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Form F-1 Scienjoy Holding Corp

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As filed with the Securities and
Exchange Commission on February 23, 2021

Registration No.                   

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

SCIENJOY
HOLDING CORPORATION

(Exact Name of Registrant as Specified
in Its Charter)

 

British
Virgin Islands
  7374   N/A
(State or Other Jurisdiction
of
Incorporation or Organization)
  (Primary Standard
Industrial
Classification Code Number)
  (I.R.S. Employer

Identification Number)

 

3rd Floor, JIA No.34, Shenggu
Nanli

Chaoyang District, Beijing 100029, 

China

(86) 10–6642 8188

(Address, including zip code, and telephone
number, including area code, of Registrant’s principal executive offices)

 

Cogency Global Inc.

122 East 42nd Street, 18th
Floor

New York, NY 10168

(800) 221-0102

(Name, address, including zip code, and
telephone number, including area code, of agent for service)

 

Copies to

 

Lan Lou, Esq.

Jun He Law Offices LLC

Suite 1919, 630 Fifth Avenue

New York, NY 10111

(646) 367-1744

Fax: (212) 703-8720

 

Approximate date of commencement of proposed sale to the
public: From time to time on or after the effective date of this registration statement.

 

If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☒

 

If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.  ☐

 

If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.  ☐

 

If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.  ☐

 

Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933.

 

Emerging growth company  ☒

 

If an emerging growth company that prepares
its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)
of the Securities Act.  ☐

 

† The term “new or revised financial
accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered   Amount to
be
Registered(1)
    Proposed
Maximum
Offering
Price Per
Share
    Proposed
Maximum
Aggregate
Offering
Price
    Amount of
Registration
Fee
 
Ordinary Shares, no par value     713,444 (2)   $ 9.65 (3)   $ 6,884,734.6     $ 751.12

 

(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the registrant is also registering an indeterminate number of additional securities as may be issued to prevent dilution resulting from share dividends, share splits or similar transactions.
   
(2) Represents the issuance of up to 713,444 shares of ordinary shares to be sold to White Lion Capital LLC (“White Lion”) under the Common Stock Purchase Agreement dated February 23, 2021.  As of February 23, 2021, the Company had 2,140,333 ordinary shares in the public float.  The 713,444 ordinary shares being registered represent approximately 33.33{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the shares in the public float as of February 23, 2021.  Assuming all of these shares are sold, the registrant’s total number of issued and outstanding ordinary shares will be 27,750,746, calculated on the total number of shares issued and outstanding on February 23, 2021 of 27,037,302. The total number of registered shares will then represent 2.57{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the aggregate issued and outstanding shares.
   
(3) Estimated at $9.65 per share, the average of the high and low prices of Scienjoy Holding Corporation’s ordinary shares on February 18, 2021, as reported by Nasdaq Capital Market, solely for the purpose of the calculation of the registration fee pursuant to Rule 457(c) under the Securities Act.

 

The Registrant hereby amends this Registration Statement
on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to such Section 8(a), may determine.

 

 

 

The information in this prospectus is not complete and may be changed.
The selling security holder may not sell these securities until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED February 23, 2021

 

PRELIMINARY PROSPECTUS

Scienjoy Holding Corporation

 

713,444 Ordinary
Shares

 

This prospectus relates to the resale
of up to 713,444 shares of our ordinary shares, no par value, (the “Ordinary Shares”), issuable to White Lion
Capital LLC, a Nevada limited liability company (“White Lion Capital”), a selling security holder, pursuant
to a “Purchase Notice Right” under a Common Stock Purchase Agreement (the “Purchase Agreement”),
dated February 23, 2021, that we entered into with White Lion Capital. The Purchase Agreement permits us to issue Purchase Notices
to White Lion Capital for up to thirty million dollars ($30,000,000)(“Commitment Amount”) in our Ordinary Shares,
under certain circumstances, over a period of up to six (6) months or until the date on which White Lion Capital shall have purchased
shares equal to the Commitment Amount, subject to the termination of the Purchase Agreement (the “Commitment Period”).
Under the Purchase Agreement, on any trading day selected by us, provided that the closing price of our Ordinary Shares upon the
delivery of a purchase notice is greater than or equal to $0.25, we have the right, but not the obligation, to present White Lion
Capital with a purchase notice, directing White Lion Capital (as principal) to purchase up to a certain amount shares of our Ordinary
Shares (“Purchase Notice”). For Purchase Notices, the purchase price per share to be paid by White Lion Capital
will be based on 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest daily volume-weighted average price of our Ordinary Shares during a valuation period, which
is five (5) trading days prior to the applicable closing date with respect to a regular Purchase Notice. We and White Lion Capital
may also elect a negotiated fixed purchase at any time during the Commitment Period provided that the closing price of our Ordinary
Shares upon delivery of such fixed purchase notice is greater than or equal to $0.25 (“Fixed Purchase Notice”).
The Fixed Purchase Notice will set forth a fixed number of shares and a fixed purchase price mutually agreed by the Company and
White Lion Capital. The fixed purchased price shall be greater than or equal to $0.25 but could be higher or lower than the Purchase
Price for a regular Purchase Notice. White Lion Capital may sell all or a portion of the shares being offered pursuant to this
Prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices.

 

The aggregate market value of our outstanding
Ordinary Shares held by non-affiliates was approximately $20,333,163.50 based on 27,037,302 our issued and outstanding Ordinary
Shares, of which 2,140,333 Ordinary Shares are held by non-affiliates, and per share price of $9.50, which was the last reported
price on the NASDAQ Capital Market of our Ordinary Shares on February 22, 2021. The 713,444 Ordinary Shares being registered represent
approximately 33.33{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the Ordinary Shares held by non-affiliate and approximately 2.64{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the total issued and outstanding Ordinary
Shares on February 23, 2021.  

 

We will not receive any proceeds from
the sale of shares of our Ordinary Shares by the selling security holder. However, we will receive proceeds from our sale of Ordinary
Shares to the selling security holder subject to our exercise of the “Purchase Notice Right” offered by White Lion
Capital. We will only pay for the audit and legal expenses of this offering, and the selling security holder will pay any other
expenses, including broker discounts or commissions or equivalent expenses and expenses of its legal counsel applicable to the
sale of its shares.

 

Our Ordinary Shares are traded on the
NASDAQ Capital Market (“NASDAQ”) under the symbol “SJ”. On February 22, 2021, the closing price for our
Ordinary Shares was $9.50 per share as reported on NASDAQ.

 

Investing in our securities involves
risks. See “Risk Factors” beginning on page 11.

 

We are both an “emerging growth company”
and a “foreign private issuer” as defined under the federal securities laws and, as such, will be subject to reduced
public company reporting requirements. See “Summary—Implications of Being an Emerging Growth Company” and “—Implications
of Being a Foreign Private Issuer.”  

 

Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this
prospectus is        , 2021.

 

 

TABLE OF CONTENTS

 

 

You should rely only on the information
provided in this prospectus, as well as the information incorporated by reference into this prospectus and any applicable prospectus
supplement. We have not authorized anyone to provide you with different information. We are not making an offer of these securities
in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the date of the applicable document. Since the respective dates of
this prospectus, our business, financial condition, results of operations and prospects may have changed.

 

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration
statement on Form F-1 that we filed with the Securities and Exchange Commission (the “SEC”). This prospectus generally
describes the Company and our securities. We may issue up to 713,444 Ordinary Shares under this prospectus that we may sell to
White Lion Capital from time to time at our sole discretion over the Commitment Period.

 

A prospectus supplement with this prospectus
may be delivered, to the extent appropriate, to update the information contained in this prospectus. The prospectus supplement
may also add, update or change information included in this prospectus. You should read both this prospectus and any applicable
prospectus supplement, together with additional information described below under the captions “Where You Can Find More Information”.
We have not authorized anyone to provide you with information different from that contained in this prospectus. The information
contained in this prospectus is accurate only as of the date on the front cover of the prospectus. You should not assume that the
information contained in this prospectus is accurate as of any other date. No offer of the securities will be made in any jurisdiction
where the offer is not permitted.

 

USE OF CERTAIN TERMS

 

As used in this prospectus, unless
the context otherwise requires, references to the terms “Company,” “we,” “us” and “our”
refer to Scienjoy Holding Corporation and, where applicable, our wholly-owned subsidiaries. Unless otherwise stated in this prospectus,
references in this prospectus to:

 

“Active
broadcasters” refers to the hosts perform live music, dancing and other entertaining
performance in front of the audience through the screens on the mobile platform;
“active
users” refers to users who visited our platforms at least once in a given period;
“ARPPU”
refers to average live streaming revenue per paying user in a given period;
“BeeLive
Acquisition” refers to the Company’s acquisition of the BeeLive businesses
and related transactions;
“Business
Combination” refers to the Company’s acquisition of Scienjoy Inc. on May
7, 2020 and related transactions;
“CDN”
refers to content delivery network;
“CAGR”
refers to compound annual growth rate;
“China”
and the “PRC” are to the People’s Republic of China, excluding, for
the purposes of this prospectus only, Taiwan, the Hong Kong Special Administrative Region
and the Macao Special Administrative Region;
“HKD”
refers to Hong Kong Dollar, the official currency of the Hong Kong Special Administrative
Region;
“Holgus”
refers to Holgus Sixiang Information Technology Co., Ltd.;
“HX”
refers to Hai Xiu (Beijing) Technology Co., Ltd.;
“HZ”
refers to Sixiang Huizhi (Beijing) Technology Culture Co., Ltd.;
“Kashgar
Times” refers to Kashgar Sixiang Times Internet Technology Co., Ltd.;
“Kashgar
Lehong” refers to Kashgar Sixiang Lehong Information Technology Co., Ltd.;
“Lavacano”
refers to Lavacano Holdings Limited;
“LH”
refers to Beijing Le Hai Technology Co., Ltd.;
“QAU”
refers to the number of active users in a given quarter;
“paying
user” refers to a registered user that has purchased virtual currency on our platforms
at least once during the relevant period;
“paying
ratio” for a given period is calculated by dividing (i) the sum of paying users
in such period, by(ii) the total active users in such period;
“Purchase Agreement” refers to Common Stock Purchase
Agreement, entered between the Company and White Lion Capital on February 23, 2021;

 

 

“QY”
or “Zhihui Qiyuan” refers to Zhihui Qiyuan (Beijing) Technology Co., Ltd.;
“registered
user” refers to a user that has registered and logged onto our platform at least
once since registration;
“RMB”
or “Renminbi” refers to the legal currency of the People’s Republic
of China;
“Scienjoy
HK” refers to Scienjoy International Limited;
“Scienjoy”
refers to Scienjoy Inc. and its subsidiaries and VIE entities, as applicable;
“SG”
refers to Beijing Sixiang Shiguang Technology Co., Ltd.;
“Share
Exchange Agreement” refers to the Share Exchanged Agreement, dated October 28,
2019, by and among Scienjoy, the Company, Lavacano Holdings Limited, and WBY Entertainment
Holdings Ltd.;
“Sixiang
Times” refers to Sixiang Times (Beijing) Technology Co., Ltd.;
“SY”
refers to Tianjin Sihui Peiying Technology Co., Ltd.;
“TF”
refers to Tongfang Investment Fund Series SPC;
“US$,”
“dollars” or “U.S. dollars” refers to the legal currency of the
United States;
“U.S.
GAAP” are to accounting principles generally accepted in the United States;
“variable
interest entity,” “Scienjoy VIEs” or “VIE entities” are
to Scienjoy’s variable interest entities, Zhihui Qiyuan (Beijing) Technology, Co.
Ltd. (智汇启源(北京)科技有限公司)
or Zhihui Qiyuan, a limited liability company organized and existing under the laws of
the PRC, and Zhihui Qiyuan’s subsidiaries, including Hai Xiu (Beijing) Technology
Company Co. Ltd., Beijing Le Hai Technology Co. Ltd., Beijing Sixiang Shiguang Technology
Co. Ltd., Sixiang Mifeng (Tianjin) Technology Co., Ltd (formerly known as Tianjin Guangju
Dingfei Technology Co., Ltd.) and Changxiang Infinite Technology (Beijing) Co., Ltd.,
each such company formed under PRC Law. Each of the VIEs is consolidated into our consolidated
financial statements in accordance with U.S. GAAP as if they were its wholly-owned subsidiaries;
“WBY”
refers to WBY Entertainment Holdings Ltd.;
“Wealthbridge”
refers to Wealthbridge Acquisition Limited;
  “White Lion Capital” refers to White Lion Capital
LLC;
“WX”
or “WFOE” refers to Sixiang Wuxian (Beijing) Technology Co., Ltd; and
“ZH”
refers to Sixiang Zhihui (Beijing) Technology Co., Ltd..

 

This prospectus contains information and
statistics relating to China’s economy and its entertainment live streaming industry derived from various publications issued
by market research companies and PRC governmental entities, which have not been independently verified by us. The information
in such sources may not be consistent with other information compiled in or outside China.

 

Translations of balances in our consolidated
balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD (or “US$”)
as of and for the year ended December 31, 2018 are solely for the convenience of the reader and were calculated at the rate of
US$1.00 = RMB6.8755, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs
purposes by the Federal Reserve Bank of New York on the last trading day of December 28, 2018.

 

Translations of balances in our consolidated
balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD (or “US$”)
as of and for the year ended December 31, 2019 are solely for the convenience of the reader and were calculated at the rate of
US$1.00 = RMB6.9618, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs
purposes by the Federal Reserve Bank of New York on the last trading day of December 28, 2019.

 

No representation is made that the
RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate.
On September 30, 2020, the noon buying rate for Renminbi was RMB6.7896 to US$1.00.

  

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS

 

Certain statements in this prospectus
may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements
include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions
or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus
may include, for example, statements about:

 

our goals
and strategies;
our ability
to attract new users and talent to our platform;
our future
business development, financial condition and results of operations;
the expected
growth in, and market size of, the mobile live streaming platforms;
expected
changes in our revenue, costs or expenditures;
our ability
to continue to source and offer new and attractive products and services;
our expectations
regarding demand for and market acceptance of our brands, platforms and services;
our expectations
regarding growth in our user base and level of user engagement;
our ability
to attract, retain and monetize users;
our ability
to continue to develop new technologies and/or upgrade our existing technologies;
growth of
and trends of competition in our industry;
government
policies and regulations relating to our industry; and
general
economic and business conditions in the markets we have businesses.

 

The preceding list is not intended to
be an exhaustive list of all of our forward-looking statements. In particular, for additional information regarding known material
factors that could affect our operating results and performance, please read the section entitled “Risk Factors” in
this prospectus and in any applicable prospectus supplement. Should one or more of the risks or uncertainties described in this
prospectus made in connection therewith occur, or should underlying assumptions prove incorrect, actual results and plans could
different materially from those expressed in any forward-looking statements.

 

 

SUMMARY

 

The following summary is qualified
in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere
in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of
investing in our Ordinary Shares, discussed under “Risk Factors,” before deciding whether to buy our Ordinary Shares.
The information in such sources may not be consistent with other information compiled in or outside of China.
 

 

Our Company

 

We were originally a blank check company
incorporated on May 2, 2018 as a British Virgin Islands company limited by shares and incorporated for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination
with one or more target businesses.

 

Initial Public Offering

 

We completed our IPO on February 8,
2019 of 5,000,000 units, with each unit consisting of one Ordinary Share of no par value, one redeemable warrant and one Right
to receive one-tenth of an ordinary share upon consummation of an initial business combination. Simultaneous with the consummation
of the IPO, we consummated a private placement of 247,500 Private Units at a price of $10.00 per Private Unit. The Private Units
were purchased by our Sponsor, Oriental Holdings Limited. The underwriters in the IPO exercised the over-allotment option and
on February 20, 2019, the underwriters purchased 750,000 over-allotment option Units, which were sold at an offering price of
$10.00 per Unit. Simultaneously with the sale of the over-allotment Units, we consummated a private sale of an additional 22,500
Private Units to our Sponsor.

 

Business Combination

 

On May 7, 2020, we consummated our Business
Combination pursuant to the Share Exchange Agreement and acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} issued and outstanding equity interests of Scienjoy Inc.,
which resulted in Scienjoy Inc. becoming our wholly-owned subsidiary.

 

Following our Business Combination, we
changed our name from Wealthbridge Acquisition Limited to “Scienjoy Holding Corporation” and continued the listing
of our Ordinary Shares on NASDAQ under the symbol “SJ”. Our Public Warrants are traded on over the counter market
under the symbol “SJOYW”.

 

Current Business Overview

 

We are a leading provider of mobile live streaming platforms
in China and focuses on interactive show live streaming from broadcasters to users. We traditionally operate on three primary platforms
(Showself Live Streaming, Lehai Live Streaming, and Haixiu Live Streaming), each using our own mobile applications and providing
live streaming entertainment from professional “broadcasters” to the end-user. In September 2020, we acquired two additional
mobile live streaming platforms, namely the BeeLive Chinese (MiFeng) and the BeeLive International, through the BeeLive Acquisition.
On our mobile live streaming platforms, users can interact directly with broadcasters and other users in the live streaming video
room. Users can also play simple and fun games using virtual currencies within the video rooms while watching live streaming of
a broadcaster. For the third quarter of 2020, we have 322,841 paying users and 97,038 active broadcasters.

 

While users have free access to all real
time video rooms, our revenue is primarily generated through sales of our virtual currency. Users can purchase virtual currency
on our platforms and can use such virtual currency to buy virtual items for broadcasters to show their support. We share revenues
generated on the platforms with talents agencies, which in turn share revenues with broadcasters.

 

 

We have achieved significant growth
since our inception. The number of registered users of the Company’s platforms at year end has increased from 170.7 million
in 2018 to approximately 200.4 million in 2019. The platforms’ annual ARPPU was RMB 1,406 and RMB1,306 for the years ended
December 31, 2018 and 2019, respectively. The platforms’ paying ratio has increased from an average of 1.40{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in 2018 to
2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in 2019. For the third quarter ended September 30, 2020, the platforms’ paying ratio has increased to 3.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
in the same period of last year.

 

On August 10, 2020, we signed an Equity
Acquisition Framework Agreement (the “BeeLive Acquisition Agreement”) with Sciscape International Limited, Tianjin
Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology Co., Ltd.. Pursuant to the
BeeLive Acquisition Agreement, we, through Scienjoy inc., acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Sciscape International Limited
which holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity), acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest
in Tianjin Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant to the Agreement, the Company is
required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in ordinary shares (approximately 5.4 million
ordinary shares) to be issued by the Company. 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of share consideration payments are subject to certain performance conditions
(i.e. earn-out provisions as discussed below) and requirements over the following three years. On August 21, 2020, all target
shares were transferred to the parties designated in BeeLive Acquisition Agreement. On September 10, 2020, we paid a cash consideration
of RMB50.0 million to Tianjin Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Ordinary Shares to Cosmic Soar Limited.
Tianjin Guangju Dingfei Technology Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin) Technology Co. and Sciscape
International Limited changed its name to Scienjoy BeeLive Limited.  BeeLive is a global live streaming platform that initially
launched in China in November 2016. During the second half of 2019, BeeLive began expanding into international markets. To date,
BeeLive International offers Arabic language live streaming product in the Middle East and Thai language live streaming product
in Southeast Asia.

 

Pursuant to the earn-out provisions of
the BeeLive Acquisition Agreement, so long as the prior core management members of Sciscape International Limited, and Tianjin
Guangju Dingfei Technology Co., Ltd. have complied with the employment agreement that he or she has entered into with BeeLive Companies
and no material changes have occurred, (i) if the BeeLive Company’s total annual revenue is no less than RMB 336.6 million
in Year 2020, Cosmic Soar Limited will be entitled to received additional 540,960 Ordinary Shares ; (ii) if the BeeLive Companies’
total annual revenue is no less than RMB 460.6 million in Year 2021, Cosmic Soar Limited will be entitled to received additional
540,960 Ordinary Shares; and (iii) if the BeeLive Companies’ total annual revenue is no less than RMB 580.9 million in Year
2022, Cosmic Soar Limited will be entitled to received additional 540,960 Ordinary Shares. If the total annual revenue of BeeLive
Company in a particular performance year does not reach the target revenue as specified above, but is equal to or more than 80{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
of the target revenue, Cosmic Solar Limited will be entitled to a reduced number of the earn-out shares. The total contingent considerations
for the earn-out were approximate RMB 39.8 million.

 

On November 1, 2020, we entered into
a cooperative agreement with China Mobile, China’s largest mobile operator, to become a video content partner providing
high-quality video for more than 100 million Video Ring Back Tone (“VRBT”) users in China Mobile’s network.
We will act as a partner of China Mobile to produce short videos specified for individuals, enterprises and advertisers, and provide
high quality video content with both entertainment and commercial features for VRBT users nationwide. Video Ring Back Tone (VRBT)
service is an innovative entertainment service that will allow the caller to enjoy watching videos on the screen of his/her mobile
phone instead of a typical tone, set by the receiving party on every call.

 

In January 2021,
the Company purchased from Cross Wealth Investment Holding Limited, an entity related to two directors of the Company, 606,061
ordinary shares of Goldenbridge Acquisition Limited (“Goldenbridge”) for an aggregated consideration of US$
2 million. Goldenbridge was formed as a special purpose acquisition company.

 

On February 8, 2021, the Board of the Company
approved the 2021 Plan (the “2021 Plan”), for the purpose of providing additional incentives to employees, directors
and consultants and to promote the success of the Company’s business. The 2021 Plan authorized the Board, any committee appointed
by Board, or any such person authorized by the Board or such committee, to grant equity incentive awards, including options, restricted
shares, and restricted share units to directors, employees and consultants of the Company for a number of Ordinary Shares not exceeding
3,000,000, subject to adjustments as may be required in accordance with the terms of the 2021 Plan. The vested portion of equity
awards will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. The maximum
exercisable term is ten years from the date of a grant. As of the date of this report, no equity award has been granted under 2021
Plan.

 

 

Purchase Agreement with White Lion Capital
LLC

 

On
February 23, 2021, we entered into the Purchase Agreement with White Lion Capital, which provides that, upon the terms and subject
to the conditions and limitations set forth therein, White Lion Capital is committed to purchase our Ordinary Shares with an aggregate
offering price of up to $30,000,000 (“Commitment Amount”) from time to time over a period of up to six (6) months
or until the date on which White Lion Capital shall have purchased shares equal to the Commitment Amount, subject to the termination
of the Purchase Agreement.

 

Purchase
of Shares under the Purchase Agreement

 

Under
the Purchase Agreement, on any trading day selected by us, provided that the closing price of our Ordinary Shares upon the delivery
of a purchase notice is greater than or equal to $0.25, we have the right, but not the obligation, to present White Lion Capital
with a purchase notice, directing White Lion Capital (as principal) to purchase up to a certain amount shares of our Ordinary Shares
(“Purchase Notice”). The maximum number of Ordinary Shares to be sold under each Purchase Notice shall be determined
by the lesser of (i) 300{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the average daily trading volume during the five (5) trading days immediately prior to the delivery
of the Purchase Notice, or (ii) $1,000,000 divided by the highest closing price of our Ordinary Shares during the five (5) trading
days immediately prior to the delivery of the Purchase Notice, which calculation amount may be increased to $2,000,000 once White
Lion Capital has funded $5,000,000 to the Company at the mutual consent of the Company and White Lion Capital. Notwithstanding
the foregoing, we and White Lion Capital may elect a negotiated fixed purchase at any time during the Commitment Period provided
that the closing price of our Ordinary Shares upon delivery of such fixed purchase notice is greater than or equal to $0.25 (“Fixed
Purchase Notice
”).

 

For
Purchase Notices, the purchase price per share to be paid by White Lion Capital will be 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest daily volume-weighted
average price of our Ordinary Shares during a valuation period, which is five (5) trading days prior to the applicable closing
date with respect to a regular Purchase Notice (“Purchase Price”). The Fixed Purchase Notice will set forth
a fixed number of shares and a fixed purchase price mutually agreed by the Company and White Lion Capital. The fixed purchased
price shall be greater than or equal to $0.25 but could be higher or lower than the Purchase Price for a regular Purchase Notice.
In the event that the fixed purchase price is substantially lower than the regular Purchase Price, which is 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest
daily volume-weighted average price of our Ordinary Shares during a valuation period, the equity value of the existing shareholders
might be significantly diluted. For more information on the transaction with White Lion Capital, see “OUR HISTORY AND CORPORATE
STRUCTURE-Purchase Agreement with White Lion Capital LLC.”

 

Competitive Strengths

 

We believe that the following competitive
strengths contribute to our success and differentiate us from our competitors:

 

Multi-Platform Live Streaming

 

We currently operate on five platforms.
Our user traffic and revenue spread across multiple products supported by multiple mobile applications. We believe this multi-product
approach increases our competitiveness by allowing us to target different sections of the population simultaneously more effectively,
achieve better traffic matching between users and broadcasters, extend the retention of broadcasters and users on our platforms,
and benefit from user traffic acquisition while mitigating risks of focusing on a single platform.

 

Innovative Product Features and
Operating Philosophy

 

Our product offerings include numerous
innovative features designed to improve user experience, increase user-stickiness, and enhance its monetization ability.

 

Strong Data Analytics Capabilities

 

We are able to use analytics-driven operational
capabilities to understand individual user behavior and larger industry trends.

 

Experienced Management Team and
Professional Staff with Strong Operational Capabilities

 

Members of our senior management team
have experience of over 20 years in various segments of the technology, business operation, and Internet industries. Our management
team has extensive experience and skill in research and development, quality control, and Internet infrastructure and operations.

 

 

Corporate Structure

 

 

 

 

Company Information

 

Our principal executive offices are located
at 3rd Floor, JIA No. 34, Shenggu Nanli, Chaoyang District, Beijing, P.R. China, 100029, and our telephone number is
(86) 10–6642 8188. Our website is www.scienjoy.com. The information found on our website is not part of this prospectus.

 

Implications of Our Being an “Emerging
Growth Company”

 

As a company with less than $1.07 billion
in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our
Business Startups Act of 2012, or the JOBS Act. An “emerging growth company” may take advantage of reduced reporting
requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company, we:

 

may
present only two years of audited financial statements and only two years of related
Management’s Discussion and Analysis of Financial Condition and Results of Operations,
or “MD&A;”
are
not required to provide a detailed narrative disclosure discussing our compensation principles,
objectives and elements and analyzing how those elements fit with our principles and
objectives, which is commonly referred to as “compensation discussion and analysis”;
are
not required to obtain an attestation and report from our auditors on our management’s
assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley
Act of 2002;
are
not required to obtain a non-binding advisory vote from our shareholders on executive
compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,”
“say-on frequency” and “say-on-golden-parachute” votes;
are
exempt from certain executive compensation disclosure provisions requiring a pay-for-performance
graph and chief executive officer pay ratio disclosure;
are
eligible to claim longer phase-in periods for the adoption of new or revised financial
accounting standards under §107 of the JOBS Act; and
will
not be required to conduct an evaluation of our internal control over financial reporting.

 

We intend to take advantage of all of
these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised
financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult
to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted
out of the phase-in periods under §107 of the JOBS Act.

 

Under the JOBS Act, we may take advantage
of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth
company. The JOBS Act provides that we would cease to be an “emerging growth company” at the end of the fiscal year
in which the fifth anniversary of our initial sale of common equity pursuant to a registration statement declared effective under
the Securities Act of 1933, as amended, herein referred to as the Securities Act, occurred, if we have more than $1.07 billion
in annual revenues, have more than $700 million in market value of our Ordinary Share held by non-affiliates, or issue more than
$1 billion in principal amount of non-convertible debt over a three-year period.

 

Implications of Being a Foreign
Private Issuer.

 

We are a foreign private issuer within
the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are
exempt from certain provisions applicable to United States domestic public companies. For example:

 

we
are not required to provide as many Exchange Act reports, or as frequently, as a domestic
public company;
for
interim reporting, we are permitted to comply solely with our home country requirements,
which are less rigorous than the rules that apply to domestic public companies;
we
are not required to provide the same level of disclosure on certain issues, such as executive
compensation;
we
are exempt from provisions of Regulation FD aimed at preventing issuers from making selective
disclosures of material information;
we
are not required to comply with the sections of the Exchange Act regulating the solicitation
of proxies, consents, or authorizations in respect of a security registered under the
Exchange Act; and
we
are not required to comply with Section 16 of the Exchange Act requiring insiders to
file public reports of their share ownership and trading activities and establishing
insider liability for profits realized from any “short-swing” trading transaction.

 

 

THE OFFERING

 

We are registering the issuance by us
of 713,444 Ordinary Shares that we may sell from time to time pursuant to a “Purchase Notice Right” under the Purchase
Agreement to White Lion Capital, a selling security holder. The Purchase Agreement permits us to issue purchase notices to White
Lion Capital for up to thirty million dollars ($30,000,000) in our Ordinary Shares, under certain circumstances, over a period
of up to six (6) months or until the date on which White Lion Capital shall have purchased shares equal to the Commitment Amount,
subject to the termination of the Purchase Agreement.

 

Our Ordinary Shares are currently listed
on NASDAQ under the symbol “SJ”. Any investment in the securities offered hereby is speculative and involves a high
degree of risk. You should carefully consider the information set forth under “Risk Factors” on page 11 of this prospectus.

 

Ordinary Shares offered by the selling security holder under this prospectus   713,444 Ordinary Shares that may be subject of one or several purchase notices to White Lion Capital .
     
Ordinary Shares outstanding before the offering   27,037,302  Ordinary Shares as of February 23, 2021.
     
Ordinary Shares outstanding after the offering assuming 713,444 are sold to White Lion Capital   27,750,746 Ordinary Shares.
     
Terms of the Offering   

The selling security holder will determine when and how they
will sell the Ordinary Shares offered in this prospectus.

 

Termination of the Offering  

The offering will conclude upon such time as all of the Ordinary
Shares has been sold pursuant to the registration statement.

 

Use of proceeds   We will not receive any proceeds from the sale of shares of our Ordinary Shares by the selling security holder. However, we will receive proceeds from our sale of Ordinary Shares to the selling security holder subject to our exercise of the “Purchase Notice Right” offered by White Lion Capital under the Purchase Agreement.  See “Use of Proceeds.”

 

 

SELECTED HISTORICAL FINANCIAL INFORMATION

 

The following tables set forth, for
the periods and dates indicated, certain selected historical financial information. You should read the following selected combined
financial and other data in conjunction with “Management’s Discussion And Analysis Of Financial Condition And Results
Of Operations” and the audited financial statements and respective notes included elsewhere in this prospectus. Historical
results are not necessarily indicative of the results that may be expected in the future.

 

The following table shows our selected
historical financial information for the periods and as of the dates indicated. The selected historical consolidated financial
information as of December 31, 2018 and 2019, and for the years ended December 31, 2018 and 2019 was derived from our
audited historical combined and consolidated financial statements, which are included elsewhere in this prospectus. The selected
historical financial information as of September  30, 2020 and for the nine months ended September  30, 2019 and
2020 was derived from our unaudited historical financial statements included elsewhere in this prospectus. The financial information
has been prepared and presented in accordance with U.S. GAAP.

 

Summary the Company’s Consolidated Statements of Income

 

    For
the years ended
December 31,
    For
the nine months ended
September  30,
 
Amounts in thousands of RMB   2018     2019     2019     2019     2020     2020  
and US$   RMB     RMB     US$     RMB     RMB     US$  
                      (unaudited)     (unaudited)     (unaudited)  
Total revenue     743,018       914,626       131,378       649,513       767,804       113,085  
Cost of revenues     (594,084 )     (720,637 )     (103,513 )     (519,511 )     (585,379 )     (86,217 )
Gross
profit
    148,934       193,989       27,865       130,002       182,425       26,868  
Sales and marketing expenses     (5,005 )     (3,804 )     (546 )     (2,397 )     (3,739 )     (551 )
General and administrative expenses     (16,265 )     (11,957 )     (1,717 )     (9,851 )     (19,739 )     (2,907 )
Research and development expenses     (10,957 )     (21,523 )     (3,092 )     (15,554 )     (20,770 )     (3,059 )
(Provision) recovery for
doubtful accounts
    (6,826 )     (854 )     (123 )     (2,896 )     2,746       404  
Income
from operations
    109,881       155,851       22,387       99,304       140,923       20,755  
Interest income     1,444       1,005       144       609       2,154       317  
Other income (loss), net     31       (310 )     (45 )     (355 )     (4,778 )     (704 )
Foreign exchange gain (loss), net     11       (5 )     (1 )     (3 )     983       145  
Change in fair value of contingent
consideration
                            87,648       12,909  
Income
before income taxes
    111,367       156,541       22,485       99,555       226,930       33,422  
Income tax expenses     (4,627 )     (6,623 )     (951 )     (2,349 )     (6,465 )     (952 )
Net income     106,740       149,918       21,534       97,206       220,465       32,470  

 

 

Summary Consolidated Balance Sheets

 

    As of December 31,     As of September 30,  
Amounts in thousands of Renminbi (“RMB”)   2018     2019     2019     2020     2020  
and US dollars (“US$”)   RMB     RMB     US$     RMB     US$  
                      (unaudited)     (unaudited)  
Cash and cash equivalents     65,294       137,351       19,729       166,865       24,577  
Accounts receivable, net     221,377       120,110       17,253       178,036       26,222  
Total current assets     348,301       269,525       38,715       357,327       52,629  
Long term investment           5,000       718       5,000       736  
Long term deposits and other assets     2,504       2,761       397       1,321       195  
Total non-current assets     3,944       10,473       1,505       346,363       51,014  
TOTAL ASSETS     352,245       279,998       40,220       703,690       103,643  
Accounts payable     81,699       27,163       3,903       24,927       3,672  
Amounts due to related parties     130,687       8,482       1,218              
Deferred revenue     38,402       40,288       5,787       48,353       7,122  
Current portion of contingent consideration – earn-out liability                       110,596       16,289  
Total current liabilities     295,309       105,472       15,151       210,359       30,983  
Contingent consideration – earn-out liability                       102,809       15,142  
Total non-current liabilities                       162,951       24,000  
Total liabilities     295,309       105,472       15,151       373,310       54,983  
Total shareholder’s equity     56,936       174,526       25,069       330,380       48,660  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY     352,245       279,998       40,220       703,690       103,643  

 

Summary Consolidated Cash Flow Data

 

    For the years ended
December 31,
    For the nine months ended
September 30,
 
Amounts in thousands of Renminbi   2018     2019     2019     2019     2020     2020  
(“RMB”) and US dollars (“US$”)   RMB     RMB     US$     RMB     RMB     US$  
                      (unaudited)     (unaudited)     (unaudited)  
                                     
Net cash provided by operating activities     107,286       228,886       32,877       172,863       96,228       14,172  
Net cash used in investing activities     (553 )     (5,457 )     (784 )     (192 )     (40,367 )     (5,946 )
Net cash used in financing activities     (170,886 )     (151,372 )     (21,743 )     (124,768 )     (23,332 )     (3,436 )
Effect of foreign exchange rate changes on cash                             (3,015 )     (443 )
Net (decrease) increase in cash and cash equivalents     (64,153 )     72,057       10,350       47,903       29,514       4,347  
Cash and cash equivalents at beginning of the year     129,447       65,294       9,379       65,294       137,351       20,230  
Cash and cash equivalents at end of the year     65,294       137,351       19,729       113,197       166,865       24,577  

 

 

BEELIVE’S SELECTED
HISTORICAL FINANCIAL INFORMATION

 

The following tables set forth, for
the periods and dates indicated, certain selected historical financial information of BeeLive. You should read the following selected
combined financial and other data in conjunction with “Management’s Discussion And Analysis Of Financial Condition
And Results Of Operations” and the audited financial statements and respective notes included elsewhere in this prospectus.
Historical results are not necessarily indicative of the results that may be expected in the future.

 

The following table shows our selected
historical financial information for the periods and as of the dates indicated. The selected historical consolidated financial
information as of December 31, 2018 and 2019, and June 30, 2020, and for the years ended December 31, 2018 and 2019, and for the
six months ended June 30, 2020 was derived from our audited historical combined and consolidated financial statements, which are
included elsewhere in this prospectus. The financial information has been prepared and presented in accordance with U.S. GAAP.

 

Summary Consolidated and Combined Statements
of Income

 

    For
the years ended
December 31,
    For the
six months ended
June 30,
 
  2018     2019     2019     2020     2020  
Amounts in thousands of RMB and US$   RMB     RMB     US$     RMB     US$  
Total revenue   ¥ 250,105     ¥ 365,602     $ 52,515     ¥ 147,216     $ 20,837  
Cost of revenues     (276,746 )     (353,876 )     (50,831 )     (136,124 )     (19,267 )
Gross (loss)/profit     (26,641 )     11,726       1,684       11,092       1,570  
Sales and marketing expenses     (26 )     (255 )     (37 )     (477 )     (67 )
General and administrative expenses     (1,484 )     (3,212 )     (461 )     (1,576 )     (223 )
Research and development expenses     (9,018 )     (4,417 )     (634 )     (3,120 )     (442 )
Provision for doubtful accounts                       (385 )     (54 )
(Loss)/income from operations     (37,169 )     3,842       552       5,534       784  
Interest income     106       537       77       16       2  
Interest expenses                       (922 )     (130 )
Other income, net           1,591       229       969       137  
Foreign exchange loss, net     (11 )     (5 )     (1 )     (21 )     (3 )
(Loss)/income before income taxes     (37,074 )     5,965       857       5,576       790  
Income tax benefits (expenses)     4,912       (877 )     (126 )     (468 )     (66 )
Net (loss)/income   ¥ (32,162 )   ¥ 5,088     $ 731     ¥ 5,108     $ 724  

 

 

Summary Consolidated and Combined Balance Sheets

 

    As of December 31,     As of June 30,  
(Amounts in thousands of Renminbi (“RMB”)   2018     2019     2019     2020     2020  
and US dollars (“US$”)   RMB     RMB     US$     RMB     US$  
Cash and cash equivalents   ¥ 18,336     ¥ 15,327     $ 2,202     ¥ 6,710     $ 950  
Accounts receivable, net     5,102       19,430       2,791       26,665       3,774  
Total current assets     47,735       56,537       8,121       73,248       10,368  
Total non-current assets     8,254       7,738       1,111       7,178       1,016  
TOTAL ASSETS     55,989       64,275       9,233       80,426       11,384  
Accounts payable     37,134       22,060       3,169       11,389       1,612  
Deferred revenue     5,876       6,863       986       7,970       1,128  
Total current liabilities     73,562       66,768       9,591       76,189       10,785  
Total non-current liabilities           10,000       1,436       11,800       1,670  
TOTAL LIABILITIES     73,562       76,768       11,027       87,989       12,455  
Total deficit     (17,573 )     (12,493 )     (1,795 )     (7,563 )     (1,071 )
TOTAL LIABILITIES AND DEFICIT   ¥ 55,989     ¥ 64,275     $ 9,233     ¥ 80,426     $ 11,384  

 

Summary Consolidated and Combined Cash Flow Data

 

    For the years ended
December
31,
    For the six months ended
June 30,
 
(Amounts in thousands of Renminbi (“RMB”)   2018     2019     2019     2020     2020  
and US dollars (“US$”)   RMB     RMB     US$     RMB     US$  
Net cash used in operating activities   ¥ (34,004 )   ¥ (21,468 )   $ (3,084 )   ¥ (10,870 )   $ (1,537 )
Net cash (used in)/provided by investing activities     (17,077 )     3,288       472       (18,662 )     (2,641 )
Net cash provided by financing activities     60,000       15,179       2,180       21,093       2,986  
Effect of exchange rate changes           (8 )     (1 )     (178 )     (27 )
Net increase/(decrease)  in cash and cash equivalents     8,919       (3,009 )     (432 )     (8,617 )     (1,219 )
Cash and cash equivalents at beginning of the year/period     9,417       18,336       2,634       15,327       2,169  
Cash and cash equivalents at end of the year/period   ¥ 18,336     ¥ 15,327     $ 2,202     ¥ 6,710     $ 950  

  

 

RISK FACTORS

 

An investment in our securities involves a high degree
of risk. Before you invest in our securities, you should carefully consider the following risks, together with all the other information
in this prospectus, including our financial statements and notes thereto, as well as any risks described in any applicable prospectus
supplement that we provide you in connection with an offering of securities pursuant to this prospectus. See “Where You
Can Find More Information.” Additionally, the risks and uncertainties discussed in this prospectus are not the only risks
and uncertainties that we face, and our business, financial condition, prospects, results of operations, cash flow and the market
price of our securities could be materially adversely affected by other matters that are not known to us or that we currently
do not consider to be material.

 

Risks Factors Relating to Our Business
and Industry

 

We may fail to retain our existing
users, keep them engaged or further grow our user base.

 

Our revenue primarily derives from live
streaming services, and therefore our ability to maintain and increase the size of our user base and user engagement level is
critical to our success. If our user base becomes smaller or our users become less active, it is possible that there would be
less spending on the virtual gifts on our platforms. Smaller user base or lower user engagement would make it difficult to retain
top broadcasters. Consequently, our financial condition would suffer a decline in revenue, and our business and results of operations
will be materially and adversely impacted.

 

To continue to maintain and improve our
existing user base and user engagement, we must ensure that we adequately and timely identify and respond to changes in user preferences,
attract and retain enough popular broadcasters, and offer new and attractive features and content. There is no guarantee that
we could meet all of these goals. A number of factors could negatively affect user growth, and engagement, including if:

 

we
fail to deliver our services or address users’ requests in a rapid and reliable
manner and therefore the user experience is adversely affected;
we
fail to innovate the content on our platforms that keeps users interested and engaged;
we
fail to retain popular broadcasters who are able to keep users engaged;
we
are unable to combat spam on or inappropriate or abusive use of our platforms, which
may lead to negative public perception of us and our brand;
we
fail to address users’ concerns related to privacy and communication, safety, security
or other factors;
there
are adverse changes in our services; and
the
growth of the number of mobile users in China does not continue to increase.

 

Our revenue growth is primarily
dependent on paying users and revenue per paying user. If we fail to continue to grow or maintain our paying user base or fail
to continue to increase revenue per paying user, our live streaming revenue may not increase, which may materially and adversely
affect our results of operations and financial condition.

 

Whether we can continue to increase our
paying ratio amongst our users or revenue per paying user depends on many factors, and many of them are out of our control. We
expect that our business will continue to be heavily dependent on revenue collected from paying users in the near future. Any
decline in the number of paying users or revenue per paying user may materially and adversely affect our results of operations
and financial condition.

 

We rely on a single monetization
model.

 

Mobile live streaming platforms use three
basic categories of revenue sharing models to monetize their live streaming operations: gift model, advertise model, and shopping
model. We currently mainly use the gift model, generating our revenue from virtual gifts purchased by our users. Although we intend
to diversify our revenue sharing models, such as by generating revenue from advertisement, there is no guarantee we will succeed.
Therefore, decreases in revenues generated from the gift model will materially and adversely affect our business, results of operations
and financial condition.

 

 

We may fail to offer attractive
content on our platforms.

 

High quality live streaming content is
important for us to attract, maintain and increase our user base and user engagement. Our content library is constantly evolving
and growing. However, if we fail to expand and diversify our content offerings, identify trending and popular genres, or maintain
the quality of our content, we may experience decreasing viewership and user engagement, which may materially and adversely affect
our financial conditions and results of operations.

 

In addition, we largely rely on our broadcasters
to create high-quality and fun live streaming content. We have in place a comprehensive incentive mechanism to encourage broadcasters
and talent agencies to supply content that is attractive to viewers. Also, talent agencies cooperating with us may guide or influence
broadcasters to develop content that is well received by viewers. However, if we fail to identify the latest trends and timely
guide broadcasters and talent agencies accordingly, our viewer number may decline and our results of operations and financial
condition may be materially and adversely affected.

 

Failure to attract, cultivate, and
retain top broadcasters may materially and negatively affect our user engagement and thus our business and operations.

 

The majority of our revenue is from sale
of virtual gifts to users. The charisma and the high-quality content of top broadcasters are primary contributors to user stickiness,
and is difficult to be replicated by other less popular broadcasters.

 

Although we have made efforts to support
top broadcasters in order to retain them, there is no guarantee that they will choose to stay with us. Top broadcasters tend to
receive more offers with attractive terms than the other broadcasters and some of them may choose to move to other platforms.
Their departure may cause a corresponding decline in our user base.

 

Sometimes we may face legal disputes with
competing platforms from which we attract some top broadcasters. Although we are not the primary target of these legal disputes,
broadcasters involved may be subject to fines or even injunctions, which may render our investment in recruiting them meaningless.
Conversely, some of our top broadcasters have left our platforms for competing platforms despite still being in a contractual
relationship with us, which have raised legal disputes. Even if we prevail in all such legal disputes, the departures of any top
broadcaster may still have a negative impact on our user engagement and reputation. To retain top broadcasters, we must devise
better compensation schemes, improve our monetization capabilities, and help the top broadcasters reach a wider audience. Although
we strive to improve in these respects, there is no guarantee that the broadcasters will not leave our platforms.

 

In terms of broadcaster cultivation, we
cannot guarantee that the performance metrics we use to track promising broadcasters will enable us to identify future top broadcasters.
Some of the broadcasters we identify as promising may turn out to be underperforming, and we may also fail to spot truly promising
broadcasters in the early stages of their career. In addition to a waste of resources, either one of these scenarios could prevent
us from cultivating top broadcasters, which could weaken our core competitive strength against competing platforms and thus cause
an outflow of users to those platforms.

 

If we fail to implement an effective
revenue sharing fee policy, we may lose our broadcasters and our results of operations and financial condition may be materially
and negatively affected.

 

We pay revenue sharing fees to the broadcasters
and talent agencies as compensation, which are determined based on a percentage of revenue from virtual gift sales that are attributed
to the broadcasters’ live streaming performance. Failure to implement a satisfactory revenue sharing fee policy may result
in undesired departures of broadcasters. For example, in 2018 we lowered our revenue sharing percentage for our broadcasters,
resulting in departures of a large number of our broadcasters from our platforms. As a result, our revenue was adversely affected.
Since then, we adjusted our revenue sharing fee policy to increase the sharing percentage for broadcasters. However, there is
no guarantee that our current and future revenue sharing fee policy will keep our broadcasters satisfied over an extended period
of time.

 

 

We partner with various talent agencies
to manage our broadcasters. If we are not able to maintain our relationship with talent agencies, our operations may be materially
and adversely affected.

 

We work with talent agencies to manage
and organize broadcasters on our platforms. Cooperation with talent agencies increases our operational efficiency in terms of
discovering, supporting, and managing broadcasters in a more organized and structured manner, and turning amateur broadcasters
into full-time broadcasters. If we fail to maintain our relationship with many of the talent agencies we are currently working
with, we may not be able to retain or attract broadcasters.

 

Failure to effectively manage our
growth and control our periodic spending to maintain such growth may materially and adversely affect our brand, and our business
and results of operations may be materially and adversely affected.

 

Our rapid growth has placed, and continues
to place, a significant strain on our management and resources. We may need to establish and expand our capacities in all aspects
of our business, such as operations, research and development, sales and marketing, and general administration, in order to meet
the increasing needs from a rapidly evolving market. We cannot assure you that our current level of growth will be sustainable.
We believe that our continued growth will depend on our ability to attract and retain viewers and top broadcasters, to develop
an infrastructure to service and support an expanding body of viewers and broadcasters, to explore new monetization avenues, and
to convert non-paying users to paying users and increase user engagement levels. We cannot assure you that we will be successful
in any of the above.

 

We expect our costs and expenses to continue
to increase in the future as we anticipate that we will need to continue to implement, from time to time, a variety of new and
upgraded operational, informational and financial systems, procedures and controls on an as-needed basis, including the continued
improvement of our accounting and other internal management systems. We will also need to expand, train, manage and motivate our
workforce and manage our relationships with viewers, talent agencies, broadcasters, and other business partners. All of these
endeavors involve risks and will require substantial management efforts and skills and significant additional expenditures. We
expect to continue to invest in our infrastructure in order to provide our services rapidly and reliably to viewers and broadcasters.
Continued growth could end up straining our ability to maintain reliable service levels for all of our viewers and broadcasters,
to develop and improve our operational, financial, legal and management controls, and to enhance our reporting systems and procedures.
Managing our growth will require significant expenditures and the allocation of valuable management resources. If we fail to achieve
the necessary level of efficiency in our organization as we grow, our business, results of operations, and financial condition
could be harmed.

 

We may fail to successfully implement
our monetization strategies.

 

Our streaming platforms are free to access,
and we generate revenues primarily from live streaming and sales of virtual gifts. As a result, our revenue is affected by our
ability to increase user engagement and convert non-paying users into paying users, which in turn depends on our ability to retain
quality broadcasters, innovate attractive content, and offer virtual gifts and other services. If we are not successful in enhancing
our ability to monetize our existing services or developing new approaches to monetization, we may not be able to maintain or
increase our revenues and profits or recover any associated costs. We monitor market developments and may adjust our monetization
strategies accordingly from time to time, which may result in decreases of our overall revenue or revenue contributions from some
monetization channels. In addition, we may in the future introduce new services to diversify our revenue streams, including services
with which we have little or no prior development or operating experience. If these new or enhanced services fail to engage customers
or platform partners, we may fail to generate sufficient revenues to justify our investments, and our business and operating results
and financial condition may suffer as a result.

 

 

Our past growth may not be indicative
of our future performance due to our limited operation history with a relatively new business model in a relatively new market.

 

We commenced business operations in
2012 and has experienced growth in the number of active and paying users and total revenue since 2014 (despite a decline in 2018
due to our lowering our revenue sharing percentage for our broadcasters). However, our past growth may not be indicative of our
future performance, as the markets for our live streaming platforms and the related products and services are relatively new and
rapidly developing. We must adapt ourselves to overcome challenges in a constantly evolving new market, especially in terms of
converting non-paying users to paying users, maintaining a stable paying user base and attracting new paying users. Our business
plan relies heavily upon an expanding user base and the resulting increased revenue from live streaming, as well as our ability
to explore other monetization avenues. However, our past experience and performance would not guarantee any future success if
we are not able to adapt rapidly to the evolving market.

 

As live streaming industry in China is
relatively young, there are few proven methods of projecting user demand or available industry standards on which we can rely.
Currently we derive our revenue primarily from sales of virtual gifts on our platforms. Although we intend to expand our monetization
avenue, we cannot assure you that our attempts to monetize our viewers and broadcasters will continue to be successful, profitable
or accepted, and therefore the income potential of our business is difficult to gauge.

 

Our growth prospects should be considered
in light of the risks and uncertainties that fast-growing early-stage companies with limited operating histories in evolving industries
may encounter, including, among others, risks and uncertainties regarding our ability to

 

develop
new virtual gifts that are appealing to users;
attract,
retain, and cultivate quality broadcasters;
maintain
stable relationships with talent agencies; and
expand
to new geographic markets with a suitable environment for the development of live-streaming
business.

 

Addressing these risks and uncertainties
will require significant capital expenditures and allocation of valuable management and employee resources. If we fail to successfully
address any of the above risks and uncertainties, the size of our user base, our revenue and operating margin may decline.

 

We mainly compete with other established
entertainment live streaming platforms. If we are unable to compete effectively, our business and operating results may be materially
and adversely affected.

 

Since running a successful live streaming
platform requires capital outlay and a large team of quality broadcasters who remain in short supply due to the fact that most
have signed contracts with existing platforms, there are high entry barriers for the entertainment live streaming industry. As
a result, our major competitors are streaming platforms with an established presence in the industry. We must compete with these
established players for user traffic and quality broadcasters and the competition remains intense.

 

In order to remain competitive, we may
be required to spend additional resources, which may adversely affect our profitability. We believe that our ability to compete
effectively depends upon many factors both within and beyond our control, including:

 

the popularity,
usefulness, ease of use, performance and reliability of our services compared to those
of our competitors, and our research and development abilities compared to our competitors;
our ability
to timely respond to and adapt to industry trends, market development and users’
preferences;
our brand
recognition in the market;
changes
mandated by legislation, regulations or government policies, some of which may have a
disproportionate effect on us; and
acquisitions
or consolidation within the industry, which may result in more formidable competitors.

 

 

Furthermore, if we involved in disputes
with any of our competitors that result in negative publicity to us, such disputes, regardless of their veracity or outcome, may
harm our reputation or brand image and in turn lead to reduced number of viewers and broadcasters. Our competitors may unilaterally
decide to adopt a wide range of measures targeted at us, including approaching our top broadcasters or attacking our platforms.
Any legal proceedings or measures we take in response to competition and disputes with our competitors may be expensive, time-consuming,
and disruptive to our operations and divert our management’s attention.

 

If we fail to compete effectively
against other entertainment medium, our results of operations and financial condition may be materially and adversely affected.

 

Our users have a vast array of entertainment
choices. Other forms of entertainment, such as traditional PC and console games, online video services, social media, as well
as more traditional mediums such as television, movies, and sports events, are much more well-established in mature markets and
may be perceived by users to offer greater variety, affordability, interactivity, and enjoyment. Our platforms compete against
these other forms of entertainment for discretionary time and spending of our users. If we are unable to sustain sufficient interest
of users in our platforms in comparison to other forms of entertainment, including new forms of entertainment that may emerge
in the future, our business model may no longer be viable.

 

We may fail to expand our business
into overseas markets successfully.

 

Our business objective includes expanding
our business into overseas markets in Southeast Asia, the Middle East and South America. As we continue to expand our international
footprint, it will be increasingly susceptible to the risks associated with international operations. We have a limited operating
history outside of China and the ability to manage our international operations successfully requires significant resources and
management attention and is subject to particular challenges of supporting a rapidly growing business in an environment of diverse
cultures, languages, customs, legal systems, alternative dispute systems and economic, political and regulatory systems. In addition,
we expect to incur significant costs associated with expanding our international operations, including hiring personnel internationally.
The risks and challenges associated with doing business internationally and our international expansion include:

 

uncertain
political and economic climates;
lack of
familiarity and burdens of complying with foreign laws, accounting and legal standards,
regulatory requirements, tariffs and other barriers;
unexpected
changes in regulatory requirements, taxes, tariffs, export quotas, custom duties or other
trade restrictions;
lack of
experience in connection with the localization of our applications, including translation
into foreign languages and adaptation for local practices, and associated expenses and
regulatory requirements;
difficulties
in adapting to differing technology standards;
difficulties
in managing and staffing international operations, including differing legal and cultural
expectations for employee relationships and increased travel, infrastructure and legal
compliance costs associated with international operations;
fluctuations
in exchange rates that may increase the volatility of our foreign-based revenue and expenses;
potentially
adverse tax consequences, including the complexities of foreign value-added tax, goods
and services tax and other transactional taxes;
difficulties
in managing and adapting to differing cultures and customs;
data privacy
laws which require that customer data be stored and processed in a designated territory
subject to laws different than China;
new and
different sources of competition as well as laws and business practices favoring local
competitors and local employees;
increased
financial accounting and reporting burdens and complexities; and
restrictions
on the repatriation of earnings.

 

 

Our business depends on a strong
brand, and any failure to maintain, protect, and enhance our brand would hurt our ability to retain or expand our user base, or
our ability to increase their level of engagement.

 

We operate five platforms under the brands
“Showself” (秀色直播),“Lehai”(乐嗨) and “Haixiu” (嗨秀),
BeeLive Chinese (“MiFeng” 蜜疯直播) and BeeLive International. Our business and financial
performance is highly dependent on the strength and the market perception of our brands and services. A well-recognized brand
is critical to increasing our user base and, in turn, facilitating our efforts to monetize our services and enhancing our attractiveness
to users. From time to time, we conduct marketing activities across various media to enhance our brand image and to guide public
perception of our brands and services. In order to create and maintain brand awareness and brand loyalty, to influence public
perception and to retain existing and attract new mobile users, customers and platform partners, we may need to substantially
increase our marketing expenditures. Since we operate in a highly competitive market, brand maintenance and enhancement directly
affect our ability to maintain our market position. In addition, we must exercise strict quality control of our platforms to ensure
that our brand image is not tarnished by substandard products or services. Any misuse of our platforms and any governmental adverse
actions against our platforms may harm our brand and reputation.

 

We must also find ways to distinguish
our platforms from those of our competitors. If for any reason we are unable to maintain and enhance our brand recognition, or
if we incur excessive expenses in this effort, our business, results of operations, and prospects may be materially and adversely
affected.

 

Our core values of focusing on user
experience and user satisfaction first and acting for the long-term may conflict with the short-term operating results of our
business.

 

At this time we are mainly focusing on
user experience and satisfaction, which we believe is essential to our success and serves the best, long-term interests of our
company and our shareholders. We may adopt strategies that we think will benefit our users, even if such strategies may negatively
impact our operating results in the short-term. We believe that a high quality user experience on our platforms helps us expand
and maintain our current user base and create better monetizing potential in the long-term.

 

If we fail to obtain or maintain
the required licenses and approvals or if we fail to comply with laws and regulations applicable to our industry, our business,
results of operations, and financial condition may be materially and adversely affected.

 

In order to conduct and develop business
in China, we have obtained the following valid licenses through our PRC variable interest entities: ICP License for provision
of Internet information services, Internet Culture Operation License for online performance and music, entertainment and game
product provision, Commercial Performance License for providing streamer agency services and License for producing radio and television
program.

 

However, the Internet industry is highly
regulated in China. Due to the uncertainties of interpretation and implementation of existing and future laws and regulations,
the licenses we currently hold may be deemed insufficient by governmental authorities. In addition, as all licenses are subject
to periodic renewal, even though we have successfully renewed such licenses in the past, there is no guarantee that we will be
able to continue to do so in the future. These uncertainties may in the future restrain our ability to expand our business scope
and may subject us to fines or other regulatory actions by relevant regulators if our practice is deemed as violating relevant
laws and regulations. As we develop and expand our business scope, we may need to obtain additional qualifications, permits, approvals,
or licenses. Moreover, we may be required to obtain additional licenses or approvals if the PRC government adopts more stringent
policies or regulations for our industry. If we fail to obtain, hold, or maintain any of the required licenses or permits or fail
to make the necessary filings on time or at all, we may be subject to various penalties, such as confiscation of the net revenues
that have been generated through the deemed unlicensed activities, the imposition of fines, and the discontinuation or restriction
of our operations. Any such penalties may disrupt our operations and materially and adversely affect our results of operations
and financial condition. 

 

 

We may be subject to intellectual
property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or
linked to our platforms, or distributed to our users, or for proprietary information appropriated by former employees, which may
materially and adversely affect our business, financial condition and prospects.

 

Companies in the Internet, technology,
and media industries are frequently involved in intellectual property infringement litigation. In China, the validity, enforceability,
and scope of protection of intellectual property rights in Internet-related industries, especially in the evolving live streaming
industry, are uncertain. We have been and may in the future be subject to intellectual property infringement claims or other allegations
by third parties for information or content displayed on, retrieved from or linked to, recorded, stored or make accessible on
our platforms, or otherwise distributed to our users, including in connection with the music, movies, video and games played,
recorded or make accessible on our platforms during streaming. For example, we face, from time to time, allegations that we have
featured pirated or illegally downloaded music and movies on our platforms, and that we have infringed on the trademarks and copyrights
of third parties, including our competitors, or allegations that we are involved in unfair trade practices. As we face increasing
competition and as litigation becomes a more common method for resolving commercial disputes in China, we face a higher risk of
being the subject of intellectual property infringement claims or other legal proceedings.

 

We permit broadcasters to upload text
and graphics to our platforms and permit our users to share them. Our platforms also permit broadcasters or users to choose their
username and profile photo. Under relevant PRC laws and regulations, online service providers, which provide storage space for
users to upload content or links to other services or content, could be held liable for copyright infringement under various circumstances,
including situations where the online service provider knows or should reasonably have known that the relevant content uploaded
or linked to on our platforms infringes upon the copyright of others and the online service provider failed to take necessary
actions to prevent such infringement.

 

We have implemented internal control measures
to ensure that the design of our platforms and the content that is streamed on our platforms does not infringe on valid intellectual
properties, such as patents and copyrights held by third parties. We also license certain intellectual properties from third parties
to implement certain functions available on our platforms.

 

Some of our employees were previously
employed at other competing companies, including our current and potential competitors. To the extent that these employees are
involved in the development of content or technology similar to ours at their former employers, we may become subject to claims
that such employees or we may have appropriated proprietary information or intellectual properties of the former employers of
our employees. If we fail to successfully defend such claims, our results of operations may be materially and adversely affected.

 

Defending claims is costly and can impose
a significant burden on our management and employees, and there can be no assurances that favorable final outcomes will be obtained
in all cases. Such claims, even if they do not result in liability, may harm our reputation. Any resulting liability or expenses,
or changes required to our platforms to reduce the risk of future liability, may have a material adverse effect on our business,
financial condition and prospects.

 

Unauthorized use of our intellectual
property and the expenses incurred in protecting our intellectual property rights may materially and adversely affect our business.

 

We consider our copyrights, trademarks,
and other intellectual properties to be critical to our success, and rely on a combination of trademark and copyright laws, trade
secrets protection, restrictions on disclosure and other agreements that restrict the use of our intellectual property to protect
these rights. Although we enter into confidentiality agreements and intellectual property ownership agreements with our employees,
these confidentiality agreements could be breached and we might not have adequate remedies for any breach. As a result, our proprietary
technology, know-how or other intellectual property could otherwise become known to third parties. In addition, third parties
may independently discover trade secrets and proprietary information, limiting our ability to assert any trade secret rights against
such parties.

 

The measures we use to protect our proprietary
rights may not be adequate to prevent the infringement or misappropriation of our intellectual property. In addition, we cannot
assure you that any of our trademark applications will ultimately proceed to registration or will result in registration with
adequate scope for our business. Some of our pending applications or registrations may be successfully challenged or invalidated
by others. If our trademark applications are not successful, we may have to use different marks for affected products or services,
or seek to enter into arrangements with any third parties who may have prior registrations, applications, or rights, which might
not be available on commercially reasonable terms, if at all.

 

 

Enforcement of intellectual property laws
in China has historically been lacking, primarily because of ambiguities in the laws and difficulties in enforcement. Accordingly,
intellectual property rights protection in China may not be as effective as in other jurisdictions with a more developed legal
framework regulating intellectual property rights. Policing unauthorized use of our proprietary technology, trademarks, and other
intellectual property is difficult and expensive, and litigation may be necessary in the future to enforce our intellectual property
rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business, as
well as materially adversely affect our results of operations and financial condition.

 

Some of our products and services
contain open source software, which may pose a particular risk to our proprietary software, products, and services in a manner
that negatively affects our business.

 

We use open source software in some of
our products and services and will continue to use open source software in the future. There is a risk that open source software
licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute
our products or services. Additionally, we may face claims from third parties claiming ownership of, or demanding release of,
the open source software or derivative works that we have developed using such software. These claims could result in litigation
and could require us to make our software source code freely available, purchase a costly license, or cease offering the implicated
products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require
significant additional research and development resources, and we may not be able to complete it successfully.

 

Furthermore, because any software source
code we contribute to open source projects is publicly available, our ability to protect our intellectual property rights with
respect to such software source code may be limited or lost entirely. As a result, we may be unable to prevent our competitors
or others from using such software source code contributed by us.

 

Our content monitoring system may
not be effective in preventing misconduct by our users and misuse of our platforms.

 

We operate entertainment live streaming
platforms that provide real-time streaming and interactions. Because we do not have full control over how and what broadcasters
or viewers will use our platforms to communicate, our platforms may be misused by individuals or groups of individuals to engage
in immoral, disrespectful, fraudulent or illegal activities. We have implemented control procedures to detect and block illegal
or inappropriate content and illegal or fraudulent activities conducted through the misuse of our platforms, but such procedures
may not prevent all such content from being broadcasted or posted or activities from being carried out. Moreover, real time streaming
renders it harder for us to filter illegal or inappropriate speeches, conduct, and behavior from our platforms prior to airing.
As a result, we may face civil lawsuits or other actions initiated by the affected viewer, or governmental or regulatory actions
against us. In response to allegations of illegal or inappropriate activities conducted through our platforms, PRC government
authorities may intervene and hold us liable for non-compliance with PRC laws and regulations concerning the dissemination of
information on the Internet and subject us to administrative penalties or other sanctions, such as requiring us to restrict or
discontinue some of the features and services provided on our websites and mobile applications, or even revoke our licenses or
permits to provide Internet content services. We endeavor to ensure all broadcasters are in compliance with relevant regulations,
but we cannot guarantee that all broadcasters will comply with all PRC laws and regulations. Therefore, our live streaming service
may be subject to investigations or subsequent penalties if content displayed on our platforms is deemed to be illegal or inappropriate
under PRC laws and regulations.

 

As of the date of this prospectus,
our platform “Showself” (秀色直播) has, since our operation commencement in 2014, received
6 administrative penalties from Beijing Cultural Market Administrative Enforcement Department, all of which are minor penalties
of fine, for the inappropriate conducts of broadcasters. The other two platforms of our, “Haixiu” (嗨秀秀场)
and “Lehai” (乐嗨秀场), received 1 and 2 administrative penalties, respectively, from the
same Department for the same reason. “Beelive Chinese version (“Mifeng” 蜜疯直播) received
2 administrative penalty from Beijing Cultural Market Administrative Enforcement Department and 1 administrative penalty from
Beijing Haidian Security Bureau. All above mentioned defects have been timely remedied by the platforms and all remedial measures
have been reported to the Department for its review and approval.

 

 

We may be held liable for information
or content displayed on, retrieved from or linked to our platforms, or distributed to our users if such content is deemed to violate
any PRC laws or regulations, and PRC authorities may impose legal sanctions on us.

 

Our users are able to exchange information,
generate content and engage in various other online activities on our live streaming platforms. We require our broadcasters and
users to agree to our terms of use upon account registration. The terms of use set out types of content strictly prohibited on
our platforms. However, signing the terms of use does not guarantee the broadcasters and users will comply with these terms.

 

In addition, because a majority of the
video and audio communications on our platforms is conducted in real time, the content generated by our broadcasters and users
on air cannot be filtered before they are streamed on our platforms. Therefore, users may engage in illegal conversations or activities,
including the publishing of inappropriate or illegal content on our platforms that may be unlawful under PRC laws and regulations.

 

Although we have also developed a robust
content monitoring system and use our best efforts to monitor content on our platforms, we cannot detect every incident of inappropriate
content on our platforms due to the immense quantity of user-generated content. As such, government authorities may hold us liable
for inappropriate or illegal content on our platforms and may subject us to fines or other disciplinary actions, including in
serious cases suspension or revocation of the licenses necessary to operate our platforms, if we are deemed to have facilitated
the appearance of inappropriate content placed by third parties on our platforms under PRC laws and regulations.

 

Application stores may temporarily take
down our applications if the content was deemed to violate relevant PRC laws or regulations.

 

Meanwhile, we may face claims for defamation,
libel, negligence, copyright, patent or trademark infringement, other unlawful activities or other theories and claims based on
the nature and content of the information delivered on or otherwise accessed through our platforms. Defending any such actions
could be costly and require significant time and attention of the management and other resources, which would materially and adversely
affect our business.

 

The complexity, uncertainties, and
changes in PRC regulation of the Internet industry and companies may materially and adversely affect our business and financial
condition.

 

The Internet industry is highly regulated
in China, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the Internet industry.
These Internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve
significant uncertainty. As a result, sometimes it may be difficult to evaluate the legal risks involved in certain actions or
omissions. Issues, risks, and uncertainties relating to PRC regulation of the Internet business include, but are not limited to,
the following:

 

There are
uncertainties relating to the regulation of the Internet business in China, including
evolving licensing practices and the requirement for real-name registrations. Permits,
licenses, or operations at some of our subsidiaries and PRC variable interest entity
levels may be subject to challenge. We may not be able to timely obtain or maintain all
the required licenses or approvals, permits, or to complete filing, registration or other
formalities necessary for our present or future operations, and we may not be able to
renew certain permits or licenses or renew certain filing or registration or other formalities.
In addition, although we are not currently required by PRC law to ask all users for their
real name and personal information when they register for a user account, PRC regulators
could require us to implement compulsory real-name registration for all users on our
platforms in the future. In late 2011, for example, the Beijing municipal government
required micro bloggers in China to implement real-name registration for all of their
registered users. If we are required to implement real-name registration for users on
our platforms, we may lose a large number of registered user accounts for various reasons,
including, for example, because users may not be able to maintain multiple accounts and
some users may dislike giving out their private information.

 

 

New regulatory
agencies may be established under the evolving PRC regulatory system for the Internet
industry. Such new agencies may issue new policies or new interpretations of existing
laws and regulations. We are unable to determine what policies may be issued by any such
new agencies in the future or how existing laws, regulations, and policies will be interpreted
by such new agencies.
New laws,
regulations or policies may be promulgated or announced that will regulate Internet activities,
including online video and online advertising businesses. If these new laws, regulations,
or policies are promulgated, additional licenses may be required for our operations.
The interpretation
and application of existing PRC laws, regulations, and policies and possible new laws,
regulations, or policies relating to the Internet industry have created substantial uncertainties
regarding the legality of existing and future foreign investments in, and the businesses
and activities of, Internet businesses in China. There are also risks that we may be
found to violate the existing or future laws and regulations given the uncertainty and
complexity of China’s regulation of Internet business.

 

Increases in the costs of content
on our platforms may have an adverse effect on our business, results of operations, and financial condition.

 

To maintain and increase user base and
user paying ratio, we must continue offering attractive and engaging content on our platforms. We provide such content mainly
through our broadcasters. In order to attract and retain top broadcasters, we need to have an attractive revenue sharing policy
and provide marketing resources to support them. If competitor platforms offer higher compensation, our costs to retain our broadcasters
may increase. As our business and user base further expand, we also need to continue updating and producing content and activities
to meet the more diversified interest of a larger user group. We also need to innovate the content on our platforms to capture
and follow the market trends, resulting in higher costs of the contents on our platforms. If we are not able to continue to retain
our broadcasters and produce high quality content on our platforms at commercially acceptable costs, our business, financial condition,
and results of operations would be adversely impacted.

 

Our failure to anticipate or successfully
implement new technologies could render our proprietary technologies or platforms unattractive or obsolete, and reduce our revenues
and market share.

 

Our technological capabilities and infrastructure
underlying our live streaming platforms are critical to our success. The Internet industry is subject to rapid technological changes
and innovation. We need to anticipate the emergence of new technologies and assess their market acceptance. We also need to invest
significant resources, including financial resources, in research and development to keep pace with technological advances in
order to make our development capabilities, our platforms and our services competitive in the market. However, development activities
are inherently uncertain, and we might encounter practical difficulties in commercializing our development results. Our significant
expenditures on research and development may not generate corresponding benefits. Given the fast pace with which the Internet
technology has been and will continue to be developed, we may not be able to timely upgrade our streaming technology, our engines
or the software framework for our platforms’ development in an efficient and cost-effective manner, or at all. New technologies
in programming or operations could render our technologies, our platforms or products or services that we are developing or expect
to develop in the future obsolete or unattractive, thereby limiting our ability to recover related product development costs,
outsourcing costs and licensing fees, which could result in a decline in our revenues and market share.

 

The proper functioning of our platforms
is essential to our business. Any disruption to our IT systems could materially affect our ability to maintain the satisfactory
performance of our platforms.

 

Disruptive and malfunctioned platforms
will drive away frustrated users of ours and reduce our user base. Smooth and proper functioning of our platforms relies on our
IT systems. However, our technology or infrastructure may not function properly at all times. Any system interruptions caused
by telecommunications failures, computer viruses, hacking or other attempts to harm our systems could result in the unavailability
or slowdown of our platforms and limit the attractiveness of content provided on our platforms. Our servers may also be vulnerable
to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to system interruptions, website
or mobile app slowdown or unavailability or loss of data. Any of such occurrences could cause severe disruption to our daily operations.
As a result, our business and results of operations may be materially and adversely affected and our market share could decline.

 

 

Any compromise to the cyber security
of our platforms could materially and adversely affect our business, reputation, and results of operations.

 

On November 7, 2016, the Standing Committee
of the National People’s Congress released the PRC Cyber Security Law, which took effect on June 1, 2017. The PRC Cyber
Security Law requires network operators to fulfill certain obligations to safeguard security in the cyberspace and enhance network
information management.

 

Our products and services are generally
provided through the Internet and involve the storage and transmission of users’ information. Any security breach would
expose us to a risk of loss of information and result in litigation and potential liability. As the techniques used to obtain
unauthorized access, disable or degrade Internet services or sabotage operating systems change frequently and often are not recognized
until launched against a target, we may not be able to anticipate such techniques or implement adequate preventative measures.
Upon a security breach, our technical team will be notified immediately and coordinate with the local support staff to diagnose
and solve the technical problems. As of the date of this prospectus, we have not experienced any material incidents of security
breach.

 

Despite the security measures we have
implemented, our facilities, systems, procedures, and those of our third-party providers, may be vulnerable to security breaches,
act of vandalism, software viruses, misplaced or lost data, programming or human errors or other similar events which may disrupt
our delivery of services or expose the confidential information of our users and others. If an actual or perceived breach of our
security occurs, the market perception of the effectiveness of our security measures could be harmed, and we may lose current
and potential users and be exposed to legal and financial risks, including legal claims, regulatory fines and penalties, which
in turn could adversely affect our business, reputation, and results of operations.

 

Concerns about the collection, use,
and disclosure of personal data and other privacy-related and security matters could deter customers and users from using our
services and adversely affect our reputation and business.

 

Concerns about our practices with regard
to the collection, use, or disclosure of personal information or other privacy-related and security matters, even if unfounded,
could damage our reputation and operations. The PRC Constitution, the PRC Criminal Law, the General Principles of the PRC Civil
Law and the PRC Cyber Security Law protect individual privacy in general, which require certain authorization or consent from
Internet users prior to collection, use, or disclosure of their personal data and also protection of the security of the personal
data of such users. In particular, Amendment 7 to the PRC Criminal Law prohibits institutions, companies, and their employees
in the telecommunications and other industries from selling or otherwise illegally disclosing a citizen’s personal information
obtained during the course of performing duties or providing services. Our internal policy requires our employees to protect the
personal data of our users, and employees who violate such policy are subject to disciplinary actions, including dismissal. While
we strive to comply with all applicable data protection laws and regulations, as well as our own privacy policies, any failure
or perceived failure to comply may result in proceedings or actions against us by government entities or private individuals,
which could have an adverse effect on our business. Moreover, failure or perceived failure to comply with applicable laws and
regulations related to the collection, use, or sharing of personal information or other privacy-related and security matters could
result in a loss of confidence in us by customers and users, which could adversely affect our business, results of operations
and financial condition.

 

Our operations depend on the performance
of the Internet infrastructure and fixed telecommunications networks in China, which may experience unexpected system failure,
interruption, inadequacy, or security breaches.

 

Almost all access to the Internet in China
is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the
Ministry of Industry and Information Technology, or the MIIT. Moreover, we primarily rely on a limited number of telecommunication
service providers to provide us with data communications capacity through local telecommunications lines and Internet data centers
to host our servers. We have limited access to alternative networks or services in the event of disruptions, failures or other
problems with China’s Internet infrastructure or the fixed telecommunications networks provided by telecommunication service
providers. Web traffic in China has experienced significant growth during the past few years. Effective bandwidth and server storage
at Internet data centers in large cities such as Beijing are scarce. With the expansion of our business, we may be required to
upgrade our technology and infrastructure to keep up with the increasing traffic on our platforms. We cannot assure you that the
Internet infrastructure and the fixed telecommunications networks in China can support the demands associated with the continued
growth in Internet usage. If we cannot increase our capacity to deliver our online services, we may not be able to satisfy the
increases in traffic we anticipate from our expanding user base, and the adoption of our services may be hindered, which could
adversely impact our business and profitability.

 

 

In addition, we have no control over the
costs of the services provided by telecommunication service providers. If the prices we pay for telecommunications and Internet
services rise significantly, our results of operations may be materially and adversely affected. Furthermore, if Internet access
fees or other charges to Internet users increase, some users may be prevented from accessing the mobile Internet and thus cause
the growth of mobile Internet users to decelerate. Such deceleration may adversely affect our ability to continue to expand our
user base.

 

We use third-party services and
technologies in connection with our business, and any disruption to the provision of these services and technologies to us could
result in adverse publicity and a slowdown in the growth of our users, which could materially and adversely affect our business,
results of operations, and financial condition.

 

Our business depends upon services and
software provided by third parties. For example, our user data is encrypted and saved on the storage cloud provided by a third-party
cloud services company. We are relying on the security measures of such third party cloud services company for data protection,
and our disaster recovery system to minimize the possibility of data loss or breach ability. If such third-party cloud services
company has a system disruption and is not able to recover quickly, our business and operations may be adversely affected.

 

Our overall network relies on broadband
connections provided by third-party operators and we expect this dependence on third parties to continue. The networks maintained
and services provided by such third parties are vulnerable to damage or interruption, which could impact our results of operations.
See “—Our operations depend on the performance of the Internet infrastructure and fixed telecommunications networks
in China, which may experience unexpected system failure, interruption, inadequacy or security breaches
.”

 

We also sell a significant portion of
our products and services through third-party online payment systems. If any of these third-party online payment systems suffers
security breaches, users may lose confidence in such payment systems and refrain from purchasing our virtual gifts online, in
which case our results of operations would be negatively impacted.

 

We exercise no control over the third
parties with whom we have business arrangements. For some of services and technologies such as online payment systems, we rely
on a limited number of third-party providers with limited access to alternative networks or services in the event of disruptions,
failures, or other problems. If such third parties increase their prices, fail to provide their services effectively, terminate
their service or agreements, or discontinue their relationships with us, we could suffer service interruptions, reduced revenues
or increased costs, any of which may have a material adverse effect on our business, results of operations, and financial condition.

 

User growth and engagement depend
upon effective interoperation with operating systems, networks, mobile devices, and standards that we do not control.

 

We offer access to our platforms across
a variety of PC and mobile operating systems and devices. We are dependent on the interoperability of our services with popular
mobile devices and mobile operating systems that we do not control, such as Windows, Android, and iOS. Any such operating systems
or devices that decide to degrade the functionality of our services or give preferential treatment to competitive services could
adversely affect usage of our services. In order to deliver high quality services, it is important that our services work well
across a range of mobile operating systems, networks, mobile devices, and standards that we do not control. We may not be successful
in developing relationships with key participants in the mobile industry or in developing services that operate effectively with
these operating systems, networks, devices and standards. Any difficulties for users and broadcasters in accessing and using our
platforms would harm our user growth and user engagement and in turn would adversely affect our results of operations and financial
condition.

 

 

We rely on our mobile application
and PC application to provide services to our users and broadcasters which, if inaccessible, may have material adverse impact
on our business and results of operations.

 

We rely on third-party mobile application
and PC application distribution channels such as Apple’s App Store, various Android application stores, and websites to
distribute our applications to users and broadcasters. We expect a substantial number of downloads of our mobile applications
and PC applications will continue to be derived from these distribution channels. The promotion, distribution, and operation of
our applications are subject to such distribution platforms’ standard terms and policies for application developers, and
such distribution channels have discretion to determine whether we comply with their terms and policies. If any of such distribution
channels determines to take down our applications or terminate the relationship with us, our business, results of operations,
and financial condition may be materially and adversely affected.

 

Continuing efforts of our executive
officers, key employees, and qualified personnel are essential to our business and the loss of their services may adversely and
negatively impact our business and results of operations.

 

Our future success depends substantially
on the continued efforts of our executive officers and key employees. If one or more of our executive officers or key employees
were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner,
or at all. Since live streaming industry is characterized by high demand and intense competition for talent, we cannot assure
you that we will be able to attract or retain qualified staffs or other highly skilled employees. In addition, as we are relatively
young, our ability to train and integrate new employees into our operations may not meet the growing demands of our business,
which may materially and adversely affect our ability to grow our business and hence our results of operations.

 

If any of our executive officers or key
employees joins a competitor or forms a competing company, we may lose users, know-how and key professionals and staff members.
Each of our executive officers and key employees has entered into an employment agreement and a non-compete agreement with us.
However, certain provisions under the non-compete agreement may be deemed invalid or unenforceable under PRC law. If any dispute
arises between our executive officers and key employees and us, we cannot assure you that we would be able to enforce these non-compete
agreements in China, where these executive officers reside, in light of uncertainties with China’s legal system.

 

We are subject to risks relating
to litigation.

 

We have been involved in and may be subject
to litigation and claims of various types, including litigation alleging infringement of intellectual property rights and unfair
competition, claims and disputes involving broadcasters, customers, our employees and suppliers. Litigation is expensive, subjects
us to the risk of significant damages, requires significant management time and attention and could have a material and adverse
effect on our business, results of operations, and financial condition.

 

We may be the subject of allegations,
harassing, or other detrimental conduct by third parties, which could harm our reputation and cause it to lose market share, users,
and customers.

 

We have been subject to allegations by
third parties, negative Internet postings and other adverse public exposure on our business, operations and staff compensation.
We may also become the target of harassment or other detrimental conduct by third parties or disgruntled former or current employees.
Such conduct may include complaints, anonymous or otherwise, to regulatory agencies, media or other organizations. We may be subject
to government or regulatory investigation or other proceedings as a result of such third-party conduct and may be required to
spend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that we will
be able to conclusively refute each of the allegations within a reasonable period of time or at a commercially reasonable cost,
or at all. Additionally, allegations, directly or indirectly against us, may be posted on the Internet, including social media
platforms by anyone, whether or not related to us, on an anonymous basis. Any negative publicity on us or our management can be
quickly and widely disseminated. Social media platforms and devices immediately publish the content of their subscribers and participants
post, often without filters or checks on the accuracy of the content posted. Information posted may be inaccurate and adverse
to us, and it may harm our reputation, business or prospects. The harm may be immediate without affording us an opportunity for
redress or correction. Our reputation may be negatively affected as a result of the public dissemination of negative and potentially
false information about our business and operations, which in turn may cause us to lose market share, users or customers.

 

 

The appointed Temporary Receiver
of Link Motion Inc. (f/k/a NQ Mobile Inc.) may bring an action to restore Link Motion Inc.’s senior position in the Showself
businesses, which may result in claims against us. 
 

 

On December 13, 2018, a shareholder plaintiff
filed a derivative lawsuit on behalf of, and against Link Motion Inc. (“LKM”) and three individual defendants, including
the chairman of the board of directors of LKM, in the United States District Court for Southern District of New York. In this
lawsuit, the shareholder plaintiff alleged certain wrong doing by the individual defendants in connection with the sales of LKM’s
corporation assets, including the sale of a 65{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in the Showself businesses (currently is conducted via Zhihui
Qiyuan) to Tongfang Investment Fund Series SPC (“TF”) pursuant to a share purchase agreement dated as of March 30,
2017. On February 1, 2019, the court issued a Preliminary Injunction Order which preliminarily enjoins the defendants to take
corrective action as necessary to restore LKM’s senior position in the underlying assets of the Showself businesses and
appointed a temporary receiver for LKM during the pendency of this action. The temporary receiver has certain statutory powers
and specified delineated powers, including but not limited to, commence, continue and/or control any action on behalf of LKM in
the U.S., the PRC, or elsewhere. Although we believe that Scienjoy’s equity securities are owned by its sellers, it is possible
that we could be sued in connection with these ongoing proceedings, which could be costly to defend, and a judgment against us
could result in significant damages. As of the date of this prospectus and to our knowledge, the temporary receiver has yet brought
any claims in any jurisdiction to restore LKM’s 65{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in the Showself businesses. However we cannot guarantee
that such claims will not be brought in the future.

 

Negative publicity may materially
and adversely affect our brand, reputation, business, and growth prospects.

 

Negative publicity involving us, our broadcasters,
our users, our management, our live streaming platforms, or our business model may materially and adversely harm our brand and
our business. We cannot assure you that we will be able to defuse negative publicity about us, our management and/or our services
to the satisfaction of our investors, users and broadcasters, customers and platform partners. There has been negative publicity
about us and the misuse of our services, which has adversely affected our brand, public image, and reputation. Such negative publicity,
especially when it is directly addressed against us, may also require us to engage in defensive media campaigns. This may cause
us to increase our marketing expenses and divert our management’s attention and may adversely impact our business and results
of operations.

 

Contractual disputes with our talent
agencies may harm our reputation, and may be costly or time-consuming to resolve.

 

We enter into contractual arrangements
with talent agencies. Pursuant to these contracts, talent agencies are responsible for recruiting and training broadcasters and
providing content for our platforms. We share with the talent agencies a certain percentage of the revenue generated by the broadcasters
they manage. Talent agencies will in turn enter into compensation arrangement with the broadcasters they manage. From time to
time, there may be contractual disputes between broadcasters and talent agencies, and/or between talent agencies and us. Any such
disputes may not only be costly and time-consuming to solve, but may also be detrimental to the quality of the content produced
by the broadcasters, or even causing broadcasters to leave our platforms.

 

We enter into exclusivity agreements with
certain of our top broadcasters, pursuant to which such top broadcasters agree not to work for other live streaming platforms
in exchange for additional support and resources from us. Although these top broadcasters are required to pay a certain amount
of fees if they breach the exclusivity agreements, we cannot guarantee that such exclusivity agreements will be an effective measure
to deter these top broadcasters from leaving our platforms.

 

 

Key performance metrics used by
us, such as QAUs, paying users, ARPPU and paying ratio, may overstate the number of our active and paying users, which may lead
to an inaccurate interpretation of our revenue metrics and our business operations by our management and by investors, and may
even misleadingly affect management’s business judgment of our operations.

 

For performance tracking purposes, we
monitor metrics such as the number of registered user accounts, active users, and paying users. We calculate certain operating
metrics in the following ways: (a) the number of registered users, which refers to the number of users that has registered and
logged onto our platforms at least once since registration; (b) the number of active users, which refers to the number of users
that has visited our platforms through PC or mobile app at least once in a given period; (c) the number of paying users, which
refers to the number of users that has purchased virtual currencies on our platforms at least once in a given period. The actual
number of individual users, however, is likely to be lower than that of registered users, active users, and paying users potentially
significantly, due to various reasons such as fraudulent representation or improper registration. Some of the user accounts may
also be created for specific purposes such as to increase virtual gifting for certain performers in various contests, but the
number of registered users, active users, and paying users do not exclude user accounts created for such purposes. We have limited
ability to validate or confirm the accuracy of information provided during the user registration process to ascertain whether
a new user account created was actually created by an existing user who is registering duplicative accounts. The respective number
of our registered users, active users, and paying users may overstate the number of individuals who register on our platforms,
sign onto our platforms, purchase virtual gifts or other products and services on our platforms, which may lead to an inaccurate
interpretation of our operating metrics. Additionally, a user needs to register a separate account for each our platform to access
such platform. When calculating our total numbers of QAUS as a whole, a user with multiple accounts with us may be counted more
than once and such numbers may be higher than the actual numbers of users. Additionally, we are able to measure unique users only
to the extent that these users are registered using the same identification method. Since we allow a user to register an account
on our platforms with the user’s mobile number, Wechat account or QQ account, our ability to identify unique users is limited.
 

 

If the tracked growth in the number of
our registered users, active users, and paying users is higher than the actual growth in the number of individuals registered,
active, or paying users, our user engagement level, sales, and business may not grow as quickly as we expect. In addition, such
overstatement may cause inaccurate evaluation of our operations by our management and by investors, which may also materially
and adversely affect our business and results of operations.

 

The security of operations of, and
fees charged by, third-party online payment platforms may have a material adverse effect on our business and results of operations.

 

Currently, we use third-party online payment
platforms, such as China UnionPay, WeChat Pay, and Alipay, to receive a large part of the cash proceeds from sales of our products
and services through direct purchases on our platforms. Any scheduled or unscheduled interruption in the ability of our users
to use these and other online payment platforms could adversely affect our payment collection, and in turn, our revenue. In addition,
in online payment transactions, secure transmission of user information, such as debit and credit card numbers and expiration
dates, personal information and billing addresses, over public networks, is essential to user privacy protection and maintaining
their confidence in our platforms.

 

We do not have control over the security
measures of our third-party payment platforms, and their security measures may not be adequate at present or may not be adequate
with the expected increased usage of online payment platforms. We could be exposed to litigation and possible liability if online
transaction safety of our users is compromised in transactions involving payments for our products and services, which could harm
our reputation and our ability to attract users and may materially adversely affect our business. We also rely on the stability
of such payment transmissions to ensure the continued payment services provided to our users. If any of these third-party online
payment platforms fails to process or ensure the security of users’ payments for any reason, our reputation will be damaged
and we may lose our paying users and discourage the potential purchases, which in turn, will materially and adversely affect our
business, financial condition, and prospects.

 

 

Our users may suffer third-party
fraud when purchasing our virtual currency and we may suffer fraud when selling virtual currency to users.

 

We offer our users multiple options to
purchase our virtual currency. Users can purchase these virtual currencies directly on web streaming portal, or make in-app purchases
using third-party payment channels including China Union Pay, WeChat pay, Alipay and Apple’s App Store. Users can also purchase
virtual currencies through third-party sales agencies officially authorized by us. Other than the above-mentioned purchase channels,
there are no other means to purchase our virtual currency. However, from time to time, certain third parties fraudulently claim
that they are sales agencies authorized by us and users can purchase our virtual currency through them. If our users choose to
purchase our virtual currency from such unauthorized third parties, they may suffer losses from such fraudulent activities by
third parties. Although we are not directly responsible for the losses in such case, our user experience may be adversely affected
and users may choose to leave our platforms as a result. Such fraudulent activities by third parties might also generate negative
publicity, disputes, or even legal claims. The measures we take in response to such negative publicity, disputes, or legal claims
may be expensive, time consuming, and disruptive to our operations and divert our management’s attention.

 

Additionally, there is a risk that even
our duly authorized third-party sales agencies may fail to deliver virtual currencies to users after users make payment. In this
case, we are responsible to deliver such virtual currencies to users. We may in turn demand payment from the authorized third-party
sale agencies but there is no guarantee that we may recover the full payment.

 

Restrictions on virtual currency
may adversely affect our revenues.

 

Due to the relatively short history of
virtual currencies in China, the regulatory framework governing the industry is still under development. On June 4, 2009, the
Ministry of Culture and the Ministry of Commerce jointly issued Notice on the Strengthening of the Administration of Online Game
Virtual Currency (the “Virtual Currency Notice”), which defines what a virtual currency is and requires that entities
obtain the approval from the competent culture administrative department before issuing virtual currency and engaging in transactions
using virtual currencies in connection with online games. The Virtual Currency Notice regulates that virtual currency may only
be used to purchase services and products provided by the online service provider that issues the virtual currency, and also prohibit
businesses that issue online game virtual currency from issuing virtual currency to game players through means other than purchases
with legal currency, and from setting game features that involve the direct payment of cash or virtual currency by players for
the chance to win virtual gifts or virtual currency based on random selection through a lucky draw, wager, or lottery. These restrictions
on virtual currency may result in lower sales of online virtual currency.

 

Currently, the PRC government has not
promulgated any specific rules, laws, or regulations to directly regulate virtual currencies, except for the above-mentioned Virtual
Currency Notice. Although the term “virtual currency” is widely used in live streaming industry, we believe that the
“virtual currency” used in our live streaming communities does not fall into a “virtual currency” as defined
under the Virtual Currency Notice, and we are not subject to any online game virtual currency laws or regulations for our live
streaming business. We have obtained the approval from the competent culture administrative department for issuing a virtual currency
for online games (which is set forth in the Internet Culture Operation Licenses that we have acquired). So far, we have not issued
any virtual currency for online games as defined under the Virtual Currency Notice. However, due to the uncertainties of the interpretation
and implementation of the law and regulation, we cannot assure you that the PRC regulatory authorities will not take a different
view, in which case we may be required to obtain additional approvals or licenses or change our current business model and may
be subject to fines or other penalties, which could adversely affect our business.

 

Our results of operations are subject
to quarterly fluctuations due to seasonality.

 

We experience seasonality in our business,
reflecting seasonal fluctuations in Internet usage. For example, the number of active users tends to be higher during the last
quarter of the year while lower near Chinese New Year season. Furthermore, the number of paying users of our online live streaming
platforms correlate with our marketing campaigns and promotional activities, which may coincide with popular western or Chinese
festivals. As a result, comparing our operating results on a period-to-period basis may not be meaningful.

 

 

We do not currently have business
insurance to cover our main assets and business. Any uninsured occurrence of business disruption, litigation, or natural disaster
could expose us to significant costs, which could have an adverse effect on our results of operations.

 

We currently do not have any business
liability or disruption insurance to cover our operations. Any uninsured occurrence of business disruption, litigation, or natural
disaster, or significant damages to our uninsured equipment or facilities could disrupt our business operations, requiring us
to incur substantial costs and divert our resources, which could have an adverse effect on our results of operations and financial
condition.

 

If we fail to implement and maintain
an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting
obligations or prevent fraud, and investor confidence and the market price of our shares may be materially and adversely affected.

 

If we are not be able to maintain on an
ongoing basis an effective internal control over financial reporting, we could suffer material misstatements in our financial
statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial
information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the
trading price of our shares. Additionally, ineffective internal control over financial reporting could expose us to increased
risk of fraud or misuse of corporate assets and subject it to potential delisting from the stock exchange on which we are listed,
regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior
periods.

 

We may grant share-based awards in
the future, which may result in increased share-based compensation expenses and have an adverse effect on our future profit. Exercise
of the options or restricted shares granted will increase the number of our shares in circulation, which may adversely affect the
market price of our shares.

 

We adopted an equity incentive plan on
February 8, 2021, or the “2021 Plan”, for the purpose of providing additional incentives to employees, directors
and consultants and to promote the success of the Company’s business. The maximum aggregate number of ordinary shares we
are authorized to issue pursuant to all awards under the 2021 Share Incentive Plan is 3,000,000 ordinary shares. As of the date
of this prospectus, no award to purchase Ordinary Shares under the 2021 Plan have yet been granted. As a result, our expenses associated
with share-based compensation may increase, which may have an adverse effect on our results of operations. Furthermore, exercise
of the awards granted under the 2021 Plan by our employs will increase the number of our shares in circulation, which may have
an adverse impact on our share price.

 

Non-compliance on the part of our
employees or third parties involved in our business could adversely affect our business.

 

Our compliance controls, policies, and
procedures may not protect us from acts committed by our employees, agents, contractors, or collaborators that violate the laws
or regulations of the jurisdictions in which we operate, which may adversely affect our business.

 

In addition, our business partners or
other third parties involved in our business through our business partners (such as contractors, talent agencies, or other third
parties entered into business relationship with our third- party business partners) may be subject to regulatory penalties or
punishments because of their regulatory compliance failures, which may, directly or indirectly, disrupt our business. When we
enter into a business relationship with a third party partner, we cannot be certain whether such third party business partner
has infringed or will infringe any other third parties’ legal rights or violate any regulatory requirements or rule out
the likelihood of incurring any liabilities imposed on us due to any regulatory failures by such third party business partner.
In addition, for those third parties actively involved in our business through our business partners, we cannot assure you that
our business partners will be able to supervise and administrate those third parties. The legal liabilities and regulatory actions
on our business partners or other third parties involved in our business may affect our business activities and reputation and
in turn, our results of operations.

 

We may not be able to ensure compliance
with United States economic sanctions laws.

 

The U.S. Department of the Treasury’s
Office of Foreign Assets Control, or OFAC, administers laws and regulations that generally prohibit U.S. persons and, in some
instances, foreign entities owned or controlled by U.S. persons, from conducting activities or transacting business with certain
countries, governments, entities or individuals that are targets of U.S. economic sanctions. We do not and will not use any of
our funds for any activities or business with any country, government, entity, or individual in violation of U.S. economic sanctions.

 

 

While
we believe that we have been, and that we continue to be, in compliance with applicable U.S. economic sanctions, our current safeguards
may fail to prevent broadcasters and users located in countries that are targets of U.S. economic sanctions from accessing our
platforms. Non-compliance with applicable U.S. economic sanctions could subject us to adverse media coverage, investigations,
and severe administrative, civil and possibly criminal sanctions, expenses related to remedial measures, and legal expenses, which
could materially adversely affect our business, results of operations, financial condition and reputation.

 

Spammers
and malicious software and applications may affect user experience, which could reduce our ability to attract users and materially
and adversely affect our business, results of operations, and financial condition.

 

Spammers
may use our streaming platforms to send spam messages to users, which may affect user experience. As a result, users may reduce
using our products and services or stop using them altogether. In spamming activities, spammers typically create multiple user
accounts for the purpose of sending a high volume of repetitive messages. Although we attempt to identify and delete accounts
created for spamming purposes, we may not be able to effectively eliminate all spam messages from our platforms in a timely fashion.
Any spamming activities could have a material and adverse effect on our business, results of operations, and financial condition.

 

In
addition, malicious software and applications may interrupt the operations of our websites, our PC clients or mobile apps and
pass on such malware to our users which could adversely hinder user experience. Although we have been successfully blocking these
attacks in the past, we cannot guarantee that this will always be the case, and in the incident if users experience a malware
attack by using our platforms, users may associate the malware with our websites, our PC clients or mobile apps, and our reputation,
business, and results of operations would be materially and adversely affected.

 

Our
leased property interests may be defective and our right to lease the properties affected by such defects may be challenged, which
could adversely affect our business.

 

Under
PRC laws, all lease agreements are required to be registered with local housing authorities. We lease several premises in China.
We cannot assure whether or not all landlords of these premises have registered the relevant lease agreements with the government
authorities, or have completed registration of their ownership rights to the premises. Furthermore, we cannot assure that some
of the premises do not have a defective title. We may be subject to monetary fines due to failure by the landlords to complete
the required registrations.

 

We
may also be forced to relocate our operations if the landlords do not obtain valid title to or complete the required registrations
with local housing authorities in a timely manner or at all. We might not be able to locate desirable alternative sites for our
operations in a timely and cost-effective manner which may adversely affect our business.

 

Future
strategic alliances or acquisitions may have a material and adverse effect on our business, reputation, and results of operations.

 

We
may enter into strategic alliances, including joint ventures or minority equity investments, with various third parties to further
our business purpose from time to time. These alliances could subject us to a number of risks, including risks associated with
sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic
alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the
actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their
reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of
our association with any such third party.

 

In
addition, when appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are
complementary to our existing business. In addition to possible shareholders’ approval, we may also have to obtain approvals
and licenses from relevant government authorities for the acquisitions and to comply with any applicable PRC laws and regulations,
which could result in increased delay and costs, and may derail our business strategy if it fails to do so. Furthermore, past
and future acquisitions and the subsequent integration of new assets and businesses into our own require significant attention
from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse
effect on our business operations. Acquired assets or businesses may not generate the expected financial results. Acquisitions
could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of
significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities
of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

 

 

The
coronavirus pandemic in China may have an adverse impact on our result of operation and financial condition for the fiscal year
2020.

 

The
coronavirus pandemic has caused significant disruptions to business operations and economic activities in China and will likely
have a negative impact on China’s economy at least in the short term. In the first few months of the fiscal year 2020, there
has been no material adverse impact on our results of operation and financial condition. However, we expect that Chinese consumers’
spending momentum may weaken, in general. As a result, the users of our platforms may be unwilling to pay for live streaming shows.
Operation-wise, the prolonged nationwide work-from-home policy may decrease the overall productivity and morale of our employees,
all of whom are located in China. In addition, due to restrictions on transportation, the broadcasters’ access to broadcast
studios are more limited and will need to perform their shows remotely without stage decoration, lighting, music, attire, and
costumes, which usually would have been provided by the talent agents in their studios. These factors may reduce the attractiveness
of content provided on our platforms. If the coronavirus pandemic continues to affect China for longer than 6 months, we expect
an adverse impact on our results of operation and financial condition for the fiscal year 2020. Furthermore, although we
do not have operations in the U.S., the uncertainty about the coronavirus impact on the global economy has caused and may continue
to cause unforeseen and unprecedented volatility in the U.S. capital markets, which may adversely affect the market for our ordinary
shares.

 

Risk
Factors Relating to Our Corporate Structure

 

We
rely on contractual arrangements with Zhihui Qiyuan (Scienjoy VIE) and its registered shareholders for our operations in China,
which may not be as effective in providing operational control as direct ownership.

 

Due
to PRC restrictions or prohibitions on foreign ownership of Internet and other related businesses in China, we operate our business
in China through the Scienjoy VIEs, in which we have no ownership interest. We rely on a series of contractual arrangements with
Zhihui Qiyuan (the Scienjoy VIE) and its registered shareholders, including the powers of attorney, to control and operate business
of the Scienjoy VIEs (namely, Zhihui Qiyuan and its subsidiaries). These contractual arrangements are intended to provide us with
effective control over the Scienjoy VIEs and allow us to obtain economic benefits from them. See “Corporate History and
Structure—Contractual Arrangements with the Scienjoy VIEs and their Respective Registered Shareholders” for more details
about these contractual arrangements. In particular, our ability to control the Scienjoy VIEs depends on the powers of attorney,
pursuant to which WX (our indirect wholly-owned subsidiary in China) can vote on all matters requiring shareholder approval in
the Scienjoy VIEs. We believe these powers of attorney are legally enforceable but may not be as effective as direct equity ownership.

 

Any
failure by Zhihui Qiyuan (the Scienjoy VIE) and its registered shareholders to perform their obligations under our contractual
arrangements with them would have a material adverse effect on our business.

 

We
rely on a series of contractual arrangements with Zhihui Qiyuan (the Scienjoy VIE) and its registered shareholders, including
the powers of attorney, to control and operate business of the Scienjoy VIEs (namely, Zhihui Qiyuan and its subsidiaries). If
Zhihui Qiyuan or its shareholders fail to perform their respective obligations under the contractual arrangements, we may incur
substantial costs and expend substantial resources to enforce our rights. We may also have to rely on legal remedies under PRC
laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective
under PRC laws.

 

 

All
these contractual arrangements are governed by and interpreted in accordance with PRC law, and disputes arising from these contractual
arrangements will be resolved through arbitration in China. However, the legal system in China, particularly as it relates to
arbitration proceedings, is not as developed as the legal system in many other jurisdictions, such as the United States. There
are very few precedents and little official guidance as to how contractual arrangements in the context of a VIE should be interpreted
or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of arbitration should legal action
become necessary. These uncertainties could limit our ability to enforce these contractual arrangements. In addition,
arbitration awards are final and can only be enforced in PRC courts through arbitration award recognition proceedings, which could
cause additional expenses and delays. In the event we are unable to enforce these contractual arrangements or we experience
significant delays or other obstacles in the process of enforcing these contractual arrangements, it may not be able to exert
effective control over the Scienjoy VIEs and may lose control over the assets owned by the Scienjoy VIEs. As a result, it may
be unable to consolidate the financial results of such entities in our combined and consolidated financial statements, our ability
to conduct our business may be negatively affected, and our operations could be severely disrupted, which could materially and
adversely affect our results of operations and financial condition.

 

If
the PRC government deems that the agreements that establish the structure for operating our businesses in China do not comply
with PRC regulations on foreign investment in Internet and other related businesses, or if these regulations or their interpretation
change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, and
may need to reorganize our current corporate structure to comply with PRC laws and regulations.

 

PRC
laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in Internet and
other related businesses (usually defined as “value-added telecommunication business” under relevant PRC authorities),
including the provision of Internet content and online service operations, which fell under the catalogue of negative list published
and updated by PRC Ministry of Commerce from time to time. Specifically, foreign ownership is prohibited in industries of online
audio and video program services and Internet cultural business (excluding music), foreign ownership of an Internet content provider
may not exceed 50{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, and the major foreign investor is required to have a record of good performance and operating experience in
managing value-added telecommunications business. We are a company registered in the British Virgin Islands and WX (our indirect
wholly-owned subsidiary in China) is a foreign-invested enterprise (or called “wholly foreign-owned enterprise”, the
“WFOE”) under PRC laws and regulations. To comply with PRC laws and regulations, we have to conduct our business in
China mainly through WX and Zhihui Qiyuan (the Scienjoy VIE) and their respective subsidiaries, based on a series of contractual
arrangements by and among WX, Zhihui Qiyuan, and its registered shareholders. As a result of these contractual arrangements, we
exert control over the Scienjoy VIEs (namely, Zhihui Qiyuan and its subsidiaries) and consolidate their financial results in our
financial statements under U.S. GAAP. The Scienjoy VIEs (namely, Zhihui Qiyuan and its subsidiaries) hold the licenses, approvals,
and key assets that are essential for our operations.

 

In
the opinion of our PRC counsel, Feng Yu Law Firm, based on its understanding of the relevant PRC laws and regulations, each of
the contracts among WX, Zhihui Qiyuan and its registered shareholders is valid, binding, and enforceable in accordance with its
terms. However, we have been further advised by our PRC counsel that there are substantial uncertainties regarding the interpretation
and application of current or future relevant PRC laws and regulations. Thus, the PRC government may ultimately take a view contrary
to the opinion of our PRC counsel. In addition, PRC government authorities may deem that foreign ownership is directly or indirectly
involved in each of the Scienjoy VIEs’ shareholding structure. If our group companies (including our WFOE and its subsidiaries
and the Scienjoy VIEs) are found in violation of any PRC laws or regulations, or if the contractual arrangements among WX, Zhihui
Qiyuan and its registered shareholders are determined as illegal or invalid by the PRC court, arbitral tribunal or regulatory
authorities, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without
limitation:

 

revoking
the business licenses and/or operating licenses of such entities;
levying
fines on our related PRC companies;
confiscating
any of our income that they deem to be obtained through illegal operations;
discontinuing
or placing restrictions or onerous conditions on our operations conducted by our related PRC companies;
placing
restrictions on our right to collect revenues;
shutting
down our servers or blocking our app/websites;
requiring
us to change our corporate structure and contractual arrangements;
imposing
additional conditions or requirements with which we may not be able to comply; or
taking
other regulatory or enforcement actions against us that could be harmful to our business.

 

 

The
imposition of any of these penalties may result in a material and adverse effect on our ability to conduct our business operations.
In addition, if the imposition of any of these penalties causes us to lose the rights to direct the activities of our consolidated
affiliated entities or the right to receive their economic benefits, we would no longer be able to consolidate their financial
results.

 

We
may lose the ability to use and enjoy assets held by the Scienjoy VIEs that are important to our business if the Scienjoy VIEs
declare bankruptcy or become subject to a dissolution or liquidation proceeding.

 

The
Scienjoy VIEs hold certain assets that are important to our operations, including the ICP License, SP License, the Internet Culture
Operation Permit, the Commercial Performance License, and Radio and Television Program Production and Operating Permit. Under
our contractual arrangements, the shareholders of the Scienjoy VIEs may not voluntarily liquidate the Scienjoy VIEs or approve
them to sell, transfer, mortgage, or dispose of their assets or legal or beneficial interests in the business in any manner without
our prior consent. However, in the event that the shareholders breach this obligation and voluntarily liquidate the Scienjoy VIEs,
or the Scienjoy VIEs declare bankruptcy, or all or part of their assets become subject to liens or rights of third-party
creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our
business, results of operations, and financial condition. Furthermore, if the Scienjoy VIEs undergo a voluntary or involuntary
liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of its assets, hindering
our ability to operate our business, which could materially and adversely affect our business, financial condition, and results
of operations.

 

Contractual
arrangements may be subject to scrutiny by the PRC tax authorities. A finding that we owe additional taxes could negatively affect
our financial condition and the value of your investment.

 

Pursuant
to applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge
by PRC tax authorities. We may be subject to adverse tax consequences if the PRC tax authorities determine that the contractual
arrangements among WX, Zhihui Qiyuan, and its registered shareholders are not on an arm’s length basis and therefore constitute
favorable transfer pricing. As a result, the PRC tax authorities could require that Scienjoy VIEs adjust their taxable income
upward for PRC tax purposes. Such an adjustment could increase Scienjoy VIEs’ tax expenses without reducing the tax expenses
of WX, subject the Scienjoy VIEs to late payment fees and other penalties for under-payment of taxes, and result in the loss of
any preferential tax treatment WX may have. As a result, our consolidated results of operations may be adversely affected.

 

We
may rely on dividends paid by our PRC subsidiaries to fund cash and financing requirements. Any limitation on the ability of our
PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay
dividends to holders of our ordinary shares.

 

We
and our Hong Kong subsidiary are holding companies, and we may rely on dividends to be paid by our PRC subsidiaries for our cash
and financing requirements, including the funds necessary to pay dividends and other cash distributions to the holders of the
ordinary shares a and service any debt it may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the
instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

 

Under
PRC laws and regulations, a wholly foreign-owned enterprise in China, such as WX, may pay dividends only out of its accumulated
profits as determined in accordance with PRC accounting standards and regulations. In addition, according to current effective
PRC laws and regulations regarding foreign investment which may be updated following the effectiveness of PRC Foreign Investment
Law, a wholly foreign-owned enterprise is required to set aside at least 10{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of its after-tax profits each year, after making
up previous years’ accumulated losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such
fund reaches 50{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of its registered capital. At the discretion of the board of directors of the wholly foreign-owned enterprise,
it may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve
funds and staff welfare and bonus funds are not distributable as cash dividends. Any limitation on the ability of our PRC subsidiaries
to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments
or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

 

 

Substantial
uncertainties exist with respect to whether the foreign investor’s controlling PRC onshore variable interest entities via
contractual arrangements will be recognized as “foreign investment” and how it may impact the viability of our current
corporate structure and operations.

 

On
March 15, 2019, the National People’s Congress of the PRC adopted the PRC Foreign Investment Law, which will come into force
on January 1, 2020. The PRC Foreign Investment Law defines the “foreign investment” as the investment activities in
China conducted directly or indirectly by foreign investors in the following manners: (i) the foreign investor, by itself or together
with other investors establishes a foreign invested enterprises in China; (ii) the foreign investor acquires shares, equities,
asset tranches, or similar rights and interests of enterprises in China; (iii) the foreign investor, by itself or together with
other investors, invests and establishes new projects in China; (iv) the foreign investor invests through other approaches as
stipulated by laws, administrative regulations or otherwise regulated by the State Council. The PRC Foreign Investment Law keeps
silent on how to define and regulate the “variable interest entities,” while adding a catch-all clause that “other
approaches as stipulated by laws, administrative regulations or otherwise regulated by the State Council” can fall into
the concept of “foreign investment,” which leaves uncertainty as to whether the foreign investor’s controlling
PRC onshore variable interest entities via contractual arrangements will be recognized as “foreign investment.” Pursuant
to the PRC Foreign Investment Law, PRC governmental authorities will regulate foreign investment by applying the principle of
pre-entry national treatment together with a “negative list,” which will be promulgated by or promulgated with approval
by the State Council or its authorized governmental department such as Ministry of Commerce. Foreign investors are prohibited
from making any investments in the industries which are listed as “prohibited” in such negative list; and, after satisfying
certain additional requirements and conditions as set forth in the “negative list,” are allowed to make investments
in the industries which are listed as “restricted” in such negative list. For any foreign investor that fails to comply
with the negative list, the competent authorities are entitled to ban its investment activities, require such investor to take
measures to correct its non-compliance and impose other penalties.

 

The
Internet content service, Internet audio-visual program services and online culture activities that we conducts through our consolidated
variable interest entities are subject to foreign investment restrictions/prohibitions set forth in the Special Administrative
Measures (Negative List) for the Access of Foreign Investment (2019) issued by Ministry of Commerce.

 

The
PRC Foreign Investment Law leaves leeway for future laws, administrative regulations or provisions of the State Council and its
departments to provide for contractual arrangements as a form of foreign investment. It is therefore uncertain whether our corporate
structure will be seen as violating foreign investment rules as we are currently using the contractual arrangements to operate
certain businesses in which foreign investors are currently prohibited from or restricted to investing. Furthermore, if future
laws, administrative regulations or provisions of the State Council and its departments mandate further actions to be taken by
companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete
such actions in a timely manner, or at all. If we fail to take appropriate and timely measures to comply with any of these or
similar regulatory compliance requirements, our current corporate structure, corporate governance and business operations could
be materially and adversely affected.

 

If
the custodians or authorized persons of our controlling non-tangible assets, including chops and seals, fail to fulfill their
responsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected.

 

In
China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied
by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with
the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can
be used for specific purposes. The chops of our PRC subsidiaries and the Scienjoy VIEs are generally held securely by the personnel
designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safe,
are stolen, or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could
be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped,
even if they were chopped by an individual who lacked the requisite power and authority to do so. If any of our authorized personnel
obtains, misuses, or misappropriates our chops for whatever reason, we could experience disruptions in our operations. We may
also have to take corporate or legal action, which could require significant time and resources to resolve while distracting management
from our operations. Any of the foregoing could adversely affect our business and results of operations.

 

 

Sales of our Ordinary shares to White
Lion Capital may cause substantial dilution to our existing shareholders and the sale of our Ordinary shares acquired by White
Lion Capital could cause the price of our Ordinary shares to decline.

 

This prospectus relates to the offering
of 713,444 Ordinary Shares that we may issue and sell from time to time to White Lion Capital pursuant to the Purchase Agreement.
It is anticipated that shares offered to White Lion Capital in this offering will be sold from time to time during a period of
up to six (6) months or until the date on which White Lion Capital shall have purchased shares equal to the Commitment Amount,
subject to the termination of the Purchase Agreement. The number of shares ultimately offered for sale to White Lion Capital under
this prospectus is dependent upon the number of shares we elect to sell to White Lion Capital under the Purchase Agreement. Depending
upon market liquidity at the time, sales of shares of our Ordinary Shares under the Purchase Agreement may cause the trading price
of our Ordinary Shares to decline.

 

After White Lion Capital has acquired shares
under the Purchase Agreement, it may sell all, some or none of those shares. Sales to White Lion Capital by us pursuant to the
Purchase Agreement under this prospectus may result in substantial dilution to the interests of other holders of our Ordinary Shares.
The sale of a substantial number of our Ordinary Shares to White Lion Capital in this offering, or anticipation of such sales,
could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we
might otherwise wish to effect sales. However, we have the right to control the timing and amount of any sales of our shares to
White Lion Capital.

 

Under
the Purchase Agreement, on any trading day selected by us, provided that the closing price of our Ordinary Shares upon the delivery
of a purchase notice is greater than or equal to $0.25, we have the right, but not the obligation, to present White Lion Capital
with a purchase notice, directing White Lion Capital (as principal) to purchase up to a certain amount shares of our Ordinary Shares
(“Purchase Notice”). The maximum number of Ordinary Shares to be sold under each Purchase Notice shall be determined
by the lesser of (i) 300{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the average daily trading volume during the five (5) trading days immediately prior to the delivery
of the Purchase Notice, or (ii) $1,000,000 divided by the highest closing price of our Ordinary Shares during the five (5) trading
days immediately prior to the delivery of the Purchase Notice, which calculation amount may be increased to $2,000,000 once White
Lion Capital has funded $5,000,000 to the Company at the mutual consent of the Company and White Lion Capital. Notwithstanding
the foregoing, we and White Lion Capital may elect a negotiated fixed purchase at any time during the Commitment Period provided
that the closing price of our Ordinary Shares upon delivery of such fixed purchase notice is greater than or equal to $0.25 (“Fixed
Purchase Notice
”).

 

For
Purchase Notices, the purchase price per share to be paid by White Lion Capital will be 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest daily volume-weighted
average price of our Ordinary Shares during a valuation period, which is five (5) trading days prior to the applicable closing
date with respect to a regular Purchase Notice (“Purchase Price”). The Fixed Purchase Notice will set forth
a fixed number of shares and a fixed purchase price mutually agreed by the Company and White Lion Capital. The fixed purchased
price shall be greater than or equal to $0.25 but could be higher or lower than the Purchase Price for a regular Purchase Notice.
In the event that the fixed purchase price is substantially lower than the regular Purchase Price, which is 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest
daily volume-weighted average price of our Ordinary Shares during a valuation period, the equity value of the existing shareholders
might be significantly diluted.

 

We may not have access to the full
amount available under the Purchase Agreement with White Lion Capital.

 

Our ability to draw down funds and sell
shares under the Purchase Agreement with White Lion Capital requires that the registration statement of which this prospectus forms
a part to be declared effective and continue to be effective. The registration statement of which this prospectus forms a part
registers the resale of 713,444 shares issuable under the Purchase Agreement with White Lion Capital, and our ability to sell
any remaining shares issuable under the Purchase Agreement with White Lion Capital is subject to our ability to prepare and file
one or more additional registration statements registering the resale of these Ordinary Shares. These registration statements may
be subject to review and comment by the staff of the Securities and Exchange Commission, and will require the consent of our independent
registered public accounting firm. Therefore, the timing of effectiveness of these registration statements cannot be assured. The
effectiveness of these registration statements is a condition precedent to our ability to sell all of our Ordinary Shares to White
Lion under the Purchase Agreement. Even if we are successful in causing one or more registration statements registering the resale
of some or all of the Ordinary Shares issuable under the Purchase Agreement with White Lion Capital to be declared effective by
the Securities and Exchange Commission in a timely manner, we may not be able to sell the shares unless certain other conditions
are met. There is no guarantee that we will be able to draw down any portion or all of the proceeds of $30,000,000 under the Purchase
Agreement with White Lion Capital.

 

Certain restrictions on the extent
of Purchase Notices and the delivery of advance notices may have little, if any, effect on the adverse impact of our issuance of
Ordinary Shares in connection with the Purchase Agreement with White Lion Capital, and as such, White Lion Capital may sell a large
number of Ordinary Shares, resulting in substantial dilution to the value of Ordinary Shares held by existing stockholders.

 

White Lion Capital has agreed to refrain
from holding an amount of shares which would result in White Lion Capital or its affiliates owning more than 4.99{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the number
of Ordinary Shares outstanding immediately prior to the issuance of shares of Ordinary Shares issuable pursuant to a Purchase Notice
at any one time(“Beneficial Ownership Limitation”). Notwithstanding the foregoing, upon mutual agreement of
the Company and White Lion Capital, expressed in writing upon not less than 61 days’ prior written notice, the Beneficial
Ownership Limitation may be increased to 9.99{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the number of shares of the Ordinary Shares outstanding immediately prior to
the issuance of Ordinary Shares issuable pursuant to a Purchase Notice.

 

 

Risk
Factors Relating to Doing Business in China

 

Uncertainties
in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.

 

The
PRC legal system is based on written statutes where prior court decisions have limited value as precedents. Our PRC subsidiaries
and the Scienjoy VIEs, in particular WX, a wholly foreign-owned enterprises, are subject to laws and regulations applicable to
foreign-invested enterprises as well as various Chinese laws and regulations generally applicable to companies incorporated in
China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the
interpretations of many laws, regulations, and rules are not always uniform, and enforcement of these laws, regulations, and rules
involves uncertainties.

 

From
time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be
more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we may receive.
Furthermore, the PRC legal system is based in part on government policies and internal rules that may have retroactive effect.
As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties,
including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural
rights, could materially and adversely affect our business and impede our ability to continue our operations.

 

Regulation
and censorship of information disseminated over the mobile and Internet in China may adversely affect our business and subject
us to liability for streaming content or content posted on our platforms.

 

Internet
companies in China are subject to a variety of existing and new rules, regulations, policies, and license and permit requirements.
In connection with enforcing these rules, regulations, policies, and requirements, relevant government authorities may suspend
services by, or revoke licenses of, any Internet or mobile content service provider that is deemed to provide illicit content
online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate
prohibited content online. For example, in 2016, the Office of the Anti-Pornography and Illegal Publications Working Group, the
Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Culture and the Ministry
of Public Security jointly launched a “Clean Up the Internet 2016” campaign. Based on publicly available information,
the campaign aims to eliminate pornographic information and content in the Internet information services industry by, among other
things, holding liable individuals and corporate entities that facilitate the distribution of pornographic information and content.
Publicly traded Chinese Internet companies voluntarily initiated self-investigations to filter and remove content from their websites
and cloud servers.

 

We
endeavor to eliminate illicit content from our platforms. We have made substantial investments in resources to monitor content
that broadcasters generate on our platforms and the way in which our users engage with each other through our platforms. We use
a variety of methods to ensure our platforms remain a healthy and positive experience for our users. Although we employ these
methods to filter content posted on our platforms, we cannot be sure that our internal content control efforts will be sufficient
to remove all content that may be viewed as indecent or otherwise non-compliant with PRC law and regulations. Government standards
and interpretations as to what constitutes illicit online content or behavior are subject to interpretation and may change in
a manner that could render our current monitoring efforts insufficient. The Chinese government has wide discretion in regulating
online activities and, irrespective of our efforts to control the content on our platforms, government campaigns and other actions
to reduce illicit content and activities could subject us to negative press or regulatory challenges and sanctions, including
fines, suspension or revocation of our licenses to operate in China or a suspension or ban on our mobile or online platform, including
suspension or closure of one or more parts of or our entire business. Further, our senior management could be held criminally
liable if we are deemed to be profiting from illicit content on our platforms. Although our business and operations have not been
materially and adversely affected by government campaigns or any other regulatory actions in the past, there is no assurance that
our business and operations will be immune from government actions or sanctions in the future. If government actions or sanctions
are brought against us, or if there are widespread rumors that government actions or sanctions have been brought against us, our
reputation could be harmed and we may lose users and customers. As a result, our revenues and results of operations may be materially
and adversely affected and the value of our ordinary shares could be dramatically reduced.

 

 

Adverse
changes in global or China’s economic, political or social conditions or government policies could have a material adverse
effect on our business, results of operations and financial condition.

 

Our
revenues are substantially sourced from China. Accordingly, our results of operations, financial condition and prospects are influenced
by economic, political, and legal developments in China. Economic reforms begun in the late 1970s have resulted in significant
economic growth. However, any economic reform policies or measures in China may from time to time be modified or revised. China’s
economy differs from the economies of most developed countries in many respects, including with respect to the amount of government
involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy
has experienced significant growth in the past 40 years, growth has been uneven across different regions and among different economic
sectors and the rate of growth has been slowing.

 

China’s
economic conditions are sensitive to global economic conditions. The global financial markets have experienced significant disruptions
since 2008 and the United States, Europe, and other economies have experienced periods of recession. The global macroeconomic
environment is facing new challenges and there is considerable uncertainty over the long-term effects of the expansionary monetary
and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies. Recent
international trade disputes, including tariff actions announced by the United States, the PRC, and certain other countries, and
the uncertainties created by such disputes may cause disruptions in the international flow of goods and services and may adversely
affect the Chinese economy as well as global markets and economic conditions. There have also been concerns about the economic
effect of military conflicts and political turmoil or social instability in the Middle East, Europe, Africa, and other places.
Any severe or prolonged slowdown in the global economy may adversely affect the Chinese economy which in turn may adversely affect
our business and operating results.

 

The
PRC government exercises significant control over China’s economic growth through strategically allocating resources, controlling
the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular
industries or companies. Although the PRC economy has grown significantly in the past decade, that growth may not continue, as
evidenced by the slow-down of the growth of the PRC economy since 2012. Any adverse changes in economic conditions in China, in
the policies of the PRC government or in the laws and regulations in China could have a material adverse effect on the overall
economic growth of China. Such developments could adversely affect our business and operating results, lead to a reduction in
demand for our services and adversely affect our competitive position.

 

Currently,
there is no law or regulation specifically governing virtual asset property rights and therefore it is not clear what liabilities,
if any, live streaming platform operators may have for virtual assets.

 

While
participating on our platforms, our users acquire, purchase, and accumulate some virtual assets, such as gifts or certain status.
Such virtual assets can be important to users and have monetary value and, in some cases, are sold for actual money. In practice,
virtual assets can be lost for various reasons, often through other users’ unauthorized use of another user account and
occasionally through data loss caused by delay of network service, network crash, or hacking activities. Currently, there is no
PRC law or regulation specifically governing virtual asset property rights. As a result, there is uncertainty as to who the legal
owner of virtual assets is, whether and how the ownership of virtual assets is protected by law, and whether an operator of live
streaming platform such as us would have any liability, whether in contract, tort or otherwise, to users or other interested parties,
for loss of such virtual assets. Based on recent PRC court judgments, the courts have typically held online platform operators
liable for losses of virtual assets by platform users and ordered online platform operators to return the lost virtual items to
users or pay damages and losses. In case of a loss of virtual assets, we may be sued by our users and held liable for damages,
which may negatively affect our reputation and business, results of operations, and financial condition.

 

 

Under
the PRC enterprise income tax law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable
tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your
investment.

 

Under
the PRC enterprise income tax law that became effective on January 1, 2008 and other related rules and regulations published by
PRC State Taxation Administration, an enterprise established outside the PRC with “de facto management bodies” within
the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a
uniform 25{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} enterprise income tax rate on our worldwide income. On April 22, 2009, the State Taxation Administration, or the SAT,
issued the Circular Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise
on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether
the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Further
to SAT Circular 82, on August 3, 2011, the State Taxation Administration issued the Administrative Measures of Enterprise Income
Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, which became effective on September
1, 2011, to provide more guidance on the implementation of SAT Circular 82.

 

According
to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered
a PRC tax resident enterprise by virtue of having our “de facto management body” in China and will be subject to PRC
enterprise income tax on our worldwide income only if all of the following conditions are met: (a) the senior management and core
management departments in charge of our daily operations function have their presence mainly in the PRC; (b) our financial and
human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) our major assets, accounting
books, company seals, and minutes and files of our board and shareholders’ meetings are located or kept in the PRC; and
(d) not less than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC.
SAT Bulletin 45 provides further rules on residence status determination, post-determination administration as well as competent
tax authorities procedures.

 

Although
SAT Circular 82 and SAT Bulletin 45 apply only to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise
group and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect SAT’s
general position on how the term “de facto management body” could be applied in determining the tax resident status
of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals, or foreigners.

 

We
do not meet all of the conditions set forth in SAT Circular 82. Therefore, we believe that we should not be treated as a “resident
enterprise” for PRC tax purposes even if the standards for “de facto management body” prescribed in the SAT
Circular 82 applied to us. For example, our minutes and files of the resolutions of our board of directors and the resolutions
of our shareholders are maintained outside the PRC.

 

However,
it is possible that the PRC tax authorities may take a different view. If the PRC tax authorities determine that we or any Hong
Kong subsidiary is a PRC resident enterprise for PRC enterprise income tax purposes, our world-wide income could be subject to
PRC tax at a rate of 25{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, which could reduce our net income. In addition, we will also be subject to PRC enterprise income tax
reporting obligations. Although dividends paid by one PRC tax resident to another PRC tax resident should qualify as “tax-exempt
income” under the enterprise income tax law, we cannot assure you that dividends paid by our PRC subsidiary to us or any
of our Hong Kong subsidiaries will not be subject to a 10{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} withholding tax if we or our Hong Kong subsidiary were treated as a
PRC resident enterprise. The PRC foreign exchange control authorities, which enforce the withholding tax on dividends, and the
PRC tax authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated
as resident enterprises for PRC enterprise income tax purposes.

 

If
we are treated as a resident enterprise, non-PRC resident shareholders may also be subject to PRC withholding tax on dividends
paid by us and PRC tax on gains realized on the sale or other disposition of our ordinary shares, if such income is sourced from
within the PRC. The tax would be imposed at the rate of 10{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the case of non-PRC resident enterprise shareholders and 20{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in
the case of non-PRC resident individual holders. In the case of dividends, we would be required to withhold the tax at source.
Any PRC tax liability may be reduced under applicable tax treaties or similar arrangements, but it is unclear whether a non-PRC
shareholders company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC
in the event that we are treated as a PRC resident enterprise. Although we are incorporated in the British Virgin Islands, it
remains unclear whether dividends received and gains realized by our non-PRC resident shareholders will be regarded as income
from sources within the PRC if we are classified as a PRC resident enterprise. Any such tax will reduce the returns on your investment
in us.

 

 

There
are uncertainties with respect to indirect transfers of PRC taxable properties outside a public stock exchange.

 

We
face uncertainties on the reporting and consequences on private equity financing transactions, private share transfers and share
exchange involving the transfer of shares in our company by non-resident investors. According to the Notice on Several Issues
Concerning Enterprise Income Tax for Indirect Share Transfer by Non-PRC Resident Enterprises, issued by the State Taxation Administration
on February 3, 2015, or SAT Circular 7, an “indirect transfer” of assets of a PRC resident enterprise, including a
transfer of equity interests in a non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may be
re-characterized and treated as a direct transfer of PRC taxable properties, if such transaction lacks reasonable commercial purpose
and was undertaken for the purpose of reducing, avoiding or deferring PRC enterprise income tax. As a result, gains derived from
such indirect transfer may be subject to PRC enterprise income tax, and tax filing or withholding obligations may be triggered,
depending on the nature of the PRC taxable properties being transferred. According to SAT Circular 7, “PRC taxable properties”
include assets of a PRC establishment or place of business, real properties in the PRC, and equity investments in PRC resident
enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject
to PRC enterprise income taxes. When determining if there is a “reasonable commercial purpose” of the transaction
arrangement, features to be taken into consideration include: whether the main value of the equity interest of the relevant offshore
enterprise derives from PRC taxable properties; whether the assets of the relevant offshore enterprise mainly consists of direct
or indirect investment in China or if its income mainly derives from China; whether the offshore enterprise and its subsidiaries
directly or indirectly holding PRC taxable properties have a real commercial nature which is evidenced by their actual function
and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction
by direct transfer of PRC taxable properties; and the tax situation of such indirect transfer outside China and its applicable
tax treaties or similar arrangements. In respect of an indirect offshore transfer of assets of a PRC establishment or place of
business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing of the PRC establishment
or place of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}. Where
the underlying transfer relates to PRC real properties or to equity investments in a PRC resident enterprise, which is not related
to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax at 10{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} would apply, subject
to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated
to make the transfer payments has the withholding obligation. Where the payer fails to withhold any or sufficient tax, the transferor
shall declare and pay such tax to the competent tax authority by itself within the statutory time limit. Late payment of applicable
tax will subject the transferor to default interest. Currently, SAT Circular 7 does not apply to the sale of shares by investors
through a public stock exchange where such shares were acquired in a transaction on a public stock exchange.

 

We
cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing
and withholding or tax payment obligations and associated penalties with respect to any internal restructuring, and our PRC subsidiary
may be requested to assist in the filing. Any PRC tax imposed on a transfer of our ordinary shares not through a public stock
exchange, or any adjustment of such gains would cause us to incur additional costs and may have a negative impact on the value
of your investment in us.

 

Implementation
of the new labor laws and regulations in China may adversely affect our business and results of operations.

 

Pursuant
to the labor contract law that took effect in January 2008, its implementation rules that took effect in September 2008 and its
amendment that took effect in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum
wages, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. Due
to lack of detailed interpretative rules and uniform implementation practices and broad discretion of the local competent authorities,
it is uncertain as to how the labor contract law and its implementation rules will affect our current employment policies and
practices. Our employment policies and practices may violate the labor contract law or its implementation rules, and we may thus
be subject to related penalties, fines, or legal fees. Compliance with the labor contract law and its implementation rules may
increase our operating expenses, in particular its personnel expenses. In the event that we decide to terminate some of its employees
or otherwise change its employment or labor practices, the labor contract law and its implementation rules may limit its ability
to affect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.
On October 28, 2010, the Standing Committee of the National People’s Congress promulgated the PRC Social Insurance Law,
or the Social Insurance Law, which became effective on July 1, 2011. According to the Social Insurance Law and related rules and
regulations, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance,
and maternity insurance and the employers must, together with their employees or separately, pay the social insurance premiums
for their employees. If the company has not fully paid such social insurance based on employee’s actual salaries, it may
face relevant authorities’ investigation and examination, and subject to penalties or fines.

 

 

We
expect our labor costs to increase due to the implementation of these laws and regulations, as updated from time to time. As the
interpretation and implementation of these laws and regulations are still evolving and become stricter, PRC tax authorities, for
example, may become the governmental agencies for collection and examination of each company’s withholding and payment of
social insurance after 2019 according to related rules and policies. We cannot assure you that our employment practice will at
all times be deemed in full compliance with labor-related laws and regulations in China, which may subject us to labor disputes
or government investigations. If our PRC subsidiaries are deemed to have violated relevant labor laws and regulations, they can
be required to provide additional compensation to their employees and our business, results of operations, and financial condition
could be materially and adversely affected.

 

Further,
labor disputes, work stoppages or slowdowns at our company or any of our third-party service providers could significantly disrupt
our daily operation or our expansion plans and have a material adverse effect on our business.

 

China’s
M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by
foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

 

The
Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, and other recently
adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could
make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require
that PRC Ministry of Commerce (or previously called “MOFCOM”) be notified in advance of any change-of-control transaction
in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such
transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change
in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the PRC Anti-Monopoly
Law promulgated by the Standing Committee of the National People’s Congress effective as of August 1, 2008 and its related
rules and regulations require that transactions which are deemed concentrations and involve parties with specified turnover thresholds
(i.e., during the previous fiscal year, (i) the total global turnover of all operators participating in the transaction exceeds
RMB10 billion and at least two of these operators each had a turnover of more than RMB 400 million within China, or (ii) the total
turnover within China of all the operators participating in the concentration exceeded RMB 2 billion, and at least two of these
operators each had a turnover of more than RMB 400 million within China) must be cleared by the anti-monopoly enforcement authority
before they can be completed. In addition, on February 3, 2011, the General Office of the State Council promulgated a Notice on
Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, also known
as Circular 6, which officially established a security review system for mergers and acquisitions of domestic enterprises by foreign
investors. Further, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition
of Domestic Enterprises by Foreign Investors, effective as of September 1, 2011, to implement Circular 6. Under Circular 6, a
security review is required for mergers and acquisitions by foreign investors having “national defense and security”
concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises
with “national security” concerns. Under the foregoing MOFCOM regulations, MOFCOM will focus on the substance and
actual impact of the transaction when deciding whether a specific merger or acquisition is subject to security review. If MOFCOM
decides that a specific merger or acquisition is subject to a security review, it will submit it to the Inter-Ministerial Panel,
an authority established under Circular 6 led by the National Development and Reform Commission, and MOFCOM under the leadership
of the State Council, to carry out security review. The regulations prohibit foreign investors from bypassing the security review
by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements or offshore
transactions. There is no explicit provision or official interpretation stating that the merging or acquisition of a company engaged
in the Internet content or mobile games business requires security review, and there is no requirement that acquisitions completed
prior to the promulgation of the Security Review Circular are subject to MOFCOM review. In addition, following the effectiveness
of the PRC Foreign Investment Law, we cannot assure that aforementioned foreign M&A rules, regulations and policies will have
extensive and substantial changes.

 

 

In
the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned
regulations and other relevant rules to complete such transactions could be time-consuming, and any required approval processes,
including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions.
We believe that it is unlikely that our business would be deemed to be in an industry that raises “national defense and
security” or “national security” concerns. However, MOFCOM or other government agencies may publish explanations
in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions
in China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized
or prohibited.

 

PRC
regulations relating to offshore investment activities by PRC residents may limit the ability of WX (our indirect wholly-owned
subsidiary in China) to increase our registered capital or distribute profits to us or otherwise expose us to liability and penalties
under PRC law.

 

The
State Administration of Foreign Exchange (SAFE) promulgated the Circular on Relevant Issues Relating to Domestic Resident’s
Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 and related
rules and regulations that require PRC residents or entities to register with SAFE or its local branch in connection with their
establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such
PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events
relating to any change of basic information (including change of such PRC citizens or residents, name, and operation term), increases
or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. According to the Notice on Further
Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015
by the SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial
foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015.

 

If
our shareholders or beneficial owners who are PRC residents or entities (as applicable) do not complete their registration with
the local SAFE branches, our PRC subsidiary (in particular, the WFOE) may be prohibited from distributing their profits and proceeds
from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional
capital to our PRC subsidiary (in particular, the WFOE). Moreover, failure to comply with the SAFE registration described above
could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. However, we may not at all times
be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations,
and we cannot compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that
all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make
or obtain any applicable registrations or approvals required by SAFE regulations. Failure by such shareholders or beneficial owners
to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiary (in particular,
the WFOE), could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our
subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect
our business and prospects.

 

 

PRC
regulation of direct investment and loans by offshore holding companies to PRC entities may delay or limit us to make additional
capital contributions or loans to our PRC subsidiaries.

 

We
are an offshore holding company conducting our operations in China through our PRC subsidiaries and the Scienjoy VIEs. We may
make loans to our PRC subsidiary and the Scienjoy VIEs or it may make additional capital contributions to our PRC subsidiaries.

 

Any
capital contributions or loans that we, as an offshore entity, make to our PRC subsidiaries (in particular, the WFOE), are subject
to PRC regulations. For example, none of our loans to a PRC subsidiary (in particular, the WFOE) can exceed the difference between
our total amount of investment and our registered capital approved under relevant PRC laws, or certain amount calculated based
on elements including capital or net assets and the cross-border financing leverage ratio and the loans must be registered with
the local branch of SAFE and the competent departments of State Development and Reform Commission in case of any external debts
of more than one year. Our capital contributions to our PRC subsidiaries (in particular, the WFOE) must be approved by or filed
with the MOFCOM, SAFE, or their respective local counterpart.

 

On
March 30, 2015, SAFE issued the Circular on the Reforming of the Management Method of the Settlement of Foreign Currency Capital
of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect on June 1, 2015. Under SAFE Circular 19, a foreign-invested
enterprise, within the scope of business, may choose to convert its registered capital from foreign currency to RMB on a discretionary
basis, and the RMB capital so converted can be used for equity investments within PRC, provided that such usage shall fall into
the scope of business of the foreign-invested enterprise, which will be regarded as the reinvestment of foreign-invested enterprise.

 

In
light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding
companies, we cannot assure you that we will be able to complete the necessary registration or obtain the necessary approval on
a timely basis, or at all. If we fail to complete the necessary registration or obtain the necessary approval, our ability to
make loans or equity contributions to our PRC subsidiaries (in particular, the WFOE) may be negatively affected, which could adversely
affect the liquidity of our PRC subsidiaries and their ability to fund their working capital and expansion projects and meet their
obligations and commitments.

 

Fluctuations
in exchange rates could have a material adverse effect on our results of operations and the value of your investment.

 

The
value of the RMB against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions
and by China’s foreign exchange policies, among other things. In July 2005, the PRC government changed its decades-old policy
of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} against the U.S. dollar over the following
three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the RMB and the U.S. dollar
remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably.
On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the
basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, RMB
is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar,
the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the
backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market
and progress towards interest rate liberalization and RMB internationalization, the PRC government may in the future announce
further changes to the exchange rate system and we cannot assure you that the RMB will not appreciate or depreciate significantly
in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policies
may impact the exchange rate between the RMB and the U.S. dollar in the future.

 

There
remains significant international pressure on the Chinese government to adopt a flexible currency policy to allow the RMB to appreciate
against the U.S. dollar, especially under the current circumstance of the Sino-US trade conflicts. Significant revaluation of
the RMB may have a material adverse effect on your investment. Substantially all of our revenues and costs are denominated in
RMB. Any significant revaluation of RMB may materially and adversely affect our revenues, earnings, and financial position. To
the extent that we need to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes,
appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion.
Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent
of our earnings or the US dollar amount available to us.

 

 

Very
limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter
into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able
to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control
regulations that restrict our ability to convert RMB into foreign currency.

 

Governmental
control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

 

The
PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance
of currency out of China. We receive substantially all of our revenues in RMB. Under existing PRC foreign exchange regulations,
payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior SAFE approval by complying with certain procedural requirements,
but may be subject to internal rules of related PRC subsidiary’s bank (in particular, the WFOE’s capital funds account
open in bank), which is also under the monitor of SAFE. Therefore, our PRC subsidiaries (in particular, the WFOE) is able to pay
dividends in foreign currencies to us without prior approval from SAFE, but should still comply with bank’s related rules.
However, approval from or registration with appropriate government authorities (including formalities in the bank) is required
where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of
loans denominated in foreign currencies. The PRC government may also at its discretion restrict access to foreign currencies for
current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign
currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

 

Failure
to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans
may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

 

Pursuant
to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit
applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies.
In the meantime, our directors, executive officers, and other employees who are PRC citizens or who are non-PRC residents residing
in PRC for a continuous period of not less than one year, subject to limited exceptions, and who have been granted incentive share
awards by us, may follow the Circular on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating
in Stock Incentive Plan of Overseas Publicly-Listed Company, or the SAFE Circular 7, promulgated by the SAFE in 2012. Pursuant
to the SAFE Circular 7, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year
who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required
to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas listed company,
and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection
with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and
other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been
granted options will be subject to these regulations upon consummation of the Business Combination. Failure to complete the SAFE
registrations may subject them to fines and legal sanctions, and may also limit our ability to contribute additional capital into
our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to us. We also face regulatory uncertainties
that could restrict our ability to adopt additional incentive plans for our directors, executive officers, and employees under
PRC law.

 

 

We
are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may
make our securities less attractive to investors.

 

We
are an “emerging growth company,” as defined in the JOBS Act. We may remain an “emerging growth company”
until the fiscal year ended February 8, 2024. However, if our non-convertible debt issued within a three-year period exceeds $1.0
billion or an annual revenue exceeds $1.07 billion, or the market value of its ordinary shares that are held by non-affiliates
exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth
company as of the following fiscal year. As an emerging growth company, we are not required to comply with the auditor attestation
requirements of section 404 of the Sarbanes-Oxley Act, have reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and are exempt from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. Additionally, as an emerging growth
company, we have elected to delay the adoption of new or revised accounting standards that have different effective dates for
public and private companies until those standards apply to private companies. As such, our financial statements may not be comparable
to companies that comply with public company effective dates. As a result, potential investors may be less likely to invest in
our securities.

 

Lavacano
will control the outcome of our shareholder actions.

 

Assuming none of the shares will be issued
under the Purchase Agreement and none of the outstanding warrants has been exercised, Lavacano holds 57.59{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of our ordinary shares.
Lavacano’s voting power gives it the power to control actions that require shareholder approval under British Virgin Islands
law, our memorandum and articles of association and Nasdaq requirements, including the election and removal of a majority of our
board of directors, approval of significant mergers and acquisitions and other business combinations, and changes to our memorandum
and articles of association.

 

Lavacano’s
control may cause transactions to occur that might not be beneficial to direct or indirect holders of our ordinary shares and
may prevent transactions that would be beneficial to you. For example, Lavacano’s voting control may prevent a transaction
involving a change of control of us, including transactions in which you as a holder of our ordinary shares might otherwise receive
a premium for your securities over the then-current market price. In addition, Lavacano is not prohibited from selling a controlling
interest in us to a third party and may do so without your approval and without providing for a purchase of your ordinary shares.
If Lavacano is acquired or otherwise undergoes a change of control, any acquirer or successor will be entitled to exercise the
voting control and contractual rights of Lavacano, and may do so in a manner that could vary significantly from that of Lavacano.

 

We
are a “controlled company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions
from certain corporate governance requirements that provide protection to shareholders of other companies.

 

Assuming
none of the outstanding warrants has been exercised, we are a “controlled company’’ as defined under the Nasdaq
Stock Market Rules because Lavacano controls more than 50{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of our voting rights. For so long as we remain a controlled company
under that definition, we are permitted to elect to rely, and will rely, on certain exemptions from corporate governance rules,
including:

 

an
exemption from the rule that a majority of our board of directors must be independent directors;
an
exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent
directors; and
an
exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

 

As
a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance
requirements.

 

 

Our
contemplated dual-class share structure with different voting rights and conversion of certain ordinary shares will limit your
ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders
of ordinary shares may view as beneficial.
 

 

We
are a Foreign Private Issuer and we plan to use our reasonable best efforts to adopt a dual-class share structure, which includes
reclassification of existing ordinary shares into class A ordinary shares with one vote per share and authorization and issuance
of class B ordinary shares with ten votes per share. Additionally, together with the adoption of a dual-class share structure,
part of the ordinary shares held by Lavacano will be converted into class B ordinary shares. While the adoption of a dual-class
structure requires our shareholders approval, Lavacano is holding more than fifty percent of the voting rights and it is likely
that the proposal to adopt a dual-class structure will be approved. Adoption of the dual-class structure and the conversion of
certain ordinary shares held by Lavacano into class B ordinary shares will result in further concentration of ownership held by
Lavacano. Consequently, Lavacano will have considerable influence over matters such as decisions regarding mergers, consolidations
and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. Lavacano
may also take actions that are not in the best interest of the Company or the Company’s other shareholders. In addition
to limiting your ability to influence corporate matters, this concentration of ownership may discourage, delay or prevent a change
in control of the Company, which could have the effect of depriving the Company’s other shareholders of the opportunity
to receive a premium for their shares as part of a sale of the Company and may reduce the price of our ordinary shares.  

 

Our
contemplated dual-class structure of ordinary shares may adversely affect the trading market for our ordinary shares.
 

 

S&P
Dow Jones and FTSE Russell have recently announced changes to their eligibility criteria for inclusion of shares of public companies
on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public
shareholders hold no more than 5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of total voting power from being added to such indices. In addition, several shareholder advisory
firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary
shares may prevent the inclusion of our ordinary shares in such indices and may cause shareholder advisory firms to publish negative
commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion
from indices could result in a less active trading market for our ordinary shares. Any actions or publications by shareholder
advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our
ordinary shares.  

 

Certain
provisions of the Third Amended and Restated Memorandum and Articles of Association may be deemed to have an antitakeover effect.
 

 

The
Third Amended and Restated Memorandum and Articles of Association may have the effect of delaying, deferring or preventing or
rendering more difficult a change in control of the Company that a shareholder might consider in his or her best interest, including
the following:  

 

Separation
of the board of directors into two classes. Our directors are appointed by our shareholders and are subject to rotational retirement
every two years. The initial terms of office of the Class I and Class II directors have been staggered over a period of two years
to ensure that all directors of the company do not face re-election in the same year. This could have the effect of making it
more difficult for a potential acquirer to take over the company.
Poison
Pill Defenses. Under the Companies Law there are no provisions that specifically prevent the issuance of preferred shares or any
such other ‘poison pill’ measures. Our Third Amended and Restated Memorandum and Articles of Association also do not
contain any express prohibitions on the issuance of any preferred shares. Therefore, the directors without the approval of the
holders of ordinary shares may issue preferred shares that have characteristics that may be deemed to be anti-takeover. Additionally,
such a designation of shares may be used in connection with plans that are poison pill plans.

 

 

We
are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
applicable to U.S. domestic public companies.

 

On
June 30, 2020, we have made the determination that we qualify as a foreign private issuer under the Exchange Act and filed Form
8-K on July 1, 2020 to announce our determination. Effective immediately after the filing of this Form 8-K, we began reporting
under the Exchange Act as a foreign private issuer. As a foreign private issuer, we are exempt from certain provisions of the
securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

 

the
rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;
the
sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered
under the Exchange Act;
the
sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability
for insiders who profit from trades made in a short period of time; and
the
selective disclosure rules by issuers of material nonpublic information under Regulation FD.

 

We
are required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating
to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required
to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by
U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to
you were you investing in a U.S. domestic issuer.

 

We
may be subject to additional reporting requirements if we lose our status as a foreign private issuer.

 

If
we lose our status as a foreign private issuer at some future time, then we will no longer be exempt from such rules and, among
other things, will be required to file periodic reports and financial statements as if we were a company incorporated in the United
States. The costs incurred in fulfilling these additional regulatory requirements could be substantial.

 

As
a company incorporated in the British Virgin Islands, we are permitted to adopt certain home country practices in relation to
corporate governance matters that differ significantly from NASDAQ corporate governance listing standards; these practices may
afford less protection to shareholders than they would enjoy if we complied fully with NASDAQ corporate governance listing standards.

 

As
a BVI company listed on NASDAQ, we are subject to NASDAQ corporate governance listing standards. However, NASDAQ rules permit
a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance
practices in the British Virgin Islands, which is our home country, may differ significantly from NASDAQ corporate governance
listing standards. For example, neither the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands nor our
memorandum and articles of association requires a majority of our directors to be independent and we could include non-independent
directors as members of our compensation committee and nominating committee, and our independent directors would not necessarily
hold regularly scheduled meetings at which only independent directors are present. To the extent we choose to follow home country
practice in the future, our shareholders may be afforded less protection than they otherwise would under NASDAQ corporate governance
listing standards applicable to U.S. domestic issuers.

 

  

CAPITALIZATION

 

The following table sets forth our
capitalization as of September 30, 2020 on a historical basis.

 

The information in this table should
be read in conjunction with the financial statements and notes thereto and other financial information incorporated by reference
into this prospectus and any prospectus supplement. Our historical results do not necessarily indicate our expected results for
any future periods.

 

(Amounts in thousands of Renminbi (“RMB”)
and US dollars (“US$”), except share and per share data or otherwise stated)

 

    As
of September 30, 2020
 
    RMB     US$  
Cash
and cash equivalents
    166,865       24,577  
                 
Shareholders’
Equity:
               
Ordinary shares     (60,229 )     (8,871 )
Statutory
reserve
    18,392       2,709  
Retained
Earnings
    366,935       54,044  
Accumulated
other comprehensive loss
    5,282       778  
Total
shareholders’ equity
    330,380       48,660  
                 
Total
capitalization
    330,380       48,660  

 

  

USE
OF PROCEEDS

 

We
will not receive any proceeds from the sale of our Ordinary Shares by the selling security holders. However, we may receive up
to $30,000,000 in aggregate gross proceeds under the Purchase Agreement from sales of Ordinary Shares we may make to White Lion
Capital. We estimate that the net proceeds to us from the sale of our Ordinary Shares to White Lion Capital pursuant to the Purchase
Agreement will be up to approximately, but not exceeding, $30,000,000 over the Commitment Period
, assuming
that we sell the full amount of our Ordinary Shares that we have the right, but not the obligation, to sell to White Lion Capital
under the Purchase Agreement, and after estimated fees and expenses. Because we are not obligated to sell any shares of our Ordinary
Shares under the Purchase Agreement, the actual total offering amount and proceeds to us, if any, are not determinable at this
time. There can be no assurance that we will receive any proceeds under or fully utilize the Purchase Agreement. See “Plan
of Distribution” elsewhere in this prospectus for more information.

 

We
intend to use the net proceeds from this offering for the expansion of working capital, supporting the operations of BeeLive International
and other general corporate purposes.

 

 

DILUTION

 

If
you invest in our Ordinary Shares, your interest will be diluted immediately to the extent of the difference between the public
offering price per share and the adjusted net tangible book value per share of our Ordinary Shares immediately after this offering.

 

Our
net tangible book value on September 30, 2020 was approximately $320,000 in deficit, or deficit of $0.01 per share. “Net
tangible book value” is total assets minus the sum of liabilities and intangible assets and goodwill. “Net tangible
book value per share” is net tangible book value divided by the total number of Ordinary Shares outstanding.

 

After
giving effect to the sale of the 713,444 Ordinary Shares at an assumed offering price of $8.31 per share, which is 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of $9.50,
the last reported sale price of our Ordinary Shares on The Nasdaq Capital Market on February 22, 2021, our adjusted net tangible
book value as of September 30, 2020 would have been $5,928,719.64 , or $0.21 per Ordinary Share. This represents an immediate increase
in net tangible book value of $0.22 per share to our existing security holders and an immediate decrease in net tangible book value
of $8.10 per share to investors participating in this offering. The following table illustrates this dilution per share to investors
participating in this offering:

 

Assumed offering price per share   $ 8.31  
Net tangible book value per share as of September 30, 2020   $ (0.01 )
Increase in net tangible book value per Ordinary Shares to existing investors   $ 0.22  
         
As adjusted net tangible book value per share as of September 30, 2020   $ 5,928,719.64  
Net dilution per share to White Lion Capital   $ 8.10  

 

The
above discussion and table are based on 27,037,302 Ordinary Shares issued and outstanding as of February 23, 2021, and excludes,
as of such date, 3,010,000 Ordinary Shares issuable upon exercise of the warrants outstanding.

 

To
the extent that any of our outstanding warrants are exercised, we grant options or awards under any equity incentive plan or issue
additional warrants, or we issue additional Ordinary Shares in the future, there may be further dilution.

 

 

UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

We
are providing the following unaudited pro forma combined financial information to aid you in your analysis of the financial aspects
of the BeeLive Acquisition.

 

The
unaudited pro forma combined statements of operations for the nine months ended September 30, 2020 give pro forma effect to the
BeeLive Acquisition as if it had occurred as of January 1, 2020. The unaudited pro forma combined statements of operations for
the year ended December 31, 2019 give pro forma effect to the BeeLive Acquisition as if it had occurred as of January 1, 2019.
This information should be read together with Scienjoy’s and BeeLive’s respective audited and unaudited financial
statements and related notes.

 

The
unaudited pro forma combined statement of operations for the nine months ended September 30, 2020 has been prepared using the
following:

 

  Scienjoy’s
unaudited historical condensed consolidated statement of income and comprehensive income for the nine months ended September
30, 2020, as included elsewhere in this prospectus;

 

  BeeLive’s unaudited historical consolidated
and combined statement of operations and comprehensive income for the nine months ended September 30, 2020.

 

The
unaudited pro forma combined statement of operations for the year ended December 31, 2019 has been prepared using the following:

 

  Scienjoy’s
audited historical consolidated statement of income for the year ended December 31, 2019 as included elsewhere in this prospectus;

 

  BeeLive’s
audited historical consolidated and combined statement of operations and comprehensive income for the year ended December
31, 2019 as included elsewhere in this prospectus.

 

Description
of the BeeLive Acquisition and the Business Combination

 

On
August 10, 2020, we signed an Equity Acquisition Framework Agreement (the “BeeLive Acquisition Agreement”) with Sciscape
International Limited, Tianjin Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology
Co., Ltd. Pursuant to the BeeLive Acquisition Agreement, we, through Scienjoy inc., acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Sciscape
International Limited which holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity), acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
of the equity interest in Tianjin Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant to the Agreement,
the Company is required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in ordinary shares (approximately
5.4 million ordinary shares) to be issued by the Company. 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of share consideration payments are subject to certain performance
conditions (i.e. earn-out provisions as discussed below) and requirements over the following three years. On August 21, 2020,
all target shares were transferred to the parties designated in BeeLive Acquisition Agreement. On September 10, 2020, we paid
a cash consideration of RMB50.0 million to Tianjin Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Ordinary Shares
to Cosmic Soar Limited. Tianjin Guangju Dingfei Technology Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin)
Technology Co. and Sciscape International Limited subsequently changed its name to Scienjoy BeeLive Limited.

 

 

Pursuant
to the earn-out provisions of the BeeLive Acquisition Agreement, so long as the prior core management members of Sciscape International
Limited, and Tianjin Guangju Dingfei Technology Co., Ltd. have complied with the employment agreement that he or she has entered
into with BeeLive Companies and no material changes have occurred, (i) if the BeeLive Company’s total annual revenue is
no less than RMB 336.6 million in Year 2020, Cosmic Soar Limited will be entitled to received additional 540,960 Ordinary Shares
; (ii) if the BeeLive Companies’ total annual revenue is no less than RMB 460.6 million in Year 2021, Cosmic Soar Limited
will be entitled to received additional 540,960 Ordinary Shares; and (iii) if the BeeLive Companies’ total annual revenue
is no less than RMB 580.9 million in Year 2022, Cosmic Soar Limited will be entitled to received additional 540,960 Ordinary Shares.
If the total annual revenue of BeeLive Company in a particular performance year does not reach the target revenue as specified
above, but is equal to or more than 80{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the target revenue, Cosmic Solar Limited will be entitled to a reduced number of the
earn-out shares. The total contingent considerations for the earn-out were approximate RMB 39.8 million.

 

Accounting
for the Business Combination

 

Business
combinations are accounted for using the purchase method of accounting in accordance with FASB ASC 805, Business Combinations.
The assets acquired and the liabilities assumed are measured at their fair values as of that date. Goodwill is recognized and
measured as the excess of the total consideration transferred at the acquisition date over the fair values of the identifiable
net assets acquired. Consideration transferred in a business acquisition is measured at the fair value as at the date of acquisition.

 

Basis
of Pro Forma Presentation

 

The
historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable
to the Business Combination, are factually supportable, and as it relates to the unaudited pro forma combined statement of operations,
are expected to have a continuing impact on the results of the post-combination company. The adjustments presented on the unaudited
pro forma combined financial statements have been identified and presented to provide relevant information necessary for an accurate
understanding of the post-combination company upon consummation of the Business Combination.

 

The
unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different
had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being
indicative of the historical financial position and results that would have been achieved had the companies always been combined
or the future financial position and results that the post-combination company will experience. All intercompany transactions
between the BeeLive and Scienjoy have been eliminated through pro forma adjustments.

 

 

UNAUDITED
PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2020

(In
thousands, except per share amounts)

 

    (A)     (B)     Pro Forma         Pro Forma  
    BeeLive     Scienjoy     Adjustments     Notes   Combined  
    RMB     RMB     RMB         RMB     US$ (3)  
                                   
Net revenues     240,663       710,263                 950,926       140,056  
Cost of revenues     (216,091 )     (539,325 )     (738 )   (4)     (756,154 )     (111,369 )
Gross profit     24,572       170,938       (738 )         194,772       28,687  
                                             
Sales and marketing expenses     (515 )     (3,714 )               (4,229 )     (623 )
General and administrative expenses     (3,858 )     (18,753 )     (1,553 )   (4)     (24,164 )     (3,559 )
Research and development expenses     (4,287 )     (20,155 )               (24,442 )     (3,600 )
Provision (recovery of) for doubtful accounts     (1,400 )     2,346                 946       139  
Operating income (loss)     14,512       130,662       (2,291 )         142,883       21,044  
                                             
Other income (expense):                                            
Interest income (expense),net     (1,453 )     2,514                 1,061       156  
Unrealized gain on marketable securities           87,648                 87,648       12,909  
Foreign exchange gain (loss), net     (7 )     978                 971       143  
Other income (expense), net     1,157       (4,780 )               (3,623 )     (534 )
Income before income taxes     14,209       217,022       (2,291 )         228,940       33,718  
Provision for income taxes     (1,876 )     (5,032 )     573     (4)     (6,335 )     (933 )
Net income     12,333       211,990       (1,718 )         222,605       32,785  
                                             
Weighted average shares outstanding, basic and diluted             17,959,972       3,786,719     (1)     21,746,691       21,746,691  
Basic and diluted net income per
share
            11.8                   10.2     $ 1.5  

 

 

UNAUDITED
PRO FORMA COMBINED STATEMENT OF OPERATIONS

YEAR
ENDED DECEMBER 31, 2019

(In
thousands, except per share amounts)

 

    (A)     (B)     Pro Forma         Pro Forma  
    BeeLive     Scienjoy     Adjustments     Notes   Combined  
    RMB     RMB     RMB         RMB     US$ (3)  
                                   
Net revenues     365,602       914,626                 1,280,228       188,557  
Cost of revenues     (353,876 )     (720,637 )     (1,265 )   (4)     (1,075,778 )     (158,445 )
Gross profit     11,726       193,989       (1,265 )         204,450       30,112  
                                             
Sales and marketing expenses     (255 )     (3,804 )               (4,059 )     (598 )
General and administrative expenses     (3,212 )     (11,957 )     (2,661 )   (4)     (17,830 )     (2,626 )
Research and development expenses     (4,417 )     (21,523 )               (25,940 )     (3,821 )
Provision for doubtful accounts           (854 )               (854 )     (126 )
Operating income (loss)     3,842       155,851       (3,926 )         155,767       22,941  
                                             
Other income (expense):                                            
Interest income     537       1,005                 1,542       227  
Foreign exchange gain (loss), net     (5 )     (5 )               (10 )     (1 )
Other expense, net     1,591       (310 )               1,281       189  
Income before income taxes     5,965       156,541       (3,926 )         158,580       23,356  
Provision for income taxes     (877 )     (6,623 )     667     (4)     (6,833 )     (1,006 )
Net income     5,088       149,918       (3,259 )         151,747       22,350  
                                             
Weighted average shares outstanding, basic             19,400,000       3,786,719     (3)     23,186,719       23,186,719  
Weighted average shares outstanding, diluted             20,002,000       3,786,719     (2)     23,788,719       23,788,719  
                                             
Basic net income per share             7.73                   6.54     $ 0.96  
Diluted  net income per share             7.50                   6.38     $ 0.94  

 

 

Pro
Forma Adjustments to the Unaudited Combined Statements of Operations

 

  (A) Derived from unaudited historical consolidated
and combined statement of operations and comprehensive income of BeeLive for the nine months ended September 30, 2020.

 

  (B) Derived
from the unaudited consolidated statement of income and comprehensive income of Scienjoy for the nine months ended September
30, 2020. See Scienjoy’s financial statements and the related notes appearing elsewhere in this proxy statement.

 

  (1) The
calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the BeeLive Acquisition
is being reflected as if it had occurred as of January 1, 2020, the calculation of weighted average shares outstanding for
basic and diluted net income per share assumes that the shares have been outstanding for the entire period presented.

 

  (2) The
calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the BeeLive Acquisition
is being reflected as if it had occurred as of January 1, 2019, the calculation of weighted average shares outstanding for
basic and diluted net income per share assumes that the shares have been outstanding for the entire period presented.

 

  (3) Translations
of balances in the pro forma combined statements of operations from RMB into USD (or “US$”) for the period ended
September 30, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.7896, representing
the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve
Bank of New York on the last trading day of September 30, 2020. No representation is made that the RMB amounts represent or
could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate.

 

  (4) Amortization
of software and trademark and related income tax effect.

 

  

MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You
should read the following discussion and analysis of our financial condition and results of operations in conjunction with our
combined financial statements and consolidated financial statements and the related notes included in this prospectus. This discussion
contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events
could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those
set forth under “Risk Factors” and elsewhere in this prospectus.

 

Overview

 

We
were originally incorporated on May 2, 2018 as a British Virgin Islands exempted company for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.
On May 7, 2020, we consummated the acquisition of Scienjoy. As a result of the business combination, we became the holding company
of Scienjoy and we changed our name from “Wealthbridge Acquisition Limited” to “Scienjoy Holding Corporation.”

 

We
are a leading provider of mobile entertainment live streaming platforms in China and operates its platforms on both PC and mobile
apps, through which users can enjoy immersive and interactive entertainment live streaming. We had approximately 243.5 million
registered users by the end of September 30, 2020, increased from 200.4 million registered users for the year ended December 31,
2019. For the quarter ended September 30, 2020, the number of paying users also increased by 28{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 322,841 from 252,299 in the
same quarter of last year.

 

We
adopt a multi-platform strategy and all platforms are categorized as “SHOW live streaming” in which professional broadcasters
provide live streaming entertainment for users primarily in the form of performances (such as singing, dancing, and talk shows).
Broadcasters on all platforms have been professionally trained by relevant broadcaster agents to provide more professional content.
Despite the similarity in contents, the different platforms adopt different operation strategies, such as, to name a few, different
broadcaster policy, events, promotion, and games. We provide a technological infrastructure to enable broadcasters, online users
and viewers to interact with each other during live streaming. All platforms can be accessed for free. We mainly derive our revenue
from sales of virtual items on the platforms. Users can purchase virtual currency to purchase virtual items for use on the platforms.
Users can recharge their virtual currency on the platforms through various online third-party payment platforms, such as WeChat
Pay or AliPay.

 

On
January 10, 2020, we consummated the acquisition of the 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in Lixiaozhi (Chongqing) Internet Technology Co.,
Ltd. (“LXZ”) from its original shareholder for a cash consideration of RMB200 (US$29). We believe the acquisition
of LXZ helps to enrich its product line, expand its user base and capitalize on the growth potential in the live streaming market.

 

On
August 10, 2020, we signed an Equity Acquisition Framework Agreement (the “BeeLive Acquisition Agreement”) with Sciscape
International Limited, Tianjin Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology
Co., Ltd.. Pursuant to the BeeLive Acquisition Agreement, we, through Scienjoy inc., acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Sciscape
International Limited which holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity), acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
of the equity interest in Tianjin Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant to the Agreement,
the Company is required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in ordinary shares (approximately
5.4 million ordinary shares) to be issued by the Company. 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of share consideration payments are subject to certain performance
conditions and requirements over the following three years. Please see the section entitled “Unaudited Pro Forma Condensed
Combined Financial Information” in this prospectus for a description of earn-out provisions. On August 21, 2020, all target
shares were transferred to the parties designated in BeeLive Acquisition Agreement. On September 10, 2020, we paid a cash consideration
of RMB50.0 million to Tianjin Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Ordinary Shares to Cosmic Soar Limited.
Tianjin Guangju Dingfei Technology Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin) Technology Co. and Sciscape
International Limited changed its name to Scienjoy BeeLive Limited.  BeeLive is a global live streaming platform that initially
launched in China in November 2016. During the second half of 2019, BeeLive began expanding into international markets. To date,
BeeLive International offers Arabic language live streaming product in the Middle East and Thai language live streaming product
in Southeast Asia. 

 

In January 2021, the Company purchased
from Cross Wealth Investment Holding Limited, an entity related to two directors of the Company, 606,061 ordinary shares of Goldenbridge
Acquisition Limited (“Goldenbridge”) for an aggregated consideration of US$ 2 million. Goldenbridge was formed
as a special purpose acquisition company.

 

 

On February 8, 2021, the Board of the Company
approved the 2021 Plan, for the purpose of providing additional incentives to employees, directors and consultants and to promote
the success of the Company’s business. The 2021 Plan authorized the compensation committee or a committee designated and
established by the Board to grant equity incentive awards, including options, restricted shares, and restricted share units to
directors, employees and consultants of the Company for a number of ordinary shares not exceeding 3,000,000, subject to adjustments
as may be required in accordance with the terms of the Plan. The vested portion of equity awards will expire if not exercised prior
to the time as the plan administrator determines at the time of its grant. The maximum exercisable term is ten years from the date
of a grant. As of the date of this report, no equity award has been granted under 2021 Plan.

 

On February 23, 2021, we entered into
the Purchase Agreement with White Lion Capital, which provides that, upon the terms and subject to the conditions and limitations
set forth therein, White Lion Capital is committed to purchase our Ordinary Shares with an aggregate offering price of up to $30,000,000
(“Commitment Amount”) from time to time over a period of up to six (6) months or until the date on which White
Lion Capital shall have purchased shares equal to the Commitment Amount, subject to the termination of the Purchase Agreement.
Under the Purchase Agreement, on any trading day selected by us, provided that the closing price of our Ordinary Shares upon the
delivery of a purchase notice is greater than or equal to $0.25, we have the right, but not the obligation, to present White Lion
Capital with a purchase notice, directing White Lion Capital (as principal) to purchase up to a certain amount shares of our Ordinary
Shares (“Purchase Notice”). For Purchase Notices, the purchase price per share to be paid by White Lion Capital
will be based on 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest daily volume-weighted average price of our Ordinary Shares during a valuation period, which
is five (5) trading days prior to the applicable closing date with respect to a regular Purchase Notice. We and White Lion Capital
may also elect a negotiated fixed purchase at any time during the Commitment Period provided that the closing price of our Ordinary
Shares upon delivery of such fixed purchase notice is greater than or equal to $0.25(“Fixed Purchase Notice”).
The Fixed Purchase Notice will set forth a fixed number of shares and a fixed purchase price mutually agreed by the Company and
White Lion Capital. The fixed purchased price shall be greater than or equal to $0.25 but could be higher or lower than the Purchase
Price for a regular Purchase Notice. For more information on the transaction with White Lion Capital, see “OUR HISTORY AND
CORPORATE STRUCTURE-Purchase Agreement with White Lion Capital LLC.”

 

In December 2019, a novel strain of coronavirus
(COVID-19) surfaced. COVID-19 has spread rapidly to many parts of the PRC and other parts of the world in the first half of 2020,
which has caused significant volatility in the PRC and international markets. In 2020, the COVID-19 pandemic did not have a material
net impact on the Company’s financial positions and operating results. The extent of the impact on the Company’s 2021
results and beyond will be dependent on future developments such as the length and severity of the crisis, the potential resurgence
of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global
economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty,
the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition,
liquidity and results of operations if the current situation continues.

 

Key
Factors Affecting Our Results of Operations

 

General
Factors

 

Development
of the mobile live streaming market in China over the past decade has been influenced by a number of macroeconomic and technological
factors and trends, including increasing disposable income and demand for cultural and entertainment activities and increased
use of the mobile internet. Our business and operating results are affected by general factors affecting China’s entertainment
live streaming industry, which may include the following:

 

China’s
overall macroeconomic landscape
China’s
overall entertainment and mobile entertainment growth
Usage
and penetration rate of mobile Internet and mobile payment
Growth
and competitive landscape of China’s mobile live streaming market, especially entertainment SHOW live streaming
Governmental
policies affecting China’s live streaming industry

 

Unfavorable
changes in any of these general industry conditions could negatively affect demand for our services and materially and adversely
affect its results of operations.

 

Specific
Factors

 

While
our business is influenced by general factors affecting the mobile live streaming industry in China, we believe our results of
operations are more directly affected by company specific factors, including the following major factors:

 

Our
ability to retain broadcasters and enhance user experience

 

We
continue to improve our operational capability with more attractive contents, such as music, dancing, talk shows, traditional
drama, online competitions and offline events, to further enhance user experience. We are offering different contents and games
to attract more users to pay for our services and to pay more money per user as well. Therefore quality broadcasters and interesting
contents are essential to our operations. In order to retain quality broadcasters, we have developed a revenue sharing policy,
pursuant to which we share revenues generated on the platforms with talents agencies, which in turn share revenues with broadcasters.
Additionally, in order to maintain the quality of broadcasters and service, we are very cautious in hiring broadcasters and has
adopted strict operation procedures for screening broadcasters before hiring. We primarily work with professional agents to identify
and retain new broadcasters. The increasing number of trained broadcasters, who provide better quality performance, also contributes
to improved ARPPU and paying ratio of Scienjoy.

 

 

In January 2021, the Company purchased
from Cross Wealth Investment Holding Limited, an entity related to two directors of the Company, 606,061 ordinary shares of Goldenbridge
Acquisition Limited (“Goldenbridge”) for an aggregated consideration of US$ 2 million. Goldenbridge was formed
as a special purpose acquisition company.

 

Our
ability to maintain and expand our user base

 

User
base is another key factor for success in the mobile live streaming industry. We endeavor to provide attractive content to keep
users on its platforms as long as possible. Our multi-platform strategy attempt to retain users by providing diversified content,
promotions and an enhanced user experience.

 

With
respect to user base, mobile SHOW live streaming sector differs from other mobile live streaming sectors such as pan entertainment
live streaming and game live streaming sector. Because, for SHOW live streaming, each broadcaster interacts in real time with
users and therefore the number of users that each broadcaster can entertain at the same period in his/her video room is limited.

 

Due
to our new strategy to focus on attracting and retaining targeted users who are willing to spend more on our platforms, the number
of our paying user increased by 32{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from 528,457 paying users in fiscal 2018 to 697,475 paying users in fiscal 2019 and for the
quarter ended September 30, 2020, the number of paying user was 322,841, increased by 28{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from 252,299 in the same period of last
year. As a result, our revenue for the year ended December 31, 2019 increased to RMB914.626 million from RMB743.018 million for
the year ended December 31, 2018. For the nine months ended September 30, 2020 revenue was RMB767.8 million, increased by 18{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
from the same period of last year. This indicates that we can generate higher revenues when we focus on the targeted users who
are willing to spend more on its platforms.

 

We
continue to seek opportunities to grow our user base and enhance our user engagement. Our ability to do so largely depends on
our ability to recruit, train, and retain high quality broadcasters and our ability to produce high quality content. We also intend
to continue to invest in our brand recognition.

 

We
intend to further explore overseas markets to expand our business and user base through both organic expansion and selective investments.
On August 10, 2020, we signed an Equity Acquisition Framework Agreement (the “BeeLive Acquisition Agreement”) with
Sciscape International Limited, Tianjin Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng
Technology Co., Ltd.. Pursuant to the BeeLive Acquisition Agreement, we, through Scienjoy inc., acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest
in Sciscape International Limited which holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity),
acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Tianjin Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant
to the Agreement, the Company is required to pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in ordinary
shares (approximately 5.4 million ordinary shares) to be issued by the Company. 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of share consideration payments are subject
to certain performance conditions and requirements over the following three years. Please see the section entitled “Unaudited
Pro Forma Condensed Combined Financial Information” in this prospectus for a description of earn-out provisions. On August
21, 2020, all target shares were transferred to the parties designated in BeeLive Acquisition Agreement. On September 10, 2020,
we paid a cash consideration of RMB50.0 million to Tianjin Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Ordinary
Shares to Cosmic Soar Limited. Tianjin Guangju Dingfei Technology Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin)
Technology Co. and Sciscape International Limited changed its name to Scienjoy BeeLive Limited.  BeeLive is a global live
streaming platform that initially launched in China in November 2016. During the second half of 2019, BeeLive began expanding
into international markets. To date, BeeLive International offers Arabic language live streaming product in the Middle East and
Thai language live streaming product in Southeast Asia.

 

Our
ability to improve innovative technologies

 

The
ability to understand market traffic and pair users with suitable broadcasters and activities is key for user stickiness and monetization
in the mobile SHOW live streaming industry. By using big data analysis to understand individual user behavior and industry trends,
we intend to adjust our platform to better guide users to appropriate broadcasters as well as to analyze traffic on other sites
to select the best methods and targets for user acquisition.

 

 

Summary
Consolidated Statements of Income

 

    For the years ended December
31,
    For the nine months ended
September 30,
 
    2018     2019     2019     2019     2020     2020  
Amounts in
thousands of RMB and US$
  RMB     RMB     US$     RMB     RMB     US$  
                      (unaudited)     (unaudited)     (unaudited)  
Total revenue     743,018       914,626       131,378       649,513       767,804       113,085  
Cost of revenues     (594,084 )     (720,637 )     (103,513 )     (519,511 )     (585,379 )     (86,217 )
Gross
profit
    148,934       193,989       27,865       130,002       182,425       26,868  
Sales and marketing expenses     (5,005 )     (3,804 )     (546 )     (2,397 )     (3,739 )     (551 )
General and administrative expenses     (16,265 )     (11,957 )     (1,717 )     (9,851 )     (19,739 )     (2,907 )
Research and development expenses     (10,957 )     (21,523 )     (3,092 )     (15,554 )     (20,770 )     (3,059 )
(Provision) recovery for
doubtful accounts
    (6,826 )     (854 )     (123 )     (2,896 )     2,746       404  
Income
from operations
    109,881       155,851       22,387       99,304       140,923       20,755  
Interest income     1,444       1,005       144       609       2,154       317  
Other income (loss), net     31       (310 )     (45 )     (355 )     (4,778 )     (704 )
Foreign exchange gain (loss), net     11       (5 )     (1 )     (3 )     983       145  
Change in fair value of contingent
consideration
                            87,648       12,909  
Income
before income taxes
    111,367       156,541       22,485       99,555       226,930       33,422  
Income tax expenses     (4,627 )     (6,623 )     (951 )     (2,349 )     (6,465 )     (952 )
Net income     106,740       149,918       21,534       97,206       220,465       32,470  

 

Revenues

  

Our
revenues consist of live streaming revenue and technical services revenue. We generate technical services revenue from providing
technical development and advisory services, but the technical services revenue accounts for less than 1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of revenue and is immaterial.
We generate its revenue mostly from the sales of virtual items used in our live streaming business.

 

Virtual
items are categorized as consumable and time-based items. Consumable items, as virtual gift service, are consumed and used by
users upon purchase, while time-based virtual items, such as privilege titles, could be used for a fixed period of time. Accordingly,
revenue is recognized at the time when the virtual item is delivered and consumed if the virtual item is a consumable item or,
in the case of time-based virtual item, recognized ratably over the period each virtual item is made available to the user, which
is usually over one to multiple months and does not exceed one year. For the years ended December 31, 2018 and 2019 and for the
nine months ended September 30, 2019 and 2020, revenue from consumable virtual items represented over 95{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the total net revenue.

 

As
we continue to grow our live streaming business, and enhance our user engagement and expand virtual gifting scenarios to increase
users’ willingness to pay, we expect our revenue from the sales of virtual items in our live streaming business to increase.

 

The
following table sets forth types of our revenue for the periods indicated:

 

    For the years ended
December 31,
    For the nine months ended
September 30,
 
    2018     2019     2019     2019     2020     2020  
Amounts in
thousands of RMB and US$
  RMB     RMB     US$     RMB     RMB     US$  
                      (Unaudited)     (Unaudited)     (Unaudited)  
Live streaming – consumable virtual
items revenue
    716,561       884,385       127,034       626,980       743,882       109,562  
Live streaming – time based virtual item revenue     26,432       26,812       3,851       20,321       20,431       3,009  
Technical services     25       3,429       493       2,212       3,491       514  
Total
revenue
    743,018       914,626       131,378       649,513       767,804       113,085  

 

 

As
of September 30, 2020, we operated four brands of live streaming platforms, consisting of: Showself Live Streaming, Lehai Live
Streaming, Haixiu Live Streaming and BeeLive Live Stream (including BeeLive Chinese version – Mifeng). The following table
sets forth our revenue by platforms for the periods indicated:

 

    For the years ended
December 31,
    For the nine months ended
September 30,
 
    2018     2019     2019     2020  
Amounts in thousands of RMB   RMB     RMB     RMB     RMB  
                (Unaudited)     (Unaudited)  
Showself     466,460       530,111       381,395       366,571  
Lehai     190,121       181,626       140,961       113,825  
Haixiu     86,412       199,460       124,945       225,771  
Beelive                       58,146  
Technical services     25       3,429       2,212       3,491  
TOTAL     743,018       914,626       649,513       767,804  

 

The
total number of paying users at Showself Live, Lehai Live, Haixiu Live and Beelive Live for the periods indicated is as following:

 

    For the year ended
December 31,
    For the Quarter ended
September
30,
 
    2018     2019     2019     2020  
Showself     354,213       390,315       137,834       127,646  
Lehai     113,737       78,890       30,133       49,609  
Haixiu     60,507       228,270       84,332       101,874  
Beelive                       43,712  
TOTAL     528,457       697,475       252,299       322,841  

 

The
ARPPU by Showself Live, Lehai Live, Haixiu Live and Beelive Live is as following (amounts in RMB):

 

    For the year ended
December 31,
    For the Quarter ended
September
30,
 
In RMB   2018     2019     2019     2020  
Showself     1,317       1,358       1,007       1,002  
Lehai     1,672       2,302       1,518       864  
Haixiu     1,428       874       703       845  
Beelive                           1,330  
Overall average     1,406       1,306       967       976  

 

Among
four brands of live streaming platforms, Showself Live streaming contributed 40{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 67{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the paying users for the all the periods
indicated. Our ARPPU in each platform may fluctuate from period to period due to the mix of live streaming services purchased
by the paying users. The overall ARPPU for the years ended December 31, 2018 and 2019 was RMB 1,406 and RMB 1,306, respectively.
For the quarter ended September 30, 2019 and 2020, the ARPPU was RMB967 and RMB976, respectively.

 

Cost
of Revenues

 

Our
cost of revenues primarily consists of (i) revenue sharing fees, including payments to various broadcasters and content providers,
(ii) user acquisition costs, (iii) bandwidth related costs, and (iv) other costs.

 

 

The
table below shows the cost of revenues for the periods indicated.

 

    For the year ended
December 31,
    For the nine months ended
September 30,
 
    2018     2019     2019     2020  
Amounts in thousands of RMB   RMB     RMB     RMB     RMB  
                (unaudited)     (unaudited)  
Revenue sharing fees     (467,303 )     (597,940 )     (428,465 )     (505,502 )
User acquisition costs     (100,134 )     (94,367 )     (70,964 )     (52,562 )
Bandwidth related costs     (8,941 )     (6,275 )     (4,626 )     (4,448 )
Others     (17,706 )     (22,055 )     (15,456 )     (22,867 )
TOTAL     (594,084 )     (720,637 )     (519,511 )     (585,379 )

 

Revenue
sharing fees and content cost:
 Our revenue sharing fees represent our payment to broadcasters based on a percentage of
revenue from sales of virtual items, including virtual gifts and other subscription based privileges. Revenue sharing fees were
63{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} and 65{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of revenues for the years ended December 31, 2018 and 2019, respectively. Revenue sharing fees were 66{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of revenues
for the nine months ended September 30, 2019 and 2020, respectively. We reduced our revenue sharing percentage for its broadcasters
the first half year of 2018, which resulted in departures of broadcasters and lower revenue for the second half year of 2018.
Subsequently, we adjusted our revenue sharing policy and provided broadcasters with higher revenue sharing percentage to attract
more talented broadcasters. As a result, the revenue sharing fees increased by 28{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in fiscal 2019 compared to fiscal 2018 and
increased by 18{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} during the nine months ended September 30, 2020 comparing to the same period of last year. We expect our sharing
fees and content cost for live streaming revenue to increase in line with the growth of our live streaming operations.

 

User
acquisition costs:
 We acquire users primarily through viral marketing, or word-of-mouth marketing, and online download.
We provide online downloads of our apps via various third-party websites, including online advertising networks, internet portals
and mobile application stores. We pay such third parties a fee for each registered user account acquired through them.

 

Bandwidth
related cost:
 Bandwidth related cost consists of fees that we pay to telecommunication service providers for server hosting,
bandwidth and content delivery-related services such as CDN (content delivery network).

 

Others: Other
costs include (i) fees that we pay to third-party payment processing platforms through which our users purchase our virtual currencies,
technology service costs, and content producing costs, (ii) personnel fees directly related to the revenue such as operation employees’
salary and benefits, and (iii) depreciation and amortization expense for servers and other equipment, and intangibles directly
related to operating the platforms. For the years ended December 31, 2018 and 2019 and for the nine months ended September 30,
2019 and 2020, other cost represented approximately 2{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to 3{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of related total revenue.

 

Operating
Expenses

 

Our
operating expenses consists of (i) sales and marketing expenses, (ii) research and development expenses, (iii) general and administrative
expenses, and (iv) provision for doubtful accounts.

 

    For the year ended
December 31,
    For the nine months ended

September 30,
 
    2018     2019     2019     2020  
Amounts in thousands of RMB   RMB     RMB     RMB     RMB  
Sales and marketing expenses     (5,005 )     (3,804 )     (2,397 )     (3,739 )
General and administrative expenses     (16,265 )     (11,957 )     (9,851 )     (19,739 )
Research and development expenses     (10,957 )     (21,523 )     (15,554 )     (20,770 )
(Provision) Recovery for doubtful accounts     (6,826 )     (854 )     (2,896 )     2,746  

 

 

Sales
and marketing expenses:
 Our sales and marketing expenses mainly consist of (i) salaries and benefits for sales and marketing
employees, and (ii) branding and advertisement expenses, including advertisements, holding promotional events and developing and
designing marketing campaigns. We expect to target sales and marketing expenditures to attract targeted paying users.

 

General
and administrative expenses
: Our general and administrative expenses primarily consist of (i) salaries and benefits for our
general and administrative staff, (ii) consulting fees, (iii) other expenses primarily including general office expenses, and
(iv) office rental expenses. We expect that general and administrative expenses will increase when we become a public company
and incurs additional costs to comply with its reporting obligations under the U.S. securities laws.

 

Research
and development expenses:
 Our research and development expenses primarily consist of (i) salaries and benefits for our
research and development employees, and (ii) other expenses primarily including depreciation related to research use. We expect
our research and development expenses to continue to grow as we continue to invest in innovative technologies to offer users a
better experience.

 

Provision
for doubtful accounts:
 We maintain an allowance for doubtful accounts which reflects our best estimate of amounts that
potentially will not be collected. When we determine the allowance for doubtful accounts, we take into consideration various factors
including but not limited to collection history and credit-worthiness of the debtors as well as the age of the individual receivables
account. We expect that the provision for doubtful accounts to decline as we have committed more resources to collection of account
receivables.

 

Results
of Operations

 

Year
Ended December 31, 2019 Compared to Year Ended December 31, 2018

 

Revenue: Total
revenues increased by RMB171.6 million, or 23{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB743.0 million for the year ended December 31, 2018 to RMB914.6 million
for the year ended December 31, 2019. Such increase was primarily attributable to our continuing efforts to grow and monetize
our business, resulting in increased user willingness to pay. These efforts include offering compelling content, optimizing product
features and introducing new games in live video rooms. User paying willingness is represented by paying ratio and user paying
amount, represented by ARPPU. Our paying ratio increased from 1.4{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} for the year ended December 31, 2018 to 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} for the year ended
December 31, 2019. Due to expanded and diversified user base, our average ARPPU decreased slightly by 7{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB 1,406 for the
year ended December 31, 2018 to RMB 1,306 for the for the year ended December 31, 2019.

 

In
fiscal 2019, we increased our revenue sharing fee for our broadcasters to retain and attract more broadcasters. We also continued
to introduce more events and games to further increase users’ willingness to pay and paying amount. As a result, our revenue
increased to RMB914.6 million for the year ended December 31, 2019 from RMB743.0 million for the year ended December 31, 2018.
The increase was primarily attributable to an increase of 23{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in live streaming revenue from consumable virtual items due to the
increase of the number of paying users from 528,457 in fiscal 2018 to 697,475 in fiscal 2019.

 

Cost
of revenues:
 Our cost of revenues increased by 21{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB594.1 million for the year ended December 31, 2018 to RMB720.6
million for the year ended December 31, 2019. The increase was primarily due to increased revenue resulting a higher revenue sharing
fee to broadcasters. We intend to provide competitive revenue sharing fee for broadcasters to attract more quality livestreaming
content to users. On the other side, with the increased of brand awareness, the user acquisition cost has been lower by 6{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from
2018 to 2019.

 

For
the year ended December 31, 2019, the Company’s bandwidth related cost amounted to RMB6.275 million, a decrease of 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} as
compared to fiscal 2018. With the increasing competition in hosting and bandwidth market and optimized technology, we were able
to cut down bandwidth related costs with its growing live streaming operations.

 

User
acquisition costs further decreased from RMB100.134 million in fiscal 2018 to RMB94.367 million in fiscal 2019. With increasing
brand awareness and increased quality content provided by Broadcasters, the Company expects user acquisition costs to decrease.

 

 

Gross
profit:
 As a result of the foregoing, our gross profit increased by 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB148.934 million for the year ended December
31, 2018 to RMB193.989 million for the year ended December 31, 2019. The gross profit margin increased from 20{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in 2018 to 21{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
in 2019.

 

Operating
expenses:

 

  Sales and marketing expenses: Our
sales and marketing expenses decreased by 24{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB5.0 million for the year ended December 31, 2018 to RMB3.8 million
for the year ended December 31, 2019. The decrease was primarily attributable to the decrease of marketing expenses. We held
a series of offline brand events for the year ended December 31, 2018, such as kiosk buildup in several second tier cities,
while we did not have the similar marketing events for the year ended December 31, 2019.
  General and administrative expenses: Our
general and administrative expenses decreased by 26{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB16.3 million for the year ended December 31, 2018 to RMB12.0
million for the year ended December 31, 2019. The decrease of general and administrative expenses was primarily attributable
to the decrease of service fees and external consulting fees and improved managerial efficiency.
  Research and development expenses: Our
research and development expenses increased from RMB11.0 million in 2018 to RMB21.5 million in 2019. We continue to strategically
focus on cutting edge technologies and invested more resources in R&D. As a result, the R&D’s headcount increased
from 45 in fiscal 2018 to 72 in fiscal 2019 and the salary and welfare for R&D employees increased by 96{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from RMB9.2
million for the year ended December 31, 2018 to RMB18.5 million for the year ended December 31, 2019.
  Provision for doubtful accounts: Our
provision for doubtful accounts decreased by 87{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from RMB6.8 million for the year ended December 31,2018 to RMB0.9 million
for the years ended December 31,2019, The decrease due to the Company’s continuous collection efforts in fiscal 2019.

 

Net
income:
 As a result of the foregoing, net income increased by 40{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, from RMB106.7 million for the year ended December
31, 2018 to RMB 149.9 million for the year ended December 31, 2019.

 

Nine
months ended September 30, 2020 Compared to nine months ended September 30, 2019

 

Revenues: Total
revenue for the nine months ended September 30, 2020 increased by 18{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB767.8 million from RMB649.5 million in the same period
of 2019. This increase was driven by our increasing ability to attract and retain paying users and broadcasters on our platform.
For the quarter ended September 30, 2020, the number of paying user was 322,841, increased by 28{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from 252,299 paying user in
the same period of fiscal 2019. The paying ratio also increased from 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in third quarter of fiscal 2019 to 3.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the third
quarter of fiscal 2020. Our average ARPPU for the third quarter of 2019 and 2020 was RMB967 and RMB976, respectively.

 

Cost
of revenues:
Our cost of revenues for the nine months ended September 30, 2020 increased by 12.7{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB585.4 million from
RMB519.5 million in the same period of 2019. The increase was primarily attributable to a 18{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} increase in our revenue sharing
fees and content costs, which was in line with the growth of our live streaming operations in the first nine months of 2020. The
other costs increased 48{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the first nine months of fiscal 2020 comparing to the same period of fiscal 2019, consistent with
the increase in revenue. On the other side, for the nine months ended September 30, 2020, the user acquisition cost amounted to
RMB52.6 million, decreased by 26{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from the same period of fiscal 2019 due to the increasing brand awareness and more quality content
provided by broadcasters attracting more viewers.

 

Gross
profit
: Our gross profit for the nine months ended September 30, 2020 increased by 40{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB182.4 million from RMB130.0 million
in the same period of 2019. Gross margin for the nine months ended September 30, 2020 expanded to 24{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from 20{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the same period
of 2019. Additionally, as we continued to expand our brand influence and enhance the quality of our content offerings, it helped
the Company to improve our gross margin in turn.

 

 

Total
operating expenses
for the nine months ended September 30, 2020 increased by 35{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB41.5 million from RMB30.7 million in
the same period of 2019.

 

  Sales
and marketing expenses for the nine months ended September 30, 2020 increased by 56{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB3.7 million from RMB2.4 million
in the same period of 2019. This increase was mainly due to the additional promotional activities that we executed in the
first nine months of fiscal 2020 following an uptick in online user traffic as more online users spent an increased amount
of time at home watching our live streaming content during the COVID-19 outbreak.
  General
and administrative expenses for the nine months ended September 30, 2020 increased by 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB19.7 million from RMB9.9
million in the same period of 2019. This increase was caused by higher employee benefits, increased headcounts, as well as
additional consulting and professional fees that we incurred as a result of our listing as a public company.
  Research
and development expenses for the nine months ended September 30, 2020 increased by 34{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB20.8 million from RMB15.6 million
in the same period of 2019 due to increased R&D headcounts and benefits to relevant employees as we continued to strengthen
our technological capabilities.
  Provision
for doubtful accounts for the nine months ended September 30, 2019 was RMB2.9 million. The Company recorded a recovery of
bad debt provision of RMB2.7 million for the nine months ended September 30 2020 as a result of its increased collection efforts.
The Company expects its provision for doubtful accounts to decline going forward as it has committed more resources to the
collection of account receivables.

 

Change
in fair value of contingent consideration
for the nine months ended September 30 2020 was RMB87.6 million. The Company’s
reverse recapitalization with Wealthbridge Acquisition Limited (“Wealthbridge”) on May 7, 2020 and acquisition of
BeeLive on August 21, 2020, involved payments of future contingent consideration upon the achievement of certain financial performance
targets and specific market price levels. Earn out liabilities are recorded for the estimated fair value of the contingent consideration
on the merger date. The fair value of the contingent consideration is re-measured at each reporting period, and the change in
fair value is recognized as either income or expense. For the nine months ended September 30, 2020, the change in fair value of
contingent condition included approximately RMB87.6 million of changes in fair value of contingent consideration.

 

Net
income
 for the nine months ended September 30 2020 increased by 127{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} to RMB220.5 million from RMB97.2 million in
the same period of 2019.  Net margin in the first nine months of fiscal 2020 expanded to 29{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from 15{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in the same period
of 2019.

 

Critical
Accounting Policies and Estimates

 

We
prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions.
We continually evaluates these estimates and assumptions based on the most recently available information, our own historical
experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates
is an integral component of the financial reporting process, actual results could differ from our expectations as a result of
changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application
and require us to make significant accounting estimates.

 

The
following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our combined
and consolidated financial statements and accompanying notes and other disclosures included in this prospectus.

 

 

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.

 

Use
of estimates

 

The
preparation of the 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 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, fair value of contingent
liability, allowance for doubtful accounts, 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 consolidated financial statements.

 

Accounts
Receivable and Allowance for Doubtful Accounts

 

Accounts
receivable are stated at the historical carrying amount net of allowance for doubtful accounts. Accounts are considered overdue
after 180 days.

 

The
Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be
collected. The Company determines the allowance for doubtful accounts 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. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired
that might indicate that an account is uncollectible. The facts and circumstances for each account may require the Company to
use substantial judgment in assessing its collectability.

 

Account
balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection
is not probable.

 

Revenue
Recognition

 

On
January 1, 2019, the Company adopted ASC 606, “Revenue from Contracts with Customers” using the modified retrospective
method applied to those contracts which were not completed as of January 1, 2019. Results for reporting periods beginning after
January 1, 2019 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance
with the Company’s historic accounting under Topic 605. Based on the Company’s assessment, the adoption of ASC 606
did not result in any adjustment on the Company’s unaudited condensed consolidated financial statements, and there were
no material differences between the Company’s adoption of ASC 606 and its historic accounting under ASC 605.

 

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. The Company derives their revenue from live streaming service and technical
service.

 

 

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.

 

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

 

The
Company generated technical revenues from providing technical development and advisory, which accounts for only less than 1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of
revenue. As the amount was immaterial, and short-term in nature which is usually less than six months, the Company recognizes
revenue when service were rendered and accepted by customers.

 

 

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.

 

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, the majority of the performance obligations are satisfied within one
year.

 

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 as of December 31, 2019 and September 30, 2020. As of December 31, 2019 and September 30, 2020, the
Company did not have any significant unrecognized uncertain tax positions.

 

Recent
Accounting Pronouncements

 

In February 2016, the FASB issued ASU
No. 2016-02, Leases (Topic 842). This update will require the recognition of a right-of-use asset and a corresponding lease liability,
initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating
leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in
the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately
from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion
of the lease liability will be classified as a financing activity while the interest component will be included in the operating
section of the statement of cash flows. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018
and requires a modified retrospective approach to adoption. Early adoption is permitted. In September 2017, the FASB issued ASU
No. 2017-13, which to clarify effective dates that public business entities and other entities were required to adopt ASC Topic
842 for annual reporting. A public business entity that otherwise would not meet the definition of a public business entity except
for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing
with the SEC adopting ASC Topic 842 for annual reporting periods beginning after December 15, 2019, and interim reporting periods
within annual reporting periods beginning after December 15, 2020. ASU No. 2017-13 also amended that all components of a leveraged
lease be recalculated from inception of the lease based on the revised after tax cash flows arising from the change in the tax
law, including revised tax rates. The difference between the amounts originally recorded and the recalculated amounts must be
included in income of the year in which the tax law is enacted. In November 2019, the FASB issued ASU No. 2019-10, by which to
defer the effective date for all other entities by an additional year. As an emerging growth company, the Company has not early
adopted this update and it will become effective on January 1, 2021. In June 2020, the FASB issued ASU No. 2020-05, “Revenue
from Contracts with Customers (Topic 606) and Leases (Topic 842) Effective Dates for Certain Entities” (“ASU 2020-05”)
in response to the ongoing impacts to businesses in response to the coronavirus (COVID-19) pandemic. ASU 2020-05 provides a limited
deferral of the effective dates for implementing previously issued ASU 606 and ASU 842 to give some relief to businesses and the
difficulties they are facing during the pandemic. ASU 2020-05 affects entities in the “all other” category and public
Not-For-Profit entities that have not gone into effect yet regarding ASU 2016-02, Leases (Topic 842). Entities in the “all
other” category may defer to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning
after December 15, 2022. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial
statements and related disclosures. As of September 30, 2020, the Company has RMB 19,366 (US$2,853) of future minimum operating
lease commitments that are not currently recognized on its unaudited condensed consolidated balance sheets. Therefore, the Company
would expect changes to its consolidated balance sheets for the recognition of these and any additional leases entered into in
the future upon adoption. 

 

In
June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU2016-13 Financial Instruments
– Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020.
The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes
an allowance based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements
to Topic 326, Financial Instruments – Credit Losses, which clarified that receivables from operating leases are not within the
scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance
with Topic 842. On May 15, 2019, the FASB issued ASU 2019-05, 9 which provides transition relief for entities adopting the Board’s
credit losses standard, ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon
adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and
(2) are within the scope of the credit losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10,
and (4) are not held-to-maturity debt securities. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are
effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the
ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date
will be the same as the effective date of ASU 2016-13. In January 2020, the FASB issued ASU 2020-2, “Financial Instruments
– Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin
No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), February
2020” (“ASU 2020-02”). ASU 2020-02 added and amended SEC paragraphs in the Accounting Standards Codification
to reflect the issuance of SEC Staff Accounting Bulletin No. 119, related to the new credit losses standard, and comments by the
SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. The Company is
evaluating the impact this ASU will have on its consolidated financial statements.

 

In
October 2018, the FASB issued ASU No. 2018-17 (“ASU 2018-17”), Consolidation (Topic 810): Targeted Improvements to
Related Party Guidance for Variable Interest Entities. The updated guidance requires entities to consider indirect interests held
through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its
entirety when determining whether a decision-making fee is a variable interest. The amendments in this update are effective for
non-public business entities for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning
after December 15, 2021, with early adoption permitted. These amendments should be applied retrospectively with a cumulative-effect
adjustment to retained earnings at the beginning of the earliest period presented. The Company is currently evaluating the impact
of adopting this standard on its consolidated financial statements.

 

In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, to simplify
the accounting for income taxes. The new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation,
the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside
basis differences. It also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and
clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. This ASU will become effective
for the Company’s annual and interim periods beginning in January 1, 2021, and early adoption is permitted. The Company
is evaluating the impact of this standard on its consolidated financial statements.

 

 

In
January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint
Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction
of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in
Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU 2020-01 is
effective for the Company beginning January 1, 2021. The Company is currently evaluating the effect of adopting this ASU on the
Company’s consolidated financial statements.

 

In
August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies
the guidance for certain financial instruments with characteristics of both debt and equity, including convertible instruments
and contracts on an entity’s own equity, by reducing the number of accounting models for convertible instruments. It also
amends guidance in ASC Topic 260, Earnings Per Share, relating to the computation of earnings per share for convertible instruments
and contracts on an entity’s own equity. ASU 2020-06 is effective for interim and annual reporting periods in fiscal years
that begin after December 15, 2021, with early adoption permitted for fiscal years that begin after December 15, 2020. The Company
is in the process of assessing the impact the adoption of ASU 2020-06 will have on the financial statements.

 

Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on
the consolidated financial position, statements of operations and cash flows.

 

Liquidity
and Capital Resources

 

Cash
Flows and Working Capital

 

The
Company sources of liquidity are primarily from the cash earned from its operating activities and cash by financing activities.
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash
and cash equivalents. The Company’s cash and cash equivalents consist of cash on hand and demand deposits placed with banks
or other financial institutions which are unrestricted as to withdrawal and use and have original maturities less than three months.
Cash and cash equivalents also consist of funds earned from the operating revenues which were held at the third party platform
fund accounts which are unrestricted as to immediate use or withdraw.

 

As
of December 31, 2019 and September 30, 2020, RMB134,772 and RMB155,034, respectively, were deposited with major financial institutions
located in the PRC. Management believes that these financial institutions are of high credit quality and continually monitor the
credit worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy
on protecting depositors’ interests. The Company has no short term investments as of December 31, 2019 and J September 30,
2020.

 

A
majority of the Company’s expense transactions are denominated in RMB and a significant portion of assets and liabilities
of the Company and its subsidiaries (including the VIEs) are denominated in RMB. RMB is not freely convertible into foreign currencies.
In the PRC certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions
at exchange rates set by the PBOC. Remittances in currencies other than RMB by the Companies in China must be processed through
the PBOC or other PRC foreign exchange regulatory bodies which require certain supporting documentation in order to effect the
remittance.

 

The
Company intends to finance its future working capital requirements and capital expenditures from cash generated from operating
activities and funds raised from financing activities. The Company believes that its current cash and cash equivalents, together
with its cash generated from operating activities and financing activities, will be sufficient to meet its present anticipated
working capital requirements and capital expenditures. However, the Company may decide to enhance its liquidity position or increase
its cash reserve for future investments or operations through additional capital and finance funding. Issuance of additional equity
securities, including convertible debt securities, would dilute the Company earnings per
share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could
result in operating and financial covenants that restrict the Company’s operations and its ability to pay dividends to its
shareholders.

 

 

As a holding company with no material operations
of its own, the Company conducts its operations primarily through its PRC subsidiaries and its variable interest entity (VIE) and
the VIE’s subsidiaries. The Company is permitted under PRC laws and regulations to provide funding to its PRC subsidiaries
in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of
capital contributions and loans.

 

The following table presents the summary
of the Company’s cash flow data.

 

    For the year ended
December 31,
    For the nine months ended

September 30,
 
    2018     2019     2019     2020  
Amounts in thousands of RMB   RMB     RMB     RMB     RMB  
                (Unaudited)     (Unaudited)  
Net cash provided by operating activities     107,286       228,886       172,863       96,228  
Net cash used in investing activities     (553 )     (5,457 )     (192 )     (40,367 )
Net cash used in financing activities     (170,886 )     (151,372 )     (124,768 )     (23,332 )
Effect of foreign exchange rate changes on cash                       (3,015 )
Net increase (decrease) in cash and cash equivalents     (64,153 )     72,057       47,903       29,514  
Cash and cash equivalents at beginning of the period     129,447       65,294       65,294       137,351  
Cash and cash equivalents at end of the period     65,294       137,351       113,197       166,865  

 

Operating Activities

 

Net cash provided by or used in operating
activities consisted primarily of the Company’s net income/loss adjusted by non-cash adjustments, such as provision for doubtful
accounts, and adjusted by changes in operating assets and liabilities, such as accounts receivable.

 

Net cash provided by operating activities
was RMB96.2 million for the nine months ended September 30, 2020. The difference between the net cash provided by operating activities
and net income of RMB220.5 million was primarily attributable to non-cash adjustment related to change in fair value of contingent
liability of RMB87.6 million, a decrease in prepaid expense and other current assets of RMB6.5 million due to improved collection
and a decrease of RMB1.4 million in long term deposits, partially offset by an increase accounts receivable of RMB25.8 million,
mainly due to increase of revenue, a decrease in accounts payable of RMB13.8 million and a decrease of accrued expenses and other
payables of RMB6.7 million due to repayments.

 

Net cash provided by operating activities
was RMB172.9 million for the nine months ended September 30, 2019. The difference between the net cash provided by operating activities
and net income of RMB97.2 million was primarily attributable to a decrease in accounts receivable of RMB114.2 million due to improvement
of collections, a decrease in prepaid expenses and other current assets of RMB17.3 million, partially offset by a decrease in
accounts payable of RMB52.7 million. The decrease in accounts receivable and prepaid expenses and other current assets was primarily
attributable to improved business operation and accounts receivable collection. The decrease in accounts payable was also attributable
to the recovery of the business from drop of 2018.

 

Net cash provided by operating activities
was RMB228.9 million for the year ended December 31, 2019. The difference between the net cash provided by operating activities
and net income of RMB149.9 million was primarily attributable to non-cash adjustment related to bad debt provision of RMB0.9 million,
a decrease in accounts receivable of RMB100.4 million due to improved collection and increase of revenue, a decrease in prepaid
expenses and other current assets of RMB18.6 million mainly due to a refund of RMB20 million investment deposit made in fiscal
2018, an increase in accrued expenses and other current liabilities of RMB6.5 million due to increased surcharge payable and security
deposits received from business venders, and an increase in accrued salary and employee benefits of RMB4.6 million due to increased
headcount and additional annual bonus incurred in 2019, partially offset by a decrease in accounts payable of RMB54.5 million due
to more payments to suppliers in fiscal 2019.

 

 

Net cash provided by operating activities
was RMB107.3 million for the year ended December 31, 2018. The difference between net income and net cash provided by operating
activities was small and primarily because non-cash adjustments almost offset changes in operating assets and liabilities. Non-cash
adjustments contributed RMB8.1 million in 2018, which was primarily attributable to depreciation of property and equipment of RMB1.2
million and provision for doubtful accounts of RMB6.8 million due to an increase in the portion over 12 months of accounts receivable.
Change in operating assets and liabilities depleted RMB7.6 million in 2018, which was primarily attributable to a decrease in accounts
receivable of RMB15.3 million, an increase in accounts payable of RMB18.2 million, a decrease in deferred revenue of RMB17.9 million
and an increase in prepaid expense and other current assets of RMB24.4 million. The decrease in accounts receivable was attributable
to less revenue in 2018 comparing to 2017 and the Company’s continuous efforts on accounts receivable collection. The increase
in accounts payable was primarily because more purchase incurred in the second half of 2018 with increasing broadcaster’s
livestream activities. The decrease in deferred revenue was primarily attributable to the decrease in the unconsumed virtual currency
as of December 31, 2018, and the increase in prepaid expenses and other current assets was primarily because the Company made an
investment in a limited partnership in Xiamen to engage in investments. The investment plan was terminated, and the Company received
its investment of RMB20 million back in 2019.

 

Investing Activities

 

Net cash used in investing activities was
primarily due to (a) purchases of property and equipment such as electronic equipment, and intangible assets such as trademark,
software copyrights, and patents;

 

Net cash used in investing activities
amounted to RMB40.3 million for the nine months ended September 30, 2020, primarily due to cash paid RMB 50.0 million cash paid
for Beelive acquisition.

 

Net cash used in investing activities
amounted to RMB0.2 million for the nine months ended September 30, 2019, primarily due to cash paid for equipment.

 

Net cash used in investing activities amounted
to RMB5.5 million for the year ended December 31, 2019, primarily due to a RMB5 million equity investment in Hangzhou Zhengrui
Energy Technology LLP and RMB0.5 million purchase of equipment.

 

Net cash used in investing activities was
RMB0.6 million for the year ended December 31, 2018, primarily due to cash paid for equipment of RMB0.5 million and intangible
assets of RMB0.02 million.

 

Financing Activities

 

Net cash used in financing activities
amounted to RMB23.3 million for the nine months ended September 30, 2020, primarily due to repayment RMB 57.4 million for loan
payables, offsetting net cash of RMB25.7 million acquired in the reverse recapitalization.

 

Net cash used in financing activities
amounted to RMB124.8 million for the nine months ended September 30, 2019, primarily due to the payments for dividends of RMB91
million to shareholders, capital distributions due to the reorganization of RMB32.3 million and repayments to related party of
RMB32.9 million, offset by proceeds from borrowing of RMB31.5 million.

 

Net cash used in financing activities amounted
to RMB151.4 million for the year ended December 31, 2019, primarily due to the payments for dividends of RMB104.6 million to shareholders
and capital distributions of RMB32.3 million due to the reorganization and the repayments of RMB13.1 million to related parties
as well as RMB1.3 million paid to IPO related cost.

 

Net cash used in financing activities was
RMB170.9 million for the year ended December 31, 2018, primarily due to the payment of dividends of RMB228.5 million to shareholders
due to the Company’s reorganization in 2018, non-recurring event, and a capital distribution due to the reorganization of
RMB10 million, offsetting the net proceeds of RMB59.2 million from borrowings from related parties and capital contributions of
RMB8.4 million.

 

 

Capital Expenditures.

 

For the years ended December 31, 2018
and 2019, the Company’s capital expenditure amounted to RMB0.6 million and RMB0.5 million, respectively. For the nine months
ended September 30, 2019 and 2020, the Company’s capital expenditure amounted to RMB0.2 million and RMB 0.5 million.

 

Off-Balance Sheet Commitments and
Arrangements

 

The Company has not entered into any financial
guarantees or other commitments to guarantee the payment obligations of any third parties. The Company has not entered into any
derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its
combined and consolidated financial statements. Furthermore, the Company does not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.

 

Contractual Obligations

 

The following table sets forth the
Company’s contractual obligations as of September 30, 2020

 

    Payment
Due by Period
 
Contractual Obligations   Total     Less than
1 year
    1-3 years     3-5 years     More than
5 years
 
    (in RMB Thousands)  
Operating Lease Obligations     19,366       4,556       8,995       5,815        

 

Quantitative and Qualitative Disclosure
about Market Risk

 

Interest Rate Risk

 

The Company’s exposure to interest
rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest bearing bank deposits.
The Company has not used derivative financial instruments to manage its interest risk exposure. Interest earning instruments carry
a degree of interest rate risk. The Company has not been exposed to, nor does the Company anticipate being exposed to, material
risks due to changes in market interest rates.

 

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,
2019 and September 30,2020, RMB134,772 and RMB 155,034, respectively, were deposited with major financial institutions located
in the PRC. Management believes that these financial institutions are of high credit quality and continually monitor the credit
worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting
depositors’ interests.

 

For the credit risk related to accounts
receivable, the Company performs ongoing credit evaluations of its customers. The Company establishes an allowance for doubtful
accounts based upon estimates, factors surrounding the credit risk of specific customers and other information. The allowance amounts
were immaterial for all periods presented.

 

Foreign Exchange 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.

 

 

OUR HISTORY AND CORPORATE STRUCTURE

 

We were originally a blank check company,
known as Wealthbridge Acquisition Limited (“Wealthbridge”), incorporated in the British Virgin Islands on May 2, 2018
with limited liability (meaning our public shareholders have no liability, as shareholders of the Company, for the liabilities
of the Company over and above the amount paid for their shares) to serve as a vehicle to effect a merger, share exchange, asset
acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses.
On May 7, 2020, we consummated the Business Combination contemplated by the Share Exchange Agreement with Lavacano and WBY, pursuant
to which we acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} the issued and outstanding equity interests of Scienjoy and changed our name to Scienjoy Holding Corporation.

 

History of Scienjoy

 

Scienjoy is a holding company incorporated
under the laws of the Cayman Islands on March 2, 2017 with authorized shares of 500,000,000 shares at a par value of $0.0001.

 

Scienjoy, through its subsidiaries and
variable interest entities, is principally engaged in operating its own live streaming platforms in the People’s Republic
of China (the “PRC”). In 2014, Scienjoy’s first live streaming APP Showself Live Streaming was launched. Scienjoy
subsequently launched “Lehai” in 2015 and “Haixiu” in 2016.

 

Reorganization of Scienjoy

 

On January 1, 2018, Tongfang Investment
Fund Series SPC (“TF”) completed the acquisition of a 65{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in Sixiang Times (Beijing) Technology Co.,
Ltd (“Sixiang Times”) from NQ Mobile Inc., Ltd. Through the acquisition of Sixiang Times, TF acquired a controlling
position in Holgus Sixiang Information Technology Co., Ltd (“Holgus”), Kashgar Sixiang Times Internet Technology Co.,
Ltd (“Kashgar Times”), Beijing Sixiang Shiguang Technology Co., Ltd. (“SG”), Hai Xiu (Beijing) Technology
Co., Ltd (“HX”) and Beijing Le Hai Technology Co., Ltd (“LH”).

 

On May 18, 2017, Scienjoy established its
wholly owned subsidiary in Hong Kong, Scienjoy International Limited (“Scienjoy HK”), as a holding company holding
all of the outstanding shares of Sixiang Wuxian (Beijing) Technology Co., Ltd (“WX” or “WFOE”) which was
established in PRC on October 17, 2017 under the laws of the People’s Republic of China as a holding company holding all
of the equity interest of Sixiang Zhihui (Beijing) Technology Co., Ltd. (“ZH”), which was incorporated on July 5,2018.

 

Scienjoy established ZH (through WX), as
a holding company for purpose of holding all of the outstanding equity interest of Holgus and Kashgar Times, as follows:

 

On July 18, 2018, Sixiang Times and ZH
executed an equity transfer agreement with Sixiang Times. Pursuant to the agreement, 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in Holgus was transferred
to ZH.

 

On July 24, 2018, Sixiang Times and ZH
executed an equity transfer agreement. Pursuant to the agreement, 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in Kashgar Times was transferred to ZH.
In consideration of the transfer, Scienjoy paid RMB10,000,000 to the former shareholders of Kashgar Times.

 

On November 16, 2018, Sixiang Times and
other minority shareholders respectively entered into certain equity transfer agreements with Sixiang Huizhi (Beijing) Technology
Culture Co., Ltd. (“HZ”) and Tianjin Sihui Peiying Technology Co., Ltd. (“SY”), and transferred 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of
the equity interest in SG to HZ, and transferred 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in HX and LH to HZ and SY. Both HZ and SY were ultimately
controlled by TF.

 

On January 28, 2019, HZ and SY executed
equity transfer agreement with Zhihui Qiyuan. Pursuant to the agreement, 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in SG, HX and LH was transferred
to Zhihui Qiyuan, which is ultimately controlled by TF. In consideration of the transfer, Scienjoy paid RMB 32,000,000 to HZ and
SY.

 

 

On January 29, 2019, Scienjoy, through
its wholly owned subsidiary WFOE, entered into a series of contractual arrangements (“VIE Agreements”) with Zhihui
Qiyuan and its registered shareholders, and in substance obtained control over all equity shares, risks and rewards of SG, HX and
LH through Zhihui Qiyuan. For a description of the VIE agreements pursuant to which Scienjoy and its subsidiaries were established
as a primary beneficiary of Zhihui Qiyuan, see “History and Corporate Structure of Scienjoy Inc.–Contracts that give
Scienjoy effective control of the Scienjoy VIEs.”

 

On January 10, 2020, the Company consummated
the acquisition of the 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} equity interest in Lixiaozhi (Chongqing) Internet Technology Co., Ltd. (“LXZ”) from its
original shareholder for a cash consideration of RMB200 (US$28). We believe the acquisition of LXZ helps to enrich its product
line, expand its user base and capitalize on the growth potential in the live streaming market.

 

On May 7, 2020, the Business Combination
was consummated. Following our Business Combination, we changed our name from “Wealthbridge Acquisition Limited” to
“Scienjoy Holding Corporation” and continued the listing of our Ordinary Shares on NASDAQ under the symbol “SJ”.
Our Public Warrants are traded on over the counter market under the symbol “SJOYW”.

 

On July 23, 2020, we established Kashgar
Sixiang Lehong Information Technology Co., Ltd. (“Kashgar Lehong”) through ZH. The setting up of such company is for
the purpose of analyzing the possibility of tax planning in such region.

 

On August 10, 2020, we signed an Equity
Acquisition Framework Agreement (the “BeeLive Acquisition Agreement”) with Sciscape International Limited, Tianjin
Guangju Dingfei Technology Co., Ltd., Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology Co., Ltd.. Pursuant to the BeeLive
Acquisition Agreement, we, through Scienjoy inc., acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Sciscape International Limited which
holds the platform BeeLive International and, through Zhihui Qiyuan (the VIE entity), acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Tianjin
Guangju Dingfei Technology Co., Ltd. which holds BeeLive Chinese (MiFeng). Pursuant to the Agreement, the Company is required to
pay (i) a cash consideration of RMB50.0 million and (ii) RMB250.0 million in ordinary shares (approximately 5.4 million ordinary
shares) to be issued by the Company. 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of share consideration payments are subject to certain performance conditions and requirements
over the following three years. Please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information”
in this prospectus for a description of earn-out provisions. On August 21, 2020, all target shares were transferred to the parties
designated in BeeLive Acquisition Agreement. On September 10, 2020, we paid a cash consideration of RMB50.0 million to Tianjin
Guangju Dingsheng Technology Co., Ltd. and issued 3,786,719 Ordinary Shares to Cosmic Soar Limited. Tianjin Guangju Dingfei Technology
Co., Ltd. subsequently changed its name to Sixiang Mifeng (Tianjin) Technology Co. and Sciscape International Limited changed its
name to Scienjoy BeeLive Limited.  BeeLive is a global live streaming platform that initially launched in China in November
2016. During the second half of 2019, BeeLive began expanding into international markets. To date, BeeLive International offers
Arabic language live streaming product in the Middle East and Thai language live streaming product in Southeast Asia.

 

Organizational Structure

 

We are a British Virgin Islands holding
company and conduct our operations in the People’s Republic of China (the “PRC”) through Zhihui Qiyuan, and other
Scienjoy VIEs, including SG, HX and LH, and through WFOE and the wholly owned subsidiaries of WFOE, including Kashgar Times, Kashgar
Lehong and Holgus. Through our Hong Kong subsidiary Scienjoy International Limited, we own a direct equity interest in WFOE. WFOE,
Zhihui Qiyuan and Zhihui Qiyuan’s registered shareholders are parties to the VIE Agreements, pursuant to which the profits
of Zhihui Qiyuan, and other Scienjoy VIEs, each such company formed under PRC Law, are directly or indirectly payable to WFOE,
and in connection with such VIE Agreements, the Scienjoy VIEs are directly or indirectly controlled by WFOE. Any failure by any
of the Scienjoy VIEs or their respective shareholders to perform their obligations under these contractual arrangements, and any
failure by us to maintain effective control over any of these Scienjoy VIEs, would have a material adverse effect on our business.
See “Risk Factors—Risks Related to Our Corporate Structure.”

 

 

The following diagram depicts our current
organizational structure. Unless otherwise indicated, equity interests depicted in this diagram are held 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}. The relationship
between WFOE and Zhihui Qiyuan as illustrated in this diagram are governed by contractual arrangements and do not constitute equity
ownership.

 

 

Contractual Arrangements among WFOE,
the Scienjoy VIEs and the Shareholders of the Scienjoy VIEs

 

Current PRC laws and regulations impose
certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services, and
certain other business. We are a company registered in the British Virgin Islands. To comply with PRC laws and regulations, we
primarily conduct our business in China through the WFOE and the Scienjoy VIEs, based on a series of contractual arrangements by
and among WFOE, the Scienjoy VIEs and the shareholders of the Scienjoy VIEs. As a result of these contractual arrangements, we
exert control over our consolidated affiliated entities in the PRC and consolidates their operating results in our financial statements
under U.S. GAAP. The following is a summary of the contractual arrangements that provide us with effective control of Scienjoy
VIEs and that enable us to receive substantially all of the economic benefits from the Scienjoy VIEs’ operations.

 

 

Contracts that give the Company effective
control of the Scienjoy VIEs

 

Exclusive Option Agreement.

 

Pursuant to the exclusive option agreement
(including its amendment or supplementary agreements, if any, the “Exclusive Option Agreement”) amongst WFOE, Zhihui
Qiyuan and the registered shareholders who collectively owned all of Zhihui Qiyuan, the registered shareholders irrevocably granted
WFOE or its designated party, an exclusive option to purchase all or part of the equity interests held by the registered shareholders
in Zhihui Qiyuan, when and to the extent permitted under PRC law, at an amount equal to the lowest permissible purchase price as
set by PRC law. Zhihui Qiyuan cannot declare any profit distributions, or create any encumbrances in any form without the prior
written consent of WFOE. The registered shareholders must remit in full any funds received from Zhihui Qiyuan to WFOE, in the event
any distributions are made by the VIE pursuant to any written consents of WFOE.

 

The Exclusive Option Agreement shall remain
effective for twenty (20) years and shall be automatically extended for an additional period of one (1) year. The additional period
automatically enters the renewal extension of one (1) year at the end of each extended additional period. WFOE has the right to
terminate this agreement at any time after giving a thirty (30) days’ prior termination notice.

 

Power of Attorney Agreements.

 

The registered shareholders of Zhihui Qiyuan
entered into the power of attorney agreement (including its amendment or supplementary agreements, if any, the “Power of
Attorney Agreement”) whereby such registered shareholders granted an irrevocable proxy of the voting rights underlying their
respective equity interests in Zhihui Qiyuan to WFOE, which includes, but are not limited to, all the shareholders’ rights
and voting rights empowered to the registered shareholders by the PRC company law and Zhihui Qiyuan’s Article of Association.
The power of attorney remains irrevocable and continuously valid from the date of execution so long as each such shareholder remains
as a shareholder of Zhihui Qiyuan.

 

Share Pledge Agreement.

 

Pursuant to the share pledge agreement
(including its amendment or supplementary agreements, if any, the “Share Pledge Agreement”) among WFOE, Zhihui Qiyuan
and the registered shareholders of Zhihui Qiyuan, such registered shareholders have pledged all their equity interests in Zhihui
Qiyuan to guarantee the performance of Zhihui Qiyuan’ obligations under the Exclusive Option Agreement, Exclusive Business
Cooperation Agreement and Power of Attorney Agreement.

 

If Zhihui Qiyuan breaches its contractual
obligations under any of other VIE Agreements, WFOE, as pledgee, will be entitled to certain rights, including the right to sell
the pledged equity interests. The registered shareholders of Zhihui Qiyuan agreed not to transfer, sell, pledge, dispose of or
otherwise create any new encumbrance on their equity interests in Zhihui Qiyuan without the prior written consent of WFOE. The
Share Pledge Agreement shall be continuously valid until all obligations under the VIE Agreements have been fulfilled, or the VIE
Agreements are terminated, or the secured debts has been fully executed.

 

 

Contracts that enable us to receive
substantially all of the economic benefits from the Scienjoy VIEs

 

Exclusive Business Cooperation Agreements

 

Pursuant to the exclusive business cooperation
agreement (including its amendment or supplementary agreements, if any, the “Exclusive Business Cooperation Agreement”)
between WFOE and Zhihui Qiyuan, WFOE is to provide exclusive business support, technical and consulting services related to all
technologies needed for its business in return for fees that equals to all of the consolidated net income after offsetting previous
year’s loss (if any) of SG, HX and LH. The service fees may be adjusted by WFOE based on the following factors:

 

complexity and difficulty of the services pursuant to the
business cooperation agreement to Zhihui Qiyuan during the month (the “Monthly Services”);
the number of WFOE’s employees who provided the Monthly
Services and the qualifications of the employees;
the number of hours WFOE’s employees spent to provide
the Monthly Services;
nature and value of the Monthly Services;
market reference price; and
Zhihui Qiyuan’ operating conditions for the month.

 

The term of the Exclusive Business Cooperation
Agreement is twenty (20) years and shall be automatically extended for an additional period of one (1) year. The additional period
automatically enters the renewal extension of one (1) year at the end of each extended additional period. Besides, WFOE has the
right to terminate this agreement at any time after giving a thirty (30) days’ prior termination notice.

 

We have been advised by Beijing Feng
Yu Law Firm (北京锋昱律师事务所) (“Feng Yu Law Firm”), our PRC
legal counsel:

 

  based on its understanding of the relevant laws and regulations, is of the opinion that each of the contracts among WFOE, Zhihui Qiyuan and its registered shareholders are valid, binding and enforceable in accordance with their terms and do not violate current effective applicable PRC Laws.

 

However, our PRC legal counsel has advised
that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, rules and
regulations. Accordingly, the PRC regulatory authorities may in the future take a view that is contrary to the opinion of our PRC
legal counsel. Our PRC legal counsel has further advised that if the PRC government finds that the agreements that establish the
structure for operating our Internet related value-added business do not comply with PRC government restrictions on foreign investment
in the aforesaid business we engage in, we could be subject to severe penalties including being prohibited from continuing operations.
See “Risk Factors—Risks relating to our corporate structure.” See “Risks Relating to Doing Business
in China— Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections
available to you and us
.”

 

 

Transaction with White Lion Capital
LLC

 

On February 23, 2021, we entered into
the Purchase Agreement with White Lion Capital, which provides that, upon the terms and subject to the conditions and limitations
set forth therein, White Lion Capital is committed to purchase our Ordinary Shares with an aggregate offering price of up to $30,000,000
(“Commitment Amount”) from time to time over a period of up to six (6) months or until the date on which White
Lion Capital shall have purchased shares equal to the Commitment Amount, subject to the termination of the Purchase Agreement.

 

Purchase
of Shares under the Purchase Agreement

 

Under
the Purchase Agreement, on any trading day selected by us, provided that the closing price of our Ordinary Shares upon the delivery
of a purchase notice is greater than or equal to $0.25, we have the right, but not the obligation, to present White Lion Capital
with a purchase notice, directing White Lion Capital (as principal) to purchase up to a certain amount shares of our Ordinary Shares
(“Purchase Notice”). The maximum number of Ordinary Shares to be sold under each Purchase Notice shall be determined
by the lesser of (i) 300{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the average daily trading volume during the five (5) trading days immediately prior to the delivery
of the Purchase Notice, or (ii) $1,000,000 divided by the highest closing price of our Ordinary Shares during the five (5) trading
days immediately prior to the delivery of the Purchase Notice, which calculation amount may be increased to $2,000,000 once White
Lion Capital has funded $5,000,000 to the Company at the mutual consent of the Company and White Lion Capital. Notwithstanding
the foregoing, we and White Lion Capital may elect a negotiated fixed purchase at any time during the Commitment Period provided
that the closing price of our Ordinary Shares upon delivery of such fixed purchase notice is greater than or equal to $0.25 (“Fixed
Purchase Notice
”).

 

For
Purchase Notices, the purchase price per share to be paid by White Lion Capital will be 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest daily volume-weighted
average price of our Ordinary Shares during a valuation period, which is five (5) trading days prior to the applicable closing
date with respect to a regular Purchase Notice (“Purchase Price”). The Fixed Purchase Notice will set forth
a fixed number of shares and a fixed purchase price mutually agreed by the Company and White Lion Capital. The fixed purchased
price shall be greater than or equal to $0.25 but could be higher or lower than the Purchase Price for a regular Purchase Notice.
In the event that the fixed purchase price is substantially lower than the regular Purchase Price, which is 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the lowest
daily volume-weighted average price of our Ordinary Shares during a valuation period, the equity value of the existing shareholders
might be significantly diluted.

 

A
Purchase Notice or Fixed Purchase Notice shall be deemed delivered to White Lion Capital on (i) the business day it is received
by email by the White Lion Capital if such notice is received on or prior to 4:00 p.m. New York time or (ii) the next business
day if it is received by email after 4:00 p.m. New York time on a business day or at any time on a day which is not a business
day. For Purchase Notices, White Lion Capital shall deposit into an escrow account a dollar amount which is 110{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the Purchase
Notice Escrow Pricing Amount, which is 87.5{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the highest closing price of the Ordinary Shares during the five (5) trading days
prior to the delivery of a Purchase Notice, multiplied by the number of shares listed in such Purchase Notice. For Fixed Purchase
Notices, the deposit amount shall be equal to the fixed purchase price multiplied by the fixed number of shares as agreed by the
Company and White Lion Capital The escrow deposit shall be completed by the second business day following the delivery of a Purchase
Notice. The number of Ordinary Shares referenced in each Purchase Notice shall be delivered to White Lion Capital no later than
the business day after the escrow agent notifies us of White Lion Capital’s escrow deposit payment. With respect to a Purchase
Notice, the closing date is the sixth (6th) trading day after the business day on which White Lion Capital receives the shares.
With respect to a Fixed Purchase Notice, the closing date is the trading day after the business day on which White Lion Capital
receives the shares. At the closing, the investment amount shall be released from the escrow account to us. In the event that the
investment amount exceeds 150{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the Purchase Notice Escrow Pricing Amount, the investment amount shall be 150{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the Purchase
Notice Escrow Pricing Amount for that applicable Purchase Notice. White Lion Capital shall return to the transfer agent, by 4:00
p.m. New York time on the closing, any balance of unsold shares, which means, the difference between the amount of shares set forth
on the Purchase Notice and the amount of shares pursuant to the investment amount (unless waived by White Lion Capital in writing).
Any fixed purchase transaction is not subject to the foregoing limit.

 

White
Lion Capital has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with
the Purchase Agreement; provided that the closing price of the Ordinary Shares upon delivery of a purchase notice is greater than
or equal to $0.25, and subject to the Commitment Amount and other limitations, as described above.

 

 

Escrow Agreement

 

On Feburary 23, 2021,
the Company entered into an escrow agreement (the “Escrow Agreement”) with White Lion Capital, and Indeglia
PC (the “Escrow Agent”) to establish an escrow account with the Escrow Agent in connection with the transaction
contemplated by the Purchase Agreement. The deposit funds to be made by White Lion Capital shall not be released by the Escrow
Agent unless the Escrow Agent receives a joint written instruction issued by White Lion Capital and the Company.

 

Registration Rights Agreement

 

In connection with
the Purchase Agreement, we also entered into a registration rights agreement (the “Registration Rights Agreement”)
with White Lion Capital, pursuant to which, we agreed to, within seven (7) trading days after February 23, 2021, file with the
Securities and Exchange Commission a registration statement, covering the resale of the maximum number of our Ordinary Shares underlying
the Purchase Agreement, as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations and interpretations
so as to permit the resale of such Ordinary Shares by White Lion Capital. If the amount of shares initially registered is insufficient,
the Company shall amend the registration statement or file a new registration statement, so as to cover all Ordinary Shares acquired
by White Lion Capital pursuant to the Purchase Agreement as soon as practicable and in no event later than ten (10) business days
after the necessity arises, subject to any limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act
of 1933, as amended, and the rules and regulations thereunder.

 

Right
of First Refusal

 

We have agreed to
grant the White Lion Capital a right of first refusal for a period of 180 days after the filing of this Registration Statement,
on all future financing by the Company; provided that, such rights of first refusal shall not apply to transactions involving (i)
investors whose principal operations are located in China and (ii) issuance of the Ordinary Shares.

 

Termination
Rights

 

We
may terminate this Agreement at any time by written notice to White Lion Capital in the event of a material breach of this Agreement
by White Lion Capital. In addition, the Purchase Agreement shall automatically terminate on the earlier of (i) the end of the Commitment
Period; (ii) the date that the Company sells and White Lion Capital purchases the total Commitment Amount, or (iii) the date that,
pursuant to or within the meaning of any Bankruptcy Law, we commence a voluntary case or any person commences a proceeding against
us, a custodian is appointed for us or for all or substantially all of our property or we make a general assignment for the benefit
of our creditors. The Company also has the right to early terminate the Purchase Agreement if the closing price of the Ordinary
Shares is below $6 in five (5) consecutive trading days within the Commitment Period.

 

No
Short-Selling by White Lion Capital

 

White
Lion Capital has agreed that neither it nor any affiliate of White Lion Capital acting on its behalf or pursuant to any understanding
with it, shall engage in any direct or indirect short-selling of our Ordinary Shares, in accordance with Regulation SHO under the
Exchange Act, during any time prior to the end of the Commitment Period.

 

 

BUSINESS

 

Mission

 

We are committed to establishing a mobile
entertainment social community where users can enjoy interactive mobile live streaming and asynchronous social connection.

 

Overview

 

We are a leading provider of mobile
live streaming platforms in China and focuses on interactive show live streaming from broadcasters to users. We have 34,651 active
show broadcasters for the year ended December 31, 2019. We had approximately 243.5 million registered users by the end of September
30, 2020, increased from 200.4 million registered users for the year ended December 31, 2019. For the quarter ended September
30, 2020, the number of paying users was approximately 322,841, increased 28{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from the same period of last year. For the quarter
ended September 30, 2020, the number of active Boardcasters was 97,038, increased 635{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from the same period of last year. Before
the BeeLive Acquisition, we operated primarily on three platforms (Showself Live Streaming, Lehai Live Streaming and Haixiu Live
Streaming). Through the BeeLive Acquisition, we added two additional platforms (BeeLive Chinese (MiFeng) and BeeLive International)
to our businesses. All our platforms are using our own mobile applications, and have created a vibrant, interactive, and close
community. According to the third party YIGUAN ANALYSYS data report in 2019 (which is publicly available without payment and is
not commissioned by us in connection with this prospectus), for six consecutive calendar quarters from the first quarter of 2018
through the second quarter of 2019, Showself Live Streaming, our flagship platform, continuously ranked No. 1 among major platforms
in the vertical show live streaming sector in terms of QAU, and for the year 2018, it ranked No. 5 in among major platforms in
all entertainment related streaming platforms including the pan entertainment sector and the show sector, also in terms of QAU.

 

With China’s rapid technological
progress and booming economic development, the past 10 years witnessed a dramatic growth of mobile Internet users in China. According
to the Frost & Sullivan Report (2018), the mobile internet market increased from RMB 99.2 billion in 2013 to RMB 1,535.2 billion
in 2017 and is expected to continue to grow at a rapid rate, reaching RMB 5,807.4 billion in 2022. Our platforms bring together
a pool of talented broadcasters and devoted viewers by customizing the live streaming videos according to use profiles and developing
interactive features that promote a more interactive and engaging experience.

 

We operate a mobile live streaming business
by which it provides live streaming entertainment from professional “broadcasters” to the end-users, allowing for operation
of live social video communities. Using our mobile applications, users can select broadcasters and enter real time video rooms
to interact with them. In addition to the real-time interaction, users can also view photos posted by broadcasters in their personal
pages, leave comments, and engage in private chats with broadcasters when such broadcasters are not streaming. In addition, users
can also play simple, fun games using virtual currencies within the video rooms while watching live streaming of a broadcaster.

 

While users have free access to all real
time video rooms, revenue is primarily generated through sales of our virtual currency. Users can purchase virtual currency on
our platforms and can use such virtual currency to buy virtual items for broadcasters to show their support. We share revenues
generated on the platforms with talents agencies, which in turn share revenues with broadcasters. Under the leadership of our experienced
management team, we continue to invest in technology advancement and industry collaboration to expand its user base and improve
its content. We are dedicated to achieving sustainable development and transforming the industry through its bold and creative
live streaming philosophy.

 

We have achieved significant growth
since our inception. The number of registered users of the Company’s platforms at year end has increased from 170.7 million
in 2018 to 200.4 million in 2019. As of September 30, 2020, we had approximately 243.5 million registered users. The platforms’
annual ARPPU was RMB 1,406 and RMB1,306 for the years ended December 31, 2018 and 2019, respectively. The platforms’ paying
ratio has increased from an average of 1.40{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in 2018 and to 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} in 2019. For the quarter ended September 30, 2019 and 2020,
the platform’s ARPPU was RMB967 and RMB976, respectively. The platforms’ paying ratio has increased from an average
of 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} for the quarter ended September 30, 2019 to 3.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} for the quarter ended September 30, 2020.

 

 

Our Competitive Strengths

 

We believe the following competitive strengths
contribute to our success and differentiate us from our competitors:

 

Multi-Platform Live Streaming

 

Starting in 2014 with the launch of the
Showself Live Streaming platform, our user base has grown into one of the largest in China, and now we are one of the leading show
live streaming providers in China. We believe our show live streaming products satisfy users’ psychological needs and decrease
users’ stress, loneliness, depression, frustration etc. in the real life.

 

Our user traffic and revenue spread across
multiple products supported by multiple mobile applications. We believe this multi-product approach increases our competitiveness
by allowing us to target different sections of the population simultaneously more effectively, achieve better traffic matching
between users and broadcasters, extend the retention of broadcasters and users on our platforms, and benefit from user traffic
acquisition while mitigating risks of focusing on a single platform. We believe that our already established position across multiple
platforms provides us with the ability to compete effectively for users and a base from which we can expand, either into additional
show live streaming platforms or into other sections of the live streaming market.

 

As a pioneer in the live streaming market,
we developed our own set of end-to-end (broadcaster-to-user) mobile video solutions. Many of the systems and technologies we have
developed, including, among others, our mobile-compatible animation engine technology, event-driven asynchronous business processing
mechanism, linearly expanding deployment of its servers, modular service development and assembly, high-throughput parallel messaging
service clusters and spam filtering based on machine learning, provide us with competitive advantages. We believe our existing
systems and technologies, supported by its continuing efforts in technology innovation, including with regard to augmented reality/virtual
reality (“AR/VR”), artificial intelligence (“AI”), big data technology, machine learning and physics engine
technology, provide us with the necessary technical skills to compete and expand in this rapidly changing industry.

 

Innovative Product Features and Operating
Philosophy

 

Our product offerings include numerous
innovative features designed to improve user experience, increase user-stickiness, and enhance its monetization ability. These
include, among others:

 

gamified product and operating philosophy that enable users
to enjoy the exciting alternative life in the mobile live streaming virtual world. In this virtual world, users can enjoy the
real interactive activities with broadcasters and also build their virtual life.
a range of online games for users to play while watching
streaming. These include simple, fun games like pet run, crazy racing and gold egg smashing. Users pay virtual currency to play
games for a chance to hit a virtual currency jackpot or win virtual goods that they can then send to broadcasters who can then
monetize the goods. These games enhance user engagement during live streaming and encourage and facilitate the use of virtual
currency and virtual goods.
both real-time streaming and asynchronous social functions.
Users of our platforms can communicate with broadcasters and other users not only when broadcasters are streaming, but also afterwards
through sending private texts and photos, and commenting on photos posted on the personal pages of specific broadcasters. This
allows users to interact with broadcasters and their communities any time they wish.

 

 

Strong Data Analytics Capabilities

 

The ability to understand market traffic
and pair users with suitable broadcasters and activities is key to driving user stickiness and monetization in the mobile live
streaming industry. We are able to use analytics-driven operational capabilities to understand individual user behavior and larger
industry trends. This allows us to better guide individual users to appropriate broadcasters, adjust the platform interface to
guide user traffic throughout the broadcasters while maintaining user experience, and analyze traffic on other sites such as network
alliances to select the best methods and targets for traffic acquisition. Our data insights and strong technological capabilities
enable us to innovate and optimize products on an ongoing basis and allow us to precisely operate Our platforms based on large
quantities of statistics collected and analyzed.

 

Experienced Management Team and Professional
Staff with Strong Operational Capabilities

 

Our senior management team has extensive
experience working with the mobile Internet, in related computer-technology industries, big data analysis, and cutting-edge technologies.
Members of our senior management team have experience of over 20 years in various segments of the technology, business operation,
and Internet industries. Under the leadership of its senior management members, we have successfully identified trends in mobile
streaming and timely seized opportunities for growth and innovation.

 

Our management team has extensive experience
and skill in research and development, quality control, and Internet infrastructure and operations. We believe that as mobile streaming
matures, strong operational and execution capabilities will become increasingly important to remaining competitive and our strong
team with years of relevant experience will provide us with a competitive advantage.

 

Our Strategies

 

Our business objective is to further
strengthen our position in the mobile show live streaming industry and to leverage our existing position to expand its business
into other related industries in China and oversea markets. Looking forward, we will seek to make use of “live+”,
explore entertainment online-merge-offline (OMO) models, integrate resources across the industry value chain, and build an ecosystem
of mobile live streaming, all to meet the diverse needs of users. We intend to implement the following strategies:

 

Provide More Engaging and Professional
Content

 

We will keep introducing more engaging
content to retain users and further boost users’ willingness to purchase virtual goods. Although most broadcasters working
in the live streaming industry provide various entertainments for users, the content provided is generally not as professional
as traditional performers. Therefore, there is still an opportunity for us to cooperate with more traditional artists and to train
our broadcasters to produce a more professional product.

 

Further Expand Our Mobile Live Streaming
Business in China and Overseas

 

We intend to update our mobile applications
to allow for easier content creation and sharing by our users. We believe that the convenience offered will continue to improve
user stickiness and develop into a destination for social interactions. Meanwhile, our multiple platforms can serve a broad range
of potential end markets. We plan to integrate our registered user accounts across multiple mobile applications into a unified
account system. We believe this will lead to a virtuous cycle: the resulting higher user engagement level would provide us with
more opportunities to cross-promote its products and gather incremental user data for further product optimization and development.

 

We have plans to expand our business globally.
We have obtained considerable experience in mobile live streaming industry and plans to promote its mobile live streaming platform
in Southeast Asia, Middle East and South America. On August 10, 2020, we signed an Equity Acquisition Framework Agreement (the
“BeeLive Acquisition Agreement”) with Sciscape International Limited, Tianjin Guangju Dingfei Technology Co., Ltd.,
Cosmic Soar Limited and Tianjin Guangju Dingsheng Technology Co., Ltd.. Pursuant to the BeeLive Acquisition Agreement, we, through
Scienjoy inc., acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Sciscape International Limited which holds the platform BeeLive International
and, through Zhihui Qiyuan (the VIE entity), acquired 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the equity interest in Tianjin Guangju Dingfei Technology Co., Ltd.
which holds BeeLive Chinese (MiFeng). Pursuant to the Agreement, the Company is required to pay (i) a cash consideration of RMB50.0
million and (ii) RMB250.0 million in ordinary shares (approximately 5.4 million ordinary shares) to be issued by the Company. 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
of share consideration payments are subject to certain performance conditions and requirements over the following three years.
Please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” in this prospectus for
a description of earn-out provisions. On August 21, 2020, all target shares were transferred to the parties designated in BeeLive
Acquisition Agreement. On September 10, 2020, we paid a cash consideration of RMB50.0 million to Tianjin Guangju Dingsheng Technology
Co., Ltd. and issued 3,786,719 Ordinary Shares to Cosmic Soar Limited. Tianjin Guangju Dingfei Technology Co., Ltd. subsequently
changed its name to Sixiang Mifeng (Tianjin) Technology Co. and Sciscape International Limited changed its name to Scienjoy BeeLive
Limited.  BeeLive is a global live streaming platform that initially launched in China in November 2016. During the second
half of 2019, BeeLive began expanding into international markets. To date, BeeLive International offers Arabic language live streaming
product in the Middle East and Thai language live streaming product in Southeast Asia.

 

 

Diversify the Live Streaming Business

 

After years of development in the field
of live video broadcasting, we have rich experience in technology, research and development, product promotion, and other aspects
of live streaming platforms operations. Since its formation, we have focused on operating show live streaming platforms. Going
forward, in addition to continuing to establish its position in this segment, we plan to leverage its relevant expertise to expand
its business into undeveloped areas based on its current user base, broadcasters, and partners.

 

First, we would like to develop our advertising
business model by providing the market with comprehensive advertising proposals, combining traditional banners and video commercials
with operative events and virtual items. We plan to acquire new media advertising companies or teams to promote our advertising
business which focuses on brands suitable for our user profiles.

 

Secondly, we would like to provide value-added
services for our broadcasters and users. Since the inception of our business, we have partnered with approximately 200,000 broadcasters.
Many of these broadcasters desire to improve their physical looks. We find it a good business opportunity to provide a fee-based
platform which will refer broadcasters to appropriate appearance enhancement hospitals. In addition, since we have a large number
of users who live in lower tier cities and have demands in various professional area, such as investment, high-end tourism, children’s
international education and healthcare. We can build a sustainable referral business for our users as well.

 

Thirdly, we would like to build up our
ecommerce business, which will be combined with our existing live streaming business. In this new business model, our broadcasters
may introduce to their viewers the products sold on our platforms. We possess comprehensive live streaming technologies, including
artificial intelligence and big data, and believe we have technical capacity and expertise to combine ecommerce business with our
live streaming business. To achieve this we have plans to strategically partner with suitable ecommerce platforms and jointly build
up our ecommerce business based on our current technologies, broadcasters’ network and users base.

 

Recently, on November 1, 2020, we entered
into a cooperative agreement with China Mobile, China’s largest mobile operator, to become a video content partner providing
high-quality video for more than 100 million Video Ring Back Tone (“VRBT”) users in China Mobile’s network.
We will act as a partner of China Mobile to produce short videos specified for individuals, enterprises and advertisers, and provide
high quality video content with both entertainment and commercial features for VRBT users nationwide. Video Ring Back Tone (VRBT)
service is an innovative entertainment service that will allow the caller to enjoy watching videos on the screen of his/her mobile
phone instead of a typical tone, set by the receiving party on every call.

 

Explore Technology Services Business

 

Our income has historically come from sales
of virtual currency to users. Almost 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of our total revenue has derived from the sale of virtual items and virtual currency
with respect to its live streaming business. Going forward, we plan to leverage our expertise and user base to expand its revenue
sources. In particular, we have plans to enter into cooperative arrangements with smaller live-streaming team, through which we
will provide such platforms with technology, operation and maintenance and promotional support services in return of revenue sharing.

 

 

Continue to Invest in and Develop Technologies
Such as Virtual Reality (VR)/Augmented Reality (AR) and Artificial Intelligence (AI)

 

We intend to continue to invest in our
data analytics capabilities and cutting-edge technologies. We also plan to further develop our technology stacks, including, but
not limited to, machine learning, physics engine, AR/VR, and AI technologies to better understand and anticipate user behavioral
trends, which in turn can be applied to the development of our applications.

 

Tap into the Next Phase of Explosive
Industry Potential through M&A

 

Mergers& Acquisitions will be one of
crucial strategies to expand our business swiftly, which support rapid execution of each element of our business growth. The targeted
sectors include related high-tech companies, data analysis companies, live streaming companies (especially oversea targets), new
media advertising companies, and beauty industry related companies. We have recently consummated the BeeLive Acquisition.

 

Our Platforms

 

We operate our live streaming communities
through multiple platforms, each with our own mobile applications. After the recent successful acquisition of Beelive, we currently
operate primarily five platforms: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming
Chinese (MiFeng) and BeeLive International. These platforms together make us the leading provider of mobile show live streaming.

 

Showself Live Streaming

 

Showself Live Streaming is our first live
streaming platform and remains the most popular of our platforms in terms of registered users and revenue. The platform was first
launched in April 2014. Showself Live Streaming is widely accessible to most mobile internet users in China because our live streaming-enabled
features only require minimal bandwidth. The following is the typical screenshot for the mobile application of Showself Live Streaming.

 

 

 

Lehai Live Streaming

 

Lehai Live Streaming was launched in July
2015 and adheres to the concept of “having fun together.” The following is the typical screenshot for the mobile application
of Lehai Live Streaming (the iOS version may vary).

 

 

 

Haixiu Live Streaming

 

Haixiu Live Streaming was launched in April
2016 and is our third platform. The following is the typical screenshot for the mobile application of Haixiu Live Streaming (the
iOS version may vary).

 

 

 

BeeLive Chinese (MiFeng)

 

BeeLive Chinese (MiFeng) was launched in
mainland China in November 2016. The following is the typical screenshot for the mobile application of BeeLive Chinese (MiFeng)
(iOS version may vary).

 

 

 

BeeLive International

 

BeeLive International was launched in second
half of 2019. It provides Arabic language service covering the Middle East and Thai language service covering Southeast Asia, respectively.
The following are two typical screenshots for the mobile application of BeeLive International in Arabic and Thai, respectively
(iOS version may vary).

 

 

 

 

 

 

Key Differences among the Platforms

 

All five platforms are categorized as “show
live streaming” in which professional broadcasters provide live streaming entertainment for users primarily in the form of
performances (singing, dancing, talk shows, etc.). Broadcasters on all five platforms have been trained by broadcaster agents to
provide content more professional than that of average amateur broadcasters. Due to different broadcasters, user and geographical
bases, the five platforms differ in their operation strategies, including the followings:

 

Showself is our largest platform. Because of the large
number of broadcasters and users base, Showself has capacity to organize different talent shows and events, such as singing, poem
writing and traditional Chinese opera.
As compared to Showself, Lehai and Haixiu have less users
who are likely to spend money on live streaming shows. As such, in addition to live streaming shows, Lehai and Haixiu offers more
free games or games that do not require much spending.
BeeLive Chinese (MiFeng), compare to other Chinese platforms,
focus more on the need of social communications of our users, therefore people tend to use them more often as a tool of communication
with friends and peers.
On
BeeLive International, more users choose to become broadcasters where they can perform
talent show themselves in front of other users and in turn receive revenue sharing fee
from them.

 

Lehai works more closely with some talent
agencies than the others. Showself and Haixiu maintain good relationship with all talent agencies. Showself’s and Haixiu’s
strategy has been proved to be more effective and Lehai plans to adopt the same strategy.

 

Layout and functions of the mobile
application of our Platforms

 

The layout and functions of the mobile
applications of our platforms are substantially the same. The above screenshots and descriptions illustrate the layout and some
of the basic functions of the Showself Live Streaming application:

 

Square.
This page serves as a menu for currently streaming broadcasters. Users can search this page for broadcasters they want
to watch. For users who do not already know any broadcasters or have no existing preference as to which broadcasters they want
to watch, several groupings of broadcasters who are conducting ongoing live streaming are presented in the square under different
headings to help viewers find a broadcaster they will enjoy. These groupings are organized under different labels, such as recommended
broadcasters (based on comprehensive analysis and mining of user-specific data such as user’s location, login time, retention,
daily activity, and consumer behavior), broadcasters located in the same city as the users, broadcasters currently followed by
the user, broadcasters recently viewed by the user, and broadcaster “PK” (broadcasters currently competing against
each other in terms of value of gifts received within ten minutes), and other labels.

 

Broadcasters’ names, number of current online
viewers, and grade based on the value of gifts received by such broadcaster along with a snapshot of the current stream are provided
on the pages for viewers’ use in selecting a broadcaster. These pages are updated with a new batch of broadcasters with every
refresh by users, presenting them with a wider range of broadcasters to choose from. For new users, this interface provides them
with an easy way to start exploring the platform. For existing users, broadcasters with closest relationship in terms of chat frequency
and value of gifts sent are always presented in the first page of the square if the broadcaster is online and this makes it easier
for users to closely watch live streaming of broadcasters they have followed. In all cases, clicking on a broadcaster’s picture
will take users to a real time video room from which they can view and interact with the broadcaster.

 

Ranking
Lists.
This page presents lists of top broadcasters by various criteria, including highest value of gifts received by
the broadcasters (on a daily, weekly, monthly and all-time basis) and greatest number of virtual flowers or the specially designated
weekly “star gifts.” Received by broadcasters. These ranking lists provide further information to viewers about broadcasters’
popularity to help them identify top broadcasters and can also motivate users to support their favorite broadcasters on the list.
This also promotes positive competition between broadcasters. The page also contains lists of viewers (by account name) that have
spent the highest amount of virtual currency in the last day, week, month and all-time.

 

 

Guardian
Teams.
Guardian teams are small groups of users organized by users with sufficient high user grades and which other users
can join. This function allows small groups of like-minded users to interact online, form friendships, and support their favorite
broadcasters as a group. This encourages user engagement and active participation. This also helps to improve user experience
and enhance users’ paying willingness. The guardian team page shows rankings of guardian teams by various criteria, including
highest value of virtual currencies spent by guardian teams (on a daily and all-time basis) and the value of gifts received by
the broadcasters from top guardian teams (on a weekly and bi-weekly basis).
Discovery.
This page allows users to follow photos posted by broadcasters and activities organized by the platform. It is also the
page through which users can purchase virtual items using “Xiu Bi,” the virtual currency used on the platform.
Me.
Users can check and manage their personal accounts through this page. Personal account information displayed mainly includes
the broadcasters by such users, current virtual currency balance, virtual items purchased, guardian teams to which the users belong
and intimate broadcasters list.

 

Content on Our Platforms

 

We have a number of live broadcasting platforms.
They provide entertainment content for users and have actively explored new entertainment, new agency, and other fields in the
upstream and downstream industry, combining entertainment, agents, and mobile Internet to create online entertainment online-merge-offline
(“OMO”). For the agents, the platforms provide support for product activities, brand building, management empowerment,
data support, and technical tools, and help it clarify its development path and strategy from the perspective of industry analysis.
For the broadcasters, the platforms have provided training through agents for items such as stage decoration, lighting, music,
attire, makeup, costumes, talent skills (such as singing, dancing, talk show and musical instruments), communication skills, and
service awareness. The platforms, agents, and broadcasters rely on each other and bridge the path for each other to build a healthy
and stable entertainment ecology.

 

For us, the establishment of a content
security system is not only a means of defense but also a strong strategic offense. Through AI technology, image recognition, big
data analysis, combination of artificial audit, the platforms have a vertical monitoring system to monitor all live streaming content
24/7 to ensure that the content is legal and in compliance, and is providing the best service to every user at the same time, creating
a refreshing and delightful user experience to increase its revenue.

 

Quality and engaging content is the core
of our development. One way for us to offer engaging content is to organize a variety of original shows on our platforms, such
as “Singer Alliance,” “Run Ms. Cang Run” and “King of Brain PK.” Secondly, our platforms make
efforts to support talented broadcasters by organizing special shows for these broadcasters such as “Crown of Weekly Star”
and “The Showself Voice.” Thirdly, our platforms continue to expand their shows to new areas such as traditional opera
and intangible cultural heritages. These shows include the live streaming series of “Revisiting the Intangible Cultural Heritage,”
“Beauty of Quintessential Chinese Culture,” and “I Write a Love Poem for My Hometown.”

 

Our Users

 

We have an active and well-structured
user base. In 2014, we transformed ourselves from a social network platform to a show live streaming platform. Since then, we
have experienced increased broadcasting competition and refined our operations. We have also accumulated a diversified user group
through constant innovation and promotion. Throughout December 31, 2019 up to September 30, 2020, the number of registered users
on our platforms have reached 243.5 million.

 

We do not limit ourselves to acquiring
users solely through self-growth fission or third-party marketing. Instead, we adopt the model of win-win game to achieve stable
and mutually beneficial expansion of our user base. In 2019, the number of paying users for our platforms was 697,475 and their
average revenue per paid user (ARPPU) for fiscal 2019 was RMB1,306. Our paying users was approximately 322,841 for the third quarter
of fiscal 2020, increased 28{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} from the same period of the last year.

 

 

To mitigate any concentration risks from
a single user group structure, we have been working on to develop a diversified base of user groups, which include young active
users with short interest span as well as users in their thirties with high spending power. In addition, a considerable number
of our users are located in economically developed areas with more leisure life styles. These users have relatively high disposable
income and more leisure time. They tend to appreciate online entertainment more and are willing to spend money on online entertainment.

 

Our Broadcasters

 

The supply of talented and popular
broadcasters is essential to us, particularly given our focus on developing professionally generated content. Broadcasters serve
as the primary interface with users and, therefore, the success of our platforms depend largely on the talent and popularity of
the broadcasters. Our active broadcasters significantly increase from 13,196 for the quarter ended September 30, 2019 to 97,038
for the quarter ended September 30, 2020.

 

Engagement of Broadcasters

 

We primarily cooperate with online and
offline broadcaster agents, or the talent agents, to recruit and manage broadcasters on an ongoing basis. Each of the platforms
also has an online application process for registered users to become broadcasters and we will select certain applicants and refer
them to the appropriate talent agents. As such, we enter into all contracts with the talent agents, as opposed to with each broadcaster
on an individual basis.

 

Before broadcasting on the platform, all
broadcasters must agree to the terms and conditions of our platforms, which includes the rules of the platforms that the broadcasters
must abide by while live streaming and also the legal consequences for violation of the rules. If any such violations occur, we
will hold the broadcasters directly liable.

 

For selected broadcasters we identify as
popular or having great potential or offering high-quality content, in addition to the above two agreements, we will separately
enter into an exclusivity agreement with each such broadcasters, which requires that the broadcasters can only live stream on our
platforms exclusively for a certain period of time. In return, we provide more resources and support to such broadcasters by recommending
their contents to potential interested users, increasing user traffic, and improving their popularity. We will be entitled to sizeable
liquidated damages if the broadcasters breach the exclusivity agreement.

 

Cooperation with the Talent Agencies

 

Talent agencies recruit broadcasters and
provide live streaming content to us. We share revenue with the talent agencies, who pay salaries to or share fees with their broadcasters.
Talent agencies are also responsible for educating and training the broadcasters on live streaming skills and techniques, such
as dress codes, room settings and communication skills. As a result, talent agencies help broadcasters to better present their
live streaming content. The use of talent agencies also frees us from direct dealings with the broadcasters.

 

Monitoring and Management of Broadcasters

 

We set out rules with which broadcasters
must comply with while using our platforms, including compliance with laws and regulations of the PRC, no performances involving
guns, knives or threats to lives, no infringement of legal rights of others and no pornography.

 

We have the right to monitor and manage
the performances of any broadcasters on our platforms. Appropriate measures are taken with respect to any broadcasters that fail
to comply with the above mentioned rules. Such measures range from warnings and fines to temporary or permanent suspension from
our platforms, and can be taken unilaterally by us as we deem fit. Since broadcasters are represented by agents, notice of any
illegal behavior or violations of platform rules will also be made to the relevant agent. The relevant agent is required to correct
any such violation upon receipt of the notification. If the violation is not corrected during the applicable grace period, we have
the right to terminate our cooperation with the relevant agent.

 

 

Marketing

 

Our marketing and promotional strategy
includes, among others, the use of third-party marketing channels to both promote our platforms and acquire users. These marketing
channels primarily include advertising agencies which provide us with market visibility and numerous opportunities to attract new
users. We typically enter into one-year framework agreements with such advertising agencies which require us to purchase a minimum
aggregate amount of advertising during the terms of the agreements. The advertisements are either display-based or performance-based,
and are priced primarily based on cost-per-download, cost-per-time, cost-per-activation or cost-per-click. We are generally able
to monitor the performance and effectiveness of the advertisements directly or through the advertising agencies.

 

We use mobile application platforms, such
as the Apple App Store and Android App Download Centers, to dispense and showcases our mobile platforms to a wide audience as well
as to advertise the positive customer feedback which our platforms have received. Users can download the apps from these application
platforms for free. Users are also able to review and rate our applications through these platforms.

 

Quality Control and Content Monitoring

 

We have programmers with extensive application
testing experience who systematically test our platforms to ensure that they conform to our standards. We are also required under
PRC laws and regulations, such as the Administrative Provisions on Mobile Internet Applications Information Services, to monitor
content on our platforms.

 

We have developed a comprehensive technology
to screen content on our applications against a filter list, item by item. The filter list compiles content and behaviors that
we have determined, taking into account relevant PRC laws and regulations, to be likely to be indicative of inappropriate, politically-sensitive,
provocative or inflammatory language, sexually-suggestive language and body movements, full or partial nudity or illegal content
or activities, abusive language or actions towards other users, spam, scams, or acts and threats of violence. Content identified
as falling into the filter list would be blocked or removed from our platforms. In addition, we regularly review any complaints
alleging the inappropriate nature of content on our platforms and remove such content promptly.

 

Broadcasters are also responsible for monitoring
the content in their rooms and ensuring that their rooms comply with applicable laws and regulations and terms of our service.
Broadcasters can block users who transmit inappropriate information from posting comments in their rooms or exclude users from
their rooms. Broadcasters also have the ability to promote certain users to act as moderators to help manage rooms in this way.
We also monitor and take measures to deal with any infringements of our content policies by broadcasters.

 

Payment

 

Users are able to purchase virtual items
we sell on our platforms by using virtual currency. Generally, users purchase virtual currency from third-party distributors with
which we have entered agreements. Users are also able to purchase virtual currency directly from our platforms using various payment
channels such as Alipay and WeChat Pay. Once users have purchased such virtual currency, they are able to purchase virtual items.
Once purchased, such virtual currency or virtual items cannot be returned in exchange for cash and we do not provide users with
a right of refund of any kind.

 

Our Technology

 

We possess technological infrastructure
and capacity that supports increasing operational efficiency, enabling innovations, and outperforming our competitors.

 

AI
And Big Data Analysis
: by using data and AI technology, we analyze user behavioral data. Through the results of such data
analysis, we can better understand users’ needs and know how to better match content with users. These operations help us
improve our user experience as well as paying ratio and ARPPU.
Live
Streaming Technology
: We have a complete peer to peer (the host starts to stream video for the user to play) live mobile
video solution with independent intellectual property rights, and it is being constantly optimized. On the user end, we have made
special optimization for video streaming playback processing in combination with CDN service providers, which supports fast video
download and opening, reasonable buffering to reduce the Caton rate, so as to ensure a smooth experience for users.

 

 

Video
Monitoring Technology
: this specially developed monitoring program can carry out real-time video monitoring for all video
streams in combination with AI technology, and create a three-dimensional content monitoring system in combination with 24-hour
continuous manual audit to discover potential violations and block applicable content.
Server
and Infrastructure
: by using the situation awareness security service provided by Alibaba cloud and combined with the
self-built monitoring platform, we can alert the system of abnormal phenomena and prevent virus and hacker intrusion.

 

Intellectual Property

 

We regard our software copyrights, domain
names, trademarks and other intellectual property as critical to our success. As of September 6, 2020, we have registered 176 copyrights
in China, with additional 9 copyrights in the process of application, 17 domain names, 8 patents for live streaming technology,
and 86 trademarks including the Showself, Haixiu, and Lehai logos, with additional 4 trademarks in the process of application.

 

We rely on trademark and copyright law,
trade secret protection, non-competition and confidentiality and/or license agreements with our employees, customers, partners
and others to protect our intellectual property rights. In general, our employees must enter into a standard intellectual property
and confidential agreement which acknowledges that (1) all inventions, trade secrets, developments and other processes generated
by employees on our behalf are our property, and such employees are assigning to us any ownership rights they may claim in those
work; and (2) such employees undertake to keep confidential all information related to our methods, business and trade secrets
during and for a reasonable time after their employment with us.

 

Competition

 

We focus on show live stream model and
in this area we face significant competition from providers of similar online streaming services. Our competitors in the mobile
live streaming market in China include other providers of show live streaming products, such as KuGou, MEME, and Shiliu, as well
as other pan-entertainment streaming platforms such as Inke, Huajiao, and gaming streaming DOYU and HUYA. We compete to promote
our products and gain users, to attract and hire management personnel with operational experience, and to secure diversified marketing
channels.

 

Employees

 

We had 197 employees as of December 31,
2019 and 249 employees as of December 31, 2020. As of December 31, 2019 and as of December 31, 2020, all of our employees were
located in China. The following table sets forth a breakdown of our employees by function as of December 31, 2019 and as of December
31, 2020.

 

    As of December 31, 2019     As of December 31, 2020  
    Number     {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     Number     {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}  
Functions:                        
General Operations     70       35.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     89       35.7 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Research and Development     58       29.4 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     70       28.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Sales and Marketing     18       9.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     18       7.2 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Legal and Internal Audit     2       1.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     1       0.4 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
General Administration     35       17.8 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     46       18.5 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Product     14       7.1 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     25       10.0 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}
Total number of employees     197       100 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}     249       100 {14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}

 

Legal Proceedings

 

We are currently not a party to any material
legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings
arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome,
is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. See
Risk Factors—Risks Related to our Business and Industry—we may be held liable for information or content
displayed on, retrieved from or linked to our platform, or distributed to our users, and PRC authorities may impose legal sanctions
on us, including, in serious cases, suspending or revoking the licenses needed to operate our platform
,” and “Risk
Factors—Risks Related to our Business and Industry—we may be subject to intellectual property infringement claims or
other allegations, which could result in our payment of substantial damages, penalties and fines, removal of relevant content from
our websites and apps or seeking license arrangements which may not be available on commercially reasonable terms
.”

 

Properties

 

Our principal executive offices are located
at 3rd – 6th Floor, JIA No. 34, Shenggu Nanli, Chaoyang District, Beijing, P.R. China, where we lease
approximately 2000 square meters of office space as of the date of this prospectus. We and our subsidiaries also lease an additional
approximately 1000 square meters of office space in Beijing and Xinjiang Uyghur Autonomous Region, P.R. China.

 

 

REGULATIONS IN PRC

 

This section summarizes the principal current
PRC laws and regulations relevant to our business and operations.

 

As the live streaming industry is still
at an early stage of development in China, new laws and regulations may be promulgated from time to time to introduce new regulatory
requirements, including but not limited to, requirements of obtaining new licenses and permits in addition to those we currently
have. There are substantial uncertainties with respect to the interpretation and implementation of current and future PRC laws
and regulations, including those applicable to live streaming industries and our business. This section sets forth a summary of
the most significant laws and regulations that are applicable to our current business activities in China and that affect the dividends
payment to our shareholders.

 

Regulations Relating to Telecommunications
Services

 

In September 2000, the State Council issued
the Regulations on Telecommunications of China, or the Telecommunications Regulations, as amended on July 29, 2014 and February
6, 2016, to regulate telecommunications activities in China. The Telecommunications Regulations set out basic guidelines on different
types of telecommunications business activities in China. According to the Catalog of Telecommunications Business (2015 Amendment)
implemented on March 1, 2016 (as amended on June 6, 2019), Internet information services constitute a type of value-added telecommunications
service. The Telecommunications Regulations require operators of value-added telecommunications services to obtain value-added
telecommunications business operation licenses from MIIT, or its provincial branches prior to the commencement of such services.

 

The Regulations for the Administration
of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, which took effect on January 1, 2002 and were amended
on September 10, 2008 and February 6, 2016, regulate foreign direct investment in telecommunications companies in China. The FITE
Regulations stipulate that foreign investors are generally prohibited from holding ultimately more than 50{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of equity interest
in a foreign-invested enterprise that provides value-added telecommunications services, including, among others, provisions of
Internet content. In addition, foreign investors are required to have sufficient experience operating value-added telecommunications
business when applying for the MIIT’s value-added telecommunications business operation license.

 

On July 13, 2006, the Ministry of Information
Industry (which is the predecessor of MIIT) issued the Circular on Strengthening the Administration of Foreign Investment in Value-added
Telecommunications Services, or the MIIT Circular 2006, which provides that (a)foreign investors can only operate a telecommunications
business in China through telecommunications enterprises with a valid telecommunications business operation license; (b) domestic
license holders may not rent, transfer or sell telecommunications business operation licenses to foreign investors in any form
or provide any foreign investors with resources, venues or facilities to promote unlicensed operations of telecommunications businesses
in China; (c) value-added telecommunications service providers or their shareholders must directly own the domain names and registered
trademarks that are used in their daily operations; (d) each value-added telecommunications service provider must have necessary
facilities for its approved business operations and maintain such facilities in the geographic regions specified in its license;
and I all value-added telecommunications service providers should improve their network and information security, establish a relevant
information safety system and set up emergency plans to ensure network and information safety.

 

According to the Special Administrative
Measures (Negative List) for the Access of Foreign Investment (2019 version) (the “Negative List”) promulgated jointly
by the MOFCOM and the National Development and Reform Commission (the “NDRC”) on June 23, 2020, the Foreign investors
are prohibited from making any investments in the industries which are listed as “prohibited” in the Negative List;
and, after satisfying certain additional requirements and conditions as set forth in the Negative List, are allowed to make investments
in the industries which are listed as “restricted” in the Negative List. For any foreign investor that fails to comply
with the Negative List, the competent authorities are entitled to ban its investment activities, require such investor to take
measures to correct its non-compliance and impose other penalties. The internet content service, internet audio-visual program
services and online culture activities are subject to foreign investment restrictions/prohibitions set forth in the Negative List.

 

 

Regulations Relating to Internet Information
Services

 

The Administrative Measures on Internet
Information Services (the “ICP Measures”) issued by the State Council on September 25, 2000 and amended on January
8, 2011, regulate provisions of Internet information services in the PRC. According to the ICP Measures, Internet information services
refers to provisions of information through the Internet to online subscribers, including commercial and non-commercial services.
Pursuant to the ICP Measures, commercial Internet information service providers shall obtain ICP Licenses from relevant PRC local
authorities before engaging in commercial Internet information services in China. The Measures for the Administration of Telecommunications
Business Licensing issued by Ministry of Information Industry on June 21, 2017 and effective on September 1, 2017 further provides
the requirements and formalities regarding application for value-added telecommunications business operation licenses, which is
also regarded as the guideline for application for ICP License in local competent authorities. In addition, according to relevant
PRC laws, administrative regulations or rules, providers of Internet information services in respect of news, publishing, education,
medical treatment, health, pharmaceuticals or medical apparatuses shall obtain consent of the relevant PRC competent authority
before applying for an operating permit or carrying out record-filing procedures.

 

Additionally, the ICP Measures and other
relevant measures also prohibit publication of any content that propagates, among others, obscenity, pornography, gambling and
violence, incite the commission of crimes or infringe upon the lawful rights and interests of third parties. If an Internet information
services provider detects that information transmitted on its system falls under the specified prohibition, such provider must
immediately terminate the transmission and delete the information and report it to the government authorities. Any provider’s
violation of these prohibitions, in serious cases, will lead to revocation of its ICP License and shutdown of its Internet systems.

 

According to the Online Live Streaming
Regulations published by on November 06, 2016 and effective on December 01, 2016, online live streaming service providers and online
live streaming publishers that provide internet news information services without licenses, or exceeding the scope of their licenses,
are subject to punishment by the CAC and the internet information offices at the level of provinces, autonomous regions, or municipalities
directly under the Central Government in accordance with the Regulations for the Administration of Internet News Information Services
which may include an order to cease such services. Other violations of the Online Live Streaming Regulations are subject to punishment
by the national and local internet information offices in accordance with PRC laws; if such violations constitute crime, criminal
liability shall be investigated in accordance with relevant PRC law.

 

Regulations Relating to Mobile Internet
Applications Information Services

 

In addition to the Telecommunications Regulations
and other regulations above, mobile applications (the “APPs”) and the Internet application store (the “APP Store”)
are specially regulated by the Regulations for the Administration of Mobile Internet Applications Information Services (the “APP
Provisions”), which were promulgated by the Cyberspace Administration of China (“CAC”) on June 28, 2016 and became
effective on August 1, 2016.

 

Pursuant to the APP Provisions, the APP
information service providers shall satisfy relevant qualifications required by laws and regulations, strictly carry out the information
security management responsibilities and fulfill their obligations in various aspects relating to the real-name system, protection
of users’ information and the examination and management of information content. The APP Store service providers shall file
with the local cyberspace administration authorities within thirty (30) days after its APP Store services have launched, and such
APP Store service providers are responsible for overseeing APP providers operated on their stores.

 

 

Regulations Relating to Online Transmission
of Audio-Visual Programs and Online Living Streaming Business

 

On April 13, 2005, the State Council promulgated
the Certain Decisions on the Entry of the Non-public-owned Capital into the Cultural Industry, according to which private capital
shall not use information network to engage in audio-visual programs service. On July 6, 2005, five PRC governmental authorities,
including the Ministry of Culture (“MOC”), the State Administration of Radio, Film and Television (“SARFT”),
the General Administration of Press and Publication (“GAPP”), the National Development and Reform Commission (“NDRC”)
and the Ministry of Commerce (“MOFCOM”), jointly adopted the Several Opinions on Canvassing Foreign Investment into
the Cultural Sector. On December 20, 2007, the SARFT and the MIIT jointly promulgated the Provisions on the Administration of Internet
Audio-Visual Program Service, which took effect on January 31, 2008 and were subsequently amended on August 28, 2015, according
to which, the entities engaged in business of online audio-visual programs shall obtain the “License for Online Transmission
of Audio/Visual Program”. Under these provisions, foreign-invested companies are actually prohibited from engaging in the
business of distributing audio-visual programs and service through Internet.

 

Providers of audio-visual program services
through the Internet (including through mobile networks), in general, must be either state-owned or state-controlled entities,
and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for Internet audio-visual
program service determined by SARFT; and such providers are required to obtain the License for Online Transmission of Audio/Video
Program issued by National Radio and Television Administration (“NRTA”), or complete certain registration procedures
with NRTA.

 

On April 28, 2008, SARFT issued a Notice
on Relevant Issues Concerning Application and Approval of License for the Online Transmission of Audio-Visual Programs, as amended
on August 28, 2015, which further sets out detailed provisions concerning the application and approval process regarding the License
for Online Transmission of Audio/Video Program. The notice also stipulates that the qualified entities for application of such
license shall include the companies absolutely controlled by multiple state-owned shareholders and enterprises relatively controlled
by state-owned capital (there shall be no affiliation between non-state-owned shareholders), and exclude foreign-invested enterprises.
Further, on March 30, 2009, SARFT promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-Visual
Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted through the Internet, including
through mobile networks, where applicable, and prohibits certain types of Internet audio-visual programs containing violence, pornography,
gambling, terrorism, superstition or other similarly prohibited elements.

 

On March 17, 2010, the SARFT issued the
Internet Audio-Visual Program Services Categories (Provisional), or the Provisional Categories, as adjusted on April 7, 2017, which
classified Internet audio/visual program services into four categories. In addition, the “Notice concerning Strengthening
the Administration of the Streaming Service of Online Audio/Visual Programs” promulgated by the State Administration of Press,
Publication, Radio, Film and Television (or the SAPPRFT, which is the predecessor of NRTA) on September 2, 2016 emphasizes that,
unless a specific license is granted under the Provisional Categories, the audio/visual programs service provider is forbidden
from engaging in live streaming on major political, military, economic, social, cultural and sports events.

 

On July 6, 2012, the SARFT and the CAC
issued the Notice Regarding Further Enhancement of Management of Online Audio and Video Programs such as Online Drama Series and
Microfilms, pursuant to which providers of Internet audio-visual program services which are engaged in the production of online
audio-visual programs such as online drama series and microfilms and broadcast such programs on their own websites shall lawfully
obtain the Radio and Television Program Production and Operating Permit issued by local branches of the NRTA and corresponding
License for Online Transmission of Audio/Video Program at the same time. Providers of Internet audio-visual program services shall
report the information on online audio-visual programs such as online drama series and microfilms which have been reviewed and
approved to the provincial branches of the NRTA in their domiciles for filing.

 

On April 25, 2016, the SAPPRFT promulgated
the Provisions on the Administration of Private Network and Targeted Communication Audio-visual Program Services (effective as
of June 1, 2016), which apply to the provision of radio, television programs and other audio-visual programs to a targeted audience
on television and all types of handheld electronic equipment. This provision covers the Internet and other information networks
as targeted transmission channels, including the provision of content, integrated broadcast control, transmission and distribution
and other activities conducted in such forms as Internet protocol television, private network mobile television and Internet television.
Anyone who provides private network and targeted transmission audio-visual program services must obtain a License for Online Transmission
of Audio/Video Program issued by the SARFT and operate its business pursuant to the scope as provided in such license. Foreign-invested
enterprises are not allowed to engage in the above referenced businesses.

 

 

On July 1, 2016, the MOC promulgated the
Notice on Strengthening the Administration of Network Performance, which regulates the behavior of entities conducting businesses
related to network performance and performers. Entities operating network performances shall be responsible for the services and
content posted on their website by performers. They must refine their content management mechanism and shut down the channel and
stop the dissemination of any network performance as soon as they realize that such network performance is in violation of relevant
laws and regulations. Network performers shall be responsible for their performances and shall not perform any program containing
violence, pornography, or other similarly prohibited elements.

 

In addition, the SAPPRFT issued the Notice
Concerning Strengthening the Administration the Streaming Service of Online Audio-Visual Programs in September 2016, pursuant to
which an Internet live-streaming service provider shall (i) equip personnel to review the content of the live-stream; (ii) establish
the technical methods and work mechanisms in order to replace the unlawful content by using the backup program; and (iii) record
the live-streaming program and keep the records for at least sixty (60) days to fulfill the inspections requirements from the competent
administrative authorities. The CAC promulgated the Regulations for the Administration of Online Live-Streaming Services, or Internet
Live-Streaming Services Provisions, on November 4, 2016, effect as of December 1, 2016, according to which, an Internet live-streaming
service provider shall (a) establish a live-streaming content review platform; (b) conduct authentication registration of Internet
live-streaming issuers based on their identity certificates, business licenses and organization code certificates; and (c) enter
into a service agreement with Internet live-streaming services user to specify both parties’ rights and obligations.

 

On March 16, 2018, the SAPPRFT issued the
Notice on Further Regulating the Communication Order of Internet Audio-Visual Programs, which requires that, among others, audio-visual
platforms shall: (i) not produce or transmit programs intended to parody or denigrate classic works, (ii) not re-edit, re-dub,
re-caption or otherwise ridicule classic works, radio and television programs, or original Internet audio-visual programs without
authorization, (iii) not transmit re-edited programs, which unfairly distort the original content, (iv) strictly monitor the adapted
content uploaded by platform users and not provide transmission channels for illicit content, (v) immediately take down unauthorized
content upon receipt of complaints from copyright owners, radio and television stations, or film and television production institutions,
(vi) strengthen the administration of movie trailers and prevent improper broadcasting of movie clips and trailers prior to authorized
release, and (vii) strengthen the administration of sponsorship and endorsement for Internet audio-visual programs. Pursuant to
this notice, the provincial branches of the NRTA shall have the authority to supervise radio and television stations and websites
that offer audio-visual programs within its jurisdiction and require them to further improve their content management systems and
implement relevant management requirements.

 

Regulations Relating to Online Cultural
Activities

 

The Ministry of Culture promulgated the
Provisional Measures on Administration of Internet Culture firstly in 2011, as most recently amended on December 15, 2017, and
the Notice on Issues Relating to Implementing the Newly Revised Provisional Measures on Administration of Internet Culture promulgated
by the Ministry of Culture in 2011, which apply to entities that engage in activities related to “online cultural products.”
“Online cultural products” are classified as cultural products developed, published and disseminated through the Internet
which mainly include: (i) online cultural products particularly developed for publishing through the Internet, such as, among other
things, online music and video files, network games and online animation features and cartoons (including flash animation); and
(ii) online cultural products converted from audio and visual products, games, performing arts, artworks and animation features
and cartoons, and published on the Internet. Pursuant to this legislation, entities are required to obtain the Internet Culture
Operation Licenses from the applicable provincial level counterpart of the Ministry of Culture and Tourism (“MCT”,
which is the predecessor of MOC) if they intend to commercially engage in any of the following types of activities:

 

production, duplication, import, release or broadcasting
of online cultural products;

 

 

publishing of online cultural products on the Internet
or transmission thereof to computers, fixed-line or mobile phones, radios, television sets or game consoles for the purpose of
browsing, reading, reviewing, using or downloading such products by online users; or
exhibitions or contests related to online cultural products.

 

On August 12, 2013, the MOC issued the
Administrative Measures for Content Self-Review by Internet Culture Business Entities, effective as of December 1, 2013, which
requires Internet culture business entities to review the content of products and services to be provided prior to providing such
content and services to the public. The content management system of an Internet culture business entity is required to specify
the responsibilities, standards and processes for content review as well as accountability measures, and is required be filed with
the provincial level counterpart of the MCT.

 

Regulations Relating to Virtual Currency

 

On January 25, 2007, the Ministry of Public
Security, the MOC, the Ministry of Information Industry and the GAPP jointly issued a circular regarding online gambling which
has implications on the issuance and use of virtual currency. It basically bans the conversion of virtual currency into real currency
or property and prohibits transfer of virtual currency among game players.

 

On February 15, 2007, fourteen PRC regulatory
authorities jointly issued a circular to further strengthen the oversight of Internet cafes and online games. In accordance with
the circular, the People’s Bank of China, or PBOC, has the authority to regulate virtual currency, including: (a) setting
limits on the aggregate amount of virtual currency that can be issued by online game operators and the amount of virtual currency
that can be purchased by an individual; (b) stipulating that virtual currency issued by online game operators can only be used
for purchasing virtual products and services within the online games and not for purchasing tangible or physical products; (c)
requiring that the price for redemption of virtual currency shall not exceed the respective original purchase price; and (d) banning
the trading of virtual currency.

 

On June 4, 2009, the MOC and the MOFCOM
jointly issued a notice to strengthen the administration of online game virtual currency. The Virtual Currency Notice requires
businesses that (a) issue online game virtual currency (in the form of prepaid cards and/or pre-payment or prepaid card points),
or (b) offer online game virtual currency transaction services to apply for approval from the MCT through its provincial branches
within three (3) months after the issuance of the notice. The Virtual Currency Notice businesses that issue virtual currency for
online games are prohibited from offering services that can trade virtual currency. Any company that fails to file the necessary
application will be subject to sanctions, including but not limited to, mandatory corrective actions and fines. Based on the Virtual
Currency Notice, the MOC further promogulated a filing guideline for the “online game virtual currency distribution enterprises”
and “online game virtual currency trading enterprises” on July 20, 2009 to regulate the entities involving such virtual
currency businesses.

 

Currently, the PRC government has not promulgated
any specific rules, laws or regulations to directly regulate virtual currency, except for the above-mentioned online game virtual
currency. To comply with the principle of above-mentioned regulations, in relation to online streaming business, our virtual currency
currently can only be used by viewers to exchange for virtual items/gifts to be used to show support for performers or gain access
to privileges and special features in the channels which are services in nature instead of “real currency or property.”
Once the virtual currency is exchanged by viewers for virtual items/gifts or the relevant privileged services, the conversion transaction
is completed and we will immediately cancel the virtual properties in our internal system. See “Risk Factors—Risks
Related to Doing Business in China—Restrictions on virtual currency may adversely affect Our revenues.”

 

Regulations Relating to Commercial Performances

 

The Administrative Regulations on Commercial
Performances was firstly promulgated by the State Council in 2005 and as most recently amended on February 6, 2016. According to
these regulations, to legally engage in commercial performances, a culture and arts performance group shall have full-time performers
and equipment in line with its performing business, and file an application with the culture administrative department of the people’s
government at the county level for approval; while a performance brokerage agency shall have three or more full-time performance
brokers and funds suitable for the relevant business, and file an application with the culture administrative department at the
provincial level. The culture administrative department shall make a decision within twenty (20) days from the receipt of the application
whether to approve the application, and upon approval, will issue a commercial performance license. Currently, there is no related
regulations or governmental interpretation to specify if above regulations apply to live streaming business.

 

 

Regulations Relating to Production of
Radio and Television Programs

 

On July 19, 2004, the SARFT issued the
Regulations on the Administration of Production and Operation of Radio and Television Programs, or the Radio and TV Programs Regulations,
which took effect on August 20, 2004 and was amended on August 28, 2015. The Radio and TV Programs Regulations require any entities
engaging in the production and operation of radio and television programs to obtain a license for such businesses from the NRTA
or its provincial branches. Entities with the Radio and Television Program Production and Operating Permit must conduct their business
operations strictly in compliance with the approved scope of production and operations and these entities (except radio and TV
stations) must not produce radio and TV programs regarding current political news or similar subjects.

 

Regulations Relating to Intellectual
Property Rights

 

Copyright

 

China has enacted various laws and regulations
relating to the protection of copyright. China is a signatory to some major international conventions on protection of copyright
and became a member of the Berne Convention for the Protection of Literary and Artistic Works in October 1992, the Universal Copyright
Convention in October 1992 and the Agreement on Trade-Related Aspects of Intellectual Property Rights upon its accession to the
World Trade Organization in December 2001.

 

The PRC Copyright Law, promulgated in 1990
and amended in 2001 and 2010, or the Copyright Law, and its related implementing regulations, promulgated in 2002 and amended in
2013, are the principal laws and regulations governing copyright related matters. The Copyright Law provides that Chinese citizens,
legal persons, or other organizations shall, whether published or not, enjoy copyright of their works, which include, among others,
works of literature, art, natural science, social science, engineering technology and computer software.

 

The State Council and the National Copyright
Administration have promulgated various rules and regulations relating to the protection of software in China. According to these
rules and regulations, software owners, licensees and transferees may register their rights in software with the Copyright Protection
Center of China and obtain software copyright registration certificates. Although such registration is not mandatory under PRC
law, software owners, licensees and transferees are encouraged to go through the registration process and registered software rights
may be entitled to better protection. For the number of software programs for which we had registered software copyrights as of
the date of this statement.

 

The amended Copyright law covers Internet
activities, products disseminated over the Internet and software products, among the subjects entitled to copyright protection.
Registration of copyright is voluntary, and it is administrated by the Copyright Protection Center of China. To further clarify
some key Internet copyright issues, on December 17, 2012, the PRC Supreme People’s Court promulgated the Regulation on Several
Issues Concerning Applicable Laws on Trial of Civil Disputes over the Infringement of Information Network Transmission Right, or
the 2013 Regulation. The 2013 Regulation took effect on January 1, 2013, and replaced the Interpretations on Some Issues Concerning
Applicable Laws for Trial of Disputes over Internet Copyright that was initially adopted in 2000 and subsequently amended in 2004
and 2006. Under the 2013 Regulation, where an Internet information service provider works in cooperation with others to jointly
provide works, performances, audio and video products of which the right holders have information network transmission right, such
behavior will constitute joint infringement of third parties’ information network transmission right, and the PRC court shall
order such Internet information service provider to assume joint liability for such infringement.

 

 

To address the problem of copyright infringement
related to content posted or transmitted on the Internet, the National Copyright Administration and Ministry of Information Industry
jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005. These measures,
which became effective on May 30, 2005, apply to acts of automatically providing services such as uploading, storing, linking or
searching works, audio or video products, or other content through the Internet based on the instructions of Internet users who
publish content on the Internet, or the Internet Content Providers, without editing, amending or selecting any stored or transmitted
content. When imposing administrative penalties upon the act which infringes upon any user’s right of communication through
information networks, the Measures for Imposing Copyright Administrative Penalties, promulgated in 2009, shall be applied.

 

Where a copyright holder finds that certain
Internet content infringes upon its copyright and sends a notice to the relevant Internet information service operator, the relevant
Internet information service operator is required to (i) immediately take measures to remove the relevant content and (ii) retain
all infringement notices for six months and to record the content, display time and IP addresses or the domain names related to
the infringement for 60 days. If the content is removed by an Internet information service operator according to the notice of
a copyright holder, the content provider may deliver a counter-notice to both the Internet information service operator and the
copyright holder, stating that the removed content does not infringe upon the copyright of other parties. After the delivery of
such counter-notice, the Internet information service operator may immediately reinstate the removed content and shall not bear
administrative legal liability for such reinstatement.

 

An Internet information service operator
may be subject to cease-and-desist orders and other administrative penalties such as confiscation of illegal income and fines,
if it is clearly aware of a copyright infringement through the Internet or, although not aware of such infringement, it fails to
take measures to remove relevant content upon receipt of the copyright owner’s notice of infringement and, as a result, damages
public interests. Where there is no evidence to indicate that an Internet information service operator is clearly aware of the
existence of copyright infringement, or the Internet information service operator has taken measures to remove relevant content
upon receipt of the copyright owner’s notice, the Internet information service provider shall not bear the relevant administrative
legal liabilities.

 

We have adopted measures to mitigate copyright
infringement risks, but we could still face copyright infringement claims with respect to copyrighted content being streamed live
or songs performed live on our platforms.

 

Patent

 

The National People’s Congress adopted
the PRC Patent Law in 1984 and amended it in 1992, 2000 and 2008, respectively. A patentable invention, utility model or design
must meet three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries,
rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances
obtained by means of nuclear transformation. The Patent Office under the State Intellectual Property Office is responsible for
receiving, examining and approving patent applications. A patent is valid for a twenty-year term for an invention and a ten-year
term for a utility model or design. Except under certain specific circumstances provided by law, any third-party user must obtain
consent or a proper license from the patent owner to use the patent, or else the use will constitute an infringement of the rights
of the patent holder.

 

According to the PRC Patent Law, if the
Patent Office finds the application of an invention conforms to the legal requirements after its preliminary examination of such
application documents, it shall publish the application promptly within eighteen (18) full months after the filing date. According
to the Guidelines of Patent Examination, the examination of a patent shall include the preliminary examination, the substantive
examination, examination of international applications entering the national phase and review. However, the above-mentioned regulations
do not explicitly state how long it takes for a patent application to be approved or denied. In practice, it generally may take
up to one year for the Patent Office to review and approve or deny applications of patents in the category of utility model or
design and two to five years in the category of invention.

 

Trademark

 

The PRC Trademark Law, adopted in 1982
and amended in 1993, 2001, 2013 and 2019, with its implementation rules adopted in 2014, protects registered trademarks. The Trademark
Office of National Intellectual Property Administration, or the Trademark Office handles trademark registrations and grants a protection
term of ten years to registered trademarks, which may be extended for another ten years upon request. Trademark license agreements
must be filed with the Trademark Office for record.

 

 

Domain name

 

On May 29, 2012, China Internet Network
Information Center (“CNNIC”) issued the Implementing Rules for Domain Name Registration setting forth detailed rules
for registration of domain names. On September 1, 2014 the CNNIC issued the Measures on Domain Name Dispute Resolution and relevant
implementing rules, pursuant to which the CNNIC can authorize a domain name dispute resolution institution to decide disputes.
On August 24, 2017, the MIIT promulgated the Measures for Administration of Internet Domain Names, which regulates the registration
of domain names.

 

Regulations Relating to Internet Infringement

 

On December 26, 2009, the Standing Committee
of National People’s Congress promulgated the PRC Tort Law, or the Tort Law, which became effective on July 1, 2010. Under
the Tort Law, an Internet user or an Internet service provider that infringes upon the civil rights or interests of others through
using the Internet assumes tort liability. If an Internet user infringes upon the civil rights or interests of another through
using the Internet, the person being infringed upon has the right to notify and request the Internet service provider whose Internet
services are facilitating the infringement to take necessary measures including the deletion, blocking or disconnection of an Internet
link. If, after being notified, the Internet service provider fails to take necessary measures in a timely manner to end the infringement,
it will be jointly and severally liable for any additional harm caused by its failure to act.

 

Regulations Relating to Internet Content
and Information Security

 

The Administrative Measures on Internet
Information Services (effective as of January 8, 2011 and amended on January 8, 2011) specify that Internet information services
regarding news, publications, education, medical and health care, pharmaceutical and medical appliances, among other things, are
to be examined, approved and regulated by the relevant authorities. Internet information providers are prohibited from providing
services beyond those included in the scope of their ICP Licenses or filings. The PRC government has promulgated measures relating
to Internet content through a number of governmental agencies, including the MIIT, the Ministry of Culture and the General Administration
of Press and Publication. These measures specifically prohibit Internet activities, that result in the publication of any content
which is found to propagate obscenity, gambling or violence, instigate crimes, undermine public morality or the cultural traditions
of the PRC or compromise state security or secrets. Internet information providers must monitor and control the information posted
on their websites. If any prohibited content is found, they must remove the offensive content immediately, keep a record of it
and report it to the relevant authorities.

 

On December 13, 2005, the Ministry of Public
Security promulgated Provisions on Technological Measures for Internet Security Protection, or the Internet Protection Measures,
which took effect on March 1, 2006. The Internet Protection Measures requires all Internet information services operators to take
proper measures including anti-virus, data back-up and other related measures, and keep records of certain information about their
users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at
least sixty (60) days and submit the above information as required by laws and regulations.

 

The Standing Committee of National People’s
Congress, China’s national legislative body, enacted the Decisions on the Maintenance of Internet Security on December 28,
2000 and subsequently amended on August 27, 2009, that may subject any persons to criminal liabilities in China for any attempt
to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information;
leak state secrets; (iv) spread false commercial information; or (v) infringe on intellectual property rights. The Ministry of
Public Security has promulgated measures that prohibit the use of the Internet in ways which, among other things, results in a
leakage of state secrets or a spread of socially destabilizing content.

 

 

In 1997, the Ministry of Public Security
issued the Administration Measures on the Security Protection of Computer Information Network with International Connections (amended
by the State Council of PRc. in 2011), which prohibit using the Internet in ways which, among others, result in a leak of state
secrets or a spread of socially destabilizing content. The Ministry of Public Security has supervision and inspection powers in
this regard, and relevant local security bureaus may also have jurisdiction. If an ICP License holder violates these measures,
the PRC government may revoke its ICP License and shut down its website.

 

On December 28, 2012, the Standing Committee
of the National People’s Congress reiterated relevant rules on the protection of Internet information by issuing the Decision
on Strengthening the Protection of Network Information, or the 2012 Decision. The 2012 Decision distinctly clarified certain relevant
obligations of Internet information service providers. Once it discovers any transmission or disclosure of information prohibited
by the relevant laws and regulations, the Internet information service provider shall stop transmission of such information, take
measures such as elimination, keeping relevant records and reporting to relevant authorities. To comply with the above laws and
regulations, we have developed the following mechanisms to monitor the content on our platforms as AI-backed automatic detection
process, manual review, self-regulation system by streamers and room managers and report by users.

 

Regulations Relating to Privacy Protection

 

Under the Several Provisions on Regulating
the Market Order of Internet Information Services, issued by the Ministry of Industry and Information Technology in 2011, an ICP
service operator may not collect any user personal information or provide such information to third parties without the consent
of a user. An ICP service operator must expressly inform the users of the method, content and purpose for the collection and processing
of such user personal information and may only collect such information necessary for the provision of its services. PRC laws and
regulations prohibit Internet content providers from disclosing any information transmitted by users through their networks to
any third parties without their authorization unless otherwise permitted by law. An ICP service operator is also required to properly
keep the user personal information, and in case of any leak or likely leak of the user personal information, the ICP service operator
must take immediate remedial measures and, in severe circumstances, make an immediate report to the telecommunication’s regulatory
authority. In addition, pursuant to the 2012 Decision and the Order for the Protection of Telecommunication and Internet User Personal
Information issued by the Ministry of Industry and Information Technology in July 2013, any collection and use of user personal
information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within
the specified purposes, methods and scope. An ICP service operator must also keep such information strictly confidential, and is
further prohibited from divulging, tampering or destroying of any such information, or selling or providing such information to
other parties. If an Internet content provider violates these regulations, the MIIT or its local bureaus may impose penalties and
the Internet content provider may be liable for damages caused to its users.

 

Regulations Relating to Internet Publication
and Cultural Products

 

On February 4, 2016, State Administration
of Press, Publication, Radio, Film and Television (or the SAPPRFT, which is the predecessor of NRTA), and the MIIT issued the Administrative
Provisions on Online Publishing Services, or the Online Publishing Provisions, which took effect on March 10, 2016. According to
the Online Publishing Provisions, all online publishing services provided within the territory of China are subject to the Online
Publishing Provisions, and an online publishing services permit shall be obtained in order to provide online publishing services.
Pursuant to the Online Publishing Provisions, “online publishing services” refer to providing online publications to
the public through information networks; and “online publications” refer to digital works with publishing features
such as having been edited, produced or processed and are made available to the public through information networks, including:
(i) written works, pictures, maps, games, cartoons, audio-visual reading materials and other original digital works containing
useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is
identical to that of any published book, newspaper, periodical, audio-visual product, electronic publication or the like; (iii)
network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection
or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.

 

 

Regulations Relating to Foreign Currency
Exchange and Dividend Distribution

 

Foreign currency exchange

 

The core regulations governing foreign
currency exchange in China are the Foreign Exchange Administration Regulations, as amended in August 2008, or the FEA Regulations.
Certain organizations in the PRC, including foreign invested enterprises, may purchase, sell and/or remit foreign currencies at
certain banks authorized to conduct foreign exchange business upon providing valid commercial documents. However, approval of the
State Administration of Foreign Exchange, or SAFE, is required for capital account transactions.

 

On August 29, 2008, the SAFE issued Circular
142 to regulate the conversion of foreign currency into Renminbi by a foreign-invested enterprise by restricting the ways in which
converted Renminbi may be used. Circular 142 requires that the registered capital of a foreign-invested enterprise converted into
Renminbi from foreign currencies may only be utilized for purposes within its business scope. Meanwhile, the SAFE strengthened
its oversight of the flow and the use of the registered capital of a foreign-invested enterprise settled in Renminbi converted
from foreign currencies. The use of such Renminbi capital may not be changed without the SAFE’s approval, and may not in
any case be used as repayment of Renminbi loans if the proceeds of such loans have not been used.

 

In 2014, the SAFE decided to reform the
foreign exchange administration system to satisfy and facilitate the business and capital operations of foreign-invested enterprises,
and issued the Circular on the Relevant Issues Concerning the Launch of Reforming Trial of the Administration Model of the Settlement
of Foreign Currency Capital of Foreign-Invested Enterprises in Certain Areas on July 4, 2014, or SAFE Circular 36. The SAFE Circular
36 suspends the application of SAFE Circular 142 in certain areas and allows a foreign-invested enterprise registered in such areas
to use the Renminbi capital converted from foreign currency registered capital for equity investments within the scope of business,
which will be regarded as the reinvestment of foreign-invested enterprise. On March 30, 2015, the SAFE issued the Circular on the
Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular
19, which took effect on June 1, 2015, and replaced SAFE Circular 142 and SAFE Circular 36. Under SAFE Circular 19, a foreign-invested
enterprise, within the scope of business, may also choose to convert its registered capital from foreign currency to Renminbi on
a discretionary basis, and the Renminbi capital so converted can be used for equity investments within the PRC, which will be regarded
as the reinvestment of foreign-invested enterprise.

 

Dividend distribution

 

The Foreign Investment Enterprise Law,
promulgated in 1986 and amended in 2000, 2016 and 2019 (which will be superseded by the Foreign Investment Law published on March
15, 2019 and effective as of January 1, 2020), and the Administrative Rules under the Foreign Investment Enterprise Law, promulgated
in 1990 and amended in 2001 and 2014 (which will be superseded by related rules after January 1, 2020), are the key regulations
governing distribution of dividends of foreign-invested enterprises.

 

According to these regulations, a wholly
foreign-owned enterprise in China, or a WFOE, may pay dividends only out of its accumulated profits, if any, determined in accordance
with PRC accounting standards and regulations. In addition, a WFOE is required to allocate at least 10{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of its accumulated profits
each year, if any, to statutory reserve funds unless its reserves have reached 50{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the registered capital of the enterprises.
These reserves are not distributable as cash dividends. The proportional ratio for withdrawal of rewards and welfare funds for
employees shall be determined at the discretion of the WFOE. Profits of a WFOE shall not be distributed before the losses thereof
before the previous accounting years have been made up. Any undistributed profit for the previous accounting years may be distributed
together with the distributable profit for the current accounting year.

 

Pursuant to the SAFE’s Circular on
Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose
Vehicles, or SAFE Circular 37, issued and effective on July 4, 2014, and its appendices, PRC residents, including PRC institutions
and individuals, must register with local branches of the SAFE in connection with their direct establishment or indirect control
of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets
or equity interest in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special
purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes
with respect to the special purpose vehicle, including but not limited to increases or decreases of capital contributed by PRC
individuals, share transfer or exchange, merger, division or other material event.

 

 

In the event that a PRC shareholder holding
interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose
vehicle may be prohibited from making distributions of profit to the offshore parent and from carrying out subsequent cross-border
foreign exchange activities and the special purpose vehicle may be restricted in their ability to contribute additional capital
into its PRC subsidiary. And, failure to comply with the various SAFE registration requirements described above could result in
liability under PRC law for foreign exchange evasion, including (i) up to 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of the total amount of foreign exchange remitted
overseas and deemed to have been evasive and (ii) in circumstances involving serious violations, a fine of no less than 30{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of
and up to the total amount of remitted foreign exchange deemed evasive. Furthermore, the persons-in-charge and other persons at
our PRC subsidiaries who are held directly liable for the violations may be subject to criminal sanctions. These regulations apply
to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions and share transfer that
we make in the future if our shares are issued to PRC residents.

 

Stock Option Rules

 

Pursuant to the Circular on Issues Concerning
the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed
Company issued by the SAFE on February 15, 2012, or the SAFE Circular 7, employees, directors, supervisors and other senior management
participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non PRC citizens
residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with
the SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain
other procedures. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit their
ability to contribute additional capital into their wholly foreign-owned subsidiaries in China and limit these subsidiaries’
ability to distribute dividends to their overseas parent company. The PRC agents shall, on behalf of the PRC residents who have
the right to exercise the employee share options, apply to the SAFE or its local branches for an annual quota for the payment of
foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds
received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the
overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution to such
PRC residents. In addition, the PRC agents shall file each quarter the form for record-filing of information of the Domestic Individuals
Participating in the Stock Incentive Plans of Overseas Listed Companies with the SAFE or its local branches. We and our PRC citizen
employees who are granted share options, or PRC option holders, will be subject to the SAFE Circular 7 after we have become an
overseas listed company. If PRC option holders fail to comply with the SAFE Circular 7, we and PRC option holders may be subject
to fines and other legal sanctions.

 

In addition, the State Administration for
Taxation has issued circulars concerning employee share options, under which employees working in the PRC who exercise share options
will be subject to PRC individual income tax. our PRC subsidiaries have obligations to file documents related to employee share
options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options.
If our employees fail to pay or if Scienjoy fail to withhold their income taxes as required by relevant laws and regulations, we
may face sanctions imposed by the PRC tax authorities or other PRC government authorities.

 

 

MANAGEMENT

 

Directors and Senior Management

 

The following table sets forth information
of our senior management and directors, and their ages as of the date of this prospectus.

 

Names   Age   Position
Xiaowu He   44   Director, Chief Executive Officer, and Chairman of the Board
Bo Wan   44   Director, Chief Operating Officer
Denny Tang   50   Chief Financial Officer
Yongsheng Liu   50   Director, Vice Chairman of the Board
Jining Li   62   Independent Director
Huifeng Chang   54   Independent Director
Jian Sun   38   Independent Director
Yibing Liu   47   Independent Director

 

Xiaowu He. Mr. He has
been our Chief Executive Officer, Director and Chairman of the Board since May 2020. He is one of the three co-founders of Scienjoy
and has served as the chief executive officer of Scienjoy since October 2011. Mr. He has been mainly responsible for Scienjoy’s
overall business, including business strategies, company operations and financings. Mr. He has also been the 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} shareholder and
director of Enmoli Inc. since December 2018 and the 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} shareholder and director of Heshine Holdings Limited, which is one of
the two shareholders of Lavacano, since January 2019. Prior to founding Scienjoy in 2011, between 2008 and 2011, Mr. He served
as the East Asia Regional Director of Business Development of Tyco International, a Fortune 500 Company, where he was responsible
for commercial cooperation and development of the entire Sensormatic product line in East Asia. From 2006 to 2007, Mr. He worked
at NCR/Teradata Toronto, Canada and provided technical and customer support for its DCM program. From 2004 to 2006, Mr. He was
a manager at M&L Export and Import Company in Toronto, Canada. Prior to working in Canada, Mr. He worked in Fujian, China,
and assumed various positions in UTStarcom, Shida System Integration Company, and Fujian Posts and Telecommunications. Mr. He received
his MBA degree from the University of New Brunswick. We believe that Mr. He’s qualifications to sit on the board include
his deep understanding of our business model and strong leadership in the capacity of an executive and a director, along with his
expertise in strategic planning, corporate financing and business development, and extensive experience in the information technology
industry. Since

 

Bo Wan. Mr. Wan has
been our Chief Operating Officer and Director since May 2020. He is one of the three Co-founders of Scienjoy and has served as
the chief operating officer of Scienjoy since October 2011. Mr. Wan has been mainly responsible for Scienjoy’s business
operation, marketing and human resources. Mr. Wan has also been the 100{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} shareholder and director of WBY Holdings Limited since
December 2019. Prior to founding Scienjoy, Mr. Wan managed a team of over thirty people in the software department at NCR/Teradata
in Beijing, China, a global leading company in financial products, data warehouse, and IT service from 2006 to 2012. He took the
lead in designing and developing multiple BI products, the company’s first cloud-based solution and other programs. From
2001 to 2006, Mr. Wan assumed various positions including project director, project manager, senior pre-sale/post-sale consultant
at NCR in Toronto, Canada. Mr. Wan also served as Huawei’s senior test development engineer in Beijing between 2000 and 2001
and worked as a project manager and software engineer at China Unicom in Tianjin between 1997 and 2000. Mr. Wan received his MBA
degree from Lawrence Technological University. We believe that Mr. Wan is qualified to sit on the board due to his in-depth knowledge
of Scienjoy, outstanding company management skills, and years of experience in supply chain, data analysis, customer development
and human resources in the information technology, Internet and Mobile Internet industry.

 

 

Denny
Tang. 
Mr. Tang has been our Chief Financial Officer since May 2020. Mr. Tang has also served as a director of Beijing
Soho Square Advertising Co. Ltd. since September 2012. He has extensive experience working in a multi-cultural and complex matrix
reporting hierarchy and has served as the chief financial officer of Scienjoy since February 2020. From 2007 to 2017, Mr. Tang
served as the Group Finance Director at Ogilvy Beijing, a 4A agency that offers a broad range of marketing communication service.
While at Ogilvy Beijing, Mr. Tang led 4 directors and set up direct procurement function that is first in kind in the PRC advertising
industry. He also assumed board of directorship in more than 20 subsidiaries and was the point of contact of JV partners. From
1999 to 2007, Mr. Tang was the business planning & developing manager (head of finance) at PCCW-NOW TV, where he was in charge
of the whole finance of a pay TV operator. From 1996 to 1999, Mr. Tang worked as the business development manager at New World
Infrastructure, where he participated in due diligence, project finance pre & post acquisition and assisted in IPO listing
of China.com, the first PRC internet company listed in the U.S. From 1992 to 1994, Mr. Tang was a senior associate at KPMG’s
Beijing office and involved in advisory and reconstruction projects of pre-listing of A/B shares of PRC state owned enterprise.
Mr. Tang graduated from Hong Kong Polytechnic University with Honors in Accountancy and earned his MBA degree from the Chinese
University of Hong Kong while gaining exchange experience at Columbia Business School. We believe that Mr. Tang is qualified to
serve as the Chief Financial Officer because he has extensive experience in accounting, finance, and business management at leading
companies in the media and internet industry.

 

Yongsheng
Liu.
 Mr. Liu was our Chief Executive Officer and Chairman of our Board since our inception through the closing of
the Business Combination and is currently a Director and Vice Chairman of the Board. Throughout the past 20 years, Mr. Liu has
assumed various corporate leadership positions and demonstrated his strong execution ability and in-depth knowledge in private
equity and corporate M&A transactions across a wide range of sectors including aviation, consumer, financial institutions,
and technology. From March 2017 to April 2018, Mr. Liu served as Chairman and CEO of Royal China Holdings Limited (HKEx: 01683),
during which he spearheaded the company’s international growth strategy focused at acquiring targets in aviation industry
and finance sector. From the beginning of 2013 to March 2017, Mr. Liu was the Chairman of Joy Air General Aviation, Chairman of
Cambodia Bayon Airlines, Vice Chairman of Everbright and Joy International Leasing Company, and President of General Aviation
Investment Company (Shanghai). From April 2004 to August 2008, Mr. Liu also served as Chief Strategy Officer of United Eagle Airlines
(subsequently renamed to Chengdu Airlines). From December 1994 to June 2000, Mr. Liu was a manager of China Southern Airlines
responsible for ground staff training. Mr. Liu received his Master degree from University of Ottawa. We believe that Mr. Liu is
qualified to sit on our board due to his many years of public company management and director experience, along with his expertise
in strategic planning, corporate financing and business development

 

Jining
Li.
 Mr. Li has served as a Director of our Board since September 2018 and since the closing of the Business
Combination he has been an Independent Director of our Board. Mr. Li is the Founder and has acted as the Chairman of Star Jet
Co., Ltd in Shanghai, China, since 2009. Mr. Li has also been the Chairman of Keen Nice Communications Limited since 2006. Prior
to Star Jet, Mr. Li founded United Eagle Airlines as the first non-government-owned airline company in the history of Chinese
aviation industry in 2004. From 2004 to 2008, Mr. Li was the Chairman of United Eagle Airlines. He served as the Chairman of China
Internet Investment Finance Holdings Limited (HKEx: 00810) from 2005 to 2007. In 2004, He was named as the Top Ten Most Influential
People in China for his pioneer achievements in aviation industry. In 1998, Mr. Li founded Guangdong Ying Lian Tong Telecommunication
Services Co., Ltd and served as Chairman until 2004. From 1990 to 1998, Mr. Li served as Chairman of Huahui Import and Export
Trading Company. From 1988 to 1990, Mr. Li served as a manager in Guangdong Branch of China Council for the Promotion of International
Trade. We believe that Mr. Li is qualified to sit on our board due to his many years of public company management and director
experience, along with his expertise in strategic planning, corporate financing and business development.

 

Huifeng
Chang
. Mr. Chang has served as an Independent Director of our Board since May 2020. He has extensive experience in business
supervision and management. Since 2016, Mr. Chang has served as the chief financial officer and overseen a finance/accounting/tax/auditing
staff of 200 people at Canadian Solar Inc., a global company with $4 billion revenue across more than 20 countries. Mr. Chang
has also been a partner at Artis Consulting LLC since 2017 and a director at Aquamarine Capital Management LLC since 2015. From
2010 to 2015, Mr. Chang was the head of trading at CICC US Securities, Inc.’s Equity Trading department and oversaw an equity
trading desk that serves over 300 institutional investors in the U.S. and over 50 institutional investors in China/Hong Kong SAR.
From 2008 to 2010, Mr. Chang was the CEO at China Southern Oriental Patron (CSOP) Asset Management, a company he started from
scratch and led to full operation. From 2000 to 2008, Mr. Chang was an equity prop trader at Citigroup Global Capital Markets.
Before that, he worked as a derivative and risk modeler at Kamakura Corporation in Honolulu for a year. From 1995 to 1999, he
served as a marketing manager at Philip Services Corporation in Honolulu. Mr. Chang graduated from Nanjing Agricultural University
with a Bachelor of Science in Soil Science and Agri-chemistry and from the Chinese Academy of Science with a Master of Science
in Soil Physics. He earned his Ph.D. in Soil Physics in 1991 and MBA in 1995 from the University of Hawaii. We believe Mr. Chang
is qualified to serve as an independent director because he is experienced in company management and business development.

 

 

Jian
Sun
. Mr. Sun has served as an Independent Director of our Board since May 2020. He has extensive experience in the accounting
field, both in academia and in practice. Mr. Sun is a Certified Public Accountant and has published articles in the field of accounting,
business finance, and corporate governance. Since 2017, Mr. Sun has been a professor in the School of Accountancy at Central University
of Finance and Economics in China (the “CUFE”). Since September 2016, he has also served as the vice dean at the CUFE.
From 2009 to 2017, Mr. Sun taught at the CUFE, first as an assistant professor and then as an associate professor. Since 2017,
he has served as an independent director at Founder Financing Services Company Limited and at Huadian Energy Company Limited.
From 2015 to 2018, he served as an independent director at Panda Financial Company Limited. He also holds part-time academic positions
at the Accounting Information Committee of Accounting Society of China and Accounting Information Standardization Committee of
the China Ministry of Finance. Mr. Sun earned his bachelor’s degree and master’s degree in accounting from Southeast
University’s Economic and Management School in 2003 and 2006, respectively. He obtained his Ph.D. in accounting from Renmin
University in 2009. From 2015 to 2016, he was a visiting scholar at Eli Broad Business School, Michigan State University. We believe
Mr. Sun is qualified to serve as an independent director because he has a deep understanding of accounting and has also served
as an independent director at various companies before.

 

Yibing
Liu
. Mr. Liu has served as an Independent Director of our Board since May 2020. He has rich experience and expertise with
technology, sales, strategy, and business development in the technology industry and in private equity and venture capital investment.
Mr. Liu has been the founder and the executive director of Xinjiang Holgus Enkeer IT Co., Ltd. and Xiamen Huachanghui Investment
Co. Ltd. since 2017 and 2016, respectively. Mr. Liu has been the partner of Beijing Wuyue Yuanhang Venture Capital LLP and Tanjin
Haiyin Private Investment Fund LLP since 2015 and 2011, respectively. Mr. Liu received his master’s degree from Peking University.
We believe Mr. Liu is qualified to serve as an independent director because he has practical experience and expertise in managing
technology companies.

 

Voting
Agreement

 

Upon
the closing the Business Combination, we, Sponsor, Lavacano and WBY entered into a six-year Voting Agreement, which, among others,
provides (i) Lavacano and WBY have the right to designate (A) 2 directors before the third anniversary of the closing date and
3 directors thereafter and (B) 3 independent directors throughout the six-year term, and (ii) Sponsor has the right to designate
(A) 1 director until the third anniversary of the closing date and (B) 1 independent director throughout the six-year term. The
parties to the Voting Agreement agreed to vote in favor of election of the foregoing designees. For additional information such
arrangement, please see the section entitled “Certain Relationships and Related Party Transactions.”

 

Compensation

 

Company
Executive Officers and Director Compensation Prior to the Closing of the Business Combination

 

Prior
to the closing of the Business Combination, other than the HKD$50,000 per month that had been paid since July 2018 to Yongsheng
Liu, no executive officer had received any cash compensation for services rendered to us. No compensation of any kind, including
finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of
their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business
combination. However, we agreed to reimburse such individuals for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.
There was no limit on the amount of these out-of-pocket expenses and there was no review of the reasonableness of the expenses
by anyone other than our board of directors and audit committee, which included persons who may seek reimbursement, or a court
of competent jurisdiction if such reimbursement is challenged.

 

 

Executive
Officers Compensation of Scienjoy for the Last Full Financial Year

 

The
following Summary Compensation Table summarizes the total compensation accrued for Scienjoy’s named executive officers for
the full year ended December 31, 2019.

 

Name and Principal Position   Salary
(RMB)
    Bonus
(RMB)
    Share and
Option
Awards
number
    All Other
Compensation
(RMB)
    Total
(RMB)
 
Xiaowu HE
(Chief Executive Officer)
    457,384              –             –            –       457,384  
Bo WAN
(Chief Operating Officer)
    1,046,227                         1,046,227  
Pei LU
(Head of the R&D Department)
    987,616                         987,616  

 

The
Company has not set aside or accrued any amounts to provide pension, retirement or similar benefits for its named executive officers.

 

Board
Practices

 

Board
Composition

 

We
are managed by a Board which currently consists of seven directors. Our Third Amended and Restated Memorandum and Articles of
Association provides that the minimum number of directors shall be two and there shall be no maximum number of directors. Subject
to the Voting Agreement, the directors shall be elected by Resolution of Shareholders or, where permitted by our Third Amended
and Restated Memorandum and Articles of Association, by Resolution of Directors. Pursuant to the respective director service agreement,
the current directorship term of each of our current non-executive directors (including the independent directors) shall expire
on the earlier of the date of the next annual stockholders meeting and the earliest of the following to occur: (a) the death of
the director; (b) the termination of the director from his membership on the Board by the mutual agreement of us and the director;
(c) the removal of the director from the Board in accordance with our governing documents; and (d) the resignation by the director
from the Board.

 

Employment
Agreements

 

Prior
to the closing of the Business Combination, we had not entered into any employment agreements with our executive officers, and
had not made any agreements to provide benefits upon termination of employment. Our current executive officers have entered into
employment agreements with certain of our operating subsidiaries. These agreements each contain customary terms, including each
executive officer’s salary, bonus, duties, employment benefits, noncompetition, non-solicitation, confidentiality of information,
assignment of inventions and intellectual property, and termination. Either party may terminate these employment agreements with
either thirty days’ written notice to the other party as specified in the respective agreements, or we may elect to terminate
any of these service agreements and make a one-month payment in lieu of notice. We may also terminate an executive officer’s
employment for certain causes, at any time, without prior notice or compensation. The foregoing description of the terms of the
employment agreements is qualified in its entirety by reference to the provisions of the Employment Agreements filed as Exhibit
10.2 to 10.5 to this registration statement on Form F-1, which is incorporated herein by reference.

 

Director
Service Agreements

 

In
connection with their election as our directors, each of our current non-executive directors (including the independent directors)
has entered into a standard director service agreement (the “Form Director Service Agreement”) with us, pursuant to
which (a) such director will be entitled to annual cash retainers and/or equity incentive plans (which have yet to be established),
(b) we agreed to indemnify its directors to the fullest extent authorized in our governing documents and applicable law, and such
indemnity only applies if the director acted honestly and in good faith with a view to our best interests and, in the case of
criminal proceedings, we had no reasonable cause to believe that the director’s conduct was unlawful; and (c) the directorship
term will expire at the next annual stockholders meeting, subject to earlier extraordinary events. The foregoing description of
the terms of the Form Director Service Agreement is qualified in its entirety by reference to the provisions of the Form Director
Service Agreement filed as Exhibit 10.1 to this registration statement on Form F-1, which is incorporated herein by reference.

 

 

Committees
of the Board of Directors

 

There
are three standing committee of our Board: the Audit Committee, the Nominating Committee and the Compensation Committee. The composition
of each committee are described below: