The9 to invest in Wuhan Weixiang Science And Technology

The9 announced that it signed a definitive share purchase agreement with Wuhan Weixiang Science And Technology, an AI-powered educational technology company in China, to purchase 19% of WeiXiang by cash and issuance of The9’s restricted shares. The9 is also granted a purchase option to purchase up to 51% of the total shares of WeiXiang based on a valuation calculated as seven times of Weixiang’s audited annual profit after tax, provided that such valuation should be higher than $45M. The platform had reached millions of daily active users. Weixiang leverages platforms like TikTok, KuaiShou and WeChat Video Channels, serving as their official ecosystem partner. Weixiang has amassed over 9M followers across these platforms. The most popular teacher had engaged over 300,000 simultaneous viewers a single live stream, and had made monthly revenue over RMB10M. Weixiang distinguishes itself from traditional live-streaming educational companies through its extensive use of AI applications. By utilizing in-house developed GPTs, Weixiang produces high-quality content scripts and educational videos at large-scale. This allows teachers to effortlessly create short videos and live streaming content. Pursuant to the agreement, The9 will pay cash consideration of $1.5M and will issue 284,465,400 restricted Class A ordinary shares to Weixiang. The restricted Class A ordinary shares to be issued to Weixiang will be subject to lock-up conditions and will only be released according to the following schedule: when the market capitalization of The9 reaches $200M, 24,533,700 Class A Ordinary shares of The9 will be released from the lock-up; when the market capitalization of The9 reaches $500M, 9,813,600 Class A Ordinary shares of The9 will be released from the lock-up, and when the market capitalization of The9 reaches $1B, 4,906,800 Class A Ordinary shares of The9 will be released from the lock-up. The rest of the restricted shares shall be released from the lock-up when either of the following conditions are met: Weixiang completes a qualified IPO and its shares owned by The9 become freely tradable in the open market; or if and when the The9 exercises its purchase option and, as a result, holds a minimum 51% of the then total share capital of Weixiang. As of the date hereof, the total number of issued and outstanding shares of The9 is 2,696,075,827, being the sum of 2,682,468,493 Class A ordinary shares and 13,607,334 Class B ordinary shares.