Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document and Entity Information | |
Document Type | 20-F/A |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Registrant Name | The9 LTD |
Document Period End Date | Dec. 31, 2020 |
Entity Incorporation, State or Country Code | F4 |
Entity Well-known Seasoned Issuer | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Entity Central Index Key | 0001296774 |
Amendment Flag | false |
Entity Interactive Data Current | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
American Depositary Shares | |
Document and Entity Information | |
Title of 12(b) Security | American Depositary Shares, each representingthree Class A ordinary shares |
Trading Symbol | NCTY |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding | 15,338,560 |
Class A Ordinary Shares | |
Document and Entity Information | |
Title of 12(b) Security | Class A ordinary shares, par value US$0.01 per share |
Trading Symbol | NCTY |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding | 108,154,341 |
Class B ordinary shares | |
Document and Entity Information | |
Entity Common Stock, Shares Outstanding | 13,607,334 |
Ordinary shares | |
Document and Entity Information | |
Entity Common Stock, Shares Outstanding | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | 12 Months Ended | |||
Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | |
Revenues: | ||||
Revenue | $ 95,860 | ¥ 625,488 | ¥ 343,077 | ¥ 17,492,415 |
Sales taxes | (1,582) | (60,557) | ||
Total net revenues | 95,860 | 625,488 | 341,495 | 17,431,858 |
Cost of revenues | (124,772) | (814,136) | (1,342,266) | (16,435,590) |
Gross profit (loss) | (28,912) | (188,648) | (1,000,771) | 996,268 |
Operating (expenses) income: | ||||
Product development | (373,654) | (2,438,095) | (13,090,530) | (24,555,308) |
Sales and marketing | (99,079) | (646,492) | (2,114,519) | (2,325,818) |
General and administrative | (16,666,348) | (108,747,919) | (113,867,000) | (89,583,331) |
Impairment of other long-lived assets | (998,498) | (6,515,200) | (34,881,000) | |
Impairment on advance and other assets | (3,122,069) | (20,371,500) | ||
Gain on disposal of subsidiaries | 72,887,173 | 475,588,803 | 1,206,925 | 10,473,159 |
Total operating (expenses) income | 51,627,525 | 336,869,597 | (162,746,124) | (105,991,298) |
Other operating income, net | 4,193 | 27,358 | 30,240 | 229,538 |
(Loss) income from operations | 51,602,806 | 336,708,307 | (163,716,655) | (104,765,492) |
Impairment on equity investments | (179,733) | (1,172,755) | (4,666,128) | (1,386,174) |
Impairment on other investments | (2,758,621) | (18,000,000) | (3,791,039) | (7,776,157) |
Impairment on other advances | (5,980,788) | |||
Interest income | 65,859 | 429,732 | 18,576 | 193,928 |
Interest expense | (623,782) | (4,070,179) | (34,501,556) | (104,776,674) |
Fair value change on warrants liability | 5,801 | 37,851 | 1,292,244 | 2,251,427 |
Gain on disposal of equity investee and available-for-sale investments | 26,712 | 174,295 | 694,628 | |
Gain on disposal of other investments | 431,976 | 2,818,643 | 13,430,588 | |
Gain on extinguishment of convertible notes | 8,698,223 | 56,800,000 | 0 | 0 |
Gain on waiver of interest-free loan | 5,424,904 | 35,397,500 | 0 | 0 |
Foreign exchange gain (loss) | (1,275,045) | (8,319,669) | (5,474,002) | (20,331,430) |
Other income (expenses), net | 307,302 | 2,005,143 | 9,372,652 | 1,598,663 |
(Loss) income before income tax expense and share of loss in equity method investments | 61,726,402 | 402,764,770 | (193,321,480) | (234,991,909) |
Income tax benefit | (1,098,099) | (7,165,097) | 0 | 0 |
Share of loss in equity method investments | (331,944) | (2,165,935) | (2,847,260) | (4,292,887) |
Net (loss) income | 60,296,359 | 393,433,738 | (196,168,740) | (239,284,796) |
Net loss attributable to noncontrolling interest | (499,545) | (3,259,528) | (13,517,983) | (16,332,968) |
Net loss attributable to redeemable noncontrolling interest | (182,394) | (1,190,122) | (4,855,589) | (5,858,902) |
Net (loss) income attributable to The9 Limited | 60,978,298 | 397,883,388 | (177,795,168) | (217,092,926) |
Change in redemption value of redeemable noncontrolling interest | (182,394) | (1,190,122) | (12,827,598) | (40,918,773) |
Net (loss) income attributable to holders of ordinary shares | 60,795,904 | 396,693,266 | (190,622,766) | (258,011,699) |
Other comprehensive (loss) income, net of tax: | ||||
Currency translation adjustments | 538,969 | 3,516,774 | (793,531) | (1,314,265) |
Total comprehensive (loss) income | 60,835,328 | 396,950,512 | (196,962,271) | (240,599,061) |
Comprehensive (loss) income attributable to: | ||||
Noncontrolling interest | 2,016,475 | 13,157,497 | (19,738,118) | (24,888,425) |
Redeemable noncontrolling interest | (182,394) | (1,190,122) | (4,855,589) | (5,858,902) |
Total comprehensive loss | $ 59,001,247 | ¥ 384,983,137 | ¥ (172,368,564) | ¥ (209,851,734) |
Net (loss) income per share attributable to holders of ordinary shares: | ||||
- Basic and diluted | (per share) | $ 0.37 | ¥ 2.42 | ¥ (1.79) | ¥ (4.15) |
Weighted average number of shares outstanding: | ||||
- Basic and diluted | shares | 163,599,920 | 163,599,920 | 106,407,008 | 62,114,760 |
Online Game Services [Member] | ||||
Revenues: | ||||
Revenue | $ 95,860 | ¥ 625,488 | ¥ 303,577 | ¥ 16,551,080 |
Other Revenues [Member] | ||||
Revenues: | ||||
Revenue | ¥ 39,500 | ¥ 941,335 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
Current assets: | |||
Cash and cash equivalents | $ 4,857,661 | ¥ 31,696,237 | ¥ 10,113,141 |
Accounts receivable, net of allowance for doubtful accounts of RMB1,319,331 and RMB233,213 as of December 31, 2019 and 2020, respectively | 457 | 2,981 | 110,437 |
Advances to suppliers | 4,249 | 27,725 | 11,246,608 |
Prepayments and other current assets, net of allowance for doubtful accounts of RMB5,343,427 and RMB 6,619,312 as of December 31, 2019and 2020, respectively | 1,510,416 | 9,855,467 | 8,848,534 |
Amounts due from related parties | 112,292 | 732,705 | 758,761 |
Assets classified as held-for-sale | 0 | 0 | 123,390,350 |
Total current assets | 6,485,075 | 42,315,115 | 154,467,831 |
Investments | 10,000,000 | ||
Property, equipment and software, net | 149,747 | 977,102 | 1,218,521 |
Operating lease right-of-use assets | 789,133 | 5,149,090 | 9,257,604 |
Other long-lived assets, net | 0 | 0 | 6,515,200 |
TOTAL ASSETS | 7,423,955 | 48,441,307 | 181,459,156 |
Current liabilities: | |||
Short-term borrowings (including short-term borrowings of the consolidated VIEs without recourse to the Group of nil as of both December 31, 2019 and 2020) | 117,526,089 | ||
Accounts payable (including accounts payable of the consolidated VIEs without recourse to the Group of RMB5,640,424 and RMB5,133,008 as of December 31, 2019 and 2020, respectively) | 5,455,543 | 35,597,417 | 38,232,425 |
Other taxes payable (including other taxes payable of the consolidated VIEs without recourse to the Group of RMB1,391,227 and RMB1,416,209 as of December 31, 2019 and 2020, respectively) | 198,226 | 1,293,423 | 1,203,644 |
Advances from customers (including advances from customers of the consolidated VIEs without recourse to the Group of RMB64,335,073and RMB15,005,074 as of December 31, 2019and 2020, respectively) | 5,825,593 | 38,011,992 | 39,527,778 |
Other advances (including other advances of the consolidated VIEs without recourse to the Group of RMB49,300,000 and nil as of December 31, 2019 and 2020, respectively) | 56,276,200 | ||
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to the Group of RMB59,306,848 and RMB52,987,306 as of December 31, 2019 and 2020, respectively) | 4,637,278 | 30,258,237 | 74,379,529 |
Refund of game points (including refund of game points of the consolidated VIEs without recourse to the Group of RMB169,998,682 as of both December 31, 2019 and 2020) | 26,053,438 | 169,998,682 | 169,998,682 |
Warrants (including warrants of consolidated VIEs without recourse to the Group of nil as of both December 31, 2019 and 2020) | 284,285 | 1,854,957 | 198,600 |
Convertible notes (including convertible notes of consolidated VIEs without recourse to the Group of nil as of both December 31, 2019 and 2020) | 414,127,908 | ||
Interest payable (including interest payable of consolidated VIEs without recourse to the Group of nil as of both December 31, 2019 and 2020) | 5,371,931 | ||
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of RMB71,176,256 and RMB62,130,247as of December 31, 2019 and 2020, respectively) | 12,807,795 | 83,570,873 | 93,140,843 |
Operating lease liabilities-current portion | 580,415 | 3,787,210 | 3,407,670 |
Liabilities directly associated with assets held-for-sale | 0 | 0 | 44,691,296 |
Total current liabilities | 55,842,573 | 364,372,791 | 1,058,082,595 |
Non-current portion of operating lease liabilities of the consolidated VIE without recourse to the Group (including operating lease liabilities of consolidated VIEs without recourse to the Group of RMB18,287 and nil as of December 31, 2019 and 2020, respectively) | 377,700 | 2,464,495 | 6,251,705 |
TOTAL LIABILITIES | 56,220,273 | 366,837,286 | 1,064,334,300 |
Commitments and contingencies (Note 29) | |||
Redeemable noncontrolling interest (Note 27) | 53,493,724 | 349,046,548 | 349,046,548 |
SHAREHOLDERS' EQUITY (DEFICIT): | |||
Additional paid-in capital | 413,143,757 | 2,695,763,016 | 2,539,552,478 |
Statutory reserves | 1,122,844 | 7,326,560 | 28,071,982 |
Accumulated other comprehensive loss | (2,556,046) | (16,678,203) | (3,777,952) |
Accumulated deficit | (458,578,915) | (2,992,227,421) | (3,410,856,231) |
The9 Limited shareholders' deficit | (44,094,750) | (287,718,247) | (839,039,915) |
Noncontrolling interest | (58,195,292) | (379,724,280) | (392,881,777) |
Total shareholders' deficit | (102,290,042) | (667,442,527) | (1,231,921,692) |
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | 7,423,955 | 48,441,307 | 181,459,156 |
Class A Ordinary Shares | |||
SHAREHOLDERS' EQUITY (DEFICIT): | |||
Ordinary shares | 2,635,565 | 17,197,060 | 7,321,099 |
Class B ordinary shares | |||
SHAREHOLDERS' EQUITY (DEFICIT): | |||
Ordinary shares | $ 138,045 | ¥ 900,741 | ¥ 648,709 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares |
Other Taxes Payable | $ 198,226 | ¥ 1,293,423 | ¥ 1,203,644 | |
Customer Refund Liability, Current | 26,053,438 | 169,998,682 | 169,998,682 | |
Customer Advances, Current | 5,825,593 | 38,011,992 | 39,527,778 | |
Other advances | 56,276,200 | |||
Accrued Expenses And Other Liabilities Current | 12,807,795 | 83,570,873 | 93,140,843 | |
Convertible Notes Payable, Current | 414,127,908 | |||
Derivative Liability, Current | 284,285 | 1,854,957 | 198,600 | |
Accounts Payable, Current | 5,455,543 | 35,597,417 | 38,232,425 | |
Due to Related Parties, Current | 4,637,278 | 30,258,237 | 74,379,529 | |
Interest Payable, Current | 5,371,931 | |||
Operating Lease, Liability, Current | 580,415 | 3,787,210 | 3,407,670 | |
Operating Lease, Liability, Noncurrent | 377,700 | 2,464,495 | 6,251,705 | |
Allowance for Doubtful Accounts Receivable, Current | $ 6,619,312 | 1,149,864 | $ 5,343,427 | 1,319,331 |
Short-term Debt | 117,526,089 | |||
Variable Interest Entity, Primary Beneficiary | ||||
Other Taxes Payable | 1,398,996 | 1,391,227 | ||
Customer Refund Liability, Current | 169,998,682 | 169,998,682 | ||
Customer Advances, Current | 15,005,074 | 15,035,073 | ||
Other advances | 49,300,000 | 0 | ||
Accrued Expenses And Other Liabilities Current | 62,130,247 | 71,176,256 | ||
Convertible Notes Payable, Current | 0 | 0 | ||
Derivative Liability, Current | 0 | 0 | ||
Accounts Payable, Current | 5,920,126 | 5,640,424 | ||
Due to Related Parties, Current | 52,987,306 | 59,306,848 | ||
Interest Payable, Current | 0 | 0 | ||
Operating Lease, Liability, Current | 18,287 | 34,227 | ||
Operating Lease, Liability, Noncurrent | 0 | $ 18,287 | ||
Short-term Debt | ¥ 0 | ¥ 0 | ||
Class A Ordinary Shares | ||||
Ordinary shares, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Common Stock, Shares Authorized | shares | 4,300,000,000 | 4,300,000,000 | 4,300,000,000 | 4,300,000,000 |
Ordinary shares, shares issued | shares | 247,090,351 | 247,090,351 | 103,737,691 | 103,737,691 |
Ordinary shares, shares outstanding | shares | 247,090,351 | 247,090,351 | 103,737,691 | 103,737,691 |
Class B ordinary shares | ||||
Ordinary shares, par value | ¥ / shares | ¥ 0.01 | ¥ 0.01 | ||
Common Stock, Shares Authorized | shares | 600,000,000 | 600,000,000 | 600,000,000 | 600,000,000 |
Ordinary shares, shares issued | shares | 12,942,011 | 12,942,011 | 9,192,011 | 9,192,011 |
Ordinary shares, shares outstanding | shares | 12,942,011 | 12,942,011 | 9,192,011 | 9,192,011 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | Ordinary sharesUSD ($)shares | Ordinary sharesCNY (¥)shares | Additional paid-in capitalUSD ($) | Additional paid-in capitalCNY (¥) | Statutory reservesUSD ($) | Statutory reservesCNY (¥) | Accumulated other comprehensive (loss) incomeUSD ($) | Accumulated other comprehensive (loss) incomeCNY (¥) | Accumulated deficitUSD ($) | Accumulated deficitCNY (¥) | Equity (deficit) attributable to The9 limitedUSD ($) | Equity (deficit) attributable to The9 limitedCNY (¥) | Noncontrolling interestUSD ($) | Noncontrolling interestCNY (¥) | USD ($) | CNY (¥) |
Balance at Dec. 31, 2017 | ¥ 3,328,852 | ¥ 2,527,215,315 | ¥ 28,071,982 | ¥ (16,445,748) | ¥ (3,015,968,137) | ¥ (473,797,736) | ¥ (328,553,104) | ¥ (802,350,840) | ||||||||
Balance (in shares) at Dec. 31, 2017 | shares | 44,544,036 | 44,544,036 | ||||||||||||||
Net income (loss) | (217,092,926) | (217,092,926) | (16,332,968) | (233,425,894) | ||||||||||||
Currency translation adjustments | 7,241,192 | 7,241,192 | (8,555,457) | (1,314,265) | ||||||||||||
Derecognition of noncontrolling interests | (20,000,000) | (20,000,000) | ||||||||||||||
Share-based compensation | 3,645,751 | 3,645,751 | 252,577 | 3,898,328 | ||||||||||||
Change in redemption value of redeemable noncontrolling interest | (40,918,773) | |||||||||||||||
Issuance of shares | ¥ 3,173,806 | 6,126,772 | 9,300,578 | 9,300,578 | ||||||||||||
Number of shares issued | shares | 46,771,429 | 46,771,429 | ||||||||||||||
Accretion in redemption value of redeemable noncontrolling interest | (40,918,773) | (40,918,773) | (40,918,773) | |||||||||||||
Balance at Dec. 31, 2018 | ¥ 6,502,658 | 2,496,069,065 | 28,071,982 | (9,204,556) | (3,233,061,063) | (711,621,914) | (373,188,952) | (1,084,810,866) | ||||||||
Balance (in shares) at Dec. 31, 2018 | shares | 91,315,465 | 91,315,465 | ||||||||||||||
Net income (loss) | (177,795,168) | (177,795,168) | (13,517,983) | (191,313,151) | ||||||||||||
Currency translation adjustments | 5,426,604 | 5,426,604 | (6,220,135) | (793,531) | ||||||||||||
Share-based compensation | $ 6,169,335 | ¥ 425,593 | 21,279,647 | 21,705,240 | 45,293 | 21,750,533 | ||||||||||
Change in redemption value of redeemable noncontrolling interest | (12,827,598) | |||||||||||||||
Issuance of shares | ¥ 1,041,557 | 35,031,364 | 36,072,921 | 36,072,921 | ||||||||||||
Number of shares issued | shares | 15,444,882 | 15,444,882 | ||||||||||||||
Accretion in redemption value of redeemable noncontrolling interest | (12,827,598) | (12,827,598) | (12,827,598) | |||||||||||||
Balance at Dec. 31, 2019 | ¥ 7,969,808 | 2,539,552,478 | 28,071,982 | (3,777,952) | (3,410,856,231) | (839,039,915) | (392,881,777) | (1,231,921,692) | ||||||||
Balance (in shares) at Dec. 31, 2019 | shares | 112,929,702 | 112,929,702 | ||||||||||||||
Net income (loss) | 397,883,388 | 397,883,388 | (3,259,528) | 394,623,860 | ||||||||||||
Currency translation adjustments | (12,900,251) | (12,900,251) | 16,417,025 | $ 538,969 | 3,516,774 | |||||||||||
Share-based compensation | ¥ 2,412,325 | 52,644,101 | 55,056,426 | 55,056,426 | ||||||||||||
Share-based compensation (in shares) | shares | 35,100,000 | 35,100,000 | ||||||||||||||
Change in redemption value of redeemable noncontrolling interest | (1,190,122) | (1,190,122) | (182,394) | (1,190,122) | ||||||||||||
Issuance of ordinary shares and warrants, net of issuance costs of RMB7,849,390 | ¥ 7,715,668 | 104,650,533 | 112,366,201 | 112,366,201 | ||||||||||||
Issuance of ordinary shares and warrants, net of issuance costs of RMB7,849,390 (in shares) | shares | 112,002,660 | 112,002,660 | ||||||||||||||
Equity on conversion option of convertible notes | 106,026 | 106,026 | 106,026 | |||||||||||||
Reversal of statutory reserves due to disposal of certain subsidiaries | (20,745,422) | 20,745,422 | ||||||||||||||
Balance at Dec. 31, 2020 | $ 2,773,610 | ¥ 18,097,801 | $ 413,143,757 | ¥ 2,695,763,016 | $ 1,122,844 | ¥ 7,326,560 | $ (2,556,046) | ¥ (16,678,203) | $ (458,578,915) | ¥ (2,992,227,421) | $ (44,094,750) | ¥ (287,718,247) | $ (58,195,292) | ¥ (379,724,280) | $ (102,290,042) | ¥ (667,442,527) |
Balance (in shares) at Dec. 31, 2020 | shares | 260,032,362 | 260,032,362 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) | 12 Months Ended |
Dec. 31, 2020CNY (¥) | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |
Stock issuance cost | ¥ 7,849,390 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Cash flows from operating activities: | ||||
Net (loss) income | $ 60,296,359 | ¥ 393,433,738 | ¥ (196,168,740) | ¥ (239,284,796) |
Adjustments for: | ||||
Gain on disposal of property, equipment and software | (4,566) | (29,793) | (2,153,158) | (183,767) |
Gain on disposal of subsidiaries | (72,887,173) | (475,588,803) | (1,206,925) | (10,473,159) |
Gain on disposal of other investments | (431,976) | (2,818,643) | (13,430,588) | 0 |
Share-based compensation expenses | 8,437,766 | 55,056,426 | 21,750,533 | 3,898,328 |
Impairment on equity investments | 179,733 | 1,172,755 | 4,666,128 | 1,386,174 |
Impairment on other investments | 2,758,621 | 18,000,000 | 3,791,039 | 7,776,157 |
Impairment on other long-lived assets | 998,498 | 6,515,200 | 34,881,000 | 0 |
Provision for doubtful accounts receivable | 15,862 | 103,501 | 169,416 | 109,939 |
Impairment on advances to suppliers | 3,172,396 | 20,699,885 | 0 | 7,765,482 |
Impairment on other advances | 5,980,787 | 0 | ||
Provision for doubtful other receivables | 343,976 | 2,244,446 | 0 | 21,042,700 |
Consulting fees paid by issuance of shares | 1,039,359 | 6,781,815 | 35,091,686 | 4,172,800 |
Gain on extinguishment of convertible notes | (8,698,223) | (56,800,000) | 0 | 0 |
Depreciation and amortization of property, equipment and software | 68,626 | 400,000 | 2,778,778 | 3,650,261 |
Amortization of land use right | 0 | 1,440,682 | 1,920,910 | |
Share of loss in equity method investments | 331,944 | 2,165,935 | 2,847,260 | 4,292,887 |
Gain on disposal of investment in equity investee and available-for-sales investment | (26,712) | (174,295) | (694,628) | 0 |
Foreign currency exchange, loss | 1,275,045 | 8,319,669 | 5,474,002 | 20,331,430 |
Fair value change on warrant liability | (5,801) | (37,851) | (1,292,244) | (2,251,427) |
Amortization of discount and interest on convertible notes | 448,018 | 2,923,316 | 33,154,191 | 98,308,205 |
Gain on waiver of interest-free loan | (5,424,904) | (35,397,500) | 0 | 0 |
Payment of issuance cost by issuance of shares Iliad | 69,833 | 455,658 | 0 | 0 |
Non-cash lease expense | 107,239 | 699,733 | 409,048 | 0 |
Changes in operating assets and liabilities | ||||
Change in accounts receivable | 606 | 3,955 | 313,044 | 1,904,732 |
Change in advances to suppliers | (3,000,149) | (19,575,974) | (1,419,353) | (1,400,665) |
Change in prepayments and other current assets | (440,932) | (2,877,084) | (6,628,897) | (20,575,190) |
Change in right-of-use assets | 522,419 | 3,408,781 | (9,666,652) | 0 |
Change in other long-lived assets | 0 | 6,220 | ||
Change in accounts payable | (403,833) | (2,635,008) | 246,764 | 905,990 |
Change in amounts due to related parties | (237,563) | (1,550,100) | 3,144,106 | (1,628,877) |
Change in other taxes payable | 13,759 | 89,779 | (491,112) | 1,234,090 |
Change in advances from customers | (232,304) | (1,515,786) | (15,887) | (2,336,252) |
Change in deferred revenue | (159,125) | (5,417,144) | ||
Change in interest payable | (823,284) | (5,371,931) | 1,457,811 | 6,053,191 |
Change in accrued expenses and other current liabilities | (3,224,414) | (21,039,288) | 11,896,337 | (2,408,745) |
Change in lease liabilities | (522,248) | (3,407,670) | 9,659,375 | 0 |
Net cash used in operating activities | (16,284,023) | (106,253,254) | (54,175,322) | (101,200,526) |
Cash flows from investing activities | ||||
Proceeds from disposal of subsidiaries | 68,036,781 | 443,939,997 | 0 | 0 |
Proceeds from disposal of assets and liabilities classified as held- for- sale | 49,300,000 | 2,800,000 | ||
Proceeds from disposal of other investments | 37,026,498 | 0 | ||
Proceeds from disposal of equity investee and available-for-sale investments | 694,628 | 0 | ||
Proceeds from disposal of property, equipment and software | 28,046 | 183,003 | 2,648,259 | 81,848 |
Proceed from tokens transferred | 6,887,915 | 0 | ||
Refund from subscribed tokens | 894,785 | 5,838,471 | 0 | 0 |
Purchase of equity method investments | (511,677) | (3,338,690) | 0 | 0 |
Purchase of other investments | (1,226,054) | (8,000,000) | 0 | (5,300,000) |
Deposit for joint venture arrangement | (34,881,000) | 0 | ||
Advances to subscribed tokens | 0 | (14,070,581) | ||
Disbursement for loans receivable from a related party | 0 | (600,000) | ||
Purchase of property, equipment and software | (55,107) | (359,573) | (796,921) | (226,717) |
Net cash (used in) provided by investing activities | 67,166,774 | 438,263,208 | 60,879,379 | (17,315,450) |
Cash flows from financing activities: | ||||
Proceeds from the issuance of ordinary shares and warrants | 7,268,995 | 47,430,195 | 0 | 0 |
Proceeds from the issuance of convertible note | 514,693 | 3,358,369 | 0 | 0 |
Loans from a related party | 16,065,376 | 11,030,602 | ||
Repayment of loans to a related party | (6,520,327) | (42,545,136) | (10,023,576) | (29,127,540) |
Proceeds from other loans | 34,881,000 | 0 | ||
Repayments of other loans | 0 | (260,073) | ||
Repayments of convertible notes | (48,878,103) | (318,929,623) | 0 | 0 |
Non-cash investing and financing activities | (47,614,742) | (310,686,195) | 40,922,800 | (18,357,011) |
Effect of foreign exchange rate changes on cash and cash equivalents | 39,745 | 259,337 | 1,257,310 | (1,494,584) |
Cash reclassified as held for sale | (43,027,475) | 0 | ||
Net change in cash and cash equivalents | 3,307,754 | 21,583,096 | 5,856,692 | (138,367,571) |
Cash and cash equivalents, beginning of period | 1,549,907 | 10,113,141 | 4,256,449 | 142,624,020 |
Cash and cash equivalents, end of period | 4,857,661 | 31,696,237 | 10,113,141 | 4,256,449 |
Non-cash investing and financing activities | ||||
Shares issued for equity investments and other investments | 236,667 | 3,091,986 | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 435,627 | ¥ 2,842,464 | ¥ 1,271,769 | ¥ 0 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2020 | |
ORGANIZATION AND NATURE OF OPERATIONS | |
ORGANIZATION AND NATURE OF OPERATIONS | 1. ORGANIZATION AND NATURE OF OPERATIONS The accompanying consolidated financial statements include the financial statements of The9 Limited (the “Company”), which was incorporated on December 22, 1999 in the Cayman Islands, its subsidiaries and variable interest entities (“VIE subsidiaries” or ”VIEs”), (collectively referred to as the “Group”). The Group is based in China targeting fast-growing technology businesses. The Group is transitioning from an online game operation business to a cryptocurrencies mining business. The Company’s principal subsidiaries and VIEs are as follows as of December 31, 2020: Date of Place of Legal Name of Entity Registration Registration Ownership Principal subsidiaries: GameNow.net (Hong Kong) Ltd. (" GameNow Hong Kong") January‑2000 Hong Kong 100 % China The9 Interactive Limited (“ C9I ”) October‑2003 Hong Kong 100 % China The9 Interactive (Beijing) Ltd. (“ C9I Beijing ”) March‑2007 PRC 100 % JiuTuo (Shanghai) Information Technology Ltd. ( "Jiu Tuo" ) July-2007 PRC 100 % China Crown Technology Ltd. ( "China Crown Technology" ) November‑2007 Hong Kong 100 % Asian Way Development Ltd. (“Asian Way”) November‑2007 Hong Kong 100 % New Star International Development Ltd. ( “New Star” ) January‑2008 Hong Kong 100 % Red 5 Studios, Inc. (“ Red 5 ”)(Note 2.2) June‑2005 USA 34.71 % Red 5 Singapore Pte. Ltd. (“ Red 5 Singapore ”) (Note 2.2) April‑2010 Singapore 34.71 % The9 Interactive, Inc. (“ The9 Interactive ”) June‑2010 USA 100 % Shanghai Jiu Gang Electronic Technology Ltd. (“ Jiu Gang ”) December‑2014 PRC 100 % City Channel Ltd. (“ City Channel ”) June‑2006 Hong Kong 100 % The9 Singapore Pte. Ltd. (“ The9 Singapore ”) April‑2010 Singapore 100 % Ninebit Inc. (“ Ninebit ”) January -2018 Cayman Islands 100 % 1111 Limited (“ 1111 ”) January -2018 Hong Kong 100 % Supreme Exchange Limited (“ Supreme ”) December‑2018 Malta 90 % BET 111 Ltd. (" Bet 111 ") January -2019 Malta 90 % Coin Exchange Ltd (" Coin ") January -2019 Malta 90 % The9 EV Limited ("The9 EV") May-2019 Hong Kong 100 % NBTC Limited (“ NBTC ”) June-2019 Hong Kong 100 % FF The9 China Joint Venture Limited ("FF The9") September-2019 Hong Kong 50 % Huiling Computer Technology Consulting (Shanghai) Co.Ltd. ("Huiling") March-2019 PRC 100 % Leixian Information Technology (Shanghai) Co., Ltd. ("Leixian") March-2019 PRC 100 % Variable interest entity: Shanghai The9 Information Technology Co., Ltd. (“ Shanghai IT ”) (Note 4) September‑2000 PRC N/A Subsidiaries and VIEs of Shanghai IT: Legal Date of Place of Ownership Held Name of Entity Registration Registration by Shanghai IT Shanghai Jiushi Interactive Network Technology Co., Ltd. ( “Jiushi” ) July‑2011 PRC 80 % Shanghai ShencaiChengjiu Information Technology Co., Ltd. (“ SH Shencai ”) May‑2015 PRC 60 % Shanghai Zhiaojiqi Information Technology Co., Ltd. ( “Shanghai Zhiaojiqi” ) November-2015 PRC 0 % Wuxi Interest Dynamic Network Technology Co., Ltd. (“ Wuxi Qudong ”) June‑2016 PRC 100 % Changsha Quxiang Network Technology Co., Ltd. (“ Changsha Quxiang ”) July‑2016 PRC 100 % Silver Express Investments Ltd. (“ Silver Express ”) November‑2007 Hong Kong 100 % |
PRINCIPAL ACCOUNTING POLICIES
PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
PRINCIPAL ACCOUNTING POLICIES | |
PRINCIPAL ACCOUNTING POLICIES | Cash and cash equivalents
Cash and cash equivalents represent cash on hand and highly liquid investments with a maturity date when acquired of three months or less. As of December 31, 2019 and 2020, cash and cash equivalents were comprised primarily of bank deposits where cash is deposited with reputable financial institutions. Included in cash and cash equivalents as of December 31, 2019 and 2020 are amounts denominated in U.S. dollar totaling US$0.35 million and US$4.6 million, respectively.
The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the PBOC, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in China’s foreign exchange trading system market. The Group’s aggregate amount of cash and cash equivalents denominated in RMB amounted to RMB7.6 million and RMB1.1 million (US$0.2 million) as of December 31, 2019 and 2020, respectively.
<6> Allowance for doubtful accounts
Starting from 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 replaces 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 will result 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 mainly consist of receivables from third-party game platforms, and other receivables, which are included in prepayments and other current assets, both of which are recorded net of allowance for doubtful accounts. Allowances for doubtful accounts are charged to general and administrative expenses. The Group provided an allowance for doubtful accounts of RMB21.2 million, RMB0.2 million and RMB2.3 million (US$0.4 million) for the years ended December 31, 2018, 2019 and 2020, respectively. The Group has written-off an amount of RMB22.2 million, RMB3.2 million and RMB2.1 million (US$0.3 million) for the years ended December 31,2018, 2019 and 2020, respectively.
<7> Investments in equity method investee and loan to equity method investee
Equity investments are comprised of investments in privately held companies. The Group uses the equity method to account for an equity investment over which it has the ability to exert significant influence but does not otherwise have control. The Group records equity method investments at the cost of acquisition, plus the Group’s share in undistributed earnings and losses since acquisition. For equity investments over which the Group does not have significant influence or control, the cost method of accounting is used.
The Group has historically provided financial support to certain equity investees in the form of loans. If the Group’s share of the undistributed losses exceeds the carrying amount of an investment accounted for by the equity method, the Group continues to report losses up to the investment carrying amount, including any loans balance due from the equity investees.
The Group assesses its equity investments and loans to equity investees for impairment on a periodic basis by considering factors including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the technological feasibility of the investee’s products and technologies, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, cash burn rate, and other company-specific information including recent financing rounds. If it has been determined that the equity investment is less than its related fair value and that this decline is other-than-temporary, the carrying value of the investment and loan to equity investee is adjusted downward to reflect these declines in value.
<8> Property, equipment and software, net
Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:
Leasehold improvements
Shorter of respective lease term or estimated useful life
Computer and equipment
3 to 4 years
Software
5 years
Office furniture and fixtures
3 years
Motor vehicles
5 years
Office buildings
10 to 20 years
In September 2019, the Group entered into a sale purchase agreement with Kapler Pte. Ltd. to sell three subsidiaries which hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction for the disposal of three subsidiaries was completed in February 2020 and the Group owned no office buildings as of December 31, 2020.
<9> Assets held for sale
Assets and asset disposal groups are classified as held-for-sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Long-lived assets to be sold are classified as held for sale if all the recognition criteria in ASC 360-10-45-9 are met:
·
Management, having the authority to approve the action, commits to a plan to sell the asset;
·
The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;
·
An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated;
·
The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year;
·
The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and
·
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Assets and liabilities classified as held-for-sale are measured at lower of their carrying amount or fair value less costs to sell.
<10> Land use rights, net
Land use rights represents operating lease prepayments to the PRC’s Land Bureau for usage of the parcel of land located at Zhangjiang, Shanghai. Amortization is calculated using the straight-line method over the estimated land use rights period of 44 years.
In September 2019, the Group entered into a sale purchase agreement with Kapler Pte. Ltd. to sell three subsidiaries which hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction for the disposal of three subsidiaries was completed in February 2020 and the Group owned no land use rights as of December 31, 2020.
<11> Impairment of long-lived assets
The Group evaluates 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. The Group assesses 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, the Group 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.
<12> Revenue recognition
Revenues are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration of the Group expects 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.
Online game services
The Group earns revenue from provision of online game operation services to players on the Group’s game servers and third-party platforms and overseas licensing of the online game to other operators. The Group grants operation right on authorized games, together with associated services which are rendered to the customers over time. The Group adopts virtual item / service consumption model for the 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 through the various transaction arrangements.
The determination on whether to record the revenue gross or net is based on an assessment of various factors, including but not limited to whether the Group (i) is the primary obligor in the arrangement; (ii) has general inventory risk; (iii) changes the product or performs part of the services; (iv) has latitude in establishing the selling price; (v) has involvement in the determination of 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 games 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. Revenues are recognized as the virtual items are consumed or over the estimated lives of the virtual items, which are estimated by considering 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 games license arrangements entered into by third-party operators, if the terms provide that (i) third-party operators are responsible for providing 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 the 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 as an agent of the third-party operators in such arrangement with game players. Accordingly, the Group records the 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 the third-party licensee operators. Monthly revenue-based royalty payments are recognized when the relevant services are delivered, provided that collectability is reasonably assured. The Group views the third-party licensee operators as its customers and recognizes revenues on a net basis, as the Group does not have the primary responsibility for fulfillment and acceptability of the game services. The Group receives additional up-front license fees from certain third-party licensee operators who are entitled to an exclusive right to access the games where initial license fee is allocated solely on the license. License fees are recognized as revenue evenly throughout the license period after commencement of the game, given that the Group’s intellectual property rights subject to the license are considered to be symbolic and the licensee has the right to access such intellectual property rights as they exist over time when the license is granted.
Technical services
Technical services are blockchain-related consulting services where the Group is to provide designing, programming, drafting of white papers, and related services to customers. These revenues are recognized when delivery of the services has occurred or when services have been rendered and the collection of the related fees is reasonably assured.
Contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, where the Group has satisfied its performance obligations and has the unconditional right to payment.
Deferred revenue related to unsatisfied performance obligations at the end of the period primarily consists of fees received from game players for online game services and technical services. For deferred revenue, due to the generally short-term duration of the contracts, the majority of the performance obligations are satisfied in the following reporting period. Of the deferred revenue balance at the beginning of the period, revenue of RMB 0.2 million and nil was recognized during the years ended December 31, 2019 and 2020, respectively.
<13> Advances from customers
The Group licenses proprietary games to operators in other countries and receives license fees and royalty income. License fees received in advance of the monetization of the game is recorded in advances from customers.
<14> Convertible notes
Convertible Notes and Beneficial Conversion Feature ("BCF")
The Group issued convertible notes and warrants in December 2015. The Group has 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 the Group’s evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as the conversion option does not provide t he 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 per the terms of the convertible notes agreement is below market value. In these instances, the value of the BCF is determined as the intrinsic value of the conversion feature 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 at the date of issuance. The allocated fair value for the warrants and the value of the BCF are both recorded in the consolidated financial statements as a debt discount from the face amount of the notes, which is then accreted to interest expense over the life of the related debt using the effective interest method.
The Group 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.
<15>Warrants
The Group accounts for the detachable warrants issued in connection with convertible notes under the authoritative guidance on accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Group classifies warrants in its consolidated balance sheet as a liability which is revalued at each balance sheet date subsequent to the initial issuance. The Group uses the Black-Scholes-Merton pricing model (the “Black-Scholes Model”) to value the detachable warrants issued in connection with convertible notes and uses binomial option pricing model to value the warrants issued in connection with equity-linked instrument. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. A small change in the estimates used may cause a relatively large change in the estimated valuation. The estimated volatility of the Group’s common stock at the date of issuance, and at each subsequent reporting period, is based on historical fluctuations in the Company’s stock price. The risk-free interest rate is based on United States Treasury zero-coupon issues with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is based on the historical pattern of exercises of warrants.
The Group accounts 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 . The Group classifies warrants in its consolidated balance sheet as a liability or equity based on the nature and characteristics of each warrant issued. 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. For liability classified warrants, the warrants are initial 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.
<16> Cost of revenues
Cost of revenues consists primarily of online game royalties, payroll, revenue sharing to third-party game platform, telecom carriers and other suppliers, maintenance and rental of Internet data center sites, depreciation and amortization of computer equipment and software, and other overhead expenses directly attributable to the services provided.
<17> Product development costs
For software development costs, including online games, to be sold or marketed to customers, the Group expenses software development costs incurred prior to reaching technological feasibility. Once a software product has reached technological feasibility, all subsequent software costs for that product are capitalized until that product is released for marketing. After an online game is released, the capitalized product development costs are amortized over the estimated product life. For the years ended December 31, 2018, 2019 and 2020, although software products have reached technological feasibility, total software costs incurred subsequent to reaching technological feasibility were immaterial and therefore not capitalized.
For website and internally used software development costs, the Group expenses all costs incurred in connection with the planning and implementation phases of development and costs that are associated with repair or maintenance of the existing websites and software. Costs incurred in the application and infrastructure development phase are capitalized and amortized over the estimated product life. Since the inception of the Group, the amount of internally generated costs qualifying for capitalization has been immaterial and, as a result, all website and internally used software development costs have been expensed as incurred.
Product development costs consist primarily of outsourced research and development, payroll, depreciation charges and other overhead for the development of the Grou" id="sjs-B4">2. PRINCIPAL ACCOUNTING POLICIES <1> Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. The accompanying consolidated financial statements have been prepared on a going concern basis. The Group has an accumulated deficit of approximately RMB2,992.2 million (US$458.6 million) and total current liabilities exceeded total assets by approximately RMB315.9 million (US$48.4 million) as of December 31, 2020. The Group expects to purchase cryptocurrencies mining machines to build its cryptocurrencies mining business in order to achieve overall revenue growth. To meet its capital needs, the Group is considering multiple alternatives, including but not limited to additional equity or debt financing as outlined below. There can be no assurance that the Group will be able to complete any such transaction on acceptable terms or otherwise. If the Group is unable to obtain the necessary capital, it will need to pursue a plan to license or sell its assets, seek to be acquired by another entity, or cease operations. These factors raise substantial doubt about the Group’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset or liability amounts that might result from the outcome of this uncertainty. Additional Equity or Debt Financing In October 2020, the Company completed a share offering by issuing 70,500,000 Class A ordinary shares and 27,025,000 warrants to purchase 2,702,500 American Depositary Shares (“ADS”), each ADS representing thirty Class A ordinary shares and each warrant exercisable for the purchase of 0.1 ADS, including 3,525,000 warrants to purchase an additional 352,500 ADSs, pursuant to the over-allotment option granted to the underwriter to purchase additional warrants to cover over-allotments with an exercise price of US$3.70 per ADS. In connection with such offering, the Company also issued representative’s warrants to purchase 117,500 ADSs, each representing thirty Class A ordinary shares, to the underwriter of the offering with an exercise price of US$4.07 per ADS. The Company received net proceeds of US$8.1 million from such offering. The Company classified the representative warrants as a financial liability and the remaining warrants as equity. In February 2021, the Company issued and sold (i) a one-year convertible note in a principal amount of US$5,000,000, (ii) 50,000 ADSs, and (iii) 10,000,000 Class A ordinary shares, for an aggregate consideration of US$5,000,000 to Streeterville Capital LLC (“Streeterville”). 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 the Company’s at an initial conversion price of US$14.00 per ADS, each ADS representing thirty Class A ordinary shares, subject to adjustment. 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$840,000 per calendar month. Payment of the redemption amount could be in cash or the Company’s ADSs, provided that any redemption made in cash which exceeds half of the original principal amount will be subject to a ten percent (10%) premium. The Company has the right to prepay all or any portion of the outstanding balance, at any time, subject to fifteen percent (15%) premium on the prepaid amount. In the event the principal amount and interest accrued for the convertible note issued to Streeterville are fully repaid, the Company has the right to repurchase the remaining Class A ordinary shares held by Streeterville that are unsold at US$0.0001 per share. In February 2021, the Group entered into a standby equity distribution agreement (“SEDA”) with YA II PN, LTD., a Cayman Islands exempt limited partnership managed by Yorkville Advisor Global, LP, pursuant to which the Group is able to sell up to US$100.0 million of the Company’s ADSs solely at the Group’s request at any time during the 36 months following the date of the SEDA. The preliminary purchase price per ADS shall be adjusted to the greater of (A) 90% of the average of the 3 lowest daily volume weighted average price of the Company’s ADSs and during the five consecutive trading days commencing on the trading day immediately following the preliminary closing date or (B) 85% of the average of the five daily volume weighted average price of the Company’s ADSs during the secondary pricing period. The Group intends to use the proceeds from the potential offering of the ADSs pursuant to the SEDA to fund the working capital required on business growth in the cryptocurrencies mining operation. The Group intends to obtain financing via the issuance of Class A ordinary shares and warrants through public or private placements, as needed. <2> Consolidation The consolidated financial statements include the financial statements of The9 Limited, its subsidiaries and VIEs in which it has a controlling financial interest. A subsidiary is consolidated from the date on which the Group obtained control and continues to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. If the Group demonstrates its ability to control a VIE through its rights to all the residual benefits of the VIE and its obligation to fund losses of the VIE, then the VIE is consolidated. All intercompany balances and transactions between The9 Limited, its subsidiaries and VIEs have been eliminated in consolidation. In April 2010, the Group acquired a controlling interest in Red 5. In June 2016, the Group completed a share exchange transaction with L&A International Holding Limited (“L&A”) and certain other shareholders of Red 5. After the transaction, the Group owned 34.71% shareholding in Red 5. As the Group controls a majority of Board of Director seats and only a majority vote is required to approve Board of Director resolutions, and as the Group has continuously funded the operation of Red 5, the Group still retained effective control over Red 5. Red 5 remained as a consolidated entity of the Group as of December 31, 2020. PRC laws and regulations currently prohibit or restrict foreign ownership of internet-related business. In September 2009, the General Administration of Press and Publication Radio, Film and Television (“GAPPRFT”) further promulgated the Circular Regarding the Implementation of the Department Reorganization Regulation by State Council and Relevant Interpretation by State Commission Office for Public Sector Reform to Further Strengthen the Administration of Pre-approval on Online Games and Approval on Import Online Games (the “GAPP Circular”). Pursuant to Administrative Measures on Network Publication (the “Network Publication Measures”) jointly issued by GAPPRFT and the Ministry of Information Industry (which has subsequently been reorganized as the Ministry of Industry and Information Technology) (“MIIT”) on February 4, 2016, effective from March 2016, wholly foreign-owned enterprises, Sino-foreign equity joint ventures and Sino-foreign cooperative enterprises shall not engage in the provision of web publishing services, including online game services. Prior examination and approval by GAPPRFT are required on project cooperation involving internet publishing services between an internet publishing services and a wholly foreign-owned enterprise, Sino-foreign equity joint venture, or Sino-foreign cooperative enterprise within China or an overseas organization or individual. It is unclear whether PRC authorities will deem the Group’s VIE structure as a kind of such “manners of cooperation” by foreign investors to gain control over or participate in domestic online game operators, and it is not clear whether GAPPRFT and MIIT have regulatory authority over the ownership structures of online game companies based in China and online game operations in China. Therefore, the Group believes that its ability to direct those activities of its VIEs that most significantly impact their economic performance is not affected by the GAPP Circular. <3> 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 reported periods. Significant accounting estimates reflected in the Group’s consolidated financial statements include the valuation of non-marketable equity investments and determination of other-than-temporary impairment, allowance for doubtful accounts, revenue recognition, assessment of impairment of other long-lived assets, assessment of impairment of advances to suppliers and other advances, incremental borrowing rates for lease assessment, fair value of redeemable noncontrolling interest, fair value of the warrants, share-based compensation expenses, consolidation of VIEs, 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. <4> Foreign currency translation The Group’s reporting currency is the Renminbi (“RMB”). The Group’s functional currency, with the exception of its subsidiaries, Red 5, The9 Interactive, and Red 5 Singapore, is the RMB. The functional currency of Red 5, The9 Interactive, and Red 5 Singapore, is the United States dollar ("US$" or "U.S. dollar"), U.S. dollar, and Singapore dollar, respectively. Assets and liabilities of Red 5, The9 Interactive, and Red 5 Singapore, are translated at the current exchange rates quoted by the People’s Bank of China (the “PBOC”) in effect at the balance sheet dates. Equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period to RMB. Gains and losses resulting from foreign currency translation to reporting currency are recorded in accumulated other comprehensive (loss) income in the consolidated statements of changes in equity for the years presented. Transactions denominated in currencies other than functional currencies, are translated into functional currencies at the exchange rates prevailing at the dates of the transactions. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and comprehensive loss. Monetary assets and liabilities denominated in foreign currencies are translated into functional currencies using the applicable exchange rates at the balance sheet dates. All such exchange gains and losses are included in foreign exchange loss in the consolidated statements of operations and comprehensive (loss) income. <5> Cash and cash equivalents Cash and cash equivalents represent cash on hand and highly liquid investments with a maturity date when acquired of three months or less. As of December 31, 2019 and 2020, cash and cash equivalents were comprised primarily of bank deposits where cash is deposited with reputable financial institutions. Included in cash and cash equivalents as of December 31, 2019 and 2020 are amounts denominated in U.S. dollar totaling US$0.35 million and US$4.6 million, respectively. The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the PBOC, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in China’s foreign exchange trading system market. The Group’s aggregate amount of cash and cash equivalents denominated in RMB amounted to RMB7.6 million and RMB1.1 million (US$0.2 million) as of December 31, 2019 and 2020, respectively. <6> Allowance for doubtful accounts Starting from 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 replaces 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 will result 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 mainly consist of receivables from third-party game platforms, and other receivables, which are included in prepayments and other current assets, both of which are recorded net of allowance for doubtful accounts. Allowances for doubtful accounts are charged to general and administrative expenses. The Group provided an allowance for doubtful accounts of RMB21.2 million, RMB0.2 million and RMB2.3 million (US$0.4 million) for the years ended December 31, 2018, 2019 and 2020, respectively. The Group has written-off an amount of RMB22.2 million, RMB3.2 million and RMB2.1 million (US$0.3 million) for the years ended December 31,2018, 2019 and 2020, respectively. <7> Investments in equity method investee and loan to equity method investee Equity investments are comprised of investments in privately held companies. The Group uses the equity method to account for an equity investment over which it has the ability to exert significant influence but does not otherwise have control. The Group records equity method investments at the cost of acquisition, plus the Group’s share in undistributed earnings and losses since acquisition. For equity investments over which the Group does not have significant influence or control, the cost method of accounting is used. The Group has historically provided financial support to certain equity investees in the form of loans. If the Group’s share of the undistributed losses exceeds the carrying amount of an investment accounted for by the equity method, the Group continues to report losses up to the investment carrying amount, including any loans balance due from the equity investees. The Group assesses its equity investments and loans to equity investees for impairment on a periodic basis by considering factors including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the technological feasibility of the investee’s products and technologies, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, cash burn rate, and other company-specific information including recent financing rounds. If it has been determined that the equity investment is less than its related fair value and that this decline is other-than-temporary, the carrying value of the investment and loan to equity investee is adjusted downward to reflect these declines in value. <8> Property, equipment and software, net Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Leasehold improvements Shorter of respective lease term or estimated useful life Computer and equipment 3 to 4 years Software 5 years Office furniture and fixtures 3 years Motor vehicles 5 years Office buildings 10 to 20 years In September 2019, the Group entered into a sale purchase agreement with Kapler Pte. Ltd. to sell three subsidiaries which hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction for the disposal of three subsidiaries was completed in February 2020 and the Group owned no office buildings as of December 31, 2020. <9> Assets held for sale Assets and asset disposal groups are classified as held-for-sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Long-lived assets to be sold are classified as held for sale if all the recognition criteria in ASC 360-10-45-9 are met: · Management, having the authority to approve the action, commits to a plan to sell the asset; · The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; · An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; · The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; · The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and · Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets and liabilities classified as held-for-sale are measured at lower of their carrying amount or fair value less costs to sell. <10> Land use rights, net Land use rights represents operating lease prepayments to the PRC’s Land Bureau for usage of the parcel of land located at Zhangjiang, Shanghai. Amortization is calculated using the straight-line method over the estimated land use rights period of 44 years. In September 2019, the Group entered into a sale purchase agreement with Kapler Pte. Ltd. to sell three subsidiaries which hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction for the disposal of three subsidiaries was completed in February 2020 and the Group owned no land use rights as of December 31, 2020. <11> Impairment of long-lived assets The Group evaluates 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. The Group assesses 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, the Group 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. <12> Revenue recognition Revenues are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration of the Group expects 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. Online game services The Group earns revenue from provision of online game operation services to players on the Group’s game servers and third-party platforms and overseas licensing of the online game to other operators. The Group grants operation right on authorized games, together with associated services which are rendered to the customers over time. The Group adopts virtual item / service consumption model for the 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 through the various transaction arrangements. The determination on whether to record the revenue gross or net is based on an assessment of various factors, including but not limited to whether the Group (i) is the primary obligor in the arrangement; (ii) has general inventory risk; (iii) changes the product or performs part of the services; (iv) has latitude in establishing the selling price; (v) has involvement in the determination of 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 games 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. Revenues are recognized as the virtual items are consumed or over the estimated lives of the virtual items, which are estimated by considering 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 games license arrangements entered into by third-party operators, if the terms provide that (i) third-party operators are responsible for providing 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 the 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 as an agent of the third-party operators in such arrangement with game players. Accordingly, the Group records the 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 the third-party licensee operators. Monthly revenue-based royalty payments are recognized when the relevant services are delivered, provided that collectability is reasonably assured. The Group views the third-party licensee operators as its customers and recognizes revenues on a net basis, as the Group does not have the primary responsibility for fulfillment and acceptability of the game services. The Group receives additional up-front license fees from certain third-party licensee operators who are entitled to an exclusive right to access the games where initial license fee is allocated solely on the license. License fees are recognized as revenue evenly throughout the license period after commencement of the game, given that the Group’s intellectual property rights subject to the license are considered to be symbolic and the licensee has the right to access such intellectual property rights as they exist over time when the license is granted. Technical services Technical services are blockchain-related consulting services where the Group is to provide designing, programming, drafting of white papers, and related services to customers. These revenues are recognized when delivery of the services has occurred or when services have been rendered and the collection of the related fees is reasonably assured. Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, where the Group has satisfied its performance obligations and has the unconditional right to payment. Deferred revenue related to unsatisfied performance obligations at the end of the period primarily consists of fees received from game players for online game services and technical services. For deferred revenue, due to the generally short-term duration of the contracts, the majority of the performance obligations are satisfied in the following reporting period. Of the deferred revenue balance at the beginning of the period, revenue of RMB 0.2 million and nil was recognized during the years ended December 31, 2019 and 2020, respectively. <13> Advances from customers The Group licenses proprietary games to operators in other countries and receives license fees and royalty income. License fees received in advance of the monetization of the game is recorded in advances from customers. <14> Convertible notes Convertible Notes and Beneficial Conversion Feature ("BCF") The Group issued convertible notes and warrants in December 2015. The Group has 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 the Group’s evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as the conversion option does not provide t he 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 per the terms of the convertible notes agreement is below market value. In these instances, the value of the BCF is determined as the intrinsic value of the conversion feature 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 at the date of issuance. The allocated fair value for the warrants and the value of the BCF are both recorded in the consolidated financial statements as a debt discount from the face amount of the notes, which is then accreted to interest expense over the life of the related debt using the effective interest method. The Group 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. <15>Warrants The Group accounts for the detachable warrants issued in connection with convertible notes under the authoritative guidance on accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Group classifies warrants in its consolidated balance sheet as a liability which is revalued at each balance sheet date subsequent to the initial issuance. The Group uses the Black-Scholes-Merton pricing model (the “Black-Scholes Model”) to value the detachable warrants issued in connection with convertible notes and uses binomial option pricing model to value the warrants issued in connection with equity-linked instrument. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. A small change in the estimates used may cause a relatively large change in the estimated valuation. The estimated volatility of the Group’s common stock at the date of issuance, and at each subsequent reporting period, is based on historical fluctuations in the Company’s stock price. The risk-free interest rate is based on United States Treasury zero-coupon issues with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is based on the historical pattern of exercises of warrants. The Group accounts 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 . The Group classifies warrants in its consolidated balance sheet as a liability or equity based on the nature and characteristics of each warrant issued. 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. For liability classified warrants, the warrants are initial 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. <16> Cost of revenues Cost of revenues consists primarily of online game royalties, payroll, revenue sharing to third-party game platform, telecom carriers and other suppliers, maintenance and rental of Internet data center sites, depreciation and amortization of computer equipment and software, and other overhead expenses directly attributable to the services provided. <17> Product development costs For software development costs, including online games, to be sold or marketed to customers, the Group expenses software development costs incurred prior to reaching technological feasibility. Once a software product has reached technological feasibility, all subsequent software costs for that product are capitalized until that product is released for marketing. After an online game is released, the capitalized product development costs are amortized over the estimated product life. For the years ended December 31, 2018, 2019 and 2020, although software products have reached technological feasibility, total software costs incurred subsequent to reaching technological feasibility were immaterial and therefore not capitalized. For website and internally used software development costs, the Group expenses all costs incurred in connection with the planning and implementation phases of development and costs that are associated with repair or maintenance of the existing websites and software. Costs incurred in the application and infrastructure development phase are capitalized and amortized over the estimated product life. Since the inception of the Group, the amount of internally generated costs qualifying for capitalization has been immaterial and, as a result, all website and internally used software development costs have been expensed as incurred. Product development costs consist primarily of outsourced research and development, payroll, depreciation charges and other overhead for the development of the Grou |
CONVENIENCE TRANSLATION
CONVENIENCE TRANSLATION | 12 Months Ended |
Dec. 31, 2020 | |
CONVENIENCE TRANSLATION | |
CONVENIENCE TRANSLATION | 3. CONVENIENCE TRANSLATION The Group, with the exception of its subsidiaries, Red 5, The9 Interactive and Red 5 Singapore, maintains its accounting records and prepares its financial statements in RMB. The U.S. dollar amounts disclosed in the accompanying consolidated financial statements are presented solely for the convenience of the readers at the rate of US$1.00 = RMB6.5250, representing the noon buying rate in New York for cable transfers of RMB, as certified for customs purposes by the Federal Reserve Bank of New York, on December 31, 2020. Such translations should not be construed as representations that the RMB amounts represent, or have been or could be converted into, United States dollars at that or any other rate. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 12 Months Ended |
Dec. 31, 2020 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | 4. VARIABLE INTEREST ENTITIES The Group is the primary beneficiary of its VIEs, including Shanghai IT which was designed by the Group to comply with PRC regulations that prohibit direct foreign ownership of businesses that operate online and TV games in the PRC. Shanghai IT and its VIE subsidiaries There are certain key contractual arrangements between the Group’s subsidiary, Huiling (wholly-owned foreign enterprise, the "WOFE") and each of the VIEs that provide the Group with control over the VIEs. As a result of these contracts, the Group concluded that it is required to consolidate the VIEs pursuant to the guidance in ASC 810 Consolidation . A summary of these contractual agreements is as follows: 1) Loan agreement. The WOFE entered into loan agreements with each shareholder of the relevant VIEs. Pursuant to the terms of these loan agreements, the WOFE granted an interest-free loan to each shareholder of the VIEs for the explicit purpose of making a capital contribution to the VIEs. These loans have an unspecified term and will remain outstanding for the shorter of the duration of WOFE or that of the VIE, or until such time that the WOFE elects to terminate the agreement (which is at the WOFE’s sole discretion), at which point the loans are payable on demand. The shareholders of the VIEs may not prepay all or any portion of the loans without the WOFE’s prior written request. 2) Equity pledge agreement. The shareholders of the VIEs entered into equity pledge agreements with the WOFE. Under the equity pledge agreements, the shareholders of the VIEs pledged all of their equity interests in the VIEs to the WOFE as collateral for all of their payments due to the WOFE and to secure performance of all obligations of the VIEs and their shareholders under the above loan agreements. In addition, the dividend distributions to the shareholders of VIEs, if any, will be deposited in an escrow account over which the WOFE has exclusive control. The pledge shall remain effective until all obligations under such agreements have been fully performed. The shareholders have the obligation to maintain ownership and effective control over the pledged equity. Under no circumstances, without the prior written consent of the WOFE, may the shareholder transfer or otherwise encumber any equity interests in the VIEs. If any event of default as provided for therein occurs, the WOFE, as the pledgee, will be entitled to dispose of the pledged equity interests through transfer or assignment and use the proceeds to repay the loans or make other payments due under the above loan agreements up to the loan amounts. 3) Call option agreement. The VIEs and their shareholders entered into equity call option agreements with the WOFE. Pursuant to such agreements, the shareholders of the VIEs grant the WOFE an irrevocable and exclusive option to purchase the shares of VIEs at a purchase price equal to the amount of the registered capital of the VIE or the loan provided by the WOFE, permissible by the then-applicable PRC laws and regulations. WOFE may exercise such right at any time during the term of the agreement. Moreover, under the call option agreements, neither the VIEs nor their shareholders may take actions that could materially affect the VIEs’ assets, liabilities, operations, equity or other legal rights without the prior written approval of the WOFE, including, without limitation, declaration and distribution of dividends and profits; sale, assignment, mortgage or disposition of, or encumbrances on, the VIE’s equity; merger or consolidation; acquisition of and investment in any third-party entities; creation, assumption, guarantee or incurrence of any indebtedness; entering into other materials contracts. The agreements shall not expire until such time as the WOFE acquires all equity interests of the relevant VIEs subject to applicable PRC laws. 4) Shareholder voting proxy agreement. Each of the VIE’s shareholders executed an irrevocable power of proxy to appoint the WOFE as the attorney-in-fact to act on his or her behalf on all matters pertaining to the VIEs and to exercise all of his or her rights as a shareholder of the VIEs, including the right to attend shareholders meetings, to exercise voting rights and to appoint directors, a general manager, and other senior management of the VIEs. The power of proxy is irrevocable and may only be terminated at the discretion of the WOFE. 5) Exclusive technical service agreement. Under the exclusive technical service agreement, the VIEs agreed to engage the WOFE as their exclusive provider of technology consulting and other services for a service fee equal to 90% of all operating profit generated by the VIEs. According to the relevant PRC rules and regulations, related party transactions should be negotiated at the arm’s length basis and apply reasonable transfer pricing methods. The determination of service fees, however, is under the sole discretion of the WOFE. These agreements do not have specific clauses on renewal but do have an initial term of 20 years (with the earliest expiration date being December 31, 2029). By virtue of the governance rights the WOFE maintains over the VIEs, through the terms of the other agreements noted above, the Group is able to unilaterally renew, extend or amend the service agreements at its discretion. The Group shall be deemed to have a controlling financial interest in a VIE if it has both of the following characteristics: a. The power to direct the activities of a VIE that most significantly impact the VIE’s economic performance; and b. The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. In determining that the Group has "the power to direct the activities of the VIE that most significantly impact the VIEs’ economic performance", the Group looked to the specific provisions of the call option agreement and shareholder voting proxy agreement. These agreements, as summarized above, provide the WOFE effective control over all of the corporate and operating decisions of the VIEs, and as such, the Group’s management concluded that the WOFE has the requisite power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance. In assessing the Group’s obligation to absorb losses, the Group notes that it has funded through the loan agreements all of the entities’ share capital and also provides financial support as necessary to the entities through intercompany transactions. The Group’s rights to receive economic benefits that are significant to the VIEs are embodied firstly in the equity pledge agreements that secure the equity owners’ obligations under the relevant agreements, and ascribes to the WOFE all of the economic benefits of the equity interests including rights to any dividends declared. Secondly, the exclusive technical service agreement further secures the ability of WOFE to receive substantially all of the economic benefits from each of the VIEs on behalf of the Group. In conclusion, because the Group, through its wholly owned subsidiary Huiling, has (1) the power to direct the activities of the VIEs that most significantly affect the VIE’s economic performance, and (2) the right to receive benefits from the VIEs that could potentially be significant to the VIEs, the Group has been deemed to be the primary beneficiary of the VIEs and has consolidated the VIEs since the date of execution of such agreements. Shareholders of the VIEs may potentially have conflicts of interest with the Company, and they may breach their contracts with the PRC subsidiaries or cause such contracts to be amended in a manner contrary to the interests of the Group. As a result, the Group may have to initiate legal proceedings, which involve significant uncertainty. Such disputes and proceedings may significantly disrupt the Groups business operations and adversely affect the Group’s ability to control the VIEs. As most of the shareholders of the VIEs are directors, officers, shareholders or employees of the Group, management is of the view that the risk that misaligned interests may lead to deconsolidation in the foreseeable future is remote and insignificant. PRC laws and regulations currently limit foreign ownership of companies that provide Internet content services, which include operating online games. In addition, foreign invested enterprises are currently not eligible to apply for the required licenses to operate online games in the PRC. The9 Limited is incorporated in the Cayman Islands and is considered a foreign entity under PRC laws. Due to restrictions on foreign ownership of companies that provide online games, the Group has entered into contractual arrangements with Shanghai IT to conduct its online games business through its VIEs in the PRC. Shanghai IT holds the necessary licenses and approvals that are essential for the online game business in China. Shanghai IT is principally owned by certain shareholder and employee of the Company. Pursuant to certain other agreements and undertakings, The9 Limited in substance controls Shanghai IT. The Group believes that its current ownership structures and contractual arrangements with Shanghai IT and its equity owners, as well as its operations, are in compliance with all existing PRC laws and regulations. There may, however, be changes and other developments in the PRC laws and regulations or their interpretation. Specifically, following the recent promulgation of the GAPPRFT Circular, it is unclear whether the authorities will deem the Group’s VIE structure and contractual arrangements with Shanghai IT as an “indirect or disguised” way for foreign investors to gain control over or participate in domestic online game operators, and challenge the Group's VIE structure accordingly. If the Group is found to be in violation of any existing or future PRC laws or regulations, or fails to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including requiring the Group to undergo a costly and disruptive restructuring, such as forcing The9 Limited to transfer its equity interest in the VIEs to a domestic entity or invalidating the VIE agreements. If the PRC government authorities impose penalties which cause the Group to lose its rights to direct the activities of and receive economic benefits from the VIEs, the Group may lose the ability to consolidate and reflect in its financial statements the financial position, and results of operation of the VIEs. The Group, however, does not believe such actions would result in the liquidation or dissolution of the Group, the WOFEs or VIEs. The aforementioned contractual arrangements with the VIEs and their respective shareholders are subject to risks and uncertainties: · The VIEs or their shareholders could fail to obtain the proper operating licenses or fail to comply with other regulatory requirements. As a result, the PRC government could impose fines, new requirements or other penalties on the VIEs or the Group mandate a change in ownership structure or operations for the VIEs or the Group, restrict the VIEs or the Group’s use of financing sources, or otherwise restrict the VIEs or the Group’s ability to conduct business. · The aforementioned contractual agreements may be unenforceable or difficult to enforce. The equity pledge agreements may be deemed improperly registered or the VIEs or the Group may fail to meet other requirements. Even if the agreements are enforceable, they may be difficult to enforce given the uncertainties in the PRC legal system. · The PRC government may declare the aforementioned contractual agreements invalid. They may modify the relevant regulation, have a different interpretation of such regulations, or otherwise determine that the Group or the VIEs have failed to comply with the legal obligations required to effectuate such contractual arrangements. · It may be difficult to finance the VIEs by means of loans or capital contributions. Loans from The9 Limited to the VIEs must be approved by the relevant PRC government body and such approval may be difficult or impossible to obtain. The VIEs are domestic PRC enterprises owned by nominee shareholders, thus the Group is not likely to finance activities of the VIEs by means of direct capital contributions. Summary financial information of the VIE subsidiaries included in the accompanying consolidated financial statements with intercompany balances and transactions eliminated are as follows: December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Total assets 150,615,709 10,357,329 1,587,330 Total liabilities 313,608,879 48,062,664 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Net revenues 16,567,372 182,119 625,488 95,860 Net loss (49,024,050) (51,667,515) (52,410,094) (8,032,199) The VIEs contributed an aggregate of 95.0%, 53.3% and 100.0% of the consolidated net revenues for the years ended December 31, 2018, 2019 and 2020, respectively. As of the fiscal years ended December 31, 2019 and 2020, the VIEs accounted for an aggregate of 83.0% and 21.4%, respectively, of the consolidated total assets, and 39.8% and 85.5%, respectively, of the consolidated total liabilities. The VIE’s assets are not used as collateral for the VIE’s obligations and can only be used to settle the VIE’s obligations. Relevant PRC laws and regulations restrict the VIE subsidiaries from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and share capital, to the Group in the form of loans and advances or cash dividends. See Note 25 for disclosure of restricted net assets. |
ADVANCES TO SUPPLIERS
ADVANCES TO SUPPLIERS | 12 Months Ended |
Dec. 31, 2020 | |
ADVANCES TO SUPPLIERS | |
ADVANCES TO SUPPLIERS | 5. ADVANCES TO SUPPLIERS Advances to suppliers are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Advance to subscribe tokens 10,094,972 — — Advance for minimum guarantee payment — — — Financing fee — — — Company registration fee 794,692 — — Advertising fee 255,259 — — Other 101,685 27,725 4,249 11,246,608 27,725 4,249 On February 6, 2018, the Group entered into an agreement with a third-party company to subscribe to a total of 5,297,157 tokens for digital assets at a consideration of US$2.0 million and the Group has paid a total of RMB2.1 million (US$0.3 million) for the advance administrative expenses. In July 2019, the Group received an advance of RMB6.9 million (US$1.1 million) from another third-party to transfer approximately 2,222,222 tokens. The Group has provided an impairment loss of RMB6.0 million (US$0.9 million) during the year ended December 31, 2019. In May 2020, the Group received a letter from the token issuer that due to the inability to deliver tokens as scheduled and the issuer had terminated the purchase agreement on April 30, 2020. Upon termination, the issuer is to refund to the participant the net amount and the Group has received a refund of US$0.8 million in July 2020 for the remaining 3,075,035 subscribed tokens. The transfer of tokens to a third-party to transfer of approximately 2,222,222 tokens was completed on the termination date of the purchase agreement. The Group has recognized a gain of RMB2.8 million (US$0.4 million) from the disposal and refund transactions to the subscribed tokens. In September 2020, the Group entered into a master cooperation and publishing agreement with Voodoo SAS (“Voodoo”), a French game developer and publisher, to cooperate on the publishing and operations of casual games in China for a period of maximum three years upon the launch of the games. In consideration for the exclusive license granted to the Group by Voodoo and as a minimum guarantee payment, the Group should pay Voodoo an aggregate amount of US$13.0 million in cash based on the agreed timetable, including an upfront payment of US$3.0 million that the Group has paid in September 2020. Due to uncertain events to the development and the probability to successfully launch the casual games in the future, the Group has performed an impairment assessment to consider the recoverable amount. As the advance on minimum guarantee payment is non-refundable in nature, the Group has fully impaired the advance paid in 2020. The Group has obtained financing for the early phase development of CrossFire New Mobile Game from the Inner Mongolia Culture Assets and Equity Exchange. As of December 31, 2020, the Group had paid RMB7.5 million (US$1.1 million) as the financing fee of the total funds raised and to be raised amounting to RMB157.5 million (US$24.1 million). According to the agreement, the Group paid the total financing fee of RMB7.5 million (US$1.1 million) upon receipt of the first payment in October 2016 (see Note 16). Due to unforeseen circumstances, the Group is not planning to finance the remaining RMB100.0 million (US$15.3 million) and due to non-recovery of the advance financing fee, the Group has fully impaired the advance financing fee in 2018. In total, the Group recorded impairment charges relating to the advances to suppliers and other advances of RMB7.8 million, RMB6.0 million and RMB20.7 million (US$3.2 million) for the years ended December 31, 2018, 2019 and 2020, respectively. |
PREPAYMENTS AND OTHER CURRENT A
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | 12 Months Ended |
Dec. 31, 2020 | |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | 6. PREPAYMENTS AND OTHER CURRENT ASSETS, NET Prepayments and other current assets are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Employee advances 1,648,197 2,292,700 351,372 Input VAT recoverable 1,441,700 1,780,484 272,871 Prepayments and deposits 1,488,463 1,551,118 237,719 Refundable withholding tax 1,297,016 — — Other receivables, net of allowance for doubtful accounts of RMB5,343,427 and RMB6,619,312 as of December 31, 2019 and 2020, respectively 2,973,158 4,231,165 648,454 8,848,534 9,855,467 1,510,416 |
ASSETS HELD-FOR-SALE AND LIABIL
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE | 12 Months Ended |
Dec. 31, 2020 | |
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE | |
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE | 7. ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE On September 26, 2019, the Group entered into an agreement with Kapler Pte. Ltd. to sell three subsidiaries, namely The9 Computer, C9I Shanghai and Shanghai Kaie for total consideration of RMB493.0 million (US$75.6 million). These subsidiaries hold land use rights and office buildings located at Zhangjiang, Shanghai. The sale of three subsidiaries was completed on February 21, 2020 with a gain on disposal amounting to RMB391.8 million (US$60.0 million). December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Assets classified as held-for-sale Cash and cash equivalents 43,027,475 — — Prepayments and other current assets 5,162,857 — — Property, equipment and software, net 14,051,044 — — Land use rights, net 61,148,974 — — Total assets classified as held-for-sale 123,390,350 — — Liabilities directly associated with assets held-for-sale Accounts payable 50,000 — — Other taxes payable 1,585,095 — — Other payables and accruals 46,800 — — Interest payable 11,384,841 — — Long-term borrowing due within one year 31,624,560 — — Total liabilities directly associated with assets held-for-sale 44,691,296 — — |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2020 | |
INVESTMENTS | |
INVESTMENTS |
—
—
—
—
%
Shanghai Big Data Cultures & Media Co., Ltd. (“Big Data”)
—
—
—
44.46
%
Maxline Holdings Limited (“Maxline”)
—
—
—
29.00
%
Leading Choice Holdings Limited (“Leading Choice”) <4>
—
—
—
—
%
Nanyang Herbs Pte. Ltd. ("Nanyang Herbs") <11>
—
—
—
50.00
%
Investments accounted for under cost method:
Shanghai Institute of Visual Art of Fudan University (“SIVA”) <8>
10,000,000
—
—
1.28
%
T3 Entertainment Co., Ltd. (“T3”) <2>
—
—
—
—
%
Smartposting Co, Ltd. (“Smartposting”)
—
—
—
14.55
%
Beijing Ti Knight Network Technology Co., Ltd. (“Beijing Ti Knight”)
—
—
—
9.90
%
Shanghai The9 Education Technology Co., Ltd. (“The9 Education Technology”)
—
—
—
19.20
%
Shanghai Ronglei Culture Communication Co., Ltd. (“Shanghai Ronglei”) <3>
—
—
—
—
%
Plutux Limited (“Plutux”) <9>
—
—
—
8.00
%
Zhenjiang Kexin Power System Design and Research Co., Ltd. (“Zhenjiang Kexin”) <5>
—
—
—
9.90
%
Shangdong Shanyeyunye Culture Co., Ltd. (“Shanyeyunye”) <6>
—
—
—
10.00
%
Beijing Weiming Naonao Technology Co., Ltd. (“BeijingNaonao”) <7>
—
—
—
9.09
%
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") <10>
—
—
—
0.156
%
Total
10,000,000
—
—
<1> System Link
In December 2019, System Link was dissolved by striking off by the Companies Registry of Hong Kong due to failure to submit annual returns required per laws and regulations.
<2> T3
In July 2019, the Group disposed all of its ordinary shares in T3 to third-parties for a total consideration of KRW6,092.8 million, approximately US$5.2 million, and recorded a gain on disposal of RMB10.4 million (US$1.6 million).
<3> Shanghai Ronglei
In December 2017, the Group entered into an investment agreement with a shareholder of Shanghai Ronglei, where the Group agreed to invest a total of RMB5.0 million (US$0.8 million) in Shanghai Ronglei. As of December 31, 2018, the Group has invested RMB4.0 million (US$0.6 million) but due to weaker than expected operating performance, the investment in Shanghai Ronglei was fully impaired and the impairment of RMB4.0 million (US$0.6 million) was recorded for the year ended December 31, 2018. In June 2019, both the Group and shareholder of Shanghai Ronglei has agreed to terminate the investment agreement and the shareholder of Shanghai Ronglei agreed to repurchase the shares issued to the Group at original cost. The Group disposed of its equity interest in Shanghai Ronglei and received RMB3.0 million (US$0.5 million) for the year ended December 31, 2019.
<4> Leading Choice
In September 2018, the Group completed a share exchange transaction with Leading Choice, which is a private company incorporated under the laws of Hong Kong for issuance and sale of 21,000,000 ordinary shares of the Company with a specific lock-up period. In exchange, the Company obtained 20% equity interest in Leading Choice. The fair value of 20% equity interest in Leading Choice was considered to be the nominal value of ordinary shares of the Group in the nonmonetary exchange transaction. The investment was fully impairment in 2018. In 2020, the Group disposed its 20% equity interest in Leading Choice to a third for a consideration of RMB0.2 million (US$0.03 million) and recorded a gain on disposal of RMB0.2 million (US$0.03 million).
<5> Zhenjiang Kexin
In June 2019, the Group completed a share exchange transaction with Comtec Windpark Renewable (Holdings) Co., Ltd. ("Comtec"), which was a private company incorporated under the laws of British Virgin Islands for issuance and sale of 3,444,882 ordinary shares of the Group. In exchange, Comtec transferred 9.9% equity interest in Zhenjiang Kexin, a company incorporated under the laws of PRC. The fair value of 9.9% equity interest in Zhenjiang Kexin was considered to be the value of the assets surrendered to the Group in the nonmonetary exchange transaction. The investment was fully impairment in 2018.
<6> Shanyeyunye
In June 2020, the Group entered into an investment agreement with third parties to establish Shandong Shanyeyunye. The Group invested a total of RMB5.0 million (US$0.8 million) in Shanyeyunye for an equity interest of 10%. Shanyeyunye is to establish a joint venture with Shandong Dazhong Digital Culture Technology Co., Ltd. to develop and operates chess and card leisure games in the Province of Shandong. Due to level of uncertainty involved to the succeed to develop and launch the game in the future, the Group recorded an impairment loss of RMB5.0 million (US$0.8 million) for the year ended December 31, 2020.
<7> BeijingNaonao
In August 2020, the Group entered into an investment agreement with Beijing Weiming Naonao Technology Co., Ltd. (“Beijing Naonao”), which aims to develop and operate games designed for therapy purposes. The Group invested RMB3.0 million (US$0.5 million) in Beijing Naonao for an equity interest of 9.09%. Due to level of uncertainty involved to succeed to develop and launch the game in the future, the Group recorded an impairment loss of RMB3.0 million (US$0.5 million) for the year ended December 31, 2020.
<8> SIVA
In 2020, the Group considered to dispose its investment in SIVA and has performed an impairment assessment to consider the recoverable amount of the investment. The Group recorded an impairment loss of RMB10.0 million (US$1.5 million) for the year ended December 31, 2020.
<9> Plutux
In September 2018, the Group completed a share exchange transaction with Plutux Labs Limited (“Plutux Labs”), which was a private company incorporated under the laws of Cayman Islands for issuance and sale of 21,000,000 ordinary shares of the Company with a specific lock-up period. In exchange, Plutux Labs transferred 8% equity interest in Plutux, a wholly-owned subsidiary of Plutux Labs. The fair value of 8% equity interest in Plutux was considered to be the nominal value of ordinary shares of the Group in the nonmonetary exchange transaction. In 2018, due to weaker than expected operating performance of Plutux, the Group recorded a full impairment loss of RMB1.4 million (US$0.2 million). Cyrus Jun-Ming Wen is a director of Plutux Labs according to the Schedule 13G filed by Plutux Labs on September 13, 2018. According to the Schedule 13D filed by Splendid Days Limited (“Splendid Days”), the Group’s convertible notes investor (see Note 19), on February 21, 2019, Cyrus Jun-Ming Wen is also a director of Truth Beauty Limited (“Truth Beauty”), the shareholder of Splendid Days. Truth Beauty has sold to the Group’s former president 100% of the issued and outstanding share capital of Splendid Days on April 9, 2020.
<10> FF Intelligent (formerly known as Smart King Limited)
In March 2019, the Group entered into a joint venture agreement with Faraday & Future Inc. (“F&F”) in an attempt to enter into electric vehicle business. In April 2019, the Group paid an initial deposit of US$5.0 million to F&F through an interest-free loan from Ark Pacific Associates Limited (“Ark Pacific Associates”), an entity affiliated with the Group’s former president. In November 2020, the Group converted the initial deposit of US$5.0 million into 2,994,011 Class B ordinary shares of FF Intelligent, the holding company of F&F that operates its electric vehicles business, at a pre-agreed conversion price set forth in the joint venture agreement. As a result of this conversion, the capital commitment in the joint venture agreement was deemed released. As the prepaid deposit for joint venture was fully impaired in 2019 as actual progress on the joint venture was below expectations. The initial recognition for the investment in FF Intelligent is recorded at nil.
<11> Nanyang Herbs
In February 2020, the Group entrusted a nominee to hold trust shares of 50% in Nanyang Herbs and the nominee is to exercise rights in accordance with the instruction of the Group. In March 2020, Nanyang Herbs entered into a research collaboration agreement with Nanyang Technological University (“NTU”) to jointly provide technology and financial support to fund the research project to embark on evidence-based study to illustrate the medicinal values and efficacies of certain herbs. The Group has invested an amount of RMB3.3 million (US$0.5 million) to Nanyang Herbs in 2020. As the result of the first phase research project below expectation, the Group recorded an impairment loss of RMB1.2 million (US$0.2 million) for the year ended December 31, 2020.
For the investments in equity, the Group has recorded share of loss of RMB4.3 million, RMB2.8 million and RMB2.2 million (US$0.3 million) for the years ended December 31, 2018, 2019 and 2020, respectively.
In total, the Group recorded impairment charges relating to its investments in equity and other of RMB9.2 million, RMB8.5 million and RMB19.2 million (US$2.9 million) for the years ended December 31, 2018, 2019 and 2020, respectively." id="sjs-B4">8. INVESTMENTS The Group’s investments comprise the following: Share ownership as of December 31, December 31, December 31, December 31, 2019 2020 2020 2020 RMB RMB US$ ( Note 3) Investments accounted for under equity method: ZTE9 Network Technology Co., Ltd., Wuxi (“ZTE9”) — — — 5.00 % System Link Corporation Limited ("System Link") <1> — — — — % Shanghai Big Data Cultures & Media Co., Ltd. (“Big Data”) — — — 44.46 % Maxline Holdings Limited (“Maxline”) — — — 29.00 % Leading Choice Holdings Limited (“Leading Choice”) <4> — — — — % Nanyang Herbs Pte. Ltd. ("Nanyang Herbs") <11> — — — 50.00 % Investments accounted for under cost method: Shanghai Institute of Visual Art of Fudan University (“SIVA”) <8> 10,000,000 — — 1.28 % T3 Entertainment Co., Ltd. (“T3”) <2> — — — — % Smartposting Co, Ltd. (“Smartposting”) — — — 14.55 % Beijing Ti Knight Network Technology Co., Ltd. (“Beijing Ti Knight”) — — — 9.90 % Shanghai The9 Education Technology Co., Ltd. (“The9 Education Technology”) — — — 19.20 % Shanghai Ronglei Culture Communication Co., Ltd. (“Shanghai Ronglei”) <3> — — — — % Plutux Limited (“Plutux”) <9> — — — 8.00 % Zhenjiang Kexin Power System Design and Research Co., Ltd. (“Zhenjiang Kexin”) <5> — — — 9.90 % Shangdong Shanyeyunye Culture Co., Ltd. (“Shanyeyunye”) <6> — — — 10.00 % Beijing Weiming Naonao Technology Co., Ltd. (“BeijingNaonao”) <7> — — — 9.09 % FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") <10> — — — 0.156 % Total 10,000,000 — — <1> System Link In December 2019, System Link was dissolved by striking off by the Companies Registry of Hong Kong due to failure to submit annual returns required per laws and regulations. <2> T3 In July 2019, the Group disposed all of its ordinary shares in T3 to third-parties for a total consideration of KRW6,092.8 million, approximately US$5.2 million, and recorded a gain on disposal of RMB10.4 million (US$1.6 million). <3> Shanghai Ronglei In December 2017, the Group entered into an investment agreement with a shareholder of Shanghai Ronglei, where the Group agreed to invest a total of RMB5.0 million (US$0.8 million) in Shanghai Ronglei. As of December 31, 2018, the Group has invested RMB4.0 million (US$0.6 million) but due to weaker than expected operating performance, the investment in Shanghai Ronglei was fully impaired and the impairment of RMB4.0 million (US$0.6 million) was recorded for the year ended December 31, 2018. In June 2019, both the Group and shareholder of Shanghai Ronglei has agreed to terminate the investment agreement and the shareholder of Shanghai Ronglei agreed to repurchase the shares issued to the Group at original cost. The Group disposed of its equity interest in Shanghai Ronglei and received RMB3.0 million (US$0.5 million) for the year ended December 31, 2019. <4> Leading Choice In September 2018, the Group completed a share exchange transaction with Leading Choice, which is a private company incorporated under the laws of Hong Kong for issuance and sale of 21,000,000 ordinary shares of the Company with a specific lock-up period. In exchange, the Company obtained 20% equity interest in Leading Choice. The fair value of 20% equity interest in Leading Choice was considered to be the nominal value of ordinary shares of the Group in the nonmonetary exchange transaction. The investment was fully impairment in 2018. In 2020, the Group disposed its 20% equity interest in Leading Choice to a third for a consideration of RMB0.2 million (US$0.03 million) and recorded a gain on disposal of RMB0.2 million (US$0.03 million). <5> Zhenjiang Kexin In June 2019, the Group completed a share exchange transaction with Comtec Windpark Renewable (Holdings) Co., Ltd. ("Comtec"), which was a private company incorporated under the laws of British Virgin Islands for issuance and sale of 3,444,882 ordinary shares of the Group. In exchange, Comtec transferred 9.9% equity interest in Zhenjiang Kexin, a company incorporated under the laws of PRC. The fair value of 9.9% equity interest in Zhenjiang Kexin was considered to be the value of the assets surrendered to the Group in the nonmonetary exchange transaction. The investment was fully impairment in 2018. <6> Shanyeyunye In June 2020, the Group entered into an investment agreement with third parties to establish Shandong Shanyeyunye. The Group invested a total of RMB5.0 million (US$0.8 million) in Shanyeyunye for an equity interest of 10%. Shanyeyunye is to establish a joint venture with Shandong Dazhong Digital Culture Technology Co., Ltd. to develop and operates chess and card leisure games in the Province of Shandong. Due to level of uncertainty involved to the succeed to develop and launch the game in the future, the Group recorded an impairment loss of RMB5.0 million (US$0.8 million) for the year ended December 31, 2020. <7> BeijingNaonao In August 2020, the Group entered into an investment agreement with Beijing Weiming Naonao Technology Co., Ltd. (“Beijing Naonao”), which aims to develop and operate games designed for therapy purposes. The Group invested RMB3.0 million (US$0.5 million) in Beijing Naonao for an equity interest of 9.09%. Due to level of uncertainty involved to succeed to develop and launch the game in the future, the Group recorded an impairment loss of RMB3.0 million (US$0.5 million) for the year ended December 31, 2020. <8> SIVA In 2020, the Group considered to dispose its investment in SIVA and has performed an impairment assessment to consider the recoverable amount of the investment. The Group recorded an impairment loss of RMB10.0 million (US$1.5 million) for the year ended December 31, 2020. <9> Plutux In September 2018, the Group completed a share exchange transaction with Plutux Labs Limited (“Plutux Labs”), which was a private company incorporated under the laws of Cayman Islands for issuance and sale of 21,000,000 ordinary shares of the Company with a specific lock-up period. In exchange, Plutux Labs transferred 8% equity interest in Plutux, a wholly-owned subsidiary of Plutux Labs. The fair value of 8% equity interest in Plutux was considered to be the nominal value of ordinary shares of the Group in the nonmonetary exchange transaction. In 2018, due to weaker than expected operating performance of Plutux, the Group recorded a full impairment loss of RMB1.4 million (US$0.2 million). Cyrus Jun-Ming Wen is a director of Plutux Labs according to the Schedule 13G filed by Plutux Labs on September 13, 2018. According to the Schedule 13D filed by Splendid Days Limited (“Splendid Days”), the Group’s convertible notes investor (see Note 19), on February 21, 2019, Cyrus Jun-Ming Wen is also a director of Truth Beauty Limited (“Truth Beauty”), the shareholder of Splendid Days. Truth Beauty has sold to the Group’s former president 100% of the issued and outstanding share capital of Splendid Days on April 9, 2020. <10> FF Intelligent (formerly known as Smart King Limited) In March 2019, the Group entered into a joint venture agreement with Faraday & Future Inc. (“F&F”) in an attempt to enter into electric vehicle business. In April 2019, the Group paid an initial deposit of US$5.0 million to F&F through an interest-free loan from Ark Pacific Associates Limited (“Ark Pacific Associates”), an entity affiliated with the Group’s former president. In November 2020, the Group converted the initial deposit of US$5.0 million into 2,994,011 Class B ordinary shares of FF Intelligent, the holding company of F&F that operates its electric vehicles business, at a pre-agreed conversion price set forth in the joint venture agreement. As a result of this conversion, the capital commitment in the joint venture agreement was deemed released. As the prepaid deposit for joint venture was fully impaired in 2019 as actual progress on the joint venture was below expectations. The initial recognition for the investment in FF Intelligent is recorded at nil. <11> Nanyang Herbs In February 2020, the Group entrusted a nominee to hold trust shares of 50% in Nanyang Herbs and the nominee is to exercise rights in accordance with the instruction of the Group. In March 2020, Nanyang Herbs entered into a research collaboration agreement with Nanyang Technological University (“NTU”) to jointly provide technology and financial support to fund the research project to embark on evidence-based study to illustrate the medicinal values and efficacies of certain herbs. The Group has invested an amount of RMB3.3 million (US$0.5 million) to Nanyang Herbs in 2020. As the result of the first phase research project below expectation, the Group recorded an impairment loss of RMB1.2 million (US$0.2 million) for the year ended December 31, 2020. For the investments in equity, the Group has recorded share of loss of RMB4.3 million, RMB2.8 million and RMB2.2 million (US$0.3 million) for the years ended December 31, 2018, 2019 and 2020, respectively. In total, the Group recorded impairment charges relating to its investments in equity and other of RMB9.2 million, RMB8.5 million and RMB19.2 million (US$2.9 million) for the years ended December 31, 2018, 2019 and 2020, respectively. |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE, NET | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | 9. PROPERTY, EQUIPMENT AND SOFTWARE, NET Property, equipment and software and related accumulated depreciation and amortization are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Office buildings 69,341,652 — — Computers and equipment 5,181,577 4,989,121 764,616 Leasehold improvements 9,359,857 — — Office furniture and fixtures 1,787,549 1,720,139 263,623 Motor vehicles 5,031,201 4,376,821 670,777 Software 14,542,095 10,511,865 1,611,014 Less: accumulated depreciation and amortization (89,974,366) (20,620,844) (3,160,283) Less: property, equipment and software, net, held-for-sale (14,051,044) — — Net book value 1,218,521 977,102 149,747 Depreciation and amortization charges for the years ended December 31, 2018, 2019 and 2020 amounting to RMB3.7 million, RMB2.8 million and RMB0.4 million (US$0.1 million), respectively. The Group has recorded a gain on disposal of property, equipment and software amounting to RMB0.2 million, RMB2.2 million, RMB0.03 million (US$0.01 million), as other income, net for the years ended December 31, 2018, 2019 and 2020. The office buildings and leasehold improvements of the Group were related to mortgaged properties and the subsidiaries that held the mortgaged properties have been disposed in February 2020 (see Note 7). |
LAND USE RIGHT, NET
LAND USE RIGHT, NET | 12 Months Ended |
Dec. 31, 2020 | |
LAND USE RIGHT, NET | |
LAND USE RIGHT, NET | 10. LAND USE RIGHTS, NET Gross carrying amount, accumulated amortization and net book value of land use rights are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Land use rights 85,160,348 — — Less: accumulated amortization (24,011,374) — — Less: land use right, net, held-for-sale (61,148,974) — — Net book value — — — Amortization charge for the years ended December 31, 2018, 2019 and 2020 amounting to RMB1.9 million, RMB1.4 million and nil, respectively. Land use rights classified as held-for-sale represented land use rights held by The9 Computer, C9I Shanghai and Shanghai Kaie in relation to the office buildings located at Zhangjiang, Shanghai and these subsidiaries were disposed in February 2020 (see Note 7). |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
LEASES | 11. LEASES The Group has operating leases primarily for office space, parking lots and warehouse after relocation of their principal office since August 2019. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the lease payments over the lease term at commencement date. As the leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at commencement date, to determine the present value of lease payments. The incremental borrowing rates approximate the rate the Group would pay to borrow in the currency of the lease payments for the weighted-average life of the lease. The operating lease ROU assets also include any lease payments made prior to lease commencement and excludes lease incentives and initial direct costs incurred if any. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Operating lease costs are recognized on a straight-line basis over the lease term. The prepaid rental expense recorded in operating lease right-of-use assets amounting to RMB0.01 million and nil as of December 31, 2019 and 2020, respectively. The items related to operating lease in the consolidated balance sheets are summarized below: December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Operating lease right-of-use assets 9,257,604 5,149,090 789,133 Operating lease liabilities-current portion 3,407,670 3,787,210 580,415 Operating lease liabilities-non-current portion 6,251,705 2,464,495 377,700 Lease cost recognized in the Group’s consolidated statements of operations and comprehensive loss is summarized as follows: Classification in Consolidated Statements of Operations and Comprehensive (Loss) Gain December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Operating lease cost Operating expenses 1,606,340 3,539,374 542,433 Cost of other leases with terms less than one year Operating expenses 82,232 67,281 10,311 Total 1,688,572 3,606,655 552,744 Maturities of operating lease liabilities are as follows: December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Due within one year 3,779,845 3,995,768 612,378 Due in the second year 3,995,768 2,502,839 383,577 Due in the third year 2,502,839 — — Total lease payments 10,278,452 6,498,607 995,955 Less: imputed interest (619,077) (246,902) (37,839) Total 9,659,375 6,251,705 958,116 As of December 31, 2020, the Group does not have significant operating or finance leases that have not yet commenced. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Supplemental cash flow information related to operating leases is as follows: December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Cash paid for amounts included in the measurement of operating lease liabilities 1,271,769 2,842,464 435,627 |
OTHER LONG-LIVED ASSETS, NET
OTHER LONG-LIVED ASSETS, NET | 12 Months Ended |
Dec. 31, 2020 | |
OTHER LONG-LIVED ASSETS, NET | |
OTHER LONG-LIVED ASSETS, NET | 12. OTHER LONG-LIVED ASSETS, NET Other long-lived assets are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Prepaid license fee 6,515,200 — — Prepaid deposit for joint venture — — — Total 6,515,200 — — Prepaid license fee represents the payment made by the Group pursuant to an IP license agreement on CrossFire New Mobile Game with an online game company in January 2016 to use its IP to develop a mobile game for a period of two years after commercialization of the game. The contract is effective through October 31, 2020 and the IP license expired as of December 31, 2020. There was no substantial development on CrossFire New Mobile Game in 2020 and both the Group and the third-party outsourced development company are waiting for the approval from relevant authorities for commercial launch. The Group is in the process of negotiating with the online game company to regain the license for such game development. Considered the game was failed to launch prior to the expiry date and the level of uncertainty involved to regain the license or to commercially launch the game in the future, the Group has performed an impairment assessment to consider the recoverable amount. As the prepaid license fee is non-refundable in nature, the Group has fully impaired the prepaid license fee of RMB6.5 million (US$1.0 million) during the year ended December 31, 2020. In March 2019, the Group entered into a joint venture agreement with F&F in an attempt to enter the electric vehicle business. The Group paid an initial deposit of US$5.0 million to F&F through an interest-free loan from Ark Pacific Associates in April 2019. In 2019, as the actual progress of the joint venture is below expectations, the Group recorded a full impairment loss of RMB34.9 million (US$5.3 million) for the year ended December 31, 2019 (see Note 29.1). In November 2020, the Group converted the initial deposit of US$5.0 million into 2,994,011 Class B ordinary shares of FF Intelligent, the holding company of F&F that operates its electric vehicles business, at a pre-agreed conversion price set forth in the joint venture agreement (see Note 8 <10>). |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 13. FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis The fair value of common stock warrants was measured using the Black-Scholes Model. Inputs used to determine estimated fair value of the warrant liabilities include the estimated fair value of the underlying stock at the valuation date, the estimated term of the warrants, risk-free interest rates, expected dividends and the expected volatility of the underlying stock. The significant unobservable inputs used in the fair value measurement of the warrant liability are the fair value of the underlying stock at the valuation date and the estimated term of the warrants. The fair value of convertible note is based on a discounted cash flow model with an unobservable input of discount rate. (Level 3) In 2015, the Group issued warrants in connection with its convertible notes has the warrants have expired as of December 31, 2020. The warrants are recorded at fair market value at the date of issuance and subsequently at each reporting date. The following table presents the change in the warrants liability that were measured at fair value on a recurring basis using significant Level 3 inputs during 2019 and 2020 (see Note 19). December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Balance at beginning of year 1,490,844 198,600 30,437 Issuance of warrants — 1,694,208 259,649 Fair value change on warrants liability recognized in other comprehensive income (1,292,244) (37,851) (5,801) Balance at the end of the year 198,600 1,854,957 284,285 |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2020 | |
TAXATION | |
TAXATION | 14. TAXATION Cayman Islands Under the current tax laws of the Cayman Islands, the Group is not subject to tax on its income or capital gains. In addition, upon payment of dividends by The9 Limited to its shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong The Group’s subsidiaries incorporated in Hong Kong did not have assessable profits that were derived in Hong Kong during the years ended December 31, 2018, 2019 and 2020. Therefore, no Hong Kong income tax has been provided for in the years presented. Singapore The Group’s subsidiaries incorporated in Singapore did not have assessable profits that were derived in Singapore during the years ended December 31, 2018, 2019 and 2020. Therefore, no Singapore income tax has been provided for in the years presented. PRC The Group’s subsidiaries and VIE subsidiaries incorporated in the PRC are subject to Enterprise Income Tax (“EIT”) on the taxable income as reported in their respective statutory financial statements adjusted in accordance with the PRC Enterprise Income Tax Law (“EIT Law”), which went into effect as of January 1, 2008. The Group’s subsidiaries and VIE subsidiaries in the PRC are generally subject to EIT at a statutory rate of 25%. The subsidiaries that hold a “High and New Technology Enterprise” (“HNTE”) qualification are subject to a 15% preferential EIT rate. The HNTE qualification is valid for three years and every qualified HNTE company is required to re-apply for it in the three years after receiving approval. In October 2017, Shanghai IT renewed its HNTE qualification and obtained approval in 2018, which entitles Shanghai IT to enjoy a preferential EIT rate of 15% during the period from 2018 to 2020. As HNTE qualification has expired in November 2020, Shanghai IT is no longer entitles the HNTE qualification benefits. As Shanghai IT did not have taxable income for the years ended December 31, 2018, 2019 and 2020, Shanghai IT has not benefited from this preferential income tax rate. United States The Group’s subsidiaries incorporated in the U.S. are registered in the state of California and are subject to U.S. federal corporate marginal income tax rate of 21% and state income tax rate of 0.28%, respectively. On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including a federal corporate rate reduction from 34% to 21%; limitations on the deductibility of interest expense and executive compensation; creation of the base erosion anti-abuse tax (“BEAT”), a new minimum tax; and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system. A majority of the provisions in the Tax Act are effective January 1, 2018. The Tax Act creates a new requirement that certain income such as Global Intangible Low-Taxed Income (“GILTI”) earned by a controlled foreign corporation (“CFC”) must be included in the gross income of the CFC U.S. shareholder. The Group has evaluated these provisions of the Tax Act and whether taxes due on future U.S. inclusions related to GILTI be recorded as current-period expense when incurred, or factored into measurement of deferred taxes. The Group concluded that the Tax Act had no material effect to the financial statements. Composition of income tax expense The current and deferred portions of income tax expense included in the consolidated statements of operations and comprehensive loss are as follows: For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Current income tax expense PRC — — 7,165,097 1,098,099 Other jurisdictions — — — — Deferred tax assets PRC (39,763,083) (5,772,005) 25,905,564 3,970,201 Other jurisdictions (19,816,235) (15,151,553) (44,312,311) (6,791,159) Subtotal (59,579,318) (20,923,558) (18,406,747) (2,820,958) Change in valuation allowance PRC 39,763,083 5,772,005 (25,905,564) (3,970,201) Other jurisdictions 19,816,235 15,151,553 44,312,311 6,791,159 Subtotal 59,579,318 20,923,558 18,406,747 2,820,958 Income tax expense — — 7,165,097 1,098,099 Reconciliation of the differences between statutory tax rate and the effective tax rate Reconciliation between the statutory EIT rate and the Group’s effective tax rate is as follows: For the year ended For the year ended For the year ended December 31, December 31, December 31, 2018 2019 2020 PRC statutory EIT rate 25 % 25 % 25 % Effect of different tax rates in other jurisdictions 2 % 1 % (10) % Change in future tax rate (upon expiration of preferential rate) 1 % 2 % — % Change of prior year deferred tax assets (11) % (15) % 1 % Change of valuation allowance (2) % (18) % (10) % Income not subject to tax and non-deductible expenses, net — % — % — % Effect of expired net operating loss (15) % 5 % (6) % PRC withholding tax — % — % 2 % Effective EIT rate — % — % 2 % Significant components of deferred tax assets For the year ended For the year ended For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Temporary differences related to expenses and accruals 1,076,708 615,041 94,259 Temporary differences related to impairment on advances to suppliers 3,438,597 2,942,771 450,999 Temporary differences related to provision for doubtful accounts 1,078,742 689,811 105,718 Others 8,771,868 8,221,500 1,260,000 Temporary differences related to depreciation, amortization, and impairment of equipment and intangible assets 24,890,416 15,396,549 2,359,624 Startup expenses and advertising fees 199,704 212,880 32,625 Temporary differences related to research and development credits 1,120,850 1,057,050 162,000 Temporary differences related to equity investments 5,069,035 11,740,058 1,799,243 Foreign tax credits — — — Temporary differences related to provision for prepayment for equipment 5,000,000 5,000,000 766,284 Tax loss carry forwards 270,594,922 256,958,435 39,380,603 Total deferred tax assets 321,240,842 302,834,095 46,411,355 Less: Valuation allowance (321,240,842) (302,834,095) (46,411,355) Total deferred tax assets — — — Movement of valuation allowance on deferred tax assets For the year ended For the year ended For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Beginning balance 342,164,400 321,240,842 49,232,313 Decrease in valuation allowance (20,923,558) (18,406,747) (2,820,958) Ending balance 321,240,842 302,834,095 46,411,355 For the years ended December 31, 2019 and 2020, the Group recorded a reversal of valuation allowance of approximately RMB 20.9 million and an increase of RMB18.4 million (US$2.8 million), respectively . The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry forward periods, the Group’s experience with tax attributes expiring as unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more-likely-than-not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry forward periods provided for in the tax law. As of December 31, 2020, the Group’s PRC subsidiaries had net operating loss carry forwards amounting to RMB 327.8 million which will expire from 2021 to 2025. The Group has provided a full valuation allowance as it is not more likely than not that the net operating losses can be utilized before expiry. According to Caishui [2018] No. 76, with effect from January 1, 2018, losses of qualified HNTE in the current year occurred five years before the year in which the entity qualified for HNTE and have not been made up shall be allowed to be carried forward to subsequent years to be made up, and the maximum carry-forward period shall be extended from five years to ten years. As of December 31, 2020, Red 5 had net operating loss carry forwards for federal and state income tax purposes of approximately US$127.2 million and US$68.4 million, respectively, which will begin to expire in 2029 and 2019, respectively. Red 5 also had credits for increasing research activities available to offset future federal and state taxes payable of approximately US$0.1 million and US$0.1 million, respectively, that will begin to expire in 2030 for federal purposes and which have no expiration for state purposes. Red 5 had foreign tax credits for federal purposes of approximately US$2.5 million, which expired in 2020. Pursuant to US tax laws and regulations, the utilization of an acquired entity’s net operating losses and credits are subject to annual limitation computed based on the fair value of the acquired entity. As a result of the limitation, the Group provided a full valuation allowance on its deferred tax assets as it is not more likely than not that the net operating losses and credits carried forward can be utilized before expiration. In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC companies unless the Group has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. The Group plans to indefinitely reinvest undistributed profits earned after December 31, 2007 from its PRC subsidiaries with operations in the PRC. Therefore, no withholding income taxes for undistributed profits of the Company’s subsidiaries established in PRC have been provided as of December 31, 2019 and 2020. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Group has not recorded any such deferred tax liability attributable to the undistributed earnings of its financial interests in VIEs because these VIEs do not have any accumulated earnings as of December 31, 2019 and 2020. The Group made its assessment of the level of authority for each tax position (including the potential application of interests and penalties) based on the tax positions’ technical merits, and measured the unrecognized benefits associated with the tax positions. The Group did not have any unrecognized tax benefits as of December 31, 2019 and 2020. The Group does not anticipate that unrecognized tax benefits will significantly increase or decrease within the next twelve months. For the years ended December 31, 2018, 2019 and 2020, the Group did not have any material interest and penalties associated with its tax positions. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. From inception to 2019, the Group is subject to examination by the PRC tax authorities. Red 5’s U.S. federal income tax returns and state income tax returns for 2015 through 2019 are open tax years, subject to examination by the relevant tax authorities. |
SHORT-TERM BORROWINGS
SHORT-TERM BORROWINGS | 12 Months Ended |
Dec. 31, 2020 | |
SHORT-TERM BORROWINGS | |
SHORT-TERM BORROWINGS | 15. SHORT-TERM BORROWINGS Short-term borrowings are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Pledged loan 82,645,089 — — Interest-free loan 34,881,000 — — Long-term borrowing due within one year 31,624,560 — — Less: borrowing classified as held for sale (31,624,560) — — Total 117,526,089 — — In June 2016, Asian Development borrowed a total of HK$92.3 million from a financial services company at an annual interest rate of 2% for a term of 24 months, which is secured by a pledge of 417,440,000 shares of L&A. The pledged loan was due in June 2018 as Asian Development has defaulted the loan in June 2016 due to a sharp decline in share price of L&A (see Note 29.2). On September 9, 2020, the High Court of Hong Kong issued an order to wind-up Asian Development given its inability to repay its liabilities and provisional liquidator to On September 9, 2020, the provisional liquidator of Asian Development made a winding-up order and the High Court of Hong Kong gazetted this order on September 18, 2020. The Official Receiver’s Office of Hong Kong has appointed a liquidator to perform the work and duties to the winding-up of Asian Development, including the prosecution of insolvency offences and disqualification of directors. Followed by the winding-up order issued by the court, the Group has lost control of Asian Development and deconsolidated Asian Development as of the date of the court order. The obligation for the payment of pledged loan remained with Asian Development as it is a limited liability company and the Group has recognized an amount of RMB83.7 million (US$12.8 million) to the gain on disposal of Asian Development. In December 2015, the Group entered an entrusted bank borrowing agreement, amounted to RMB31.6 million (US$4.8 million), with a subsidiary of Splendid Days and China Merchants Bank as entrustment bank. Both the principal and interest of the entrusted bank loan were repaid on February 11, 2020. In March 2019, the Group entered into a joint venture agreement with F&F, to establish a joint venture in China to manufacture and distribute electric vehicles designed and developed by F&F with a committed capital investment amounting to US$600.0 million. The Group made the initial deposit of US$5.0 million to F&F in April 2019 through an interest-free loan granted from Ark Pacific Associates for a period of one year. The loan was due on March 31, 2020 and the loan was waived by Ark Pacific Associates followed by a private settlement deed entered among the Group, Splendid Days and Ark Pacific Associates where upon the settlement of the convertible notes and the satisfaction of the conditions set forth in the private settlement deed, the interest-free loan will be waived. As of December 31, 2020, the Group has fulfilled the obligation stated in the private settlement deed and the interest-free loan was waived. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 16. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Funds raised for CrossFire New Mobile Game 57,499,910 56,311,274 8,630,080 Professional services 11,844,738 9,866,284 1,512,074 Agency commission fees payable — 6,397,096 980,398 Staff cost related payables 9,851,024 3,842,856 588,943 Office expenses 3,543,495 1,920,735 294,365 Product development services 906,906 848,237 129,998 Other payables 3,540,000 — — Utility fees 1,646,394 — — Others 4,308,376 4,384,391 671,937 Total 93,140,843 83,570,873 12,807,795 The Group has financed the early phase development of CrossFire New Mobile Game through fundraising from the Inner Mongolia Culture Assets and Equity Exchange. As of December 31, 2020, the Group had raised RMB57.5 million (US$8.8 million). The Group does not plan to finance the remaining RMB100.0 million (US$15.3 million) from the planned fundraising arrangement, and due to non-recovery of the advance financing fee, the Group fully impaired the advance financing fee in 2018. In April 2020, Inner Mongolia Culture Assets and Equity Exchange filed a civil claim against the Group to recover RMB57.5 million (US$8.8 million) of principal and RMB4.6 million (US$0.7 million) of interest that the Group has previously raised to finance the early phase development of CrossFire New Mobile Game. The Group cooperated with a third-party company for development and operation of CrossFire New Mobile Game and plan to apply for the requisite license from GAPPRPT for CrossFire New Mobile Game as soon as development of the game is finalized to launch the game. In October 2020, Intermediate Court of Changsha City, Hunan Province issued a decision to reject all claims against the Group. As of December 31, 2020, no appeal claim has been made by Inner Mongolia Culture Assets to the sentence of the court. |
Refund of WoW game points
Refund of WoW game points | 12 Months Ended |
Dec. 31, 2020 | |
Refund of WoW game points | |
Refund of WoW game points | 17. Refund of WoW game points As a result of the loss of the World of Warcraft (“WoW”) license on June 7, 2009, the Group announced a refund plan in connection with inactivated WoW game point cards, which the Group recorded as refund of game points. According to the plan, inactivated WoW game point card holders are eligible to receive a cash refund from the Group. The Group recorded a liability in connection with both inactivated points cards and activated but unconsumed point cards of approximately RMB200.4 million (US$30.7 million). Upon the loss of the WoW license, the Group concluded the nature of the obligation substantively changed from deferred revenue, for which the Group had the responsibility to satisfy the underlying performance obligation, to an obligation to refund players for their unconsumed points. The Group has accounted for this refund liability by applying the derecognition guidance specified in ASC 405‑20. In accordance with this guidance, the refund liability associated with these WoW game points, to the extent not refunded, will be recorded as other operating income after the Group is legally released from the obligation to refund amounts under the applicable laws. In consultation with its legal counsel, the Group concluded the legal liability relating to the inactivated WoW game point cards was extinguished in September 2011 on the basis that the legal liability lapsed two years from the date the Group publicly announced the refund policy that applied to these cards. Accordingly, the associated liability amounting to RMB26.0 million (US$4.0 million) was recognized as other operating income for the year ended December 31, 2011. With respect to the remaining refund liability, based on current PRC laws, to the extent not refunded, the Company, in consultation with legal counsel, has determined that it will be legally released from this liability in September 2029, which represents 20 years from the discontinuation of WoW in 2009. However, if the Group were to publicly announce a refund policy, the Group would be legally released from any remaining liability for these activated, but unconsumed points that remained two years from the date of such announcement. To date, the Group has determined not to publicly announce any refund policy with respect to this remaining liability, and no refunds have been claimed. The remaining refund liability relating to the activated, but unconsumed WoW game points is RMB170.0 million (US$26.1 million) as of both December 31, 2019 and 2020. |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 12 Months Ended |
Dec. 31, 2020 | |
CONVERTIBLE NOTES | |
CONVERTIBLE NOTES | 18. CONVERTIBLE NOTES On November 24, 2015, the Group entered into an agreement with Splendid Days for a private placement of secured convertible notes and warrants for gross proceeds of US$40,050,000. The transaction closed on December 11, 2015 and the Group has recognized an amount of US$8.1 million as BCF from the convertible notes. Pursuant to the terms of the agreement, the convertible notes shall mature in December 2018, subject to an extension for two years at the discretion of the investor. The convertible notes accrue interest at a rate of 12% per annum and are payable upon maturity of the notes. According to the Schedule 13D filed by Splendid Days on March 5, 2018, Splendid Days’s equity was transferred from Ark Pacific Special Opportunities Fund I, L.P., an entity affiliated with the Group's former president to Truth Beauty Limited. The equity of Splendid Days was transferred to the Group’s former president on April 9, 2020. The notes are secured by the equity interest of the Group’s subsidiaries (The9 Computer and C9I Shanghai), and the Group’s office buildings. Splendid Days is entitled to put the convertible notes to the Group upon a change in control and upon an event of default. The Group has entered into a deed of settlement with the Splendid Days on March 12, 2019 wherein the Group will proceed to dispose of office buildings and use the proceeds to repay both convertible notes and the entrusted bank loan. Annual interest rate on the loan remained at 12% up to settlement date. In September 2019, the Group entered into an agreement with Kapler Pte. Ltd. to sell three subsidiaries, namely The9 Computer, C9I Shanghai and Shanghai Kaie for total consideration of RMB493.0 million (US$75.6 million). These subsidiaries hold land use rights and office buildings located at Zhangjiang, Shanghai. The transaction was completed on February 21, 2020. On May 29, 2020, the Group entered into a private settlement deed with Splendid Days and Ark Pacific Associates relating to the convertible notes repayment. Pursuant to the private settlement deed, the interest rate on the convertible notes was retrospectively lowered from 12% to 7% per annum for the period commencing from the original convertible notes issuance date until February 21, 2020, the date on which interest stopped to accrue on the convertible notes. The Group settled approximately US$50.0 million of the total outstanding amount due to Splendid Days and its designated affiliates primarily relating to convertible notes and entrusted loan in aggregate by cash and further settled the remaining portion on June 12, 2020 by an initial issuance of 32,400,000 Class A ordinary shares of the Company to Splendid Days. Those Class A ordinary shares are subject to certain lock-up conditions and the number of Class A ordinary shares held or to be held by Splendid Days may also be subject to quantitative adjustments based on the market value of the Company’s shares, as set forth in the private settlement deed. For the extinguishment of the convertible notes, the intrinsic value of the BCF as of extinguishment date was determined as nil and all the reacquisition price allocated to the convertible notes. In accordance with the terms and conditions set forth in the private settlement deed, the interest-free loan of US$5.0 million extended by Ark Pacific Associates was waived in December 2020 given the conditions set forth have been satisfied. As of December 31, 2020, the Group deemed there is no quantitative adjustments required to the number of Class A ordinary shares issued to Splendid Days in June 2020. The Group recognized a gain on extinguishment on convertible notes amounting to RMB56.8 million (US$8.7 million) for the year ended December 31, 2020. On February 3, 2020, the Group entered into a convertible promissory note with Iliad Research and Trading, L.P., for convertible notes of US$500,000 with interest at a rate of 6% per annum. The convertible note was repaid in October 2020 and no gain or loss on extinguishment. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2020 | |
WARRANTS | |
WARRANTS | 19. WARRANTS The warrants on convertible notes are exercisable at any time after the commitment date to purchase up to 4,778,846 shares of the Company’s ADS as follows: Warrants Principal Amount Exercise Price Tranche I US$ 5,000,000 US$ 1.50 Tranche A US$ 2,750,000 US$ 2.60 Tranche B US$ 1,650,000 US$ 5.20 Tranche C US$ 550,000 US$ 7.80 For the tranches A, B and C, the expiration date is the third anniversary of the issuance date or if the holder has exercised its option to extend the maturity date of all or any portion of the convertible notes in accordance with the terms and conditions thereof, the fifth anniversary of the issuance date. Tranches A, B and C expired on December 20, 2018. Tranche I expired in December 2020. The holder of the warrants did not exercise until the expiration date. The fair value of the warrants as of December 31, 2019 and 2020 is RMB0.2 million and nil, respectively. The change in fair value of the warrants liability resulted in a loss of RMB2.3 million, RMB1.3 million and RMB0.2 million (US$0.03 million) for the years ended December 31, 2018, 2019 and 2020, respectively. In October 2020, the Group has completed an offering for the issuance of ordinary shares, warrants and representative’s warrants. The warrants on equity-linked instruments are classified as equity, these warrants are exercisable immediately after the issuance date to purchase up to 2,702,500 of the Company’s ADSs and expire three years after the issuance date. The representative’s warrants are classified as a liability, these warrants exercisable commencing six months from the effective date of the registration statement and expire three years after the effective date. No remeasurement to the equity classified warrants after initial recognition and the Group will reassess the classification on each reporting date. For the liability classified warrants, the fair value of the warrants as of issuance date and December 31, 2020 is RMB1.7 million (US$0.3 million) and RMB1.9 million (US$0.3 million), respectively. The change in fair value of the warrants liability resulted in a gain of RMB0.2 million (US$0.02 million) for the year ended December 31, 2020. |
SHAREHOLDER RIGHTS PLAN
SHAREHOLDER RIGHTS PLAN | 12 Months Ended |
Dec. 31, 2020 | |
SHAREHOLDER RIGHTS PLAN | |
SHAREHOLDER RIGHTS PLAN | 20. SHAREHOLDER RIGHTS PLAN On January 8, 2009, the Company adopted a shareholder rights plan. The shareholder rights plan is designed to protect the best interests of the Company and its shareholders by discouraging third-parties from seeking to obtain control of the Company in a tender offer or similar hostile transaction. The shareholder rights plan was amended on March 9, 2009, June 8, 2017, and June 16, 2017. Pursuant to the terms of the shareholder rights plan, as amended, one right was distributed with respect to each ordinary share of the Company outstanding at the close of business on January 22, 2009. The rights will become exercisable only if a person or group (the “Acquiring Person”) obtains ownership of 15% or more of the Company’s voting securities (including by acquisition of the Company’s ADSs representing ordinary shares) (a “Triggering Event”), subject to certain exceptions. In the case of a Triggering Event, the rights plan entitles shareholders other than the Acquiring Person to purchase, for an exercise price of US$19.50, a number of shares with a value twice that of the exercise price. The number of shares each such shareholder will be entitled to purchase is equal to the product of (i) the number of shares then owned by such shareholder and (ii) two times the exercise price divided by the then current market price per share. The rights plan expired on January 8, 2019. The plan has not been exercisable as of the expiration date and has not been extended. On May 6, 2019, an extraordinary general meeting was held to adjust the authorized share capital and to adopt a dual-class share structure, consisting of Class A ordinary shares and Class B ordinary shares. Each Class A ordinary share is entitled to one vote per share on all matters subject to vote at general meetings of the Group. Each Class B ordinary share is entitled to fifty (50) votes per share on all matters subject to vote at general meetings of the Group. Class A ordinary shares and Class B ordinary shares were split from the ordinary shares issued at the time of change. No new shares were issued. Only Mr. Jun Zhu and Incsight Limited (“Incsight”) hold Class B ordinary shares. As of December 31, 2020, there were 260,032,362 ordinary shares issued or outstanding, being the sum of 247,090,351 Class A ordinary shares and 12,942,011 Class B ordinary shares. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2020 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 21. EMPLOYEE BENEFITS Full-time employees of the Group’s subsidiaries and VIE subsidiaries registered in the PRC are entitled to statutory staff welfare benefits, including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. These subsidiaries and VIE subsidiaries are required to accrue for these benefits based on certain percentages of the employees’ salaries in accordance with the relevant regulations, and to make contributions to the state-sponsored pension and medical plans out of the amounts accrued for medical and pension benefits. The total amounts charged to the consolidated statements of operations and comprehensive gain (loss) for such employee benefits amounted to RMB7.9 million, RMB4.5 million and RMB1.2 million (US$0.2 million) for the years ended December 31, 2018, 2019 and 2020, respectively. The PRC government is responsible for the medical benefits and ultimate pension liability to these employees. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2020 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 22. SHARE-BASED COMPENSATION 22.1 Share Option Plan On December 15, 2004, in connection with its initial public offering, the Company adopted a share option plan (“2004 Option Plan”). As of December 31, 2013, the total number of ordinary shares reserved in the 2004 Option Plan was 6,449,614 shares. The maximum contractual term of the awards under this plan shall be no more than five years from the date of grant. The options granted under this plan shall be at the money on the date of grant and typically vest over a three-year period, with one third of the options to vest on the each of the anniversary after the grant date. The 2004 Option Plan was amended in November 2015 to increase the maximum aggregate number of ordinary shares to 14,449,614 shares. The 2004 Option Plan was amended in August 2016 to increase the maximum aggregate number of ordinary shares to 34,449,614 shares. On June 6, 2017, the Group and optionees have entered into certain stock option agreements, pursuant to which the Group has granted to the optionees options to acquire the ordinary shares, par value US$0.01 each, of the Group. According to the agreements, 6,328,535 options were exercised to ordinary shares, and 10,806,665 options were canceled. In December 2018, the 2004 Option Plan was amended to increase the maximum aggregate number of ordinary shares to 100,000,000 shares. As of December 31, 2020, options to purchase 50,000 ordinary shares were outstanding and options to purchase 33,352,118 ordinary shares were available for future grant under the 2004 Option Plan. Stock Options The following table summarizes the Group’s share option activities with its employees and directors: Weighted-Average Remaining Number of Weighted-Average Contractual Term Aggregate Options Exercise Price (years) Intrinsic Value Outstanding as of January 1, 2020 50,000 US$ 0.93 3.07 Nil Granted — — — Nil Exercised — — — Nil Forfeited — — — Nil Outstanding as of December 31, 2020 50,000 US$ 0.93 2.07 Nil Vested and expected to vest as of December 31, 2020 50,000 US$ 0.93 2.07 Nil Exercisable as of December 31, 2020 50,000 US$ 0.93 2.07 Nil The options expected to vest are estimated by applying the pre-vesting forfeiture rate assumptions to total unvested options. The total intrinsic value of options exercised during the year was nil for years ended December 31, 2018, 2019 and 2020. On January 24, 2018, as approved by the Board of Directors, the Group granted share options totaling 5,750,000 shares to directors, officers and consultants. The remaining shares shall become vested in a series of 36 successive equal monthly installments upon grantees’ completion of each month of service to the Company over the 36‑month period measured from the grant date. On September 4, 2018, the Group canceled a portion of the options totaling 4,700,000 share options granted to directors, officers and consultants. The 1,000,000 share options were forfeited due to the resignation of the Group’s former president. The weighted-average grant-date fair value of options granted during 2018 was US$0.51. The fair value of the share options was measured on the respective grant dates based on the Black-Scholes option pricing model, with below assumptions made regarding expected term and volatility, risk-free interest rate and dividend yield: Risk-free interest rate 2.19 % Expected life (years) 2.93 Expected dividend yield — % Volatility 78.55 % Fair value of options at grant date US$ 0.51 The following table summarizes the share option activities subject to performance condition: Weighted-Average Remaining Number of Weighted-Average Contractual Term Aggregate Intrinsic Options Exercise Price (years) Value Outstanding as of January 1, 2020 1,000,000 US$ 0.93 3.07 Nil Granted — — — Nil Exercised — — — Nil Forfeited (1,000,000) US$ 0.93 — Nil Outstanding as of December 31, 2020 — — 0 Nil Vested and expected to vest as of December 31, 2020 — — 0 Nil Exercisable as of December 31, 2020 — — — Nil The grant-date fair value of share options with performance condition during 2018 was US$0.51. The fair value of the awards that are based on the performance condition was calculated using the Black-Scholes option pricing model with the following assumptions: Risk-free interest rate 2.19 % Expected life (years) 2.93 Expected dividend yield — % Volatility 78.55 % Fair value of options at grant date US$ 0.51 Restricted Ordinary Shares On September 4, 2018, the Group granted an aggregate amount of 30,000,000 restricted ordinary shares to directors, officers and consultants. In exchange for such restricted ordinary shares granted, the Group forfeited and canceled the stock options in the total amount of 6,200,000 shares previously granted on January 24, 2018. Half of each individual’s shares will only vest if the Group meets certain target on non-GAAP profit before tax in 2019. If the Group fails to achieve this target, such half of each individual’s shares will be forfeited and canceled. The remaining half of each individual’s shares is subjected to a half year lock-up period. After the half year lock-up period, such remaining shares shall become vested in 36 successive equal monthly installments upon grantees’ completion of each month of service to the Group measured from the last day of each month after the vesting commencement date. On January 21, 2019, the Group forfeited and canceled an aggregate amount of 15,000,000 restricted ordinary shares with the vesting condition that the Group meets certain target on non-GAAP profit before tax in 2019 previously granted on September 4, 2018. The vesting conditions of the remaining 15,000,000 ordinary shares are subjected to a half year lock-up period. After the half year lock-up period, such remaining shares shall become vested in 24 successive equal monthly installments instead of 36 installments upon grantees’ completion of each month of service to the Group measured from the last day of each month after the Vesting Commencement Date dated on March 5, 2019. On June 17, 2020, the Group granted an aggregate amount of 29,100,000 restricted Class A ordinary shares to directors, officers and consultants as share incentive awards for their services to the Company pursuant to Eighth Amended and Restated 2004 Stock Option Plan. Among those restricted Class A ordinary shares grants, 15,600,000 restricted Class A ordinary shares are subject to restrictions on transferability that would be removed once certain pre-agreed performance targets are met, and 13,500,000 restricted Class A ordinary shares are subject to restrictions on transferability for a six-month period that would be removed in installments once certain service period conditions are met. All the restrictions attached to those shares have been removed upon the satisfaction of the underlying targets and conditions as of December 31, 2020. Share-Based Compensation For the years ended December 31, 2018, 2019 and 2020, the Group recorded share-based compensation of RMB3.9 million, RMB21.3 million and RMB55.1 million (US$8.4 million), respectively, for options granted to the Group’s employees and directors. As of December 31, 2020, there was approximately RMB4.4 million (US$0.7 million) unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested options and restricted shares with performance condition. Total unrecognized compensation cost may be adjusted for future changes in estimated forfeitures. 22.2 Stock Options and Ordinary Shares Granted by Red 5 In February 2006, Red 5 adopted a Stock Incentive Plan (“Red 5 Stock Incentive Plan”) under which Red 5 may grant to its employees, director and consultants stock options to purchase common shares or restricted shares. As of December 31, 2010, 13,626,955 shares were reserved under Red 5 Stock Incentive Plan. In September 2011, Red 5 further increased the number of common shares reserved to 22,855,591. If an option shall expire or terminate for any reason without having been exercised in full, the reserved shares subject to such option shall again be available for subsequent option grants under the plan. From the inception of this plan to December 31, 2020, Red 5 granted a total of 38,191,879 options to its employees and directors at the exercise price ranging from US$0.0001 to US$0.2450 per share, which vest over four years commencing from grant date. Options expire within a period of not more than ten years from the grant date. An option granted to a person who is a greater than 10% shareholder on the date of grant may not be exercisable more than five years after the grant date. As of December 31, 2020, options to purchase 5,111,250 shares of common stock were outstanding and options to purchase 15,480,087 shares of common stock were available for future grant. The following table summarizes the Red 5’s share option activities with its employees and directors: Weighted-Average Weighted-Average Remaining Number of Exercise Price per Contractual Term Aggregate Options Option (years) Intrinsic Value Outstanding as of January 1, 2020 5,111,250 US$ 0.049 1.24 Nil Granted — — — Nil Exercised — — — Nil Forfeited — — Nil Outstanding as of December 31, 2020 5,111,250 US$ 0.049 Nil Vested and expected to vest as of December 31, 2020 5,111,250 US$ 0.049 Nil Exercisable as of December 31, 2020 5,111,250 US$ 0.049 Nil The option’s intrinsic value was calculated by the excess of the estimated fair value of Red 5’s common shares, which was determined by the Group with the assistance of an independent valuation firm. The options expected to vest are estimated by applying the pre-vesting forfeiture rate assumptions to total unvested options. The total intrinsic value of options exercised for the year ended December 31, 2018, 2019 and 2020 were nil. The fair value of options granted at US$0.0178, measured on the grant date based on the Black-Scholes option pricing model with assumptions made regarding expected term and volatility, risk-free interest rate and dividend yield: Risk-free interest rate 0.78 % Expected life (years) 4.00 Expected dividend yield 0.00 % Volatility 45.70 % Red 5 recorded share-based compensation of RMB0.04 million, RMB0.05 million and nil for options and shares of restricted common stock granted for the years ended December 31, 2018, 2019 and 2020, respectively. The share-based payment awards were recorded as a component of noncontrolling interest in the consolidated financial statements. As of December 31, 2020, unrecognized compensation cost related to share-based awards granted to Red 5 grantees is nil. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended |
Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 23. RELATED PARTY TRANSACTIONS AND BALANCES Transaction with equity investee In 2013, the Group entered into an agreement with ZTE9, an equity investee of the Group, to jointly operate IPTV games in the PRC. According to the agreement, the Group pays ZTE9 a royalty fee for providing game contents on IPTV. In July 2020, ZTE9 initiated the liquidation process given its inability to repay its liabilities due. In September 2020, the Group entered into a debt settlement agreement with ZTE9 by paying ZTE9 an amount of RMB1.0 million (US$0.2 million) and all outstanding balances have been offset. No IPTV business transaction in 2019 and 2020 and total amount due to ZTE9 for IPTV business was RMB0.2 million and nil as of December 31, 2019 and 2020, respectively. No borrowing lent to ZTE9 in 2019 and 2020 and total amount due from ZTE9 for outstanding loans was RMB1.0 million and nil as of December 31, 2019 and 2020, respectively. The Group charged service fees to Big Data of RMB0.02 million and nil for the years ended December 31, 2019 and 2020, respectively. Total amount due from Big Data was RMB0.1 million and RMB0.1 million (US$0.02 million) as of December 2019 and 2020, respectively. Transaction with Mr. Jun Zhu Mr. Jun Zhu, the chairman and chief executive officer, provided loans of RMB16.1 million and nil to the Group in 2019 and 2020, respectively. The Group has repaid a total of nil and RMB42.5 million (US$6.5 million) for the years ended December 31, 2019 and 2020, respectively. The loans were interest-free and the outstanding balance of RMB63.2 million and RMB20.6 million (US$3.2 million) remained as of December 31, 2019 and 2020, respectively. In May 2019, the issued and outstanding ordinary shares then held by Incsight, which is wholly owned by Mr. Jun Zhu, and the issued and outstanding ordinary shares then held by Mr. Jun Zhu himself, were re-designated and re-classified as Class B ordinary shares. All other ordinary shares then issued and outstanding were re-designated and re-classified as Class A ordinary shares. On the same date, the Company amended and restated then effective Amended and Restated Memorandum of Association and Articles of Association in their entirety and adopted the Second Amended and Restated Memorandum and Articles of Association which reflect, among other things, the changes to the capital structure of the Company. As a result of such changes, Mr. Jun Zhu holds the majority of the Company’s outstanding voting power and the Company became a “controlled company” as defined under Nasdaq Stock Market Rules. Transaction with Comtec In June 2019, the Group entered into a share purchase agreement with Comtec Windpark Renewable (holdings) Co., Ltd. ("Comtec"), a wholly-owned subsidiary of Comtec Solar Systems Group Limited (SEHK: 00712) (“Comtec Group”), an entity affiliated with Kwok Keung Chau, independent director of the Company. Pursuant to the share purchase agreement, the Company has issued 3,444,882 Class A ordinary shares to purchase 9.9% equity interest in Zhenjiang Kexin, a lithium battery management system and power storage system supplier . |
(LOSS) INCOME PER SHARE
(LOSS) INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2020 | |
(LOSS) INCOME PER SHARE | |
(LOSS) INCOME PER SHARE | 24. (LOSS) INCOME PER SHARE Loss per share is calculated as follows: For the year For the year For the year For the year ended December ended December ended December ended December 31, 2018 31, 2019 31, 2020 31, 2020 RMB RMB RMB US$ (Note 3) Numerator: Net (loss) income attributable to ordinary shareholders before change in redeemable noncontrolling interest (217,092,926) (177,795,168) 397,883,388 60,978,298 Change in redeemable noncontrolling interest (40,918,773) (12,827,598) (1,190,122) (182,394) Net (loss) income attributable to ordinary shareholders (258,011,699) (190,622,766) 396,693,266 60,795,904 Denominator: Denominator for basic and diluted (loss) income per share – weighted-average shares outstanding 62,114,760 106,407,008 163,599,920 163,599,920 Net (loss) income attributable to holders of ordinary shares per share - Basic and diluted (4.15) (1.79) 2.42 0.37 The Company had 20,383,333, 13,213,978 and 4,200,645 stock options, warrants and non-vested shares outstanding as of December 31, 2018, 2019 and 2020, respectively, which were excluded in the computation of diluted loss per share in the periods presented, as their effect would have been anti-dilutive due to the net loss reported in such periods. |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 25. RESTRICTED NET ASSETS Pursuant to laws applicable to entities incorporated in the PRC, the subsidiaries and the VIEs of the Group established in the PRC must make appropriations from after-tax profit to non-distributable reserved funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriation of 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of such reserved fund reaches 50% of their registered capital; the other fund appropriations are at the subsidiaries’ discretion. These reserve funds can only be used for specific purposes of enterprise expansion, and the staff bonus and welfare are not distributable as cash dividends. The appropriation to these reserves by the Group’s PRC entities was nil for the years ended December 31, 2018, 2019 and 2020. The accumulated reserves as of December 31, 2020 were RMB3.8 million (US$0.6 million). In addition, due to restrictions on the distribution of registered capital from the Company’s PRC subsidiaries, the PRC subsidiaries’ registered capital of RMB11.5 million (US$1.8 million) as of December 31, 2020, were considered restricted. As a result of these PRC laws and regulations, as of December 31, 2020, approximately RMB7.7 million (US$1.2 million), were not available for distribution to the Company by its PRC subsidiaries in the form of dividends, loans or advances. |
NONCONTROLLING INTEREST
NONCONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2020 | |
NONCONTROLLING INTEREST | |
NONCONTROLLING INTEREST | 26. NONCONTROLLING INTEREST As of December 31, 2019, the Group’s noncontrolling interests mainly included equity interest in Red 5 and equity awards granted as compensation by the Group’s subsidiaries. The following schedule shows the effects of changes in the ownership interest of The9 Limited in its subsidiaries on equity attributed to The9 Limited for the years ended December 31, 2018, 2019 and 2020. December 31, December 31, December 31, December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Net (loss) income attributable to The9 Limited (217,092,926) (177,795,168) 397,883,388 60,978,299 Transfers (to) from the noncontrolling interest: Change in The9 Limited’s additional paid-in capital for adjustment on noncontrolling interest as a result of issuance of common shares of Red 5 upon vesting of stock options and restricted shares (1) — — — — Change from net (loss) income attributable to The9 Limited and transfers to noncontrolling interests (217,092,926) (177,795,168) 397,883,388 60,978,299 (1) In June 2016, the Group completed a share exchange transaction with L&A and certain other shareholders of Red 5, whereby the Group exchanged approximately 30.6% equity interest (on a fully-diluted basis) owned in Red 5 for a total of 723,313,020 (after a one-to-five stock split) of newly issued shares of L&A, after deducting a 6% of total shares received (769,481,940 shares) for the payment of a service fee to a third-party consultant. As a result, the percentage of noncontrolling interest in Red 5 changed from 10.4% to 58.1%, after deducting shares of Series B redeemable convertible preferred shares (“SBPS”) from total shares of Red 5. |
REDEEMABLE NONCONTROLLING INTER
REDEEMABLE NONCONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2020 | |
REDEEMABLE NONCONTROLLING INTEREST | |
REDEEMABLE NONCONTROLLING INTEREST | 27. REDEEMABLE NONCONTROLLING INTEREST The holders of SBPS were as follows: December 31, December 31, Holder 2019 2020 Number of Number of Shares Shares L&A International Holdings Limited 10,180,553 10,180,553 Shanghai Oriental Pearl Culture Development Co., Ltd. 17,258,399 17,258,399 On December 31, 2014, the Group considered the redemption of the SBPS to be probable. The Group accreted the carrying value of SBPS to redemption value using the effective interest rate method over the period from the issuance date to the redemption date. A reconciliation of redeemable noncontrolling interest is as follows: For the year ended For the year ended For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Redeemable noncontrolling interest opening balance 341,074,539 349,046,548 53,493,724 Net loss attributable to redeemable noncontrolling interest (4,855,589) (1,190,122) (182,394) Change in redeemable noncontrolling interest 12,827,598 1,190,122 182,394 Redeemable noncontrolling interest ending balance 349,046,548 349,046,548 53,493,724 |
DISPOSAL OF SUBSIDIARIES
DISPOSAL OF SUBSIDIARIES | 12 Months Ended |
Dec. 31, 2020 | |
DISPOSAL OF SUBSIDIARIES | |
DISPOSAL OF SUBSIDIARIES | 28. DISPOSAL OF SUBSIDIARIES On September 26, 2019, the Group entered into an agreement with Kapler Pte. Ltd. to sell three subsidiaries namely, The9 Computer, C9I Shanghai and Shanghai Kaie for total consideration of RMB493.0 million (US$75.6 million). These subsidiaries hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction was completed on February 21, 2020 and the Group has recorded a gain of RMB391.8 million (US$60.1 million). On September 9, 2020, the provisional liquidator of Asian Development made a winding-up order and the High Court of Hong Kong gazetted this order on September 18, 2020. The Official Receiver’s Office has appointed a liquidator to perform the work and duties to the winding-up of Asian Development, including the prosecution of insolvency offences and disqualification of directors. Followed by the winding-up order issued by the court, the Group has lost control of Asian Development and deconsolidated Asian Development as of the date of the court order. The obligation for the payment of pledged loan remained with Asian Development as it is a limited liability company and the Group has recognized an amount of RMB83.7 million (US$12.0 million) to the gain on disposal of Asian Development. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 29. COMMITMENTS AND CONTINGENCIES 29.1 Other operating commitments In October 2016, the Group had raised RMB57.5 million (US$8.8 million), and the Group planned to raise an additional RMB100.0 million (US$15.3 million) until CrossFire New Mobile Game is launched. Under this fundraising arrangement, the Group will share certain percentages of revenues from CrossFire New Mobile Game to investors providing funding to the Group. The Group does not plan to finance the remaining RMB100.0 million (US$15.3 million) from the planned fundraising arrangement. The Group is obligated to pay an amount of US$2.0 million within 30 days after commercial launch date of the game to Smilegate as minimum guarantee for royalty. In April 2020, Inner Mongolia Culture Assets and Equity Exchange filed a civil claim against Wuxi Qudong and Shanghai IT based on the cooperation agreement entered in September 2016. Inner Mongolia Culture Assets and Equity Exchange claims to request a refund of RMB57.5 million (US$8.8 million) which the Group has previously raised to finance the early phase development of CrossFire New Mobile Game and the interest compensation on the fund raised amounting to RMB4.6 million (US$0.7 million). On October 20, 2020, Intermediate Court of Changsha City, Hunan Province issued a decision to reject all claims against the Group. As of December 31, 2020, Inner Mongolia Culture Assets and Equity Exchange did not appeal against the sentence of the court in the period granted and no further claim filed by Inner Mongolia Culture Assets and Equity Exchange against the Group. In June 2017, Shanghai IT entered into an investment agreement with the shareholders of Beijing Ti Knight where Shanghai IT will invest a total of RMB9.0 million (US$1.4 million) in Beijing Ti Knight. As of December 31, 2020, Shanghai IT has invested RMB4.9 million (US$0.8 million) and has a remaining capital contribution commitment amounting to RMB4.1 million (US$0.6 million). Shanghai IT’s purchase commitment amounting to RMB6.8 million (US$1.0 million) for the outsourcing development agreement entered on October 9, 2016 with Beijing Ti Knight will be waived if Shanghai IT’s accumulated investment in Beijing Ti Knight is more than RMB6.0 million (US$0.9 million). Hence, as of December 31, 2020, the Group has both a capital commitment and a purchase commitment amounting to RMB4.1 million (US$0.6 million) and RMB6.8 million (US$1.0 million), respectively, but the purchase commitment will be waived under the condition that accumulated investment in Beijing Ti Knight by Shanghai IT is more than RMB6.0 million (US$0.9 million). As of December 31, 2020, the agreements have not been terminated but the outsourcing development of the related game has been transferred to a third-party company. In 2019, Jiu Gang has signed a joint venture agreement with Shenzhen EN-plus Technologies Co., Ltd. ("EN+"), an electric vehicle charging equipment company incorporated in the PRC, to establish a joint venture to engage in sales of new energy electric vehicle charging equipment, investment, construction and operation of charging stations, and provision of operational services for urban charging equipment and platforms for electric vehicles. According to the joint venture agreement, the Group will make a cash investment of RMB50.0 million (US$7.7 million) in the joint venture in consideration for which it will receive 80% equity interest in the joint venture, and EN+ will contribute its current and future proprietary electric vehicle charging technology to the joint venture in consideration for which it will receive a 20% equity interest of the joint venture. As of December 31, 2020, there has been no progress with forming the joint venture. In March 2019, the Group entered into a joint venture agreement with F&F to establish a joint venture to manufacture, market, distribute and sell electric cars in the PRC. Under the terms of joint venture agreement, the Group will make capital contribution of up to US$600.0 million in three equal installments to the joint venture, and F&F will make contributions including its use rights for a piece of land in the PRC to manufacture electric cars and will grant the joint venture an exclusive license to manufacture, market, distribute and sell certain F&F’s car models and other potential selected car models in the PRC, in each case subject to the satisfaction of certain conditions, such as establishment of the joint venture and funding arrangements. The Group is only obligated to contribute capital into the joint venture if the Group can raise funds for this joint venture. The Group has paid the initial deposit of US$5.0 million in April 2019. In November 2020, the Group converted the initial deposit of US$5.0 million into 2,994,011 Class B ordinary shares of FF Intelligent, the holding company of F&F that operates its electric vehicles business, at a pre-agreed conversion price set forth in the joint venture agreement. As a result of this conversion, the joint venture agreement with F&F was deemed to be terminated and the capital commitment in the joint venture agreement was deemed released. In September 2020, the Group entered into a master cooperation and publishing agreement with Voodoo, a French game developer and publisher, to cooperate on the publishing and operations of casual games in mainland China. Pursuant to the master cooperation and publishing agreement and amendment agreement entered in December 2020, the Group obtained exclusive licenses of several games developed by Voodoo. Voodoo granted the Group an exclusive, sub-licensable license to test, perform, market, promote, distribute, reproduce, modify, support and/or otherwise use or exploit such games directly or through authorized contractors in mainland China for a maximum period of three years, commencing upon the upload and distribution of the underlying games on any platform. In consideration for the exclusive license granted to the Group and as a minimum guarantee payment, the Group is to pay an aggregate amount of US$13.0 million in cash to Voodoo based on the agreed timetable, subject to satisfaction of certain conditions related to delivery of games by Voodoo, including an upfront payment of US$3.0 million that the Group has paid in September 2020. As of December 31, 2020, the game granted by Voodoo is under development. 29.2 Contingencies In June 2016, Asian Development borrowed HK$92.3 million (US$11.9 million) from a financial services company at an annual interest rate of 2% for a term of 24 months. This loan is secured by 417,440,000 shares of L&A. Pursuant to the financing agreement, such loan is considered to be in default since the market price of the pledged shares had fallen below the collateralized stock price by more than 35% for ten consecutive trading days. Asian Development had not made any remediation pursuant to the financing agreement. Upon default, the lender shall be entitled to foreclose the pledged shares and become the legal and beneficial owner of the pledged shares. If the market value of the pledged shares cannot cover the total outstanding amount owed by Asian Development to the lender under the financing agreement, the lender may claim against Asian Development to recover any outstanding amounts under the financing agreement, in addition to foreclosure of the pledged shares as mentioned above. On September 9, 2020, the High Court of Hong Kong issued an order to wind-up Asian Development given its inability to pay for the liabilities due and has appointed provisional liquidator to close remaining corporate affairs within the statutory timeframe . Red 5 and its affiliates are currently in dispute with Qihoo 360 and its affiliates regarding System Link and Firefall and various legal proceedings have been initiated and are ongoing in connection with such dispute since 2016 where litigations have been filed with both Intellectual Property Court of Shanghai and Hong Kong International Arbitration Centre. In May 2019, the Group has entered into an out-of-court settlement with Qihoo 360 where both the Group and Qihoo 360 agreed to withdraw litigations filed in relation to the dispute over Firefall and to liquidate the joint venture, System Link. The Group has withdrawn all the claims against Qihoo 360 and settled the litigation proceedings in Shanghai in May 2019. In August 2019, the Group has received a refund from Intellectual Property Court of Shanghai on court acceptance fee paid in 2016 and recognized other income amounting to RMB3.8 million (US$0.6 million) in 2019. As of December 31, 2020, the Group is implementing the mediation agreement with Qihoo 360 to settle the arbitration proceeding in Hong Kong. As described in Note 27, in August 2014, Red 5 issued 27,438,952 Series B redeemable convertible preferred shares of Red 5 to a new investor, Oriental Pearl. Due to the stock exchange transaction with L&A in 2016, a 37% share of the SBPS was owned by L&A as of December 31, 2019 (see Note 27). Per Articles of Association of Red 5, major holders of SBPS, at any time on or after April 1, 2017 (the “Redemption Election”), can require Red 5 to redeem all, but not less than all, of the outstanding shares of SBPS, as applicable, in three equal annual installments. New Star, a wholly owned subsidiary of the Group, owns 39,766,589 Series A redeemable convertible preferred shares which have similar terms with the Series B redeemable convertible preferred shares. The redemption value of SBPS was US$16.5 million for the first installment, US$18.1 million for the second installment and US$19.9 million for the third installment. Since Red 5 is in a net liability position, the Group does not believe the preferred shareholders will request such redemption. As of the issuance date of these consolidated financial statements, there was no such preferred shareholder requiring Red 5 to redeem the preferred shares. Shanghai Oh Yeah Information Technology Co., Ltd. filed several related civil claims in April 2019 against joint defendants including Shanghai IT, ZTE9 and a third-party defendant, regarding copyright infringements of their intellectual property to the Intellectual Property Court of Shanghai with a total aggregated claim amount of RMB3.0 million (US$0.5 million). The Group has assessed the likelihood of the outcome and have accrued an amount for the contingency. On July 28, 2020, the Intellectual Property Court of Shanghai granted the claims withdrawal request from Shanghai Oh Yeah Information Technology Co., Ltd. and underlying legal proceeding was dismissed. Due to the Group’s failure to repay the convertible notes in a timely manner as stipulated in the previous deed of settlement and its amendments, in May 2020, Splendid Days obtained an injunction order from the Court of First Instance of the Hong Kong Special Administrative Region prohibiting the Group from disposing its assets worldwide up to the value of US$55.5 million and such injunction order was also registered in the High Court of the Republic of Singapore. In May 2020, Splendid Days also commenced an arbitration proceeding in Hong Kong under the rules of the Hong Kong International Arbitration Centre against the Group. The Group entered into a Settlement Deed with Splendid Days and other parties named therein to settle the Convertible Notes. The injunction order against the Group has been discharged. Upon the satisfaction of the conditions set forth in the Settlement Deed, the arbitration proceeding will be terminated. As of December 31, 2020, the arbitration proceeding has not been terminated. The hearing of the arbitration proceeding is expected to be held in April 2021. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 30. SEGMENT REPORTING The Group operates in one segment whose business is developing and operating online games and related services. The Group’s chief operating decision maker is the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group. The Group generates its revenues from customers in the Greater China (including PRC, Taiwan, Hong Kong and Macau) and other areas for the years ended December 31, 2018, 2019 and 2020. The following geographic area information includes net revenues based on location of players for the years ended December 31, 2018, 2019 and 2020: 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Greater China 16,430,205 182,107 625,488 95,860 Other areas 1,001,653 159,388 — — Total 17,431,858 341,495 625,488 95,860 The majority of the Group’s assets is located in Greater China. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 31. SUBSEQUENT EVENTS In January 2021, the Company entered into a share subscription and warrant purchase agreement with the holding entities of several investors (“Investors”) in the cryptocurrencies mining industry based on the pre-agreed legally-binding term sheet. Pursuant to the Purchase Agreement, the Company issued 8,108,100 Class A ordinary shares in aggregate at US$0.1233 per share and 207,891,840 warrants in aggregate, to the Investors in February 2021. The warrants will only be exercisable upon the satisfaction of its respective condition in connection with the market capitalization of the Company reaching US$100 million, US$300 million, US$500 million and US$1 billion within the time frames of 6 months, 12 months, 24 months and 36 months from its issuance date, respectively. The transaction was closed in February 2021. In February 2021, the Company issued and sold (i) a one-year convertible note in a principal amount of US$5,000,000, (ii) 50,000 ADSs, and (iii) 10,000,000 Class A ordinary shares, for an aggregate consideration of US$5,000,000 to Streeterville. 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 the Company’s at an initial conversion price of US$14 per ADS, each ADS representing thirty Class A ordinary shares, subject to adjustment. Payment of the redemption amount could be in cash or the Company’s ADSs, provided that any redemption made in cash which exceed half of the original principal amount will be subject to a ten percent (10%) premium. The Company has the right to prepay all or any portion of the outstanding balance, at any time, subject to fifteen percent (15%) premium on the prepaid amount. In the event the principal amount and interest accrued for the convertible note issued to Streeterville are fully repaid, the Company have the right to repurchase the remaining Class A ordinary shares held by Streeterville that are unsold at US$0.0001 per share. In February 2021, NBTC Limited, the Company’s wholly-owned subsidiary, signed a strategic cooperation framework purchase agreement, or the Cooperation Agreement, with Shenzhen MicroBT Electronics Technology Co., Ltd., the manufacturer of WhatsMiner bitcoin mining machines. Pursuant to the Cooperation Agreement, upon the payment of a deposit, NBTC Limited has the right of first offer to purchase 5,000 WhatsMiner bitcoin mining machines from MicroBT within one year, including but not limited to models M32 and M31S. The Company completed first batch purchase of 440 WhatsMiner M32 machines in February 2021. Other than WhatsMiner bitcoin mining machines, the Company also plan to continue purchasing different types of cryptocurrency mining machines in the near future. In February 2021 the Company entered into a standby equity distribution agreement, or the SEDA, with YA II PN, LTD., a Cayman Islands exempt limited partnership managed by Yorkville Advisor Global, LP pursuant to which the Company are able to sell up to US$100.0 million of the Company’s ADSs solely at the Company’s request at any time during the 36 months following the date of the SEDA. In February 2021, the Company entered into purchase agreements with five Bitcoin mining machine owners to purchase Bitcoin mining machines by issuance of the Company’s Class A ordinary shares. Pursuant to the purchase agreements, the Company issued an aggregate of 26,838,360 Class A ordinary shares in exchange for 26,007 Bitcoin mining machines, with a total hash rate of approximately 549PH/S, accounting for about 0.36% of the global hash rate of Bitcoin. Majority of these mining machines have already been deployed in Xinjiang, Sichuan and Gansu in China. The number of Class A ordinary shares issued to each owner was determined based on the fair market value of Bitcoin mining machines, as apprised by an independent valuation firm prior to the execution of the purchase agreements, at a pre-agreed per share price of approximately US$0.37 per Class A ordinary share (equivalent to US$11.18 per ADS). In February 2021, the Company’s board of directors and board committees authorized and approved the issuance of an aggregate number of 33,090,000 restricted Class A ordinary shares of the Company to certain directors, executive officers, employees and consultants of the Company as share incentive awards for their services to us pursuant to the Option Plan. Among those restricted Class A ordinary shares grants, 32,190,000 restricted Class A ordinary shares are subject to restrictions on transferability that would be removed upon the satisfaction of the conditions that half of the restricted shares should vest if the Company’s market capitalization reaches US$400 million and the other half should vest if the Company’s market capitalization reaches US$500 million. The Company also granted 900,000 restricted Class A ordinary share units to the Company’s directors which are immediately vested and issued the same number of shares. In February 2021, the Company entered into a share purchase agreement with each of the four investors in the cryptocurrencies mining industry, respectively. Pursuant to the share purchase agreements, the Company should issue 9,231,240 Class A ordinary shares in aggregate to investors for an aggregate consideration of US$11.5 million. Such transactions were subsequently closed. Pursuant to the share purchase agreements, as soon as practicable following the filing of the Company’s annual report on Form 20-F for the year ended December 31, 2020, the Company should file a registration statement on Form F-3 covering resale of the investors’ Class A ordinary shares. In February 2021, the Company entered into a legally binding memorandum of understanding on the acquisition of 70% equity interest in Hangzhou SuanLiTechnology Co., Ltd., a cryptocurrency cloud mining blockchain Software-as-a-Service company. The acquisition consideration would be approximately US$7.0 million, subject to due diligence and valuation to be conducted by an independent valuation firm. The Company will pay the acquisition consideration by issuance of Class A ordinary shares at a price of US$82.89 per ADS, representing the closing market price of the Company’s ADSs prior to the signing of the memorandum of understanding. In February 2021, the Company signed a framework agreement with a Filecoin mining machine vendor to purchase Filecoin mining machines for cash consideration of US$10 million. In March 2021, the Company entered into purchase agreements with five Bitcoin mining machine owners to purchase Bitcoin mining machines by issuance of the Company’s Class A ordinary shares. Pursuant to the purchase agreements, the Company issued an aggregate of 3,832,830 Class A ordinary shares in exchange for various Bitcoin mining machines including different brands, such as WhatsMiner, AntMiner and AvalonMiner, with a total number of 8,489 units and a total hash rate of approximately 251PH/S. These Bitcoin mining machines have already been deployed in Qinghai, Xinjiang and Inner Mongolia in China. The number of Class A ordinary shares issued to each owner was determined based on the fair market value of Bitcoin mining machines, as apprised by an independent valuation firm prior to the execution of the purchase agreements, at a pre-agreed per share price of approximately US$0.78 per Class A ordinary share (equivalent to US$23.35 per ADS). In March 2021, the Company signed three legally-binding memoranda of understanding with three unrelated Bitcoin mining machine owners to purchase Bitcoin mining machines by the issuance of Class A ordinary shares. According to the memoranda of understanding, the Company will issue approximately 5,883,750 Class A ordinary shares (equivalent to 196,125 ADSs) to the sellers based on a per share price of approximately US$1.3 (equivalent to US$38.51 per ADS). The number of Class A ordinary shares to be issued is subject to certain price adjustment mechanisms to be assessed 6 months after the signing of the definitive agreements. The Company will designate an independent valuation firm to conduct examination and assessment of the Bitcoin mining machine fair market value, and will make adjustment to the number of Class A ordinary shares to be issued if needed. In March 2021, the Company issued and sold a one-year convertible note in a principal amount of US$20,000,000 to Streeterville for an aggregate consideration of US$20,000,000. The Company are obligated to register certain number of ADSs for the resale of the Class A ordinary shares issuable upon the conversion of such note. 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 the Company’s at an initial conversion price of per ADS calculated as ninety percent (90%) of the lower of (a) the average of the closing trade prices during the five (5) 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$3,360,000 per calendar month. Payment of the redemption amount could be in cash or the Company’s ADSs, provided that any redemptions made in cash which exceed half of the original principal amount will be subject to a ten percent (10%) premium. The Company have the right to prepay all or any portion of the outstanding balance, at any time, subject to fifteen percent (15%) premium on the prepaid amount. In March 2021, the Company’s wholly-owned subsidiary NBTC Limited signed a Bitcoin mining machine purchase agreement with Bitmain Technologies Limited. Pursuant to the purchase agreement, the Company will purchase 24,000 Antminer S19j Bitcoin mining machines, which are scheduled to deliver starting from November 2021, for a total consideration of US$82,800,000 payable in installments according to the agreed time schedule. The Company has made the first installment payment of US$16.6 million on March 22, 2021. |
FINANCIAL INFORMATION OF PARENT
FINANCIAL INFORMATION OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2020 | |
FINANCIAL INFORMATION OF PARENT COMPANY | |
FINANCIAL INFORMATION OF PARENT COMPANY | CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME FOR THE YEARS ENDED DECEMBER 31, 2018, 2019 AND 2020 2018 2019 2020 2020 RMB RMB RMB US$ Operating expenses: General and administrative (21,435,150) (68,165,230) (87,638,664) (13,431,213) Total operating expenses (21,435,150) (68,165,230) (87,638,664) (13,431,213) Loss from operations (21,435,150) (68,165,230) (87,638,664) (13,431,213) Impairment on equity investment — — (1,172,755) (179,733) Interest expenses (98,308,205) (33,154,189) (2,923,055) (447,978) Fair value change on warrants liability 2,251,427 1,292,243 37,851 5,801 Gain on extinguishment of convertible notes — — 56,755,902 8,698,223 Gain on waiver of interest-free loan — — 35,397,500 5,424,904 Foreign exchange gain (loss) 1,963,364 (1,648,652) 29,578,454 4,533,096 Other expenses, net (18,180,060) (1,636,394) (40,059,304) (6,139,355) Loss before income tax expense and share of loss in equity method investment (133,708,624) (103,312,222) (10,024,071) (1,536,255) Share of loss in equity method investment — — (2,165,935) (331,944) Equity in (loss) income of subsidiaries and VIEs (83,384,302) (74,482,946) 410,073,394 62,846,497 Net (loss) income (217,092,926) (177,795,168) 397,883,388 60,978,298 Other comprehensive income (loss), net of tax: Currency translation adjustments 7,241,192 5,426,604 (12,900,251) (1,977,050) Total comprehensive (loss) income (209,851,734) (172,368,564) 384,983,137 59,001,248 CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2020 December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) ASSETS Current assets: Cash and cash equivalents 143,896 8,545,918 1,309,719 Prepayments and other current assets, net 63,873 4,090,219 626,853 Amounts due from intercompany 1,303,065,115 1,008,125,860 154,502,048 Total current assets 1,303,272,884 1,020,761,997 156,438,620 Investments in subsidiaries and VIEs (1,681,526,537) (1,295,612,695) (198,561,332) Total assets (378,253,653) (274,850,698) (42,122,712) LIABILITIES Current liabilities: Short-term borrowings 34,881,000 — — Accrued expenses and other current liabilities 11,578,754 11,012,592 1,687,754 Warrants 198,600 1,854,957 284,285 Convertible notes 414,127,908 — — Total current liabilities 460,786,262 12,867,549 1,972,039 Total liabilities 460,786,262 12,867,549 1,972,039 SHAREHODERS’ EQUITY (DEFICIT) Class A ordinary shares 7,321,099 17,197,060 2,635,565 Class B ordinary shares 648,709 900,741 138,045 Additional paid-in capital 2,539,552,478 2,695,763,016 413,143,757 Statutory reserves 28,071,982 7,326,560 1,122,844 Accumulated other comprehensive loss (3,777,952) (16,678,203) (2,556,046) Accumulated deficit (3,410,856,231) (2,992,227,421) (458,578,915) Total shareholders’ deficit (839,039,915) (287,718,247) (44,094,750) Total liabilities and shareholders’ equity (378,253,653) (274,850,698) (42,122,711) CONDENSED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 2019 AND 2020 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Cash flows from operating activities: Net (loss) income (217,092,926) (177,795,168) 397,883,388 60,978,298 Adjustments for: Share-based compensation expenses 3,645,751 21,705,240 55,056,426 8,437,766 Fair value change on warrants liability (2,251,427) (1,292,244) (37,851) (5,801) Amortization of discount and interest on convertible notes 98,308,205 33,154,191 2,923,316 448,018 Foreign exchange (gain) loss (1,963,364) 1,648,652 (29,578,454) (4,533,096) Equity in loss (income) of subsidiaries and VIEs 83,384,302 74,482,946 (410,073,394) (62,846,497) Consulting fees paid by issuance of shares 4,172,800 35,091,686 6,781,815 1,039,359 Gain on extinguishment of convertible notes — — (56,755,902) (8,698,223) Gain on waiver of interest-free loan — — (34,881,000) (5,345,747) Payment of issuance cost by issuance of shares — — 455,658 69,833 Changes in operating assets and liabilities: Change in prepayments and other current assets (2,971) (1,894) (4,026,346) (617,065) Change in amounts due from intercompany 30,882,203 (28,060,447) 349,361,587 53,542,003 Change in accrued expenses and other current liabilities 898,712 6,329,916 (566,162) (86,767) Net cash (used in) provided by operating activities (18,715) (34,737,122) 276,543,081 42,382,081 Cash flows from financing activities: Proceeds from the issuance of ordinary shares and warrants — — 47,430,195 7,268,995 Proceeds from the issuance of convertible note — — 3,358,369 514,693 Proceeds from other loans — 34,881,000 — — Repayments of convertible notes — — (318,929,623) (48,878,103) Net cash provided by (used in) financing activities — 34,881,000 (268,141,059) (41,094,415) Net change in cash and cash equivalents (18,715) 143,878 8,402,022 1,287,666 Cash and cash equivalents, beginning of year 18,733 18 143,896 22,053 Cash and cash equivalents, end of year 18 8,545,918 1,309,719 Supplement disclosure of cash flow information: Interest paid — — 36,310,455 5,564,821 Income taxes paid — — — — |
PRINCIPAL ACCOUNTING POLICIES (
PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
PRINCIPAL ACCOUNTING POLICIES | |
Basis of presentation | <1> Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. The accompanying consolidated financial statements have been prepared on a going concern basis. The Group has an accumulated deficit of approximately RMB2,992.2 million (US$458.6 million) and total current liabilities exceeded total assets by approximately RMB315.9 million (US$48.4 million) as of December 31, 2020. The Group expects to purchase cryptocurrencies mining machines to build its cryptocurrencies mining business in order to achieve overall revenue growth. To meet its capital needs, the Group is considering multiple alternatives, including but not limited to additional equity or debt financing as outlined below. There can be no assurance that the Group will be able to complete any such transaction on acceptable terms or otherwise. If the Group is unable to obtain the necessary capital, it will need to pursue a plan to license or sell its assets, seek to be acquired by another entity, or cease operations. These factors raise substantial doubt about the Group’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset or liability amounts that might result from the outcome of this uncertainty. Additional Equity or Debt Financing In October 2020, the Company completed a share offering by issuing 70,500,000 Class A ordinary shares and 27,025,000 warrants to purchase 2,702,500 American Depositary Shares (“ADS”), each ADS representing thirty Class A ordinary shares and each warrant exercisable for the purchase of 0.1 ADS, including 3,525,000 warrants to purchase an additional 352,500 ADSs, pursuant to the over-allotment option granted to the underwriter to purchase additional warrants to cover over-allotments with an exercise price of US$3.70 per ADS. In connection with such offering, the Company also issued representative’s warrants to purchase 117,500 ADSs, each representing thirty Class A ordinary shares, to the underwriter of the offering with an exercise price of US$4.07 per ADS. The Company received net proceeds of US$8.1 million from such offering. The Company classified the representative warrants as a financial liability and the remaining warrants as equity. In February 2021, the Company issued and sold (i) a one-year convertible note in a principal amount of US$5,000,000, (ii) 50,000 ADSs, and (iii) 10,000,000 Class A ordinary shares, for an aggregate consideration of US$5,000,000 to Streeterville Capital LLC (“Streeterville”). 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 the Company’s at an initial conversion price of US$14.00 per ADS, each ADS representing thirty Class A ordinary shares, subject to adjustment. 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$840,000 per calendar month. Payment of the redemption amount could be in cash or the Company’s ADSs, provided that any redemption made in cash which exceeds half of the original principal amount will be subject to a ten percent (10%) premium. The Company has the right to prepay all or any portion of the outstanding balance, at any time, subject to fifteen percent (15%) premium on the prepaid amount. In the event the principal amount and interest accrued for the convertible note issued to Streeterville are fully repaid, the Company has the right to repurchase the remaining Class A ordinary shares held by Streeterville that are unsold at US$0.0001 per share. In February 2021, the Group entered into a standby equity distribution agreement (“SEDA”) with YA II PN, LTD., a Cayman Islands exempt limited partnership managed by Yorkville Advisor Global, LP, pursuant to which the Group is able to sell up to US$100.0 million of the Company’s ADSs solely at the Group’s request at any time during the 36 months following the date of the SEDA. The preliminary purchase price per ADS shall be adjusted to the greater of (A) 90% of the average of the 3 lowest daily volume weighted average price of the Company’s ADSs and during the five consecutive trading days commencing on the trading day immediately following the preliminary closing date or (B) 85% of the average of the five daily volume weighted average price of the Company’s ADSs during the secondary pricing period. The Group intends to use the proceeds from the potential offering of the ADSs pursuant to the SEDA to fund the working capital required on business growth in the cryptocurrencies mining operation. The Group intends to obtain financing via the issuance of Class A ordinary shares and warrants through public or private placements, as needed. |
Consolidation | <2> Consolidation The consolidated financial statements include the financial statements of The9 Limited, its subsidiaries and VIEs in which it has a controlling financial interest. A subsidiary is consolidated from the date on which the Group obtained control and continues to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. If the Group demonstrates its ability to control a VIE through its rights to all the residual benefits of the VIE and its obligation to fund losses of the VIE, then the VIE is consolidated. All intercompany balances and transactions between The9 Limited, its subsidiaries and VIEs have been eliminated in consolidation. In April 2010, the Group acquired a controlling interest in Red 5. In June 2016, the Group completed a share exchange transaction with L&A International Holding Limited (“L&A”) and certain other shareholders of Red 5. After the transaction, the Group owned 34.71% shareholding in Red 5. As the Group controls a majority of Board of Director seats and only a majority vote is required to approve Board of Director resolutions, and as the Group has continuously funded the operation of Red 5, the Group still retained effective control over Red 5. Red 5 remained as a consolidated entity of the Group as of December 31, 2020. PRC laws and regulations currently prohibit or restrict foreign ownership of internet-related business. In September 2009, the General Administration of Press and Publication Radio, Film and Television (“GAPPRFT”) further promulgated the Circular Regarding the Implementation of the Department Reorganization Regulation by State Council and Relevant Interpretation by State Commission Office for Public Sector Reform to Further Strengthen the Administration of Pre-approval on Online Games and Approval on Import Online Games (the “GAPP Circular”). Pursuant to Administrative Measures on Network Publication (the “Network Publication Measures”) jointly issued by GAPPRFT and the Ministry of Information Industry (which has subsequently been reorganized as the Ministry of Industry and Information Technology) (“MIIT”) on February 4, 2016, effective from March 2016, wholly foreign-owned enterprises, Sino-foreign equity joint ventures and Sino-foreign cooperative enterprises shall not engage in the provision of web publishing services, including online game services. Prior examination and approval by GAPPRFT are required on project cooperation involving internet publishing services between an internet publishing services and a wholly foreign-owned enterprise, Sino-foreign equity joint venture, or Sino-foreign cooperative enterprise within China or an overseas organization or individual. It is unclear whether PRC authorities will deem the Group’s VIE structure as a kind of such “manners of cooperation” by foreign investors to gain control over or participate in domestic online game operators, and it is not clear whether GAPPRFT and MIIT have regulatory authority over the ownership structures of online game companies based in China and online game operations in China. Therefore, the Group believes that its ability to direct those activities of its VIEs that most significantly impact their economic performance is not affected by the GAPP Circular. |
Use of estimates | <3> 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 reported periods. Significant accounting estimates reflected in the Group’s consolidated financial statements include the valuation of non-marketable equity investments and determination of other-than-temporary impairment, allowance for doubtful accounts, revenue recognition, assessment of impairment of other long-lived assets, assessment of impairment of advances to suppliers and other advances, incremental borrowing rates for lease assessment, fair value of redeemable noncontrolling interest, fair value of the warrants, share-based compensation expenses, consolidation of VIEs, 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. |
Foreign currency translation | <4> Foreign currency translation The Group’s reporting currency is the Renminbi (“RMB”). The Group’s functional currency, with the exception of its subsidiaries, Red 5, The9 Interactive, and Red 5 Singapore, is the RMB. The functional currency of Red 5, The9 Interactive, and Red 5 Singapore, is the United States dollar ("US$" or "U.S. dollar"), U.S. dollar, and Singapore dollar, respectively. Assets and liabilities of Red 5, The9 Interactive, and Red 5 Singapore, are translated at the current exchange rates quoted by the People’s Bank of China (the “PBOC”) in effect at the balance sheet dates. Equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period to RMB. Gains and losses resulting from foreign currency translation to reporting currency are recorded in accumulated other comprehensive (loss) income in the consolidated statements of changes in equity for the years presented. Transactions denominated in currencies other than functional currencies, are translated into functional currencies at the exchange rates prevailing at the dates of the transactions. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and comprehensive loss. Monetary assets and liabilities denominated in foreign currencies are translated into functional currencies using the applicable exchange rates at the balance sheet dates. All such exchange gains and losses are included in foreign exchange loss in the consolidated statements of operations and comprehensive (loss) income. |
Cash and cash equivalents | <5> Cash and cash equivalents Cash and cash equivalents represent cash on hand and highly liquid investments with a maturity date when acquired of three months or less. As of December 31, 2019 and 2020, cash and cash equivalents were comprised primarily of bank deposits where cash is deposited with reputable financial institutions. Included in cash and cash equivalents as of December 31, 2019 and 2020 are amounts denominated in U.S. dollar totaling US$0.35 million and US$4.6 million, respectively. The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the PBOC, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in China’s foreign exchange trading system market. The Group’s aggregate amount of cash and cash equivalents denominated in RMB amounted to RMB7.6 million and RMB1.1 million (US$0.2 million) as of December 31, 2019 and 2020, respectively. |
Allowance for doubtful accounts | <6> Allowance for doubtful accounts Starting from 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 replaces 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 will result 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 mainly consist of receivables from third-party game platforms, and other receivables, which are included in prepayments and other current assets, both of which are recorded net of allowance for doubtful accounts. Allowances for doubtful accounts are charged to general and administrative expenses. The Group provided an allowance for doubtful accounts of RMB21.2 million, RMB0.2 million and RMB2.3 million (US$0.4 million) for the years ended December 31, 2018, 2019 and 2020, respectively. The Group has written-off an amount of RMB22.2 million, RMB3.2 million and RMB2.1 million (US$0.3 million) for the years ended December 31,2018, 2019 and 2020, respectively. |
Investments in equity method investee and loan to equity method investee | <7> Investments in equity method investee and loan to equity method investee Equity investments are comprised of investments in privately held companies. The Group uses the equity method to account for an equity investment over which it has the ability to exert significant influence but does not otherwise have control. The Group records equity method investments at the cost of acquisition, plus the Group’s share in undistributed earnings and losses since acquisition. For equity investments over which the Group does not have significant influence or control, the cost method of accounting is used. The Group has historically provided financial support to certain equity investees in the form of loans. If the Group’s share of the undistributed losses exceeds the carrying amount of an investment accounted for by the equity method, the Group continues to report losses up to the investment carrying amount, including any loans balance due from the equity investees. The Group assesses its equity investments and loans to equity investees for impairment on a periodic basis by considering factors including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the technological feasibility of the investee’s products and technologies, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, cash burn rate, and other company-specific information including recent financing rounds. If it has been determined that the equity investment is less than its related fair value and that this decline is other-than-temporary, the carrying value of the investment and loan to equity investee is adjusted downward to reflect these declines in value. |
Property, equipment and software, net | <8> Property, equipment and software, net Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Leasehold improvements Shorter of respective lease term or estimated useful life Computer and equipment 3 to 4 years Software 5 years Office furniture and fixtures 3 years Motor vehicles 5 years Office buildings 10 to 20 years In September 2019, the Group entered into a sale purchase agreement with Kapler Pte. Ltd. to sell three subsidiaries which hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction for the disposal of three subsidiaries was completed in February 2020 and the Group owned no office buildings as of December 31, 2020. |
Assets held for sale | <9> Assets held for sale Assets and asset disposal groups are classified as held-for-sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Long-lived assets to be sold are classified as held for sale if all the recognition criteria in ASC 360-10-45-9 are met: · Management, having the authority to approve the action, commits to a plan to sell the asset; · The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; · An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; · The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; · The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and · Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets and liabilities classified as held-for-sale are measured at lower of their carrying amount or fair value less costs to sell. |
Land use right, net | <10> Land use rights, net Land use rights represents operating lease prepayments to the PRC’s Land Bureau for usage of the parcel of land located at Zhangjiang, Shanghai. Amortization is calculated using the straight-line method over the estimated land use rights period of 44 years. In September 2019, the Group entered into a sale purchase agreement with Kapler Pte. Ltd. to sell three subsidiaries which hold the land use rights and office buildings located at Zhangjiang, Shanghai. The transaction for the disposal of three subsidiaries was completed in February 2020 and the Group owned no land use rights as of December 31, 2020. |
Impairment of long-lived assets | <11> Impairment of long-lived assets The Group evaluates 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. The Group assesses 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, the Group 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. |
Revenue recognition | <12> Revenue recognition Revenues are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration of the Group expects 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. Online game services The Group earns revenue from provision of online game operation services to players on the Group’s game servers and third-party platforms and overseas licensing of the online game to other operators. The Group grants operation right on authorized games, together with associated services which are rendered to the customers over time. The Group adopts virtual item / service consumption model for the 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 through the various transaction arrangements. The determination on whether to record the revenue gross or net is based on an assessment of various factors, including but not limited to whether the Group (i) is the primary obligor in the arrangement; (ii) has general inventory risk; (iii) changes the product or performs part of the services; (iv) has latitude in establishing the selling price; (v) has involvement in the determination of 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 games 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. Revenues are recognized as the virtual items are consumed or over the estimated lives of the virtual items, which are estimated by considering 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 games license arrangements entered into by third-party operators, if the terms provide that (i) third-party operators are responsible for providing 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 the 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 as an agent of the third-party operators in such arrangement with game players. Accordingly, the Group records the 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 the third-party licensee operators. Monthly revenue-based royalty payments are recognized when the relevant services are delivered, provided that collectability is reasonably assured. The Group views the third-party licensee operators as its customers and recognizes revenues on a net basis, as the Group does not have the primary responsibility for fulfillment and acceptability of the game services. The Group receives additional up-front license fees from certain third-party licensee operators who are entitled to an exclusive right to access the games where initial license fee is allocated solely on the license. License fees are recognized as revenue evenly throughout the license period after commencement of the game, given that the Group’s intellectual property rights subject to the license are considered to be symbolic and the licensee has the right to access such intellectual property rights as they exist over time when the license is granted. Technical services Technical services are blockchain-related consulting services where the Group is to provide designing, programming, drafting of white papers, and related services to customers. These revenues are recognized when delivery of the services has occurred or when services have been rendered and the collection of the related fees is reasonably assured. Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, where the Group has satisfied its performance obligations and has the unconditional right to payment. Deferred revenue related to unsatisfied performance obligations at the end of the period primarily consists of fees received from game players for online game services and technical services. For deferred revenue, due to the generally short-term duration of the contracts, the majority of the performance obligations are satisfied in the following reporting period. Of the deferred revenue balance at the beginning of the period, revenue of RMB 0.2 million and nil was recognized during the years ended December 31, 2019 and 2020, respectively. |
Advances from customers | <13> Advances from customers The Group licenses proprietary games to operators in other countries and receives license fees and royalty income. License fees received in advance of the monetization of the game is recorded in advances from customers. |
Convertible notes | <14> Convertible notes Convertible Notes and Beneficial Conversion Feature ("BCF") The Group issued convertible notes and warrants in December 2015. The Group has 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 the Group’s evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as the conversion option does not provide t he 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 per the terms of the convertible notes agreement is below market value. In these instances, the value of the BCF is determined as the intrinsic value of the conversion feature 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 at the date of issuance. The allocated fair value for the warrants and the value of the BCF are both recorded in the consolidated financial statements as a debt discount from the face amount of the notes, which is then accreted to interest expense over the life of the related debt using the effective interest method. The Group 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 | <15>Warrants The Group accounts for the detachable warrants issued in connection with convertible notes under the authoritative guidance on accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock. The Group classifies warrants in its consolidated balance sheet as a liability which is revalued at each balance sheet date subsequent to the initial issuance. The Group uses the Black-Scholes-Merton pricing model (the “Black-Scholes Model”) to value the detachable warrants issued in connection with convertible notes and uses binomial option pricing model to value the warrants issued in connection with equity-linked instrument. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. A small change in the estimates used may cause a relatively large change in the estimated valuation. The estimated volatility of the Group’s common stock at the date of issuance, and at each subsequent reporting period, is based on historical fluctuations in the Company’s stock price. The risk-free interest rate is based on United States Treasury zero-coupon issues with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is based on the historical pattern of exercises of warrants. The Group accounts 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 . The Group classifies warrants in its consolidated balance sheet as a liability or equity based on the nature and characteristics of each warrant issued. 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. For liability classified warrants, the warrants are initial 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. |
Cost of revenues | <16> Cost of revenues Cost of revenues consists primarily of online game royalties, payroll, revenue sharing to third-party game platform, telecom carriers and other suppliers, maintenance and rental of Internet data center sites, depreciation and amortization of computer equipment and software, and other overhead expenses directly attributable to the services provided. |
Product development costs | <17> Product development costs For software development costs, including online games, to be sold or marketed to customers, the Group expenses software development costs incurred prior to reaching technological feasibility. Once a software product has reached technological feasibility, all subsequent software costs for that product are capitalized until that product is released for marketing. After an online game is released, the capitalized product development costs are amortized over the estimated product life. For the years ended December 31, 2018, 2019 and 2020, although software products have reached technological feasibility, total software costs incurred subsequent to reaching technological feasibility were immaterial and therefore not capitalized. For website and internally used software development costs, the Group expenses all costs incurred in connection with the planning and implementation phases of development and costs that are associated with repair or maintenance of the existing websites and software. Costs incurred in the application and infrastructure development phase are capitalized and amortized over the estimated product life. Since the inception of the Group, the amount of internally generated costs qualifying for capitalization has been immaterial and, as a result, all website and internally used software development costs have been expensed as incurred. Product development costs consist primarily of outsourced research and development, payroll, depreciation charges and other overhead for the development of the Group’s proprietary games. Other overhead product development costs include costs incurred by the Group to develop, maintain, monitor, and manage its websites. |
Sales and marketing expenses | <18> Sales and marketing expenses Sales and marketing expenses consist primarily of advertising and promotional expenses, payroll and other overhead expenses incurred by the Group’s sales and marketing personnel. Advertising expenses in the amount of RMB 0.3 million, RMB0.2 million and RMB0.1 million (US$0.02 million) for the years ended December 31, 2018, 2019 and 2020, respectively, were expensed as incurred. |
Government grants | <19> Government grants Unrestricted government subsidies from local government agencies allowing the Group full discretion to utilize the funds were RMB1.6 million, RMB1.2 million and RMB 0.1 million (US$0.02 million) for the years ended December 31, 2018, 2019 and 2020, respectively, which were recorded in other income, net in the consolidated statements of operations and comprehensive loss. |
Share-based compensation | <20> 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. The fair value of the stock options containing a market condition is estimated using a Monte Carlo simulation model. For options awarded by private subsidiaries of the Group, the fair value of shares is estimated based on the equity value of the subsidiary. The Group evaluates the fair value of the subsidiary by making judgments and assumptions about the projected financial and operating results of the subsidiary. 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. On January 1, 2019, the Group adopted ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvement to Nonemployee Share-based Payment Accounting ("ASU 2018-07") to amend the accounting for share-based payment awards issued to nonemployees. Under ASU 2018-07, the accounting for awards to non-employees is similar to the model for employee awards. 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. |
Leases | <21> Leases The Group applied ASC 842, Leases , on January 1, 2019 on a modified retrospective basis and has elected not to recast comparative periods. Right-of-use ("ROU") assets represent the Group's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. The operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. As most of the Group's leases do not provide an implicit rate, the Company uses the PBOC's incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Group's lease terms may include options to extend or terminate the lease. Renewal options are considered within the ROU assets and lease liability when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For operating leases with a term of one year or less, the Group has elected to not recognize a lease liability or ROU asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expense on a straight-line basis over the lease term. Short-term lease expense is immaterial to its consolidated statements of operations, comprehensive loss, and cash flows. The Group has operating lease agreements with insignificant non-lease components and has elected the practical expedient to combine and account for lease and non-lease components as a single lease component. |
Income taxes | <22> Income taxes Current income taxes are provided for in accordance with the laws and regulations applicable to the Group as enacted by the relevant tax authorities. Income taxes are accounted for under the asset and liability method. Deferred taxes are determined based upon differences between the financial reporting and tax bases of assets and liabilities 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 as 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. The Group recognizes 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 relevant tax authority. Income tax related interest is classified as interest expenses and penalties as income tax expense. |
Redeemable noncontrolling interests | <23> Redeemable noncontrolling interests Redeemable noncontrolling interests are equity interests of the Group's consolidated subsidiary not attributable to the Group that has redemption features that are not solely within the Group’s control. These interests are classified as temporary equity because their redemption is considered probable. These interests are measured at the greater of estimated redemption value at the end of each reporting period or the initial carrying amount of the redeemable noncontrolling interests adjusted for cumulative earnings (loss) allocations. |
Noncontrolling interest | <24> Noncontrolling interest A noncontrolling interest in a subsidiary or VIE of the Group represents the portion of the equity (net assets) in the subsidiary or VIE not directly or indirectly attributable to the Group. Noncontrolling interests are presented as a separate component of equity in the consolidated balance sheets and modifies the presentation of net (loss) income by requiring earnings and other comprehensive income loss to be attributed to controlling and noncontrolling interest. |
(Loss) income per share | <25> (Loss) income per share Basic (loss) income per share is computed by dividing net (loss) income attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted (loss) income per share is calculated by dividing net (loss) income attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. Ordinary share equivalents of stock options and warrants are calculated using the treasury stock method and are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net (loss) income is recorded. |
Segment reporting | <26> Segment reporting The Group has one operating segment whose business is developing and operating online games and related services. The Group’s chief operating decision maker is the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group. The Group generates its revenues from customers in Greater China and other areas. |
Certain risks and concentration | <27> Certain risks and concentration Financial instruments that potentially subject the Group to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and prepayments and other current assets. As of December 31, 2019 and 2020, substantially all of the Group’s cash and cash equivalents were held by major financial institutions, which management believes are of high credit worthiness. |
Fair value measurements | <28> Fair value measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. The fair value measurement guidance provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 inputs are unadjusted quoted prices in active markets for identical assets that the management has the ability to access at the measurement date. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 inputs include unobservable inputs to the valuation methodology that reflect management’s assumptions about the assumptions that market participants would use in pricing the asset. Management develops these inputs based on the best information available, including their own data. |
Financial instruments | <29> Financial instruments Financial instruments primarily consist of cash and cash equivalents, investments, accounts receivable, accounts payable, warrants, convertible notes and short-term borrowings. The carrying value of the Group’s cash and cash equivalents, investments, accounts receivable, accounts payable, convertible notes and short-term borrowings approximate their market values due to the short-term nature of these instruments. |
Recent accounting pronouncements | <30> Recent accounting pronouncements Income Taxes In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Group is currently evaluating the impact of ASU 2019-12 on its financial position, results of operations, and cash flow. |
ORGANIZATION AND NATURE OF OP_2
ORGANIZATION AND NATURE OF OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ORGANIZATION AND NATURE OF OPERATIONS | |
Schedule of Group's principal subsidiaries and VIE subsidiaries | The Group is based in China targeting fast-growing technology businesses. The Group is transitioning from an online game operation business to a cryptocurrencies mining business. The Company’s principal subsidiaries and VIEs are as follows as of December 31, 2020: Date of Place of Legal Name of Entity Registration Registration Ownership Principal subsidiaries: GameNow.net (Hong Kong) Ltd. (" GameNow Hong Kong") January‑2000 Hong Kong 100 % China The9 Interactive Limited (“ C9I ”) October‑2003 Hong Kong 100 % China The9 Interactive (Beijing) Ltd. (“ C9I Beijing ”) March‑2007 PRC 100 % JiuTuo (Shanghai) Information Technology Ltd. ( "Jiu Tuo" ) July-2007 PRC 100 % China Crown Technology Ltd. ( "China Crown Technology" ) November‑2007 Hong Kong 100 % Asian Way Development Ltd. (“Asian Way”) November‑2007 Hong Kong 100 % New Star International Development Ltd. ( “New Star” ) January‑2008 Hong Kong 100 % Red 5 Studios, Inc. (“ Red 5 ”)(Note 2.2) June‑2005 USA 34.71 % Red 5 Singapore Pte. Ltd. (“ Red 5 Singapore ”) (Note 2.2) April‑2010 Singapore 34.71 % The9 Interactive, Inc. (“ The9 Interactive ”) June‑2010 USA 100 % Shanghai Jiu Gang Electronic Technology Ltd. (“ Jiu Gang ”) December‑2014 PRC 100 % City Channel Ltd. (“ City Channel ”) June‑2006 Hong Kong 100 % The9 Singapore Pte. Ltd. (“ The9 Singapore ”) April‑2010 Singapore 100 % Ninebit Inc. (“ Ninebit ”) January -2018 Cayman Islands 100 % 1111 Limited (“ 1111 ”) January -2018 Hong Kong 100 % Supreme Exchange Limited (“ Supreme ”) December‑2018 Malta 90 % BET 111 Ltd. (" Bet 111 ") January -2019 Malta 90 % Coin Exchange Ltd (" Coin ") January -2019 Malta 90 % The9 EV Limited ("The9 EV") May-2019 Hong Kong 100 % NBTC Limited (“ NBTC ”) June-2019 Hong Kong 100 % FF The9 China Joint Venture Limited ("FF The9") September-2019 Hong Kong 50 % Huiling Computer Technology Consulting (Shanghai) Co.Ltd. ("Huiling") March-2019 PRC 100 % Leixian Information Technology (Shanghai) Co., Ltd. ("Leixian") March-2019 PRC 100 % Variable interest entity: Shanghai The9 Information Technology Co., Ltd. (“ Shanghai IT ”) (Note 4) September‑2000 PRC N/A Subsidiaries and VIEs of Shanghai IT: Legal Date of Place of Ownership Held Name of Entity Registration Registration by Shanghai IT Shanghai Jiushi Interactive Network Technology Co., Ltd. ( “Jiushi” ) July‑2011 PRC 80 % Shanghai ShencaiChengjiu Information Technology Co., Ltd. (“ SH Shencai ”) May‑2015 PRC 60 % Shanghai Zhiaojiqi Information Technology Co., Ltd. ( “Shanghai Zhiaojiqi” ) November-2015 PRC 0 % Wuxi Interest Dynamic Network Technology Co., Ltd. (“ Wuxi Qudong ”) June‑2016 PRC 100 % Changsha Quxiang Network Technology Co., Ltd. (“ Changsha Quxiang ”) July‑2016 PRC 100 % Silver Express Investments Ltd. (“ Silver Express ”) November‑2007 Hong Kong 100 % |
PRINCIPAL ACCOUNTING POLICIES_2
PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PRINCIPAL ACCOUNTING POLICIES | |
Schedule of estimated useful lives | Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Leasehold improvements Shorter of respective lease term or estimated useful life Computer and equipment 3 to 4 years Software 5 years Office furniture and fixtures 3 years Motor vehicles 5 years Office buildings 10 to 20 years |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
VARIABLE INTEREST ENTITIES | |
Schedule of financial information of VIE subsidiaries included in consolidated financial statements with intercompany balances and transactions eliminated | Summary financial information of the VIE subsidiaries included in the accompanying consolidated financial statements with intercompany balances and transactions eliminated are as follows: December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Total assets 150,615,709 10,357,329 1,587,330 Total liabilities 313,608,879 48,062,664 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Net revenues 16,567,372 182,119 625,488 95,860 Net loss (49,024,050) (51,667,515) (52,410,094) (8,032,199) |
ADVANCES TO SUPPLIERS (Tables)
ADVANCES TO SUPPLIERS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ADVANCES TO SUPPLIERS | |
Summary of advances to suppliers | Advances to suppliers are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Advance to subscribe tokens 10,094,972 — — Advance for minimum guarantee payment — — — Financing fee — — — Company registration fee 794,692 — — Advertising fee 255,259 — — Other 101,685 27,725 4,249 11,246,608 27,725 4,249 |
PREPAYMENTS AND OTHER CURRENT_2
PREPAYMENTS AND OTHER CURRENT ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | |
Schedule of prepayments and other current assets | Prepayments and other current assets are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Employee advances 1,648,197 2,292,700 351,372 Input VAT recoverable 1,441,700 1,780,484 272,871 Prepayments and deposits 1,488,463 1,551,118 237,719 Refundable withholding tax 1,297,016 — — Other receivables, net of allowance for doubtful accounts of RMB5,343,427 and RMB6,619,312 as of December 31, 2019 and 2020, respectively 2,973,158 4,231,165 648,454 8,848,534 9,855,467 1,510,416 |
ASSETS HELD-FOR-SALE AND LIAB_2
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE | |
Summary of assets and liabilities held for sale | December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Assets classified as held-for-sale Cash and cash equivalents 43,027,475 — — Prepayments and other current assets 5,162,857 — — Property, equipment and software, net 14,051,044 — — Land use rights, net 61,148,974 — — Total assets classified as held-for-sale 123,390,350 — — Liabilities directly associated with assets held-for-sale Accounts payable 50,000 — — Other taxes payable 1,585,095 — — Other payables and accruals 46,800 — — Interest payable 11,384,841 — — Long-term borrowing due within one year 31,624,560 — — Total liabilities directly associated with assets held-for-sale 44,691,296 — — |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INVESTMENTS | |
Schedule of Investments in equity investees |
—
—
—
—
%
Shanghai Big Data Cultures & Media Co., Ltd. (“Big Data”)
—
—
—
44.46
%
Maxline Holdings Limited (“Maxline”)
—
—
—
29.00
%
Leading Choice Holdings Limited (“Leading Choice”) <4>
—
—
—
—
%
Nanyang Herbs Pte. Ltd. ("Nanyang Herbs") <11>
—
—
—
50.00
%
Investments accounted for under cost method:
Shanghai Institute of Visual Art of Fudan University (“SIVA”) <8>
10,000,000
—
—
1.28
%
T3 Entertainment Co., Ltd. (“T3”) <2>
—
—
—
—
%
Smartposting Co, Ltd. (“Smartposting”)
—
—
—
14.55
%
Beijing Ti Knight Network Technology Co., Ltd. (“Beijing Ti Knight”)
—
—
—
9.90
%
Shanghai The9 Education Technology Co., Ltd. (“The9 Education Technology”)
—
—
—
19.20
%
Shanghai Ronglei Culture Communication Co., Ltd. (“Shanghai Ronglei”) <3>
—
—
—
—
%
Plutux Limited (“Plutux”) <9>
—
—
—
8.00
%
Zhenjiang Kexin Power System Design and Research Co., Ltd. (“Zhenjiang Kexin”) <5>
—
—
—
9.90
%
Shangdong Shanyeyunye Culture Co., Ltd. (“Shanyeyunye”) <6>
—
—
—
10.00
%
Beijing Weiming Naonao Technology Co., Ltd. (“BeijingNaonao”) <7>
—
—
—
9.09
%
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") <10>
—
—
—
0.156
%
Total
10,000,000
—
—" id="sjs-B4">The Group’s investments comprise the following: Share ownership as of December 31, December 31, December 31, December 31, 2019 2020 2020 2020 RMB RMB US$ ( Note 3) Investments accounted for under equity method: ZTE9 Network Technology Co., Ltd., Wuxi (“ZTE9”) — — — 5.00 % System Link Corporation Limited ("System Link") <1> — — — — % Shanghai Big Data Cultures & Media Co., Ltd. (“Big Data”) — — — 44.46 % Maxline Holdings Limited (“Maxline”) — — — 29.00 % Leading Choice Holdings Limited (“Leading Choice”) <4> — — — — % Nanyang Herbs Pte. Ltd. ("Nanyang Herbs") <11> — — — 50.00 % Investments accounted for under cost method: Shanghai Institute of Visual Art of Fudan University (“SIVA”) <8> 10,000,000 — — 1.28 % T3 Entertainment Co., Ltd. (“T3”) <2> — — — — % Smartposting Co, Ltd. (“Smartposting”) — — — 14.55 % Beijing Ti Knight Network Technology Co., Ltd. (“Beijing Ti Knight”) — — — 9.90 % Shanghai The9 Education Technology Co., Ltd. (“The9 Education Technology”) — — — 19.20 % Shanghai Ronglei Culture Communication Co., Ltd. (“Shanghai Ronglei”) <3> — — — — % Plutux Limited (“Plutux”) <9> — — — 8.00 % Zhenjiang Kexin Power System Design and Research Co., Ltd. (“Zhenjiang Kexin”) <5> — — — 9.90 % Shangdong Shanyeyunye Culture Co., Ltd. (“Shanyeyunye”) <6> — — — 10.00 % Beijing Weiming Naonao Technology Co., Ltd. (“BeijingNaonao”) <7> — — — 9.09 % FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") <10> — — — 0.156 % Total 10,000,000 — — |
PROPERTY, EQUIPMENT AND SOFTW_2
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
Schedule of property, equipment and software and related accumulated depreciation and amortization | Property, equipment and software and related accumulated depreciation and amortization are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Office buildings 69,341,652 — — Computers and equipment 5,181,577 4,989,121 764,616 Leasehold improvements 9,359,857 — — Office furniture and fixtures 1,787,549 1,720,139 263,623 Motor vehicles 5,031,201 4,376,821 670,777 Software 14,542,095 10,511,865 1,611,014 Less: accumulated depreciation and amortization (89,974,366) (20,620,844) (3,160,283) Less: property, equipment and software, net, held-for-sale (14,051,044) — — Net book value 1,218,521 977,102 149,747 |
LAND USE RIGHT, NET (Tables)
LAND USE RIGHT, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LAND USE RIGHT, NET | |
Schedule of gross carrying amount, accumulated amortization and net book value of intangible asset | Gross carrying amount, accumulated amortization and net book value of land use rights are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Land use rights 85,160,348 — — Less: accumulated amortization (24,011,374) — — Less: land use right, net, held-for-sale (61,148,974) — — Net book value — — — |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
Schedule of items related to operating lease in consolidated balance sheet | December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Operating lease right-of-use assets 9,257,604 5,149,090 789,133 Operating lease liabilities-current portion 3,407,670 3,787,210 580,415 Operating lease liabilities-non-current portion 6,251,705 2,464,495 377,700 |
Schedule of lease cost | Classification in Consolidated Statements of Operations and Comprehensive (Loss) Gain December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Operating lease cost Operating expenses 1,606,340 3,539,374 542,433 Cost of other leases with terms less than one year Operating expenses 82,232 67,281 10,311 Total 1,688,572 3,606,655 552,744 |
Schedule of maturities of operating lease liabilities | December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Due within one year 3,779,845 3,995,768 612,378 Due in the second year 3,995,768 2,502,839 383,577 Due in the third year 2,502,839 — — Total lease payments 10,278,452 6,498,607 995,955 Less: imputed interest (619,077) (246,902) (37,839) Total 9,659,375 6,251,705 958,116 |
Schedule of supplemental cash flow information related to operating leases | December 31, 2019 December 31, 2020 December 31, 2020 RMB RMB US$ (Note 3) Cash paid for amounts included in the measurement of operating lease liabilities 1,271,769 2,842,464 435,627 |
OTHER LONG-LIVED ASSETS, NET (T
OTHER LONG-LIVED ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
OTHER LONG-LIVED ASSETS, NET | |
Schedule of other long-lived assets | Other long-lived assets are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Prepaid license fee 6,515,200 — — Prepaid deposit for joint venture — — — Total 6,515,200 — — |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
Schedule of changes in warrants liability measured at fair value on a recurring basis using significant level 3 inputs | In 2015, the Group issued warrants in connection with its convertible notes has the warrants have expired as of December 31, 2020. The warrants are recorded at fair market value at the date of issuance and subsequently at each reporting date. The following table presents the change in the warrants liability that were measured at fair value on a recurring basis using significant Level 3 inputs during 2019 and 2020 (see Note 19). December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Balance at beginning of year 1,490,844 198,600 30,437 Issuance of warrants — 1,694,208 259,649 Fair value change on warrants liability recognized in other comprehensive income (1,292,244) (37,851) (5,801) Balance at the end of the year 198,600 1,854,957 284,285 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
TAXATION | |
Schedule of composition of income tax expense | The current and deferred portions of income tax expense included in the consolidated statements of operations and comprehensive loss are as follows: For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Current income tax expense PRC — — 7,165,097 1,098,099 Other jurisdictions — — — — Deferred tax assets PRC (39,763,083) (5,772,005) 25,905,564 3,970,201 Other jurisdictions (19,816,235) (15,151,553) (44,312,311) (6,791,159) Subtotal (59,579,318) (20,923,558) (18,406,747) (2,820,958) Change in valuation allowance PRC 39,763,083 5,772,005 (25,905,564) (3,970,201) Other jurisdictions 19,816,235 15,151,553 44,312,311 6,791,159 Subtotal 59,579,318 20,923,558 18,406,747 2,820,958 Income tax expense — — 7,165,097 1,098,099 |
Schedule of reconciliation between statutory EIT rate and Group's effective tax rate | Reconciliation between the statutory EIT rate and the Group’s effective tax rate is as follows: For the year ended For the year ended For the year ended December 31, December 31, December 31, 2018 2019 2020 PRC statutory EIT rate 25 % 25 % 25 % Effect of different tax rates in other jurisdictions 2 % 1 % (10) % Change in future tax rate (upon expiration of preferential rate) 1 % 2 % — % Change of prior year deferred tax assets (11) % (15) % 1 % Change of valuation allowance (2) % (18) % (10) % Income not subject to tax and non-deductible expenses, net — % — % — % Effect of expired net operating loss (15) % 5 % (6) % PRC withholding tax — % — % 2 % Effective EIT rate — % — % 2 % |
Schedule of significant components of deferred tax assets and liabilities | Significant components of deferred tax assets For the year ended For the year ended For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Temporary differences related to expenses and accruals 1,076,708 615,041 94,259 Temporary differences related to impairment on advances to suppliers 3,438,597 2,942,771 450,999 Temporary differences related to provision for doubtful accounts 1,078,742 689,811 105,718 Others 8,771,868 8,221,500 1,260,000 Temporary differences related to depreciation, amortization, and impairment of equipment and intangible assets 24,890,416 15,396,549 2,359,624 Startup expenses and advertising fees 199,704 212,880 32,625 Temporary differences related to research and development credits 1,120,850 1,057,050 162,000 Temporary differences related to equity investments 5,069,035 11,740,058 1,799,243 Foreign tax credits — — — Temporary differences related to provision for prepayment for equipment 5,000,000 5,000,000 766,284 Tax loss carry forwards 270,594,922 256,958,435 39,380,603 Total deferred tax assets 321,240,842 302,834,095 46,411,355 Less: Valuation allowance (321,240,842) (302,834,095) (46,411,355) Total deferred tax assets — — — |
Schedule of movement of valuation allowance on deferred tax assets | Movement of valuation allowance on deferred tax assets For the year ended For the year ended For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Beginning balance 342,164,400 321,240,842 49,232,313 Decrease in valuation allowance (20,923,558) (18,406,747) (2,820,958) Ending balance 321,240,842 302,834,095 46,411,355 |
SHORT-TERM BORROWINGS (Tables)
SHORT-TERM BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SHORT-TERM BORROWINGS | |
Schedule of short-term bank borrowings | Short-term borrowings are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Pledged loan 82,645,089 — — Interest-free loan 34,881,000 — — Long-term borrowing due within one year 31,624,560 — — Less: borrowing classified as held for sale (31,624,560) — — Total 117,526,089 — — |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities are as follows: December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Funds raised for CrossFire New Mobile Game 57,499,910 56,311,274 8,630,080 Professional services 11,844,738 9,866,284 1,512,074 Agency commission fees payable — 6,397,096 980,398 Staff cost related payables 9,851,024 3,842,856 588,943 Office expenses 3,543,495 1,920,735 294,365 Product development services 906,906 848,237 129,998 Other payables 3,540,000 — — Utility fees 1,646,394 — — Others 4,308,376 4,384,391 671,937 Total 93,140,843 83,570,873 12,807,795 |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
WARRANTS | |
Schedule of warrants on convertible notes are exercisable at any time after commitment date to purchase shares of the Group's ADS | The warrants on convertible notes are exercisable at any time after the commitment date to purchase up to 4,778,846 shares of the Company’s ADS as follows: Warrants Principal Amount Exercise Price Tranche I US$ 5,000,000 US$ 1.50 Tranche A US$ 2,750,000 US$ 2.60 Tranche B US$ 1,650,000 US$ 5.20 Tranche C US$ 550,000 US$ 7.80 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stock Options | |
Schedule of share option activities | The following table summarizes the Group’s share option activities with its employees and directors: Weighted-Average Remaining Number of Weighted-Average Contractual Term Aggregate Options Exercise Price (years) Intrinsic Value Outstanding as of January 1, 2020 50,000 US$ 0.93 3.07 Nil Granted — — — Nil Exercised — — — Nil Forfeited — — — Nil Outstanding as of December 31, 2020 50,000 US$ 0.93 2.07 Nil Vested and expected to vest as of December 31, 2020 50,000 US$ 0.93 2.07 Nil Exercisable as of December 31, 2020 50,000 US$ 0.93 2.07 Nil |
Schedule of fair value of options valuation assumptions | The fair value of the share options was measured on the respective grant dates based on the Black-Scholes option pricing model, with below assumptions made regarding expected term and volatility, risk-free interest rate and dividend yield: Risk-free interest rate 2.19 % Expected life (years) 2.93 Expected dividend yield — % Volatility 78.55 % Fair value of options at grant date US$ 0.51 |
Performance conditions | |
Schedule of share option activities | The following table summarizes the share option activities subject to performance condition: Weighted-Average Remaining Number of Weighted-Average Contractual Term Aggregate Intrinsic Options Exercise Price (years) Value Outstanding as of January 1, 2020 1,000,000 US$ 0.93 3.07 Nil Granted — — — Nil Exercised — — — Nil Forfeited (1,000,000) US$ 0.93 — Nil Outstanding as of December 31, 2020 — — 0 Nil Vested and expected to vest as of December 31, 2020 — — 0 Nil Exercisable as of December 31, 2020 — — — Nil |
Schedule of fair value of options valuation assumptions | The fair value of the awards that are based on the performance condition was calculated using the Black-Scholes option pricing model with the following assumptions: Risk-free interest rate 2.19 % Expected life (years) 2.93 Expected dividend yield — % Volatility 78.55 % Fair value of options at grant date US$ 0.51 |
Stock options and ordinary shares granted by Red 5 | |
Schedule of share option activities | The following table summarizes the Red 5’s share option activities with its employees and directors: Weighted-Average Weighted-Average Remaining Number of Exercise Price per Contractual Term Aggregate Options Option (years) Intrinsic Value Outstanding as of January 1, 2020 5,111,250 US$ 0.049 1.24 Nil Granted — — — Nil Exercised — — — Nil Forfeited — — Nil Outstanding as of December 31, 2020 5,111,250 US$ 0.049 Nil Vested and expected to vest as of December 31, 2020 5,111,250 US$ 0.049 Nil Exercisable as of December 31, 2020 5,111,250 US$ 0.049 Nil |
Schedule of fair value of options valuation assumptions | Risk-free interest rate 0.78 % Expected life (years) 4.00 Expected dividend yield 0.00 % Volatility 45.70 % |
(LOSS) INCOME PER SHARE (Tables
(LOSS) INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
(LOSS) INCOME PER SHARE | |
Schedule of loss per share calculation | Loss per share is calculated as follows: For the year For the year For the year For the year ended December ended December ended December ended December 31, 2018 31, 2019 31, 2020 31, 2020 RMB RMB RMB US$ (Note 3) Numerator: Net (loss) income attributable to ordinary shareholders before change in redeemable noncontrolling interest (217,092,926) (177,795,168) 397,883,388 60,978,298 Change in redeemable noncontrolling interest (40,918,773) (12,827,598) (1,190,122) (182,394) Net (loss) income attributable to ordinary shareholders (258,011,699) (190,622,766) 396,693,266 60,795,904 Denominator: Denominator for basic and diluted (loss) income per share – weighted-average shares outstanding 62,114,760 106,407,008 163,599,920 163,599,920 Net (loss) income attributable to holders of ordinary shares per share - Basic and diluted (4.15) (1.79) 2.42 0.37 |
NONCONTROLLING INTEREST (Tables
NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
NONCONTROLLING INTEREST | |
Schedule of effects of changes in ownership interest of subsidiaries | As of December 31, 2019, the Group’s noncontrolling interests mainly included equity interest in Red 5 and equity awards granted as compensation by the Group’s subsidiaries. The following schedule shows the effects of changes in the ownership interest of The9 Limited in its subsidiaries on equity attributed to The9 Limited for the years ended December 31, 2018, 2019 and 2020. December 31, December 31, December 31, December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Net (loss) income attributable to The9 Limited (217,092,926) (177,795,168) 397,883,388 60,978,299 Transfers (to) from the noncontrolling interest: Change in The9 Limited’s additional paid-in capital for adjustment on noncontrolling interest as a result of issuance of common shares of Red 5 upon vesting of stock options and restricted shares (1) — — — — Change from net (loss) income attributable to The9 Limited and transfers to noncontrolling interests (217,092,926) (177,795,168) 397,883,388 60,978,299 |
REDEEMABLE NONCONTROLLING INT_2
REDEEMABLE NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
REDEEMABLE NONCONTROLLING INTEREST | |
Schedule of holders of SBPS | The holders of SBPS were as follows: December 31, December 31, Holder 2019 2020 Number of Number of Shares Shares L&A International Holdings Limited 10,180,553 10,180,553 Shanghai Oriental Pearl Culture Development Co., Ltd. 17,258,399 17,258,399 |
Schedule of reconciliation of redeemable noncontrolling interest | A reconciliation of redeemable noncontrolling interest is as follows: For the year ended For the year ended For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$ (Note 3) Redeemable noncontrolling interest opening balance 341,074,539 349,046,548 53,493,724 Net loss attributable to redeemable noncontrolling interest (4,855,589) (1,190,122) (182,394) Change in redeemable noncontrolling interest 12,827,598 1,190,122 182,394 Redeemable noncontrolling interest ending balance 349,046,548 349,046,548 53,493,724 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT REPORTING | |
Schedule of geographic area information includes revenue | The following geographic area information includes net revenues based on location of players for the years ended December 31, 2018, 2019 and 2020: 2018 2019 2020 2020 RMB RMB RMB US$ (Note 3) Greater China 16,430,205 182,107 625,488 95,860 Other areas 1,001,653 159,388 — — Total 17,431,858 341,495 625,488 95,860 |
ORGANIZATION AND NATURE OF OP_3
ORGANIZATION AND NATURE OF OPERATIONS (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Entity Incorporation, State or Country Code | F4 |
GameNow.net (Hong Kong) Ltd ("GameNow Hong Kong") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2000-01 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
China The9 Interactive Limited ("C9I") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2003-10 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
China The9 Interactive (Beijing) Ltd ("C9I Beijing") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2007-03 |
Place of registration | PRC |
Legal Ownership | 100.00% |
JiuTuo (Shanghai) Information Technology Ltd ("Jiu Tuo") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2007-07 |
Place of registration | PRC |
Legal Ownership | 100.00% |
China Crown Technology Ltd ("China Crown Technology") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2007-11 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
Asian Way Development Ltd ("Asian Way") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2007-11 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
New Star International Development Ltd ("New Star") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2008-01 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
Red 5 Studios, Inc. ("Red 5") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2005-06 |
Place of registration | USA |
Legal Ownership | 34.71% |
Red 5 Singapore Pte. Ltd. ("Red 5 Singapore") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2010-04 |
Place of registration | Singapore |
Legal Ownership | 34.71% |
The9 Interactive, Inc. ("The9 Interactive") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2010-06 |
Place of registration | USA |
Legal Ownership | 100.00% |
Jiu Gang | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2014-12 |
Place of registration | PRC |
Legal Ownership | 100.00% |
The9 Singapore Pte ltd ("The9 Singapore") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2010-04 |
Place of registration | Singapore |
Legal Ownership | 100.00% |
Ninebit Inc. ("Ninebit") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2018-01 |
Place of registration | Cayman Islands |
Legal Ownership | 100.00% |
1111 Limited ("1111") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2018-01 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
Supreme Exchange Limited ("Supreme") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2018-12 |
Place of registration | Malta |
Legal Ownership | 90.00% |
BET 111 Ltd. ("Bet 111") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-01 |
Place of registration | Malta |
Legal Ownership | 90.00% |
Coin Exchange Ltd ("Coin") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-01 |
Place of registration | Malta |
Legal Ownership | 90.00% |
The9 EV Limited | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-05 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
NBTC Limited | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-06 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
FF The9 China JointVentureLimited | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-09 |
Place of registration | Hong Kong |
Legal Ownership | 50.00% |
Huiling Computer Technology Consulting (Shanghai) Co.Ltd. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-03 |
Place of registration | PRC |
Legal Ownership | 100.00% |
Leixian Information Technology (Shanghai) Ltd. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-03 |
Place of registration | PRC |
Legal Ownership | 100.00% |
Shanghai The9 Information Technology Co., Ltd. ("Shanghai IT") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2000-09 |
Place of registration | PRC |
Shanghai Jiushi Interactive Network Technology Co., Ltd. ("Jiushi") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2011-07 |
Place of registration | PRC |
Legal Ownership | 80.00% |
Shanghai ShencaiChengjiu Information Technology co., Ltd. ("SH Shencai") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2015-05 |
Place of registration | PRC |
Legal Ownership | 60.00% |
Wuxi Interest Dynamic Network Technology Co Ltd ("Wuxi Qudong") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2016-06 |
Place of registration | PRC |
Legal Ownership | 100.00% |
Changsha Quxiang Network Technology Co Ltd | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2016-07 |
Place of registration | PRC |
Legal Ownership | 100.00% |
Silver Express Investments Ltd. ("Silver Express") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2007-11 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
City Channel Ltd. ("City Channel") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2006-06 |
Place of registration | Hong Kong |
Legal Ownership | 100.00% |
PRINCIPAL ACCOUNTING POLICIES -
PRINCIPAL ACCOUNTING POLICIES - Estimated useful life (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Leasehold improvements | |
Property, equipment and software, net | |
Property plant and equipment, useful life | Shorter of respective lease term or estimated useful life |
Computer and equipment | Minimum | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 3 years |
Computer and equipment | Maximum | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 4 years |
Software | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 5 years |
Office furniture and fixtures | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 3 years |
Motor vehicles | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 5 years |
Office buildings | Minimum | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 10 years |
Office buildings | Maximum | |
Property, equipment and software, net | |
Property plant and equipment, useful life | 20 years |
PRINCIPAL ACCOUNTING POLICIES_3
PRINCIPAL ACCOUNTING POLICIES - Additional Information (Details) | 1 Months Ended | 12 Months Ended | ||||||||||||
Feb. 28, 2021USD ($)$ / sharesshares | Jan. 31, 2021shares | Oct. 31, 2020USD ($)$ / sharesshares | Sep. 30, 2019subsidiary | Dec. 31, 2020USD ($)segment | Dec. 31, 2020CNY (¥)segment | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016shares | Dec. 31, 2009$ / shares | |
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Accumulated deficit | $ (458,578,915) | ¥ (2,992,227,421) | ¥ (3,410,856,231) | |||||||||||
Current liabilities exceeded total assets | 48,400,000 | 315,900,000 | ||||||||||||
Exercise Price | $ / shares | $ 19.50 | |||||||||||||
Net proceeds | 7,268,995 | ¥ 47,430,195 | ¥ 0 | ¥ 0 | ||||||||||
Cash equivalents, bank deposits | $ | 4,600,000 | $ 350,000 | ||||||||||||
Cash and cash equivalents | 4,857,661 | 4,256,449 | 31,696,237 | $ 1,549,907 | 10,113,141 | ¥ 142,624,020 | ||||||||
Allowance for doubtful accounts receivable | 15,862 | 103,501 | 169,416 | 109,939 | ||||||||||
Allowance for doubtful accounts written off | 300,000 | 2,100,000 | 3,200,000 | 22,200,000 | ||||||||||
Advertising expenses | 20,000 | 100,000 | 200,000 | 300,000 | ||||||||||
Unrestricted government subsidies from local government | $ 20,000 | ¥ 100,000 | ¥ 1,200,000 | ¥ 1,600,000 | ||||||||||
Deferred Revenue | ¥ | 0 | 200,000 | ||||||||||||
Number of subsidiaries disposed off | subsidiary | 3 | |||||||||||||
Number of operating segment | segment | 1 | 1 | ||||||||||||
Share Offering | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Net proceeds | $ | $ 8,100,000 | |||||||||||||
Share Offering | Class A Ordinary Shares | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares issued | 70,500,000 | |||||||||||||
Number of shares represented by each ADS | 30 | |||||||||||||
Share Offering | ADS | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of warrants issued | 27,025,000 | |||||||||||||
Number of shares called by warrants | 2,702,500 | |||||||||||||
Number of shares called by each warrant | 0.1 | |||||||||||||
Over-allotment option | ADS | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares issued | 3,525,000 | |||||||||||||
Number of shares called by warrants | 352,500 | |||||||||||||
Exercise Price | $ / shares | $ 3.70 | |||||||||||||
Representative warrants | Share Offering | Class A Ordinary Shares | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares represented by each ADS | 30 | |||||||||||||
Representative warrants | Share Offering | ADS | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares called by warrants | 117,500 | |||||||||||||
Exercise Price | $ / shares | $ 4.07 | |||||||||||||
Controlled by PRC State Administration for Foreign Exchange, under authority of People's Bank of China | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Cash and cash equivalents | $ 200,000 | ¥ 1,100,000 | ¥ 7,600,000 | |||||||||||
Red 5 Studios, Inc. ("Red 5") | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Share ownership for investments accounted for under equity method (as a percent) | 34.71% | 34.71% | ||||||||||||
Subsequent Event | Class A Ordinary Shares | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares issued | 8,108,100 | |||||||||||||
Number of warrants issued | 207,891,840 | |||||||||||||
Subsequent Event | ADS | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Authorized shares to shell | 100,000,000 | |||||||||||||
Period to sell authorized shares | 36 months | |||||||||||||
Subsequent Event | Convertible notes issued to Iliad | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Conversion Price | $ / shares | $ 14 | |||||||||||||
Subsequent Event | Convertible notes issued to Streeterville, one | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Threshold amount for redemption per calendar month | $ | $ 840,000 | |||||||||||||
Redemption premium percentage | 10.00% | |||||||||||||
Prepayment premium percentage | 15.00% | |||||||||||||
Number of days in a year considered for interest rate determination | $ | 360 | |||||||||||||
Period for exercising the right to convert | 6 months | |||||||||||||
Term of convertible note (in years) | 1 year | |||||||||||||
Subsequent Event | Convertible notes issued to Streeterville, one | Class A Ordinary Shares | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares represented by each ADS | 30 | |||||||||||||
Repurchase price of shares | $ / shares | $ 0.0001 | |||||||||||||
Ordinary shares | 10,000,000 | |||||||||||||
Aggregate consideration | $ | $ 5,000,000 | |||||||||||||
Subsequent Event | Convertible notes issued to Streeterville, one | ADS | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Ordinary shares | 50,000 | |||||||||||||
Subsequent Event | Convertible notes issued to Streeterville, one | Convertible notes issued to Iliad | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Principal amount | $ | $ 5,000,000 | |||||||||||||
Interest rate (as a percent) | 6.00% | |||||||||||||
Conversion Price | $ / shares | $ 14 | |||||||||||||
Minimum | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Share-based awards vesting period | 1 year | 1 year | ||||||||||||
Maximum | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Number of shares called by warrants | 4,778,846 | |||||||||||||
Share-based awards vesting period | 4 years | 4 years | ||||||||||||
Land use right | ||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | ||||||||||||||
Intangible Assets, useful life | 44 years | 44 years |
CONVENIENCE TRANSLATION (Detail
CONVENIENCE TRANSLATION (Details) | Dec. 31, 2020 |
CONVENIENCE TRANSLATION | |
Exchange rates used to translate amounts from RMB to US$ | 6.5250 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) | 12 Months Ended | ||||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | |
VARIABLE INTEREST ENTITIES | |||||
Total assets | $ 7,423,955 | ¥ 181,459,156 | ¥ 48,441,307 | ||
Total liabilities | 56,220,273 | 1,064,334,300 | 366,837,286 | ||
Revenue | 95,860 | ¥ 625,488 | 343,077 | ¥ 17,492,415 | |
Net loss | 60,978,298 | 397,883,388 | (177,795,168) | (217,092,926) | |
Variable Interest Entity, Primary Beneficiary | Before elimination of intercompany balances and transactions | |||||
VARIABLE INTEREST ENTITIES | |||||
Total assets | 1,587,330 | 150,615,709 | 10,357,329 | ||
Total liabilities | 48,062,664 | 423,900,573 | ¥ 313,608,879 | ||
Revenue | 95,860 | 625,488 | 182,119 | 16,567,372 | |
Net loss | $ (8,032,199) | ¥ (52,410,094) | ¥ (51,667,515) | ¥ (49,024,050) |
VARIABLE INTEREST ENTITIES - Ad
VARIABLE INTEREST ENTITIES - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
VARIABLE INTEREST ENTITIES | |||
Percentage of operating profit generated by the VIEs | 90.00% | ||
Initial term of exclusive technical service agreement | 20 years | ||
VIEs contribution on net revenue | 100.00% | 53.30% | 95.00% |
VIEs account on total assets | 21.40% | 83.00% | |
VIEs account on total liabilities | 85.50% | 39.80% |
ADVANCES TO SUPPLIERS (Details)
ADVANCES TO SUPPLIERS (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
Advances to suppliers | |||
Advances to suppliers | $ 4,249 | ¥ 27,725 | ¥ 11,246,608 |
Advance to subscribe tokens | |||
Advances to suppliers | |||
Advances to suppliers | 10,094,972 | ||
Company registration fee | |||
Advances to suppliers | |||
Advances to suppliers | 794,692 | ||
Advertising Fee | |||
Advances to suppliers | |||
Advances to suppliers | 255,259 | ||
Others | |||
Advances to suppliers | |||
Advances to suppliers | $ 4,249 | ¥ 27,725 | ¥ 101,685 |
ADVANCES TO SUPPLIERS - Additio
ADVANCES TO SUPPLIERS - Additional Information (Detail) ¥ in Millions | Feb. 06, 2018USD ($) | Feb. 06, 2018CNY (¥) | Sep. 30, 2020USD ($) | Jul. 31, 2020USD ($) | Jul. 31, 2019USD ($) | Jul. 31, 2019CNY (¥) | Oct. 31, 2016USD ($) | Oct. 31, 2016CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) |
Advances to suppliers | |||||||||||||||
Funds required for the development of CrossFire new mobile game | $ 800,000 | ||||||||||||||
Number of tokens subscribed | 5,297,157 | 3,075,035 | 2,222,222 | ||||||||||||
Advance Paid For Administrative Expenses | $ 300,000 | ¥ 2.1 | |||||||||||||
Payments for subscription of tokens | $ 2,000,000 | ||||||||||||||
Refund recievable on termination of tokens | $ 400,000 | ¥ 2.8 | |||||||||||||
Maximum period of agreement term | 3 years | ||||||||||||||
Minimum guarantee payment | $ 13,000,000 | ||||||||||||||
Upfront payment | $ 3,000,000 | ||||||||||||||
Impairment on advances to suppliers | 3,200,000 | ¥ 20.7 | $ 900,000 | ¥ 6 | ¥ 7.8 | ||||||||||
Inner Mongolia Culture Assets and Equity Exchange | CrossFire New Mobile Game | |||||||||||||||
Advances to suppliers | |||||||||||||||
Financing service fee paid | $ 1,100,000 | ¥ 6.9 | $ 1,100,000 | ¥ 7.5 | 1,100,000 | ¥ 7.5 | |||||||||
Funds required for the development of CrossFire new mobile game | $ 24,100,000 | ¥ 157.5 | |||||||||||||
Non recovery of advance financing fee | $ 15,300,000 | ¥ 100 | |||||||||||||
Number of tokens subscribed | 2,222,222 |
PREPAYMENTS AND OTHER CURRENT_3
PREPAYMENTS AND OTHER CURRENT ASSETS, NET (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | |||
Receivable from subscribe tokens | $ 400,000 | ¥ 2,800,000 | |
Employee advances | 351,372 | 2,292,700 | ¥ 1,648,197 |
Prepayments and deposits | 237,719 | 1,551,118 | 1,488,463 |
Input VAT recoverable | 272,871 | 1,780,484 | 1,441,700 |
Refundable withholding tax | 1,297,016 | ||
Other receivables, net of allowance for doubtful accounts of RMB5,343,427 and RMB6,619,312 as of December 31, 2019 and 2020, respectively | 648,454 | 4,231,165 | 2,973,158 |
Prepayments and other current assets, total | $ 1,510,416 | 9,855,467 | 8,848,534 |
Other receivables, allowance for doubtful accounts | ¥ 6,619,312 | ¥ 5,343,427 |
ASSETS HELD-FOR-SALE AND LIAB_3
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE - Additional Information (Details) | May 29, 2020USD ($) | Feb. 21, 2020USD ($) | Feb. 21, 2020CNY (¥) | Sep. 26, 2019USD ($)subsidiary | Sep. 30, 2019subsidiary | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Sep. 26, 2019CNY (¥) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Number of subsidiaries disposed of | 3 | |||||||||
Gain (Loss) on Disposition of Stock in Subsidiary | $ 72,887,173 | ¥ 475,588,803 | ¥ 1,206,925 | ¥ 10,473,159 | ||||||
12% Convertible Senior Notes Due 2018 | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Repayment of convertible notes | $ | $ 50,000,000 | |||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Number of subsidiaries disposed of | 3 | |||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | Held for sale | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Total consideration | $ 75,600,000 | ¥ 493,000,000 | ||||||||
Gain (Loss) on Disposition of Stock in Subsidiary | $ 60,000,000 | ¥ 391,800,000 |
ASSETS HELD-FOR-SALE AND LIAB_4
ASSETS HELD-FOR-SALE AND LIABILITIES HELD-FOR-SALE (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
Assets classified as held-for-sale | |||
Total assets classified as held-for-sale | $ 0 | ¥ 0 | ¥ 123,390,350 |
Liabilities directly associated with assets held-for-sale | |||
Long-term borrowing due within one year | (31,624,560) | ||
Total liabilities directly associated with assets held-for-sale | $ 0 | 0 | ¥ 44,691,296 |
The9 Computer, C9I Shanghai and Shanghai Kaie | Held for sale | |||
Assets classified as held-for-sale | |||
Cash and cash equivalents | 43,027,475 | ||
Prepayments and other current assets | 5,162,857 | ||
Property, equipment and software, net | 14,051,044 | ||
Land use rights, net | 61,148,974 | ||
Total assets classified as held-for-sale | 123,390,350 | ||
Liabilities directly associated with assets held-for-sale | |||
Accounts payable | 50,000 | ||
Other taxes payable | 1,585,095 | ||
Other payables and accruals | 46,800 | ||
Interest payable | 11,384,841 | ||
Long-term borrowing due within one year | 31,624,560 | ||
Total liabilities directly associated with assets held-for-sale | ¥ 44,691,296 |
INVESTMENTS (Details)
INVESTMENTS (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Schedule of Investments [Line Items] | ||||
Investments in equity investees | ¥ 10,000,000 | |||
Leading Choice | ||||
Schedule of Investments [Line Items] | ||||
Equity Investment Percentage of Ownership Interest Disposed | 20.00% | 20.00% | ||
Proceeds From Ownership Interest Disposed | $ | $ 30 | |||
Equity Securities, FV-NI, Realized Gain (Loss) | $ 30 | ¥ 200,000 | ||
ZTE9 Network Technology Co., Ltd., Wuxi ("ZTE9") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under equity method (as a percent) | 5.00% | 5.00% | ||
Shanghai Big Data Cultures Media Co | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under equity method (as a percent) | 44.46% | 44.46% | ||
Maxline Holdings Limited Maxline | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under equity method (as a percent) | 29.00% | 29.00% | ||
Nanyang Herbs Pte. Ltd. ("Nanyang Herbs") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under equity method (as a percent) | 50.00% | 50.00% | ||
Shanghai Institute of Visual Art of Fudan University ("SIVA") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 1.28% | 1.28% | ||
Cost method investments | ¥ 10,000,000 | |||
Smartposting Co, Ltd. | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 14.55% | 14.55% | ||
Beijing Ti Knight Network Technology Co., Ltd. ("Beijing Ti Knight") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 9.90% | 9.90% | ||
Shanghai The9 Education Technology Co., Ltd. ("The9 Education Technology") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 19.20% | 19.20% | ||
Plutux Limited ("Plutux") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 8.00% | 8.00% | ||
Plutux Limited ("Plutux") | Leading Choice | ||||
Schedule of Investments [Line Items] | ||||
Proceeds From Ownership Interest Disposed | ¥ 200,000 | |||
Zhenjiang Kexin Power System Design and Research Co., Ltd. ("Zhenjiang Kexin") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 9.90% | 9.90% | 9.90% | |
Shangdong ShanYeYunYe Culture Co., Ltd ("Shanyeyunye") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 10.00% | 10.00% | ||
Beijing Weiming Naonao Technology Co., Ltd ("BeijingNaoNao") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 9.09% | 9.09% | ||
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") | ||||
Schedule of Investments [Line Items] | ||||
Share ownership for investments accounted for under cost method (as a percent) | 0.156% | 0.156% |
INVESTMENTS - Additional Inform
INVESTMENTS - Additional Information (Details) ₩ in Millions | Apr. 09, 2020 | Nov. 30, 2020USD ($)shares | Aug. 31, 2020USD ($) | Aug. 31, 2020CNY (¥) | Feb. 29, 2020USD ($) | Feb. 29, 2020CNY (¥) | Jul. 31, 2019KRW (₩) | Jul. 31, 2019USD ($) | Jul. 31, 2019CNY (¥) | Jun. 30, 2019shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2018CNY (¥)shares | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | Aug. 31, 2020CNY (¥) | Jun. 30, 2020USD ($) | Jun. 30, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Apr. 30, 2019USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) |
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Impairment of investment | $ 2,758,621 | ¥ 18,000,000 | ¥ 3,791,039 | ¥ 7,776,157 | |||||||||||||||||||||
Income (Loss) from Equity Method Investments | (331,944) | (2,165,935) | (2,847,260) | (4,292,887) | |||||||||||||||||||||
Payment for equity fund investment | $ 511,677 | ¥ 3,338,690 | 0 | 0 | |||||||||||||||||||||
Percentage of issued and outstanding share capital Sold | 100.00% | ||||||||||||||||||||||||
Proceeds from disposal of equity method investees | ¥ | 694,628 | 0 | |||||||||||||||||||||||
Leading Choice | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Equity Investment Percentage of Ownership Interest Disposed | 20.00% | 20.00% | |||||||||||||||||||||||
Proceeds from ownership interest disposed | $ | $ 30,000 | ||||||||||||||||||||||||
Gain on disposal | 30,000 | ¥ 200,000 | |||||||||||||||||||||||
Shanyeyunye | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | 10.00% | |||||||||||||||||||||||
Impairment of investment | 800,000 | 5,000,000 | |||||||||||||||||||||||
Cost method investment | $ 800,000 | ¥ 5,000,000 | |||||||||||||||||||||||
BeijingNaonao | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 9.09% | 9.09% | |||||||||||||||||||||||
Impairment of investment | $ 500,000 | ¥ 3,000,000 | |||||||||||||||||||||||
Cost method investments, original cost including transaction cost | $ 500,000 | ¥ 3,000,000 | |||||||||||||||||||||||
SIVA | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Impairment of investment | 1,500,000 | 10,000,000 | |||||||||||||||||||||||
Plutux | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Impairment of investment | $ 200,000 | ¥ 1,400,000 | |||||||||||||||||||||||
Equity method investment ownership ( as a percentage) | 8.00% | 8.00% | |||||||||||||||||||||||
Smart King | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Cost method investment | $ | $ 5,000,000 | $ 5,000,000 | |||||||||||||||||||||||
Smart King | Class B ordinary shares | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Common stock issued | 2,994,011 | ||||||||||||||||||||||||
Nanyang Herbs | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Impairment of investment | $ 200,000 | ¥ 1,200,000 | |||||||||||||||||||||||
Income (Loss) from Equity Method Investments | 300,000 | 2,200,000 | 2,800,000 | 4,300,000 | |||||||||||||||||||||
Equity method investment ownership ( as a percentage) | 50.00% | 50.00% | |||||||||||||||||||||||
Cost method investment | 500,000 | ¥ 3,300,000 | |||||||||||||||||||||||
Impairment in equity and other investments | $ 2,900,000 | ¥ 19,200,000 | 8,500,000 | ¥ 9,200,000 | |||||||||||||||||||||
Shanghai Big Data Cultures Media Co | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Equity method investment ownership ( as a percentage) | 44.46% | 44.46% | |||||||||||||||||||||||
T3 Entertainment Company Ltd | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Total consideration | ₩ 6,092.8 | $ 5,200,000 | |||||||||||||||||||||||
Gain on disposal | $ 1,600,000 | ¥ 10,400,000 | |||||||||||||||||||||||
Smartposting Co, Ltd. | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Ownership Percentage Under Cost Method Investments | 14.55% | 14.55% | |||||||||||||||||||||||
Beijing Ti Knight Network Technology Co., Ltd. ("Beijing Ti Knight") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Ownership Percentage Under Cost Method Investments | 9.90% | 9.90% | |||||||||||||||||||||||
Maxline Holdings Limited Maxline | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Equity method investment ownership ( as a percentage) | 29.00% | 29.00% | |||||||||||||||||||||||
Leading Choice Holdings Limited | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Common Stock, Shares Subscribed but Unissued | 21,000,000 | 21,000,000 | |||||||||||||||||||||||
Shanghai The9 Education Technology Co., Ltd. ("The9 Education Technology") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Ownership Percentage Under Cost Method Investments | 19.20% | 19.20% | |||||||||||||||||||||||
Shanghai Ronglei Culture Communication Co., Ltd. ("Shanghai Ronglei") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Impairment of investment | $ 600,000 | 4,000,000 | |||||||||||||||||||||||
Proceeds from disposal of equity method investees | 500,000 | ¥ 3,000,000 | |||||||||||||||||||||||
Cost method investment | $ 600,000 | ¥ 4,000,000 | $ 800,000 | ¥ 5,000,000 | |||||||||||||||||||||
Plutux Limited ("Plutux") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Ownership Percentage Under Cost Method Investments | 8.00% | 8.00% | |||||||||||||||||||||||
Plutux Limited ("Plutux") | Plutux Limited ("Plutux") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 20.00% | 20.00% | |||||||||||||||||||||||
Plutux Limited ("Plutux") | Leading Choice | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Proceeds from ownership interest disposed | ¥ | ¥ 200,000 | ||||||||||||||||||||||||
Zhenjiang Kexin Power System Design and Research Co., Ltd. ("Zhenjiang Kexin") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Ownership Percentage Under Cost Method Investments | 9.90% | 9.90% | 9.90% | ||||||||||||||||||||||
Common Stock, Shares Subscribed but Unissued | 3,444,882 | ||||||||||||||||||||||||
Shanghai Institute of Visual Art of Fudan University ("SIVA") | |||||||||||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||||||||||||
Ownership Percentage Under Cost Method Investments | 1.28% | 1.28% |
PROPERTY, EQUIPMENT AND SOFTW_3
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
Property, equipment and software, net | |||
Less: accumulated depreciation and amortization | $ (3,160,283) | ¥ (20,620,844) | ¥ (89,974,366) |
Property, equipment and software, net, held for sale | 0 | 0 | (14,051,044) |
Property plant and equipment, net | 149,747 | 977,102 | 1,218,521 |
Office buildings | |||
Property, equipment and software, net | |||
Property plant and equipment, gross | 69,341,652 | ||
Computer and equipment | |||
Property, equipment and software, net | |||
Property plant and equipment, gross | 764,616 | 4,989,121 | 5,181,577 |
Leasehold improvements | |||
Property, equipment and software, net | |||
Property plant and equipment, gross | 9,359,857 | ||
Office furniture and fixtures | |||
Property, equipment and software, net | |||
Property plant and equipment, gross | 263,623 | 1,720,139 | 1,787,549 |
Motor vehicles | |||
Property, equipment and software, net | |||
Property plant and equipment, gross | 670,777 | 4,376,821 | 5,031,201 |
Software | |||
Property, equipment and software, net | |||
Property plant and equipment, gross | $ 1,611,014 | ¥ 10,511,865 | ¥ 14,542,095 |
PROPERTY, EQUIPMENT AND SOFTW_4
PROPERTY, EQUIPMENT AND SOFTWARE, NET - Additional Information (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | ||||
Depreciation and amortization of property, equipment and software | $ 68,626 | ¥ 400,000 | ¥ 2,778,778 | ¥ 3,650,261 |
Gain (Loss) on Disposition of Property Plant Equipment | $ 10,000 | ¥ 30,000 | ¥ 2,200,000 | ¥ 200,000 |
LAND USE RIGHT, NET (Details)
LAND USE RIGHT, NET (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
LAND USE RIGHT, NET | |||
Land use right | $ 0 | ¥ 0 | ¥ 85,160,348 |
Less: accumulated amortization | 0 | 0 | (24,011,374) |
Less: land use right, net, held-for-sale | 0 | 0 | ¥ (61,148,974) |
Net book value | $ 0 | ¥ 0 |
LAND USE RIGHT, NET - Additiona
LAND USE RIGHT, NET - Additional Information (Details) - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
LAND USE RIGHT, NET | |||
Amortization of land use right | ¥ 0 | ¥ 1,440,682 | ¥ 1,920,910 |
LEASES - Operating leases recog
LEASES - Operating leases recognized in balance sheet (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
LEASES | |||
Operating lease right-of-use assets | $ 789,133 | ¥ 5,149,090 | ¥ 9,257,604 |
Operating lease liabilities-current portion | 580,415 | 3,787,210 | 3,407,670 |
Operating lease liabilities-non-current portion | $ 377,700 | ¥ 2,464,495 | ¥ 6,251,705 |
LEASES - Lease cost (Details)
LEASES - Lease cost (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
LEASES | |||
Operating lease cost | $ 542,433 | ¥ 3,539,374 | ¥ 1,606,340 |
Cost of other leases with terms less than one year | 10,311 | 67,281 | 82,232 |
Total | $ 552,744 | ¥ 3,606,655 | ¥ 1,688,572 |
LEASES - Maturities of operatin
LEASES - Maturities of operating lease liabilities (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
LEASES | |||
Due within one year | $ 612,378 | ¥ 3,995,768 | ¥ 3,779,845 |
Due in the second year | 383,577 | 2,502,839 | 3,995,768 |
Due in the third year | 2,502,839 | ||
Total lease payments | 995,955 | 6,498,607 | 10,278,452 |
Less: imputed interest | (37,839) | (246,902) | (619,077) |
Total | $ 958,116 | ¥ 6,251,705 | ¥ 9,659,375 |
LEASES - Operating lease costs
LEASES - Operating lease costs (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
LEASES | ||
Prepaid rental expense | ¥ 0 | ¥ 10 |
OTHER LONG-LIVED ASSETS, NET (D
OTHER LONG-LIVED ASSETS, NET (Details) | 1 Months Ended | 12 Months Ended | |||||||
Nov. 30, 2020USD ($)shares | Apr. 30, 2019USD ($) | Mar. 31, 2019USD ($)shares | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | |
Schedule of Other Assets [Line Items] | |||||||||
Prepaid license fee | $ 0 | ¥ 6,515,200 | ¥ 0 | ||||||
Prepaid deposit for joint venture | 0 | 0 | 0 | ||||||
Total | 0 | 6,515,200 | ¥ 0 | ||||||
Impairment of prepaid license fee | 1,000,000 | ¥ 6,500,000 | |||||||
Initial deposit paid for investments | $ 5,000,000 | 34,881,000 | ¥ 0 | ||||||
Initial deposit for joint venture arrangement | $ 5,000,000 | 34,881,000 | ¥ 0 | ||||||
Impairment loss on joint venture arrangement | $ 998,498 | ¥ 6,515,200 | $ 5,300,000 | ¥ 34,881,000 | |||||
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") | |||||||||
Schedule of Other Assets [Line Items] | |||||||||
Initial deposit paid for investments | $ 5,000,000 | $ 5,000,000 | |||||||
Number of Class B ordinary shares into which the initial deposit was converted | shares | 2,994,011 | 2,994,011 | |||||||
Initial deposit for joint venture arrangement | $ 5,000,000 | $ 5,000,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) ¥ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
Change in warrants liability that were measured at fair value on a recurring basis using significant Level 3 inputs | |||
Balance at beginning of year | $ 30,437 | ¥ 198,600 | ¥ 1,490,844 |
Issuance of warrants | 259,649 | 1,694,208 | |
Fair value change on warrants liability recognized in other comprehensive income | (5,801) | (37,851) | (1,292,244) |
Balance at the end of the year | $ 284,285 | ¥ 1,854,957 | ¥ 198,600 |
TAXATION - Composition of incom
TAXATION - Composition of income tax expense (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Income Taxes [Line Items] | ||||
Deferred taxation | $ (2,820,958) | ¥ (18,406,747) | ¥ (20,923,558) | ¥ (59,579,318) |
Change in valuation allowance | 2,820,958 | 18,406,747 | 20,923,558 | 59,579,318 |
Income tax benefit | 1,098,099 | 7,165,097 | 0 | 0 |
Domestic tax authority | ||||
Income Taxes [Line Items] | ||||
Current income tax (expense) benefit | 1,098,099 | 7,165,097 | 0 | 0 |
Deferred taxation | 3,970,201 | 25,905,564 | (5,772,005) | (39,763,083) |
Change in valuation allowance | (3,970,201) | (25,905,564) | 5,772,005 | 39,763,083 |
Foreign tax authority | ||||
Income Taxes [Line Items] | ||||
Current income tax (expense) benefit | 0 | 0 | 0 | 0 |
Deferred taxation | (6,791,159) | (44,312,311) | (15,151,553) | (19,816,235) |
Change in valuation allowance | $ 6,791,159 | ¥ 44,312,311 | ¥ 15,151,553 | ¥ 19,816,235 |
TAXATION - Reconciliation (Deta
TAXATION - Reconciliation (Details) | 1 Months Ended | 12 Months Ended | ||
Dec. 22, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
TAXATION | ||||
PRC statutory EIT rate | 34.00% | 25.00% | 25.00% | 25.00% |
Effect of different tax rates in other jurisdictions | (10.00%) | 1.00% | 2.00% | |
Change in future tax rate (upon expiration of preferential rate) | 2.00% | 1.00% | ||
Change of prior year deferred tax assets | 1.00% | (15.00%) | (11.00%) | |
Change of valuation allowance | (10.00%) | (18.00%) | (2.00%) | |
Effect of expired net operating loss | (6.00%) | 5.00% | (15.00%) | |
PRC withholding tax | 2.00% | |||
Effective EIT rate | 2.00% |
TAXATION - Components of deferr
TAXATION - Components of deferred tax assets (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
TAXATION | |||||
Temporary differences related to expenses and accruals | $ 94,259 | ¥ 615,041 | ¥ 1,076,708 | ||
Temporary differences related to impairment on advances to suppliers | 450,999 | 2,942,771 | 3,438,597 | ||
Temporary differences related to provision for doubtful accounts | 105,718 | 689,811 | 1,078,742 | ||
Others | 1,260,000 | 8,221,500 | 8,771,868 | ||
Temporary differences related to depreciation, amortization, and impairment of equipment and intangible assets | 2,359,624 | 15,396,549 | 24,890,416 | ||
Startup expenses and advertising fees | 32,625 | 212,880 | 199,704 | ||
Temporary differences related to research and development credits | 162,000 | 1,057,050 | 1,120,850 | ||
Temporary differences related to equity investments | 1,799,243 | 11,740,058 | 5,069,035 | ||
Foreign tax credits | 0 | 0 | 0 | ||
Temporary differences related to provision for prepayment for equipment | 766,284 | 5,000,000 | 5,000,000 | ||
Tax loss carry forwards | 39,380,603 | 256,958,435 | 270,594,922 | ||
Total deferred tax assets | 46,411,355 | 302,834,095 | 321,240,842 | ||
Less: Valuation allowance | (46,411,355) | (302,834,095) | $ (49,232,313) | (321,240,842) | ¥ (342,164,400) |
Total deferred tax assets | $ 0 | ¥ 0 | ¥ 0 |
TAXATION - Valuation allowance
TAXATION - Valuation allowance (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | |
TAXATION | |||
Beginning Balance | $ 49,232,313 | ¥ 321,240,842 | ¥ 342,164,400 |
Decrease in valuation allowance | (2,820,958) | (18,406,747) | (20,923,558) |
Ending Balance | $ 46,411,355 | ¥ 302,834,095 | ¥ 321,240,842 |
TAXATION - Additional Informati
TAXATION - Additional Information (Details) | 1 Months Ended | 12 Months Ended | |||||||
Dec. 22, 2017 | Oct. 31, 2017 | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | |
Income Taxes [Line Items] | |||||||||
Statutory tax rate | 34.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | ||
Preferential enterprise income tax rate for three years | 15.00% | 15.00% | |||||||
Increase (decrease) in valuation allowance | $ 2,820,958 | ¥ 18,406,747 | ¥ 20,923,558 | ||||||
Effective Income Tax Rate Reconciliation, Equity in Earnings (Losses) of Unconsolidated Subsidiary, Amount | 0 | $ 0 | |||||||
Net operating loss carry forwards | ¥ | ¥ 327,800,000 | ||||||||
Deferred taxation | $ (2,820,958) | ¥ (18,406,747) | ¥ (20,923,558) | ¥ (59,579,318) | |||||
Withholding income tax rate for dividends from profits of foreign invested enterprises | 10.00% | 10.00% | |||||||
Income tax, statute of limitation, underpayment of tax liability to be considered as special circumstance | ¥ | ¥ 100,000 | ||||||||
Income tax, statute of limitation under special circumstance | 10 years | 10 years | |||||||
Scenario, Plan [Member] | |||||||||
Income Taxes [Line Items] | |||||||||
Statutory tax rate | 21.00% | ||||||||
Minimum | |||||||||
Income Taxes [Line Items] | |||||||||
Period for Carry Forward of Qualified HNTE Losses | 5 years | 5 years | |||||||
Withholding income tax rate for dividends from profits of foreign invested enterprises | 5.00% | 5.00% | |||||||
Percentage of beneficial interest owned | 25.00% | 25.00% | |||||||
Income tax, statute of limitation | 3 years | 3 years | |||||||
Maximum | |||||||||
Income Taxes [Line Items] | |||||||||
Period for Carry Forward of Qualified HNTE Losses | 10 years | 10 years | |||||||
Withholding income tax rate for dividends from profits of foreign invested enterprises | 10.00% | 10.00% | |||||||
Percentage of beneficial interest owned | 25.00% | 25.00% | |||||||
Income tax, statute of limitation | 5 years | 5 years | |||||||
Shanghai The9 Information Technology Co., Ltd. ("Shanghai IT") | |||||||||
Income Taxes [Line Items] | |||||||||
Preferential enterprise income tax rate for three years | 15.00% | ||||||||
CAYMAN ISLANDS | |||||||||
Income Taxes [Line Items] | |||||||||
Accrued Withholding Income Tax Amount | $ 0 | ||||||||
Hong Kong | |||||||||
Income Taxes [Line Items] | |||||||||
Accrued Withholding Income Tax Amount | 0 | $ 0 | $ 0 | ||||||
Singapore | |||||||||
Income Taxes [Line Items] | |||||||||
Accrued Withholding Income Tax Amount | 0 | $ 0 | 0 | ||||||
United states | |||||||||
Income Taxes [Line Items] | |||||||||
Statutory tax rate | 21.00% | 21.00% | |||||||
State income tax rate | 0.28% | 0.28% | |||||||
Federal tax | |||||||||
Income Taxes [Line Items] | |||||||||
Net operating loss carry forwards | $ 127,200,000 | ||||||||
Net operating loss carry forwards, expiration year | 2029 | 2029 | |||||||
Tax credit available to offset future taxes payable | 100,000 | ||||||||
State income tax | |||||||||
Income Taxes [Line Items] | |||||||||
Net operating loss carry forwards | $ 68,400,000 | ||||||||
Net operating loss carry forwards, expiration year | 2019 | 2019 | |||||||
Tax credit available to offset future taxes payable | 100,000 | ||||||||
Foreign tax authority | |||||||||
Income Taxes [Line Items] | |||||||||
Deferred taxation | $ (6,791,159) | ¥ (44,312,311) | ¥ (15,151,553) | ¥ (19,816,235) | |||||
Foreign tax credit available to offset future taxes payable | $ 2,500,000 | ||||||||
Tax credit available to offset future taxes payable, expiration date | 2020 | 2020 |
SHORT-TERM BORROWINGS (Details)
SHORT-TERM BORROWINGS (Details) | Dec. 31, 2019CNY (¥) |
SHORT-TERM BORROWINGS | |
Short-term borrowings | ¥ 117,526,089 |
Long-term borrowings due within one year | 31,624,560 |
Less: borrowing classified as held for sale | (31,624,560) |
Pledged Loan | |
SHORT-TERM BORROWINGS | |
Short-term borrowings | 82,645,089 |
Interest-free loan | |
SHORT-TERM BORROWINGS | |
Short-term borrowings | ¥ 34,881,000 |
SHORT-TERM BORROWINGS - Additio
SHORT-TERM BORROWINGS - Additional Information (Details) $ in Millions | Sep. 18, 2020USD ($) | Sep. 18, 2020CNY (¥) | Sep. 09, 2020USD ($) | Sep. 09, 2020CNY (¥) | Apr. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2016HKD ($)shares | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) |
SHORT-TERM BORROWINGS | |||||||||||||
Initial deposit for joint venture arrangement | $ 5,000,000 | ¥ 34,881,000 | ¥ 0 | ||||||||||
Repayment of the principal and interest by cash | $ 48,878,103 | ¥ 318,929,623 | ¥ 0 | ¥ 0 | |||||||||
Asian Development | Disposal Group, Disposed of by Means Other than Sale | |||||||||||||
SHORT-TERM BORROWINGS | |||||||||||||
Gain on disposal of subsidiary | $ 12,800,000 | ¥ 83,700,000 | $ 12,000,000 | ¥ 83,700,000 | |||||||||
Joint venture to manufacture, market, distribute and sell electric cars | |||||||||||||
SHORT-TERM BORROWINGS | |||||||||||||
Initial deposit for joint venture arrangement | $ 5,000,000 | ||||||||||||
Maximum | Joint venture to manufacture, market, distribute and sell electric cars | |||||||||||||
SHORT-TERM BORROWINGS | |||||||||||||
Committed capital investment in joint venture | $ 600,000,000 | ||||||||||||
L&A International Holding Limited | |||||||||||||
SHORT-TERM BORROWINGS | |||||||||||||
Line of credit annual interest rate | 2.00% | ||||||||||||
Line of credit amount | $ 92.3 | ||||||||||||
Line of credit , duration | 24 months | ||||||||||||
Amount of shares pledged | shares | 417,440,000 | ||||||||||||
Entrusted Bank Borrowing Agreement | |||||||||||||
SHORT-TERM BORROWINGS | |||||||||||||
Bank borrowing amount | $ 4,800,000 | ¥ 31,600,000 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Funds raised for CrossFire New Mobile Game | $ 8,630,080 | ¥ 56,311,274 | ¥ 57,499,910 |
Professional services | 1,512,074 | 9,866,284 | 11,844,738 |
Agency commission fees payable | 980,398 | 6,397,096 | |
Staff cost related payables | 588,943 | 3,842,856 | 9,851,024 |
Office expenses | 294,365 | 1,920,735 | 3,543,495 |
Product development services | 129,998 | 848,237 | 906,906 |
Other payables | 3,540,000 | ||
Utility fees | 1,646,394 | ||
Others | 671,937 | 4,384,391 | 4,308,376 |
Total | $ 12,807,795 | ¥ 83,570,873 | ¥ 93,140,843 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Additional Information (Details) | 1 Months Ended | ||||||||
Sep. 30, 2020USD ($) | Apr. 30, 2020USD ($) | Apr. 30, 2020CNY (¥) | Oct. 31, 2016USD ($) | Oct. 31, 2016CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Oct. 31, 2016CNY (¥) | |
Accounts Payable and Accrued Liabilities | |||||||||
Funds raised for the development of CrossFire new mobile game | $ 8,630,080 | ¥ 56,311,274 | ¥ 57,499,910 | ||||||
Refund claimed through civil suit | $ 13,000,000 | ||||||||
Inner Mongolia Culture Assets and Equity Exchange | CrossFire New Mobile Game | |||||||||
Accounts Payable and Accrued Liabilities | |||||||||
Funds raised for the development of CrossFire new mobile game | $ 8,800,000 | 8,800,000 | 57,500,000 | ¥ 57,500,000 | |||||
Additional funds aimed to be raised for the development of CrossFire new mobile game | 15,300,000 | $ 15,300,000 | ¥ 100,000,000 | ¥ 100,000,000 | |||||
Principal amount of refund claimed through civil suit | $ 8,800,000 | ¥ 57,500,000 | 8,800,000 | ¥ 57,500,000 | |||||
Interest amount of refund claimed through civil suit | $ 700,000 | ¥ 4,600,000 | $ 700,000 | ¥ 4,600,000 |
Refund of WoW Game Points (Deta
Refund of WoW Game Points (Details) | 12 Months Ended | |||||||
Dec. 31, 2011USD ($) | Dec. 31, 2011CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2009USD ($) | Dec. 31, 2009CNY (¥) | |
Acquired Finite-Lived Intangible Assets | ||||||||
Liability related to refund of WOW game points | $ 26,053,438 | ¥ 169,998,682 | ¥ 169,998,682 | |||||
Other operating income | $ 4,000,000 | ¥ 26,000,000 | ||||||
Legal liability | 2 years | 2 years | ||||||
Liability related to refund of WOW game points, release period | 20 years | 20 years | ||||||
World of Warcraft ("WoW") | ||||||||
Acquired Finite-Lived Intangible Assets | ||||||||
Liability related to refund of WOW game points | $ 26,100,000 | ¥ 170,000,000 | $ 26,100,000 | ¥ 170,000,000 | $ 30,700,000 | ¥ 200,400,000 |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) | Jun. 12, 2020shares | May 29, 2020USD ($) | Sep. 26, 2019USD ($)subsidiary | Nov. 24, 2015USD ($) | Nov. 24, 2015USD ($) | Oct. 31, 2020USD ($) | Sep. 30, 2019subsidiary | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Feb. 03, 2020USD ($) | Sep. 26, 2019CNY (¥) | Dec. 11, 2015USD ($) |
Debt Instrument [Line Items] | ||||||||||||||
Number of subsidiaries disposed off | subsidiary | 3 | |||||||||||||
Gain on extinguishment of convertible notes | $ 8,698,223 | ¥ 56,800,000 | ¥ 0 | ¥ 0 | ||||||||||
Interest-free loan extended by Ark Pacific Associates Limited | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Principal amount | $ 5,000,000 | |||||||||||||
Convertible notes issued to Iliad | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Principal amount | $ 500,000 | |||||||||||||
Interest rate (as a percent) | 6.00% | |||||||||||||
Gain on extinguishment of convertible notes | $ 0 | |||||||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Number of subsidiaries disposed off | subsidiary | 3 | |||||||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | Held for sale | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Total consideration | $ 75,600,000 | ¥ 493,000,000 | ||||||||||||
12% Convertible Senior Notes Due 2018 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Principal amount | $ 40,050,000 | $ 40,050,000 | ||||||||||||
Notes due date | 2018 | |||||||||||||
Notes extension | 2 years | |||||||||||||
Interest rate (as a percent) | 12.00% | 12.00% | ||||||||||||
Interest rate after reduction applied retrospectively (as a percent) | 7.00% | |||||||||||||
Repayment of convertible notes | $ 50,000,000 | |||||||||||||
Repayment of debt in shares | shares | 32,400,000 | |||||||||||||
Beneficial conversion feature | $ 8,100,000 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2009 |
SHAREHOLDER RIGHTS PLAN | ||
Exercise Price | $ 19.50 | |
Tranche I | ||
SHAREHOLDER RIGHTS PLAN | ||
Principal Amount | 5,000,000 | |
Exercise Price | $ 1.50 | |
Tranche A | ||
SHAREHOLDER RIGHTS PLAN | ||
Principal Amount | 2,750,000 | |
Exercise Price | $ 2.60 | |
Tranche B | ||
SHAREHOLDER RIGHTS PLAN | ||
Principal Amount | 1,650,000 | |
Exercise Price | $ 5.20 | |
Tranche C | ||
SHAREHOLDER RIGHTS PLAN | ||
Principal Amount | 550,000 | |
Exercise Price | $ 7.80 |
WARRANTS - Additional Informati
WARRANTS - Additional Information (Details) | 1 Months Ended | 12 Months Ended | |||||||
Oct. 31, 2020shares | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2016shares | |
SHAREHOLDER RIGHTS PLAN | |||||||||
Fair value of warrants | ¥ | ¥ 0 | ¥ 200,000 | |||||||
Fair value change on warrants liability | $ (5,801) | ¥ (37,851) | ¥ (1,292,244) | ¥ (2,251,427) | |||||
Equity linked warrants | |||||||||
SHAREHOLDER RIGHTS PLAN | |||||||||
Expiration term of warrants | 3 years | ||||||||
Representative warrants | |||||||||
SHAREHOLDER RIGHTS PLAN | |||||||||
Fair value of warrants | 300,000 | ¥ 1,700,000 | $ 300,000 | ¥ 1,900,000 | |||||
Fair value change on warrants liability | $ 20,000 | ¥ 200,000 | |||||||
Expiration term of warrants | 3 years | ||||||||
Period from effective date of the registration statement, that the warrants become exercisable | 6 months | ||||||||
Maximum | |||||||||
SHAREHOLDER RIGHTS PLAN | |||||||||
Number of shares called by warrants | 4,778,846 | ||||||||
Maximum | Equity linked warrants | ADS | |||||||||
SHAREHOLDER RIGHTS PLAN | |||||||||
Number of shares called by warrants | 2,702,500 |
SHAREHOLDER RIGHTS PLAN (Detail
SHAREHOLDER RIGHTS PLAN (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2009 |
SHAREHOLDER RIGHTS PLAN | |||
Exercise price of shareholders rights plan | $ 19.50 | ||
Minimum | |||
SHAREHOLDER RIGHTS PLAN | |||
Shareholders rights plan, ownership interest for rights to be exercisable | 15.00% | ||
Class A Ordinary Shares | |||
SHAREHOLDER RIGHTS PLAN | |||
Ordinary shares, shares issued | 247,090,351 | 103,737,691 | |
Ordinary shares, shares outstanding | 247,090,351 | 103,737,691 | |
Class B ordinary shares | |||
SHAREHOLDER RIGHTS PLAN | |||
Ordinary shares, shares issued | 12,942,011 | 9,192,011 | |
Ordinary shares, shares outstanding | 12,942,011 | 9,192,011 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
EMPLOYEE BENEFITS | ||||
Employee benefits expenses related to full-time employees of subsidiaries and VIE subsidiaries incorporated in PRC | $ 0.2 | ¥ 1.2 | ¥ 4.5 | ¥ 7.9 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share option activities (Details) | Sep. 04, 2018shares | Jan. 24, 2018shares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2020CNY (¥)shares |
Stock Options | |||||||||
Number of Options | |||||||||
Outstanding at beginning of year | shares | 50,000 | 50,000 | |||||||
Granted | shares | 5,750,000 | 0 | 0 | ||||||
Exercised | shares | 0 | 0 | |||||||
Forfeited | shares | (4,700,000) | 0 | 0 | ||||||
Outstanding at end of year | shares | 50,000 | 50,000 | 50,000 | 50,000 | |||||
Vested and expected at end of year | shares | 50,000 | 50,000 | |||||||
Exercisable at end of year | shares | 50,000 | 50,000 | |||||||
Weighted-Average Exercise Price | |||||||||
Outstanding at beginning of year | $ / shares | $ 0.93 | ||||||||
Granted | $ / shares | 0 | ||||||||
Exercised | $ / shares | 0 | ||||||||
Forfeited | $ / shares | 0 | ||||||||
Outstanding at end of year | $ / shares | 0.93 | $ 0.93 | |||||||
Vested and expected at end of year | $ / shares | 0.93 | ||||||||
Exercisable at end of year | $ / shares | $ 0.93 | ||||||||
Weighted-Average Remaining Contractual Term (years) | |||||||||
Outstanding at beginning of year | 2 years 26 days | 2 years 26 days | 3 years 26 days | 3 years 26 days | |||||
Vested and expected to vest at end of year | 2 years 26 days | 2 years 26 days | |||||||
Exercisable at end of year | 2 years 26 days | 2 years 26 days | |||||||
Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | ¥ | ¥ 0 | ||||||||
Granted | ¥ / shares | ¥ 0 | ||||||||
Exercised | $ 0 | ¥ 0 | $ 0 | $ 0 | |||||
Forfeited | ¥ | 0 | ||||||||
Outstanding at end of year | ¥ | ¥ 0 | ¥ 0 | |||||||
Vested and expected to vest at end of period | ¥ | ¥ 0 | ||||||||
Exercisable at end of period | ¥ | ¥ 0 | ||||||||
Performance conditions | |||||||||
Number of Options | |||||||||
Outstanding at beginning of year | shares | 1,000,000 | 1,000,000 | |||||||
Granted | shares | 0 | 0 | |||||||
Exercised | shares | 0 | 0 | |||||||
Forfeited | shares | (1,000,000) | (1,000,000) | |||||||
Outstanding at end of year | shares | 0 | 0 | 1,000,000 | 1,000,000 | |||||
Vested and expected at end of year | shares | 0 | 0 | |||||||
Exercisable at end of year | shares | 0 | 0 | |||||||
Weighted-Average Exercise Price | |||||||||
Outstanding at beginning of year | $ / shares | $ 0.93 | ||||||||
Granted | $ / shares | 0 | ||||||||
Exercised | $ / shares | 0 | ||||||||
Forfeited | $ / shares | 0.93 | ||||||||
Outstanding at end of year | $ / shares | 0 | $ 0.93 | |||||||
Vested and expected at end of year | $ / shares | 0 | ||||||||
Exercisable at end of year | $ / shares | $ 0 | ||||||||
Weighted-Average Remaining Contractual Term (years) | |||||||||
Outstanding at beginning of year | 0 years | 0 years | 3 years 26 days | 3 years 26 days | |||||
Vested and expected to vest at end of year | 0 years | 0 years | |||||||
Exercisable at end of year | 0 years | 0 years | |||||||
Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | ¥ | ¥ 0 | ||||||||
Granted | ¥ / shares | ¥ 0 | ||||||||
Exercised | ¥ | ¥ 0 | ||||||||
Forfeited | ¥ | 0 | ||||||||
Outstanding at end of year | ¥ | ¥ 0 | ¥ 0 | |||||||
Vested and expected to vest at end of period | ¥ | ¥ 0 | ||||||||
Exercisable at end of period | ¥ | ¥ 0 | ||||||||
Stock options and ordinary shares granted by Red 5 | |||||||||
Number of Options | |||||||||
Outstanding at beginning of year | shares | 5,111,250 | 5,111,250 | |||||||
Granted | shares | 0 | 0 | |||||||
Exercised | shares | 0 | 0 | |||||||
Forfeited | shares | 0 | 0 | |||||||
Outstanding at end of year | shares | 5,111,250 | 5,111,250 | 5,111,250 | 5,111,250 | |||||
Vested and expected at end of year | shares | 5,111,250 | 5,111,250 | |||||||
Exercisable at end of year | shares | 5,111,250 | 5,111,250 | |||||||
Weighted-Average Exercise Price | |||||||||
Outstanding at beginning of year | $ / shares | $ 0.049 | ||||||||
Granted | $ / shares | 0 | ||||||||
Exercised | $ / shares | 0 | ||||||||
Forfeited | $ / shares | 0 | ||||||||
Outstanding at end of year | $ / shares | 0.049 | $ 0.049 | |||||||
Vested and expected at end of year | $ / shares | 0.049 | ||||||||
Exercisable at end of year | $ / shares | $ 0.049 | ||||||||
Weighted-Average Remaining Contractual Term (years) | |||||||||
Outstanding at beginning of year | 2 months 27 days | 2 months 27 days | 1 year 2 months 27 days | 1 year 2 months 27 days | |||||
Vested and expected to vest at end of year | 2 months 27 days | 2 months 27 days | |||||||
Exercisable at end of year | 2 months 27 days | 2 months 27 days | |||||||
Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | $ | $ 0 | ||||||||
Granted | ¥ / shares | ¥ 0 | ||||||||
Exercised | $ | 0 | $ 0 | $ 0 | $ 0 | |||||
Forfeited | $ | 0 | ||||||||
Outstanding at end of year | $ | 0 | $ 0 | |||||||
Vested and expected to vest at end of period | $ | 0 | ||||||||
Exercisable at end of period | $ | $ 0 |
SHARE-BASED COMPENSATION - Blac
SHARE-BASED COMPENSATION - Black-Scholes option pricing model (Details) | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.19% |
Expected life (years) | 2 years 11 months 5 days |
Volatility | 78.55% |
Fair value of options at grant date | $ 0.51 |
Performance conditions | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.19% |
Expected life (years) | 2 years 11 months 5 days |
Volatility | 78.55% |
Fair value of options at grant date | $ 0.51 |
Stock options and ordinary shares granted by Red 5 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 0.78% |
Expected life (years) | 4 years |
Expected dividend yield | 0.00% |
Volatility | 45.70% |
SHARE-BASED COMPENSATION - (Det
SHARE-BASED COMPENSATION - (Details) | Jun. 17, 2020shares | Jan. 21, 2019shares | Sep. 04, 2018shares | Jan. 24, 2018shares | Jun. 06, 2017shares | Feb. 28, 2021shares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017USD ($) | Dec. 31, 2020CNY (¥)shares | Aug. 31, 2016shares | Nov. 30, 2015shares | Dec. 31, 2013shares | Sep. 30, 2011shares | Dec. 31, 2010shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Equity granted | 15,000,000 | 30,000,000 | |||||||||||||||||
Number of awards granted | 32,190,000 | ||||||||||||||||||
Share-based Compensation | $ 8,437,766 | ¥ 55,056,426 | ¥ 21,750,533 | ¥ 3,898,328 | |||||||||||||||
Directors, officers and consultants | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of options canceled | 15,000,000 | 6,200,000 | |||||||||||||||||
2004 Option Plan | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of options canceled | 10,806,665 | ||||||||||||||||||
Maximum aggregate number of ordinary shares approved for issuance | 100,000,000 | 100,000,000 | 34,449,614 | 14,449,614 | 6,449,614 | ||||||||||||||
Stock options contractual term | 5 years | 5 years | |||||||||||||||||
Options to purchase ordinary share, outstanding shares | 50,000 | 50,000 | |||||||||||||||||
Options to purchase ordinary shares, available for future grants | 33,352,118 | 33,352,118 | |||||||||||||||||
Number of options exercised | 6,328,535 | ||||||||||||||||||
Stock Options | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of options canceled | 4,700,000 | 0 | 0 | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 5,750,000 | 0 | 0 | ||||||||||||||||
Total instrinsic value of options exercised | $ 0 | ¥ 0 | $ 0 | $ 0 | |||||||||||||||
Options to purchase ordinary share, outstanding shares | 50,000 | 50,000 | 50,000 | 50,000 | |||||||||||||||
Number of options exercised | 0 | 0 | |||||||||||||||||
Fair value of options granted | $ / shares | $ 0.51 | ||||||||||||||||||
Share options granted | 5,750,000 | 0 | 0 | ||||||||||||||||
Shares vested period | 36 months | ||||||||||||||||||
Share options forfeited | 1,000,000 | ||||||||||||||||||
Stock options and ordinary shares granted by Red 5 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of options canceled | 0 | 0 | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 0 | |||||||||||||||||
Maximum aggregate number of ordinary shares approved for issuance | 22,855,591 | 13,626,955 | |||||||||||||||||
Total instrinsic value of options exercised | $ | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||||||||
Options to purchase ordinary share, outstanding shares | 5,111,250 | 5,111,250 | 5,111,250 | 5,111,250 | |||||||||||||||
Options to purchase ordinary shares, available for future grants | 15,480,087 | 15,480,087 | |||||||||||||||||
Share-based Compensation | ¥ | ¥ 0 | ¥ 50,000 | ¥ 40,000 | ||||||||||||||||
Number of options exercised | 0 | 0 | |||||||||||||||||
Share options granted | 0 | 0 | |||||||||||||||||
Unrecognized compensation cost | ¥ | ¥ 0 | ||||||||||||||||||
Stock award term | 10 years | 10 years | |||||||||||||||||
Option granted | 38,191,879 | 38,191,879 | |||||||||||||||||
Maximum exercisable period for stock options granted to a person who is a greater than 10% shareholder on date of grant | 5 years | 5 years | |||||||||||||||||
Stock options and ordinary shares granted by Red 5 | Maximum | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Stock options, exercise price | $ / shares | $ 0.2450 | ||||||||||||||||||
Stock options and ordinary shares granted by Red 5 | Minimum | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Fair value of options granted | $ / shares | 0.0178 | ||||||||||||||||||
Stock options, exercise price | $ / shares | $ 0.0001 | ||||||||||||||||||
Performance conditions | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of options canceled | 1,000,000 | 1,000,000 | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 0 | |||||||||||||||||
Total instrinsic value of options exercised | ¥ | ¥ 0 | ||||||||||||||||||
Options to purchase ordinary share, outstanding shares | 0 | 1,000,000 | 1,000,000 | 0 | |||||||||||||||
Share-based Compensation | $ 8,400,000 | ¥ 55,100,000 | ¥ 21,300,000 | ¥ 3,900,000 | |||||||||||||||
Number of options exercised | 0 | 0 | |||||||||||||||||
Fair value of options granted | $ / shares | $ 0.51 | ||||||||||||||||||
Share options granted | 0 | 0 | |||||||||||||||||
Unrecognized compensation cost | $ 700,000 | ¥ 4,400,000 | |||||||||||||||||
Restricted shares | Class A Ordinary Shares | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of awards granted | 29,100,000 | ||||||||||||||||||
Performance based Restricted Shares | Class A Ordinary Shares | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of awards granted | 15,600,000 | ||||||||||||||||||
Time based Restricted Shares | Class A Ordinary Shares | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||
Number of awards granted | 13,500,000 | ||||||||||||||||||
Lock in period | 6 months |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Details) | 1 Months Ended | 12 Months Ended | 24 Months Ended | ||||||
Sep. 30, 2020USD ($) | Sep. 30, 2020CNY (¥) | Jun. 30, 2019shares | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | Dec. 31, 2020CNY (¥) | |
RELATED PARTY TRANSACTIONS AND BALANCES | |||||||||
Repayments of related party debt | $ 6,520,327 | ¥ 42,545,136 | ¥ 10,023,576 | ¥ 29,127,540 | |||||
Zhenjiang Kexin Power System Design and Research Co., Ltd. ("Zhenjiang Kexin") | |||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | |||||||||
Common Stock, Shares Subscribed but Unissued | shares | 3,444,882 | ||||||||
Percentage of equity interest | 9.90% | 9.90% | 9.90% | ||||||
Chief Executive Officer | |||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | |||||||||
Loan from related party | 16,100,000 | ¥ 0 | |||||||
Repayments of related party debt | $ 6,500,000 | ¥ 42,500,000 | 0 | ||||||
Amount due to related party | 3,200,000 | 63,200,000 | 20,600,000 | ||||||
Big Data | |||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | |||||||||
Revenue from related party | 0 | 20,000 | |||||||
Amount due from related party | $ 20,000 | 100,000 | 100,000 | ||||||
ZTE9 network technology Co., Ltd., Wuxi ("ZTE9") | |||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | |||||||||
Revenue from related party | ¥ 0 | ||||||||
Repayments of related party debt | $ 200,000 | ¥ 1,000,000 | |||||||
Funds to related party | ¥ 0 | 0 | |||||||
Amount due from related party | 1,000,000 | 0 | |||||||
Amount due to related party | ¥ 200,000 | ¥ 0 |
(LOSS) INCOME PER SHARE (Detail
(LOSS) INCOME PER SHARE (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | |
Numerator: | ||||
Net loss attributable to ordinary shareholders before change in redeemable noncontrolling interest | $ 60,978,298 | ¥ 397,883,388 | ¥ (177,795,168) | ¥ (217,092,926) |
Change in redeemable noncontrolling interest | (182,394) | (1,190,122) | (12,827,598) | (40,918,773) |
Net loss attributable to ordinary shareholders | $ 60,795,904 | ¥ 396,693,266 | ¥ (190,622,766) | ¥ (258,011,699) |
Denominator: | ||||
Denominator for basic and diluted loss per share - weighted-average shares outstanding | 163,599,920 | 163,599,920 | 106,407,008 | 62,114,760 |
Net (loss) income attributable to holders of ordinary shares per share - Basic and diluted | (per share) | $ 0.37 | ¥ 2.42 | ¥ (1.79) | ¥ (4.15) |
(LOSS) INCOME PER SHARE - Addit
(LOSS) INCOME PER SHARE - Additional Information (Details) - shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
(LOSS) INCOME PER SHARE | |||
Anti-dilutive securities excluded from computation of diluted loss per share | 4,200,645 | 13,213,978 | 20,383,333 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | |
Restricted Cash and Cash Equivalents Items | |||||
Appropriation of statutory reserves | ¥ 0 | ¥ 0 | ¥ 0 | ||
Accumulated reserves | $ 0.6 | ¥ 3,800,000 | |||
Restricted registered capital | 1.8 | 11,500,000 | |||
Amount of restricted net assets | $ 1.2 | ¥ 7,700,000 | |||
Minimum | |||||
Restricted Cash and Cash Equivalents Items | |||||
Percentage of appropriation of statutory reserve from retained earnings after tax profits | 10.00% | ||||
Maximum | |||||
Restricted Cash and Cash Equivalents Items | |||||
Percentage of appropriations of statutory reserve of registered capital | 50.00% |
NONCONTROLLING INTEREST (Detail
NONCONTROLLING INTEREST (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
NONCONTROLLING INTEREST | ||||
Net (loss) income attributable to The9 Limited | $ 60,978,299 | ¥ 397,883,388 | ¥ (177,795,168) | ¥ (217,092,926) |
Transfers (to) from the noncontrolling interest | ||||
Change in The9 Limited's additional paid-in capital for adjustment on noncontrolling interest as a result of issuance of common shares of Red 5 upon vesting of stock options and restricted shares (1) | 0 | 0 | 0 | 0 |
Change from net (loss) income attributable to The9 Limited and transfers to noncontrolling interests | $ 60,978,299 | ¥ 397,883,388 | ¥ (177,795,168) | ¥ (217,092,926) |
NONCONTROLLING INTEREST- Additi
NONCONTROLLING INTEREST- Additional Information (Details) - shares | 1 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2020 | Dec. 31, 2016 | May 31, 2016 | |
L&A International Holding Limited | ||||
Noncontrolling Interest | ||||
Equity interest owned by company | 58.10% | 35.00% | 37.00% | 10.40% |
Ordinary shares of L&A | 723,313,020 | |||
Stock split ratio | one-to-five stock split | |||
Percentage of shares received related to payment of service fee to third party consultant | 6.00% | |||
Ordinary shares of L&A, gross | 769,481,940 | |||
Red 5 Studios, Inc. ("Red 5") | MOU | ||||
Noncontrolling Interest | ||||
Equity interest owned by company | 30.60% |
REDEEMABLE NONCONTROLLING INT_3
REDEEMABLE NONCONTROLLING INTEREST - Holders of SPBS (Details) - Series B Redeemable Convertible Preferred Shares - shares | Dec. 31, 2020 | Dec. 31, 2019 |
Shanghai Oriental Pearl Culture Development Co Ltd | ||
Redeemable Noncontrolling Interest | ||
Number of shares | 17,258,399 | 17,258,399 |
L&A International Holding Limited | ||
Redeemable Noncontrolling Interest | ||
Number of shares | 10,180,553 | 10,180,553 |
REDEEMABLE NONCONTROLLING INT_4
REDEEMABLE NONCONTROLLING INTEREST - Reconciliation (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
NONCONTROLLING INTEREST | ||||
Redeemable noncontrolling interest opening balance | $ 53,493,724 | ¥ 349,046,548 | ¥ 341,074,539 | |
Net loss attributable to redeemable noncontrolling interest | (182,394) | (1,190,122) | (4,855,589) | ¥ (5,858,902) |
Change in redeemable noncontrolling interest | 182,394 | 1,190,122 | 12,827,598 | |
Redeemable noncontrolling interest ending balance | $ 53,493,724 | ¥ 349,046,548 | ¥ 349,046,548 | ¥ 341,074,539 |
REDEEMABLE NONCONTROLLING INT_5
REDEEMABLE NONCONTROLLING INTEREST - Additional Information (Details) - CNY (¥) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Redeemable Noncontrolling Interest | ||
Common shares purchased by Oriental Pearl, value | ¥ 36,072,921 | ¥ 9,300,578 |
Ordinary shares | ||
Redeemable Noncontrolling Interest | ||
Common stock issued | 15,444,882 | 46,771,429 |
Common shares purchased by Oriental Pearl, value | ¥ 1,041,557 | ¥ 3,173,806 |
DISPOSAL OF A SUBSIDIARY (Detai
DISPOSAL OF A SUBSIDIARY (Details) $ in Millions | Sep. 18, 2020USD ($) | Sep. 18, 2020CNY (¥) | Sep. 09, 2020USD ($) | Sep. 09, 2020CNY (¥) | Feb. 21, 2020USD ($) | Feb. 21, 2020CNY (¥) | Sep. 26, 2019USD ($)subsidiary | Sep. 30, 2019subsidiary | Sep. 26, 2019CNY (¥) |
DISPOSAL OF A SUBSIDIARY | |||||||||
Number of subsidiaries disposed of | 3 | ||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | |||||||||
DISPOSAL OF A SUBSIDIARY | |||||||||
Number of subsidiaries disposed of | 3 | ||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | Disposal Group, Disposed of by Sale | |||||||||
DISPOSAL OF A SUBSIDIARY | |||||||||
Number of subsidiaries disposed of | 3 | ||||||||
Total consideration | $ 75.6 | ¥ 493,000,000 | |||||||
Gain on disposal of subsidiary | $ 60.1 | ¥ 391,800,000 | |||||||
Asian Development | Disposal Group, Disposed of by Means Other than Sale | |||||||||
DISPOSAL OF A SUBSIDIARY | |||||||||
Gain on disposal of subsidiary | $ 12.8 | ¥ 83,700,000 | $ 12 | ¥ 83,700,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ / shares in Units, $ in Millions | Jun. 06, 2017$ / sharesshares | Oct. 09, 2016USD ($) | Oct. 09, 2016CNY (¥) | Nov. 30, 2020USD ($)shares | Sep. 30, 2020USD ($) | Apr. 30, 2020USD ($) | Apr. 30, 2020CNY (¥) | Apr. 30, 2019USD ($) | Mar. 31, 2019USD ($)shares | Jan. 31, 2019USD ($) | Oct. 31, 2016USD ($) | Oct. 31, 2016CNY (¥) | Jun. 30, 2016HKD ($)shares | Aug. 31, 2014shares | Dec. 31, 2020USD ($)shares | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020CNY (¥) | Jul. 31, 2020USD ($) | Jun. 30, 2020 | Dec. 31, 2019CNY (¥) | Jun. 30, 2017USD ($) | Jun. 30, 2017CNY (¥) | Dec. 31, 2016 | Oct. 31, 2016CNY (¥) | Jun. 30, 2016USD ($) | May 31, 2016 | Nov. 24, 2015USD ($) |
Loss Contingencies | ||||||||||||||||||||||||||||||
Funds raised for the development of CrossFire new mobile game | $ 8,630,080 | ¥ 56,311,274 | ¥ 57,499,910 | |||||||||||||||||||||||||||
Funds required for the development of CrossFire new mobile game | $ 800,000 | |||||||||||||||||||||||||||||
Investments in equity investees | ¥ | 10,000,000 | |||||||||||||||||||||||||||||
Initial deposit paid for investments | $ 5,000,000 | ¥ 34,881,000 | ¥ 0 | |||||||||||||||||||||||||||
Number of installments to pay capital contribution | 3,000,000 | |||||||||||||||||||||||||||||
Total aggregated claim | $ 13,000,000 | |||||||||||||||||||||||||||||
Redeemable convertible preferred shares redemption value | 182,394 | ¥ 1,190,122 | 12,827,598 | |||||||||||||||||||||||||||
Maximum assets worldwide not to be disposed off | 55,500,000 | |||||||||||||||||||||||||||||
Minimum Guarantee Payment | 13,000,000 | |||||||||||||||||||||||||||||
Upfront Payment | $ 3,000,000 | |||||||||||||||||||||||||||||
12% Convertible Senior Notes Due 2018 | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Interest rate (as a percent) | 12.00% | |||||||||||||||||||||||||||||
Principal amount | $ 40,050,000 | |||||||||||||||||||||||||||||
Copyright infringements | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Total aggregated claim | 500,000 | 3,000,000 | ||||||||||||||||||||||||||||
2004 Option Plan | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Number of options canceled | shares | 10,806,665 | |||||||||||||||||||||||||||||
Common stock par value | $ / shares | $ 0.01 | |||||||||||||||||||||||||||||
Beijing Ti Knight | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Purchase commitment amount | 900,000 | 6,000,000 | ||||||||||||||||||||||||||||
Joint venture to manufacture, market, distribute and sell electric cars | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Initial deposit paid for investments | $ 5,000,000 | |||||||||||||||||||||||||||||
Joint venture to manufacture, market, distribute and sell electric cars | Maximum | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Investment commitments | 600,000,000 | |||||||||||||||||||||||||||||
Equity Method Investment Funding Commitment | 600,000,000 | |||||||||||||||||||||||||||||
System Link Corporation Limited ('System Link") | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Refund of court acceptance fee paid | $ 600,000 | ¥ 3,800,000 | ||||||||||||||||||||||||||||
First Installment | Series B Redeemable Convertible Preferred Shares | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Redeemable convertible preferred shares redemption value | 16,500,000 | |||||||||||||||||||||||||||||
Second Installment | Series B Redeemable Convertible Preferred Shares | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Redeemable convertible preferred shares redemption value | 18,100,000 | |||||||||||||||||||||||||||||
Third Installment | Series B Redeemable Convertible Preferred Shares | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Redeemable convertible preferred shares redemption value | 19,900,000 | |||||||||||||||||||||||||||||
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Initial deposit paid for investments | $ 5,000,000 | $ 5,000,000 | ||||||||||||||||||||||||||||
Number Of Shares In To Which Initial Deposit On Investments Were Converted | shares | 2,994,011 | 2,994,011 | ||||||||||||||||||||||||||||
Shanghai The9 Information Technology Co., Ltd. ("Shanghai IT") | Beijing Ti Knight | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Investment commitments | 600,000 | 4,100,000 | $ 1,400,000 | ¥ 9,000,000 | ||||||||||||||||||||||||||
Investments in equity investees | 800,000 | 4,900,000 | ||||||||||||||||||||||||||||
Purchase commitment amount | $ 600,000 | ¥ 4,100,000 | 1,000,000 | 6,800,000 | ||||||||||||||||||||||||||
Maximum accumulated investment for waiving purchase commitment | 900,000 | ¥ 6,000,000 | ||||||||||||||||||||||||||||
Equity Method Investment Funding Commitment | $ 600,000 | ¥ 4,100,000 | $ 1,400,000 | ¥ 9,000,000 | ||||||||||||||||||||||||||
L&A International Holding Limited | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Line of credit amount | $ 92.3 | $ 11,900,000 | ||||||||||||||||||||||||||||
Interest rate (as a percent) | 2.00% | 2.00% | ||||||||||||||||||||||||||||
Line of credit , duration | 24 months | |||||||||||||||||||||||||||||
Amount of shares pledged | shares | 417,440,000 | |||||||||||||||||||||||||||||
Percentage of shares owned | 58.10% | 35.00% | 37.00% | 58.10% | 10.40% | |||||||||||||||||||||||||
Red 5 Studios, Inc. ("Red 5") | Series B Redeemable Convertible Preferred Shares | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Redeemable convertible preferred shares issued, shares | shares | 27,438,952 | |||||||||||||||||||||||||||||
New Star International Development Ltd ("New Star") | Series A Preferred Stock | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Redeemable convertible preferred shares issued, shares | shares | 39,766,589 | 39,766,589 | ||||||||||||||||||||||||||||
Jiu Gang | Smilegate | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Share ownership for investments accounted for under equity method (as a percent) | 20.00% | 20.00% | ||||||||||||||||||||||||||||
Jiu Gang | Shenzhen EN-plus Technologies Co., Ltd. ("EN+") | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Share ownership for investments accounted for under equity method (as a percent) | 80.00% | 80.00% | ||||||||||||||||||||||||||||
Jiu Gang | Joint venture related to new energy electric vehicles | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Investment commitments | 7,700,000 | 50,000,000 | ||||||||||||||||||||||||||||
Equity Method Investment Funding Commitment | $ 7,700,000 | ¥ 50,000,000 | ||||||||||||||||||||||||||||
CrossFire New Mobile Game | Smilegate | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Period for payment of minimum guarantee for royalty | 30 days | |||||||||||||||||||||||||||||
CrossFire New Mobile Game | Minimum | Smilegate | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Guarantee for royalty | $ 2,000,000 | |||||||||||||||||||||||||||||
CrossFire New Mobile Game | Inner Mongolia Culture Assets and Equity Exchange | ||||||||||||||||||||||||||||||
Loss Contingencies | ||||||||||||||||||||||||||||||
Funds raised for the development of CrossFire new mobile game | $ 8,800,000 | $ 8,800,000 | ¥ 57,500,000 | ¥ 57,500,000 | ||||||||||||||||||||||||||
Additional funds aimed to be raised for the development of CrossFire new mobile game | 15,300,000 | 15,300,000 | 100,000,000 | ¥ 100,000,000 | ||||||||||||||||||||||||||
Funds required for the development of CrossFire new mobile game | $ 24,100,000 | ¥ 157,500,000 | ||||||||||||||||||||||||||||
Principal amount of refund claimed through civil suit | $ 8,800,000 | ¥ 57,500,000 | 8,800,000 | ¥ 57,500,000 | ||||||||||||||||||||||||||
Interest amount of refund claimed through civil suit | $ 700,000 | ¥ 4,600,000 | $ 700,000 | ¥ 4,600,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Revenues from External Customers and Long-Lived Assets | ||||
Net revenues | $ 95,860 | ¥ 625,488 | ¥ 341,495 | ¥ 17,431,858 |
Greater China | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Net revenues | 95,860 | 625,488 | 182,107 | 16,430,205 |
Other areas | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Net revenues | $ 0 | ¥ 0 | ¥ 159,388 | ¥ 1,001,653 |
SEGMENT REPORTING - Additional
SEGMENT REPORTING - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2020segment | |
SEGMENT REPORTING | |
Number of operating segment | 1 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Jun. 17, 2020shares | May 29, 2020USD ($) | Sep. 26, 2019USD ($)subsidiary | Mar. 31, 2021USD ($)item$ / sharesshares | Feb. 28, 2021USD ($)item$ / sharesshares | Jan. 31, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($) | Sep. 30, 2019subsidiary | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Mar. 22, 2021USD ($) | Dec. 31, 2019$ / shares | Dec. 31, 2019CNY (¥) | Sep. 26, 2019CNY (¥) | Nov. 24, 2015USD ($) |
Number of subsidiaries disposed of | subsidiary | 3 | ||||||||||||||||
Convertible notes (including convertible notes of consolidated VIEs without recourse to the Group of nil as of both December 31, 2019 and 2020) | ¥ | ¥ 414,127,908 | ||||||||||||||||
Refund claimed through civil suit | $ 13,000,000 | ||||||||||||||||
Number of awards granted | shares | 32,190,000 | ||||||||||||||||
Cash consideration for purchase of Filecoin mining machine | $ 10,000,000 | ||||||||||||||||
Proceeds from the issuance of convertible note | $ 514,693 | ¥ 3,358,369 | ¥ 0 | ¥ 0 | |||||||||||||
Class A Ordinary Shares | |||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | $ 0.01 | |||||||||||||||
Restricted shares | Class A Ordinary Shares | |||||||||||||||||
Number of awards granted | shares | 29,100,000 | ||||||||||||||||
12% Convertible Senior Notes Due 2018 | |||||||||||||||||
Repayment of convertible notes | $ 50,000,000 | ||||||||||||||||
Principal amount | $ 40,050,000 | ||||||||||||||||
Interest rate (as a percent) | 12.00% | ||||||||||||||||
Debt Instrument, Face Amount | $ 40,050,000 | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||||||||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | |||||||||||||||||
Number of subsidiaries disposed of | subsidiary | 3 | ||||||||||||||||
The9 Computer, C9I Shanghai and Shanghai Kaie | Held for sale | |||||||||||||||||
Total consideration | $ 75,600,000 | ¥ 493,000,000 | |||||||||||||||
Subsequent Event | |||||||||||||||||
Market capitalization to be reached in 6 months | $ 100,000,000 | ||||||||||||||||
Market capitalization to be reached in 12 months | 300,000,000 | ||||||||||||||||
Market capitalization to be reached in 24 months | 500,000,000 | ||||||||||||||||
Market capitalization to be reached in 36 months | $ 1,000,000,000 | ||||||||||||||||
Subsequent Event | Convertible notes issued to Streeterville, one | |||||||||||||||||
Period for exercising the right to convert | 6 months | ||||||||||||||||
Debt Instrument, Term | 1 year | ||||||||||||||||
Number of days in a year considered for interest rate determination | 360 | ||||||||||||||||
Debt Conversion, Period To Exercise Conversion Right | 6 months | ||||||||||||||||
Threshold amount for redemption per calendar month | $ 840,000 | ||||||||||||||||
Redemption premium percentage | 10.00% | ||||||||||||||||
Prepayment premium percentage | 15.00% | ||||||||||||||||
Subsequent Event | Convertible notes issued to Streeterville, two | |||||||||||||||||
Principal amount | $ 20,000,000 | ||||||||||||||||
Interest rate (as a percent) | 6.00% | ||||||||||||||||
Period for exercising the right to convert | 6 months | ||||||||||||||||
Debt Instrument, Term | 1 year | ||||||||||||||||
Debt Instrument, Face Amount | $ 20,000,000 | ||||||||||||||||
Proceeds from the issuance of convertible note | $ 20,000,000 | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | ||||||||||||||||
Number of days in a year considered for interest rate determination | item | 360 | ||||||||||||||||
Debt Conversion, Period To Exercise Conversion Right | 6 months | ||||||||||||||||
Initial conversion price as percent of trading prices | 90.00% | ||||||||||||||||
Number of trading days considered for determination of initial conversion price | item | (5) | ||||||||||||||||
Period after the Start date that the lender has right to redeem the convertible note | 6 months | ||||||||||||||||
Threshold amount for redemption per calendar month | $ 3,360,000 | ||||||||||||||||
Redemption premium percentage | 10.00% | ||||||||||||||||
Prepayment premium percentage | 15.00% | ||||||||||||||||
Subsequent Event | Class A Ordinary Shares | |||||||||||||||||
Number of shares issued | shares | 8,108,100 | ||||||||||||||||
Aggregate price per share | $ / shares | $ 0.1233 | ||||||||||||||||
Number of warrants issued | shares | 207,891,840 | ||||||||||||||||
Number of shares agreed to issue | shares | 9,231,240 | ||||||||||||||||
Consideration receivable on issuance of shares | $ 11,500,000 | ||||||||||||||||
Shares Issued, Price Per Share | $ / shares | $ 0.1233 | ||||||||||||||||
Shares Agreed To Issue | shares | 9,231,240 | ||||||||||||||||
Subsequent Event | Class A Ordinary Shares | Convertible notes issued to Streeterville, one | |||||||||||||||||
Ordinary shares | shares | 10,000,000 | ||||||||||||||||
Aggregate consideration | $ 5,000,000 | ||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.0001 | ||||||||||||||||
Share Price | $ / shares | $ 0.0001 | ||||||||||||||||
Subsequent Event | ADS | |||||||||||||||||
Authorized shares to shell | shares | 100,000,000 | ||||||||||||||||
Period to sell authorized shares | 36 months | ||||||||||||||||
Subsequent Event | ADS | Convertible notes issued to Streeterville, one | |||||||||||||||||
Ordinary shares | shares | 50,000 | ||||||||||||||||
Subsequent Event | Hangzhou SuanLiTechnology Co., Ltd | |||||||||||||||||
Equity interest acquired | 70.00% | ||||||||||||||||
Acquisition consideration | $ 7,000,000 | ||||||||||||||||
Subsequent Event | Hangzhou SuanLiTechnology Co., Ltd | ADS | |||||||||||||||||
Share price per ADS | $ / shares | $ 82.89 | ||||||||||||||||
Subsequent Event | Restricted shares | Class A Ordinary Shares | |||||||||||||||||
Number of awards authorized | shares | 33,090,000 | ||||||||||||||||
Subsequent Event | Restricted shares subject to certain market capitalization conditions | Class A Ordinary Shares | |||||||||||||||||
Number of awards granted | shares | 900,000 | ||||||||||||||||
Market capitalization | $ 400,000,000 | ||||||||||||||||
Subsequent Event | Restricted shares subject to certain market capitalization conditions | Vesting of next half of awards | Class A Ordinary Shares | |||||||||||||||||
Market capitalization | $ 500,000,000 | ||||||||||||||||
Subsequent Event | Restricted shares units | Class A Ordinary Shares | |||||||||||||||||
Number of awards granted | shares | 32,190,000 | ||||||||||||||||
Subsequent Event | Cooperation agreement with Shenzhen MicroBT Electronics Technology Co., Ltd | |||||||||||||||||
Number of Bitcoin mining machines purchased | item | 440 | ||||||||||||||||
Number of Bitcoin mining machines that the company has right to offer to purchase | item | 5,000 | ||||||||||||||||
Period to exercise the right to offer purchase of Bitcoin mining machines | 1 year | ||||||||||||||||
Number Of Bitcoin Mining Machines Purchased | item | 440 | ||||||||||||||||
Subsequent Event | Bitcoin mining machine purchase agreement, one | |||||||||||||||||
Number of bitcoin mining machine owners with whom the company has entered into purchase agreements | item | 5 | ||||||||||||||||
Total hash rate | $ / shares | $ 549 | ||||||||||||||||
Percentage of global hash rate of Bitcoin | 0.36% | ||||||||||||||||
Number Of Bitcoin Mining Machine Owners With Whom Purchase Agreements Were Entered | item | 5 | ||||||||||||||||
Total Hash Rate Of Bitcoin Mining Machines | $ / shares | $ 549 | ||||||||||||||||
Subsequent Event | Bitcoin mining machine purchase agreement, one | Class A Ordinary Shares | |||||||||||||||||
Aggregate price per share | $ / shares | $ 0.37 | ||||||||||||||||
Number of shares issued in exchange for Bitcoin mining machines | shares | 26,838,360 | ||||||||||||||||
Number of Bitcoin mining machines purchased | 26,007 | ||||||||||||||||
Number Of Bitcoin Mining Machines Purchased | 26,007 | ||||||||||||||||
Stock Issued During Period, Shares, Purchase of Assets | shares | 26,838,360 | ||||||||||||||||
Shares Issued, Price Per Share | $ / shares | $ 0.37 | ||||||||||||||||
Subsequent Event | Bitcoin mining machine purchase agreement, one | ADS | |||||||||||||||||
Aggregate price per share | $ / shares | 11.18 | ||||||||||||||||
Shares Issued, Price Per Share | $ / shares | 11.18 | ||||||||||||||||
Subsequent Event | Bitcoin mining machine purchase agreement, two | |||||||||||||||||
Number of bitcoin mining machine owners with whom the company has entered into purchase agreements | item | 5 | ||||||||||||||||
Number of Bitcoin mining machines purchased | item | 8,489 | ||||||||||||||||
Total hash rate | $ / shares | 251 | ||||||||||||||||
Number Of Bitcoin Mining Machines Purchased | item | 8,489 | ||||||||||||||||
Number Of Bitcoin Mining Machine Owners With Whom Purchase Agreements Were Entered | item | 5 | ||||||||||||||||
Total Hash Rate Of Bitcoin Mining Machines | $ / shares | 251 | ||||||||||||||||
Subsequent Event | Bitcoin mining machine purchase agreement, two | Class A Ordinary Shares | |||||||||||||||||
Aggregate price per share | $ / shares | $ 0.78 | ||||||||||||||||
Number of shares issued in exchange for Bitcoin mining machines | shares | 3,832,830 | ||||||||||||||||
Stock Issued During Period, Shares, Purchase of Assets | shares | 3,832,830 | ||||||||||||||||
Shares Issued, Price Per Share | $ / shares | $ 0.78 | ||||||||||||||||
Subsequent Event | Bitcoin mining machine purchase agreement, two | ADS | |||||||||||||||||
Aggregate price per share | $ / shares | 23.35 | ||||||||||||||||
Shares Issued, Price Per Share | $ / shares | $ 23.35 | ||||||||||||||||
Subsequent Event | Legally-binding memoranda of understanding | |||||||||||||||||
Number of legally-binding memoranda of understanding signed | item | 3 | ||||||||||||||||
Number of bitcoin mining machine owners with whom the company has entered into legally-binding memoranda of understanding | item | 3 | ||||||||||||||||
Period for determination of price adjustments on number of shares to be issued | 6 months | ||||||||||||||||
Subsequent Event | Legally-binding memoranda of understanding | Class A Ordinary Shares | |||||||||||||||||
Number of shares agreed to issue | shares | 5,883,750 | ||||||||||||||||
Shares Agreed To Issue | shares | 5,883,750 | ||||||||||||||||
Share Price | $ / shares | $ 1.30 | ||||||||||||||||
Subsequent Event | Legally-binding memoranda of understanding | ADS | |||||||||||||||||
Number of shares agreed to issue | shares | 196,125 | ||||||||||||||||
Shares Agreed To Issue | shares | 196,125 | ||||||||||||||||
Share Price | $ / shares | $ 38.51 | ||||||||||||||||
Subsequent Event | Antminer S19j Bitcoin mining machines purchase agreement, one | |||||||||||||||||
Number of Bitcoin mining machines agreed to purchase | item | 24,000 | ||||||||||||||||
Total consideration payable in installments | $ 82,800,000 | ||||||||||||||||
First installment payment | $ 16,600,000 | ||||||||||||||||
Subsequent Event | Convertible notes issued to Iliad | |||||||||||||||||
Initial conversion price (in dollars per ADS) | $ / shares | $ 14 | ||||||||||||||||
Subsequent Event | Convertible notes issued to Iliad | Convertible notes issued to Streeterville, one | |||||||||||||||||
Principal amount | $ 5,000,000 | ||||||||||||||||
Initial conversion price (in dollars per ADS) | $ / shares | $ 14 | ||||||||||||||||
Interest rate (as a percent) | 6.00% | ||||||||||||||||
Debt Instrument, Face Amount | $ 5,000,000 | ||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% |
FINANCIAL INFORMATION OF PARE_2
FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Condensed Statement of Income Captions [Line Items] | ||||
Revenue | $ 95,860 | ¥ 625,488 | ¥ 343,077 | ¥ 17,492,415 |
Cost of revenue | (124,772) | (814,136) | (1,342,266) | (16,435,590) |
Gross loss | (28,912) | (188,648) | (1,000,771) | 996,268 |
Operating expenses: | ||||
Product development | (373,654) | (2,438,095) | (13,090,530) | (24,555,308) |
Sales and marketing | (99,079) | (646,492) | (2,114,519) | (2,325,818) |
General and administrative | (16,666,348) | (108,747,919) | (113,867,000) | (89,583,331) |
Total operating expenses | (51,627,525) | (336,869,597) | 162,746,124 | 105,991,298 |
Loss from operations | 51,602,806 | 336,708,307 | (163,716,655) | (104,765,492) |
Impairment on equity investments | (179,733) | (1,172,755) | (4,666,128) | (1,386,174) |
Fair value change on warrants liability | (5,801) | (37,851) | (1,292,244) | (2,251,427) |
Gain on extinguishment of convertible notes | 8,698,223 | 56,800,000 | 0 | 0 |
Gain on waiver of interest-free loan | 5,424,904 | 35,397,500 | 0 | 0 |
Foreign exchange gain (loss) | (1,275,045) | (8,319,669) | (5,474,002) | (20,331,430) |
Other expenses, net | 307,302 | 2,005,143 | 9,372,652 | 1,598,663 |
Loss before income tax expense and share of loss in equity method investment | 61,726,402 | 402,764,770 | (193,321,480) | (234,991,909) |
Share of loss in equity method investments | (331,944) | (2,165,935) | (2,847,260) | (4,292,887) |
Income tax benefit | (1,098,099) | (7,165,097) | 0 | 0 |
Net (loss) income | 60,296,359 | 393,433,738 | (196,168,740) | (239,284,796) |
Other comprehensive income (loss), net of tax: | ||||
Currency translation adjustments | 538,969 | 3,516,774 | (793,531) | (1,314,265) |
Total comprehensive loss | 59,001,247 | 384,983,137 | (172,368,564) | (209,851,734) |
Parent Company | ||||
Operating expenses: | ||||
General and administrative | (13,431,213) | (87,638,664) | (68,165,230) | (21,435,150) |
Total operating expenses | (13,431,213) | (87,638,664) | (68,165,230) | (21,435,150) |
Loss from operations | (13,431,213) | (87,638,664) | (68,165,230) | (21,435,150) |
Impairment on equity investments | (179,733) | (1,172,755) | 0 | 0 |
Interest expenses | (447,978) | (2,923,055) | (33,154,189) | (98,308,205) |
Fair value change on warrants liability | (5,801) | (37,851) | (1,292,244) | (2,251,427) |
Gain on extinguishment of convertible notes | 8,698,223 | 56,755,902 | 0 | 0 |
Gain on waiver of interest-free loan | 5,424,904 | 35,397,500 | 0 | 0 |
Foreign exchange gain (loss) | 4,533,096 | 29,578,454 | (1,648,652) | 1,963,364 |
Other expenses, net | (6,139,355) | (40,059,304) | (1,636,394) | (18,180,060) |
Loss before income tax expense and share of loss in equity method investment | (1,536,255) | (10,024,071) | (103,312,222) | (133,708,624) |
Share of loss in equity method investments | (331,944) | (2,165,935) | 0 | 0 |
Equity in (loss) income of subsidiaries and VIEs | 62,846,497 | 410,073,394 | (74,482,946) | (83,384,302) |
Net (loss) income | 60,978,298 | 397,883,388 | (177,795,168) | (217,092,926) |
Other comprehensive income (loss), net of tax: | ||||
Currency translation adjustments | (1,977,050) | (12,900,251) | 5,426,604 | 7,241,192 |
Total comprehensive loss | $ 59,001,248 | ¥ 384,983,137 | ¥ (172,368,564) | ¥ (209,851,734) |
FINANCIAL INFORMATION OF PARE_3
FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED BALANCE SHEETS (Details) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Current assets: | ||||||
Cash and cash equivalents | $ 4,857,661 | ¥ 31,696,237 | $ 1,549,907 | ¥ 10,113,141 | ¥ 4,256,449 | ¥ 142,624,020 |
Prepayments and other current assets, net | 1,510,416 | 9,855,467 | 8,848,534 | |||
Total current assets | 6,485,075 | 42,315,115 | 154,467,831 | |||
Investments in subsidiaries and VIEs | 10,000,000 | |||||
TOTAL ASSETS | 7,423,955 | 48,441,307 | 181,459,156 | |||
Current liabilities: | ||||||
Short-term borrowings | 117,526,089 | |||||
Warrants | 284,285 | 1,854,957 | 198,600 | |||
Total current liabilities | 55,842,573 | 364,372,791 | 1,058,082,595 | |||
TOTAL LIABILITIES | 56,220,273 | 366,837,286 | 1,064,334,300 | |||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Additional paid-in capital | 413,143,757 | 2,695,763,016 | 2,539,552,478 | |||
Statutory reserves | 1,122,844 | 7,326,560 | 28,071,982 | |||
Accumulated other comprehensive loss | (2,556,046) | (16,678,203) | (3,777,952) | |||
Accumulated deficit | (458,578,915) | (2,992,227,421) | (3,410,856,231) | |||
Total shareholders' deficit | (44,094,750) | (287,718,247) | (839,039,915) | |||
Total liabilities and shareholders' equity | 7,423,955 | 48,441,307 | 181,459,156 | |||
Parent Company | ||||||
Current assets: | ||||||
Cash and cash equivalents | 1,309,719 | 8,545,918 | $ 22,053 | 143,896 | ¥ 18 | ¥ 18,733 |
Prepayments and other current assets, net | 626,853 | 4,090,219 | 63,873 | |||
Amounts due from intercompany | 154,502,048 | 1,008,125,860 | 1,303,065,115 | |||
Total current assets | 156,438,620 | 1,020,761,997 | 1,303,272,884 | |||
Investments in subsidiaries and VIEs | (198,561,332) | (1,295,612,695) | (1,681,526,537) | |||
TOTAL ASSETS | (42,122,712) | (274,850,698) | (378,253,653) | |||
Current liabilities: | ||||||
Short-term borrowings | 0 | 0 | 34,881,000 | |||
Accrued expenses and other current liabilities | 1,687,754 | 11,012,592 | 11,578,754 | |||
Warrants | 284,285 | 1,854,957 | 198,600 | |||
Convertible notes | 0 | 0 | 414,127,908 | |||
Total current liabilities | 1,972,039 | 12,867,549 | 460,786,262 | |||
TOTAL LIABILITIES | 1,972,039 | 12,867,549 | 460,786,262 | |||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Additional paid-in capital | 413,143,757 | 2,695,763,016 | 2,539,552,478 | |||
Statutory reserves | 1,122,844 | 7,326,560 | 28,071,982 | |||
Accumulated other comprehensive loss | (2,556,046) | (16,678,203) | (3,777,952) | |||
Accumulated deficit | (458,578,915) | (2,992,227,421) | (3,410,856,231) | |||
Total shareholders' deficit | (44,094,750) | (287,718,247) | (839,039,915) | |||
Total liabilities and shareholders' equity | (42,122,711) | (274,850,698) | (378,253,653) | |||
Class A Ordinary Shares | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | 2,635,565 | 17,197,060 | 7,321,099 | |||
Class A Ordinary Shares | Parent Company | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | 2,635,565 | 17,197,060 | 7,321,099 | |||
Class B ordinary shares | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | 138,045 | 900,741 | 648,709 | |||
Class B ordinary shares | Parent Company | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | $ 138,045 | ¥ 900,741 | ¥ 648,709 |
FINANCIAL INFORMATION OF PARE_4
FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF CASH FLOWS (Details) | 12 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Cash flows from operating activities: | ||||
Net (loss) income | $ 60,296,359 | ¥ 393,433,738 | ¥ (196,168,740) | ¥ (239,284,796) |
Adjustments for: | ||||
Share-based compensation expenses | 8,437,766 | 55,056,426 | 21,750,533 | 3,898,328 |
Fair value change on warrants liability | (5,801) | (37,851) | (1,292,244) | (2,251,427) |
Amortization of discount and interest on convertible notes | 448,018 | 2,923,316 | 33,154,191 | 98,308,205 |
Foreign exchange (gain) loss | 1,275,045 | 8,319,669 | 5,474,002 | 20,331,430 |
Consulting fees paid by issuance of shares | 1,039,359 | 6,781,815 | 35,091,686 | 4,172,800 |
Gain on extinguishment of convertible notes | (8,698,223) | (56,800,000) | 0 | 0 |
Payment of issuance cost by issuance of shares Iliad | 69,833 | 455,658 | 0 | 0 |
Changes in operating assets and liabilities | ||||
Change in prepayments and other current assets | (440,932) | (2,877,084) | (6,628,897) | (20,575,190) |
Change in accounts payable | (403,833) | (2,635,008) | 246,764 | 905,990 |
Change in accrued expenses and other current liabilities | (3,224,414) | (21,039,288) | 11,896,337 | (2,408,745) |
Net cash (used in) provided by operating activities | (16,284,023) | (106,253,254) | (54,175,322) | (101,200,526) |
Cash flows from financing activities: | ||||
Proceeds from the issuance of ordinary shares and warrants | 7,268,995 | 47,430,195 | 0 | 0 |
Proceeds from the issuance of convertible note | 514,693 | 3,358,369 | 0 | 0 |
Proceeds from other loans | 34,881,000 | 0 | ||
Repayments of convertible notes | (48,878,103) | (318,929,623) | 0 | 0 |
Net cash provided by (used in) financing activities | (47,614,742) | (310,686,195) | 40,922,800 | (18,357,011) |
Net change in cash and cash equivalents | 3,307,754 | 21,583,096 | 5,856,692 | (138,367,571) |
Cash and cash equivalents, beginning of period | 1,549,907 | 10,113,141 | 4,256,449 | 142,624,020 |
Cash and cash equivalents, end of period | 4,857,661 | 31,696,237 | 10,113,141 | 4,256,449 |
Supplement disclosure of cash flow information: | ||||
Interest paid | 7,309,624 | 47,695,297 | 0 | 260,073 |
Income taxes paid | 1,098,099 | 7,165,097 | 0 | 0 |
Parent Company | ||||
Cash flows from operating activities: | ||||
Net (loss) income | 60,978,298 | 397,883,388 | (177,795,168) | (217,092,926) |
Adjustments for: | ||||
Share-based compensation expenses | 8,437,766 | 55,056,426 | 21,705,240 | 3,645,751 |
Fair value change on warrants liability | (5,801) | (37,851) | (1,292,244) | (2,251,427) |
Amortization of discount and interest on convertible notes | 448,018 | 2,923,316 | 33,154,191 | 98,308,205 |
Foreign exchange (gain) loss | (4,533,096) | (29,578,454) | 1,648,652 | (1,963,364) |
Equity in loss (income) of subsidiaries and VIEs | (62,846,497) | (410,073,394) | 74,482,946 | 83,384,302 |
Consulting fees paid by issuance of shares | 1,039,359 | 6,781,815 | 35,091,686 | 4,172,800 |
Gain on extinguishment of convertible notes | (8,698,223) | (56,755,902) | 0 | 0 |
Gain on waiver of interest-free loan | (5,345,747) | (34,881,000) | 0 | 0 |
Payment of issuance cost by issuance of shares Iliad | 69,833 | 455,658 | 0 | 0 |
Changes in operating assets and liabilities | ||||
Change in prepayments and other current assets | (617,065) | (4,026,346) | (1,894) | (2,971) |
Change in amounts due from intercompany | 53,542,003 | 349,361,587 | (28,060,447) | 30,882,203 |
Change in accrued expenses and other current liabilities | (86,767) | (566,162) | 6,329,916 | 898,712 |
Net cash (used in) provided by operating activities | 42,382,081 | 276,543,081 | (34,737,122) | (18,715) |
Cash flows from financing activities: | ||||
Proceeds from the issuance of ordinary shares and warrants | 7,268,995 | 47,430,195 | 0 | 0 |
Proceeds from the issuance of convertible note | 514,693 | 3,358,369 | 0 | 0 |
Proceeds from other loans | 0 | 0 | 34,881,000 | 0 |
Repayments of convertible notes | (48,878,103) | (318,929,623) | 0 | 0 |
Net cash provided by (used in) financing activities | (41,094,415) | (268,141,059) | 34,881,000 | 0 |
Net change in cash and cash equivalents | 1,287,666 | 8,402,022 | 143,878 | (18,715) |
Cash and cash equivalents, beginning of period | 22,053 | 143,896 | 18 | 18,733 |
Cash and cash equivalents, end of period | 1,309,719 | 8,545,918 | 143,896 | 18 |
Supplement disclosure of cash flow information: | ||||
Interest paid | 5,564,821 | 36,310,455 | 0 | 0 |
Income taxes paid | $ 0 | ¥ 0 | ¥ 0 | ¥ 0 |