Document and Entity Information
Document and Entity Information - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Document and Entity Information | ||
Document Type | 20-F | |
Document Registration Statement | false | |
Document Annual Report | true | |
Document Period End Date | Dec. 31, 2022 | |
Document Transition Report | false | |
Document Shell Company Report | false | |
Entity File Number | 001-34238 | |
Entity Registrant Name | The9 LTD | |
Entity Incorporation, State or Country Code | E9 | |
Entity Address, Address Line One | 17 Floor, No. 130 Wu Song Road | |
Entity Address, Address Line Two | Hong Kou District | |
Entity Address, City or Town | Shanghai | |
Entity Address, Postal Zip Code | 200080 | |
Entity Address, Country | CN | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
ICFR Auditor Attestation Flag | false | |
Entity Emerging Growth Company | false | |
Document Accounting Standard | U.S. GAAP | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | FY | |
Entity Central Index Key | 0001296774 | |
Amendment Flag | false | |
Auditor Name | RBSM LLP | GRANT THORNTON |
Auditor Firm ID | 587 | 1487 |
Auditor Location | New York, New York | Shanghai, China |
Business Contact | ||
Document and Entity Information | ||
Entity Address, Address Line One | 17 Floor, No. 130 Wu Song Road | |
Entity Address, Address Line Two | Hong Kou District | |
Entity Address, City or Town | Shanghai | |
Entity Address, Postal Zip Code | 200080 | |
Entity Address, Country | CN | |
Contact Personnel Name | George Lai | |
City Area Code | +86-21 | |
Local Phone Number | 6108-6080 | |
Contact Personnel Email Address | georgelai@corp.the9.com | |
ADR | ||
Document and Entity Information | ||
Title of 12(b) Security | American Depositary Shares | |
Trading Symbol | NCTY | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 160,315,107 | |
Common Class A [Member] | ||
Document and Entity Information | ||
Title of 12(b) Security | Class A ordinary shares, par value US$0.01 per share | |
No Trading Symbol Flag | true | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 847,437,583 | |
Class B ordinary shares | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 13,607,334 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Revenues: | ||||
Revenue | ¥ 118,887,879 | $ 17,237,122 | ¥ 135,875,140 | ¥ 625,488 |
Total net revenues | 118,887,879 | 17,237,122 | 135,875,140 | 625,488 |
Total cost | (184,623,615) | (26,767,908) | (88,034,503) | (814,136) |
Gross (loss) profit | (65,735,736) | (9,530,786) | 47,840,637 | (188,648) |
Operating income (expenses): | ||||
Product development | (2,432,975) | (352,748) | (1,917,562) | (2,438,095) |
Sales and marketing | (118,586,562) | (17,193,435) | (22,039,467) | (646,492) |
General and administrative | (376,379,730) | (54,569,931) | (293,152,801) | (108,747,919) |
Impairment on advance and other assets | (159,224,137) | (23,085,330) | (20,371,500) | |
Impairment on cryptocurrency | (58,624,256) | (8,499,718) | (50,887,472) | |
Impairment on equipment | (176,874,099) | (25,600,000) | (11,639,246) | (6,515,200) |
Impairment on other long-lived assets | (6,515,200) | |||
Gain on disposal of subsidiaries | (3,748,717) | (543,513) | 15,015,770 | 475,588,803 |
Total operating (expenses) income | (895,870,476) | (129,889,009) | (364,620,778) | 336,869,597 |
Other operating income, net | 27,358 | |||
Income (loss) from operations | (961,606,212) | (139,419,795) | (316,780,141) | 336,708,307 |
Impairment on equity investments | (17,300,000) | (2,501,380) | (7,599,505) | (1,172,755) |
(Impairment) gain on other investments | (29,958,381) | (4,343,557) | 17,245,513 | (18,000,000) |
Realized gain on exchange cryptocurriencies | 10,864,747 | 1,575,240 | ||
Interest income | 429,732 | |||
Interest expense | (23,209,451) | (3,365,054) | (119,174,037) | (4,070,179) |
Fair value change on warrants liability | 37,851 | |||
Gain from change in fair value of convertible feature derivative liability | 37,249,976 | 5,400,739 | 62,246,860 | |
Gain on disposal of equity investee and available-for-sale investments | 711,914 | 100,000 | 0 | 174,295 |
Gain on disposal of other investments | 2,818,643 | |||
Gain on extinguishment of convertible notes | 56,755,902 | |||
Gain on waiver of interest-free loan | 35,397,500 | |||
Foreign exchange loss | (6,301,271) | (913,598) | (6,449,136) | (8,319,669) |
Other income (expenses), net | 10,008,938 | 1,451,160 | (44,589,670) | 2,005,143 |
Income(loss) before income tax expense and share of loss in equity method investments | (979,492,255) | (142,013,027) | (415,100,116) | 402,764,770 |
Income tax expense | (7,165,097) | |||
Share of loss in equity method investments | (1,725,152) | (2,165,935) | ||
Net income (loss) | (979,492,255) | (142,013,027) | (416,825,268) | 393,433,738 |
Net loss attributable to noncontrolling interest | (4,633,205) | (671,752) | (5,590,513) | (3,259,528) |
Net loss attributable to redeemable noncontrolling interest | 0 | 0 | (1,190,122) | |
Net income (loss) attributable to The9 Limited | (974,859,050) | (141,341,275) | (411,234,755) | 397,883,388 |
Change in redemption value of redeemable noncontrolling interest | 349,046,548 | (1,190,122) | ||
Net income(loss) attributable to shareholders of ordinary shares | (974,859,050) | (141,341,275) | (411,234,755) | 396,693,266 |
Other comprehensive income (loss), net of tax: | ||||
Currency translation adjustments | 166,220 | 24,100 | 3,984,443 | 3,516,774 |
Total comprehensive income (loss) | (979,326,035) | (141,988,927) | (412,840,825) | 396,950,512 |
Comprehensive income (loss) attributable to: | ||||
Noncontrolling interest | (4,633,205) | (671,752) | (5,590,513) | 13,157,497 |
Redeemable noncontrolling interest | (1,190,122) | |||
The9 Limited | ¥ (974,692,830) | $ (141,317,175) | ¥ (407,250,312) | ¥ 384,983,137 |
Net income (loss) per share attributable to shareholders of ordinary shares: | ||||
Earnings per share, Basic | (per share) | ¥ (1.35) | $ (0.20) | ¥ (0.83) | ¥ 2.42 |
Earnings per share, Diluted | (per share) | ¥ (1.35) | $ (0.20) | ¥ (0.83) | ¥ 2.42 |
Weighted average number of shares outstanding: | ||||
Weighted average number of shares outstanding, Basic | shares | 720,237,128 | 720,237,128 | 495,304,894 | 163,599,920 |
Weighted average number of shares outstanding, Diluted | shares | 720,237,128 | 720,237,128 | 495,304,894 | 163,599,920 |
Cryptocurrency mining revenue | ||||
Revenues: | ||||
Revenue | ¥ 101,782,024 | $ 14,757,006 | ¥ 134,122,954 | |
Total cost | (142,212,740) | (20,618,909) | (83,449,749) | |
Online game services and other revenues | ||||
Revenues: | ||||
Revenue | 17,105,855 | 2,480,116 | 1,752,186 | ¥ 625,488 |
Total cost | ¥ (42,410,875) | $ (6,148,999) | ¥ (4,584,754) | ¥ (814,136) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 58,063,733 | $ 8,418,450 | ¥ 428,420,773 |
Short term investment | 800,000 | ||
Accounts receivable, net of allowance for doubtful accounts of RMB552,542 and RMB 234,794 as of December 31, 2021 and 2022, respectively | 151,432 | 21,956 | 3,682,282 |
Advances to suppliers | 30,345 | 4,400 | 2,781,139 |
Prepayments and other current assets, net of allowance for doubtful accounts of RMB5,655,941 and RMB 2,777,903 as of December 31, 2021 and 2022, respectively | 272,487,578 | 39,506,985 | 528,109,288 |
Amounts due from related parties | 599,574 | 86,930 | 599,574 |
Cryptocurrencies | 66,341,653 | 9,618,636 | 86,118,349 |
Total current assets | 397,674,315 | 57,657,357 | 1,050,511,405 |
Investments | 35,297,395 | 5,117,641 | 73,915,119 |
Property, equipment and software, net | 142,847,637 | 20,710,961 | 172,980,284 |
Operating lease right-of-use assets, net | 12,061,697 | 1,748,782 | 6,363,724 |
Other long-lived assets, net | 11,225,639 | 1,627,563 | 6,547,843 |
TOTAL ASSETS | 599,106,683 | 86,862,304 | 1,310,318,375 |
Current liabilities: | |||
Accounts payable (including accounts payable of the consolidated VIE without recourse to the Group of RMB9,186,474 and RMB5,185,040 as of December 31, 2021 and 2022, respectively) | 165,947,326 | 24,060,101 | 39,895,562 |
Other taxes payable (including other taxes payable of the consolidated VIE without recourse to the Group of RMB1,407,802 and RMB1,404,994 as of December 31, 2021 and 2022, respectively) | 1,651,041 | 239,378 | 1,508,277 |
Advances from customers (including advances from customers of the consolidated VIE without recourse to the Group of RMB18,296,128 and RMB15,005,074 as of December 31, 2021 and 2022, respectively) | 17,727,516 | 2,570,248 | 18,984,340 |
Amounts due to related parties (including amounts due to related parties of the consolidated VIE without recourse to the Group of RMB46,608,736 and RMB45,408,736as of December 31, 2021 and 2022, respectively) | 21,159,559 | 3,067,848 | 23,790,959 |
Refund of game points (including refund of game points of the consolidated VIE without recourse to the Group of RMB169,998,682 as of both December 31, 2021 and 2022) | 169,998,682 | 24,647,492 | 169,998,682 |
Convertible notes (including convertible notes of cnsolidated VIE without recourse to the Group of nil as of both December 31, 2021 and 2022) | 60,984,058 | 8,841,857 | 92,848,377 |
Conversion feature derivative liability | 51,775,453 | 7,506,735 | 51,825,629 |
Interest payable (including interest payable of consolidated VIE without recourse to the Group of nil as of both December 31, 2021 and 2022) | 2,130,283 | 308,862 | 937,328 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIE without recourse to the Group of RMB35,719,940 and RMB35,450,947 as of December 31, 2021 and 2022, respectively) | 66,973,577 | 9,710,256 | 140,199,581 |
Current portion of operating lease liabilities of the consolidated VIE without recourse to the Group (including operating lease liabilities of consolidated VIE without recourse to the Group of RMB574,607 and RMB485,665 as of December 31, 2021 and 2022, respectively) | 5,792,931 | 839,896 | 4,306,738 |
Contract liabilities | 22,099 | 3,204 | |
Total current liabilities | 564,162,525 | 81,795,877 | 544,295,473 |
Non-current portion of operating lease liabilities of the consolidated VIE without recourse to the Group (including operating lease liabilities of consolidated VIE without recourse to the Group of RMB370,877 and nil as of December 31, 2021 and 2022, respectively) | 7,405,805 | 1,073,741 | 2,567,342 |
TOTAL LIABILITIES | 571,568,330 | 82,869,618 | 546,862,815 |
Commitments and contingencies (Note 25) | |||
Redeemable noncontrolling interest (Note 23) | 0 | 0 | 0 |
EQUITY | |||
Additional paid-in capital | 4,371,228,191 | 633,768,513 | 4,139,122,755 |
Statutory reserves | 7,326,560 | 1,062,251 | 7,326,560 |
Accumulated other comprehensive loss | (12,527,540) | (1,816,323) | (12,693,760) |
Accumulated deficit | (4,378,321,226) | (634,796,906) | (3,403,462,176) |
The9 Limited shareholders' equity | 45,309,203 | 6,569,217 | 776,470,952 |
Noncontrolling interest | (17,770,850) | (2,576,531) | (13,015,392) |
Total equity | 27,538,353 | 3,992,686 | 763,455,560 |
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY | 599,106,683 | 86,862,304 | 1,310,318,375 |
Class A ordinary shares | |||
EQUITY | |||
Ordinary shares | 56,659,429 | 8,214,845 | 45,233,784 |
Class B ordinary shares | |||
EQUITY | |||
Ordinary shares | ¥ 943,789 | $ 136,837 | ¥ 943,789 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2021 $ / shares |
Accounts receivable, net of allowance for doubtful accounts | ¥ 234,794 | ¥ 552,542 | ||
Prepayments and other current assets, net of allowance for doubtful accounts | 22,738,176 | 5,655,941 | ||
Accounts payable | 165,947,326 | $ 24,060,101 | 39,895,562 | |
Other taxes payable | 1,651,041 | 239,378 | 1,508,277 | |
Advances from customers | 17,727,516 | 2,570,248 | 18,984,340 | |
Amounts due to intercompany | 21,159,559 | 3,067,848 | 23,790,959 | |
Refund of game points | 169,998,682 | 24,647,492 | 169,998,682 | |
Convertible notes | 60,984,058 | 8,841,857 | 92,848,377 | |
Interest payable | 2,130,283 | 308,862 | 937,328 | |
Accrued expenses and other current liabilities | 66,973,577 | 9,710,256 | 140,199,581 | |
Current portion of operating lease liabilities | 5,792,931 | 839,896 | 4,306,738 | |
Non-current portion of operating lease liabilities | 7,405,805 | $ 1,073,741 | 2,567,342 | |
Variable interest entity, primary beneficiary | ||||
Accounts payable | 5,185,040 | 9,186,474 | ||
Other taxes payable | 1,404,994 | 1,407,802 | ||
Advances from customers | 15,005,074 | 18,296,128 | ||
Amounts due to intercompany | 45,408,736 | 46,608,736 | ||
Refund of game points | 169,998,682 | 169,998,682 | ||
Convertible notes | 0 | 0 | ||
Interest payable | 0 | 0 | ||
Accrued expenses and other current liabilities | 35,450,947 | 35,719,940 | ||
Current portion of operating lease liabilities | 485,665 | 574,607 | ||
Non-current portion of operating lease liabilities | ¥ 0 | ¥ 370,877 | ||
Class A ordinary shares | ||||
Ordinary shares, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Ordinary shares, shares authorized | shares | 4,300,000,000 | 4,300,000,000 | 4,300,000,000 | |
Ordinary shares, shares issued | shares | 847,437,583 | 847,437,583 | 677,781,251 | |
Ordinary shares, shares outstanding | shares | 847,437,583 | 847,437,583 | 677,781,251 | |
Class B ordinary shares | ||||
Ordinary shares, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Ordinary shares, shares authorized | shares | 600,000,000 | 600,000,000 | 600,000,000 | |
Ordinary shares, shares issued | shares | 13,607,334 | 13,607,334 | 13,607,334 | |
Ordinary shares, shares outstanding | shares | 13,607,334 | 13,607,334 | 13,607,334 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) | Ordinary shares CNY (¥) shares | Ordinary shares USD ($) shares | Additional paid-in capital CNY (¥) | Additional paid-in capital USD ($) | Statutory reserves CNY (¥) | Statutory reserves USD ($) | Accumulated other comprehensive (loss) income CNY (¥) | Accumulated other comprehensive (loss) income USD ($) | Accumulated deficit CNY (¥) | Accumulated deficit USD ($) | Equity (deficit) attributable to The9 limited CNY (¥) | Equity (deficit) attributable to The9 limited USD ($) | Noncontrolling interest CNY (¥) | Noncontrolling interest USD ($) | CNY (¥) | USD ($) |
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 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 | 3,516,774 | ||||||||||||
Change in redemption value of redeemable noncontrolling interest | (1,190,122) | (1,190,122) | (1,190,122) | |||||||||||||
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 | ||||||||||||||
Issuance of ordinary shares | ¥ 7,715,668 | 104,650,533 | 112,366,201 | 112,366,201 | ||||||||||||
Issuance of ordinary shares (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 | ¥ 18,097,801 | 2,695,763,016 | 7,326,560 | (16,678,203) | (2,992,227,421) | (287,718,247) | (379,724,280) | (667,442,527) | ||||||||
Balance (in shares) at Dec. 31, 2020 | shares | 260,032,362 | 260,032,362 | ||||||||||||||
Net loss | (411,234,755) | (411,234,755) | (5,590,513) | (416,825,268) | ||||||||||||
Currency translation adjustments | 3,984,443 | 3,984,443 | 3,984,443 | |||||||||||||
Change in redemption value of redeemable noncontrolling interest | 349,046,548 | |||||||||||||||
Consolidated subsidiary | 795,063 | 795,063 | ||||||||||||||
Share-based compensation | ¥ 5,392,416 | 144,774,065 | 150,166,481 | 150,166,481 | ||||||||||||
Share-based compensation (in shares) | shares | 83,661,205 | 83,661,205 | ||||||||||||||
Issuance of ordinary shares | ¥ 11,555,004 | 997,389,251 | 1,008,944,255 | 1,008,944,255 | ||||||||||||
Issuance of ordinary shares (in shares) | shares | 176,968,248 | 176,968,248 | ||||||||||||||
Purchase of equipment | ¥ 3,302,261 | 140,914,432 | 144,216,693 | 144,216,693 | ||||||||||||
Purchase of equipment (in shares) | shares | 50,258,970 | 50,258,970 | ||||||||||||||
Issuance of convertible debt | ¥ 957,128 | 25,801,328 | 26,758,456 | 26,758,456 | ||||||||||||
Issuance of convertible debt | shares | 14,777,050 | 14,777,050 | ||||||||||||||
Conversion of convertible debt into ordinary shares | ¥ 1,383,990 | 45,335,212 | 46,719,202 | 46,719,202 | ||||||||||||
Conversion of convertible debt into ordinary shares (in shares) | shares | 21,618,840 | 21,618,840 | ||||||||||||||
Exercise of warrants | ¥ 5,488,973 | 60,837,127 | 66,326,100 | 66,326,100 | ||||||||||||
Exercise of warrants (in shares) | shares | 84,071,910 | 84,071,910 | ||||||||||||||
Disposal of Red5 | 28,308,324 | 28,308,324 | 371,504,338 | 399,812,662 | ||||||||||||
Balance at Dec. 31, 2021 | ¥ 46,177,573 | 4,139,122,755 | 7,326,560 | (12,693,760) | (3,403,462,176) | 776,470,952 | (13,015,392) | 763,455,560 | ||||||||
Balance (in shares) at Dec. 31, 2021 | shares | 691,388,585 | 691,388,585 | ||||||||||||||
Net loss | (974,859,050) | (974,859,050) | (4,633,205) | (979,492,255) | ||||||||||||
Currency translation adjustments | 166,220 | 166,220 | 166,220 | $ 24,100 | ||||||||||||
Consolidated subsidiary | 122,253 | 122,253 | ||||||||||||||
Share-based compensation | 202,345,626 | 202,345,626 | 202,345,626 | |||||||||||||
Issuance of ordinary shares | ¥ 193,103 | 3,218,367 | 3,411,470 | 3,411,470 | ||||||||||||
Issuance of ordinary shares (in shares) | shares | 3,931,632 | 3,931,632 | ||||||||||||||
Cancellation of ordinary shares | ¥ (960,666) | (18,555,648) | (19,516,314) | (19,516,314) | ||||||||||||
Cancellation of ordinary shares (in shares) | shares | (14,854,090) | (14,854,090) | ||||||||||||||
Conversion of convertible debt into ordinary shares | ¥ 12,193,208 | 45,097,091 | 57,290,299 | 57,290,299 | ||||||||||||
Conversion of convertible debt into ordinary shares (in shares) | shares | 180,578,790 | 180,578,790 | ||||||||||||||
Balance at Dec. 31, 2022 | ¥ 57,603,218 | $ 8,351,682 | ¥ 4,371,228,191 | $ 633,768,513 | ¥ 7,326,560 | $ 1,062,251 | ¥ (12,527,540) | $ (1,816,323) | ¥ (4,378,321,226) | $ (634,796,906) | ¥ 45,309,203 | $ 6,569,217 | ¥ (17,770,850) | $ (2,576,531) | ¥ 27,538,353 | $ 3,992,686 |
Balance (in shares) at Dec. 31, 2022 | shares | 861,044,917 | 861,044,917 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Parenthetical) - CNY (¥) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) | ||
Stock issuance cost | ¥ 3,720,691 | ¥ 7,849,390 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Cash flows from operating activities: | ||||
Net (loss) income | ¥ (979,492,255) | $ (142,013,027) | ¥ (416,825,268) | ¥ 393,433,738 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||
Gain on disposal of property, equipment and software | (8,839,140) | (1,281,555) | (3,908,778) | (29,793) |
(Gain) loss on disposal of subsidiaries | 3,748,717 | 543,513 | (15,015,770) | (475,588,803) |
Gain on disposal of other investments | (2,818,643) | |||
Share-based compensation expenses | 202,345,626 | 29,337,358 | 150,166,481 | 55,056,426 |
Impairment on equity investments | 17,300,000 | 2,501,380 | 7,599,505 | 1,172,755 |
Impairment (gain) on other investments | 29,958,381 | 4,343,557 | (17,245,513) | 18,000,000 |
Impairment on advance and other assets | 159,224,137 | 23,085,330 | 20,699,885 | |
Impairment loss of equipment, intangible assets and long lived assets | 176,874,099 | 25,600,000 | 11,639,246 | 6,515,200 |
Impairment of cryptocurrencies | 58,624,256 | 8,499,718 | 50,887,472 | |
Provision for doubtful accounts receivable | 320,729 | 103,501 | ||
Provision for doubtful other receivables | 20,835,972 | 3,020,932 | 298,221 | 2,244,446 |
Consulting fees paid by issuance of shares | 6,781,815 | |||
Gain on extinguishment of convertible notes | (56,755,902) | |||
Gain from change in fair value of conversion feature derivative liability | (37,249,976) | (5,400,739) | (62,246,860) | |
Depreciation and amortization of property, equipment and software | 91,380,588 | 13,248,940 | 47,435,448 | 447,782 |
Share of loss in equity method investments | 1,725,152 | 2,165,935 | ||
Gain on disposal of investment in equity investee and available-for-sales investment | (711,914) | (103,218) | (174,295) | |
Foreign currency exchange loss | 6,301,271 | 913,598 | 6,449,136 | 8,319,669 |
Fair value change on warrant liability | (37,851) | |||
Exchange rate change on convertible notes face value | (2,296,722) | |||
Amortization of discount and interest on convertible notes | 23,197,049 | 3,363,256 | 120,626,467 | 2,923,316 |
Cancellation of ordinary shares | (1,876,314) | (272,040) | ||
Gain on waiver of interest-free loan | (35,397,500) | |||
Royalty fee paid by issuance of shares | 1,188,828 | |||
Payment of issuance cost by issuance of shares | (2,985,626) | (432,875) | 455,658 | |
Non-cash lease expense | 5,112,096 | 741,184 | 3,893,019 | 699,733 |
Changes in operating assets and liabilities: | ||||
Change in accounts receivable | 3,530,850 | 511,925 | (13,628,485) | 3,955 |
Change in advances to suppliers | 2,750,794 | 398,828 | (2,753,414) | (19,575,974) |
Change in prepayments and other current assets | 72,383,805 | 10,494,665 | (537,076,522) | (2,877,084) |
Change in right-of-use assets | 3,408,781 | |||
Change in accounts payable | 121,755,135 | 17,652,835 | 38,799,942 | (2,635,008) |
Change in amounts due to related parties | 44,543 | (1,550,100) | ||
Change in other taxes payable | 142,764 | 20,699 | (2,833,161) | 89,779 |
Change in advances from customers | (1,234,725) | (179,018) | 3,174,181 | (1,515,786) |
Change in interest payable | 1,192,955 | 172,962 | 937,328 | (5,371,931) |
Change in accrued expenses and other current liabilities | (71,722,378) | (10,398,767) | 60,345,979 | (21,039,288) |
Change in lease liabilities | (4,485,413) | (650,324) | (4,485,278) | (3,407,670) |
Change in cryptocurrencies | (42,755,445) | (6,198,957) | (114,904,483) | |
Net cash used in operating activities | (154,700,000) | (22,400,000) | (687,688,577) | (106,253,254) |
Cash flows from investing activities | ||||
Proceeds from disposal of subsidiaries | 443,939,997 | |||
Proceeds from disposal of other investments | 16,638,067 | 2,412,293 | ||
Proceeds from disposal of property, equipment and software | 407,228 | 59,043 | 11,725,873 | 183,003 |
Payment for financial products | (800,000) | |||
Proceeds from financial products | 800,000 | 115,989 | ||
Proceeds from sales of Cryptocurrencies | 5,637,172 | 817,313 | ||
Refund from subscribed tokens and other investment | 4,500,000 | 652,439 | 5,838,471 | |
Purchase of equity method investments | (13,934,157) | (3,338,690) | ||
Purchase of other investments | (23,161,897) | (3,358,159) | (46,611,013) | (8,000,000) |
Contribution from shareholder | 40,000 | 5,799 | ||
Decrease in cash and cash equivalents on disposal of subsidiaries | (239,182) | |||
Purchase of property, equipment and software | (247,330,128) | (35,859,498) | (75,621,008) | (359,573) |
Purchase of intangible assets | (6,315,981) | (915,731) | (16,403,586) | |
Net cash (used in) provided by investing activities | (248,785,539) | (36,070,512) | (141,883,073) | 438,263,208 |
Cash flows from financing activities: | ||||
Proceeds from the issuance of ordinary shares and warrants | 1,011,476,118 | 47,430,195 | ||
Proceeds from warrants exercises | 64,471,143 | |||
Proceeds from the issuance of convertible note | 33,704,460 | 4,886,687 | 161,588,128 | 3,358,369 |
ADS issuance fee | (3,720,691) | (7,849,390) | ||
Repayment of loans from a related party | (2,631,400) | (381,517) | (6,378,690) | (42,545,136) |
Proceeds from other loans | 2,466,480 | 357,606 | ||
Repayments of other loans | (513,850) | (74,501) | ||
Repayments of convertible notes | (318,929,623) | |||
Net cash (used in) provided by financing activities | 33,025,690 | 4,788,275 | 1,227,436,008 | (310,686,195) |
Effect of foreign exchange rate changes on cash and cash equivalents | 144,985 | 21,020 | (1,139,822) | 259,337 |
Net change in cash and cash equivalents | (370,357,040) | (53,696,723) | 396,724,536 | 21,583,096 |
Cash and cash equivalents, beginning of year | 428,420,773 | 62,115,173 | 31,696,237 | 10,113,141 |
Cash and cash equivalents, end of year | 58,063,733 | 8,418,450 | 428,420,773 | 31,696,237 |
Supplemental disclosure of cash flow information: | ||||
Interest paid | 47,695,297 | |||
Income taxes paid | 7,165,097 | |||
Non-cash investing and financing activities | ||||
Cash paid for amounts included in the measurement of operating lease liabilities | 2,381,173 | 345,238 | 4,813,050 | ¥ 2,842,464 |
Investment in an investment security in exchange of mining machine | 2,115,187 | 306,673 | ||
Investment in an investment security in USDT | 634,870 | 92,047 | ||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 10,810,069 | 1,567,313 | 5,107,653 | |
Share issued for purchase of Bitcoin mining machine | 144,216,693 | |||
Share cancellation for decrease the mining machine | 17,640,000 | 2,557,560 | ||
Share issued for repayments of convertible notes | ¥ 57,290,299 | $ 8,306,313 | 46,719,202 | |
Conversion of warrant payable | ¥ 1,854,957 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2022 | |
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 entitie (“VIE subsidiaries” or “VIE”), (collectively referred to as the “Group”). The Company or The9 Limited, and its subsidiaries and consolidated VIE are also collectively referred to as the “Group”, or where appropriate, the terms the “ Group”,”we”,”our”, or “us” also referred to The9 or the Company and its subsidiaries and the consolidated VIE as a whole. The Group had been operating an online game business before the Group’s listing until 2021, the Group has turned our business focus to blockchain business and are primarily engaged in the operation of cryptocurrency mining and a Non-Fungible Token platform NFTSTAR since 2022. The Company’s principal subsidiaries and VIE are as follows as of December 31, 2022: Date of Place of Legal Name of Entity Registration Registration Ownership Principal subsidiaries: GameNow.net (Hong Kong) Ltd. (“ GameNow Hong Kon 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 % 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 % NFTStar Singapore Pte. Ltd. (“ NFTStar Singapore August-2021 Singapore 100 % NFTSTAR US Inc. (“ NFTSTAR US August-2021 USA 100 % NFTSTAR LTD.UK (“ NFTSTAR UK July-2021 UK 100 % NFTSTAR Hong Kong LTD. (“ NFTSTAR Hong Kong August-2021 Hong Kong 100 % STARNFT HONG KONG LIMITED (“ STARNFT Hong Kong October-2021 Hong Kong 100 % Nswap Singapore Pte. Ltd. (“ Nswap Singapore May-2021 Singapore 100 % Montcrypto Limited (“ Montcrypto February-2021 Canada 61 % Terry First Limited (“ Terry First June-2021 UK 100 % System Run Limited (“ System Run September-2021 Cayman Islands 100 % Lucky Pure Limited (“ Lucky Pure September-2021 Cayman Islands 100 % Vast Ocean International Limited(“ Vast Ocean April-2021 Hong Kong 100 % The9 Singapore Pte. Ltd. (“ The9 Singapore April ‑ 2010 Singapore 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 % Shanghai Yuyou Network Technology Co., Ltd. (“ Yuyou December-2016 PRC 100 % Hangzhou Niuxin Technology Co., Ltd. (“ Niuxin August-2021 PRC 100 % Variable interest entity: Shanghai The9 Information Technology Co., Ltd. (“ Shanghai IT September ‑ 2000 PRC N/A Subsidiaries and VIE 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 % Silver Express Investments Ltd. (“ Silver Express November ‑ 2007 Hong Kong 100 % Shanghai Jiuciyuan Computer Co., Ltd. (“ Jiuciyuan July-2021 PRC 60 % Shanghai Big data culture media Co., Ltd(“Big data”) April-2007 PRC 68.0078 % |
PRINCIPAL ACCOUNTING POLICIES
PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
PRINCIPAL ACCOUNTING POLICIES | |
PRINCIPAL ACCOUNTING POLICIES | 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 consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of wholly owned and majority owned subsidiaries, VIE and subsidiaries of the VIE over which the Company exercises control and, when applicable, entity for which the Company has a controlling financial interest or is the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation. Going concern and management’s plan The accompanying consolidated financial statements have been prepared on a going concern basis. The Group’s total current liabilities exceeded total current assets by approximately RMB 166.5 million (US$24.1 million) as of December 31, 2022. The Group has suffered recurring losses from operations. The Group also suffered a cash outflow from operations of approximately RMB154.7 million (US$22.4 million) for the year ended December 31, 2022. To meet its working capital needs, the Group is considering multiple alternatives, including, but not limited to, disposal of certain assets to meet the current obligations, additional equity or loan financing and cost controls as outlined below. There is no assurance that the Group will be able to complete any such transaction on acceptable terms or otherwise. 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 the going concern uncertainty for at least one year plus a day upon issuance of this annual report. Disposal of certain assets to meet the current obligations Although majority of the current liabilities may not lead to actual short term cash outflow, in case the Group needs to obtain cash to meet certain current obligations, the Group can sell cryptocurrencies and cryptocurrency mining machines on hand. Both have active and liquid secondary market which can provide additional working capital to meet current obligations in addition to the Group’s current cash balance. Additional equity or loan financing i) Since 2020, the Group has been issuing convertible notes to an investor when the Group is in need for additional financing, including US$0.5 million in February 2020, US$5 million in February 2021, US$20 million in March 2021 and US$5.5 million in August 2022. The Group has been repaying to the investor by issuance of shares. Therefore such financing has brought net cash inflow to the Group. In case the Group needs to obtain cash to meet certain current obligations, the Group may issue further convertible notes to raise funds. ii) The Group had obtained financial support from Mr. Jun Zhu, CEO and Chairman of the Group, from 2016 to 2019. In case the Group needs to obtain cash to meet certain current obligations, the Group may seek further financial support from Mr. Jun Zhu Cost controls In 2022, a significant portion of the Group’s cash outflows was attributable to our NFT business. The Group has been reducing the cash outflow for this business significantly. Also, the Group has the ability to control the level of discretionary spending on expenses by implementation of cost savings on non-essential expenses from the day-to-day business operations. <2> Consolidation The consolidated financial statements include the financial statements of The9 Limited, its subsidiaries and VIE 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 VIE and its subsidiaires 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 controlled a majority of Board of Director seats and had continuously funded to the operation of Red 5, the Group retained effective control over Red 5 and Red 5 remained as a consolidated entity of the Group as of June 29, 2021. On June 29, 2021, two directors appointed by the Group resigned from Red 5 and the Group confirmed it will not assign new directors to Red 5 in the future. The Group lost control of Red 5 and no longer consolidate of Red 5 effective on July 1,2021. 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 VIE and its subsidiaires 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, fair value of conversion feature, share-based compensation expenses, consolidation of VIE and its subsidiaires, 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, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd. Nswapr Singapore Pte. Ltd., The 9 Singapore Pte. Ltd. and MONTCRYPTO LTD. is the RMB. The functional currency of, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd., Nswapr Singapore Pte. Ltd. and The 9 Singapore Pte. Ltd, is the United States dollar (“US$” or “U.S. dollar”). The functional currency of MONTCRYPTO LTD. is CAD. Assets and liabilities of, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd., Nswapr Singapore Pte. Ltd.,The 9 Singapore Pte. Ltd. and MONTCRYPTO LTD. 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 income (loss) 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, 2021 and 2022, 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, 2021 and 2022 are amounts denominated in U.S. dollar totaling US$67.2 million and US$6.1 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 RMB19.7 million and RMB14.2 million (US$2.1 million) as of December 31, 2021 and 2022, 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 RMB2.3 million, RMB0.6 million and RMB20.8 million (US$3.0 million) for the years ended December 31, 2020, 2021 and 2022, respectively. The Group has written-off an amount of RMB2.1 million, RMB1.3 million and RMB3.8 million(US$0.5 million) for the years ended December 31, 2020, 2021 and 2022, 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 26 months 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, 2022. Management has assessed the basis of depreciation of the Group’s Crypto-currency Machines used to verify digital currency transactions and generate digital currencies and believes they should be depreciated over a 3 year period. The rate at which the Group generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors including the following: ● ● ● The Group operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. This assessment takes into consideration the availability of historical data and management’s expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data comes available. To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period either as a result of changes in circumstances or through the availability of greater quantities of data then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets. <9> Cryptocurrencies Cryptocurrencies (including Bitcoin, ETH, Filecoin and BNB) are included in current assets in the accompanying consolidated balance sheets. Cryptocurrencies purchased are recorded at cost and Cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite usfeful lives,thus it should not be amortized but should be tested for impairment annually, or more frequently when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment of cryptocurrency exists when the carrying amount exceeds its fair value, which is measured using the intraday low quoted price of the Cryptocurrencies at the time its fair value is being measured on any day subsequent to its acquisition and an impairment charge will be recognized. The Company monitors and tracks the Cryptocurrencies price on a daily basis and recognizes the impairment charge whenever there are observable transactions in which the carrying amount of the Cryptocurrencies exceeds their fair value at any time. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the Cryptocurrencies. Subsequent reversal of impairment losses is not permitted. Purchases of Cryptocurrencies by the Company, if any, will be included within investing activities in the accompanying consolidated statements of cash flows, while Cryptocurrencies awarded to the Group through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of Cryptocurrencies are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in “realized gain (loss) on exchange of Cryptocurrencies” in the consolidated statements of operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting. <10> 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. <11> 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 both December 31, 2021 and 2022. <12> 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. <13> Revenue recognition The Group recognizes revenues when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services. Depending on the terms of the contract and the laws that apply to the contract, control of the goods or services may be transferred over time or at a point in time. The Group does not believe that significant management judgments are involved in revenue recognition. Under ASC 606, Revenue from contracts with customers, the core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when the Company satisfies a performance obligation. In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Noncash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Majority of the Group’s cryptocurrency mining revenues was Bitcoin. The Group generates our Bitcoin mining revenues through provision of computing power, or hash rate, in crypto asset transaction verification services to Bitcoin mining pools. In exchange for that, the Group are entitled to receive a fractional share of the Bitcoin award from the Bitcoin mining pools. The transaction consideration the Group receives is noncash consideration, which the Group measure at fair value on the date received, which is not materially different than the fair value at contract inception. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pools successfully place a block and we receive confirmation of the consideration, at which time revenue is recognized. Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the Financial Accounting Standards Board (“FASB”), the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. Other than Bitcoins, the Group is also engaged in the mining of Filecoins. The Group generates Filecoins mining revenues through provision of computing storage space to the main networks. In exchange for that, The Group is entitled to receive a fractional share of the Filecoins awards from the main networks. For Filecoin mining, unlike other cryptocurrency mining, Filecoin mining main network requires miners not only to contribute mining machines with computing storage space, but miners also need to pledge certain amount of Filecoins to the main network to start the Filecoin mining. Then Filecoin main network will continuously reward the miners by Filecoin awards. Upon the end of the mining process, which is typically a 540 days process, the Filecoin main network will release the pledged Filecoins to the miners. The Group cooperates with a third party company where we contribute mining machines and the third party contributes Filecoins for pledging to the Filcoin main network. Under this mining cooperation, the Filecoins mined are distributed to the third party ahead of us according to the agreed distribution schedule. Therefore in the early stage of the 540 days mining process, the Group does not own any Filecoin. Since it is not probable that a significant reversal of cumulative revenue will not occur, the Group does not recognize any Filecoin mining revenue before the Group starts to own the Filecoins being mined. Only when the Group starts to own the Filecoins being mined (after the distribution made to the third party under the agreed distribution schedule). The Group started to own the Filecoins being mined from January 1, 2022, the Group started to recognize Filecoin mining revenue and the intangible assets at fair value on the date the Group received awards of the Filecoin from the thitd-party network. NFTs are created and recorded using blockchain technology. Cryptocurrencies and blockchain platforms can be used to create NFTs. Those NFTs can then be bought and sold on marketplaces that are linked to the underlying blockchain technology. The Group recognizes revenues when control of the promised goods is transferred to our customers. The Group earns revenue from selling the NFTs on the platforms and provision of operation services to third-party on the platforms. When selling the NFTs on the platforms , the Group records the revenues from amount paid by the customers, commission fees paid to platforms are recorded as cost of revenues. The customers can also trade directly with the other customers, the Group records the revenues from collecting the royalties (5% of the selling price). 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 s |
CONVENIENCE TRANSLATION
CONVENIENCE TRANSLATION | 12 Months Ended |
Dec. 31, 2022 | |
CONVENIENCE TRANSLATION | |
CONVENIENCE TRANSLATION | 3. CONVENIENCE TRANSLATION The Group, with the exception of its subsidiaries, The9 Interactive, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd., Nswapr Singapore Pte. Ltd. and The 9 Singapore Pte. Ltd, 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 = RMB 6.8972, 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, 2022. 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, 2022 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | 4. VARIABLE INTEREST ENTITIES The Group is the primary beneficiary of its VIE, 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 VIE that provide the Group with control over the VIE. As a result of these contracts, the Group concluded that it is required to consolidate the VIE 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 VIE. Pursuant to the terms of these loan agreements, the WOFE granted an interest-free loan to each shareholder of the VIE for the explicit purpose of making a capital contribution to the VIE. 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 VIE 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 VIE entered into equity pledge agreements with the WOFE. Under the equity pledge agreements, the shareholders of the VIE pledged all of their equity interests in the VIE to the WOFE as collateral for all of their payments due to the WOFE and to secure performance of all obligations of the VIE and their shareholders under the above loan agreements. In addition, the dividend distributions to the shareholders of VIE, 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 VIE. 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 VIE and their shareholders entered into equity call option agreements with the WOFE. Pursuant to such agreements, the shareholders of the VIE grant the WOFE an irrevocable and exclusive option to purchase the shares of VIE 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 VIE nor their shareholders may take actions that could materially affect the VIE’s 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 VIE 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 VIE and to exercise all of his or her rights as a shareholder of the VIE, including the right to attend shareholders meetings, to exercise voting rights and to appoint directors, a general manager, and other senior management of the VIE. 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 VIE 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 VIE. 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 VIE, 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 VIE’s 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 VIE, and as such, the Group’s management concluded that the WOFE has the requisite power to direct the activities of the VIE that most significantly impact the VIE’s 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 VIE 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 VIE 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 VIE that most significantly affect the VIE’s economic performance, and (2) the right to receive benefits from the VIE that could potentially be significant to the VIE, the Group has been deemed to be the primary beneficiary of the VIE and has consolidated the VIE since the date of execution of such agreements. Shareholders of the VIE 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 VIE. As most of the shareholders of the VIE 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 VIE 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 VIE 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 VIE, the Group may lose the ability to consolidate and reflect in its financial statements the financial position, and results of operation of the VIE. The Group, however, does not believe such actions would result in the liquidation or dissolution of the Group, the WOFEs or VIE. The aforementioned contractual arrangements with the VIE and their respective shareholders are subject to risks and uncertainties: ● The VIE 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 VIE or the Group mandate a change in ownership structure or operations for the VIE or the Group, restrict the VIE or the Group’s use of financing sources, or otherwise restrict the VIE 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 VIE 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 VIE have failed to comply with the legal obligations required to effectuate such contractual arrangements. ● It may be difficult to finance the VIE by means of loans or capital contributions. Loans from The9 Limited to the VIE must be approved by the relevant PRC government body and such approval may be difficult or impossible to obtain. The VIE are domestic PRC enterprises owned by nominee shareholders, thus the Group is not likely to finance activities of the VIE by means of direct capital contributions. Summary financial information of the VIE and its subsidiaries included in the accompanying consolidated financial statements with intercompany balances and transactions eliminated are as follows: December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Total assets 28,596,733 21,943,116 3,181,453 Total liabilities 282,163,247 272,939,140 39,572,455 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) Net revenues 625,488 1,278,918 655,201 94,995 Net loss (52,410,094) (23,621,808) (23,286,056) (3,376,161) The VIE contributed an aggregate of 100%, 0.9% and 0.6% of the consolidated net revenues for the years ended December 31, 2020, 2021 and 2022, respectively. As of the fiscal years ended December 31, 2021 and 2022, the VIE accounted for an aggregate of 2.2% and 3.7%, respectively, of the consolidated total assets, and 51.6% and 47.8%, 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 21 for disclosure of restricted net assets. |
ADVANCES TO SUPPLIERS
ADVANCES TO SUPPLIERS | 12 Months Ended |
Dec. 31, 2022 | |
ADVANCES TO SUPPLIERS | |
ADVANCES TO SUPPLIERS | 5. ADVANCES TO SUPPLIERS Advances to suppliers are as follows: December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Other 2,781,139 30,345 4,400 2,781,139 30,345 4,400 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$1.0 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 2020. 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$3.0 million that the Group has paid in September 2020. Due to uncertain events to the development and the probability to successfully launch the casual games in the future, the Group has performed an impairment assessment to consider the recoverable amount. As the advance on minimum guarantee payment is non-refundable in nature, the Group has fully impaired the advance paid in 2020. In total, the Group recorded impairment charges relating to the advances to suppliers and other advances of RMB20.7 million, nil and nil for the years ended December 31, 2020, 2021 and 2022, respectively. |
PREPAYMENTS AND OTHER CURRENT A
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | 12 Months Ended |
Dec. 31, 2022 | |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | 6. PREPAYMENTS AND OTHER CURRENT ASSETS, NET Prepayments and other current assets are as follows: December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Employee advances 1,294,840 1,785,204 258,830 Input VAT recoverable 2,310,475 2,632,299 381,647 Prepayments and deposits 465,073,710 266,027,845 38,570,412 Receivable in relating to disposal of a subsidiary 55,251,240 — — Other receivables, net of allowance for doubtful accounts of RMB5,655,941 and RMB22,738,176, as of December 31, 2021 and 2022, respectively 4,179,023 2,042,230 296,096 528,109,288 272,487,578 39,506,985 In March 2021, the Group 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, for a total consideration of US$82.8 million payable in installments according to the agreed time schedule. As of December 31,2022, the Group has prepaid RMB 513.7 million (US$74.5 million). As of December 31,2022, the Group received and confirmed 11,614 Antminer S19j Bitcoin mining machines as fixed assets of RMB 273.2 million (US$39.6 million), which the Group has reclassified such to property and equipment during December 31, 2022. In August 2021, we formally stepped into the NFT business. In November 2021, we have entered into license agreements with international sports stars pursuant to which they have, respectively, granted us license to use their likeness for production of NFTs. As of December 31,2022, the Group has prepaid to the sports stars of RMB 135.5 million (US$ 19.6 million). Due to the instability of the NFT business development the Group recorded a full impairment of such prepayment amount at December 31, 2022. In November 2021, the Group signed Antminer S19j Bitcoin mining machines hosting service agreements with Compute North LLC and Miningsky Technologies(manitoba)Inc. As of December 31, 2022, the Group has prepaid RMB 23.7 million (US$ 3.4 million). Due to Compute North and Miningsky Technologies breach of contracts, the Group terminated the agreements with them, and expected that the prepayment will not be recovered. The Group recorded a full impairment of such prepayment amount at Decembef 31, 2022. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS | |
INVESTMENTS | 7. INVESTMENTS The Group’s investments comprise the following: Share ownership as of December 31, December 31, December 31, December 31, 2021 2022 2022 2022 RMB RMB US$ ( Note 3) Investments accounted for under equity method: ZTE9 Network Technology Co., Ltd., Wuxi (“ZTE9”) — — — 5.00 % Skychain Technologies Inc. (“Skychain”) <1> 4,609,500 — — 9.81 % Maxline Holdings Limited (“Maxline”) — — — 29.00 % Nanyang Herbs Pte. Ltd. (“Nanyang Herbs”) <2> — — — 50.00 % Investments accounted for under cost method: Shanghai Ronglei Culture Communication Co., Ltd. (“Shanghai Ronglei”) <13> — 5,000,000 724,932 12.92 % Shanghai The9 Education Technology Co., Ltd. (“The9 Education Technology”) — — — 19.20 % Dragonfly Ventures II, L.P. (“Dragonfly”)<3> 19,519,950 19,519,950 2,830,127 1.19 % Redblock Inc. (“Redblock”) <4> 1,942,860 1,942,860 281,688 1.00 % Gameway Pte.Ltd. (“Gameway”) <14> — 634,870 92,047 1.25 % Zhenjiang Kexin Power System Design and Research Co., Ltd. (“Zhenjiang Kexin”) — — — 9.90 % Shangdong Shanyeyunye Culture Co., Ltd. (“Shanyeyunye”) <10> — — — 10.00 % Beijing Weiming Naonao Technology Co., Ltd. (“BeijingNaonao”) <11> — — — 9.09 % Shanghai Lingjun Sports Culture Development Co., Ltd. (“Shanghai Lingjun”) <6> 6,000,000 — — 12.76 % Hangzhou Lianfang Technology Co., Ltd. (“Hangzhou Lianfang”) <7> 2,000,000 — — 4.00 % Skychain Technologies Inc. (“Skychain”) <1> 10,653,015 — — 15.11 % Shanghai Institute of Visual Art of Fudan University (“SIVA”) <12> — — — 1.28 % Investments accounted for under readily determinable fair values Nano Labs, Ltd. (“Nano Labs”) <9> — 584,566 84,754 * SMI Vantage(“SMI”) <5> 14,850,376 6,759,811 980,080 9.10 % FF Intelligent Mobility Global Holdings Ltd. (“FF Intelligent”) <8> 14,349,418 855,338 124,013 * Total 73,915,119 35,297,395 5,117,641 *Less than 1% The Group recorded the impairment on equity investments of RMB1.2 million, RMB7.6 million and RMB 17.3 million (US$ 2.5 million) for the years ended December 31,2020, 2021 and 2022, respectively. The Group recorded the impairment on other investments of RMB18 million, the gain of RMB17.2 million and the impairment of RMB 30 million (US$ 4.3 million) for the years ended December 31,2020, 2021 and 2022, respectively. The Group recorded the gain on disposal of equity investment and available-for-sale investments of RMB 0.2 million, nil, RMB 0.7 million (US$ 0.1 million) for the years ended December 2020, 2021 and 2022, respectively. <1> Skychain In April 2021, the Group signed a legally binding term sheet on a CAD 4 million investment in Skychain Technologies Inc., a company listed in TSX Venture Exchange in Canada. The purpose of the investment is for the construction and operation of a 12 MW cryptocurrency mining facility located in Birtle, Manitoba, Canada. In June 2021, we announced the closing of the investment in Skychain and entered into subscription agreements to purchase share units and debentures issued by Skychain Technologies Inc. Upon the completion of construction, we plan to deploy our cryptocurrency mining machines there. The Group invested RMB 10.6 million (US$ 1.5 million) to get 15.11 % of shares and RMB 10.6 million (US$ 1.5 million) to get the Debentures of Skychain, the Debentures shall mature on the fourth anniversary of the closing date , the Group has an option to extend maturity for additional 12 months , and the Debentures bear interest at a rate of 1% per annum. The Group recorded share of loss of RMB 1.7 million (US$ 0.2 million) and impairment of loss of RMB 4.3 million (US$ 0.6 million) for the year ended December 31, 2021. Due to the local regulatory and permitting issues as well as significant construction delays, the Group recorded a full impairment loss of RMB 15.3 million (US $2.2 million) for the year ended December 31, 2022. <2> 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 February 2020, Nanyang Herbs entered into a research collaboration agreement with Nanyang Technological University (“NTU”) to jointly provide technology and financial support to fund the research project to embark on evidence-based study to illustrate the medicinal values and efficacies of certain herbs. The Group has invested an amount of RMB3.3 million (US$0.5 million) to Nanyang Herbs in 2020 and amount of RMB3.3 million (US$0.5 million) in 2021. Because of the uncertainty of medical research projects, the Group incurred loss of RMB 3.3 million (US$0.5 million) for the year ended December 31, 2020. Also, the Group incurred another loss of RMB 3.3 million (US $0.5 million) for the ended December 31, 2021. <3> Dragonfly In March 2021, the Group entered into an investment agreement with Dragonfly Ventures II, L.P. (“Dragonfly”). The Group invested RMB19.5 million (US$2.8 million) in 2021. <4> Redblock In July 2021, the Group entered into an investment agreement with Redblock Inc. (“Redblock “). The Group invested RMB1.9 million (US$0.3 million) in 2021. <5> SMI In June 2021, the Group entered into a subscription agreement with SMI Vantage (“SMI”), which the Group paid RMB 1.6 million (US$0.2 million) to subscribe shares and options of SMI. In August 2021 the Group exercised the options, and paid RMB 4.9 million (US$0.7 million) to obtain additional shares. In April 2022, the Group sold machines to SMI in exchange for additional shares which valued RMB 2.1 million (US$0.3 million).The Group recorded an investment income of RMB 8.3 million (US$1.2 million) and an investment loss of RMB 10.2 million (US$1.5 million) for the years ended December 31, 2021 and 2022, respectively. <6> Shanghai Lingjun In August 2021, the Group enterd into an agreement with Shanghai Lingjun Sports Culture Development Co., Ltd. (“Shanghai Lingjun”). The Group invested RMB6.0 million (US$0.9 million) in Shanghai Lingjun for an equity interest of 12.76%. Due to the uncertainty in business development, the Group decided to end the investment and received the investment payback of RMB 4.5 million (US$0.7million)in 2022 and RMB 1.5 million (US$0.2million)in March 2023. <7> Hangzhou Lianfang In August 2021, the Group entered into an investment agreement with Hangzhou Lianfang Technology Co., Ltd. (“Hangzhou Lianfang”). The Group invested RMB2.0 million (US$0.3 million) in Hangzhou Lianfang for an equity interest of 4.00%. Due to the uncertainty in business development, the Group recorded an ful impairment loss of RMB 2.0 million (US$0.3million) for the year ended December 31, 2022. <8> 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$5.0 million into 2,994,011 Class B ordinary shares of FF Intelligent, the holding company of F&F that operates its electric vehicles business, at a pre-agreed conversion price set forth in the joint venture agreement. As a result of this conversion, the capital commitment in the joint venture agreement was deemed released. The prepaid deposit for joint venture was fully impaired in 2019 as the actual progress of the joint venture was below expectations. The initial recognition for the investment in FF Intelligent is recorded at nil. On July 21, 2021, FF Intelligent completed a merger with a SPAC company and became a public company FF Intelligent Electric Inc. (Nasdaq: FFIE). The Group owns 423,053 shares of FFIE after the merger. Such shares are subject to a 6-month lock-up period and were released to The9’s brokerage account in January 2022. The Group rebooked the investment for the 423,053 shares of FFIE received from F&F and recognized a gain on investments of RMB 37.7 million (US$ 5.5 million), The Group recognized a loss on change in investment of RMB 23.4 million (US$ 3.4 million) based on its fair value as of December 31, 2021. As the result, the Group recognized a net gain of RMB 14.3 million (US$ 2.1 million) for the year end December 31, 2021. The Group recognized a loss on change in investment of RMB 13.5 million (US$ 2.0 million) based on its fair value as of December 31, 2022. <9> Nano Labs In July 2022, the Group has made a RMB 20.2 million (US$3 million) strategic investment in the initial public offering of Nano Labs to obtain of 260,642 American depositary shares (“ADSs”) of Nano Labs. In July and August 2022, the Group sold 187,656 ADSs of Nano Labs and received RMB 15.2 million (US$2.2 million), the Group recorded a realized gain on disposal of equity investee and available-for-sale investments of RMB 0.7 million ( US$0.1 million). The Group recognized a loss on change in investment of RMB 4.3 million (US$ 0.6 million) based on its fair value as of December 31, 2022. <10>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$0.7 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$0.7 million) for the year ended December 31, 2020. In 2022, the Group sold the equity interest of 10% to the third party for total RMB 4.7 million (US$0.7 million) which the Group received a deposit of RMB 3.3 million (US$ 0.5 million) in 2021 and received the remaining balance of RMB 1.4 million (US$ 0.2 million) in 2022. <11>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$0.4 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$0.4 million) for the year ended December 31, 2020. <12> 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$1.4 million) for the year ended December 31, 2020. For the investments in equity, the Group has recorded share of loss of RMB2.2 million, RMB1.7 million and nil for the years ended December 31, 2020, 2021 and 2022, respectively. In total, the Group recorded impairment charges relating to its investments in equity and other of RMB19.2 million, RMB3.3 million and nil for the years ended December 31, 2020, 2021 and 2022, respectively. <13> Ronglei In October 2021, the Group entered into an investment agreement with Ronglei. The Group invested RMB 2 million (US$0.3 million) in 2021 and invested RMB 3 million (US$0.4 million) in 2022. Total investment in Rongli amounted to RMB 5 million (US$0.7 million), which represented an equity interest of 12.92% as of December 31, 2022. <14> Gameway In February 2022, the Group entered into an investment agreement with Gameway. The Group invested RMB0.6million (US$0.09 million) in 2022 or an equity interest of 1.25% as of December 31, 2022. |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | 8 . PROPERTY, EQUIPMENT AND SOFTWARE, NET Property, equipment and software and related accumulated depreciation and amortization are as follows: December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Computers and equipment 215,468,985 265,098,467 38,435,665 Office furniture and fixtures 1,738,419 1,710,298 247,970 Motor vehicles 3,982,228 3,344,272 484,874 Software 10,524,000 10,542,201 1,528,476 Less: accumulated depreciation and amortization (58,733,348) (137,847,601) (19,986,024) Net book value 172,980,284 142,847,637 20,710,961 Depreciation and amortization charges for the years ended December 31, 2020, 2021 and 2022 amounting to RMB0.4 million, RMB47.4 million and RMB 91.4 |
CRYPTOCURRENCIES
CRYPTOCURRENCIES | 12 Months Ended |
Dec. 31, 2022 | |
CRYPTOCURRENCIES | |
CRYPTOCURRENCIES | 9 . CRYPTOCURRENCIES The Group’s cryptocurrencies comprise the following: December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Bitcoins (BTC) <1> 77,693,877 60,576,929 8,782,829 Tether (USDT) <2> 8,424,472 29,318 4,251 Ethereum(ETH) <4> — 4,924,572 713,996 Filecoin (Fil) <3> — 808,711 117,252 Binance Coin(BNB) — 2,123 308 Total 86,118,349 66,341,653 9,618,636 Addtioanl information about Bitcoins and ETH The following table presents additional information about BTC as of and for the years end December 31,2022 and 2021,respectively: December31,2021 December31,2022 RMB RMB Opening balance 77,693,877 Receipt of BTC from Cryptocurrency mining 128,598,905 101,782,024 Interest income — 937 Sales of BTC in exchange of cash — (5,637,172) Exchange of BTC into other cryptocurrency — (67,987,322) Used in operating activities (17,556) (1,121,887) Realized gain or loss — 11,078,688 Less: Impairment of cryptocurrencies (50,887,472) (55,232,216) Ending balance 77,693,877 60,576,929 The following table presents additional information about ETH as of and for the years end December 31,2022 and 2021,respectively: December31,2021 December31,2022 RMB RMB Opening balance — — Receipt of ETH from NFT business — 9,573,703 Receipt of ETH from Games — 154,359 Additions from exchange of BTC&USDT — 4,087,824 Interest income — 1,019 Used in operating activities — (6,152,339) Realized gain or loss — (213,941) Less: Impairment of cryptocurrencies — (2,526,053) Ending balance — 4,924,572 <1> Bitcoins (BTC) Since February 2021, the Group has generated Bitcoin mining revenues through provision of computing power, or hash rate, in crypto asset transaction verification services to Bitcoin mining pools. In exchange for that, the Group is entitled to receive a fractional share of the Bitcoin award from the Bitcoin mining pools. The transaction consideration received is noncash consideration, which the Group measures at fair value on the date received, which is not materially different than the fair value at contract inception. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pools successfully place a block and the Group received the consideration, at which time revenue and intangible assets are recognized. As of December 31, 2022, the Group owned 542 Bitcoins, including 70 Bitcoins pledged as of December 31, 2022, the value of pledged Bitcoins is approximately RMB 7.8 million (US$ 1.1 million), no pledged Bitcoins released in 2022 and subsequent to 2022 <2> Tether (USDT) Tether is a stablecoin because it was originally designed to always be worth US$1. Since the Group turned the business focus to blockchain industry, from time to time the Group needs to make certain payments in USDT. Therefore the Group uses US$ to purchase USDT from time to time. As of December 31, 2022, the Group owned 4,210 USDT. <3>Filecoin (Fil) Among these intangible assets, the Group had pledged <4> Ethereum(ETH) Since the Group began the business in NFT and Web3 Games, from time to time the Group needs to make certain payments in ETH and collect the major revenue income with ETH. As of December 31, 2022, the Group owned 706 ETH. Cryptocurrencies, (including Bitcoin, Tether, Filecoin, Ethereum and Binance Coin) are included in current assets in the accompanying balance sheets. Cryptocurrencies purchased are recorded at cost and Cryptocurrencies awarded to the Group through its mining activities are accounted for in connection with the Group’s revenue recognition policy as disclosed in Note 2 above. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives, thus they should not be amortized but should be tested for impairment on annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the indefinite-lived asset is impaired. Impairment of cryptocurrency exists when the carrying amount exceeds its fair value, which is measured using the intraday low quoted price of the Cryptocurrencies at the time its fair value is being measured on any day subsequent to its acquisition and an impairment charge will be recognized. The Group monitors and tracks the Cryptocurrencies price on a daily basis and recognizes the impairment charge whenever there are observable transactions in which the carrying amount of the Cryptocurrencies exceed their fair value at any time. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the Cryptocurrencies. Subsequent reversal of impairment losses is not permitted. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | 10. 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 nil and nil as of December 31, 2021 and 2022, respectively. The items related to operating lease in the consolidated balance sheets are summarized below: December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Operating lease right-of-use assets 6,363,724 12,061,697 1,748,782 Operating lease liabilities-current portion 4,306,738 5,792,931 839,896 Operating lease liabilities-non-current portion 2,567,342 7,405,805 1,073,741 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, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Operating lease cost Operating expenses 4,220,789 4,254,040 616,778 Cost of other leases with terms less than one year Operating expenses 62,430 87,329 12,662 Total 4,283,219 4,341,369 629,440 Maturities of operating lease liabilities are as follows: December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Due within one year 4,511,953 6,278,361 910,277 Due in the second year 1,780,332 5,172,713 749,973 Due in the third year 882,132 2,502,839 362,878 Total lease payments 7,174,417 13,953,913 2,023,128 Less: imputed interest (300,337) (755,177) (109,491) Total 6,874,080 13,198,736 1,913,637 The following table summarizes the lease term and discount rate for the Company’s operating lease as of December 31, 2022: Operating Lease Weighted average remaining lease term (in years) 1.23 Weighted average discount rate 4.65 % As of December 31, 2022, 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, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Cash paid for amounts included in the measurement of operating lease liabilities 4,813,050 2,381,173 345,238 |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2022 | |
TAXATION | |
TAXATION | 11. 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, 2020, 2021 and 2022. 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, 2020, 2021 and 2022. 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 entitled the HNTE qualification benefits. As Shanghai IT did not have taxable income for the years ended December 31, 2020, 2021 and 2022, 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 Delaware and are subject to U.S. federal corporate marginal income tax rate of 21% and state income tax rate of 8.7%, 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, 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) PRC 7,165,097 — — — Deferred tax assets PRC 25,905,564 4,915,611 (35,242,565) (5,109,692) Other jurisdictions (44,312,311) (183,867,203) — — Subtotal (18,406,747) (178,951,592) (35,242,565) (5,109,692) Change in valuation allowance PRC (25,905,564) (4,915,611) 35,242,565 5,109,692 Other jurisdictions 44,312,311 183,867,203 — — Subtotal 18,406,747 178,951,592 35,242,565 5,109,692 Income tax expense 7,165,097 — — — 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, 2020 2021 2022 PRC statutory EIT rate 25 % 25 % 25 % Effect of different tax rates in other jurisdictions (10) % 0 % 0 % Change in future tax rate (upon expiration of preferential rate) 0 % 0 % 0 % Change of prior year deferred tax assets 1 % (19) % (11) % Change of valuation allowance (10) % (28) % (20) % Income not subject to tax and non-deductible expenses, net 0 % 0 % 0 % Effect of expired net operating loss (6) % 22 % 6 % PRC withholding tax 2 % 0 % 0 % Effective EIT rate 2 % 0 % 0 % Significant components of deferred tax assets For the year ended For the year ended For the year ended December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Temporary differences related to expenses and accruals 1,059,821 838,333 121,547 Temporary differences related to impairment on advances to suppliers 1,955,941 1,955,941 283,585 Temporary differences related to provision for doubtful accounts 631,200 631,200 91,515 Temporary differences related to depreciation, amortization, and impairment of equipment and intangible assets 17,022,219 (3,466,064) (502,532) Startup expenses and advertising fees 105,917 105,917 15,357 Temporary differences related to equity investments 11,740,058 9,252,558 1,341,495 Temporary differences related to provision for prepayment for equipment 5,000,000 — — Tax loss carry forwards 86,367,347 79,322,053 11,500,617 Total deferred tax assets 123,882,503 88,639,938 12,851,584 Less: Valuation allowance (123,882,503) (88,639,938) (12,851,584) 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, 2021 2022 2022 RMB RMB US$ (Note 3) Beginning balance 302,834,095 123,882,503 17,961,276 Decrease in valuation allowance (178,951,592) (35,242,565) (5,109,692) Ending balance 123,882,503 88,639,938 12,851,584 For the years ended December 31, 2021 and 2022, the Group recorded an Decrease of valuation allowance of approximately RMB 179 million and RMB 35.2 million (US$5.1 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, 2022, the Group’s PRC subsidiaries had net operating loss carry forwards amounting to RMB 317.3 million which will expire from 2023 to 2027. 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. 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, 2021 and 2022. 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 VIE because these VIE do not have any accumulated earnings as of December 31, 2021 and 2022. 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, 2021 and 2022. 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, 2020, 2021 and 2022, 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. 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 2022, the Group is subject to examination by the PRC tax authorities. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities are as follows: December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Funds raised for CrossFire New Mobile Game 30,384,772 30,254,560 4,386,499 Professional services 4,480,561 2,178,267 315,819 Agency commission fees payable 6,397,096 2,940,840 426,382 Staff cost related payables 6,505,481 6,976,762 1,011,535 Office expenses 1,439,218 1,099,142 159,361 Product development services 992,730 1,028,127 149,064 Other payables 33,808,410 3,527,013 511,369 Lawsuit dues 54,703,506 17,199,963 2,493,760 Others 1,487,807 1,768,903 256,467 Total 140,199,581 66,973,577 9,710,256 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, 2022, the Group had raised RMB57.5 million (US$8.3 million). The Group does not plan to finance the remaining RMB100.0 million (US$4.5 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$9.0 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 the filing date, no appeal claim has been made by Inner Mongolia Culture Assets to the sentence of the court. In April 2022, the Group has negotiated and intends to sign another settlement deed pursuant to which the Group agreed to pay Splendid Days and a third-party total of approximately USD 8.6 million in order to settle outstanding claims under the Convertible Notes. The Group recorded other payables for such estimated settlement amounts for RMB17.2 million (US$3 million) as of December 31, 2022. Upon the satisfaction of certain conditions set forth in the foregoing settlement deed, the arbitration proceeding will be terminated. In late 2021, the Group entered into a share purchase agreement with a third party 51miner Limited (“51miner”) to sell all its equity interest in Niulian Technology (Shaoxing) Co. Ltd. (“Niulian”) to 51miner. Before the disposal, Niulian held certain BTC, FIL and XCH mining machines and mined these cryptocurrencies in China. Since the regulatory risk of mining in China had been increasing, The9 decided to transfer those machines which can mine overseas to NBTC based on net book value. Therefore, as of the disposal date, the Group recorded an other payables for RMB30.6 million (US$4.8million). As of December 31, 2022, the Group’s balance of other payments payable to Niulian for RMB 1.53million (US$0.2 million). In 2022, the Group borrowed a loan of RMB 2.5 million (US$0.4 million) from collaborator for the development of mining operations in Canada. In 2022, the Group have repayed the loan of RMB 0.5 million (US$0.07million). As of December 31, 2022, the Group’s balance of loan is RMB 2.0 million (US$0.3 million). |
Refund of WoW game points
Refund of WoW game points | 12 Months Ended |
Dec. 31, 2022 | |
Refund of WoW game points | |
Refund of WoW game points | 13. 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$29.1million). 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$3.8 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$24.6million) as of both December 31, 2021 and 2022. |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE NOTES | |
CONVERTIBLE NOTES | 14. CONVERTIBLE NOTES On February 2, 2021 (the “Original Issue Date”), the Group entered into a Securities Purchase Agreement (“Purchase Agreement”) and a 6% Convertible Debenture Agreement (the “Note Agreement”) with an accredited private investor (the “Investor” or “Holder”) pursuant to which the Group agreed to issue and sell in a private placement to the Investor an aggregate principal amount of $5,000,000 of convertible notes due February 2, 2022 (the “February Note”) and sold 50,000 American Depositary Shares (“ADSs”) at $18.5 per share, having a fair value of $0.9 million. The Group also issued as collateral 10 million ordinary common shares (each ADSs share is worth 30 Class A ordinary shares). The collateral Class A ordinary shares subject to redemption at $0.0001 per share if not utilized to settle the outstanding convertible debenture. The Group issued a convertible promissory note on February 2, 2021 at $5 million that mature on February 2, 2022 and accrued interest at 6.00% per annum. In connection with the promissory note, the Group issued 50,000 ADSs. The note is convertible into ADSs at a conversion price of $14 per share.The Group evaluated the potential embedded derivative resulting from the conversion feature within the Indenture for bifurcation from the February Note. The conversion feature of the February Note was deemed clearly and closely related to the February Note and accordingly was not bifurcated as a standalone derivative. Upon issuance of the February Note, the Group allocated the proceeds received to the February Note and ADSs on a relative fair value basis. As a result of such allocation, the Group determined the initial carrying value of the February Note to be $1.7 million. The Group recorded the relative fair value of the ADSs as a debt discount of $0.6 million and amortized the discount over the life of the note (12 months). The $5,000,000 convertible note was repaid in full in 2021. On March 17, 2021 (the “Original Issue Date”), the Group entered into a Securities Purchase Agreement (“Purchase Agreement”) and a 6% Convertible Debenture Agreement (the “Note Agreement”) with an accredited private investor (the “Investor” or “Holder”) pursuant to which the Group agreed to issue and sell in a private placement to the Investor an aggregate principal amount of $20,000,000 of convertible note due March 17, 2022 (the “March Note”) and was required to issue ADSs, having a fair value of $2,444,444 as commitment shares value. The Group issued a convertible promissory note on March 17, 2021 at $20 million that matures on March 17, 2022 and accrued interest at 6.00% per annum. The Group also was required to issue ADSs having a fair value of $2,444,444 as commitment shares value, subsequent to the Group having an effective registration statement for the underlying shares or on September 17, 2021. The Group issued 3,277,050 shares on May 6, 2021 having a fair value of $2,444,444. The March Note is convertible into shares of ADSs at the lower of the conversion price of 90% of the average 5 day trading price preceding the redemption notice or 90% of the closing price on the day before the redemption notice. The February Note and March Note have anti-dilution protection in the event of certain stock splits. On August 4, 2022 (the “Original Issue Date”), the Group entered into a Securities Purchase Agreement (“Purchase Agreement”) and a 6% Convertible Debenture Agreement (the “Note Agreement”) with an accredited private investor (the “Investor” or “Holder”) pursuant to which the Group agreed to issue and sell in a private placement to the Investor an aggregate principal amount of $5,500,000 of convertible note due August 3, 2023 The Note carries an original issue discount of $500,000 (the “OID”). In addition, Company agrees to pay $15,000 to Investor to cover Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Securities (the “Transaction Expense Amount”), which amount will be reduced from the amount funded hereunder. The “Purchase Price”, therefore, shall be $4,985,000 The Note is convertible into shares of ADSs at the lower of the conversion price of 90% of the average 5 day trading price preceding the redemption notice or 90% of the closing price on the day before the redemption notice. All the Note have anti-dilution protection in the event of certain stock splits. Interest on the Notes is payable by shares. Under certain circumstances, interest on the Notes will be payable in cash at the election of the holder if such payments are permitted under the Notes Agreement. The indenture governing the February and March Notes contains customary events of default. No event of default existed as the date of this annual report. The Group evaluated the embedded derivative resulting from the conversion feature within the Indenture for bifurcation from the March Note. The conversion feature of the March Note was not deemed clearly and closely related to the March Note and was bifurcated as a standalone derivative. The Group recorded this embedded derivative liability as a current liability on its consolidated balance sheets with a corresponding debt discount, which is netted against the principal amount of the 6.0% Notes. The Group is accreting the debt discount associated with the March Note and ADSs to interest expense over the term of the agreement using the effective interest rate method. The fair value of the conversion option related to the March 2021 Note was calculated using the Black-Scholes option pricing model, using the following assumptions at issuance: (1) dividend yield of 0%; (2) expected volatility of 205.94%, (3) weighted average risk-free interest rate of 0.07%, (4) expected life of 1 year, and (5) estimated fair value of the Group’s ADSs of $42.39 per share. The following assumptions used at December 31, 2022: (1) dividend yield of 0%; (2) expected volatility of 107.09%, (3) weighted average risk-free interest rate of 4.73%, (4) expected life of 1.21 year, and (5) estimated fair value of the Group’s ADSs of $0.44 per share. The Group is accreting the debt discount associated with the August Note and ADSs to interest expense over the term of the agreement using the effective interest rate method. The fair value of the conversion option related to the August 2022 Note was calculated using the Black-Scholes option pricing model, using the following assumptions at issuance: (1) dividend yield of 0%; (2) expected volatility of 107.02%, (3) weighted average risk-free interest rate of 3.11%, (4) expected life of 1 year, and (5) estimated fair value of the Group’s ADSs of $1.20 per share. The following assumptions used at December 31, 2022: (1) dividend yield of 0%; (2) expected volatility of 107.08%, (3) weighted average risk-free interest rate of 4.73%, (4) expected life of 0.59 year, and (5) estimated fair value of the Group’s ADSs of $0.44 per share. The following table provides a summary of the changes in convertible debt, net of unamortized discount, during 2022: 2022 Balance at January 1, RMB 92,848,377 Issuance of convertible debt, face value 37,199,800 Debt discount from issuance/sale of ADS shares — Debt discount from derivative liability (embedded conversion option) (37,199,800) Debt discount from extension fee (2,940,840) Deferred financing fees (3,483,254) Repayment of convertible debt — Conversion of convertible debt into ordinary shares (50,182,932) Amortization of debt discount 16,607,603 Exchange rate change on convertible notes face value 8,135,104 Convertible debt, net at December 31, RMB 60,984,058 As of December 31, 2022 and December 31, 2021, the Group had the following convertible notes outstanding: December 31, 2022 December 31, 2021 Accrued Accrued Principal Interest Principal Interest August 2022 $5,500,000 Notes convertible into ADS common stock, 6% interest, due August 2023 RMB 37,199,800 RMB 911,140 RMB — — March 2021 $20,000,000 Notes convertible into ADS common stock, 6% interest, due March 2024 RMB 129,956,000 RMB 12,013,055 RMB 129,956,000 RMB 6,201,653 February 2021 $5,000,000 Notes convertible into ADS common stock at $14.00 per share, 6% interest, due February 2022 — — RMB 32,195,500 RMB 12,388,301 Repayment of convertible debt RMB (57,914,207) RMB (11,853,771) RMB (39,926,775) RMB (17,652,626) Exchange rate change on convertible notes face value RMB 5,838,382 RMB — RMB (2,296,722) RMB — Total Convertible Notes Payable, Net RMB 115,079,975 RMB 1,070,424 RMB 119,928,003 RMB 937,328 Less: Debt Discount (54,095,917) — (27,079,626) — RMB 60,984,058 RMB 1,070,424 RMB 92,848,377 RMB 937,328 Amortization of debt discount and interest expense for the ended December 31, 2022, 2021 and 2020 on the convertible notes payable amounted to RMB 23.2 million (US$3.4 million), RMB 120.6 million and RMB 2.9 million, respectively. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2022 | |
WARRANTS | |
WARRANTS | 15. WARRANTS In January 2021, the Group 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 Group issued 8,108,100 Class A ordinary shares in aggregate at US$0.1233 per Class A ordinary share and 207,891,840 warrants in aggregate, each warrant representing the right to purchase one Class A ordinary share, to the Investors in February 2021. The warrants are divided into four equal tranches: Tranche IWarrants, Tranche II Warrants, Tranche III Warrants and Tranche IV Warrants. The exercise price of each of the Tranche I Warrants, Tranche II Warrants and Tranche III Warrants is US$0.1233 per Class A ordinary share while the exercise price of the Tranche IV Warrants is US$0.2667 per Class A ordinary share. 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. These warrants are classified as equity and so there is no remeasurement to the warrants after initial recognition. The fair value of these warrants as of the initial recognition was US$122 million. Variables used in the option-pricing model include (1) risk-free interest rate at the date of grant (0.18%), (2) expected warrant life of 3 years, (3) expected volatility of 190%, and (4) expected dividend yield of 0. In July 2022, our board of directors approved to cancel 51,972,960 Tranche IV warrants previously granted. The fair value of the remaining Tranche I/II/III warrants was US$92 million. In April 2021, the Group completed an underwritten offering with Maxim Group LLC. In this transaction, The Group issued 112,953,000 Class A ordinary shares, or 3,765,100 American Depositary Shares (“ADSs”) and warrants to purchase 2,823,825 ADSs. The offering price of each ADS and accompanying 0.75 of an ADS warrant is $33.20. Each warrant has an exercise price of $36.00 per ADS, will be exercisable upon issuance, and will expire three years from the date of issuance. In addition, the underwriter Maxim Group LLC also subscribed the over-allotment for an additional 16,942,800 Class A ordinary shares, or 564,760 ADSs and warrants to purchase 423,570 ADSs at the same price. The over-allotment warrants also have an exercise price of $36.00 per ADS, will be exercisable upon issuance, and will expire three years from the date of issuance. These warrants are classified as equity and so there is no remeasurement to the warrants after initial recognition. The fair value of these warrants as of the initial recognition was US$94 million. Variables used in the option-pricing model include (1) risk-free interest rate at the date of grant (0.37%), (2) expected warrant life of 3 years, (3) expected volatility of 236%, and (4) expected dividend yield of 0. |
SHAREHOLDER RIGHTS PLAN
SHAREHOLDER RIGHTS PLAN | 12 Months Ended |
Dec. 31, 2022 | |
SHAREHOLDER RIGHTS PLAN | |
SHAREHOLDER RIGHTS PLAN | 16 . 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. As a special resolution in the annual general meeting of shareholders and the class meeting of holders of the Class B ordinary shares held on December 22, 2021, the Company’s Second Amended and Restated Memorandum and Articles of Association was amended so that each Class B ordinary share of the Company shall entitle the holder thereof to one hundred (100) votes per share on all matters subject to vote at general meetings of the Company. Only Mr. Jun Zhu and Incsight Limited (“Incsight”) hold Class B ordinary shares. As of December 31, 2022, there were 861,044,917 ordinary shares issued or outstanding |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 17 . 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 RMB1.2 million, RMB4.1 million and RMB6.4 million (US$0.93 million) for the years ended December 31, 2020, 2021 and 2022, 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, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 18. SHARE-BASED COMPENSATION 18.1 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$0.01 each, of the Group. According to the agreements, 6,328,535 options were exercised to ordinary shares, and 10,806,665 options were canceled. In December 2018, the 2004 Option Plan was amended to increase the maximum aggregate number of ordinary shares to 100,000,000 shares. By the amendment to the Option Plan in August 2021, we increased the total number of ordinary shares reserved under the Option Plan from 100,000,000 to 250,000,000. As of December 31, 2022, options to purchase 50,000 ordinary shares were outstanding and 108,073,400 ordinary shares were available for future grant under the 2004 Option Plan. Stock Options The following table summarizes the Group’s share option activities with its employees and directors: Weighted-Average Remaining Number of Weighted-Average Contractual Term Aggregate Options Exercise Price (years) Intrinsic Value Outstanding as of January 1, 2022 50,000 US$ 0.93 1.07 Nil Granted — — — Nil Exercised — — — Nil Forfeited — — — Nil Outstanding as of December 31, 2022 50,000 US$ 0.93 0.07 Nil Vested and expected to vest as of December 31, 2022 50,000 US$ 0.93 0.07 Nil Exercisable as of December 31, 2022 50,000 US$ 0.93 0.07 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, 2020, 2021 and 2022. 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$0.51. The fair value of the share options was measured on the respective grant dates based on the Black-Scholes option pricing model, with below assumptions made regarding expected term and volatility, risk-free interest rate and dividend yield: Risk-free interest rate 2.19 % Expected life (years) 2.93 Expected dividend yield 0.00 % Volatility 78.55 % Fair value of options at grant date US$ 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, 2021. On February 14, 2021, our board of directors and board committees authorized and approved the issuance of an aggregate number of 33,090,000 Class A ordinary shares of our company to certain directors, executive officers, employees and consultants of our company as share incentive awards for their services to us pursuant to the Option Plan. Among those Class A ordinary shares grants, 32,190,000 shares were restricted Class A ordinary shares, subject to restrictions on transferability to be removed upon the satisfaction of the conditions that half of the restricted shares should vest if our market capitalization reaches US$400 million and the other half should vest if our market capitalization reaches US$500 million. We also granted 900,000 restricted Class A ordinary share units to our directors which are immediately vested and issued the same number of shares. In September 15, 2021, our board of directors and board committees authorized and approved the issuance of an aggregate number of 44,290,560 Class A ordinary shares of our company to certain directors, executive officers, employees and consultants of our company as share incentive awards for their services to us pursuant to the Option Plan. Among those Class A ordinary shares grants, 44,290,560 shares were restricted Class A ordinary shares, subject to the following vesting condition: restricted shares shall vest within two years, i.e., 1/24th of all restricted share grants shall vest on the last day of each month after the date of the grant. We also granted 4,950,000 restricted Class A ordinary share units to our directors which are immediately vested and issued the same number of shares. Share-Based Compensation For the years ended December 31, 2020, 2021 and 2022, the Group recorded share-based compensation of RMB55.1 million, RMB150.2 million and RMB202.3 million (US$29.3 million), respectively, for restricted ordinary shares granted to the Group’s employees and directors. As of December 31, 2022, there was approximately RMB 59.7 million (US$8.7 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. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 19 . 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$0.1 million) and all outstanding balances have been offset. No IPTV business transaction and borrowing lent to ZTE9 in 2021 and 2022, respectively. Transaction with Mr. Jun Zhu Mr. Jun Zhu, the chairman and chief executive officer, provided loans of nil and nil to the Group in 2021 and 2022, respectively. The Group has repaid a total of RMB6.4 million and RMB2.6 million (US$0.4 million) for the years ended December 31, 2021 and 2022, respectively. The loans were interest-free and the outstanding balance of RMB14.1 million and RMB11.5 million (US$1.7 million) remained as of December 31, 2021 and 2022, 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 at that time., Kwok Keung Chau is an independent director of the Company. He resigned from Comtec Group in January 2020 so he is no longer an affiliate with Comtec. 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, 2022 | |
(LOSS) INCOME PER SHARE | |
(LOSS) INCOME PER SHARE | 20. (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, 2020 31, 2021 31, 2022 31, 2022 RMB RMB RMB US$ (Note 3) Numerator: Net (loss) income attributable to ordinary shareholders before change in redeemable noncontrolling interest 397,883,388 (411,234,755) (974,859,050) (141,341,275) Change in redeemable noncontrolling interest (1,190,122) — — — Net (loss) income attributable to ordinary shareholders 396,693,266 (411,234,755) (974,859,050) (141,341,275) Denominator: Denominator for basic and diluted (loss) income per share – weighted-average shares outstanding 163,599,920 495,304,894 720,237,128 720,237,128 Net (loss) income attributable to holders of ordinary shares per share - Basic and diluted 2.42 (0.83) (1.35) (0.20) The Company had 4,200,645, 366,148,968 and 271,620,613 stock options, warrants and non-vested shares outstanding as of December 31, 2020, 2021 and 2022, 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, 2022 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 21. RESTRICTED NET ASSETS Pursuant to laws applicable to entities incorporated in the PRC, the subsidiaries and the VIE 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, 2020, 2021 and 2022. The accumulated reserves as of December 31, 2022 were RMB10.6 million (US$1.5 million). In addition, due to restrictions on the distribution of registered capital from the Company’s PRC subsidiarie, the PRC subsidiaries’ registered capital of RMB81 million (US$11.7 million) as of December 31, 2022, were considered restricted. As a result of these PRC laws and regulations, as of December 31, 2022, approximately RMB70.4 million (US$10.2 million), were not available for distribution to the Company by its PRC subsidiaries in the form of dividends, loans or advances. |
NONCONTROLLING INTEREST
NONCONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2022 | |
NONCONTROLLING INTEREST | |
NONCONTROLLING INTEREST | 22. NONCONTROLLING INTEREST The following schedule shows the movement on the noncontrolling interests of The9 Limited for the years ended December 31, 2020, 2021 and 2022. RMB US$ (Note 3) Noncontrolling interests on December 31, 2019 392,881,777 56,962,503 Net loss attributable to noncontrolling interests 3,259,528 472,587 Translation difference charge to noncontrolling interests (16,417,025) (2,380,245) Noncontrolling interests on December 31, 2020 379,724,280 55,054,845 Net loss attributable to noncontrolling interests 5,590,513 810,548 Noncontrolling interests from consolidation since acquisition (372,299,401) (53,978,339) Noncontrolling interests on December 31, 2021 13,015,392 1,887,054 Net loss attributable to noncontrolling interests 4,633,205 671,752 Contributions from noncontrolling interests (40,000) (5,799) Noncontrolling interests from consolidation since acquisition 162,253 23,524 Noncontrolling interests on December 31, 2022 17,770,850 2,576,531 |
REDEEMABLE NONCONTROLLING INTER
REDEEMABLE NONCONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2022 | |
REDEEMABLE NONCONTROLLING INTEREST | |
REDEEMABLE NONCONTROLLING INTEREST | 23. REDEEMABLE NONCONTROLLING INTEREST 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. As the Group lost control of Red 5 and no longer consolidated of Red 5, redeemable noncontrolling interest record as nil on December 31, 2021 and December 31, 2022. A reconciliation of redeemable noncontrolling interest is as follows: For the year ended For the year ended For the year ended For the year ended December 31, December 31, December 31, December 31, 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) Redeemable noncontrolling interest opening balance 349,046,548 349,046,548 — — Net loss attributable to redeemable noncontrolling interest (1,190,122) — — — Change in redeemable noncontrolling interest 1,190,122 (349,046,548) — — Redeemable noncontrolling interest ending balance 349,046,548 — — — |
DISPOSAL OF SUBSIDIARIES
DISPOSAL OF SUBSIDIARIES | 12 Months Ended |
Dec. 31, 2022 | |
DISPOSAL OF SUBSIDIARIES | |
DISPOSAL OF SUBSIDIARIES | 24. 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$71.5 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$56.8 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$12.1 million) to the gain on disposal of Asian Development. In April 2010, the Group acquired a controlling interest in Red 5 Studios, Inc. (“Red 5”), an online game development studio based in the U.S. Thereafter till 2016, the Group and Red 5 entered into several equity transactions with several third party investors and the Group’s equity holding to approximately 35%. Nevertheless, the Group retained the control of the Board of Red 5 at that time. The performance of Red 5 was under expectation afterwards and has become an inactive company. In June 2021, the two directors of Red 5 appointed by the Group resigned from Red 5 and the Group issued a letter of renunciation to Red 5 confirming the Group had renounced its right of business control of Red5 and confirmed the Group will not assign any new director to Red 5 in the future. Accordingly, the Group lost control of Red 5 and no longer consolidated of Red 5 as of June 30, 2021. The Group recognized a net gain on deconsolidation of subsidiaries amounted to RMB 9.5 million (US$1.4 million) for the year ended December 31, 2021. In December 7, 2021, NBTC entered into a share purchase agreement with a third party 51miner Limited (“51miner”) to sell all its equity interest in Niulian Technology (Shaoxing) Co. Ltd. (“Niulian”) to 51miner. Before the disposal, Niulian held certain BTC, FIL and XCH mining machines and mined these cryptocurrencies in China. Since the regulatory risk of mining in China had been increasing, The9 decided to transfer those machines which can mine overseas to NBTC based on net book value. Such transfer was completed before the disposal. Therefore as of the disposal date, Niulian’s assets only included approximately US$0.04M cash, US$4.3M receivable from NBTC and US$2M FIL and XCH mining machines and mining related prepayments. Group has recorded a net gain of RMB 5.6 million (US$0.8 million) of and for the year ended December 31, 2021. The9 Interactive Inc. is a wholly-owned subsidiary of The9 Limited.Since all the business activities have been terminated from 2019, the9 Interactive Inc. is converting into dormant status. The9 decided to disposal the company by December 31,2022. Group has recorded a net loss of RMB 3.7 million (US$0.5 million) of and for the year ended December 31, 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 25. COMMITMENTS AND CONTINGENCIES 25.1 Other operating commitments In October 2016, the Group had raised RMB57.5 million (US$8.3 million), and the Group planned to raise an additional RMB100.0 million (US$14.5 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$14.5 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$8.3 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 the filing date of this report, 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 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. After the Group turned its business focus to blockchain business in 2021, such game development had been ceased. In August 2021, we formally stepped into the NFT business. NFTSTAR Singapore Pte. Ltd., our Singapore wholly owned subsidiary, launched a NFT trading and community platform NFTSTAR. NFTSTAR is a NFT trading and community platform that provides users with purchase, trade, and interactive activities. NFTSTAR features NFT collections created by global stars licensed IPs. In November 2021, we have entered into license agreements with international sports stars pursuant to which they have, respectively, granted us license to use their likeness for production of NFTs. As of December 31,2022, the total sum paid under license agreements is US$17.7 million, the Group still has payment commitment amounting to US$37.8 million as of December 31, 2022. 25.2 Contingencies 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$55.5 million and such injunction order was also registered in the High Court of the Republic of Singapore. In May 2020, Splendid Days also commenced an arbitration proceeding in Hong Kong under the rules of the Hong Kong International Arbitration Centre against the Group. On May 29, 2020, the Group entered into a Settlement Deed with Splendid Days and other parties named therein to settle the Convertible Notes. The injunction order against the Group had been discharged. As of December 31, 2021, the arbitration proceeding has not been terminated. In April 2022 the Group has negotiated and intends to sign another settlement deed pursuant to which the Group agreed to pay Splendid Days and a third-party total of approximately USD 8.6 million in order to settle outstanding claims under the Convertible Notes. The Group recorded other payables for such estimated settlement amounts for RMB 54.7 million (US$ 7.9 million) for the year ended December 31, 2021. As of December 31, 2022, the remaining unpaid balance is RMB 17.2 million (US$ 2.5 million). Upon the satisfaction of certain conditions set forth in the foregoing settlement deed, the arbitration proceeding will be terminated. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 26. SEGMENT REPORTING The Group is engaged in blockchain business including the operation of cryptocurrency mining and NFT business. The Group reports the operating segments based on cryptocurrency mining and NFT business. 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 measures the performance of its operating segments based on revenue and income (loss) from operations. The following tables present information about the Group’s reportable segments for the years ended December 31, 2022, 2021 and 2020: Year ended December 31, 2022: Cryptocurrency Mining NFT Business Corporate Total RMB USD RMB USD RMB USD RMB USD (Note 3) (Note 3) (Note 3) (Note 3) Revenue 101,782,024 14,757,006 10,034,353 1,454,844 7,071,502 1,025,272 118,887,879 17,237,122 Loss from operations (397,933,746) (57,694,970) (275,269,814) (39,910,371) (288,402,652) (41,814,454) (961,606,212) (139,419,795) Prepayments and other current asset 254,603,252 36,914,002 — — 17,884,326 2,592,983 272,487,578 39,506,985 Cryptocurrencies, net 62,669,034 9,086,156 3,672,619 532,480 — — 66,341,653 9,618,636 Property, equipment and software, net 128,975,415 18,699,677 — — 13,872,222 2,011,284 142,847,637 20,710,961 Year ended December 31, 2021: Cryptocurrency Mining NFT Business Corporate Total RMB USD RMB USD RMB USD RMB USD Revenue 134,122,945 21,046,818 298,817 46,891 1,453,378 228,065 135,875,140 21,321,774 Loss from operations (67,252,412) (10,553,371) (20,413,919) (3,203,389) (229,113,810) (35,952,957) (316,780,141) (49,709,717) Prepayments and other current asset 394,533,886 61,910,976 116,390,410 18,264,195 17,184,991 2,696,700 528,109,288 82,871,871 Cryptocurrencies, net 86,118,349 13,513,848 — — — — 86,118,349 13,513,848 Property, equipment and software, net 171,169,287 26,860,196 — — 1,810,997 284,185 172,980,284 27,144,381 Year ended December 31, 2020: Cryptocurrency Mining NFT Business Corporate Total RMB USD RMB USD RMB USD RMB USD Revenue — — — — 625,488 95,860 625,488 95,860 Loss from operations — — — — 336,708,307 51,602,806 336,708,307 51,602,806 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 27. SUBSEQUENT EVENTS The Company adopted Tenth Amended and Restated 2004 Share Option Plan (the “Amended Plan”), as approved and authorized by the board of directors of the Company on April 29, 2023. The Amended Plan amends and restates the previously adopted Ninth Amended and Restated 2004 Share Option Plan (the “Original Plan”) of the Company in its entirety and assumes all awards granted under the Original Plan. The number of Class A ordinary shares that are available for award grant purposes under the Amended Plan increased by 300,000,000 Class A ordinary shares from 250,000,000 Class A ordinary shares to 550,000,000 Class A ordinary shares. The Amended Plan will expire upon the twentieth anniversary of its effective date. |
FINANCIAL INFORMATION OF PARENT
FINANCIAL INFORMATION OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2022 | |
FINANCIAL INFORMATIONS OF PARENT COMPANY | |
FINANCIAL INFORMATION OF PARENT COMPANY | PARENT COMPANY FOR THE YEARS ENDED DECEMBER 31, 2020, 2021 AND 2022 2020 2021 2022 2022 RMB RMB RMB US$ Operating expenses: General and administrative (87,638,664) (186,462,351) (232,037,437) (33,642,266) Total operating expenses (87,638,664) (186,462,351) (232,037,437) (33,642,266) Loss from operations (87,638,664) (186,462,351) (232,037,437) (33,642,266) Impairment on equity investment (1,172,755) (7,599,505) (15,252,515) (2,211,407) Gain on other investments — 22,743,763 (28,735,889) (4,166,312) Interest expenses (2,923,055) (109,175,494) — — Fair value change on warrants liability 37,851 — — — Gain on disposal of equity investee and available-for-sale investments — — 711,914 103,218 Non operating income — — 423,270 61,368 Gain from change in fair value of convertible feature derivative liability — 62,246,860 37,249,976 5,400,739 Gain on extinguishment of convertible notes 56,755,902 — — — Gain on waiver of interest-free loan 35,397,500 — — — Foreign exchange gain (loss) 29,578,454 (2,457,272) (7,140,909) (1,035,334) Other expenses, net (40,059,304) (54,703,506) — — Loss before income tax expense and share of loss in equity method investment (10,024,071) (275,407,505) (244,781,590) (35,489,994) Share of loss in equity method investment (2,165,935) (1,725,152) — — Equity in (loss) income of subsidiaries and VIE 410,073,394 (134,102,098) (730,077,459) (105,851,282) Net income (loss) 397,883,388 (411,234,755) (974,859,049) (141,341,276) Other comprehensive income (loss), net of tax: Currency translation adjustments (12,900,251) 3,984,443 — — Total comprehensive income (loss) 384,983,137 (407,250,312) (974,859,049) (141,341,276) PARENT COMPANY CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2021 AND 2022 December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) ASSETS Current assets: Cash and cash equivalents 12,243,809 18,704,249 2,711,861 Prepayments and other current assets, net 56,226 Amounts due from intercompany 2,358,774,226 2,378,886,528 344,906,125 Total current assets 2,371,074,261 2,397,590,777 347,617,986 Investments 44,452,310 8,199,715 1,188,847 Investments in subsidiaries and VIE (1,420,365,177) (2,150,220,191) (311,752,623) Total assets 995,161,394 255,570,301 37,054,210 LIABILITIES Current liabilities: Accrued expenses and other current liabilities 61,326,625 18,772,708 2,721,787 Amounts due to intercompany 12,689,811 78,728,877 11,414,614 Warrants 51,825,629 51,775,453 7,506,735 Bond payable 92,848,377 60,984,058 8,841,857 Total current liabilities 218,690,442 210,261,096 30,484,993 Total liabilities 218,690,442 210,261,096 30,484,993 SHAREHODERS’ EQUITY Class A ordinary shares 45,233,784 56,659,429 8,214,845 Class B ordinary shares 943,789 943,789 136,837 Additional paid-in capital 4,139,122,755 4,371,228,191 633,768,513 Statutory reserves 7,326,560 7,326,560 1,062,251 Accumulated other comprehensive loss (12,693,760) (12,527,539) (1,816,323) Accumulated deficit (3,403,462,176) (4,378,321,225) (634,796,906) Total shareholders’ equity 776,470,952 45,309,205 6,569,217 Total liabilities and shareholders’ equity 995,161,394 255,570,301 37,054,210 PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 2021 AND 2022 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) Cash flows from operating activities: Net income (loss) 397,883,388 (411,234,755) (974,859,049) (141,341,276) Adjustments for: Share-based compensation expenses 55,056,426 — — — Employee share-based compensation expense — 150,166,481 202,345,626 29,337,358 Fair value change on warrants liability (37,851) — — — Interest expenses — 120,626,467 — — Amortization of discount and interest on convertible notes 2,923,316 — 23,074,518 3,345,491 Foreign exchange (gain) loss (29,578,454) 4,465,094 (166,222) (24,100) Cancle of ordinary shares — — (1,876,314) (272,040) Equity in loss (income) of subsidiaries and VIE (410,073,394) 108,608,497 773,156,627 112,097,174 Consulting fees paid by issuance of shares 6,781,815 — — — Gain from change in fair value of conversion feature derivative liability — (62,246,860) (37,249,976) (5,400,739) Gain on extinguishment of convertible notes (56,755,902) (2,296,722) 8,135,104 1,179,479 Gain on waiver of interest-free loan (34,881,000) — — — Payment of issuance cost by issuance of shares 455,658 — — — Changes in operating assets and liabilities: Change in prepayments and other current assets (4,026,346) 4,033,993 56,226 8,152 Change in amounts due from intercompany 349,361,587 (1,192,553,035) 49,338,235 7,153,372 Change in accrued expenses and other current liabilities (566,162) 49,376,705 (46,565,182) (6,751,317) Increase/(Decrease) in interest payable — 937,328 1,192,955 172,962 Net cash (used in) provided by operating activities 276,543,081 (1,230,116,807) (3,417,452) (495,484) Cash flows from investing activities: Purchase of property, plant and equipment — — (17,640,000) (2,557,560) Net cash (used in) provided by investing activities — — (17,640,000) (2,557,560) Cash flows from financing activities: Proceeds from the issuance of ordinary shares and warrants 47,430,195 64,471,143 — — Proceeds from the issuance of convertible note 3,358,369 161,588,128 33,704,460 4,886,687 Purchase of other investment — — (22,277,084) (3,229,874) ADS issuance fee — (3,720,691) — — New issued stock to investors — 1,011,476,118 — — Proceeds from disposal of other investment — — 15,228,067 2,207,862 Repayments of convertible notes (318,929,623) — — — Net cash provided by (used in) financing activities (268,141,059) 1,233,814,698 26,655,443 3,864,675 Effect of foreign exchange rate changes on cash and cash equivalents — — 862,449 125,045 Net change in cash and cash equivalents 8,402,022 3,697,891 6,460,440 936,676 Cash and cash equivalents, beginning of year 143,896 8,545,918 12,243,809 1,775,185 Cash and cash equivalents, end of year 8,545,918 12,243,809 18,704,249 2,711,861 Supplement disclosure of cash flow information: Interest paid 36,310,455 — — — |
PRINCIPAL ACCOUNTING POLICIES (
PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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 consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of wholly owned and majority owned subsidiaries, VIE and subsidiaries of the VIE over which the Company exercises control and, when applicable, entity for which the Company has a controlling financial interest or is the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation. Going concern and management’s plan The accompanying consolidated financial statements have been prepared on a going concern basis. The Group’s total current liabilities exceeded total current assets by approximately RMB 166.5 million (US$24.1 million) as of December 31, 2022. The Group has suffered recurring losses from operations. The Group also suffered a cash outflow from operations of approximately RMB154.7 million (US$22.4 million) for the year ended December 31, 2022. To meet its working capital needs, the Group is considering multiple alternatives, including, but not limited to, disposal of certain assets to meet the current obligations, additional equity or loan financing and cost controls as outlined below. There is no assurance that the Group will be able to complete any such transaction on acceptable terms or otherwise. 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 the going concern uncertainty for at least one year plus a day upon issuance of this annual report. Disposal of certain assets to meet the current obligations Although majority of the current liabilities may not lead to actual short term cash outflow, in case the Group needs to obtain cash to meet certain current obligations, the Group can sell cryptocurrencies and cryptocurrency mining machines on hand. Both have active and liquid secondary market which can provide additional working capital to meet current obligations in addition to the Group’s current cash balance. Additional equity or loan financing i) Since 2020, the Group has been issuing convertible notes to an investor when the Group is in need for additional financing, including US$0.5 million in February 2020, US$5 million in February 2021, US$20 million in March 2021 and US$5.5 million in August 2022. The Group has been repaying to the investor by issuance of shares. Therefore such financing has brought net cash inflow to the Group. In case the Group needs to obtain cash to meet certain current obligations, the Group may issue further convertible notes to raise funds. ii) The Group had obtained financial support from Mr. Jun Zhu, CEO and Chairman of the Group, from 2016 to 2019. In case the Group needs to obtain cash to meet certain current obligations, the Group may seek further financial support from Mr. Jun Zhu Cost controls In 2022, a significant portion of the Group’s cash outflows was attributable to our NFT business. The Group has been reducing the cash outflow for this business significantly. Also, the Group has the ability to control the level of discretionary spending on expenses by implementation of cost savings on non-essential expenses from the day-to-day business operations. |
Consolidation | <2> Consolidation The consolidated financial statements include the financial statements of The9 Limited, its subsidiaries and VIE 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 VIE and its subsidiaires 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 controlled a majority of Board of Director seats and had continuously funded to the operation of Red 5, the Group retained effective control over Red 5 and Red 5 remained as a consolidated entity of the Group as of June 29, 2021. On June 29, 2021, two directors appointed by the Group resigned from Red 5 and the Group confirmed it will not assign new directors to Red 5 in the future. The Group lost control of Red 5 and no longer consolidate of Red 5 effective on July 1,2021. 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 VIE and its subsidiaires 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, fair value of conversion feature, share-based compensation expenses, consolidation of VIE and its subsidiaires, 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, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd. Nswapr Singapore Pte. Ltd., The 9 Singapore Pte. Ltd. and MONTCRYPTO LTD. is the RMB. The functional currency of, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd., Nswapr Singapore Pte. Ltd. and The 9 Singapore Pte. Ltd, is the United States dollar (“US$” or “U.S. dollar”). The functional currency of MONTCRYPTO LTD. is CAD. Assets and liabilities of, NFTSTAR US Inc., NBTC US Inc., NFTStar Singapore Pte. Ltd., Nswapr Singapore Pte. Ltd.,The 9 Singapore Pte. Ltd. and MONTCRYPTO LTD. 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 income (loss) 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, 2021 and 2022, 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, 2021 and 2022 are amounts denominated in U.S. dollar totaling US$67.2 million and US$6.1 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 RMB19.7 million and RMB14.2 million (US$2.1 million) as of December 31, 2021 and 2022, 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 RMB2.3 million, RMB0.6 million and RMB20.8 million (US$3.0 million) for the years ended December 31, 2020, 2021 and 2022, respectively. The Group has written-off an amount of RMB2.1 million, RMB1.3 million and RMB3.8 million(US$0.5 million) for the years ended December 31, 2020, 2021 and 2022, 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 26 months 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, 2022. Management has assessed the basis of depreciation of the Group’s Crypto-currency Machines used to verify digital currency transactions and generate digital currencies and believes they should be depreciated over a 3 year period. The rate at which the Group generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors including the following: ● ● ● The Group operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. This assessment takes into consideration the availability of historical data and management’s expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data comes available. To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period either as a result of changes in circumstances or through the availability of greater quantities of data then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets. |
CRYPTOCURRENCIES | <9> Cryptocurrencies Cryptocurrencies (including Bitcoin, ETH, Filecoin and BNB) are included in current assets in the accompanying consolidated balance sheets. Cryptocurrencies purchased are recorded at cost and Cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite usfeful lives,thus it should not be amortized but should be tested for impairment annually, or more frequently when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment of cryptocurrency exists when the carrying amount exceeds its fair value, which is measured using the intraday low quoted price of the Cryptocurrencies at the time its fair value is being measured on any day subsequent to its acquisition and an impairment charge will be recognized. The Company monitors and tracks the Cryptocurrencies price on a daily basis and recognizes the impairment charge whenever there are observable transactions in which the carrying amount of the Cryptocurrencies exceeds their fair value at any time. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the Cryptocurrencies. Subsequent reversal of impairment losses is not permitted. Purchases of Cryptocurrencies by the Company, if any, will be included within investing activities in the accompanying consolidated statements of cash flows, while Cryptocurrencies awarded to the Group through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of Cryptocurrencies are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in “realized gain (loss) on exchange of Cryptocurrencies” in the consolidated statements of operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting. |
Assets held for sale | <10> 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 rights, net | <11> 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 both December 31, 2021 and 2022. |
Impairment of long-lived assets | <12> 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 | <13> Revenue recognition The Group recognizes revenues when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services. Depending on the terms of the contract and the laws that apply to the contract, control of the goods or services may be transferred over time or at a point in time. The Group does not believe that significant management judgments are involved in revenue recognition. Under ASC 606, Revenue from contracts with customers, the core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when the Company satisfies a performance obligation. In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Noncash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Majority of the Group’s cryptocurrency mining revenues was Bitcoin. The Group generates our Bitcoin mining revenues through provision of computing power, or hash rate, in crypto asset transaction verification services to Bitcoin mining pools. In exchange for that, the Group are entitled to receive a fractional share of the Bitcoin award from the Bitcoin mining pools. The transaction consideration the Group receives is noncash consideration, which the Group measure at fair value on the date received, which is not materially different than the fair value at contract inception. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pools successfully place a block and we receive confirmation of the consideration, at which time revenue is recognized. Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the Financial Accounting Standards Board (“FASB”), the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. Other than Bitcoins, the Group is also engaged in the mining of Filecoins. The Group generates Filecoins mining revenues through provision of computing storage space to the main networks. In exchange for that, The Group is entitled to receive a fractional share of the Filecoins awards from the main networks. For Filecoin mining, unlike other cryptocurrency mining, Filecoin mining main network requires miners not only to contribute mining machines with computing storage space, but miners also need to pledge certain amount of Filecoins to the main network to start the Filecoin mining. Then Filecoin main network will continuously reward the miners by Filecoin awards. Upon the end of the mining process, which is typically a 540 days process, the Filecoin main network will release the pledged Filecoins to the miners. The Group cooperates with a third party company where we contribute mining machines and the third party contributes Filecoins for pledging to the Filcoin main network. Under this mining cooperation, the Filecoins mined are distributed to the third party ahead of us according to the agreed distribution schedule. Therefore in the early stage of the 540 days mining process, the Group does not own any Filecoin. Since it is not probable that a significant reversal of cumulative revenue will not occur, the Group does not recognize any Filecoin mining revenue before the Group starts to own the Filecoins being mined. Only when the Group starts to own the Filecoins being mined (after the distribution made to the third party under the agreed distribution schedule). The Group started to own the Filecoins being mined from January 1, 2022, the Group started to recognize Filecoin mining revenue and the intangible assets at fair value on the date the Group received awards of the Filecoin from the thitd-party network. NFTs are created and recorded using blockchain technology. Cryptocurrencies and blockchain platforms can be used to create NFTs. Those NFTs can then be bought and sold on marketplaces that are linked to the underlying blockchain technology. The Group recognizes revenues when control of the promised goods is transferred to our customers. The Group earns revenue from selling the NFTs on the platforms and provision of operation services to third-party on the platforms. When selling the NFTs on the platforms , the Group records the revenues from amount paid by the customers, commission fees paid to platforms are recorded as cost of revenues. The customers can also trade directly with the other customers, the Group records the revenues from collecting the royalties (5% of the selling price). 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. Contract liability 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 contract liability, 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 contract liability balance at the beginning of the period, revenue of nil was recognized during the years ended December 31, 2021 and 2022, respectively. |
Advances from customers | <14> 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 | <15> Convertible notes Convertible Notes and Beneficial Conversion Feature (“BCF”) The Group evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Accounting Standards Codification Topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretations of this standard and Accounting Standards Update 2020-06, which was adopted by the Group effective January 1, 2021. The Group recognizes derivative instruments as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The result of this accounting treatment is that the fair value of the derivative instrument is marked-to-market each balance sheet date and with the change in fair value recognized in the statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation then that the related fair value is removed from the books. Gains or losses on debt extinguishment are recognized in the statement of operations upon conversion, exercise or cancellation of a derivative instrument after any shares issued in such a transaction are recorded at market value. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Instruments that become a derivative after inception are recognized as a derivative on the date they become a derivative with the offsetting entry recorded in earnings. The Group determines the fair value of derivative instruments and hybrid instruments, considering all of the rights and obligations of each instrument, based on available market data using the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, and risk-free rates) necessary to fair value these instruments. For instruments in default with no remaining time to maturity the Group uses a one-year term for their years to maturity estimate unless a sooner conversion date can be estimated or is known. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. ASU 2020-06 changed the accounting for convertible instruments. It requires convertible debt instruments to be accounted for under one of the following three models: embedded derivative, substantial premium, or no proceeds allocated (traditional debt) models. It eliminated the cash conversion and beneficial conversion feature models. |
Warrants | <16>Warrants The Group account for the warrants issued in connection with equity-linked instrument under authoritative guidance on accounting from ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The Group classifies warrants in its consolidated balance sheet as a liability or equity based on the nature and characteristics of each warrant issued. For those warrants classified as equity, there is no remeasurement to the warrants after initial recognition. For those warrants classified as liability, the proceeds are allocated first to the liability classified warrants at the full fair value then the remaining proceeds allocated to the equity instruments offered. The warrants are initially recognized on its fair value as of issuance date then remeasured at each reporting period and adjusted to fair value. The changes in the fair value of the warrant liability are recorded in the income of the period. |
Cost of revenues | <17> Cost of revenues Cost of revenues consists primarily of electricity of cryptocurrency mining, fee deducted by the mining pools, 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 | <18> 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, 2020, 2021 and 2022, 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 | <19> 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 0.1 million, RMB20.0 million and RMB10.1 million (US$1.5 million) for the years ended December 31, 2020, 2021 and 2022, respectively, were expensed as incurred. |
Government grants | <20> Government grants Unrestricted government subsidies from local government agencies allowing the Group full discretion to utilize the funds were RMB 0.1 million, RMB 0.1 million and RMB 0.06 million (US$0.01 million) for the years ended December 31, 2020, 2021 and 2022, respectively, which were recorded in other income, net in the consolidated statements of operations and comprehensive loss. |
Share-based compensation | <21> 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 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 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 | <22> Leases The Group applied ASC 842, Leases 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 | <23> 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. Since February 2021, we started our cryptocurrency mining business in China. Since this is a new industry in China, there is no explicit tax law in China regarding whether such mining revenue is taxable in China, since such revenue is non-cash before the cryptocurrencies are sold for fiat. For the year end of December 31, 2022, we have only achived RMB 10.8 million realized gain on sold or use of cryptocurrencies. As such, we believe that it is more-likely-than-not such mining revenue is not taxable. Should there be any update in China tax laws on mining revenue, we will accrue and pay any relevant taxes according to tax laws. |
Redeemable noncontrolling interests | <24> 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 | <25> 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 | <26> (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 | <27> Segment reporting The Group has two operating segment whose business are crypto mining business and NFT business. 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 | <28> 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, 2021 and 2022, 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 | <29> 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 | <30> 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, short-term investments, accounts receivable, accounts payable, convertible notes and short-term borrowings approximate their market values due to the short-term nature of these instruments. |
Deconsolidation of subsidiary | <31> Deconsolidation of subsidiary In accordance with ASC 810-40, deconsolidation of a subsidiary occurs when: (a) some or all of the ownership interests of the subsidiary are sold resulting in the loss of a controlling financial interest; (b) a contractual agreement granting control of the subsidiary expires; (c) the subsidiary issues its shares to outsiders reducing the parent’s ownership interest resulting in the loss of a controlling financial interest; or (d) the subsidiary becomes subject to the control of a government, court, administrator or regulator. The parent should recognize a gain or loss measured as the difference between: (a) the aggregate of: (i) the fair value of any consideration received, (ii) the fair value of any retained non-controlling interest, and (iii) the carrying amount of any non-controlling interest at the date the subsidiary is deconsolidated; and (b) the carrying amount of the subsidiary’s assets and liabilities. A subsidiary should be deconsolidated from the date a controlling financial interest is lost and should also consider the equity components included in the non-controlling interest and the amounts previously recognized in accumulated other comprehensive income (loss), i.e., the foreign currency translation adjustment. |
Reclassification | <32> Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the previously reported financial positions, results of operations and cash flows. |
Recent accounting pronouncements | <33> Recent accounting pronouncements The Group considers the applicability and impact of all ASUs. The ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Group’s consolidated financial position and/or results of operations. Recent Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. The adoption of this standard had no material impact on the Group’s consolidated financial statements. In December 2019, the FASB issued Accounting Standards Update 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU summarizes the FASB’s recently issued Accounting Standards Update (ASU) No. 2019-12, simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this ASU had no material impact on our consolidated financial statements. Recently Issued Accounting Pronouncements The Group considers the applicability and impact of all ASUs. The ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Group’s consolidated financial position and/or results of operations. In June 2016, the FASB issued 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. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, excluding entities eligible to be smaller reporting company. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-13 has been amended by ASU 2019-04, ASU 2019-05, and ASU 2019-11. For entities that have not yet adopted ASU No. 2016-13, the effective dates and transition methodology for ASU 2019-04, ASU 2019-05, and ASU 2019-11 are the same as the effective dates and transition methodology in ASU 2016-13. The Group did not adopt this standard yet due to the status of smaller reporting company. The Group plans to adopt this standard for the year beginning January 1, 2023. We do not expect the adoption of this standard will have material impact on the Group’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in fiscal periods ending after December 15, 2020. We do not expect the adoption of this standard will have material impact on the Group’s consolidated financial statements. In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The ASU addresses the diversity in practice in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (e.g., warrants) that remain equity classified after modification or exchange. Under the guidance, an issuer determines the accounting for the modification or exchange based on whether the transaction was done to issue equity, to issue or modify debt or for other reasons. The guidance is applied prospectively to all modifications or exchanges that occur on or after the date of adoption. We do not expect the adoption of this standard will have material impact on the Group’s consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures. |
ORGANIZATION AND NATURE OF OP_2
ORGANIZATION AND NATURE OF OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND NATURE OF OPERATIONS | |
Schedule of Group's principal subsidiaries and VIE subsidiaries | The Group had been operating an online game business before the Group’s listing until 2021, the Group has turned our business focus to blockchain business and are primarily engaged in the operation of cryptocurrency mining and a Non-Fungible Token platform NFTSTAR since 2022. The Company’s principal subsidiaries and VIE are as follows as of December 31, 2022: Date of Place of Legal Name of Entity Registration Registration Ownership Principal subsidiaries: GameNow.net (Hong Kong) Ltd. (“ GameNow Hong Kon 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 % 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 % NFTStar Singapore Pte. Ltd. (“ NFTStar Singapore August-2021 Singapore 100 % NFTSTAR US Inc. (“ NFTSTAR US August-2021 USA 100 % NFTSTAR LTD.UK (“ NFTSTAR UK July-2021 UK 100 % NFTSTAR Hong Kong LTD. (“ NFTSTAR Hong Kong August-2021 Hong Kong 100 % STARNFT HONG KONG LIMITED (“ STARNFT Hong Kong October-2021 Hong Kong 100 % Nswap Singapore Pte. Ltd. (“ Nswap Singapore May-2021 Singapore 100 % Montcrypto Limited (“ Montcrypto February-2021 Canada 61 % Terry First Limited (“ Terry First June-2021 UK 100 % System Run Limited (“ System Run September-2021 Cayman Islands 100 % Lucky Pure Limited (“ Lucky Pure September-2021 Cayman Islands 100 % Vast Ocean International Limited(“ Vast Ocean April-2021 Hong Kong 100 % The9 Singapore Pte. Ltd. (“ The9 Singapore April ‑ 2010 Singapore 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 % Shanghai Yuyou Network Technology Co., Ltd. (“ Yuyou December-2016 PRC 100 % Hangzhou Niuxin Technology Co., Ltd. (“ Niuxin August-2021 PRC 100 % Variable interest entity: Shanghai The9 Information Technology Co., Ltd. (“ Shanghai IT September ‑ 2000 PRC N/A Subsidiaries and VIE 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 % Silver Express Investments Ltd. (“ Silver Express November ‑ 2007 Hong Kong 100 % Shanghai Jiuciyuan Computer Co., Ltd. (“ Jiuciyuan July-2021 PRC 60 % Shanghai Big data culture media Co., Ltd(“Big data”) April-2007 PRC 68.0078 % |
PRINCIPAL ACCOUNTING POLICIES_2
PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PRINCIPAL ACCOUNTING POLICIES | |
Schedule of estimated useful lives | Leasehold improvements Shorter of respective lease term or estimated useful life Computer and equipment 26 months 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, 2022 | |
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 and its subsidiaries included in the accompanying consolidated financial statements with intercompany balances and transactions eliminated are as follows: December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Total assets 28,596,733 21,943,116 3,181,453 Total liabilities 282,163,247 272,939,140 39,572,455 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) Net revenues 625,488 1,278,918 655,201 94,995 Net loss (52,410,094) (23,621,808) (23,286,056) (3,376,161) |
ADVANCES TO SUPPLIERS (Tables)
ADVANCES TO SUPPLIERS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ADVANCES TO SUPPLIERS | |
Summary of advances to suppliers | Advances to suppliers are as follows: December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Other 2,781,139 30,345 4,400 2,781,139 30,345 4,400 |
PREPAYMENTS AND OTHER CURRENT_2
PREPAYMENTS AND OTHER CURRENT ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 2022 RMB RMB US$ (Note 3) Employee advances 1,294,840 1,785,204 258,830 Input VAT recoverable 2,310,475 2,632,299 381,647 Prepayments and deposits 465,073,710 266,027,845 38,570,412 Receivable in relating to disposal of a subsidiary 55,251,240 — — Other receivables, net of allowance for doubtful accounts of RMB5,655,941 and RMB22,738,176, as of December 31, 2021 and 2022, respectively 4,179,023 2,042,230 296,096 528,109,288 272,487,578 39,506,985 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS | |
Schedule of Investments in equity investees | The Group’s investments comprise the following: Share ownership as of December 31, December 31, December 31, December 31, 2021 2022 2022 2022 RMB RMB US$ ( Note 3) Investments accounted for under equity method: ZTE9 Network Technology Co., Ltd., Wuxi (“ZTE9”) — — — 5.00 % Skychain Technologies Inc. (“Skychain”) <1> 4,609,500 — — 9.81 % Maxline Holdings Limited (“Maxline”) — — — 29.00 % Nanyang Herbs Pte. Ltd. (“Nanyang Herbs”) <2> — — — 50.00 % Investments accounted for under cost method: Shanghai Ronglei Culture Communication Co., Ltd. (“Shanghai Ronglei”) <13> — 5,000,000 724,932 12.92 % Shanghai The9 Education Technology Co., Ltd. (“The9 Education Technology”) — — — 19.20 % Dragonfly Ventures II, L.P. (“Dragonfly”)<3> 19,519,950 19,519,950 2,830,127 1.19 % Redblock Inc. (“Redblock”) <4> 1,942,860 1,942,860 281,688 1.00 % Gameway Pte.Ltd. (“Gameway”) <14> — 634,870 92,047 1.25 % Zhenjiang Kexin Power System Design and Research Co., Ltd. (“Zhenjiang Kexin”) — — — 9.90 % Shangdong Shanyeyunye Culture Co., Ltd. (“Shanyeyunye”) <10> — — — 10.00 % Beijing Weiming Naonao Technology Co., Ltd. (“BeijingNaonao”) <11> — — — 9.09 % Shanghai Lingjun Sports Culture Development Co., Ltd. (“Shanghai Lingjun”) <6> 6,000,000 — — 12.76 % Hangzhou Lianfang Technology Co., Ltd. (“Hangzhou Lianfang”) <7> 2,000,000 — — 4.00 % Skychain Technologies Inc. (“Skychain”) <1> 10,653,015 — — 15.11 % Shanghai Institute of Visual Art of Fudan University (“SIVA”) <12> — — — 1.28 % Investments accounted for under readily determinable fair values Nano Labs, Ltd. (“Nano Labs”) <9> — 584,566 84,754 * SMI Vantage(“SMI”) <5> 14,850,376 6,759,811 980,080 9.10 % FF Intelligent Mobility Global Holdings Ltd. (“FF Intelligent”) <8> 14,349,418 855,338 124,013 * Total 73,915,119 35,297,395 5,117,641 *Less than 1% |
PROPERTY, EQUIPMENT AND SOFTW_2
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 2022 RMB RMB US$ (Note 3) Computers and equipment 215,468,985 265,098,467 38,435,665 Office furniture and fixtures 1,738,419 1,710,298 247,970 Motor vehicles 3,982,228 3,344,272 484,874 Software 10,524,000 10,542,201 1,528,476 Less: accumulated depreciation and amortization (58,733,348) (137,847,601) (19,986,024) Net book value 172,980,284 142,847,637 20,710,961 |
CRYPTOCURRENCIES (Tables)
CRYPTOCURRENCIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CRYPTOCURRENCIES | |
Schedule of cryptocurrencies | December 31, December 31, December 31, 2021 2022 2022 RMB RMB US$ (Note 3) Bitcoins (BTC) <1> 77,693,877 60,576,929 8,782,829 Tether (USDT) <2> 8,424,472 29,318 4,251 Ethereum(ETH) <4> — 4,924,572 713,996 Filecoin (Fil) <3> — 808,711 117,252 Binance Coin(BNB) — 2,123 308 Total 86,118,349 66,341,653 9,618,636 |
Schedule of intangible assets addtioanl information about Bitcoins and ETH | December31,2021 December31,2022 RMB RMB Opening balance 77,693,877 Receipt of BTC from Cryptocurrency mining 128,598,905 101,782,024 Interest income — 937 Sales of BTC in exchange of cash — (5,637,172) Exchange of BTC into other cryptocurrency — (67,987,322) Used in operating activities (17,556) (1,121,887) Realized gain or loss — 11,078,688 Less: Impairment of cryptocurrencies (50,887,472) (55,232,216) Ending balance 77,693,877 60,576,929 December31,2021 December31,2022 RMB RMB Opening balance — — Receipt of ETH from NFT business — 9,573,703 Receipt of ETH from Games — 154,359 Additions from exchange of BTC&USDT — 4,087,824 Interest income — 1,019 Used in operating activities — (6,152,339) Realized gain or loss — (213,941) Less: Impairment of cryptocurrencies — (2,526,053) Ending balance — 4,924,572 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule of items related to operating lease in consolidated balance sheet | December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Operating lease right-of-use assets 6,363,724 12,061,697 1,748,782 Operating lease liabilities-current portion 4,306,738 5,792,931 839,896 Operating lease liabilities-non-current portion 2,567,342 7,405,805 1,073,741 |
Schedule of lease cost | Classification in Consolidated Statements of Operations and Comprehensive (Loss) Gain December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Operating lease cost Operating expenses 4,220,789 4,254,040 616,778 Cost of other leases with terms less than one year Operating expenses 62,430 87,329 12,662 Total 4,283,219 4,341,369 629,440 |
Schedule of maturities of operating lease liabilities | December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Due within one year 4,511,953 6,278,361 910,277 Due in the second year 1,780,332 5,172,713 749,973 Due in the third year 882,132 2,502,839 362,878 Total lease payments 7,174,417 13,953,913 2,023,128 Less: imputed interest (300,337) (755,177) (109,491) Total 6,874,080 13,198,736 1,913,637 |
Summary of lease term and discount rate for the Company's operating lease | Operating Lease Weighted average remaining lease term (in years) 1.23 Weighted average discount rate 4.65 % |
Schedule of supplemental cash flow information related to operating leases | December 31, 2021 December 31, 2022 December 31, 2022 RMB RMB US$ (Note 3) Cash paid for amounts included in the measurement of operating lease liabilities 4,813,050 2,381,173 345,238 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) PRC 7,165,097 — — — Deferred tax assets PRC 25,905,564 4,915,611 (35,242,565) (5,109,692) Other jurisdictions (44,312,311) (183,867,203) — — Subtotal (18,406,747) (178,951,592) (35,242,565) (5,109,692) Change in valuation allowance PRC (25,905,564) (4,915,611) 35,242,565 5,109,692 Other jurisdictions 44,312,311 183,867,203 — — Subtotal 18,406,747 178,951,592 35,242,565 5,109,692 Income tax expense 7,165,097 — — — |
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, 2020 2021 2022 PRC statutory EIT rate 25 % 25 % 25 % Effect of different tax rates in other jurisdictions (10) % 0 % 0 % Change in future tax rate (upon expiration of preferential rate) 0 % 0 % 0 % Change of prior year deferred tax assets 1 % (19) % (11) % Change of valuation allowance (10) % (28) % (20) % Income not subject to tax and non-deductible expenses, net 0 % 0 % 0 % Effect of expired net operating loss (6) % 22 % 6 % PRC withholding tax 2 % 0 % 0 % Effective EIT rate 2 % 0 % 0 % |
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, 2021 2022 2022 RMB RMB US$ (Note 3) Temporary differences related to expenses and accruals 1,059,821 838,333 121,547 Temporary differences related to impairment on advances to suppliers 1,955,941 1,955,941 283,585 Temporary differences related to provision for doubtful accounts 631,200 631,200 91,515 Temporary differences related to depreciation, amortization, and impairment of equipment and intangible assets 17,022,219 (3,466,064) (502,532) Startup expenses and advertising fees 105,917 105,917 15,357 Temporary differences related to equity investments 11,740,058 9,252,558 1,341,495 Temporary differences related to provision for prepayment for equipment 5,000,000 — — Tax loss carry forwards 86,367,347 79,322,053 11,500,617 Total deferred tax assets 123,882,503 88,639,938 12,851,584 Less: Valuation allowance (123,882,503) (88,639,938) (12,851,584) 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, 2021 2022 2022 RMB RMB US$ (Note 3) Beginning balance 302,834,095 123,882,503 17,961,276 Decrease in valuation allowance (178,951,592) (35,242,565) (5,109,692) Ending balance 123,882,503 88,639,938 12,851,584 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 2022 2022 RMB RMB US$ (Note 3) Funds raised for CrossFire New Mobile Game 30,384,772 30,254,560 4,386,499 Professional services 4,480,561 2,178,267 315,819 Agency commission fees payable 6,397,096 2,940,840 426,382 Staff cost related payables 6,505,481 6,976,762 1,011,535 Office expenses 1,439,218 1,099,142 159,361 Product development services 992,730 1,028,127 149,064 Other payables 33,808,410 3,527,013 511,369 Lawsuit dues 54,703,506 17,199,963 2,493,760 Others 1,487,807 1,768,903 256,467 Total 140,199,581 66,973,577 9,710,256 |
CONVERTIBLE NOTES (Tables)
CONVERTIBLE NOTES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE NOTES | |
Summary of changes in convertible debt, net of unamortized discount | 2022 Balance at January 1, RMB 92,848,377 Issuance of convertible debt, face value 37,199,800 Debt discount from issuance/sale of ADS shares — Debt discount from derivative liability (embedded conversion option) (37,199,800) Debt discount from extension fee (2,940,840) Deferred financing fees (3,483,254) Repayment of convertible debt — Conversion of convertible debt into ordinary shares (50,182,932) Amortization of debt discount 16,607,603 Exchange rate change on convertible notes face value 8,135,104 Convertible debt, net at December 31, RMB 60,984,058 |
Summary of convertible notes outstanding | December 31, 2022 December 31, 2021 Accrued Accrued Principal Interest Principal Interest August 2022 $5,500,000 Notes convertible into ADS common stock, 6% interest, due August 2023 RMB 37,199,800 RMB 911,140 RMB — — March 2021 $20,000,000 Notes convertible into ADS common stock, 6% interest, due March 2024 RMB 129,956,000 RMB 12,013,055 RMB 129,956,000 RMB 6,201,653 February 2021 $5,000,000 Notes convertible into ADS common stock at $14.00 per share, 6% interest, due February 2022 — — RMB 32,195,500 RMB 12,388,301 Repayment of convertible debt RMB (57,914,207) RMB (11,853,771) RMB (39,926,775) RMB (17,652,626) Exchange rate change on convertible notes face value RMB 5,838,382 RMB — RMB (2,296,722) RMB — Total Convertible Notes Payable, Net RMB 115,079,975 RMB 1,070,424 RMB 119,928,003 RMB 937,328 Less: Debt Discount (54,095,917) — (27,079,626) — RMB 60,984,058 RMB 1,070,424 RMB 92,848,377 RMB 937,328 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) - Stock Options | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of share option activities | The following table summarizes the Group’s share option activities with its employees and directors: Weighted-Average Remaining Number of Weighted-Average Contractual Term Aggregate Options Exercise Price (years) Intrinsic Value Outstanding as of January 1, 2022 50,000 US$ 0.93 1.07 Nil Granted — — — Nil Exercised — — — Nil Forfeited — — — Nil Outstanding as of December 31, 2022 50,000 US$ 0.93 0.07 Nil Vested and expected to vest as of December 31, 2022 50,000 US$ 0.93 0.07 Nil Exercisable as of December 31, 2022 50,000 US$ 0.93 0.07 Nil |
Schedule of fair value of options valuation assumptions | Risk-free interest rate 2.19 % Expected life (years) 2.93 Expected dividend yield 0.00 % Volatility 78.55 % Fair value of options at grant date US$ 0.51 |
(LOSS) INCOME PER SHARE (Tables
(LOSS) INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
(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, 2020 31, 2021 31, 2022 31, 2022 RMB RMB RMB US$ (Note 3) Numerator: Net (loss) income attributable to ordinary shareholders before change in redeemable noncontrolling interest 397,883,388 (411,234,755) (974,859,050) (141,341,275) Change in redeemable noncontrolling interest (1,190,122) — — — Net (loss) income attributable to ordinary shareholders 396,693,266 (411,234,755) (974,859,050) (141,341,275) Denominator: Denominator for basic and diluted (loss) income per share – weighted-average shares outstanding 163,599,920 495,304,894 720,237,128 720,237,128 Net (loss) income attributable to holders of ordinary shares per share - Basic and diluted 2.42 (0.83) (1.35) (0.20) |
NONCONTROLLING INTEREST (Tables
NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NONCONTROLLING INTEREST | |
Schedule of effects of changes in ownership interest of subsidiaries | RMB US$ (Note 3) Noncontrolling interests on December 31, 2019 392,881,777 56,962,503 Net loss attributable to noncontrolling interests 3,259,528 472,587 Translation difference charge to noncontrolling interests (16,417,025) (2,380,245) Noncontrolling interests on December 31, 2020 379,724,280 55,054,845 Net loss attributable to noncontrolling interests 5,590,513 810,548 Noncontrolling interests from consolidation since acquisition (372,299,401) (53,978,339) Noncontrolling interests on December 31, 2021 13,015,392 1,887,054 Net loss attributable to noncontrolling interests 4,633,205 671,752 Contributions from noncontrolling interests (40,000) (5,799) Noncontrolling interests from consolidation since acquisition 162,253 23,524 Noncontrolling interests on December 31, 2022 17,770,850 2,576,531 |
REDEEMABLE NONCONTROLLING INT_2
REDEEMABLE NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REDEEMABLE NONCONTROLLING INTEREST | |
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 For the year ended December 31, December 31, December 31, December 31, 2020 2021 2022 2022 RMB RMB RMB US$ (Note 3) Redeemable noncontrolling interest opening balance 349,046,548 349,046,548 — — Net loss attributable to redeemable noncontrolling interest (1,190,122) — — — Change in redeemable noncontrolling interest 1,190,122 (349,046,548) — — Redeemable noncontrolling interest ending balance 349,046,548 — — — |
ORGANIZATION AND NATURE OF OP_3
ORGANIZATION AND NATURE OF OPERATIONS (Details) | 12 Months Ended |
Dec. 31, 2022 | |
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% |
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% |
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% |
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% |
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% |
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% |
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% |
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% |
Shanghai Jiu Gang Electronic technology Ltd. ("Jiu Gang") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2014-12 |
Place of registration | PRC |
Legal Ownership | 100% |
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% |
NFTStar Singapore Pte. Ltd. ("NFTStar Singapore") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-08 |
Place of registration | Singapore |
Legal Ownership | 100% |
NFTSTAR US Inc. ("NFTSTAR US") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-08 |
Place of registration | USA |
Legal Ownership | 100% |
NFTSTAR LTD.UK ("NFTSTAR UK") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-07 |
Place of registration | UK |
Legal Ownership | 100% |
NFTSTAR Hong Kong LTD. ("NFTSTAR Hong Kong") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-08 |
Place of registration | Hong Kong |
Legal Ownership | 100% |
STARNFT HONG KONG LIMITED ("STARNFT Hong Kong") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-10 |
Place of registration | Hong Kong |
Legal Ownership | 100% |
Nswap Singapore Pte. Ltd. ("Nswap Singapore") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-05 |
Place of registration | Singapore |
Legal Ownership | 100% |
Montcrypto Limited("Montcrypto") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-02 |
Place of registration | Canada |
Legal Ownership | 61% |
Terry First Limited ("Terry First") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-06 |
Place of registration | UK |
Legal Ownership | 100% |
System Run Limited ("System Run") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-09 |
Place of registration | Cayman Islands |
Legal Ownership | 100% |
Lucky Pure Limited ("Lucky Pure") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-09 |
Place of registration | Cayman Islands |
Legal Ownership | 100% |
Vast Ocean International Limited("Vast Ocean") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-04 |
Place of registration | Hong Kong |
Legal Ownership | 100% |
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% |
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% |
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% |
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% |
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% |
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% |
NBTC Limited ("NBTC") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-06 |
Place of registration | Hong Kong |
Legal Ownership | 100% |
FF The9 China Joint Venture Limited ("FF The9") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-09 |
Place of registration | Hong Kong |
Legal Ownership | 50% |
Huiling Computer Technology Consulting (Shanghai) Co.Ltd. ("Huiling") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-03 |
Place of registration | PRC |
Legal Ownership | 100% |
Leixian Information Technology (Shanghai) Co., Ltd. ("Leixian") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2019-03 |
Place of registration | PRC |
Legal Ownership | 100% |
Hangzhou Niuxin Technology Co., Ltd. ("Niuxin") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-08 |
Place of registration | PRC |
Legal Ownership | 100% |
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% |
Shanghai Yu You Network Technology Co., Ltd. ("Yuyou") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2016-12 |
Place of registration | PRC |
Legal Ownership | 100% |
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% |
Shanghai Zhiaojiqi Information Technology Co., Ltd. ("Shanghai Zhiaojiqi") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2015-11 |
Place of registration | PRC |
Legal Ownership | 0% |
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% |
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% |
Shanghai Jiuciyuan Computer Co., Ltd. ("Jiuciyuan") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2021-07 |
Place of registration | PRC |
Legal Ownership | 60% |
Shanghai Big data culture media Co., Ltd("Big data") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Date of registration | 2007-04 |
Place of registration | PRC |
Legal Ownership | 68.0078% |
PRINCIPAL ACCOUNTING POLICIES -
PRINCIPAL ACCOUNTING POLICIES - Estimated useful life (Details) | 12 Months Ended |
Dec. 31, 2022 | |
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 | 26 months |
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 | |||||||||||||
Jun. 29, 2021 director | Sep. 30, 2019 subsidiary | Dec. 31, 2022 CNY (¥) segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | Aug. 31, 2022 USD ($) | Aug. 04, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Mar. 17, 2021 USD ($) | Feb. 28, 2021 USD ($) | Feb. 02, 2021 USD ($) | Feb. 29, 2020 USD ($) | |
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Excess of Group's total current liabilities over total current assets | ¥ 166,500,000 | $ 24,100,000 | |||||||||||||
Cash outflow from operations | 154,700,000 | $ 22,400,000 | ¥ 687,688,577 | ¥ 106,253,254 | |||||||||||
Number of directors appointed | director | 2 | ||||||||||||||
Cash and cash equivalent | 6,100,000 | $ 67,200,000 | |||||||||||||
Allowance for doubtful accounts receivable | 20,800,000 | 3,000,000 | 600,000 | 2,300,000 | |||||||||||
Allowance for doubtful accounts written off | 3,800,000 | 500,000 | 1,300,000 | 2,100,000 | |||||||||||
Number of subsidiaries disposed off | subsidiary | 3 | ||||||||||||||
Advertising expenses | 10,100,000 | 1,500,000 | 20,000,000 | 100,000 | |||||||||||
Cash and cash equivalents | 58,063,733 | 428,420,773 | $ 8,418,450 | ||||||||||||
Unrestricted government subsidies from local government | 60,000 | $ 10,000 | 100,000 | ¥ 100,000 | |||||||||||
Realized gain not believed taxable | ¥ | ¥ 10,800,000 | ||||||||||||||
Number of operating segment | segment | 2 | 2 | |||||||||||||
Deferred Revenue | ¥ | ¥ 0 | 0 | |||||||||||||
Red 5 Studios, Inc. ("Red 5") | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Percentage of shares acquired | 34.71% | 34.71% | |||||||||||||
Controlled by PRC State Administration for Foreign Exchange, under authority of People's Bank of China | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Cash and cash equivalents | ¥ 14,200,000 | ¥ 19,700,000 | $ 2,100,000 | ||||||||||||
February 2020 Note | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Principal amount | $ 500,000 | ||||||||||||||
February Note | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Principal amount | $ 5,000,000 | $ 5,000,000 | |||||||||||||
March Note | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Principal amount | $ 20,000,000 | $ 20,000,000 | |||||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Principal amount | $ 5,500,000 | $ 5,500,000 | |||||||||||||
Minimum | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
Share-based awards vesting period | 1 year | 1 year | |||||||||||||
Maximum | |||||||||||||||
PRINCIPAL ACCOUNTING POLICIES | |||||||||||||||
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, 2022 |
CONVENIENCE TRANSLATION | |
Exchange rates used to translate amounts from RMB to US$ | 6.8972 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
VARIABLE INTEREST ENTITIES | |||||
Total assets | ¥ 599,106,683 | ¥ 1,310,318,375 | $ 86,862,304 | ||
Total liabilities | 571,568,330 | 546,862,815 | 82,869,618 | ||
Revenue | 118,887,879 | $ 17,237,122 | 135,875,140 | ¥ 625,488 | |
Net loss | (974,859,050) | (141,341,275) | (411,234,755) | 397,883,388 | |
Variable interest entity, primary beneficiary | Before elimination of intercompany balances and transactions | |||||
VARIABLE INTEREST ENTITIES | |||||
Total assets | 21,943,116 | 28,596,733 | 3,181,453 | ||
Total liabilities | 272,939,140 | 282,163,247 | $ 39,572,455 | ||
Revenue | 655,201 | 94,995 | 1,278,918 | 625,488 | |
Net loss | ¥ (23,286,056) | $ (3,376,161) | ¥ (23,621,808) | ¥ (52,410,094) |
VARIABLE INTEREST ENTITIES - Ad
VARIABLE INTEREST ENTITIES - Additional Information (Details) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
VARIABLE INTEREST ENTITIES | ||||
Percentage of operating profit generated by the VIEs | 90% | |||
Initial term of exclusive technical service agreement | 20 years | |||
VIEs contribution on net revenue | 0.60% | 0.90% | 100% | |
VIEs account on total assets | 3.70% | 2.20% | ||
VIEs account on total liabilities | 47.80% | 51.60% |
ADVANCES TO SUPPLIERS (Details)
ADVANCES TO SUPPLIERS (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Advances to suppliers | |||
Advances to suppliers | ¥ 30,345 | $ 4,400 | ¥ 2,781,139 |
Other | |||
Advances to suppliers | |||
Advances to suppliers | ¥ 30,345 | $ 4,400 | ¥ 2,781,139 |
ADVANCES TO SUPPLIERS - Additio
ADVANCES TO SUPPLIERS - Additional Information (Detail) ¥ in Millions | 1 Months Ended | 12 Months Ended | |||||||||||
Feb. 06, 2018 USD ($) | Feb. 06, 2018 CNY (¥) | Sep. 30, 2020 USD ($) | Jul. 31, 2020 USD ($) | Jul. 31, 2019 USD ($) | Jul. 31, 2019 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | |
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 receivable 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 | $ 0 | ¥ 0 | ¥ 20.7 | $ 900,000 | ¥ 6 | ||||||||
Inner Mongolia Culture Assets and Equity Exchange | CrossFire New Mobile Game | |||||||||||||
Advances to suppliers | |||||||||||||
Financing service fee paid | $ 1,000,000 | ¥ 6.9 | |||||||||||
Number of tokens subscribed | 2,222,222 |
PREPAYMENTS AND OTHER CURRENT_3
PREPAYMENTS AND OTHER CURRENT ASSETS, NET (Details) | 1 Months Ended | 12 Months Ended | |||||
Mar. 31, 2021 USD ($) item | Dec. 31, 2022 CNY (¥) item | Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) item | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | |
PREPAYMENTS AND OTHER CURRENT ASSETS, NET | |||||||
Employee advances | ¥ 1,785,204 | $ 258,830 | ¥ 1,294,840 | ||||
Input VAT recoverable | 2,632,299 | 381,647 | 2,310,475 | ||||
Prepayments and deposits | 266,027,845 | 38,570,412 | 465,073,710 | ||||
Receivable in relating to disposal of a subsidiary | ¥ | 55,251,240 | ||||||
Other receivables, net of allowance for doubtful accounts of RMB 6,619,312 and RMB 5,655,941, as of December 31, 2020 and 2021, respectively | 2,042,230 | 296,096 | 4,179,023 | ||||
Prepayments and other current assets, total | 272,487,578 | $ 39,506,985 | 528,109,288 | $ 82,871,871 | |||
Purchase of Antminer Bitcoin Mining Machines | item | 24,000 | ||||||
Total consideration payable for Bitcoin mining machines | $ | $ 82,800,000 | ||||||
Perpayments for purchased servers for the cryptocurrency business | ¥ 513,700,000 | $ 74,500,000 | |||||
Number of antminer bitcoin mining machines received and confirmed as fixed assets | item | 11,614 | 11,614 | |||||
Antminer Bitcoin Mining Machines | ¥ 273,200,000 | $ 39,600,000 | |||||
Other receivables, allowance for doubtful accounts | ¥ | ¥ 22,738,176 | ¥ 5,655,941 | |||||
Total payment commitment | 135,500,000 | $ 19,600,000 | |||||
Prepayments of service agreements | ¥ 23,700,000 | $ 3,400,000 |
INVESTMENTS (Details)
INVESTMENTS (Details) | 1 Months Ended | 12 Months Ended | |||||||||||
Aug. 31, 2021 | Aug. 31, 2020 | Jun. 30, 2019 | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | Jul. 31, 2022 shares | Apr. 30, 2022 CNY (¥) | Apr. 30, 2022 USD ($) | Feb. 28, 2022 CNY (¥) | Feb. 28, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2021 USD ($) | |
INVESTMENTS | |||||||||||||
Investments in equity investees | ¥ 35,297,395 | ¥ 73,915,119 | $ 5,117,641 | ||||||||||
Shanghai Lingjun Sports Culture Development Co., Ltd. ("Shanghai Lingjun") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 12.76% | ||||||||||||
Zhenjiang Kexin Power System Design and Research Co., Ltd. ("Zhenjiang Kexin") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 9.90% | ||||||||||||
Beijing Weiming Naonao Technology Co. Ltd | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 9.09% | ||||||||||||
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") | |||||||||||||
INVESTMENTS | |||||||||||||
Cost method investments | 855,338 | ¥ 14,349,418 | 124,013 | ||||||||||
Shanghai Ronglei Culture Communication Co., Ltd. [Member] | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 12.92% | ||||||||||||
Cost method investments | 5,000,000 | 724,932 | |||||||||||
Nano Labs, Ltd. [Member] | |||||||||||||
INVESTMENTS | |||||||||||||
Investments in equity investees | ¥ 584,566 | 84,754 | |||||||||||
Ordinary shares obtain | shares | 260,642 | ||||||||||||
Gameway Pte.Ltd. [Member] | |||||||||||||
INVESTMENTS | |||||||||||||
Equity method investments | ¥ 600,000 | $ 90,000 | |||||||||||
Percentage of equity interest | 1.25% | 1.25% | |||||||||||
Cost method investments | ¥ 634,870 | 92,047 | |||||||||||
Zte9 Network Technology Co. Ltd. Wuxi | |||||||||||||
INVESTMENTS | |||||||||||||
Equity method investment ownership ( as a percentage) | 5% | 5% | |||||||||||
Skychain Technologies Inc. ("Skychain") | |||||||||||||
INVESTMENTS | |||||||||||||
Equity method investments | ¥ 4,609,500 | $ 1,500,000 | |||||||||||
Equity method investment ownership ( as a percentage) | 9.81% | 9.81% | |||||||||||
Cost method investments | ¥ 10,653,015 | $ 15.11 | |||||||||||
Maxline Holdings Limited Maxline | |||||||||||||
INVESTMENTS | |||||||||||||
Equity method investment ownership ( as a percentage) | 29% | 29% | |||||||||||
Nanyang Herbs Pte Ltd | |||||||||||||
INVESTMENTS | |||||||||||||
Equity method investment ownership ( as a percentage) | 50% | 50% | |||||||||||
Shanghai The9 Education Technology Co Ltd | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 19.20% | ||||||||||||
Dragonfly Ventures II, L.P. ("Dragonfly") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 1.19% | ||||||||||||
Cost method investments | 19,519,950 | ¥ 19,519,950 | 2,830,127 | ||||||||||
Redblock Inc. ("Redblock") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 1% | ||||||||||||
Cost method investments | 1,942,860 | ¥ 1,942,860 | 281,688 | ||||||||||
Zhenjiang Kexin Power System Design and Research Co., Ltd. ("Zhenjiang Kexin") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 9.90% | ||||||||||||
Shangdong Shanyeyunye Culture Co. Ltd | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 10% | ||||||||||||
BeijingNaonao | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 9.09% | ||||||||||||
Shanghai Lingjun Sports Culture Development Co., Ltd. ("Shanghai Lingjun") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 12.76% | ||||||||||||
Cost method investments | ¥ 6,000,000 | ||||||||||||
Hangzhou Lianfang Technology Co., Ltd. ("Hangzhou Lianfang") | |||||||||||||
INVESTMENTS | |||||||||||||
Percentage of equity interest | 4% | 4% | |||||||||||
Cost method investments | ¥ 2,000,000 | ||||||||||||
Shanghai Institute Of Visual Art Of Fudan University | |||||||||||||
INVESTMENTS | |||||||||||||
Cost method investments | $ | $ 1.28 | ||||||||||||
SMI Vantage("SMI") | |||||||||||||
INVESTMENTS | |||||||||||||
Equity method investments | ¥ 2,100,000 | $ 300,000 | |||||||||||
Investments in equity investees | ¥ 6,759,811 | ¥ 14,850,376 | $ 980,080 | $ 9.10 |
INVESTMENTS - Additional Inform
INVESTMENTS - Additional Information (Details) $ in Millions | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||
Jul. 21, 2021 shares | Mar. 31, 2023 CNY (¥) | Mar. 31, 2023 USD ($) | Aug. 31, 2022 CNY (¥) | Aug. 31, 2022 USD ($) | Jul. 31, 2022 CNY (¥) shares | Jul. 31, 2022 USD ($) | Aug. 31, 2021 CNY (¥) | Aug. 31, 2021 USD ($) | Jun. 30, 2021 CNY (¥) | Nov. 30, 2020 USD ($) shares | Aug. 31, 2020 CNY (¥) | Jun. 30, 2020 CNY (¥) | Aug. 31, 2022 shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) | Jul. 31, 2022 USD ($) shares | Apr. 30, 2022 CNY (¥) | Apr. 30, 2022 USD ($) | Feb. 28, 2022 CNY (¥) | Feb. 28, 2022 USD ($) | Dec. 31, 2021 USD ($) | Aug. 31, 2021 USD ($) | Jul. 31, 2021 CNY (¥) | Jul. 31, 2021 USD ($) | Jun. 30, 2021 USD ($) | Apr. 30, 2021 CAD ($) | Mar. 31, 2021 CNY (¥) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Aug. 31, 2020 USD ($) | Jun. 30, 2020 USD ($) | Feb. 29, 2020 | Apr. 30, 2019 USD ($) | |
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
(Impairment) gain on other investments | ¥ 30,000,000 | ¥ 17,200,000 | ¥ 18,000,000 | $ 4,300,000 | |||||||||||||||||||||||||||||||||||||
Gain on disposal of equity investment and available-for-sale investments | 711,914 | $ 100,000 | 0 | 174,295 | |||||||||||||||||||||||||||||||||||||
Impairment on equity investments | 17,300,000 | 2,501,380 | 7,599,505 | 1,172,755 | |||||||||||||||||||||||||||||||||||||
Income (Loss) from Equity Method Investments | (1,725,152) | (2,165,935) | |||||||||||||||||||||||||||||||||||||||
Gain on disposal of investment in equity investee and available-for-sales investment | 711,914 | 103,218 | 174,295 | ||||||||||||||||||||||||||||||||||||||
Gain on investment | 14,300,000 | $ 2,100,000 | |||||||||||||||||||||||||||||||||||||||
Recognized a loss on change in investment | ¥ 13,500,000 | $ 2,000,000 | 23,400,000 | 3,400,000 | |||||||||||||||||||||||||||||||||||||
Shanyeyunye | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | $ | $ 900,000 | ||||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 10% | 10% | |||||||||||||||||||||||||||||||||||||||
Nanyang Herbs | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Impairment in equity and other investments | ¥ 0 | 3,300,000 | |||||||||||||||||||||||||||||||||||||||
Skychain Technologies Inc. ("Skychain") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Amount of investment agreed | ¥ 10,600,000 | $ 4 | |||||||||||||||||||||||||||||||||||||||
Amount invested | ¥ 4,609,500 | $ 1,500,000 | |||||||||||||||||||||||||||||||||||||||
Percentage of shares acquired | 9.81% | 9.81% | |||||||||||||||||||||||||||||||||||||||
Percentage of debentures acquired | 15.11% | ||||||||||||||||||||||||||||||||||||||||
Investments for Debentures | ¥ 10,600,000 | 1,500,000 | |||||||||||||||||||||||||||||||||||||||
Renewal term of debenture | 12 months | ||||||||||||||||||||||||||||||||||||||||
Debenture, interest rate | 1% | ||||||||||||||||||||||||||||||||||||||||
Impairment on equity investments | ¥ 1,700,000 | 200,000 | |||||||||||||||||||||||||||||||||||||||
Impairment loss | 15,300,000 | $ 2,200,000 | ¥ 4,300,000 | 600,000 | |||||||||||||||||||||||||||||||||||||
Equity method investment ownership ( as a percentage) | 9.81% | 9.81% | |||||||||||||||||||||||||||||||||||||||
Nanyang Herbs | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Percentage of shares acquired | 50% | ||||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 3,300,000 | 3,300,000 | $ 500,000 | $ 500,000 | |||||||||||||||||||||||||||||||||||||
Equity method investment ownership ( as a percentage) | 50% | ||||||||||||||||||||||||||||||||||||||||
Principal Investment Gain (Loss) | ¥ 3,300,000 | $ 500,000 | 3,300,000 | $ 500,000 | |||||||||||||||||||||||||||||||||||||
Dragonfly Ventures II, L.P. ("Dragonfly") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 19,500,000 | $ 2,800,000 | |||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 1.19% | 1.19% | |||||||||||||||||||||||||||||||||||||||
Redblock Inc. ("Redblock") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 1,900,000 | $ 300,000 | |||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 1% | 1% | |||||||||||||||||||||||||||||||||||||||
SMI Vantage("SMI") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Amount invested | ¥ 2,100,000 | $ 300,000 | |||||||||||||||||||||||||||||||||||||||
Investment income (loss) | 10,200,000 | 1,500,000 | |||||||||||||||||||||||||||||||||||||||
Income (loss) Investment income | ¥ 8,300,000 | $ 1,200,000 | |||||||||||||||||||||||||||||||||||||||
Common Stock, Value, Subscriptions | ¥ 1,600,000 | $ 200,000 | |||||||||||||||||||||||||||||||||||||||
Share exercised options paid | ¥ 4,900,000 | $ 700,000 | |||||||||||||||||||||||||||||||||||||||
Shanghai Lingjun Sports Culture Development Co., Ltd. ("Shanghai Lingjun") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | 6,000,000 | ||||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 12.76% | 12.76% | |||||||||||||||||||||||||||||||||||||||
Investment payback | ¥ 1,500,000 | $ 200,000 | 4,500,000 | 700,000 | |||||||||||||||||||||||||||||||||||||
Hangzhou Lianfang Technology Co., Ltd. ("Hangzhou Lianfang") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Impairment loss | ¥ 2,000,000 | $ 300,000 | |||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 2,000,000 | $ 300,000 | |||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 4% | 4% | 4% | 4% | |||||||||||||||||||||||||||||||||||||
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | $ | $ 5,000,000 | $ 5,000,000 | |||||||||||||||||||||||||||||||||||||||
Shares acquisition after merger | shares | 423,053 | 423,053 | 423,053 | ||||||||||||||||||||||||||||||||||||||
Gain on investment | ¥ 37,700,000 | $ 5,500,000 | |||||||||||||||||||||||||||||||||||||||
Lock-up period | 6 months | ||||||||||||||||||||||||||||||||||||||||
Investment recognition recorded | $ | $ 0 | ||||||||||||||||||||||||||||||||||||||||
FF Intelligent Mobility Global Holdings Ltd. ("FF Intelligent") | Class B ordinary shares | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Common stock issued | shares | 2,994,011 | ||||||||||||||||||||||||||||||||||||||||
Shanyeyunye | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Impairment loss | 5,000,000 | 700,000 | |||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 5,000,000 | 1,400,000 | 4,700,000 | $ 200,000 | $ 500,000 | $ 700,000 | $ 700,000 | ||||||||||||||||||||||||||||||||||
Percentage of equity interest | 10% | ||||||||||||||||||||||||||||||||||||||||
Shanyeyunye | Shanyeyunye | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 3,300,000 | ||||||||||||||||||||||||||||||||||||||||
BeijingNaonao | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Impairment loss | 3,000,000 | 400,000 | |||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 3,000,000 | $ 400,000 | |||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 9.09% | ||||||||||||||||||||||||||||||||||||||||
SIVA | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Impairment loss | 10,000,000 | $ 1,400,000 | |||||||||||||||||||||||||||||||||||||||
Income (Loss) from Equity Method Investments | 0 | 1,700,000 | 2,200,000 | ||||||||||||||||||||||||||||||||||||||
Impairment in equity and other investments | ¥ 19,200,000 | ||||||||||||||||||||||||||||||||||||||||
Shanghai Ronglei Culture Communication Co Ltd | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Amount of investment agreed | ¥ 2,000,000 | $ 300,000 | |||||||||||||||||||||||||||||||||||||||
Investment recognition recorded | 3,000,000 | 400,000 | ¥ 5,000,000 | $ 700,000 | |||||||||||||||||||||||||||||||||||||
Nano Labs, Ltd. [Member] | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Investment made | ¥ 20,200,000 | $ 3,000,000 | |||||||||||||||||||||||||||||||||||||||
Number of shares sold | shares | 187,656 | ||||||||||||||||||||||||||||||||||||||||
Gain on investment | ¥ 700,000 | $ 100,000 | ¥ 15,200,000 | $ 2,200,000 | |||||||||||||||||||||||||||||||||||||
Ordinary shares obtain | shares | 260,642 | 260,642 | |||||||||||||||||||||||||||||||||||||||
Recognized a loss on change in investment | ¥ 4,300,000 | $ 600,000 | |||||||||||||||||||||||||||||||||||||||
Gameway Pte.Ltd. [Member] | |||||||||||||||||||||||||||||||||||||||||
INVESTMENTS. | |||||||||||||||||||||||||||||||||||||||||
Amount invested | ¥ 600,000 | $ 90,000 | |||||||||||||||||||||||||||||||||||||||
Percentage of equity interest | 1.25% | 1.25% | 1.25% | 1.25% |
PROPERTY, EQUIPMENT AND SOFTW_3
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) |
Property, equipment and software, net | ||||
Less: accumulated depreciation and amortization | ¥ (137,847,601) | $ (19,986,024) | ¥ (58,733,348) | |
Property plant and equipment, net | 142,847,637 | 20,710,961 | 172,980,284 | $ 27,144,381 |
Computer and equipment | ||||
Property, equipment and software, net | ||||
Property plant and equipment, gross | 265,098,467 | 38,435,665 | 215,468,985 | |
Office furniture and fixtures | ||||
Property, equipment and software, net | ||||
Property plant and equipment, gross | 1,710,298 | 247,970 | 1,738,419 | |
Motor vehicles | ||||
Property, equipment and software, net | ||||
Property plant and equipment, gross | 3,344,272 | 484,874 | 3,982,228 | |
Software | ||||
Property, equipment and software, net | ||||
Property plant and equipment, gross | ¥ 10,542,201 | $ 1,528,476 | ¥ 10,524,000 |
PROPERTY, EQUIPMENT AND SOFTW_4
PROPERTY, EQUIPMENT AND SOFTWARE, NET - Additional Information (Details) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Property, equipment and software, net | ||||
Depreciation and amortization of property, equipment and software | ¥ 91,380,588 | $ 13,248,940 | ¥ 47,435,448 | ¥ 447,782 |
Gain (Loss) on Disposition of Property Plant Equipment | 8,800,000 | 1,300,000 | 3,900,000 | 30,000 |
Impairment on equipment | 176,900,000 | 25,600,000 | 11,600,000 | 0 |
Cost of revenues | ||||
Property, equipment and software, net | ||||
Depreciation and amortization charges | 45,400,000 | 6,600,000 | 16,600,000 | 0 |
General and administrative expense | ||||
Property, equipment and software, net | ||||
Depreciation and amortization charges | ¥ 46,000,000 | $ 6,600,000 | ¥ 30,800,000 | ¥ 400,000 |
CRYPTOCURRENCIES Summary of int
CRYPTOCURRENCIES Summary of intangible assets (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) |
CRYPTOCURRENCIES | ||||
Intangible assets - cryptocurrencies | ¥ 66,341,653 | $ 9,618,636 | ¥ 86,118,349 | $ 13,513,848 |
Bitcoins | ||||
CRYPTOCURRENCIES | ||||
Intangible assets - cryptocurrencies | 60,576,929 | 8,782,829 | 77,693,877 | |
Tether | ||||
CRYPTOCURRENCIES | ||||
Intangible assets - cryptocurrencies | 29,318 | 4,251 | ¥ 8,424,472 | |
Ethereum | ||||
CRYPTOCURRENCIES | ||||
Intangible assets - cryptocurrencies | 4,924,572 | 713,996 | ||
Filecoin | ||||
CRYPTOCURRENCIES | ||||
Intangible assets - cryptocurrencies | 808,711 | 117,252 | ||
Binance Coin | ||||
CRYPTOCURRENCIES | ||||
Intangible assets - cryptocurrencies | ¥ 2,123 | $ 308 |
CRYPTOCURRENCIES - Additional i
CRYPTOCURRENCIES - Additional information about Bitcoins (Details) | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Additional information about BTC | |||
Realized gain or loss | ¥ 10,864,747 | $ 1,575,240 | |
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Operating Expenses | Operating Expenses | |
Bitcoins | |||
Additional information about BTC | |||
Opening balance | ¥ 77,693,877 | ||
Receipt of BTC from Cryptocurrency mining | 101,782,024 | ¥ 128,598,905 | |
Interest income | 937 | ||
Sales of BTC in exchange of cash | (5,637,172) | ||
Exchange of BTC into other cryptocurrency | (67,987,322) | ||
Used in operating activities | (1,121,887) | (17,556) | |
Realized gain or loss | 11,078,688 | ||
Less: Impairment of cryptocurrencies | (55,232,216) | (50,887,472) | |
Ending balance | ¥ 60,576,929 | ¥ 77,693,877 |
CRYPTOCURRENCIES - Additional_2
CRYPTOCURRENCIES - Additional information about ETH (Details) | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Additional information about ETH | |||
Realized gain or loss | ¥ 10,864,747 | $ 1,575,240 | |
Ethereum [Member] | |||
Additional information about ETH | |||
Opening balance | 0 | $ 0 | |
Receipt of ETH from NFT business | 9,573,703 | ||
Receipt of ETH from Games | 154,359 | ||
Additions from exchange of BTC&USDT | 4,087,824 | ||
Interest income | 1,019 | ||
Used in operating activities | (6,152,339) | ||
Realized gain or loss | (213,941) | ||
Less: Impairment of cryptocurrencies | (2,526,053) | ||
Ending balance | $ 4,924,572 | $ 0 |
CRYPTOCURRENCIES - Additional_3
CRYPTOCURRENCIES - Additional Information (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2021 item | Dec. 31, 2022 CNY (¥) item | Dec. 31, 2022 USD ($) | |
Number of bitcoin owned | 542 | ||
Number of bitcoin pledged | 70 | ||
Number of tether owned | 4,210 | ||
Filecoin Mining | |||
Number of Cryptocurrency Units Owned | 48,800 | ||
Number of bitcoin owned | 110 | ||
Number of tether owned | 1,500,000 | ||
Bitcoins | |||
Number of pledged bitcoins released | 0 | ||
Value of pledged bitcoins | ¥ 7.8 | $ 1.1 | |
Ethereum [Member] | |||
Number of Cryptocurrency Units Owned | 706 | ||
Filecoin [Member] | |||
Number of Cryptocurrency Units Owned | 39,152 | ||
Number of pledged bitcoins released | 0 | ||
Value of pledged bitcoins | ¥ 0.6 | $ 0.1 | |
Under Pledge | |||
Number of bitcoin owned | 70 | ||
Released from pledge | |||
Number of bitcoin owned | 40 | ||
Number of tether owned | 1,500,000 |
LEASES - Operating leases recog
LEASES - Operating leases recognized in balance sheet (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
LEASES | |||
Operating lease right-of-use assets | ¥ 12,061,697 | $ 1,748,782 | ¥ 6,363,724 |
Current portion of operating lease liabilities | 5,792,931 | 839,896 | 4,306,738 |
Non-current portion of operating lease liabilities | ¥ 7,405,805 | $ 1,073,741 | ¥ 2,567,342 |
LEASES - Lease cost (Details)
LEASES - Lease cost (Details) | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
LEASES | |||
Operating lease cost | ¥ 4,254,040 | $ 616,778 | ¥ 4,220,789 |
Cost of other leases with terms less than one year | 87,329 | 12,662 | 62,430 |
Total | ¥ 4,341,369 | $ 629,440 | ¥ 4,283,219 |
LEASES - Maturities of operatin
LEASES - Maturities of operating lease liabilities (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
LEASES | |||
Due within one year | ¥ 6,278,361 | $ 910,277 | ¥ 4,511,953 |
Due in the second year | 5,172,713 | 749,973 | 1,780,332 |
Due in the third year | 2,502,839 | 362,878 | 882,132 |
Total lease payments | 13,953,913 | 2,023,128 | 7,174,417 |
Less: imputed interest | (755,177) | (109,491) | (300,337) |
Total | ¥ 13,198,736 | $ 1,913,637 | ¥ 6,874,080 |
LEASES - Summarizes the lease t
LEASES - Summarizes the lease term and discount rate (Details) | Dec. 31, 2022 |
LEASES | |
Weighted average remaining lease term (in years) | 1 year 2 months 23 days |
Weighted average discount rate | 4.65% |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information related to operating leases (Details) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
LEASES | ||||
Cash paid for amounts included in the measurement of operating lease liabilities | ¥ 2,381,173 | $ 345,238 | ¥ 4,813,050 | ¥ 2,842,464 |
LEASES - Additional information
LEASES - Additional information (Details) - CNY (¥) ¥ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
Prepaid rental expense | ¥ 0 | ¥ 0 |
TAXATION - Composition of incom
TAXATION - Composition of income tax expense (Details) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
TAXATION | ||||
Deferred taxation | ¥ (35,242,565) | $ (5,109,692) | ¥ (178,951,592) | ¥ (18,406,747) |
Change in valuation allowance | 35,242,565 | 5,109,692 | 178,951,592 | 18,406,747 |
Income tax expense | 7,165,097 | |||
Domestic tax authority | ||||
TAXATION | ||||
Current income tax expense | 0 | 0 | 0 | 7,165,097 |
Deferred taxation | (35,242,565) | (5,109,692) | 4,915,611 | 25,905,564 |
Change in valuation allowance | ¥ 35,242,565 | $ 5,109,692 | (4,915,611) | (25,905,564) |
Foreign tax authority | ||||
TAXATION | ||||
Deferred taxation | (183,867,203) | (44,312,311) | ||
Change in valuation allowance | ¥ 183,867,203 | ¥ 44,312,311 |
TAXATION - Reconciliation (Deta
TAXATION - Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
TAXATION | |||
PRC statutory EIT rate | 25% | 25% | 25% |
Effect of different tax rates in other jurisdictions | 0% | 0% | (10.00%) |
Change in future tax rate (upon expiration of preferential rate) | 0% | 0% | 0% |
Change of prior year deferred tax assets | (11.00%) | (19.00%) | 1% |
Change of valuation allowance | (20.00%) | (28.00%) | (10.00%) |
Income not subject to tax and non-deductible expenses, net | 0% | 0% | 0% |
Effect of expired net operating loss | 6% | 22% | (6.00%) |
PRC withholding tax | 0% | 0% | 2% |
Effective EIT rate | 0% | 0% | 2% |
TAXATION - Components of deferr
TAXATION - Components of deferred tax assets (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) |
TAXATION | |||||
Temporary differences related to expenses and accruals | ¥ 838,333 | $ 121,547 | ¥ 1,059,821 | ||
Temporary differences related to impairment on advances to suppliers | 1,955,941 | 283,585 | 1,955,941 | ||
Temporary differences related to provision for doubtful accounts | 631,200 | 91,515 | 631,200 | ||
Temporary differences related to depreciation, amortization, and impairment of equipment and intangible assets | (3,466,064) | (502,532) | 17,022,219 | ||
Startup expenses and advertising fees | 105,917 | 15,357 | 105,917 | ||
Temporary differences related to equity investments | 9,252,558 | 1,341,495 | 11,740,058 | ||
Temporary differences related to provision for prepayment for equipment | 0 | 0 | 5,000,000 | ||
Tax loss carry forwards | 79,322,053 | 11,500,617 | 86,367,347 | ||
Total deferred tax assets | 88,639,938 | 12,851,584 | 123,882,503 | ||
Less: Valuation allowance | (88,639,938) | (12,851,584) | (123,882,503) | $ (17,961,276) | ¥ (302,834,095) |
Total deferred tax assets | ¥ 0 | $ 0 | ¥ 0 |
TAXATION - Valuation allowance
TAXATION - Valuation allowance (Details) | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
TAXATION | |||
Beginning Balance | ¥ 123,882,503 | $ 17,961,276 | ¥ 302,834,095 |
Decrease in valuation allowance | (35,200,000) | (5,109,692) | (178,951,592) |
Ending Balance | ¥ 88,639,938 | $ 12,851,584 | ¥ 123,882,503 |
TAXATION - Additional Informati
TAXATION - Additional Information (Details) | 1 Months Ended | 12 Months Ended | |||||||
Dec. 22, 2017 | Oct. 31, 2017 | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2020 USD ($) | |
TAXATION | |||||||||
Statutory tax rate | 25% | 25% | 25% | 25% | 25% | ||||
Preferential enterprise income tax rate for three years | 15% | 15% | |||||||
Increase (decrease) in valuation allowance | $ 5,109,692 | ¥ 35,200,000 | ¥ 178,951,592 | ||||||
Effective Income Tax Rate Reconciliation, Equity in Earnings (Losses) of Unconsolidated Subsidiary, Amount | 0 | $ 0 | |||||||
Net operating loss carry forwards | ¥ | ¥ 317,300,000 | ||||||||
Deferred taxation | $ (5,109,692) | ¥ (35,242,565) | (178,951,592) | ¥ (18,406,747) | |||||
Withholding income tax rate for dividends from profits of foreign invested enterprises | 10% | 10% | |||||||
Income tax, statute of limitation under special circumstance | 10 years | 10 years | |||||||
Minimum | |||||||||
TAXATION | |||||||||
Statutory tax rate | 21% | 21% | |||||||
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% | 5% | |||||||
Percentage of beneficial interest owned | 25% | 25% | |||||||
Income tax, statute of limitation | 3 years | 3 years | |||||||
Maximum | |||||||||
TAXATION | |||||||||
Statutory tax rate | 34% | ||||||||
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% | 10% | |||||||
Percentage of beneficial interest owned | 25% | 25% | |||||||
Income tax, statute of limitation | 5 years | 5 years | |||||||
Shanghai The9 Information Technology Co., Ltd. ("Shanghai IT") | |||||||||
TAXATION | |||||||||
Preferential enterprise income tax rate for three years | 15% | ||||||||
CAYMAN ISLANDS | |||||||||
TAXATION | |||||||||
Accrued Withholding Income Tax Amount | $ 0 | ||||||||
Hong Kong | |||||||||
TAXATION | |||||||||
Accrued Withholding Income Tax Amount | 0 | 0 | $ 0 | ||||||
Singapore | |||||||||
TAXATION | |||||||||
Accrued Withholding Income Tax Amount | $ 0 | $ 0 | $ 0 | ||||||
United states | |||||||||
TAXATION | |||||||||
Statutory tax rate | 21% | 21% | |||||||
State income tax rate | 8.70% | 8.70% | |||||||
Foreign tax authority | |||||||||
TAXATION | |||||||||
Deferred taxation | ¥ | ¥ (183,867,203) | ¥ (44,312,311) |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Funds raised for CrossFire New Mobile Game | ¥ 30,254,560 | $ 4,386,499 | ¥ 30,384,772 |
Professional services | 2,178,267 | 315,819 | 4,480,561 |
Agency commission fees payable | 2,940,840 | 426,382 | 6,397,096 |
Staff cost related payables | 6,976,762 | 1,011,535 | 6,505,481 |
Office expenses | 1,099,142 | 159,361 | 1,439,218 |
Product development services | 1,028,127 | 149,064 | 992,730 |
Other payables | 3,527,013 | 511,369 | 33,808,410 |
Lawsuit dues | 17,199,963 | 2,493,760 | 54,703,506 |
Others | 1,768,903 | 256,467 | 1,487,807 |
Total | ¥ 66,973,577 | $ 9,710,256 | ¥ 140,199,581 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Additional Information (Details) | 1 Months Ended | 12 Months Ended | ||||||||||
Apr. 30, 2020 CNY (¥) | Apr. 30, 2020 USD ($) | Oct. 31, 2016 CNY (¥) | Oct. 31, 2016 USD ($) | Sep. 30, 2016 CNY (¥) | Sep. 30, 2016 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Apr. 30, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Oct. 31, 2016 USD ($) | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||||||
Funds raised for the development of CrossFire new mobile game | ¥ 30,254,560 | $ 4,386,499 | ¥ 30,384,772 | |||||||||
Settlement of outstanding claims | $ 8,600,000 | |||||||||||
Payables under share purchase agreement | 17,200,000 | 3,000,000 | ||||||||||
Inner Mongolia Culture Assets and Equity Exchange | CrossFire New Mobile Game | ||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||||||
Funds raised for the development of CrossFire new mobile game | ¥ 57,500,000 | 57,500,000 | 8,300,000 | $ 8,300,000 | ||||||||
Additional funds aimed to be raised for the development of CrossFire new mobile game | 100,000,000 | 100,000,000 | 4,500,000 | $ 14,500,000 | ||||||||
Principal amount of refund claimed through civil suit | ¥ 57,500,000 | $ 9,000,000 | ¥ 57,500,000 | $ 8,300,000 | ||||||||
Interest amount of refund claimed through civil suit | ¥ 4,600,000 | $ 700,000 | ¥ 4,600,000 | $ 700,000 | ||||||||
Collaborator | ||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||||||
Proceeds from loan | 2,500,000 | $ 400,000 | ||||||||||
Repayments of loan | 500,000 | $ 70,000 | ||||||||||
Short-term Debt | 2,000,000 | 300,000 | ||||||||||
51miner Limited | ||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||||||
Payables under share purchase agreement | 30,600,000 | 4,800,000 | ||||||||||
Niulian | ||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||||||||||
Payables under share purchase agreement | ¥ 1,530,000 | $ 200,000 |
Refund of WoW Game Points (Deta
Refund of WoW Game Points (Details) | 1 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2011 | Dec. 31, 2011 CNY (¥) | Dec. 31, 2011 USD ($) | Dec. 31, 2009 | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Jun. 07, 2009 CNY (¥) | Jun. 07, 2009 USD ($) | |
Refund of WoW game points | ||||||||||
Refund of game points | ¥ 169,998,682 | $ 24,647,492 | ¥ 169,998,682 | |||||||
Other operating income | ¥ 26,000,000 | $ 3,800,000 | ||||||||
Legal liability | 2 years | |||||||||
Liability related to refund of WOW game points, release period | 20 years | |||||||||
World of Warcraft ("WoW") | ||||||||||
Refund of WoW game points | ||||||||||
Refund of game points | ¥ 170,000,000 | $ 24,600,000 | ¥ 170,000,000 | $ 24,600,000 | ¥ 200,400,000 | $ 29,100,000 |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) | 1 Months Ended | 11 Months Ended | 12 Months Ended | ||||||||||
Aug. 04, 2022 USD ($) | May 06, 2021 USD ($) shares | Mar. 17, 2021 USD ($) $ / shares Y D | Feb. 02, 2021 USD ($) $ / shares shares | Feb. 28, 2021 USD ($) shares | Dec. 31, 2021 USD ($) | Dec. 31, 2022 CNY (¥) Y $ / shares | Dec. 31, 2022 USD ($) Y $ / shares | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Aug. 31, 2022 USD ($) | Aug. 22, 2022 Y $ / shares | Mar. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||||||||
Legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred | $ 15,000 | ||||||||||||
Proceeds from the issuance of convertible note | ¥ 33,704,460 | $ 4,886,687 | ¥ 161,588,128 | ¥ 3,358,369 | |||||||||
February Note | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Principal amount | $ 5,000,000 | $ 5,000,000 | |||||||||||
Interest rate (as a percent) | 6% | 6% | |||||||||||
Repayments of convertible notes | $ 5,000,000 | ||||||||||||
Ordinary shares | shares | 14 | ||||||||||||
Amount of fair value | $ 900,000 | ||||||||||||
Initial carrying value | $ 1,700,000 | ||||||||||||
March Note | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Principal amount | $ 20,000,000 | $ 20,000,000 | |||||||||||
Interest rate (as a percent) | 6% | 6% | |||||||||||
Ordinary shares | shares | 3,277,050 | ||||||||||||
Amount of fair value | $ 2,444,444 | ||||||||||||
March Note | Dividend Yield | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | 0 | 0 | 0 | ||||||||||
March Note | Expected Volatility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | 205.94 | 107.09 | 107.09 | ||||||||||
March Note | Weighted Average Risk-free Interest Rate | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | 0.07 | 4.73 | 4.73 | ||||||||||
March Note | Expected Life | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | Y | 1 | 1.21 | 1.21 | ||||||||||
March Note | Estimated Fair Value of Price Per Share | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | $ / shares | 42.39 | 0.44 | 0.44 | ||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Principal amount | $ 5,500,000 | $ 5,500,000 | |||||||||||
Debt instrument redemption percentage | 6% | ||||||||||||
Original issue discount | $ 500,000 | ||||||||||||
Proceeds from the issuance of convertible note | $ 4,985,000 | ||||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | Dividend Yield | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | 0 | 0 | 0 | ||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | Expected Volatility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | 107.08 | 107.08 | 107.02 | ||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | Weighted Average Risk-free Interest Rate | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | 4.73 | 4.73 | 3.11 | ||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | Expected Life | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | Y | 0.59 | 0.59 | 1 | ||||||||||
Convertible Debenture Agreement, Six Percent, August 2022 [Member] | Estimated Fair Value of Price Per Share | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Fair value of conversion option | $ / shares | 0.44 | 0.44 | 1.20 | ||||||||||
Class A ordinary shares | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Ordinary shares | shares | 30 | ||||||||||||
Shares subject to redemption price per share | $ / shares | $ 0.0001 | ||||||||||||
ADR [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Ordinary shares | shares | 10,000,000 | ||||||||||||
ADR [Member] | February Note | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Ordinary shares | shares | 50,000 | ||||||||||||
Sale of stock price per share | $ / shares | $ 18.5 | ||||||||||||
Conversion price | $ / shares | $ 14 | ||||||||||||
Debt discount | $ 600,000 | ||||||||||||
Amortized discount over the life | 12 months | ||||||||||||
ADR [Member] | March Note | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument redemption percentage | 90% | ||||||||||||
Amount of fair value | $ 2,444,444 | ||||||||||||
Conversion price percentage | 90% | ||||||||||||
Average trading day price | D | 5 | ||||||||||||
ADR [Member] | Convertible Debenture Agreement, Six Percent, August 2022 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument redemption percentage | 90% | 90% | |||||||||||
Conversion price percentage | 90% | 90% | |||||||||||
Average trading day price | Y | 5 | 5 |
CONVERTIBLE NOTES - Summary of
CONVERTIBLE NOTES - Summary of Changes In Convertible Debt, Net of Unamortized Discount (Details) | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Debt Instrument [Line Items] | |||
Balance at January 1, | ¥ 92,848,377 | ||
Issuance of convertible debt, face value | 37,199,800 | ||
Debt discount from derivative liability (embedded conversion option) | (37,199,800) | ||
Debt discount from extension fee | (2,940,840) | ||
Deferred financing fees | (3,483,254) | ||
Conversion of convertible debt into ordinary shares | (50,182,932) | ||
Amortization of debt discount | 16,607,603 | ||
Exchange rate change on convertible notes face value | 8,135,104 | ||
Convertible debt, net at December 31, | 60,984,058 | $ 8,841,857 | ¥ 92,848,377 |
Convertible Notes Payable, Net | |||
Debt Instrument [Line Items] | |||
Exchange rate change on convertible notes face value | ¥ 5,838,382 | ¥ (2,296,722) |
CONVERTIBLE NOTES - Summary o_2
CONVERTIBLE NOTES - Summary of Convertible Notes Outstanding (Details) | 12 Months Ended | |||||||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Aug. 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Mar. 17, 2021 USD ($) | Feb. 28, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Amortization Of Debt Discount Premium (Interest Expenses ) | $ 3,400,000 | ¥ 23,200,000 | ¥ 120,600,000 | ¥ 2,900,000 | ||||
Exchange rate change on convertible notes face value | 8,135,104 | |||||||
August Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ | $ 5,500,000 | |||||||
March Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ | $ 20,000,000 | $ 20,000,000 | ||||||
February 2021 note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ | $ 5,000,000 | |||||||
Convertible Notes Payable, Net | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 60,984,058 | 92,848,377 | ||||||
Accrued Interest | 1,070,424 | 937,328 | ||||||
Repayment of convertible debt, Principal amount | (57,914,207) | (39,926,775) | ||||||
Repayment of convertible debt, Accrued interest | (11,853,771) | (17,652,626) | ||||||
Exchange rate change on convertible notes face value | 5,838,382 | (2,296,722) | ||||||
Convertible Notes Payable, Net | August Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 37,199,800 | |||||||
Accrued Interest | 911,140 | |||||||
Convertible Notes Payable, Net | March Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 129,956,000 | 129,956,000 | ||||||
Accrued Interest | 12,013,055 | 6,201,653 | ||||||
Convertible Notes Payable, Net | February 2021 note | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 32,195,500 | |||||||
Accrued Interest | 12,388,301 | |||||||
Convertible Notes Payable, Net | Less: Debt Discount | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 54,095,917 | 27,079,626 | ||||||
Convertible Notes Payable, Net | Total | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 115,079,975 | 119,928,003 | ||||||
Accrued Interest | ¥ 1,070,424 | ¥ 937,328 |
CONVERTIBLE NOTES - Summary o_3
CONVERTIBLE NOTES - Summary of Convertible Notes Outstanding (Parenthetical) (Details) - USD ($) | Aug. 31, 2021 | Mar. 31, 2021 | Mar. 17, 2021 | Feb. 28, 2021 | Feb. 02, 2021 |
March Note | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 20,000,000 | $ 20,000,000 | |||
Interest rate (as a percent) | 6% | 6% | |||
February Note | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 5,000,000 | $ 5,000,000 | |||
Interest rate (as a percent) | 6% | 6% | |||
August Note | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 5,500,000 | ||||
Interest rate (as a percent) | 6% |
WARRANTS - Additional Informati
WARRANTS - Additional Information (Details) $ / shares in Units, $ in Millions | Jul. 31, 2022 USD ($) shares | Apr. 30, 2021 USD ($) Y $ / shares shares | Feb. 28, 2021 $ / shares shares | Jan. 31, 2021 USD ($) Y | Dec. 31, 2009 $ / shares |
SHAREHOLDER RIGHTS PLAN | |||||
Exercise price of warrant | $ / shares | $ 19.50 | ||||
Warrants forfeitable, previously granted | 51,972,960 | ||||
Warrants and rights outstanding | $ | $ 92 | ||||
Weighted Average Risk-free Interest Rate | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants, measurement input | 0.37 | 0.18 | |||
Expected Life | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants, measurement input | Y | 3 | 3 | |||
Expected Volatility | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants, measurement input | 236 | 190 | |||
Dividend Yield | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants, measurement input | 0 | ||||
Investors | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Number of shares called by warrants | 207,891,840 | ||||
Over-allotment option | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Fair value of warrants | $ | $ 122 | ||||
ADR | Over-allotment option | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Expiration term of warrants | 3 years | ||||
Class A ordinary shares | Investors | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants issued | 8,108,100 | ||||
Class A ordinary shares | Investors | Tranche I-III | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Share price | $ / shares | $ 0.1233 | ||||
Class A ordinary shares | Investors | Tranche IV | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Share price | $ / shares | $ 0.2667 | ||||
Time Frames of 6 months | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Fair value of warrants | $ | 100 | ||||
Time Frames of 12 months | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Fair value of warrants | $ | 300 | ||||
Time Frames of 24 months | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Fair value of warrants | $ | 500 | ||||
Time Frames of 36 months | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Fair value of warrants | $ | $ 1,000 | ||||
Maxim Groups LLC | Over-allotment option | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Fair value of warrants | $ | $ 94 | ||||
Maxim Groups LLC | ADR | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants issued | 3,765,100 | ||||
Number of shares called by warrants | 2,823,825 | ||||
Share price | $ / shares | $ 0.75 | ||||
Maxim Groups LLC | ADR | Over-allotment option | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants issued | 564,760 | ||||
Number of shares called by warrants | 423,570 | ||||
Maxim Groups LLC | Class A ordinary shares | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants issued | 112,953,000 | ||||
Maxim Groups LLC | Class A ordinary shares | Over-allotment option | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Warrants issued | 16,942,800 | ||||
Maxim Groups LLC | Maximum | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Exercise price of warrant | $ / shares | $ 36 | ||||
Maxim Groups LLC | Minimum | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Exercise price of warrant | $ / shares | $ 33.20 |
SHAREHOLDER RIGHTS PLAN (Detail
SHAREHOLDER RIGHTS PLAN (Details) | Dec. 22, 2021 Vote | May 06, 2019 Vote | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Dec. 31, 2009 $ / shares |
SHAREHOLDER RIGHTS PLAN | |||||
Exercise price of warrant | $ / shares | $ 19.50 | ||||
Jun Zhu and Incsight Limited | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Ordinary shares, shares issued | 861,044,917 | ||||
Ordinary shares, shares outstanding | 861,044,917 | ||||
Class A ordinary shares | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Ordinary shares, shares issued | 847,437,583 | 677,781,251 | |||
Ordinary shares, shares outstanding | 847,437,583 | 677,781,251 | |||
Votes per share | Vote | 1 | ||||
Class A ordinary shares | Jun Zhu and Incsight Limited | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Ordinary shares, shares issued | 847,437,583 | ||||
Class B ordinary shares | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Ordinary shares, shares issued | 13,607,334 | 13,607,334 | |||
Ordinary shares, shares outstanding | 13,607,334 | 13,607,334 | |||
Votes per share | Vote | 100 | 50 | |||
Class B ordinary shares | Jun Zhu and Incsight Limited | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Ordinary shares, shares outstanding | 13,607,334 | ||||
Minimum | |||||
SHAREHOLDER RIGHTS PLAN | |||||
Shareholders rights plan, ownership interest for rights to be exercisable | 15% |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) $ in Thousands, ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
EMPLOYEE BENEFITS | ||||
Employee benefits expenses related to full-time employees of subsidiaries and VIE subsidiaries incorporated in PRC | ¥ 6.4 | $ 930 | ¥ 4.1 | ¥ 1.2 |
SHARE-BASED COMPENSATION - (Det
SHARE-BASED COMPENSATION - (Details) | 12 Months Ended | |||||||||||||||||||
Sep. 15, 2021 shares | Feb. 14, 2021 USD ($) shares | Jun. 17, 2020 shares | Jan. 21, 2019 shares | Sep. 04, 2018 shares | Jan. 24, 2018 shares | Jun. 06, 2017 $ / shares shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Aug. 31, 2021 shares | Jul. 31, 2021 shares | Dec. 31, 2018 shares | Aug. 31, 2016 shares | Nov. 30, 2015 shares | Dec. 31, 2013 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Equity granted | 15,000,000 | 30,000,000 | ||||||||||||||||||
Share-based compensation expenses | ¥ 202,345,626 | $ 29,337,358 | ¥ 150,166,481 | ¥ 55,056,426 | ||||||||||||||||
Directors, officers and consultants | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Number of options cancelled | 15,000,000 | 6,200,000 | ||||||||||||||||||
Class A ordinary shares | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Number of awards granted | 44,290,560 | 33,090,000 | ||||||||||||||||||
Granted | 4,950,000 | 900,000 | ||||||||||||||||||
Share options granted | 4,950,000 | 900,000 | ||||||||||||||||||
Common stock par value | $ / shares | $ 0.01 | $ 0.01 | ||||||||||||||||||
Market capitalization | $ | $ 500,000,000 | |||||||||||||||||||
2004 Option Plan | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Number of options cancelled | 10,806,665 | |||||||||||||||||||
Maximum aggregate number of ordinary shares approved for issuance | 250,000,000 | 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 | |||||||||||||||||||
ordinary shares, available for future grants | 108,073,400 | |||||||||||||||||||
Number of options exercised | 6,328,535 | |||||||||||||||||||
Shares vested period | 3 years | 3 years | ||||||||||||||||||
Common stock par value | $ / shares | $ 0.01 | |||||||||||||||||||
Stock Options | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Number of options cancelled | 4,700,000 | 0 | 0 | |||||||||||||||||
Granted | 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 | |||||||||||||||||
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 | |||||||||||||||||||
Performance conditions | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Unrecognized compensation cost | ¥ 59,700,000 | $ 8,700,000 | ||||||||||||||||||
Share-based compensation expenses | ¥ 202,300,000 | $ 29,300,000 | ¥ 150,200,000 | ¥ 55,100,000 | ||||||||||||||||
Restricted shares | Class A ordinary shares | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||
Number of awards granted | 44,290,560 | 32,190,000 | 29,100,000 | |||||||||||||||||
Shares vested period | 2 years | |||||||||||||||||||
Market capitalization | $ | $ 400,000,000 | |||||||||||||||||||
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 |
SHARE-BASED COMPENSATION - Blac
SHARE-BASED COMPENSATION - Black-Scholes option pricing model (Details) - Stock Options | 12 Months Ended |
Dec. 31, 2022 $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.19% |
Expected life (years) | 2 years 11 months 4 days |
Expected dividend yield | 0% |
Volatility | 78.55% |
Fair value of options at grant date | $ 0.51 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share option activities (Details) - Stock Options | 12 Months Ended | |||||||
Sep. 04, 2018 shares | Jan. 24, 2018 shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) | Dec. 31, 2022 CNY (¥) shares | |
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 | |||||||
Exercisable at end of year | shares | 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 | 25 days | 25 days | 1 year 25 days | 1 year 25 days | ||||
Vested and expected to vest at end of year | 25 days | 25 days | ||||||
Exercisable at end of year | 25 days | 25 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 |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Details) | 1 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2020 CNY (¥) | Sep. 30, 2020 USD ($) | Jun. 30, 2019 shares | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
RELATED PARTY TRANSACTIONS AND BALANCES | ||||||||
Repayments of related party debt | ¥ 2,631,400 | $ 381,517 | ¥ 6,378,690 | ¥ 42,545,136 | ||||
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% | |||||||
Chief Executive Officer | ||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||||||
Repayments of related party debt | 2,600,000 | $ 400,000 | 6,400,000 | |||||
Loan from related party | 0 | ¥ 0 | ||||||
Amount due to related party | 11,500,000 | 14,100,000 | $ 1,700,000 | |||||
ZTE9 network technology Co., Ltd., Wuxi ("ZTE9") | ||||||||
RELATED PARTY TRANSACTIONS AND BALANCES | ||||||||
Repayments of related party debt | ¥ 1,000,000 | $ 100,000 | ||||||
Revenue from related party | ¥ 0 | ¥ 0 |
(LOSS) INCOME PER SHARE (Detail
(LOSS) INCOME PER SHARE (Details) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Numerator: | ||||
Net loss attributable to ordinary shareholders before change in redeemable noncontrolling interest | ¥ (974,859,050) | $ (141,341,275) | ¥ (411,234,755) | ¥ 397,883,388 |
Change in redeemable noncontrolling interest | 0 | 0 | 0 | (1,190,122) |
Net Income (Loss) Available to Common Stockholders, Basic | ¥ (974,859,050) | $ (141,341,275) | ¥ (411,234,755) | ¥ 396,693,266 |
Denominator: | ||||
Weighted average number of shares outstanding, Basic | 720,237,128 | 720,237,128 | 495,304,894 | 163,599,920 |
Weighted average number of shares outstanding, Diluted | 720,237,128 | 720,237,128 | 495,304,894 | 163,599,920 |
Earnings per share, Basic | (per share) | ¥ (1.35) | $ (0.20) | ¥ (0.83) | ¥ 2.42 |
Earnings per share, Diluted | (per share) | ¥ (1.35) | $ (0.20) | ¥ (0.83) | ¥ 2.42 |
(LOSS) INCOME PER SHARE - Addit
(LOSS) INCOME PER SHARE - Additional Information (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
(LOSS) INCOME PER SHARE | |||
Anti-dilutive securities excluded from computation of diluted loss per share | 271,620,613 | 366,148,968 | 4,200,645 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Restricted Cash and Cash Equivalents Items | ||||
Appropriation of statutory reserves | ¥ 0 | ¥ 0 | ¥ 0 | |
Accumulated reserves | 10,600,000 | $ 1.5 | ||
Restricted registered capital | 81,000,000 | 11.7 | ||
Amount of restricted net assets | ¥ 70,400,000 | $ 10.2 | ||
Minimum | ||||
Restricted Cash and Cash Equivalents Items | ||||
Percentage of appropriation of statutory reserve from retained earnings after tax profits | 10% | |||
Maximum | ||||
Restricted Cash and Cash Equivalents Items | ||||
Percentage of appropriations of statutory reserve of registered capital | 50% |
NONCONTROLLING INTEREST (Detail
NONCONTROLLING INTEREST (Details) | 12 Months Ended | |||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | |
NONCONTROLLING INTEREST | ||||||
Noncontrolling interests, Beginning Balance | ¥ 13,015,392 | $ 1,887,054 | ¥ 379,724,280 | $ 55,054,845 | ¥ 392,881,777 | $ 56,962,503 |
Net loss attributable to noncontrolling interest | 4,633,205 | 671,752 | 5,590,513 | 810,548 | 3,259,528 | 472,587 |
Translation difference charge to noncontrolling interests | (16,417,025) | (2,380,245) | ||||
Noncontrolling interests from consolidation since acquisition | 162,253 | 23,524 | 372,299,401 | 53,978,339 | ||
Contributions from noncontrolling interests | (40,000) | (5,799) | ||||
Noncontrolling Interest, Ending Balance | ¥ 17,770,850 | $ 2,576,531 | ¥ 13,015,392 | $ 1,887,054 | ¥ 379,724,280 | $ 55,054,845 |
REDEEMABLE NONCONTROLLING INT_3
REDEEMABLE NONCONTROLLING INTEREST - Reconciliation (Details) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
NONCONTROLLING INTEREST | ||||
Redeemable noncontrolling interest opening balance | ¥ 0 | $ 0 | ¥ 349,046,548 | ¥ 349,046,548 |
Net loss attributable to redeemable noncontrolling interest | 0 | 0 | (1,190,122) | |
Change in redeemable noncontrolling interest | (349,046,548) | 1,190,122 | ||
Redeemable noncontrolling interest ending balance | ¥ 0 | $ 0 | ¥ 0 | ¥ 349,046,548 |
DISPOSAL OF SUBSIDIARIES - Addi
DISPOSAL OF SUBSIDIARIES - Additional Information (Details) | 12 Months Ended | |||||||||||||
Sep. 09, 2020 CNY (¥) | Sep. 09, 2020 USD ($) | Feb. 21, 2020 CNY (¥) | Feb. 21, 2020 USD ($) | Sep. 26, 2019 CNY (¥) subsidiary | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 07, 2021 USD ($) | Sep. 26, 2019 USD ($) | Apr. 30, 2010 | |
DISPOSAL OF SUBSIDIARIES | ||||||||||||||
Gain (Loss) on disposal of subsidiaries | ¥ 711,914 | $ 103,218 | ¥ 174,295 | |||||||||||
Account receivables | 151,432 | ¥ 3,682,282 | $ 21,956 | |||||||||||
51miner Limited | ||||||||||||||
DISPOSAL OF SUBSIDIARIES | ||||||||||||||
Gain (Loss) on disposal of subsidiaries | 5,600,000 | $ 800,000 | ||||||||||||
Cash | $ 40,000 | |||||||||||||
Account receivables | 4,300,000 | |||||||||||||
Mining machines and mining related prepayments | $ 2,000,000 | |||||||||||||
Red 5 Studios, Inc. | ||||||||||||||
DISPOSAL OF SUBSIDIARIES | ||||||||||||||
Net gain on deconsolidation of subsidiaries | ¥ 9,500,000 | $ 1,400,000 | ||||||||||||
The9 Limited. | ||||||||||||||
DISPOSAL OF SUBSIDIARIES | ||||||||||||||
Gain (Loss) on disposal of subsidiaries | ¥ 83,700,000 | $ 12,100,000 | ¥ 3,700,000 | $ 500,000 | ||||||||||
Kapler Pte. Ltd. | ||||||||||||||
DISPOSAL OF SUBSIDIARIES | ||||||||||||||
Number of subsidiaries sale | subsidiary | 3 | |||||||||||||
Total consideration | ¥ 493,000,000 | $ 71,500,000 | ||||||||||||
Gain (Loss) on disposal of subsidiaries | ¥ 391,800,000 | $ 56,800,000 | ||||||||||||
Red5 Studio Inc. | ||||||||||||||
DISPOSAL OF SUBSIDIARIES | ||||||||||||||
Percentage of interest owned | 35% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 12 Months Ended | |||||||||||||
Apr. 30, 2022 USD ($) | Sep. 30, 2020 USD ($) | Apr. 30, 2020 CNY (¥) | Apr. 30, 2020 USD ($) | Jan. 31, 2019 USD ($) | Oct. 31, 2016 CNY (¥) | Oct. 31, 2016 USD ($) | Sep. 30, 2016 CNY (¥) | Sep. 30, 2016 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) | Oct. 31, 2016 USD ($) | |
COMMITMENTS AND CONTINGENCIES | |||||||||||||||
Funds raised for the development of CrossFire new mobile game | ¥ 30,254,560 | ¥ 30,384,772 | $ 4,386,499 | ||||||||||||
Investments in equity investees | 35,297,395 | 73,915,119 | 5,117,641 | ||||||||||||
Total aggregated claim | $ 13,000,000 | ||||||||||||||
Upfront payment | $ 3,000,000 | ||||||||||||||
Redeemable convertible preferred shares redemption value | 0 | $ 0 | |||||||||||||
Maximum assets worldwide not to be disposed off | 55,500,000 | ||||||||||||||
Settlement claims | $ 8,600,000 | ||||||||||||||
Other litigation settlement amount | ¥ 54,700,000 | $ 7,900,000 | |||||||||||||
Remaining unpaid balance for settlement | 17,200,000 | 2,500,000 | |||||||||||||
Second Installment | Series B Redeemable Convertible Preferred Shares | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||
Redeemable convertible preferred shares redemption value | 17,700,000 | ||||||||||||||
Third Installment [Member] | Series B Redeemable Convertible Preferred Shares | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||
Redeemable convertible preferred shares redemption value | $ 37,800,000 | ||||||||||||||
CrossFire New Mobile Game | Smilegate | Copyright infringements | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||
Period for payment of minimum guarantee for royalty | 30 days | ||||||||||||||
CrossFire New Mobile Game | Minimum | Smilegate | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||
Guarantee for royalty | $ 2,000,000 | ||||||||||||||
CrossFire New Mobile Game | Inner Mongolia Culture Assets and Equity Exchange | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||
Funds raised for the development of CrossFire new mobile game | ¥ 57,500,000 | 57,500,000 | 8,300,000 | $ 8,300,000 | |||||||||||
Additional funds aimed to be raised for the development of CrossFire new mobile game | 100,000,000 | ¥ 100,000,000 | $ 4,500,000 | $ 14,500,000 | |||||||||||
Principal amount of refund claimed through civil suit | ¥ 57,500,000 | $ 9,000,000 | ¥ 57,500,000 | $ 8,300,000 | |||||||||||
Interest amount of refund claimed through civil suit | ¥ 4,600,000 | $ 700,000 | ¥ 4,600,000 | $ 700,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) | 12 Months Ended | |||||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
SEGMENT REPORTING | ||||||||
Revenue | ¥ 118,887,879 | $ 17,237,122 | ¥ 135,875,140 | $ 21,321,774 | ¥ 625,488 | $ 95,860 | ||
Loss from operations | (961,606,212) | (139,419,795) | (316,780,141) | (49,709,717) | 336,708,307 | 51,602,806 | ||
Prepayments and other current assets, net | 272,487,578 | 528,109,288 | $ 39,506,985 | $ 82,871,871 | ||||
Cryptocurrencies | 66,341,653 | 86,118,349 | 9,618,636 | 13,513,848 | ||||
Property, Plant and Equipment, Net | 142,847,637 | 172,980,284 | 20,710,961 | 27,144,381 | ||||
Cryptocurrency Mining | ||||||||
SEGMENT REPORTING | ||||||||
Revenue | 101,782,024 | 14,757,006 | 134,122,945 | 21,046,818 | ||||
Loss from operations | (397,933,746) | (57,694,970) | (67,252,412) | (10,553,371) | ||||
Prepayments and other current assets, net | 254,603,252 | 394,533,886 | 36,914,002 | 61,910,976 | ||||
Cryptocurrencies | 62,669,034 | 86,118,349 | 9,086,156 | 13,513,848 | ||||
Property, Plant and Equipment, Net | 128,975,415 | 171,169,287 | 18,699,677 | 26,860,196 | ||||
NFT Business | ||||||||
SEGMENT REPORTING | ||||||||
Revenue | 10,034,353 | 1,454,844 | 298,817 | 46,891 | ||||
Loss from operations | (275,269,814) | (39,910,371) | (20,413,919) | (3,203,389) | ||||
Prepayments and other current assets, net | 0 | 116,390,410 | 0 | 18,264,195 | ||||
Cryptocurrencies | 3,672,619 | 532,480 | ||||||
Property, Plant and Equipment, Net | 0 | 0 | ||||||
Corporate | ||||||||
SEGMENT REPORTING | ||||||||
Revenue | 7,071,502 | 1,025,272 | 1,453,378 | 228,065 | 625,488 | 95,860 | ||
Loss from operations | (288,402,652) | $ (41,814,454) | (229,113,810) | $ (35,952,957) | ¥ 336,708,307 | $ 51,602,806 | ||
Prepayments and other current assets, net | 17,884,326 | 17,184,991 | 2,592,983 | 2,696,700 | ||||
Property, Plant and Equipment, Net | ¥ 13,872,222 | ¥ 1,810,997 | $ 2,011,284 | $ 284,185 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - shares | Apr. 29, 2023 | Apr. 28, 2023 |
Subsequent Event [Line Items] | ||
Increase in number of shares available for grant | 300,000,000 | |
Shares available for grant | 550,000,000 | 250,000,000 |
FINANCIAL INFORMATION OF PARE_2
FINANCIAL INFORMATION OF PARENT COMPANY - PARENT COMPANY CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Details) | 12 Months Ended | |||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | |
Operating expenses: | ||||||
General and administrative | ¥ (376,379,730) | $ (54,569,931) | ¥ (293,152,801) | ¥ (108,747,919) | ||
Total operating expenses | 895,870,476 | 129,889,009 | 364,620,778 | (336,869,597) | ||
Loss from operations | (961,606,212) | (139,419,795) | (316,780,141) | $ (49,709,717) | 336,708,307 | $ 51,602,806 |
Impairment on equity investments | (17,300,000) | (2,501,380) | (7,599,505) | (1,172,755) | ||
Fair value change on warrants liability | 37,851 | |||||
Gain on disposal of equity investee and available-for-sale investments | 711,914 | 100,000 | 0 | 174,295 | ||
Gain from change in fair value of convertible feature derivative liability | 37,249,976 | 5,400,739 | 62,246,860 | |||
Gain on extinguishment of convertible notes | 56,755,902 | |||||
Gain on waiver of interest-free loan | 35,397,500 | |||||
Foreign exchange gain (loss) | (6,301,271) | (913,598) | (6,449,136) | (8,319,669) | ||
Other expenses, net | 10,008,938 | 1,451,160 | (44,589,670) | 2,005,143 | ||
Loss before income tax expense and share of loss in equity method investment | (979,492,255) | (142,013,027) | (415,100,116) | 402,764,770 | ||
Share of loss in equity method investments | (1,725,152) | (2,165,935) | ||||
Net income (loss) | (974,859,050) | (141,341,275) | (411,234,755) | 397,883,388 | ||
Other comprehensive income (loss), net of tax: | ||||||
Currency translation adjustments | 166,220 | 24,100 | 3,984,443 | 3,516,774 | ||
Total comprehensive income (loss) | (979,326,035) | (141,988,927) | (412,840,825) | 396,950,512 | ||
Parent Company | ||||||
Operating expenses: | ||||||
General and administrative | (232,037,437) | (33,642,266) | (186,462,351) | (87,638,664) | ||
Total operating expenses | (232,037,437) | (33,642,266) | (186,462,351) | (87,638,664) | ||
Loss from operations | (232,037,437) | (33,642,266) | (186,462,351) | (87,638,664) | ||
Impairment on equity investments | (15,252,515) | (2,211,407) | (7,599,505) | (1,172,755) | ||
Gain on other investments | (28,735,889) | (4,166,312) | 22,743,763 | 0 | ||
Interest expenses | (109,175,494) | (2,923,055) | ||||
Fair value change on warrants liability | 0 | 0 | 0 | 37,851 | ||
Gain on disposal of equity investee and available-for-sale investments | 711,914 | 103,218 | 0 | 0 | ||
Non operating income | 423,270 | 61,368 | 0 | 0 | ||
Gain from change in fair value of convertible feature derivative liability | 37,249,976 | 5,400,739 | 62,246,860 | 0 | ||
Gain on extinguishment of convertible notes | 0 | 56,755,902 | ||||
Gain on waiver of interest-free loan | 0 | 35,397,500 | ||||
Foreign exchange gain (loss) | (7,140,909) | (1,035,334) | (2,457,272) | 29,578,454 | ||
Other expenses, net | (54,703,506) | (40,059,304) | ||||
Loss before income tax expense and share of loss in equity method investment | (244,781,590) | (35,489,994) | (275,407,505) | (10,024,071) | ||
Share of loss in equity method investments | (1,725,152) | (2,165,935) | ||||
Equity in (loss) income of subsidiaries and VIEs | (730,077,459) | (105,851,282) | (134,102,098) | 410,073,394 | ||
Net income (loss) | (974,859,049) | (141,341,276) | (411,234,755) | 397,883,388 | ||
Other comprehensive income (loss), net of tax: | ||||||
Currency translation adjustments | 3,984,443 | (12,900,251) | ||||
Total comprehensive income (loss) | ¥ (974,859,049) | $ (141,341,276) | ¥ (407,250,312) | ¥ 384,983,137 |
FINANCIAL INFORMATION OF PARE_3
FINANCIAL INFORMATION OF PARENT COMPANY - PARENT COMPANY CONDENSED BALANCE SHEETS (Details) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2019 CNY (¥) |
Current assets: | ||||||
Cash and cash equivalents | ¥ 58,063,733 | $ 8,418,450 | ¥ 428,420,773 | |||
Prepayments and other current assets, net | 272,487,578 | 39,506,985 | 528,109,288 | $ 82,871,871 | ||
Total current assets | 397,674,315 | 57,657,357 | 1,050,511,405 | |||
Investments in subsidiaries and VIE | 35,297,395 | 5,117,641 | 73,915,119 | |||
Total assets | 599,106,683 | 86,862,304 | 1,310,318,375 | |||
Current liabilities: | ||||||
Amounts due to intercompany | 21,159,559 | 3,067,848 | 23,790,959 | |||
Total current liabilities | 564,162,525 | 81,795,877 | 544,295,473 | |||
Total liabilities | 571,568,330 | 82,869,618 | 546,862,815 | |||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Additional paid-in capital | 4,371,228,191 | 633,768,513 | 4,139,122,755 | |||
Statutory reserves | 7,326,560 | 1,062,251 | 7,326,560 | |||
Accumulated other comprehensive loss | (12,527,540) | (1,816,323) | (12,693,760) | |||
Accumulated deficit | (4,378,321,226) | (634,796,906) | (3,403,462,176) | |||
Total shareholders' equity (deficit) | 45,309,203 | 6,569,217 | 776,470,952 | |||
Total liabilities and shareholders' equity | 599,106,683 | 86,862,304 | 1,310,318,375 | |||
Parent Company | ||||||
Current assets: | ||||||
Cash and cash equivalents | 18,704,249 | 2,711,861 | 12,243,809 | $ 1,775,185 | ¥ 8,545,918 | ¥ 143,896 |
Prepayments and other current assets, net | 56,226 | |||||
Amounts due from intercompany | 2,378,886,528 | 344,906,125 | 2,358,774,226 | |||
Total current assets | 2,397,590,777 | 347,617,986 | 2,371,074,261 | |||
Investments | 8,199,715 | 1,188,847 | 44,452,310 | |||
Investments in subsidiaries and VIE | (2,150,220,191) | (311,752,623) | (1,420,365,177) | |||
Total assets | 255,570,301 | 37,054,210 | 995,161,394 | |||
Current liabilities: | ||||||
Accrued expenses and other current liabilities | 18,772,708 | 2,721,787 | 61,326,625 | |||
Amounts due to intercompany | 78,728,877 | 11,414,614 | 12,689,811 | |||
Warrants | 51,775,453 | 7,506,735 | 51,825,629 | |||
Bond payable | 60,984,058 | 8,841,857 | 92,848,377 | |||
Total current liabilities | 210,261,096 | 30,484,993 | 218,690,442 | |||
Total liabilities | 210,261,096 | 30,484,993 | 218,690,442 | |||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Additional paid-in capital | 4,371,228,191 | 633,768,513 | 4,139,122,755 | |||
Statutory reserves | 7,326,560 | 1,062,251 | 7,326,560 | |||
Accumulated other comprehensive loss | (12,527,539) | (1,816,323) | (12,693,760) | |||
Accumulated deficit | (4,378,321,225) | (634,796,906) | (3,403,462,176) | |||
Total shareholders' equity (deficit) | 45,309,205 | 6,569,217 | 776,470,952 | |||
Total liabilities and shareholders' equity | 255,570,301 | 37,054,210 | 995,161,394 | |||
Class A ordinary shares | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | 56,659,429 | 8,214,845 | 45,233,784 | |||
Class A ordinary shares | Parent Company | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | 56,659,429 | 8,214,845 | 45,233,784 | |||
Class B ordinary shares | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | 943,789 | 136,837 | 943,789 | |||
Class B ordinary shares | Parent Company | ||||||
SHAREHOLDERS' EQUITY (DEFICIT) | ||||||
Ordinary shares | ¥ 943,789 | $ 136,837 | ¥ 943,789 |
FINANCIAL INFORMATION OF PARE_4
FINANCIAL INFORMATION OF PARENT COMPANY - PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Details) | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Cash flows from operating activities: | ||||
Net income (loss) | ¥ (979,492,255) | $ (142,013,027) | ¥ (416,825,268) | ¥ 393,433,738 |
Adjustments for: | ||||
Share-based compensation expenses | 202,345,626 | 29,337,358 | 150,166,481 | 55,056,426 |
Fair value change on warrants liability | (37,851) | |||
Amortization of discount and interest on convertible notes | 23,197,049 | 3,363,256 | 120,626,467 | 2,923,316 |
Foreign exchange (gain) loss | 6,301,271 | 913,598 | 6,449,136 | 8,319,669 |
Cancellation of ordinary shares | (1,876,314) | (272,040) | ||
Consulting fees paid by issuance of shares | 6,781,815 | |||
Gain from change in fair value of conversion feature derivative liability | (37,249,976) | (5,400,739) | (62,246,860) | |
Payment of issuance cost by issuance of shares | (2,985,626) | (432,875) | 455,658 | |
Changes in operating assets and liabilities: | ||||
Change in prepayments and other current assets | 72,383,805 | 10,494,665 | (537,076,522) | (2,877,084) |
Change in accrued expenses and other current liabilities | (71,722,378) | (10,398,767) | 60,345,979 | (21,039,288) |
Increase/(Decrease) in interest payable | 1,192,955 | 172,962 | 937,328 | (5,371,931) |
Net cash (used in) provided by operating activities | (154,700,000) | (22,400,000) | (687,688,577) | (106,253,254) |
Cash flows from investing activities: | ||||
Net cash (used in) provided by investing activities | (248,785,539) | (36,070,512) | (141,883,073) | 438,263,208 |
Cash flows from financing activities: | ||||
Proceeds from the issuance of ordinary shares and warrants | 1,011,476,118 | 47,430,195 | ||
Proceeds from the issuance of convertible note | 33,704,460 | 4,886,687 | 161,588,128 | 3,358,369 |
ADS issuance fee | (3,720,691) | (7,849,390) | ||
Net cash provided by (used in) financing activities | 33,025,690 | 4,788,275 | 1,227,436,008 | (310,686,195) |
Effect of foreign exchange rate changes on cash and cash equivalents | 144,985 | 21,020 | (1,139,822) | 259,337 |
Net change in cash and cash equivalents | (370,357,040) | (53,696,723) | 396,724,536 | 21,583,096 |
Cash and cash equivalents, beginning of period | 428,420,773 | |||
Cash and cash equivalents, end of period | 58,063,733 | 8,418,450 | 428,420,773 | |
Supplement disclosure of cash flow information: | ||||
Interest paid | 47,695,297 | |||
Parent Company | ||||
Cash flows from operating activities: | ||||
Net income (loss) | (974,859,049) | (141,341,276) | (411,234,755) | 397,883,388 |
Adjustments for: | ||||
Share-based compensation expenses | 0 | 0 | 0 | 55,056,426 |
Employee share-based compensation expense | 202,345,626 | 29,337,358 | 150,166,481 | 0 |
Fair value change on warrants liability | 0 | 0 | 0 | (37,851) |
Interest expenses | 0 | 0 | 120,626,467 | 0 |
Amortization of discount and interest on convertible notes | 23,074,518 | 3,345,491 | 0 | 2,923,316 |
Foreign exchange (gain) loss | (166,222) | (24,100) | 4,465,094 | (29,578,454) |
Cancellation of ordinary shares | (1,876,314) | (272,040) | ||
Equity in loss (income) of subsidiaries and VIE | 773,156,627 | 112,097,174 | 108,608,497 | (410,073,394) |
Consulting fees paid by issuance of shares | 0 | 0 | 0 | 6,781,815 |
Gain from change in fair value of conversion feature derivative liability | (37,249,976) | (5,400,739) | (62,246,860) | 0 |
Gain on extinguishment of convertible notes | 8,135,104 | 1,179,479 | (2,296,722) | (56,755,902) |
Gain on waiver of interest-free loan | 0 | 0 | 0 | (34,881,000) |
Payment of issuance cost by issuance of shares | 0 | 0 | 0 | 455,658 |
Changes in operating assets and liabilities: | ||||
Change in prepayments and other current assets | 56,226 | 8,152 | 4,033,993 | (4,026,346) |
Change in amounts due from intercompany | 49,338,235 | 7,153,372 | (1,192,553,035) | 349,361,587 |
Change in accrued expenses and other current liabilities | (46,565,182) | (6,751,317) | 49,376,705 | (566,162) |
Increase/(Decrease) in interest payable | 1,192,955 | 172,962 | 937,328 | 0 |
Net cash (used in) provided by operating activities | (3,417,452) | (495,484) | (1,230,116,807) | 276,543,081 |
Cash flows from investing activities: | ||||
Purchase of property, plant and equipment | (17,640,000) | (2,557,560) | ||
Net cash (used in) provided by investing activities | (17,640,000) | (2,557,560) | ||
Cash flows from financing activities: | ||||
Proceeds from the issuance of ordinary shares and warrants | 0 | 0 | 64,471,143 | 47,430,195 |
Proceeds from the issuance of convertible note | 33,704,460 | 4,886,687 | 161,588,128 | 3,358,369 |
Purchase of other investment | 22,277,084 | 3,229,874 | ||
ADS issuance fee | 0 | 0 | (3,720,691) | 0 |
New issued stock to investors | 0 | 0 | 1,011,476,118 | 0 |
Proceeds from disposal of other investment | 15,228,067 | 2,207,862 | ||
Repayments of convertible notes | 0 | 0 | 0 | (318,929,623) |
Net cash provided by (used in) financing activities | 26,655,443 | 3,864,675 | 1,233,814,698 | (268,141,059) |
Effect of foreign exchange rate changes on cash and cash equivalents | 862,449 | 125,045 | 0 | 0 |
Net change in cash and cash equivalents | 6,460,440 | 936,676 | 3,697,891 | 8,402,022 |
Cash and cash equivalents, beginning of period | 12,243,809 | 1,775,185 | 8,545,918 | 143,896 |
Cash and cash equivalents, end of period | 18,704,249 | 2,711,861 | 12,243,809 | 8,545,918 |
Supplement disclosure of cash flow information: | ||||
Interest paid | ¥ 0 | $ 0 | ¥ 0 | ¥ 36,310,455 |