UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August
Commission File Number:
(Translation of registrant’s name into English)
Room 1118, 11th Floor, Building 3, Wangzhou Rd. No.99, Liangzhu Street
Yuhang District, Hangzhou, Zhejiang
People’s Republic of China
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 99.1 to this report is a press release of Scienjoy Holding Corporation (the “Company”), dated August 29, 2024, regarding the Company’s unaudited condensed consolidated financial results for the six months ended June 30, 2024.
Attached as Exhibit 99.2 to this report is Management’s Discussion and Analysis.
Attached as Exhibit 99.3 to this report is the Company’s unaudited condensed consolidated financial statements.
1
EXPLANATORY NOTE
This Form 6-K is hereby incorporated by reference into the registration statement of the Company on Form S-8 (Registration Number 333-256373) and the registration statement of the Company on Form F-3 (Registration Number 333-280628), to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release | |
| 99.2 | Management’s Discussion and Analysis | |
| 99.3 | Unaudited Condensed Consolidated Financial Statements | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Scienjoy Holding Corporation | ||
| By: | /s/ Xiaowu He | |
| Name: | Xiaowu He | |
| Title: | Chief Executive Officer | |
Date: August 29, 2024
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Exhibit 99.1
Scienjoy Holding Corporation Reports Second Quarter and First Half 2024 Unaudited Financial Results
BEIJING, August 29, 2024 /PRNewswire/ — Scienjoy Holding Corporation (“Scienjoy”, the “Company”, or “we”) (NASDAQ: SJ), an interactive entertainment leader in the Chinese market, today announced its financial results for the second quarter and first half of fiscal year 2024 ended June 30, 2024.
Second Quarter 2024 Operating and Financial Summaries
| ● | Total revenues increased by 3.2% to RMB374.8 million (US$51.6 million) for the three months ended June 30, 2024 from RMB363.2 million in the same period of 2023. |
| ● | Gross profit increased by 28.3% to RMB64.7 million (US$8.9 million) for the three months ended June 30, 2024 from RMB50.4 million in the same period of 2023. |
| ● | Income from operations increased by 148.0% to RMB28.6 million (US$3.9 million) for the three months ended June 30, 2024 from RMB11.5 million in the same period of 2023. |
| ● | Net income was RMB33.4 million (US$4.6 million) for the three months ended June 30, 2024, as compared with RMB84.9 million in the same period of 2023. The decrease in net income was primarily attributed to the change in fair value of investment in marketable security, which does not affect the Company’s normal business operations. The change in fair value of investment in marketable security was primarily attributable to the fair value changes in investments in publicly traded company. The share price of publicly traded company experienced a moderate increase during the three months ending June 30, 2024, compared to a significant increase during the same period of 2023. |
| ● | Net income attributable to the Company’s shareholders was RMB35.3 million (US$4.9 million) for the three months ended June 30, 2024, as compared with RMB84.7 million in the same period of 2023. |
| ● | Adjusted net income attributable to the Company’s shareholders was RMB38.5 million (US$5.3 million) for the three months ended June 30, 2024, as compared with RMB86.8 million in the same period of 2023. |
First Half 2024 Operating and Financial Summaries
| ● | Total revenues increased by 3.6% to RMB691.1 million (US$95.1 million) for the six months ended June 30, 2024 from RMB667.4 million in the same period of 2023. |
| ● | Gross profit increased by 30.1% to RMB117.8 million (US$16.2 million) for the six months ended June 30, 2024 from RMB90.5 million in the same period of 2023. |
| ● | Income from operations increased by 136.5% to RMB38.9 million (US$5.3 million) for the six months ended June 30, 2024 from RMB16.4 million in the same period of 2023. |
| ● | Net income was RMB36.2 million (US$5.0 million) for the six months ended June 30, 2024, as compared with RMB79.3 million in the same period of 2023. The decrease in net income was primarily attributed to the change in fair value of investment in marketable security, which does not affect the Company’s normal business operations. The change in fair value of investment in marketable security was primarily attributable to the fair value changes in investments in publicly traded company. The share price of publicly traded company experienced a moderate increase during the six months ending June 30, 2024, compared to a significant increase during the same period of 2023. |
| ● | Net income attributable to the Company’s shareholders was RMB41.9 million (US$5.8 million) for the six months ended June 30, 2024, as compared with RMB81.6 million in the same period of 2023. |
| ● | Adjusted net income attributable to the Company’s shareholders was RMB47.5 million (US$6.5 million) for the six months ended June 30, 2024, as compared with RMB92.0 million in the same period of 2023. |
| ● | As of June 30, 2024, the Company had RMB188.8 million (US$26.0 million) in cash and cash equivalents, as compared with RMB205.5 million as of December 31, 2023. |
Mr. Victor He, Chairman and Chief Executive Officer of Scienjoy, commented, “The first half of 2024 has shown solid growth in both our revenue and gross profit, reaffirming our confidence in and expectations for our existing strategy focused on global expansion and metaverse innovation. As emerging AI algorithms and applications rapidly integrate into daily life, our metaverse platform, SJ-Verse, has been energized with groundbreaking innovations and significant momentum. These advancements include more targeted and personalized content, deeper social integration, comprehensive developer support, and enhanced platform connectivity. During this period, SJ-Verse has remained on course with its established goals, notably through partnerships with local creators, service providers and third-party developers to build a metaverse ecosystem uniquely characterized by Dubai’s culture. This initiative is designed to resonate with local preferences while nurturing a diverse global community of engaged users. Furthermore, we continue to make substantial investments in AI-Generated Content (AIGC) technologies, viewing them as a promising and profitable avenue within the metaverse landscape. We believe that by integrating AIGC technology into all our product offerings, we could attract and retain a larger global user base, offering a constantly evolving portfolio filled with surprises and entertainment. Looking ahead, we will be empowered by these revolutionary AI-driven innovations, enabling us to diversify risks and seize more growth opportunities within the future metaverse ecosystem.”
Mr. Denny Tang, Chief Financial Officer of Scienjoy, added, “We are pleased to report robust results for the first half of 2024, despite external challenges and market volatilities. In the second quarter and first half of fiscal year 2024, our revenue experienced steady growth of 3.2% and 3.6%, respectively; gross profit increased substantially by 28.3% and 30.1%, respectively; and income from operations surged by 148.0% and 136.5%, respectively. These figures reinforce our confidence in the effectiveness of our strategic initiatives and our unwavering commitment to executing them more efficiently. We are actively engaged in the metaverse industry, one of the most dynamic and innovative frontiers in today’s rapidly evolving world, with each spark of innovation presenting an opportunity for growth. Therefore, we remain vigilant, striving to stay ahead of trends and seize these opportunities. Simultaneously, we view business globalization as the path to becoming a significant player in the global metaverse arena. Going forward, we are committed to delivering more shareholder value by remaining steadfast in our dedication to innovation and our growth strategies.”
Second Quarter 2024 Financial Results
Total revenues increased by 3.2% to RMB374.8 million (US$51.6 million) for the three months ended June 30, 2024 from RMB363.2 million in the same period of 2023, primarily caused by increase of average revenue per paying user (“ARPPU”) as the economy recovers in China. The overall ARPPU for the three months ended June 30, 2023 and 2024 was RMB1,690 and RMB1,943, respectively.
Cost of revenues decreased by 0.8% to RMB310.1 million (US$42.7 million) for the three months ended June 30, 2024 from RMB312.7 million in the same period of 2023. The decrease was primarily attributable to a 60.2%, or RMB15.1 million, year-over-year decrease in users acquisition costs for the three months ended June 30, 2023, due to the fact that the Company already had a stable market share, and a decrease of RMB0.9 million in bandwidth related costs, as well as a decrease of RMB1.3 million in others costs. The decreased cost was partially offset by an increase of RMB14.7 million in revenue sharing fees, which was in line with the increase of revenue.
Gross profit increased by 28.3% to RMB64.7 million (US$8.9 million) for the three months ended June 30, 2024 from RMB50.4 million in the same period of 2023.
Total operating expenses decreased by 7.1% to RMB36.1 million (US$5.0 million) for the three months ended June 30, 2024 from RMB38.9 million in the same period of 2023.
| ● | Sales and marketing expenses decreased by 26.5% to RMB0.2 million (US$0.03 million) for the three months ended June 30, 2024 from RMB0.3 million in the same period of 2023, primarily due to fewer marketing activities. |
2
| ● | General and administrative expenses decreased by 13.0% to RMB16.7 million (US$2.3 million) for the three months ended June 30, 2024 from RMB19.1 million in the same period of 2023, primarily caused by a decrease of RMB2.7 million in share based compensation. |
| ● | Research and development expenses decreased by 3.3% to RMB17.5 million (US$2.4 million) and RMB18.1 million for the three months ended June 30, 2024 and 2023, due to a decrease of RMB1.6 million employee salary and welfare and a decrease of RMB0.4 million in share base compensation, offset by an increase of RMB1.5 million in technical services. |
| ● | Provision for credit losses increased by 29.2% to RMB1.8 million (US$0.2 million) for the three months ended June 30, 2024 from RMB1.4 million in the same period of 2023. |
Income from operations increased by 148.0% to RMB28.6 million (US$3.9 million) for the three months ended June 30, 2024 from RMB11.5 million in the same period of 2023.
Change in fair value of contingent consideration was Nil for the three months ended June 30, 2024, as compared to a gain of RMB2.5 million in the same period of 2023. Change in fair value of contingent consideration is derived from earn out liabilities resulted from historical acquisitions. 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.
Change in fair value of warrant liabilities was Nil for the three months ended June 30, 2024, as compared to a gain of RMB2.1 million in the same period of 2023. The fair value of the Company’s warrants derivative liability assumed from the SPAC acquisition is re-measured to its fair value at the end of each reporting period, with the change being recorded as other expense or gain. In February 2024, the Company’s warrants expired according to the terms of the warrant agreement. As of February 6, 2024, the Company has no warrants issued and outstanding.
Change in fair value of investment in marketable security decreased by 89.0% to a gain of RMB7.0 million (US$1.0 million) for the three months ended June 30, 2024 from a gain of RMB63.6 million in the same period of 2023. The change was primarily attributable to the fair value changes in investments in publicly traded company. The share price of publicly traded company experienced a moderate increase during the three months ending June 30, 2024, compared to a significant increase during the same period of 2023.
Investment loss decreased by 71.2% to RMB1.1 million (US$0.2 million) for the three months ended June 30, 2024 from RM3.9 million in the same period of 2023. The investment loss was primarily attributable to one-time share of unrealized loss in the long-term investments.
Income tax expense was RMB3.0 million for the three months ended June 30, 2024, as compared with income tax benefit of RMB6.5 million in the same period of 2023, which was mainly due to more taxable income.
Net income decreased by 60.6% to RMB33.4 million (US$4.6 million) for the three months ended June 30, 2024 from RMB84.9 million in the same period of 2023. The decrease in net income was primarily attributed to the change in fair value of investment in marketable security mentioned above, which does not affect the Company’s normal business operations.
Net income attributable to the Company’s shareholders decreased by 58.3% to RMB35.3 million (US$4.9 million) for the three months ended June 30, 2024 from RMB84.7 million in the same period of 2023.
Adjusted net income attributable to the Company’s shareholders decreased by 55.6% to RMB38.5 million (US$5.3 million) for the three months ended June 30, 2024 from RMB86.8 million in the same period of 2023.
3
Basic and diluted net income per ordinary share was RMB0.86 (US$0.12) and RMB0.85 (US$0.12) for the three months ended June 30, 2024, respectively. In comparison, basic and diluted net income per ordinary share was RMB2.09 and RMB2.08 in the same period of 2023, respectively.
Adjusted basic and diluted net income per ordinary share was RMB0.94 (US$0.13) and RMB0.93 (US$0.13) for the three months ended June 30, 2024, respectively. In comparison, adjusted basic and diluted net income per ordinary share was RMB2.15 and RMB2.13 in the same period of 2023, respectively.
First Half 2024 Financial Results
Total net revenues increased by 3.6% to RMB691.1 million (US$95.1 million) for the six months ended June 30, 2024 from RMB667.4 million in the same period of 2023, primarily caused by increase of average ARPPU as the economy recovers in China. The overall ARPPU for the six months ended June 30, 2023 and 2024 was RMB2,002 and RMB2,407, respectively.
Cost of revenues decreased by 0.6% to RMB573.3 million (US$78.9 million) for the six months ended June 30, 2024 from RMB576.9 million in the same period of 2023. The decrease was primarily attributable to a 56.6%, or RMB22.2 million, year-over-year decrease in the Company’s user acquisition costs due to the fact that the Company already had a stable market share, and a decrease of RMB1.3 million in bandwidth related costs, as well as a decrease of RMB2.7 million in others costs. partially offset by an increase of RMB22.7 million in revenue sharing fees, which was in line with the increase of revenue.
Gross profit increased by 30.1% to RMB117.8 million (US$16.2 million) for the six months ended June 30, 2024 from RMB90.5 million in the same period of 2023.
Total operating expenses increased by 6.5% to RMB78.9 million (US$10.9 million) for the six months ended June 30, 2024 from RMB74.1 million in the same period of 2023.
| ● | Sales and marketing expenses increased by 367.2% to RMB2.2 million (US$0.3 million) for the six months ended June 30, 2024 from RMB0.5 million in the same period of 2023, primarily attributable to sales and marketing activities in our new subsidiaries in Dubai. The Company is taking initiative in Dubai market, aiming at global expansion starting from the dynamic Middle East and North Africa (MENA) region. |
| ● | General and administrative expenses increased by 0.3% to RMB36.6 million (US$5.0 million) for the six months ended June 30, 2024 from RMB36.5 million in the same period of 2023. The increase was primarily due to an increase of RMB4.1 million in employee salary and welfare and RMB1.0 million membership fees, offset by a decrease of RMB2.6 million in office renovation expenses and a decrease of RMB2.4 million in. share based compensation. |
| ● | Research and development expenses increased by 11.8% to RMB39.1 million (US$5.4 million) from RMB34.9 million for the six months ended June 30, 2024 and 2023, due to an increase of RMB5.9 million in technical services fees, offset by a decrease of RMB1.6 million in employee salary and welfare. |
| ● | Provision for credit losses decreased by 49.5% to RMB1.1 million (US$0.2 million) for the six months ended June 30, 2024 from RMB2.2 million in the same period of 2023. |
Income from operations increased by136.5% to RMB38.7 million (US$5.3 million) for the six months ended June 30, 2024 from RMB16.4 million in the same period of 2023.
Change in fair value of contingent consideration was Nil for the six months ended June 30, 2024, as compared to a loss of RMB2.0 million in the same period of 2023. Change in fair value of contingent consideration is derived from earn out liabilities resulted from historical acquisitions. 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.
4
Change in fair value of warrant liabilities was Nil for the six months ended June 30, 2024, as compared to a gain of RMB0.2 million in the same period of 2023. The fair value of the Company’s warrants derivative liability assumed from the SPAC acquisition is re-measured to its fair value at the end of each reporting period, with the change being recorded as other expense or gain. In February 2024, the Company’s warrants expired according to the terms of the warrant agreement. As of February 6, 2024, the Company has no warrants issued and outstanding.
Change in fair value of investment in marketable security decreased by 94.2% to a gain of RMB3.8 million (US$0.5 million) for the six months ended June 30, 2024 from a gain of RMB65.1 million in the same period of 2023. The change was primarily attributable to the fair value changes in investments in publicly traded company. The share price of publicly traded company experienced a moderate increase during the six months ending June 30, 2024, compared to a significant increase during the same period of 2023.
Investment loss decreased by 18.0% to RMB3.4 million (US$0.5 million) for the six months ended June 30, 2024 from RMB4.1 million in the same period of 2023. The investment loss was primarily attributable to one-time share of unrealized loss in the long-term investments.
Income tax expense was RMB7.7 million for the six months ended June 30, 2024, as compared with income tax benefit of RMB0.6 million in the same period of 2023, which was mainly due to more taxable income.
Net income decreased by 54.3%to RMB36.2 million (US$5.0 million) for the six months ended June 30, 2024 from RMB79.3 million in the same period of 2023. The decrease in net income was primarily attributed to the change in fair value of investment in marketable security mentioned above, which does not affect the Company’s normal business operations.
Net income attributable to the Company’s shareholders decreased by 48.6% to RMB41.9 million (US$5.8 million) for the six months ended June 30, 2024 from RMB81.6 million in the same period of 2023.
Adjusted net income attributable to the Company’s shareholders decreased by 48.3% to RMB47.5 million (US$6.5 million) for the six months ended June 30, 2024 from RMB92.0 million in the same period of 2023.
Basic and diluted net income per ordinary share was RMB1.02(US$0.14) and RMB1.01 (US$0.14) for the six months ended June 30, 2024, respectively. In comparison, basic and diluted net income per ordinary share was RMB2.02 and RMB2.01 in the same period of 2023, respectively.
Adjusted basic and diluted net income per ordinary share was RMB1.16 (US$0.16) and RMB1.15 (US$0.16) for the six months ended June 30, 2024., respectively. In comparison, adjusted basic and diluted net income per ordinary share was RMB2.28 and RMB2.26 in the same period of 2023, respectively.
As of June 30, 2024, the Company had RMB188.8 million (US$26.0 million) in cash and cash equivalents, which represented a decrease of RMB16.7 million from RMB205.5 million as of December 31, 2023.
Business Outlook
The Company expects its total net revenues to be in the range of RMB303 million to RMB323 million in the third quarter of 2024. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof.
About Scienjoy Holding Corporation
Scienjoy is a pioneering Nasdaq-listed interactive entertainment leader. Driven by the vision of shaping a metaverse lifestyle, Scienjoy leverages AI-powered technology to create immersive experiences that resonate with global audiences, fostering meaningful connections and redefining entertainment. For more information, please visit http://ir.scienjoy.com/.
5
Use of Non-GAAP Financial Measures
Adjusted net income is calculated as net income adjusted for change in fair value of contingent consideration, change in fair value of warrant liability and share based compensation. Adjusted basic and diluted net income per ordinary share is non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. The non-GAAP financial measures are presented to enhance investors’ overall understanding of the Company’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to its most directly comparable GAAP financial measures. As non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures as a substitute for, or superior to, such metrics in accordance with US GAAP.
For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of Non-GAAP Results” near the end of this release.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2672 to US$1.00, the noon buying rate in effect on June 30, 2024, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB amounts could have been, or could be, converted, realized or settled in U.S. dollars at that rate on June 30, 2024, or at any other rate.
Safe Harbor Statement
Certain statements made in this release are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, are: the ability to manage growth; ability to identify and integrate other future acquisitions; ability to obtain additional financing in the future to fund capital expenditures; fluctuations in general economic and business conditions; costs or other factors adversely affecting our profitability; litigation involving patents, intellectual property, and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in the Company’s filings with the Securities and Exchange Commission (“SEC”) from time to time. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Such information speaks only as of the date of this release.
For investor and media inquiries, please contact:
Investor Relations Contacts
Denny Tang
Chief Financial Officer
Scienjoy Holding Corporation
+86-10-64428188
ir@scienjoy.com
Ascent Investor Relations LLC
Tina Xiao
+1-646-932-7242
investors@ascent-ir.com
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share and per share data or otherwise stated)
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 205,465 | 188,764 | 25,975 | |||||||||
| Accounts receivable, net | 260,979 | 246,812 | 33,962 | |||||||||
| Prepaid expenses and other current assets | 78,653 | 59,840 | 8,234 | |||||||||
| Amounts due from related parties | 355 | - | - | |||||||||
| Investment in marketable security | 31,525 | 35,290 | 4,856 | |||||||||
| Total current assets | 576,977 | 530,706 | 73,027 | |||||||||
| Property and equipment, net | 2,193 | 1,863 | 256 | |||||||||
| Intangible assets, net | 412,154 | 408,690 | 56,238 | |||||||||
| Goodwill | 182,467 | 182,536 | 25,118 | |||||||||
| Long term investment | 254,411 | 267,519 | 36,812 | |||||||||
| Long term deposits and other assets | 726 | 731 | 101 | |||||||||
| Right-of-use assets-operating lease | 12,157 | 8,544 | 1,176 | |||||||||
| Deferred tax assets | 7,379 | 5,222 | 719 | |||||||||
| Total non-current assets | 871,487 | 875,105 | 120,420 | |||||||||
| TOTAL ASSETS | 1,448,464 | 1,405,811 | 193,447 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | 73,183 | 35,034 | 4,820 | |||||||||
| Accrued salary and employee benefits | 14,763 | 9,394 | 1,293 | |||||||||
| Accrued expenses and other current liabilities | 27,610 | 8,244 | 1,134 | |||||||||
| Income tax payable | 13,005 | 9,196 | 1,265 | |||||||||
| Lease liabilities-operating lease -current | 7,974 | 6,101 | 840 | |||||||||
| Deferred revenue | 97,586 | 84,997 | 11,696 | |||||||||
| Total current liabilities | 234,121 | 152,966 | 21,048 | |||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liabilities | 59,818 | 59,109 | 8,134 | |||||||||
| Lease liabilities-operating lease -non-current | 4,798 | 2,773 | 382 | |||||||||
| Total non-current liabilities | 64,616 | 61,882 | 8,516 | |||||||||
| TOTAL LIABILITIES | 298,737 | 214,848 | 29,564 | |||||||||
| Commitments and contingencies | ||||||||||||
| EQUITY | ||||||||||||
| Ordinary share, no par value, unlimited Class A ordinary shares and Class B ordinary shares authorized, 38,113,879 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding as of December 31, 2023, respectively; 38,920,797 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding as of June 30, 2024, respectively. | ||||||||||||
| Class A ordinary shares | 423,623 | 439,212 | 60,438 | |||||||||
| Class B ordinary shares | 23,896 | 23,896 | 3,288 | |||||||||
| Shares to be issued | 30,777 | 20,817 | 2,865 | |||||||||
| Treasury stocks | (19,216 | ) | (19,216 | ) | (2,644 | ) | ||||||
| Statutory reserves | 44,698 | 48,040 | 6,611 | |||||||||
| Retained earnings | 628,821 | 667,399 | 91,837 | |||||||||
| Accumulated other comprehensive income | 17,965 | 17,357 | 2,388 | |||||||||
| Total shareholders’ equity | 1,150,564 | 1,197,505 | 164,783 | |||||||||
| Non-controlling interests | (837 | ) | (6,542 | ) | (900 | ) | ||||||
| Total equity | 1,149,727 | 1,190,963 | 163,883 | |||||||||
| TOTAL LIABILITIES AND EQUITY | 1,448,464 | 1,405,811 | 193,447 | |||||||||
7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(All amounts in thousands, except share and per share data or otherwise stated)
| For the three months ended | For the six months ended | |||||||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||
| 2023 | 2024 | 2024 | 2023 | 2024 | 2024 | |||||||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||||||
| Livestreaming - consumable virtual items revenue | 349,629 | 362,293 | 49,853 | 640,740 | 671,308 | 92,375 | ||||||||||||||||||
| Livestreaming - time based virtual items revenue | 6,379 | 6,542 | 900 | 11,890 | 12,516 | 1,722 | ||||||||||||||||||
| Technical services and others | 7,143 | 6,005 | 826 | 14,812 | 7,315 | 1,007 | ||||||||||||||||||
| Total revenues | 363,151 | 374,840 | 51,579 | 667,442 | 691,139 | 95,104 | ||||||||||||||||||
| Cost of revenues | (312,718 | ) | (310,117 | ) | (42,674 | ) | (576,913 | ) | (573,329 | ) | (78,893 | ) | ||||||||||||
| Gross profit | 50,433 | 64,723 | 8,905 | 90,529 | 117,810 | 16,211 | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Sales and marketing expenses | (257 | ) | (189 | ) | (26 | ) | (466 | ) | (2,177 | ) | (300 | ) | ||||||||||||
| General and administrative expenses | (19,148 | ) | (16,650 | ) | (2,291 | ) | (36,457 | ) | (36,580 | ) | (5,034 | ) | ||||||||||||
| Research and development expenses | (18,135 | ) | (17,534 | ) | (2,413 | ) | (34,945 | ) | (39,061 | ) | (5,375 | ) | ||||||||||||
| Provision for doubtful accounts | (1,369 | ) | (1,769 | ) | (243 | ) | (2,230 | ) | (1,126 | ) | (155 | ) | ||||||||||||
| Total operating expenses | (38,909 | ) | (36,142 | ) | (4,973 | ) | (74,098 | ) | (78,944 | ) | (10,864 | ) | ||||||||||||
| Income from operations | 11,524 | 28,581 | 3,932 | 16,431 | 38,866 | 5,347 | ||||||||||||||||||
| Change in fair value of contingent consideration | 2,540 | - | - | (1,978 | ) | - | - | |||||||||||||||||
| Change in fair value of warrants liability | 2,085 | - | - | 153 | - | - | ||||||||||||||||||
| Change in fair value of investment in marketable security | 63,570 | 6,991 | 962 | 65,148 | 3,764 | 518 | ||||||||||||||||||
| Investment loss | (3,870 | ) | (1,114 | ) | (153 | ) | (4,088 | ) | (3,354 | ) | (462 | ) | ||||||||||||
| Interest income, net | 691 | 449 | 62 | 1,095 | 2,428 | 334 | ||||||||||||||||||
| Other income, net | 354 | 575 | 79 | 525 | 688 | 95 | ||||||||||||||||||
| Foreign exchange gain, net | 1,454 | 974 | 134 | 1,421 | 1,508 | 208 | ||||||||||||||||||
| Income before income taxes | 78,348 | 36,456 | 5,016 | 78,707 | 43,900 | 6,040 | ||||||||||||||||||
| Income tax benefits (expenses) | 6,526 | (3,035 | ) | (418 | ) | 632 | (7,673 | ) | (1,056 | ) | ||||||||||||||
| Net income | 84,874 | 33,421 | 4,598 | 79,339 | 36,227 | 4,984 | ||||||||||||||||||
| Less: net income (loss) attributable to noncontrolling interest | 138 | (1,919 | ) | (264 | ) | (2,247 | ) | (5,693 | ) | (783 | ) | |||||||||||||
| Net income attributable to the Company’s shareholders | 84,736 | 35,340 | 4,862 | 81,586 | 41,920 | 5,767 | ||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||
| Other comprehensive loss - foreign currency translation adjustment | (511 | ) | (172 | ) | (24 | ) | (498 | ) | (608 | ) | (84 | ) | ||||||||||||
| Comprehensive income | 84,363 | 33,249 | 4,574 | 78,841 | 35,619 | 4,900 | ||||||||||||||||||
| Less: comprehensive income (loss) attributable to non-controlling interests | 138 | (1,919 | ) | (264 | ) | (2,247 | ) | (5,693 | ) | (783 | ) | |||||||||||||
| Comprehensive income attributable to the Company’s shareholders | 84,225 | 35,168 | 4,838 | 81,088 | 41,312 | 5,683 | ||||||||||||||||||
| Weighted average number of shares* | ||||||||||||||||||||||||
| Basic | 40,447,415 | 41,164,872 | 41,164,872 | 40,447,415 | 41,164,872 | 41,164,872 | ||||||||||||||||||
| Diluted | 40,771,279 | 41,334,310 | 41,334,310 | 40,660,023 | 41,461,415 | 41,461,415 | ||||||||||||||||||
| Earnings per share | ||||||||||||||||||||||||
| Basic | 2.09 | 0.86 | 0.12 | 2.02 | 1.02 | 0.14 | ||||||||||||||||||
| Diluted | 2.08 | 0.85 | 0.12 | 2.01 | 1.01 | 0.14 | ||||||||||||||||||
8
Reconciliations of Non-GAAP Results
(All amounts in thousands, except share and per share data or otherwise stated)
| For the three months ended | For the six months ended | |||||||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||
| 2023 | 2024 | 2024 | 2023 | 2024 | 2024 | |||||||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||||||
| Net income attributable to the Company’s shareholders | 84,736 | 35,340 | 4,862 | 81,586 | 41,920 | 5,767 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||
| Change in fair value of contingent consideration | 2,540 | - | - | (1,978 | ) | - | - | |||||||||||||||||
| Change in fair value of warrants liability | 2,085 | - | - | 153 | - | - | ||||||||||||||||||
| Share based compensation | (6,720 | ) | (3,194 | ) | (440 | ) | (8,613 | ) | (5,629 | ) | (775 | ) | ||||||||||||
| Adjusted net income attributable to the Company’s shareholders* | 86,831 | 38,534 | 5,302 | 92,024 | 47,549 | 6,542 | ||||||||||||||||||
| Adjusted net income attributable to the Company’s shareholders per ordinary share* | ||||||||||||||||||||||||
| Basic | 2.15 | 0.94 | 0.13 | 2.28 | 1.16 | 0.16 | ||||||||||||||||||
| Diluted | 2.13 | 0.93 | 0.13 | 2.26 | 1.15 | 0.16 | ||||||||||||||||||
“Adjusted net income attributable to the Company’s shareholders” is defined as net income attributable to the Company’s shareholders excluding change in fair value of contingent consideration, change in fair value of warrant liability and share based compensation. For more information, refer to “Use of Non-GAAP Financial Measures” and “Reconciliations of Non-GAAP Results” above.
9
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes. 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
| A. | Operating Results |
Overview
Scienjoy Holding Corporation (“we” or the “Company”) was 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 Inc. As a result of the business combination, we became the holding company of Scienjoy Inc. 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 328.0 million registered users by the end of June 30, 2024.
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.
In March 2024, our subsidiary Scienjoy Meta Technology L.L.C unveiled its latest advancements in artificial intelligence, AI Mate and AI Vision in Dubai. We have been focusing on digital and AI technology development, establishing Scienjoy Meta Technology L.L.C to spearhead AI solutions. Together, they aim to inspire, connect, and transform lives worldwide with innovative and user-centric technologies.
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 Holding Corporation.
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.
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.
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.
2
Summary Consolidated Statements of Operations and Comprehensive Income
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Total revenue | 667,442 | 691,139 | 95,104 | |||||||||
| Cost of revenues | (576,913 | ) | (573,329 | ) | (78,893 | ) | ||||||
| Gross profit | 90,529 | 117,810 | 16,211 | |||||||||
| Sales and marketing expenses | (466 | ) | (2,177 | ) | (300 | ) | ||||||
| General and administrative expenses | (36,457 | ) | (36,580 | ) | (5,034 | ) | ||||||
| Research and development expenses | (34,945 | ) | (39,061 | ) | (5,375 | ) | ||||||
| Provision for credit losses | (2,230 | ) | (1,126 | ) | (155 | ) | ||||||
| Income from operations | 16,431 | 38,866 | 5,347 | |||||||||
| Change in fair value of contingent consideration | (1,978 | ) | - | - | ||||||||
| Change in fair value of warrant liabilities | 153 | - | - | |||||||||
| Change in fair value of investment in marketable security | 65,148 | 3,764 | 518 | |||||||||
| Investments loss | (4,088 | ) | (3,354 | ) | (462 | ) | ||||||
| Interest income, net | 1,095 | 2,428 | 334 | |||||||||
| Other income, net | 525 | 688 | 95 | |||||||||
| Foreign exchange gain, net | 1,421 | 1,508 | 208 | |||||||||
| Income before income taxes | 78,707 | 43,900 | 6,040 | |||||||||
| Income tax benefit (expense) | 632 | (7,673 | ) | (1,056 | ) | |||||||
| Net income | 79,339 | 36,227 | 4,984 | |||||||||
| Less: net loss attributable to non-controlling interest | (2,247 | ) | (5,693 | ) | (783 | ) | ||||||
| Net income attributable to the Company’s shareholders | 81,586 | 41,920 | 5,767 | |||||||||
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 is not material. Our revenue is 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 six months ended June 30, 2023 and 2024, revenue from consumable virtual items represented over 96% 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 six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Live streaming - consumable virtual items revenue | 640,740 | 671,308 | 92,375 | |||||||||
| Live streaming - time based virtual item revenue | 11,890 | 12,516 | 1,722 | |||||||||
| Technical services and others | 14,812 | 7,315 | 1,007 | |||||||||
| Total revenue | 667,442 | 691,139 | 95,104 | |||||||||
3
As of June 30, 2024, we operated five brands of live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming (including BeeLive Chinese version – Mifeng) and Hongle Live Streaming. The following table sets forth our revenue by platforms for the periods indicated:
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Showself | 171,689 | 139,571 | 19,205 | |||||||||
| Lehai | 100,818 | 188,100 | 25,883 | |||||||||
| Haixiu | 121,639 | 143,525 | 19,750 | |||||||||
| Beelive | 160,379 | 111,507 | 15,344 | |||||||||
| Hongle | 98,105 | 101,121 | 13,915 | |||||||||
| Technical services and others | 14,812 | 7,315 | 1,007 | |||||||||
| TOTAL | 667,442 | 691,139 | 95,104 | |||||||||
The total number of paying users at Showself Live, Lehai Live, Haixiu Live, Beelive Live and Hongle Live for the periods indicated is as following:
| For the six months ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| Number in thousands | ||||||||
| Showself | 95,037 | 57,294 | ||||||
| Lehai | 78,603 | 92,680 | ||||||
| Haixiu | 61,656 | 55,540 | ||||||
| Beelive | 52,047 | 37,053 | ||||||
| Hongle | 38,581 | 41,509 | ||||||
| TOTAL | 325,924 | 284,076 | ||||||
The ARPPU by Showself Live, Lehai Live, Haixiu Live, Beelive Live and Hongle Live is as following (amounts in RMB):
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Showself | 1,807 | 2,436 | 335 | |||||||||
| Lehai | 1,283 | 2,030 | 279 | |||||||||
| Haixiu | 1,973 | 2,584 | 356 | |||||||||
| Beelive | 3,081 | 3,009 | 414 | |||||||||
| Hongle | 2,543 | 2,436 | 335 | |||||||||
| Overall average | 2,002 | 2,407 | 331 | |||||||||
Among five brands of live streaming platforms, Showself Live streaming contributed at least 20% 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 six months ended June 30, 2023 and 2024 was RMB2,002 and RMB2,407, 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 six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Revenue sharing fees | 511,806 | 534,486 | 73,547 | |||||||||
| User acquisition costs | 39,307 | 17,061 | 2,348 | |||||||||
| Bandwidth related costs | 6,670 | 5,338 | 735 | |||||||||
| Others | 19,130 | 16,444 | 2,263 | |||||||||
| TOTAL | 576,913 | 573,329 | 78,893 | |||||||||
4
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 both were 77% of revenues for the six months ended June 30, 2023 and 2024, respectively. As we need to attract more talented broadcasters and offer more content to users, 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 4% in the six months ended June 30, 2024 compared to six months ended June 30, 2023, which was in line with the increase of revenue in the six months ended June 30, 2024. 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 six months ended June 30, 2023 and 2024 other cost represented approximately 2% to 3% 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 credit losses.
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Sales and marketing expenses | (466 | ) | (2,177 | ) | (300 | ) | ||||||
| General and administrative expenses | (36,457 | ) | (36,580 | ) | (5,034 | ) | ||||||
| Research and development expenses | (34,945 | ) | (39,061 | ) | (5,375 | ) | ||||||
| Provision for credit losses | (2,230 | ) | (1,126 | ) | (155 | ) | ||||||
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.
5
Provision for credit losses: We maintain an allowance for credit losses which reflects our best estimate of amounts that potentially will not be collected. When we determine the allowance for credit losses, we take into consideration various factors including but not limited to collection history experience and credit-worthiness of the debtors as well as the age of the individual receivables account. We expect that the provision for credit losses to decline as we have committed more resources to collection of account receivables.
Results of Operations
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Revenue: Total revenues increased by 3.6% to RMB691.1 million for the six months ended June 30, 2024 from RMB667.4 million in the same period of 2023, primarily caused by increase of average ARPPU as the economy recovers in China. The overall ARPPU for the six months ended June 30, 2023 and 2024 was RMB2,002 and RMB2,407, respectively.
Cost of revenues: Our cost of revenues decreased by 0.6% to RMB573.3 million for the six months ended June 30, 2024 from RMB576.9 million in the same period of 2023. The decrease was primarily attributable to a 56.6%, or RMB22.6 million, year-over-year decrease in the Company’s user acquisition costs due to the fact that the Company already had a stable market share, and a decrease of RMB1.3 million in bandwidth related costs, as well as a decrease of RMB2.7 million in others costs. partially offset by an increase of RMB22.7 million in revenue sharing fees, which was in line with the increase of revenue.
Gross profit: Our gross profit increased by 30.1% to RMB117.8 million for the six months ended June 30, 2024 from RMB90.5 million in the same period of 2023.
Total operating expenses: Total operating expenses increased by 6.5% to RMB78.9 million for the six months ended June 30, 2024 from RMB74.1 million in the same period of 2023.
| ● | Sales and marketing expenses: Our sales and marketing expenses increased by 367.2% to RMB2.2 million for the six months ended June 30, 2024 from RMB0.5 million in the same period of 2023, primarily attributable to sales and marketing activities in our new subsidiaries in Dubai. The Company is taking initiative in Dubai market, aiming at global expansion starting from the dynamic Middle East and North Africa (MENA) region. |
| ● | General and administrative expenses: Our general and administrative expenses increased by 0.3% to RMB36.6 million for the six months ended June 30, 2024 from RMB36.5 million in the same period of 2023. The increase was primarily due to an increase of RMB4.1 million in employee salary and welfare and RMB1.0 million membership fees, offset by a decrease of RMB2.6 million in office renovation expenses and a decrease of RMB2.4 million in.share based compensation. |
| ● | Research and development expenses: Our research and development expenses increased by 11.8% to RMB39.1 million for the six months ended June 30, 2024 from RMB34.9 million in the same period of 2023, due to an increase of RMB5.9 million in technical services fees, offset by a decrease of RMB1.6 million in employee salary and welfare. |
| ● | Provision for credit losses: Our provision for credit losses decreased by 49.5% to RMB1.1 million for the six months ended June 30, 2024 from RMB2.2 million in the same period of 2023. |
Change in fair value of contingent consideration: Change in fair value of contingent consideration was Nil million for the six months ended June 30, 2024, as compared with a loss of RMB2.0 million in the same period of 2023. Change in fair value of contingent consideration is derived from earn out liabilities resulted from historical acquisitions. 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.
6
Change in fair value of warrant liabilities: Change in fair value of warrant liabilities was Nil million for the six months ended June 30, 2024, as compared with a gain of RMB0.2 million in the same period of 2023. The fair value of the Company’s warrants derivative liability assumed from the SPAC acquisition is re-measured to its fair value at the end of each reporting period, with the change being recorded as other expense or gain.
Change in fair value of investment in marketable security: Change in fair value of investment in marketable security decreased by 94.2% to a gain of RMB3.8 million for the six months ended June 30, 2024 from a gain of RMB65.1 million in the same period of 2023. The change was primarily attributable to the fair value changes in investments in publicly traded company.
Investment loss: Investment loss decreased by 18.0% to RMB3.4 million for the six months ended June 30, 2024 from RMB4.1 million in the same period of 2023. The investment loss was primarily attributable to one-time share of unrealized loss in the long-term investments.
Income tax expense: Income tax expense was RMB7.7 million for the six months ended June 30, 2024, as compared with income tax benefit of RMB0.6 million in the same period of 2023, which was mainly due to more taxable income.
Net income: As a result of the foregoing, net income decreased by 54.3% to RMB36.2 million for the six months ended June 30, 2024 from RMB79.3 million in the same period of 2023.
| B. | 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 proceeds from 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, 2023 and June 30, 2024, RMB199,822 and RMB173,929 (USD23,933), 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, 2023 and June 30, 2024.
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 for at least the next 12 months. 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.
7
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 six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| Amounts in thousands of RMB and US$ | RMB | RMB | US$ | |||||||||
| Net cash provided by operating activities | 31,616 | 351 | 48 | |||||||||
| Net cash used in investing activities | (4,701 | ) | (16,915 | ) | (2,328 | ) | ||||||
| Net cash used in financing activities | 1,052 | 355 | 49 | |||||||||
| Effect of foreign exchange rate changes on cash | (499 | ) | (492 | ) | (67 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | 27,468 | (16,701 | ) | (2,298 | ) | |||||||
| Cash and cash equivalents at beginning of the period | 175,292 | 205,465 | 28,273 | |||||||||
| Cash and cash equivalents at end of the period | 202,760 | 188,764 | 25,975 | |||||||||
Operating Activities
Net cash provided by operating activities consisted primarily of the Company’s net income adjusted by non-cash adjustments, such as provision for credit losses, and adjusted by changes in operating assets and liabilities, such as accounts receivable.
Net cash provided by operating activities was RMB0.4 million for the six months ended June 30, 2024. The difference between the net cash provided by operating activities and net income of RMB36.2 million was primarily attributable to non-cash adjustment of RMB15.5 million, a decrease in prepaid expense and other current assets of RMB18.8 million due to collection from third parties loans, a decrease in accounts receivable of RMB13.0 million due to faster collection, partially offset by decreased in accounts payable of RMB38.2 million, decreased in accrued expenses and other current liabilities of RMB19.4 million, decreased in deferred revenue of RMB12.6 million, decreased in accrued salary and employee benefits of RMB5.4 million and decreased in lease liabilities of RMB3.9 million.
Net cash provided by operating activities was RMB31.6 million for the six months ended June 30, 2023. The difference between the net cash provided by operating activities and net income of RMB79.3 million was primarily attributable to non-cash adjustment of RMB42.5 million, a decrease of accounts receivable of RMB59.3 million and decrease of prepaid expense and other current assets RMB19.8 million due to refunded RMB34 million prepayment in property and equipment purchase, partially offset by a decrease in accounts payables of RMB59.0 million due to declining revenue.
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; (b) payment for long term investments.
Net cash used in investing activities amounted to RMB16.9 million for the six months ended June 30, 2024, primarily due to RMB16.7 million paid for long term investments.
Net cash used in investing activities amounted to RMB4.7 million for the six months ended June 30, 2023, primarily due to RMB4.5 million paid for long term investments.
Financing Activities
Net cash provided by financing activities amounted to RMB0.4 million for the six months ended June 30, 2024, primarily due to collection from related parties of RMB0.4 million.
Net cash provided by financing activities amounted to RMB1.1 million for the six months ended June 30, 2023, primarily due to net proceeds RMB1.1 million from related parties loans.
8
Capital Expenditures.
For the six months ended June 30, 2023 and 2024, the Company’s capital expenditure amounted to RMB0.2 million and RMB0.3 million, respectively. The Company intends to fund its future capital expenditures with the existing cash balance and other financing alternatives. The Company will continue to make capital expenditures to support the growth of its business.
| C. | Research and Development, Patents and Licenses, etc. |
See “Item 4. Information on the Company—B. Business Overview—Our Technology” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property” of our annual report on Form 20-F for the fiscal year ended December 31, 2023 filed with the SEC on April 26, 2024.
| D. | Trend Information |
Other than as described elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operating results or financial condition.
| E. | Critical Accounting Estimates |
We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate 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 unaudited condensed consolidated financial statements and accompanying notes and other disclosures included in this report.
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.
9
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, allowance for credit losses, and valuation of deferred taxes and deferred tax assets. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
Accounts Receivable and Allowance for Credit Losses
Accounts receivables are stated at the historical carrying amount net of allowance for credit losses.
The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. the Company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable.
Revenue Recognition
The Company applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. Revenues are recognized when control of the promised virtual items or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those virtual items or services. Revenue is recorded, net of sales related taxes and surcharges. 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.
10
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 and others
The Company generated technical revenues from providing technical development and advisory, which accounts for only less than 2% 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, all performance obligations are satisfied within one year.
11
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. | |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses and other current assets, accounts payables, balances with related parties and other current liabilities, approximate their fair values because of the short-term maturity of these instruments.
Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis
The following tables represent the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and June 30, 2024:
| As of December 31, 2023 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
Amounts in thousands of RMB | RMB | RMB | RMB | RMB | ||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in marketable equity security | 31,525 | - | - | 31,525 | ||||||||||||
| As of June 30, 2024 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
| Amounts in thousands of RMB | RMB | RMB | RMB | RMB | ||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in marketable equity security | 35,290 | - | - | 35,290 | ||||||||||||
Warrant liabilities
The Company’s warrants assumed from SPAC acquisition on May 7,2020, the date of the closing of SPAC Transaction, that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative as contemplated in ASC 815-40. The warrant is recorded as derivative liability on the consolidated balance sheet upon the SPAC transaction and is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain in accordance with ASC 820.
On February 5, 2024, all above warrants expired and were cancelled according to the terms of the warrant agreement.
12
Exhibit 99.3
SCIENJOY HOLDING CORPORATION
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share and per share data or otherwise stated)
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Amounts due from related parties | ||||||||||||
| Investment in marketable security | ||||||||||||
| Total current assets | ||||||||||||
| Property and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Goodwill | ||||||||||||
| Long term investment | ||||||||||||
| Long term deposits and other assets | ||||||||||||
| Right-of-use assets-operating lease | ||||||||||||
| Deferred tax assets | ||||||||||||
| Total non-current assets | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | ||||||||||||
| Accrued salary and employee benefits | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Income tax payable | ||||||||||||
| Lease liabilities-operating lease -current | ||||||||||||
| Deferred revenue | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| Lease liabilities-operating lease -non-current | ||||||||||||
| Total non-current liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| Commitments and contingencies | ||||||||||||
| EQUITY | ||||||||||||
| Ordinary share, no par value, unlimited Class A ordinary shares and Class B ordinary shares authorized, | ||||||||||||
| Shares to be issued | ||||||||||||
| Treasury stocks | ( | ) | ( | ) | ( | ) | ||||||
| Statutory reserves | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive income | ||||||||||||
| Total shareholders’ equity | ||||||||||||
| Non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||
| Total equity | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(All amounts in thousands, except share and per share data or otherwise stated)
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Live streaming - consumable virtual items revenue | ||||||||||||
| Live streaming - time based virtual item revenue | ||||||||||||
| Technical services and others | ||||||||||||
| Total revenue | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Provision for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Income from operations | ||||||||||||
| Change in fair value of contingent consideration | ( | ) | ||||||||||
| Change in fair value of warrant liabilities | ||||||||||||
| Change in fair value of investment in marketable security | ||||||||||||
| Investments loss | ( | ) | ( | ) | ( | ) | ||||||
| Interest income, net | ||||||||||||
| Other income, net | ||||||||||||
| Foreign exchange gain, net | ||||||||||||
| Income before income taxes | ||||||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ||||||||
| Net income | ||||||||||||
| Less: net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||
| Net income attributable to the Company’s shareholders | ||||||||||||
| Other comprehensive loss: | ||||||||||||
| Other comprehensive loss - foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive income | ||||||||||||
| Less: comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive income attributable to the Company’s shareholders | ||||||||||||
| Weighted average number of shares | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
| Earnings per share | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(All amounts in thousands, except share and per share data or otherwise stated)
| Ordinary shares | Shares to be | Treasury stocks | Statutory | Retained | Accumulated other comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | issued | shares | Amount | reserves | earnings | Income | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares for achievement of earnout target | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Share based compensation | - | - | ||||||||||||||||||||||||||||||||||||||
| Appropriation to statutory reserves | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Ordinary shares | Shares to be | Treasury stocks | Statutory | Retained | Accumulated other comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||||||
| Shares | Amount | issued | shares | Amount | reserves | earnings | Income | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares for achievement of earnout target | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Share based compensation | ||||||||||||||||||||||||||||||||||||||||
| Appropriation to statutory reserves | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 (US$) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
SCIENJOY HOLDING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except share and per share data or otherwise stated)
| For the six months ended | ||||||||||||
| June 30, | June 30, | June 30, | ||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||
| Depreciation of property and equipment | ||||||||||||
| Amortization of intangible assets | ||||||||||||
| Provision for credit losses | ||||||||||||
| Loss from disposal of property and equipment | ||||||||||||
| Deferred tax expense (benefit) | ( | ) | ||||||||||
| Change in fair value of contingent consideration | ||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||||||
| Change in fair value of investment in marketable security | ( | ) | ( | ) | ( | ) | ||||||
| Investments loss | ||||||||||||
| Share based compensation | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Changes in operating assets and liabilities | ||||||||||||
| Accounts receivable | ||||||||||||
| Prepaid expense and other current assets | ||||||||||||
| Long term deposits and other assets | ( | ) | ( | ) | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ( | ) | ||||||
| Deferred revenue | ( | ) | ( | ) | ( | ) | ||||||
| Accrued salary and employee benefits | ( | ) | ( | ) | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Income tax payable | ( | ) | ( | ) | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||||||
| Cash flows from investing activities | ||||||||||||
| Payment for long term investments | ( | ) | ( | ) | ( | ) | ||||||
| Purchase of property and equipment and intangible assets | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from bank loan | ||||||||||||
| Repayment for bank loan | ( | ) | ||||||||||
| Repayment from related parties | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of foreign exchange rate changes on cash | ( | ) | ( | ) | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at beginning of the period | ||||||||||||
| Cash and cash equivalents at end of the period | ||||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Income taxes paid | ||||||||||||
| Supplemental non-cash investing and financing information: | ||||||||||||
| Issuance of Class A ordinary shares for achievement of earnout target | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Scienjoy Holding Corporation (the “Company” or “Scienjoy”) through its subsidiaries, and variable interest entities(“VIE”) and its subsidiaries (collectively the “Group”) are principally engaged in operating its own live streaming platforms in the People’s Republic of China (the “PRC”), which enable users to view and interact with broadcasters through online chat, virtual items and playing games. The primary theme of the Company’s platform is entertainment live streaming.
(a) Recent developments
On April 11, 2024, the Company formed a
On May 30, 2024, the Company formed a wholly
(b) Organization
| Subsidiaries | Date of incorporation | Place of incorporation | Percentage of direct/indirect ownership | Principal activities | ||||
| Scienjoy Inc. | ||||||||
| Scienjoy Pte. Ltd. (“Scienjoy SG”) | ||||||||
| Scienjoy International Limited (“Scienjoy HK”) | ||||||||
| Scienjoy BeeLive Limited (formerly known as Sciscape International Limited, “SIL”) | ||||||||
| Golden Shield Enterprises Limited (“Golden Shield”) | ||||||||
| Scienjoy Verse Tech Ltd (“Scienjoy Verse”) (a 51% owned subsidiary of Scienjoy SG through entrust agreement between Scienjoy SG and Mr Xiaowu He, Chief Executive Officer and Chairman of the Board) | ||||||||
| Scienjoy Meta Technology LLC (“Scienjoy Meta”) (a wholly owned subsidiary of Scienjoy Verse) | ||||||||
| SJ Verse Global Media LLC (“SJ Verse”) (a 90% owned subsidiary of Scienjoy Verse) | ||||||||
| Scenovo Pte. Ltd. (“Scenovo SG”) | ||||||||
| Techjoy Pte. Ltd. (“Techjoy SG”) | ||||||||
| Sixiang Wuxian (Beijing) Technology Co., Ltd. (“WXBJ”) (a wholly owned subsidiary of Scienjoy HK) | ||||||||
| Sixiang Zhihui (Beijing) Technology Co., Ltd. (“ZH”) (a wholly owned subsidiary of WXBJ) | ||||||||
| Sixiang Yingyue (Shanghai) Technology Co., Ltd(“SXYY”) (a wholly owned subsidiary of WXBJ) | ||||||||
| Holgus Sixiang Information Technology Co., Ltd. (“Holgus X”) (a wholly owned subsidiary of ZH) | ||||||||
| Kashgar Sixiang Times Internet Technology Co., Ltd. (“Kashgar Times”) (a wholly owned subsidiary of ZH) | ||||||||
| Kashgar Sixiang Lehong Information Technology Co., Ltd (“Kashgar Lehong”) (a wholly owned subsidiary of ZH) | ||||||||
| Holgus Sixiang Haohan Internet Technology Co., Ltd. (“Holgus H”) (a wholly owned subsidiary of ZH) |
F-6
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)
(b) Organization (continued)
| Subsidiaries | Date of incorporation | Place of incorporation | Percentage of direct/indirect ownership | Principal activities | ||||
| Sixiang ZhiHui (Hainan) Technology Co., Ltd (“ZHHN”) (a wholly owned subsidiary of ZH) | ||||||||
| Sixiang Wuxian (Zhejiang) Culture Technology Co., Ltd (“WXZJ”) (a wholly owned subsidiary of Scienjoy HK) | ||||||||
| Sixiang Zhihui (Zhejiang) Culture Technology Co., Ltd (“ZHZJ”) (a wholly owned subsidiary of WXZJ) | ||||||||
| VIEs | ||||||||
| Zhihui Qiyuan (Beijing) Technology Co., Ltd. (“QY”) (Controlled through contractual agreements by WXBJ) | ||||||||
| Beijing Sixiang Shiguang Technology Co., Ltd. (“SG”) (a wholly owned subsidiary of QY) | ||||||||
| Hai Xiu (Beijing) Technology Co., Ltd. (“HX”) (a wholly owned subsidiary of QY) | ||||||||
| Beijing Le Hai Technology Co., Ltd. (“LH”) (a wholly owned subsidiary of QY) | ||||||||
| Sixiang Mifeng (Tianjin) Technology Co., Ltd (“DF”, formerly known as Tianjin Guangju Dingfei Technology Co., Ltd) (a wholly owned subsidiary of QY) | ||||||||
| Changxiang Infinite Technology (Beijing) Co., Ltd. (“CX”) (a wholly owned subsidiary of DF) | ||||||||
| Zhihui QiYuan (Hainan) Investment Co., Ltd (“QYHN”) (a wholly owned subsidiary of QY) | ||||||||
| Huayu Hefeng (Qingdao) Technology Co., Ltd (“HYHF”) (a wholly owned subsidiary of SG) | ||||||||
| Beijing Weiliantong Technology Co., Ltd.(“WLT”) (a wholly owned subsidiary of QY) | ||||||||
| Chuangda Zhihui (Beijing) Technology Co., Ltd.(“CDZH”) (a wholly owned subsidiary of SG) | ||||||||
| Beijing Huayi Dongchen Technology Co., Ltd. (“HYDC”) (a wholly owned subsidiary of CDZH) | ||||||||
| Hongcheng Huiying (Zhejiang)Technology Industry Development Co., Ltd.(“HCHY”) (a 51% owned subsidiary of QYHN) | ||||||||
| Hangzhou Sixiang Fengjing Culture Technology Co., Ltd.(“SXFJ”) (a 51% owned subsidiary of QYHN) | ||||||||
| Sixiang Qiyuan (Hangzhou) Culture Technology Co., Ltd (“QYHZ”) (Controlled through contractual agreements by WXZJ) | ||||||||
| Xiuli (Zhejiang) Culture Technology Co., Ltd (“XLZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Leku (Zhejiang) Culture Technology Co., Ltd. (“LKZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Haifan (Zhejiang) Culture Technology Co., Ltd (“HFZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Xiangfeng (Zhejiang) Culture Technology Co., Ltd (“XFZJ”) (a wholly owned subsidiary of QYHZ) | ||||||||
| Hongren (Zhejiang) Culture Technology Co., Ltd (“HRZJ”) (a wholly owned subsidiary of QYHZ) |
F-7
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2023 and 2024 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in Scienjoy Holding Corporation’s annual financial statements for the fiscal year ended December 31, 2023 filed with the SEC on April 26, 2024.
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, and its VIE and VIE’s subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE are eliminated upon consolidation.
(b) Business combinations
The Company accounts for all business combinations under the purchase method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase method of accounting requires that the consideration transferred to be allocated to net assets including separately identifiable assets and liabilities the Company acquired, based on their estimated fair value. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of the cost of the acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings. The determination and allocation of fair values to the identifiable net assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable judgment from management. Although the Company believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
(c) Use of estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to revenue recognition, estimating the useful lives of long-lived assets and intangible assets, valuation assumptions in performing asset impairment tests of long-lived assets, allowance for credit losses, and valuation of deferred taxes and deferred tax assets. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
F-8
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Foreign currency
The functional currency of the Company is in US dollars and the functional currency of the Company’s subsidiaries and VIEs are Renminbi (“RMB”), as determined based on the criteria of Accounting Standards Codification (“ASC”) 830 (“ASC 830”) “Foreign Currency Matters”. The reporting currency of the Company is also the RMB.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange in place at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of operations.
Assets and liabilities of the Company translated from their respective functional currencies to the reporting currency at the exchange rates at the balance sheet dates, equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period. The resulting foreign currency translation adjustment are recorded in other comprehensive income (loss).
(e) Convenience translation
Translations of balances in the consolidated balance
sheets, consolidated statements of operations and comprehensive income and consolidated statements of cash flows from RMB into USD (or
“US$”) as of and for the six months ended June 30, 2024 are solely for the convenience of the reader and were calculated at
the rate of US$
(f) Accounts receivable and allowance for credit losses
Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts.
The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. The Company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable.
F-9
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Fair value of financial instruments
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses and other current assets, accounts payables, balances with related parties and other current liabilities, approximate their fair values because of the short-term maturity of these instruments.
Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis
| As of December 31, 2023 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in marketable equity security | ||||||||||||||||
| As of June 30, 2024 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in marketable equity security | ||||||||||||||||
F-10
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Fair value of financial instruments (continued)
Warrant liabilities
The Company’s warrants assumed from SPAC acquisition on May 7,2020, the date of the closing of SPAC Transaction, that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative as contemplated in ASC 815-40. The warrant is recorded as derivative liability on the consolidated balance sheet upon the SPAC transaction and is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain in accordance with ASC 820.
On February 5, 2024, all above warrants expired and were cancelled according to the terms of the warrant agreement.
(h) Revenue recognition
The Company applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. Revenues are recognized when control of the promised virtual items or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those virtual items or services. Revenue is recorded, net of sales related taxes and surcharges.
Live streaming
The Company is principally engaged in operating its own live streaming platforms, which enable broadcasters and viewers to interact with each other during live streaming. The Company is responsible for providing a technological infrastructure to enable the broadcasters, online users and viewers to interact through live streaming platforms. All the platforms can be accessed for free. The Company mainly derives the revenue from sales of virtual items in the platforms. The Company has a recharge system for users to purchase the Company’s virtual currency then purchase virtual items for use. Users can recharge via various online third-party payment platforms, including WeChat Pay, AliPay and other payment platforms. Virtual currency is non-refundable and often consumed soon after it is purchased.
The Company designs, creates and offers various virtual items for sales to users with pre-determined stand-alone selling price. Virtual items are categorized as consumable and time-based items. Consumable items are consumed upon purchase and use while time-based items could be used for a fixed period of time. Users can purchase and present consumable items to broadcasters to show support for their favorite broadcasters, or purchase time-based virtual items for one or multiple months for a monthly fee, which provide users with recognized status, such as priority speaking rights or special symbols over a period of time.
The Company shares a portion of the sales proceeds of virtual items (“revenue sharing fee”) with broadcasters and talent agencies in accordance with their revenue sharing arrangements. Broadcasters, who do not have revenue sharing arrangements with the Company, are not entitled to any revenue sharing fee. The Company also utilizes third-party payment collection channels, which charges the payment handling cost for users to purchase the virtual currency directly from it. The payment handling costs are recorded in cost of sales.
The Company evaluates and determines that it is the principal and views users to be its customers, because the Company controls the virtual items before they are transferred to users. Its control is evidenced by the Company’s sole ability to monetize the virtual items before they are transferred to users, and is further supported by the Company being primarily responsible to the users for the delivery of the virtual items as well as having full discretion in establishing pricing for the virtual items. Accordingly, the Company reports live streaming revenues on a gross basis with the amounts billed to users recorded as revenues and revenue sharing fee paid to broadcasters and related agencies recorded as cost of revenues.
F-11
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Revenue recognition (continued)
Sales proceeds are initially recorded as deferred revenue and recognized as revenue based on the consumption of the virtual items. The Company has determined that each individual virtual item represents a distinct performance obligation. Accordingly, live streaming revenue is recognized immediately when the consumable virtual item is used, or in the case of time-based virtual items, revenue is recognized over the fixed period on a straight-line basis. The Company does not have further obligations to the user after the virtual items are consumed. The Company’s live streaming virtual items are generally sold without right of return and the Company does not provide any other credit and incentive to its users. Unconsumed virtual currency is recorded as deferred revenue.
The Company also cooperates with independent third-party distributors to sell virtual currency through annual distribution agreements with these distributors. Third-party distributors purchase virtual currency from the Company with no refund provision according to the annual distribution agreements, and they are responsible for selling the virtual currency to end users. They may engage their own sales representatives, which are referred to as “sales agents” to directly sell to individual end users. The Company has no control over such “sales agents”. The Company has discretion to determine the price of the virtual currency sold to its third-party distributors, but has no discretion as to the price at which virtual currency is sold by its third-party distributors to the sales agents.
Technical services and others
The Company generated technical and other revenues
from providing multi-channel network (“MCN”) agency service, technical development, advisory and others, which accounts for
only approximately
Practical expedients and exemptions
The Company’s contracts have an original duration of one year or less. Accordingly, the Company does not disclose the value of unsatisfied performance obligations.
Revenue by types and platforms
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Live streaming - consumable virtual items revenue | ||||||||||||
| Live streaming - time based virtual item revenue | ||||||||||||
| Technical services and others | ||||||||||||
| Total revenue | ||||||||||||
F-12
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Revenue recognition (continued)
As of June 30, 2024, we operated five brands of
live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming
(including BeeLive Chinese version – Mifeng) and Hongle Live Streaming.
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Showself | ||||||||||||
| Lehai | ||||||||||||
| Haixiu | ||||||||||||
| Beelive | ||||||||||||
| Hongle | ||||||||||||
| Technical services and others | ||||||||||||
| TOTAL | ||||||||||||
Contract balances
Contract balances include accounts receivable and deferred revenue. Accounts receivable primarily represent cash due from distributors and are recorded when the right to consideration is unconditional. The allowance for doubtful accounts reflects the best estimate of probable losses inherent to the account receivable balance. Deferred revenue primarily includes unconsumed virtual currency and unamortized revenue from time-based virtual items in the Company’s platforms, where there is still an obligation to be provided by the Company, which will be recognized as revenue when all of the revenue recognition criteria are met. Due to the generally short-term duration of the relevant contracts, all performance obligations are satisfied within one year.
(i) Government subsidies
Government subsidies are primarily referred to
the amounts received from various levels of local governments from time to time which are granted for general corporate purposes and to
support its ongoing operations in the region. The grants are determined at the discretion of the relevant government authority and there
are no restrictions on their use. The government subsidies amounted to RMB
(j) Sales and marketing expenses
Sales and marketing expenses consist primarily
of advertising and market promotion expenses. The advertising and market promotion expenses amounted to RMB
F-13
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The Company follows the liability method in accounting for income taxes in accordance to ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. A valuation allowance would be recorded against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.
The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive loss. The Company did not recognize any interest and penalties associated with uncertain tax positions for the six months ended June 30, 2023 and 2024. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.
(l) Value added tax (“VAT”)
Revenue represents the invoiced value of service,
net of VAT. The VAT is based on gross sales price and VAT rates range up to
F-14
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Earnings (loss) per share
The Company computes earnings (loss) per share
(“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted
EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents
the dilutive effect on a per share basis of the potential common shares (e.g., convertible securities, options and warrants) as if they
had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive
effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Contingently
issuable shares were not included in the computation of diluted shares outstanding if they were not issuable should the end of the reporting
period have been the end of the contingency period. For the six months ended June 30, 2023 and 2024, there was
(n) Non-controlling interests
(o) Segment reporting
The Company follows ASC 280, “Segment Reporting.” The Company’s Chief Executive Officer or chief operating decision-maker reviews the consolidated financial results when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has only one reportable segment. As the Company’s long-lived assets are substantially all located in the PRC and the majority of the Company’s revenues are derived from within the PRC, no geographical segments are presented.
F-15
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Recent accounting pronouncements
In March 2023, the FASB issued ASU 2023-03, which amends various SEC paragraphs in the Accounting Standards Codification. This includes amendments to Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718). The amendments are in response to SEC Staff Accounting Bulletin No. 120 and other SEC staff announcements and guidance. This ASU does not introduce new guidance and therefore does not have a specified transition or effective date. However, for smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2023. The adoption of this ASU did not have any material impact on the Company’s unaudited condensed consolidated interim financial statements and disclosure.
In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the process of evaluating the impact of the new guidance on its unaudited condensed consolidated unaudited condensed financial statements.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the Company’s unaudited condensed consolidated interim financial statements.
3. CONCENTRATION OF RISK
(a) Credit risk
Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables
included in prepaid expenses, other current assets, and amounts due from related parties. As of December 31, 2023 and June
30, 2024, RMB
For the credit risk related to accounts receivable, the Company adopted Credit Losses (Topic 326) effective January 1, 2023. The company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
F-16
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
3. CONCENTRATION OF RISK (CONTINUED)
(b) Currency convertibility risk
Substantially all of the Company’s businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China. However, the unification of the exchange rates does not imply the convertibility of RMB (¥) into US$ ($) or other foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
(c) Significant customers
For the six months ended June 30, 2023 and 2024, no customer individually represents greater than 10% of the total revenue, respectively.
(d) Significant suppliers
For the six months ended
June 30, 2023, one vendor accounted for
4. ACQUISITION
4.1 Acquisition of SJ Verse
On October 7, 2023, Scienjoy Verse Tech Ltd entered
into a share acquisition agreement with a third party to pursuant
| RMB | ||||
| Cash acquired | ||||
| Prepaid expenses and other current assets | ||||
| Property and equipment, net | ||||
| Goodwill | ||||
| Total assets | ||||
| Current liabilities | ||||
| Non-current liabilities | ||||
| Total liabilities | ||||
| ( | ) | |||
| Total consideration | ||||
F-17
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
5. ACCOUNTS RECEIVABLE, NET
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Accounts receivable | ||||||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Accounts receivable, net | ||||||||||||
| For the year ended December 31, | For the six months ended June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Beginning balance | ||||||||||||
| Additions | ||||||||||||
| Exchange difference | - | - | ||||||||||
| Ending balance | ||||||||||||
Three unrelated distributors accounted for
6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| VAT recoverable | ||||||||||||
| Prepaid expense | ||||||||||||
| Investment buyback receivable (1) | ||||||||||||
| Loan receivable (2) | ||||||||||||
| Other receivables | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| (1) | |
| (2) | (i) On March 2, 2023, the Company lent RMB
(ii) On October 10, 2023, the Company lent RMB
(iii) During six months ended June 30, 2024, the Company made several loans to two third parties. These loans terms were for |
F-18
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
7. Lease
The Company has several operating leases for offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Total lease expense for the six months ended June
30, 2023 and 2024 amounted to RMB
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Right-of-use assets, net | ||||||||||||
| Operating lease liabilities - current | ||||||||||||
| Operating lease liabilities - non-current | ||||||||||||
| Total operating lease liabilities | ||||||||||||
| Remaining lease term and discount rate: | |||
| Weighted average remaining lease term (years) | |||
| Weighted average discount rate |
| Twelve months ending June 30, | RMB | US$ | ||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total future minimum lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | ||||||||
8. INCOME TAXES
Enterprise income tax
British Virgin Islands
Under the current laws of the British Virgin Islands, the Company incorporated in the British Virgin Islands is not subject to tax on income or capital gain. Additionally, the British Virgin Islands does not impose a withholding tax on payments of dividends to shareholders.
Cayman Islands
Under the current laws of the Cayman Islands, the subsidiary of the Company incorporated in the Cayman Islands is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Singapore
Under Singapore tax laws, subsidiaries in Singapore
are subject to statutory income tax rate at
F-19
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
8. INCOME TAXES (CONTINUED)
Dubai
Subsidiaries in Dubai are subject to statutory
income tax rate at
Hong Kong
Under the current Hong Kong Inland Revenue Ordinance,
the subsidiary of the Company in Hong Kong is subject to
The PRC
The Company’s subsidiaries and the VIE that
are each incorporated in the PRC are subject to Corporate Income Tax (“CIT”) on the taxable income as reported in their respective
statutory financial statements adjusted in accordance with the new PRC Enterprise Income Tax Laws (“PRC Income Tax Laws”)
effective from January 1, 2008. Pursuant to the PRC Income Tax Laws, the Company’s PRC subsidiaries and the VIE are subject to a
CIT statutory rate of
Under the PRC Income Tax Laws, an enterprise which qualifies as a High
and New Technology Enterprise (the “HNTE”) is entitled to a preferential tax rate of
Under the PRC Income Tax Laws, during the period
from January 1, 2010 to December 31, 2030, an enterprise which established in region of Holgus and Kashgar is entitled to a preferential
tax rate of
Holgus X qualifies for the conditions and entitled
for a preferential tax rate of
Uncertain tax positions
The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur any interest or penalty related to potential underpaid income tax expenses for the six months ended June 30, 2023 and 2024, and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2024.
F-20
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
8. INCOME TAXES (CONTINUED)
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Current income tax expense | ||||||||||||
| Deferred income tax (benefit)expense | ( | ) | ||||||||||
| Income tax (benefit) expenses | ( | ) | ||||||||||
| For the six months ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| Income tax computed at PRC statutory tax rate | % | % | ||||||
| Effect of tax-preferential entities | ( | )% | ( | )% | ||||
| Non-deductible expenses | % | % | ||||||
| Income tax (benefit) expense | ( | )% | % | |||||
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Deferred tax assets: | ||||||||||||
| Allowance for doubtful accounts | ||||||||||||
| Net operating losses carried forward | ||||||||||||
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets for the Company. Thus, there were no valuation allowances as of December 31, 2023 and June 30, 2024 for the deferred tax assets.
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Deferred tax liabilities | ||||||||||||
| Intangible assets acquired through acquisition | ||||||||||||
F-21
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
9. RELATED PARTY BALANCES AND TRANSACTIONS
| Name of Related Parties | Relationship with the Company | |
| Mr. He Xiaowu | ||
| Enmoli Inc. | ||
| Sixiang Zhuohong Private Equity LP |
| For the six months ended June 30, | ||||||||||||||
| 2023 | 2024 | 2024 | ||||||||||||
| RMB | RMB | US$ | ||||||||||||
| Sixiang Zhuohong Private Equity LP | Sold | |||||||||||||
| As of December 31, | As of June 30, | |||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Amount due from related parties | ||||||||||||
| Enmoli Inc (1) | ||||||||||||
| Total | ||||||||||||
| (1) |
10. SHAREHOLDERS’ EQUITY
Ordinary Shares
The Company is authorized to issue an number of par value Class A ordinary shares and Class B ordinary shares.
On November 8, 2021, the Company’s 2021
annual general meeting of shareholders (the “AGM”) approved the following shareholders’ resolutions: (i) the adoption
of a dual-class share structure, pursuant to which the Company’s authorized share capital shall be re-classified and re-designed
into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one (1) vote and each Class
B ordinary share being entitled to ten (10) votes at a meeting of the shareholders or on any resolution of shareholders; and (ii) the
authorization to the Company to issue up to
As of June 30, 2024, the Company had
F-22
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
10. SHAREHOLDERS’ EQUITY (CONTINUED)
Shares issued for SPAC and acquisitions
Acquisition of Weiliantong
In connection of the acquisition of Weiliantong,
on March 3, 2022, the Company issued
Treasury Shares
In October, 2022, the Company repurchased an aggregate
of
In November, 2023, the Company repurchase an aggregate
of
As of June 30, 2024, all these shares were held in an escrow account as reserve solely for potential needed.
Warrants
As of June 30, 2024, there were no warrants outstanding and exercisable, and no warrants have been exercised for the six months ended June 30, 2024.
The Public Warrants became exercisable upon the
completion of the SPAC Transaction on May 7, 2020 with exercise price of US$
The Company may call the warrants for redemption
(excluding the Private Warrants), in whole and not in part, at a price of US$
| ● | at any time while the Public Warrants are exercisable, | |
| ● | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, | |
| ● | if, and only if, the reported last sale price of the Class A ordinary shares equals or exceeds US$ | |
| ● | if, and only if, there is a current registration statement in effect with respect to the issuance of the Class A ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis”. The exercise price and number of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. The Public Warrants may only be exercised for a whole number of shares, meaning that the Public Warrants must be exercised in multiples of two. However, the warrants will not be adjusted for issuances of Class A ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
F-23
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
10. SHAREHOLDERS’ EQUITY (CONTINUED)
The private warrants are identical to the public
warrants with the exercise price of US$
| Number of warrants | Weighted average life | Expiration dates | ||||||
| Balance of warrants outstanding as of December 31, 2022 | ||||||||
| Balance of warrants outstanding as of December 31, 2023 | ||||||||
| Forfeited | ( | ) | - | - | ||||
| Balance of warrants outstanding as of June 30, 2024 | - | |||||||
| Balance of warrants exercisable as of June 30, 2024 | - | |||||||
Unit Purchase Option
On February 8, 2019, the Company sold to
Chardan, for $
Liability Classified Warrants
All of the Company’s outstanding warrants contain a contingent cash payment feature and therefore were accounted for as a liability and are adjusted to fair value at each balance sheet date. The change in fair value of the warrant liability is recorded as change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive loss (Note 2).
The Company accounted for the unit purchase option,
inclusive of the receipt of $
F-24
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
10. SHAREHOLDERS’ EQUITY (CONTINUED)
Shares to be issued
As of December 31, 2023, Weiliantong achieved
As of June 30, 2024 and the December 31, 2023, the rest of shares to
be issued amounted to RMB
2021 Equity Incentive Plan
On August 3, 2021, the Employee Share Option Committee
(the “ESOP Committee”) of the Company approved a resolution which appointed the Chief Executive Officer and Chief Operating
Officer as Authorized Officer of ESOP Committee to grant share options to employees, directors, advisors, consultants and service providers
of the Company. In 2021, the ESOP Committee approved the granting of
11. STATUTORY RESERVES AND RESTRICTED NET ASSETS
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries.
In accordance with the PRC Regulations on Enterprises
with Foreign Investment and the articles of association of the Company’s PRC subsidiaries, a foreign-invested enterprise established
in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare
and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign-invested
enterprise is required to allocate at least
Foreign exchange and other regulations in the
PRC may further restrict the Company’s VIE from transferring funds to the Company in the form of dividends, loans and advances.
Amounts restricted include paid-in capital, additional paid-in capital and statutory reserves of the Company’s PRC Subsidiaries
and the equity of VIE, as determined pursuant to PRC generally accepted accounting principles. As of December 31, 2023 and June 30, 2024,
restricted net assets of the Company’s PRC subsidiaries and VIE were RMB
F-25
SCIENJOY HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data or otherwise stated)
12. COMMITMENTS AND CONTINGENCIES
(a) Capital and Other Commitments
The Company did not have significant capital and other commitments as of December 31, 2023 and June 30, 2024.
(b) Contingencies
From time to time, the Company is party to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed consolidated financial statements.
13. SUBSEQUENT EVENTS
The Company evaluated all events and transactions that occurred after June 30, 2024 up through the date the Company issued these unaudited condensed consolidated financial statements, for disclosure or recognition in the unaudited condensed consolidated financial statements of the Company as appropriate.
F-26
Document And Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Document Information Line Items | |
| Entity Registrant Name | SCIENJOY HOLDING CORPORATION |
| Document Type | 6-K |
| Current Fiscal Year End Date | --12-31 |
| Amendment Flag | false |
| Entity Central Index Key | 0001753673 |
| Document Period End Date | Jun. 30, 2024 |
| Document Fiscal Year Focus | 2024 |
| Document Fiscal Period Focus | Q2 |
| Entity File Number | 001-38799 |
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
|
Jun. 30, 2024
¥ / shares
shares
|
Dec. 31, 2023
¥ / shares
shares
|
Jun. 30, 2024
$ / shares
shares
|
|
| Class A Ordinary Shares | |||
| Ordinary share, par value (in Dollars per share and Yuan Renminbi per share) | (per share) | |||
| Ordinary shares, issued | 38,920,797 | 38,113,879 | 38,920,797 |
| Ordinary shares, outstanding | 38,920,797 | 38,113,879 | 38,920,797 |
| Ordinary shares, authorized | Unlimited | Unlimited | |
| Class B Ordinary Shares | |||
| Ordinary share, par value (in Dollars per share and Yuan Renminbi per share) | (per share) | |||
| Ordinary shares, issued | 2,925,058 | 2,925,058 | 2,925,058 |
| Ordinary shares, outstanding | 2,925,058 | 2,925,058 | 2,925,058 |
| Ordinary shares, authorized | Unlimited | Unlimited |
Unaudited Condensed Consolidated Statements of Changes in Equity ¥ in Thousands, $ in Thousands |
Ordinary shares
CNY (¥)
shares
|
Ordinary shares
USD ($)
shares
|
Shares to be issued
CNY (¥)
|
Shares to be issued
USD ($)
|
Treasury stocks
CNY (¥)
shares
|
Treasury stocks
USD ($)
shares
|
Statutory reserves
CNY (¥)
|
Statutory reserves
USD ($)
|
Retained earnings
CNY (¥)
|
Retained earnings
USD ($)
|
Accumulated other comprehensive income
CNY (¥)
|
Accumulated other comprehensive income
USD ($)
|
Non-controlling interests
CNY (¥)
|
Non-controlling interests
USD ($)
|
CNY (¥) |
USD ($) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance (in Dollars) | ¥ 420,776 | ¥ 33,923 | ¥ (16,482) | ¥ 39,208 | ¥ 665,099 | ¥ 18,070 | ¥ 1,892 | ¥ 1,162,486 | ||||||||
| Balance (in Shares) | shares | 39,609,726 | 39,609,726 | (794,120) | (794,120) | ||||||||||||
| Balance at Dec. 31, 2022 | ¥ 420,776 | 33,923 | ¥ (16,482) | 39,208 | 665,099 | 18,070 | 1,892 | 1,162,486 | ||||||||
| Balance (in Shares) at Dec. 31, 2022 | shares | 39,609,726 | 39,609,726 | (794,120) | (794,120) | ||||||||||||
| Net income | 81,586 | (2,247) | 79,339 | |||||||||||||
| Issuance of shares for achievement of earnout target | ¥ 13,106 | (13,106) | ||||||||||||||
| Issuance of shares for achievement of earnout target (in Shares) | shares | 995,118 | 995,118 | ||||||||||||||
| Share based compensation | ¥ 8,613 | 8,613 | ||||||||||||||
| Appropriation to statutory reserves | 3,741 | (3,741) | ||||||||||||||
| Foreign currency translation adjustments | (498) | (498) | ||||||||||||||
| Balance at Jun. 30, 2023 | ¥ 442,495 | 20,817 | ¥ (16,482) | 42,949 | 742,944 | 17,572 | (355) | 1,249,940 | ||||||||
| Balance (in Shares) at Jun. 30, 2023 | shares | 40,604,844 | 40,604,844 | (794,120) | (794,120) | ||||||||||||
| Balance (in Dollars) | ¥ 442,495 | 20,817 | ¥ (16,482) | 42,949 | 742,944 | 17,572 | (355) | 1,249,940 | ||||||||
| Balance (in Shares) | shares | 40,604,844 | 40,604,844 | (794,120) | (794,120) | ||||||||||||
| Balance (in Dollars) | ¥ 447,519 | 30,777 | ¥ (19,216) | 44,698 | 628,821 | 17,965 | (837) | 1,149,727 | ||||||||
| Balance (in Shares) | shares | 41,038,937 | 41,038,937 | (913,845) | (913,845) | ||||||||||||
| Balance at Dec. 31, 2023 | ¥ 447,519 | 30,777 | ¥ (19,216) | 44,698 | 628,821 | 17,965 | (837) | 1,149,727 | ||||||||
| Balance (in Shares) at Dec. 31, 2023 | shares | 41,038,937 | 41,038,937 | (913,845) | (913,845) | ||||||||||||
| Net income | 41,920 | (5,693) | 36,227 | $ 4,984 | ||||||||||||
| Issuance of shares for achievement of earnout target | ¥ 9,960 | (9,960) | ||||||||||||||
| Issuance of shares for achievement of earnout target (in Shares) | shares | 403,089 | 403,089 | ||||||||||||||
| Share based compensation | ¥ 5,629 | 5,629 | ||||||||||||||
| Share based compensation (in Shares) | shares | 403,829 | 403,829 | ||||||||||||||
| Appropriation to statutory reserves | 3,342 | (3,342) | ||||||||||||||
| Foreign currency translation adjustments | (608) | (12) | (620) | |||||||||||||
| Balance at Jun. 30, 2024 | ¥ 463,108 | $ 63,726 | 20,817 | $ 2,865 | ¥ (19,216) | $ (2,644) | 48,040 | $ 6,611 | 667,399 | $ 91,837 | 17,357 | $ 2,388 | (6,542) | $ (900) | 1,190,963 | 163,883 |
| Balance (in Shares) at Jun. 30, 2024 | shares | 41,845,855 | 41,845,855 | (913,845) | (913,845) | ||||||||||||
| Balance (in Dollars) | ¥ 463,108 | $ 63,726 | ¥ 20,817 | $ 2,865 | ¥ (19,216) | $ (2,644) | ¥ 48,040 | $ 6,611 | ¥ 667,399 | $ 91,837 | ¥ 17,357 | $ 2,388 | ¥ (6,542) | $ (900) | ¥ 1,190,963 | $ 163,883 |
| Balance (in Shares) | shares | 41,845,855 | 41,845,855 | (913,845) | (913,845) |
Organization and Principal Activities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Organization and Principal Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Scienjoy Holding Corporation (the “Company” or “Scienjoy”) through its subsidiaries, and variable interest entities(“VIE”) and its subsidiaries (collectively the “Group”) are principally engaged in operating its own live streaming platforms in the People’s Republic of China (the “PRC”), which enable users to view and interact with broadcasters through online chat, virtual items and playing games. The primary theme of the Company’s platform is entertainment live streaming.
(a) Recent developments
On April 11, 2024, the Company formed a 51% owned subsidiary Scenovo Pte. Ltd. and its 70% owned subsidiary Techjoy Pte. Ltd.in Singapore, which are engaged in developing business in developing multi-channel network business in Singapore and other international markets.
On May 30, 2024, the Company formed a wholly 51% owned subsidiary Hangzhou Sixiang Fengjing Culture Technology Co., Ltd. in Zhejiang PRC, as an investment holding company.’
(b) Organization
Subsidiaries of the Company and VIEs where the Company is the primary beneficiary include the following:
|
Summary of Significant Accounting Policies |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2023 and 2024 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in Scienjoy Holding Corporation’s annual financial statements for the fiscal year ended December 31, 2023 filed with the SEC on April 26, 2024.
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, and its VIE and VIE’s subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE are eliminated upon consolidation.
(b) Business combinations
The Company accounts for all business combinations under the purchase method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase method of accounting requires that the consideration transferred to be allocated to net assets including separately identifiable assets and liabilities the Company acquired, based on their estimated fair value. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of the cost of the acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings. The determination and allocation of fair values to the identifiable net assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable judgment from management. Although the Company believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
(c) Use of estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to revenue recognition, estimating the useful lives of long-lived assets and intangible assets, valuation assumptions in performing asset impairment tests of long-lived assets, allowance for credit losses, and valuation of deferred taxes and deferred tax assets. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
(d) Foreign currency
The functional currency of the Company is in US dollars and the functional currency of the Company’s subsidiaries and VIEs are Renminbi (“RMB”), as determined based on the criteria of Accounting Standards Codification (“ASC”) 830 (“ASC 830”) “Foreign Currency Matters”. The reporting currency of the Company is also the RMB.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange in place at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of operations.
Assets and liabilities of the Company translated from their respective functional currencies to the reporting currency at the exchange rates at the balance sheet dates, equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period. The resulting foreign currency translation adjustment are recorded in other comprehensive income (loss).
(e) Convenience translation
Translations of balances in the consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated statements of cash flows from RMB into USD (or “US$”) as of and for the six months ended June 30, 2024 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB7.2672, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on the last trading day of June 30, 2024. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate.
(f) Accounts receivable and allowance for credit losses
Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts.
The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. The Company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable.
(g) Fair value of financial instruments
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses and other current assets, accounts payables, balances with related parties and other current liabilities, approximate their fair values because of the short-term maturity of these instruments.
Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis
The following tables represent the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and June 30, 2024:
Warrant liabilities
The Company’s warrants assumed from SPAC acquisition on May 7,2020, the date of the closing of SPAC Transaction, that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative as contemplated in ASC 815-40. The warrant is recorded as derivative liability on the consolidated balance sheet upon the SPAC transaction and is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain in accordance with ASC 820.
On February 5, 2024, all above warrants expired and were cancelled according to the terms of the warrant agreement.
(h) Revenue recognition
The Company applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. Revenues are recognized when control of the promised virtual items or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those virtual items or services. Revenue is recorded, net of sales related taxes and surcharges.
Live streaming
The Company is principally engaged in operating its own live streaming platforms, which enable broadcasters and viewers to interact with each other during live streaming. The Company is responsible for providing a technological infrastructure to enable the broadcasters, online users and viewers to interact through live streaming platforms. All the platforms can be accessed for free. The Company mainly derives the revenue from sales of virtual items in the platforms. The Company has a recharge system for users to purchase the Company’s virtual currency then purchase virtual items for use. Users can recharge via various online third-party payment platforms, including WeChat Pay, AliPay and other payment platforms. Virtual currency is non-refundable and often consumed soon after it is purchased.
The Company designs, creates and offers various virtual items for sales to users with pre-determined stand-alone selling price. Virtual items are categorized as consumable and time-based items. Consumable items are consumed upon purchase and use while time-based items could be used for a fixed period of time. Users can purchase and present consumable items to broadcasters to show support for their favorite broadcasters, or purchase time-based virtual items for one or multiple months for a monthly fee, which provide users with recognized status, such as priority speaking rights or special symbols over a period of time.
The Company shares a portion of the sales proceeds of virtual items (“revenue sharing fee”) with broadcasters and talent agencies in accordance with their revenue sharing arrangements. Broadcasters, who do not have revenue sharing arrangements with the Company, are not entitled to any revenue sharing fee. The Company also utilizes third-party payment collection channels, which charges the payment handling cost for users to purchase the virtual currency directly from it. The payment handling costs are recorded in cost of sales.
The Company evaluates and determines that it is the principal and views users to be its customers, because the Company controls the virtual items before they are transferred to users. Its control is evidenced by the Company’s sole ability to monetize the virtual items before they are transferred to users, and is further supported by the Company being primarily responsible to the users for the delivery of the virtual items as well as having full discretion in establishing pricing for the virtual items. Accordingly, the Company reports live streaming revenues on a gross basis with the amounts billed to users recorded as revenues and revenue sharing fee paid to broadcasters and related agencies recorded as cost of revenues.
Sales proceeds are initially recorded as deferred revenue and recognized as revenue based on the consumption of the virtual items. The Company has determined that each individual virtual item represents a distinct performance obligation. Accordingly, live streaming revenue is recognized immediately when the consumable virtual item is used, or in the case of time-based virtual items, revenue is recognized over the fixed period on a straight-line basis. The Company does not have further obligations to the user after the virtual items are consumed. The Company’s live streaming virtual items are generally sold without right of return and the Company does not provide any other credit and incentive to its users. Unconsumed virtual currency is recorded as deferred revenue.
The Company also cooperates with independent third-party distributors to sell virtual currency through annual distribution agreements with these distributors. Third-party distributors purchase virtual currency from the Company with no refund provision according to the annual distribution agreements, and they are responsible for selling the virtual currency to end users. They may engage their own sales representatives, which are referred to as “sales agents” to directly sell to individual end users. The Company has no control over such “sales agents”. The Company has discretion to determine the price of the virtual currency sold to its third-party distributors, but has no discretion as to the price at which virtual currency is sold by its third-party distributors to the sales agents.
Technical services and others
The Company generated technical and other revenues from providing multi-channel network (“MCN”) agency service, technical development, advisory and others, which accounts for only approximately 2% or less of revenue for the six months ended June 30, 2023 and 2024. 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.
Revenue by types and platforms
The following table sets forth types of our revenue for the periods indicated:
As of June 30, 2024, we operated five brands of live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming (including BeeLive Chinese version – Mifeng) and Hongle Live Streaming. The following table sets forth our revenue by platforms for the periods indicated:
Contract balances
Contract balances include accounts receivable and deferred revenue. Accounts receivable primarily represent cash due from distributors and are recorded when the right to consideration is unconditional. The allowance for doubtful accounts reflects the best estimate of probable losses inherent to the account receivable balance. Deferred revenue primarily includes unconsumed virtual currency and unamortized revenue from time-based virtual items in the Company’s platforms, where there is still an obligation to be provided by the Company, which will be recognized as revenue when all of the revenue recognition criteria are met. Due to the generally short-term duration of the relevant contracts, all performance obligations are satisfied within one year.
(i) Government subsidies
Government subsidies are primarily referred to the amounts received from various levels of local governments from time to time which are granted for general corporate purposes and to support its ongoing operations in the region. The grants are determined at the discretion of the relevant government authority and there are no restrictions on their use. The government subsidies amounted to RMB459 and RMB703 (US$97) for the six months ended June 30, 2023 and 2024 are recorded as other income.
(j) Sales and marketing expenses
Sales and marketing expenses consist primarily of advertising and market promotion expenses. The advertising and market promotion expenses amounted to RMB465 and RMB2,045 (US$281) for the six months ended June 30, 2023 and 2024, respectively.
(k) Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The Company follows the liability method in accounting for income taxes in accordance to ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. A valuation allowance would be recorded against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.
The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive loss. The Company did not recognize any interest and penalties associated with uncertain tax positions for the six months ended June 30, 2023 and 2024. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.
(l) Value added tax (“VAT”)
Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company’s subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing.
(m) Earnings (loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Contingently issuable shares were not included in the computation of diluted shares outstanding if they were not issuable should the end of the reporting period have been the end of the contingency period. For the six months ended June 30, 2023 and 2024, there was 212,608 and 296,543 shares related to RSU incentive plan, respectively.
(n) Non-controlling interests
As of June 30, 2024, non-controlling interests represent 49% non-controlling shareholders’ interests in HCHY, 49% non-controlling shareholders’ interests in SXFJ, 49% non-controlling shareholders’ interests in Scienjoy Verse, 10% non-controlling shareholders’ interests in SJ Verse, 49% non-controlling shareholders’ interests in Scenovo SG and 30% non-controlling shareholders’ interests in Techjoy SG. The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the operating results of the Company are presented on the face of the consolidated statements of comprehensive income (loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders of the Company.
(o) Segment reporting
The Company follows ASC 280, “Segment Reporting.” The Company’s Chief Executive Officer or chief operating decision-maker reviews the consolidated financial results when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has only one reportable segment. As the Company’s long-lived assets are substantially all located in the PRC and the majority of the Company’s revenues are derived from within the PRC, no geographical segments are presented.
(v) Recent accounting pronouncements
In March 2023, the FASB issued ASU 2023-03, which amends various SEC paragraphs in the Accounting Standards Codification. This includes amendments to Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718). The amendments are in response to SEC Staff Accounting Bulletin No. 120 and other SEC staff announcements and guidance. This ASU does not introduce new guidance and therefore does not have a specified transition or effective date. However, for smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2023. The adoption of this ASU did not have any material impact on the Company’s unaudited condensed consolidated interim financial statements and disclosure.
In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the process of evaluating the impact of the new guidance on its unaudited condensed consolidated unaudited condensed financial statements.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the Company’s unaudited condensed consolidated interim financial statements. |
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Concentration of Risk |
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| Concentration of Risk [Abstract] | |
| CONCENTRATION OF RISK | 3. CONCENTRATION OF RISK
(a) Credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses, other current assets, and amounts due from related parties. As of December 31, 2023 and June 30, 2024, RMB199,822 and RMB173,929 (US$23,933), respectively, were deposited with major financial institutions located in the PRC. There is a RMB500,000 deposit insurance limit for a legal entity’s aggregated balance at each mainland PRC bank, and the bank deposits with financial institutions in the Hong Kong Special Administrative Region are insured by the government authority up to HKD 500,000. Management believes that these financial institutions are of high credit quality and continually monitor the credit worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests.
For the credit risk related to accounts receivable, the Company adopted Credit Losses (Topic 326) effective January 1, 2023. The company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
(b) Currency convertibility risk
Substantially all of the Company’s businesses are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China. However, the unification of the exchange rates does not imply the convertibility of RMB (¥) into US$ ($) or other foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
(c) Significant customers
For the six months ended June 30, 2023 and 2024, no customer individually represents greater than 10% of the total revenue, respectively.
(d) Significant suppliers
For the six months ended June 30, 2023, one vendor accounted for 11.8% of the Company’s total purchases. For the six months ended June 30, 2024, one vendor accounted for 14.3% of the Company’s total purchases. As of December 31, 2023, one vendor accounted for 11.1% of the Company’s accounts payable. As of June 30, 2024, no vendor accounted for greater than 10% of the Company’s accounts payable. |
Acquisition |
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| Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACQUISITION | 4. ACQUISITION
4.1 Acquisition of SJ Verse
On October 7, 2023, Scienjoy Verse Tech Ltd entered into a share acquisition agreement with a third party to pursuant 90% equity in SJ Verse (formerly name as “Nujoom Almashareq Media L.L.C”) for a consideration of US$1,000 (RMB7,092). The transaction was completed on October 7, 2023. SJ Verse is a Dubai-based multi-channel network (MCN) committed to discovering, nurturing, and propelling emerging content creators into the spotlight. The historical operating results of SJ Verse were not significant to the Company. The Company believes the SJ Verse acquisition will help to explore oversea market. The SJ Verse acquisition was accounted for as business combination in accordance with ASC 805. Acquisition-related costs incurred for the acquisitions are not material. The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition based on a valuation performed by an independent valuation firm engaged by the Company.
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Accounts Receivable, Net |
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| ACCOUNTS RECEIVABLE, NET | 5. ACCOUNTS RECEIVABLE, NET
Accounts receivable and allowance for credit losses consist of the following:
An analysis of the allowance for credit losses is as follows:
Three unrelated distributors accounted for 30.3%, 24.8% and 12.1% of the Company’s accounts receivable as of December 31, 2023, respectively. Four unrelated distributors accounted for 37.0%, 23.2%, 12.3%, and 10.0% of the Company’s accounts receivable as of June 30, 2024, respectively. |
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Prepaid Expenses and Other Current Assets |
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| PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
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Lease |
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| Lease [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASE | 7. Lease
The Company has several operating leases for offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Total lease expense for the six months ended June 30, 2023 and 2024 amounted to RMB3,627 and RMB4,585 (US$631), respectively.
Supplemental balance sheet information related to operating leases was as follows:
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:
Maturities of lease liabilities were as follows:
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Income Taxes |
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| Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | 8. INCOME TAXES
Enterprise income tax
British Virgin Islands
Under the current laws of the British Virgin Islands, the Company incorporated in the British Virgin Islands is not subject to tax on income or capital gain. Additionally, the British Virgin Islands does not impose a withholding tax on payments of dividends to shareholders.
Cayman Islands
Under the current laws of the Cayman Islands, the subsidiary of the Company incorporated in the Cayman Islands is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Singapore
Under Singapore tax laws, subsidiaries in Singapore are subject to statutory income tax rate at 17.0% if revenue is generated in Singapore and there are no withholding taxes in Singapore on remittance of dividends.
Dubai
Subsidiaries in Dubai are subject to statutory income tax rate at 9% above the threshold of .
Hong Kong
Under the current Hong Kong Inland Revenue Ordinance, the subsidiary of the Company in Hong Kong is subject to 16.5% Hong Kong profit tax on its taxable income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.
The PRC
The Company’s subsidiaries and the VIE that are each incorporated in the PRC are subject to Corporate Income Tax (“CIT”) on the taxable income as reported in their respective statutory financial statements adjusted in accordance with the new PRC Enterprise Income Tax Laws (“PRC Income Tax Laws”) effective from January 1, 2008. Pursuant to the PRC Income Tax Laws, the Company’s PRC subsidiaries and the VIE are subject to a CIT statutory rate of 25%.
Under the PRC Income Tax Laws, an enterprise which qualifies as a High and New Technology Enterprise (the “HNTE”) is entitled to a preferential tax rate of 15% provided it continues to meet HNTE qualification standards on an annual basis. SG qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2018 to 2023. SG is renewing the HNTEs. HX qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2017 to 2026. LH qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2016 to 2024. WLT qualifies as an HNTE and is entitled for a preferential tax rate of 15% from 2017 to 2026.
Under the PRC Income Tax Laws, during the period from January 1, 2010 to December 31, 2030, an enterprise which established in region of Holgus and Kashgar is entitled to a preferential tax rate of 0% in five consecutive years and a preferential tax rate of 9% for the next five years since the first-year income generated from operations provided it continues to meet the conditions within the required scope.
Holgus X qualifies for the conditions and entitled for a preferential tax rate of 0% from 2017 to 2021 and a preferential tax rate of 9% from 2022 to 2026. Kashgar Times qualifies for the conditions and entitled for a preferential tax rate of 0% from 2016 to 2020 and a preferential tax rate of 9% from 2021 to 2025. Holgus H qualifies for the conditions and entitled for a preferential tax rate of 0% from 2020 to 2025 and a preferential tax rate of 9% from 2026 to 2030. Kashgar Lehong qualifies for the conditions and entitled for a preferential tax rate of 0% from 2020 to 2025 and a preferential tax rate of 9% from 2026 to 2030. For the six months ended June 30, 2023 and 2024, total tax saving for the preferential tax rate were RMB33,058 and RMB3,610 (US$497), respectively, the impacts on basic EPS were RMB0.8 and RMB0.1 (US$0.0), respectively, and the impacts on dilutive EPS were RMB0.8 and RMB0.1 (US$0.0), respectively.
Uncertain tax positions
The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur any interest or penalty related to potential underpaid income tax expenses for the six months ended June 30, 2023 and 2024, and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2024.
The income tax expenses comprise:
A reconciliation of the differences between the statutory tax rate and the effective tax rate for EIT for the six months ended June 30, 2023 and 2024 is as follows:
The components of deferred taxes are as follows:
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets for the Company. Thus, there were no valuation allowances as of December 31, 2023 and June 30, 2024 for the deferred tax assets.
The components of deferred liabilities are as follows:
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Related Party Balances and Transactions |
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| RELATED PARTY BALANCES AND TRANSACTIONS | 9. RELATED PARTY BALANCES AND TRANSACTIONS
In addition to the information disclosed elsewhere in the financial statements, the principal related parties with which the Company had transactions during the years presented are as follows:
For the six months ended June 30, 2024, significant related party transactions were as follows:
As of December 31, 2023 and June 30, 2024, the amounts due from related parties are as follows:
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Shareholders' Equity |
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| SHAREHOLDERS’ EQUITY | 10. SHAREHOLDERS’ EQUITY
Ordinary Shares
The Company is authorized to issue an number of par value Class A ordinary shares and Class B ordinary shares.
On November 8, 2021, the Company’s 2021 annual general meeting of shareholders (the “AGM”) approved the following shareholders’ resolutions: (i) the adoption of a dual-class share structure, pursuant to which the Company’s authorized share capital shall be re-classified and re-designed into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one (1) vote and each Class B ordinary share being entitled to ten (10) votes at a meeting of the shareholders or on any resolution of shareholders; and (ii) the authorization to the Company to issue up to 50,000,000 Class A Preferred Shares with such designations, powers, preferences and relative, participation, optional and other rights, if any, and such qualifications, limitations and restrictions as the directors may determine among other matters. Additionally, together with the adoption of a dual-class share structure, 2,625,058 Class A ordinary shares held by Heshine Holdings Limited have been converted into 2,625,058 Class B ordinary shares.
As of June 30, 2024, the Company had 38,920,797 Class A ordinary shares and 2,925,058 Class B ordinary shares issued and outstanding.
Shares issued for SPAC and acquisitions
Acquisition of Weiliantong
In connection of the acquisition of Weiliantong, on March 3, 2022, the Company issued 3,898,511 Class A ordinary shares to the original shareholders of Weiliantong as part of total RMB180,000 worth share consideration, which was calculated based on US$5.13 per share based on the 20 days average closing price of the Company’s Class A ordinary shares prior to the acquisition. The fair value of the shares issued approximated RMB127,000 as part of the purchase consideration. On April 7, 2023, the Company issued 487,314 Class A ordinary shares for achieving Earn-out Target 2022. On April 8, 2024, the Company issued 403,089 Class A ordinary shares for achieving Earn-out Target 2023 (details see shares to be issued in Note 10).
Treasury Shares
In October, 2022, the Company repurchased an aggregate of 794,120 Class A ordinary shares at price of US$3.01 per share, which was recorded as treasury shares.
In November, 2023, the Company repurchase an aggregate of 119,725 Class A ordinary shares at price of US$3.2 per share, which was recorded as treasury shares.
As of June 30, 2024, all these shares were held in an escrow account as reserve solely for potential needed.
Warrants
As of June 30, 2024, there were no warrants outstanding and exercisable, and no warrants have been exercised for the six months ended June 30, 2024.
The Public Warrants became exercisable upon the completion of the SPAC Transaction on May 7, 2020 with exercise price of US$11.5 per full share. The Public Warrants will expire five years from February 5, 2019 (or February 5, 2024).
The Company may call the warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of US$0.01 per warrant:
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis”. The exercise price and number of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. The Public Warrants may only be exercised for a whole number of shares, meaning that the Public Warrants must be exercised in multiples of two. However, the warrants will not be adjusted for issuances of Class A ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
The private warrants are identical to the public warrants with the exercise price of US$11.5 per full share and expiration by February 5, 2024, except that the private warrants and the Class A ordinary shares issuable upon the exercise of the private warrants will not be transferable, assignable or salable until after the completion of the SPAC Transaction, subject to certain limited exceptions. The private warrants may only be exercised for a whole number of shares, meaning that the private warrants must be exercised in multiples of two. Additionally, the private warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than the initial purchasers or their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.
As of June 30, 2024, the Company had no exercisable warrants. A summary of warrants activity for the years ended December 31, 2023 and 2022 is as follows:
Unit Purchase Option
On February 8, 2019, the Company sold to Chardan, for $100, an option to purchase up to 375,000 Units exercisable at $11.50 per Unit (or an aggregate exercise price of $4,312,500) exercisable on the completion of the SPAC Transaction on May 7, 2020. On February 20, 2019, in connection with the underwriters’ election to exercise the over-allotment option in full, the Company issued Chardan an option to purchase up to an additional 56,250 Units exercisable at $11.50 per Unit for no additional consideration. Each Unit consists of one ordinary share, one redeemable warrant and one right (together “UPO”). The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires February 5, 2024. For the year ended December 31, 2021, 100,000 UPO have been exercised for 100,000 warrants and 110,000 shares. As of June 30, 2024, the Company had no exercisable UPO units.
Liability Classified Warrants
All of the Company’s outstanding warrants contain a contingent cash payment feature and therefore were accounted for as a liability and are adjusted to fair value at each balance sheet date. The change in fair value of the warrant liability is recorded as change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive loss (Note 2).
The Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated the fair value of the unit purchase option is approximately $1,286,000, or $2.98 per Unit, using the Black-Scholes option-pricing model. The fair value of the unit purchase option granted to the underwriters was estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 2.44% and (3) expected life of five years. The option and such units purchased pursuant to the option, as well as the Class A ordinary shares underlying such units, the rights included in such units, the Class A ordinary shares that are issuable for the rights included in such units, the warrants included in such units, and the shares underlying such warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners. The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the registration statement with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of Class A ordinary shares at a price below its exercise price.
Shares to be issued
As of December 31, 2023, Weiliantong achieved 82.72% of Weiliantong Earn-out Target 2023 and the Company was obligated to issue 403,089 Class A ordinary shares (the “Weiliantong 2023 Earn-out shares”) to the original shareholders of Weiliantong. As a result, the Company classified the Weiliantong 2023 Earn-out shares with fair value of RMB9,960 as shares to be issued in the Company’s equity as of December 31, 2023. The Weiliantong 2023 earnout shares was issued on April 8, 2024 and was excluded from shares to be issued account as of June 30, 2024.
As of June 30, 2024 and the December 31, 2023, the rest of shares to be issued amounted to RMB20,817, representing the Company’s obligation to issue 636,691 Class A ordinary shares to Weilaijin with the fair value of RMB20,817 in connection with the acquisition of Weiliantong in 2022. The Company is required to issue the related shares upon receipt of exercise notice from Weilaijin.
2021 Equity Incentive Plan
On August 3, 2021, the Employee Share Option Committee (the “ESOP Committee”) of the Company approved a resolution which appointed the Chief Executive Officer and Chief Operating Officer as Authorized Officer of ESOP Committee to grant share options to employees, directors, advisors, consultants and service providers of the Company. In 2021, the ESOP Committee approved the granting of 2,053,783 Restricted Share Units (“RSU”) under the 2021 Equity Incentive Plan. As of December 31, 2022, the Company had 716,956 RSUs outstanding. For the year ended December 31, 2023, the ESOP Committee approved the granting of 512,217 RSUs under the 2021 Equity Incentive Plan. For the year ended December 31,2023,21,206 RSUs was forfeited and 434,093 RSUs was vested. As of December 31, 2023, the Company had 773,874 RSUs outstanding. For the six months ended June 30, 2024, the ESOP Committee approved the granting of 272,999 RSUs under the 2021 Equity Incentive Plan. For the year ended December 31,2023, 2,973 RSUs was forfeited and 403,829 RSUs was vested. As of June 30, 2024, the Company had 639,544 RSUs outstanding. |
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Statutory Reserves and Restricted Net Assets |
6 Months Ended |
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Jun. 30, 2024 | |
| Statutory Reserves and Restricted Net Assets [Abstract] | |
| STATUTORY RESERVES AND RESTRICTED NET ASSETS | 11. STATUTORY RESERVES AND RESTRICTED NET ASSETS
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries.
In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company’s PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign-invested enterprise is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign-invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. WXBJ and WXZJ was established as a foreign-invested enterprise and, therefore, is subject to the above mandated restrictions on distributable profits. As of December 31, 2023 and June 30, 2024, the Company had appointed RMB44,698 and RMB48,040 (US$6,611), respectively in its statutory reserves.
Foreign exchange and other regulations in the PRC may further restrict the Company’s VIE from transferring funds to the Company in the form of dividends, loans and advances. Amounts restricted include paid-in capital, additional paid-in capital and statutory reserves of the Company’s PRC Subsidiaries and the equity of VIE, as determined pursuant to PRC generally accepted accounting principles. As of December 31, 2023 and June 30, 2024, restricted net assets of the Company’s PRC subsidiaries and VIE were RMB413,117 and RMB426,418 (US$58,677), respectively. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2024 | |
| Commitments and Contingencies [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES
(a) Capital and Other Commitments
The Company did not have significant capital and other commitments as of December 31, 2023 and June 30, 2024.
(b) Contingencies
From time to time, the Company is party to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed consolidated financial statements. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2024 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS
The Company evaluated all events and transactions that occurred after June 30, 2024 up through the date the Company issued these unaudited condensed consolidated financial statements, for disclosure or recognition in the unaudited condensed consolidated financial statements of the Company as appropriate. |
Accounting Policies, by Policy (Policies) |
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| Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation and principles of consolidation | (a) Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2023 and 2024 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in Scienjoy Holding Corporation’s annual financial statements for the fiscal year ended December 31, 2023 filed with the SEC on April 26, 2024. The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, and its VIE and VIE’s subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE are eliminated upon consolidation. |
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| Business combinations | (b) Business combinations The Company accounts for all business combinations under the purchase method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase method of accounting requires that the consideration transferred to be allocated to net assets including separately identifiable assets and liabilities the Company acquired, based on their estimated fair value. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of the cost of the acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings. The determination and allocation of fair values to the identifiable net assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable judgment from management. Although the Company believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material. |
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| Use of estimates | (c) Use of estimates The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, but are not limited to revenue recognition, estimating the useful lives of long-lived assets and intangible assets, valuation assumptions in performing asset impairment tests of long-lived assets, allowance for credit losses, and valuation of deferred taxes and deferred tax assets. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
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| Foreign currency | (d) Foreign currency The functional currency of the Company is in US dollars and the functional currency of the Company’s subsidiaries and VIEs are Renminbi (“RMB”), as determined based on the criteria of Accounting Standards Codification (“ASC”) 830 (“ASC 830”) “Foreign Currency Matters”. The reporting currency of the Company is also the RMB. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange in place at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of operations. Assets and liabilities of the Company translated from their respective functional currencies to the reporting currency at the exchange rates at the balance sheet dates, equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period. The resulting foreign currency translation adjustment are recorded in other comprehensive income (loss). |
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| Convenience translation | (e) Convenience translation Translations of balances in the consolidated balance sheets, consolidated statements of operations and comprehensive income and consolidated statements of cash flows from RMB into USD (or “US$”) as of and for the six months ended June 30, 2024 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB7.2672, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on the last trading day of June 30, 2024. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate. |
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| Accounts receivable and allowance for credit losses | (f) Accounts receivable and allowance for credit losses Accounts receivable are stated at the historical carrying amount net of allowance for doubtful accounts. The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. The Company makes specific bad debt provisions based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable.
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| Fair value of financial instruments | (g) Fair value of financial instruments Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses and other current assets, accounts payables, balances with related parties and other current liabilities, approximate their fair values because of the short-term maturity of these instruments. Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis The following tables represent the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and June 30, 2024:
Warrant liabilities The Company’s warrants assumed from SPAC acquisition on May 7,2020, the date of the closing of SPAC Transaction, that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management are considered to be a derivative as contemplated in ASC 815-40. The warrant is recorded as derivative liability on the consolidated balance sheet upon the SPAC transaction and is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain in accordance with ASC 820. On February 5, 2024, all above warrants expired and were cancelled according to the terms of the warrant agreement. |
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| Revenue recognition | (h) Revenue recognition The Company applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. Revenues are recognized when control of the promised virtual items or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those virtual items or services. Revenue is recorded, net of sales related taxes and surcharges. Live streaming The Company is principally engaged in operating its own live streaming platforms, which enable broadcasters and viewers to interact with each other during live streaming. The Company is responsible for providing a technological infrastructure to enable the broadcasters, online users and viewers to interact through live streaming platforms. All the platforms can be accessed for free. The Company mainly derives the revenue from sales of virtual items in the platforms. The Company has a recharge system for users to purchase the Company’s virtual currency then purchase virtual items for use. Users can recharge via various online third-party payment platforms, including WeChat Pay, AliPay and other payment platforms. Virtual currency is non-refundable and often consumed soon after it is purchased. The Company designs, creates and offers various virtual items for sales to users with pre-determined stand-alone selling price. Virtual items are categorized as consumable and time-based items. Consumable items are consumed upon purchase and use while time-based items could be used for a fixed period of time. Users can purchase and present consumable items to broadcasters to show support for their favorite broadcasters, or purchase time-based virtual items for one or multiple months for a monthly fee, which provide users with recognized status, such as priority speaking rights or special symbols over a period of time. The Company shares a portion of the sales proceeds of virtual items (“revenue sharing fee”) with broadcasters and talent agencies in accordance with their revenue sharing arrangements. Broadcasters, who do not have revenue sharing arrangements with the Company, are not entitled to any revenue sharing fee. The Company also utilizes third-party payment collection channels, which charges the payment handling cost for users to purchase the virtual currency directly from it. The payment handling costs are recorded in cost of sales. The Company evaluates and determines that it is the principal and views users to be its customers, because the Company controls the virtual items before they are transferred to users. Its control is evidenced by the Company’s sole ability to monetize the virtual items before they are transferred to users, and is further supported by the Company being primarily responsible to the users for the delivery of the virtual items as well as having full discretion in establishing pricing for the virtual items. Accordingly, the Company reports live streaming revenues on a gross basis with the amounts billed to users recorded as revenues and revenue sharing fee paid to broadcasters and related agencies recorded as cost of revenues.
Sales proceeds are initially recorded as deferred revenue and recognized as revenue based on the consumption of the virtual items. The Company has determined that each individual virtual item represents a distinct performance obligation. Accordingly, live streaming revenue is recognized immediately when the consumable virtual item is used, or in the case of time-based virtual items, revenue is recognized over the fixed period on a straight-line basis. The Company does not have further obligations to the user after the virtual items are consumed. The Company’s live streaming virtual items are generally sold without right of return and the Company does not provide any other credit and incentive to its users. Unconsumed virtual currency is recorded as deferred revenue. The Company also cooperates with independent third-party distributors to sell virtual currency through annual distribution agreements with these distributors. Third-party distributors purchase virtual currency from the Company with no refund provision according to the annual distribution agreements, and they are responsible for selling the virtual currency to end users. They may engage their own sales representatives, which are referred to as “sales agents” to directly sell to individual end users. The Company has no control over such “sales agents”. The Company has discretion to determine the price of the virtual currency sold to its third-party distributors, but has no discretion as to the price at which virtual currency is sold by its third-party distributors to the sales agents. Technical services and others The Company generated technical and other revenues from providing multi-channel network (“MCN”) agency service, technical development, advisory and others, which accounts for only approximately 2% or less of revenue for the six months ended June 30, 2023 and 2024. 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. Revenue by types and platforms The following table sets forth types of our revenue for the periods indicated:
As of June 30, 2024, we operated five brands of live streaming platforms, consisting of: Showself Live Streaming, Lehai Live Streaming, Haixiu Live Streaming, BeeLive Live Streaming (including BeeLive Chinese version – Mifeng) and Hongle Live Streaming. The following table sets forth our revenue by platforms for the periods indicated:
Contract balances Contract balances include accounts receivable and deferred revenue. Accounts receivable primarily represent cash due from distributors and are recorded when the right to consideration is unconditional. The allowance for doubtful accounts reflects the best estimate of probable losses inherent to the account receivable balance. Deferred revenue primarily includes unconsumed virtual currency and unamortized revenue from time-based virtual items in the Company’s platforms, where there is still an obligation to be provided by the Company, which will be recognized as revenue when all of the revenue recognition criteria are met. Due to the generally short-term duration of the relevant contracts, all performance obligations are satisfied within one year. |
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| Government subsidies | (i) Government subsidies Government subsidies are primarily referred to the amounts received from various levels of local governments from time to time which are granted for general corporate purposes and to support its ongoing operations in the region. The grants are determined at the discretion of the relevant government authority and there are no restrictions on their use. The government subsidies amounted to RMB459 and RMB703 (US$97) for the six months ended June 30, 2023 and 2024 are recorded as other income. |
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| Sales and marketing expenses | (j) Sales and marketing expenses Sales and marketing expenses consist primarily of advertising and market promotion expenses. The advertising and market promotion expenses amounted to RMB465 and RMB2,045 (US$281) for the six months ended June 30, 2023 and 2024, respectively.
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| Income taxes | (k) Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The Company follows the liability method in accounting for income taxes in accordance to ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. A valuation allowance would be recorded against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive loss. The Company did not recognize any interest and penalties associated with uncertain tax positions for the six months ended June 30, 2023 and 2024. As of December 31, 2023 and June 30, 2024, the Company did not have any significant unrecognized uncertain tax positions. |
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| Value added tax (“VAT”) | (l) Value added tax (“VAT”) Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company’s subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing.
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| Earnings (loss) per share | (m) Earnings (loss) per share The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Contingently issuable shares were not included in the computation of diluted shares outstanding if they were not issuable should the end of the reporting period have been the end of the contingency period. For the six months ended June 30, 2023 and 2024, there was 212,608 and 296,543 shares related to RSU incentive plan, respectively. |
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| Non-controlling interests | (n) Non-controlling interests As of June 30, 2024, non-controlling interests represent 49% non-controlling shareholders’ interests in HCHY, 49% non-controlling shareholders’ interests in SXFJ, 49% non-controlling shareholders’ interests in Scienjoy Verse, 10% non-controlling shareholders’ interests in SJ Verse, 49% non-controlling shareholders’ interests in Scenovo SG and 30% non-controlling shareholders’ interests in Techjoy SG. The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interests in the operating results of the Company are presented on the face of the consolidated statements of comprehensive income (loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders of the Company. |
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| Segment reporting | (o) Segment reporting The Company follows ASC 280, “Segment Reporting.” The Company’s Chief Executive Officer or chief operating decision-maker reviews the consolidated financial results when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has only one reportable segment. As the Company’s long-lived assets are substantially all located in the PRC and the majority of the Company’s revenues are derived from within the PRC, no geographical segments are presented.
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| Recent accounting pronouncements | (v) Recent accounting pronouncements In March 2023, the FASB issued ASU 2023-03, which amends various SEC paragraphs in the Accounting Standards Codification. This includes amendments to Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718). The amendments are in response to SEC Staff Accounting Bulletin No. 120 and other SEC staff announcements and guidance. This ASU does not introduce new guidance and therefore does not have a specified transition or effective date. However, for smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2023. The adoption of this ASU did not have any material impact on the Company’s unaudited condensed consolidated interim financial statements and disclosure. In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the process of evaluating the impact of the new guidance on its unaudited condensed consolidated unaudited condensed financial statements. In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the Company’s unaudited condensed consolidated interim financial statements. |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Principal Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Subsidiaries of the Company and VIEs | Subsidiaries of the Company and VIEs where the
Company is the primary beneficiary include the following:
|
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables represent the fair value
hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023
and June 30, 2024:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Forth Types of Our Revenue | The following table sets forth types of our revenue
for the periods indicated:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Sets Forth Our Revenue | The following table sets forth our revenue by platforms
for the periods indicated:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities | The following table summarizes the fair value of the identifiable assets acquired and
liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition based on
a valuation performed by an independent valuation firm engaged by the Company.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Receivable and Allowance for Credit Losses | Accounts receivable and allowance for credit losses
consist of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Analysis of the Allowance for Credit Losses | An analysis of the allowance for credit losses
is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses and Other Current Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist
of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Balance Sheet Information Related to Operating Leases | Supplemental balance sheet information related
to operating leases was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Weighted Average Remaining Lease Terms and Discount Rates of Operating Leases | The weighted average remaining lease terms and
discount rates for all of operating leases were as follows as of June 30, 2024:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturities Lease Liabilities | Maturities of lease liabilities were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Income Tax Expenses | The income tax expenses comprise:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Reconciliation of Differences Between the Statutory Tax Rate and the Effective Tax Rate | A reconciliation of the differences between the
statutory tax rate and the effective tax rate for EIT for the six months ended June 30, 2023 and 2024 is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Deferred Taxes | The components of deferred taxes are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Balances and Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Balances and Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Name of Related Parties and Relationship | In addition to the information disclosed elsewhere
in the financial statements, the principal related parties with which the Company had transactions during the years presented are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Significant Related Party Transactions | For the six months ended June 30, 2024, significant
related party transactions were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Amounts Due from Related Parties | As of December 31, 2023 and June 30, 2024, the
amounts due from related parties are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrant [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' Equity (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity | As of June 30, 2024, the Company had no exercisable warrants. A summary
of warrants activity for the years ended December 31, 2023 and 2022 is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Principal Activities (Details) |
May 30, 2024 |
Apr. 11, 2024 |
|---|---|---|
| Scenovo Pte. Ltd [Member] | ||
| Organization and Principal Activities [Line Items] | ||
| Ownership percentage | 51.00% | |
| Techjoy Pte. Ltd [Member] | ||
| Organization and Principal Activities [Line Items] | ||
| Ownership percentage | 70.00% | |
| Hangzhou Sixiang Fengjing Culture Technology Co., Ltd [Member] | ||
| Organization and Principal Activities [Line Items] | ||
| Ownership percentage | 51.00% |
Summary of Significant Accounting Policies (Details) ¥ in Thousands, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
shares
|
Jun. 30, 2024
USD ($)
shares
|
Jun. 30, 2023
CNY (¥)
shares
|
|
| Summary of Significant Accounting Policies [Line Items] | |||
| Technical development, advisory and others percentage | 2.00% | 2.00% | 2.00% |
| Other income | ¥ 703 | $ 97 | ¥ 459 |
| Advertising and market promotion expenses | ¥ 2,045 | $ 281 | ¥ 465 |
| Value added tax percentage | 13.00% | 13.00% | |
| Non-controlling interests, description | As of June 30, 2024, non-controlling interests represent 49% non-controlling shareholders’ interests in HCHY, 49% non-controlling shareholders’ interests in SXFJ, 49% non-controlling shareholders’ interests in Scienjoy Verse, 10% non-controlling shareholders’ interests in SJ Verse, 49% non-controlling shareholders’ interests in Scenovo SG and 30% non-controlling shareholders’ interests in Techjoy SG. | As of June 30, 2024, non-controlling interests represent 49% non-controlling shareholders’ interests in HCHY, 49% non-controlling shareholders’ interests in SXFJ, 49% non-controlling shareholders’ interests in Scienjoy Verse, 10% non-controlling shareholders’ interests in SJ Verse, 49% non-controlling shareholders’ interests in Scenovo SG and 30% non-controlling shareholders’ interests in Techjoy SG. | |
| USD [Member] | |||
| Summary of Significant Accounting Policies [Line Items] | |||
| Convenience translation | 1 | 1 | |
| RMB [Member] | |||
| Summary of Significant Accounting Policies [Line Items] | |||
| Convenience translation | 7.2672 | 7.2672 | |
| Restricted Stock Units (RSUs) [Member] | |||
| Summary of Significant Accounting Policies [Line Items] | |||
| Antidilutive securities excluded from computation of earnings per share (in Shares) | 296,543 | 296,543 | 212,608 |
Summary of Significant Accounting Policies (Details) - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|---|---|---|---|
| Financial assets: | |||
| Investment in marketable equity security | ¥ 35,290 | $ 4,856 | ¥ 31,525 |
| Quoted price in active markets for identical assets Level 1 [Member] | |||
| Financial assets: | |||
| Investment in marketable equity security | 35,290 | 31,525 | |
| Significant other observable inputs Level 2 [Member] | |||
| Financial assets: | |||
| Investment in marketable equity security | |||
| Significant unobservable inputs Level 3 [Member] | |||
| Financial assets: | |||
| Investment in marketable equity security |
Summary of Significant Accounting Policies (Details) - Schedule of Forth Types of Our Revenue ¥ in Thousands, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
CNY (¥)
|
|
| Schedule of Forth Types of Our Revenue [Line Items] | |||
| Total revenue | ¥ 691,139 | $ 95,104 | ¥ 667,442 |
| Live streaming - consumable virtual items revenue [Member] | |||
| Schedule of Forth Types of Our Revenue [Line Items] | |||
| Total revenue | 671,308 | 92,375 | 640,740 |
| Live streaming - time based virtual item revenue [Member] | |||
| Schedule of Forth Types of Our Revenue [Line Items] | |||
| Total revenue | 12,516 | 1,722 | 11,890 |
| Technical services and others [Member] | |||
| Schedule of Forth Types of Our Revenue [Line Items] | |||
| Total revenue | ¥ 7,315 | $ 1,007 | ¥ 14,812 |
Summary of Significant Accounting Policies (Details) - Schedule of Sets Forth Our Revenue ¥ in Thousands, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
CNY (¥)
|
|
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | ¥ 691,139 | $ 95,104 | ¥ 667,442 |
| Showself [Member] | |||
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | 139,571 | 19,205 | 171,689 |
| Lehai [Member] | |||
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | 188,100 | 25,883 | 100,818 |
| Haixiu [Member] | |||
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | 143,525 | 19,750 | 121,639 |
| Beelive [Member] | |||
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | 111,507 | 15,344 | 160,379 |
| Hongle [Member] | |||
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | 101,121 | 13,915 | 98,105 |
| Technical services and others [Member] | |||
| Schedule of Sets Forth Our Revenue [Line Items] | |||
| TOTAL | ¥ 7,315 | $ 1,007 | ¥ 14,812 |
Concentration of Risk (Details) ¥ in Thousands, $ in Thousands, $ in Thousands |
6 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023 |
Dec. 31, 2023
CNY (¥)
|
Jun. 30, 2024
HKD ($)
|
|
| Concentration of Risk [Line Items] | |||||
| Credit risk financial instruments | ¥ 173,929 | $ 23,933 | ¥ 199,822 | ||
| Deposit insurance | ¥ | ¥ 500,000 | ||||
| Bank deposits | $ | $ 500,000 | ||||
| Supplier Concentration Risk [Member] | Accounts Payable [Member] | Vendors [Member] | |||||
| Concentration of Risk [Line Items] | |||||
| Concentration risk percentage | 14.30% | 14.30% | 11.80% | 11.10% | |
Acquisition (Details) ¥ in Thousands, $ in Thousands |
Oct. 07, 2023
CNY (¥)
|
Oct. 07, 2023
USD ($)
|
|---|---|---|
| Acquisition [Line Items] | ||
| Original shareholders for a cash consideration | ¥ 7,092 | $ 1,000 |
| Nujoom Almashareq Media L.L.C [Member] | ||
| Acquisition [Line Items] | ||
| Share acquisition agreement equity rate | 90.00% | 90.00% |
Acquisition (Details) - Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities ¥ in Thousands |
Jun. 30, 2024
CNY (¥)
|
|---|---|
| Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities [Abstract] | |
| Cash acquired | ¥ 212 |
| Prepaid expenses and other current assets | 104 |
| Current assets | 316 |
| Property and equipment, net | 270 |
| Goodwill | 9,686 |
| Total assets | 10,272 |
| Current liabilities | 303 |
| Non-current liabilities | 3,165 |
| Total liabilities | 3,468 |
| 10% Equity Value with non-controlling interests | (288) |
| Total consideration | ¥ 7,092 |
Acquisition (Details) - Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities (Parentheticals) |
Jun. 30, 2024 |
|---|---|
| Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities [Abstract] | |
| Equity Value | 10.00% |
Accounts Receivable, Net (Details) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Distributor One [Member] | ||
| Accounts Receivable, Net [Line Items] | ||
| Accounts receivable, percentage | 37.00% | 30.30% |
| Distributor Two [Member] | ||
| Accounts Receivable, Net [Line Items] | ||
| Accounts receivable, percentage | 23.20% | 24.80% |
| Distributor Three [Member] | ||
| Accounts Receivable, Net [Line Items] | ||
| Accounts receivable, percentage | 12.30% | 12.10% |
| Distributor Four [Member] | ||
| Accounts Receivable, Net [Line Items] | ||
| Accounts receivable, percentage | 10.00% |
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable and Allowance for Credit Losses ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|---|---|---|---|
| Schedule of Accounts Receivable and Allowance for Credit Losses [Abstract] | |||
| Accounts receivable | ¥ 253,035 | $ 34,818 | ¥ 266,076 |
| Less: allowance for credit losses | (6,223) | (856) | (5,097) |
| Accounts receivable, net | ¥ 246,812 | $ 33,962 | ¥ 260,979 |
Accounts Receivable, Net (Details) - Schedule of Analysis of the Allowance for Credit Losses ¥ in Thousands, $ in Thousands |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|
| Schedule of Analysis of the Allowance for Credit Losses [Abstract] | |||
| Beginning balance | ¥ 5,097 | $ 701 | ¥ 3,546 |
| Additions | 1,126 | 155 | 1,530 |
| Exchange difference | 21 | ||
| Ending balance | ¥ 6,223 | $ 856 | ¥ 5,097 |
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid Expenses and Other Current Assets ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
||||
|---|---|---|---|---|---|---|---|
| Schedule of Prepaid Expenses and Other Current Assets [Abstract] | |||||||
| VAT recoverable | ¥ 18,694 | $ 2,572 | ¥ 25,221 | ||||
| Prepaid expense | 5,530 | 761 | 6,019 | ||||
| Investment buyback receivable | [1] | 30,000 | 4,128 | 30,000 | |||
| Loan receivable | [2] | 2,989 | 411 | 16,200 | |||
| Other receivables | 2,627 | 362 | 1,213 | ||||
| Prepaid expenses and other current assets | ¥ 59,840 | $ 8,234 | ¥ 78,653 | ||||
| |||||||
Lease (Details) ¥ in Thousands, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
CNY (¥)
|
|
| Lease [Abstract] | |||
| Total lease expense | ¥ 4,585 | $ 631 | ¥ 3,627 |
Lease (Details) - Schedule of Balance Sheet Information Related to Operating Leases ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|---|---|---|---|
| Schedule of Balance Sheet Information Related to Operating Leases [Line Items] | |||
| Right-of-use assets, net | ¥ 8,544 | $ 1,176 | ¥ 12,157 |
| Operating lease liabilities - current | 6,101 | 840 | 7,974 |
| Operating lease liabilities - non-current | 2,773 | 382 | 4,798 |
| Total operating lease liabilities | ¥ 8,874 | $ 1,222 | ¥ 12,772 |
Lease (Details) - Schedule of Weighted Average Remaining Lease Terms and Discount Rates of Operating Leases |
Jun. 30, 2024 |
|---|---|
| Schedule of Weighted Average Remaining Lease Terms and Discount Rates of Operating Leases [Abstract] | |
| Weighted average remaining lease term (years) | 1 year 6 months |
| Weighted average discount rate | 4.75% |
Lease (Details) - Schedule of Maturities Lease Liabilities ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|---|---|---|---|
| Schedule of Maturities Lease Liabilities [Abstract] | |||
| 2025 | ¥ 6,327 | $ 871 | |
| 2026 | 2,811 | 387 | |
| Total future minimum lease payments | 9,138 | 1,258 | |
| Less: imputed interest | (264) | (36) | |
| Present value of lease liabilities | ¥ 8,874 | $ 1,222 | ¥ 12,772 |
Income Taxes (Details) ¥ / shares in Units, $ / shares in Units, د.إ in Thousands, ¥ in Thousands, $ in Thousands |
6 Months Ended | |||
|---|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
¥ / shares
|
Jun. 30, 2024
USD ($)
$ / shares
|
Jun. 30, 2024
AED (د.إ)
|
Jun. 30, 2023
CNY (¥)
¥ / shares
|
|
| Income Taxes [Line Items] | ||||
| Statutory income tax rate percentage | 25.00% | 25.00% | 25.00% | 25.00% |
| Profit tax percentage | 17.50% | 17.50% | 17.50% | (0.80%) |
| Preferential tax rate | ¥ 3,610 | $ 497 | ¥ 33,058 | |
| Impacts on basic EPS | (per share) | ¥ 0.1 | $ 0 | ¥ 0.8 | |
| Impacts on dilutive EPS | (per share) | ¥ 0.1 | $ 0 | ¥ 0.8 | |
| High and New Technology Enterprise (“the HNTE”) [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 15.00% | 15.00% | 15.00% | |
| Holgus [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 0.00% | 0.00% | 0.00% | |
| Kashgar [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 9.00% | 9.00% | 9.00% | |
| PRC Income Tax Laws [Member] | ||||
| Income Taxes [Line Items] | ||||
| Statutory income tax rate percentage | 25.00% | 25.00% | 25.00% | |
| From 2018 to 2024 [Member] | SG [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 15.00% | 15.00% | 15.00% | |
| From 2017 to 2026 [Member] | HX [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 15.00% | 15.00% | 15.00% | |
| From 2017 to 2026 [Member] | WLT [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 15.00% | 15.00% | 15.00% | |
| From 2016 to 2024 [Member] | LH [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 15.00% | 15.00% | 15.00% | |
| From 2017 to 2021 [Member] | Holgus X [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 0.00% | 0.00% | 0.00% | |
| From 2022 to 2026 [Member] | Holgus X [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 9.00% | 9.00% | 9.00% | |
| From 2016 to 2020 [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 0.00% | 0.00% | 0.00% | |
| From 2021 to 2025 [Member] | Kashgar Times [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 9.00% | 9.00% | 9.00% | |
| From 2026 to 2030 [Member] | Holgus H [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 0.00% | 0.00% | 0.00% | |
| From 2026 to 2030 [Member] | Kashgar Lehong [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 0.00% | 0.00% | 0.00% | |
| From 2026 to 2030 [Member] | Holgus H [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 9.00% | 9.00% | 9.00% | |
| From 2026 to 2030 [Member] | Kashgar Lehong [Member] | ||||
| Income Taxes [Line Items] | ||||
| Preferential tax rate, percentage | 9.00% | 9.00% | 9.00% | |
| Singapore [Member] | ||||
| Income Taxes [Line Items] | ||||
| Statutory income tax rate percentage | 17.00% | 17.00% | 17.00% | |
| Dubai [Member] | ||||
| Income Taxes [Line Items] | ||||
| Statutory income tax rate percentage | 9.00% | 9.00% | 9.00% | |
| Statutory income tax (in Dirhams) | د.إ 375,000 | |||
| Hong Kong [Member] | ||||
| Income Taxes [Line Items] | ||||
| Profit tax percentage | 16.50% | 16.50% | 16.50% | |
Income Taxes (Details) - Schedule of Income Tax Expenses ¥ in Thousands, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
CNY (¥)
|
|
| Schedule of Income Tax Expenses [Abstract] | |||
| Current income tax expense | ¥ 6,225 | $ 857 | ¥ 1,087 |
| Deferred income tax (benefit)expense | 1,448 | 199 | (1,719) |
| Income tax (benefit) expenses | ¥ 7,673 | $ 1,056 | ¥ (632) |
Income Taxes (Details) - Schedule of Reconciliation of Differences Between the Statutory Tax Rate and the Effective Tax Rate |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Schedule of Reconciliation of Differences Between the Statutory Tax Rate and the Effective Tax Rate [Abstract] | ||
| Income tax computed at PRC statutory tax rate | 25.00% | 25.00% |
| Effect of tax-preferential entities | (8.20%) | (44.80%) |
| Non-deductible expenses | 0.70% | 19.00% |
| Income tax (benefit) expense | 17.50% | (0.80%) |
Income Taxes (Details) - Schedule of Components of Deferred Taxes ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|---|---|---|---|
| Deferred tax assets: | |||
| Allowance for doubtful accounts | ¥ 1,555 | $ 214 | ¥ 3,724 |
| Net operating losses carried forward | 3,667 | 505 | 3,655 |
| Total deferred tax assets | 5,222 | 719 | 7,379 |
| Deferred tax liabilities | |||
| Intangible assets acquired through acquisition | 59,109 | 8,134 | 59,818 |
| Total deferred tax liabilities | ¥ 59,109 | $ 8,134 | ¥ 59,818 |
Related Party Balances and Transactions (Details) - Schedule of Name of Related Parties and Relationship |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Mr. He Xiaowu [Member] | |
| Schedule of Name of Related Parties and Relationship [Line Items] | |
| Relationship with the Company | Chief Executive Officer and Chairman of the Board |
| Enmoli Inc. [Member] | |
| Schedule of Name of Related Parties and Relationship [Line Items] | |
| Relationship with the Company | Where Mr. He Xiaowu acted as director |
| Sixiang Zhuohong Private Equity LP [Member] | |
| Schedule of Name of Related Parties and Relationship [Line Items] | |
| Relationship with the Company | Equity investee of the Company |
Related Party Balances and Transactions (Details) - Schedule of Significant Related Party Transactions ¥ in Thousands, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
CNY (¥)
|
|
| Related Party [Member] | Sixiang Zhuohong Private Equity LP [Member] | |||
| Schedule of Significant Related Party Transactions [Line Items] | |||
| Equity interest of sold | ¥ 13,500 | $ 1,858 | |
Related Party Balances and Transactions (Details) - Schedule of Significant Related Party Transactions (Parentheticals) |
Jun. 30, 2024 |
|---|---|
| Hangzhou Zhange Culture Technology Co Ltd [Member] | Related Party [Member] | |
| Schedule of Significant Related Party Transactions [Line Items] | |
| Equity interest of sold percentage | 6.00% |
Related Party Balances and Transactions (Details) - Schedule of Amounts Due from Related Parties ¥ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
||
|---|---|---|---|---|---|
| Amount due from related parties | |||||
| Amount due from related parties | ¥ 355 | ||||
| Enmoli Inc [Member] | |||||
| Amount due from related parties | |||||
| Amount due from related parties | [1] | ¥ 355 | |||
| |||||
Shareholders' Equity (Details) |
6 Months Ended | 12 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Nov. 30, 2023
$ / shares
shares
|
Apr. 08, 2023
shares
|
Apr. 07, 2023
shares
|
Oct. 31, 2022
$ / shares
shares
|
Mar. 03, 2022
CNY (¥)
shares
|
May 07, 2020
$ / shares
|
Feb. 20, 2019
$ / shares
shares
|
Feb. 08, 2019
USD ($)
$ / shares
shares
|
Jun. 30, 2024
CNY (¥)
¥ / shares
shares
|
Jun. 30, 2024
USD ($)
$ / shares
shares
|
Dec. 31, 2023
USD ($)
shares
|
Dec. 31, 2022
shares
|
Dec. 31, 2021
shares
|
Jun. 30, 2024
$ / shares
|
Dec. 31, 2023
CNY (¥)
¥ / shares
shares
|
Mar. 03, 2022
$ / shares
|
Nov. 08, 2021
shares
|
|
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Per share based (in Dollars per share) | $ / shares | $ 5.13 | ||||||||||||||||
| Fair value amount (in Yuan Renminbi) | ¥ | ¥ 127,000 | ||||||||||||||||
| Repurchased aggregate share | 119,725 | ||||||||||||||||
| Treasury stock, per shares (in Dollars per share) | $ / shares | $ 3.2 | ||||||||||||||||
| Exercisable per share (in Dollars per share) | $ / shares | $ 11.5 | $ 11.5 | |||||||||||||||
| Company sold (in Dollars) | $ | $ 100,000 | ||||||||||||||||
| Option purchase | 375,000 | ||||||||||||||||
| Aggregate exercise price (in Dollars) | $ | $ 4,312,500 | ||||||||||||||||
| Option to purchase additional exercisable | 56,250 | ||||||||||||||||
| Warrants shares | 110,000 | ||||||||||||||||
| Receipt of cash payament (in Dollars) | $ | $ 100,000 | ||||||||||||||||
| Unit purchase option (in Dollars) | $ | $ 1,286,000 | ||||||||||||||||
| Expected volatility | 35.00% | 35.00% | |||||||||||||||
| Risk-free interest rate | 2.44% | 2.44% | |||||||||||||||
| Earn-out shares (in Dollars) | $ | $ 9,960,000 | ||||||||||||||||
| Warrant [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Warrant price per (in Dollars per share) | $ / shares | $ 0.01 | ||||||||||||||||
| Warrants expiration date | Feb. 05, 2024 | ||||||||||||||||
| Warrants shares | 100,000 | ||||||||||||||||
| UPO [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Warrants shares | 100,000 | ||||||||||||||||
| RSUs [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| ESOP Committee approved amount | 2,053,783 | ||||||||||||||||
| RSUs outstanding | 716,956 | ||||||||||||||||
| Stock Issued During Period, Value, Restricted Stock Award, Forfeitures (in Dollars) | $ | 21,206 | ||||||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value (in Dollars) | $ | $ 434,093 | ||||||||||||||||
| Common Unit, Outstanding | 773,874 | ||||||||||||||||
| Shares vested | 403,829 | ||||||||||||||||
| RSUs outstanding | 639,544 | ||||||||||||||||
| RSUs [Member] | 2021 Equity Incentive Plan [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| ESOP Committee approved amount | 272,999 | 272,999 | 512,217 | ||||||||||||||
| Shares forfeited | 2,973 | ||||||||||||||||
| Business Combination [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Per share price (in Dollars per share) | $ / shares | $ 2.98 | ||||||||||||||||
| Weiliantong [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Convertible promissory note (in Yuan Renminbi) | ¥ | ¥ 180,000 | ||||||||||||||||
| Issuances total | 82.72% | ||||||||||||||||
| Weilaijin [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Fair value (in Yuan Renminbi) | ¥ | ¥ 20,817,000 | ||||||||||||||||
| Class A Ordinary Shares [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Authorized issue | Unlimited | Unlimited | Unlimited | ||||||||||||||
| Authorized issue (in Dollars per share) | (per share) | |||||||||||||||||
| Ordinary shares | 2,625,058 | ||||||||||||||||
| Ordinary shares, issued | 38,920,797 | 38,113,879 | |||||||||||||||
| Ordinary shares, outstanding | 38,920,797 | 38,113,879 | |||||||||||||||
| Issuance of ordinary shares | 403,089 | 3,898,511 | |||||||||||||||
| Repurchased aggregate share | 794,120 | ||||||||||||||||
| Treasury stock, per shares (in Dollars per share) | $ / shares | $ 3.01 | ||||||||||||||||
| Class A Ordinary Shares [Member] | Warrant [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Exercisable per share (in Dollars per share) | $ / shares | 16.5 | ||||||||||||||||
| Class A Ordinary Shares [Member] | Weiliantong [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Ordinary shares, issued | 403,089 | ||||||||||||||||
| Issuance of ordinary shares | 487,314 | ||||||||||||||||
| Class A Ordinary Shares [Member] | Weilaijin [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Ordinary shares, issued | 636,691 | ||||||||||||||||
| Shares to be issued (in Yuan Renminbi) | ¥ | ¥ 20,817,000 | ¥ 20,817,000 | |||||||||||||||
| Class B Ordinary Shares [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Authorized issue | Unlimited | Unlimited | Unlimited | ||||||||||||||
| Authorized issue (in Dollars per share) | (per share) | |||||||||||||||||
| Ordinary shares | 2,625,058 | ||||||||||||||||
| Ordinary shares, issued | 2,925,058 | 2,925,058 | |||||||||||||||
| Ordinary shares, outstanding | 2,925,058 | 2,925,058 | |||||||||||||||
| Class A Preferred Shares [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Preferred stock, shares issued | 50,000,000 | ||||||||||||||||
| Public Warrants [Member] | |||||||||||||||||
| Shareholders’ Equity [Line Items] | |||||||||||||||||
| Exercise price (in Dollars per share) | $ / shares | $ 11.5 | $ 11.5 | |||||||||||||||
Shareholders' Equity (Details) - Schedule of Warrants Activity - shares |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2024 |
|
| Schedule of Warrants Activity [Abstract] | ||
| Number of warrants, beginning balance | 6,023,700 | 6,023,700 |
| Weighted average life, beginning balance | 1 year 1 month 6 days | 1 month 6 days |
| Expiration dates, beginning balance | Feb. 05, 2024 | Feb. 05, 2024 |
| Number of warrants,Forfeited | (6,023,700) | |
| Number of warrants, ending balance | ||
| Expiration dates, ending balance | Feb. 05, 2024 | Feb. 05, 2024 |
| Number of warrants, Balance of warrants exercisable | ||
| Expiration dates, Balance of warrants exercisable | Feb. 05, 2024 |
Statutory Reserves and Restricted Net Assets (Details) ¥ in Thousands, $ in Thousands |
Jun. 30, 2024
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
|---|---|---|---|
| Statutory Reserves and Restricted Net Assets [Line Items] | |||
| Foreign invested percentage | 10.00% | 10.00% | |
| Annual after-tax profit, percentage | 50.00% | 50.00% | |
| Statutory reserves | ¥ 48,040 | $ 6,611 | ¥ 44,698 |
| Restricted net assets | ¥ 426,418 | $ 58,677 | ¥ 413,117 |