Exhibit 99.2
INDEX TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page |
Condensed consolidated balance sheets as of December 31, 2023 and June 30, 2024 (unaudited) | F-2 |
F-3 | |
F-4 | |
F-5 | |
Notes to unaudited condensed consolidated financial statements | F-6 |
F-1
TUANCHE LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data, unless otherwise stated)
Note | December 31, 2023 | June 30, 2024 | ||||||
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| RMB |
| RMB |
| US$ | ||
(unaudited) |
| Note 3(d) | ||||||
ASSETS | ||||||||
Current assets: |
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Cash and cash equivalents |
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Restricted cash |
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Accounts and notes receivable, net | 5 | | | | ||||
Prepayment and other current assets, net |
| 6 | |
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Prepayment to related parties |
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Total current assets |
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Non-current assets: |
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Operating lease right-of-use assets | | | | |||||
Long-term investments |
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Goodwill | 4 | | | | ||||
Other non-current assets |
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Total non-current assets |
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Total assets |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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Advance from customers |
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Salary and welfare benefits payable |
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Short-term borrowings |
| 8 | |
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Other taxes payable |
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Current portion of deferred revenue | | | | |||||
Short-term operating lease liabilities | | | | |||||
Payables due to related parties | | | | |||||
| 9 | |
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Total current liabilities |
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Long-term borrowings | 10 | | | | ||||
Non-current portion of deferred revenue | | | | |||||
Long-term operating lease liabilities | | | | |||||
Warrant liability | 15 | | | | ||||
Total non-current liabilities |
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Total liabilities |
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Commitments and contingencies |
| 14 |
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Shareholders’ equity: |
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Class A ordinary shares: US$ |
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Class B ordinary shares: US$ |
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Treasury stock ( |
| ( | ( | ( | ||||
Additional paid-in capital |
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Accumulated deficit |
| ( | ( | ( | ||||
Accumulated other comprehensive loss |
| ( | ( | ( | ||||
Total TuanChe Limited shareholders’ equity |
| | ( | ( | ||||
Total shareholders’ equity | | ( | ( | |||||
TOTAL LIABILITIES AND EQUITY | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
TUANCHE LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(All amounts in thousands, except for share and per share data, unless otherwise stated)
| Note | For the six months ended June 30, | ||||||
2023 |
| 2024 | ||||||
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| RMB |
| RMB |
| US$ | |
| Note 3(d) | |||||||
Net revenues |
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Offline Marketing Services: | ||||||||
Auto shows | | | | |||||
Special promotion events | | | | |||||
Referral service for commercial bank | | | | |||||
Online marketing | | | | |||||
Others | | | | |||||
Total net revenues | | | | |||||
Cost of revenues |
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| ( |
| ( |
| ( | |
Gross profit |
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Operating expenses: |
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Selling and marketing expenses |
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| ( |
| ( |
| ( | |
General and administrative expenses |
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| ( |
| ( |
| ( | |
Research and development expenses |
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| ( |
| ( |
| ( | |
Impairment of long-lived assets | ( | ( | ( | |||||
Total operating expenses |
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| ( |
| ( |
| ( | |
Loss from operations |
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| ( |
| ( |
| ( | |
Other income/(expenses): | ||||||||
Interest income/(expenses), net |
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| ( |
| ( | |
Foreign exchange loss |
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| ( |
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Gain from equity method investments |
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Change in fair value of warrant liability |
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Other income, net |
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Loss before income taxes |
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| ( |
| ( |
| ( | |
Income tax benefit | | | | |||||
Net loss |
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| ( |
| ( |
| ( | |
Net loss attributable to TuanChe Limited’s ordinary shareholders | ( | ( |
| ( | ||||
Net loss |
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| ( |
| ( |
| ( | |
Other comprehensive loss: |
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Foreign currency translation adjustments |
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| ( |
| ( |
| ( | |
Total other comprehensive loss |
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| ( |
| ( |
| ( | |
Total comprehensive loss |
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| ( |
| ( |
| ( | |
Comprehensive loss attributable to: |
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TuanChe Limited’s shareholders | ( | ( | ( | |||||
Net loss attributable to the TuanChe Limited’s ordinary shareholders per share | ||||||||
Basic and diluted |
| 13 |
| ( |
| ( |
| ( |
Weighted average number of ordinary shares | ||||||||
Basic and diluted |
| 13 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
TUANCHE LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(All amounts in thousands, except for share and per share data, unless otherwise stated)
| Ordinary shares | Treasury stock | ||||||||||||||||||||
Number of | Number of | Accumulated | ||||||||||||||||||||
Class A | Class B | Additional | other | TuanChe Limited | ||||||||||||||||||
Ordinary | Ordinary | paid-in | Accumulated | comprehensive | shareholders’ | Total | ||||||||||||||||
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| Shares | Amounts | Shares |
| Amounts |
| Shares |
| Amounts |
| capital |
| deficit |
| loss |
| equity |
| equity | ||
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| RMB |
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| RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||
Balance at December 31, 2022 |
| | | |
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| ( |
| ( |
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| ( |
| ( | |
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Shares issuance for vested restricted shares | | — | — | — | — | — | — | — | — | — | — | |||||||||||
Share-based compensation | — | — | — | — | — | — | | — | — | | | |||||||||||
Net loss |
| — | — | — |
| — |
| — |
| — |
| — |
| ( |
| — | ( |
| ( | |||
Foreign currency translation adjustment | — | — | — | — | — | — | — | — | ( | ( | ( | |||||||||||
Balance at June 30, 2023 |
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| ( |
| ( |
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| ( |
| ( | |
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Balance at December 31, 2023 |
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| ( |
| ( |
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| ( |
| ( | |
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Shares issuance for vested restricted shares | | | — | — | — | — | ( | — | — | — | — | |||||||||||
Share-based compensation | — | — | — | — | | | | — | — | | | |||||||||||
Net loss | — | — | — | — | — | — | — | ( | — | ( | ( | |||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | — | — | ( | ( | ( | |||||||||||
Balance at June 30, 2024 |
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| ( |
| ( |
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| ( |
| ( | ( |
| ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
TUANCHE LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except for share and per share data, unless otherwise stated)
| For the six months ended June 30, | |||||
| 2023 | 2024 | ||||
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| RMB |
| RMB |
| US$ |
Note 3(d) | ||||||
Net cash used in operating activities | ( | ( | ( | |||
Cash flows from investing activity: |
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Purchase of property, equipment and software, and other non-current assets |
| — |
| ( | ( | |
Net cash used in investing activity |
| — |
| ( | ( | |
Cash flows from financing activities: |
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Cash received from borrowings | | | | |||
Repayments of short-term borrowings |
| ( |
| ( | ( | |
Net cash generated from financing activities |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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| ( | ( | |
Net decrease in cash, cash equivalents and restricted cash |
| ( |
| ( | ( | |
Cash, cash equivalents and restricted cash at beginning of the period |
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Including: | ||||||
Cash and cash equivalents at the beginning of the period |
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Restricted cash at the beginning of the period |
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Cash, cash equivalents and restricted cash at end of the period |
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Including: | ||||||
Cash and cash equivalents at the end of the period |
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Restricted cash at the end of the period |
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Supplemental disclosures of cash flow information: |
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Cash paid for interest expense |
| ( |
| ( | ( | |
Supplemental schedule of non-cash investing and financing activities: |
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Right-of-use assets obtained in exchange for new operating lease liabilities | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
1.Organization and Reorganization
TuanChe Limited (the “Company”) was incorporated in the Cayman Islands on September 28, 2012. The Company is a holding company and conducts its business mainly through its subsidiaries, variable interest entities (“VIEs”) and subsidiaries of VIEs (collectively referred to as the “Group”). The Group commenced operations through TuanChe Internet, a PRC company established by several PRC citizens in May 2012. TuanChe Internet holds an Internet Content Provider (“ICP”) license to operate Tuanche.com that provides internet information services to automobile manufacturers, car dealers and consumers.
The Group is primarily engaged in the operation of providing auto shows, special promotion events services, referral service for a commercial bank, online marketing services, subscription and support service, aftermarket promotion service, customer referral services and other related businesses in the People’s Republic of China (the “PRC” or “China”).
Contractual arrangements with VIEs
PRC laws and regulations place certain restrictions on foreign investment in value-added telecommunication service businesses. The Group conduct operations in the PRC partially through TuanChe Internet, Drive New Media, Internet Drive Technology and Hainashuke, which are variable interest entities, or VIEs, and their subsidiaries, collectively referred to as consolidated affiliated entities. The Group have entered into a series of contractual arrangements, through TuanYuan, Sangu Maolu and Chema, or its WFOEs, with each of its VIEs and their respective shareholders, respectively. The series of contractual arrangements include exclusive business cooperation agreement, exclusive call option agreement, equity pledge agreement, powers of attorney and spousal consent letters.
The Group believes that these contractual arrangements enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIEs, and (2) receive the economic benefits of the VIEs that could be significant to the VIEs. Accordingly, the Company is considered the primary beneficiary of the VIEs and is able to consolidate the VIEs and VIEs’ subsidiaries.
Risks in relation to the VIE structure
A significant part of the Company’s business is conducted through the VIEs of the Group, of which the Company is the ultimate primary beneficiary. In the opinion of management, the contractual arrangements with the VIEs and the nominee shareholders are in compliance with PRC laws and regulations and are legally binding and enforceable. The nominee shareholders are also shareholders of the Group and have indicated they will not act contrary to the contractual arrangements. However, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including those that govern the contractual arrangements, which could limit the Group’s ability to enforce these contractual arrangements and if the nominee shareholders of the VIEs were to reduce their interests in the Group, their interest may diverge from that of the Group and that may potentially increase the risk that they would seek to act contrary to the contractual arrangements.
The Company’s ability to control the VIEs also depends on the Power of Attorney the shareholders has to vote on all matters requiring shareholder approval in the VIEs. As noted above, the Company believes these Power of Attorney are legally enforceable but may not be as effective as direct equity ownership.
F-6
1.Organization and Reorganization (Continued)
Risks in relation to the VIE structure (Continued)
In addition, if the Group’s corporate structure or the contractual arrangements with the VIEs were found to be in violation of any existing or future PRC laws and regulations, the PRC regulatory authorities could, within their respective jurisdictions:
● | revoke the Group’s business and operating licenses |
● | require the Group to discontinue or restrict its operations; |
● | restrict the Group’s right to collect revenues; |
● | block the Group’s websites; |
● | require the Group to restructure the operations, re-apply for the necessary licenses or relocate the Group’s businesses, staff and assets; |
● | impose additional conditions or requirements with which the Group may not be able to comply; or |
● | take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business. |
The imposition of any of these restrictions or actions could result in a material adverse effect on the Group’s ability to conduct its business. In such case, the Group may not be able to operate or control the VIEs, which may result in deconsolidation of the VIEs in the Group’s consolidated financial statements. In the opinion of the Company’s management, the likelihood for the Group to lose such ability is remote based on current facts and circumstances. The Group believes that the contractual arrangements among each of the VIEs, their respective shareholders and relevant wholly foreign owned enterprise are in compliance with PRC law and are legally enforceable. The Group’s operations depend on the VIEs to honor their contractual arrangements with the Group. These contractual arrangements are governed by PRC law and disputes arising out of these agreements are expected to be decided by arbitration in the PRC. Management believes that each of the contractual arrangements constitutes valid and legally binding obligations of each party to such contractual arrangements under PRC laws. However, the interpretation and implementation of the laws and regulations in the PRC and their application on the legality, binding effect and enforceability of contracts are subject to the discretion of competent PRC authorities, and therefore there is no assurance that relevant PRC authorities will take the same position as the Group herein in respect of the legality, binding effect and enforceability of each of the contractual arrangements. Meanwhile, since the PRC legal system continues to evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to the Group to enforce the contractual arrangements should the VIEs or the nominee shareholders of the VIEs fail to perform their obligations under those arrangements.
F-7
1.Organization and Reorganization (Continued)
Risks in relation to the VIE structure (Continued)
The following combined financial information of the Group’s VIEs as of December 31, 2023 and June 30, 2024 and for the six months ended June 30, 2023 and 2024 were included in the accompanying condensed consolidated financial statements of the Group as follows:
As of December 31, | As of June 30, | |||
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| 2023 |
| 2024 |
| RMB | RMB | ||
(unaudited) | ||||
ASSETS | ||||
Current assets: |
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Cash and cash equivalents |
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Amount due from the subsidiaries of the Group |
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Other current assets | | | ||
Total current assets |
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Non-current assets: |
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Long-term investments |
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Operating lease right-of-use assets | | | ||
Total non-current assets |
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TOTAL ASSETS |
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Current liabilities: |
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Short term borrowings | | | ||
Accounts payable | | | ||
Advance from customers |
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Salary and welfare benefits payable |
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Other taxes payable |
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Short-term operating lease liabilities | | | ||
Current portion of deferred revenue | | | ||
Other current liabilities | | | ||
Account due to subsidiaries of the Group | | | ||
Total current liabilities | | | ||
Long-term borrowings |
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Long-term operating lease liabilities | — | | ||
Non-current portion of deferred revenue | | | ||
Total non-current liabilities | | | ||
TOTAL LIABILITIES |
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| For the six months ended June 30, | |||
| 2023 |
| 2024 | |
RMB | RMB | |||
Net revenues |
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Net income/ (loss) |
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| ( |
| For the six months ended June 30, | |||
| 2023 |
| 2024 | |
RMB | RMB | |||
Net cash used in operating activities |
| ( |
| ( |
Net cash generated from investing activities |
| — |
| — |
Net cash generated from financing activities |
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Net decrease in cash, cash equivalent and restricted cash |
| ( |
| ( |
F-8
1.Organization and Reorganization (Continued)
Risks in relation to the VIE structure (Continued)
In accordance with various contractual agreements, the Company has the power to direct the activities of the VIEs and subsidiaries of VIEs and can have assets transferred out of the VIEs. Therefore, the Company considers that there are no assets in the respective VIEs that can be used only to settle obligations of the respective VIEs, except for the registered capital of the VIEs amounting to approximately RMB
There is no VIE in the Group where the Company or any subsidiary has a variable interest but is not the primary beneficiary.
2.Going Concern
The Group has incurred recurring operating losses since its inception, including net losses of RMB
Historically, the Group has relied principally on both operational sources of cash and non-operational sources of financing from investors to fund its operations and business development. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan which includes strictly implementing the expenses, accelerating the collection of accounts receivable and increasing the proportion of advance from customers, pursuing cooperation opportunities for electric vehicles industry and potential financing to improve the Group’s cash flow from operations and financing.
If the Group fails to achieve these goals, the Group may need additional financing to execute its business plan. If additional financing is required, the Group cannot predict whether this additional financing will be in the form of equity, debt, or another form, and the Group may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that financing sources are not available, or that the Group is unsuccessful in increasing its gross profit margin and reducing operating losses, the Group may be unable to implement its current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on the Group’s business, financial condition and results of operations and would materially adversely affect its ability to continue as a going concern.
The Group’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of such uncertainties.
F-9
3.Significant Accounting Policies
a)Basis of presentation
The consolidated financial statements of the Group have been prepared in accordance with U.S. GAAP. Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.
b)Principles of consolidation
The condensed consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and subsidiaries of VIEs for which the Company is the primary beneficiary.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.
All transactions and balances among the Company, its subsidiaries, VIEs and subsidiaries of VIEs have been eliminated upon consolidation.
c)Use of estimates
The preparation of the Group’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to determining the provision for accounts receivable, provision for prepayment and other current assets, assessment for valuation allowance of deferred tax assets, valuation and recognition of share-based compensation expenses, impairment assessment on goodwill and long-lived assets, long-term investments, valuation of warrant liabilities.
d)Convenience Translation
Translations of balances in the condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss and condensed consolidated statements of cash flows from RMB into US$ as of and for the six months ended June 30, 2024 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB
F-10
3.Significant Accounting Policies (Continued)
e)Fair value measurements
Accounting guidance defines fair value as 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 it considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes 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. Accounting guidance establishes three levels of inputs that may be used to measure fair value:
● | Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
● | Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
● | Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The Group’s financial instruments include cash and cash equivalents, restricted cash, accounts and notes receivable, prepayment and other current assets, long-term investments, short-term borrowings, accounts payable, other payables and other liabilities of which the carrying values approximate their fair value due to their short term in nature and other liabilities.
The fair value of warrant liability was determined using the Black Scholes Model, with level 3 inputs (Note 15).
f)Accounts and notes receivables, net
The carrying value of accounts receivable is reduced by an allowance that reflects the Group’s best estimate of the amounts that will not be collected. An allowance for doubtful accounts is recorded in the period when a loss is probable based on an assessment of specific evidence indicating collection is unlikely, historical bad debt rates, accounts aging, financial conditions of the customer and industry trends. Starting from January 1, 2021, the Group adopted ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). The Group’s accounts receivable and other receivables are within the scope of ASC Topic 326. To estimate expected credit losses, the Group has identified the relevant risk characteristics of the receivables which include size and nature. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the past collection experience, current economic conditions and future economic conditions (external data and macroeconomic factors). This is assessed at each quarter based on the Group’s specific facts and circumstances. There have been no significant changes in the assumptions since adoption. Accounts receivable balances are written off against the allowance when they are determined to be uncollectible. Notes receivable represents notes receivable issued by reputable financial institutions that entitle the Group to receive the full face amount from the financial institutions at maturity. Refer to Note 5 for details.
F-11
3.Significant Accounting Policies (Continued)
g)Goodwill
Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. The Group’s goodwill as of December 31, 2023 and June 30, 2024 was related to its acquisition of Longye in January 2020. In accordance with ASC 350, Goodwill and Other Intangible Assets, recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.
Goodwill is tested for impairment at the reporting unit level on an annual basis (December 31 for the Group) and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. These events or circumstances include a significant change in stock prices, business environment, legal factors, financial performances, competition, or events affecting the reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The estimation of fair value of reporting unit using a discounted cash flow methodology also requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Group’s business, estimation of the useful life over which cash flows will occur, and determination of the Group’s weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for the reporting unit.
Management has determined that the Group has one reporting unit within the entity at which goodwill is monitored for internal management purposes. Starting from January 1, 2020, the Group adopted ASU 2017-04, which simplifies the accounting for goodwill impairment by eliminating Step 2 from the goodwill impairment test. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, versus determining an implied fair value in Step 2 to measure the impairment loss. Management evaluated the recoverability of goodwill by performing a qualitative assessment before using the quantitative impairment test approach at the reporting unit level. Based on an assessment of the qualitative factors, management determined that it is more-likely-than-not that the fair value of the reporting unit is more than its carrying amount as of June 30, 2023 and 2024. Therefore, management performed quantitative assessment,
If the Group reorganizes its reporting structure in a manner that changes the composition of its reporting units, goodwill is reassigned based on the relative fair value of each of the affected reporting units.
h)Impairment of long-lived assets
Long-lived assets or asset group, including intangible assets with finite lives, are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. The Group recognized RMB
F-12
3.Significant Accounting Policies (Continued)
i)Revenue recognition
The Group recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services using the five steps defined under ASC Topic 606.
The Group determines revenue recognition through the following steps:
● | identification of the contract, or contracts, with a customer; |
● | identification of the performance obligations in the contract; |
● | determination of the transaction price; |
● | allocation of the transaction price to the performance obligations in the contract; and |
● | recognition of revenue when, or as, the Group satisfies a performance obligation |
Revenue is recognized upon transfer of control of promised goods or services to a customer.
Revenue is recorded net of Value Added Tax (“VAT”) and related surcharges collected from customers, which are subsequently remitted to government authorities.
Offline marketing services revenue
Auto shows revenue
The Group’s online website and offline infrastructure allow them to organize auto shows, which aim at facilitating transactions between consumers and industry customers that includes auto dealers, automakers and automotive service providers. The Group charges a fixed admission fee per auto show event from its industry customers for arranging, decorating and providing booth space at auto shows. The Group has identified one performance obligation for the transaction - providing a decorated venue for auto dealers, automakers and automotive service providers, as the individual service promised in auto show contracts are not distinct individually. As the Group has control of the auto show services and discretion in establishing the price of auto show admission fee to auto dealers, automakers and other automotive service providers, it is considered to be a principal in accordance with ASC 606. The auto shows revenue is recognized on a straight-line basis over the period of the contract, which is usually from two days to four days, when the services are provided.
Special promotion events revenue
The Group provides integrated services to support auto dealers’ own special promotion events during a specific period. The services include event planning and execution, marketing, training and onsite coaching, etc. The Group charges a fixed service fee per special promotion event. The Group has identified one performance obligation as the individual service promised in service contracts are not distinct individually. As the Group has control of the service and discretion in establishing the price of the fee to auto dealers, it is considered to be a principal in accordance with ASC 606. The special promotion events revenue is recognized on a straight-line basis over the promotion period of the contract, which is usually one week, when the services are provided.
F-13
3.Significant Accounting Policies (Continued)
i)Revenue recognition (Continued)
Referral service for commercial bank revenue
In October 2019, the Group commenced its auto loan referral services in collaboration with a commercial bank. The referral services provided to the bank include (i) referral services and (ii) periodic guarantee for the following time periods: (a) from the date of loan issuance by the commercial bank to the consumer to the date when the consumer’s vehicle mortgage registration is completed (the mortgage registration procedures should be completed within 120 days after the loan issuance) and (b) no overdue of more than 30 days for any of the first 3 monthly repayment. The referral service and periodic guarantee are two separate performance obligations that meet the criteria to be considered distinct, of which, referral services revenue is recognized at a point in time upon the delivery of the services and a guarantee liability is recorded at fair value at inception of the loans. Revenue from the periodic guarantee is recognized by a systematic and rational amortization method over the term of guarantee period. The Company has ceased the cooperation since April 2022.
Online marketing services revenue
The Group’s online marketing services revenue primarily include (i) live streaming promotion events services, (ii) customer referral services, (iii) marketing information services and (iv) demand-side platform services.
The Group commenced its live streaming promotion events services from the first quarter of 2020, holding promotional events on the live streaming platform of Zhejiang Tmall Technology Co., Ltd. (“Tmall”), which aims at facilitating transactions between consumers and industry customers that includes auto dealers, automakers and automotive service providers. The Group identified only one performance obligation that is to provide the industry customers with arranging, decorating and providing the platform for live show. The Group charges a fixed admission fee per live streaming promotion event from its industry customers. As the Group has control of the services and discretion in establishing the price of live streaming promotion admission fee to auto dealers, automakers and other automotive service providers, it is considered to be a principal in accordance with ASC 606. The live streaming promotion events services revenue is recognized on a straight-line basis over the promotion period of the contract, which is usually one week, when the services are provided.
Other revenue
The Group also commenced its customer referral services from the first quarter of 2020 by referring its industry customers to Beijing Baidu Netcom Science Technology Co., Ltd. (“Baidu”) to use the membership services of a Baidu’s auto content distribution platform. The Group identified only one performance obligation that is to provide referral service to Baidu. The Group charges Baidu a fixed rate commission fee based on the membership fee amount for the services rendered. Revenue is recognized at point-in-time when the industry customers successfully register as a membership of Baidu’s auto content distribution platform.
For the marketing information services, the Group generates consumers’ demand information through its online channels and provides to the industry customers upon consumers’ consent. The Group identified only one performance obligation that is to provide consumer’s demand information to the industry customers. The marketing information service fee is charged based on the quantity of consumers’ demand information delivered. Revenue is recognized at a point in time upon the delivery of such consumers’ demand information.
On January 13, 2020, the Company completed the acquisition of Longye a Software-as-a-Service (“SaaS”) company who mainly provides subscription and support services to industry customers, including auto dealers, automakers and automotive service providers, with access to cloud services, software licenses and related support and updates during the term of the arrangement. Cloud services allow industry customers to use the Group’s multi-tenant software without taking possession of the software. The Group identified the only one performance obligation that is to provide integrated cloud services to industry customers. The Group initially records the subscription and support services fee as deferred revenue upon receipt and then recognizes the revenue on a straight-line basis over the service period, which is usually from one year to five years. The subscription and support services revenue is recognized on a straight-line basis over the period of the contract when the services are provided.
F-14
3.Significant Accounting Policies (Continued)
i)Revenue recognition (Continued)
Contract balances
Contract liabilities primarily result from the timing difference between the Group’s satisfaction of performance obligation and the customers’ payment. Substantial all auto show revenue and referral service for commercial bank revenue and SaaS revenue are recognized over time during the six months ended June 30, 2023 and 2024.
Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenues recognized prior to invoicing when the Group has satisfied the Group’s performance obligation and has the unconditional rights to payment.
The Group applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Group has no material incremental costs of obtaining contracts with customers that the Group expects the benefit of those costs to be longer than one year which need to be recognized as assets.
j)Taxation
Income taxes
Current income taxes are provided on the basis of income/(loss) for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any tax loss and tax credit carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or tax laws is recognized in the consolidated statements of operations and comprehensive loss in the period the change in tax rates or tax laws is enacted. A valuation allowance is provided to reduce the amount of deferred income tax assets if it is considered more likely than not that some portion or all of the deferred income tax assets will not be realized.
Uncertain tax positions
In order to assess uncertain tax positions, the Group applies a more likely than not threshold and a two-step approach for the tax position measurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Group recognizes interest and penalties, if any, under accrued expenses and other current liabilities on its consolidated balance sheet and under other expenses in its consolidated statements of operations and comprehensive loss. The Group did not have any significant unrecognized uncertain tax positions as of December 31, 2023 and June 30, 2024.
F-15
3.Significant Accounting Policies (Continued)
k)Warrant liability
In connection with the issuances of ordinary shares, the Group issued warrants to purchase ordinary shares on November 23, 2022. The Group evaluates the warrants under Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity. Warrants recorded as liabilities are recorded at their fair value and remeasured on each reporting date with change in estimated fair value of warrant liability in the condensed consolidated statement of operations and comprehensive loss.
l)Concentrations and Risks
Advertising and promotional service provider
The Group relied on advertising and promotional service providers and their affiliates for advertising and promotional service to support its operations during the six months ended June 30, 2023 and 2024. Total number of advertising and promotional service providers accounting for more than 10% is
Credit risk
Financial instruments that potentially subject the Group to the concentration of credit risk consist of cash and cash equivalents, restricted cash and accounts and notes receivable. As of December 31, 2023 and June 30, 2024, all of the Group’s cash and cash equivalents and restricted cash were held in large reputable financial institutions located in the United States of America or China, which management consider being of high credit quality. Accounts receivable is typically unsecured and is derived from revenue earned from the Company’s businesses.
Major customers
There were
There was
4.Goodwill
The following table presents the Group’s goodwill as of the respective balance sheet dates:
| December 31, 2023 |
| June 30, 2024 | |
| RMB |
| RMB | |
(Unaudited) | ||||
Goodwill |
| |
| |
Less: impairment |
| ( |
| ( |
Goodwill, net |
| |
| |
F-16
5.Accounts and notes receivables, net
Accounts and notes receivables consist of the following:
| December 31, 2023 |
| June 30, 2024 | |
RMB | RMB | |||
(Unaudited) | ||||
Notes receivable | | | ||
Accounts receivable |
| |
| |
Less: allowance for doubtful accounts |
| ( |
| ( |
Accounts receivable, net |
| |
| |
The Group recognized the allowance for doubtful accounts of RMB
6.Prepayment and other current assets, net
The following is a summary of prepayments and other current assets:
| December 31, 2023 |
| June 30, 2024 | |
RMB | RMB | |||
(Unaudited) | ||||
Deductible VAT |
| |
| |
Deposits |
| |
| |
Receivables due from third-party online payment platforms |
| |
| |
Staff advances |
| |
| |
Receivable from borrowers for the guarantee payment to commercial bank | | | ||
Others |
| |
| |
Less: provisions for prepayment and other current assets | ( | ( | ||
Total prepayment and other current assets, net |
| |
| |
The Group recognized provisions for prepayment and other current assets of RMB
F-17
7.Taxation
a)Income taxes
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company in the Cayman Islands to their shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
Commencing from the year of assessment 2018/2019, the first HK$
China
Effective from January 1, 2008, the PRC’s statutory income tax rate is
The following table presents an unaudited reconciliation of the differences between the statutory income tax rate and the Company’s effective income tax rate for the six months ended June 30, 2023 and 2024:
| For the six months ended | |||
June 30, | ||||
| 2023 |
| 2024 | |
% | % | |||
Statutory income tax rate of the PRC |
| |
| |
Permanent differences |
| ( |
| ( |
Change in valuation allowance |
| ( |
| ( |
Effect of preferential tax rate | ( | ( | ||
Others | | ( | ||
Effective income tax rate |
| |
|
8.Short-term borrowings
For the six months ended June 30, 2024, the Group had repaid borrowings of RMB
Term loan |
| Maturity date |
| Principal amount |
| Interest rate per annum |
| Name of bank |
Loan 1 |
|
| |
| | % | ||
Loan 2 |
|
| |
| | % | ||
Loan 3 |
|
| |
| | % | ||
Loan 4 |
|
| |
| | % | ||
Loan 5 |
|
| |
| | % | ||
Total |
|
| |
|
|
|
|
As of June 30, 2024, the loan 5 is guaranteed by a third party.
F-18
9.Other current liabilities
The following is a summary of other current liabilities as of December 31, 2023 and June 30, 2024:
| December 31, 2023 |
| June 30, 2024 | |
| RMB |
| RMB | |
(Unaudited) | ||||
Professional service fee |
| |
| |
Advertising expense payables |
| |
| |
Promotional expense payables |
| |
| |
Others |
| |
| |
Total |
| |
| |
10.Long-term borrowings
For the six months ended June 30, 2024, the Group had repaid long-term borrowings of RMB
Term loan |
| Maturity date |
| Principal amount |
| Interest rate per annum |
| Name of bank |
Loan 1 | | | % | Bank of China Limited Beijing Xuanwu Branch | ||||
Loan 2 |
|
| |
| | % | China Construction Bank Corporation Beijing Chaoyang Branch | |
Total |
|
| |
|
|
|
|
As of June 30, 2024, the loan 1 is guaranteed by a third party.
11.Share-based Compensation
Description of stock option plan and Share option replacement
In June 2018, the directors of the Company (the “Directors”) approved the TuanChe Limited Share Incentive Plan (the “Share Incentive Plan”). Under the Share Incentive Plan,
F-19
11.Share-based Compensation (Continued)
Description of stock option plan and Share option replacement (Continued)
On May 4, 2023, the directors of the Company (the “Directors”) approved the 2023 Share Incentive Plan (the “2023 Plan”). Under the 2023 Plan, the Group are authorized to issue an aggregate of
For the six months ended June 30, 2024, the Company has granted
A summary of the restricted shares activities is presented below:
Number of restricted | Weighted-Average | |||
| shares |
| Grant-Date Fair Value | |
US$ | ||||
Outstanding as of December 31, 2023 | | | ||
Granted | | | ||
Forfeit | | | ||
Vested | ( | | ||
Outstanding as of June 30, 2024 (unaudited) |
| |
| |
For the six months ended June 30, 2023 and 2024, total share-based compensation expenses recognized by the Group for the restricted shares granted were RMB
As of June 30, 2024, there was RMB
12.Equity
Ordinary shares and Pre-funded Warrant
On November 23, 2022, the Company issued
The Company determined that the Pre-Funded Warrant meet the requirements for equity classification. The Pre-Funded warrants were recorded at their fair value on the date of issuance as a component of total equity. In addition, since these Pre-Funded warrants are exercisable for a nominal amount, they have been shown as exercised when issued and as outstanding common stock in the consolidated financial statements and earnings per share calculations.
Warrant
On November 23, 2022, the Warrant are classified as a liability and the fair value allocated to the Warrant was RMB
F-20
13.Net Loss Per Share
As the Group incurred losses for the six months ended June 30, 2023 and 2024, the potential and restricted shares granted were anti-dilutive and excluded from the calculation of diluted net loss per share of the Company.
The following table sets unaudited forth the computation of basic and diluted net loss per share for the six months ended June 30, 2023 and 2024:
For the six months ended June 30, | ||||
| 2023 |
| 2024 | |
Numerator : | ||||
Net loss attributable to TuanChe Limited’s shareholders |
| ( |
| ( |
Denominator: |
|
| ||
Weighted average number of ordinary shares outstanding, basic and diluted |
| |
| |
Basic and diluted net loss per share attributable to TuanChe Limited’s shareholders |
| ( |
| ( |
14.Commitments and contingencies
Litigation
From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of any unresolved matters, individually and in the aggregate, is reasonably possible to have a material adverse effect on the Group’s financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the future. The Group records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis. The Group has not recorded any material liabilities in this regard as of December 31, 2023 and June 30, 2024.
15.Fair Value Measurement
For the year ended | For the six months ended | |||||
December 31, 2023 | June 30, 2024 | |||||
| RMB |
| RMB |
| US$ | |
Warrant liability: |
|
|
|
|
|
|
Level 1 Inputs |
| — |
| — |
| — |
Level 2 Inputs |
| — |
| — |
| — |
Level 3 Inputs |
| |
| |
| |
Balance at fair value |
| |
| |
| |
| As of December 31, 2023 |
| As of June 30, 2024 | ||
Expiration of warrant (years) |
| |
| | |
Fair market value per share (US$)* |
| |
| | |
Exercise price (US$)* |
| |
| | |
Risk-free rate |
| | % | | % |
Dividend yield |
| — |
| — | |
Standard derivation in the value of stock |
| | % | | % |
*Effective on January 26, 2024, The Group changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS to sixteen (
F-21
15.Fair Value Measurement (Continued)
| For the six months ended June 30, 2024 | |
RMB | ||
Fair value of warrants at beginning of the period (Level 3) |
| |
Issuances |
| — |
Change in fair value |
| ( |
Effect of exchange rate changes |
| |
Fair value of warrants at end of the period (Level 3) |
| |
16.Related party transactions and balance
The Company entered into outsourcing service agreements with Shanghai Three Drivers Culture Media Co., Limited (“STDC”). The outsourcing service expenses provided by STDC for the Company are RMB
For the six months ended June 30, 2024, the Company received RMB
On November 22, 2023, the company received RMB
17.Subsequent event
The Group has performed an evaluation of subsequent events through the date the financial statements were issued and has determined that there are no events that would have required adjustment or disclosure in the financial statements.
F-22