What changed in this filing

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Item 1. Business

2020-03-31 compared with 2019-03-11 · 1270 added, 686 removed, 0 unchanged (100% of the section changed)

are a Cayman Islands company incorporated on February 5, 2018 as an exempted company with limited liability.

We chose to incorporate

in the Cayman Islands due to (i) its tax-neutrality, which allows international transactions to be structured efficiently without

an additional layer of tax and (ii) simplicity of establishment and flexibility of administration, including easy migration to

another jurisdiction, statutory procedure for merger or consolidation, and no takeover code or bespoke public company filing requirements.

companies are Cayman Islands companies wishing to conduct business outside the Cayman Islands and, as such, are exempted from

complying with certain provisions of the Companies Law.

As an exempted company, we have applied for and received a tax exemption

undertaking from the Cayman Islands government that, in accordance with section 6 of the Tax Concessions Law (2018 Revision) of

the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing

any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no

tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall

be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in

part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or

interest or other sums due under a debenture or other obligation of us.

were formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization

or similar business combination with one or more businesses or entities, which we refer to as a “target business.”

Our efforts to identify a prospective target business is not limited to a particular industry or geographic location.

we believe we are particularly well-positioned to capitalize on growing opportunities created by consumer/lifestyle assets that

may have particular application for the PRC market (including traditional consumer staples characterized by lower cyclicality,

such as food and beverages and household products;

luxurious lifestyle products and retail brands, such as fashion, cosmetics,

entertainment and leisure and other consumer discretionary products;

E-commerce and online retailers;

and sub-sectors within other

high potential industries driven by retail sentiments and consumer demand such as consumer-focused pharmaceuticals, including

sport nutrition, vitamins, dietary supplements, and other consumer-oriented healthcare services).

believe our management team is well positioned to identify attractive risk-adjusted returns in the marketplace and that our professional

contacts and transaction sources, ranging from industry executives, private owners, private equity funds, family offices, commercial

and investment bankers, lawyers and other financial sector service providers and participants, in addition to the geographical

reach of our affiliates, will continue to enable us to pursue a broad range of opportunities.

Our management believes that its

collective ability to identify and implement value creation initiatives has been an essential driver of past performance and will

continue to remain central to its differentiated acquisition strategy.

In addition, we believe our alliance with Symphony, which

purchased from us, through an affiliate, an aggregate of 13,000,000 private warrants, will continue to allow us to potentially

access/leverage relevant Asian distribution networks, enhance our insights into PRC consumer demand, and deepen our connections

with leading relevant Asian trading houses.

past performance by our management team and Symphony is not a guarantee either (i) of success with respect to any business combination

we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination.

investors should not rely upon the historical record of our management or of Symphony as indicative of future performance.

deploy a proactive sourcing strategy, focusing on companies where the combination of the operating experience, relationships and

capital markets expertise of our management team and Symphony can be catalysts to enhancing the overall value proposition of the

potential target acquisition.

others, we believe the consumer/lifestyle sectors represent a particularly attractive deal sourcing ground that leverages both

our team’s and our sponsor partner’s respective skill sets, and that could potentially serve as a strong platform

for future bolt-on acquisitions.

Our investment thesis, inter alia, is supported by the following trends:

is expected to remain a major driver in global consumer demands, particularly in the luxury lifestyle sector.

By 2018, retail

sales in China may potentially surpass that of the United States for the first time to become the world’s largest consumer

McKinsey, the global strategy consultancy, forecasts that fueled by rapid growth in per capita income especially in second

and third-tier cities.

China’s luxury consumers will grow from its present roughly one-third of the global luxury market

to roughly 44% by 2025.

Understanding and leveraging China market insights are key components of our consumer/lifestyle strategy

sentiments in China have become increasingly polarized.

While a growing affinity towards local brands has been observed for goods

such as sportswear and appliances due to rising national pride, selected high-profile Western brands remain a much-desired symbol

of prestige, fashion and quality.

As a result, we believe that branding strategies in China will require new levels of sophistication

and precision in balancing these two trends.

In this regard, we believe Symphony’s track record in formulating and implementing

China distribution strategies for foreign brands will be particularly valuable.

anticipate certain categories of international consumer products may be better positioned to reap benefits from a China-oriented

strategy than others such as:

already in a mature or near saturation phase in their home markets but with strong under-exploited growth potential in Asia, with

nutritional/health foods in the US being but one such possible example;

undervalued or fatigued international fashion/lifestyle brands facing erosion of legacy value (due, perhaps, to loss of major

licensing contracts, repeated failures to meet revenue targets, and/or unsuccessful product innovations, among others) that might

be revamped and turned around through a fresh entrance into Asia’s developing markets, thereby extending their product lives;

entrants into the Chinese market encumbered by subsequent failed execution (due, perhaps, to lack of a strong local distribution

partner, reputation damage from mismanagement, and/or failed localization initiatives), where fresh partners/leadership could

successfully address such past challenges or correct any past failures.

anticipate that technology will be another key driver of potential opportunities in the consumer/lifestyle sector, such as where

selected distressed retailers, under e-commerce pressure, might benefit from injection of a robust digitization/online strategy.

In such cases, we may explore forming strategic alliances between acquired fatigued international consumer brands and leading

Chinese e-commerce players as a viable next step to capture synergy and create value.

By doing so, we expect to benefit from China’s

fast growing e-commerce sector, which contributed to 42% of the global market in 2016, up from less than 1% in 2005.

anticipate deleveraging will remain an important theme for many of Asia’s major economies, particularly China and India.

To the extent possible, we will seek to take advantage of such distressed situations by identifying and acquiring high-quality

consumer business franchises from relevant over-leveraged conglomerates that might be available at a substantial discount, particularly

in cases where our management or sponsor may have actionable relationships with such potential sellers.

objective is to generate meaningful returns through a disciplined strategy of underwriting intrinsic worth and affecting positive

change to unlock value, with a priority focus on the consumer/lifestyle sector.

Consistent with such objective, we have identified

the following general criteria and guidelines in evaluating potential target businesses:

businesses in the consumer/lifestyle sector that are potentially positioned to benefit from our industry networks and insights,

or in other high-potential industries that can equally benefit from, inter alia, (a) the rebranding and optimization of distribution

channels, (b) a rigorous Greater China execution and/or distribution strategy, and/or (c) application of e-commerce initiatives

that can drive strong efficiency gains and/or improve staggered sales;

businesses that are available for sale at substantial discounts due to the deleveraging needs of their respective parent companies;

businesses that are at an inflection point, such as those requiring additional management expertise, have untapped potential for

new products or services, or where we believe we can drive improved financial performance and where acquisition through a publicly

listed vehicle may help facilitate growth;

businesses that have recently been pressured by significant waves of devaluation whose growth potential can be re-animated through

further related sector add-on acquisitions and complementary strategic alliances.

In such cases, we may seek to create value through

the simultaneous acquisition and merger of multiple targets with significant synergetic values.

However, we do not intend to purchase

multiple businesses in unrelated industries in conjunction with our initial business combination unless we believe a specific

case can be made for such action;

businesses, in general, that suggest unrecognized and underpriced value;

businesses that will offer attractive risk-adjusted equity returns for our shareholders.

Financial returns will be evaluated based

on (a) the ability to achieve cost savings, (b) the potential for organic growth in cash flows, (c) the ability to accelerate

growth, including through the opportunity for follow-on acquisitions and (d) the prospects of benefiting from other value creation

Potential upside from improvement in earnings and an improved capital structure will be weighed against any identified

downside risks.

criteria and guidelines are not exhaustive.

Any evaluation relating to the merits of a particular initial business combination

may be based, to the extent relevant, on the preceding criteria and guidelines as well as other considerations, factors and criteria

that our management may deem relevant at the time.

Notwithstanding the foregoing, we may complete a business combination with

a target business that does not meet any of the preceding criteria and guidelines.

funds in the trust account of $251,886,105 as of December 31, 2018 available to use for a business combination (assuming no stockholder

seeks conversion of their shares or seeks to sell their shares to us in a tender offer in relation to such business combination),

we offer a target business a variety of options such as providing the owners of a target business with shares in a public company

and a public means to sell such shares, providing capital for the potential growth and expansion of its operations or strengthening

its balance sheet by reducing its debt ratio.

Because we are able to consummate our initial business combination using our cash,

debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that

will allow us to tailor the consideration to be paid to the target business to fit its needs and desires.

Activities Since Inception

August 20, 2018, we consummated our initial public offering of 22,000,000 units, each unit consisting of one ordinary share, par

value $0.0001 per share, one half of one warrant, each whole warrant exercisable for one ordinary shares at an exercise price

of $11.50 per share, and one right to receive one-tenth (1/10) of one ordinary share upon consummation of our initial business

combination, pursuant to the registration statements on Form S-1 (File Nos.

333-226423 and 333-226859).

The units were sold in

our initial public offering at an offering price of $10.00 per unit, generating gross proceeds of $220,000,000 (before underwriting

discounts and commissions and offering expenses).

Simultaneously with the consummation of our initial public offering, we completed

the private placement of 11,800,000 warrants, issued to an affiliate of Symphony, at a price of $0.50 per warrant, generating

gross proceeds of $5,900,000.

August 22, 2018, the underwriters of our initial public offering exercised their over-allotment option in full and purchased 3,000,000

units at an offering price of $10.00 per unit, generating gross proceeds of $30.0 million.

On August 22, 2018, simultaneously

with the sale of the over-allotment units, we completed a private placement for an additional 1,200,000 warrants, issued to an

affiliate of Symphony, at a price of $0.50 per warrant, generating gross proceeds of $600,000.

million of the net proceeds from the initial public offering (including the over-allotment) and the private placements with Symphony

were deposited in a trust account established for the benefit of our public stockholders.

units began trading on August 16, 2018 on the Nasdaq Capital Market under the symbol TKKSU.

Commencing on September 12, 2018,

the securities comprising the units began separate trading.

The units, ordinary shares and warrants are trading on the Nasdaq

Capital Market under the symbols “TKKSU,”

“TKKSC”

and “TKKSW,”

respectively.

a Business Combination

are not presently engaged in, and we will not engage in, any substantive commercial business until our initial business combination.

We intend to utilize cash derived from the proceeds of our initial public offering and the private placement of private warrants,

our share capital, debt or a combination of these in effecting a business combination.

Although substantially all of the net proceeds

of our initial public offering and the private placement of private warrants are intended to be applied generally toward effecting

a business combination as described in this report, the proceeds are not otherwise being designated for any more specific purposes.

A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital

but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences

of undertaking a public offering itself.

These include time delays, significant expense, loss of voting control and compliance

with various Federal and state securities laws.

In the alternative, we may seek to consummate a business combination with a company

that may be financially unstable or in its early stages of development or growth.

While we may seek to effect simultaneous business

combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect

only a single business combination.

of Target Businesses

anticipate that target business candidates will continue to be brought to our attention from various unaffiliated sources, including

investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members

of the financial community.

Target businesses may be brought to our attention by such unaffiliated sources as a result of being

solicited by us through calls or mailings.

These sources may also introduce us to target businesses they think we may be interested

in on an unsolicited basis, since many of these sources will have read our public filings and know what types of businesses we

are targeting.

Our officers and directors, as well as their respective affiliates, may also bring to our attention target business

candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions

they may have, as well as attending trade shows or conventions.

In no event, however, will any of our existing officers, directors,

special advisors or initial shareholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting

fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination

(regardless of the type of transaction) other than the $15,000 per month administrative services fee, the repayment of any loans

from our sponsor, officers and directors for working capital purposes and reimbursement of any out-of-pocket expenses.

to enter into a business combination with a target business that is affiliated with our officers, directors or initial shareholders,

we will do so only if we have obtained an opinion from an independent investment banking firm or another independent entity that

commonly renders valuation opinions that the business combination is fair to our unaffiliated shareholders from a financial point

However, as of the date of this report, there is no affiliated entity that we consider a business combination target.

of a Target Business and Structuring of a Business Combination

to the limitations that a target business have a fair market value of at least 80% of the balance in the trust account at the

time of the execution of a definitive agreement for our initial business combination, as described above in more detail, our management

has virtually unrestricted flexibility in identifying and selecting a prospective target business.

In evaluating a prospective

target business, our management may consider a variety of factors in addition to those listed in the sections titled “Business

Strategies”

and “Acquisition Criteria,”

above, including one or more of the following:

condition and results of operation;

and skill of management and availability of additional personnel;

requirements;

● competitive

of development of its products, processes or services;

of current or potential market acceptance of the products, processes or services;

● proprietary

features and degree of intellectual property or other protection for its products, processes or services;

environment of the industry;

associated with effecting the business combination.

believe such factors will be important in evaluating prospective target businesses, regardless of the location or industry in

which such target business operates.

However, this list is not intended to be exhaustive.

Furthermore, we may decide to enter

into a business combination with a target business that does not meet these criteria and guidelines.

evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors

as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business

In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass,

among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other

information which is made available to us.

This due diligence review will be conducted either by our management or by unaffiliated

third parties we may engage, although we have no current intention to engage any such third parties.

time and costs required to select and evaluate a target business and to structure and complete the business combination cannot

presently be ascertained with any degree of certainty.

Any costs incurred with respect to the identification and evaluation of

a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce

the amount of capital available to otherwise complete a business combination.

structures to comply with regulations in certain Chinese industries

may need to adopt alternative structures in the event that we elect to acquire a target company in certain Chinese industries.

The Chinese government has restricted or limited direct foreign ownership of certain kinds of assets and companies operating in

a wide variety of industries, including certain aspects of telecommunications, advertising, food production, and heavy equipment

manufacturers.

The Chinese government may apply these restrictions in other industries in the future.

In addition, there can be

restrictions on the foreign ownership of businesses that are determined from time to time to be in “important industries”

that may affect the national economic security or having “famous Chinese brand names”

or “well established Chinese

brand names.”

Subject to the review requirements of the Ministry of Commerce and other relevant agencies as discussed elsewhere

for acquisitions of assets and companies in China and subject to the various percentage ownership limitations that exist from

time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries

may nonetheless sometimes be consummated using contractual arrangements with permitted Chinese parties which could, for example,

result in a structure where, in exchange for our payment of the acquisition consideration, the target business would be majority

or wholly owned by Chinese residents whom we designate, and the target business would continue to hold the requisite licenses

necessary to operate its business.

To the extent such agreements are employed, they may be for control of specific assets such

as intellectual property or control of blocks of the equity ownership interests of a company.

The agreements would be designed

to secure for us economic benefits and to assume risk of losses and control over the subject assets or equity interests similar

to the rights of full ownership, while leaving the technical ownership in the hands of Chinese parties.

example, these contracts could result in a structure where, in exchange for our payment of the acquisition consideration:

the target company would be majority owned by Chinese residents whom would be likely designated by us and the target company would

continue to hold the requisite licenses for the target business and (ii) we would establish a new subsidiary in China which would

provide technology, technical support, consulting and related services to the target company in exchange for fees, which would

transfer to us substantially all of the economic benefits of ownership of the target company.

contractual arrangements would be designed to provide the following:

exercise of effective control over the target company;

assumption of the economic benefits and risk of losses of the target company that are substantially similar to full ownership;

receipt of a pledged interest in all of the issued and outstanding interests of the target company, including the right to vote

such shares, as security for the performance of the target company’s obligations under the contractual arrangements;

receipt of an irrevocable proxy for the maximum period permitted by law, to vote the shareholders’

shares in the target

company in such manner and for or against such proposals as we may determine;

receipt of an exclusive option to purchase all or part of the equity interests in the target company owned by the Chinese residents

whom we designate, or all or part of the assets of the target company, in each case when and to the extent permitted by Chinese

we cannot predict the terms of any such contract that we will be able to negotiate, at a minimum, any contractual arrangement

would need to provide us with effective control over the target’s operations and management either directly through board

control or through affirmative and/or negative covenants and veto rights with respect to matters such as entry into material agreements,

management changes and issuance of debt or equity securities, among other potential control provisions.

We have not, however,

established specific provisions which must be in an agreement in order to meet the definition of business combination.

agreements likely also would provide for increased ownership or full ownership and control by us when and if permitted under Chinese

law and regulation.

If we choose to effect our initial business combination that employs the use of these types of control arrangements,

we may have difficulty in enforcing our rights.

Therefore, these contractual arrangements may not be as effective in providing

us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership through

a merger or shares exchange.

For example, if the target business or any other entity fails to perform its obligations under these

contractual arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements,

and rely on legal remedies under Chinese law, including seeking specific performance or injunctive relief, and claiming damages,

which we cannot assure you will be sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect

to receive from the business combination.

we believe under such contractual arrangement, we will be considered the primary beneficiary and be able to consolidate financial

results of the target company in our consolidated financial statements.

In the event that in the future generally accepted accounting

policies in the United States and the SEC accounting regulations change and we are deemed not to be the primary beneficiary by

controlling the target company through such contractual arrangement, we would not be able to consolidate line by line the target

company’s financial results in our consolidated financial statements.

we expect that the contractual arrangements upon which we would be relying would be governed by Chinese law and would be the only

basis of providing resolution of disputes which may arise through either arbitration or litigation in China.

Accordingly, these

contracts would be interpreted in accordance with Chinese law and any disputes would be resolved in accordance with Chinese legal

Uncertainties in the Chinese legal system could limit our ability to enforce these contractual arrangements.

event we are unable to enforce these contractual arrangements, we may not be able to exert the effective level of control over

the target business.

have not selected any target business on which to concentrate our search for our initial business combination and we are, therefore,

unable to determine at this time what form an acquisition of a target business will take.

Market Value of Target Business

to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to

at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial

business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust

account balance.

We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets

of the target business or businesses.

We may, however, structure a business combination where we merge directly with the target

business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives

of the target management team or shareholders or for other reasons, but we will only complete such business combination if the

post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires

a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment

Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our shareholders

prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations

ascribed to the target and us in the business combination transaction.

For example, we could pursue a transaction in which we

issue a substantial number of new shares in exchange for all of the outstanding capital of a target.

In this case, we could acquire

a 100% controlling interest in the target.

However, as a result of the issuance of a substantial number of new shares, our shareholders

immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent

to our initial business combination.

If less than 100% of the equity interests or assets of a target business or businesses are

owned or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is

what will be valued for purposes of the 80% of net assets test.

In order to consummate such an acquisition, we may issue a significant

amount of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private

offering of debt or equity securities.

Since we have no specific business combination under consideration, we have not entered

into any such fund raising arrangement and have no current intention of doing so.

The fair market value of the target will be

determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual

and potential sales, earnings, cash flow and/or book value).

If our board is not able to independently determine that the target

business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm,

or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria.

are not required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly

renders valuation opinions, as to the fair market value if our board of directors independently determines that the target business

complies with the 80% threshold.

Nasdaq delists our securities from trading on its exchange, we would not be required to satisfy the fair market value requirement

described above and could complete a business combination with a target business having a fair market value substantially below

80% of the balance in the trust account.

of Business Diversification

business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at

the time of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating

businesses at the same time.

Therefore, at least initially, the prospects for our success may be entirely dependent upon the future

performance of a single business.

Unlike other entities which may have the resources to complete several business combinations

of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the

resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses.

By consummating

a business combination with only a single entity, our lack of diversification may:

us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon

the particular industry in which we may operate subsequent to a business combination, and

in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited

number of products, processes or services.

we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for

each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,

which may make it more difficult for us, and delay our ability, to complete the business combination.

With multiple acquisitions,

we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and

due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation

of the operations and services or products of the acquired companies in a single operating business.

Ability to Evaluate the Target Business’

we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business

combination, we cannot assure you that our assessment of the target business’

management will prove to be correct.

we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public

Furthermore, the future role of our officers and directors, if any, in the target business following a business combination

cannot presently be stated with any certainty.

While it is possible that some of our key personnel will remain associated in senior

management or advisory positions with us following a business combination, it is unlikely that they will devote their full time

efforts to our affairs subsequent to a business combination.

Moreover, they would only be able to remain with the company after

the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with

the business combination.

Such negotiations would take place simultaneously with the negotiation of the business combination and

could provide for them to receive compensation in the form of cash payments and/or our securities for services they would render

to the company after the consummation of the business combination.

While the personal and financial interests of our key personnel

may influence their motivation in identifying and selecting a target business, their ability to remain with the company after

the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed

with any potential business combination.

Additionally, our officers and directors may not have significant experience or knowledge

relating to the operations of the particular target business.

a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.

We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do

recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

May Not Have the Ability to Approve an Initial Business Combination

connection with any proposed business combination, we will either (1) seek shareholder approval of our initial business combination

at a meeting called for such purpose at which public shareholders may seek to convert their public shares, regardless of whether

they vote for or against the proposed business combination, into their pro rata share of the aggregate amount

then on deposit in the trust account (net of taxes payable) or (2) provide our public shareholders with the opportunity to sell

their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to

their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in

each case subject to the limitations described herein.

Notwithstanding the foregoing, our initial shareholders have agreed, pursuant

to written letter agreements with us, not to convert any public shares held by them into their pro rata share

of the aggregate amount then on deposit in the trust account.

If we determine to engage in a tender offer, such tender offer will

be structured so that each shareholder may tender any or all of his, her or its public shares rather than some pro rata portion

of his, her or its shares.

The decision as to whether we will seek shareholder approval of a proposed business combination or

will allow shareholders to sell their shares to us in a tender offer will be made by us based on a variety of factors such as

the timing of the transaction, whether the terms of the transaction would otherwise require us to seek shareholder approval or

whether we were deemed to be a foreign private issuer (which would require us to conduct a tender offer rather than seeking shareholder

approval under SEC rules).

If we so choose and we are legally permitted to do so, we have the flexibility to avoid a shareholder

vote and allow our shareholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate

issuer tender offers.

In that case, we will file tender offer documents with the SEC which will contain substantially the same

financial and other information about the initial business combination as is required under the SEC’s proxy rules.

consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation

and, solely if we seek shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor

of the business combination.

chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under

the Securities Act.

However, if we seek to consummate an initial business combination with a target business that imposes any

type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon

consummation of such initial business combination, our net tangible asset threshold may limit our ability to consummate such initial

business combination (as we may be required to have a lesser number of shares converted or sold to us) and may force us to seek

third party financing which may not be available on terms acceptable to us or at all.

As a result, we may not be able to consummate

such initial business combination and we may not be able to locate another suitable target within the applicable time period,

Public shareholders may therefore have to wait until February 20, 2020 (or June 20, 2020 if we extend the period of

time to consummate a business combination through issuance of the potential extension warrants, as described in more detail herein)

in order to be able to receive a pro rata share of the trust account.

initial shareholders and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of any

proposed business combination, (2) not to convert any ordinary shares in connection with a shareholder vote to approve a proposed

initial business combination and (3) not sell any ordinary shares in any tender in connection with a proposed initial business

As a result, if we sought shareholder approval of a proposed transaction, we would need only 9,275,001 of our public

shares (or approximately 37.1% of our public shares) to be voted in favor of the transaction in order to have such transaction

approved (assuming the 200,000 shares issued to the representative of the underwriters upon the consummation of our initial public

offering are voted in favor of the transaction).

of our officers, directors, initial shareholders or their affiliates has indicated any intention to purchase units or ordinary

shares in the open market or in private transactions.

However, if we hold a meeting to approve a proposed business combination

and a significant number of shareholders vote, or indicate an intention to vote, against such proposed business combination, our

officers, directors, initial shareholders or their affiliates could make such purchases in the open market or in private transactions

in order to influence the vote.

Notwithstanding the foregoing, our officers, directors, initial shareholders and their affiliates

will not make purchases of ordinary shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which

are rules designed to stop potential manipulation of a company’s stock.

to Extend Time to Complete Business Combination

have until February 20, 2020 to consummate our initial business combination.

However, if we anticipate that we may not be able

to consummate our initial business combination by February 20, 2020, we may, by resolution of our board of directors, extend the

period of time to consummate a business combination for no more than four (4) months as set out below.

Pursuant to the terms of

our amended and restated memorandum and articles of association and the trust agreement entered into between us and Continental

Stock Transfer & Trust Company on August 15, 2018, in order for the time available for us to consummate our initial business

combination to be extended, we must issue to holders of our public shares by way of a dividend one warrant to purchase one half

of an ordinary share for an aggregate of up to 25,000,000 potential extension warrants.

Each potential extension warrant would

be identical to the warrants included in the units sold in our initial public offering.

In the event that we extend the period

to consummate our initial business combination by issuing the potential extension warrants referenced above, we will issue a press

release announcing such intention at least one month prior to our February 20, 2020 deadline.

This press release will indicate

(i) that the record date to establish the holders of record entitled to receive the dividend of potential extension warrants will

be February 20, 2020 and (ii) the payment date of such dividend.

Alternatively, pursuant to the terms of our amended and restated

memorandum and articles of association and the trust agreement entered into between us and Continental Stock Transfer & Trust

Company on August 15, 2018, we may extend the period of time to consummate a business combination by obtaining shareholder approval,

in which case we will afford public shareholders an opportunity to redeem their public shares.

If we extend the period of time

to consummate a business combination by obtaining shareholder approval, we will not issue the potential extension warrants discussed

In either case, we are not obligated to extend the time for us to complete our initial business combination.

Conversion/Tender

any meeting called to approve an initial business combination, public shareholders may seek to convert their public shares, regardless

of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate

amount then on deposit in the trust account, less any taxes then due but not yet paid.

Notwithstanding the foregoing, our initial

shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro

rata share of the aggregate amount then on deposit in the trust account.

The conversion rights will be effected under

our amended and restated memorandum and articles of association and Cayman Islands law as redemptions.

If we hold a meeting to

approve an initial business combination, a holder will always have the ability to vote against a proposed business combination

and not seek conversion of his shares.

Alternatively,

if we engage in a tender offer, each public shareholder will be provided the opportunity to sell his public shares to us in such

tender offer.

The tender offer rules require us to hold the tender offer open for at least 20 business days.

Accordingly, this

is the minimum amount of time we would need to provide holders to determine whether they want to sell their public shares to us

in the tender offer or remain an investor in our company.

initial shareholders, officers and directors will not have conversion rights with respect to any ordinary shares owned by them,

directly or indirectly, whether acquired prior to our initial public offering or purchased by them in the aftermarket.

may also require public shareholders, whether they are a record holder or hold their shares in “street name,”

tender their certificates to our transfer agent or to deliver their shares to the transfer agent electronically using Depository

Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, at any time at or prior to

the vote on the business combination.

Once the shares are converted by the legal holder, and effectively redeemed by us under

Cayman Islands law, the transfer agent will then update our Register of Members to reflect all conversions.

The proxy solicitation

materials that we will furnish to shareholders in connection with the vote for any proposed business combination will indicate

whether we are requiring shareholders to satisfy such delivery requirements.

Accordingly, a shareholder would have from the time

our proxy statement is mailed through the vote on the business combination to deliver his shares if he wishes to seek to exercise

his conversion rights.

Under our amended and restated memorandum and articles of association, we are required to provide at least

10 days’

advance notice of any general meeting, which would be the minimum amount of time a shareholder would have to determine

whether to exercise conversion rights.

As a result, if we require public shareholders who wish to convert their ordinary shares

into the right to receive a pro rata portion of the funds in the trust account to comply with the foregoing delivery

requirements, holders may not have sufficient time to receive the notice and deliver their shares for conversion.

investors may not be able to exercise their conversion rights and may be forced to retain our securities when they otherwise would

is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the

The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not

to pass this cost on to the converting holder.

However, this fee would be incurred regardless of whether or not we require holders

seeking to exercise conversion rights.

The need to deliver shares is a requirement of exercising conversion rights regardless

of the timing of when such delivery must be effectuated.

However, in the event we require shareholders seeking to exercise conversion

rights to deliver their shares prior to the consummation of the proposed business combination and the proposed business combination

is not consummated, this may result in an increased cost to shareholders.

request to convert or tender such shares once made, may be withdrawn at any time up to the vote on the proposed business combination

or expiration of the tender offer.

Furthermore, if a holder of a public share delivered his certificate in connection with an

election of their conversion or tender and subsequently decides prior to the vote on the business combination or the expiration

of the tender offer not to elect to exercise such rights, he may simply request that the transfer agent return the certificate

(physically or electronically).

the initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise

their conversion or tender rights would not be entitled to convert their shares for the applicable pro rata share

of the trust account.

In such case, we will promptly return any shares delivered by public holders.

Liquidation of Trust Account if No Business Combination

we do not complete a business combination by February 20, 2020 (or until June 20, 2020 if we extend the period of time to consummate

a business combination through issuance of the potential extension warrants, as described in more detail herein), it will trigger

our automatic winding up, liquidation and dissolution pursuant to the terms of our amended and restated memorandum and articles

of association.

As a result, this has the same effect as if we had formally gone through a voluntary liquidation procedure under

the Companies Law.

Accordingly, no vote would be required from our shareholders to commence such a voluntary winding up, liquidation

and dissolution.

amount in the trust account (less approximately $2,500 representing the aggregate nominal par value of the shares of our public

shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided

that immediately following the date on which the proposed distribution is proposed to be made, we are able to pay our debts as

they fall due in the ordinary course of business.

If we are forced to liquidate the trust account, we anticipate that we would

distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior to the

distribution date (including any accrued interest, net of taxes payable).

Prior to such distribution, we would be required to

assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision

for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them.

assure you that we will properly assess all claims that may be potentially brought against us.

As such, our shareholders could

potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the

event we enter an insolvent liquidation.

Furthermore, while we will seek to have all vendors and service providers (which would

include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective

target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any

monies held in the trust account, there is no guarantee that they will execute such agreements.

Nor is there any guarantee that,

even if such entities execute such agreements with us, they will not seek recourse against the trust account or that a court would

conclude that such agreements are legally enforceable.

of our initial shareholders, our sponsor and Symphony has agreed to waive its rights to participate in any liquidation of our

trust account or other assets with respect to the insider shares and private warrants and to vote their insider shares in favor

of any dissolution and plan of distribution which we submit to a vote of shareholders.

There will be no distribution from the

trust account with respect to our warrants or rights, which will expire worthless.

They have also waived any right to receive

the potential extension warrants on account of their insider shares.

we are unable to complete an initial business combination and expend all of the net proceeds of our initial public offering, other

than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account.

The amount in the trust account as of December 31, 2018 is approximately $10.08 per public share.

proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would be prior to

the claims of our public shareholders.

Although we will seek to have all vendors, including lenders for money borrowed, prospective

target businesses or other entities we engage execute agreements with us waiving any right, title, interest or claim of any kind

in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will

execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the

trust account, including but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims,

as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with a claim against

our assets, including the funds held in the trust account.

If any third party refused to execute an agreement waiving such claims

to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage

such third party and evaluate if such engagement would be in the best interest of our shareholders if such third party refused

to waive such claims.

Examples of possible instances where we may engage a third party that refused to execute a waiver include

the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly

superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a provider

of required services willing to provide the waiver.

In any event, our management would perform an analysis of the alternatives

available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed

that such third party’s engagement would be significantly more beneficial to us than any alternative.

In addition, there

is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,

any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.

Capital Holding has agreed that, if we liquidate the trust account prior to the consummation of a business combination, it will

be liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services

rendered or contracted for or products sold to us in excess of the net proceeds of our initial public offering not held in the

trust account, but only to the extent necessary to ensure that such debts or obligations do not reduce the amounts in the trust

account and only if such parties have not executed a waiver agreement.

However, we cannot assure you that it will be able to satisfy

those obligations if it is required to do so.

Accordingly, the actual per-share distribution could be less than $10.00 due to

claims of creditors.

Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against

us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included

in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders.

extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders

at least $10.00 per share.

identifying, evaluating and selecting a target business, we may continue to encounter intense competition from other entities

having a business objective similar to ours.

Many of these entities are well established and have extensive experience identifying

and effecting business combinations directly or through affiliates.

Many of these competitors possess greater technical, human

and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these

While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of

our initial public offering, our ability to compete in acquiring certain sizable target businesses may be limited by our available

financial resources.

following also may not be viewed favorably by certain target businesses:

obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent to

shareholders in connection with such business combination may delay or prevent the completion of a transaction;

obligation to convert public shares held by our public shareholders may reduce the resources available to us for a business combination;

may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our securities

following a business combination;

outstanding warrants and rights and the potential future dilution they represent;

obligation to pay EarlyBirdCapital a fee of 3.5% of the gross proceeds of our initial public offering upon consummation of our

initial business combination pursuant to the business combination marketing agreement;

obligation to either repay or issue warrants upon conversion of up to $1,000,000 of working capital loans that may be made to

us by our initial shareholders, officers, directors or their affiliates;

obligation to register the resale of the insider shares, as well as the private warrants (and underlying securities) and any securities

issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital loans;

impact on the target business’

assets as a result of unknown liabilities under the securities laws or otherwise depending

on developments involving us prior to the consummation of a business combination.

of these factors may place us at a competitive disadvantage in successfully negotiating a business combination.

Our management

believes, however, that our status as a public entity and potential access to the United States public equity markets may give

us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business

with significant growth potential on favorable terms.

Furthermore, the fact that we will not be required to pay our underwriters

any deferred compensation upon consummation of an initial business combination may give us a competitive advantage over other

similarly structured blank check companies.

we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the

target business.

We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete

have four executive officers.

These individuals are not obligated to devote any specific number of hours to our matters and intend

to devote only as much time as they deem necessary to our affairs.

The amount of time they will devote in any time period will

vary based on whether a target business has been selected for the business combination and the stage of the business combination

process the company is in.

Accordingly, once management locates a suitable target business to acquire, they will spend more time

investigating such target business and negotiating and processing the business combination (and consequently spend more time to

our affairs) than they would prior to locating a suitable target business.

We presently expect our executive officers to devote

such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while

we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target

business for a business combination).

We do not intend to have any full time employees prior to the consummation of a business

Reporting and Audited Financial Statements

have registered our units, ordinary shares, warrants and rights under the Exchange Act and have reporting obligations, including

the requirement that we file annual, quarterly and current reports with the SEC.

In accordance with the requirements of the Exchange

Act, our annual report will contain financial statements audited and reported on by our independent registered public accountants.

will provide shareholders with audited financial statements of the prospective target business as part of any proxy solicitation

sent to shareholders to assist them in assessing the target business.

In all likelihood, the financial information included in

the proxy solicitation materials will need to be prepared in accordance with U.S.

GAAP or IFRS, depending on the circumstances,

and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB.

The financial

statements may also be required to be prepared in accordance with U.S.

GAAP for the Form 8-K announcing the closing of an initial

business combination, which would need to be filed within four business days thereafter.

We cannot assure you that any particular

target business identified by us as a potential acquisition candidate will have the necessary financial information.

To the extent

that this requirement cannot be met, we may not be able to acquire the proposed target business.

will be required to comply with the internal control requirements of the Sarbanes-Oxley Act beginning for the fiscal year ending

December 31, 2019.

A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy

of their internal controls.

The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley

Act may increase the time and costs necessary to complete any such acquisition.

are an emerging growth company as defined in the JOBS Act and will remain such for up to five years.

However, if our non-convertible

debt issued within a three-year period or our total revenues exceed $1.0 billion or revenues exceed $1.07 billion, or the market

value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter

of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year.

As an emerging growth

company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in

Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

provide advertisement and content production services and operate an award winning mobile and online advertising, digital media

and entertainment business in China.

After launching our CHEERS App in 2018, we are fast becoming one of the leading e-commerce

platforms in China by allowing our users to access our online store (e-Mall), video content, live streaming, and online games.

By leveraging our rich library of original professionally-produced content to drive user engagement, we have created an ecosystem

that attracts and retains a large and growing viewing audience base for our platform.

of February 28, 2020, we have distributed over 86,000 minutes of proprietary video content to our users, including short videos,

online variety shows, online dramas, live streaming, and our lifestyle video series, which achieved more than 7.5 billion views

cumulatively.

the year December 31, 2018 and 2019, downloads of our CHEERS App were approximately 6.2 million and 72.5 million, respectively.

As of December 31, 2018 and 2019, the cumulative number of downloads of the CHEERS App exceeded 12 million and 85 million, respectively

vision is to become a world leading mobile media and entertainment company dedicated to providing people pursuing a better life

with an integrative platform of featuring e-commerce and high quality lifestyle entertainment.

Exchange Agreement

our predecessor, was incorporated on February 5, 2018 as an Cayman Islands exempted company with limited liability.

TKK was formed

for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization

or similar business combination with one or more businesses or entities.

In pursuit of this purpose, on February 14, 2020, TKK

consummated the transaction (the “Business Combination”) contemplated by the Share Exchange Agreement dated as of

September 6, 2019, as amended ( “Share Exchange Agreement”), by and among TKK, Glory Star New Media Group Limited,

a Cayman Islands exempted company (“Glory Star”), Glory Star New Media (Beijing) Technology Co., Ltd., a wholly foreign-owned

enterprise limited liability company (“WFOE”) incorporated in the People’s Republic of China (“PRC”)

and indirectly wholly-owned by Glory Star, Xing Cui Can International Media (Beijing) Co., Ltd., a limited liability company incorporated

in the PRC (“Xing Cui Can”), Horgos Glory Star Media Co., Ltd., a limited liability company incorporated in the PRC

(“Horgos”), each of Glory Star’s shareholders (collectively, the “Sellers”), TKK Symphony Sponsor

1, TKK’s sponsor (the “Sponsor”), in the capacity as the representative from and after the closing of the Business

Combination for TKK’s shareholders other than the Sellers, and Bing Zhang, in the capacity as the representative for the

Sellers thereunder, pursuant to which Glory Star New Media Group Holdings Limited (“GS Holdings”) acquired 100% of

the equity interests of Glory Star from the Sellers.

Upon closing of the

Business Combination (the “Closing”), we acquired all of the issued and outstanding securities of Glory Star in exchange

for (i) approximately 41,204,025 of our ordinary shares (“Closing Payment Shares”), or one ordinary share for approximately

0.04854 outstanding shares of Glory Star, of which 2,060,201 of the Closing Payment Shares (the “Escrow Shares”) shall

be deposited into escrow to secure certain indemnification obligations of the Sellers, plus (ii) earnout payments consisting of

up to an additional 5,000,000 of our ordinary shares if we meet certain financial performance targets for the 2019 fiscal year,

which we believe we have met, and an additional 5,000,000 of our ordinary shares if we meet certain financial performance targets

for the 2020 fiscal year (the “Earnout Shares”).

In the event that a financial performance target is not met for the

2019 fiscal year and/or 2020 fiscal year but we meet certain financial performance targets for the 2019 fiscal year and 2020 fiscal

year combined, the Sellers will be entitled to receive any Earnout Shares that they otherwise did not receive (the “Alternative

Earnout”).

connection with the Share Exchange Agreement:

entered into a Registration Rights Agreement (“Registration Rights Agreement”) with the Sponsor and the Sellers pursuant

to which TKK will grant certain registration rights to the Sellers with respect to the registration of the Closing Payment Shares

and Earnout Shares.

entered into a Lock-Up Agreement (“Lock-Up Agreement”) with certain Sellers that directly or indirectly own in excess

of 10% of Glory Star Group equity prior to the Closing pursuant to which each Seller party thereto agreed that such Seller will

not, during the period from the Closing and ending on the earlier of (i) with respect to 50% of the Closing Payment Shares (including

Escrow Shares) and Earnout Shares (“Restricted Securities”), (x) the six month anniversary of the date of the Closing,

(y) the date on which the Closing sale price of our ordinary shares equals or exceeds $12.50 per share for any 20 trading days

within any 30 trading day period commencing after the Closing, and (z) the date after the Closing on which we consummate a liquidation,

merger, share exchange or other similar transaction with an unaffiliated third party (a “Subsequent Transaction”),

and (ii) with respect to the remaining 50% of the Restricted Securities, (x) the one year anniversary of the date of the Closing

and (y) the date after the Closing on which we consummate a Subsequent Transaction, sell, transfer, assign, pledge, hypothecate

or otherwise dispose of, directly or indirectly, the Restricted Securities, or publicly disclose the intention to do any of the

Each Seller further agreed that the Escrow Shares will continue to be subject to such transfer restrictions until they

are released from the escrow account.

However, each Seller party thereto will be allowed to transfer any of our Restricted Securities

(other than the Escrow Shares while they are held in the escrow account) by gift, will or intestate succession or to any affiliate,

shareholder, members, party or trust beneficiary, provided in each such case that the transferee thereof agrees to be bound by

the restrictions set forth in the applicable Lock-Up Agreement.

entered into a Non-Competition and Non-Solicitation Agreement (“Non-Competition Agreement”) with certain Sellers that

directly or indirectly own in excess of 30% of Glory Star’s equity prior to the Closing (including Glory Star Group’s

chairman) and their principal shareholders (together with the applicable Seller, the “Subject Parties”).

Non-Competition Agreements, for a period of three (3) years after the Closing, each Subject Party and our affiliates will not,

without our prior written consent, anywhere in the PRC or any other markets directly or indirectly engage in which we are engaged,

or are actively contemplating to become engaged, in the Business (as defined below) (or own, manage, finance or control, or become

engaged or serve as an officer, director, employee, member, partner, agent, consultant, advisor or representative of, an entity

that engages in) of online media and entertainment services (collectively, the “Business”).

However, the Subject Parties

and their respective affiliates may own passive investments of no more than 3% of any class of outstanding equity interests in

a competitor that is publicly traded, so long as the Subject Parties and their affiliates and their respective directors, officers,

managers and employees who were involved with the our business, and the immediate family members of the Subject Parties or their

respective affiliates, are not involved in the management or control of such competitor.

Under the Non-Competition Agreements,

during such restricted period, the Subject Parties also will not, without our prior written consent, (i) solicit or hire our employees,

consultants or independent contractors as of the Closing (or during the year prior to the Closing) or otherwise interfere with

our relationships with such persons, (ii) solicit or divert our customers as of the Closing (or during the year prior to the

Closing) relating to the Business or otherwise interfere with our contractual relationships with such persons, or (iii) interfere

with or disrupt any of our vendors, suppliers, distributors, agents or other service providers for a purpose competitive with

us as it relates to the Business.

The Subject Parties will also agree in each Non-Competition Agreement to not disparage us and

to keep confidential and not use our confidential information.

after the Business Combination, our public shareholders own approximately 5.05% of GS Holdings, TKK’s former directors,

officers and initial shareholders, including the Sponsor, and EarlyBirdCapital, Inc.

(“EBC”) own approximately 12.16%

of GS Holdings, and the Sellers own approximately 82.79% of GS Holdings.

giving effect to the Business Combination transaction and the issuance of the Closing Payment Shares described above, there are

49,767,866 of our ordinary shares issued and outstanding.

connection with the Business Combination, TKK initiated a tender offer to purchase for cash up to 25,000,000 of its ordinary shares

at a price of $10.28 per share and a contingent cash payment equal to a pro rata portion of any additional accrued interest remaining

in TKK’s Company’s trust account in excess of $10.28 per share, net to the seller in cash, without interest, less

any applicable withholding taxes (“Tender Offer”).

The Tender Offer was made pursuant to a Schedule TO filed by TKK

with the SEC on October 17, 2019, as amended.

The Tender Offer expired at 5:00 p.m.

New York City time on February 13, 2020.

of the expiration of the Tender Offer, a total of 24,986,159 ordinary shares have been validly tendered and not withdrawn and

at the final price of approximately $10.31 per share, net to the seller in cash.

Upon the expiration of the Tender Offer and the

closing of the Business Combination, the total amount of funds in the TKK’s trust account of $257,863,157 were released

and distributed as follows:

(1) $257,720,393 for the repurchase of 24,986,156 ordinary shares to shareholders who elected tender

their ordinary shares, and (2) $142,764 for the payment of fees and expenses related to the Business Combination.

connection with the Business Combination, on February 14, 2020, we entered into a Business Combination Marketing Agreement Fee

Amendment (“Fee Amendment”) with EBC whereby EBC agreed to amend the fees payable under the Business Combination Marketing

Agreement, dated August 15, 2018, by and between EBC and TKK (“Original Marketing Agreement”).

Under the Original

Marketing Agreement, EBC agreed to assist TKK in connection with TKK’s business combination with one or more businesses

or entities in exchange for a cash fee equal to 3.5% of the gross proceeds received in the IPO.

In addition, TKK agreed to reimburse

EBC for up to $20,000 of its reasonable costs and expenses incurred by it.

Under the Fee Amendment, EBC agreed to reduce its fee

of $8.75 million due under the Original Agreement and forgo reimbursement of expenses in exchange for a convertible promissory

note in the amount of $4.0 million without interest (“EBC Note”).

The EBC Note is for a period of one year and is

convertible, at EBC’s option, into our ordinary shares at the conversion price equal to the volume-weighted average price

of our ordinary shares on Nasdaq or such other securities exchange or securities market on which our ordinary shares are then

listed or quoted, for the ten trading days prior to such conversion date;

provided, however, the conversion price shall not be

less than $5.00 (the “Floor Price”).

The EBC Note automatically converts into our ordinary shares on the maturity

EBC Note includes a covenant that we will use our best efforts to register the shares issuable under the EBC Note pursuant to

a registration statement with the SEC as soon as practicable, and obtain effectiveness of such registration statement with 180

calendar days from the date of the EBC Note (“Effectiveness Deadline”).

In the event such registration statement is

not effective by the Effectiveness Deadline, the Floor Price shall automatically decrease to $4.00, and by one dollar ($1.00)

for every 30-day period thereafter;

provided, however, the Floor Price shall not be less than $1.00.

February 14, 2020, we entered into an amended and restated promissory note with the Sponsor (the “Amended Sponsor Note”)

to (i) extend the maturity date from the closing of the Business Combination to a date that is one year from the closing of the

Business Combination and (ii) increased the principal amount of the note to $1.4 million, which included $300,000 in advances

we received from the Sponsor from November 2019 to January 2020.

In addition, under the Amended Sponsor Note, we granted the Sponsor

the right to convert the $1.4 million Amended Sponsor Note to our ordinary shares at the conversion price equal to the volume-weighted

average price of our ordinary shares on Nasdaq or such other securities exchange or securities market on which our ordinary shares

are then listed or quoted, for the ten trading days prior to such conversion date;

provided, however, the conversion price shall

not be less than $5.00.

The Amended Sponsor Note automatically converts into our ordinary shares on the maturity date.

in 2016, we focused on providing advertisement and content production services and becoming a leading mobile and online advertising,

media and entertainment business in China by creating professionally-produced content featuring lifestyle, culture and fashion.

In 2018, we expanded into e-commerce services by introducing our CHEERS APP which integrated our e-commerce services with professionally-produced

Primary to our vision, we continue to produce, create and add to our rich library of short videos, drama series, and

live streaming, which we own and stream on our mobile app, Internet Protocol Television (IPTV), and online platform, as well as

for distributions and licensing to other medium such as Chinese television stations and third party online streaming platforms

throughout China and the world.

Leveraging the popularity of our professionally-produced content and distribution networks, we

drive viewing audiences to our CHEERS App ecosystem to convert them as users of our online video steaming services and as customers

to our e-Mall and online games.

CHEERS App is our core platform serving millions of users in China.

Most of the users are attracted to download our mobile app

after they watch our professionally-produced content (both long and short videos on various distribution channels) featuring,

lifestyle, culture and fashion.

Central to our business model, the CHEERS App has been developed into a comprehensive content-driven

e-commerce platform in which shoppers can access multiple segments such as online store (e-Mall), live streamings, original short

videos, and online games.

The mobile app users can watch our high-quality video content and shop in our in-app e-Mall.

combination has become a prevalent trend in Chinese e-commerce innovation.

following is a summary of our CHEERS App:

(Online Store).

our brand, large viewing audience, and users of CHEERS App video app, in April 2019, we launched our e-Mall platform where we

offer products to our users through third party merchants that we have screened and approved.

We charge third-party merchants

on our e-Mall platform a service fee and a commission for the sales of their products.

of December 31, 2019, our e-Mall carried over 13,180 Stock Keeping Units (“SKUs”) and recorded over RMB133.76 million

(US$19.36 million) in the volume of merchandise sold through its CHEERS App - gross merchandise value (“GMV”), achieving

an impressive monthly GMV of RMB33.73 million (US$4.82 million) in December 2019, up from only RMB1.3 million (US$0.2 million)

in April 2019.

June, 2018, we launched our first live streaming called Shopping Genius.

We now have 4 live streaming in production including

Shopping Genius, Bargaining Genius, Guessing Game, Unbeatable Lucky Card, each 90 minute segments, where users can interact with

each other and the hosts, obtain discount coupons by participating in our real-time online games and quizzes, and make purchases

in our e-Mall with these discount coupons.

In addition, as requested by some clients, some live streaming are customized in order

to lead the audience to make purchases in the clients’

online stores and/or in other e-commerce platforms such as JD.com

and Taobao.com.

We monetize live streaming by promoting products where our subscribers can purchase products through our e-Mall.

In addition, our e-commerce suppliers and distributors of our e-Mall have the option to enter separate advertising agreements

with us to promote their products in our live streaming.

show promotes various products for sale on e-Mall and provides an opportunity for viewers to participate in question and answer

games for the discount coupons for the promotional products.

show promotes various products for sale on e-Mall and allows viewers to compete with each other for discount coupons for the

promotional products.

is a live game show that allows viewers to win points that go towards discounts for purchase of items in e-Mall.

stream our professionally-produced content on CHEERS App where we generate advertising revenues from traditional pre-video, in-video,

banner advertisements, and pop-up advertisements.

We also generate revenues from soft product placements that are incorporated

into our original video content.

We leverage our deep library of professionally-produced content, large viewing audience base,

and big data analytics capabilities to help our advertisers target their specific demographics in China.

have developed four (4) online games for CHEERS App where players can play the games that we have developed in-house.

online games through users’

in-app purchases of gift packages and game privileges.

In February, 2017, we started

production of our series TV shows, which contain six (6) lifestyle shows including Cheers Food, Cheers Health, Cheers Fashion,

Cheers Baby, Cheers Space and Cheers World, each episodes are 30 minutes in length.

Our series TV shows are unique in the content

creation and production, with trending lifestyle updates filmed both in-studio and outdoors.

We generate revenues from our series

TV shows by licensing to TV stations with exclusive advertising times and charging advertising fees, and by displaying products

of our e-Mall.

We distribute and promote our series TV shows content on a variety of online video platforms, mobile apps, IPTV

and television channels where we generate advertising revenues from traditional pre-video, in-video, and pop-up advertisements.

We also generate revenues from soft product placements that are incorporated into our series TV shows.

We produce and license

our series TV shows for airing on local broadcast, basic cable television networks, and throughout China.

Our shows can be seen

on satellite stations such as Anhui Satellite Television and Shenzhen Satellite Television, which are year-to-year contracts.

The following is a summary of our series TV shows:

TV program features and promotes healthy lifestyle.

TV program features high-end fashion and beauty, and is touted as the fashion bible in the fashion field.

TV program is China’s only leading short tourism program that brings together the world’s best tourism destinations,

sharing travel experiences from unique perspectives of the visitors and the cultural scene of the destinations.

fully recommended by the cultural centers or consulates of foreign embassies in China and has close ties and cooperation with

embassies in many countries around the world.

TV program is hosted by Cao Ying, who shares the parenting experience of parents in the form of question and answer format,

and in-depth interviews.

This is one of few programs of this type in China.

TV programs centers around food and the stories between people and food from various perspectives.

Since the launch of Shenzhen

Satellite TV, our average ranking has remained stable within the top 8 in China.

regular weekly programs focus on home décor and interior design.

& Variety Shows

have partnered with third parties to produce and license original online drama and variety show series for distribution on online

video platforms.

We currently developed the following drama series and variety shows:

Greatest Hero

TV series My Greatest Hero explores the lives of a high school tennis team.

This program is in partnership with iQIYI

and has become one of the most popular youth TV series amongst young people.

variety show was developed in 2018 as a “light-variety”

2019, we developed season 2 of this variety show.

It is currently one of the most popular variety shows in China.

on the contract with our partners, we can either share revenues generated by the number of viewers, or share advertising revenues

generated by the contents.

distribute and promote our professionally-produced contents on CHEERS App and on a variety of online video platforms, mobile apps,

IPTV and television channels where we generate advertising revenues from traditional pre-video, in-video, and pop-up advertisements.

We also generate revenues from soft product placements that are incorporated into our original video content, including our online

short videos.

In addition, our e-Mall suppliers and distributors have the option to enter into separate advertising agreements

for displaying their products in our live streamings.

All items displayed in the live streamings can be purchased in e-Mall.

leverage our deep library of professionally-produced content, wide distribution channel, and big data analytics capabilities to

help our advertisers target their specific demographics in China.

provide brand advertising services to third-party advertising agencies by producing variety shows, short videos, and live streaming

according to customers’

needs for a fee.

We also provide planning, shooting, and post-production services for a fee.

Licensing and Distribution

time to time we may also acquire rights to rebroadcast and/or distribute third-party film and television drama.

of e-commerce in China

growing e-commerce market scale, as well as the population of online shoppers in China, have built a solid industry outlook for

emerging e-commerce platforms.

In an October 2019 market research study that we commissioned, Market Overview of Content-Driven

E-commerce Platform in China , iResearch Consulting reported that the total e-commerce market sales in China has reached RMB15,242

billion in 2018, with a compound annual growth rate (CAGR) of 17.6% from 2014 to 2018.

The e-commerce sales in China grows faster

than that of total retail sales of consumer goods in China, which has a CAGR of 8.8% from 2014 to 2018.

National Bureau of Statistics, iResearch

population of online shoppers has reached 610 million in 2018, of which 97% are also mobile shoppers, according to iResearch.

The total population of online shoppers in China is expected to reach 900 million by 2021, at a CAGR of 13.8%.

CNNIC, iResearch

of online video users

development of high-speed internet network and the growing popularity of short video platforms have fueled the growth of online

video viewership.

According to iResearch report, the population of online video users in China has reached 0.59 billion by the

end of 2018, with a CAGR of 17% from 2014 to 2018.

Online video users take up 69% of total internet users by the end of 2018,

while it was only 47% by the end of 2014.

CNNIC, iResearch

content-driven e-commerce platforms

the rapid growth of e-commerce market and online video users, many e-commerce platforms started to leverage video content in assisting

the customer acquisition of their e-commerce platforms.

video content-driven e-commerce platform refers to an e-commerce platform with promotional and advertising video content that

encourage or incentivize customers in making purchase on our e-commerce platform.

The video content adopted by most platforms

are live streaming shows and short videos.

video content-driven e-commerce platform can be PGC, UGC, or PUGC content-driven, depending on who produces the content:

refers to Professional Generated Content, which relies on professional video producers and is normally more costly to produce.

However, it also has the highest commercial value for our attention to details and consistent quality;

refers to User Generated Content, which features contents produced by the general public;

refers to Professional User Generated Content, which is the combination of PGC and UGC.

video content-driven e-commerce platform can usually monetize video content through following means:

● Advertising

revenue for in-video product placement, start screen ads, in-app banner ads, and other forms of advertisements;

revenue from video producers and live streamers on the platform when transactions are completed and settled;

e-commerce sales of commodities on the platform.

PGC video content-driven e-commerce platform

proprietary PGC video content-driven e-commerce platform is a segment of content-driven e-commerce platform, with in-house professional

video production and proprietary e-commerce platform.

When compared with other video content-driven e-commerce platforms, a proprietary

PGC video content-driven e-commerce platform usually have larger advantage in maintaining high-quality content production with

dedicated professional production team.

proprietary PGC video content-driven e-commerce platform industry is still at an early stage of development with high growth rate

but limited qualified market participants.

However, many e-commerce platforms have or are planning on developing video content

on their platforms in 2019.

to iResearch report, the market scale of proprietary PGC video content-driven e-commerce platforms in terms of GMV is approximately

RMB2.6 billion in 2018, with a CAGR of 191.5% from 2016 to 2018.

The market is expected to grow at a CAGR of 47.6% to RMB19.5

billion in 2023.

successful factors for video content-driven E-commerce platforms

of commodities:

A platform must be careful and thoughtful in selecting commodities with high popularity and reasonable profit

margin to keep customers attracted.

● Sustainable

high-quality video content:

A platform must be able to sustain consistent video content quality and avoid publishing any video

that may result in negative publicity, or even regulatory punishment.

customer inflow:

A platform must secure a solid channel for customer acquisition and to keep all customer activities within a

proprietary ecosystem in order to minimize customer loss.

to iResearch report, we are amongst the top 5 video content-driven e-commerce platforms in China in terms of monthly GMV in August

competitors include Alibaba (Nasdaq:

BABA), Pin Duoduo (Nasdaq:

PDD), Douyu (Nasdaq:

DOYU), Qu Toutiao (Nasdaq:

Media (SZ.300413), and TVZone Media (SH.603721) for users, shoppers, and advertising customers.

We also compete with other

internet media and entertainment services, such as internet and social platforms that offer content in emerging and

innovative media formats, as well as major TV stations.

of December 31, 2019, we had 173 full time employees.

We have entered into written employment contracts with all of our employees

in accordance with PRC Labor Law and Contract Law.

None of our employees is covered by collective bargaining contracts.

that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes or

any difficulty in recruiting staff for our operations.

required by PRC regulations, we participate in various government statutory social security plans, including a pension contribution

plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan

and a housing provident fund.

We are required under PRC law to contribute to social security plans at specified percentages of

the salaries, bonuses and certain allowances of our employees up to a maximum amount specified by the local government from time

An employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the

required contributions within a stipulated deadline and be subject to a late fee.

success depends largely on our ability to protect our core technology and intellectual property.

To accomplish this, we rely on

our trade secrets, including know-how, confidentiality clauses in standard labor agreements and third party nondisclosure agreements,

copyright laws, trademarks, intellectual property licenses and other contractual rights to establish and protect our proprietary

rights in our technology.

We currently do not own any patents and do not have any pending patent applications.

of December 31, 2019, we owned 45 registered trademarks and 16 trademark registration applications in the PRC, and 4 registered

trademark applications in Hong Kong.

In addition, as of December 31, 2019, we have 31 registered copyrights in the PRC (including

copyrights with respect to 28 software products developed by it relating to various aspects of our operations and 3 copyright

The software and registered works are crucial to our business.

time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.

However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to

time that may harm our business.

To the best knowledge of management, there are no material legal proceedings pending against

are no proceedings in which any of our directors, officers, or any beneficial shareholder of more than five percent (5%) of our

voting securities is an adverse party or has a material interest adverse to us.

from fluctuations in the level of advertising spending resulting from changes in the overall economic and market conditions in

China, our revenues are affected by seasonal fluctuations in business and consumer spending that also affect the level of advertising

spending over time in China.

Our quarterly operating results have fluctuated in the past and may continue to fluctuate depending

upon a number of factors, many of which are out of our control.

Our operating results tend to be seasonal.

As a result, detailed

attention shall be paid when comparing our operating results on a period-to-period basis.

For example, online user numbers tend

to be higher during holidays and end of the year, and advertising revenues tend to be higher at the end of the year.

do not maintain any property insurance policies covering equipment and facilities for losses due to fire, earthquake, flood or

any other disaster.

Consistent with customary industry practice in China, we do not maintain business interruption insurance or

key employee insurance for our executive officers.

Uninsured damage to any of our equipment or buildings or a significant product

liability claim could have a material adverse effect on our results of operations.

and Development

We were incorporated as

an exempted company under the laws of the Cayman Islands on February 5, 2018 under the name TKK Symphony Acquisition Corporation.

In connection with the Share Exchange Agreement, we changed our name from “TKK Symphony Acquisition Corporation”

“Glory Star New Media Group Holdings Ltd”(“GS Holdings”).

As a result of the Business Combination, all

of our business operations are conducted through our subsidiaries and our VIEs.

following is a brief description of each of our subsidiaries and VIEs:

Glory Star New Media Group Limited (“Glory Star”) is

a limited company incorporated on November 30, 2018, under the laws of the Cayman Islands.

Glory Star is authorized to issue 5,000,000

ordinary shares of which 2,000,000 ordinary shares are issued and outstanding.

Glory Star is wholly owned by GS Holdings.

Glory Star New Media Group HK Limited (“Glory Star HK”) is a limited company incorporated on December

18, 2018, under the Companies Ordinance of Hong Kong.

The total amount of share capital of Glory Star HK is HKD 1.00 with one

(1) authorized share.

Glory Star HK is wholly owned by Glory Star.

Glory Star New Media (Beijing) Technology Co., Ltd.

(“WFOE”) is a wholly foreign-owned enterprise established by Glory

Star HK on March 13, 2019.

WFOE has been issued a business license (No.

91110113MA01HN7N6P) by the Beijing Administration for

Industry and Commerce Shunyi District Bureau on April 4, 2019.

Xing Cui Can International Media (Beijing) Co., Ltd.

(“Xing Cui Can”) is a limited liability company

incorporated under laws of PRC on September 7, 2016, and the current shareholders are:

Bing Zhang, Jia Lu, Ran Zhang, Yixing He,

Ronghui Zhang, Hui Lin, Hui Jin, Hanying Li, Yinghao Zhang, and Jiancong Xiao, all of whom are PRC residents.

Xing Cui Can currently

holds a business license issued by Beijing Administration for Industry and Commerce Chaoyang District Bureau.

Through a series

of contractual agreements, WFOE is deemed to control Xing Cui Can and have rights to consolidate all of Xing Cui Can’s audited

financial results.

Horgos Glory Star Media Co., Ltd.

(“Horgos”) is a limited liability company incorporated under laws of PRC on November

The current shareholders are Xing Cui Can, Bing Zhang, Jia Lu, Ran Zhang, Yixing He, Ronghui Zhang, Hui Lin, Hui Jin,

Hanying Li, Yinghao Zhang and Everest Venture Capital Investment Co., Ltd.

(“Everest”).

Horgos currently holds a business

license issued by Horgos Market Supervisory Authority.

Xianhong Liang and Jiancong Xiao are the beneficial owners of Horgos through

Through a series of contractual agreements, WFOE is deemed to control Horgos and have rights to consolidate all of Horgos’s

audited financial results.

to the incorporation of Glory Star, on August 31, 2017 (the “Acquisition Date”), Horgos completed the acquisition

of 100% of the equity interest of Leshare Star (Beijing) Technology Co., Ltd.

(“Beijing Leshare”), a company incorporated

in the PRC, which is mainly engaged in internet advertising activities and owns a copyright of “Fashion Star Short Video

App Leshare Software.”

Horgos purchased all 100% equity interest of Beijing Leshare from six individual shareholders with

a consideration of $0.

Prior to the acquisition, Mr.

Bing Zhang was the chief operation officer of Horgos and had a 65% equity

interest in Beijing Leshare, hence the acquisition was deemed as a related party transaction.

Beijing Leshare’s assets and

liabilities were recorded at their carrying values as of the Acquisition Date, and the results of operations of Beijing Leshare

are consolidated with the results of operations of Glory Star Group, starting on August 31, 2017.

addition, on October 26, 2018, Messrs.

Bing Zhang, Ran Zhang and Jia Lu, management of Horgos, acquired 51% of the equity interest

from Lead Eastern Investment Co., Ltd.

(“Dangdai Dongfang”) in a management buy-out for RMB39.4 million ($6.0 million)

based on the then net asset value of Horgos (“MBO”).

Prior to the MBO, Dangdai Dongfang was the largest shareholder

of Horgos, and wanted Horgos to focus on traditional advertising and the production of content for the cable TV networks, the

business of Horgos at that time.

However, the management of Horgos wanted to expand and transform Horgos into an online media

and e-commerce company which is what the Glory Star Group is today.

However, at that time, Dangdai Dongfang did not wish to make

the additional investments into Horgos’

new business and was in fact looking to liquidate its holdings in Horgos.

Immediately following the closing of the MBO, Dangdai Dongfang ceased to be a shareholder

of Horgos and Mr.

Bing Zhang, directly and indirectly through Xing Cui Can, became the controlling shareholders of Horgos, holding

72.58% of the equity interest in Horgos.

principal executive offices are located at 22F, Xinhua Technology Building, No.

8 Tuofangying Road, Jiangtai District, Chaoyang

District, Beijing.

Star New Media Group Holdings Limited is a Cayman Islands holding company and conducts our operations in China through our PRC

subsidiaries and VIEs.

Through our Hong Kong subsidiary Glory Star HK, we own a direct equity interest in WFOE, our wholly-owned

PRC subsidiary.

WFOE has entered into a series of contractual arrangements with (i) Xing Cui Can and our shareholders, and (ii)

Horgos and our shareholders, which allows us to exercise effective control over Xing Cui Can and Horgos and receive substantially

all the economic benefit of Xing Cui Can and Horgos.

Any failure by the VIEs or their respective shareholders to perform their

obligations under these contractual arrangements, and any failure by us to maintain effective control over Xing Cui Can and Horgos,

would result in our inability to continue to consolidate our VIEs’

financial results of operations in our financial results

of operations and would have a material adverse effect on our business.

following diagram illustrates our corporate structure.

Unless otherwise indicated, equity interests depicted in this diagram are

The relationships between WFOE and Xing Cui Can, and WFOE and Horgos as illustrated in this diagram are governed by

the VIE Contracts and do not constitute equity ownership.

Arrangements among WFOE, the VIEs and the VIEs Shareholders

PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in

value-added telecommunication services, and certain other business.

Glory Star HK is a company registered in Hong Kong.

is considered a foreign-invested enterprise.

To comply with PRC laws and regulations, we primarily conduct our business in

China through the VIE’s based on the VIE Contracts.

As a result of VIE Contracts, Glory Star HK exerts control over

Glory Star’s consolidated affiliated entities in the PRC and consolidates their operating results in our financial

statements under U.S.

The following is a summary of the VIE Contracts that provide us with effective control of the

VIEs and that enables it to receive substantially all of the economic benefit from our operations.

that give us effective control of the VIEs

Cooperation Agreement .

WFOE entered into separate business cooperation agreements with Xing Cui Can and Horgos, and their

respective shareholders in September 2019, pursuant to which (1) each VIE shall not enter into any transaction which may materially

affect such VIE’s assets, obligations, rights and operations without the written consent of WFOE;

(2) each VIE and the VIE

shareholders agree to accept suggestions by WFOE in respect of the employment and dismissal of such VIE’s employees, daily

operations, dividend distribution and financial management of such VIE;

and (3) the VIE and the VIE shareholders shall only appoint

individuals designated by WFOE as the director, general manager, chief financial officer and other senior management members.

In addition, each of the VIE shareholders agree that (i) unless required by WFOE, will not make any decisions or otherwise request

the VIE to distribute any profits, funds, assets or property to the VIE shareholders, or (ii) issue any dividends or other distribution

with respect to the shares of the VIE held by the VIE shareholders.

The term of each business cooperation agreement is perpetual

unless terminated by WFOE upon thirty (30) days advance notice, or upon the transfer of all shares of the respective VIEs to WFOE

(or our designee).

Option Agreement .

WFOE entered into separate exclusive option agreements with Xing Cui Can and Horgos, and their respective

shareholders in September 2019.

Pursuant to these exclusive option agreements, the VIE shareholders have granted WFOE (or our

designee) an option to acquire all or a portion of each of their equity interests in the VIEs at the price equivalent to the lowest

price then permitted under PRC law.

If the equity interests are transferred in installments, the purchase price for each installment

shall be pro rata to the equity interests transferred.

WFOE may, at our sole discretion, at any time exercise the option granted

by the VIE shareholders.

Moreover, WFOE may transfer such option to any third party.

The VIE shareholders may not, among other

obligations, change or amend the articles of association and bylaws of the VIE, increase or decrease the registered capital of

the VIEs, sell, transfer, mortgage or dispose of their equity interest in any way, or incur, inherit, guarantee or assume any

debt except for debts incurred in the ordinary course of business unless otherwise expressly agreed to by WFOE, and enter into

any material contracts except in the ordinary course of business unless otherwise expressly agreed to by WFOE.

The term of each

of these exclusive option agreements is 10 years and will be extended automatically for successive 5 year terms except where WFOE

provides prior written notice otherwise.

The exclusive option agreements may be terminated by WFOE upon thirty (30) days advance

notice, or upon the transfer of all shares of the respective VIEs to WFOE (or our designee).

Pledge Agreement .

WFOE entered into separate share pledge agreements with Xing Cui Can and Horgos, and their respective shareholders

in September 2019.

Pursuant to these share pledge agreements, the VIE shareholders have pledged all of their equity interests

in the VIEs as priority security interest in favor of WFOE to secure the performance of the VIEs and their shareholders’

performance of their obligations under, where applicable, (i) the Master Exclusive Service Agreement, (ii) the Business Cooperation

Agreement, and (iii) the Exclusive Option Agreements (collectively the “Principal Agreements”).

WFOE is entitled to

exercise our right to dispose of the VIE shareholders’

pledged interests in the equity of the VIE in the event that either

the VIE shareholders or the VIE fails to perform their respective obligations under the Principal Agreements.

The equity pledge

agreements will remain in full force and remain effective until the VIE and the VIE shareholders have satisfied their obligations

under the Principal Agreements.

Agreements and Powers of Attorney .

WFOE entered into separate Proxy Agreements and Powers of Attorney with Xing Cui Can and

Horgos, and their respective shareholders in September 2019.

Pursuant to the proxy agreements and powers of attorney, each VIE

shareholder irrevocably nominates and appoints WFOE or any natural person designated by WFOE as our attorney-in-fact to exercise

all rights of such VIE equity holder in such VIE, including, but not limited to, (i) execute and deliver any and all written decisions

and to sign any minutes of meetings of the board or shareholder of the VIE, (ii) make shareholder’s decisions on any matters

of the VIE, including without limitation, the sale, transfer, mortgage, pledge or disposal of any or all of the assets of the

VIE, (iii) sell, transfer, pledge or dispose of any or all shares in the VIE, (iv) nominate, appoint, or remove the directors,

supervisors and senior management members of the VIE when necessary, (v) oversee the business performance of the VIE, (vi) have

full access to the financial information of the VIE, (vii) file any shareholder lawsuits or take other legal action against the

VIE’s directors or senior management members, (viii) approve annual budget or declare dividends, (ix) manage and dispose

of the assets of the VIE, (x) have the full rights to control and manage the VIE’s finance, accounting and daily operations,

(xi) approve filing of any documents with the relevant governmental authorities or regulatory bodies, and (xii) any other rights

provided by the VIE’s charters and/or the relevant laws and regulations on the VIE shareholders.

The proxy agreements and

powers of attorney shall remain in effect during the term of the Exclusive Service Agreements.

and Guarantee Letter .

Each of the VIE shareholders signed a confirmation and guarantee letter in September 2019, pursuant

to which each VIE equity holder agreed to fully implement the arrangements set forth in the Principal Agreements, Share Pledge

Agreement, and the Proxy Agreement and Power of Attorney, and agreed to not carry out any act which may be contrary to the purpose

or intent of such agreements.

Each of the VIE shareholders’

spouses, if applicable, signed a spousal consent in September 2019 pursuant to

which the spouse of each of the shareholders acknowledges that the equity interests in Horgos and Xing Cui Can held by the spouse

will be disposed according to the arrangements set forth in the Principal Agreements, Share Pledge Agreement, and the Proxy Agreement

and Power of Attorney and undertakes not to carry out any act with the intent to interfere with the arrangements set forth in

aforementioned agreements, and agree to be bound by the aforementioned agreements if they receive any equity interests in Horgos

and Xing Cui Can.

that enable us to receive substantially all of the economic benefit from the VIEs

Exclusive Service Agreements .

WFOE entered into separate Exclusive Service Agreements with Xing Cui Can and Horgos in September

2019, pursuant to which WFOE provides exclusive technology support and services, staff training and consultation services, public

relation services, market development, planning and consultation services, human resource management services, licensing of intellectual

property, and other services as determined by the parties.

In exchange, the VIEs pay service fees to WFOE equal to the pre-tax

profits of the VIEs less (i) accumulated losses of the VIEs and their subsidiaries in the previous financial year, (ii) operating

costs, expenses, and taxes, and (iii) reasonable operating profits under applicable PRC tax law and practices.

During the term

of these agreements, WFOE has the right to adjust the amount and time of payment of the service fees at our sole discretion without

the consent of the VIEs.

WFOE (or our service provider) will own any intellectual property arising from the performance of these

The term of each of these Exclusive Service Agreements is perpetual unless terminated by WFOE upon thirty (30) days’

advance notice, or upon the transfer of all shares of the respective VIEs to WFOE (or our designee) 10 years under the Option

of Our Industry

PRC government imposes extensive controls and regulations over the e-commerce industry and media industry, including television,

advertising, media content production.

This section summarizes the principal PRC regulations that are relevant to our lines of

on Foreign Investment

Catalogue of Industries for Foreign Investment

June 28, 2017, the National Development and Reform Commission (the “NDRC”), and Ministry of Commerce (“MOFCOM”),

promulgated the Foreign Investment Catalog which was implemented on July 28, 2017.

For foreign investment, the Foreign

Investment Catalog is divided into encouraged industries, restricted industries and prohibited industries, and industries which

are not listed in the Foreign Investment Catalog are categorized as the permitted industries for foreign investment.

of restricted industries and prohibited industries in the Foreign Investment Catalog was abolished by the Special Administrative

Measures for Foreign Investment Access (Negative List) (2018 Edition) , which was then replaced by Special Administrative

Measures for Foreign Investment Access (Negative List) (2019 Edition) (the “2019 Negative List”) promulgated on

June 30, 2019 by NDRC and MOFCOM and implemented on July 30, 2019.

According to the 2019 Negative List, foreign investment in

value-added telecommunications services (except for e-commerce) falls within the Negative List.

As a result, foreign investors

can only conduct investment activities through equity or contractual joint ventures with certain shareholding requirements and

approvals from competent authorities.

PRC partners are required to hold the majority interests in the joint ventures and approval

from MOFCOM, or the Ministry of Industry and Information Technology (“MIIT”) for the incorporation of the joint ventures

and the business operations.

October 8, 2016, the MOFCOM promulgated the Interim Administrative Measures for Record-filing of the Incorporation and Change

of Foreign-invested Enterprises , or FIE Interim Administrative Measures, as amended on June 30, 2018.

Under the FIE Interim

Administrative Measures, the incorporation and change of Foreign-invested Enterprises, or FIE, are subject to record filing procedures,

instead of prior approval requirements, provided that the incorporation or change does not trigger any special entry administrative

measures required by the government.

If the incorporation or change of FIE matter is subject to the special entry administration

measures, the approval of the MOFCOM or their local counterparts is still required.

Direct Investment in Value-Added Telecommunications Companies

to the Provisions on Administration of Foreign-Invested Telecommunications Enterprises promulgated by the State Council

on December 11, 2001, as amended on September 10, 2008 and February 6, 2016, or the FITE Regulations, the ultimate foreign equity

ownership in a value-added telecommunications services provider may not exceed 50%.

Moreover, for a foreign investor to acquire

any equity interest in a value-added telecommunication business in China, it must satisfy a number of stringent performance and

operational experience requirements, including demonstrating good track records and experience in operating value-added telecommunication

business overseas.

Foreign investors that meet these requirements must obtain approvals from the MIIT, and MOFCOM or their authorized

local counterparts, which retain considerable discretion in granting approvals.

issued the Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications

Business , or the MIIT Circular, on July 13, 2006.

The MIIT Circular indicates a PRC company that holds an Internet Content

Provider License, or the ICP License, is prohibited from leasing, transferring or selling the ICP License to foreign investors

in any form, and from providing any assistance, including resources, sites or facilities, to foreign investors that conduct value-added

telecommunications business illegally in China.

Moreover, the domain names and registered trademarks used by an operating company

providing value-added telecommunications service must be legally owned by such company and/or our shareholders.

In addition, such

company’s operation premises and equipment must comply with our approved ICP License, and such company should improve our

internal internet and information security standards and emergency management procedures.

June 19, 2015, MIIT issued the Circular on Loosening the Restrictions on Shareholding by Foreign Investors in Online Data Processing

and Transaction Processing Business (for-profit E-commerce) , or the Circular 196.

The Circular 196 allows a foreign investor

to hold 100% of the equity interest in a PRC entity that provides online data processing and transaction processing services (for-profit

With respect to the applications for a license for on-line data processing and transaction processing business (for-profit

e-commerce), the requirements for the proportion of foreign equity are governed by this Circular, other requirements and corresponding

approval procedures are subject to the FITE Regulations.

However, due to the lack of additional interpretation from PRC regulatory

authorities, it remains unclear as to what impact MIIT Circular 2015 may have on us or other PRC internet companies with similar

corporate and contractual structures.

view of these restrictions on foreign direct investment in value-added telecommunications services and certain other types of

businesses under which our business may fall, including internet culture services and radio/television programs production and

operation business, we may rely on contractual arrangements with our VIEs to operate such business in China.

For more information,

please see “Our Corporate Structure.”

Due to the lack of interpretative guidance from the relevant PRC governmental

authorities, there are uncertainties regarding whether PRC governmental authorities would consider our corporate structure and

contractual arrangements to constitute foreign ownership of a value-added telecommunications business.

Investment Law

The National People’s

Congress (NPC) Standing Committee promulgated the Foreign Investment Law on March 15, 2019, which came into effect on January

1, 2020, to replace the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises, the Law of the People’s

Republic of China on Sino-Foreign Equity Joint Ventures and the Law of the People’s Republic of China on Sino-Foreign Cooperative

Joint Ventures as the basic law on foreign investment in the PRC.

Foreign Investment Law stipulates that the foreign investors’

capital contributions, profits, capital gains, income from

asset disposal, intellectual property royalties, legally obtained compensation or indemnification, and liquidation income that

are made or obtained in China, may be freely remitted in or out of China in RMB or foreign exchange according to law.

it further stipulates that the state protects the legitimate rights and interests of intellectual property rights held by foreign

investors and FIEs.

In formulating specific normative documents concerning foreign investment, local governments’

at various levels and their relevant departments shall comply with the provisions of laws and regulations, including Foreign Investment

Without the basis of laws and regulations, local governments shall not reduce or prejudice FIEs’

legitimate rights

and interests, impose additional regulatory burden, set additional impediments for FIE on accessing specific markets, or interfere

with the FIE’s normal business activities.

to the lack of additional interpretation from PRC regulatory authorities, it is unclear how the Foreign Investment Law will be

implemented in practice by the PRC government authorities and whether the offshore companies controlled by the PRC investors through

variable interest entities structure be deemed as foreign investment remains to be seen.

For more information, please see “Risk

Factors —

Risks Relating to Doing Business in China –

Substantial uncertainties and restrictions with respect to the

political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon how our

business may conducted in the PRC and accordingly on the results of our operations and financial condition.”

Related to E-Commerce

2005, the General Office of the State Council issued Several Opinions on Accelerating the Development of Electronic Commerce

to stress the significance of the e-commerce and the importance of regulating the development of e-commerce.

In 2007, MOFCOM

promulgated the Guiding Opinions on Online Trading (for Tentative Implementation), under which, the term “Online Trading”

is defined as the commodity or service trading conducted between the buyer and the seller by making use of internet and the behaviors

of online trading participants.

to the Opinions of the Ministry of Commerce on Promoting the Regularized Development of the E-Commerce promulgated by MOFCOM

in 2007, which required to, among others, regularize the information release and transmission behaviors of all parties concerned

to online trading, applaud legal, regularized, fair and equitable online marketing, electronic contracting, after-sale services

and other e-commerce trading acts, prevent and settle various kinds of trading disputes, regularize electronic payment acts and

ensuring the safe flow of funds.

Opinions on Promoting E-Commerce Application was promulgated by MOFCOM in October 2013, which aims to further promote the

development of e-commerce, guide the healthy and speedy development of network retailing, strengthen the development of e-commerce

for rural villages and agricultural products, support the development of urban community e-commerce application system and promote

innovative application of cross-border e-commerce.

May 2015, the State Council promulgated the Opinions on Striving to Develop E-commerce to Speed Up the Cultivation of New Economic

Driving Force in order to lower the requirements for market access, further simplify the registration of registered capital,

deeply promote the reform from ”certificate before license”

to ”license before certificate”

of e-commerce and simplify the approval process for the overseas listing of e-commerce enterprises in the territory and encourage

the cross-border RMB direct investment in the field of e-commerce.

addition, in December 2016, Guiding Opinions on Fully Enhancing the Credit Construction in the E-commerce Sector was issued

by the State Administration for Industry and Commerce and other governmental authorities.

These opinions require that e-commerce

platforms (a) establish and perfect internal credit constraint mechanisms, and make full use of big data technologies to strengthen

the credit control in terms of commodity quality, intellectual property rights, service level, etc.;

(b) establish the business

credit early risk warning system, and promptly publish the relevant information to society and risk prompts for seriously dishonest

businesses selling forged and fake commodities and hyping credit by malicious scalping, according to requirements of relevant

industrial competent and regulatory authorities;

submit clues on suspected illegalities and irregularities identified to relevant industrial competent and regulatory authorities,

and (d) coordinate with relevant authorities concerning investigation and treatment of business operators on e-commerce platforms.

In the event an e-commerce platform fails to actively fulfill our responsibilities, the relevant industrial competent or regulatory

authority is authorized to promptly take measures, such as engage in communications, provide notification and impose administrative

punishments in accordance with the law.

We believe that we are currently in material compliance with the guidance provided by

the opinions.

by Third-Party Platform Providers for Online Food Trading

In July 2016, the

State Food and Drug Administration promulgated the Measures for Investigation and Handling of Illegal Acts Involving

Online Food Safety , pursuant to which a third-party platform provider for online food trading in the PRC is required to

file a record with the food and drug administration at the provincial level and obtain a filing number.

If an online food

trading third-party platform provider fails to complete such filing, the provider may be ordered to make rectifications and

given a warning by the competent food and drug administration, and failure to make such rectification may be subject to fines

ranging from RMB5,000 to RMB30,000.

As of March 18, 2019, Glory Star Media (Beijing) Co., Ltd has completed the required

filing formalities with the relevant food and drug administration.

Relating to Product Quality and Consumer Rights Protection

on the PRC Consumer Rights and Interests Protection Law , as amended in and effective March 2014, and the Administrative

Measures on Online Trading, or Online Trading Measures, by State Administration for Industry and Commerce, or SAIC, on January

29, 2014, have provided stringent requirements and obligations on business operators, including internet business operators and

platform service providers.

For example, consumers are entitled to return goods purchased online, subject to certain exceptions,

within seven days upon receipt of such goods for no reason.

To ensure that sellers and service providers comply with these laws

and regulations, the platform operators are required to implement rules governing transactions on the platform, monitor the information

posted by sellers and service providers, and report any violations by such sellers or service providers to the relevant authorities.

In addition, online marketplace platform providers may, pursuant to the relevant PRC consumer protection laws, be exposed to liabilities

if the lawful rights and interests of consumers are infringed upon in connection with consumers’

purchase of goods or acceptance

of services on online marketplace platforms and the online marketplace platform providers fail to provide consumers with the contact

information of the seller or manufacturer.

Furthermore, online marketplace platform providers may be jointly and severally liable

with sellers and manufacturers if they are aware or should be aware that any seller or manufacturer is using the online platform

to infringe upon the lawful rights and interests of consumers and fail to take measures necessary to prevent or stop such activity.

Tort Liability Law of the PRC, which was enacted by the Standing Committee of the NPC, or SCNPC, in December 2009 and took effect

in July 2010, also provides that if an online service provider is aware that an online user is committing infringing activities,

such as selling counterfeit products, through our internet services and fails to take necessary measures, it will be jointly liable

with the said online user for such infringement.

If the online service provider receives any notice from the infringed party on

any infringing activities, the online service provider will take necessary measures, including deleting, blocking and unlinking

the infringing content, in a timely manner.

Otherwise, it will be jointly liable with the respective online user for the extended

an e-commerce platform service provider, we are subject to the PRC Consumer Rights and Interests Protection Law, the Online Trading

Measures and the Tort Liability Law of the PRC and believe that we are currently in compliance with these regulations in all material

on the Media Industry

According to the Provisions

on the Administration of Radio and Television Program Production promulgated by the State Administration of Radio, Film

and Television, or SARFT, on July 19, 2004 and took effect in August 20, 2004, and was amended on August 28, 2015, entities

engaging in (i) the production of television programs, such as feature programs, general programs, drama series and

animations, and (ii) the trading activities and agency services on the copyrights of such programs, must first obtain

preliminary approval from the SARFT or their provincial branches for license.

Horgos and Glory Star Media (Beijing) Co., Ltd

have obtained the required approvals accordingly.

on the Advertising Industry

Relating to Advertising Law

principal regulations governing advertising businesses in China include Advertising Law promulgated by SCNPC on October

27, 1994, which was amended on April 24, 2015 and October 26, 2018.

Under the Advertising Law, advertisers refer to any legal

persons, economic organizations or individuals that, directly or through agents, design, produce and publish advertisements to

promote products or services.

Advertisement operators refer to those legal persons, economic organizations or individuals consigned

to provide advertisement content design, production and agency services.

Advertisement publishers refer to those legal persons

or other economic organizations that publish advertisements for the advertisers or for those advertisement operators that are

consigned by the advertisers.

An advertisement should present distinct and clear descriptions of the product’s function,

place of origin, quality, price, manufacturer, validity period, warranties or the contents, forms, quality, price or promises

of the services offered.

False advertising that may mislead consumers and compromise legal rights and interests of consumers will

subject the advertiser to civil liabilities.

Where the advertising operator or advertising publisher is unable to provide the

real name, address or valid contact information of the advertiser, the consumers may require the advertising operator or advertising

publisher make compensation in advance.

For false advertisements of goods or services other than those stipulated in the preceding

paragraph which caused harm to consumers, where the advertising operator, advertising publisher and advertising spokesperson knew

or should have known the falsity yet still provided design, production, agency or publishing services, or provide recommendation

or endorsement, they will bear joint and several liability with the advertiser.

advertising laws and regulations provide specific content requirements for advertisements in China, which include prohibitions

on, among other things, misleading content, superlative wording, socially destabilizing content or content involving obscenities,

superstition, violence, discrimination or infringement of the public interest.

Advertisements for anesthetic, psychotropic, toxic

or radioactive drugs are also prohibited.

It is prohibited to disseminate tobacco advertisements via broadcast, film, television

or print media, or in any waiting lounge, theater, cinema, conference hall, stadium or other public area.

There are also specific

restrictions and requirements regarding advertisements that relate to matters such as patented products or processes, pharmaceuticals,

medical instruments, agrochemicals, foodstuff, alcohol and cosmetics.

In addition, all advertisements relating to pharmaceuticals,

medical instruments, agrochemicals and veterinary pharmaceuticals advertised through broadcast, film, television, newspaper, magazine

and other forms of media, together with any other advertisements which are subject to censorship by administrative authorities

according to relevant laws and administrative regulations, must be submitted to the relevant administrative authorities for content

approval prior to dissemination.

Advertisers are required

by PRC advertising laws and regulations to ensure that the content of the advertisements they prepare are true and accurate as

well as in full compliance with applicable laws and regulations.

In providing advertising services, advertising service providers

and advertising publishers must review the prescribed supporting documents provided by advertisers for advertisements and verify

that the content of the advertisements complies with applicable PRC laws and regulations.

Violation of these regulations may result

in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders

to publish an advertisement correcting the misleading information.

In circumstances involving serious violations, the SAIC or their

local branches may revoke violators’

licenses or permits for advertising business operations.

Furthermore, advertisers, advertising

service providers or advertising distributors may be subject to civil or criminal liability if they infringe on the legal rights

and interests of third parties in the course of their advertising business.

Relating to Internet Advertising

July 4, 2016, the SAIC promulgated the Interim Measures for the Administration of Internet Advertising , or the Internet

Advertising Measures, which became effective on September 1, 2016.

The Internet Advertising Measures provides additional compliance

requirements for online advertising business in addition to those requirements set forth in the Advertising Law.

Pursuant to the

Internet Advertising Measures, Internet Advertising refers to the commercial advertising for direct or indirect marketing goods

or services in the form of text, image, audio, video, or others means through websites, webpages, internet apps, or other internet

Major additional compliance requirements are:

(i) advertisements must be identifiable and marked with the word “advertisement,”

enabling consumers to distinguish them from non-advertisement content;

(ii) publishing advertisements on the Internet through

a pop-up page or in other forms shall provide a prominently marked “CLOSE”

button to ensure “one-click closure;”

(iii) sponsored search results must be clearly distinguished from organic search results;

(iv) it is forbidden to send advertisements

or advertisement links by email without the recipient’s permission or induce Internet users to click on an advertisement

in a deceptive manner;

and (v) internet information service providers that do not participate in the operation of internet advertisements

should stop publishing illegal advertisements if they know or should know that the advertisements are illegal.

According to Internet

Advertising Measures, it is not allowed to publish the online advertisement for prescription drugs, tobaccos and goods or services

prohibited from publish according to applicable laws and administrative regulations.

In addition, all advertisements for medical

treatment, pharmaceuticals, food formula for special medical purposes, medical devices, pesticides, veterinary drugs, healthcare

food and other special goods or services must be submitted to the relevant administrative authorities for content approval prior

to publishing.

Related to Internet Information Security and Privacy Protection

government authorities have enacted laws and regulations with respect to internet information security and protection of personal

information from any abuse or unauthorized disclosure.

Internet information in China is regulated and restricted from a national

security standpoint.

The SCNPC enacted the Decisions on Maintaining Internet Security in 2000 , and was amended on August

27, 2009, which may subject violators to criminal punishment in China for any effort to:

(i) gain improper entry into a computer

or system of strategic importance;

(ii) disseminate politically disruptive information;

(iii) leak state secrets;

false commercial information;

or (v) infringe intellectual property rights.

The Ministry of Public Security has promulgated measures

that prohibit use of the internet in ways which, among other things, result in a leakage of state secrets or a spread of socially

destabilizing content.

If an internet information service provider violates these measures, the Ministry of Public Security and

the local security bureaus may revoke the service provider’s operating license and shut down our websites.

Under the Several Provisions

on Regulating the Market Order of Internet Information Services issued by the MIIT in 2011, an internet information service

provider may not collect any user personal information or provide any such information to third parties without the consent of

the users and it must expressly inform the users of the method, content and purpose of the collection and processing of such user

personal information and may only collect such information necessary to provide its services.

An internet information service provider

is also required to properly maintain the user personal information, and in case of any leak or likely leak of the user personal

information, the internet information service provider must take immediate remedial measures and, in severe circumstances, make

an immediate report to the telecommunications regulatory authority.

In addition, pursuant to the Decision on Strengthening the

Protection of Online Information issued by the SCNPC in December 2012 and the Order for the Protection of Telecommunication

and Internet User Personal Information issued by the MIIT in July 2013, any collection and use of user personal information

must (i) be subject to the consent of the user;

(ii) be in accordance with the principles of legality, rationality and necessity;

and (iii) be within the specified purposes, methods and scopes.

internet information service provider must also keep such information strictly confidential, and is prohibited from divulging,

tampering or destroying any such information, or selling or providing such information to other parties.

An internet information

service provider is required to take technical and other measures to prevent the collected personal information from any unauthorized

disclosure, damage or loss.

Any violation of these laws and regulations may subject the internet information service provider

to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, shut down of websites or even

criminal liabilities.

addition, pursuant to the Notice on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens

issued by of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security

in 2013, and the Interpretation on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal

Information of Citizens issued by the Supreme People’s Court and the Supreme People’s Procuratorate in May 2017,

the following activities may constitute the crime of infringing upon a citizen’s personal information:(i) providing a citizen’s

personal information to specified persons or releasing a citizen’s personal information online or through other methods

in violation of relevant national provisions;

(ii) providing legitimately collected information relating to a citizen to others

without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable);

(iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty

or providing services;

or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information

in violation of applicable rules and regulations.

pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 29, 2015, which became effective in November

2015, any internet service provider that fails to fulfill the obligations related to internet information security administration

as required by applicable laws and refuses to rectify upon orders is subject to criminal penalty for the result of (i) any dissemination

of illegal information in large scale;

(ii) any severe effect due to the leakage of the client’s information;

serious loss of criminal evidence;

or (iv) other severe situation.

In addition, any individual or entity that (a) sells or provides

personal information to others in a way violating the applicable law, or (b) steals or illegally obtains any personal information

is subject to criminal penalty in severe situation.

November 2016, the SCNPC promulgated the Network Security Law of the People’s Republic of China , or the Network Security

Law, effective June 1, 2017.

The Network Security Law is formulated to maintain the network security, safeguard the cyberspace

sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other

organizations, and requires that a network operator, which includes, among others, internet information services providers, take

technical measures and other necessary measures in accordance with the provisions of applicable laws and regulations as well as

the compulsory requirements of the national and industrial standards to safeguard the safe and stable operation of the networks,

effectively respond to network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality

and availability of network data.

The Network Security Law emphasizes that any individuals and organizations that use networks

is required to comply with the PRC Constitution and laws, abide by public order and cannot endanger network security or make use

of networks to engage in unlawful activities such as endangering national security, economic order and social order, and infringing

the reputation, privacy, intellectual property rights and other lawful rights and interests of other people.

The Network Security

Law has reaffirmed the basic principles and requirements as specified in other existing laws and regulations on personal information

protections, such as the requirements on the collection, use, processing, storage and disclosure of personal information, and

internet service providers being required to take technical and other necessary measures to ensure the security of the personal

information they have collected and prevent the personal information from being divulged, damaged or lost.

Any violation of the

provisions and requirements under the Network Security Law may subject the internet service provider to warnings, fines, confiscation

of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities.

comply with these PRC laws and regulations, we have adopted internal procedures to monitor content displayed on our website and

However, due to the large amount of data we generate and process, we may not be able to properly protect customers’

personal information and safeguard our networks.

See “Risk Factors —

Risks Relating to Our Business and Industry –

Our business generates and processes a large amount of data, and the improper use or disclosure of such data could harm our reputation

as well as have a material adverse effect on our business and prospects.”

Related to Intellectual Property Rights

the Copyright Law , issued in 1990 and most recently amended in 2010, or the Copyright Law, and our related Implementing

Regulations issued in 2002 and amended in 2013, creators of protected works enjoy personal and property rights with respect to

publication, authorship, alteration, integrity, reproduction, distribution, lease, exhibition, performance, projection, broadcasting,

dissemination via information network, production, adaptation, translation, compilation and related activities.

Other than the

rights of authorship, alternation and integrity of an author which shall be unlimited in time, the term of a copyright is the

life of the individual author plus 50 years, but for by a corporation the term is 50 years after first publication.

In consideration

of the social benefit and costs of copyrights, the PRC authorities balance copyright protections with limitations that permit

certain uses, such as for private study, research, personal entertainment and teaching, without compensation to the author or

prior authorization.

Measures for Administrative Protection of Copyright Related to Internet , which was jointly promulgated by the National

Copyright Administration, or NCA, and the MIIT on April 29, 2005, and became effective on May 30, 2005, provides that upon receipt

of an infringement notice from a legitimate copyright holder, an operator of Internet information services, or ICP operator, must

take remedial actions immediately by removing or disabling access to the infringing content.

If an ICP operator knowingly transmits

infringing content or fails to take remedial actions after receipt of a notice of infringement that harms public interest, the

ICP operator could be subject to administrative penalties, including an order to cease infringing activities, confiscation by

the authorities of all income derived from the infringement activities, or payment of fines.

May 18, 2006, the State Council promulgated the Regulations on the Protection of the Right to Network Dissemination of Information

(as amended in 2013) .

Under these regulations, an owner of the network dissemination rights with respect to written works

or audio or video recordings who believes that information storage, search or link services provided by an Internet service provider

infringe his or her rights may require that the Internet service provider delete, or disconnect the links to, such works or recordings.

order to further implement the Computer Software Protection Regulations promulgated by the State Council in 2001 and amended

in January 2013, the National Copyright Administration issued the Computer Software Copyright Registration Procedures in 2002,

which apply to software copyright registration, license contract registration and transfer contract registration.

of December 31, 2019, we had twenty-eight (28) registered software copyrights and three (3) work copyrights.

on Trademarks

Registered trademarks are

protected by the Trademark Law of the PRC (Revised in 2019) which was adopted in 1982 and subsequently amended in 1993,

2001, 2013 and 2019, respectively as well as by the Implementation Regulations of the PRC Trademark Law adopted by the State

Council in 2002 and as most recently amended on April 29, 2014.

The Trademark Office under the SAIC handles trademark registrations.

The Trademark Office grants a ten-year term to registered trademarks and the term may be renewed for another ten-year period upon

request by the trademark owner.

A trademark registrant may license their registered trademarks to another party by entering into

trademark license agreements, which must be filed with the Trademark Office for record.

As with patents, the Trademark Law has

adopted a first-to-file principle with respect to trademark registration.

If a trademark applied for is identical or similar to

another trademark that has already been registered or subject to a preliminary examination and approval for use on the same or

similar kinds of products or services, such trademark application may be rejected.

Any person applying for the registration of

a trademark may not injure existing trademark rights first obtained by others, nor may any person register in advance a trademark

that has already been used by another party and has already gained a “sufficient degree of reputation”

party’s use.

of December 31, 2019, we had forty-five (45) registered trademarks and sixteen (16) trademarks registration applications in the

on Domain Names

MIIT promulgated the Measures on Administration of Internet Domain Names , or the Domain Name Measures, on August 24, 2017,

which took effect on November 1, 2017, and replaced the Administrative Measures on China Internet Domain Name promulgated

by MII on November 5, 2004.

According to the Domain Name Measures, the MIIT is in charge of the administration of PRC internet

domain names.

The domain name registration follows a first-to-file principle.

Applicants for registration of domain names must

provide the true, accurate and complete information of their identities to domain name registration service institutions.

applicants will become the holder of such domain names upon the completion of the registration procedure.

of December 31, 2019, we had 3 domain names in PRC.

The PRC Labor Contract

Law was promulgated on June 29, 2007, as amended on December 28, 2012, and became effective on July 1, 2013.

According to the

PRC Labor Contract Law of PRC, labor contracts must be entered into if labor relationships are to be established between an entity

and the employees.

The entity cannot require the employees to work in excess of the time limit as permitted under the relevant

labor laws and regulations and shall pay the employees wages that are no lower than local standards on minimum wages.

shall also abide by the aforementioned laws and regulations and perform procedures for dissolution and termination of labor contracts,

payment of labor remuneration and economic compensation, use of labor dispatch and payment of social insurance.

on Social Insurance and Housing Provident Fund

to the PRC Social Insurance Law issued by the SCNPC on October 28, 2010, and implemented on July 1, 2011, and subsequently

revised on December 29, 2018, the state established a social insurance system including basic pension insurance, basic medical

insurance, unemployment insurance, work-related injury insurance and maternity insurance, under which both employers and individuals

are required to pay social insurance premiums.

Migrant workers participate in such social insurance schemes, and foreigners employed

within the territory of the PRC also participate in social insurance as well.

Violations of the PRC Social Insurance Law may result

in the imposition of fines, and criminal liability may be incurred in serious cases.

An employer that fails to make social insurance

contributions may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline and

be subject to a late fee of 0.05% per day, as the case may be.

If the employer still fails to rectify the failure to make social

insurance contributions within the deadline, it may be subject to a fine ranging from one to three times the amount overdue.

to the Regulations on Management of Housing Provident Fund which was promulgated and implemented by the State Council on

April 3, 1999, and subsequently revised on March 24, 2002, and March 24, 2019, enterprises in China are required to register with

the housing provident fund management center within 30 days from the date of establishment, and complete the procedures for establishment

of housing accumulation fund accounts for their employees within 20 days from the date of registration.

In violation of such regulation,

an enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions

within a stipulated deadline.

on Foreign Exchange Registration of Offshore Investment by PRC Residents

On July 4, 2014, State Administration

of Foreign Exchange, or the SAFE, promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic

Residents’

Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles , or SAFE Circular

37, which replaced the former circular commonly known as “SAFE Circular 75”

promulgated by SAFE on October 21, 2005.

SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or

indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’

owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a

“special purpose vehicle.”

SAFE Circular 37 further requires amendment to the registration in the event of any significant

changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share

transfer or exchange, merger, division or other material event.

In the event that a PRC shareholder holding interests in a special

purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited

from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities,

and the special purpose vehicle may be restricted in our ability to contribute additional capital into our PRC subsidiary.

failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion

of foreign exchange controls.

SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign

Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015.

This notice has amended SAFE Circular

37 requiring PRC residents or entities to register with qualified banks rather than SAFE or their local branches in connection

with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

on Foreign Currency Exchange

principal regulation governing foreign currency exchange in China is the Foreign Exchange Administration Rules of the PRC ,

or the Foreign Exchange Administration Rules, promulgated on January 29, 1996, as subsequently amended on January 14, 1997, and

August 1, 2008.

Under these rules, RMB is generally freely convertible for payments of current account items, such as trade and

service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such

as capital transfer, direct investment, investment in securities, derivative products or loan unless prior approval of SAFE is

the Foreign Exchange Administration Rules, foreign-invested enterprises in the PRC may purchase foreign exchange without the approval

of SAFE for paying dividends by providing certain evidencing documents, such as board resolutions and tax certificates, or for

trade and services-related foreign exchange transactions by providing commercial documents evidencing such transactions.

are also allowed to retain foreign currency, subject to an approval by SAFE of a cap amount, to satisfy foreign exchange liabilities.

In addition, foreign exchange transactions involving overseas direct investment or investment and exchange in securities and derivative

products abroad are subject to registration with SAFE and approval or file with the relevant governmental authorities if necessary.

On November 19, 2012, SAFE

promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment,

which was amended on May 4, 2015, and October 10, 2018, respectively.

This Circular substantially amends and simplifies the current

foreign exchange procedure.

Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as

pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds

by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to our

foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity

may be opened in different provinces, which was not possible previously.

In addition, SAFE promulgated the Circular on Printing

and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the

Supporting Documents in May 2013 and was further amended on October 10, 2018, which specifies that the administration by SAFE

or their local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks

shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided

by SAFE and their branches.

February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange

Concerning Direct Investment, or SAFE Notice 13.

After SAFE Notice 13 became effective on June 1, 2015, instead of applying

for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE,

entities and individuals will be required to apply for such foreign exchange registrations from qualified banks.

The qualified

banks, under the supervision of SAFE, will directly examine the applications and conduct the registration.

The Circular on Reforming

the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise , or the SAFE Circular No.

19, which was promulgated by the SAFE on March 30, 2015 and became effective on June 1, 2015, provides that a foreign-invested

enterprise may, according to their actual business needs, settle with a bank the portion of the foreign exchange capital in their

capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests

(or for which the bank has registered the injection of the monetary capital contribution into the account).

Pursuant to the SAFE

Circular No.19, for the time being, foreign-invested enterprises are allowed to settle 100% of their foreign exchange capitals

on a discretionary basis;

a foreign-invested enterprise shall truthfully use their capital for our own operational purposes within

the scope of business;

where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign

exchanges settled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding

account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where

it is registered.

Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts , or the

SAFE Circular No.

16, which was promulgated by the SAFE and became effective on June 9, 2016, provides that enterprises registered

in the PRC may also convert their foreign debts from foreign currency into Renminbi on a self-discretionary basis.

The SAFE Circular

16 also provides an integrated standard for conversion of foreign exchange under capital account items (including but not

limited to foreign currency capital and foreign debts) on self-discretionary basis, which applies to all enterprises registered

Enterprise Income Tax

According to the Enterprise

Income Tax, or EIT Law , which was promulgated by the NPC on March 16, 2007, and implemented on January 1, 2008, and subsequently

revised on February 24, 2017, and December 29, 2018, and the Implementation Regulations of EIT Law, which was promulgated by the

State Council on December 6, 2007, and implemented on January 1, 2008 and amended on April 23, 2019, enterprises are divided into

resident enterprises and non-resident enterprises.

Resident enterprises, which refer to enterprises that are set up in accordance

with the PRC law, or that are set up in accordance with the law of the foreign country (region) but with actual administration

institution in China, pay enterprise income tax originating both within and outside China at the tax rate of 25%.

enterprises refer to entities established under foreign law whose actual administration institution is not within China but have

institution or premises in China, or which do not have institution or premises in China but have income sourced within China.

enterprises that have set up institutions or premises in China pay enterprise income tax at the tax rate of 25% in relation to

the income originated from China and obtained by the aforementioned institutions or premises, as well as the income incurred outside

China, provided there is an actual relationship between such income and the aforementioned institutions or premises.

For non-resident

enterprises that have no institutions or premises in China, or, although they have institutions or premises in China, there is

no actual relationship between the income and the aforementioned institutions or premises, they pay enterprise income tax at the

tax rate of 10% in relation to the income originated from China.

The aforementioned income includes income from sales of goods,

provision of labor services, transfer of property, equity investment including dividends, interest income, rental income, income

from royalties, donations and other income.

In addition, according to the EIT Law and the Implementation Regulations of EIT Law,

for the income incurred from equity investment including dividends and bonus among eligible resident enterprises, and the income

which is incurred from equity investment including dividends and bonus obtained from resident enterprise by non-resident enterprises

that have set up institutions or premises in China and the income has an actual relationship with such institutions or premises,

such incomes are tax-free income.

High and New Technology Enterprises

to EIT Law and its implementation rules, certain “high and new technology enterprises”

that hold independent ownership

of core intellectual property and simultaneously meet a list of other criteria, financial or non-financial, as stipulated in the

implementation rules, will enjoy a reduced 15% enterprise income tax rate.

The State Administration of Taxation, the Ministry

of Science and Technology and the Ministry of Finance jointly issued the Administrative Rules for the Certification of High and

New Technology Enterprises delineating the specific criteria and procedures for the “high and new technology enterprises”

certification in April 2008.

October 15, 2019, one of our VIE subsidiaries, Leshare Star (Beijing) Technology Co., Ltd.

(悦享星光（北京）科技有限公司),

was recognized as a “high and new technology enterprise”

by the Beijing Municipal Science & Technology Commission,

Beijing Municipal Finance Bureau and Beijing Municipal Tax Service of State Taxation Administration and will be entitled to a

preferential tax rate of 15%, subject to certain qualification criteria, from 2020 to 2022.

to Several Opinions on Promoting the Development of High and New Technology Enterprises in Zhongguancun Science Park, Administrative

Measures for Zhongguancun High and New Technology Enterprise Bank (For Trial Implementation) and Measures for Financial Support

of Zhongguancun National Independent Innovation Demonstration Zone to Enhance Innovation Ability and Optimize Innovation Environment,

the enterprise recognized as qualified high and new technology enterprises by Zhongguancun Science Park Management Committee is

entitled to a series of special services and financial supports when it meets certain criteria, such as financial incentive for

being award of patents and registration of international trademarks, more opportunities of participate in intergovernmental scientific

and technological cooperation projects, more opportunities of its technologies, products and services enter the international

market, entrepreneurship training related services and other preferential treatments.

December 10, 2019 and December 16, 2019, Leshare Star (Beijing) Technology Co., Ltd.（悦享星光（北京）科技有限公司）and

Glory Star Media (Beijing) Co., Ltd.（耀世星辉（北京）传媒有限公司）were

recognized as qualified high and new technology enterprises by Zhongguancun Science Park Management Committee and will entitle

them aforesaid preferential treatments, subject to certain qualification criteria, from 2019 to 2021.

on PRC Value-added Tax

to the Interim Regulations of PRC on Value-added Tax, which was promulgated by the State Council on December 13, 1993 and

subsequently revised on November 10, 2008, February 6, 2016 and November 19, 2017 and the Detailed Rules for the Implementation

of the Interim Regulations of the People’s Republic of China on Value-added Tax which was promulgated by the Ministry

of Finance (the “MOF”) on December 25, 1993, and subsequently revised on December 15, 2008 and October 28, 2011, entities

and individuals that sell goods or labor services of processing, repair or replacement, sell services, intangible assets, or immovables,

or import goods within the territory of China are taxpayers of value-added tax (“VAT”), and pay VAT in accordance

Unless otherwise stipulated, the VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property

leasing services or importing goods;

11% for taxpayers selling transportation, postal, basic telecommunications, construction,

or immovable leasing services, selling immovables, transferring land use rights, or selling or importing specific goods;

otherwise stipulated, 6% for taxpayers selling services or intangible assets.

On March 23, 2016, the MOF

and the SAT published the Circular of the MOF and the SAT on Fully Launch of the Pilot Scheme for the Conversion of Business

Tax to Value-added Tax and annexes, pursuant to which entities and individuals that sell services, intangible assets, or immovables

pay VAT instead of business tax since May 1, 2016.

to the Circular of the MOF and the SAT on Adjusting Value-added Tax Rate, which was promulgated by the MOF and the SAT

on April 4, 2018, and became effective on May 1, 2018, the tax rates for the taxable sales or goods import activity, which were

subject to the tax rates of 17% and 11%, respectively, were adjusted to 16% and 10%, respectively.

to the Circular on Policies in Relation to the Deepening of Value-added Tax Reforms, which was jointly promulgated by the

MOF, the SAT and the General Administration of Customs on March 20, 2019, the tax rate of 16% and 10% originally applicable to

general VAT taxpayers’

VAT taxable sales or goods import shall be adjusted to 13% and 9%, respectively.

The EIT Law prescribes a

standard withholding tax rate of 20% on dividends and other PRC sourced passive income of non-resident enterprises.

The Implementation

Rules reduced the rate from 20% to 10%.

The central government of the PRC and the government of Hong Kong signed the Arrangement

between the Mainland of the PRC and Hong Kong for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with

respect to Taxes on Income on August 21, 2006, or the Arrangement.

According to the Arrangement, no more than 5% withholding

tax shall apply to dividends paid by a PRC company to a Hong Kong resident, provided that the recipient is a company that holds

at least 25% of the equity interests of the PRC company and is deemed as the “beneficial owner”

under the Arrangement.

Notice on the Implementation of the Fourth Protocol of Arrangement between Chinese Mainland and Hong Kong SAR on Avoidance of

Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income (Announcement [2016] No.12 of the State Administration

of Taxation), Announcement of the State Administration of Taxation on the Implementation of the Third Protocol of Arrangement

between Chinese Mainland and Hong Kong SAR on Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes

on Income , Announcement [2011] No.1 , Notice on the Implementation of the Second Protocol of Arrangement between Chinese

Mainland and Hong Kong SAR on Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income

(Guo Shui Han [2008] No.

685) and Circular of the State Administration of Taxation on Interpreting and Implementing Some Clauses

in the Arrangement between Mainland China and Hong Kong SAR concerning Avoiding Double Taxation and Preventing Tax Evasion on Income

(Guo Shui Han [2007] No.

403), which was partially repealed on January 4, 2011 and August 27, 2015, have amended the Arrangement

February 3, 2018, the SAT promulgated Announcement of the State Administration of Taxation on Issues Relating to “Beneficial

in Tax Treaties, State Administration of Taxation Announcement [2018] No.

9 , Circular 9, which clarifies that

a beneficial owner shall be a person who has ownership and control over the income and the rights and property from which the

income is derived.

To prove “beneficial owner”

status, the applicant shall submit the materials pursuant to the provisions

of Article 7 of the Announcement of the State Administration of Taxation on Promulgation of the “

Administrative Measures

on Entitlement of Non-residents to Treatment under Tax Treaties”

(State Administration of Taxation Announcement [2015]

60, was amended by Announcement of the State Administration of Taxation on Partially Amending Taxation Regulatory Documents

on June 15, 2018).

Therein, where an applicant is a “beneficial owner”

pursuant to the provisions of Article 3 of

this Announcement, the applicant shall also provide, in addition to the tax resident identity of the applicant, the tax resident

identity documents of the person who satisfies the criteria for “beneficial owner”

and the person who satisfies the

criteria, issued by the tax authorities in charge at the country (region) where he/she resides;

where the applicant is a “beneficial

pursuant to the provisions of item (4) of Article 4 of this Announcement, the applicant shall also provide, in addition

to the tax resident identity document of the applicant, the tax resident identity documents of the person who holds 100% of the

applicant’s shares directly or indirectly and the multi-tier holders, issued by the tax authorities in charge at the country

(region) for which the said person and the multi-tier holders are residents;

the tax resident identity document shall prove that

the person is a tax resident in the year in which the income is obtained or the preceding year.

on Tax regarding Indirect Transfer

On February 3, 2015, the

SAT issued the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises ,

or Circular 7.

Pursuant to Circular 7, an “indirect transfer”

of assets, including equity interests in a PRC resident

enterprise, by non-PRC resident enterprises, may be re-characterized and treated as a direct transfer of PRC taxable assets, if

such arrangement does not have a reasonable commercial purpose and is established for the purpose of avoiding payment of PRC enterprise

As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax.

When determining

whether there is a “reasonable commercial purpose”

of the transaction arrangement, considerations include, inter alia,

(i) whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable

(ii) whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or

if our income is mainly derived from China;

and (iii) whether the offshore enterprise and their subsidiaries directly or indirectly

holding PRC taxable assets have real commercial nature evidenced by their actual function and risk exposure.

According to the Circular

7, where the payer fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority

by itself within the statutory time limit.

Late payment of applicable tax will subject the transferor to default interest.

Circular 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were

acquired on a public stock exchange.

On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding regarding Non-PRC

Resident Enterprise Income Tax, or SAT Circular 37, which further elaborates the relevant implemental rules regarding the calculation,

reporting and payment obligations of the withholding tax by the non-resident enterprises.

Nonetheless, there remain uncertainties

as to the interpretation and application of the SAT Circular 7.

The SAT Circular 7 may be determined by the tax authorities to

be applicable to our offshore transactions or sale of our shares or those of our offshore subsidiaries where non-resident enterprises,

being the transferors, were involved.

Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors

On August 8, 2006, six PRC

regulatory agencies, including MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the

State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and SAFE, jointly adopted the Regulations

on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors , or the M&A Rules, which became effective on September

8, 2006, and were amended on June 26, 2009.

The M&A Rules, among other things, include provisions that purport to require an

offshore special purpose vehicle formed for the purpose of acquiring PRC domestic companies and controlled by PRC individuals to

obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas

stock exchange.

On September 21, 2006, the CSRC published on their official website procedures regarding approval of overseas listings

by special purpose vehicles.

The CSRC approval procedures require the filing of an application and supporting documents with the

OF OUR BUSINESS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business