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EX-99.1
3
tm2621158d1_ex99-1.htm
EXHIBIT 99.1

 

 

Exhibit 99.1

 

The9 Posts Record Quarterly Profit; Expects
Sequential Growth Through 2026

 

Digital asset gains power record quarter; AI-powered
game creation platform the9bit surpasses 8 million registered users

 

Hong Kong — July 27, 2026 — The9 Limited (Nasdaq:
NCTY) (“The9” or the “Company”), a global diversified high-tech company, today reported net income of US$23 million
for the three months ended March 31, 2026, delivering the strongest quarter in the Company’s history since its 2004 IPO. The
result reflects substantial digital asset-related income, accelerating adoption of the9bit, and the continued build-out of the Company’s
cryptocurrency operations and digital asset holdings.

 

Digital Asset-Related Income and Token Allocation

 

First-quarter net income was driven primarily by the receipt of 1.425
billion 9BIT tokens during the period, measured at fair value based on observable market prices on digital asset trading platforms including
KuCoin, MEXC and BingX.

 

An additional 475 million 9BIT tokens were received in April 2026
and will be reflected in second-quarter results, bringing the Company’s total allocation to approximately 1.9 billion tokens under
its cooperation agreement with the 9BIT Foundation, an independent crypto foundation established in Panama.

 

The Company accounts for its digital assets in accordance with applicable
US GAAP. Its unaudited financial information for the three months ended March 31, 2026, has been reviewed by The9’s independent
auditors under applicable standards.

 

As of the date of this release, the Company’s total cryptocurrency
holdings, including BTC and 9BIT, are valued at approximately US$110 million based on quoted market prices. This estimate is provided
for reference only and may not reflect realizable value.

 

the9bit Platform Growth

 

The9’s AI-powered game creation platform, the9bit, has scaled
rapidly since its August 2025 launch, surpassing 8 million registered users who have created more than 110,000 games using its proprietary
AI-assisted tools. By enabling creators to transform ideas and digital assets into playable games, the9bit lowers development barriers
and expands the Company’s content offerings.

 

Advancing the9bit as an AI-Native Game Operating System

 

The9 is developing the9bit into an AI-native production operating
system for interactive entertainment. At its center is a proprietary, model-agnostic orchestration layer that integrates AI agents, foundation
models and development workflows into a unified platform — a capability the Company believes represents the9bit’s core competitive
advantage, independent of any single foundation model. In each project, an AI producer agent transforms a single natural-language prompt
into a structured development plan and autonomously directs a distributed workforce of over 60 specialized AI agents across the full
production pipeline, designed to enable playable interactive experiences in as little as 10 minutes. The Company expects this advantage
to compound over time, as every production cycle generates proprietary data that further strengthens the platform’s intelligence
layer.

 

  

  

 

 

Incentive Plan

 

The Board of Directors has approved a long-term incentive plan under
which senior management will be eligible to receive equity awards representing up to 12% of the Company’s outstanding shares. Notably,
the awards vest only if the Company achieves higher quarterly net income in each of the remaining three quarters of 2026 compared with
the first quarter, reflecting management’s confidence that the Company’s profitability will continue to strengthen through
the year. The awards are further subject to multi-year vesting conditions and a three-year lock-up period, reinforcing management’s
commitment to sustained, long-term shareholder value creation.

 

About The9 Limited

 

The9 Limited (Nasdaq: NCTY) is a global, diversified high-tech company
redefining how games are created, played, and monetized. Founded in 1999 and Nasdaq-listed since 2004, The9 brings over two decades of
gaming heritage to its flagship platform the9bit, an AI-powered digital asset ecosystem built around AI game creation and the
$9BIT token economy, where every participant can play, create, earn, and own a stake in its growth. Beyond the9bit, The9 continues to
explore emerging opportunities across AI-empowered industries and the broader digital ecosystem, including an equity stake in AI-driven
drug discovery company NYB, building a multi-engine business positioned at the frontier of AI and the new economy, reshaping how value
is created and shared.

  

Forward-Looking Statements 

 

This release contains statements that are forward-looking statements
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s beliefs
and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout
this document and include statements regarding, amongst other things, results of operations, financial condition, liquidity, prospects,
growth, strategies and the industry in which we operate. The use of words “will”, “expects”, “intends”,
 “anticipates”, “estimates”, “predicts”, “believes”, “should”, “potential”,
 “may”, “preliminary”, “forecast”, “objective”, “plan”, or “target”,
and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees
of future performance and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including,
but not limited to statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations,
financial condition, liquidity, prospects, growth, strategies, future market conditions or economic performance and developments in the
capital and credit markets and expected future financial performance, and the markets in which we operate. For a discussion of these and
other risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statement,
see The9’s filings with the U.S. Securities and Exchange Commission. The9 undertakes no obligation to update or revise forward-looking
statements to reflect subsequent events or circumstances, except as required by applicable law.

 

Investor Relations Contact

 

Ms. Jojo Su

Investor Relations Specialist

The9 Limited

Tel: +86 (21) 6108-6080

Email: [email protected]

 

  

  

 

 

THE9 LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INFORMATION

(Expressed in Renminbi - RMB and US Dollars - US$. All amounts in thousands, except for per share data, or otherwise noted.)

 

 
   
 Three months ended March 31, 

 
   
 2025  
 2026  
 2026 

 
   
 RMB  
 RMB  
 US$ 

 
   
    
    
 (Note 1) 

 
 Revenues: 
     
     
    

 
   Cryptocurrency mining revenue 
  21,447  
  4,622  
  670 

 
   Online game services and other revenues from third party 
  15,509  
  3,932  
  570 

 
   Online game services and other revenues from related party 
  -  
  4,287  
  621 

 
   
     
     
    

 
 Total net revenues 
  36,956  
  12,841  
  1,861 

 
  Cost of cryptocurrency mining 
  (25,894) 
  (6,483) 
  (940)

 
  Cost of online game services and other revenues from third party 
  (9,152) 
  (1,996) 
  (289)

 
  Cost of online game services and other revenues from related party 
  -  
  (1,842) 
  (267)

 
  Total cost 
  (35,046) 
  (10,321) 
  (1,496)

 
   
     
     
    

 
 Gross profit 
  1,910  
  2,520  
  365 

 
   
     
     
    

 
 Operating income (expenses): 
     
     
    

 
    Product development 
  (147) 
  (3,567) 
  (517)

 
    Sales and marketing 
  (165) 
  (4,816) 
  (698)

 
    General and administrative 
  (33,194) 
  (32,417) 
  (4,699)

 
    Realized gain on exchange cryptocurrencies 
  12,106  
  7,584  
  1,099 

 
    Fair value change on cryptocurrencies 
  (39,675) 
  (68,647) 
  (9,952)

 
 Total operating expenses 
  (61,075) 
  (101,863) 
  (14,767)

 
   
     
     
    

 
 Loss from operations 
  (59,165) 
  (99,343) 
  (14,402)

 
   
     
     
    

 
 Impairment on other investments 
  (555) 
  -  
  - 

 
 Interest expenses 
  (2,224) 
  (11,548) 
  (1,674)

 
 Gain (loss) on fair value of derivative 
  (3,254) 
  2,155  
  312 

 
 Gain on extinguishment of convertible notes 
  -  
  377  
  55 

 
 Gain on extinguishment of debt 
  -  
  2,940  
  426 

 
 Changes in fair value on other investments 
  (230) 
  (12) 
  (2)

 
 Cryptocurrency reward 
  -  
  188,623  
  27,345 

 
 Fair value change on 9BIT tokens 
  -  
  70,778  
  10,262 

 
 Other income, net 
  450  
  213  
  32 

 
 Foreign transaction exchange gain 
  232  
  1,434  
  208 

 
 Income (loss) from continuing operations before income tax expense and share of loss in equity method investments 
  (64,746) 
  155,617  
  22,562 

 
 Income tax expense 
  -  
  -  
  - 

 
 Share of gain in equity method investments 
  301  
  -  
  - 

 
 Net  income (loss) 
  (64,445) 
  155,617  
  22,562 

 
   Net income (loss) attributable to noncontrolling interest 
  1,793  
  (1,150) 
  (167)

 
 Net income (loss) attributable to The9 Limited ordinary
 shareholders 
  (66,238) 
  156,767  
  22,729 

 
 Other comprehensive income (loss): 
     
     
    

 
       Currency translation adjustments 
  (152) 
  (4) 
  (1)

 
 Total comprehensive income (loss) 
  (64,597) 
  155,613  
  22,561 

 
 Comprehensive income (loss) attributable to: 
     
     
    

 
       Noncontrolling interest 
  1,793  
  (1,150) 
  (167)

 
       The9 Limited 
  (66,390) 
  156,763  
  22,728 

 
 Net income (loss) per share attributable to The9 Limited ordinary shareholders: 
     
     
    

 
 - Basic and diluted 
  (0.04) 
  0.05  
  0.01 

 
   
     
     
    

 
 Weighted average number of shares outstanding 
     
     
    

 
 - Basic and diluted 
  1,667,504  
  3,129,745  
  3,129,745 

 

 

The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.

 

  

  

 

 

THE9 LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS INFORMATION

(Expressed in Renminbi - RMB and US Dollars - US$. All amounts in thousands, except for share data, or otherwise noted.)

 

 
   
 As of December 31, 
2025  
 As of Mar 31,

 2026  
 As of Mar 31,

 2026 

 
   
 RMB  
 RMB  
 US$ 

 
   
    
 (UNAUDITED)  
 (UNAUDITED) 

 
   
    
    
 (Note 1) 

 
 Assets 
     
     
    

 
 Current Assets: 
     
     
    

 
   Cash and cash equivalents 
  58,489  
  16,252  
  2,356 

 
   Accounts receivable, net of allowance for credit losses 
  3,782  
  5,851  
  848 

 
   Accounts receivable-related party 
  6,284  
  8,312  
  1,205 

 
   Prepayments and other current assets, net of allowance for credit losses 
  19,543  
  20,444  
  2,964 

 
   Prepayments and other current assets-related party 
  515  
  1,213  
  176 

 
   Advances to suppliers 
  1,620  
  3,281  
  476 

 
   Cryptocurrencies 
  13,673  
  7,095  
  1,029 

 
   Cryptocurrencies, restricted 
  238,533  
  156,001  
  22,615 

 
   Cryptocurrencies (9BIT Tokens) 
  -  
  259,401  
  37,605 

 
   Short term loan receivable-related party 
  -  
  1,105  
  160 

 
 Total current assets 
  342,439  
  478,955  
  69,434 

 
   
     
     
    

 
 Investments 
  171,558  
  171,546  
  24,869 

 
 Property, equipment and software, net 
  43,582  
  38,383  
  5,564 

 
 Operating lease right-of-use assets, net 
  11,836  
  10,839  
  1,571 

 
 Convertible notes receivable-related party 
  7,306  
  14,501  
  2,102 

 
 Intangible assets 
  15,801  
  14,934  
  2,165 

 
 Other long-lived assets, net 
  1,226  
  4,740  
  687 

 
 Total Assets 
  593,748  
  733,898  
  106,392 

 
   
     
     
    

 
 LIABILITIES AND EQUITY 
     
     
    

 
 Current Liabilities: 
     
     
    

 
   Accounts payable 
  15,849  
  14,962  
  2,169 

 
   Accounts payable-related party 
  3,629  
  4,744  
  688 

 
   Other taxes payable 
  1,434  
  1,408  
  204 

 
   Advances from customers 
  5,924  
  5,997  
  869 

 
   Amounts due to related parties 
  9,658  
  9,658  
  1,400 

 
   Loan, net 
  174,476  
  138,374  
  20,060 

 
   Convertible notes 
  48,152  
  54,528  
  7,905 

 
   Conversion feature derivative liability 
  24,589  
  22,009  
  3,191 

 
   Interest payables 
  3,941  
  4,738  
  687 

 
   Accrued expense and other current liabilities 
  49,809  
  49,580  
  7,187 

 
   Current portion of operating lease liabilities 
  4,189  
  4,237  
  614 

 
   Deferred revenue 
  1,635  
  2,317  
  336 

 
   Put option liability 
  112  
  112  
  16 

 
 Total current liabilities 
  343,397  
  312,664  
  45,326 

 
   Non-current portion of operating lease liabilities 
  7,815  
  6,786  
  984 

 
 Total Liabilities 
  351,212  
  319,450  
  46,310 

 
   
     
     
    

 
 Ordinary shares contingently redeemable 
  72,699  
  72,699  
  10,539 

 
 Equity 
     
     
    

 
 Class A ordinary shares (US$0.01 par value; 43,000,000,000 shares authorized, 4,504,052,678 and 4,518,342,878 shares issued and outstanding as of December 31, 2025 and March 31, 2026, respectively) 
  317,358  
  318,338  
  46,149 

 
 Class B ordinary shares (US$0.01 par value; 6,000,000,000 shares authorized, 63,607,334 and 63,607,334 shares issued and outstanding as of December 31, 2025 and March 31, 2026, respectively) 
  4,533  
  4,533  
  657 

 
 Additional paid-in capital 
  4,706,242  
  4,721,561  
  684,483 

 
 Statutory reserves 
  7,327  
  7,327  
  1,062 

 
 Accumulated other comprehensive loss 
  (11,924) 
  (11,928) 
  (1,729)

 
 Accumulated deficit 
  (4,832,656) 
  (4,675,889) 
  (677,862)

 
 The9 Limited shareholders' equity 
  190,880  
  363,942  
  52,760 

 
 Noncontrolling interest 
  (21,043) 
  (22,193) 
  (3,217)

 
 Total equity 
  169,837  
  341,749  
  49,543 

 
 TOTAL LIABILITIES AND EQUITY 
  593,748  
  733,898  
  106,392 

 

 

The accompanying notes are an integral part of
these consolidated financial statements.

 

  

  

 

 

THE9 LIMITED

UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

FOR THREE MONTHS ENDED MARCH 31, 2025 AND 2026

(Expressed in Renminbi - RMB and US Dollars - US$. All amounts in thousands, except for share data, or otherwise noted.)        

 

 
   
  Three months
 ended March 31, 

 
   
  2025  
  2026 

 
   
  RMB   
  RMB  
  US$ 

 
 Cash flows from operating activities: 
     
     
    

 
 Net income(loss) 
  (64,445) 
  155,617  
  22,562 

 
 Adjustments for reconcile net income (loss) to net cash used in operating
 activities: 
     
     
    

 
 Loss (Gain) on disposal of property, equipment and software 
  14  
  1  
  - 

 
 Amortization of deferred loan costs 
  414  
  1,038  
  151 

 
 Conversion of interest of convertible debt into ordinary shares 
  (257) 
  -  
  - 

 
 Share-based compensation expenses 
  9,855  
  14,219  
  2,061 

 
 Share of loss in equity method investments 
  (301) 
  -  
  - 

 
 Changes in fair value on other investments 
  230  
  12  
  2 

 
 Impairment on other investments 
  555  
  -  
  - 

 
 (Gain) loss from change in fair value of conversion feature derivative, option assets and liabilities 
  3,254  
  (2,155) 
  (313)

 
 Depreciation and amortization of property, equipment and software 
  4,496  
  5,026  
  729 

 
 Foreign currency exchange gain 
  (232) 
  (1,434) 
  (208)

 
 Gain on extinguishment of debt 
  -  
  (2,940) 
  (426)

 
 Non-cash interest expense on convertible notes 
  1,088  
  9,586  
  1,390 

 
 Amortization of intangible assets 
  -  
  867  
  126 

 
 Gain on extinguishment of convertible notes 
  -  
  (377) 
  (55)

 
 Non-cash lease expense 
  1,113  
  997  
  145 

 
 Cryptocurrency mining revenue 
  (21,447) 
  (4,622) 
  (670)

 
 Receipt of USDC and USDT from exchange of other cryptocurrencies 
  (12,488) 
  -  
  - 

 
 Receipt of USDC from operating activities 
  -  
  (257) 
  (38)

 
 Realized gain on sale/exchange of cryptocurrencies 
  (12,106) 
  (7,584) 
  (1,099)

 
 Change in fair value of cryptocurrency 
  39,675  
  (2,131) 
  (309)

 
 Payment of default deficit 
  -  
  3,597  
  522 

 
 Receipt of 9bit from operating activities 
  -  
  (188,623) 
  (27,345)

 
 Payment in cryptocurrencies for operating activities 
  13,724  
  5,428  
  787 

 
 Sale of cryptocurrencies for cash 
  10,447  
  -  
  - 

 
 Interest expense 
  863  
  1,418  
  206 

 
 Sale of cryptocurrencies for other cryptocurrencies 
  13,114  
  -  
  - 

 
   Change in accounts receivable 
  (5,375) 
  (4,099) 
  (594)

 
   Change in advance to suppliers 
  (100) 
  (1,661) 
  (241)

 
   Change in prepayments and other current assets 
  5,205  
  (1,427) 
  (207)

 
   Change in other long-lived assets 
  (8,987) 
  (3,514) 
  (510)

 
   Change in Operating lease right-of-use assets 
  (2,189) 
  -  
  - 

 
   Change in accounts payable 
  4,257  
  225  
  33 

 
   Change in amounts due from related parties 
  2,312  
  (10,119) 
  (1,467)

 
   Change in other taxes payable 
  221  
  (26) 
  (4)

 
   Change in advances from customers 
  (75) 
  756  
  110 

 
   Change in accrued expenses and other current liabilities 
  9,651  
  (229) 
  (33)

 
   Change in Operating lease liabilities 
  1,052  
  (979) 
  (143)

 
 Net cash used in operating activities 
  (6,462) 
  (33,390) 
  (4,838)

 
   
     
     
    

 
 Cash flows from investing activities 
     
     
    

 
 Loan to a related party 
  -  
  (8,073) 
  (1,170)

 
 Proceeds from disposal of property, equipment and software 
  89  
  -  
  - 

 
   
     
  -  
  - 

 
 Net cash provided by (used in) investing activities 
  89  
  (8,073) 
  (1,170)

 
   
     
     
    

 
 Cash flows from financing activities: 
     
     
    

 
 Proceeds from issuance of convertible notes 
  21,472  
  -  
  - 

 
 Repayments of BTC Mortgage loan 
  (16,334) 
  -  
  - 

 
 Net cash provided by (used in) financing activities 
  5,138  
  -  
  - 

 
 Effect of foreign exchange rate changes on cash and cash equivalents 
  935  
  (774) 
  (115)

 
 Net change in cash and cash equivalents 
  (300) 
  (42,237) 
  (6,123)

 
 Cash and cash equivalents, beginning of year 
  10,911  
  58,489  
  8,479 

 
 Cash and cash equivalents, end of year 
  10,611  
  16,252  
  2,356 

 
   
     
     
    

 
 Supplemental disclosure of cash flow information: 
     
     
    

 
   
     
     
    

 
 Interest paid 
  -  
  -  
  - 

 
 Income taxes paid 
  -  
  -  
  - 

 
   
     
     
    

 
 Non-cash investing and financing activities: 
     
     
    

 
 Loan payment in exchange for cryptocurrencies 
  -  
  9,891  
  1,434 

 
 Operating lease right-of-use assets obtained in exchange for operating lease
 liabilities 
  1,114  
  -  
  - 

 
 Conversion of convertible notes into ordinary shares 
  -  
  2,080  
  301 

 
 Settlement of L2 T6 Loan in USBT 
  -  
  25,307  
  3,669 

 

 

The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.

 

  

  

 

 

UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THREE MONTHS ENDED MARCH 31,
2026

(Amounts in thousands of Renminbi (“RMB”), and in thousands of U.S. Dollars (“US$”), including number of shares)

 

 
   
  Number
 of
 shares  
  Par
 value  
  Additional
 paid-in
 capital  
  Statutory
 reserves  
  Accumulated
 other
 comprehensive
 loss  
  Accumulated
 deficit  
  Equity
 (deficit)
 attributable
 to The9
 limited  
  Noncontrolling
 interest  
  Total
 Shareholder
 Equity
 (deficit) 

 
   
     
  RMB  
  RMB  
  RMB  
  RMB  
  RMB  
  RMB  
  RMB  
  RMB 

 
 Balance as of January 1, 2026 
  4,567,660  
  321,891  
  4,706,242  
  7,327  
  (11,924) 
  (4,832,656) 
  190,880  
  (21,043) 
  169,837 

 
 Net income 
  -  
  -  
  -  
  -  
  -  
  156,767  
  156,767  
  (1,150) 
  155,617 

 
 Currency translation adjustments 
  -  
  -  
  -  
  -  
  (4) 
  -  
  (4) 
  -  
  (4)

 
 Cancellation of ordinary shares 
  (4,457) 
  (320) 
  320  
  -  
  -  
  -  
     
  -  
  - 

 
 Share-based compensation 
  -  
  -  
  14,219  
  -  
  -  
  -  
  14,219  
  -  
  14,219 

 
 Conversion of convertible
 debt into ordinary shares 
  18,748  
  1,300  
  780  
  -  
  -  
  -  
  2,080  
  -  
  2,080 

 
 Balance as of March 31, 2026 
  4,581,950  
  322,871  
  4,721,561  
  7,327  
  (11,928) 
  (4,675,889) 
  363,942  
  (22,193) 
  341,749 

 
 Balance as of March 31, 2026 (US$ except share
 data) 
  4,581,950  
  46,806  
  684,483  
  1,062  
  (1,729) 
  (677,862) 
  52,760  
  (3,217) 
  49,543 

 

 

  

  

 

 

THE9 LIMITED 

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 

 

Note 1 – Organization and Nature of Operations

 

The accompanying unaudited condensed consolidated financial statements
include the financial statements of The9 Limited (“The9”), incorporated in the Cayman Islands, its subsidiaries, the consolidated
variable interest entity (the “VIE”), and the subsidiaries of the VIE (collectively, the “Group,” the “Company,”
 “we,” “our,” or “us”). The Group is primarily engaged in the operation of cryptocurrency mining, and,
since the second half of 2024, has reentered the online gaming business in mainland China through business cooperation with various gaming
companies.

 

There have been no material changes to the Group’s principal
subsidiaries or VIE structure during the three months ended March 31, 2026.

 

Note 2 – Basis of Presentation and Summary of Significant Accounting
Policies

 

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they
do not include all information and footnotes required by the U.S. GAAP for complete annual financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company’s financial position
as of March 31, 2026, and its results of operations and comprehensive income (loss), changes in equity, and cash flows for the periods
presented have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of results for
the year ending December 31, 2026.

 

The condensed consolidated balance sheet as of December 31, 2025 has
been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by U.S.
GAAP for complete annual financial statements.

 

These condensed consolidated financial statements should be read in
conjunction with the Company’s audited consolidated financial statements and notes thereto included in its Annual Report on Form
20-F for the year ended December 31, 2025. The accounting policies applied are consistent with those used in the Company’s most
recent audited annual financial statements, with no material changes during the period.

 

Note 3 – Convenience Translation

 

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
= RMB6.8980, representing the noon buying rate on the last trading day of March 2026 (March 31, 2026), as set forth in the H.10 statistical
release of the U.S. Federal Reserve Board.

 

  

  

 

 

Note 4 – Variable Interest Entity

 

The Group is the primary beneficiary of its VIE, Shanghai The9 Information
Technology Co., Ltd. (“Shanghai IT” or the “VIE”), which was designed to comply with PRC regulations that prohibit
direct foreign ownership of businesses that operate online games in the PRC. Through contractual arrangements between the Group’s
subsidiary, Huiling Computer Technology Consulting (Shanghai) Co. Ltd. (“Huiling”, a wholly-owned foreign enterprise, the
 “WOFE”), and Shanghai IT’s shareholders, the Group has (1) the power to direct the activities of the VIE that most significantly
affect its economic performance, and (2) the right to receive benefits from the VIE that could potentially be significant to the VIE.
Accordingly, the Group has consolidated the VIE pursuant to ASC 810, Consolidation. There have been no changes to the contractual
arrangements, the Group’s control conclusion, or identified risks and uncertainties related to the VIE structure during the three
months ended March 31, 2026. For a full description of the contractual arrangements and associated risks, see Note 5 to the Group’s
audited consolidated financial statements included in its Annual Report on Form 20-F for the year ended December 31, 2025.

 

The VIE’s assets are not used as collateral for the VIE’s
obligations and can only be used to settle the VIE’s obligations.

 

Note 5 – Investments

 

The Group’s investments, accounted for under the equity method
and cost method, are more fully described in Note 11 to the Group’s audited consolidated financial statements for the year ended
December 31, 2025. There have been no material changes in the composition, carrying value, or impairment assessment of the Group’s
investment portfolio during the three months ended March 31, 2026.

 

Note 6 – Call Option Assets

 

As of December 31, 2025 and March 31, 2026, the Group’s call
option assets, related to its equity interest in Kuaijin, were carried at a fair value of nil. There have been no changes in the terms
of the call option or reassessment triggering a change in fair value during the three months ended March 31, 2026.

 

Note 7 – Cryptocurrencies

 

The Group holds digital assets, including Bitcoin (“BTC”)
and 9BIT tokens, which are accounted for in accordance with applicable U.S. GAAP.

 

During the
three months ended March 31, 2026, the Group received 1,425,000,000 9BIT tokens pursuant to a cooperation agreement with the 9BIT Foundation,
an independent crypto foundation established in Panama, in connection with the Group’s
AI-powered game creation platform, the9bit. the9bit started its operation in late 2025. It focuses on the Southeast Asia market for the
time being, and will expand to other countries in the future.

 

According
to the cooperation agreement, the9bit will utilize 9BIT as its platform token in a non-exclusive basis. Being the initial ecosystem contributor,
the9bit will be rewarded a total of 1,900,000,000 9BIT tokens (1,425,000,000 tokens were received during the three months ended March
31, 2026 and 475,000,000 tokens were received subsequently in April 2026) by 9BIT Foundation for its contribution to the 9BlT ecosystem.
the9bit does not have any obligation for how long it will utilize 9BIT as its platform token or whether it will utilize other tokens
in the future. The Group recognized such cryptocurrency reward when it received 9BIT tokens in its wallet.

 

The tokens
were measured at fair value based on observable market prices on digital asset trading platforms, including KuCoin, MEXC, and BingX, on
which 9BIT tokens are listed. The initial receipt of RMB188,815 thousand (US$27,372 thousand) was recorded within other income as “Cryptocurrency
reward.” The tokens are subsequently remeasured to fair value at
each reporting date, with changes recognized in net income as “Fair
value change on 9BIT tokens”.

 

9BIT Token roll-forward — three months ended March 31, 2026:

 

 
   
 Tokens  
 RMB (’000)  
 US$ (’000) 

 
 Balance at December 31, 2025 
  -  
  -  
  - 

 
 Tokens received 
  1,425,000,000  
  188,623  
  27,345 

 
 Fair value change 
  -  
  70,778  
  10,262 

 
 Balance at March 31, 2026 
  1,425,000,000  
  259,401  
  37,605 

 

 

  

  

 

 

In
addition to 9BIT tokens, the Group holds other cryptocurrencies, consisting primarily of Bitcoin (BTC), together with smaller holdings
of Tether (USDT) and USD Coin (USDC). The following table presents the roll-forward of Cryptocurrencies and Cryptocurrencies, restricted
(excluding 9BIT tokens, presented in a separate balance sheet line item, see above) for the three months ended March 31, 2026: 

 

 
 (RMB in thousands) 
 Amount 

 
 Balance at December 31, 2025 
  252,206 

 
 Receipt of cryptocurrencies from mining activities 
  4,622 

 
 Receipt of USDC from operating activities 
  257 

 
 Payment for operating activities 
  (5,428)

 
 Repaid of BTC Mortgage borrowing 
  (22,366)

 
 Interest expense 
  (1,418)

 
 Payment of default deficit 
  (3,596)

 
 Exchange gain or loss for RMB/USD translation 
  (118)

 
 Realized gain on sale/exchange of cryptocurrencies 
  7,584 

 
 Fair value change on cryptocurrencies 
  (68,647)

 
 Balance at March 31, 2026 
  163,096 

 

 

See Note 22, Subsequent Events for additional 9BIT tokens received
subsequent to March 31, 2026.

 

Note 8 – Put Option Liabilities

 

The Group’s remaining put option liability relates to its equity
interest in Shenma, as more fully described in Note 17 to the Group’s audited consolidated financial statements for the year ended
December 31, 2025. The put option liability was RMB112 thousand (US$16 thousand) as of both December 31, 2025 and March 31, 2026, with
no significant change in fair value recognized during the three months ended March 31, 2026.

 

Note 9 – Leases

 

The Group has operating leases primarily for office space, parking
lots, and warehouse space. Balances related to operating leases as of March 31, 2026 were as follows:

 

 
   
 December 31, 2025  
 March 31, 2026 

 
 Operating lease right-of-use assets (RMB ’000) 
  11,836  
  10,839 

 
 Operating lease liabilities – current (RMB ’000) 
  4,189  
  4,237 

 
 Operating lease liabilities – non-current (RMB ’000) 
  7,815  
  6,786 

 

 

Operating lease cost recognized for the three months ended March 31,
2026 was RMB1,133 thousand (US$164 thousand), compared to RMB1,199 thousand for the three months ended March 31, 2025. There have been
no new leases entered into, material modifications, or terminations during the three months ended March 31, 2026, and no changes to the
weighted-average discount rate or remaining lease term materially different from that disclosed as of December 31, 2025 (4.65%). The
weighted average remaining lease term (in years) are 2.95 years as of December 31, 2025 and 2.70 years as of March 31, 2026.

 

Note 10 – Taxation

 

The Group is subject to income taxation in the Cayman Islands, Hong
Kong, Singapore, the PRC, and the United States, as more fully described in Note 19 to the Group’s audited consolidated financial
statements for the year ended December 31, 2025. There have been no changes to the Group’s tax jurisdictions, statutory rates, or
preferential tax qualifications during the three months ended March 31, 2026.

 

  

  

 

 

No income tax expense was recorded for the three months ended March
31, 2026, notwithstanding net income of RMB156,767 thousand for the period. This net income was primarily attributable to the receipt
and fair value remeasurement of 9BIT tokens by a Group subsidiary incorporated in Hong Kong. Hong Kong operates a territorial system
of taxation, under which profits tax applies only to profits arising in or derived from Hong Kong. This subsidiary maintains no office,
employees, or operations in Hong Kong and holds only a registered address through a registered agent. Accordingly, and consistent with
the Group’s Hong Kong subsidiaries not having historically derived assessable profits in Hong Kong (as disclosed in Note 19 to
the Group’s audited annual financial statements), management has concluded that no Hong Kong income tax is applicable to this income.

 

Note 11 – Loan

 

The loan balance decreased from RMB174,476 thousand (US$25,300 thousand)
as of December 31, 2025 to RMB138,374 thousand (US$20,060 thousand) as of March 31, 2026, primarily reflecting the following activity
during the three months ended March 31, 2026:

 

In February 2026, the Group received the first batch of five default
notices under Loan Agreement #2, stating that an Event of Default had occurred under loan tranches #3, #4, #5, #6, and #7 due to a diminution
in the value of pledged collateral. Pursuant to these notices, the Group transferred 0.5 million USDT to the lender to cure the default
deficit for tranches #3, #4, #5, #6, and #7. In mid-February 2026, the Group received a second batch of five default notices and transferred
US$0.9 million to cure the default deficit under tranches #3, #4, #5, and #7. The Group did not cure the deficit under tranche #6; instead,
the Group terminated that loan tranche, with a principal amount of approximately US$3.6 million plus accrued interest, and forfeited its
right to receive the pledged collateral of 48 BTC in full settlement.

 

As of March 31, 2026, the remaining loan balance under Loan Agreement
#2 remains outstanding under the terms described above and in the Group’s audited consolidated financial statements as of and for
the year ended December 31, 2025.

 

Note 12 – Convertible Notes

 

As of March 31, 2026, the Group had the following convertible notes
outstanding, both bearing 6% interest per annum and convertible into ADSs at the lower of 90% of the average 5-day trading price preceding
the redemption notice or 90% of the closing price on the day before the redemption notice:

 

 
   
 March 31, 2026
 Principal
 (RMB ’000)  
 March 31, 2026
 Accrued Interest
 (RMB ’000) 

 
 February 2025 $3,300,000 Note, due February 27, 2026(on April 14, 2026, the maturity date for this Note is extended until September 5, 2026) 
  11,883  
  3,484 

 
 September 2025 $8,800,000 Note, due September 22, 2026 
  42,645  
  18,525 

 
 Total 
  54,528  
  22,009 

 

 

The following table presents the roll-forward of convertible notes,
net of unamortized discount, for the three months ended March 31, 2026:

 

 
 (RMB in thousands) 
 Amount 

 
 Balance at January 1, 2026 
  48,152 

 
 Issuance of convertible notes, face value 
  - 

 
 Amortization of debt discount 
  8,486 

 
 Conversion 
  (1,963)

 
 Exchange rate change on notes’ face value 
  (147)

 
 Balance at March 31, 2026 
  54,528 

 

 

The fair value of the conversion option embedded in each note is estimated
using the Black-Scholes option pricing model. Key assumptions used as of March 31, 2026 were: (1) dividend yield of 0%; (2) expected volatility
of 78.18%-78.39%; (3) risk-free interest rate of 3.71%-3.72%; (4) expected life of 0.43-0.48 years; and (5) estimated fair value of the
Group’s ADSs of $4.93 per share.

 

  

  

 

 

Note 13 – Warrants

 

The Group has issued warrants to purchase Class A ordinary shares in
connection with various financing transactions completed between 2021 and September 2025, as more fully described in Note 24 to the Group’s
audited consolidated financial statements for the year ended December 31, 2025. These warrants are classified as equity, with no remeasurement
subsequent to initial recognition. There were no new warrant issuances, exercises, cancellations, or expirations during the three months
ended March 31, 2026.

 

Note 14 – Fair Value Measurement

 

 
   
 Level 1  
 Level 2  
 Level 3  
 Total (RMB ’000)  
 Total (US$ ’000) 

 
 Assets 
     
     
     
     
    

 
 Cryptocurrencies 
  7,095  
  -  
  -  
  7,095  
  1,029 

 
 Cryptocurrencies, restricted 
  156,001  
  -  
  -  
  156,001  
  22,615 

 
 Cryptocurrencies (9BIT Tokens) 
  259,401  
  -  
  -  
  259,401  
  37,605 

 
 Total assets 
  422,497  
  -  
  -  
  422,497  
  61,249 

 
 Liabilities 
     
     
     
     
    

 
 Conversion Feature Derivative Liability 
  -  
  -  
  22,009  
  22,009  
  3,191 

 
 Put option liabilities 
  -  
  -  
  112  
  112  
  16 

 
 Total liabilities 
  -  
  -  
  22,121  
  22,121  
  3,207 

 

 

There have been no changes to the Group’s valuation techniques
or significant unobservable inputs for Level 3 items during the three months ended March 31, 2026.

 

Note 15 – Share-Based Compensation

 

The Group’s share-based compensation arrangements are more fully
described in Note 28 to the Group’s audited consolidated financial statements for the year ended December 31, 2025. The increase
in Class A ordinary shares outstanding during the three months ended March 31, 2026 reflects the scheduled vesting of restricted shares
previously granted and disclosed in the Group’s Annual Report on Form 20-F for the year ended December 31, 2025. No new share-based
awards were authorized or granted during the three months ended March 31, 2026.

 

Share-based compensation expense recognized for the three months ended
March 31, 2026 was RMB14,219 thousand (US$1,982 thousand), compared to RMB9,855 thousand for the three months ended March 31, 2025.

 

As of March 31, 2026, there was approximately RMB 141,595 thousand
(US$20,527 thousand) of unrecognized compensation cost related to non-vested restricted shares, expected to be recognized over a weighted-average
period of approximately 1.41 years.

 

Note 16 – Related Party Transactions and Balances

 

Convertible notes receivable – related party (NYB)

 

The Group’s convertible notes receivable from Nanyang Biologics
(“NYB”), a related party, increased from RMB7,306 thousand at December 31, 2025 to RMB14,501 thousand (US$2,102 thousand)
at March 31, 2026, reflecting the closing of the Second NYB Convertible Note Agreement in January 2026, pursuant to which the Group funded
an additional US$1,000,000 principal amount under substantially similar terms as the original agreement, plus accrued interest during
the period.

 

  

  

 

 

Loan receivable – related party

 

Transactions with Shanghai ZSHX

 

Shanghai Zhong Shun Heng Xin Network Science and Technology Co., Ltd. (“Shanghai
ZSHX”), the 49% noncontrolling interest holder of the Group’s Shanghai joint venture, received online gaming revenue on behalf
of the Group through its provision of a payment channel. For the three months ended March 31, 2026, revenue – related party amounted
to RMB4,287 thousand (US$621 thousand) and cost – related party amounted to RMB1,842 thousand (US$267 thousand). As of March 31,
2026, accounts receivable – related party amounted to RMB8,312 thousand (US$1,205 thousand), prepayments and other current assets
 – related party amounted to RMB1,213 thousand (US$176 thousand), and accounts payable – related party amounted to RMB4,744
thousand (US$688 thousand).

 

Note 17 – (Loss) Income Per Share

 

Basic and diluted net income (loss) per share is calculated as follows:

 

 
   
 Three months ended
 March 31, 2025  
 Three months ended
 March 31, 2026 

 
 Net (loss) income attributable to The9 Limited ordinary shareholders (RMB ’000) 
  (66,238) 
  156,767 

 
 Weighted-average shares outstanding – basic and diluted
 (’000) 
  1,667,504  
  3,129,745 

 
 Net (loss) income per share – basic and diluted 
 $(0.04) 
 $0.05 

 

 

Potential ordinary shares, including warrants, convertible notes, unvested
shares, and contingently redeemable shares, were excluded from the calculation of diluted net income (loss) per share for both periods
presented, as their effect would have been antidilutive. As a result, weighted-average shares outstanding and net income (loss) per share
are presented on a combined basic and diluted basis for both periods.

 

Note 18 – Noncontrolling Interest

 

 
   
 RMB (’000)  
 US$ (’000) 

 
 Noncontrolling interest at December 31, 2025 
  (21,043) 
  (3,050)

 
 Net loss attributable to noncontrolling interest 
  (1,150) 
  (167)

 
 Noncontrolling interest at March 31, 2026 
  (22,193) 
  (3,217)

 

  

Note 19 – Ordinary Shares Contingently Redeemable

 

As of March 31, 2026, ordinary shares contingently redeemable of RMB72,699
thousand (US$10,539 thousand) relate solely to 417,880,500 shares issued to Shenma Limited as consideration for the Group’s investment
in Shenma, which remain subject to Shenma’s right to force redemption or repurchase. There has been no change in this balance or
in the terms of Shenma’s redemption right during the three months ended March 31, 2026.

 

Note 20 – Commitments and Contingencies

 

Contingencies

 

The Group is involved in the following legal proceedings, each carried
forward from the Group’s audited consolidated financial statements as of and for the year ended December 31, 2025:

 

·Skychain Technologies Inc.: the Group holds a summary judgment of CAD 2 million and is pursuing enforcement. Skychain’s appeal
was rejected by the court in April 2023.

 

·Hashland Inc.: the Group’s breach-of-hosting-agreement claim
is pending in Texas state court. Based on the latest court hearing, the Group has obtained a default judgment against all defendants.
The Group will continue to pursue for the enforcement of the judgment..

 

·LGHSTR Ltd. and affiliates: the Group withdrew its Shanghai court
filing in October 2025 and initiated arbitration with the Hong Kong International Arbitration Center. As of the date of this report, the
parties have engaged arbitrators for the next procedure as required by the Hong Kong International Arbitration Center.

 

Other than the foregoing, the Group is not currently a party to any
material legal or administrative proceedings.

 

  

  

 

 

Note 21 – Segment Reporting

 

The Group has two reportable segments, each evaluated separately by
the Chief Executive Officer (“CEO”), who serves as the Group’s Chief Operating Decision Maker (“CODM”):
Cryptocurrency Mining and Online Game Services. The CODM uses segment revenue, significant segment expenses, and segment profit or loss
to assess performance and allocate resources. There have been no changes to the identification of the Group’s reportable segments
or the measure of segment profit or loss used by the CODM during the three months ended March 31, 2026.

 

The following table presents segment revenue and segment loss for the
three months ended March 31, 2026 and 2025:

 

 
 (RMB in thousands) 
 Cryptocurrency Mining  
 Online Game Services  
 Total 

 
 Three months ended March 31, 2026 
     
     
    

 
 Revenue 
  4,622  
  8,219  
  12,841 

 
 Less: Cost of revenue 
  (6,483) 
  (3,838) 
  (10,321)

 
 Product development 
  —  
  (3,567) 
  (3,567)

 
 Sales and marketing 
  —  
  (4,816) 
  (4,816)

 
 General and administrative 
  (2,822) 
  (29,595) 
  (32,417)

 
 Realized gain on exchange cryptocurrencies 
  7,584  
  —  
  7,584 

 
 Fair value change on cryptocurrencies 
  (68,647) 
  —  
  (68,647)

 
 Segment income (loss) 
  (65,746) 
  (33,597) 
  (99,343)

 
   
     
     
    

 
 Three months ended March 31, 2025 
     
     
    

 
 Revenue 
  21,447  
  15,509  
  36,956 

 
 Less: Cost of revenue 
  (25,894) 
  (9,152) 
  (35,046)

 
 Product development 
  —  
  (147) 
  (147)

 
 Sales and marketing 
  —  
  (165) 
  (165)

 
 General and administrative 
  (4,199) 
  (28,995) 
  (33,194)

 
 Realized gain on exchange cryptocurrencies 
  12,106  
  —  
  12,106 

 
 Fair value change on cryptocurrencies 
  (39,675) 
  —  
  (39,675)

 
 Segment income (loss) 
  (36,215) 
  (22,950) 
  (59,165)

 

 

A reconciliation of segment income (loss) to the Group’s consolidated
net income (loss) is as follows:

 

 
 (RMB in thousands) 
 Three months ended
 March 31, 2026  
 Three months ended
 March 31, 2025 

 
 Total segment income (loss) 
  (99,343) 
  (59,165)

 
 Corporate and unallocated items, including: 
     
    

 
 Cryptocurrency reward (9BIT tokens) 
  188,623  
  — 

 
 Fair value change on 9BIT tokens 
  70,778  
  — 

 
 Interest expense 
  (11,548) 
  (2,224)

 
 Gain (loss) on fair value of derivative 
  2,155  
  (3,254)

 
 Gain on extinguishment of convertible notes 
  377  
  — 

 
 Gain on extinguishment of debt 
  2,940  
  — 

 
 Other items, net 
  2,785  
  (1,595)

 
 Net income (loss) 
  156,767  
  (66,238)

 

 

The following table presents segment assets as of March 31, 2026:

 

 
 (RMB in thousands) 
 Cryptocurrency Mining  
 Online Game Services  
 Total 

 
 Prepayments and other current assets 
  1,116  
  20,541  
  21,657 

 
 Cryptocurrencies 
  163,096  
  259,401  
  422,497 

 
 Property, equipment and software, net 
  36,530  
  1,853  
  38,383 

 
 Total assets 
  225,553  
  508,345  
  733,898 

 

 

  

  

 

 

Depreciation and amortization expenses by segment for the three months
ended March 31, 2026 and 2025 are as follows:

 

 
 (RMB in thousands) 
 Cryptocurrency Mining  
 Online Game Services  
 Total 

 
 Three months ended March 31, 2026 
  4,993  
  34  
  5,026 

 
 Three months ended March 31, 2025 
  4,481  
  15  
  4,496 

 

 

Note 22 – Subsequent Events

 

In April 2026, the Group received an additional 475,000,000 9BIT tokens
pursuant to its cooperation agreement with the 9BIT Foundation, bringing the Group’s total token allocation under the agreement
to approximately 1.9 billion tokens. As of the date of this report, the Group’s total cryptocurrency holdings, including BTC and
9BIT tokens, were valued at approximately US$110 million based on quoted market prices; this estimate is provided for reference only and
may not reflect realizable value.

 

The Group has evaluated events occurring after March 31, 2026 through
July 27, 2026 and, other than as described above, has determined there were no material subsequent events requiring disclosure.