the internet industry. Shanghai IT, the variable interest entity operating our online gaming business, may be deemed to be providing commercial internet information services and transaction processing services, which would require Shanghai IT to obtain an ICP License. An ICP License is a value-added telecommunications business operating license required for provision of commercial internet information services. As of the date of this annual report, Shanghai IT owns the ICP License. Furthermore, if we will provide mobile applications to mobile device users, it is uncertain if Shanghai IT will be required to obtain a separate value-added telecommunications business operating license with respect to the services provided through mobile devices in addition to the ICP License. Although we believe that not obtaining such separate license is in line with the current market practice, there can be no assurance that we will not be required to apply for an operating license for our mobile applications in the future. The Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Business, issued by the MIIT in July 2006, prohibits domestic telecommunication service providers from leasing, transferring or selling telecommunications business operating licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for its illegal operation of a telecommunications business in mainland China. According to this circular, either the holder of a value-added telecommunication services operation permit or its shareholders must directly own the domain names and trademarks used by such license holders in their provision of value-added telecommunication services. The circular also requires each license holder to have the necessary facilities, including servers, for its approved business operations and to maintain such facilities in the regions covered by its license. Shanghai IT currently owns the domain names and trademarks in connection with our value-added telecommunications business and has the necessary personnel to operate our websites. If an ICP License holder fails to comply with the requirements and also fails to remedy such non-compliance within a specified period of time, the MIIT or its local counterparts have the discretion to take administrative measures against such license holder, including revoking its ICP License. The interpretation and application of existing laws, regulations and policies in mainland China and possible new laws, regulations or policies in mainland China 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 mainland China, including our business. We cannot assure you that we have obtained all the permits or licenses required for conducting our business in mainland China or will be able to maintain our existing licenses or obtain new ones. If the PRC government considers that we were operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our business or impose restrictions on the affected portion of our business. Any of these actions by the PRC government may have a material adverse effect on our business and results of operations. 61 Table of Contents ​ On September 15, 2021, the People’s Bank of China, together with the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, jointly issued the Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading and Speculation, which clarified that virtual currencies do not have the same legal status as legal tender. Activities related to virtual currencies are considered illegal financial activities, including, but not limited to, the exchange between legal tender and virtual currencies, exchange between virtual currencies, buying and selling virtual currencies as a central counterparty, providing intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions. These activities are suspected of illegal issuance of tokens and securities, illegal issuance of securities, illegal futures business, and illegal fundraising. In February 2026, Chinese authorities, led by the People’s Bank of China (PBOC), issued new regulations further clarifying the legal boundaries of digital asset activities. The regulations reaffirm that virtual currencies do not possess the same legal status as fiat currency and reiterate that related activities constitute illegal financial conduct. Significantly, the new rules introduced a regulatory framework for the tokenization of Real World Assets (RWA), imposing strict prohibitions on domestic issuance while permitting overseas offerings only upon obtaining requisite approvals. The regulations also explicitly prohibit the issuance of RMB-pegged stable coins outside of mainland China without prior authorization. Concurrently, the PBOC has advanced the development of the digital yuan (e-CNY) framework, allowing interest-bearing functionalities for real-name wallets, thereby integrating it more deeply into the formal financial system. This evolving regulatory landscape continues to classify most private-sector virtual currency activities as unlawful within China. Chinese law restrict financial activities related to virtual currencies, including any crimes committed through virtual currency transactions. This means that non-financial activities involving Bitcoin, such as holding or transferring Bitcoin as a commodity without engaging in trading or other financial services, are not explicitly prohibited. However, all forms of trading, exchange, and financial transactions involving virtual currencies are considered illegal financial activities in China. Substantial uncertainties remain as to whether our activities will be deemed as prohibited trading and financial activities under the laws of mainland China. If such activities are deemed as prohibited trading and financial activities under the laws of mainland China, the legal consequences would be that these activities are invalid and therefore not protected by the laws of mainland China. These uncertainties could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects. The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of the ADSs. We conduct our business globally through our subsidiaries in the U.S., Kazakhstan, Hong Kong and Singapore, and conduct our business operations through the variable interest entity in mainland China. Our operations in mainland China are governed by laws and regulations of mainland China. The PRC government has significant oversight and discretion over the conduct of our business, and it may influence our operations, which could result in a material adverse change in our operation and/or the value of the ADSs. Also, the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers in recent years. For example, on July 6, 2021, the PRC government authorities made public the Opinions on Strictly Scrutinizing Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by PRC- based companies and proposed to take effective measures, such as promoting the construction of regulatory systems to deal with the risks and incidents faced by PRC-based overseas-listed companies. On September 24, 2024, the State Council promulgated the Regulation on Network Data Security Management, which took effect on January 1, 2025. This regulation applies to network data handling activities and the supervision and administration of security thereof carried out within the territory of the PRC. This Regulation also applies to the activities outside the territory of the PRC to handle the personal information of natural persons within the territory of the PRC, which conform to the following circumstances prescribed in the second paragraph of Article 3 of the Law of the PRC on the Protection of Personal Information, including: (i) where the purpose is to provide domestic natural persons with products or services; (ii) where the activities of domestic natural persons are analyzed and evaluated; and (iii) other circumstances as prescribed by laws and administrative regulations. Besides, where network data processors carry out network data processing activities that affect or may affect national security, they shall carry out a national security review in accordance with relevant national regulations. This regulation also stipulates network data processors may transmit personal information abroad if it meets any of the certain conditions, such as having passed the security assessment for data cross-border transmission organized by the state cyberspace administration, or having been certified by a specialized agency in respect of the protection of personal information in accordance with the provisions of the state cyberspace administration, or meeting the provisions on standard contract for cross-border transmission of personal information as developed by the state cyberspace administration etc. 62 Table of Contents ​ If the CSRC, the CAC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for our future offshore offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business. We may rely on dividends and other distributions on equity paid by our Chinese mainland subsidiaries to fund any cash and financing requirements we may have. Although currently substantially all of our revenue is generated from our subsidiaries outside of mainland China, any limitation on the ability of our Chinese mainland subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business. We are a holding company, and we may rely on dividends and other distributions on equity paid by our Chinese mainland subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. After the middle of 2021, substantially all of our revenue is generated from our subsidiaries outside of mainland China. However, any limitation on the ability of our Chinese mainland subsidiaries to make payments to us may still have a material adverse effect on our ability to conduct our business. If our Chinese mainland 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. In addition, the PRC tax authorities may require our Chinese mainland subsidiaries to adjust their taxable income under the contractual arrangements they currently have in place with the consolidated variable interest entity in a manner that would materially and adversely affect their ability to pay dividends and other distributions to us. See “—Risks Related to Our Corporate Structure—Our contractual arrangements with the variable interest entity may result in adverse tax consequences to us.” Under laws and regulations of mainland China, our Chinese mainland subsidiaries, as wholly foreign-owned enterprises in mainland China, may pay dividends only out of their respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise 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 Chinese mainland 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. Future movements in exchange rates between the U.S. dollar and the RMB may adversely affect the value of the ADSs. The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions and by foreign exchange policies in mainland China, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or mainland China or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future. Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, the ADSs in U.S. dollars. Very limited hedging options are available in mainland 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 exchange control regulations of mainland China that restrict our ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 63 Table of Contents ​ Restrictions on currency exchange in mainland China limit our ability to utilize our revenues effectively, make dividend payments and meet our foreign currency denominated obligations. In 2025, we derived 32.8% of our revenues from mainland China which were denominated in RMB. For that portion of revenues denominated in RMB, restrictions on currency exchange in mainland China limit our ability to utilize revenues generated in RMB to fund our business activities outside of mainland China, make dividend payments in U.S. dollars, or obtain and remit sufficient foreign currency to satisfy our foreign currency-denominated obligations, such as paying license fees and royalty payments. The principal regulation governing foreign currency exchange in mainland China is the Foreign Exchange Administration Rules (1996), as amended. Under such rules, the RMB is generally freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loans or investment in securities outside of mainland China unless the prior approval of the State Administration of Foreign Exchange, or SAFE, or designated banks is obtained. Although the government regulations of mainland China now allow greater convertibility of RMB for current account transactions, significant restrictions still remain. For example, foreign exchange transactions under capital account of our Chinese mainland subsidiaries, including principal payments in respect of foreign currency-denominated obligations, remain subject to significant foreign exchange controls and the approval and filing procedures of SAFE or authorized banks, as applicable. These limitations could affect our ability to obtain foreign exchange for capital expenditures. We cannot be certain that the PRC regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions. As a result, there is no assurance the PRC government will not intervene in or impose restrictions on the ability of us, our subsidiaries, and the consolidated variable interest entity to transfer cash. To the extent cash in the business is in mainland China or an entity in mainland China, the funds may not be available to fund operations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the variable interest entity by the PRC government to transfer cash. Regulation in mainland China of loans to and direct investment in entities in mainland China by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans or additional capital contributions to our Chinese mainland subsidiaries and the variable interest entity, which could materially and adversely affect our liquidity and our ability to fund and expand our business. We are an offshore holding company conducting our operations in mainland China through our Chinese mainland subsidiaries and the variable interest entity. We may make loans to our Chinese mainland subsidiaries and the variable interest entity subject to the approval from or registration with governmental authorities and limitation on amount, we may make additional capital contributions to our wholly foreign-owned Chinese mainland subsidiaries, we may establish new Chinese mainland subsidiaries and make capital contributions to these new Chinese mainland subsidiaries, or we may acquire offshore entities with business operations in mainland China in an offshore transaction. Most of the aforementioned ways of making loans or investments in entities in mainland China are subject to regulations and approvals of mainland China. For example, any loans to our Chinese mainland subsidiaries and the variable interest entity are subject to applicable foreign loan registrations with the local counterpart of SAFE and limitation on amount under laws of mainland China. If we decide to finance our wholly owned subsidiary in mainland China by means of capital contributions, these capital contributions are subject to filing and registration with certain PRC government authorities, including the Ministry of Commerce or its local counterparts and the SAMR through its Enterprise Registration System, the National Enterprise Credit Information Publicity System and the local counterpart of SAFE. In addition, an FIE shall use its capital pursuant to the principle of authenticity and self-use within its business scope. ​ 64 Table of Contents ​ SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign Invested Enterprises, or the SAFE Circular 19, effective June 2015 and amended on December 2019, in replacement of a former regulation. According to the SAFE Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans (unless otherwise permitted in the business license), the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred to a third party. Although the SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within mainland China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in mainland China in actual practice. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or the SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in the SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Specifically, the SAFE Circular 16 provides that the capital of an FIE shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of such FIE or the payment prohibited by laws and regulations; (ii) directly or indirectly used for investment in securities or investments in financial management other than banks’ principal-secured products unless otherwise provided by laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises). Violations of the SAFE Circular 19 and the SAFE Circular 16 could result in administrative penalties. The SAFE Circular 19 and the SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold to our Chinese mainland subsidiaries, which may adversely affect our liquidity and our ability to fund and expand our business in mainland China. On October 23, 2019, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in mainland China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment. On April 10, 2020, SAFE promulgated the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business, or the SAFE Circular 8, under which eligible enterprises are allowed to make domestic payments by using their capital funds, foreign loans and the income under capital accounts of overseas listing without providing the evidentiary materials concerning authenticity of each expenditure in advance, provided that their capital use shall be authentic and conforms to the prevailing administrative regulations on the use of income under capital accounts. Because we conduct business operations through contractual arrangement with the consolidated variable interest entity through contractual arrangements, we are not able to make capital contribution to the variable interest entity and its subsidiaries; however, we may provide financial support to them by loans. Under the laws and regulations of mainland China, loans to the variable interest entity directly from the Cayman entity shall not exceed 200% of the net assets of the variable interest entity, whereas loans from our Chinese mainland subsidiaries, subject to the laws and regulations of mainland China concerning foreign currency, are not subject to amount limitations. Even though Renminbi capital, foreign debt and repatriated funds raised through overseas listing may be used at the discretion of the foreign-invested enterprise pursuant to the SAFE Circular 19 and the SAFE Circular 16, it is still not clear whether our Chinese mainland subsidiaries, as foreign invested enterprises, are allowed to extend intercompany loans to the variable interest entity. Despite the lack of legal majority ownership, we are able to direct the activities of and derive economic benefits from the consolidated variable interest entity and therefore our Cayman Island holding company is considered the primary beneficiary of the consolidated variable interest entity for accounting purposes and consolidates the variable interest entity and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated variable interest entity as a consolidated entity under U.S. GAAP and we consolidate the financial results of the consolidated variable interest entity in our consolidated financial statements in accordance with U.S. GAAP. Neither The9 Limited nor its investors have an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the consolidated variable interest entity, and the contractual arrangements are not equivalent to an equity ownership in the business of the consolidated variable interest entity. In light of the various requirements imposed by regulations of mainland China on loans to and direct investment in entities in mainland China by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with respect to our future loans to our Chinese mainland subsidiaries or the variable interest entity or its subsidiaries or with respect to our future capital contributions to our Chinese mainland subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund our operations in mainland China may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 65 Table of Contents ​ Regulations of mainland China relating to the establishment of offshore special purpose companies by residents of mainland China may subject our resident shareholders in mainland China or us to penalties and fines, and limit our ability to inject capital into our Chinese mainland subsidiaries, limit our subsidiaries’ ability to increase their registered capital, distribute profits to us, or otherwise adversely affect us. On July 4, 2014, SAFE issued the Circular on Several Issues Concerning Foreign Exchange Administration of Domestic Residents Engaging in Overseas Investment, Financing and Round-Trip Investment via Special Purpose Vehicles, or the SAFE Circular 37. The SAFE Circular 37 and its detailed guidelines require residents of mainland China to register with the local branch of SAFE before contributing their legally owned onshore or offshore assets or equity interest into any special purpose vehicle, or SPV, directly established, or indirectly controlled, by them for the purpose of investment or financing. The SAFE Circular 37 further requires that when there is (a) any change to the basic information of the SPV, such as any change relating to its individual resident shareholders of mainland China, name or operation period or (b) any material change, such as increase or decrease in the share capital held by its individual resident shareholders of mainland China, a share transfer or exchange of the shares in the SPV, or a merger or split of the SPV, the resident of mainland China must register such changes with the local branch of SAFE on a timely basis. We have requested all of our shareholders who, based on our knowledge, are residents of mainland China or whose ultimate beneficial owners are residents of mainland China to comply with all applicable SAFE registration requirements. However, we have no control over our shareholders. We cannot assure you that the beneficial owners in mainland China of our company and our subsidiaries have completed the required SAFE registrations or complied with other related requirements. Nor can we assure you that they will be in full compliance with the SAFE registration in the future. Any non-compliance by the beneficial owners in mainland China of our company and our subsidiaries may subject us or such resident shareholders of mainland China to fines and other penalties. It may also limit our ability to contribute additional capital to our Chinese mainland subsidiaries and our subsidiaries’ ability to distribute profits or make other payments to us. Regulation in mainland China of direct investment and loans by offshore holding companies to entities in mainland China may delay or limit us from using offshore assets, including the proceeds of our initial public offering and other offering, to make additional capital contributions or loans to our subsidiary in mainland China. We are an offshore holding company conducting our operations in mainland China through our Chinese mainland subsidiaries, the variable interest entity and its subsidiaries. We may make loans to our subsidiary in mainland China, the variable interest entity and its subsidiaries, subject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions to our subsidiary in mainland China. Any loans to our Chinese mainland subsidiaries, which are treated as foreign-invested enterprises under laws of mainland China, are subject to foreign exchange loan registrations. In addition, a foreign-invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise shall not be used for the following purposes: (i) direct or indirect payment beyond the business scope of the enterprises or the payment prohibited by the laws and regulations; (ii) direct or indirect investment in securities or investments other than banks’ principal-secured products unless otherwise provided by laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).In light of the various requirements imposed by regulations of mainland China on loans to and direct investment in entities in mainland China 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 subsidiary in mainland China may be negatively affected, which could adversely affect the liquidity of our subsidiary in mainland China and its ability to fund its working capital and expansion projects and meet its obligations and commitments. 66 Table of Contents ​ Failure to comply with regulations of mainland China regarding the registration requirements for employee stock ownership plans or share option plans may subject the plan participants in mainland China or us to fines and other legal or administrative sanctions. In February 2012, SAFE promulgated the Notice of the State Administration of Foreign Exchange on the Relevant Issues Concerning the Administration of Foreign Exchange for Domestic Individuals’ Participation in Equity Incentive Programs of Overseas Listed Companies, or Circular 7. Under Circular 7, residents of mainland China who participate in stock incentive plan in an overseas publicly listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are residents of mainland China must retain a qualified agent in mainland China, which could be a subsidiary in mainland China of such overseas publicly listed company or another qualified institution selected by such subsidiary in mainland China, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. Such participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the agent in mainland China is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the agent in mainland China or the overseas entrusted institution or other material changes. We and our employees in mainland China who have been granted stock incentive awards are subject to these regulations. However, neither our plan participants in mainland China nor we have completed such requisite registration and other procedures. In addition, we cannot assure you that we will be able to complete the registration for new employees who participate in such stock incentive plan in the future in a timely manner or at all. Failure of our plan participants in mainland China to complete their SAFE registrations may subject these residents in mainland China or us to fines and legal sanctions and may also limit our ability to contribute additional capital into our subsidiary in mainland China, limit the ability of our subsidiary in mainland China to distribute dividends to us, or otherwise materially and adversely affect our business. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors and employees under laws of mainland China. Uncertainties with respect to the PRC legal system could adversely affect us. We conduct our business primarily through our subsidiaries, and through the variable interest entity in mainland China. Our Chinese mainland subsidiaries are generally subject to laws and regulations applicable to foreign investment in mainland China and, in particular, laws applicable to wholly-foreign-owned enterprises. We entered into a series of contractual arrangements with the variable interest entity in mainland China to conduct business operations. Almost all of the agreements under those contractual arrangements are governed by laws of mainland China and disputes arising out of these agreements are expected to be decided by arbitration in mainland China. The legal system of mainland China is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Legislation and regulations of mainland China have significantly enhanced the protections afforded to various forms of foreign investments in mainland China for the past decades. Despite the lack of legal majority ownership, we are able to direct the activities of and derive economic benefits from the consolidated variable interest entity and therefore our Cayman Island holding company is considered the primary beneficiary of the consolidated variable interest entity for accounting purposes and consolidates the variable interest entity and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the consolidated variable interest entity as a consolidated entity under U.S. GAAP and we consolidate the financial results of the consolidated variable interest entity in our consolidated financial statements in accordance with U.S. GAAP. Neither The9 Limited nor its investors have an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the consolidated variable interest entity, and the contractual arrangements are not equivalent to an equity ownership in the business of the consolidated variable interest entity. From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations. Furthermore, the PRC legal system is based, in part, on government policies and internal rules, some of which are not published in a timely manner, or at all, but which may have retroactive effect. As a result, we may not always be aware of any potential violation of these policies and rules. Such unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede our ability to continue our operations. PRC government has significant oversight over the conduct of our business and it has indicated an intent to exert more oversight over offerings that are conducted overseas and/or foreign investment in China-based issuers in recent years. Any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. 67 Table of Contents ​ We may not be able to pursue growth through strategic acquisitions in mainland China due to complicated procedures under PRC laws and regulations for foreign investors to acquire companies in mainland China. In recent years, certain laws and regulations of mainland China have established procedures and requirements that are expected to make merger and acquisition activities in mainland China by foreign investors more time-consuming and complex. These laws and regulations include, without limitation, the Rules on the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, and the Anti-Monopoly Law and the MOFCOM Security Review Rules. In some instances, the Ministry of Commerce needs to be notified in advance of any change-of-control transaction in which a foreign investor takes control of a domestic enterprise in mainland China. The approval by the Ministry of Commerce may also need to be obtained in circumstances where overseas companies established or controlled by enterprises or residents in mainland China acquire affiliated domestic companies. Laws and regulations of mainland China also require certain merger and acquisition transactions to be subject to merger control review or security review. The MOFCOM Security Review Rules, effective from September 1, 2011, provide that, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors shall be subject to the security review by the Ministry of Commerce, the principle of substance over form shall be applied. In particular, foreign investors are prohibited from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. If the business of any target company that we expect to acquire becomes subject to the security review, we may not be able to successfully complete the acquisition of such company, either by equity or asset acquisition, capital contribution or through any contractual arrangement. Complying with the requirements of the laws and regulations of mainland China to complete acquisition transactions could become more time-consuming and complex. Any required approval, such as approval by the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to grow our business or increase our market share. Furthermore, it is uncertain whether the M&A Rules, security review rules or the other regulations of mainland China regarding the acquisitions of companies in mainland China by foreign investors will be amended when the Foreign Investment Law becomes effective in the future. The continued growth of mainland China’s internet market depends on the establishment of adequate telecommunications infrastructure. Although private sector internet service providers currently exist in mainland China, almost all access to the internet is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of mainland China’s MIIT. In addition, the national networks in mainland China connect to the internet through government-controlled international gateways. These government-controlled international gateways are the only channel through which a domestic user in mainland China can connect to the international internet network. We rely on this infrastructure to provide data communications capacity primarily through local telecommunications lines. Although the government has announced plans to aggressively develop the national information infrastructure, we cannot assure you that this infrastructure will be developed as planned or at all. In addition, we will have no access to alternative networks and services, on a timely basis if at all, in the event of any infrastructure disruption or failure. The internet infrastructure in mainland China may not support the demands necessary for the continued growth in internet usage. You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in this annual report based on foreign laws. We are an exempted company incorporated under the laws of the Cayman Islands. We no longer conduct substantially all of our operations in China and substantially all of our assets are no longer located in China. However, all our senior executive officers reside within China for a significant portion of the time. As a result, it may be difficult for you to effect service of process upon us or our management residing in China. In addition, China does not have treaties providing for reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-Chinese mainland jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible. 68 Table of Contents ​ It may be difficult for overseas regulators to conduct investigation or collect evidence within China. 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 mainland China. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “—General Risks Related to Our Shares, ADSs and Warrants—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law” for risks arising from investing in us as a Cayman Islands company. Our Chinese mainland subsidiaries are subject to restrictions on paying dividends or making other payments. We may rely on dividends paid by our Chinese mainland subsidiaries to fund our operations, such as paying dividends to our shareholders or meeting obligations under any indebtedness we or our overseas subsidiaries incurred. Current regulations of mainland China restrict our Chinese mainland subsidiaries from paying dividends in the following two principal aspects: (i) our Chinese mainland subsidiaries are only permitted to pay dividends out of their respective after-tax profits, if any, determined in accordance with PRC accounting standards and regulations, and (ii) these entities are required to allocate at least 10% of their respective after-tax profits each year, if any, to fund statutory reserve funds until the cumulative total of the allocated reserves reaches 50% of registered capital, and a portion of their respective after-tax profits to their staff welfare and bonus reserve funds as determined by their respective boards of directors or shareholders. These reserves are not distributable as dividends. See “Item 4. Information on the Company—B. Business Overview—Government Regulations.” Further, if these entities incur debt on their behalf in the future, the instruments governing such debt may restrict their ability to pay dividends or make other payments. Our inability to receive dividends or other payments from our Chinese mainland subsidiaries may adversely affect our ability to continue to grow our business and make cash or other distributions to the holders of our ordinary shares and ADSs. In addition, failure to comply with SAFE regulations may restrict the ability of our subsidiaries to make dividend payments to us. See “—Risks Related to Doing Business in China—Regulations of mainland China relating to the establishment of offshore special purpose companies by residents of mainland China may subject our resident shareholders of mainland China or us to penalties and fines, and limit our ability to inject capital into our Chinese mainland subsidiaries, limit our subsidiaries’ ability to increase their registered capital, distribute profits to us, or otherwise adversely affect us.” The income tax laws of mainland China may increase our tax burden or the tax burden on the holders of our shares or ADSs, and tax benefits available to us may be reduced or repealed, causing the value of your investment in us to decrease. Our subsidiaries and the variable interest entity in mainland China are subject to enterprise income tax, on the taxable income as reported in their respective statutory financial statements adjusted in accordance with the PRC Enterprise Income Tax Law, which was approved by the National People’s Congress on March 16, 2007. The PRC Enterprise Income Tax Law went into effect as of January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, which unified the tax rate generally applicable to both domestic and foreign-invested enterprises in mainland China. Our subsidiaries and the variable interest entity in mainland China are generally subject to enterprise income tax at a statutory rate of 25%. Shanghai IT, the variable interest entity which holds a High and New Technology Enterprise, or HNTE, qualification is entitled to enjoy a 15% preferential enterprise income tax rate till November 23, 2020. As the HNTE qualification has expired in 2020, Shanghai IT was no longer entitled to enjoy a preferential enterprise income tax rate. Moreover, unlike the tax regulations effective before 2008, which specifically exempted withholding taxes on dividends payable to non-Chinese mainland investors from foreign-invested enterprises in mainland China, the PRC Enterprise Income Tax Law and its implementation rules provide that a withholding income tax rate of 10% will be applicable to dividends payable by Chinese companies to non-Chinese mainland-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and the governments of other countries or regions. While the Tax Agreement between mainland China and Hong Kong provides dividends paid by a foreign-invested enterprise in mainland China to its corporate shareholder, which is considered a Hong Kong tax resident, will be subject to withholding tax at the rate of 5% of total dividends, this is limited to instances where the corporate shareholder directly holds at least 25% of our shares that is to pay dividends for at least twelve consecutive months immediately prior to receiving the dividends and meets certain other criteria prescribed by the regulations. Under the Administrative Measures for Non-Resident Taxpayer to Enjoy Treatments under Tax Treaties, which became effective in January 2020, non-resident taxpayers shall determine whether they are eligible for treaty benefits and file a report and materials with the tax authorities. Meanwhile, the reduced withholding tax rate also applies if the conditions stipulated by other tax rules and regulations are met. 69 Table of Contents ​ In February 2018, the State Administration of Taxation, or SAT issued the Announcement of the State Administration of Taxation on Issues Relating to “Beneficial Owner” in Tax Treaties on issues relating to “beneficial owner” in tax treaties, or Circular No. 9, which took effect on April 1, 2018. Circular No. 9 provides detailed guidance to determine whether the applicant engages in substantive business activities to constitute a “beneficial owner”. When determining the applicant’s status of the “beneficial owner” regarding tax treatments in connection with dividends, interests or royalties in the tax treaties, several factors, including, without limitation, whether the applicant is obligated to pay more than 50% of his or her income in the past twelve months to residents in third country or region, whether the business operated by the applicant constitutes the actual business activities, and whether the other country or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes at all or levy tax at an extremely low rate, will be taken into account, and it will be analyzed according to the actual circumstances of the specific cases. If the non-resident taxpayer does not apply to the withholding agent for the tax treaty benefits, or such taxpayer does not satisfy the criteria to be entitled to tax treaty benefits, the withholding agent should withhold tax pursuant to the provisions of tax laws of mainland China. We cannot assure you that any dividends to be distributed from our subsidiaries to us or from us to our non-Chinese mainland shareholders and ADS holders, whose jurisdiction of incorporation has a tax treaty with mainland China providing a different withholding arrangement, will be entitled to the benefits under the withholding arrangement. In addition, the PRC Enterprise Income Tax Law deems an enterprise established offshore but having its management organ in mainland China as a “resident enterprise” that will be subject to the Chinese mainland tax at the rate of 25% of its global income. Under the Implementation Rules of the PRC Enterprise Income Tax Law, the term “management organ” is defined as “an organ which has substantial and overall management and control over the manufacturing and business operation, personnel, accounting, properties and other factors.” On April 22, 2009, the SAT further issued a notice regarding recognizing an offshore-established enterprise controlled by shareholders in mainland China as a resident enterprise according to its management organ, or Circular 82. According to Circular 82, a foreign enterprise controlled by a Chinese mainland company or a Chinese mainland company group shall be deemed a resident enterprise of mainland China, if (i) the senior management and the core management departments in charge of its daily operations are mainly located and function in mainland China; (ii) its financial decisions and human resource decisions are subject to the determination or approval of persons or institutions located in mainland China; (iii) its major assets, accounting books, company seals, minutes and files of board meetings and shareholders’ meetings are located or kept in mainland China; and (iv) more than half of the directors or senior management with voting rights reside in mainland China. On July 27, 2011, SAT issued the Administrative Measures of Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, which was amended in April 2015, June 2016 and June 2018. SAT Bulletin 45 further clarified the detailed procedures for determining resident status under Circular 82, competent tax authorities in charge and post-determination administration of such resident enterprises. Although our offshore companies are not controlled by any Chinese mainland company or Chinese mainland company group, we cannot assure you that we will not be deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law and thus be subject to PRC enterprise income tax on our global income. According to the PRC Enterprise Income Tax Law and its implementation rules, dividends are exempted from income tax if such dividends are received by a resident enterprise on equity interests it directly owns in another resident enterprise. However, foreign corporate holders of our shares or ADSs may be subject to taxation at a rate of 10% on any dividends received from us or any gains realized from the transfer of our shares or ADSs if we are deemed to be a resident enterprise or if such income is otherwise regarded as income from “sources within mainland China.” The PRC Enterprise Income Tax Law empowers the PRC State Council to enact appropriate implementing rules and measures and there is no guarantee that we or our subsidiaries will be entitled to any of the preferential tax treatments. Nor can we assure you that the tax authorities will not, in the future, discontinue any of our preferential tax treatments, potentially with retroactive effect. Any significant increase in the enterprise income tax rate under the PRC Enterprise Income Tax Law applicable to our Chinese mainland subsidiaries and the variable interest entity, or the imposition of withholding taxes on dividends payable by our subsidiaries to us, or an enterprise income tax levy on us or any of our subsidiaries or variable interest entity registered outside of mainland China, or dividends or capital gains received by our shareholders due to shares or ADSs held in us will have a material adverse impact on our results of operations and financial conditions and the value of investments in us. 70 Table of Contents ​ We are required to pay value added tax as a result of tax reforms in various regions in mainland China and we may be subject to similar tax treatments elsewhere in mainland China. On March 23, 2016, the Ministry of Finance and the SAT jointly issued the Circular on the Pilot Program for Overall Implementation of the Collection of Value Added Tax Instead of Business Tax, or Circular 36, which took effect on May 1, 2016. Pursuant to Circular 36, all companies operating in construction, real estate, finance, modern service or other sectors which were required to pay business tax are required to pay value added tax, or VAT, in lieu of business tax. As a result of Circular 36, the services provided by general VAT payers will be subject to VAT at the rate of 6%, and the services provided by small-scale VAT payers will be subject to VAT at the rate of 3%. While as general VAT payers may reduce their VAT payable amount by the VAT which they paid in connection with their purchasing activities, or the Input VAT, those companies as small-scale VAT payers may not reduce their VAT payable amount by their Input VAT. As a result, some of our subsidiaries and the variable interest entity may be subject to more unfavorable tax treatment as a result of the tax reform, and our business, financial condition and results of operations could be materially and adversely affected. Strengthened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on our acquisition strategy. In connection with the PRC Enterprise Income Tax Law, the SAT issued, on February 3, 2015, the Notice on Several Issues regarding Enterprise Income Tax for Indirect Property Transfer by Non-resident Enterprises, or SAT Circular 7, which further specifies the criteria for judging reasonable commercial purpose, and the legal requirements for the voluntary reporting procedures and filing materials in the case of indirect property transfer. SAT Circular 7 has listed several factors to be taken into consideration by tax authorities in determining whether an indirect transfer has a reasonable commercial purpose. However, despite these factors, an indirect transfer satisfying all the following criteria shall be deemed to lack reasonable commercial purpose and be taxable under the laws of mainland China: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from the taxable properties in mainland China; (ii) at any time during the one-year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in mainland China, or 90% or more of its income is derived directly or indirectly from mainland China; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the taxable properties in mainland China are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gains derived from the indirect transfer of the taxable properties in mainland China is lower than the potential Chinese mainland tax on the direct transfer of such assets. Nevertheless, the indirect transfer falling into the scope of the safe harbor under SAT Circular 7 may not be subject to mainland China tax and such safe harbor includes qualified group restructuring, public market trading and tax treaty exemptions. According to SAT Circular 7, where the payer fails to withhold tax in a sufficient amount, the transferor can declare and pay such tax to the tax authority by itself within the statutory time period. Late payment of applicable tax will subject the transferor to default interest. On October 17, 2017, the SAT released the Public Notice Regarding Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Public Notice 37, which further elaborates the implementation rules regarding the calculation, reporting and payment obligations of the withholding tax by the non-resident enterprises. Under SAT Circular 7 and SAT Public Notice 37, the entities or individuals obligated to pay the transfer price to the transferor shall be the withholding agent and shall withhold the Chinese mainland tax from the transfer price. If the withholding agent fails to do so, the transferor shall report to and pay the Chinese mainland tax to the PRC tax authorities. In case neither the withholding agent nor the transferor complies with the obligations under SAT Circular 7 and SAT Public Notice 37, other than imposing penalties such as late payment interest on the transferors, the tax authority may also hold the withholding agent liable and impose a penalty of 50% to 300% of the unpaid tax on the withholding agent, provided that such penalty imposed on the withholding agent may be reduced or waived if the withholding agent has submitted the materials in connection with the indirect transfer to the PRC tax authorities in accordance with SAT Circular 7 and SAT Public Notice 37. Since we may pursue acquisition as one of our growth strategies, and have conducted and may conduct acquisitions involving complex corporate structures, the PRC tax authorities may, at their discretion, adjust the capital gains and impose tax return filing obligations on us or request us to submit additional documentation for their review in connection with any of our acquisitions, thus causing us to incur additional acquisition costs. 71 Table of Contents ​ The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under laws of mainland China, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing. The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through acquisitions of domestic companies in the Chinese mainland and controlled by persons or entities in mainland China to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. On July 6, 2021, the PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by PRC-based companies and proposed to take effective measures, such as promoting the construction of regulatory systems to deal with the risks and incidents faced by PRC-based overseas-listed companies. On February 17, 2023, the CSRC issued the Trial Measures, which came into effect on March 31, 2023. According to the Trial Measures, the overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC. Specifically, the determination of an indirect offering and listing will be conducted on a “substance over form” basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) the main part of the business activities is carried out in the territory of mainland China or the main place of business is in mainland China, and the senior management personnel responsible for business operations and management are mostly citizens of mainland China or are ordinarily resident in mainland China. According to the Trial Measures, the issuer or its affiliated domestic company, as the case may be, shall file with the CSRC: (i) with respect to its initial public offering and listing overseas, it shall file with the CSRC within three business days after submitting the application documents for offering and listing overseas. (ii) with respect to its follow-on offering in the same overseas market, it shall file with the CSRC within three business days after completion of the follow-on offering. (iii) If an issuer, after completion of the offering and listing overseas, make offering and listing in other overseas markets, it shall put on record in accordance with the provisions of the Article(i). According to the Trial Measures, domestic enterprises which have already listed overseas is not required to make such filing immediately. However, we cannot assure you that any new rules or regulations promulgated by CSRC in the future will not require us to obtain any approval or filing. Non-compliance with the Trial Measures or an overseas listing completed in breach of the Trial Measures may result in a warning on the domestic companies or a fine of RMB1 million to RMB10 million on them. The controlling shareholder or actual controller of the domestic enterprise organizes or instructs the illegal acts, then a fine between RMB1 million to RMB10 million shall be imposed on them, and for other directly responsible personnel in charge shall be punished by a fine of RMB500,000 to RMB5,000,000. Furthermore, If the circumstances are serious, the CSRC may impose a securities market ban on the responsible personnel from entering the securities market, and if they constitute a crime, criminal liability shall be investigated in accordance with the law. According to the Trial Measures, an overseas offering and listing is prohibited under any of the following circumstances: (i) if the intended securities offering and listing is specifically prohibited by national laws and regulations and provisions; (ii) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy; (v) if, the domestic enterprises are currently under investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations of laws and regulations, although no clear conclusions have been reached; (vi) if there are material ownership disputes over the equities held by the controlling shareholder or the shareholder under the control of the controlling shareholder or the de facto controller. Relatedly, on September 6, 2024, the National Development and Reform Commission and the Ministry of Finance, jointly issued the 2024 Negative List, which came into effect on November 1, 2024. Pursuant to such Special Administrative Measures, if a domestic company engaging in the prohibited business stipulated in the 2024 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities. Besides, our foreign investors shall not be involved in our operation and management, and their shareholding percentage shall be subject, mutatis mutandis, to the regulations on the domestic securities investments by foreign investors. Since the 2024 Negative List do not specify whether indirect overseas listings are subject to their restrictions, it is unclear as to whether and to what extent listed companies like us will be subject to these requirements. If we are required to comply with these requirements and fail to do so on a timely basis, if at all, our business operation, financial conditions and business prospect may be adversely and materially affected. 72 Table of Contents ​ In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the enacted version of the revised Measures for Cybersecurity Review, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshore offerings, or a rescission of any such approval or filing if we obtain, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval or filing or other government authorization for our offshore offerings. These regulatory authorities may impose fines and penalties on our operations in mainland China, limit our ability to pay dividends outside of mainland China, limit our operating privileges in mainland China, delay or restrict the repatriation of the proceeds from our offshore offerings into mainland China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our listed securities. General Risks Related to Our Shares, ADSs and Warrants The ADSs may be delisted from the Nasdaq Capital Market as a result of our failure of meeting the Nasdaq Capital Market continued listing requirements. The ADSs are currently listed on the Nasdaq Capital Market under the symbol “NCTY.” We must continue to meet the requirements set forth in Nasdaq Listing Rule 5550 to remain listing on the Nasdaq Capital Market. The listing standards of the Nasdaq Capital Market provide that a company, in order to qualify for continued listing, must maintain a minimum ADS price of US$1.00 and satisfy standards relative to minimum shareholders’ equity, minimum market value of publicly held shares, or MVPHS, minimum MVLS, and various additional requirements. On January 11, 2024, we received a notification letter from the Listing Qualifications Department of Nasdaq, notifying us that we no longer complied with Rule 5550(b) (1) of the Nasdaq Listing Rules due to our failure to maintain a minimum of $2,500,000 in stockholders’ equity. The Nasdaq notification letter also noted that we did not meet the alternatives of market value of listed securities or net income from continuing operations. Pursuant to Rule 5810(c) (2) of the Nasdaq Listing Rules, we had 45 calendar days (no later than February 26, 2024) to submit a plan to regain compliance with the foregoing listing requirement. On April 22, 2024, we received a notification letter from Nasdaq stating that we have regained compliance with the minimum bid price requirement and this matter was closed. There can be no assurance that the ADSs would be eligible for trading on any other exchanges or markets in the United States. If Nasdaq determines to delist our ordinary shares, or if we fail to list the ADSs on other stock exchanges or find alternative trading venue for the ADSs, the market liquidity and the price of the ADSs and our ability to obtain financing for our operations could be materially and adversely affected. As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than U.S. public companies. We are a “foreign private issuer” as defined in the SEC rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Further, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies. 73 Table of Contents ​ As a foreign private issuer, we file annual reports on Form 20-F within four months of the close of each fiscal year ended December 31 and reports on Form 6-K relating to certain material events promptly after we publicly announce these events. However, because of the above exemptions for foreign private issuers, our shareholders are not afforded the same protections or information generally available to investors holding shares in public companies organized in the United States. While we are a foreign private issuer, we are not subject to certain Nasdaq corporate governance listing standards applicable to U.S. listed companies. We are entitled to rely on a provision in the Nasdaq corporate governance listing standards that allows us to elect to follow Cayman Islands “home county” corporate law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the Nasdaq. For example, in each of November 2015 and August 2016, our board of directors approved an increase in the total number of ordinary shares reserved for issuance under our then effective stock option plan, for which we have followed “home country practice” in lieu of obtaining a shareholder approval pursuant to Nasdaq Market Rule 5635(c). In June 2020, we also followed “home country practice” in lieu of obtaining a shareholder approval pursuant to Nasdaq Market Rule 5635(a) with respect to issuance of securities in excess of 20% of our total issued and outstanding shares prior to such issuance. We also followed “home country practice” in lieu of the requirement under Nasdaq rule 5635(d) to seek shareholder approval in connection with certain transactions involving the sale, our issuance or potential issuance of common stock (or securities convertible into or exercisable for common stock) at a price less than certain references price equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance. We may also rely on other exemptions available to foreign private issuers in the future, and to the extent that we choose to do so in the future, 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 believe that we were likely a passive foreign investment company for U.S. federal income tax purposes for the taxable year ended December 31, 2025, and it is possible that we may be a PFIC for the current taxable year and for future taxable years, which could result in adverse U.S. federal income tax consequences to U.S. Holders of the ADSs or Class A ordinary shares. We will be a “passive foreign investment company” (“PFIC”) for a taxable year if either (1) 75% or more of our gross income for such year consists of certain types of passive income, or (2) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. Passive income generally includes dividends, interest, royalties and rents (other than certain royalties and rents derived in the active conduct of a trade or business and not derived from a related person), net gains from the sale or exchange of property producing such income and net foreign currency gains. Cash and assets readily convertible into cash are generally classified as passive assets, and goodwill and other unbooked intangibles associated with active business activities are generally be classified as non-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. Although the law in this regard is unclear, we intend to treat the variable interest entity (including its subsidiaries) as being owned by us for U.S. federal income tax purposes, not only because we exercise effective control over its operations, but also because we are entitled to substantially all of its economic benefits, and, as a result, we consolidate its results of operations in our consolidated financial statements. We must make a separate determination after the close of each taxable year as to whether we were a PFIC for that taxable year. Because the value of our assets for purposes of the PFIC test will generally be determined by reference to the market price of the ADSs, our PFIC status depends in part on the market price of the ADSs, which may be volatile. Recent declines in the market price of the ADSs has increased the risk that we may be a PFIC and, based on the nature and composition of our assets and income, and the current value of our assets (including unbooked goodwill), we believe that we were likely a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2025. Moreover, it is possible that we may be a PFIC for the current taxable year or future taxable years. As the market price of the ADSs may continue to fluctuate considerably, however, we cannot assure you of our PFIC status for any taxable year. Further, as previously disclosed, although not free from doubt, we believe that we were a PFIC for U.S. federal income tax purposes for prior years. In addition, it is possible that one or more of our subsidiaries were also PFICs for such years for U.S. federal income tax purposes. If we are a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations”) holds the ADSs or Class A ordinary shares, the U.S. Holder may be subject to certain adverse U.S. federal income tax consequences. Additionally, if we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or Class A ordinary shares, we will generally continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds the ADSs or Class A ordinary shares, unless we were to cease to be a PFIC and the U.S. Holder were to make a “deemed sale” election with respect to the ADSs or Class A ordinary shares. See “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.” 74 Table of Contents ​ You should consult your tax advisors regarding the U.S. federal income tax consequences to your investment in the ADSs and ordinary shares if we are treated as a PFIC for any taxable year, as well as the application of the PFIC rules. Substantial future sales or the perception of sales of the ADSs or ordinary shares could adversely affect the price of the ADSs. If our shareholders sell or are perceived by the market to sell substantial amounts of the ADSs, including those issued upon the exercise of outstanding options, in the public market, the market price of the ADSs could fall. Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. If any existing shareholder or shareholders sell or are perceived by the market to sell a substantial amount of Class A ordinary shares, the prevailing market price for the ADSs could be adversely affected. We may issue additional ordinary shares or ADSs for future acquisitions. If we pay for our future acquisitions in whole or in part with additionally issued ordinary shares or ADSs, your ownership interest in our company would be diluted and this, in turn, could have a material adverse effect on the price of the ADSs. The market price for the ADSs may be volatile. We have been experiencing extreme price volatility. During the year 2025, the closing trade price of the ADSs ranged from US$6.21 to US$17.06 per ADS. Such extreme price volatility was probably attributable to our cryptocurrency mining business and the macro environment for the overall cryptocurrency industry. Due to such extreme price volatility, the risks exposure to and the possibilities of short squeeze also increased. The market price for the ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors including the following: ● actual or anticipated fluctuations in our operating results; ● the market price of cryptocurrency; ● the development of our cryptocurrency mining business; ● changes in financial estimates by securities analysts; ● price fluctuations of publicly traded securities of other PRC-based companies engaging in internet-related services or other similar businesses; ● changes in the economic performance or market valuations of other internet companies; ● announcements from us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● fluctuations in the exchange rates between the U.S. dollar and the RMB; ● addition or departure of key personnel; and ● pending and potential litigation. In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the ADSs. The warrants are speculative in nature. The Warrants we offered do not confer any rights of ordinary share ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire our Class A ordinary shares at a fixed price. 75 Table of Contents ​ In November 2023, we closed a private placement securities purchase transaction with Bripheno Pte. Ltd., a Singapore limited liability company, pursuant to which we sold and issued (i) 150,000,000 Class A ordinary shares (equivalent to 500,000 ADSs) at a price of US$12 per ADS, (ii) two-year 3% per annum convertible promissory note at the purchase price of US$6 million with the conversion price of US$15 per ADS, and (iii) warrants to purchase an aggregate of 120,000,000 Class A ordinary shares (equivalent to 400,000 ADSs) at an exercise price of US$60 per ADS. The warrants would expire in three years from the date of issuance and may be extended by mutual agreement for additional one year. These securities were subject to a six-month lock up period. We raised a total of US$12 million as the aggregate consideration for the securities. In March 2025, we signed a share purchase agreement in a private placement with Elune Capital Limited, or Elune Capital, a company registered under the laws of British Virgin Islands, pursuant to which we sold and issued to Elune Capital (i) 47,169,600 Class A ordinary shares for a total consideration price of US$2 million, at the price of US$0.0424 per Class A ordinary share, and (ii) warrants to purchase 141,508,800 Class A ordinary shares at an exercise price of US$0.0424 per Class A ordinary share. The warrants have an exercise period of two years, and are subject to the following vesting conditions: one-half of the warrants can be exercised after Elune Capital or its business partner signs a strategic cooperation agreement with us, and the other half of the warrants can be exercised after our GameFi platform is launched. As of the date of this annual report, this transaction has been closed, and none of the warrants have been exercised. In March 2025, we signed a share purchase agreement in a private placement with WEVISION PTE. LTD., or WEVISION, a company registered under the laws of the Republic of Singapore, pursuant to which we sold and issued to WEVISION (i) 23,584,800 Class A ordinary shares for a total consideration price of US$1 million, at the price of US$0.0424 per Class A ordinary share, and (ii) warrants to purchase 70,754,400 Class A ordinary shares at an exercise price of US$0.0424 per Class A ordinary share. The warrants have an exercise period of two years and are subject to the following vesting conditions: one-half of the warrants can be exercised after WEVISION signs a strategic cooperation agreement with us and Elune or its cryptocurrency partner, and the other half of the warrants can be exercised after our GameFi platform is launched. As of the date of this annual report, this transaction has been closed, and none of the warrants have been exercised. In March 2025, we signed a share purchase agreement in a private placement with Bripheno Pte. Ltd., Bripheno, pursuant to which we sold and issued to the Bripheno (i) 117,000,000 Class A ordinary shares for a total consideration price of US$4,960,800, at the price of US$0.0424 per Class A ordinary share, and (ii) warrants to purchase 90,000,000 Class A Shares at an exercise price of US$0.2 per Class A ordinary share. The warrants have an exercise period of two years. As of the date of this annual report, this transaction has been closed, and none of the warrants have been exercised. In September 2025, we signed a private placement securities purchase agreement with individual investor, a PRC citizen, Qin Kelun, pursuant to which we sold and issued to Qin Kelun (i) 65,934,000 Class A ordinary shares for a total consideration price of US$2 million, at the price of US$0.0303 per Class A ordinary share, and (ii) warrants to purchase 141,508,800 Class A ordinary shares at an exercise price of US$0.0424 per Class A ordinary share. The warrants have an exercise period of two years, and are subject to the following vesting conditions: one-half of the warrants can be exercised when the Elune Capital Limited or its cryptocurrency exchange partner enters into a strategic cooperation agreement with the Company and WEVISION, and the other half of the warrants can be exercised after our GameFi platform is launched. As of the date of this annual report, this transaction has been closed, and none of the warrants have been exercised. There is no public market for the warrants we offered and we do not expect one to develop. There is presently no established public trading market for the warrants we offered and we do not expect a market to develop. In addition, we do not intend to apply to list the warrants or on any securities exchange or nationally recognized trading system, including the Nasdaq. Without an active market, the liquidity of the warrants will be limited. Purchasers of our warrants will not have any rights of ordinary shareholders until such warrants are exercised. The warrants we offered do not confer any rights of ordinary share ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire ordinary shares at a fixed price. 76 Table of Contents ​ Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial. We have a dual-class share structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and our Class B ordinary shares shall at all times vote together as one class on all resolutions submitted to a vote by our shareholders. Each Class A ordinary share shall entitle the holder thereof to one vote on all matters subject to vote at our general meetings, and each Class B ordinary share shall entitle the holder thereof to a hundred votes on all matters subject to vote at our general meetings. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of any Class B ordinary share by the holder of such Class B ordinary share to any person who is not an affiliate of such shareholder, such Class B ordinary share shall be automatically and immediately converted into one Class A ordinary share. Mr. Jun Zhu, our chairman and chief executive officer, beneficially owns all of our outstanding Class B ordinary shares. As of March 31, 2026, Mr. Jun Zhu beneficially owned approximately 71.51% of the aggregate voting power of our company. As a result of the dual-class share structure and the concentration of ownership, holders of our Class B ordinary shares have 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. They may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our 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 the ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial. In addition, we may incur incremental compensation expenses to the holders of Class B ordinary shares as a result of their becoming entitled to high votes on each Class B ordinary share. Our shareholders may not have the same protections generally available to stockholders of other Nasdaq-listed companies because we are currently a “controlled company” within the meaning of the Nasdaq Listing Rules. Because Mr. Jun Zhu holds a majority of the total outstanding voting power in our company for the election of our board of directors, we are a “controlled company” within the meaning of Nasdaq Listing Rule 5615(c). As a controlled company, we qualify for, and our board of directors, the composition of which is controlled by Mr. Jun Zhu, may rely upon, exemptions from several of Nasdaq’s corporate governance requirements, including requirements that: ● a majority of the board of directors consist of independent directors; ● compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee comprised solely of independent directors; and ● director nominees be selected or recommended to the board of directors by a majority of its independent directors or by a nominating committee that is composed entirely of independent directors. Accordingly, to the extent that we may choose to rely on one or more of these exemptions, our shareholders would not be afforded the same protections generally as shareholders of other Nasdaq-listed companies for so long as Mr. Zhu is able to control the composition of our board and our board determines to rely upon one or more of such exemptions. The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation. We are incorporated under the laws of the Cayman Islands. The rights of holders of our Class A ordinary shares and, therefore, certain of the rights of holders of the ADSs, are governed by Cayman Islands law, including the provisions of the Companies Act (As Revised) of the Cayman Islands, or the Companies Act, and by our Fourth Amended and Restated Memorandum and Articles of Association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law” for a description of certain key differences between the provisions of the Companies Act applicable to us and, for example, the Delaware General Corporation Law relating to shareholders’ rights and protections. 77 Table of Contents ​ Our Fourth Amended and Restated Memorandum and Articles of Association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and ADSs. Our Fourth Amended and Restated Memorandum and Articles of Association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our dual-class voting structure gives disproportionate voting power to the holders of our Class B ordinary shares. In addition, our board of directors will have the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, including Class A ordinary shares represented by ADS. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of the ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and ADSs may be materially and adversely affected. You may face difficulties in protecting your interests, and our ability to protect our rights through the U.S. federal courts may be limited, because we are incorporated under Cayman Islands law. Our corporate affairs are governed by our Fourth Amended and Restated Memorandum and Articles of Association and by the Companies Act and common law of the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and provides significantly less protection to investors. Therefore, our public shareholders may have more difficulties protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States. In addition, with respect to Cayman Islands companies, plaintiffs may face special obstacles, including, but not limited to, those relating to jurisdiction and standing, in attempting to assert derivative claims in state or federal courts of the United States. As a result, our shareholders may not be able to protect their interests if they are harmed in a manner that would otherwise enable them to sue in a United States federal court. Our currently effective memorandum and articles of association provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive judicial forum within the U.S. for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, which could limit the ability of holders of our Class A ordinary shares, the ADSs or other securities to obtain a favorable judicial forum for disputes with us, our directors and officers, the depositary, and potentially others. Our Fourth Amended and Restated Memorandum and Articles of Association provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than our company. The enforceability of similar federal court choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings in the United States, and it is possible that a court could find this type of provision to be inapplicable or unenforceable. If a court were to find the federal choice of forum provision contained in our Fourth Amended and Restated Memorandum and Articles of Association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. If upheld, the forum selection clause in our Fourth Amended and Restated Memorandum and Articles of Association may limit a security-holder’s ability to bring a claim against us, our directors and officers, the depositary, and potentially others in his or her preferred judicial forum, and this limitation may discourage such lawsuits. Holders of our shares or the ADSs will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder pursuant to the exclusive forum provision in our Fourth Amended and Restated Memorandum and Articles of Association. 78 Table of Contents ​ Your ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, will be limited because we are incorporated in the Cayman Islands, because we conduct a substantial portion of our operations in China and because the majority of our directors and officers reside outside of the United States. We are an exempted company incorporated in the Cayman Islands, substantially all of our assets are located in the U.S. For assets located in China, we conduct a substantial portion of our operations through our wholly owned subsidiaries and variable interest entity in China. Most of our directors and officers reside outside of the United States and most of the assets of those persons are located outside of the United States. As of the date of this annual report, most of our directors and officers are located in China and none of them are located in the U.S. 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 securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. You may not be able to exercise your right to vote. As a holder of ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You may give voting instructions to the depositary of the ADSs to vote the underlying Class A ordinary shares represented by your ADSs. Otherwise, you will not be able to exercise your right to vote with respect to the underlying Class A ordinary shares represented by your ADSs unless you withdraw the shares and become the registered holder of such shares prior to the record date for the general meeting. However, you may not receive sufficient advance notice of a shareholders’ meeting to enable you to withdraw the underlying Class A ordinary shares represented by your ADSs and become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. Pursuant to our Fourth Amended and Restated Memorandum and Articles of Association, we may convene a shareholders’ meeting on seven business days’ notice. If we ask for your instructions, the depositary will notify you of the upcoming vote and arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out your voting instructions or for the manner of carrying out your voting instructions, if any such action or non-action is in good faith. This means that you may not be able to exercise your right to direct how the underlying Class A ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested. If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline. The trading market for the ADSs depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts or the content that they publish about us. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade the ADSs or change their opinion of the ADSs, our ADS price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our ADS price or trading volume to decline. Because we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of the ADSs for return on your investment. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income. 79 Table of Contents ​ Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in us being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, we receive from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs. There is no guarantee that the ADSs will appreciate in value in the future or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs. Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings. We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act of 1933, as amended, or the Securities Act, or an exemption from the registration requirements is available. Also, under the deposit agreement, the depositary will not make rights available to you unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act, or exempt from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. The depositary may, but is not required to, sell such undistributed rights to third parties in this situation. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings. You may not receive distributions on ordinary shares or any value for them if it is illegal or impractical to make them available to you. The depositary of the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. We have no obligation to register ADSs, ordinary shares, rights or other securities under U.S. securities laws. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive the distribution we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may have a material adverse effect on the value of your ADSs. ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action. The deposit agreement governing the ADSs provides that, to the fullest extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the ADSs. 80 Table of Contents ​ If you or any other ADS holders bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and / or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiffs in any such action. Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. No provision of the deposit agreement or ADSs serves as a waiver of any ADS holder or us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.