The9 Ltd. (China)

The Company had been operating an online game business before the Company s listing until this year, the Company has turned its business focus to blockchain business and are primarily engaged in the operation of cryptocurrency mining and a Non-Fungible Token platform NFTSTAR.
For the year ended December 31, 2021, the Company operated and developed proprietary and licensed online games. The Company generated its online game service revenues primarily through an item-based revenue model, under which players play games for free, but they are charged for in-game items, such as performance-enhancing items, clothing and accessories. Its customers typically access its online games through personal computers, mobile devices or TVs. The Company is also transitioning to cryptocurrencies mining business.
The Company operates in one segment whose business is Cryptocurrency mining revenue, developing and operating online games and related services.
HISTORY
The Company was incorporated in the Cayman Islands on December 22, 1999 under the name GameNow.net Limited and was renamed The 9 Limited in February 2004. The Company formed GameNow.net (Hong Kong) Limited, or GameNow, on January 17, 2000 in Hong Kong, as a wholly-owned subsidiary. The Company has historically conducted its operations in large part through The9 Computer, a direct wholly-owned subsidiary of GameNow in China.
Its ADSs, each representing one ordinary share, have been listed on the Nasdaq Global Market since December 15, 2004. Its ADSs are traded under the symbol “NCTY.”
In October 2002, the Company and Webzen formed 9Webzen to launch and operate the MU game in China. 9Webzen established 9Webzen Shanghai as its wholly-owned subsidiary in China on January 29, 2003 to operate MU in China. The Company currently holds a 51 ownership interest in 9Webzen and has been actively managing the daily operations of 9Webzen since its inception. The Company accounts for their interest in 9Webzen using the equity method because under the joint venture agreement, Webzen has the right to participate in certain decisions to be made in the ordinary course of business of 9Webzen.
In July 2003, the Company and China Interactive formed C9I to acquire an exclusive license from VUG to localize and operate the WoW game in China. The Company has had effective control over C9I s management and operations since its inception. The Company currently holds a 68.9 ownership interest in C9I. When C9I was established in July 2003, we and China Interactive owned 54 and 46 of C9I, respectively. The Company shares ownership in C9I increased to 68.9 in January 2005 when China Interactive transferred a 14.9 interest in C9I to us at the per share price equal to the aggregate invested amount per share paid by China Interactive for the transferred shares. Such transfer was made in connection with their grant of a demand loan in the aggregate principal amount of US 4.6 million to China Interactive.
In February 2005, C9I established a wholly-owned subsidiary, C9I China, to operate WoW in China.
In September 2006, the Company commercially launched the first proprietary MMORPG, JJW, which is a side-scrolling MMORPG based on cartoon characters.
In July 2014, the Company and Qihoo 360 entered into an agreement to form a joint venture in which each party shall own 50 equity interest in the joint venture and share profits based on the respective equity interests in the joint venture. The joint venture, System Link Corporation Limited, or System Link, was formed in August 2014. In August 2014, its subsidiary Red 5 Singapore Pte. Ltd., or Red 5 Singapore, a wholly-owned subsidiary of Red 5, entered into a license agreement with System Link for publishing and operating Firefall, a MMOFPS game, for a five-year term in China.
Effective May 9, 2018, the Company effected a change of the ratio of the ADSs to ordinary shares from one ADS representing one ordinary share to three ordinary shares. Unless otherwise indicated, ADSs and per ADS amount in this annual report have been retroactively adjusted to reflect the changes in ratio for all periods presented.