Content Production and Competition - The company relies on in-house teams for original content production and faces competition for qualified personnel, which may impact its ability to produce high-quality content[46] - User growth for mobile and online video and e-commerce products has been significant, but the company must continue to provide compelling content to retain and attract users[48] - A substantial portion of the company's revenue comes from advertising; failure to retain or attract advertising customers could materially affect its financial condition[49] - The company faces intense competition from major players like Alibaba and Pinduoduo, which may impact its user traffic and market share[51] - The increase in professionally-produced content in China may lead to heightened competition for users and advertising customers[53] - Maintaining and enhancing the company's brand is crucial for attracting users and advertisers; perceived low-quality content could harm brand reputation[52] Financial and Operational Risks - The company operates in a capital-intensive industry and requires significant cash to fund operations and content production; failure to secure adequate capital may adversely affect its business[47] - The company has a limited operating history since 2016, making it difficult to predict future performance based on past growth rates[55] - Effective management of growth is essential; failure to enhance infrastructure and operational systems may adversely affect business prospects[57] - The company must adapt to rapidly evolving user behavior on mobile devices to maintain competitiveness in the e-commerce sector[60] - The company faces risks related to its relationships with third-party platforms, which could significantly impact user base and revenue streams if agreements are not renewed or extended favorably[61] - The performance and reliability of the Internet infrastructure in China are critical to the company's operations, and disruptions could significantly affect its business[82] - The company is exposed to cybersecurity risks, and any incidents could lead to reputational harm and negatively impact financial results[83] - The company relies on third parties for payment processing, and any changes in the payment ecosystem could adversely impact revenues and operating results[81] - The company generates and processes a large amount of data, and any improper use or disclosure could harm its reputation and have a material adverse effect on its business[78] Regulatory and Legal Environment - The company is subject to PRC regulations that may lead to penalties or administrative actions if any content is found objectionable, potentially harming its business operations[63] - The company faces legal and regulatory risks associated with AI and machine learning technologies, which could increase compliance costs and impact business operations[116] - The regulatory environment for NFTs and metaverse businesses in China is uncertain, potentially leading to compliance costs or penalties[158] - The company operates under significant uncertainties regarding the interpretation and implementation of internet-related laws and regulations[202] - The PRC government has significant oversight over business operations, which may lead to regulatory changes that could negatively impact the company's financial condition[219] - The evolving nature of PRC laws regarding cybersecurity and data protection may require the company to adapt its practices at substantial costs[200] Shareholder and Corporate Governance - The controlling shareholder, Mr. Bing Zhang, holds approximately 84.3% of the voting power, significantly influencing corporate decisions[98] - The dual-class share structure may affect the market price and trading activity of Class A Ordinary Shares, potentially leading to exclusion from major indices[231] - Mr. Bing Zhang, the chairman and CEO, holds approximately 84.3% of the voting power, classifying the company as a "controlled company" under Nasdaq rules[232] Economic and Market Conditions - The growth of the Chinese economy has slowed down, with GDP growth at 3.0% in 2022, impacting the company's business operations[167] - Economic downturns and global financial crises could materially affect the company's financial condition and operations[165] - The company derives substantially all of its revenue from China, making it highly sensitive to economic conditions in the region[92] Technology and Innovation - The company is investing in new product offerings and technologies, including generative AI, but these investments carry inherent risks and may not yield expected benefits[75] - The company is increasingly utilizing AI technology, which may lead to unintended consequences and legal liabilities that could adversely affect its business[69] - The creation of the company's metaverse platform is contingent on developing a secure and reliable blockchain[108] - The metaverse platform is under development, aiming to integrate intelligent retail, video on demand, social networking, gaming, and NFTs, but its acceptance and interest remain uncertain[111] - The NFT marketplace is dependent on third-party technology and artwork, and any infringement claims could severely limit platform development[110] Compliance and Financial Management - The company relies on dividends from its wholly-owned subsidiaries in China to meet cash requirements, which may be limited by PRC regulations[212] - Future changes in PRC regulations could restrict the company's ability to remit profits out of China, adversely affecting liquidity[211] - The company may incur substantial costs if it exercises the option to acquire equity ownership of Horgos and Xing Cui Can due to tax implications[140] - The company has been granted preferential income tax rates of 15% for certain subsidiaries, which are expected to last until 2029; if these are discontinued, the tax rate may increase to 25%[222] Risks from External Factors - The company’s operations could be disrupted by natural disasters or health epidemics, affecting overall performance[93] - The company is exposed to risks from health epidemics, such as COVID-19, which could disrupt operations and affect financial performance[149] - The company may face significant legal and financial exposure due to potential cybersecurity breaches or unauthorized access to customer data[196] Market Dynamics - The company faces growing competition in the advertising industry, which may lead to a loss of market share and revenues[161] - The NFT industry is characterized by volatility, and price fluctuations in digital assets could impact the value of NFTs offered through the platform[120] - The NFT market is still nascent, and if it does not develop, users may struggle to sell their NFTs, adversely affecting business operations[112] - Significant resources are being devoted to the metaverse platform and Experience Centers, but success is uncertain due to unpredictable consumer preferences and regulatory changes[113]

App Downloads and User Engagement - The total downloads of CHEERS Apps increased from 376.5 million in 2022 to 474 million by December 31, 2023, representing a growth of approximately 25.8%[330] - Monthly Active Users (MAU) data indicates a significant engagement with CHEERS Apps, with management using this metric to adjust promotional activities and advertising campaigns[330] - The CHEERS e-Mall downloads rose from 34.5 million in 2022 to 53.5 million in 2023, marking a growth of approximately 55%[331] - The CHEERS Video downloads increased from 342 million in 2022 to 410 million in 2023, reflecting a growth of about 19.9%[331] - The CheerReal app achieved 9.2 million downloads by the end of 2023, indicating successful user acquisition for the digital collection platform[331] - MAU for CHEERS Video increased from 47.7 million in December 2022 to 50.1 million in December 2023, while CHEERS e-Mall MAU rose from 3.8 million to 6.5 million[332] - The average Daily Time Spent (DTS) on CHEERS Video was 59 minutes in 2023, reflecting user engagement with the platform[334] - Eleven live streaming shows are currently in production, allowing users to interact and make purchases in real-time, enhancing user engagement and monetization[344] Technological Innovations and Developments - CHEERS Telepathy, a new AI content creation platform, was launched in July 2023, enhancing digital content production capabilities[328] - CHEERS Telepathy, an AI content creation platform, enhances user engagement by automating content generation and optimizing marketing strategies[348] - The CHEERS Metaverse, announced in December 2023, aims to redefine shopping experiences by integrating AI, digital twin, cloud computing, and blockchain technologies[356] - The company plans to leverage blockchain technologies and strategic collaborations to develop a metaverse platform, focusing on immersive experiences in intelligent retail and social networking[325] - The CHEERS ecosystem is set to expand with new apps, including CheerCar and CheerChat, aimed at enhancing user engagement and content monetization[324] Financial Performance - Glory Star reported total consolidated net revenues of $152.3 million for the year ended December 31, 2023, a decrease of 3.8% from $157.1 million in 2022[502] - The Cheers APP Internet Business generated revenues of $141.0 million in 2023, down from $144.0 million in 2022, while the Traditional Media Business saw revenues decline to $11.3 million from $13.0 million[502] - Operating income for the Cheers APP Internet Business increased to $27.1 million in 2023, compared to $24.5 million in 2022, while the Traditional Media Business reported operating income of $2.2 million, slightly down from $2.2 million in 2022[502] - Revenues for the year ended December 31, 2023, were approximately $152.3 million, a decrease of approximately $4.8 million, or 3.03% from $157.1 million in 2022[506] - 97.9% of revenues in 2023 were derived from advertising services, indicating a strong reliance on this revenue stream[506] - The increase in revenues was primarily due to an increase in advertising revenues of approximately RMB 32.4 million, driven by efforts to expand the customer base[507] - Operating income for 2023 was $29.3 million, an increase of $2.6 million, or 9.57% from $26.7 million in 2022[505] - Net income for 2023 was $30.5 million, representing an increase of $4.1 million, or 15.46% from $26.4 million in 2022[505] - Total operating expenses decreased by $7.3 million, or 5.61%, from $130.4 million in 2022 to $123.0 million in 2023[505] Regulatory Compliance and Legal Matters - The PRC government imposes extensive regulations on the e-commerce and media industries, which the company must navigate to operate effectively[380] - The company is currently in material compliance with the guidance provided by the State Administration for Industry and Commerce regarding credit construction in the e-commerce sector[394] - The company believes it is in compliance with the PRC Consumer Rights and Interests Protection Law and the Online Trading Measures in all material aspects[398] - The company has obtained the necessary approvals for television program production and trading activities from the State Administration of Radio, Film and Television[399] - The company must ensure that advertisements comply with specific content requirements, including prohibitions on misleading content and certain types of products[401] - The company is required to establish systems for the receipt and registration of online advertising in accordance with the Administrative Measures for Online Advertising[404] - The company must protect personal information as mandated by the Civil Code and the Personal Information Protection Law, with penalties for violations including fines and revocation of licenses[411] - The company has adopted internal procedures to monitor content displayed on its website and application to comply with PRC laws and regulations[413] Corporate Structure and Ownership - The company is structured as a Cayman Islands exempted holding company and operates in China through PRC subsidiaries and VIEs[460] - The company relies on dividends and distributions from its VIEs to fund cash and financing requirements, including paying dividends to shareholders[474] - The VIE shareholders have granted the company an option to acquire their equity interests at the lowest price permitted under PRC law, with a term of 10 years, extendable for successive 5-year terms[467] - The company provides exclusive technology support and services to its VIEs, which pay service fees equal to their pre-tax profits less certain deductions[473] - The company must comply with PRC laws and regulations regarding foreign ownership, primarily conducting business through VIE contracts[465] Taxation and Financial Incentives - The company is subject to a 25% enterprise income tax rate for resident enterprises on income sourced both within and outside China[437] - Non-resident enterprises with institutions in China pay a 25% tax rate on income sourced from China, while those without institutions pay a 10% tax rate[437] - The standard withholding tax rate on dividends for non-resident enterprises is reduced from 20% to 10% under the Implementation Rules of the EIT Law[446] - The VAT rate for taxpayers selling goods was adjusted from 17% to 16% and from 11% to 10% as per the Circular on Adjusting Value-added Tax Rate[444] - The tax rate for certain high and new technology enterprises is reduced to 15% if they meet specific criteria[438] - The company is eligible for various financial supports and services as a recognized high and new technology enterprise[440] Employee and Operational Insights - As of December 31, 2023, the company had 127 full-time employees, with 47.2% in the CHEERS Platform and e-Mall Department[374] - Glory Star's principal executive office spans approximately 1,770 square meters, with total leased office space of 2,048 square meters, incurring monthly rent of approximately $26,029.55[485] - The company does not anticipate declaring or paying dividends in the foreseeable future, focusing instead on retaining funds for business operations and expansion[478]

Financial Performance - Total revenues for the six months ended June 30, 2023, were $67,435,000, a decrease of 3.6% compared to $69,933,000 for the same period in 2022[6] - Net income attributable to Glory Star New Media Group Holdings Limited's shareholders for the six months ended June 30, 2023, was $8,747,000, down from $10,807,000 in the prior year, representing a decline of 19.3%[6] - The company reported a basic and diluted earnings per share of $0.12 for the six months ended June 30, 2023, down from $0.16 in the same period of 2022[6] - The company experienced a comprehensive loss of $108,000 for the six months ended June 30, 2023, compared to a comprehensive income of $3,337,000 in the same period of 2022[6] - Total consolidated net revenues for the six months ended June 30, 2023, were $67,435, a decrease of 3.6% from $69,933 in the same period of 2022[114] Revenue Breakdown - Advertising revenue decreased to $64,863, down 3.9% from $67,231 in the prior year[43] - Copyright revenue increased to $2,451, up 10.9% from $2,209 in the same period of 2022[43] - CHEERS E-mall marketplace service revenue decreased to $110, down 56.5% from $252 in the prior year[43] - The Cheers APPs Internet Business generated net revenues of $61,608 for the six months ended June 30, 2023, an increase of 1.5% from $60,672 in 2022[114] - The Traditional Media Business reported net revenues of $5,827 for the six months ended June 30, 2023, down 37.5% from $9,261 in the same period of 2022[114] Assets and Liabilities - Total current assets increased to $246,978,000 as of June 30, 2023, compared to $183,845,000 as of December 31, 2022, reflecting a growth of 34.3%[3] - Cash and cash equivalents rose significantly to $152,441,000 from $70,482,000, marking an increase of 116.5%[3] - Total liabilities remained relatively stable at $33,446,000 as of June 30, 2023, compared to $33,460,000 at the end of 2022[4] - Total liabilities decreased to $31,640 as of June 30, 2023, from $38,872 at the end of 2022[21] - Total assets as of June 30, 2023, were $261,493, up from $188,597 at the end of 2022[21] Shareholder Equity - The total shareholders' equity increased to $232,783,000 as of June 30, 2023, compared to $172,428,000 as of December 31, 2022, indicating a growth of 34.9%[4] - As of June 30, 2023, the Company issued and outstanding ordinary shares totaled 92,317,950, an increase from 68,124,402 shares as of December 31, 2022, reflecting a growth of approximately 35.5%[101] Cash Flow - Net cash provided by operating activities for June 2023 was $27,179, compared to a net cash used of $(30,627) in June 2022[12] - Net cash provided by financing activities increased significantly to $60,385 for the six months ended June 30, 2023, compared to $710 in the same period of 2022[21] - The company reported a net increase in cash and cash equivalents of $81,959 for the period, compared to a decrease of $(32,525) in the previous year[12] Operating Expenses - Operating expenses totaled $58,723,000 for the six months ended June 30, 2023, slightly down from $59,428,000 in the previous year[6] - The Company incurred total operating lease expenses of $202 thousand for the six months ended June 30, 2023, compared to $233 thousand for the same period in 2022, a decrease of 13.3%[85] Future Plans - The company plans to continue focusing on market expansion and new product development to drive future growth[6] Customer Concentration - Four customers accounted for 20%, 19%, 17%, and 13% of total revenue for the six months ended June 30, 2023[48] Other Financial Metrics - The allowance for doubtful accounts decreased to $716 from $1,006 in the previous year[58] - The Company recognized share-based compensation expenses of $nil for the six months ended June 30, 2023, compared to $2 for the same period in 2022, indicating a significant reduction in expenses[99] - The Company had capital expenditure commitments of $14,894 as of June 30, 2023, primarily related to the acquisition of CheerCar, CheerReal, and a VR platform[115]

User Engagement and Growth - The CHEERS App downloads increased from 259 million in December 2021 to 342 million by December 31, 2022, while CHEERS e-Mall downloads rose from 12.5 million to 34.5 million in the same period[354]. - Monthly Active Users (MAU) are tracked to manage operations, with a focus on adjusting promotional activities based on user engagement[355]. - The Repurchase Rate (RPR) for the CHEERS e-Mall was 34.5% for the 360-day period during the commercial year of 2022, indicating strong customer retention[355]. - The average Daily Time Spent (DTS) on the CHEERS video platform was 56 minutes during the commercial year of 2022, reflecting user engagement[356]. - The company has launched ten live streaming shows, enhancing user interaction and driving sales through discount coupons and real-time games[366]. - The CHEERS video platform has been upgraded to include a UGC rights management system, encouraging user-generated content and creator partnerships[362]. Ecosystem and Product Development - The CHEERS ecosystem is expanding with the introduction of new apps, including CheerCar and CheerReal, and the anticipated launch of CheerChat in 2023[352]. - The company plans to leverage blockchain technologies and strategic collaborations to develop a metaverse platform that integrates intelligent retail, social networking, and gaming[353]. - The CheerChat app, which entered beta testing in 2021, aims to penetrate the social audio market and is expected to launch in 2023[386]. - The company has developed four online games for its CHEERS e-Mall platform, monetizing through in-app purchases[382]. - The company plans to develop Glory Star metaverse experience centers, integrating reality with the virtual world using 5G, AI, AR, and VR technologies[388]. Market Trends and Projections - The total e-commerce market sales in China reached RMB34,810 billion in 2019, with a CAGR of 12.4% from 2015 to 2019[401]. - The population of online shoppers in China is expected to reach 850 million by 2021, at a CAGR of 10.8%[401]. - The population of online video users in China reached 850.44 million by March 2020, with a CAGR of 13.3% from 2015[403]. - The market scale of proprietary PGC video content-driven e-commerce platforms was approximately RMB3.5 billion in 2019, with a CAGR of 151.6% from 2016 to 2019[408]. - The market for proprietary PGC video content-driven e-commerce platforms is expected to grow at a CAGR of 32.5% to RMB14.5 billion by 2024[408]. Regulatory Environment - The PRC government imposes extensive regulations on the e-commerce industry, affecting the company's operations and potential foreign investments[419]. - Foreign investors are prohibited from holding more than 50% equity in telecommunications enterprises providing value-added services, impacting the company's investment structure[422]. - The company is currently in compliance with the PRC Consumer Rights and Interests Protection Law and the Online Trading Measures in all material aspects[438]. - The company has adopted internal procedures to monitor content displayed on its website and application to comply with PRC laws and regulations[453]. - Internet information service providers are required to protect user personal information and may face penalties for violations, including fines and revocation of licenses[448]. - The Network Security Law mandates that internet operators take necessary measures to safeguard network data and prevent illegal activities[451]. - The company must maintain a monitoring system for platform-based operators to ensure compliance with market regulations[436]. Financial and Taxation Matters - The enterprise income tax rate for resident enterprises is 25%, while non-resident enterprises pay 10% for income sourced within China without a local presence[477]. - The standard withholding tax rate on dividends for non-resident enterprises is 20%, reduced to 10% under certain conditions[485]. - The VAT rate for taxpayers selling goods is 17%, adjusted to 16% in 2018, and further reduced to 13% in 2019[482][484]. - The company intends to retain all available funds and future earnings for business operations and expansion, with no anticipated dividends in the foreseeable future[516]. - Current PRC regulations require WFOE to pay dividends to the Hong Kong subsidiary only from accumulated after-tax profits, with a mandatory 10% set aside for statutory reserves[519]. Corporate Structure and Compliance - The company operates through VIEs due to restrictions on foreign ownership in certain sectors, consolidating their operating results in financial statements under U.S. GAAP[503]. - The exclusive option agreements with VIE shareholders allow the company to acquire equity interests at the lowest price permitted under PRC law, with a term of 10 years[505]. - The business cooperation agreements stipulate that VIEs cannot enter transactions affecting their assets without WFOE's consent, ensuring control over operations[504]. - The share pledge agreements provide WFOE with priority security interests in VIEs' equity to secure performance under principal agreements[506]. - The company is structured as a Cayman Islands exempted company, conducting operations in China through PRC subsidiaries and VIEs[499]. Employment and Social Security - As of December 31, 2022, the company had 138 full-time employees, with the CHEERS Platform and e-Mall Department accounting for 58.0% of the total headcount[413]. - The company participates in various government statutory social security plans, contributing specified percentages of employee salaries[412]. - The PRC Social Insurance Law mandates both employers and individuals to pay social insurance premiums[464].

User Engagement and Growth - As of December 31, 2021, the total downloads of the CHEERS App reached approximately 271 million, up from 169 million as of December 31, 2020, representing a growth of 60.7%[315] - Monthly Active Users (MAUs) increased to 47.6 million as of December 31, 2021, compared to 37.7 million as of December 31, 2020, reflecting a growth of 26.3%[316] - The CHEERS App integrates e-commerce services with professionally-produced content, driving user conversion and revenue growth[311] - The company aims to attract influencers to enhance platform adoption and user engagement, which is expected to increase profitability[324] - The CHEERS video platform has been upgraded to include a UGC rights management system, enhancing user engagement and content creation opportunities[323] Financial Performance - Gross Merchandise Value (GMV) for the e-Mall was approximately $409 million for the year ended December 31, 2021, a significant increase from $132 million in 2020, marking a growth of 209.1%[318] - The company generates advertising revenues from various formats, including pre-video, in-video, and pop-up advertisements on its CHEERS video platform[331] - The company produces and licenses series TV shows, generating revenues through advertising fees and product placements[339] Market Trends and Projections - The total e-commerce market sales in China reached RMB 34,810 billion in 2019, with a compound annual growth rate (CAGR) of 12.4% from 2015 to 2019[347] - The population of online shoppers in China is expected to reach 850 million by 2021, with a CAGR of 10.8%[349] - The population of online video users in China reached 850.44 million by March 2020, with a CAGR of 13.3% from 2015[352] - The market scale of proprietary PGC video content-driven e-commerce platforms was approximately RMB3.5 billion in 2019, with a CAGR of 151.6% from 2016 to 2019, and is expected to grow at a CAGR of 32.5% to RMB14.5 billion by 2024[356] Technological Development - The CHEERS ecosystem plans to leverage blockchain technologies and strategic collaborations to develop a metaverse platform featuring intelligent retail, video on demand, and social networking[313] - The company is focused on developing a metaverse platform that combines online and offline experiences, utilizing cutting-edge technologies[321] - The company has developed four online games for the CHEERS e-Mall platform, monetizing through in-app purchases[333] - The company plans to launch metaverse experience centers in Beijing, Shenzhen, and New York City, integrating e-commerce, social networking, and gaming[335] - The CheerChat app, currently in beta testing, aims to penetrate the social audio market with unique features and intelligent voice translation technology[337] Compliance and Regulatory Environment - The PRC government imposes extensive controls and regulations over the e-commerce and media industries, which may impact the company's operations[367] - Foreign investment in value-added telecommunications services is restricted, requiring PRC partners to hold majority interests in joint ventures[368] - The company believes it is currently in compliance with the PRC Consumer Rights and Interests Protection Law, Online Trading Measures, and the Civil Code of the PRC in all material aspects[386] - The company must ensure that advertisements are true and accurate, complying with PRC advertising laws, or face penalties including fines and revocation of advertising licenses[391] - The company must protect user personal information and cannot disclose it without user consent, with severe penalties for violations[396] Intellectual Property and Assets - The company owned 72 registered trademarks in the PRC and 4 in Hong Kong, along with 50 registered copyrights in the PRC as of December 31, 2021[363] - As of December 31, 2021, the company had forty-four (44) registered software copyrights and six (6) artwork copyrights[406] - The company had 6 domain names registered in the PRC as of December 31, 2021[409] Taxation and Financial Structure - The enterprise income tax rate for resident enterprises is 25%, while non-resident enterprises pay 10% for income sourced within China without a local institution[422] - The standard withholding tax rate on dividends for non-resident enterprises is 20%, but can be reduced to 10% under certain conditions[431] - The VAT rate for selling goods is generally 17%, with specific rates of 11% and 6% for certain services and intangible assets[427] - The company intends to retain all available funds for business operations and expansion, with no anticipated dividends in the foreseeable future[454] Employment and Labor Relations - As of December 31, 2021, the company had 162 full-time employees and maintained a good working relationship with them, with no significant labor disputes reported[361] - The company is fully compliant with regulations regarding the housing provident fund contributions[413] - The company must adhere to the PRC Labor Contract Law, which mandates labor contracts and compliance with local minimum wage standards[410]

Financial Performance - Total revenues increased by 23.6% to US$153.0 million for the full year of 2021 from US$123.8 million for the full year of 2020[2] - Net income attributable to Glory Star New Media Group Holdings Limited's shareholders was $35,287 thousand in 2021, compared to $48,990 thousand in 2020, reflecting a decrease of 28%[18] - The company reported a comprehensive income of $38,178 thousand in 2021, down from $55,458 thousand in 2020, reflecting a decrease of 31.2%[19] - Net income for 2021 was $35,352 million, a decrease of 27.9% from $48,959 million in 2020[21] - Basic earnings per ordinary share for 2021 was $0.54, down from $0.91 in 2020, indicating a decline in profitability per share[19] User Engagement and App Performance - Downloads of the CHEERS App reached approximately 271 million as of December 31, 2021, a 60% increase from approximately 169 million as of December 31, 2020[1] - Monthly active users (MAUs) of the CHEERS App increased to approximately 47.6 million from 37.7 million for the full year of 2020[1] - Gross Merchandise Value (GMV) of the CHEERS App was approximately US$409 million, compared to US$132 million for the full year of 2020[1] Revenue Streams - Advertising revenues increased by 27.0% to US$132.9 million for the full year of 2021 from US$104.7 million for the full year of 2020[5] - CHEERS e-Mall marketplace service revenues increased by 348.7% to US$6.8 million for the full year of 2021 from US$1.5 million for the full year of 2020[5] Operating Expenses and Cash Flow - Income from operations increased by 18.3% to US$36.3 million for the full year of 2021 from US$30.7 million for the full year of 2020[6] - Operating expenses increased to $116,725 thousand in 2021, up from $93,094 thousand in 2020, primarily driven by higher selling and marketing expenses[18] - Net cash provided by operating activities increased by 431.5% to US$46.5 million for the full year of 2021 from US$8.7 million for the full year of 2020[2] - Cash and cash equivalents at the end of 2021 reached $77,302 million, up from $17,731 million in 2020, representing a 335.5% increase[21] Strategic Plans and Future Growth - The Company plans to implement a new metaverse retail strategy and develop the CheerChat application, anticipated to launch in 2022[4] - The company plans to focus on market expansion and new product development to drive future growth[18] Balance Sheet and Liabilities - Cash and cash equivalents decreased to $77,302 thousand from $17,731 thousand, indicating a significant change in liquidity position[16] - Total assets decreased to $143,396 thousand in 2021 from $195,173 thousand in 2020, representing a decline of 26.5%[16] - Total liabilities increased to $38,949 thousand in 2021, compared to $35,709 thousand in 2020, marking an increase of 6.6%[16] Other Financial Metrics - Research and development expenses rose to $920 thousand in 2021, compared to $691 thousand in 2020, highlighting increased investment in innovation[18] - The company experienced a significant change in fair value of warrant liability, with a loss of $809 million in 2021 compared to a loss of $19,714 million in 2020[21] - Accounts receivable improved significantly, with a change of $19,904 million in 2021 compared to a decrease of $24,043 million in 2020[21] - Depreciation and amortization expenses were $2,090 million in 2021, down from $2,910 million in 2020[21] - The company reported a substantial increase in share-based compensation for employees, totaling $4 million in 2021 compared to $5,381 million in 2020[21] - The effect of exchange rate changes resulted in a gain of $881 million in 2021, compared to a gain of $1,108 million in 2020[21]

User Growth and Engagement - As of December 31, 2020, the total downloads of the CHEERS App reached approximately 169 million, up from 85 million as of December 31, 2019, indicating significant growth in user acquisition [218]. - Daily Active Users (DAUs) increased from 1.91 million in 2019 to 5.37 million in 2020, reflecting a substantial rise in user engagement [220]. Sales and Product Expansion - Gross Merchandise Value (GMV) for the e-Mall surged from $19.36 million in 2019 to $132 million in 2020, demonstrating strong sales growth [223]. - The e-Mall carried 24,975 SKUs as of December 31, 2020, compared to 13,180 SKUs as of December 31, 2019, indicating an expansion in product offerings [223]. Financial Activities - The company completed a public offering on February 24, 2021, raising approximately $11.3 million in net proceeds from the sale of 3,810,976 ordinary shares [212]. - The underwriters exercised their over-allotment option on March 25, 2021, resulting in additional net proceeds of approximately $1.7 million [213]. E-commerce and Market Trends - The CHEERS App serves as a comprehensive content-driven e-commerce platform, integrating video content with online shopping, which is a growing trend in Chinese e-commerce [226]. - The company aims to capitalize on the growth potential of China's live streaming and e-commerce markets while exploring innovative monetization opportunities [215]. - The total e-commerce market sales in China reached RMB34,810 billion in 2019, with a CAGR of 12.4% from 2015 to 2019 [240]. - The population of online shoppers in China is expected to reach 850 million by 2021, at a CAGR of 10.8% [241]. - The population of online video users in China reached 850.44 million by March 2020, with a CAGR of 13.3% from 2015 [243]. - The market scale of proprietary PGC video content-driven e-commerce platforms was approximately RMB3.5 billion in 2019, with a CAGR of 151.6% from 2016 to 2019, expected to grow to RMB14.5 billion by 2024 [248]. - The company is among the top five video content-driven e-commerce platforms in China based on semi-annual GMV for the first half of 2020 [252]. Employee and Operational Information - As of December 31, 2020, the company had 159 full-time employees and maintained a good working relationship with them [253]. - The company does not own any real property, relying on leased office space for its operations [341]. - As of December 31, 2020, the company has a total of 2,317 square meters of office space, paying approximately $40,832 in monthly rent [341]. Intellectual Property and Compliance - The company owned 59 registered trademarks in the PRC and 4 registered trademarks in Hong Kong as of December 31, 2020 [255]. - As of December 31, 2020, the company had thirty-six (36) registered software copyrights and four (4) work copyrights [298]. - The company is required to comply with the PRC Labor Contract Law, which mandates that labor contracts must be established with employees and wages must meet local minimum standards [303]. - Under the PRC Social Insurance Law, both employers and individuals are required to pay social insurance premiums, with penalties for non-compliance including fines and potential criminal liability [304]. Regulatory Environment - The company is subject to extensive controls and regulations over the e-commerce and media industry in China [260]. - The ultimate foreign equity ownership in a value-added telecommunications services provider may not exceed 50% [263]. - The Foreign Investment Law allows foreign investors to freely remit capital contributions and profits made in China, enhancing the protection of intellectual property rights [269]. - The PRC Consumer Rights and Interests Protection Law mandates that consumers can return goods purchased online within seven days for no reason, impacting online marketplace operations [277]. - The company is subject to stringent regulations regarding advertising, including the requirement for advertisements to be true and accurate, with penalties for violations [284]. - Internet Advertising Measures require that online advertisements be clearly identifiable and marked, ensuring consumer awareness [285]. - The company is currently in compliance with regulations related to product quality and consumer rights protection, as well as internet advertising laws [279][284]. - E-commerce regulations have been established to promote the healthy development of online trading and protect consumer rights [272]. - The company has obtained necessary approvals for television program production and trading activities, complying with media industry regulations [280]. Taxation and Financial Regulations - The EIT Law imposes a 25% tax rate on resident enterprises and a 10% rate on non-resident enterprises without a physical presence in China [315]. - High and new technology enterprises enjoy a reduced enterprise income tax rate of 15% if they meet specific criteria [316]. - Leshare Star (Beijing) Technology Co., Ltd. recognized as a high and new technology enterprise, entitled to a preferential tax rate of 15% from 2019 to 2022 [317]. - The VAT rate for general taxpayers selling goods was adjusted from 17% to 13% as per the 2019 reforms [323]. - The EIT Law prescribes a standard withholding tax rate of 10% on dividends paid to non-resident enterprises [324]. VIE Structure and Agreements - The company is structured as a Cayman Islands exempted holding company and operates in China through PRC subsidiaries and VIEs [330]. - The VIE Contracts allow the company to consolidate the financial results of its VIEs under U.S. GAAP, despite restrictions on foreign ownership in certain sectors [332]. - The Master Exclusive Service Agreements enable the company to receive service fees equal to the pre-tax profits of the VIEs, adjusted for losses, operating costs, and taxes [340]. - The exclusive option agreements grant the company the right to acquire equity interests in the VIEs at the lowest price permitted under PRC law, with a term of 10 years [334]. - The share pledge agreements provide the company with a priority security interest in the VIEs' equity interests to secure performance under the Principal Agreements [335]. - Proxy agreements allow the company to exercise all rights of VIE equity holders, including management and financial oversight [336]. - The VIE shareholders have agreed to implement arrangements set forth in the Principal Agreements and not to interfere with these agreements [338].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-38631 GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED (Exact name of registrant as specified in its charter) | --- | --- | |---------- ...

Business Combination and Corporate Structure - The Business Combination resulted in the acquisition of 100% of Glory Star's equity interests, with TKK issuing approximately 41,204,025 ordinary shares as part of the transaction[10]. - The Business Combination was accounted for as a reverse merger, with Glory Star considered the acquirer for accounting purposes[11]. - The Business Combination was finalized on February 14, 2020, following the Share Exchange Agreement dated September 6, 2019[9]. - Following the Business Combination, public shareholders own approximately 5.05% of GS Holdings, while Sellers own approximately 82.79%[28]. - Glory Star New Media Group operates through Variable Interest Entities (VIEs) to comply with PRC laws, consolidating their operating results in financial statements under U.S. GAAP[89]. - The company has entered into multiple agreements with VIEs, including Business Cooperation Agreements, which restrict VIEs from making significant operational changes without WFOE's consent[90]. - Exclusive Option Agreements allow WFOE to acquire equity interests in VIEs at the lowest price permitted under PRC law, with a term of 10 years and automatic extensions[91]. - Share Pledge Agreements secure WFOE's interests in VIEs, allowing it to dispose of pledged interests if VIEs fail to meet obligations[92]. - Proxy Agreements grant WFOE extensive control over VIEs, including rights to manage finances, operations, and appoint senior management[93]. - The Master Exclusive Service Agreements enable WFOE to provide various services to VIEs in exchange for service fees equal to the VIEs' pre-tax profits minus certain deductions[97]. Financial Performance and Growth - As of December 31, 2019, the cumulative downloads of the CHEERS App reached 85 million, up from 12 million in 2018, representing a growth of approximately 608.33%[19]. - The CHEERS App downloads for the year ended December 31, 2019, were approximately 72.5 million, compared to 6.2 million in 2018, indicating significant user growth[19]. - The e-Mall recorded a gross merchandise value (GMV) of RMB133.76 million (US$19.36 million) as of December 31, 2019, achieving a monthly GMV of RMB33.73 million (US$4.82 million) in December 2019, up from RMB1.3 million (US$0.2 million) in April 2019[37]. - The company anticipates needing approximately $75 million to support its working capital needs over the next twelve months[178]. - As of June 30, 2019, the company had approximately $38.2 million in working capital[178]. - The company has experienced significant user growth for its mobile and online video and e-commerce products over the past several years[181]. - The company generates a substantial part of its revenues from advertising within its mobile and online video content and e-commerce platform[183]. - The company expects mobile and online advertising revenue as a percentage of total revenues to decrease due to the rapid growth of revenues generated from its e-Mall[183]. User Engagement and Content Strategy - The CHEERS App serves millions of users in China, integrating e-commerce with professionally-produced content, and has developed into a comprehensive content-driven platform[35]. - The company must continue to produce new original content and source new talent to attract and retain users on the CHEERS App[175]. - Maintaining and growing user engagement is critical for the company's competitive position in the rapidly evolving industry[175]. - Failure to anticipate user preferences may lead to reduced user traffic, adversely affecting the company's financial condition and results[175]. - The company’s success depends on the quality of its professionally-produced content (PPC), which has seen increased competition in China[189]. - The company must adapt to rapidly evolving user behavior on mobile devices to maintain its competitiveness[198]. - The company’s future growth on its e-commerce platform depends on attracting new customers and increasing spending from existing customers[196]. Market and Industry Trends - The total e-commerce market sales in China reached RMB 15,242 billion in 2018, with a CAGR of 17.6% from 2014 to 2018[54]. - The population of online shoppers in China is expected to reach 900 million by 2021, growing at a CAGR of 13.8%[55]. - The market scale of proprietary PGC video content-driven e-commerce platforms was approximately RMB 2.6 billion in 2018, with a CAGR of 191.5% from 2016 to 2018, and is projected to grow to RMB 19.5 billion by 2023[62]. - Online video users in China reached 0.59 billion by the end of 2018, representing 69% of total internet users[55]. - The company is among the top 5 video content-driven e-commerce platforms in China in terms of monthly GMV as of August 2019[65]. Regulatory Environment - The PRC government imposes extensive regulations on the e-commerce and media industries, affecting foreign investment and operational structures[98]. - The Foreign Investment Law, effective January 1, 2020, protects the rights of foreign investors and regulates their capital contributions and profits in China[108]. - Glory Star New Media Group's corporate structure relies on contractual arrangements with VIEs due to restrictions on foreign ownership in value-added telecommunications services[105]. - The company must navigate uncertainties regarding the interpretation of its corporate structure by PRC governmental authorities[105]. - The implementation of the Foreign Investment Law by PRC government authorities remains unclear, particularly regarding offshore companies controlled by PRC investors through variable interest entities[109]. - The State Council's 2005 Opinions emphasized the importance of regulating e-commerce development, highlighting its significance in the economy[110]. - MOFCOM's 2007 Opinions mandated regularization of online trading behaviors to ensure fair and equitable e-commerce practices[111]. - The 2013 Implementing Opinions aimed to promote e-commerce, particularly in rural areas and for agricultural products, supporting innovative cross-border e-commerce applications[112]. - The 2015 State Council Opinions aimed to simplify market access and registration processes for e-commerce enterprises, encouraging cross-border RMB direct investment[113]. Intellectual Property and Competition - Intellectual property rights protection in China may be less effective than in other jurisdictions, potentially impacting the company's revenues and competitive position[208]. - Unauthorized use of the company's intellectual property by third parties could adversely affect revenues and reputation[208]. - The company may struggle with piracy of its copyrighted content, particularly original content, which could lead to economic losses[208]. - The company faces significant competition from major players such as Alibaba, Pinduoduo, and Douyu, which may impact its user traffic and advertising customer retention[186]. - The company relies on third-party advertising agencies for sales and collection of payments from brand advertisers, which may affect its liquidity and cash flows[184]. Operational Challenges - The company operates under PRC regulations that restrict the dissemination of certain types of content, which could lead to penalties or license revocation if not complied with[203]. - The internet video streaming industry is rapidly evolving, and the company's success depends on its ability to adapt to technological changes and user behavior[207]. - The company faces potential additional costs associated with developing tools and software for a fragmented mobile services market in China[207]. - Changes in mobile operating systems that degrade service functionality could adversely affect user engagement[207]. - The company is dependent on the interoperability of its services with popular mobile operating systems like Android and iOS, which it does not control[207]. - The company may incur substantial capital expenditures in product development to adapt to technological changes[207].

Financial Performance - For the three months ended September 30, 2019, the company reported a net income of $552,308, with interest income of $1,365,513 and operating costs of $690,455[88]. - For the nine months ended September 30, 2019, the company had a net income of $2,966,101, driven by interest income of $4,423,040 and operating costs of $1,434,041[89]. Cash and Securities - As of September 30, 2019, the company held marketable securities in the Trust Account amounting to $256,286,247[95]. - Cash used in operating activities for the nine months ended September 30, 2019, was $1,209,724, influenced by interest earned on marketable securities[93]. Capital Structure - The company generated gross proceeds of $250 million from its Initial Public Offering, with an additional $6.5 million from the sale of Private Placement Warrants[91]. - The company has a working capital deficit of $80,945 as of September 30, 2019[101]. - An unsecured promissory note of up to $1,100,000 was issued to the Sponsor for working capital loans, with $850,000 outstanding as of September 30, 2019[100]. - The company does not have any long-term debt or off-balance sheet financing arrangements as of September 30, 2019[102]. Strategic Intent - The company intends to utilize funds in the Trust Account primarily for acquiring target businesses and covering related expenses[97]. - The company entered into a Share Exchange Agreement with Glory Star, issuing Exchange Shares valued at $425 million[82].