The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. 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. This report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A. Operating Results We are an internet company listed on Nasdaq in 2004. We had been operating an online game business before our listing until 2021, when we turned our business focus to blockchain business. We have been primarily engaged in the operation of cryptocurrency mining since 2022. The major factors affecting our results of operations and financial conditions include: ● our revenues’ composition and sources of revenues; ● price of Bitcoin; ● our cost of revenues; and ● our operating expenses. As of the date of this annual report, we pledged 386 Bitcoins for eight loan tranches to secure the repayment of the net loan proceeds of approximately 24.6 million USDT to Equity First under the second loan agreement as of 2024 (the “Loan Agreement #2”), pursuant to which our subsidiary 1111 Limited assigns to Equities First and transfers all rights, title, ownership, and interest in and to the Bitcoin collateral. 1111 Limited and Equities First agreed that the loan and the pledge are non-recourse, i.e., Equities First shall look only to the Bitcoin collateral for the repayment of the principal loan amounts. Within five days of 1111 Limited’s repayment of the principal loan amounts, Equities First shall reassign all rights, titles, ownership and interest in the Bitcoin back to 1111 Limited. Each loan tranche has the same loan-to-value ratio of 65%. Each tranche of the loan (a) shall be payable back after one-year period, (b) has an annual interest rate of 3.25% on the respective principal amount, with such interest payable quarterly, and (c) is subject to 2% of the origination fee withheld from the principal amount of each tranche. 107 Table of Contents ​ In addition, pursuant to the Loan Agreement #2, the Default Floor is initially seventy percent (70%) of the fair market value of the Collateral per the closing statement of each tranche, and the Valuation Event occurs when the Fair Market Price (“FMP”) of the Collateral has fallen to below the Default Floor. If a Valuation Event occurs, we shall top up the collateral and cure the deficiency. In early February 2026, we received the first batch of five default notices describing that due to a diminution in the value of the collateral, the Event of Default occurred under the Loan Agreement #2, related to the loan tranches #3, #4, #5, #6, and #7. Pursuant to the first batch of default notices, we have transferred 518,358.59 USDT to Equities First to cure the default deficit under the loan tranches #3, #4, #5, #6, and #7. In mid February 2026, we received the second batch of five default notices pursuant to which we have transferred 909,183.84 USD to cure the default deficit under the loan tranches #3, #4, #5, and #7. We did not cure the deficit under the default notice under the tranche #6. Instead, we terminated the loan a principal amount of approximately USD 3.6 million plus accrued interest, and forfeited our right to receive the Collateral of 48 BTC as settlement in full. As of the date of this report, the rest of the loan amount under the Loan Agreement #2 remains outstanding. ​ Revenue Composition and Sources of Revenue. We began cryptocurrency mining activities in February 2021. In 2023, 2024, we generated substantially all of our revenues from cryptocurrency mining, the remaining portion of our revenues from provision of hosting services, consulting services and other services. In 2025, we generated about half of our revenues from online game and the remaining portion of our revenues are from cryptocurrency mining. The following table sets forth our revenues generated from cryptocurrency mining, and online game services and other revenues (third parties and related party), both in amounts and as percentages of total revenues for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ ​ % ​ (in thousands, except percentages) Revenues: ​ ​ ​ ​ ​ ​ ​ Cryptocurrency mining revenue 168,324 96.7 110,739 99.1 56,352 8,058 52.2 Online game services and other revenues from third parties ​ 5,721 ​ 3.3 ​ 975 ​ 0.9 ​ 43,692 ​ 6,248 ​ 40.5 Online game services and other revenues from related party — — — — 7,854 1,123 7.3 Total Revenues 174,045 100.0 111,714 100.0 107,898 15,429 100.0 ​ Cryptocurrency Mining. In 2023, 2024 and 2025, revenues from our cryptocurrency mining business amounted to RMB168.3 million, RMB110.7 million and RMB56.4 million (US$8.1 million), respectively. All of our cryptocurrency mining revenues were in Bitcoin. Since February 2021, we have generated our Bitcoin mining revenues through provision of computing power, or hash rate, in crypto asset transaction verification services to Bitcoin mining pool operators in exchange for non-cash consideration in Bitcoin. The provision of computing power is our sole performance obligation in our agreements with the mining pool operators and is satisfied over time. We are entitled to receive a fractional share of the Bitcoin award (less mining pool fees deducted by the mining pool operators) from the Bitcoin mining pool operators based on the daily computing power provided to the mining pool operators. The Contract inception and our enforceable right to compensation begin only when, and last as long as, we provide computing power to the mining pool operators on a daily basis. The contract is terminable at any time either by us or the mining pool operator without any penalty to either party. As such, the termination option results in a contract that continuously renews and therefore has a duration for accounting purposes of less than 24 hours. However, the continual renewal of the agreement does not represent a material right requiring separate performance obligations, as the contractual payout formula remains the same upon each renewal. Currently, we only participate in a Full-Pay-Per-Share (“FPPS”) mining pool. The FPPS payout model of Bitcoin is based on a contractual formula, which primarily calculates the hash rate provided to the mining pool as a percentage of total network hash rate, and other inputs, less mining pool fees. We are entitled to compensation once we begin to provide computing power that measures in hash rate to the mining pool operator over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on the same day of contract inception. We recognize non-cash consideration on the same day that control of the contracted service is transferred to the mining pool operator, which is the same day as the contract inception. The transaction consideration we received, if any, is noncash consideration in the form of Bitcoin. Changes in the fair value of the noncash consideration after contract inception due to the form of consideration (change in the market price of Bitcoin) are not included in the transaction price and, therefore, are not included in revenue. 108 Table of Contents ​ The consideration is all variable. Because it is probable that a significant reversal of cumulative revenue will not occur and we are able to calculate the payout based on the contractual formula, noncash consideration is recognized based on the spot price of Bitcoin determined using our principal market for Bitcoin at the inception of each contract, which is on a daily basis. Noncash consideration is measured at fair value at contract inception. The fair value of the cryptocurrency consideration is determined using the quoted price per our principal market for Bitcoin at the beginning of the contract period, which is the same day that control of the contracted service is transferred to the mining pool operator. This amount (less mining pool fees deducted by the mining pool operator) is recognized as revenue as hash rate is provided to the mining pool operators. Online game services and other revenues from third parties. In 2023, 2024 and 2025, our online game services and other revenues from third parties mainly included revenues from the 9bit gaming platform, online games and provision of hosting and consulting services. Our online game services and other revenues from third parties amounted to RMB5.7 million, RMB1.0 million and RMB43.7 million (US$6.2 million) in 2023, 2024 and 2025, respectively. Online game services and other revenues from related party. In 2023, 2024 and 2025, our online game services and other revenues from related party are revenues from mobile game - Ultraman: Hero Beyond Time – 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. The related party received online gaming revenue on behalf of the Group by provision of payment channel. Our online game services and other revenues from related parties amounted to nil in both 2023 and 2024, and RMB7.9 million (US$1.1 million) in 2025, respectively. Cost of cryptocurrency mining. In 2023, 2024 and 2025, our cost of revenue primarily consisted of costs associated with running the cryptocurrency mining business, including electricity costs and depreciation on cryptocurrency mining equipment. In addition, our cost of revenues consisted of costs directly attributable to rendering our services, including depreciation of equipment and computer equipment and other overhead expenses directly attributable to the services we provided. Cost of online game services and other revenues from third parties. In 2023, 2024 and 2025, our cost of online game services and other revenues from third parties primarily consisted of costs associated of costs directly attributable to rendering our services, including channel fee expenses, revenue share payment, payrolls, depreciation of equipment and computer equipment and other overhead expenses directly attributable to the services we provided. Cost of online game services and other revenues from related party. In 2023, 2024 and 2025, our cost of online game services and other revenues from related party primarily consisted of costs associated of costs directly attributable to rendering our services, including channel fee expenses, revenue share payment, payrolls, and other overhead expenses directly attributable to the online game revenue incurred by related party on behalf of the Group. Operating Expenses. In 2023, 2024 and 2025, our operating expenses primarily consisted of impairment loss of equipment, product development expenses, sales and marketing expenses, general and administrative expenses, fair value change on cryptocurrencies, the realized gain on exchange cryptocurrencies and impairment of cryptocurrencies. Product Development Expenses. In 2023, 2024 and 2025, our product development expenses primarily consisted of outsourced research and development, payroll, depreciation charges and other overhead. Our product development expenses amounted to RMB2.0 million, RMB0.9 million and RMB9.8 million (US$1.4 million) for the years ended December 31, 2023, 2024 and 2025, respectively. Sales and Marketing Expenses. Our sales and marketing expenses primarily consisted of advertising and promotional expenses, payroll and other overhead expenses incurred by our sales and marketing personnel. Our sales and marketing expenses amounted to RMB1.7 million, RMB0.2 million and RMB34.0 million (US$4.9 million) for the years ended December 31, 2023, 2024 and 2025, respectively. General and Administrative Expenses. In 2023, 2024 and 2025, our general and administrative expenses primarily consisted of non-cash share-based compensation, payroll and professional fees incurred in connection with professional service providers for auditing, legal services, depreciation and amortization expenses. General and administration expenses amounted to RMB196.8 million, RMB157.8 million and RMB205.8 million (US$29.4 million) for the years ended December 31, 2023, 2024 and 2025, respectively. 109 Table of Contents ​ Impairment of cryptocurrencies. In December 2023, FASB issued an updated accounting standard ASU 2023-08 Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60) for accounting for and disclosure of crypto assets, or ASU 2023-08. Effective January 1, 2023, we adopted early on this updated accounting standard, our crypto assets are measured at fair value. There was no impairment of cryptocurrencies recognized in 2023 as the fair value of our cryptocurrencies exceeded their carrying value. Prior to the adoption of ASU 2023-08, the useful life of cryptocurrency is indefinite, thus it should not be amortized but should be tested for impairment annually, or more frequently, when events or changes in circumstances occur which indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment of cryptocurrency exists when the carrying amount exceeds its fair value, which is measured using the intraday low quoted price of the cryptocurrency at the time its fair value is being measured on any day subsequent to its acquisition and an impairment charge will be recognized. To the extent an impairment loss is recognized, the loss established the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. We recognized impairment of cryptocurrencies of nil for all the years ended December 31, 2023, 2024 and 2025, respectively. Impairment on equipment. We recognized impairment on equipment of RMB161.0 million, RMB6.5 million and nil for the years ended December 31, 2023, 2024 and 2025, respectively. Impairment on advance and other assets. We recognized impairment on advance and other assets of nil, RMB0.8 million and RMB7.8 million (US$1.1 million) for the years ended December 31, 2023, 2024 and 2025, respectively. Realized gain on exchange cryptocurrencies. We recognized realized gain on exchange cryptocurrencies of RMB42.8 million, RMB60.8 million and RMB10.6 million (US$1.5 million) for the years ended December 31, 2023, 2024 and 2025, respectively. Fair value change on cryptocurrencies. We recognized realized fair value change on cryptocurrencies of RMB40.0 million, RMB48.3 million and RMB36.2 million (US$5.2 million) for the years ended December 31, 2023, 2024 and 2025, respectively, and was recognized as a result of our adoption of ASU 2023-08, under which cryptocurrencies are recognized at fair value with changes in fair value recognized in net income. The gain recognized in 2023 and 2024 was attributable to increase in the price of Bitcoin. The loss recognized in 2025 was attributable to decrease in the price of Bitcoin. Loss on disposal of subsidiaries. We recognized loss on disposal of subsidiaries of RMB0.3 million, RMB11.6 million and RMB1.5 million (US$0.2 million) for the years ended December 31, 2023, 2024 and 2025, respectively. Changes in fair value on other investments. We recognized gain (loss) on changes in fair value on other investments of RMB3.5 million, RMB(7.2 million) and RMB(0.3 million) (US$(0.04 million)) for the years ended December 31, 2023, 2024 and 2025, respectively. Gain (loss) on fair value of derivative, option assets and liabilities. We recognized gain (loss) on fair value of derivative, option assets and liabilities of RMB23.2 million, RMB 45.0 million and RMB(5.7 million) (US$(0.8 million)) for the years ended December 31, 2023, 2024 and 2025, respectively. Gain on Extinguished Liabilities of WoW. We had a gain on extinguished liabilities of WoW of RMB175.3 million, nil and nil for the years ended December 31, 2023, 2024 and 2025, respectively. Gain from discontinued operations, net. We recognized gain from discontinued operations, net, RMB156.9 million, nil and nil for the years ended December 31, 2023, 2024 and 2025 respectively. The gain from discontinued operations, net of tax, were related to the disposal of NFT Business. Holding Company Structure We are a holding company incorporated in the Cayman Islands. We carry out our business mainly through our subsidiaries in Hong Kong and mainland China, among other jurisdictions. Currently, the majority of our revenues are derived from our Hong Kong subsidiaries and the Chinese mainland subsidiaries. As a result, our cash requirements and our ability to pay dividends principally depend upon dividends and other distributions from our subsidiaries in Hong Kong and mainland China. We do not foresee any foreign currency or dividend distribution control in Hong Kong. 110 Table of Contents ​ We have gradually increased our business operations through the variable interest entity in mainland China in 2025. In terms of our business operations in mainland China, our cash requirements and our ability to pay dividends principally depend upon dividends and other distributions from our Chinese mainland subsidiaries, which in turn are derived principally from earnings generated by the variable interest entity. Current regulations of mainland China restrict the variable interest entity and subsidiaries from paying dividends in the following two principal aspects: (i) the variable interest entity and Chinese mainland subsidiaries are only permitted to pay dividends out of their respective accumulated 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 accumulated profits each year, if any, to fund certain capital reserves until the cumulative total of the allocated reserves reach 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. These reserves are not distributable as dividends. See “Item 4. Information on the Company—B. Business Overview—Government Regulations.” In addition, failure to comply with SAFE regulations may restrict the ability of our subsidiaries to make dividend payments to us. See “Item 3. Key Information—D. Risk Factors—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.” Income and Sales Taxes Cayman Islands Under the current tax laws of the Cayman Islands, we are not subject to tax on our income or capital gains. Hong Kong Our subsidiaries incorporated in Hong Kong did not have assessable profits that were derived in Hong Kong during the year ended December 31, 2025. United States Our subsidiaries in the United States are registered in Delaware and are subject to U.S. federal corporate income tax at a rate of 21% for the taxable year ended December 31, 2025 and state corporate income tax at a rate of 8.7%. Our subsidiaries incorporated in the U.S. did not have assessable profits that were derived in the U.S. during the year ended December 31, 2025. Singapore Our subsidiaries incorporated in Singapore did not have assessable profits that were derived in Singapore during the year ended December 31, 2025. Mainland China Our subsidiaries and the variable interest entity and its subsidiaries incorporated 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. Our subsidiaries and the variable interest entity and its Chinese mainland subsidiaries are generally subject to enterprise income tax at a statutory rate of 25%. We had moved all mining operations outside of mainland China. 111 Table of Contents ​ In addition, under the PRC Enterprise Income Tax Law, enterprises organized under the laws of their respective jurisdictions outside of mainland China may be classified as either “non-resident enterprises” or “resident enterprises.” Non-resident enterprises are subject to withholding tax at the rate of 20% with respect to their Chinese mainland-sourced dividend income if they have no establishment or place of business in mainland China or if such income is not related to their establishment or place of business in mainland China, unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and the governments of other countries or regions. The State Council has reduced the withholding tax rate to 10% in the newly promulgated implementation rules of the PRC Enterprise Income Tax Law. As we are incorporated in the Cayman Islands, we may be regarded as a “non-resident enterprise.” We hold equity interests in certain Chinese mainland subsidiaries through subsidiaries in Hong Kong. According to the Tax Agreement between mainland China and Hong Kong, dividends paid by a foreign-invested enterprise in mainland China to its corporate shareholder in Hong Kong holding 25% or more of its equity interest may be subject to withholding tax at the maximum rate of 5% if certain criteria are met. Entitlement to such lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is further subject to approval and filing procedures of the tax authority. In February 2018, the 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 a more elastic 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. This circular further provides that applicants who intend to prove his or her status of the “beneficial owner” shall submit the relevant documents to the tax bureau according to the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties, pursuant to which non-resident taxpayers which satisfy the criteria to be entitled to tax treaty benefits may, at the time of tax declaration or withholding declaration through a withholding agent, enjoy the tax treaty benefits, and be subject to follow-up administration by the tax authorities. 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 us or from our subsidiaries 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. ​ 112 Table of Contents ​ 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 New 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 Circular 82 which was partly repealed on December 29, 2017. According to Circular 82, a foreign enterprise controlled by a company in mainland China or a company group in mainland China 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 SAT Bulletin 45, as amended on April 17, 2015, June 28, 2016 and June 15, 2018, which further clarified the detailed procedures for determination of the resident status provided in Circular 82, competent tax authorities in charge and post-determination administration of such resident enterprises. Although our offshore companies are not controlled by any company in mainland China or company group in mainland China, 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 of mainland China on equity interests it directly owns in another resident enterprise of mainland China. 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 “sourced within mainland China.” See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—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.” With respect to sales taxes, before December 31, 2011, all the services provided by our Chinese mainland subsidiaries were subject to business taxes at the rate of 5%. 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 and was amended on July 11, 2017 and March 20, 2019. 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 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%. Recent Accounting Pronouncements A list of recent accounting pronouncements that are relevant to us is included in Note 2. Principal Accounting Policies to our consolidated financial statements, which are included in this annual report. 113 Table of Contents ​ Results of Operations The following table sets forth a summary of our consolidated statements of operations for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ ​ % Net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cryptocurrency mining revenue 168,324 96.7 ​ 110,739 99.1 ​ 56,352 8,058 ​ 52.2 Online game services and other revenues from third parties 5,721 3.3 ​ 975 0.9 ​ 43,692 6,248 ​ 40.5 Online game services and other revenues from related party — — ​ — — ​ 7,854 1,123 ​ 7.3 ​ 174,045 100.0 ​ 111,714 100.0 ​ 107,898 15,429 ​ 100.0 Total net revenues 174,045 100.0 ​ 111,714 100.0 ​ 107,898 15,429 ​ 100.0 Cost of revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of cryptocurrency mining (191,928) (110.3) ​ (106,464) (95.3) ​ (67,960) (9,718) ​ (63.0) Cost of online game services and other revenues from third parties ​ (21,251) ​ (12.2) ​ (6,854) ​ (6.1) ​ (31,208) ​ (4,462) ​ (28.9) Cost of online game services and other revenues from related party — — ​ — — ​ (6,921) (990) ​ (6.4) Total cost of revenues (213,179) (122.5) ​ (113,318) (101.4) ​ (106,089) (15,170) ​ (98.3) Gross profit (loss) (39,134) (22.5) ​ (1,604) (1.4) ​ 1,809 259 ​ 1.7 Operating income (expenses): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product development (1,970) (1.1) ​ (856) (0.8) ​ (9,798) (1,401) ​ (9.1) Sales and marketing (1,729) (1.0) ​ (246) (0.2) ​ (33,951) (4,855) ​ (31.5) General and administrative (196,790) (113.1) ​ (157,832) (141.3) ​ (205,816) (29,431) ​ (190.8) Impairment on advance and other assets — — ​ (794) (0.7) ​ (7,807) (1,116) ​ (7.2) Impairment on equipment (161,002) (92.5) ​ (6,505) (5.8) ​ — — ​ — Realized gain on exchange cryptocurrencies ​ 42,836 ​ 24.6 ​ 60,783 ​ 54.4 ​ 10,627 ​ 1,520 ​ 9.8 Fair value change on cryptocurrencies ​ 40,036 ​ 23.0 ​ 48,290 ​ 43.2 ​ (36,178) ​ (5,173) ​ (33.5) Total operating expenses (278,619) (160.1) ​ (57,160) (51.2) ​ (282,923) (40,456) ​ (262.2) Loss from operations (317,753) (182.6) ​ (58,764) (52.6) ​ (281,114) (40,197) ​ (260.5) Loss on disposal of subsidiaries (282) (0.2) ​ (11,606) (10.4) ​ (1,502) (215) ​ (1.4) Impairment on equity investments — — ​ — — ​ (41,629) (5,953) ​ (38.6) Impairment on other investment ​ — ​ — ​ — ​ — ​ (64,960) ​ (9,289) ​ (60.2) Changes in fair value on other investments ​ 3,490 ​ 2.0 ​ (7,160) ​ (6.4) ​ (278) ​ (40) ​ (0.3) Interest income ​ — ​ — ​ — ​ — ​ 449 ​ 64 ​ 0.4 Interest expense ​ (31,379) ​ (18.0) ​ (34,224) ​ (30.6) ​ (23,264) ​ (3,327) ​ (21.6) Gain (loss) on fair value of derivative, option assets and liabilities ​ 23,171 ​ 13.3 ​ 45,037 ​ 40.3 ​ (5,733) ​ (820) ​ (5.3) Gain on extinguishment of convertible bonds ​ — ​ — ​ — ​ — ​ 1,203 ​ 172 ​ 1.1 Gain (loss) on disposal of equity investee and available-for-sale investments ​ 1,666 ​ 1.0 ​ (8) ​ (0.0) ​ — ​ — ​ — Gain on disposal of other investment ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,400 ​ 486 ​ 3.2 Foreign exchange (loss) gain ​ (6,816) ​ (3.9) ​ (713) ​ (0.6) ​ 2,989 ​ 427 ​ 2.8 Gain on extinguished liabilities of WoW ​ 175,302 ​ 100.7 ​ — ​ — ​ — ​ — ​ — Other income (expenses), net ​ 8,324 ​ 4.8 ​ (5,082) ​ (4.5) ​ 2,204 ​ 316 ​ 2.0 Loss from continuing operations before income tax expense and share of loss in equity method investments ​ (144,277) ​ (82.9) ​ (72,520) ​ (64.9) ​ (408,235) ​ (58,376) ​ (378.4) Income tax expense ​ — ​ — ​ — ​ — ​ (110) ​ (16) ​ (0.1) Share of loss in equity method investments ​ — ​ — ​ (1,122) ​ (1.0) ​ (571) ​ (82) ​ (0.5) Loss from continuing operations ​ (144,277) ​ (82.9) ​ (73,642) ​ (65.9) ​ (408,916) ​ (58,474) ​ (379.0) Loss from discontinued operations, net of tax ​ (1,956) ​ (1.1) ​ — ​ — ​ — ​ — ​ — Gain on disposal of discontinued operations, net of tax ​ 158,809 ​ 91.2 ​ — ​ — ​ — ​ — ​ — Net income (loss) ​ 12,576 ​ 7.2 ​ (73,642) ​ (65.9) ​ (408,916) ​ (58,474) ​ (379.0) Net loss attributable to noncontrolling interest ​ (7,427) ​ (4.3) ​ (218) ​ (0.2) ​ (6,470) ​ (925) ​ (6.0) Net income (loss) attributable to The9 Limited ordinary shareholders ​ 20,003 ​ 11.5 ​ (73,424) ​ (65.7) ​ (402,446) ​ (57,549) ​ (373.0) Currency translation adjustments ​ 785 ​ 0.5 ​ (148) ​ (0.1) ​ (34) ​ (5) ​ (0.0) Total comprehensive (loss) income ​ 13,361 ​ 7.7 ​ (73,790) ​ (66.1) ​ (408,950) ​ (58,479) ​ (379.0) Note: (1) Translation from Renminbi amounts into U.S. dollars was made at a rate of RMB6.9931 to US$1.00 for the convenience of the reader only. Year 2025 Compared to Year 2024 Revenues. Our revenues decreased by 3.4% from RMB111.7 million in 2024 to RMB107.9 million (US$15.4 million) in 2025, primarily because of we resumed the mining activities due to the decrease of Bitcoin price in November 2025 and increase in 9bit platform and online game revenue. Cost of Revenue. Cost of revenue decreased by 6.4% from RMB113.3 million in 2024 to RMB106.1 million (US$15.2 million) in 2025, primarily due to decrease in relevant cryptocurrency mining cost and increase in 9bit platform and online game cost. Product Development Expenses. Product development expenses increased by 1,044.6% from RMB0.9 million in 2024 to RMB9.8 million (US$1.4 million) in 2025. The increase was primarily due to outsourced research and development on 9bit gaming platform and payroll expense on online game. Sales and Marketing Expenses. Sales and marketing expenses increased by 13,701.2% from RMB0.2 million in 2024 to RMB34.0 million (US$4.9 million) in 2025. The increase in sales and marketing expenses was primarily due to growth in 9bit gaming platform and online game user acquisition costs and promotional expenses. 114 Table of Contents ​ General and Administrative Expenses. General and administrative expenses increased by 30.4% from RMB157.8 million in 2024 to RMB205.8 million (US$29.4 million) in 2025. The increase was primarily due to the increase in share-based compensation to senior management and investors. Impairment on Equipment. No impairment on equipment was recognized in 2025. We recorded impairment on equipment of RMB6.5 million in 2024. The difference was primarily because of we sold some old machinery in the United States, and the net book value of the remaining old machinery after depreciation is relatively low. Impairment on Advance and Other Assets. We recorded impairment on advance and other assets of RMB0.8 million in 2024, primarily due to the impairment of deposit paid to Montcompute Limited. We recorded impairment on advance and other assets of RMB7.8 million (US$1.1 million) in 2025, primarily due to the impairment on security deposit paid to Hashland Inc. Realized Gain on Exchange Cryptocurrencies. Our realized gain on exchange cryptocurrencies decreased from RMB60.8 million in 2024 to RMB10.6 million (US$1.5 million) in 2025, primarily because of decrease expend on cryptocurrencies. Fair value Change on Cryptocurrencies. We recorded fair value change on cryptocurrencies of RMB48.3 million and RMB (36.2 million) (US$(5.2 million)) in 2024 and 2025, respectively. The difference was primarily due to the price change of the cryptocurrencies. Impairment on Equity Investments. We recorded impairment on equity investments of RMB41.6 million (US$6.0 million) in 2025. No impairment on equity investments was recognized in 2024. The difference was primarily due to the impairment on Beijing Weiming Naonao Technology Co., Ltd. Changes in fair value on other investments. We recognized negative changes in fair value on other investment amounted to RMB7.2 million in 2024, primarily due to the investment loss in SMI. We recognized negative changes in fair value on other investment amounted to RMB0.3 million (US$40 thousand) in 2025, primarily due to the negative fair value change on Nano Labs, Ltd. Loss on Disposal of Subsidiaries. We had a loss on disposal of subsidiaries of RMB1.5 million (US$0.2 million) in 2025. We had a loss on disposal of subsidiaries of RMB11.6 million in 2024. The difference was primarily due to loss on disposal of Montcompute Ltd. in 2024. Interest Expenses. We recorded interest expenses amounting to RMB 23.3 million (US$3.3 million) in 2025 and RMB34.2 million in 2024, primarily due to the decrease on non-cash amortization of debt discount. Gain (loss) from Change in Fair Value of Conversion Feature Derivative Liability. We had a loss from change in fair value of conversion feature derivative liability of RMB5.7 million (US$0.8 million) in 2025 and a gain from change in fair value of conversion feature derivative liability of RMB 45.0 million in 2024, primarily due to the decrease on non-cash amortization of debt discount and fair value change on options. Gain (loss) on Disposal of Equity Investee and Available For-Sale Investments. We had loss on equity investee and available for-sales of RMB0.008 million in 2024 and nil in 2025. The difference was primarily due to sales of Nano Labs, Ltd. Shares in 2024. Foreign Exchange Gain (Loss). We recorded foreign exchange loss of RMB 0.7 million in 2024 and gain of RMB 3.0 million (US$0.4 million) in 2025. Other (Expenses) Income, Net. We recorded other income amounting to RMB 2.2 million (US$0.3 million) in 2025, mainly relating to income from sales of fixed assets. We recorded other expense amounting to RMB5.1 million in 2024, mainly relating to disposal of subsidiaries and loss on write off of fixed assets in 2024. Net (Loss) Income Attributable to The9 Limited ordinary Shareholders. Primarily as a result of the cumulative effect of the above factors, we recorded a net loss attributable to our ordinary shareholders of RMB402.4 million (US$57.5 million) in 2025, as compared with net loss attributable to our ordinary shareholders of RMB73.4 million in 2024. 115 Table of Contents ​ Year 2024 Compared to Year 2023 Revenues. Our revenues decreased by 35.8%, from RMB174.0 million in 2023 to RMB111.7 million in 2024, primarily because of we suspended the cryptocurrency mining business in USA and Kazakhstan since June 2024. Cost of Revenue. Cost of revenue decreased by 46.8% from RMB213.2 million in 2023 to RMB113.3 million in 2024, primarily due to the relevant cryptocurrency mining has decreased and the decreased depreciation of mining machines. Product Development Expenses. Product development expenses decreased by 56.5% from RMB2.0 million in 2023 to RMB0.9 million in 2024. The decrease was primarily due to the reduction of personnel in the research and development department. Sales and Marketing Expenses. Sales and marketing expenses decreased by 85.8% from RMB1.7 million in 2023 to RMB0.2 million in 2024. The decrease in sales and marketing expenses was primarily due to the decrease of marketing expense on online games. General and Administrative Expenses. General and administrative expenses decreased by 19.8% from RMB196.8 million in 2023 to RMB157.8 million in 2024. The decrease was primarily due to the reduction in the transportation costs of the mining machines. Impairment on Cryptocurrency. In December 2023, FASB issued an updated accounting standard ASU 2023-08. Effective January 1, 2023, we adopted early on this updated accounting standard, our crypto assets are measured at fair value. There was no impairment of cryptocurrencies recognized in 2023 as the fair value of our cryptocurrencies exceeded the carrying value of our cryptocurrencies. Prior to the adoption of ASU 2023-08, the useful life of cryptocurrency is indefinite, thus it should not be amortized but should be tested for impairment annually, or more frequently, when events or changes in circumstances occur which indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment of cryptocurrency exists when the carrying amount exceeds its fair value, which is measured using the intraday low quoted price of the cryptocurrency at the time its fair value is being measured on any day subsequent to its acquisition and an impairment charge will be recognized. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. We recognized impairment of cryptocurrencies of RMB58.6 million in 2022, based on the impairment assessment performed after considering our cryptocurrencies carrying amount exceeded its fair value at any time subsequent to their acquisition. Impairment on Equipment. Our impairment on equipment decreased from RMB161.0 million in 2023 to RMB6.5 million in 2024, primarily because of the fluctuations of market price of computer equipment. Impairment on Advance and Other Assets. We recorded impairment on advance and other assets of RMB0.8 million in 2024. No impairment on advance and other assets was recognized in 2023. The difference was primarily due to the impairment of deposit paid to Montcompute Limited. Realized Gain on Exchange Cryptocurrencies. Our realized gain on exchange cryptocurrencies increased from RMB42.8 million in 2023 to RMB60.8 million in 2024, primarily because of the rise in the prices of cryptocurrencies. Fair value Change on Cryptocurrencies. We recorded fair value change on cryptocurrencies of RMB40.0 million and RMB48.3 million in 2023 and 2024. The difference was primarily due to the increase in the price of the cryptocurrencies. Impairment on Equity Investments. No impairment on equity investments was recognized in 2023 and 2024. Changes in fair value on other investments. We recognized positive changes in fair value on other investment amounted to RMB3.5 million in 2023, primarily due to the gain on our investment in SMI, partially offset by the loss on our investments in FF Intelligent and Nano Labs. We recognized negative changes in fair value on other investment amounted to RMB7.2 million in 2024, primarily due to the investment loss in SMI. Gain (Loss) on Disposal of Subsidiaries. We had a loss on disposal of subsidiaries of RMB0.3 million in 2023. We had a loss on disposal of subsidiaries of RMB11.6 million in 2024. The difference was primarily due to loss on disposal of MONTCOMPUTE LTD in 2024. Interest Expenses. We recorded interest expenses amounting to RMB31.4 million in 2023, mainly resulting from increase in non-cash amortization of debt discount and interest expense relating to the convertible notes. We recorded interest expenses amounting to RMB34.2 million in 2024, mainly resulting from non-cash amortization of debt discount and interest expense relating to convertible notes and BTC Mortgage loan. 116 Table of Contents ​ Gain from Change in Fair Value of Conversion Feature Derivative Liability. We had a gain from change in fair value of conversion feature derivative liability of RMB23.2 million in 2023, mainly related to the convertible notes we issued in March 2021 and November 2023. We had a gain from change in fair value of conversion feature derivative liability of RMB45.0 million in 2024, mainly related to the convertible notes we issued in March 2021 and November 2023. Gain on Disposal of Equity Investee and Available For-Sale Investments. We had gain on disposal of equity investee and available for-sale investments of RMB1.7 million in 2023 and loss on equity investee and available for-sales of RMB0.008 million in 2024. The decrease was primarily due to sales of Nano Labs, Ltd. shares. Gain on Extinguished Liabilities of WoW. We had a gain on extinguished liabilities of WoW of RMB175.3 million and nil in 2023 and 2024, respectively. The difference was primarily due to our derecognized refund liabilities relating to WoW games and recognized a gain on extinguished liabilities of WoW in 2023. Foreign Exchange Loss. We recorded foreign exchange loss of RMB6.8 million in 2023 and RMB0.7 million in 2024. Other (Expenses) Income, Net. We recorded other income amounting to RMB8.3 million in 2023, mainly relating to the other income from collection of accounts receivables of 51 miners in 2023, which was recorded as impaired in 2023. We recorded other expense amounting to RMB5.1 million in 2024, mainly relating to disposal of subsidiaries and loss on write off of fixed assets in 2024. Loss from Discontinued Operations, Net of Tax. We had loss from discontinued operations of RMB2.0 million in 2023 and nil in 2024. The difference was primarily due to the loss in NFT business in 2023. Gain on disposal of discontinued operations. We had a gain on disposal of discontinued operations of RMB158.8 million and nil in 2023 and 2024, which was primarily due to the gain on disposal of NFT business in 2023. Net (Loss) Income Attributable to The9 Limited ordinary Shareholders. Primarily as a result of the cumulative effect of the above factors, we recorded a net loss attributable to our ordinary shareholders of RMB73.4 million in 2024, as compared with gain loss attributable to holders of ordinary shares of RMB20.0 million in 2023. B.Liquidity and Capital Resources We are a holding company and conduct our operations primarily through our subsidiaries in mainland of China, Hong Kong, U.S., and Kazakhstan. Currently, the majority of our revenues are derived from the joint ventures in mainland of China and our Hong Kong subsidiaries. As a result, our cash requirements and our ability to pay dividends principally depend upon dividends and other distributions from our subsidiaries in Hong Kong. We do not foresee any foreign currency or dividend distribution control in Hong Kong. In the past three years, we have gradually and significantly reduced our business operation through the variable interest entity in mainland China. In terms of our business operations in mainland China, our cash requirements and our ability to pay dividends principally depend upon dividends and other distributions from our Chinese mainland subsidiaries, which in turn are derived principally from earnings generated by the variable interest entity. Specifically, Shanghai Hui Ling, one of our Chinese mainland subsidiaries, obtains funds from the entities in mainland China in the form of payments under the exclusive technical service agreements, pursuant to which Shanghai Hui Ling is entitled to determine the amount of payment. We acknowledge that the PRC government imposes controls on the convertibility of the RMB into foreign currencies, and in certain cases, the remittance of currency out of mainland China. However, under existing foreign exchange regulations of mainland China, payments of current account items, including profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain procedural requirements. Therefore, we are able to pay dividends in foreign currencies without prior approval from SAFE or designated banks. Approval from or registration with appropriate government authorities and authorized banks is required where RMB is to be converted into foreign currency and remitted out of mainland China to pay capital expenses such as the repayment of loans denominated in foreign currencies. Furthermore, if our subsidiaries or any newly formed subsidiaries incur debt on their own behalf, the agreements governing their debt may restrict their ability to pay dividends to us. 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.” 117 Table of Contents ​ Current regulations of mainland China restrict the variable interest entity and subsidiaries from paying dividends in the following two principal aspects: (i) the variable interest entity and Chinese mainland subsidiaries are only permitted to pay dividends out of their respective accumulated 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 accumulated profits each year, if any, to fund certain capital reserves 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. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, companies may not distribute the reserve funds as cash dividends except upon a liquidation of these subsidiaries. In addition, dividend payments from our Chinese mainland subsidiaries could be delayed as we may only distribute such dividends upon completion of annual statutory audits of the subsidiaries. As of December 31, 2025, such restricted portion was RMB133.0 million (US$19.0 million). We have not directed our Chinese mainland subsidiaries or the variable interest entity to distribute any dividends to-date. 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 RMB24.4 million (US$3.5 million) to our subsidiaries, respectively, and received cash from 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 “Item 3. Key Information—Financial Information Related to the Consolidated Variable Interest Entity” and pages F-28 to F-33 of this annual report on Form 20-F. Cash Flows and Working Capital We fund our operations primarily through our available cash in hand as well as cash generated from our operating, financing and investing activities. As of December 31, 2023, 2024 and 2025, we had RMB45.2 million, RMB10.9 million and RMB58.5 million (US$8.4 million), respectively, in cash and cash equivalents. The increase in cash and cash equivalents from 2024 to 2025 was primarily due to the increase in funds raised from financing and investment activities. The decrease in cash and cash equivalents from 2023 to 2024 was primarily due to continued cash outflow in connection with operating activities and administrative expenses. We had an accumulated deficit of approximately RMB4,832.7 million (US$691.1 million) as of December 31, 2025. Our total current liabilities exceeded total current assets as of the same date. We generated negative cash flow from operating in 2025. However, we believe our current cash and cash equivalents and current working capital position as of December 31, 2025, and as of the filing date of this annual report are sufficient to meet our current obligation payments for the next twelve months plus a day from the filing date of this annual report. 118 Table of Contents ​ To meet our working capital needs, we are also considering multiple alternatives, including, but not limited to, additional equity and debt financing, as described below. We may incur losses, negative cash flows from operating activities and negative working capital position in the future. See “Item 3. Key Information—D. Risk Factors—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.” Additional Equity and Debt Financing 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 unless parties agree in writing to extend the term for an 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 May 2024, we agreed and signed a private placement agreement with Fine Vision Fund, established by Finewill Capital, an internationally renowned investment institution, pursuant to which Fine Vision Fund would invest US$3.5 million to us, with upfront investment of US$2.5 million and second installment of US$1.0 million based on a pre-agreed condition. We would issue Class A ordinary shares to Fine Vision Fund. The value of each share for the upfront investment equals to 15.6% premium on the average closing price over the thirty consecutive trading days prior to the signing of the agreement. The value of each share for the second installment equals to 25% premium on the average closing price over the thirty consecutive trading days prior to the fulfillment of the pre-agreed condition. These shares to be issued are subject to the statutory lock-up period. In February 2025, we issued and sold a one-year convertible note in a principal amount of US$3,300,000 to Streeterville for an aggregate consideration of US$2,995,000. The note carries an original issue discount of $300,000.00. The convertible note bears interest at a rate of 6.0% per year, computed on the basis of a 360-day year. Streeterville has the right, at any time after six months have elapsed since the purchase date until the outstanding balance has been paid in full, at its election, to convert all or any portion of the outstanding balance into ADSs of our company at an initial conversion price per ADS calculated as 90% of the lower of (a) the average of the closing trade prices during the five trading days immediately preceding the date of the conversion, and (b) the closing trade price on the trading day immediately preceding the date of the conversion. Beginning on the date that is six months from the note purchase date, Streeterville has the right, exercisable at any time in its sole and absolute discretion, to redeem any portion of the convertible note up to US$500,000 per calendar month. Payment of the redemption amount could be in cash or the ADSs. 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. This transaction has been closed in May 2025. 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 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. This transaction has been closed in May 2025. 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. This transaction has been closed in April 2025. 119 Table of Contents ​ In September 2025, we signed a private placement securities purchase agreement with an accredited 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. This transaction has been closed in October 2025. In September 2025, we issued and sold a one-year convertible note in a principal amount of US$8,800,000 to Streeterville for an aggregate consideration of US$7,995,000. The note carries an original issue discount of $800,000.00. The convertible note bears interest at a rate of 6.0% per year, computed on the basis of a 360-day year. Streeterville has the right, at any time after six months have elapsed since the purchase date until the outstanding balance has been paid in full, at its election, to convert all or any portion of the outstanding balance into ADSs of our company at an initial conversion price per ADS calculated as 90% of the lower of (a) the average of the closing trade prices during the five trading days immediately preceding the date of the conversion, and (b) the closing trade price on the trading day immediately preceding the date of the conversion. Beginning on the date that is six months from the note purchase date, Streeterville has the right, exercisable at any time in its sole and absolute discretion, to redeem any portion of the convertible note up to US$1,250,000 per calendar month. Payment of the redemption amount could be in cash or the ADSs. In 2024, our wholly owned subsidiary 1111 Limited signed a master loan agreement with an unrelated institutional investment firm, Equities First Holdings LLC, or Equities First, pursuant to which Equities First extends loans to 1111 Limited in several tranches, each of which is secured by 1111 Limited’s Bitcoin as collateral for the maximum value of 300 Bitcoins. Historically, we pledged 273 Bitcoins for six loan tranches to secure the repayment of the net loan proceeds of approximately 12 million USDT. Each loan tranche has the same loan-to-value ratio of 65%. Each tranche of the loan (a) shall be payable back after one-year period, (b) has an annual interest rate of 3.25% on the respective principal amount, with such interest payable quarterly, and (c) is subject to 2% of the origination fee withheld from the principal amount of each tranche. In addition, 1111 Limited signed a master pledge agreement with Equities First, pursuant to which it assigns to Equities First and transfers all rights, title, ownership, and interest in and to the Bitcoin collateral. 1111 Limited and Equities First agreed that the loan and the pledge are non-recourse, i.e., Equities First shall look only to the Bitcoin collateral for the repayment of the principal loan amounts. Within five days of 1111 Limited’s repayment of the principal loan amounts, Equities First shall reassign all rights, titles, ownership and interest in the Bitcoin back to 1111 Limited. As of the date of this report, we have repaid all the loans under the master loan agreement, and 273 Bitcoins have been redelivered from Equities First to us. In April 2025, 1111 Limited signed another master loan agreement with Equities First, with substantially similar material commercial terms and conditions with the first loan agreement as of 2024 (the “Loan Agreement #2”). Historically, we pledged 386 Bitcoins for eight loan tranches to secure the repayment of the net loan proceeds of approximately 24.6 million USDT. Pursuant to the Loan Agreement #2, the Default Floor is initially seventy percent (70%) of the fair market value of the Collateral per the closing statement of each tranche, and the Valuation Event occurs when the Fair Market Price (“FMP”) of the Collateral has fallen to below the Default Floor. If a Valuation Event occurs, we shall top up the collateral and cure the deficiency. In early February 2026, we received the first batch of five default notices describing that due to a diminution in the value of the collateral, the Event of Default occurred under the Loan Agreement #2, related to the loan tranches #3, #4, #5, #6, #7. Pursuant to the first batch of default notices, we have transferred 518,358.59 USDT to Equities First to cure the default deficit under the loan tranches #3, #4, #5, #6, and #7. In mid February 2026, we received the second batch of five default notices pursuant to which we have transferred 909,183.84 USD to cure the default deficit under the loan tranches #3, #4, #5#, and #7. We did not cure the deficit under the default notice under the tranche #6 Instead, we terminated the loan with a principal amount of approximately USD 3.6 million plus accrued interest, and forfeited our right to receive the Collateral of 48 BTC as settlement in full. As of the date of this report, the rest of the loan amount under the Loan Agreement #2 remains outstanding. We may continue to carry out similar equity and debt financing in the future. Our management believes that we may continue as a going concern and our current funds and working capital in addition to our ability to raise funds will meet the obligations for the next 12 months plus a day. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—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.” 120 Table of Contents ​ The following table sets forth the summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ US$ ​ (in thousands) Net cash used in operating activities ​ (46,320) ​ (44,197) ​ (31,756) ​ (4,540) Net cash provided by (used in) investing activities 4,470 (57,018) 1,115 159 Net cash provided by financing activities 32,465 69,768 78,468 11,221 Effect of foreign exchange rate changes on cash and cash equivalents (3,457) (2,864) (249) (36) Net change in cash and cash equivalents (12,842) (34,311) 47,578 6,804 Cash and cash equivalents at the beginning of year 58,064 45,222 10,911 1,560 Cash and cash equivalents at the end of year 45,222 10,911 58,489 8,364 ​ Operating Activities Net cash used in operating activities was RMB31.8 million (US$4.5 million) in 2025, compared to RMB44.2 million in 2024 and RMB46.3 million in 2023. The decrease in net cash used in operating activities in 2025 was mainly due to cash used in operating activities related to cryptocurrency mining. The decrease in net cash used in operating activities in 2024 was mainly due to cash used in operating activities related to cryptocurrency mining. The net cash used in operating activities in 2025 reflected a net loss of RMB408.9 million (US$58.5 million), primarily due to (i) cryptocurrency mining revenue of RMB56.4 million (US$8.1 million), (ii) receipt of USDC and USDT from exchange of other cryptocurrencies of RMB16.9 million (US$2.4 million) (iii) receipt of USDC from operating activities of RMB15.9 million (US$2.3 million), partially offset by (i) share-based compensation expenses of RMB116.1 million (US$16.6 million), (ii) payment in cryptocurrencies for operating activities of RMB88.3 million (US$12.6 million), (iii) sale of cryptocurrencies for cash of RMB67.9 million (US$9.7 million), (vi) impairment on other investment of RMB65.0 million (US$9.3 million), and (v) impairment on equity investment of RMB41.6 million (US$6.0 million), and (vi) loss from change in fair value of cryptocurrencies of RMB36.2 million (US$5.2 million). The net cash used in operating activities in 2024 reflected a net loss of RMB73.6 million, primarily due to (i) cryptocurrency mining revenue of RMB110.7 million, (ii) realized gain on exchange cryptocurrency of RMB 60.8 million, (iii) change in fair value of cryptocurrency of RMB 48.3 million, partially offset by (i) payment for operating activities of RMB104.2 million, (ii) sale of cryptocurrencies for cash of RMB109.0 million, (iii) share-based compensation expense of RMB44.7 million, (vi) depreciation and amortization of property, equipment and software of RMB 61.5 million, and (v) amortization of discount and interest on convertible notes of RMB 30.3 million. The net cash used in operating activities in 2023 reflected a net income of RMB12.6 million, primarily due to (i) cryptocurrency mining revenue of RMB168.3 million, (ii) gain on extinguished liabilities of WoW of RMB175.3 million, and (iii) gain on disposal of discontinued operations of RMB158.8 million, partially offset by (i) impairment loss of equipment and intangible assets of RMB161.0 million, (ii) decrease of cryptocurrencies for payment for operating activities and sale of cryptocurrencies for cash of RMB223.7 million, (iii) depreciation and amortization of property, equipment and software of RMB86.9 million, and (iv) share-based compensation expense of RMB70.8 million. Investing Activities Net cash provided by investing activities was RMB1.1 million (US$0.2 million) in 2025, which primarily included (i) refund received from return of License assets of RMB9.0 million (US$1.3 million), and (ii) refund received from return of Royalty assets of RMB9.0 million (US$1.3 million), (iii) proceeds from disposal of other investment of RMB3.4 million (US$0.5 million), and (iv) proceeds from redemption of short term investment of RMB2.5 million (US$0.4 million), partially offset by (i) loan to a related party of RMB7.1 million (US$1.0 million), (ii) cash paid for purchase of short term investment of RMB3.4 million (US$0.5 million), (iii) purchase of intangible assets of RMB10.5million (US$1.5 million), and (iv) purchase of property, equipment and software of RMB1.4 million (US$0.2 million). Net cash used in investing activities was RMB57.0 million in 2024, which primarily included (i) purchase of other investment of RMB28.4 million, and (ii) purchase of equity investment of RMB10.6 million. 121 Table of Contents ​ Net cash provided by investing activities was RMB4.7 million in 2023, which primarily included (i) proceeds from disposal of other investment of RMB5.2 million, and (ii) refund received from other investment of RMB1.5 million, partially offset by purchase of property, equipment and software of RMB2.1 million. Financing Activities Net cash provided by financing activities in 2025 was RMB78.5 million (US$11.2 million), primarily attributable to (i) proceeds from convertible notes of RMB78.4 million (US$11.2 million), (ii) proceeds from equity financing of RMB31.5 million (US$4.5 million), and (iii) contributions from noncontrolling interests of RMB1.1 million (US$0.2 million), and partially offset by (i) repayments of BTC Mortgage loan of RMB32.0 million (US$4.6 million). Net cash provided by financing activities in 2024 was RMB69.8 million, primarily attributable to (i) proceeds from BTC Mortgage loan of RMB87.3 million, (ii) proceeds from equity financing of RMB17.8 million, and (iii) contribution from shareholder of RMB1.1 million, and partially offset by (i) repayment of loans from a related party of RMB2.8 million. Net cash provided by financing activities in 2023 was RMB32.2 million, primarily attributable to the proceeds from issuance of convertible note of RMB85.3 million, partially offset by (i) repayments of convertible notes of RMB42.9 million, and (ii) repayment of loans from a related party of RMB9.5 million. Material Cash Requirements Our material cash requirements as of December 31, 2025 and any subsequent period primarily include our purchase of mining machines, convertible notes payable and operating lease obligations. We incurred capital expenditures of RMB2.1 million, nil and RMB11.9 million (US$1.7 million) in 2023, 2024 and 2025, respectively. In 2023, 2024 and 2025, the capital expenditures principally consisted of purchases of cryptocurrency mining machines, other equipment, software and license. Our convertible notes payable includes the one-year convertible notes in a principal amount of US$8.8 million issued to Streeterville Capital, LLC. If Streeterville Capital, LLC converts the notes or if we choose to repay the notes by issuance of shares, the upcoming cash repayment will be reduced. As of December 31, 2025, we have RMB48.2 million (US$6.9 million) of convertible debt-current. Our operating lease obligations includes the lease of office space, parking lots and warehouse. As of December 31, 2025, we have RMB4.2 million (US$0.6 million) of current portion of operating lease liabilities and RMB7.8 million (US$1.1 million) of non-current portion of operating lease liabilities. C.Research and Development, Patents and Licenses, etc. Our research and development efforts are primarily focused on development of online game related products. Our product development expenses were RMB2.0 million, RMB0.9 million and RMB9.8 million (US$1.4 million) in 2023, 2024 and 2025, respectively. D.Trend Information Except as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period beginning on January 1, 2026 and ending on the date of this annual report that are reasonably likely to have a material adverse effect on our net sales or revenues, results of operations, profitability, liquidity or capital resources, or that would cause the reported financial information not necessarily to be indicative of future operating results or financial conditions. 122 Table of Contents ​ E.Critical Accounting Estimates We prepare financial statements in conformity with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the financial reporting period. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our financial statements as their application assists management in making their business decisions. Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported revenues and expenses during the reporting periods. The most significant accounting estimates reflected in the Group’s consolidated financial statements include impairment of long-term investments, allowance for credit losses, assessment of impairment of property, equipment and software, and other long-lived assets, assessment of impairment of advances to suppliers and other advances, incremental borrowing rates for lease assessment, fair value of the warrants, fair value of conversion feature, share-based compensation expenses, consolidation of VIE and its subsidiaries, valuation allowances for deferred tax assets, and contingencies. Such accounting policies are affected significantly by judgments, assumptions and estimates used in the preparation of the Group’s consolidated financial statements, and actual results could differ materially from these estimates. Revenue Recognition We recognize revenues when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services. Depending on the terms of the contract and the laws that apply to the contract, control of the goods or services may be transferred over time or at a point in time. We do not believe that significant management judgments are involved in revenue recognition. We adopted ASC 606 using the modified retrospective transition approach method, reflecting the cumulative effect of initially applying the standard to revenue recognition as of January 1, 2018. We evaluated all revenue streams to assess the impact of implementing ASC 606 on revenue contracts. The adoption did not have an effect over the consolidated financial statements on the adoption date and no adjustment to prior year consolidated financial statements was required. Under ASC 606, Revenue from contracts with customers, the core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when we satisfy a performance obligation. In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). 123 Table of Contents ​ If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Noncash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty arising from the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Cryptocurrency Mining Revenue The Group’s cryptocurrency mining revenues are in Bitcoin. We generate our Bitcoin mining revenues through the provision of computing power, or hash rate, in crypto asset transaction verification services to Bitcoin mining pool operators in exchange for non-cash consideration in Bitcoin. The provision of computing power is the sole performance obligation in our agreements with the mining pool operators and is satisfied over time. We are entitled to receive a fractional share of the Bitcoin award (less mining pool fees deducted by the mining pool operator) from the Bitcoin mining pool operators based on the daily computing power provided to the mining pool operators. The contract inception and the Group’s enforceable right to compensation begins only when, and lasts as long as, we provide computing power to the mining pool operator on a daily basis. The contract is terminable at any time either by the Company or the mining pool operator without any penalty to either party. As such, the termination option results in a contract that continuously renews and therefore has a duration for accounting purposes of less than 24 hours. However, the continual renewal of the agreement does not represent a material right requiring separate performance obligations, as the contractual payout formula remains the same upon each renewal. Currently, the Group only participates in a Full-Pay-Per-Share (“FPPS”) mining pool. The FPPS payout model of Bitcoin is based on a contractual formula, which primarily calculates the hash rate provided to the mining pool as a percentage of total network hash rate, and other inputs, less mining pool fees. The Group is entitled to compensation once it begins to provide computing power that measures in hash rate to the mining pool operator over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on a daily basis, which is the same day as the contract inception. The Group recognizes non-cash consideration on the same day that control of the contracted service is transferred to the mining pool operator, which is the same day as the contract inception. The transaction consideration the Group received, if any, is noncash consideration in the form of Bitcoin. Changes in the fair value of the noncash consideration after contract inception due to the form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and, therefore, are not included in revenue. The consideration is all variable. Because it is probable that a significant reversal of cumulative revenue will not occur and we are able to calculate the payout based on the contractual formula, noncash consideration is recognized based on the spot price of Bitcoin determined using our principal market for Bitcoin at the inception of each contract, which is on a daily basis. Noncash consideration is measured at fair value at contract inception. The fair value of the cryptocurrency consideration is determined using the quoted price per our principal market for Bitcoin at the beginning of the contract period, which is the same day that control of the contracted service is transferred to the mining pool operator. This amount (less mining pool fees deducted by the mining pool operator) is recognized as revenue as hash rate is provided to the mining pool operator. 124 Table of Contents ​ Online game services The Group earns revenue from the provision of online game operation services to players on the Group’s game servers and third-party platforms and overseas licensing of online game to other operators. The Group grants operation rights on authorized games, together with associated services that are rendered to customers over time. The Group adopts a virtual item and service consumption model for online game services. Players can access certain games free of charge, but many purchase game points to acquire in-game premium features. The Group may act as principal or agent depending on the nature of the transaction. In 2025, the Group launched 9-bit related businesses, including the sale of game currency CDKEYs. CDKEYs are nonrefundable and non-returnable once sold. Revenue from CDKEYs is recognized at the point of sale, when the CDKEY is made available to the customer and the performance obligation is satisfied. The determination of whether to record revenue gross or net is based on an assessment of various factors, including whether the Group (i) controls the specified virtual goods or services before transfer to the customer; (ii) customizes the virtual product or performs part of the services; (iii) has discretion over the selling price; (iv) has involvement in determining product or service specifications. The assessment is performed for all licensed online games. When acting as principal Revenues from online game operation operated through telecom carriers and certain online game operators are recognized upon consumption of the in-game premium features based on gross revenue sharing-payments to third-party operators, but net of value-added tax (“VAT”). The Group earns revenue from the sale of in-game virtual items. Revenue is recognized as the virtual items are consumed or over the estimated lives of the virtual items, estimated based on the average period that players are active and players’ behavior patterns derived from operating data. Accordingly, commission fees paid to third-party operators are recorded as cost of revenues. When acting as agent With respect to game license arrangements entered into by third-party operators, if the terms provide that (i) third-party operators are responsible for providing the game desired by the game players; (ii) the hosting and maintenance of game servers for running the games is the responsibility of third-party operators; (iii) third-party operators have the right to review and approve the pricing of in-game virtual items and the specification, modification or update of any game made by the Group; and (iv) publishing, providing payment solution and market promotion services are the responsibilities of third-party operators and the Group is responsible to provide intellectual property licensing and subsequent technical services, then the Group considers itself an agent of the third-party operators in such arrangements with game players. Accordingly, the Group records game revenues from these licensed games, net of amounts paid to the third-party operators. Licensing revenue The Group licenses its online games, most of which are developed in-house, to third parties. The Group receives monthly revenue-based royalty payments from third-party licensee operators. These royalties are recognized when the relevant game services are provided to end users. The Group views third-party licensee operators as its customers and recognizes revenue when the Group has transferred control of the game services. Royalties are recognized only at the later of (a) the subsequent sale or usage by the licensee occurs or (b) the performance obligation to which the royalty relates has been satisfied, in whole or in part. The fixed fee and variable royalty components of each license are recognized ratably over the contractual license term, commencing when the game is launched and the licensee is granted access, because the Group’s intellectual property subject to the license is symbolic in nature and the licensee has the right to access such intellectual property as it exists throughout the license period. 125 Table of Contents ​ Fair Value of Cryptocurrencies Effective January 1, 2023, we have elected to early adopt ASU 2023-08. As a result of the adoption of ASU 2023-08, cryptocurrencies are recorded at fair value, and changes in fair value are recognized in change in fair value of cryptocurrencies and in operating income (loss) on the consolidated statements of operations and comprehensive income (loss), as of and for the year ended December 31, 2023, 2024 and 2025. We track the cost basis of cryptocurrencies in accordance with the first-in-first-out method of accounting. See note <10> to our consolidated financial statements, which are included in this annual report, for further information regarding the impact of the adoption of ASU 2023-08 on us. Income Taxes We account for income taxes under the asset and liability method. Deferred taxes are determined based upon the differences between the carrying value of assets and liabilities for financial reporting and tax purposes at currently enacted statutory tax rates for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period of change. A valuation allowance is provided on deferred tax assets to the extent that it is more likely than not that such deferred tax assets will not be realized. The total income tax provision includes current tax expenses under applicable tax regulations and the change in the balance of deferred tax assets and liabilities. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including our ability to generate taxable income within the period during which the temporary differences reverse or our tax loss carry forwards expire, the outlook for the PRC economic environment, and the overall future industry outlook. We consider these factors in reaching our conclusion on the recoverability of the deferred tax assets and determine the valuation allowances necessary at each balance sheet date. We recognize the impact of an uncertain income tax position at the largest amount that is more-likely-than-not to be sustained upon audit by the tax authority. Income tax related interest is classified as interest expenses and penalties as income tax expense. As of December 31, 2023, 2024 and 2025, we did not have any material liability for uncertain tax positions. Our policy is to recognize, if any, tax-related interest as interest expenses and penalties as income tax expenses. For the year ended December 31, 2023, 2024 and 2025, we did not have any material interest and penalties associated with tax positions. In recent years, the rise of cryptocurrency prices and transaction volume has attracted the attention of tax authorities. As the laws governing cryptocurrencies are still evolving, the tax treatment of cryptocurrencies in various jurisdictions are subject to change. While some countries intend to or have imposed taxation on cryptocurrency assets and transactions, other tax authorities are silent. As there is considerable uncertainty over the taxation of cryptocurrencies, we cannot guarantee that the cryptocurrency assets and transactions denominated in cryptocurrencies will not be subject to further taxation in the future, including, but not limited to, additional taxes and increased tax rate. These events could reduce the economic return of cryptocurrency and increase the holding costs of cryptocurrency assets, which could materially and adversely affect the businesses and financial performances of our cryptocurrency mining business, and in turn could have a material adverse effect on our business and results of operations. 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, effectively a surcharge on the electricity price per kW/h. Share-Based Compensation The Group has granted share-based compensation awards to certain employees under several equity plans. The Group measures the cost of employee services received in exchange for an equity award, based on the fair value of the award at the date of grant. Share-based compensation expense is recognized net of estimated forfeitures, determined based on historical experience. The Group recognizes share-based compensation expense over the requisite service period. For performance and market-based awards which also require a service period, the Group uses graded vesting over the longer of the derived service period or when the performance condition is considered probable. The Company determines the grant date fair value of stock options using a Black-Scholes Model with assumptions made regarding expected term, volatility, risk-free interest rate, and dividend yield. Once the equity value of the subsidiary is determined, it is allocated (as applicable) into the various classes of shares and options using the option-pricing method, which is one of the generally accepted valuation methodologies. 126 Table of Contents ​ The expected term represents the period of time that stock-based awards granted are expected to be outstanding. The expected term of stock-based awards granted is determined based on historical data on employee exercise and post-vesting employment termination behavior. Expected volatilities are based on historical volatilities of the Company’s ordinary shares. Risk-free interest rate is based on United States government bonds issued with maturity terms similar to the expected term of the stock-based awards. The Group recognizes compensation expense, net of estimated forfeitures, on all share-based awards on a straight-line basis over the requisite service period, which is generally a one-to-four-year vesting period or in the case of market-based awards, over the greater of the vesting period or derived service period. Forfeiture rate is estimated based on historical forfeiture patterns and adjusted to reflect future changes in circumstances and facts, if any. If actual forfeitures differ from those estimates, the estimates may need to be revised in subsequent periods. The Group uses historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. For stock option modifications, the Group compares the fair value of the original award immediately before and after the modification. For modifications, or probable-to-probable vesting conditions, the incremental fair value of fully vested awards is recognized as expense on the date of the modification, with the incremental fair value of unvested awards recognized ratably over the new service period. While we paid a discretionary cash dividend in January 2009, we do not anticipate paying any recurring cash dividends in the foreseeable future. In September 2023, our board of directors and board committees authorized and approved the issuance of an aggregate number of 214,650,000 Class A ordinary shares of our Company (equivalent to 715,500 ADSs) as the share incentive awards granted to our directors, officers and employees pursuant to the Option Plan. The 205,200,000 Class A ordinary shares issued in the form of the restricted shares to our executive officers and employees are subject to a three-year vesting schedule and lock-up restrictions, provided that the second-year and the third-year tranches of the restricted share grants shall be released from the lock-up restrictions only upon the satisfaction of certain pre-agreed performance targets. The remaining 9,450,000 Class A ordinary shares were issued in the form of the restricted share units to our independent directors as part of their compensation for their services as our independent directors for the next three years. In March 2025, our board of directors and board committees authorized and approved the issuance of an aggregate number of 450,000,000 Class A ordinary shares (equivalent to 1,500,000 ADSs) pursuant to the Option Plan. 450,000,000 Class A ordinary shares were issued in the form of restricted shares to our directors, officers and employees. All such Class A ordinary shares are subject to a three-year vesting schedule and lock-up restrictions i.e. 1/36 portion of the respective shares shall vest on the last day of each calendar month following the date of the grant. In June, October and December 2024, and February 2025, respectively, our board of directors and board committees authorized and approved the issuance of an aggregate number of 81,126,600 Class A ordinary shares (equivalent to 270,422 ADSs) pursuant to the Option Plan to various consultants as compensation for their services in connection with the development of online business. In addition, we have issued an aggregate number of 34,128,300 Class A ordinary shares which are subject to the statutory lock-up conditions, to the various consultants as compensation for their services in connection with the development of online business. From March 2025 to March 31, 2026, our board of directors and board committees authorized and approved the issuance of an aggregate number of 7,281,300 Class A ordinary shares (equivalent to 24,271 ADSs) pursuant to the Option Plan to the consultant as compensation for his services in connection with the development of Gamefi platform. In addition, from April 1, 2025 to March 31, 2026, we have issued an aggregate number of 7,652,700 Class A ordinary shares which are subject to the statutory lock-up conditions, to the consultant as compensation for its services in connection with the development of Gamefi business. Due to the failure of the joint venture company to achieve annual operational targets and termination of cooperation with Zhejiang Huanyu, Tongze and JiTuo 4,457,400 Class A ordinary shares we issued to the consultant, which are subject to the statutory lock-up conditions, were returned to us in January 2026. 127 Table of Contents ​ In September 2025, our board of directors and board committees authorized and approved the issuance of an aggregate number of 535,500,000 Class A ordinary shares (equivalent to 1,785,000 ADSs) pursuant to the Eleventh Amended and Restated 2004 Stock Option Plan in the form of restricted shares to our directors, officers, employees, and three consultants. Out of all granted restricted shares issued to our directors, executive officers and employees, (i) half of the restricted shares to each of them shall vest immediately upon approval of our board of directors and board committees; (ii) 25% of the restricted shares to each of them shall vest and be released from lock-up on the first anniversary of the approval of our board of directors and board committees, and (iii) 25% of the restricted shares to each of them shall vest and be released from lock-up on the second anniversary of the approval of our board of directors and board committees. Portion of the restricted shares were issued to three consultants, with one consultant’s restricted shares vesting in full upon approval of our board of directors and board committees; and the other two consultants’ restricted shares vesting under the following conditions: (i) 1/3 of the restricted shares shall vest and be released from lock-up after half a year, 1/3 shall vest on the first anniversary and the last 1/3 shall vest on the second anniversary of the approval of our board of directors and board committees. Share-based compensation expenses of RRMB70.8 million, RMB44.7 million and RMB116.1 million (US$16.6 million) were recognized for the year ended December 31, 2023, 2024 and 2025, respectively, for options and restricted shares granted to our company’s and its subsidiaries’ employees and directors. Allowance for doubtful accounts Effective on January 1, 2020, the Group adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost and is codified in Accounting Standards Codification (“ASC”) Topic 326, Credit Losses (“ASC 326”). ASU 2016-13 replaced the existing incurred loss impairment model and introduces an expected loss approach with macroeconomic forecasts referred to as a current expected credit losses (“CECL”) methodology, which resulted in more timely recognition of credit losses. There was no significant impact on its consolidated financial statements and related disclosures as a result. Under the incurred loss methodology, credit losses are only recognized when the losses are probable of having been incurred. The CECL methodology requires that the full amount of expected credit losses for the lifetime of the financial instrument be recorded at the time it is originated or acquired, considering relevant historical experience, current conditions and reasonable and supportable macroeconomic forecasts that affect the collectability of financial assets, and adjusted for changes in expected lifetime credit losses subsequently, which may require earlier recognition of credit losses. Accounts receivable primarily consist of amounts due from third-party game platforms and a related party. As of December 31, 2025, accounts receivable – related party amounted to RMB 6.3 million (US$0.9 million). No allowance for credit losses has been recorded for accounts receivable – related party, as such amounts are considered fully collectible. See Note 7 and Note 8 for further details. Other receivables are included in prepayments and other current assets. Both accounts receivable and other receivables are recorded net of allowance for credit losses. Allowances for credit losses are charged to general and administrative expenses. The Group provided an allowance for credit losses of RMB17.8 million, nil and RMB 7.8 million (US$1.1 million) for the years ended December 31, 2023, 2024 and 2025, respectively. The Group has written-off an amount of RMB0.1 million, RMB0.8 million and RMB 7.8 million (US$1.1 million) for the years ended December 31, 2023, 2024 and 2025, respectively. The ending balance of allowances for credit losses are RMB 39.6 million and RMB 40.8 million (US$5.7 million) as of December 31, 2024 and 2025, respectively. Impairment of long-lived assets We evaluate its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or that the useful life is shorter than the Group had originally estimated. We assess the recoverability of the long-lived assets by comparing the carrying amount to the estimated future undiscounted cash flow expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, we would recognize an impairment loss based on the fair value of the assets. Indefinite-lived intangible assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of the intangible asset to its carrying amount. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess. Impairment charges relating to equipment amounting to RMB161.0 million, RMB6.5 million and nil were recognized in 2023, 2024 and 2025, respectively. 128 Table of Contents ​ Consolidation of Variable Interest Entity, or VIE Historically majority of our revenues was derived from online game operation in mainland China. Laws and regulations of mainland China, including the GAPP Circular and the Administrative Measures on Network Publication prohibit or restrict foreign ownership of online game related businesses. We believe, consistent with the view of our PRC legal counsel that our structure complies with these foreign ownership restrictions, subject to the interpretation and implementation of the GAPP Circular and the Administrative Measures on Network Publication. Specifically, we operated our online game business through Shanghai IT and have entered into a series of contractual arrangements with Shanghai IT and its equity owners. As a result of these contractual arrangements, we are entitled to receive service fees for services provided to Shanghai IT for an amount determined at our discretion, up to 90% of Chinese mainland entities’ profits. In addition, the equity owners of record for these entities have pledged all their equity interests in the VIE to us as collateral for all of their payments due to the wholly owned foreign enterprise, or WFOE, and to secure performance of all obligations of the VIE and their shareholders under various agreements. In addition, the agreements provide that any dividend distributions made by the VIEs, if any, are required to be deposited in an escrow account over which we have exclusive control. Moreover, through the Call Option Agreements and Shareholder Voting Proxy Agreements, each shareholder of the VIE granted WFOE or any third parties designated by the WFOE an irrevocable power of attorney to act on all matters pertaining to the VIE. We believe that the terms of the Call Option Agreements are currently exercisable and legally enforceable under the laws and regulations of mainland China. We also believe that the minimum amount of consideration permitted by the applicable laws of mainland China to exercise the options does not represent a financial barrier or disincentive for us to exercise our rights under the Call Option Agreements. A simple majority vote of our board of directors is required to pass a resolution to exercise our rights under the Call Option Agreements, for which consent of the shareholder of the VIE is not required. As a result of the totality of these arrangements, we have both the power to direct activities that most significantly impact the VIE economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that are significant to Shanghai IT. As a result, we concluded we are the primary beneficiary of Shanghai IT and as such Shanghai IT is consolidated VIE of our company. Since the beginning of 2021, we have changed our business focus from online games to the blockchain industry, including the operation of cryptocurrency mining. We expect going forward that a majority of our revenues will be sourced outside of mainland China, and the revenues to be recorded in the variable interest entity will be minimal. Convertible Notes and Beneficial Conversion Feature We have issued convertible notes and warrants throughout 2023 and 2025. We have evaluated whether the conversion feature of the notes is considered an embedded derivative instrument subject to bifurcation in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities. Based on our evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as conversion option does not provide the holder of the notes with means to net settle the contracts. Convertible notes, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective rate of conversion pursuant to the terms of the convertible note agreement is below market value. In these instances, the value of the beneficial conversion feature is determined as the intrinsic value of the conversion feature, which is recorded as deduction to the carrying amount of the notes and credited to additional paid-in-capital. For convertible notes issued with detachable warrants, a portion of the note’s proceeds is allocated to the warrant based on the fair value of the warrants as of the date of issuance. The allocated fair values for the warrants and beneficial conversion feature are both recorded in the financial statements as debt discounts from the face amount of the notes, which are then accreted to interest expense over the life of the related debt using the effective interest method. We present the occurred debt issuance costs as a direct deduction from the convertible notes. Amortization of the costs is reported as interest expense. Upon the extinguishment of the convertible notes, the reacquisition price is allocated to the repurchased beneficial conversion feature measured at the intrinsic value as of the extinguishment date, the residual amount allocated to convertible debt. The difference between the reacquisition price of convertible debt and the net carrying amount of the extinguished convertible debt is recognized as gain or loss in the statement of operations and comprehensive (loss) gain of the period of extinguishment. Warrants We account for the warrants issued in connection with equity-linked instrument under authoritative guidance on accounting from ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. We classify warrants in its consolidated balance sheet as a liability or equity based on the nature and characteristics of each warrant issued. For those warrants classified as equity, there is no remeasurement to the warrants after initial recognition. For those warrants classified as liability, the proceeds are allocated first to the liability classified warrants at the full fair value then the remaining proceeds allocated to the equity instruments offered. The warrants are initially recognized on its fair value as of issuance date then remeasured at each reporting period and adjusted to fair value. The changes in the fair value of the warrant liability are recorded in the income of the period. 129 Table of Contents ​ Ordinary shares contingently redeemable Ordinary shares contingently redeemable are the restricted shares issued by us with repurchase clauses. Our consideration shares issued are redeemable and are presented as a temporary equity in the mezzanine section of the balance sheet.