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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of September
Commission File Number:
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(Exact name of registrant as specified in its charter)
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Floor 8, Building D, Shengyin Building, Shengxia Road 666 Pudong District, Shanghai 201203 People’s Republic of China +86 21-5058-2081 (Address of principal executive offices)
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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
Jinxin Technology Holding Company is furnishing its unaudited interim condensed consolidated financial statements and footnotes for the six months ended June 30, 2025 and 2026. The unaudited interim condensed consolidated financial statements and notes are attached as Exhibit 99.1 to this report of foreign private issuer on Form 6-K, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2025 and 2026 is attached as Exhibit 99.2 to this report of foreign private issuer on Form 6-K.
Incorporation by Reference
This current report on Form 6-K, including Exhibits 99.1 and 99.2 attached hereto, is incorporated by reference into the registration statement on Form F-3 (File No. 333-292449) of Jinxin Technology Holding Company and shall be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
1
EXHIBIT INDEX
| Exhibit No. | Description | |
| Exhibit 99.1 | Unaudited Interim Condensed Consolidated Financial Statements of Jinxin Technology Holding Company | |
| Exhibit 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended June 30, 2025 and 2026 | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Jinxin Technology Holding Company | ||
| By: | /s/ Jin Xu | |
| Name: | Jin Xu | |
| Title: | Chairman of the Board of Directors and Chief Executive Officer | |
Date: September 22, 2026
3
Exhibit 99.1
INDEX TO FINANCIAL STATEMENTS
JINXIN TECHNOLOGY HOLDING COMPANY
F-1
JINXIN TECHNOLOGY HOLDING COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
DECEMBER 31, 2025 AND JUNE 30, 2026
(Amounts in thousands of RMB and US$, except for number of shares)
| As of | ||||||||||||
| December 31, 2025 |
June 30, 2026 (Unaudited) |
|||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Short-term investments | ||||||||||||
| Accounts receivable | ||||||||||||
| Inventories | ||||||||||||
| Advance to suppliers | ||||||||||||
| Amount due from related parties | ||||||||||||
| Other current assets | ||||||||||||
| Total current assets | ||||||||||||
| Non-current assets: | ||||||||||||
| Long-term investments | ||||||||||||
| Property and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Operating lease right-of-use assets, net | ||||||||||||
| Total non-current assets | ||||||||||||
| Total assets | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term borrowing | ||||||||||||
| Accounts payable | ||||||||||||
| Accrued expenses and other liabilities | ||||||||||||
| Tax payables | ||||||||||||
| Operating lease liabilities – current | ||||||||||||
| Contract liabilities | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities: | ||||||||||||
| Operating lease liabilities – non-current | ||||||||||||
| Other non-current liabilities | ||||||||||||
| Total non-current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Shareholders’ equity: | ||||||||||||
| Ordinary shares (US$ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Treasury stock at cost ( | ( | ) | ( | ) | ||||||||
| Statutory reserve | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||||||
| Total JINXIN TECHNOLOGY HOLDING COMPANY shareholders’ equity | ||||||||||||
| Non-controlling interests | ||||||||||||
| Total equity | ||||||||||||
| Total liabilities and equity | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-2
JINXIN TECHNOLOGY HOLDING COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Net revenues | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||
| Other income | ||||||||||||
| Other expenses | ||||||||||||
| Interest income | ||||||||||||
| Interest expenses | ( | ) | ( | ) | ||||||||
| Gain from equity method investments | ||||||||||||
| Investment income | ||||||||||||
| Exchange (loss) gain | ( | ) | ||||||||||
| Government subsidy | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Income tax expense | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Less: net income (loss) attributable to non-controlling interests | ( | ) | ||||||||||
| Net loss attributable to the Company’s ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive loss | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive income | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Less: comprehensive income (loss) attributable to non-controlling interests | ( | ) | ||||||||||
| Comprehensive loss attributable to the Company’s ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Earnings (loss) per share: | ||||||||||||
| Ordinary shares – basic | ( | ) | ( | ) | ( | ) | ||||||
| Ordinary shares – diluted | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average shares outstanding used in calculating basic and diluted earnings (loss) per share: | ||||||||||||
| Ordinary shares – basic | ||||||||||||
| Ordinary shares – diluted | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-3
JINXIN TECHNOLOGY HOLDING COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2025
AND 2026
(Amounts in thousands of RMB and US$, except for number of shares)
| Ordinary shares | TREASURY STOCK | Additional paid-in |
Statutory |
Retained |
Accumulated other comprehensive |
Total
JINXIN TECHNOLOGY HOLDING COMPANY Shareholder’s |
Non- controlling |
Total shareholder’s |
||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | reserve | earnings | Income (Loss) | equity | interests | Equity | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 (RMB) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Capital contribution from shareholders | — | |||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | |||||||||||||||||||||||||||||||||||||||||||
| Transfer to statutory reserve | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Capital contribution from non-controlling interests | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 (RMB) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 (RMB) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Capital contribution from shareholders | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 (RMB) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 (US$) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
JINXIN TECHNOLOGY HOLDING COMPANY
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares)
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Gain from equity method investments | ( | ) | ( | ) | ( | ) | ||||||
| Investment income | ( | ) | ( | ) | ( | ) | ||||||
| Share based compensation expense | ||||||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||||||
| Non-cash lease expense | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ( | ) | ||||||||
| Advance to suppliers | ( | ) | ( | ) | ( | ) | ||||||
| Inventories | ( | ) | ||||||||||
| Amount due from related parties | ||||||||||||
| Other current assets | ( | ) | ||||||||||
| Accounts payable | ||||||||||||
| Contract liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Accrued expenses and other payables | ( | ) | ||||||||||
| Tax payables | ( | ) | ( | ) | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Amount due to related parties | ( | ) | ||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from disposal of property and equipment | ||||||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ( | ) | ||||||
| Payments for short-term investments | ( | ) | ( | ) | ( | ) | ||||||
| Payments for long-term investments | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Repayment of borrowings | ( | ) | ( | ) | ||||||||
| Repurchase of treasury shares | ( | ) | ( | ) | ||||||||
| Capital contribution from non-controlling interests in subsidiaries | ||||||||||||
| Proceeds from the initial public offering | ||||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||||||
| Effect of exchange rate changes | ( | ) | ( | ) | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Cash and cash equivalents at beginning of year | ||||||||||||
| Cash and cash equivalents at end of year | ||||||||||||
| Supplemental disclosures of cash flows information: | ||||||||||||
| Cash paid for interest expense | ||||||||||||
| Cash paid for income taxes | ||||||||||||
| Supplemental disclosure of noncash information: | ||||||||||||
| Liabilities assumed in connection with purchase of intangible assets | ||||||||||||
| Liabilities assumed in connection with unpaid professional service fee | ||||||||||||
| Operating lease right of use assets obtained exchange for operating lease liabilities | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION
(a) Nature of operations
JINXIN TECHNOLOGY HOLDING COMPANY (the ‘‘Company’’) was incorporated in the Cayman Islands in August 2015 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company through its consolidated subsidiaries, variable interest entity (the ‘‘VIE’’) and the subsidiaries of the VIE (collectively, the “Group”) are principally engaged in provision of digital textbook subscription services in the People’s Republic of China (the ‘‘PRC’’ or ‘‘China’’). Due to the PRC legal restrictions on foreign ownership and investment in such business, the Company conducts its primary business operations through its VIE and subsidiaries of the VIE. The Company is ultimately controlled by Mr. Jin Xu (the ‘‘Founder’’) and the nominee shareholders of the VIE.
In August, 2015, the Company established a wholly-owned subsidiary, Namibox Limited (“Namibox HK”), in accordance with the laws and regulations in Hong Kong.
In November, 2015, Namibox HK established a wholly-owned subsidiary, Shanghai Mihe Information Technology Co., Ltd. (“Shanghai Mihe”), a wholly-owned foreign enterprise (“WFOE”) incorporated in the People’s Republic of China (“PRC”), as part of a restructure of the Company.
Namibox HK and Shanghai Mihe are currently not engaging in any active business operations and merely acting as holding companies.
Prior to the incorporation of the Company and the completion of the Corporate Reorganization (as defined below), the main operating activities of the Company were carried out by Shanghai Jinxin Network Technology Co., Ltd. (“Shanghai Jinxin” or the “VIE”) and its subsidiaries, which were all established in the PRC. Shanghai Jinxin are principally engaged in provision of digital textbook subscription services in PRC.
As of the date of this report, the details of the Company’s principal subsidiaries are as follows:
| Entity | Date of incorporation/ acquisition | Place of incorporation | Percentage of direct or indirect ownership by the Company | Principal activities | ||||
| Subsidiaries: | ||||||||
| Namibox Limited (“Namibox HK”) | ||||||||
| Shanghai Mihe Information Technology Co., Ltd. (“Shanghai Mihe”) | ||||||||
| Variable Interest Entities (the “VIEs”) | ||||||||
| Shanghai Jinxin Network Technology Co., Ltd. (“Shanghai Jinxin”) | ||||||||
| Held directly by Shanghai Jinxing | ||||||||
| Zhongjiao Enshi Education Technology (Shanghai) Co., Ltd. (“Zhongjiao Enshi”) | ||||||||
| Shanghai Pindu Education Technology Co., Ltd. (“Shanghai Pindu”) |
F-6
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION (cont.)
| Entity | Date of incorporation/ acquisition | Place of incorporation | Percentage of direct or indirect ownership by the Company | Principal activities | ||||
| Shanghai Mouding Education Technology Co., Ltd. (“Shanghai Mouding”) | ||||||||
| Shanghai Jingche Network Technology Co., Ltd. (“Shanghai Jingche”) | ||||||||
| Hainan Aixin Education Technology Limited (“Hainan Aixin”) | ||||||||
| Shanghai Shuzhi Rongchuang Network Technology Co., Ltd. | ||||||||
| Shanghai Xinzhi Future Network Technology Co., Ltd. |
The PRC laws and regulations currently place certain restrictions on foreign ownership of companies that engage in engage in radio and television program production and operation business and value-added telecommunication business. To comply with PRC laws and regulations, the Group conducts all of its business in China through the VIE and subsidiaries of the VIE. Despite the lack of technical majority ownership, the Company has effective control of the VIE through a series of contractual arrangements (the “Contractual Agreements”) and a parent-subsidiary relationship exists between the Company and the VIE. The equity interests of the VIE are legally held by PRC individuals and a PRC entity (the “Nominee Shareholders”). Through the Contractual Agreements, the Nominee Shareholders of the VIE effectively assigned all of their voting rights underlying their equity interests in the VIE to the Company, via the WFOE, and therefore, the Company has the power to direct the activities of the VIE that most significantly impact its economic performance. The Company also has the right to receive economic benefits and obligations to absorb losses from the VIE, via the WFOE, that potentially could be significant to the VIE. Based on the above and in accordance with SEC Regulation SX-3A-02 and ASC 810-10, the Company is deemed to be the primary beneficiary of Shanghai Jinxin and the financial positions, the operating results and cash flows of Shanghai Jinxin and its subsidiaries are consolidated in the Company’s unaudited interim condensed consolidated financial statements for financial reporting purposes. The described contractual arrangements are as follows:
| ● | Exclusive Technology and Consulting Service Agreement |
Pursuant to the Exclusive Technology and Consulting Service Agreement, Shanghai Jinxin is obliged to pay service fee to Shanghai Mihe for the exclusive services such as technical services, Internet support, business consulting, marketing consulting, system integration, product development and system maintenance. The service fee shall consist of
| ● | Exclusive Option Agreement |
Pursuant to the Exclusive Option Agreement, the shareholders of Shanghai Jinxin have unconditionally and irrevocably granted Shanghai Mihe or its designated purchaser the right to purchase all or part of their equity interests in Shanghai Jinxin (“Equity Option”). The purchase price payable by Shanghai Mihe in respect of the transfer of equity interests upon exercise of the Equity Option shall be RMB
F-7
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION (cont.)
The Exclusive Option Agreement shall remain effective unless terminated (i) in accordance with the provisions of the Exclusive Option Agreement or any other supplemental agreements; or (ii) the entire equity interests held by the shareholders of Shanghai Jinxin in Shanghai Jinxin have been transferred to Shanghai Mihe or its designated person.
| ● | Powers of Attorneys |
Pursuant to the Powers of Attorneys, each of the shareholders of Shanghai Jinxin irrevocably authorized Shanghai Mihe or its designee(s) to act on their respective behalf as proxy attorney, to the extent permitted by law, to exercise all rights of shareholders concerning all the equity interest held by each of them in Shanghai Jinxin, including but not limited to proposing to convene or attend shareholder meetings, signing resolutions and minutes of such meetings, exercising all the rights as shareholders in such meeting (including but not limited to voting rights, nomination rights and appointment rights), the right to receive dividends and the right to sell, transfer, pledge or dispose of all the equity held in part or in whole, and exercising all other rights as shareholders. The Powers of Attorneys will remain irrevocable and effective during the period that the shareholder remains his/her/its shareholding.
| ● | Equity Pledge Agreements |
Pursuant to the Equity Pledge Agreements, each of the shareholders of Shanghai Jinxin unconditionally and irrevocably pledged and granted first priority security interests over all of his/her/its equity interests in Shanghai Jinxin together with all related rights thereto to Shanghai Mihe as security for performance of the contractual arrangements and all direct, indirect or consequential damages and foreseeable loss of interest incurred by Shanghai Mihe as a result of any event of default on the part of the shareholders of Shanghai Jinxin, Shanghai Jinxin and all expenses incurred by Shanghai Mihe as a result of enforcement of the obligations of the shareholders of Shanghai Jinxin and/or Shanghai Jinxin under the contractual arrangements. Upon the occurrence and during the continuance of an event of default (as defined in the Equity Pledge Agreements), Shanghai Mihe shall have the right to (i) require the shareholders of Shanghai Jinxin to immediately pay any amount payable under the contractual arrangements; or (ii) to purchase, auction or sell all or part of the pledged equity interests in Shanghai Jinxin and will have priority in receiving the proceeds from such disposal.
The said equity pledge under the Equity Pledge Agreements takes effect upon the completion of registration with relevant administrative department of industry and commerce and shall remain valid until after all the contractual obligations of the shareholders of Shanghai Jinxin and Shanghai Jinxin under the relevant contractual arrangements have been fully performed and all the outstanding debts of the shareholders of Shanghai Jinxin and/or Shanghai Jinxin under the relevant contractual arrangements have been fully paid.
| ● | Business Operation Agreement |
Pursuant to the Business Operation Agreement, the shareholders of Shanghai Jinxin and Shanghai Jinxin have jointly and severally further undertaken to Shanghai Mihe that, without the prior written consent of Shanghai Mihe, Shanghai Jinxin shall not engage in any transactions or actions that may have substantial adverse impact on its assets, business, staff, obligations, rights or results of operations. The shareholders of Shanghai Jinxin have agreed to accept, and strictly follow, the advice and instructions from Shanghai Mihe on the appointment and dismissal of relevant staff, the daily operation and management, and the financial management policies, among other things, from time to time. If the cash of Shanghai Jinxin is not enough to pay its debt, Shanghai
F-8
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION (cont.)
Mihe is liable to pay the debt; if the loss of Shanghai Jinxin leads to a net asset balance of less than the its registered capital, Shanghai Mihe shall be liable to make up for the deficiency; if one party lacks the necessary working capital to maintain its daily business operations, it may request the other party to provide short-term interest-free loans.
| ● | Spouse Consents |
Pursuant to the Spouse Consents, the respective spouse of the Individual Shareholders of Shanghai Jinxin has irrevocably undertaken that, including without limitation to, the spouse (i) has full knowledge of and has consented to the entering into of the contractual arrangements by the relevant Individual Registered Shareholder; (ii) undertakes to execute all documents and take all actions necessary to ensure the proper performance of the contractual arrangements (as amended from time to time); and (iii) undertakes that if he/she acquires any equity interest in Shanghai Jinxin held by his/her spouse, he/she shall be bound by the existing contractual arrangements, and upon request by Shanghai Mihe, will enter into the substantially similar contractual arrangements.
The Company believes that Shanghai Jinxin is considered a VIE under Accounting Codification Standards (“ASC”) 810 “Consolidation”, because the equity investors in Shanghai Jinxin no longer have the characteristics of a controlling financial interest, and the Company, through Shanghai Mihe, is the primary beneficiary of Shanghai Jinxin and controls Shanghai Jinxin’s operations. Accordingly, Shanghai Jinxin has been consolidated as a deemed subsidiary into the Company as a reporting company under ASC 810.
As required by ASC 810-10, the Company performs a qualitative assessment to determine whether the Company is the primary beneficiary of Shanghai Jinxin which is identified as a VIE of the Company. A quality assessment begins with an understanding of the nature of the risks in the entity as well as the nature of the entity’s activities including terms of the contracts entered into by the entity, ownership interests issued by the entity and the parties involved in the design of the entity. The Company’s assessment of the involvement with Shanghai Jinxin reveals that the Company has the absolute power to direct the most significant activities that impact the economic performance of Shanghai Jinxin. Shanghai Mihe is obligated to absorb a majority of the loss from Shanghai Jinxin activities and receive a majority of Shanghai Jinxin’s expected residual returns. In addition, Shanghai Jinxin’s shareholders have pledged their equity interest in Shanghai Jinxin to Shanghai Mihe, irrevocably granted Shanghai Mihe an exclusive option to purchase, to the extent permitted under PRC Law, all or part of the equity interests in Shanghai Jinxin and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by Shanghai Mihe. Under the accounting guidance, the Company is deemed to be the primary beneficiary of Shanghai Jinxin and the financial positions, the operating results and cash flows of Shanghai Jinxin and Shanghai Jinxin’s subsidiaries are consolidated in the Company for financial reporting purposes.
Comparative VIE financials, are set forth below:
| December 31, 2025 | As of June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Current assets | ||||||||||||
| Non-current assets: | ||||||||||||
| Total assets | ||||||||||||
| Current liabilities: | ||||||||||||
| Non-current liabilities: | ||||||||||||
| Total liabilities | ||||||||||||
| Net asset | ||||||||||||
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||||||
F-9
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION (cont.)
| As of June 30, 2026 | ||||||||||||||||||||||||||||||||
| Parent company | WFOE (“Shanghai Mihe”) | Subsidiaries | Shanghai Jinxin and its subsidiaries (the VIEs) | Elimination of intercompany balances | Consolidated Financials | Consolidated Financials | % of the Consolidated Financials | |||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | US$ | ||||||||||||||||||||||||||
| A | B | C | D | E | F=A+B+C+D+E | G=D/F | ||||||||||||||||||||||||||
| Cash and cash equivalents | % | |||||||||||||||||||||||||||||||
| Other current assets | % | |||||||||||||||||||||||||||||||
| Intercompany receivable from subsidiaries | ( | ) | ||||||||||||||||||||||||||||||
| Intercompany receivable from WFOE | ( | ) | ||||||||||||||||||||||||||||||
| Investment in WFOE | ( | ) | ||||||||||||||||||||||||||||||
| Investment in subsidiaries | ( | ) | ||||||||||||||||||||||||||||||
| Other non-current assets | % | |||||||||||||||||||||||||||||||
| Total assets | ( | ) | % | |||||||||||||||||||||||||||||
| Other current liabilities | % | |||||||||||||||||||||||||||||||
| Intercompany payables to parent company | ( | ) | ||||||||||||||||||||||||||||||
| Non-current liabilities | % | |||||||||||||||||||||||||||||||
| Total liabilities | ( | ) | % | |||||||||||||||||||||||||||||
| Total shareholders’ equity (deficit) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||||||
| Total liabilities and shareholders’ equity (deficit) | ( | ) | % | |||||||||||||||||||||||||||||
| Revenues | % | |||||||||||||||||||||||||||||||
| Gross (loss) profit | ( | ) | % | |||||||||||||||||||||||||||||
| Total operating expenses | % | |||||||||||||||||||||||||||||||
| Net (loss) income | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||
| Total comprehensive (loss) income | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ( | ) | ( | ) | ( | )% | ||||||||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||||
| Effect of Exchange rate on cash | ( | ) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||||
F-10
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION (cont.)
Quantitative Metrics of the VIE, Shanghai Jinxin are set forth below:
| As of June 30, 2025 | ||||||||||||||||||||||||||||
| Parent company | WFOE (“Shanghai Mihe”) | Subsidiaries | Shanghai Jinxin and its subsidiaries (the VIEs) | Elimination of intercompany balances | Consolidated Financials | % of the Consolidated Financials | ||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||
| A | B | C | D | E | F=A+B+C+D+E | G=D/F | ||||||||||||||||||||||
| Cash and cash equivalents | % | |||||||||||||||||||||||||||
| Other current assets | ( | ) | % | |||||||||||||||||||||||||
| Intercompany receivable from subsidiaries | ( | ) | ||||||||||||||||||||||||||
| Intercompany receivable from WFOE | ( | ) | ||||||||||||||||||||||||||
| Investment in WFOE | ( | ) | ||||||||||||||||||||||||||
| Investment in subsidiaries | ( | ) | ||||||||||||||||||||||||||
| Other non-current assets | % | |||||||||||||||||||||||||||
| Total assets | ( | ) | % | |||||||||||||||||||||||||
| Other current liabilities | ( | ) | % | |||||||||||||||||||||||||
| Intercompany payables to parent company | ( | ) | ||||||||||||||||||||||||||
| Non-current liabilities | % | |||||||||||||||||||||||||||
| Total liabilities | ( | ) | % | |||||||||||||||||||||||||
| Total shareholders’ equity (deficit) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||
| Total liabilities and shareholders’ equity (deficit) | ( | ) | % | |||||||||||||||||||||||||
| Revenues | % | |||||||||||||||||||||||||||
| Gross (loss) profit | ( | ) | % | |||||||||||||||||||||||||
| Total operating expenses | % | |||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||
| Total comprehensive (loss) income | ( | ) | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | % | |||||||||||||||||||||
| Net cash provided by financing activities | ( | ) | % | |||||||||||||||||||||||||
| Effect of Exchange rate on cash | ( | ) | ||||||||||||||||||||||||||
F-11
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION (cont.)
As of June 30, 2026, Jinxin Technology Holding Company had made cumulative capital contributions of RMB
There are no pledge or collateralization of the VIE and VIE’s subsidiaries’ assets that can only be used to settled obligations of the VIE and VIE’s subsidiaries, except for the restricted net assets disclosed in Note 14. Relevant PRC laws and regulations restrict the VIE from transferring a portion of its net assets to the Company in the form of loans and advances or cash dividends.
As the VIE is incorporated as limited liability company under the PRC Company Law, creditors of the VIE do not have recourse to the general credit of the Company for any of the liabilities of the VIE in normal course of business.
Risks in relation to the VIE structure
The Company believes that the contractual arrangements with its VIE and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
| ● | revoke the business and operating licenses of the Company’s PRC subsidiary and VIE; |
| ● | discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIE; |
| ● | limit the Company’s business expansion in China by way of entering into contractual arrangements; |
| ● | impose fines or other requirements with which the Company’s PRC subsidiary and VIE may not be able to comply; |
| ● | require the Company or the Company’s PRC subsidiary and VIE to restructure the relevant ownership structure or operations; or |
| ● | restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance. |
The Company’s ability to conduct its business may be negatively affected if the PRC government were to carry out any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE and VIE’s subsidiaries in its unaudited interim condensed consolidated financial statements as it may lose the ability to exert control over the VIE and their respective shareholders and it may lose the ability to receive economic benefits from the VIE and VIE’s subsidiaries. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary and VIE.
F-12
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS
ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited interim condensed consolidated financial statements of the Company 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 financial reporting that are consistent with those used in the preparation of the Company’s audited consolidated financial statements for the years ended December 31, 2024 and 2025. Accordingly, these unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of results to be expected for any other interim period or for the year ending December 31, 2026. The unaudited interim condensed consolidated balance sheets as of December 31, 2025 was derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2024 and 2025.
Principles of consolidation
The accompanying unaudited interim condensed consolidated financial statements of the Company include the financial statements of the Company and its subsidiaries, VIE and VIE’s subsidiaries for which the Company is the ultimate primary beneficiary.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors (the “Board”); and to cast majority of votes at the meeting of the Board or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
All significant transactions and balances between the Company and its subsidiaries, VIE and VIE’s subsidiaries have been eliminated. The non-controlling interests in consolidated subsidiaries are shown separately in the unaudited interim condensed consolidated financial statements.
Use of estimates
The preparation of the unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue and expenses during the reported period in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s unaudited interim condensed consolidated financial statements mainly include, but are not limited to, standalone selling price of each distinct performance obligation in revenue recognition, depreciable lives of property, equipment and software, assessment for impairment of long-lived assets, inventory valuation for excess and obsolete inventories, lower of cost and net realizable value of inventories, valuation of deferred tax assets and current expected credit loss of receivables. Actual results could differ from those estimates.
Foreign currency
The Company’s reporting currency is the Renminbi (“RMB”). The functional currency of the Company and its subsidiaries which are incorporated in Hong Kong (“HK”) is United States dollars (“US$”). The functional currencies of the other subsidiaries are their respective local currencies. The determination of the respective functional currency is based on the criteria set out by ASC 830, Foreign Currency Matters, (“ASC 830”).
F-13
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Transactions denominated in currencies other than in the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are included in the unaudited interim condensed consolidated statements of comprehensive income.
The financial statements of the Company’s entities of which the functional currency is not RMB are translated from their respective functional currency into RMB. Assets and liabilities denominated in foreign currencies are translated into RMB at the exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into RMB at the appropriate historical rates. Income and expense items are translated into RMB using the periodic average exchange rates. The resulting foreign currency translation adjustments are recorded in other comprehensive income in the unaudited interim condensed consolidated statements of comprehensive income, and the accumulated foreign currency translation adjustments are presented as a component of accumulated other comprehensive income in the consolidated statements of shareholders’ equity.
Convenience translation
Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income and consolidated statements of cash flows from RMB into US$ as of and for the six months ended June 30, 2026 are solely for the convenience of the reader and were calculated at the rate of US$
Cash and cash equivalents
Cash and cash equivalents represent cash on hand, time deposits and highly-liquid investments placed with banks or other financial institutions, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.
Short-term investments
All highly liquid investments with maturities of greater than three months, but less than twelve months, are classified as short-term investments. Short-term investments primarily include wealth management financial products with variable interest issued by commercial banks with the intention to be sold within twelve months. The Company account for short-term investments in accordance with ASC 320 and records at fair value. Interest income are reflected on the unaudited interim condensed consolidated statements of comprehensive income.
Accounts receivable and allowance for credit losses
Accounts receivable are stated at the historical carrying amount net of allowance for credit losses.
The Company maintains an allowance for credit losses which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for credit losses taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the debtors as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability.
F-14
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
On January 1, 2023, the Company adopted ASC326, Financial Instruments-Credit Losses (“ASC326”), using modified-retrospective transition approach. Following the adoption of this guidance, a cumulative-effect adjustment in accumulated deficit of nil was recognized as of January 1, 2023. Pursuant to ASC 326, an allowance for credit losses for financial assets, including accounts receivable, carried at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on credit losses expected to arise over the life of the asset’s contractual term, which includes consideration of prepayments. Assets are written off when the Company determines that such financial assets are deemed uncollectible and are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the necessary reserve at the balance sheet date. The Company pools financial assets based on similar risk characteristics to estimate expected credit losses. The Company estimates expected credit losses on financial assets individually when those assets do not share similar risk characteristics. The Company closely monitors its accounts receivable including timely account reconciliations, detailed reviews of past due accounts, updated credit limits, and monthly analysis of the adequacy of their reserve for credit losses.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost of inventory are determined using the first-in-first-out method. The Company records inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, historical experience and application of the specific identification method. For all periods presented, there were no inventory reserves recognized.
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Property and equipment are depreciated at rates sufficient to write off their costs less impairment and residual value, if any, over their estimated useful lives on a straight-line basis. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets.
| Category | Estimated useful life | |
| Leasehold improvements | ||
| Computer and electronic equipment | ||
| Office equipment | ||
| Motor vehicles |
F-15
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Intangible assets
Intangible assets are carried at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method over the estimated useful lives from
| Category | Estimated useful life | |
| Purchased copyright |
Impairment of long-lived assets other than goodwill
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge recognized for the six months ended June 30, 2025 and 2026 was .
Long-term investments
The Company’s long-term investments include equity investments in entities. Investments in entities in which the Company can exercise significant influence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC topic 323, Investments — Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investments at cost and then market value. The Company subsequently adjusts the carrying amount of the investments to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. The Company evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary.
Fair value of financial instruments
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
F-16
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:
| Level 1 | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||
| Level 2 | Other inputs that are directly or indirectly observable in the marketplace. | |||
| Level 3 | Unobservable inputs which are supported by little or no market activity. |
Financial assets and liabilities of the Company primarily consist of cash and cash equivalents, short-term investments, accounts receivables, amounts due from related parties, accounts payables, amounts due to related parties, accrued expenses and other liabilities excluding payroll and welfare payables. As of December 31, 2025 and June 30, 2026, the carrying values of these financial assets and liabilities approximate their fair values.
The following table summarizes the carrying values of the Company’s financial instruments that the management believes should be categorized as Level 2:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Financial assets: | ||||||||||||
| Short-term investments | ||||||||||||
Revenue recognition
Revenue is recognized when or as the control of the goods or services is transferred to a customer. Depending on the terms of the contract and the laws that apply to the contract, control of the goods and services may be transferred over time or at a point in time. Control of the goods and services is transferred over time if the Company’s performance:
| (i) | provides all of the benefits received and consumed simultaneously by the customer; |
| (ii) | creates and enhances an asset that the customer controls as the Company performs; or |
| (iii) | does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the goods and services. |
If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers. If the standalone selling price is not directly observable, it is estimated using expected cost plus a margin or adjusted market assessment approach, depending on the availability of observable information. Assumptions and estimations have been made in estimating the relative selling price of each distinct performance obligation, and changes in judgments on these assumptions and estimates may impact the revenue recognition.
F-17
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
When either party to a contract has performed, the Company presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment.
A contract asset is the Company’s right to consideration in exchange for goods and services that the Company has transferred to a customer. A receivable is recorded when the Company has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.
If a customer pays consideration or the Company has a right to an amount of consideration that is unconditional, before the Company transfers a good or service to the customer, the Company presents the contract liability when the payment is made, or a receivable is recorded (whichever is earlier). A contract liability is the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer.
Subscription revenue from users
The Company generates subscription revenue from its catalogue of digital educational content directly provisioned to end users via its “Nami Box” platform. The Company identifies the content subscribers as its customers. The performance obligation is the provision of the digital educational content to user over the prescribed subscription period. The subscription period for the majority is twelve months or less. The subscription revenue is recognized over the period of customer’s subscription. The Company typically receives payment when the users initiate the subscription of the digital educational content.
Licensing revenues from content aggregators and distributors
The Company generates licensing revenue through partnering with content aggregators and distributors (normally they are major telecom and broadcast operators in China) whereby allowing to distribute the digital content through their platforms. For purposes of revenue recognition, management believes that the content aggregators and distributors should be identified its customers. The performance obligation is provision of digital educational content to the customers and allow them distributed via their platform over a contracted period. The Company signs master service agreements with customers that set forth a contract period, which is typically twelve months. The Company receives a statement from its customers on either a monthly or quarterly basis indicating the Company’s potential entitlement to licensing fees based on the amount of content delivered to end user subscribers of the customer. After the Company reviews and agrees to the statement sent by the customers, the Company will receive payment within the standard agreed upon terms, which typically within 15-60 days. The revenue is recognized at the point in time when the statement is mutually agreed upon by both parties.
Revenue from content sold to hardware manufacturers
The Company generates revenue by selling its content to hardware manufacturers in China whereby they are allowed to install the Company’s digital educational content on the manufacturers’ devices for sale to end users. For purposes of revenue recognition, management has identified that the hardware manufacturers as its customers. The performance obligation is to make available its catalogue of digital educational content to its customers, and allow them to install such content on devices that they manufacture. The Company signs master service agreements with its customers; these agreements typically cover a twelve-month period. As part of the sales process, the Company typically receives purchase order for specific content from the customers, after which the Company will deliver the selected digital educational content to the customers in accordance to the purchase order. The Company typically receives payment in advance prior to delivery of the digital educational content. Revenue is recognized at the point in time when control of the select digital educational content delivered to the customer. The Company provides one year after-sales service to the customers and recognizes a related warranty expense based on the Company’s historical experience rate as well as experience rates typical to the industry.
F-18
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Revenue from sales of digital educational hardware devices
The Company generates revenue by selling its digital educational hardware devices, featured with the installation of the Company’s digital educational content, to hardware distributors in China, who subsequently resell the digital educational hardware devices to the end users. The Company identifies hardware distributors as its customers. The Company signs contracts with the distributors, which specifies the price, sales quantity of hardware devices and delivery schedule. The Company will deliver the selected digital educational hardware devices to the customers in accordance with the contracts. The Company typically receives payment in advance prior to delivery of the digital educational hardware devices. The promises of digital educational hardware devices and digital educational content should be combined into a single performance obligation since they are highly interrelated. Each promise cannot separately satisfy the requirement of the end customers. Revenue is recognized at the point in time when control of the select digital educational hardware devices delivered to the customers. The Company provides one year after-sales service to the customers and recognizes a related warranty expense based on the Company’s historical experience rate as well as experience rates typical to the industry.
Cost of revenues
Costs of revenues primarily consist of staff costs, digital educational content costs, inventory cost and other direct costs of providing these services or goods.
Sales and marketing expenses
Sales and marketing expenses consist primarily of advertising expenses, salaries and other compensation-related expenses to sales and marketing personnel and warranty expenses. The Company expenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. The Company recorded advertising costs of RMB
Research and development expenses
Research and development costs are expensed as incurred. These costs primarily consist of payroll and related expenses for personnel engaged in research and development activities.
General and administrative expenses
General and administrative expenses primarily consist of salaries, bonuses and benefits for employees involved in general corporate functions and those not specifically dedicated to research and development activities, depreciation and amortization of fixed assets which are not used in research and development activities, legal and other professional services fees, rental and other general corporate related expenses.
Government subsidy
Government subsidy represent cash subsidies received from the PRC government. Cash subsidies that have no defined rules and regulations to govern the criteria necessary for companies to enjoy the benefits are recognized when received. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business.
Income taxes
Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Tax, (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive loss in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized.
F-19
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The Company records liabilities related to uncertain tax positions when, despite the Company’s belief that the Company’s tax return positions are supportable, the Company believes that it is more likely than not that those positions may not be fully sustained upon review by tax authorities. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense. The Company did not recognize uncertain tax positions as of December 31, 2025 and June 30, 2026.
Comprehensive income
The Company applies ASC 220, Comprehensive Income (“ASC 220”), with respect to reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is defined to include all changes in equity of the Company during a period arising from transactions and other event and circumstances except those resulting from investments by shareholders and distributions to shareholders. For the years presented, the Company’s comprehensive income includes net income and other comprehensive income, which mainly consists of the foreign currency translation adjustment that have been excluded from the determination of net income.
Leases
As the lessee, the Company recognizes in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, the Company makes an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities and recognizes lease expenses for such lease generally on a straight-line basis over the lease term.
Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are included within operating lease liabilities on the consolidated balance sheets as of December 31, 2025 and June 30, 2026.
Share-based compensation
The Company applies ASC 718 (“ASC 718”), “Compensation — Stock Compensation,” to account for its employee share-based payments. In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award, and all of its share-based awards to employees have been classified as equity awards. The cost of these awards is measured based on the fair value at the grant date. The related compensation expense is recognized using an accelerated method over the requisite service period, which generally corresponds to the vesting period. For awards where no future service is required, the cost is expensed immediately on the grant date.
Segment reporting
ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.
Based on the criteria established by ASC 280, our chief operating decision maker (“CODM”) has been identified as our , who reviews consolidated revenues and gross profit when making decisions about allocating resources and assessing performance of the company. As a whole and hence, we have only
For the operating results of segment provided to and reviewed by CODM, please refer to the consolidated statements of income and comprehensive income.
F-20
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Earnings (loss) per share
Net income (loss) is not allocated to other participating securities if based on their contractual terms they are not obligated to share the income. Basic earnings per share is computed by dividing net income attributable to ordinary shareholders by the weighted-average number of ordinary equivalent shares outstanding during the year. Diluted earnings per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the year. Ordinary equivalent shares consist of ordinary shares issuable upon the exercise of share options using the treasury stock method.
Non-controlling interests
For the Group’s subsidiaries majority-owned by the Company’s VIE and VIE’s subsidiaries, non-controlling interests are recognized to reflect the portion of the equity which is not attributable, directly or indirectly, to the Group as the controlling shareholder. The non-controlling interests in the consolidated balance sheet arise from the consolidation of
Statutory reserve
Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from their after-tax profit to the non-distributable “statutory surplus reserve fund.” Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of
Treasury stock
The Company repurchases its common stock from time to time pursuant to a board-authorized share repurchase program through open market purchases and repurchase plans.
F-21
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The repurchases of common stock are accounted for as treasury stock, and result in a reduction of stockholders' equity. When treasury shares are reissued. the Company accounts for the reissuance in accordance with FASB ASC No. 505-30. "Treasury Stock" and charges the excess of the repurchase cost over issuance price using the weighted average method to retained earnings. The purchase cost is calculated based on the specific identified method. In the case where the repurchase cost over issuance price using the weighted average method is lower than the issuance price, the Company credits the difference to additional paid-in capital.
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical performance and the specific facts and circumstances of each matter.
Accounting pronouncements adopted
The Company has prepared its condensed consolidated interim financial statements at and for the six months ended June 30, 2026 in conformity with U.S. GAAP. In the six months ended June 30, 2026, there were no recently implemented accounting pronouncements that materially affect the business.
Recent accounting pronouncements
The Company is an emerging growth company (‘‘EGC’’) as defined by the Jumpstart Our Business Startups Act (‘‘JOBS Act’’). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the extended transition periods. However, this election will not apply should the Company cease to be classified as an EGC.
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which enhances the transparency of income tax disclosures. The amendments in ASU 2023-09 requires (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating ASU 2023-09 to determine the impact it may have on its consolidated financial statements disclosures.
F-22
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
In November 2024, the FASB issued ASU 2024-03, “Reporting Comprehensive Income — Expense Disaggregation Disclosures”, which focuses on improving the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.
In January 2025, the FASB issued ASU 2025-01, “Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date.” This pronouncement revises the effective date of ASU 2024-03 and clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Entities within the ASU’s scope are permitted to early adopt the accounting standard update. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and, if applicable, an accounting policy election to simplify the measurement of credit losses for certain receivables and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of ASU 2025-05 on its condensed consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-11, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. As the Board stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, the amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For entities other than public business entities, for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In December 2025, the FASB issued ASU 2025-12, which is to correct, clarify, and otherwise improve U.S. GAAP. ASU 2025-12 includes 33 improvements that span a wide range of topics, including Clarifying diluted earnings per share (EPS) calculation when a loss from continuing operations exists, Clarifying disclosure requirements for lease receivables from sales-type or direct financing leases, Revising the calculation of the reference amount for beneficial interests to prevent double counting credit losses, Clarifying the permissible methods to account for treasury stock retirements, and Clarifying the guidance for transfers of receivables from contracts with customers. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share, related to Issue 4) using one of the following transition methods: (i) Prospectively to all transactions recognized on or after the date that the entity first applies the amendments, or (ii) Retrospectively to the beginning of the earliest comparative period presented. An entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of cash flows.
F-23
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS
ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
3. CONCENTRATION OF RISKS
(a) Concentration of credit risks
Financial instruments that potentially subject the Company, its subsidiaries, VIE and VIE’s subsidiaries to significant concentration of credit risk primarily cash and cash equivalents and accounts receivables. The carrying amounts of cash and cash equivalents represent the maximum exposure to credit risk. As of December 31, 2025 and June 30, 2026, the Company, its wholly-owned subsidiaries, VIE and VIE’s subsidiaries have RMB
Accounts receivable are typically unsecured and denominated in RMB, derived from revenue earned from customers in the PRC, which are exposed to credit risk. The risk is mitigated by credit evaluations the Company, its subsidiaries, VIE and VIE’s subsidiaries perform on its customers and its ongoing monitoring process of outstanding balances. The Company, its subsidiaries, VIE and VIE’s subsidiaries maintain an allowance for credit losses and actual losses have generally been within management’s expectations.
(b) Currency convertibility risk
Substantially majority of the Company, its subsidiaries, VIE and VIE’s subsidiaries’ operating activities are settled in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with supporting documents.
(c) Major customers and supplying channels
For the six months ended June 30, 2025, two major clients accounted for
For the six months ended June 30, 2025, three vendors respectively accounted for
F-24
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS
ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Cash at bank | ||||||||||||
| Other cash and cash equivalents | ||||||||||||
5. SHORT-TERM INVESTMENTS
Short-term investments comprised of the following:
| As of June 30, 2026 | ||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Total | ||||||||||||||||
| RMB | RMB | RMB | RMB | US$ | ||||||||||||||||
| Bank Wealth Management | ||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Bank Wealth Management | ||||||||||||||||
As of December 31, 2025 and June 30, 2026, the Company had short-term investments, which mainly consists of wealth management products purchased from commercial banks, in the amount of RMB
6. ACCOUNTS RECEIVABLE
Accounts receivable and the allowance for credit losses consisted of the following:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Accounts receivable | ||||||||||||
| Allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
As of December 31, 2025 and June 30, 2026, all accounts receivable were due from third party customers. Except for a balance of RMB
F-25
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
6. ACCOUNTS RECEIVABLE (cont.)
An analysis of the allowance for credit losses was as follows:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Balance at beginning of the year | ||||||||||||
| Additional provision charged to expense | ( | ) | ( | ) | ||||||||
| Balance at the end of the year | ||||||||||||
7. INVENTORIES
Inventories consisted of the following:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Finished goods | ||||||||||||
| Less: provision for impairment of inventories | ||||||||||||
During the six months ended June 30, 2025 and 2026, the Company recorded provision for impairment of inventories of and for the obsolete inventories in cost of revenues, respectively.
8. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| At cost: | ||||||||||||
| Computer and electronic equipment | ||||||||||||
| Office equipment | ||||||||||||
| Motor vehicles | ||||||||||||
| Leasehold improvements | ||||||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||
Depreciation expense was RMB
F-26
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX
MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share
data)
9. INTANGIBLE ASSETS, NET
The following table presents the Company’s intangible assets as of the respective balance sheet dates:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Purchased copyright | ||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Balance at the end of the year | ||||||||||||
The intangible assets are amortized using the straight-line method, which is the Company’s best estimate of how these assets will be economically consumed over their respective estimated useful lives of to years.
Amortization expense was RMB
The annual estimated amortization expenses for the intangible assets for each of the next five years are as follows:
| RMB | US$ | |||||||
| Remaining of 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
10. LONG-TERM INVESTMENTS
The Company’s long-term investments consisted of the following:
| Equity method investments | Amounts | |||
| RMB | ||||
| Balance as of December 31, 2024 | ||||
| Capital contribution by the Company | ||||
| Gain attributable to nonconsolidated entity | ||||
| Balance as of June 30, 2025 (RMB) | ||||
| Balance as of December 31, 2025 | ||||
| Capital contribution by the Company | ||||
| Gain attributable to nonconsolidated entity | ||||
| Balance as of June 30, 2026 (RMB) | ||||
| Balance as of June 30, 2026 (US$) | ||||
In June 2016, the Company through its subsidiary, Shanghai Jinxin, and a third company jointly set up Shanghai Diyi Educational Technology Limited (“Shanghai Diyi”). The Company injected capital of RMB
F-27
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS
ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
11. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consisted of the following:
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Payroll and welfare payables | ||||||||||||
| Others | ||||||||||||
12. TAXATION
Enterprise income tax (“EIT”)
Cayman Islands
The Company is incorporated in the Cayman Islands and conducts its primary business operations through the subsidiaries in the PRC and Hong Kong. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain arising in Cayman Islands.
Hong Kong
Subsidiaries in Hong Kong are subject to Hong Kong profits tax rate of
PRC
The Company’s PRC subsidiaries are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified
Income tax expenses comprised of:
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Current | ( | ) | ( | ) | ||||||||
| Deferred | ||||||||||||
| ( | ) | ( | ) | |||||||||
F-28
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
12. TAXATION (cont.)
The reconciliation of tax computed by applying the statutory income tax rate of
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| Statutory income tax rate | % | % | ||||||
| Income tax exemptions and reliefs | ( | )% | ( | )% | ||||
| Income tax difference under different tax jurisdictions | ( | )% | ( | )% | ||||
| Non-deductible expense | ( | )% | ( | )% | ||||
| Development & research expense | % | % | ||||||
| Prior year loss carry forward | ||||||||
| Effect of change in valuation allowance | ( | )% | ( | )% | ||||
| Income tax expense | % | ( | )% | |||||
For the purpose of presentation in the consolidated balance sheets, deferred income tax assets and liabilities have been offset, and included in other assets on the accompanying consolidated balance sheets.
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Deferred tax assets | ||||||||||||
| Net operating loss carry-forwards | ||||||||||||
| Valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| Total deferred tax assets | ||||||||||||
The Company operates through several subsidiaries. Valuation allowance is considered for each of the entities. Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis.
F-29
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS
ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
13. Ordinary shares
The Company was incorporated in the Cayman Islands in August 2015 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company authorized
14. RESTRICTED NET ASSETS
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries, the VIE and subsidiaries of the VIE. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries, the VIE and subsidiaries of the VIE only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the unaudited interim condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries, the VIE and subsidiaries of the VIE.
In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company’s PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign-invested enterprise is required to allocate at least
F-30
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
14. RESTRICTED NET ASSETS (cont.)
Foreign exchange and other regulations in the PRC may further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of dividends, loans and advances. Amounts restricted include paid-in capital and statutory reserves of the Company’s PRC subsidiaries, as determined pursuant to PRC generally accepted accounting principles. As of June 30, 2026, restricted net assets of the Company’s PRC subsidiaries were RMB
15. LEASES
The Company entered into operating lease agreements for office spaces and employee dormitories. None of the amounts disclosed below for these leases contains variable payments, residual value guarantees or options that were recognized as part of the right-of-use assets and lease liabilities. As the Company’s leases did not provide an implicit discount rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
As of June 30, 2026, the Company recognized operating lease liabilities, including current and noncurrent, in the amount of RMB
Rent expense for the six months ended June 30, 2025 and 2026 was RMB
Lease commitments
The Company’s maturity analysis of operating lease liabilities as of June 30, 2026 is as follows:
| Operating Leases | ||||
| Remaining of 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total lease payment | ||||
| Less imputed interest | ( | ) | ||
| Present value of operating lease liabilities | ||||
| Less: current obligation | ||||
| Long-term obligation as of June 30, 2026 (RMB) | ||||
| Long-term obligation as of June 30, 2026 (US$) | ||||
Supplemental disclosure related to operating leases were as follows:
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||
| Operating cash flows for operating leases | ||||||||||||
| Weighted average remaining lease term of operating leases (years) | ||||||||||||
| Weighted average discount rate of operating leases | % | % | % | |||||||||
F-31
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS
ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
16. NET REVENUES
The following table presents the Company’s revenues disaggregated by service lines for the six months ended June 30, 2025 and 2026:
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Subscription revenue from users | ||||||||||||
| Licensing revenues from content aggregators and distributors | ||||||||||||
| Revenue from content sold to hardware manufacturers | ||||||||||||
| Revenue from sales of digital educational hardware devices | ||||||||||||
| Others | ||||||||||||
The following table presents the movement of the Company’s contract liabilities for the six months ended June 30, 2025 and 2026:
| As of June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Balance at the beginning of the year | ||||||||||||
| Cash payment received from the customers | ||||||||||||
| Revenue and value-added tax recognized | ( | ) | ( | ) | ( | ) | ||||||
| Balance at the end of the year | ||||||||||||
The amount of revenue recognized that was included in the contract liabilities at the beginning of the year were RMB
17. SHARE BASED COMPENSATION
Share option plan (the “2016 Plan”)
On April 6, 2016, the shareholders and Board of Directors of the Company approved the 2016 Plan. Under the 2016 Plan, the maximum aggregate number of shares that may be issued shall not exceed
F-32
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
17. SHARE BASED COMPENSATION (cont.)
A summary of the employee equity award activity under the 2016 Plan is stated below:
| Number of options | Weighted- average exercise price | Weighted- average grant-date fair value | Weighted- average remaining contractual term | Aggregate intrinsic Value | ||||||||||||||||
| RMB | RMB | Years | RMB | |||||||||||||||||
| Outstanding, December 31, 2025 | ||||||||||||||||||||
| Granted | — | |||||||||||||||||||
| Forfeited | — | |||||||||||||||||||
| Outstanding, June 30, 2026 | ||||||||||||||||||||
| Vested and expected to vest at June 30, 2026 | ||||||||||||||||||||
| Exercisable at June 30, 2026 | ||||||||||||||||||||
| Outstanding, December 31, 2024 | ||||||||||||||||||||
| Granted | — | |||||||||||||||||||
| Forfeited | — | |||||||||||||||||||
| Outstanding, June 30, 2025 | ||||||||||||||||||||
| Vested and expected to vest at June 30, 2025 | ||||||||||||||||||||
| Exercisable at June 30, 2025 | ||||||||||||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the awards and the fair value of the underlying Ordinary Shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant Ordinary Shares.
Share incentive plan (the “2025 Plan”)
On January 5, 2025, the shareholders and Board of Directors of the Company approved the 2025 Plan. Under the 2025 Plan, the maximum aggregate number of shares that may be issued shall not exceed
The terms of the options shall not exceed years from the date of grant. The purpose of the 2025 Plan is to selected directors, employees and other eligible persons to incentivize their performance and align their interests with the Company. Under the 2025 plan, restricted shares may be granted to staff members, consultants and non-employee directors.
A summary of the restricted share activities under the 2025 Plan is stated below:
|
Number of shares | Weighted- average grant-date fair value | |||||||
| RMB | ||||||||
| Outstanding, December 31, 2025 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Outstanding, June 30, 2026 | ||||||||
Total share-based compensation cost for the restricted shares amounted to RMB
18. RELATED PARTY TRANSACTIONS
a) Related parties
| Shanghai Diyi |
F-33
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
18. RELATED PARTY TRANSACTIONS (cont.)
b) Amount due from related parties
| As of | ||||||||||||||
| Name of Related Party | Nature | December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||||
| Shanghai Diyi | ||||||||||||||
c) Net Revenues — Related Party
| For the six months ended June 30, | ||||||||||||
| Name of Related Party | 2025 | 2026 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Shanghai Diyi | ||||||||||||
d) Cost of revenues — Related Party
| For the six months ended June 30, | ||||||||||||
| Name of Related Party | 2025 | 2026 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Shanghai Diyi | ||||||||||||
19. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
Condensed balance sheets
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Amount due from subsidiaries | ||||||||||||
| Other current assets | ||||||||||||
| Total current assets | ||||||||||||
| Non-current assets | ||||||||||||
| Intangible assets | ||||||||||||
| Investment in subsidiaries | ( | ) | ( | ) | ( | ) | ||||||
| Total non-current assets | ( | ) | ( | ) | ( | ) | ||||||
| Total assets | ||||||||||||
F-34
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
19. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (cont.)
| As of | ||||||||||||
| December 31, 2025 | June 30, 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Accounts payable | ||||||||||||
| Amount due to subsidiaries | ||||||||||||
| Total liabilities | ||||||||||||
| Shareholders’ equity: | ||||||||||||
| Ordinary shares (US$ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Treasury stock | ( | ) | ( | ) | ||||||||
| Statutory reserve | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||||||
| Total shareholders’ equity | ||||||||||||
| Total liabilities, shareholders’ equity | ||||||||||||
Condensed statement of comprehensive income
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Cost of revenues | ( | ) | ( | ) | ||||||||
| Gross loss | ( | ) | ( | ) | ||||||||
| Sales and marketing expenses | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||
| Exchange gain (loss) | ( | ) | ||||||||||
| Share of loss from subsidiaries and Consolidated VIEs | ( | ) | ( | ) | ( | ) | ||||||
| Loss before taxes | ( | ) | ( | ) | ( | ) | ||||||
| Income tax expense | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Comprehensive loss | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
F-35
JINXIN TECHNOLOGY HOLDING COMPANY
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
19. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (cont.)
Condensed statements of cash flows
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes | ( | ) | ( | ) | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Cash and cash equivalents at beginning of year | ||||||||||||
| Cash and cash equivalents at end of year | ||||||||||||
Basis of presentation
In the Company-only financial statements, the Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since inception.
The Company records its investment in its subsidiary under the equity method of accounting as prescribed in ASC 323-10, Investment-Equity Method and Joint Ventures, and such investment is presented on the balance sheets as “Investments in subsidiaries” and the share of the subsidiaries’ profit or loss is presented as “Share of profits of subsidiaries and Consolidated VIEs” on the statements of operations.
The subsidiaries did not pay any dividends to the Company for the years presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted and as such, these Company-only financial statements should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements.
20. SUBSEQUENT EVENTS
The Company has evaluated subsequent events from June 30, 2026 through September 21 2026, which is the date that these unaudited interim condensed consolidated financial statements are available to be issued.
On September 15,2026, the Company entered into an Economic Interest Transfer Agreement with HK Education Vision Holding Co., Limited (the “Seller”) and Yuanwei Network Technology (Shanghai) Co., Ltd. (the “Target Company”). Pursuant to the agreement, the Company agreed to acquire the economic interests in relation to
Other than the foregoing, there were no material subsequent events requiring disclosure in these unaudited interim condensed consolidated financial statements.
F-36
Exhibit 99.2
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED June 30, 2025 AND 2026
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements and the related notes. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors.
A. Operating Results
Key Factors Affecting Our Results of Operations
Our results of operations and financial condition are affected by the general factors driving China’s K-9 digital educational content services market. We have benefited from the China’s overall economic growth, significant urbanization rate, and higher per capita disposable income of urban households in China, which has allowed many households in China to spend more on education. Our results of operations and financial condition are also affected by a number of technological advancements in the K-9 digital educational content services market, including technological advancements in interaction, gamification and other content features that contribute to continued improvement in children’s learning experience and education quality, as well as the increasing mobile internet penetration in China.
While our business is influenced by these general factors, we believe our results of operations are also directly affected by certain company specific factors, including the following major factors:
Our ability to grow our user base, especially paying user base
We currently derive all of our revenues from fees charged to users and business partners for the contents on our learning app and platform. Our revenues are driven by the increase in the number of our paying users, which is affected by our ability to grow the number of registered users, and our ability to convert a greater portion of our registered users into paying users. Our ability to maintain and enhance user engagement, depends on, among other things, our ability to continually offer popular digital educational contents and provide an engaging and effective learning experience. The number of our cumulative registered users increased from 48.2 million as of December 31, 2025 to 50.3 million as of June 30, 2026. Our paying users increased from 1.46 million in 2023 to 1.52 million in 2024 and further to 1.51 million in 2025, and increased from 0.85 million in the six months ended June 30, 2025 to 0.87 million in the six months ended June 30, 2026. Furthermore, we had a quite strong performance in terms of the retention of our paying users.
Our ability to optimize our product and content offerings
We offer a diversified suite of integrated digital educational contents to individual users and distributors, and our results are affected by the gross margins for the mix of products and contents we offer. We intend to continue to leverage our integrated strategy to optimize our product mix and develop new products and contents with higher gross margins that meet diversified needs of both individual users and distributors.
Our ability to manage our costs and operating expenses effectively
Our results of operations are affected by our ability to control our costs. In an effort to improve our operating efficiency, we continuously upgrade our content generation engine, optimize our content development process, and strive to improve the efficiency of content development and work productivity, which help reduces content development costs. We also manage to control our operating expenses through streamlining the organizational structure, optimizing personnel structure, as well as strengthening budget control. We intend to continue to prudently control our costs for our digital educational materials.
We have also optimized our research and development expenditures by streamlining our R&D team and reducing outsourced technical service fees, while continuing to enhance our technologies to offer innovative content. We plan to continue monitoring and optimizing our R&D spending to align with our strategic priorities and improve operating efficiency.
Historically, we have been able to maintain our sales and marketing expenses as a relatively low percentage of our revenues, due to our strong brand reputation and word-of-mouth referrals from existing customers and users. Through our Wechat enterprise account, we have been able to establish a strong private domain traffic pool, which facilitates closer relationships with our users, enables more precise marketing and enhances conversion rate. Since we launched our Wechat enterprise account in December 2021, we have recorded private traffic of over 470,000 users. Leveraging such traffic pool, we have launched various marketing programs to fuel our growth of sales. We intend to continue to leverage our existing brand value and to efficiently market our product and content offerings.
Our ability to continue to upgrade our technological capabilities
We have a strong ability to deploy advanced technologies into our learning app and content creation, which differentiates us from our competitors and is also a key factor that affects our revenues and financial results. We also employ strong in-house content development expertise in educational materials, gamification features, video and audio effects as well as art design. We leverage our expertise in applying advanced technologies to infuse our educational contents with solid pedagogy and elements of fun. We also utilize AI technologies and big data analysis to provide superior user experience. We will continue to increase our investments in developing and upgrading our technology with a focus on providing a uniquely interactive and effective learning experience. Our emphasis will be on technological advancement, such as AR/VR/metahuman/AI-generated content technologies and other metaverse related features to further optimize the immersive self-learning experience for children. We believe our ability to grow our business significantly depends on our ability to continue to upgrade our technological capabilities to optimize our product and content offerings.
KEY COMPONENTS OF RESULTS OF OPERATIONS
Revenues
We derived revenues from (i) provision of digital educational contents to individual users through our Namibox app, (ii) licensing content aggregators and distributors, who are mainly telecom and broadcast operators, to distribute our digital educational contents through their platforms to end users, (iii) sales of digital educational contents to hardware manufacturers for them to pre-install our digital contents in their devices to be sold to end users, (iv) sales of digital educational hardware devices, featured with the installation of our digital educational contents, to hardware distributors for them to sell our devices to end users, and (ⅴ) other revenues, primarily representing the public opinion monitoring and public relations services we provided to certain mainstream telecom and broadcast operators. The following table sets forth a breakdown of our revenues both in absolute amounts and as a percentage of our total revenues for the years indicated.
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Subscription revenue from users | 28,523 | 13.7 | 19,023 | 2,804 | 13.4 | |||||||||||||||
| Licensing revenues from content aggregators and distributors | 144,716 | 69.4 | 79,933 | 11,781 | 56.3 | |||||||||||||||
| Revenue from content sold to hardware manufacturers | 14,251 | 6.8 | 20,688 | 3,049 | 14.6 | |||||||||||||||
| Revenue from sales of digital educational hardware devices | 21,012 | 10.1 | 17,267 | 2,545 | 12.2 | |||||||||||||||
| Others |
— | — | 5,184 | 763 | 3.5 | |||||||||||||||
| Total | 208,502 | 100.0 | 142,095 | 20,942 | 100.0 | |||||||||||||||
2
Cost of Revenues
Costs of revenues consist primarily of (i) staff costs, (ii) digital educational content costs, (iii) inventory cost and (iv) others. The following table sets forth a breakdown of our cost of revenues by nature both in absolute amounts and as a percentage of our total cost of revenues for the periods indicated.
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||
| Staff costs | 3,625 | 2.0 | 2,785 | 410 | 2.4 | |||||||||||||||
| Digital educational content costs | 153,217 | 86.3 | 95,531 | 14,079 | 83.6 | |||||||||||||||
| Inventory cost | 20,670 | 11.6 | 15,603 | 2,300 | 13.7 | |||||||||||||||
| Others | 17 | 0.1 | 344 | 51 | 0.3 | |||||||||||||||
| Total | 177,529 | 100.0 | 114,263 | 16,840 | 100.0 | |||||||||||||||
Operating Expenses
Our operating expenses consist of sales and marketing expenses, research and development expenses and general and administrative expenses. The following table sets forth a breakdown of our operating expenses both in absolute amounts and as a percentage of our total operating expenses for the periods indicated.
Sales and marketing expenses
Sales and marketing expenses consist primarily of advertising expenses, salaries and other compensation-related expenses to sales and marketing personnel and warranty expenses. We expense all advertising costs as incurred and classify these costs under sales and marketing expenses.
General and administrative expenses
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees involved in general corporate functions and those not specifically dedicated to research and development activities, depreciation and amortization of fixed assets which are not used in research and development activities, legal and other professional services fees, rental and other general corporate related expenses.
Research and development expenses
Research and development costs are expensed as incurred. These costs primarily consist of payroll and related expenses for personnel engaged in research and development activities.
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| Sales and marketing expenses | 8,805 | 16.1 | 11,738 | 1,730 | 27.7 | |||||||||||||||
| General and administrative expenses | 20,715 | 37.7 | 19,449 | 2,866 | 46.0 | |||||||||||||||
| Research and development expenses | 25,359 | 46.2 | 11,146 | 1,643 | 26.3 | |||||||||||||||
| Total | 54,879 | 100.0 | 42,333 | 6,239 | 100.0 | |||||||||||||||
3
RESULTS OF OPERATIONS
The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as a percentage of our total revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| Revenues | 208,502 | 100.0 | 142,095 | 20,942 | 100.0 | |||||||||||||||
| Cost of revenues | (177,529 | ) | (85.1 | ) | (114,263 | ) | (16,840 | ) | (80.4 | ) | ||||||||||
| Gross profit | 30,973 | 14.9 | 27,832 | 4,102 | 19.6 | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Sales and marketing expenses | (8,805 | ) | (4.3 | ) | (11,738 | ) | (1,730 | ) | (8.3 | ) | ||||||||||
| General and administrative expenses | (20,715 | ) | (9.9 | ) | (19,449 | ) | (2,866 | ) | (13.7 | ) | ||||||||||
| Research and development expenses | (25,359 | ) | (12.2 | ) | (11,146 | ) | (1,643 | ) | (7.8 | ) | ||||||||||
| Total operating expenses | (54,879 | ) | (26.4 | ) | (42,333 | ) | (6,239 | ) | (29.8 | ) | ||||||||||
| Operating loss | (23,906 | ) | (11.5 | ) | (14,501 | ) | (2,137 | ) | (10.2 | ) | ||||||||||
| Other income | 4 | — | 34 | 5 | — | |||||||||||||||
| Other expenses | — | — | 250 | 37 | 0.2 | |||||||||||||||
| Interest income | 136 | 0.1 | 12 | 2 | — | |||||||||||||||
| Interest expenses | — | — | (238 | ) | (34 | ) | (0.2 | ) | ||||||||||||
| Gain from equity method investments | 2,571 | 1.2 | 1,213 | 179 | 0.9 | |||||||||||||||
| Investment income | 404 | 0.2 | 504 | 74 | 0.4 | |||||||||||||||
| Exchange gain (loss) | (1,558 | ) | (0.7 | ) | 2,169 | 320 | 1.5 | |||||||||||||
| Government subsidy | 1,273 | 0.6 | 93 | 14 | 0.1 | |||||||||||||||
| Loss before income taxes | (21,076 | ) | (10.1 | ) | (10,464 | ) | (1,540 | ) | (7.4 | ) | ||||||||||
| Income tax expense | — | — | (52 | ) | (8 | ) | — | |||||||||||||
| Net loss | (21,076 | ) | (10.1 | ) | (10,516 | ) | (1,548 | ) | (7.4 | ) | ||||||||||
Six Months ended June 30, 2026 compared to Six Months ended June 30, 2025
Net Revenues
Our revenues decreased by 31.8% from RMB208.5 million for the six months ended June 30, 2025 to RMB142.1 million (US$20.9 million) for the six months ended June 30, 2026, primarily due to the decrease of revenue from content aggregators and distributors.
Revenue from individual users. Our subscription revenue from individual users decreased by 33.3% from RMB28.5 million for the six months ended June 30, 2025 to RMB19.0 million (US$2.8 million) for the six months ended June 30, 2026, primarily due to a decline in regular paying users, while new users from integrated publishing partnerships remained in the trial phase.
Revenue from content aggregators and distributors. Our revenue from content aggregators and distributors, who are mainly telecom and broadcast operators, decreased by 44.8% from RMB144.7 million for the six months ended June 30, 2025 to RMB79.9 million (US$11.8 million) for the six months ended June 30, 2026. The decrease was primarily due to a decrease in membership card sales through carrier internet channels.
Revenue from hardware manufacturers. Our revenue from hardware manufacturers increased by 44.8% from RMB14.3 million for the six months ended June 30, 2025 to RMB20.7 million (US$3.1 million) for the six months ended June 30, 2026, primarily due to an increase in technology service revenue from digitalizing paper-based textbooks.
Revenue from hardware distributors. Our revenue from hardware distributors decreased by 17.6% from RMB21.0 million for the six months ended June 30, 2025 to RMB17.3 million (US$2.5 million) for the six months ended June 30, 2026, primarily due to a supplier transition for certain products, inventory clearance, and no new production.
4
Cost of Revenues
Our cost of revenues decreased by 35.6% from RMB177.5 million for the six months ended June 30, 2025 to RMB114.3 million (US$16.8 million) for the six months ended June 30, 2026, primarily due to reduced licensing costs from content aggregators and distributors.
Gross Profit
As a result of the foregoing, our gross profit decreased by 10.3% from RMB31.0 million for the six months ended June 30, 2025 to RMB27.8 million (US$4.1 million) for the six months ended June 30, 2026. Our gross profit margin was 14.9% and 19.6% for the six months ended June 30, 2025 and 2026, respectively.
Operating Expenses
Our total operating expenses decreased by 23.0% from RMB54.9 million for the six months ended June 30, 2025 to RMB42.3 million (US$6.2 million) for the six months ended June 30, 2026, reflecting the decreases in research and development expenses.
Sales and marketing expenses. Our sales and marketing expenses increased by 33.0% from RMB8.8 million for the six months ended June 30, 2025 to RMB11.7 million (US$1.7 million) for the six months ended June 30, 2026. Such increase was primarily due to the establishment of a new live streaming marketing department and the expansion of the integrated publishing business.
General and administrative expenses. Our general and administrative expenses decreased by 5.8% from RMB20.7 million for the six months ended June 30, 2025 to RMB19.5 million (US$2.9 million) for the six months ended June 30, 2026. This decrease was primarily due to a reduction in travel and meeting expenses, as the Company did not hold its annual all-staff event in the first half of 2026, whereas such event was held in the same period of 2025 and resulted in higher travel and meeting-related expenses.
Research and development expenses. Our research and development expenses decreased by 56.3% from RMB25.4 million for the six months ended June 30, 2025 to RMB11.1 million (US$1.6 million) for the six months ended June 30, 2026, primarily due to reduced technical service fees and staff salaries and benefits.
Operating Income (loss)
Our operating loss was RMB14.5 million (US$2.1 million) for the six months ended June 30, 2026, compared to operating loss of RMB23.9 million for the six months ended June 30, 2025.
Net Income (loss)
As a result of the foregoing, we had net loss of RMB10.5 million (US$1.5 million) for the six months ended June 30, 2026, compared to net loss of RMB21.1 million for the six months ended June 30, 2025.
B. Liquidity and Capital Resources
Cash Flows and Working Capital
The following table sets forth a summary of our cash flows for the periods presented:
| For the six months ended June 30, | ||||||||||||
| 2025 | 2026 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (in thousands) | ||||||||||||
| Net cash provided by (used in) operating activities | 14,217 | (2,741 | ) | (403 | ) | |||||||
| Net cash used in investing activities | (55,949 | ) | (27,634 | ) | (4,074 | ) | ||||||
| Net cash provided by (used in) financing activities | 3,531 | (5,060 | ) | (745 | ) | |||||||
| Effect of exchange rate changes | 770 | (2,787 | ) | (411 | ) | |||||||
| Net decrease in cash and cash equivalents | (37,431 | ) | (38,222 | ) | (5,633 | ) | ||||||
| Cash and cash equivalents at beginning of year | 92,586 | 64,269 | 9,472 | |||||||||
| Cash and cash equivalents at end of year | 55,155 | 26,047 | 3,839 | |||||||||
5
To date, we have financed our operating and investing activities primarily through cash generated from operating activities. As of June 30, 2025 and 2026, our cash and cash equivalents were RMB55.2 million and RMB26.0 million (US$3.8 million), respectively. Our cash and cash equivalents primarily consist of bank deposits.
We believe that our current cash and cash equivalents and expected cash provided by operating activities will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for the next twelve months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we identify and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.
As of June 30, 2026, 71.7% and 28.3% of our cash and cash equivalents were held in mainland China and Hong Kong, respectively. Substantially all of our cash and cash equivalents were denominated in Renminbi. As of June 30, 2026, 70.3% of cash and cash equivalents were held by the VIE and its subsidiaries.
Although we consolidate the results of the VIE and its subsidiaries, we only have access to the assets or earnings of the VIE and its subsidiaries through our contractual arrangements with the VIE and its shareholders. See “Corporate History and Structure — Contractual Arrangements with the VIE and its Shareholders.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “— Holding Company Structure.”
All of our revenues have been, and we expect they are likely to continue to be, in the form of Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiary is allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC subsidiary is required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Historically, our PRC subsidiary has not paid dividends to us, and they will not be able to pay dividends until they generate accumulated profits. Furthermore, capital account transactions, which include foreign direct investment in and loans to our PRC subsidiary, must be approved by and/or registered with SAFE, its local branches and certain local banks.
As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiary only through loans or capital contributions, subject to the approval, filings or registration of government authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from this offering to make loans or capital contributions to our PRC subsidiary. We expect to invest substantially all of the proceeds from this offering in our PRC operations for general corporate purposes within the business scopes of our PRC subsidiary and the VIE and its subsidiaries. See “Risk Factors — Risks Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans to our PRC subsidiary and the VIE in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”
Operating Activities
Net cash used in operating activities was RMB2.7 million (US$0.4 million) in the six months ended June 30, 2026. The difference between our net cash used in operating activities and our net loss of RMB10.5 million (US$1.5 million) was due to the combined effect of adjustments for non-cash items and changes in working capital. Adjustments for non-cash items primarily included depreciation and amortization of office property and equipment and lease expense of RMB18.3 million (US$2.7 million). Changes in working capital mainly resulted from an increase in accounts receivable of RMB19.5 million (US$2.9 million), a decrease in contract liabilities of RMB2.8 million (US$0.4 million), and partially offset by an increase in advance to suppliers of RMB3.2 million (US$0.5 million), a decrease in inventories of RMB0.5 million (US$0.1 million), an increase in accounts payable of RMB9.9 million (US$1.5 million).
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Net cash generated from operating activities was RMB14.2 million (US$2.0 million) in the six months ended June 30, 2025. The difference between our net cash provided by operating activities and our net loss of RMB21.1 million (US$2.9 million) was due to the combined effect of adjustments for non-cash items and changes in working capital. Adjustments for non-cash items primarily included depreciation and amortization of office property and equipment and lease expense of RMB20.1 million (US$2.8 million). Changes in working capital mainly resulted from a decrease in accounts receivable of RMB10.7 million (US$1.5 million), a decrease in contract liabilities of RMB5.7 million (US$0.8 million), and partially offset by an increase in advance to suppliers of RMB6.0 million (US$0.8 million), an increase in inventories of RMB4.0 million (US$0.6 million), an increase in accounts payable of RMB20.7 million (US$2.9 million).
Investing Activities
Net cash used in investing activities was RMB27.6 million (US$4.1 million) in the six months ended June 30, 2026, primarily due to (i) payments for short-term investments of RMB17.0 million (US$2.5 million), and (ii) purchase of intangible assets of RMB10.6 million (US$1.6 million.
Net cash used in investing activities was RMB55.9 million (US$7.8 million) in the six months ended June 30, 2025, primarily due to (i) payments for short-term investments of RMB22.5 million (US$3.1 million), and (ii) purchase of intangible assets of RMB30.4 million (US$4.3 million).
Financing Activities
Net cash used in financing activities was RMB5.1 million (US$0.8 million) in the six months ended June 30, 2026, primarily due to the repayment of borrowings of RMB5.0 million (US$0.7 million).
Net cash generated from financing activities was RMB3.5 million (US$0.5 million) in the six months ended June 30, 2025, primarily due to proceeds from the initial public offering of RMB3.0 million (US$0.4 million).
MATERIAL CASH REQUIREMENTS
Our material cash requirements as of June 30, 2026 and any subsequent interim period primarily include our capital expenditures, operating lease commitments and working capital requirements.
Our capital expenditures are primarily incurred for purchases of intangible assets, property and equipment. We made capital expenditures of RMB23.6 million and RMB10.6 million (US$1.6 million) in the six months ended June 30, 2025 and 2026. Our capital expenditures have been primarily funded by cash generated from our operations.
Our operating lease commitments consist of the commitments under the lease agreements for our office premises and employee dormitories. We lease our office facilities under non-cancelable operating leases with various expiration dates. Our operating lease commitments are related to our office lease agreements in China.
The following table sets forth our contractual obligations as of June 30, 2026:
| Payment due by June 30, | ||||||||||||||||||||
| Total | Remaining of 2026 | 2027 | 2028 | 2029 | ||||||||||||||||
| (RMB in thousands) | ||||||||||||||||||||
| Operating lease payment | 3,676 | 1,785 | 1,517 | 374 | — | |||||||||||||||
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We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in product development services with us.
Other than as shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of June 30, 2026.
HOLDING COMPANY STRUCTURE
Jinxin Technology Holding Company is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiary, the consolidated VIE and its subsidiaries. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries. If our existing PRC subsidiary or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their accumulated after-tax profits, if any, as determined in accordance with PRC accounting standards and regulations. Under the PRC law, each of our PRC subsidiary and the VIE in China is required to set aside at least 10% of its after-tax profits each year, if any, after making up previous years’ accumulated losses, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, each of our wholly foreign-owned subsidiaries in China may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIE may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the SAFE. Our PRC subsidiary has not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.
As an offshore holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund raising activities to our PRC subsidiary only through loans or capital contributions, and to the consolidated VIE only through loans, in each case subject to the satisfaction of the applicable government registration and approval requirements. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our initial public offering to make loans to our PRC subsidiary and the VIE in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiary and consolidated VIE when needed. Notwithstanding the foregoing, our PRC subsidiary may use its own retained earnings (rather than Renminbi converted from foreign currency denominated capital) to provide financial support to the consolidated VIE either through entrustment loans or direct loans to such consolidated VIE’s nominee shareholders, which would be contributed to the consolidated VIE as capital injections. Such direct loans to the nominee shareholders would be eliminated in our consolidated financial statements against the consolidated VIE’s share capital.
C. Research and Development, Patents and Licenses, etc.
See “Item 4. Information on The Company—4.B. Business Overview—Technology” and “Item 4. Information on The Company—4.B. Business Overview—Intellectual Property” of our annual report for the fiscal year ended December 31, 2025 filed with the SEC on April 28, 2026.
D. Trend Information
Other than as disclosed elsewhere in this interim report, we are not aware of any trends, uncertainties, demands, commitments or events for the six months ended June 30, 2026 that are reasonably likely to have a material and adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition.
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E. Critical Accounting Estimates
We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates. The following descriptions of critical accounting estimates should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included elsewhere in this annual report.
Impairment of Long-lived Assets Other Than Goodwill
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than we had originally estimated. When these events occur, we evaluate the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, we recognize an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge recognized for the six months ended June 30, 2025 and 2026 was nil.
Share-based Compensation
We apply ASC 718 (“ASC 718”), Compensation — Stock Compensation, to account for our employee share-based payments. In accordance with ASC 718, we determine whether an award should be classified and accounted for as a liability award or an equity award, and all of its share-based awards to employees have been classified as equity awards. The cost of these awards is measured based on the fair value at the grant date. The related compensation expense is recognized using an accelerated method over the requisite service period, which generally corresponds to the vesting period. For awards where no future service is required, the cost is expensed immediately on the grant date.
Valuation of Deferred Tax Assets
Deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of loss and comprehensive loss in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized.
Recently Issued Accounting Pronouncements
A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our consolidated financial statements included elsewhere in this interim report.
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