The9 Limited Announces Unaudited Financial Information as of and for the Six Months Ended December 31, 2017

THE9 LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(Expressed in Renminbi - RMB and US Dollars - US$, except share data)

Six months
ended June 30,

Six months
ended December 31,

2016

2017

RMB
(unaudited)

RMB
(unaudited)

RMB
(unaudited)

US$
(Note)

Revenues:

  Online game services

14,764,789

27,910,283

56,799,234

8,729,882

  Other revenues

998,950

5,326,969

645,193

99,164

15,763,739

33,237,252

57,444,427

8,829,046

Sales taxes

(4,478)

(24,728)

(55,132)

(8,474)

Total net revenues

15,759,261

33,212,524

57,389,295

8,820,572

Cost of revenues

(10,022,806)

(20,183,093)

(13,759,248)

(2,114,758)

Gross profit

5,736,455

13,029,431

43,630,047

6,705,814

Operating expenses:

   Product development

(24,644,352)

(34,165,939)

(20,468,044)

(3,145,881)

   Sales and marketing

(5,438,769)

(9,903,014)

(3,651,200)

(561,179)

   General and administrative

(67,495,956)

(86,261,135)

(41,328,724)

(6,352,109)

Total operating expenses

(97,579,077)

(130,330,088)

(65,447,968)

(10,059,169)

      Other operating income 

175,880

3,441,107

174,074

26,755

Loss from operations

(91,666,742)

(113,859,550)

(21,643,847)

(3,326,600)

Impairment on other investment

-

(2,806,439)

(9,109,312)

(1,400,076)

Interest income (expenses), net

(42,754,204)

(23,236,767)

(41,137,471)

(6,322,713)

Fair value change on warrants liability

3,843,386

10,807,612

8,772,080

1,348,244

Gain (loss) on disposal of equity investee and available-for-sale
investment 

115,349

(1,217,405)

-

-

Foreign exchange gain (loss)

5,546,485

(8,835,965)

13,660,262

2,099,544

Other income (expenses), net

2,028,053

1,101,268

2,641,534

405,996

Loss before income tax expense and share of loss in equity
method investments

(122,887,673)

(138,047,026)

(46,816,754)

(7,195,605)

Income tax benefit

-

6,079,282

-

-

Recovery of equity investment in excess of cost

-

-

60,548,651

9,306,157

(1,472,283)

(80,579,942)

(1,464,848)

(225,143)

Net income (loss) for the period

(124,359,956)

(212,547,906)

12,267,049

1,885,409

Net (loss) gain attributable to noncontrolling interest

(8,122,462)

(13,307,081)

12,078,102

1,856,370

Net (loss) gain attributable to redeemable noncontrolling interest

(2,458,427)

(7,651,793)

4,575,730

703,277

Net loss attributable to The9 Limited

(113,779,067)

(191,589,032)

(4,386,783)

(674,238)

Change in redemption value of redeemable noncontrollling interest

(35,759,965)

(45,026,749)

(21,366,268)

(3,283,935)

Net loss attributable to holders of ordinary shares

(236,615,781)

(25,753,051)

(3,958,173)

Other comprehensive income (loss):

      Currency translation adjustments

731,780

(440,220)

(10,257,541)

(1,576,555)

Total comprehensive (loss) income

(123,628,176)

(212,988,126)

2,009,508

308,854

Comprehensive (loss) income attributable to:

      Noncontrolling interest

(4,221,606)

(12,439,886)

17,679,256

2,717,252

      Redeemable noncontrolling interest

(2,458,427)

(7,651,793)

4,575,730

703,277

      The9 Limited

(116,948,143)

(192,896,447)

(20,245,478)

(3,111,675)

Net loss attributable to holders of ordinary shares per share

- Basic 

(6.25)

(9.89)

(0.77)

(0.12)

- Diluted

(6.25)

(9.89)

(0.77)

(0.12)

Weighted average number of shares outstanding

- Basic 

23,915,501

23,915,501

33,426,448

33,426,448

- Diluted

23,915,501

23,915,501

33,426,448

33,426,448

Note: The United States dollar ("US dollar" or "US$") amounts disclosed in the accompanying
financial statements are presented solely for the convenience of the readers at the rate of US$1.00
=RMB6.5063, 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 December 31, 2017.

THE9 LIMITED

UNAUDITED CONSOLIDATED BALANCE SHEETS INFORMATION

(Expressed in Renminbi - RMB and US Dollars - US$)

 As of December
31, 2016

As of December 31, 2017

RMB

RMB

US$

(audited)

(unaudited)

(Note)

Assets

Current Assets:

Cash and cash equivalents

38,878,076

142,624,020

21,920,911

Accounts receivable, net of allowance for doubtful
accounts of RMB992,010 and RMB1,039,958 as of
December 31, 2016 and 2017, respectively

8,607,120

2,607,568

400,776

 Advances to suppliers

9,085,165

8,102,278

1,245,297

Prepayments and other current assets

11,625,716

6,616,297

1,016,906

Amounts due from related parties

19,842,139

2,492,842

383,143

Assets classified as held for sale 

-

20,669,377

3,176,825

Total current assets

88,038,216

183,112,382

28,143,858

Investments in equity investees

163,037,501

48,243,558

7,414,899

Property, equipment and software, net

26,765,824

20,721,252

3,184,798

Land use right, net

66,431,476

64,510,566

9,915,092

Other long-lived assets, net

6,618,977

6,521,420

1,002,324

Total Assets

350,891,994

323,109,178

49,660,971

Liabilities, Redeemable Noncontrolling Interest
and Shareholders' Equity (Deficit)

Current Liabilities:

Short-term borrowing

107,517,367

108,743,369

16,713,550

Accounts payable

37,038,856

37,129,671

5,706,726

Other taxes payable

283,994

1,714,992

263,589

Advances from customers

26,711,967

47,558,542

7,309,614

Amounts due to related parties                 

107,203,023

88,939,108

13,669,691

Deferred revenue

15,921,873

5,576,269

857,057

Refund of game points

169,998,682

169,998,682

26,128,319

Warrants

16,357,737

3,742,271

575,177

Convertible notes

-

260,563,020

40,047,803

Interest payable

412,626

9,505,843

1,461,021

Accrued expense and other current liabilities

92,302,898

83,700,051

12,864,462

Liabilities directly associated with assets classified
as held for sale 

-

2,273,532

349,435

Total current liabilities

573,749,023

819,445,350

125,946,444

Long-term borrowing

35,141,459

-

-

Convertible notes

197,284,836

-

-

Total Liabilities

806,175,318

819,445,350

125,946,444

Redeemable Noncontrolling Interest

246,771,133

306,014,668

47,033,593

Shareholders' Equity (Deficits):

Ordinary shares (US$0.01 par value; 23,915,501 and
44,544,036 shares issued and outstanding as of
December 31, 2016 and 2017, respectively)

1,931,642

3,328,852

511,635

Additional paid-in capital

2,525,599,832

2,527,215,315

388,425,882

Statutory reserves

28,071,982

28,071,982

4,314,585

Accumulated other comprehensive income (loss)

2,582,023

(16,445,748)

(2,527,665)

Accumulated deficit

(2,897,802,287)

(3,015,968,137)

(463,545,816)

The9 Limited shareholders' deficit

(339,616,808)

(473,797,736)

(72,821,379)

Noncontrolling interest

(362,437,649)

(328,553,104)

(50,497,687)

Total shareholder's deficit

(802,350,840)

(123,319,066)

Total liabilities, redeemable noncontrolling
interest and shareholder's equity 

350,891,994

323,109,178

49,660,971

Note: The United States dollar ("US dollar" or "US$") amounts disclosed in the accompanying
financial statements are presented solely for the convenience of the readers at the rate of US$1.00
=RMB6.5063, 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 December 31, 2017.