The9 Limited (NCTY) to Acquire Shenma Limited

The9 Limited (Nasdaq: NCTY) ("The9"), an established Internet company, today announced that it signed a legally binding term sheet (the "Term Sheet") with Shenma Limited ("Shenma") to purchase 51% shares of Shenma by cash and issuance of The9's restricted shares. Pursuant to the Term Sheet, The9 will pay cash consideration of US$1 million and will issue restricted Class A ordinary shares to Shenma or its shareholders with the value of US$14.3 million. The value of each share will be determined by the average closing price of The9's American depositary shares ("ADS"), each representing 300 Class A ordinary shares of The9, for a period of 20 trading days prior to the signing of the definitive agreement. The restricted Class A ordinary shares to be issued to Shenma will be subject to lock-up conditions and will only be released according to the following schedule: (i) when the market capitalization of The9 reaches US$200 million, 33,938,400 Class A ordinary shares (equivalent to 113,128 ADSs) of The9 will be released from the lock-up; (ii) when the market capitalization of The9 reaches US$500 million, 13,575,300 Class A ordinary shares (equivalent to 45,251 ADSs) of The9 will be released from the lock-up, and (iii) when the market capitalization of The9 reaches US$1 billion, 6,787,800 Class A Ordinary shares (equivalent to 22,626 ADSs) of The9 will be released from the lock-up. The rest of the restricted Class A ordinary shares will be released from the lock-up when Shenma completes a qualified IPO and its shares owned by The9 become freely tradable in the open market.

Shenma developed and operates Shenma.io, a leading digital human SaaS platform driven by artificial intelligence-generated content (AIGC). The platform has 350,000 registered users, 150,000 short video scripts model library, 9,000 digital human creators and different brand customers. Using Shenma's proprietary cloning technology, users can create 1:1 digital human clone character with image and voice. Together with different contents supported by AIGC, each user can manage a large number of accounts efficiently. The digital human creators using Shenma platform can monetize their products on different social platforms 24 hours a day, 7 days a week with much lower cost compared to real people. Shenma platform also offers video, audio and text automatic replies to enhance the monetization of products.

"With the continuous breakthroughs in technology, AI generates content and digital humans express content. The combination of these two new technologies will become a new form of media interaction in the future. Traditional advertising industries will be disrupted by these two new technologies and social media. We have already obtained multiple intellectual properties in China. Our proprietary digital human SaaS platform can assist our users in many application scenarios including digital human key opinion leader creation, live streaming, information flow advertising, training courses, etc. Users just need to enter text or import audio, and then we can quickly generate digital human broadcast video with precise mouth shapes and rich expressions," said Mr. Jianjun Ma, founder of Shenma.

"While we are continuing our cryptocurrency mining business and benefiting from the recent increase in value of the 300 Bitcoins that we hold as of today, we believe AIGC will bring revolutionary changes to almost every industry. In 2023, China's AIGC market exceeded RMB10 billion. After the proposed investment in a leading AI SaaS legal service platform 365LAWHELP.COM, this time we plan to directly acquire a leading AIGC driven digital human SaaS platform ShenMa. We will continue to participate in the explosive growth of AI application opportunities through investments and acquisitions in specific industries and markets," said Mr. George Lai, CFO and Director of The9.

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