Exhibit 99.3
SCIENJOY HOLDING CORPORATION
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share and per share data or otherwise stated)
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Amounts due from related parties | ||||||||||||
| Investment in marketable security | ||||||||||||
| Total current assets | ||||||||||||
| Property and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Goodwill | ||||||||||||
| Long term investment | ||||||||||||
| Long term deposits and other assets | ||||||||||||
| Right-of-use assets-operating lease | ||||||||||||
| Deferred tax assets | ||||||||||||
| Total non-current assets | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | ||||||||||||
| Accrued salary and employee benefits | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Income tax payable | ||||||||||||
| Lease liabilities-operating lease -current | ||||||||||||
| Deferred revenue | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| Lease liabilities-operating lease -non-current | ||||||||||||
| Total non-current liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| Commitments and contingencies | ||||||||||||
| EQUITY | ||||||||||||
| Ordinary share, no par value, unlimited Class A ordinary shares and Class B ordinary shares authorized, | ||||||||||||
| Shares to be issued | ||||||||||||
| Treasury stocks | ( | ) | ( | ) | ( | ) | ||||||
| Statutory reserves | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive income | ||||||||||||
| Total shareholders’ equity | ||||||||||||
| Non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||
| Total equity | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(All amounts in thousands, except share and per share data or otherwise stated)
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Live streaming - consumable virtual items revenue | ||||||||||||
| Live streaming - time based virtual item revenue | ||||||||||||
| Technical services and others | ||||||||||||
| Total revenue | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Provision for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Income from operations | ||||||||||||
| Change in fair value of contingent consideration | ( | ) | ||||||||||
| Change in fair value of warrant liabilities | ||||||||||||
| Change in fair value of investment in marketable security | ||||||||||||
| Investments loss | ( | ) | ( | ) | ( | ) | ||||||
| Interest income, net | ||||||||||||
| Other income, net | ||||||||||||
| Foreign exchange gain, net | ||||||||||||
| Income before income taxes | ||||||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ||||||||
| Net income | ||||||||||||
| Less: net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||
| Net income attributable to the Company’s shareholders | ||||||||||||
| Other comprehensive loss: | ||||||||||||
| Other comprehensive loss - foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive income | ||||||||||||
| Less: comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive income attributable to the Company’s shareholders | ||||||||||||
| Weighted average number of shares | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
| Earnings per share | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(All amounts in thousands, except share and per share data or otherwise stated)
| Ordinary shares | Shares to be | Treasury stocks | Statutory | Retained | Accumulated other comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | issued | shares | Amount | reserves | earnings | Income | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares for achievement of earnout target | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Share based compensation | - | - | ||||||||||||||||||||||||||||||||||||||
| Appropriation to statutory reserves | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Ordinary shares | Shares to be | Treasury stocks | Statutory | Retained | Accumulated other comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | issued | shares | Amount | reserves | earnings | Income | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares for achievement of earnout target | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Share based compensation | ||||||||||||||||||||||||||||||||||||||||
| Appropriation to statutory reserves | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 (US$) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except share and per share data or otherwise stated)
| For the six months ended | ||||||||||||
| June 30, | June 30, | June 30, | ||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||
| Depreciation of property and equipment | ||||||||||||
| Amortization of intangible assets | ||||||||||||
| Provision for credit losses | ||||||||||||
| Loss from disposal of property and equipment | ||||||||||||
| Deferred tax expense (benefit) | ( | ) | ||||||||||
| Change in fair value of contingent consideration | ||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||||||
| Change in fair value of investment in marketable security | ( | ) | ( | ) | ( | ) | ||||||
| Investments loss | ||||||||||||
| Share based compensation | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Changes in operating assets and liabilities | ||||||||||||
| Accounts receivable | ||||||||||||
| Prepaid expense and other current assets | ||||||||||||
| Long term deposits and other assets | ( | ) | ( | ) | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ( | ) | ||||||
| Deferred revenue | ( | ) | ( | ) | ( | ) | ||||||
| Accrued salary and employee benefits | ( | ) | ( | ) | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Income tax payable | ( | ) | ( | ) | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||||||
| Cash flows from investing activities | ||||||||||||
| Payment for long term investments | ( | ) | ( | ) | ( | ) | ||||||
| Purchase of property and equipment and intangible assets | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from bank loan | ||||||||||||
| Repayment for bank loan | ( | ) | ||||||||||
| Repayment from related parties | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of foreign exchange rate changes on cash | ( | ) | ( | ) | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at beginning of the period | ||||||||||||
| Cash and cash equivalents at end of the period | ||||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Income taxes paid | ||||||||||||
| Supplemental non-cash investing and financing information: | ||||||||||||
| Issuance of Class A ordinary shares for achievement of earnout target | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Scienjoy Holding Corporation (the “Company” or “Scienjoy”) through its subsidiaries, and variable interest entities(“VIE”) and its subsidiaries (collectively the “Group”) are principally engaged in operating its own live streaming platforms in the People’s Republic of China (the “PRC”), which enable users to view and interact with broadcasters through online chat, virtual items and playing games. The primary theme of the Company’s platform is entertainment live streaming.
(a) Recent developments
On April 11, 2024, the Company formed a
On May 30, 2024, the Company formed a wholly
(b) Organization
| Subsidiaries | Date of incorporation | Place of incorporation | Percentage of direct/indirect ownership | Principal activities | ||||
| Scienjoy Inc. | ||||||||
| Scienjoy Pte. Ltd. (“Scienjoy SG”) | ||||||||
| Scienjoy International Limited (“Scienjoy HK”) | ||||||||
| Scienjoy BeeLive Limited (formerly known as Sciscape International Limited, “SIL”) | ||||||||
| Golden Shield Enterprises Limited (“Golden Shield”) | ||||||||
| Scienjoy Verse Tech Ltd (“Scienjoy Verse”) (a 51% owned subsidiary of Scienjoy SG through entrust agreement between Scienjoy SG and Mr Xiaowu He, Chief Executive Officer and Chairman of the Board) | ||||||||
| Scienjoy Meta Technology LLC (“Scienjoy Meta”) (a wholly owned subsidiary of Scienjoy Verse) | ||||||||
| SJ Verse Global Media LLC (“SJ Verse”) (a 90% owned subsidiary of Scienjoy Verse) | ||||||||
| Scenovo Pte. Ltd. (“Scenovo SG”) | ||||||||
| Techjoy Pte. Ltd. (“Techjoy SG”) | ||||||||
| Sixiang Wuxian (Beijing) Technology Co., Ltd. (“WXBJ”) (a wholly owned subsidiary of Scienjoy HK) | ||||||||
| Sixiang Zhihui (Beijing) Technology Co., Ltd. (“ZH”) (a wholly owned subsidiary of WXBJ) | ||||||||
| Sixiang Yingyue (Shanghai) Technology Co., Ltd(“SXYY”) (a wholly owned subsidiary of WXBJ) | ||||||||
| Holgus Sixiang Information Technology Co., Ltd. (“Holgus X”) (a wholly owned subsidiary of ZH) | ||||||||
| Kashgar Sixiang Times Internet Technology Co., Ltd. (“Kashgar Times”) (a wholly owned subsidiary of ZH) | ||||||||
| Kashgar Sixiang Lehong Information Technology Co., Ltd (“Kashgar Lehong”) (a wholly owned subsidiary of ZH) | ||||||||
| Holgus Sixiang Haohan Internet Technology Co., Ltd. (“Holgus H”) (a wholly owned subsidiary of ZH) |
F-6
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
(b) Organization (continued)
| Subsidiaries | Date of incorporation | Place of incorporation | Percentage of direct/indirect ownership | Principal activities | ||||
| Sixiang ZhiHui (Hainan) Technology Co., Ltd (“ZHHN”) (a wholly owned subsidiary of ZH) | ||||||||
| Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd (“WXZJ”) (a wholly owned subsidiary of Scienjoy HK) | ||||||||
| Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd (“ZHZJ”) (a wholly owned subsidiary of WXZJ) | ||||||||
| VIEs | ||||||||
| Zhihui Qiyuan (Beijing) Technology Co., Ltd. (“QY”) (Controlled through contractual agreements by WXBJ) | ||||||||
| Beijing Sixiang Shiguang Technology Co., Ltd. (“SG”) (a wholly owned subsidiary of QY) | ||||||||
| Hai Xiu (Beijing) Technology Co., Ltd. (“HX”) (a wholly owned subsidiary of QY) | ||||||||
| Beijing Le Hai Technology Co., Ltd. (“LH”) (a wholly owned subsidiary of QY) | ||||||||
| Sixiang Mifeng (Tianjin) Technology Co., Ltd (“DF”, formerly known as Tianjin Guangju Dingfei Technology Co., Ltd) (a wholly owned subsidiary of QY) | ||||||||
| Changxiang Infinite Technology (Beijing) Co., Ltd. (“CX”) (a wholly owned subsidiary of DF) | ||||||||
| Zhihui QiYuan (Hainan) Investment Co., Ltd (“QYHN”) (a wholly owned subsidiary of QY) | ||||||||
| Huayu Hefeng (Qingdao) Technology Co., Ltd (“HYHF”) (a wholly owned subsidiary of SG) | ||||||||
| Beijing Weiliantong Technology Co., Ltd.(“WLT”) (a wholly owned subsidiary of QY) | ||||||||
| Chuangda Zhihui (Beijing) Technology Co., Ltd.(“CDZH”) (a wholly owned subsidiary of SG) | ||||||||
| Beijing Huayi Dongchen Technology Co., Ltd. (“HYDC”) (a wholly owned subsidiary of CDZH) | ||||||||
| Hongcheng Huiying (Zhejiang)Technology Industry Development Co., Ltd.(“HCHY”) (a 51% owned subsidiary of QYHN) | ||||||||
| Hangzhou Sixiang Fengjing Culture Technology Co., Ltd.(“SXFJ”) (a 51% owned subsidiary of QYHN) | ||||||||
| Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd (“QYHZ”) (Controlled through contractual agreements by WXZJ) | ||||||||
| Xiuli (Zhejiang) Culture Technology Co., Ltd (“XLZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Leku (Zhejiang) Culture Technology Co., Ltd. (“LKZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Haifan (Zhejiang) Culture Technology Co., Ltd (“HFZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Xiangfeng (Zhejiang) Culture Technology Co., Ltd (“XFZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Hongren (Zhejiang) Culture Technology Co., Ltd (“HRZJ”) (a wholly owned subsidiary of QYHZ) |
F-7
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2023 and 2024 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in Scienjoy Holding Corporation’s annual financial statements for the fiscal year ended December 31, 2023 filed with the SEC on April 26, 2024.
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, and its VIE and VIE’s subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE are eliminated upon consolidation.
(b) Business combinations
The Company accounts for all business combinations under the purchase method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase method of accounting requires that the consideration transferred to be allocated to net assets including separately identifiable assets and liabilities the Company acquired, based on their estimated fair value. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of the cost of the acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings. The determination and allocation of fair values to the identifiable net assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable judgment from management. Although the Company believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
(c) Use of estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to revenue recognition, estimating the useful lives of long-lived assets and intangible assets, valuation assumptions in performing asset impairment tests of long-lived assets, allowance for credit losses, and valuation of deferred taxes and deferred tax assets. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
F-8
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Foreign currency
The functional currency of the Company is in US dollars and the functional currency of the Company’s subsidiaries and VIEs are Renminbi (“RMB”), as determined based on the criteria of Accounting Standards Codification (“ASC”) 830 (“ASC 830”) “Foreign Currency Matters”. The reporting currency of the Company is also the RMB.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange in place at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of operations.
Assets and liabilities of the Company translated from their respective functional currencies to the reporting currency at the exchange rates 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. The resulting foreign currency translation adjustment are recorded in other comprehensive income (loss).
(e) Convenience translation
Translations of balances in the consolidated balance
sheets, consolidated statements of operations and comprehensive income and consolidated statements of cash flows from RMB into USD (or
“US$”) as of and for the six months ended June 30, 2024 are solely for the convenience of the reader and were calculated at
the rate of US$
(f) Accounts receivable and allowance for credit losses
Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts.
The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. The Company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable.
F-9
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Fair value of financial instruments
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses and other current assets, accounts payables, balances with related parties and other current liabilities, approximate their fair values because of the short-term maturity of these instruments.
Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis
| As of December 31, 2023 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in marketable equity security | ||||||||||||||||
| As of June 30, 2024 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in marketable equity security | ||||||||||||||||
F-10
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Fair value of financial instruments (continued)
Warrant liabilities
The Company’s warrants assumed from SPAC acquisition on May 7,2020, the date of the closing of SPAC Transaction, that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative as contemplated in ASC 815-40. The warrant is recorded as derivative liability on the consolidated balance sheet upon the SPAC transaction and is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain in accordance with ASC 820.
On February 5, 2024, all above warrants expired and were cancelled according to the terms of the warrant agreement.
(h) Revenue recognition
The Company applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. Revenues are recognized when control of the promised virtual items or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those virtual items or services. Revenue is recorded, net of sales related taxes and surcharges.
Live streaming
The Company is principally engaged in operating its own live streaming platforms, which enable broadcasters and viewers to interact with each other during live streaming. The Company is responsible for providing a technological infrastructure to enable the broadcasters, online users and viewers to interact through live streaming platforms. All the platforms can be accessed for free. The Company mainly derives the revenue from sales of virtual items in the platforms. The Company has a recharge system for users to purchase the Company’s virtual currency then purchase virtual items for use. Users can recharge via various online third-party payment platforms, including WeChat Pay, AliPay and other payment platforms. Virtual currency is non-refundable and often consumed soon after it is purchased.
The Company designs, creates and offers various virtual items for sales to users with pre-determined stand-alone selling price. Virtual items are categorized as consumable and time-based items. Consumable items are consumed upon purchase and use while time-based items could be used for a fixed period of time. Users can purchase and present consumable items to broadcasters to show support for their favorite broadcasters, or purchase time-based virtual items for one or multiple months for a monthly fee, which provide users with recognized status, such as priority speaking rights or special symbols over a period of time.
The Company shares a portion of the sales proceeds of virtual items (“revenue sharing fee”) with broadcasters and talent agencies in accordance with their revenue sharing arrangements. Broadcasters, who do not have revenue sharing arrangements with the Company, are not entitled to any revenue sharing fee. The Company also utilizes third-party payment collection channels, which charges the payment handling cost for users to purchase the virtual currency directly from it. The payment handling costs are recorded in cost of sales.
The Company evaluates and determines that it is the principal and views users to be its customers, because the Company controls the virtual items before they are transferred to users. Its control is evidenced by the Company’s sole ability to monetize the virtual items before they are transferred to users, and is further supported by the Company being primarily responsible to the users for the delivery of the virtual items as well as having full discretion in establishing pricing for the virtual items. Accordingly, the Company reports live streaming revenues on a gross basis with the amounts billed to users recorded as revenues and revenue sharing fee paid to broadcasters and related agencies recorded as cost of revenues.
F-11
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Revenue recognition (continued)
Sales proceeds are initially recorded as deferred revenue and recognized as revenue based on the consumption of the virtual items. The Company has determined that each individual virtual item represents a distinct performance obligation. Accordingly, live streaming revenue is recognized immediately when the consumable virtual item is used, or in the case of time-based virtual items, revenue is recognized over the fixed period on a straight-line basis. The Company does not have further obligations to the user after the virtual items are consumed. The Company’s live streaming virtual items are generally sold without right of return and the Company does not provide any other credit and incentive to its users. Unconsumed virtual currency is recorded as deferred revenue.
The Company also cooperates with independent third-party distributors to sell virtual currency through annual distribution agreements with these distributors. Third-party distributors purchase virtual currency from the Company with no refund provision according to the annual distribution agreements, and they are responsible for selling the virtual currency to end users. They may engage their own sales representatives, which are referred to as “sales agents” to directly sell to individual end users. The Company has no control over such “sales agents”. The Company has discretion to determine the price of the virtual currency sold to its third-party distributors, but has no discretion as to the price at which virtual currency is sold by its third-party distributors to the sales agents.
Technical services and others
The Company generated technical and other revenues
from providing multi-channel network (“MCN”) agency service, technical development, advisory and others, which accounts for
only approximately
Practical expedients and exemptions
The Company’s contracts have an original duration of one year or less. Accordingly, the Company does not disclose the value of unsatisfied performance obligations.
Revenue by types and platforms
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Live streaming - consumable virtual items revenue | ||||||||||||
| Live streaming - time based virtual item revenue | ||||||||||||
| Technical services and others | ||||||||||||
| Total revenue | ||||||||||||
F-12
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Revenue recognition (continued)
As of June 30, 2024, we operated five brands of
live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming
(including BeeLive Chinese version – Mifeng) and Hongle Live Streaming.
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Showself | ||||||||||||
| Lehai | ||||||||||||
| Haixiu | ||||||||||||
| Beelive | ||||||||||||
| Hongle | ||||||||||||
| Technical services and others | ||||||||||||
| TOTAL | ||||||||||||
Contract balances
Contract balances include accounts receivable and deferred revenue. Accounts receivable primarily represent cash due from distributors and are recorded when the right to consideration is unconditional. The allowance for doubtful accounts reflects the best estimate of probable losses inherent to the account receivable balance. Deferred revenue primarily includes unconsumed virtual currency and unamortized revenue from time-based virtual items in the Company’s platforms, where there is still an obligation to be provided by the Company, which will be recognized as revenue when all of the revenue recognition criteria are met. Due to the generally short-term duration of the relevant contracts, all performance obligations are satisfied within one year.
(i) Government subsidies
Government subsidies are primarily referred to
the amounts received from various levels of local governments from time to time which are granted for general corporate purposes and to
support its ongoing operations in the region. The grants are determined at the discretion of the relevant government authority and there
are no restrictions on their use. The government subsidies amounted to RMB
(j) Sales and marketing expenses
Sales and marketing expenses consist primarily
of advertising and market promotion expenses. The advertising and market promotion expenses amounted to RMB
F-13
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The Company follows the liability method in accounting for income taxes in accordance to ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. A valuation allowance would be recorded against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.
The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive loss. The Company did not recognize any interest and penalties associated with uncertain tax positions for the six months ended June 30, 2023 and 2024. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.
(l) Value added tax (“VAT”)
Revenue represents the invoiced value of service,
net of VAT. The VAT is based on gross sales price and VAT rates range up to
F-14
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Earnings (loss) per share
The Company computes earnings (loss) per share
(“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted
EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents
the dilutive effect on a per share basis of the potential common shares (e.g., convertible securities, options and warrants) as if they
had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive
effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Contingently
issuable shares were not included in the computation of diluted shares outstanding if they were not issuable should the end of the reporting
period have been the end of the contingency period. For the six months ended June 30, 2023 and 2024, there was
(n) Non-controlling interests
(o) Segment reporting
The Company follows ASC 280, “Segment Reporting.” The Company’s Chief Executive Officer or chief operating decision-maker reviews the consolidated financial results when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has only one reportable segment. As the Company’s long-lived assets are substantially all located in the PRC and the majority of the Company’s revenues are derived from within the PRC, no geographical segments are presented.
F-15
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Recent accounting pronouncements
In March 2023, the FASB issued ASU 2023-03, which amends various SEC paragraphs in the Accounting Standards Codification. This includes amendments to Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718). The amendments are in response to SEC Staff Accounting Bulletin No. 120 and other SEC staff announcements and guidance. This ASU does not introduce new guidance and therefore does not have a specified transition or effective date. However, for smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2023. The adoption of this ASU did not have any material impact on the Company’s unaudited condensed consolidated interim financial statements and disclosure.
In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the process of evaluating the impact of the new guidance on its unaudited condensed consolidated unaudited condensed financial statements.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the Company’s unaudited condensed consolidated interim financial statements.
3. CONCENTRATION OF RISK
(a) Credit risk
Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables
included in prepaid expenses, other current assets, and amounts due from related parties. As of December 31, 2023 and June
30, 2024, RMB
For the credit risk related to accounts receivable, the Company adopted Credit Losses (Topic 326) effective January 1, 2023. The company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
F-16
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
3. CONCENTRATION OF RISK (CONTINUED)
(b) Currency convertibility risk
Substantially all of the Company’s businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China. However, the unification of the exchange rates does not imply the convertibility of RMB (¥) into US$ ($) or other foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
(c) Significant customers
For the six months ended June 30, 2023 and 2024, no customer individually represents greater than 10% of the total revenue, respectively.
(d) Significant suppliers
For the six months ended
June 30, 2023, one vendor accounted for
4. ACQUISITION
4.1 Acquisition of SJ Verse
On October 7, 2023, Scienjoy Verse Tech Ltd entered
into a share acquisition agreement with a third party to pursuant
| RMB | ||||
| Cash acquired | ||||
| Prepaid expenses and other current assets | ||||
| Property and equipment, net | ||||
| Goodwill | ||||
| Total assets | ||||
| Current liabilities | ||||
| Non-current liabilities | ||||
| Total liabilities | ||||
| ( | ) | |||
| Total consideration | ||||
F-17
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
5. ACCOUNTS RECEIVABLE, NET
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Accounts receivable | ||||||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Accounts receivable, net | ||||||||||||
| For the year ended December 31, | For the six months ended June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Beginning balance | ||||||||||||
| Additions | ||||||||||||
| Exchange difference | - | - | ||||||||||
| Ending balance | ||||||||||||
Three unrelated distributors accounted for
6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| VAT recoverable | ||||||||||||
| Prepaid expense | ||||||||||||
| Investment buyback receivable (1) | ||||||||||||
| Loan receivable (2) | ||||||||||||
| Other receivables | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| (1) | |
| (2) | (i) On March 2, 2023, the Company lent RMB
(ii) On October 10, 2023, the Company lent RMB
(iii) During six months ended June 30, 2024, the Company made several loans to two third parties. These loans terms were for |
F-18
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
7. Lease
The Company has several operating leases for offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Total lease expense for the six months ended June
30, 2023 and 2024 amounted to RMB
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Right-of-use assets, net | ||||||||||||
| Operating lease liabilities - current | ||||||||||||
| Operating lease liabilities - non-current | ||||||||||||
| Total operating lease liabilities | ||||||||||||
| Remaining lease term and discount rate: | |||
| Weighted average remaining lease term (years) | |||
| Weighted average discount rate |
| Twelve months ending June 30, | RMB | US$ | ||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total future minimum lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | ||||||||
8. INCOME TAXES
Enterprise income tax
British Virgin Islands
Under the current laws of the British Virgin Islands, the Company incorporated in the British Virgin Islands is not subject to tax on income or capital gain. Additionally, the British Virgin Islands does not impose a withholding tax on payments of dividends to shareholders.
Cayman Islands
Under the current laws of the Cayman Islands, the subsidiary of the Company incorporated in the Cayman Islands is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Singapore
Under Singapore tax laws, subsidiaries in Singapore
are subject to statutory income tax rate at
F-19
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
8. INCOME TAXES (CONTINUED)
Dubai
Subsidiaries in Dubai are subject to statutory
income tax rate at
Hong Kong
Under the current Hong Kong Inland Revenue Ordinance,
the subsidiary of the Company in Hong Kong is subject to
The PRC
The Company’s subsidiaries and the VIE that
are each incorporated in the PRC are subject to Corporate Income Tax (“CIT”) on the taxable income as reported in their respective
statutory financial statements adjusted in accordance with the new PRC Enterprise Income Tax Laws (“PRC Income Tax Laws”)
effective from January 1, 2008. Pursuant to the PRC Income Tax Laws, the Company’s PRC subsidiaries and the VIE are subject to a
CIT statutory rate of
Under the PRC Income Tax Laws, an enterprise which qualifies as a High
and New Technology Enterprise (the “HNTE”) is entitled to a preferential tax rate of
Under the PRC Income Tax Laws, during the period
from January 1, 2010 to December 31, 2030, an enterprise which established in region of Holgus and Kashgar is entitled to a preferential
tax rate of
Holgus X qualifies for the conditions and entitled
for a preferential tax rate of
Uncertain tax positions
The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur any interest or penalty related to potential underpaid income tax expenses for the six months ended June 30, 2023 and 2024, and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2024.
F-20
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
8. INCOME TAXES (CONTINUED)
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Current income tax expense | ||||||||||||
| Deferred income tax (benefit)expense | ( | ) | ||||||||||
| Income tax (benefit) expenses | ( | ) | ||||||||||
| For the six months ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| Income tax computed at PRC statutory tax rate | % | % | ||||||
| Effect of tax-preferential entities | ( | )% | ( | )% | ||||
| Non-deductible expenses | % | % | ||||||
| Income tax (benefit) expense | ( | )% | % | |||||
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Deferred tax assets: | ||||||||||||
| Allowance for doubtful accounts | ||||||||||||
| Net operating losses carried forward | ||||||||||||
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets for the Company. Thus, there were no valuation allowances as of December 31, 2023 and June 30, 2024 for the deferred tax assets.
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Deferred tax liabilities | ||||||||||||
| Intangible assets acquired through acquisition | ||||||||||||
F-21
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
9. RELATED PARTY BALANCES AND TRANSACTIONS
| Name of Related Parties | Relationship with the Company | |
| Mr. He Xiaowu | ||
| Enmoli Inc. | ||
| Sixiang Zhuohong Private Equity LP |
| For the six months ended June 30, | ||||||||||||||
| 2023 | 2024 | 2024 | ||||||||||||
| RMB | RMB | US$ | ||||||||||||
| Sixiang Zhuohong Private Equity LP | Sold | |||||||||||||
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Amount due from related parties | ||||||||||||
| Enmoli Inc (1) | ||||||||||||
| Total | ||||||||||||
| (1) |
10. SHAREHOLDERS’ EQUITY
Ordinary Shares
The Company is authorized to issue an number of par value Class A ordinary shares and Class B ordinary shares.
On November 8, 2021, the Company’s 2021
annual general meeting of shareholders (the “AGM”) approved the following shareholders’ resolutions: (i) the adoption
of a dual-class share structure, pursuant to which the Company’s authorized share capital shall be re-classified and re-designed
into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one (1) vote and each Class
B ordinary share being entitled to ten (10) votes at a meeting of the shareholders or on any resolution of shareholders; and (ii) the
authorization to the Company to issue up to
As of June 30, 2024, the Company had
F-22
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
10. SHAREHOLDERS’ EQUITY (CONTINUED)
Shares issued for SPAC and acquisitions
Acquisition of Weiliantong
In connection of the acquisition of Weiliantong,
on March 3, 2022, the Company issued
Treasury Shares
In October, 2022, the Company repurchased an aggregate
of
In November, 2023, the Company repurchase an aggregate
of
As of June 30, 2024, all these shares were held in an escrow account as reserve solely for potential needed.
Warrants
As of June 30, 2024, there were no warrants outstanding and exercisable, and no warrants have been exercised for the six months ended June 30, 2024.
The Public Warrants became exercisable upon the
completion of the SPAC Transaction on May 7, 2020 with exercise price of US$
The Company may call the warrants for redemption
(excluding the Private Warrants), in whole and not in part, at a price of US$
| ● | at any time while the Public Warrants are exercisable, | |
| ● | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, | |
| ● | if, and only if, the reported last sale price of the Class A ordinary shares equals or exceeds US$ | |
| ● | if, and only if, there is a current registration statement in effect with respect to the issuance of the Class A ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis”. The exercise price and number of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. The Public Warrants may only be exercised for a whole number of shares, meaning that the Public Warrants must be exercised in multiples of two. However, the warrants will not be adjusted for issuances of Class A ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
F-23
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
10. SHAREHOLDERS’ EQUITY (CONTINUED)
The private warrants are identical to the public
warrants with the exercise price of US$
| Number of warrants | Weighted average life | Expiration dates | ||||||
| Balance of warrants outstanding as of December 31, 2022 | ||||||||
| Balance of warrants outstanding as of December 31, 2023 | ||||||||
| Forfeited | ( | ) | - | - | ||||
| Balance of warrants outstanding as of June 30, 2024 | - | |||||||
| Balance of warrants exercisable as of June 30, 2024 | - | |||||||
Unit Purchase Option
On February 8, 2019, the Company sold to
Chardan, for $
Liability Classified Warrants
All of the Company’s outstanding warrants contain a contingent cash payment feature and therefore were accounted for as a liability and are adjusted to fair value at each balance sheet date. The change in fair value of the warrant liability is recorded as change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive loss (Note 2).
The Company accounted for the unit purchase option,
inclusive of the receipt of $
F-24
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
10. SHAREHOLDERS’ EQUITY (CONTINUED)
Shares to be issued
As of December 31, 2023, Weiliantong achieved
As of June 30, 2024 and the December 31, 2023, the rest of shares to
be issued amounted to RMB
2021 Equity Incentive Plan
On August 3, 2021, the Employee Share Option Committee
(the “ESOP Committee”) of the Company approved a resolution which appointed the Chief Executive Officer and Chief Operating
Officer as Authorized Officer of ESOP Committee to grant share options to employees, directors, advisors, consultants and service providers
of the Company. In 2021, the ESOP Committee approved the granting of
11. STATUTORY RESERVES AND RESTRICTED NET ASSETS
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries.
In accordance with the PRC Regulations on Enterprises
with Foreign Investment and the articles of association of the Company’s PRC subsidiaries, a foreign-invested enterprise established
in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare
and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign-invested
enterprise is required to allocate at least
Foreign exchange and other regulations in the
PRC may further restrict the Company’s VIE from transferring funds to the Company in the form of dividends, loans and advances.
Amounts restricted include paid-in capital, additional paid-in capital and statutory reserves of the Company’s PRC Subsidiaries
and the equity of VIE, as determined pursuant to PRC generally accepted accounting principles. As of December 31, 2023 and June 30, 2024,
restricted net assets of the Company’s PRC subsidiaries and VIE were RMB
F-25
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
12. COMMITMENTS AND CONTINGENCIES
(a) Capital and Other Commitments
The Company did not have significant capital and other commitments as of December 31, 2023 and June 30, 2024.
(b) Contingencies
From time to time, the Company is party to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed consolidated financial statements.
13. SUBSEQUENT EVENTS
The Company evaluated all events and transactions that occurred after June 30, 2024 up through the date the Company issued these unaudited condensed consolidated financial statements, for disclosure or recognition in the unaudited condensed consolidated financial statements of the Company as appropriate.
F-26