Our Sponsor, officers, and certain members of our board of directors will directly benefit from the Business Combination and have interests in the Business Combination that may be different from, or in addition to, the interests of TKK shareholders. See “The Business Combination — Interests of Certain Persons in the Business Combination.”

You must make your own decision as to whether to tender your ordinary shares and, if so, how many ordinary shares to tender. In doing so, you should read carefully the information in this Offer to Purchase and in the Letter of Transmittal, including the purposes and effects of the Offer. See “The Offer — Purpose of the Offer; Certain Effects of the Offer.” You should discuss whether to tender your ordinary shares with your broker, if any, or other financial advisors. See “Risk Factors” for a discussion of risks that you should consider, including risks relating to Glory Star, and the inherent difficulty in obtaining accurate valuations on advertising/e-commerce/media companies such as Glory Star, before participating in the Offer.

Our Sponsor and our initial shareholders have agreed to waive their redemption rights in connection with the Offer with respect to the ordinary shares they own and as such, will not tender any shares they hold to TKK. See “The Offer — Purpose of the Offer; Certain Effects of the Offer” and “The Business Combination — Interests of Certain Persons in the Business Combination.”

The information contained herein concerning Glory Star, its business, and industry has been provided by Glory Star.

Neither the SEC nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this Offer. Any representation to the contrary is a criminal offense.

Questions and requests for assistance regarding the Offer may be directed to Morrow Sodali LLC, as information agent (the “Information Agent”) for the Offer, at the telephone numbers and e-mail address set forth on the back cover of this Offer to Purchase. You may request additional copies of the Offer to Purchase, the Letter of Transmittal, and the other Offer documents, if any, from the Information Agent at the telephone number and e-mail address on the back cover of this Offer to Purchase. You may also contact your broker, dealer, commercial bank, trust company or nominee for copies of these documents.

October 17, 2019

IMPORTANT

If you desire to tender all or any portion of your ordinary shares, you must do one of the following before the Offer expires:

•        if your ordinary shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact the nominee and have the nominee tender your ordinary shares for you;

•        if you hold certificates for ordinary shares registered in your own name, you must complete and sign the appropriate enclosed Letter of Transmittal according to its instructions and deliver it, together with any required signature guarantees, the certificates for your ordinary shares and any other documents required by the Letter of Transmittal, to Continental Stock Transfer & Trust Company;

•        if you are a participant institution of The Depository Trust Company, or DTC, you must tender your ordinary shares according to the procedure for book-entry transfer described in “The Offer — Procedures for Tendering Ordinary Shares” of this Offer to Purchase; or

•        if you are a holder of Units and wish to tender ordinary shares included in such Units, you must separate the Units into ordinary shares, warrants and rights prior to tendering such ordinary shares pursuant to the Offer. For specific instructions regarding separation of Units, you will need to contact your broker and/or see the letter from your broker/nominee, which includes an instruction form for your completion which provides a box to check to request separation of the Units. Accordingly, while we believe that such separation of the Units can typically be accomplished within three business days, no assurance can be given regarding how quickly units can be separated and Unit holders are urged to promptly contact their broker/nominee if they wish to tender the shares underlying their Units. If you fail to cause your ordinary shares to be separated in a timely manner before the Offer expires, you will not be able to validly tender such ordinary shares prior to the expiration of the Offer.

To validly tender ordinary shares pursuant to the Offer, other than ordinary shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must properly complete and duly execute the Letter of Transmittal and deliver it to us in accordance with the procedures described in Offer to Purchase.

We are not making the Offer to, and will not accept any tendered ordinary shares from, shareholders in any jurisdiction where it would be illegal to do so. However, we may, at our discretion, take any actions necessary for us to comply with the applicable laws and regulations to make the Offer to shareholders in any such jurisdiction.

We have not authorized any person to make any recommendation on our behalf as to whether you should tender your ordinary shares pursuant to the Offer. You should rely only on the information contained in this Offer to Purchase and in the related Letter of Transmittal or other information to which we have referred you. We have not authorized anyone to provide you with information or to make any representation in connection with the Offer other than those contained in this Offer to Purchase or in the related Letter of Transmittal. If anyone makes any recommendation or gives any information or representation regarding the Offer, you must not rely upon that recommendation, information or representation as having been authorized by us, our board of directors, the Depositary or the Information Agent for the Offer. You should not assume that the information provided in this Offer is accurate as of any date other than the date as of which it is shown, or if no date is otherwise indicated, the date of this Offer.

HOW TO OBTAIN ADDITIONAL INFORMATION

This Offer to Purchase incorporates important information about us that is not included or delivered herewith. If you would like to receive additional information or if you want additional copies of this document, the appendices or any other documents we file with the SEC, such information is available without charge upon written or oral request. Please contact the Information Agent for the Offering at:

Morrow Sodali LLC
470 West Avenue — 3rd Floor
Stamford CT 06902
Individuals, please call (800) 662-5200
Banks and brokerage forms, please call (203) 658-9400
Email: TKKS.info@morrowsodali.com

TABLE OF CONTENTS

CERTAIN DEFINITIONS

Unless otherwise stated or where the context otherwise requires, references in this Offer to Purchase to:

•        “we,” “us,” “our,” the “Company,” or “TKK” means the registrant, TKK Symphony Acquisition Corporation, a Cayman Islands exempted company;

•        “Additional Agreements” means the Registration Rights Agreement, Escrow Agreement, Non-Compete Agreements and Lock-Up Agreement, as contemplated by the Share Exchange Agreement;

•        “Memorandum and Articles of Association” means TKK’s Amended and Restated Memorandum and Articles of Association, as further amended and in effect on the date hereof;

•        “Business Combination” means the acquisition of Glory Star by TKK pursuant to the terms of the Share Exchange Agreement;

•        “Business Combination Deadline” means February 20, 2020 (or until June 20, 2020 if we extend the period of time to consummate a business combination through the issuance of 25,000,000 warrants, each to purchase one-half of an ordinary share, as a dividend to our public shareholders (“potential extension warrants”)), the deadline for consummating TKK’s initial business combination;

•        “Cayman Islands Companies Law” means the Cayman Islands Companies Law (2018 Revision), as amended;

•        “Closing Payment Shares” means the ordinary shares of TKK in an aggregate number equal to $425,000,000 divided by the redemption price, that are to be issued to the Sellers upon the consummation of the Business Combination as consideration therefor;

•        “combined company” means TKK (to be renamed “Glory Star New Media Group Holdings Limited”) and its subsidiaries following the consummation of the Business Combination;

•        “Earnout Shares” means a maximum of 10,000,000 ordinary shares that may be issued to the Sellers if, after the Business Consummation, the combined company meets certain financial performance targets for the 2019 fiscal year and 2020 fiscal year;

•        “Escrow Shares” means 5% of the Closing Payment Shares that are to be deposited into escrow to secure certain indemnification obligations of Glory Star and the Sellers;

•        “Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

•        “founder shares” means the ordinary shares held by the Sponsor and other initial shareholders;

•        “FPI” or “FPI status” means a foreign private issuer as defined by and determined pursuant to Rule 3b-4 under the Exchange Act;

•        “Glory Star” means Glory Star New Media Group Limited, a Cayman Islands exempted company;

•        “Glory Star Group” means Glory Star together with its consolidated subsidiaries and VIEs.

•        “Glory Star Parties” are the VIEs, the WFOE and Glory Star, collectively;

•        “Horgos” means Horgos Glory Star Media Co., Ltd., a limited liability company incorporated in the PRC;

•        “initial public offering” or “IPO” means TKK’s initial public offering of Units at $10.00 per Unit which closed in August 2018;

•        “Nasdaq” means the Nasdaq Capital Market;

•        “PRC” means the People’s Republic of China;

•        “private placement warrants” means the warrants issued to an affiliate of the Sponsor in a private placement in connection with the IPO;

•        “public rights” and “rights” means the rights sold as part of the units in the IPO (whether they were purchased in the offering or thereafter in the open market); one right entitles the holder thereof to receive one-tenth (1/10) of an ordinary share upon the consummation of an initial business combination

•        “public shareholders” means holders of public shares;

•        “public shares” means the ordinary shares sold as part of the units in the IPO (whether they were purchased in the offering or thereafter in the open market);

•        “public warrants” or “warrants” are to the redeemable warrants sold as part of the units in the IPO (whether they were purchased in the offering or thereafter in the open market); each warrant entitles the holder thereof to purchase one-half of one ordinary share at a price of $5.75 per half share, subject to adjustment;

•        “Purchase Price” means $10.26 per ordinary share or $256,500,000 in aggregate;

•        “Purchaser Representative” means TKK Symphony Sponsor 1, a Cayman Islands exempted company, as representative of the Purchaser;

•        “RMB” refers to Renminbi, the lawful currency of China;

•        “SEC” means the United States Securities and Exchange Commission;

•        “Securities Act” means the United States Securities Act of 1933, as amended;

•        “Seller Representative” means Bing Zhang, as representative of the Sellers;

•        “Sellers” means the shareholders of Glory Star;

•        “Share Exchange” means the acquisition of the shares of Glory Star from the Sellers pursuant to the terms of the Share Exchange Agreement;

•        “Share Exchange Agreement” means the Share Exchange Agreement, dated as of September 6, 2019, as may be amended from time to time, by and among by and among TKK, Glory Star, WFOE, Xing Cui Can, Horgos, each of the Sellers, the Purchaser Representative, and the Seller Representative.

•        “Sponsor” means TKK Symphony Sponsor 1, a Cayman Islands exempted company;

•        “Trust Account” means the segregated account at Continental Stock Transfer and Trust Company, where certain of the proceeds from our IPO and the sale of the private placement warrants were deposited pursuant to an Investment Management Trust Agreement by and between TKK and Continental Stock Transfer & Trust Company, as trustee;

•        “underwriters” means the underwriters of TKK’s IPO;

•        “Units” means the units issued in TKK’s IPO; each Unit comprised of one ordinary share, one warrant and one right (whether they were purchased in the IPO or thereafter in the open market);

•        “VIE Contracts” means certain documents executed by the VIEs, the WFOE, the shareholders of the VIEs and certain other parties thereto as necessary to implement certain contractual arrangements in the PRC, which allow the WFOE to (i) exercise effective control over the VIEs and their subsidiaries, (ii) receive substantially all of the economic benefits of the VIEs and their subsidiaries; and (iii) have an exclusive option to purchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC law;

•        “VIEs” means Xing Cui Can and Horgos, the variable interest entities of Glory Star;

•        “WFOE” means Glory Star New Media (Beijing) Technology Co., Ltd., a wholly foreign-owned enterprise limited liability company and indirectly wholly-owned by Glory Star; and

•        “Xing Cui Can” means Xing Cui Can International Media (Beijing) Co., Ltd., a limited liability company incorporated in the PRC.

RISK FACTORS

You should carefully consider the following risk factors in addition to the other information included or incorporated by reference in this Offer to Purchase, including matters addressed in the section entitled “Forward-Looking Statements” before you decide whether to tender ordinary shares in this Offer. We caution you not to place undue reliance on the forward-looking statements contained in this Offer, which speak only as of the date hereof.

Risks Relating to Glory Star Group’s Business and Industry

There are many risks and uncertainties that may affect Glory Star Group’s operations, performance, development and results. Many of these risks are beyond Glory Star’s control. The following is a description of the important risk factors that may affect Glory Star Group’s business. If any of these risks were to actually occur, Glory Star Group’s business, financial condition or results of operations could be materially adversely affected. Additional risks and uncertainties not currently known to Glory Star Group or that Glory Star Group currently considers to be immaterial may also materially adversely affect its business, financial condition or results of operations.

If Glory Star Group fails to anticipate user preferences and provide high-quality content, especially popular original content, in a cost-effective manner, it may not be able to attract and retain users to remain competitive.

Glory Star Group’s success depends on its ability to maintain and grow users and user time spent on its CHEERS App. To attract and retain users and compete against its competitors, Glory Star Group must continue to offer high-quality content, especially popular original content that provides its users with a superior online entertainment experience. To this end, Glory Star Group must continue to produce new original content and source new talent and producers in a cost effective manner. Given that it operates in a rapidly evolving industry, Glory Star Group must anticipate user preferences and industry trends and respond to such trends in a timely and effective manner. If Glory Star Group fails to fulfill the needs and preferences of its users in order to deliver a superior user experience or control its costs in doing so, it may suffer from reduced user traffic, and its business, financial condition and results of operations may be materially and adversely affected.

Glory Star Group currently relies on its in-house team of employees to generate creative ideas for original content and to supervise the original content origination and production process and intends to continue to invest its human and capital resources in such content production. Glory Star Group faces fierce competition for qualified personnel in a limited pool of high-quality creative talent. If it is not able to compete effectively for highly qualified personnel or attract and retain top talent at reasonable costs, its original content production capabilities would be materially and adversely impacted. If Glory Star Group is unable to offer popular original content that addresses its user’s tastes and preferences in a cost effective manner, it may suffer a reduction in user traffic and its business, financial condition and results of operations may be materially and adversely affected.

Glory Star Group operates in a capital intensive industry and requires a significant amount of cash to fund its operations and to produce or acquire high quality video content. If it fails to obtain sufficient capital to fund its operations, its business, financial condition and future prospects may be materially and adversely affected.

The operation of an internet video streaming content provider and producer of television shows requires significant and continuous investment in content production or acquisition and video production technology. Producing high-quality original content is costly and time-consuming and typically requires a long period of time in order to realize a returns on investment, if at all. If Glory Star Group cannot obtain adequate capital to meet its capital needs, it may not be able to fully execute its strategic plans for growth and its business, financial condition and prospects may be materially and adversely affected. Glory Star anticipates it will need approximately $75 million to support its working capital needs in the next twelve (12) months. Even though Glory Star Group has recognized net income for the years ended December 31, 2017 and 2018, historically Glory Star Group has funded its working capital requirements through profits, bank loans and private placement of capital raise. As of June 30, 2019, Glory Star Group had approximately $38.2 million in working capital.

If Glory Star Group’s efforts to retain users and attract new users for its mobile and on-line video content and e-commerce products are not successful, its business, financial condition and results of operations will be materially and adversely affected.

In addition to its content production for television shows, Glory Star Group has experienced significant user growth for its mobile and on-line video and e-commerce products over the past several years. Glory Star Group’s ability to continue to retain users and attract new users will depend in part on its ability to consistently provide its users with compelling content choices, as well as a quality experience for selecting and viewing video content. If Glory Star Group introduces new features or service offerings, or change the mix of existing features and services offerings, in a manner that is not favorably received by its users, it may not be able to attract and retain users and its business, financial condition and results of operations would be materially and adversely affected.

If Glory Star Group fails to retain existing or attract new advertising customers to advertise within its mobile and online video content or on its e-commerce platform, maintain and increase its wallet share of advertising budget, or if it is unable to collect accounts receivable in a timely manner, its business, financial condition and results of operations may be materially and adversely affected.

Glory Star Group generates a substantial part of its revenues from advertising placed within its mobile and online video content and on its e-commerce platform. With the launch of its e-Mall in 2019, Glory Star Group anticipates that although mobile and online advertising revenue as a percentage of its total revenues is expected to decreased due to the fast growth in revenues generated in its e-Mall, its mobile and online advertising business is still growing and remains one of its largest sources of revenue. However, because its advertising customers are not under long term contracts, Glory Star Group may not be able to retain its advertising customers in the future, attract new advertising customers continuously or be able to retain its advertising customers at all. If its advertising customers find that they can generate better returns elsewhere, or if Glory Star Group’s competitors provide better online advertising services to suit the advertising customers’ goals, Glory Star Group may lose some or all of its advertising customers. In addition, third parties may develop and use certain technologies to block the display of online advertisements, and should this occur Glory Star Group’s members will be able to skip the viewing of its advertising customers’ advertisements, which may in turn cause Glory Star Group to lose advertising customers. If Glory Star Group’s advertising customers determine that their expenditures on internet video streaming platforms or its video content does not generate expected returns, they may allocate a portion or all of their advertising budgets to other advertising channels such as television, newspapers and magazines or other internet channels such as e-commerce and social media platforms, and reduce or discontinue business with us. Since most of Glory Star Group’s advertising customers are not bound by long-term contracts, they may easily reduce or discontinue advertising arrangements without incurring material liabilities. Failure to retain existing advertising customers or attract new advertising customers to advertise within the video content produced by us or on our e-commerce platform may materially and adversely affect Glory Star Group’s business, financial conditions and results of operations.

Glory Star Group’s brand advertising customers typically enter into advertising agreements through various third-party advertising agencies. In China’s advertising industry, advertising agencies typically have good relationships and maintain longer periods of cooperation with the brand advertising customers they represent. In addition to entering into advertising contracts directly with advertising customers, Glory Star Group also enters into advertising contracts with third-party advertising agencies, which represent advertising customers, even if Glory Star Group has direct contact with such advertisers. As a result, it relies on third-party advertising agencies for sales to, and collection of payment from, its brand advertisers. The financial soundness of its advertising customers and advertising agencies may affect its collection of accounts receivable. Glory Star Group makes a credit assessment of its advertising customers and advertising agencies to evaluate the collectability of the advertising service fees before entering into an advertising contract. However, Glory Star Group may not be able to accurately assess the creditworthiness of each advertising customer or advertising agency, and any inability of advertising customers or advertising agencies to pay Glory Star Group for its services in a timely manner would negatively our liquidity and cash flows and may materially and adversely affect our business, financial condition and results of operations.

Glory Star Group operates in a highly competitive market and it may not be able to compete effectively.

Glory Star Group faces significant competition in China in various sub-market it operates, primarily from Alibaba (Nasdaq: BABA), Pin Duouo (Nasdaq:PDD), Douyu (Nasdaq: DOYU), Qu Toutiao (Nasdaq: QTT), Mango Media (SZ.300413), and Zhong Tian Guangze (SH.603721). Glory Star Group competes for users, usage time, advertising customers, and shoppers. Some of its competitors have a longer operating history and significantly greater financial resources than it does, and, in turn, may be able to attract and retain more users, usage time and advertising customers. Glory Star Group’s competitors may compete with it in a variety of ways, including by conducting brand promotions and other marketing activities, and making investments in and acquisitions of its business partners. If any of its competitors achieves greater market acceptance than it does or is able to offer more attractive internet video content, its user traffic and its market share may decrease, which may result in a loss of advertising customers, shoppers, and users, as well as have a material and adverse effect on its business, financial condition and results of operations. Glory Star Group also faces competition for users and user time from major television stations, which are increasing their internet video offerings. Glory Star Group also faces competition from users and user time from other internet media and entertainment services, such as internet and social media platforms that offer content in emerging and innovative media formats..

The success of Glory Star Group’s business depends on its ability to maintain and enhance its brand.

Glory Star Group believes that maintaining and enhancing its brand is of significant importance to the success of its business. Glory Star Group’s well-recognized brand is critical to increasing its user base and, in turn, expanding its shoppers for its e-commerce platform and attractiveness to advertising customers and content providers. Since the internet video industry is highly competitive, maintaining and enhancing its brand depends largely on its ability to become and remain a market leader in China, which may be difficult and expensive to accomplish. To the extent its original content is perceived as low quality or otherwise not appealing to users, Glory Star Group’s ability to maintain and enhance its brand may be adversely impacted which in turn may result in a loss of users for our mobile and online video and e-commerce platform.

Increases in professionally-produced content, or PPC, by others may have a material and adverse effect on Glory Star Group’s business, financial condition and results of operations.

Glory Star Group depends on the quality of its PPC for the success of its business model. The amount of PPC, especially TV series and movies, have recently increased significantly in China and may continue to increase in the future. Due to relatively robust online advertising budgets, internet video streaming platforms are generating more revenues and are competing aggressively to produce and license more PPC in general. As the demand for quality PPC grows, the number of PPC producers will likely grow resulting in an increase in competition for Glory Star Group’s users and usage time, which in turn may result in a loss of advertising customers, users, and shoppers on our e-commerce platform. Any significant loss in advertising customers, users, or shoppers on our e-commerce platform would have a material and adverse effect on our business, financial condition and results of operations.

The continued and collaborative efforts of Glory Star Group’s senior management and key employees are crucial to its success, and any loss of senior management or key employees may materially and adversely affect our business, financial condition and results of operations.

Glory Star Group’s success depends on the continued and collaborative efforts of its senior management, especially its executive officers, including its founder, Mr. Bing Zhang. If one or more of Glory Star Group’s executives or other key personnel are unable or unwilling to continue to provide their services, Glory Star Group may not be able to find suitable replacements easily or at all. Competition for management and key personnel is intense and the pool of qualified candidates is limited. Glory Star Group may not be able to retain the services of its executives or key personnel, or attract and retain experienced executives or key personnel in the future. If any of its executive officers or key employees joins a competitor or forms a competing business, Glory Star Group may lose crucial business secrets, technological know-how, advertisers and other valuable resources. Each of Glory Star Group’s executive officers and key employees has entered into an employment agreement which contains non-compete provisions. However, Glory Star Group cannot assure you that they will abide by the employment agreements or that Glory Star Group’s efforts to enforce these agreements will be effective enough to protect its interests

Glory Star does not currently have a chief financial officer and has limited staff with SEC and US GAAP knowledge and experience, and is currently relying on third party consultant with SEC and US GAAP knowledge and experience to assist with its financial statements. As a result of these limitations, Glory Star may be exposed to potential risks relating to its internal controls over financial reporting.

Glory Star does not currently have a chief financial officer, although it is in the process of recruiting a chief financial officer with US GAAP and SEC reporting experience. Further, Glory Star has limited staff with appropriate levels of SEC and US GAAP knowledge and experience to meet the combined company’s future financial reporting requirements. It is currently relying on third party consultants with SEC and US GAAP knowledge and experience to assist with preparation of its consolidated financial statements. As a result of these material weaknesses identified, Glory Star may be exposed to potential risks relating to its internal controls over financial reporting.

In addition, historically, it has been difficult to attract qualified accounting and financial personnel for PRC companies with the requirements that Glory Star seeks. Glory Star can provide no assurance that it will be able to successfully hire a qualified chief financial officer and staff with appropriate levels of SEC and US GAAP knowledge. In the event that the material weaknesses of Glory Star’s internal controls over financial reporting due to the lack of a qualified chief financial officer and accounting staff that cannot be remediated in a timely manner, its internal controls over financial reporting would not be effective which may cause a material misstatement in its financial statements and other information it reports. As a result, these deficiencies and potential misstatements would likely cause investors to lose confidence in the consolidated company’s reported financial and other information and could lead to a decline in the trading price of the company’s common shares.

Glory Star Group’s limited operating history makes it difficult to evaluate its business and prospects.

Glory Star Group expects to continue to grow its user and customer bases and explore new market opportunities. However, due to its limited operating history since 2016, Glory Star Group’s historical growth rate may not be indicative of its future performance. Glory Star Group cannot assure you that its growth rate will be the same as in the past. In addition, Glory Star Group may in the future introduce new services or significantly expand its existing services, including those that currently are of relatively small scale or with which Glory Star Group has little or no prior development or operating experience. If these new or enhanced services fail to engage users and customers, its business and operating results may suffer as a result. Glory Star Group cannot assure you that it will be able to recoup its investments in introducing these new services or enhancing existing smaller business lines, and it may experience significant loss and impairment of asset value due to such efforts. Furthermore, as a technology-based entertainment company, Glory Star Group frequently introduces innovative products and services to its users and advertising customers in order to capture new market opportunities. However, Glory Star Group cannot assure you that its products and services will be well received by its users and advertising customers. If Glory Star Group’s existing or new products and services are not well received by its users and customers, it may suffer damages to its brand image and may not be able to maintain or expand its user and customer base, which in turn may have a material and adverse effect on its business, financial condition and results of operations. You should consider Glory Star Group’s prospects in light of the risks and uncertainties fast-growing companies with limited operating histories in a fast evolving industry.

Glory Star Group may not be able to manage its growth effectively.

Glory Star Group has experienced rapid growth since it launched its services in 2016. To manage the further expansion of its business and the growth of its operations and personnel, it need to continuously expand and enhance its infrastructure and technology, and improve its operational and financial systems, procedures, compliance and controls. Glory Star Group also needs to expand, train and manage its growing employee base. In addition, Glory Star Group’s management will be required to maintain and expand its relationships with distributors, advertising customers, and other third parties. Glory Star Group cannot assure you that its current infrastructure, systems, procedures and controls will be adequate to support its expanding operations. If Glory Star Group fails to manage its expansion effectively, its business, financial condition, results of operations and prospects may be materially and adversely affected.

Glory Star Group faces risks, such as unforeseen costs and potential liability in connection with content it produces, licenses and/or distributes through third-party platforms and its e-commerce platform.

As a producer, licensor and distributor of content, Glory Star Group faces potential liability for negligence, copyright and trademark infringement, or other claims based on the content that it produces, licenses, provides and/or distributes. Glory Star Group also may face potential liability for content used in promoting its service, including marketing materials and features on its platform such as user reviews. Glory Star Group is responsible for the production costs and other expenses of its original content. Litigation to defend these claims could be costly and the expenses and damages arising from any liability or unforeseen production risks could harm its business, financial condition and results of operations. Glory Star Group may not be indemnified against claims or costs of these types and it may not have insurance coverage for these types of claims.

Videos and other content produced by Glory Star Group or displayed on its e-commerce platform may be found objectionable by PRC regulatory authorities and may subject it to penalties and other administrative actions.

Glory Star Group is subject to PRC regulations governing internet access and the distribution of videos and other forms of information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet any content that, among other things, violates PRC laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, frightening, gruesome, offensive, fraudulent or defamatory. Furthermore, as an internet video streaming producer, Glory Star Group is not allowed to (i) produce or disseminate programs that distort, parody or vilify classic literary works; (ii) re-edit, re-dub or re-caption the subtitles of classic literary works, radio and television programs, and network-based original audio-video programs, (iii) intercept program segments and splice them into new programs; or (iv) disseminate edited pieces of works that distort the originals. Failure to comply with these requirements may result in monetary penalties, revocation of licenses to provide internet content or other licenses, suspension of the concerned platforms and reputational harm. In addition, these laws and regulations are subject to interpretation by the relevant authorities, and it may not be possible to determine in all cases the types of content that could cause Glory Star Group to be held liable as an internet content provider.

To the extent that PRC regulatory authorities find any content produced by Glory Star Group or displayed on its e-commerce platform objectionable, they may require Glory Star Group to limit or eliminate the dissemination of such content on its platform in the form of take-down orders or otherwise.

Glory Star Group operates in a rapidly evolving industry. If Glory Star Group fails to keep up with the technological developments and users’ changing requirements, its business, financial condition, results of operations and prospects may be materially and adversely affected.

The internet video streaming industry is rapidly evolving and subject to continuous technological changes. Glory Star Group’s success will depend on its ability to keep up with the changes in technology and user behavior resulting from the technological developments. As it make its services available across a variety of mobile operating systems and devices, Glory Star Group is dependent on the interoperability of its services with popular mobile devices and mobile operating systems that it does not control, such as Android and iOS. Any changes in such mobile operating systems or devices that degrade the functionality of Glory Star Group’s services or give preferential treatment to competitive services could adversely affect usage of its services. Further, if the number of mobile operating systems and devices increases, which is typically seen in a dynamic and fragmented mobile services market such as China, Glory Star Group will likely incur additional costs and expenses associated with developing tools and software necessary for access to its e-commerce platform by these devices and systems. If Glory Star Group fails to adapt its products and services to such changes in an effective and timely manner, it may suffer from decreased user traffic, which may result in a reduced user base. Furthermore, changes in technologies may require substantial capital expenditures in product development as well as in modification of products, services or infrastructure. Glory Star Group may not execute its business strategies successfully due to a variety of reasons such as technical hurdles, misunderstanding or erroneous prediction of market demand or lack of necessary resources. Failure to keep up with technological development may result in Glory Star Group’s products and services being less attractive, which, in turn, may materially and adversely affect its business, results of operations and prospects.

Glory Star Group may not be able to adequately protect its intellectual property rights, and any failure to protect its intellectual property rights could adversely affect its revenues and competitive position.

Glory Star Group believes that trademarks, trade secrets, copyrights, and other intellectual property it uses are critical to its business. Glory Star Group relies on a combination of trademark, copyright and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect its intellectual property and its brand. Protection of intellectual property rights in China may not be as effective as in the United States or other jurisdictions, and as a result, it may not be able to adequately protect its intellectual property rights, which could adversely affect its revenues and competitive position. In addition, any unauthorized use of its intellectual property by third parties may adversely affect its revenues and its reputation. Further, Glory Star Group may have difficulty addressing the threats to its business associated with piracy of its copyrighted content, particularly its original content. Glory Star Group’s content and streaming services may be potentially subject to unauthorized consumer copying and illegal digital dissemination without an economic return to Glory Star Group.

Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and it may need to resort to litigation to enforce or defend intellectual property or to determine the enforceability, scope and validity of its proprietary rights or those of others. Such litigation and an adverse determination in any such litigation could result in substantial costs and diversion of resources and management attention.

Glory Star Group’s business generates and processes a large amount of data, and the improper use or disclosure of such data could harm its reputation as well as have a material adverse effect on its business and prospects.

Glory Star Group’s e-commerce platform generates and processes a large quantity of personal, transaction, demographic and behavioral data. Glory Star Group faces risks inherent in handling large volumes of data and in protecting the security of such data. In particular, Glory Star Group faces a number of challenges relating to data from transactions and other activities on its platform, including:

•        protecting the data in and hosted on its system, including against attacks on its system by outside parties or fraudulent behavior by its employees;

•        addressing concerns related to privacy and sharing, safety, security and other factors; and

•        complying with applicable laws, rules and regulations relating to the collection, use, disclosure or security of personal information, including any requests from regulatory and government authorities relating to such data.

Any systems failure or security breach or lapse that results in the release of user data could harm Glory Star Group’s reputation and brand and, consequently, its business, in addition to exposing Glory Star Group to potential legal liability.

Failure to maintain or improve its technology infrastructure could harm its business and prospects.

Adopting new software and upgrading Glory Star Group’s online infrastructure requires significant investments of time and resources, including adding new hardware, updating software and recruiting and training new engineering personnel. Maintaining and improving its technology infrastructure require significant levels of investment. Adverse consequences could include unanticipated system disruptions, slower response times, impaired quality of buyers’ and sellers’ experiences and delays in reporting accurate operating and financial information. In addition, much of the software and interfaces Glory Star Group uses are internally developed and proprietary technology. If Glory Star Group experiences problems with the functionality and effectiveness of its software, or are unable to maintain and constantly improve its technology infrastructure to handle its business needs, Glory Star Group’s business, financial condition, results of operation and prospects, as well as its reputation, could be materially and adversely affected.

Glory Star Group is subject to payment processing risk.

Glory Star Group’s e-commerce customers pay for their services using a variety of different online payment methods. Glory Star Group relies on third parties to process such payments. Acceptance and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees. To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as delays in receiving payments from payment processors and/or changes to rules or regulations concerning payment processing, Glory Star Group’s revenues, operating expenses and results of operations could be adversely impacted.

The successful operation of Glory Star Group’s business depends upon the performance and reliability of the Internet infrastructure in China.

Other than the production of television shows that are transmitted via satellite television in China, Glory Star Group’s business depends on the performance and reliability of the Internet infrastructure in China. Almost all access to the Internet is maintained through state-owned telecommunications operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology of China. In addition, the national networks in China are connected to the Internet through state-owned international gateways, which are the only channels through which a domestic user can connect to the Internet outside of China. Glory Star Group may not have access to alternative networks in the event of disruptions, failures or other problems with China’s Internet infrastructure. In addition, the Internet infrastructure in China may not support the demands associated with continued growth in Internet usage.

Security breaches and attacks against Glory Star Group’s internal systems and network, and any potential resulting breach or failure to otherwise protect confidential and proprietary information, could damage Glory Star Group’s reputation and negatively impact its business, as well as materially and adversely affect its financial condition and results of operations.

Although Glory Star Group has employed resources to develop security measures against unauthorized access to its systems and networks, its cybersecurity measures may not successfully detect or prevent all unauthorized attempts to access the data on its network or compromise and disable its systems. Unauthorized access to its network and systems may result in the misappropriation of information or data, deletion or modification of user information, or a denial-of-service or other interruption to its business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against Glory Star Group or its third-party service providers, it may be unable to anticipate, or implement adequate measures to protect against these attacks. If Glory Star Group is unable to avert these attacks and security breaches, it could be subject to significant legal and financial liability, its reputation would be harmed and it could sustain substantial revenue loss from user dissatisfaction. Glory Star Group may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Actual or anticipated attacks and risks may cause Glory Star Group to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. Cybersecurity breaches would not only harm its reputation and business, but also could materially decrease its revenue and net income.

Glory Star Group relies upon its partners to make its service available through Internet Protocol Television (IPTV).

In the IPTV video streaming market, only a small number of qualified license holders can provide internet audio and visual program services to the TV terminal users via IPTV , set-top boxes and other electronic products. Most of those license holders are radio or TV stations. Private companies that wish to operate such business need to cooperate with those license holders to legally provide relevant services. If Glory Star Group is not successful in maintaining existing or creating new relationships, or if it encounters technological, content licensing, regulatory or other impediments to delivering its streaming content to its members via these devices, Glory Star Group’s ability to grow its business may be adversely impacted.

Disruption or failure of Glory Star Group’s IT systems could impair its users’ online entertainment experience and adversely affect its reputation.

Glory Star Group’s ability to provide users with a high-quality online entertainment experience on its e-commerce platform depends on the continuous and reliable operation of its IT systems. Glory Star Group cannot assure you that it will be able to procure sufficient bandwidth in a timely manner or on acceptable terms or at all. Failure to do so may significantly impair user experience on its platform and decrease the overall effectiveness of its platform to both users and advertisers.

If Glory Star Group experiences frequent or persistent service disruptions, whether caused by failures of its own systems or those of third-party service providers, Glory Star Group’s users’ experience may be negatively affected, which in turn, may have a material and adverse effect on its reputation. Glory Star Group cannot assure you that it will be successful in minimizing the frequency or duration of service interruptions.

Undetected programming errors could adversely affect Glory Star Group’s user experience and market acceptance of its video content, which may materially and adversely affect its business, financial condition and results of operations.

Video content produced by Glory Star Group or displayed on its e-commerce platform may contain programming errors that may only become apparent after its release. Glory Star Group generally has been able to resolve such programming errors in a timely manner. However, Glory Star Group cannot assure you that it will be able to detect and resolve all these programming errors effectively. Undetected audio or video programming errors or defects may adversely affect user experience which in turn may have a material and adverse effect on Glory Star Group’s business, financial condition and results of operation.

Glory Star Group’s revenue and net income may be materially and adversely affected by any economic slowdown in China and indirectly by trade disputes between the United States and China that may contribute to uncertainties in economic outlook.

The success of Glory Star Group’s business depends on consumers spending from e-commerce, advertising fees, production costs and copyright payments from third parties which may be affected by consumer confidence and uncertainties in the outlook for economic growth within China. Glory Star Group derives substantially all of its revenue from China. As a result, its revenue and net income are impacted to a significant extent by economic conditions in China and globally, as well as economic conditions specific to online and mobile commerce and advertising of brands. The PRC government has in recent years implemented a number of measures to control the rate of economic growth, including by raising and lowering of interest rates and adjusting deposit reserve ratios for commercial banks as well as by implementing other measures designed to tighten or loosen credit and liquidity. In the past, these measures have contributed to a slowdown of the PRC economy and although recently the PRC has taken steps to reduce interest rates and adjusting deposit reserve ratios to increase the availability of credit in response to a weakening economy cause, in part, by the continuing trade dispute with the United States, no assurances can be given that the PRC’s efforts will result in more certainty in domestic economic outlook or an increase in consumer confidence. Any continuing or worsening slowdown could significantly reduce domestic commerce in China, including through the Internet generally and within its ecosystem. An economic downturn, whether actual or perceived, a further decrease in economic growth rates or an otherwise uncertain economic outlook in China or any other market in which Glory Star Group may operate could have a material adverse effect on its business, financial condition and results of operations.

Glory Star Group faces risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt its operations.

Glory Star Group is vulnerable to natural disasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect its ability to produce video content or provide products and services on its e-commerce platform.

Glory Star Group’s business operations could be disrupted if any of its employees are suspected of having Ebola virus disease, H1N1 flu, H7N9 flu, avian flu, SARS or other epidemic, since it could require its employees to be quarantined and/or its offices to be disinfected. In addition, Glory Star Group’s business, financial condition or results of operations could be materially and adversely affected to the extent that any of these epidemics harms the Chinese economy in general.

Glory Star Group’s quarterly operating results may fluctuate, which makes its results of operations difficult to predict and may cause its quarterly results of operations to fall short of expectations.

Glory Star Group’s 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 its control. Its operating results tend to be seasonal. As a result, comparing Glory Star Group’s operating results on a period-to-period basis may not be meaningful. For example, online user numbers tend to be lower during school holidays and certain parts of the school year, and advertising revenues tend to be lower during the Chinese New Year season, which may negatively affects Glory Star Group’s cash flow for those periods.

Glory Star Group requires highly qualified personnel to generate high quality video content and if it is unable to hire or retain qualified personnel, it may not be able to grow effectively and its business, financial condition, and results of operation may be materially and adversely affected.

Glory Star Group currently relies on its in-house team of employees to generate creative ideas for original content and to supervise the original content origination and production process and intends to continue to invest its human and capital resources in such content production. Glory Star Group faces fierce competition for qualified personnel in a limited pool of high-quality creative talent. If it is not able to compete effectively for highly qualified personnel or attract and retain top talent at reasonable costs, its original content production capabilities would be materially and adversely impacted. If Glory Star Group is unable to offer popular original content that addresses its user’s tastes and preferences in a cost effective manner, it may suffer a reduction in user traffic and its business, financial condition and results of operations may be materially and adversely affected.

Glory Star Group’s future success also depends upon its ability to attract and retain highly qualified management personnel. Expansion of Glory Star Group’s business and its management will require additional managers and employees with industry experience, and its success will be highly dependent on its ability to attract and retain skilled management personnel and other employees. Glory Star Group may not be able to attract or retain highly qualified personnel. Competition for skilled management personnel is significant in China. This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees.

Glory Star’s controlling shareholder will have substantial influence over Glory Star and its interests may not be aligned with the interests of its other shareholders.

As of September 22, 2019, Glory Star has 2,000,000 issued and outstanding ordinary shares. 797,584 ordinary shares are held by Happy Starlight Limited, which is controlled by Mr. Bing Zhang, Glory Star’s sole director and Chief Executive Officer. As such, Mr. Zhang will have substantial influence over Glory Star’s business, including decisions regarding mergers, consolidations, the sale of all or substantially all of its assets, election of directors, declaration of dividends and other significant corporate actions. As the controlling shareholder, he may take actions that are not in the best interests of Glory Star’s other shareholders. These actions may be taken in many cases even if they are opposed by Glory Star’s other shareholders. In addition, this concentration of ownership may discourage, delay or prevent a change in control which could deprive you of an opportunity to receive a premium for your ordinary shares as part of a sale of its company.

Glory Star does not foresee paying cash dividends in the foreseeable future and, as a result, its investors’ sole source of gain will depend on capital appreciation, if any.

Glory Star does not plan to declare or pay any cash dividends on its shares of ordinary shares in the foreseeable future and currently intends to retain any future earnings for funding growth. As a result, investors should not rely on an investment in its securities if they require the investment to produce dividend income. Capital appreciation, if any, of Glory Star’s shares may be its investors’ sole source of gain for the foreseeable future.

Glory Star’s bank accounts are in China and are not insured or protected against loss.

Glory Star maintains its cash primarily with major banks in China which is primarily owned by the Chinese government. Glory Star’s cash accounts are not insured or otherwise protected. Should any bank or trust company holding its cash deposits become insolvent, or if it is otherwise unable to withdraw funds, it could lose the cash on deposit with that particular bank or trust company or have its account frozen.

Glory Star Group’s failure to protect its intellectual property rights could have a negative impact on its business.

Glory Star Group believes its brand, trade names, trademarks and other intellectual property are critical to its success. The success of its business depends substantially upon its continued ability to use its brand, trade names and trademarks to increase brand awareness and to further develop its brand. The unauthorized reproduction of its trade names or trademarks could diminish the value of its brand and its market acceptance, competitive advantages or goodwill. In addition, its proprietary information, which has not been patented or otherwise registered as its property, is a component of its competitive advantage and its growth strategy.

Monitoring and preventing the unauthorized use of its intellectual property is difficult. The measures Glory Star Group takes to protect its brand, trade names, trademarks and other intellectual property rights may not be adequate to prevent their unauthorized use by third parties. In addition, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving, and could involve substantial risks to Glory Star Group. To Glory Star Group’s knowledge, the relevant authorities in China historically have not protected intellectual property rights to the same extent as the United States. If Glory Star Group is unable to adequately protect its brand, trade names, trademarks and other intellectual property rights, it may lose these rights and its business may suffer materially. Further, unauthorized use of Glory Star Group brands, trade names or trademarks could cause brand confusion among advertisers and harm its reputation as a provider of high quality and comprehensive advertising services. If Glory Star Group’s brand recognition decreases, it may lose advertisers and fail in its expansion strategies, and its business, results of operations, financial condition and prospects could be materially and adversely affected.

Glory Star Group may be named as a defendant in litigation, or may be joined as a defendant in litigation brought against its customers by third parties, its customers’ competitors, governmental or regulatory authorities or consumers, which could result in judgments against Glory Star Group and materially disrupt its business. These actions could involve claims alleging, among other things, that:

•        advertising claims made with respect to its customers’ products or services are false, deceptive or misleading;

•        its customers’ products are defective or injurious and may be harmful to others; or

•        marketing, communicating or advertising materials created for its customers infringe on the proprietary rights of third parties.

The damages, costs, expenses and attorneys’ fees arising from any of these claims could have a material and adverse affect on Glory Star Group’s business, financial condition, results of operations, and prospects to the extent that it is not adequately indemnified by its customers. In any case, Glory Star Group’s reputation may be negatively affected by these allegations.

Glory Star Group relies on computer software and hardware systems in its operations, the failure of which could adversely affect its business, financial condition, and results of operations.

Glory Star Group is dependent upon its computer software and hardware systems in designing its advertisements and keeping important operational and market information. In addition, Glory Star Group relies on its computer hardware for the storage, delivery and transmission of data. Any system failure that causes interruptions to the input, retrieval and transmission of data or increase in service time could disrupt its normal operations. Although Glory Star Group has a disaster recovery plan that is designed to address the failures of its computer software and hardware systems, it may not be able to effectively carry out this disaster recovery plan or restore its operations within a sufficiently short time frame to avoid business disruptions. Any failure in Glory Star Group’s computer software or hardware systems could decrease its revenues and harm its relationships with advertisers, television channels and other media companies, which in turn could have a material adverse effect on its business, results of operations and financial condition.

Glory Star Group does not maintain business liability or disruption, litigation or property insurance and any business liability or disruption, litigation or property damage it experience may result in substantial costs to it and the diversion of its resources.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business disruption, business liability or similar business insurance products. Glory Star Group has determined that the risks of disruption or liability from its business, the potential loss or damage to its property, including its facilities, equipment and office furniture, the cost of obtaining insurance coverage for these risks and the difficulties associated with obtaining such insurance on commercially reasonable terms, make it impractical for Glory Star Group to have obtained such insurance on terms and conditions that are commercially reasonable. As a result, Glory Star Group did not purchase any business liability, disruption, litigation or property insurance coverage for its operations in China. Any occurrence of an uninsured loss or damage to its property or litigation or business disruption may result in substantial costs to Glory Star Group and the diversion of its resources, which could have an adverse effect on its operating results.

Risks Related to Glory Star Group’s Corporate Structure

The PRC government may determine that the VIE Contracts are not in compliance with applicable PRC laws, rules and regulations.

To comply with applicable PRC laws, rules and regulations, Glory Star Group conducts its operations in the PRC through the VIE Contracts, a series of contractual arrangements entered into among (i) WFOE, (ii) Glory Star and certain shareholders of Glory Star, (iii) Xing Cui Can and its shareholders, and (iv) Horgos and its shareholder, which consist of the Business Cooperation Agreement, Exclusive Option Agreement, Proxy Agreement and Power of Attorney, and Share Pledge Agreement. As a result of these VIE Contracts, Glory Star manages and operates its value-added telecommunication services and certain other business through the WFOE, Xing Cui Can and Horgos pursuant to the rights it holds under the VIE Contracts. A majority of the economic benefit and almost all of the risks arising from the operations of Xing Cui Can and Horgos are ultimately enjoyed and undertaken by Glory Star under these agreements.

There are risks involved with the operation of its business in reliance on the VIE Contracts, including the risk that the VIE Contracts may be determined by PRC regulators or courts to be unenforceable. Although Glory Star believes it is in compliance with current PRC regulations in the execution and implementation of the VIE Contracts, it cannot assure you the PRC government would agree that the VIE Contracts fully comply with existing PRC policies or with policies that may be adopted in the future. PRC laws and regulations governing the validity of these VIE Contracts are uncertain. If the VIE Contracts were for any reason determined to be in breach of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such breach, including:

•        imposing economic penalties;

•        discounting or restricting the operations of Horgos and Xing Cui Can;

•        imposing conditions or requirements in respect of the VIE Contracts with which Horgos, Xing Cui Can or WFOE may not be able to comply;

•        requiring Glory Star to restructure the relevant ownership structure or operations;

•        taking other regulatory or enforcement actions that could adversely affect its business; and

•        revoking the business licenses and/or the licenses or certificates of Horgos, Xing Cui Can or WFOE, and/or voiding the VIE Contracts.

Any of these actions would adversely affect its ability to manage, operate and gain the financial benefits of Horgos and Xing Cui Can, which would have a material adverse impact on its business, financial condition and results of operations.

Glory Star’s ability to manage and operate Horgos and Xing Cui Can under the VIE Contracts may not be as effective as direct ownership.

Glory Star Group conducts its advertising operation, e-commerce and certain other business in the PRC and generates virtually all of its revenues for its business through the VIE Contracts. Glory Star’s plans for future growth

are based substantially on growing the operations of Horgos and Xing Cui Can. However, the VIE Contracts may not be as effective in providing Glory Star with control over Horgos and Xing Cui Can as direct ownership. Under the current VIE Contracts, if Horgos, Xing Cui Can or their shareholders fail to perform their obligations under these contractual arrangements, Glory Star may have to incur substantial costs and resources to enforce such arrangements, and rely on legal remedies under PRC law, which it cannot be sure would be effective. Therefore, if Glory Star is unable to effectively control Horgos and Xing Cui Can, it may have an adverse effect on Glory Star’s ability to achieve its business objectives and grow its revenues.

As the VIE Contracts are governed by PRC law, Glory Star would be required to rely on PRC law to enforce its rights and remedies under them; PRC law may not provide Glory Star with the same rights and remedies as are available in contractual disputes governed by the law of other jurisdictions.

The VIE Contracts are governed by PRC law and provide for the resolution of disputes through arbitral proceedings. If Horgos, Xing Cui Can or their shareholders fail to perform their obligations under the VIE Contracts, Glory Star would be required to resort to legal remedies available under PRC law, including seeking specific performance or injunctive relief, or claiming damages. Glory Star cannot be sure that such remedies would provide Glory Star with effective means of causing Horgos or Xing Cui Can to meet their obligations, or recovering any losses or damages as a result of non-performance. Further, the legal environment in the PRC is not as developed as in some other jurisdictions. Uncertainties in the application of various laws, rules, regulations or policies in the PRC legal system could limit its liability to enforce the VIE Contracts and protect its interests.

The payment arrangement under the VIE Contracts may be challenged by the PRC tax authorities.

Glory Star Group generates its revenues through the payments it receive pursuant to the VIE Contracts. Glory Star Group could face adverse tax consequences if the PRC tax authorities determine that the VIE Contracts were not entered into based on arm’s length negotiations. For example, PRC tax authorities may adjust its income and expenses for PRC tax purposes, which could result in its being subject to higher tax liability, or cause other adverse financial consequences. According to the PRC Tax Administration and Collection Law, (中华人民共和国税收征收管理法), and Implementation Regulations for the Law of the PRC Tax Administration and Collection Law 《中华人民共和国税收征收管理法实施细则(2016修订 )》, in the case of a transfer pricing related adjustment, the statute of limitation is three years normally and 10 years in special instances.

Glory Star Group relies on the approval certificates and business license held by it for its advertising operation, e-commerce and certain other business and any deterioration of the relationship between Horgos and Xing Cui Can could materially and adversely affect its business operations.

Glory Star Group operates its advertising operation, e-commerce and certain other business in the PRC on the basis of the approval certificates, business license and other requisite licenses held by Glory Star. There is no assurance that Glory Star Group will be able to renew its licenses or certificates when their terms expire with substantially similar terms as the ones it currently holds.

Further, its relationship with Horgos and Xing Cui Can is governed by the VIE Contracts, which is intended to provide Glory Star with effective control over the business operations of Horgos and Xing Cui Can. However, the VIE Contracts may not be effective in providing control over the application for and maintenance of the licenses required for Glory Star Group’s business operations. Glory Star could violate the VIE Contracts, go bankrupt, suffer from difficulties in its business or otherwise become unable to perform its obligations under the VIE Contracts and, as a result, its operations, reputations and business could be severely harmed.

If the WFOE exercises the purchase option it holds over the share capital of Horgos or Xing Cui Can pursuant to the Exclusive Option Agreement, the payment of the purchase price could materially and adversely affect its financial position.

Under the Exclusive Option Agreement, the WFOE has the option to purchase up to 100% of the equity interest in Horgos and Xing Cui Can at a price equivalent to the lowest price then permitted under PRC law, provided that the acquisition will not violate any PRC laws or regulations in effect. As Horgos and Xing Cui Can are already Glory Star’s contractually controlled affiliates, the WFOE’s exercising of the options would not bring immediate benefits to it, and payment of the purchase price could adversely affect Glory Star Group’s financial position.

Risks Relating to Doing Business in China

Glory Star Group is subject to PRC laws or regulations that govern its industry.

Glory Star Group is subject to administrative regulatory authorities and applicable laws in the PRC to operate its business. In order to operate its business Glory Star Group is required to obtain licenses and permits by various governmental agencies. Glory Star Group will not be able to operate some of businesses if it loses its licenses and permits, which will adversely affect its business.

Glory Star Group is subject to risks relating to the nature of China’s advertising industry, including frequent and sudden changes in advertising proposals.

The nature of the advertising business in China is such that sudden changes in advertising proposals and actual advertisements are frequent. In China, television stations, as the advertising publisher, remain responsible for the content of advertisements, and as a result, television stations may reject or recommend changes to the content of advertisements. Glory Star Group strives to minimize problems related to work for clients by encouraging the conclusion of basic written agreements, but it is exposed to the risk of unforeseen incidents or disputes with advertising clients. In addition, similar to other companies in its industry in the PRC where relationships between advertising clients within a particular industry and advertising companies are not typically exclusive, Glory Star Group is currently acting for multiple clients within a single industry in a number of industries. If this practice in China is to change in favor of exclusive relationships and if Glory Star Group’s efforts to respond to this change are ineffective, its business, results of operations and financial condition could be materially and adversely affected.

China regulates media content extensively and it may be subject to government actions based on the advertising content it design for advertising clients or services it provide to them.

PRC advertising laws and regulations require advertisers, advertising operators and advertising publishers, including Glory Star Group’s businesses, to ensure that the advertisements shall not contain any false or misleading content and their advertising activities shall be in full compliance with applicable laws, rules and regulations. Violation of these laws, rules or regulations may result in penalties, including fines, confiscation of advertising fees, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. In circumstances involving serious violations, the PRC government may revoke its business license. In addition, such non-compliance can constitute a violation of criminal law and criminal proceedings could be brought against Glory Star Group as a result.

Glory Star Group’s business includes assisting advertising clients in designing and producing advertisements, as well as executing their advertising campaigns. Glory Star Group acts as agent for its clients in dealing with television channels, or other media on whose platform its clients want to display their advertisements. Under Glory Star Group’s agreements with television stations, it is typically responsible for the compliance with applicable laws, rules and regulations with respect to advertising content that it provide to the media. In addition, some of its advertising clients provide completed advertisements for Glory Star Group to display on the television channels. Although these advertisements are subject to internal review and verification, their content may not fully comply with applicable laws, rules and regulations. Further, for advertising content related to special types of products and services, such as pharmaceuticals and medical procedures, pesticides and health products, it is required to confirm that Glory Star Group’s clients have obtained requisite government approvals. Glory Star Group endeavors to comply with such requirements, including by requesting relevant documents from the advertising clients and employing qualified advertising inspectors who are trained to review advertising content for compliance with applicable PRC laws, rules and regulations. However, Glory Star Group cannot assure you that violations or alleged violations of the content requirements will not occur with respect to its operations. If the relevant PRC governmental agencies determine the content of the advertisements that Glory Star Group represents violated any applicable laws, rules or regulations, Glory Star Group could be subject to penalties, which may harm its reputation and may divert significant amounts of its management’s time and other resources. It may be difficult and expensive to defend against such proceedings. Although Glory Star Group’s agreements with its clients normally require them to warrant the fairness, accuracy and compliance with relevant laws and regulations of their advertising content and agree to indemnify Glory Star Group for violations of these warranties, these contractual remedies may not cover all of its losses resulting from governmental penalties. Violations or alleged violations of the content requirements could also harm Glory Star Group’s reputation and impair its ability to conduct and expand its business.

Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to Glory Star Group.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which legal decisions have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in the PRC. WFOE, Glory Star’s PRC operating subsidiary, is a wholly foreign-owned enterprise and is subject to laws and regulations applicable to foreign investment in the PRC as well as laws and regulations applicable to foreign-invested enterprises. WFOE is a privately owned company and is subject to various PRC laws and regulations that are generally applicable to companies in the PRC. These laws and regulations are still evolving, and their interpretation and enforcement involve uncertainties. For example, Glory Star may have to resort to administrative and court proceedings to enforce the legal protections that it enjoy either by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection Glory Star may enjoy in the PRC legal system than in more developed legal systems. These uncertainties may also impede its ability to enforce the contracts Glory Star has entered into. As a result, these uncertainties could materially and adversely affect its business and operations.

Delays in issuing invoices due to China taxing authorities may materially and adversely affect its cash flow.

Companies operating in China may be required to obtain VAT invoices in advance from the Chinese tax authorities in order to collect the dues from its customers according to their contractual arrangement. To accomplish this, companies submit invoices to the Chinese tax authorities and awaits for the VAT invoices to be issued. Upon receipt, it sends the VAT invoices to the customers for payment. From time to time, the Chinese tax authority may delay issuing the VAT invoices because the amount of the company’s invoices exceeded the quotas previously granted for the VAT invoices for that period of time. Such quotas are set by the Chinese tax authorities based on the amount of invoices issued by the company over a period of time pursuant to the company’s past business operation, which quotas are adjusted periodically. As such, for fast growing companies like Glory Star, its invoices may periodically exceed the current quota granted which results in a delay in obtaining VAT invoices impacting its ability to timely invoice and collect its accounts receivable from its clients. To address this challenge, Glory Star has taken an active role in reaching out to the Chinese tax authorities to explain the company’s fast growth which is outpacing the quota needed to timely obtain VAT invoices. In addition, Glory Star is working closely with its clients to receive payments before VAT invoices are issued. However, if Glory Star is unable to timely increase its quota resulting in delays in issuing VAT invoices or its clients are unable or unwilling to make payments before receipt of VAT invoices, it may suffer delays in collecting its accounts receivable and hence affect its cash flow.

Competition in its industry is growing and could cause Glory Star Group to lose market share and revenues in the future.

Glory Star Group may face growing competition in its industry and it believes that the market is becoming more competitive as this industry matures and begins to consolidate. Some of its competitors have larger and more established borrower bases and substantially greater financial, marketing and other resources than Glory Star Group. As a result, Glory Star Group could lose market share and its revenues could decline, thereby affecting its earnings and potential for growth.

Glory Star Group’s business depends on the continuing efforts of its management. If it loses their services, its business may be severely disrupted.

Glory Star Group’s business operations depend on the continuing efforts of its management, particularly the executive officers named in this document. If one or more of its management were unable or unwilling to continue their employment with Glory Star Group, it might not be able to replace them in a timely manner, or at all. Glory Star Group may incur additional expenses to recruit and retain qualified replacements. Glory Star Group’s business may be severely disrupted and its financial condition and results of operations may be materially and adversely affected. In addition, its management may join a competitor or form a competing company. Glory Star Group may not be able to successfully enforce any contractual rights it has with its management team, in particular in China, where all of these

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 the business Glory Star Group may be able to conduct in the PRC and accordingly on the results of its operations and financial condition.

Glory Star Group’s business operations may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence and control over the manner in which Glory Star Group must conduct its business activities. Glory Star Group’s ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the current government leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activities and greater economic decentralization. However, the government of the PRC may not continue to pursue these policies, or may significantly alter these policies from time to time without notice.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing Glory Star Group’s business, or the laws and regulations applicable to foreign investments in China. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business and new polices or regulations in certain less developed areas causes uncertainty and may affect Glory Star Group’s business. Consequently, Glory Star Group cannot clearly foresee the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to foreign investors.

The Second Session of the Thirteen National People’s Congress of the People’s Republic of China voted to adopt the Foreign Investment Law of the People’s Republic of China (“the Foreign Investment Law”) on March 15, 2019, which shall come into effect on January 1, 2020. The current three major foreign investment laws (the Sino-Foreign Equity Joint Venture Law, Sino-Foreign Cooperative Joint Venture Law and Wholly Foreign Owned Enterprise Law) shall be replaced by the Foreign Investment Law on January 1, 2020.

The Foreign Investment Law expressly stipulated that “the State protects foreign investors’ investment, earnings and other legitimate rights and interests within the territory of China pursuant to the present Law;” “foreign investors may, according to the present Law, freely remit into or out of China, in Renminbi or any other foreign currency, their contributions, profits, capital gains, income from asset proposal, intellectual property royalties, lawfully acquired compensation, indemnity or liquidation income and so on within the territory of China;” “Foreign investors shall not invest in any field with investment prohibited by the negative list for foreign investment access. Foreign investors shall meet the investment conditions stipulated under the negative list for any field with investment restricted by the negative list for foreign investment access;” “In formulating normative documents concerning foreign investment, the people’s governments at all levels and their departments concerned shall comply with laws and regulations, and if there are no laws or administrative regulations to serve as the basis, they shall not impair foreign-invested enterprises’ legitimate rights and interests or increase their obligations, set any market access and exit conditions, or intervene the normal production and operation activities of any foreign-invested enterprise.”

It is unclear how the Foreign Investment Law will be implemented in practice by the PRC government authorities. Comparing with the Draft Foreign Investment Law of the People’s Republic of China published in 2015, the Foreign Investment Law does not include the following expression of ‘control or acquire equities of an enterprise within the territory of China through contractual arrangements, including but not limited to contracts and trust agreements.’ Whether the offshore companies controlled by the PRC investors through variable interest entities structure be deemed as foreign investment remains to be seen.

Fluctuations in the foreign currency exchange rate between U.S. Dollars and Renminbi could adversely affect Glory Star Group’s financial condition.

The value of the RMB against the U.S. dollar and other currencies may fluctuate. Exchange rates are affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of foreign currencies. Following the removal of the U.S. dollar peg, the RMB appreciated more than 20% against the U.S. dollar over three years. From July 2008 until June 2010, however, the RMB traded stably within a narrow range against the U.S. dollar. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant appreciation of the RMB against foreign currencies. On June 20, 2010, the PBOC announced that the PRC government would reform the RMB exchange rate regime and increase the flexibility of the exchange rate. On August 11, 2015, the PBOC led central parity quoting banks to further improve the formation mechanism of the RMB against the US dollar, indicating that the central parity quoting price shall be decided with reference to the closing price on the previous trading day. On December 11, 2015, the China Foreign Exchange Trade System launched the RMB exchange-rate index, which strengthened the reference to a currency basket to better maintain the stability of the RMB exchange rate against the currencies in the basket. As a result, the CNY/USD central parity formation mechanism of “closing rate + exchange-rate movements of a basket of currencies” was developed. In June 2016, the Foreign Exchange Self-Disciplinary Mechanism was established, allowing financial institutions to play a more important role in maintaining orderly operations in the foreign-exchange market and in an environment for fair competition. In February 2017, the Foreign Exchange Self-Disciplinary Mechanism adjusted the reference period for the central parity against the currency basket from 24 hours ahead of submitting the quotes to 15 hours between the closing on the previous trading day and the submission of the quotes, which avoided repeated references to the daily movements of the USD exchange rate in the central parity of the following day. In general, the RMB exchange-rate central parity formation mechanism has been improving, which has effectively improved the rule-based, transparent, and market-oriented nature of RMB exchange-rate policies and has played an active role in stabilizing exchange-rate expectations. The flexibility of the RMB exchange rate against the US dollar was further strengthened, exhibiting larger two-way fluctuations. Glory Star Group cannot predict how this new policy and mechanism will impact the RMB exchange rate.

Glory Star Group’s revenues and costs are mostly denominated in the RMB, and a significant portion of its financial assets are also denominated in the RMB. Any significant fluctuations in the exchange rate between the RMB and the U.S. dollar may materially adversely affect Glory Star Group’s cash flows, revenues, earnings and financial position, and the amount of and any dividends, if any, it may pay on its ordinary shares in U.S. dollars. In addition, any fluctuations in the exchange rate between the RMB and the U.S. dollar could result in foreign currency translation losses for financial reporting purposes.

It may be difficult to protect interests and exercising rights as a shareholder since Glory Star conducts all of its operations in China, and all of its officers and its Chairman reside outside the United States.

Glory Star is incorporated in the Cayman Islands and it conducts all of its operations in China through Horgos, Xing Cui Can and their subsidiaries, its consolidated VIEs in China. In addition, all of Glory Star’s officers and its chairman reside outside of the United States and substantially all of the assets of those persons are located outside of the United States. As a result of all of the above, shareholders may have more difficulty in protecting their interests through actions against Glory Star’s management, or major shareholders than would shareholders of a corporation doing business entirely or predominantly within the United States.

Future inflation in China may inhibit economic activity and adversely affect Glory Star Group’s operations.

The Chinese economy has experienced periods of rapid expansion in recent years, which can lead to high rates of inflation or deflation. This has caused the PRC government to, from time to time, enact various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the PRC government to once again impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China. Any action on the part of the PRC government that seeks to control credit and/or prices may materially adversely affect Glory Star Group’s business operations.

PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent Glory Star from using proceeds from future financing activities to make loans or additional capital contributions to its PRC operating subsidiaries.

As an offshore holding company with PRC subsidiaries, Glory Star may transfer funds to its PRC subsidiaries or finance its operating entity by means of shareholder loans or capital contributions. Any loans to its PRC subsidiaries, which are foreign-invested enterprises, shall be limited to within the margin between the total investment and registered capital approved by the examination and approval authorities. Within the scope of the aforementioned margin, foreign-invested enterprises may voluntarily contract foreign debts. Where the margin is exceeded, the original examination and approval authorities shall re-conduct appraisal and determination of total investment. Such loan shall be registered with SAFE, or its local counterparts. Furthermore, any capital increase contributions Glory Star makes to its PRC subsidiaries, which are foreign-invested enterprises, shall be subject to record-filing via the Comprehensive Management System of Ministry of Commerce, or MOFCOM. Glory Star may not be able to obtain these government registrations or approvals on a timely basis, if at all. If Glory Star fails to receive such registrations or approvals, its ability to provide loans or capital increase contributions to its PRC subsidiaries may be negatively affected, which could adversely affect its liquidity and its ability to fund and expand its business.

In addition, SAFE promulgated a Notice on Further Improving and Adjusting the Foreign Exchange Administration Policies on Direct Investments on November 19, 2012, or Circular 59 (《国家外汇管理局关于进一步改进和调整直接投资外汇管理政策的通知》(汇发[2012]59号 ) ), which became effective on December 17, 2012, and was further amended on May 4, 2015 and October 10, 2018, respectively, requires the authenticity of settlement of net proceeds from offshore offerings to be closely examined and the net proceeds to be settled in the manner described in the offering documents. Furthermore, SAFE promulgated a Notice on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises, or Circular 19 (《国家外汇管理局关于改革外商投资企业外汇资本金结汇管理方式的通知》(汇发[2015]19号) ), promulgated on March 30, 2015, and taken effect from June 1, 2015, pursuant to which the foreign-invested enterprises shall be allowed to settle their foreign exchange capitals on a discretionary basis, the RMB funds obtained by foreign-invested enterprises from the discretionary settlement of their foreign exchange capitals shall be managed under the accounts for foreign exchange settlement pending payment, and a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business and it shall not, unless otherwise prescribed by laws and regulations, use the foregoing funds for investment in securities etc. Besides, SAFE further promulgated a Notice on Reforming and Standardizing the Administrative Provisions on Capital Account Foreign Exchange Settlement, or Circular 16 (《国家外汇管理局关于改革和规范资本项目结汇管理政策的通知》(汇发〔2016〕16号 ) ), on June 9, 2016, according to which a domestic institution shall use foreign exchange earnings under capital account within its business scope and in a truthful manner for proprietary purposes and a bank shall not process foreign exchange settlement or payment formalities for a domestic institution that applies for the payment and settlement of all of its foreign exchange earnings under capital account in one lump-sum or the payment of all RMB funds in its Account for Foreign Exchange Settlement Pending Payment, if the domestic institution is unable to provide relevant materials in proof of transaction authenticity.

Circular 59, Circular 19 and Circular 16 may significantly limit Glory Star’s ability to effectively use the proceeds from future financing activities as the Wholly Foreign Owned Enterprise may not convert the funds received from Glory Star in foreign currencies into RMB or may not use the RMB funds obtained from foreign exchange settlement for certain purposes, which may materially adversely affect Glory Star’s liquidity and its ability to fund and expand its business in the PRC.

The disclosures about Glory Star in reports and other filings with the SEC and its other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.

Information about Glory Star’s in SEC filings and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure of Glory Star’s in SEC reports and other filings are not subject to the review by CSRC, a PRC regulator that is tasked with oversight of the capital markets in China. Accordingly, you should review information about Glory Star in SEC reports, filings and its other public pronouncements with the understanding that no local regulator has done any review of information about Glory Star in SEC reports, other filings or any of its other public pronouncements.

The approval of the CSRC may be required in connection with the Business Combination with Glory Star; the failure to obtain this approval, if required, could have a material adverse effect on its business, operating results and reputation.

On August 8, 2006, six PRC regulatory agencies, including the 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 the State Administration of Foreign Exchange, or 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 22, 2009 (《关于外国投资者并购境内企业的规定(2009修订 )》 ). The M&A Rules, among other things, include provisions that purport to require an offshore special purpose vehicle incorporated 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 its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CSRC approval procedures require the filing of an application and supporting documents with the CSRC.

Based on the advice of Glory Star’s PRC legal advisor at the time, Glory Star believes that no specific CSRC approval was required in the context of Business Combination because (i) the CSRC has not issued any definitive rules or interpretations concerning whether the Business Combination is subject to the CSRC approval procedures under the M&A Rules; (ii) WFOE was established by Glory Star as a wholly foreign-owned enterprise, and Glory Star has not acquired any equity interest or assets of a PRC domestic company owned by PRC companies or individuals as defined under the M&A Rules that are its beneficial owners after the effective date of the M&A Rules, (iii) no provision in the M&A Rules clearly classifies the contractual arrangements among Horgos and Xing Cui Can, Glory Star’s VIEs and their shareholders as a type of acquisition transaction subject to the M&A Rules, and (iv) the CSRC currently has not issued any definitive rule or interpretation concerning whether the Business Combination falls under the M&A Rules. There can be no assurance that the relevant PRC government agencies, including the CSRC, would reach the same conclusion as Glory Star’s PRC counsel, and hence Glory Star may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. In that case, the relevant regulatory agencies may impose fines and penalties on Glory Star’s operations in the PRC, limit its operating privileges in the PRC, or take other actions that could have a material adverse effect on its business, financial condition, results of operations, reputation and prospects.

The M&A Rules set forth complex procedures for acquisitions conducted by foreign investors, which could make it more difficult to pursue growth through acquisitions.

The M&A Rules established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. In the future, Glory Star may grow its business in part by acquiring complementary businesses. Complying with the requirements of this regulation to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit Glory Star’s ability to complete such transactions. Any delay or inability to obtain applicable approvals to complete acquisitions could affect Glory Star’s ability to expand its business or maintain its market share. In addition, in the future, if any of Glory Star’s acquisitions were subject to the M&A Rules and were found not to be in compliance with the requirements of the M&A Rules, relevant PRC regulatory agencies may impose fines and penalties on Glory Star’s operations in the PRC, limit its operating privileges in the PRC, or take other actions that could have a material adverse effect on its business, financial condition, results of operations, reputation and prospects.

PRC regulations relating to offshore investment activities by PRC residents and PRC citizens may increase the administrative burden Glory Star faces and may subject its PRC resident beneficial owners or employees who are stock option holders to personal liabilities, limit its subsidiary’s abilities to increase its registered capital or distribute profits to us, limit its ability to inject capital into its PRC subsidiary, or may otherwise expose Glory Star to liability under PRC law.

SAFE has promulgated regulations that require PRC residents and PRC corporate entities to register with local branches of SAFE in connection with their direct or indirect offshore investment activities. These regulations may apply to Glory Star’s shareholders who are PRC residents and may apply to any offshore acquisitions that it make in the

future. In accordance with the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37 (《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》(汇发[2014]37号 ) ), any PRC resident who is a direct or indirect shareholder of an offshore company is required to update his or her registration with the relevant SAFE branches, with respect to that offshore company, any material change involving an increase or decrease of capital, transfer or swap of shares, merger, division or other material event. 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 its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

There is uncertainty concerning under what circumstances residents of other countries and regions can be classified as a PRC resident. The PRC government authorities may interpret its beneficial owners’ status differently or their status may change in the future. Moreover, Glory Star may not be fully informed of the identities of the beneficial owners of Glory Star and it cannot assure you that all of its PRC resident beneficial owners will comply with SAFE regulations. The failure of Glory Star’s beneficial owners who are PRC residents to make any required registrations may subject Glory Star to fines and legal sanctions, and prevent Glory Star from being able to make distributions or pay dividends, as a result of which its business operations and its ability to distribute profits to you could be materially adversely affected.

Restrictions on foreign exchange under PRC laws may limit Glory Star’s ability to convert cash derived from its operating activities into foreign currencies and may materially and adversely affect the value of your investment.

Substantially all of Glory Star’s revenues and operating expenses are denominated in Renminbi. Under the relevant foreign exchange regulations in the PRC, conversion of the Renminbi is permitted, without the need for SAFE approval, for “current account” transactions, which includes dividends, trade, and service-related foreign exchange transactions, subject to procedural requirements including presenting relevant documentary evidence of such transactions and conducting such transactions at designated foreign exchange banks within China who have the licenses to carry out foreign exchange business. Conversion of the Renminbi for “capital account” transactions, which includes foreign direct investment, loans and investment in negotiable instruments, is still subject to significant limitations and requires approvals from and registration with SAFE and other PRC regulatory authorities. Under Glory Star’s current structure, its source of funds primarily consists of dividend payments from its subsidiary in the PRC. Glory Star cannot assure you that it will be able to meet all of its foreign currency obligations or to remit profits out of China. If future changes in relevant regulations were to place restrictions on the ability of Glory Star’s subsidiaries to remit dividend payments, its liquidity and ability to satisfy its third-party payment obligations and its ability to distribute dividends could be materially adversely affected.

Glory Star may rely on dividends and other distributions on equity paid by its wholly-owned subsidiaries to fund any cash and financing requirements it may have, and any limitation on the ability of its subsidiaries or Glory Star to make payments to Glory Star could have a material adverse effect on its ability to conduct its business.

Glory Star is a holding company, and it may rely on dividends from its wholly-owned subsidiaries and service, license and other fees paid to its wholly-owned subsidiary in China by Horgos Star and Xing Cui Can for its cash requirements, including any debt it may incur. Current PRC regulations permit Glory Star’s PRC subsidiaries to pay dividends to Glory Star only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, Glory Star’s PRC subsidiary, Xing Cui Can and Horgos are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of their registered capital, and each of its subsidiaries is required to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of its board of directors. These reserves are not distributable as cash dividends. Furthermore, if Glory Star’s PRC subsidiaries, Xing Cui Can and Horgos incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to Glory Star. In addition, the PRC tax authorities may require Glory Star to adjust its taxable income under the contractual arrangements it currently have in place in a manner that would materially and adversely affect its PRC subsidiaries’ ability to pay dividends and other distributions to Glory Star. Any limitation on the ability of its subsidiaries to distribute dividends to Glory Star or on the ability of Horgos and Xing Cui Can to make payments to Glory Star could materially and adversely limit its ability to grow, make investments or acquisitions that could be beneficial to its businesses, pay dividends, or otherwise fund and conduct its business.

Glory Star may be treated as a resident enterprise for PRC tax purposes under the EIT Law, which may subject Glory Star to PRC income tax for its global income and withholding for any dividends it pay to its non-PRC shareholders.

Under the Enterprise Income Tax Law (“EIT Law”), enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises,” and will generally be subject to the uniform 25% enterprise income tax rate for their global income. Although the term “de facto management bodies” is defined as “management bodies which have substantial and overall management and control power on the operation, human resources, accounting and assets of the enterprise,” the circumstances under which an enterprise’s “de facto management body” would be considered to be located in China are currently unclear. A circular issued by the State Administration of Taxation (《国家税务总局关于境外注册中资控股企业依据实际管理机构标准认定为居民企业有关问题的通知》) on April 22, 2009, provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise” with its “de facto management bodies” located within China if the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function mainly in the PRC; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (4) at least half of the enterprise’s directors or senior management with voting rights reside in the PRC. In addition, the State Administration of Taxation recently promulgated the Interim Provisions on Administration of Income Tax of Chinese-Controlled Resident Enterprise Registered Overseas (《境外注册中资控股居民企业所得税管理办法(试行 )》), effective from September 1, 2011, which clarified certain matters concerning the determination of resident status, administrative matters following this determination, and competent tax authorities. These interim provisions also specify that, when an enterprise that is both Chinese-controlled and incorporated outside of mainland China, receives PRC-sourced incomes such as dividends and interests, no PRC withholding tax is applicable if such enterprise has obtained a certificate evidencing its status as a PRC resident enterprise that is registered overseas and controlled by Chinese.

Most members of Glory Star’s management team are based in China and are expected to remain in China. Although its offshore holding companies are not controlled by any PRC company or company group, Glory Star cannot assure you that it will not be deemed to be a PRC resident enterprise under the EIT Law and its implementation rules. If Glory Star is deemed to be a PRC resident enterprise, it will be subject to PRC enterprise income tax at the rate of 25% on its global income. In that case, however, dividend income Glory Star receives from its PRC subsidiaries may be exempt from PRC enterprise income tax because the EIT Law and its implementation rules generally provide that dividends received by a PRC resident enterprise from its directly invested entity that is also a PRC resident enterprise is exempt from enterprise income tax. Accordingly, if Glory Star is deemed to be a PRC resident enterprise and earn income other than dividends from its PRC subsidiaries, a 25% enterprise income tax on Glory Star’s global income could significantly increase its tax burden and materially and adversely affect its cash flow and profitability.

In addition, the EIT Law and its implementation rules are relatively new and ambiguities exist with respect to the interpretation of the provisions relating to identification of PRC-sourced income. If Glory Star is deemed to be a PRC resident enterprise, dividends distributed to its non-PRC entity investors by Glory Star, or the gain its non-PRC entity investors may realize from the transfer of its common shares, may be treated as PRC-sourced income and therefore be subject to a 10% PRC withholding tax pursuant to the EIT Law and, as a result, the value of your investment may be materially and adversely affected.

Glory Star Group may have exposure to greater than anticipated tax liabilities.

Under PRC laws and regulations, arrangements and transactions among business entities may be subject to audit or challenge by the PRC tax authorities. The tax laws applicable to Glory Star Group’s business activities are subject to interpretation. Glory Star Group could face material and adverse tax consequences if the PRC tax authorities determine that some of its business activities are not based on arm’s-length prices and adjust its taxable income accordingly. In addition, the PRC tax authorities may impose late payment fees and other penalties to Glory Star Group for under-paid taxes. Glory Star Group’s consolidated net profit in the future may be materially and adversely affected if it is subject to greater than anticipated tax liabilities.

The PRC legal system has inherent uncertainties regarding the interpretation and enforcement of PRC laws and regulations which could limit the legal protections available to investors.

Substantially all of Glory Star Group’s operations are conducted in the PRC. The PRC legal system is a civil law system based on written statutes, and prior court decisions can only be cited as reference and have almost no precedential value. Since 1979, the PRC government has been developing a comprehensive system of laws, rules and regulations in relation to economic matters, such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because of the limited volume of published cases and their non-binding nature, the interpretation and enforcement of these laws, rules and regulations involve some degree of uncertainty, which may lead to additional restrictions and uncertainty for Glory Star Group’s business and uncertainty with respect to the outcome of any legal action investors may take against Glory Star Group in the PRC. In addition, Glory Star Group cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. Any changes to such laws and regulations may materially increase Glory Star Group’s costs and regulatory exposure in complying with them.

If Glory Star becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, it may have to expend significant resources to investigate and resolve any related issues, which could materially adversely impact its business operations and reputation.

Certain U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has been centered around financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of certain U.S.-listed Chinese companies has sharply decreased in value. Certain companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this scrutiny, criticism and negative publicity may have on Glory Star’s business. If Glory Star becomes the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, it will have to expend significant resources to investigate such allegations and/or defend. This situation will be costly and time consuming and distract its management from growing Glory Star. Such allegations may materially adversely impact its business operations and reputation.

The risk of discontinuation of Glory Star’s Preferential Tax Treatments.

Currently, Glory Star is eligible to be exempted from income tax from 2017 to 2020, and will be eligible for certain tax rebates from local taxing authorities from 2021 to 2025. If such preferential tax is no longer available to Glory Star, the income tax rate may increase up to 25%, which could have an adverse effect on financial condition and results of operations.

Risks Relating to Glory Star’s Ordinary Shares

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because Glory Star is incorporated under Cayman Islands law.

Glory Star is an exempted company incorporated under the laws of the Cayman Islands. Glory Star’s corporate affairs are governed by its memorandum and articles of association, the Cayman Islands Companies Law and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of its directors to Glory Star under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from common law of England and Wales, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of Glory Star’s shareholders and the fiduciary responsibilities of its directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws as compared to the United

States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

There is uncertainty as to whether the courts of the Cayman Islands would:

•        recognize or enforce judgments of courts of the United States obtained against Glory Star based on certain civil liability provisions of U.S. securities laws; and

•        entertain original actions brought against Glory Star predicated upon certain civil liability provisions of U.S. securities laws.

There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

Certain judgments obtained against Glory Star by its shareholders may not be enforceable.

Glory Star is a Cayman Islands company and all of its assets are located outside of the United States. Substantially all of Glory Star’s current operations are conducted in the PRC. In addition, all of Glory Star’s directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against Glory Star or against these individuals in the United States in the event that you believe that your rights have been infringed under the United States federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against Glory Star’s assets or the assets of its directors and officers.

Risks Relating to the Consummation of the Business Combination

Shareholders of TKK will not be afforded an opportunity to vote on the Business Combination, which means TKK may consummate the Business Combination even though a majority of its public shareholders do not support such a combination.

TKK will not hold a shareholder vote to approve the Business Combination before it consummates the Business Combination. However, it expects to hold a meeting of shareholders to seek shareholder approval of proposed amendments to its Memorandum and Articles of Association, and will separately distribute materials to its shareholders in connection therewith. As an FPI, TKK will not be required to seek shareholder approval to the extent the laws of the Cayman Islands, its jurisdiction of incorporation, do not require such a vote. Accordingly, TKK may consummate the Business Combination even if holders of a majority of its public shares do not approve of the Business Combination.

As an FPI, TKK is not required to meet certain Nasdaq standards related to shareholder voting.

The Nasdaq rules generally require a company to obtain shareholder approval in the following circumstances: (a) in connection with an acquisition, if a company issues shares equal to 20% or more of its pre-transaction outstanding shares, or 5% or more of its pre-transaction outstanding shares when a related party has a 5% or greater interest in the target; (b) in connection with a stock issuance that results in a change of control (whereby, as a result of an issuance, an investor or a group would own, or have the right to acquire, 20% or more of the outstanding shares of ordinary shares or voting power and such ownership or voting power would be the largest ownership position in Glory Star); (c) in connection with an equity compensation plan (whereby a company establishes or materially amends a stock option or purchase plan or other arrangement pursuant to which stock may be acquired by officers, directors, employees or consultants); or (d) in connection with a private placement where the issuance (together with sales by officers, directors, or substantial shareholders, if any) equals 20% or more of the pre-transaction outstanding shares of Glory Star at a price less than the greater of book or market value.

Although many blank check companies listed on Nasdaq would be required to seek shareholder approval in connection with their initial business combination (for example, if the consideration paid in connection with the transaction includes the issuance of 20% or more of such company’s then issued and outstanding shares), because TKK is an FPI, TKK is not required to seek shareholder approval under the Nasdaq rules to the extent the laws of the Cayman Islands do not require such a vote. The laws of the Cayman Islands provide TKK with a variety of methods to consummate the Business Combination without a shareholder vote to approve the Business Combination, including the manner in which the Business Combination is structured.

The only opportunities shareholders of TKK have to make the investment decision regarding the Business Combination will be to exercise their right to redeem TKK ordinary shares for cash.

Because TKK intends to consummate the Business Combination without seeking shareholder approval, shareholders will not have the right or opportunity to vote on the Business Combination. Accordingly, the only opportunities afforded to the shareholders of TKK to make an investment decision regarding the Business Combination is to exercise their redemption rights within the period of time (which will be through November 15, 2019) as set forth in this Offer to Purchase.

If TKK due diligence investigation of Glory Star Group was inadequate, then shareholders of TKK who do not redeem their ordinary shares in this Offer could lose some or all of their investment following the Business Combination.

Even though TKK conducted a due diligence investigation of Glory Star Group, it cannot be sure that this diligence uncovered all material issues that may be present in Glory Star Group or its business, or that it would be possible to uncover all material issues through a more protracted amount of due diligence, or that factors outside of Glory Star Group and its business and outside of its control will not later arise. The requirement that TKK must complete the Business Combination by the Business Combination Deadline, and TKK’s lack of experience investing in or managing companies in the e-commerce industry and media industry may have limited its ability to perform, and the available time to conduct, due diligence, and the Business Combination may be consummated pursuant to terms that TKK would have rejected upon a more comprehensive investigation.

TKK will issue ordinary shares as consideration in the Business Combination, which will dilute the interest of shareholders of TKK following the Business Combination and likely present other risks.

TKK will issue a substantial number of ordinary shares in order to complete the Business Combination. The issuance of additional ordinary shares:

•        will significantly dilute the equity interest of existing shareholders of TKK; and

•        may adversely affect prevailing market prices for the securities of TKK.

If the Offer is completed, additional sources of financing may not be available and TKK’s redemption of ordinary shares in the Offer will cause its public float to be reduced. As a result, its shareholders may be disadvantaged by reduced liquidity in its securities.

The Offer exposes TKK to a number of risks including:

•        use of funds to redeem ordinary shares in the Offer and to pay expenses of the Offer will reduce the funds available as working capital for the continuation of Glory Star Group’s business following the Business Combination;

•        TKK may not be able to replenish cash reserves by raising debt or equity financing in the future on terms acceptable to us, or at all; and

•        the “public float,” which is the number of shares owned by non-affiliate shareholders and available for trading in the securities markets, following the Offer and prior to the Business Combination, will be reduced, which may reduce the volume of trading in ordinary shares and may result in lower stock prices and reduced liquidity in the trading of ordinary shares prior to the completion of the Business Combination.

TKK’s board of directors did not, and is not required to, obtain a fairness opinion in connection with the Business Combination.

TKK’s board of directors did not, and is not required to, obtain a fairness opinion in determining whether or not to proceed with the Business Combination. Shareholders of TKK will be relying on the judgment of TKK’s board of directors, who determined the advisability of the Business Combination and that the fair market value of Glory Star Group is equal to at least 80% of the balance in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account), as required by its Memorandum and Articles of Association. TKK’s shareholders will be relying on the judgment of its board of directors, whose collective experience in business evaluations for blank check companies like TKK is not significant. Furthermore, the directors may have a conflict of interest in analyzing the transaction due to their personal and financial interests and may be incorrect in its assessment of Glory Star Group and the Business Combination. As such, no assurance can be provided that Glory Star Group has a fair market value of at least 80% of the balance in the Trust Account or that the price TKK is paying for Glory Star Group is fair to TKK and its shareholders from a financial point of view. TKK’s board of directors unanimously recommends that you do not accept the offer with respect to your ordinary shares.

TKK may redeem the warrants at a time that is not beneficial to warrant holders.

TKK may call the warrants for redemption at any time after the redemption criteria described elsewhere in this Offer to Purchase have been satisfied. If TKK calls the warrants for redemption, warrant holders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do so.

TKK may waive one or more of the conditions to the Business Combination.

TKK may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws.

There is no guarantee, even if we consummate the Business Combination, that the public warrants will ever be in the money and they may expire worthless.

The exercise price for our public warrants is $5.75 per one-half share, or $11.50 per whole share. There is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the public warrants may expire worthless.

The Sponsor, private placement warrant holder, and the Sellers will have registration rights, the future exercise of which may adversely affect the market price of the ordinary shares.

Pursuant to an agreement entered into concurrently with TKK’s IPO, following the Business Combination, the Sponsor and certain holder of the private placement warrants, may demand that we register their unregistered ordinary shares and private placement warrants. In addition, TKK entered into a Registration Rights Agreement with the Seller Representative, pursuant to which TKK shall grant each Seller certain registration rights with respect to the Closing Payment Shares and Earnout Shares.

TKK will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of the ordinary shares.

Our ability to successfully effect the Business Combination and to successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel, including certain personnel of Glory Star, whom we expect to join us following the Business Combination. The loss of such key personnel could negatively impact the operations and profitability of our post-combination business.

Our ability to successfully effect the Business Combination and successfully operate the business is dependent upon the efforts of certain key personnel, including certain personnel of Glory Star. Although we expect such key personnel to remain with TKK following the Business Combination, it is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of our post-combination business. Furthermore, while we have scrutinized individuals we intend to engage to stay with TKK following the Business

Combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.

Our officers, directors, security holders and their respective affiliates, including the Sponsor, may have competitive pecuniary interests that conflict with our interests.

We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. Further, we do not have a policy that expressly prohibits any of the Sponsor, officers, directors or their respective affiliates from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.

A market for the securities of TKK after the Business Combination may not fully develop, which would adversely affect the liquidity and price of our securities.

We intend to continue to list the ordinary shares and warrants on Nasdaq under the symbols “TKKS” and “TKKSW,” respectively, on or promptly after the consummation of the Business Combination, by filing a new listing application with Nasdaq, however, there is no guarantee that we will meet the Nasdaq listing requirements. Following the Business Combination, the price of our securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for our securities may never fully develop or, if developed, it may not be sustained. In addition, the price of the securities after the offering can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the Over the Counter markets, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national exchange. You may be unable to sell your securities unless a market can be established or sustained.

There is a limited amount of cash available to be used for other corporate purposes by TKK.

TKK and Glory Star have incurred significant costs associated with the Business Combination, including TKK’s expenses of approximately $371,677 as of June 30, 2019 and certain fees owed to the underwriters (see “The Share Exchange Agreement — Business Combination Marketing Agreement”). These expenses have limited the amount of cash available to be used for other corporate purposes following the Business Combination.

If the Business Combination’s benefits do not meet the expectations of investors and/or shareholders, the market price of our securities may decline.

The market price of TKK’s securities prior to the consummation of the Business Combination or the market price of our securities following the consummation of the Business Combination may decline as a result of the Business Combination if the market does not view the Business Combination positively due to current market environment, uncertainty of regulation, assessment of valuation, among others. Accordingly, shareholders may experience a loss as a result of a decline in the market price of TKK’s securities prior to the consummation of the Business Combination or TKK’s securities following the consummation of the Business Combination. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

The market price of TKK’s securities may decline as a result of the Business Combination.

The market price of TKK’s securities may decline as a result of the Business Combination for a number of reasons, including if:

•        investors react negatively to the prospects of the combined company’s business and the prospects of the Business Combination;

•        the effect of the Business Combination on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts;

•        the combined company does not achieve the perceived benefits of the Business Combination as rapidly or to the extent anticipated by financial or industry analysts;

•        the value of Glory Star Group proves to be materially less than the value used by our board of directors to determine the Closing consideration.

Accordingly, investors may experience a loss as a result of decreasing market prices. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

TKK’s shareholders may not realize a benefit from the Business Combination commensurate with the ownership dilution they will experience in connection with the Business Combination.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Business Combination, TKK’s shareholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Business Combination.

TKK’s ability to request indemnification from the Sellers for damages arising out of the Business Combination is limited to those claims where damages exceed $2,125,000 and is also limited to ordinary shares of TKK placed in escrow or issuable in the earn-out.

To provide a fund to secure the indemnification obligations of the Sellers to TKK against losses that TKK may sustain as a result of or in connection with any breach, inaccuracy or nonfulfillment or the alleged breach, inaccuracy or nonfulfillment of any of the representations, warranties and covenants of Glory Star contained in the Share Exchange Agreement or any certificate or other writing delivered to TKK pursuant to the Share Exchange Agreement, 5% of the Closing Payment Shares will be placed in escrow, valued at the redemption price, which will be returned for cancellation to the extent that TKK has damages for which it is entitled to indemnification. Total payments made by the Seller Representative to TKK with respect to such losses shall not exceed an amount equal to the value of the Escrow Shares plus the value of the Earnout Shares (the “Indemnifiable Loss Limit”). Claims for indemnification may be asserted against the Escrow Shares by TKK, within certain prescribed periods, once its aggregate losses equals at least $2,125,000 (the “Basket”), at which point, TKK will be entitled to indemnification for the total amount of such losses, subject to the Indemnifiable Loss Limit. Notwithstanding the foregoing, any indemnification claims for breaches of certain representations and warrants in the Share Exchange Agreement or fraud claims are not subject to the Indemnifiable Loss Limit and/or the Basket. As a consequence of these limitations, TKK may not be able to be entirely compensated for indemnifiable damages that it may sustain.

In the event that a significant number of ordinary shares are redeemed, the ordinary shares of TKK may become less liquid following the Business Combination.

If a significant number of ordinary shares are redeemed, TKK may be left with a significantly smaller number of shareholders following the Business Combination. As a result, trading in ordinary shares following the Business Combination may be further limited and your ability to sell your ordinary shares in the market could be adversely affected.

The issuance of ordinary shares in connection with the Business Combination, the potential exercise of the outstanding warrants and the issuance of additional ordinary shares as result thereof, or from future public or private offerings, and the automatic conversion of the outstanding rights, will result in substantial dilution and could have an adverse effect on the market prices of TKK’s securities.

TKK currently has 31,450,000 ordinary shares outstanding. In connection with the Business Combination and pursuant to the Share Exchange Agreement, TKK has agreed to issue an aggregate number of ordinary shares equal to $425,000,000 divided by the redemption price (or 41,423,002 ordinary shares assuming a redemption price of $10.26 per share) to the Sellers as consideration, and may issue up to an additional 10,000,000 ordinary shares to Sellers in earnout payments. Additionally, (i) upon closing of the Business Combination, each outstanding right will be automatically converted into one-tenth (1/10) of an ordinary share and (ii) 30 days following the closing of the Business

Combination, the warrants will be exercisable for ordinary shares. The issuance of ordinary shares as consideration for the Business Combination, the potential exercise of outstanding warrants, and the issuance of additional shares in future public or private offerings, will result in substantial dilution and could have an adverse effect on the market price TKK’s securities.

Upon the consummation of the Business Combination, TKK’s former public shareholders will own:

•        approximately 36.49% of the outstanding shares of ordinary shares, assuming no tender of ordinary shares in connection with the Offer, a redemption price of $10.26 per share; or

•        0% of the outstanding shares of ordinary shares assuming all of the ordinary shares are validly tendered and not properly withdrawn, and are purchased, a redemption price of $10.26 per share in the Offer.

The issuance of additional ordinary shares, the exercise of warrants and the conversion of rights:

•        will significantly dilute the equity interest of existing TKK shareholders; and

•        may adversely affect prevailing market prices for ordinary shares and warrants.

Our shareholders will only be able to exercise a warrant if the issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.

No warrants will be exercisable on a cash basis and we will not be obligated to issue registered ordinary shares unless the ordinary shares issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Because the exemptions from qualification in certain states for re-sales of warrants and for issuances of ordinary shares by the issuer upon exercise of a warrant may be different, a warrant may be held by a holder in a state where an exemption is not available for issuance of ordinary shares upon exercise of the warrants and the holder will be precluded from exercising the warrant. As a result, the warrants may be deprived of any value, the market for the warrants may be limited and the holders of warrants may not be able to exercise their warrants if the Ordinary shares issuable upon such exercise is not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside.

Risks Relating to the Failure to Consummate the Business Combination

If TKK is not able to consummate the Business Combination by the Business Combination Deadline, TKK would cease all operations except for the purpose of the winding up of TKK, and TKK would redeem its public shares and liquidate.

TKK is required to complete the Business Combination by the Business Combination Deadline. If TKK is unable to consummate the Business Combination by the Business Combination Deadline, TKK will, as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including investment earnings (less up to $100,000 of investment earnings to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

If we are required to wind-up, liquidate the Trust Account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Cayman Islands Companies Law. In that case, investors may be forced to wait beyond the Business Combination Deadline before the redemption proceeds of our Trust Account become available to them, and they receive the return of their pro rata portion of the proceeds from our Trust Account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable to complete our initial business combination.

If we are unable to consummate a business combination, our public shareholders may be forced to wait until 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) before receiving liquidation distributions.

We have 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 which to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the expiration of this full time period will public shareholders be entitled to liquidation distributions if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your investment, you may be forced to sell your securities potentially at a loss.

Our board of directors may decide not to extend the term we have to consummate our initial business combination, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, and the warrants and rights will be worthless.

We 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 to no later than June 20, 2020 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. 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 above. In either case, we are not obligated to extend the time for us to complete our initial business combination.

If we are unable to consummate our initial business combination within the applicable time period, we will, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion of the funds held in the Trust Account and as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the warrants and rights will be worthless.

Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them.

Our amended and restated memorandum and articles of association provide that we will continue in existence only until 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) if a business combination has not been consummated by such time. If we are unable to complete an initial business combination during such time period, it will trigger our automatic winding up, liquidation and dissolution. As such, our shareholders could potentially be liable for any claims to the extent of distributions received by them pursuant to such process and any liability of our shareholders may extend beyond the date of such distribution. Accordingly, we cannot assure you that third parties, or us under the control of an official liquidator, will not seek to recover from our shareholders amounts owed to them by us.

If we are unable to consummate a transaction within the required time period, upon notice from us, the trustee of the Trust Account will distribute the amount in our Trust Account to our public shareholders. Concurrently, we shall

pay, or reserve for payment, from funds not held in trust, our liabilities and obligations, although we cannot assure you that there will be sufficient funds for such purpose. If there are insufficient funds held outside the Trust Account for such purpose, TKK Capital Holding has agreed that it will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement.

If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offense and may be liable to pay a fine of US$18,292.68 and subject to imprisonment for five years in the Cayman Islands.

Our directors may decide not to enforce indemnification obligations against TKK Capital Holding, an affiliate of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to TKK’s public shareholders.

In the event that the proceeds in the Trust Account are reduced below $10.00 per share, and TKK Capital Holding, an affiliate of the Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent director(s) would determine whether to take legal action against TKK Capital Holding to enforce its indemnification obligations. While we currently expect that our independent director(s) would take legal action on our behalf against TKK Capital Holding to enforce its indemnification obligations to us, it is possible that our independent director(s) in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent director(s) choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our public shareholders may be reduced below $10.00 per share.

Risks Relating to the Offer

TKK requires shareholders who wish to redeem their ordinary shares in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

TKK requires public shareholders who wish to redeem their ordinary shares to either tender their certificates to its transfer agent at any time prior to the expiration date set forth in these tender offer documents or to deliver their shares to the transfer agent electronically using the DTC’s DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical certificate, a shareholder’s broker and/or clearing broker, DTC and TKK’s transfer agent will need to act to facilitate this request. It is TKK’s understanding that shareholders should generally allow at least two weeks to obtain physical certificates from the transfer agent. However, given the time limitations created by the expiration of the tender offer and because TKK does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While it typically takes a short time to deliver shares through the DWAC System, there is no assurance this will be the case. Accordingly, if it takes longer than TKK anticipates for shareholders to deliver their ordinary shares, shareholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their ordinary shares.

As TKK will require its public shareholders who wish to redeem their ordinary shares in connection with the Offer to comply with specific requirements for redemption described above, such redeeming shareholders may be unable to sell their securities when they wish to in the event that the Business Combination is not consummated.

If TKK requires public shareholders who wish to redeem their ordinary shares in connection with the proposed Business Combination to comply with specific requirements for redemption as described above and the Business Combination is not consummated, TKK will promptly return such certificates to its public shareholders. Accordingly, shareholders of TKK who attempted to redeem their ordinary shares in such a circumstance will be unable to sell

their securities after the failed acquisition until TKK has returned their securities to them. The market price for TKK’s ordinary shares may decline during this time and shareholders of TKK may not be able to sell their securities when they wish to, even while other shareholders that did not seek redemption may be able to sell their securities.

There is no guarantee that a shareholder’s decision whether to tender ordinary shares will put the shareholder in a better future economic position.

We can give no assurance as to the price at which a shareholder may be able to sell its ordinary shares in the future following the completion of the Business Combination. Certain events following the consummation of the Business Combination may cause an increase in our share price, and may result in a lower value realized now than a shareholder of TKK might realize in the future had the shareholder not agreed to tender ordinary shares. Similarly, if a shareholder of TKK does not tender ordinary shares, the shareholder will bear the risk of ownership of the Ordinary shares of TKK after the consummation of the Business Combination, and there can be no assurance that a shareholder can sell the shareholder’s shares in the future for a greater amount than the redemption price set forth in the Offer. A shareholder of TKK should consult the shareholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

The Offer presents potential risks and disadvantages to us and our continuing shareholders.

The Offer exposes us to a number of risks including:

•        the use of a substantial portion of the cash in our Trust Account, which reduces the funds available as working capital for our businesses going forward, available for significant cash acquisitions in the future or available for other business opportunities that could create significant value for our shareholders;

•        the risk that we would not be able to replenish our cash reserves by raising debt or equity financing in the future on terms acceptable to us, or at all; and

•        the risk that the Offer may reduce our “public float,” which is the number of shares owned by non-affiliate shareholders and available for trading in the securities markets, and the number of our shareholders, which may reduce the volume of trading in the ordinary shares and may result in lower share prices and reduced liquidity in the trading of the ordinary shares following completion of the Offer and limit our ability to meet Nasdaq listing standards, including having the requisite number of round lot holders or shareholders. Please see risk factor entitled “Nasdaq could delist our ordinary shares, which could limit investors’ ability to transact in our securities and subject us to additional trading restrictions,” below.

Because we may redeem up to all of our ordinary shares in the Offer, the liquidity of our securities in the open market may be significantly reduced.

We may redeem up to all of our ordinary shares in the Offer, which would result in significantly fewer ordinary shares issued and outstanding and, in turn, would significantly reduce the liquidity of our securities, including our ordinary shares that are not redeemed.

Risks Relating to TKK Symphony Acquisition Corporation

The requirement that we complete an initial business combination within a specific period of time may give potential target businesses leverage over us in negotiating a business transaction.

We have 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) to complete an initial business combination. Any potential target business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time limits referenced above.

The requirement that 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 may limit the type and number of companies that we may complete such a business combination with.

Pursuant to the 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. This restriction may limit the type and number of companies with which we may complete a business combination. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the Trust Account.

If Nasdaq delists our securities from trading on its exchange after our initial public offering, 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.

Because we are incorporated under the laws of the Cayman Islands, you may face difficulty protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.

We are an exempted company incorporated under the laws of the Cayman Islands and certain of our officers and directors are residents of jurisdictions outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) or the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.

We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.

Certain obligations of our Sponsor are memorialized in agreements between our Sponsor, the underwriters of our IPO and us, and these agreements may be amended to change these obligations or eliminate them entirely.

In connection with our IPO, our Sponsor, certain affiliate of our Sponsor, our officers and directors and other initial shareholders agreed to certain obligations pursuant to certain Letter Agreements, as amended, including:

•        in connection with a shareholder vote to approve our initial business combination and/or amend the provisions of our Memorandum and Articles of Association (the article that contains all of the special provisions applicable to us prior to and in connection with our initial business combination) prior to consummation of our initial business combination, to vote their shares in favor of the proposed initial business combination;

•        that he, she or it will not exercise redemption rights in connection with any shares held by such person;

•        to waive their rights to participate in any liquidation distribution with respect to the ordinary shares if we fail to consummate an initial business combination; and

•        only with respect to an affiliate our Sponsor, if we are unable to complete an initial business combination and are forced to dissolve and liquidate, to indemnify us for all claims of contracted parties, to the extent we fail to obtain valid and enforceable waivers from such parties (we have not, however, sought information nor received information from such affiliate of our Sponsor relating to its ability to satisfy any indemnification obligation).

The Letter Agreements were filed as exhibits to our Report on Form 8-K filed with the SEC on August 21, 2018. The Letter Agreements may be amended or terminated with the consent of each of the parties thereto. Accordingly, if each of the parties to the agreements determines that these obligations are no longer in their best interest, then the agreements may be amended or terminated and these obligations may be changed or eliminated entirely.

Since TKK’s Sponsor will lose its entire investment if the Business Combination is not consummated, a conflict of interest may exist in determining whether the Business Combination is appropriate for TKK’s initial business combination.

Our Sponsor and initial shareholders own an aggregate of 6,250,000 founder shares. Symphony has also, through an affiliate, purchased from us an aggregate of 13,000,000 private warrants at $0.50 per private warrant (for a total purchase price of $6,500,000) that will expire worthless if we do not consummate a business combination. In the event of our dissolution and liquidation, our Sponsor may not receive distributions from the Trust Account with respect to these shares. Therefore, our Sponsor’s financial interests may influence its motivation in identifying and selecting an acquisition target and consummating our initial business combination in a timely manner. In addition, many of our directors are affiliated with our Sponsor, which may result in a conflict of interest when they determine whether the terms, conditions and timing of a particular initial business combination are appropriate and in our shareholders’ best interest.

Unless we complete an initial business combination, we will not repay loans provided to us from our Sponsor, and neither our officers, directors, nor any of their respective affiliates, will receive reimbursement for any out-of-pocket expenses incurred by them if such expenses exceed the amount available to us for working capital and general corporate purposes. Therefore, they may have a conflict of interest in determining whether a particular initial business combination is appropriate and in the best interest of TKK.

We shall provide reimbursement of out-of-pocket expenses reasonably incurred by our officers, directors, or any of their respective affiliates, in connection with identifying, investigating and consummating an initial business combination, for which there is no maximum amount of out-of-pocket expenses that may be incurred. Notwithstanding, neither our officers, directors, nor any of their respective affiliates, will receive reimbursement for any out-of-pocket expenses reasonably incurred by them to the extent that such expenses exceed the amount not required to be retained in the Trust Account unless an initial business combination is consummated. In addition, the Sponsor has provided loans to us in the aggregate amount of $350,000 as of June 30, 2019, and we expect that the Sponsor will provide additional loans to us prior to the Business Combination Deadline, which loans are repayable only upon the consummation of a business combination. The financial interest of our officers, directors, or any of their respective affiliates, including the Sponsor, could influence their motivation in selecting an acquisition target and thus, there may be a conflict of interest when determining whether a particular initial business combination is in the shareholders’ best interest.

Nasdaq could delist our ordinary shares, which could limit investors’ ability to transact in our securities and subject us to additional trading restrictions.

Our securities are listed on the Nasdaq Capital Market, a national securities exchange. We cannot assure you that we will be able to remain in compliance with the Nasdaq listing requirements.

If the Nasdaq Capital Market delists our securities, we could face significant material adverse consequences, including:

•        a limited availability of market quotations for our securities;

•        reduced liquidity for our securities;

•        a determination that our ordinary shares are a “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

•        a limited amount of news and analyst coverage; and

•        a decreased ability to issue additional securities or obtain additional financing in the future.

In addition, it is a condition to consummation to the Business Combination that our ordinary shares shall have been approved for listing on Nasdaq, subject to completion of the Business Combination. If our securities are delisted from Nasdaq, the Sellers could elect to terminate the Share Exchange Agreement and, as a result, we would not be able to complete the Business Combination, or another business combination, before the Business Combination Deadline.

If our ordinary shares become subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions, and trading activity in our securities may be adversely affected.

If at any time we have net tangible assets of $5,000,001 or less and our ordinary shares have a market price per share of less than $5.00, transactions in our ordinary shares may be subject to the “penny stock” rules promulgated under the Exchange Act. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

•        make a special written suitability determination for the purchaser;

•        receive the purchaser’s written agreement to the transaction prior to sale;

•        provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and

•        obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.

If our ordinary shares become subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

We may be a passive foreign investment company, or “PFIC,” which could result in adverse United States federal income tax consequences to U.S. investors.

Since we may be a PFIC, beneficial owners that are U.S. taxpayers of our ordinary shares may be subject to potentially adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. In particular, tendering U.S. Holders, as defined under “Material U.S. Federal Income Tax Consequences”, may be required to treat any gain recognized on the tender as ordinary income and may be subject to an interest charge on the portion of any gain that is attributable to a prior tax year. We urge U.S. investors to consult their own tax advisors regarding the possible application of the PFIC rules. See “Material U.S. Federal Income Tax Consequences.”

FORWARD-LOOKING STATEMENTS

This Offer to Purchase contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our and Glory Star Group’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. The risks and uncertainties include, but are not limited to:

•        future operating or financial results;

•        the risk that governmental and regulatory review of the tender offer documents may result in the inability of Glory Star to complete the Offer by the Expiration Date;

•        the ability of Glory Star to consummate the Business Combination and any initial business combination;

•        future payments of dividends and the availability of cash for payment of dividends;

•        future acquisitions, business strategy and expected capital spending;

•        assumptions regarding interest rates and inflation;

•        ability to attract and retain senior management and other key employees;

•        ability to manage our growth;

•        fluctuations in general economic and business conditions;

•        financial condition and liquidity, including its ability to obtain additional financing in the future (from warrant exercises or outside services) to fund capital expenditures, acquisitions and other general corporate activities;

•        estimated future capital expenditures needed to preserve our capital base;

•        the ability to meet the Nasdaq listing standards, including having the requisite number of shareholders, and the potential delisting of Glory Star New Media Group Holdings Limited (formerly TKK) securities from Nasdaq;

•        potential changes in the legislative and regulatory environments;

•        a lower return on investment;

•        potential volatility in the market price of our securities; and

•        other factors discussed in “Risk Factors.”

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors” in this Offer to Purchase. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this Offer to Purchase. Except as required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Offer to Purchase or to reflect the occurrence of unanticipated events.

You should carefully consider these risks, in addition to the risks factors set forth in the section titled “Risk Factors” and other information in this Offer to Purchase and in our other filings with the SEC, including the final prospectus related to our IPO dated August 15, 2018 (Registration No. 333-226423) and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, or our 2018 Annual Report, which is incorporated herein by reference. The documents we file with the SEC, including those referred to above, also discuss some of the risks that could cause actual results to differ from those contained or implied in the forward-looking statements. See “Where You Can Find More Information.”

INFORMATION ABOUT TKK AND GLORY STAR GROUP

Information about TKK Symphony Acquisition Corporation

TKK Symphony Acquisition Corporation is a blank check company incorporated under the laws of the Cayman Islands on February 5, 2018. TKK was incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. TKK is not limited to a particular industry or geographic region for purposes of consummating a business combination. However, TKK believes it is particularly well-positioned to capitalize on growing opportunities created by consumer/lifestyle assets that may have particular application for the Peoples Republic of China market.

In August 2018, TKK consummated its IPO of an aggregate of 25,000,000 Units, including 3,000,000 Units pursuant to the partial exercise of the over-allotment option by the underwriters of the IPO. Each Unit issued in the IPO consists of one ordinary share, one warrant and one right. Each warrant entitles the holder to purchase one-half of an ordinary share at a price of $5.75 per half share. Simultaneously with the consummation of the IPO, TKK completed a private placement of 13,000,000 warrants, which we refer to as the “private placement warrants,” at a purchase price of $0.50 per warrant to its Symphony, generating gross proceeds of $6,500,000. On August 16, 2018, the Units commenced trading on the Nasdaq under the symbol “TKKU.” As a result of the partial exercise of the overallotment option, as of August 22, 2018, the Sponsor forfeited 75,000 ordinary shares so that the initial shareholders, including the Sponsor, maintain aggregate ownership, on an as-converted basis, at 20% of TKK’s issued and outstanding ordinary shares.

The 25,000,000 Units sold in the IPO were sold at an offering price of $10.00 per Unit, generating gross proceeds of $250,000,000, which was placed in the Trust Account pending TKK’s completion of an initial business combination.

On September 12, 2018, the ordinary shares, warrants and rights underlying the Units sold in the IPO began to trade separately.

If TKK does not consummate our initial business combination by the Business Combination Deadline, TKK must liquidate the Trust Account to the holders of the public shares and dissolve.

Information about Glory Star Group

This section contains forward-looking statements about the business and operations of the Glory Star Group and the combined company following the Business Combination. The actual results of combined company may differ materially from those currently anticipated as a result of many factors, including those described under “Risk Factors” and elsewhere in this Offer to Purchase. See “Forward-Looking Statements.”

Overview

Glory Star Group provides advertisement and content production services and operates a leading mobile and online advertising, digital media and entertainment business in China. After launching its CHEERS App in 2018, it is fast becoming one of the leading e-commerce platforms in China by allowing its users to access its online store (e-Mall), video content, live streaming, and online games. By leveraging Glory Star Group’s rich library of original professionally-produced content to drive user engagement, Glory Star Group has created an ecosystem that attracts and retains a large and growing viewing audience base for its platform.

As of June 30, 2019, Glory Star Group had distributed nearly 70,000 minutes of proprietary video content to its users, including short videos, online variety shows, online dramas, live streaming, and its lifestyle video series, which achieved more than 4.2 billion views cumulatively.

As of August 30, 2019, downloads of Glory Star Group’s CHEERS App exceeded 50 million. Below is a visual representation of the CHEERS App:

Glory Star Group’s Vision

Glory Star Group’s 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.

Glory Star Group’s Business

Established in 2016, Glory Star Group 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, Glory Star Group expanded into e-commerce services by introducing its CHEERS APP which integrated its e-commerce services with professionally-produced content. Primary to its vision, Glory Star Group continues to produce, create and add to its rich library of short videos, drama series, and live streaming, which Glory Star Group owns and streams on its own 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 its professionally-produced content and distribution networks, Glory Star Group drives viewing audiences to its CHEERS App ecosystem to convert them as users of its online video steaming services and as customers to its e-Mall and online games.

Cheers APP

The CHEERS App is Glory Star Group’s 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. Such a combination has become a prevalent trend in Chinese e-commerce innovation. The following is a summary of Glory Star Group’s CHEERS App:

-        E-Mall (Online Store)

Leveraging its brand, its large viewing audience, and users of its CHEERS App video app, in April 2019, Glory Star Group launched its e-Mall platform where Glory Star Group offers products to its users through third party merchants that its has screened and approved. Glory Star Group charges third-party merchants to its e-Mall platform a service fee and a commission for sales of their products.

As of August 31, 2019, Glory Star Group’s e-Mall has sold over 5,300 Stock Keeping Units (“SKUs”), recording over RMB25.1 million (US$3.5 million) in Gross Merchandise Value (“GMV”), achieving an impressive monthly GMV of RMB12.6 million (US$1.8 million) in August 2019, up from only RMB1.3 million (US$0.2 million) in April 2019.

-        Live Streaming

In June, 2018, Glory Star Group launched its first live streaming called Shopping Genius. As of September, 2019, Glory Star Group now has 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 the 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. Glory Star Group monetizes live streaming by promoting products where its subscribers can purchase products through its e-Mall. In addition, Glory Star Group’s e-commerce suppliers and distributors of on e-Mall have the option to enter separate advertising agreements with Glory Star Group for promoting their products in Glory Star Group’s live streaming.

-        Online Short Videos

Glory Star Group streams its professionally-produced content on its CHEERS App where it generates advertising revenues from traditional pre-video, in-video, banner advertisements, and pop-up advertisements. Glory Star Group also generates revenues from soft product placements that are incorporated into its original video content. Glory Star Group leverages its deep library of professionally-produced content, large viewing audience base, and big data analytics capabilities to help its advertisers target their specific demographics in China.

-        Online Games

Glory Star Group has developed four (4) online games for its CHEERS App where players can play our games that it has developed in-house. Glory Star Group monetizes online games through users’ in-app purchases of gift packages and game privileges.

Series TV Shows

In February, 2017, Glory Star Group started production of its 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. Glory Star Group’s series TV shows are unique in the content creation and production, with trending lifestyle updates filmed both in-studio and outdoor. Glory Star Group generates revenues from its series TV shows by licensing to TV stations with exclusive advertising times and charging advertising fees, and by displaying products of our E-mall. Glory Star Group distributes and promotes its 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. Glory Star Group also generates revenues from soft product placements that are incorporated into its series TV shows. Glory Star Group produces and licenses

its 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 (AHTV) and Shenzhen Satellite Television, which are year-to-year contracts. The following is a summary of Glory Star Group’s series TV shows:

Depending on the contract with partners, Glory Star either shares revenues generated by the number of viewers, or share of advertising revenues generated by the contents.

Advertising

Glory Star Group distributes and promotes its professionally-produced content on its CHEERS App and on a variety of online video platforms, mobile apps, IPTV and television channels where it generates advertising revenues from traditional pre-video, in-video, and pop-up advertisements. Glory Star Group also generates revenues from soft product placements that are incorporated into Glory Star Group’s original video content, including its online short videos. In addition, Glory Star Group’s e-Mall suppliers and distributors have the option to enter into separate advertising agreements for displaying their products in Glory Star Group’s live streamings. All items displayed in the live streamings can be purchased in e-Mall. Glory Star Group leverages its deep library of professionally-produced content, wide distribution channel, and big data analytics capabilities to help its advertisers target their specific demographics in China.

Production Services

Glory Star Group provides brand advertising services to third-party advertising agencies by producing variety shows, short videos, and live streaming according to customers’ needs for a fee. Glory Star Group also provides planning, shooting, and post-production services for a fee.

Content Licensing and Distribution

Glory Star Group, from time to time, may also acquire rights to rebroadcast and/or distribute third-party film and television drama.

Industry overview

Growth of e-commerce in China

The 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. According to iResearch report, 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.

Source: National Bureau of Statistics, iResearch

The 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%.

Source: CNNIC, iResearch

Growth of online video users

The 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.

Source: CNNIC, iResearch

Video content-driven e-commerce platforms

With 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.

A 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 its e-commerce platform. The video content adopted by most platforms are live streaming shows and short videos.

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

•        PGC 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 its attention to details and consistent quality;

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

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

Monetization

A 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;

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

•        Direct e-commerce sales of commodities on the platform.

Proprietary PGC video content-driven e-commerce platform

A 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.

Market Scale

The 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.

According 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.

Source: iResearch

Key successful factors for video content-driven E-commerce platforms

•        Selection 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.

•        Stable 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.

Competitive landscape

According to iResearch report, Glory Star Group is amongst the top 5 video content-driven e-commerce platforms in China in terms of monthly GMV in August 2019.

Competition

Glory Star Group’s competitors include Alibaba (Nasdaq: BABA), Pin Duouo (Nasdaq: PDD), Douyu (Nasdaq: DOYU), Qu Toutiao (Nasdaq: QTT), Mango Media (SZ.300413), and Zhong Guang Tianze (SH.603721) for users, shoppers, and advertising customers. Glory Star Group also competes 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.

Employees

As of August 15, 2019, Glory Star Group had 171 full time employees. Glory Star Group has entered into written employment contracts with all of its employees in accordance with PRC Labor Law and Contract Law. None of its employees is covered by collective bargaining contracts. Glory Star Group believes that it maintains a good working relationship with its employees and Glory Star Group has not experienced any significant labor disputes or any difficulty in recruiting staff for its operations.

As required by PRC regulations, Glory Star Group participates 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. Glory Star Group is required under PRC law to contribute to social security plans at specified percentages of the salaries, bonuses and certain allowances of its employees up to a maximum amount specified by the local government from time to 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.

Intellectual Property

Glory Star Group’s success depends largely on its ability to protect its core technology and intellectual property. To accomplish this, Glory Star Group relies on its 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 protects its proprietary rights in its technology. Glory Star Group currently does not own any patents and does not have any pending patent applications.

As of June 30, 2019, Glory Star owned thirty-six registered trademarks and twenty-three copyrights (including copyrights with respect to twenty software products developed by it relating to various aspects of its operations and three copyright works). The software and registered works are crucial to Glory Star’s business.

Legal Proceedings

From time to time, Glory Star Group 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 its business. To the best knowledge of management, there are no material legal proceedings pending against Glory Star Group.

There are no proceedings in which any of its directors, officers, or any beneficial shareholder of more than five percent (5%) of its voting securities is an adverse party or has a material interest adverse to Glory Star.

Seasonality

Aside from fluctuations in the level of advertising spending resulting from changes in the overall economic and market conditions in China, Glory Star’s revenues are affected by seasonal fluctuations in business and consumer spending that also affect the level of advertising spending over time in China. Glory Star’s 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 its control. Glory Star’s operating results tend to be seasonal. As a result, detailed attention shall be paid when comparing its 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.

Facilities

Glory Star Group’s principal executive office is located at F22, Xinhua Technology Building, No. 8 Tuofangying Road, Jiangtai, Chaoyang District, Beijing, People’s Republic of China, which has approximately 1,770 square meters of office space. As of August 31, 2019, Glory Star Group also rents an additional six facilities primarily used for office space. Total space under lease, including Glory Star Group’s principal executive office is 2,267 (m2). Glory Star pays monthly rent of approximately $281,935 per month. Lease expiration dates range from 2020 to 2025. Glory Star Group believes that its current offices are suitable and adequate to operate its business at this time. Glory Star Group does not own any real property.

Insurance

Glory Star Group does 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, Glory Star Group does not maintain business interruption insurance or key employee insurance for its executive officers. Uninsured damage to any of its equipment or buildings or a significant product liability claim could have a material adverse effect on its results of operations.

Dividend Policy

Glory Star’s board of directors has complete discretion on whether to pay dividends, subject to the any rights and restrictions attached to any class of shares. The form, frequency and amount of any dividends declared will depend upon Glory Star’s future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant or are required to be satisfied pursuant to Cayman law.

Glory Star is a holding company, and its relies on dividends paid by its operating subsidiaries in China for its cash needs, including the funds necessary to pay dividends and other cash distributions to its shareholders, if any, service any debt it may incur and pay its operating expenses. The payment of dividends in China is subject to limitations. Regulations in the PRC currently permit payment of dividends by its PRC subsidiaries only out of their accumulated profits as determined in accordance with accounting standards and regulations in China. Each of Glory Star’s PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year to contribute to its reserve fund until the accumulated balance of the reserve fund reaches 50% of its registered capital. Each of Glory Star’s PRC subsidiaries is also required to reserve a portion of its after-tax profits to its employee welfare and bonus fund, the amount of which is determined by its board of directors. These funds are not distributable in cash dividends.

Memorandum and Articles of Association

Glory Star was incorporated in the Cayman Islands as an exempted company with limited liability on November 30, 2018 with registration number 345545. Glory Star’s memorandum and articles of association (the “articles”) filed under the laws of the Cayman Islands contain, inter alia, provisions designed to provide certain rights and protections to the company’s shareholders. Pursuant to the articles, if different classes of shares are issued, the amendment of the rights attaching to any class will generally require the consent in writing of the holders of at least two-thirds of the issued shares of that class.

Furthermore, the Companies Law (as revised) of the Cayman Islands (the “Companies Law”) requires certain corporate actions to be passed by the shareholders of the company by way of a ‘Special Resolution’, being the consent of at least two-thirds of votes of shareholders at a general meeting (a higher threshold may be specified in the company’s articles), or all of the shareholders pursuant to a written resolution (provided that this method is permitted by the articles, as is the case with Glory Star). Such actions are as follows:

•        Amending the memorandum of association;

•        Authorising a reduction of share capital;

•        Amending the articles of association;

•        Adopting articles of association where the memorandum of association was not accompanied by articles of association;

•        Changing the name of the company and/or adopting or changing a dual foreign name of the company;

•        Permitting the paperless transfer of shares in a company pursuant to the rules of an approved stock exchange;

•        Appointing an inspector to examine the affairs of the company;

•        Voluntarily winding up the company under the Companies Law;

•        Requiring the Court to wind up the company under the Companies Law;

•        In support of an application to the Court to recall the liquidation;

•        In connection with the re-registration of a company as an exempted limited duration company (and vice versa);

•        In connection with the re-registration of a company as a special economic zone company (and vice versa);

•        Conversion of an ordinary non-resident company into a company;

•        Conversion of a company into a segregated portfolio company; and

•        Approving mergers and consolidations of a company.

In addition, Glory Star’s articles permit the company to:

(a)     be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing; and

(b)    reduce its share capital and any capital redemption reserve in any manner, authorised and consent required by Companies Law;

in each case with the approval of a Special Resolution.

Aside from the statutory requirements for a Special Resolution above, the articles require certain other corporate actions to have the consent of the shareholders by way of an ‘Ordinary Resolution’ (i.e. with a majority consent, or a unanimous consent in the case of a written resolution), including the following:

•        Increasing the share capital of the company;

•        Consolidating and dividing all or any of its share capital into shares of larger amount than its existing shares;

•        Subdividing its existing shares, or any of them, into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived;

•        Cancelling any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled;

•        Converting all or any of its paid up shares into stock and reconvert that stock into paid up shares of any denomination;

•        Determining (a) the minimum and maximum number; (b) the remuneration; and (c) the shareholding qualification of the directors of the company; and

•        Subject to the Companies Law, approve the capitalization of any credit of the company’s reserve accounts.

Exchange Controls

The Cayman Islands currently has no exchange control restrictions.

The following diagram illustrates Glory Star’s corporate structure as of the date of this Offer to Purchase. Unless otherwise indicated, equity interests depicted in this diagram are held 100%. 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.

Contractual Arrangements among WFOE, the VIEs and the VIEs Shareholders

Current 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. WFOE is considered a foreign-invested enterprise. To comply with PRC laws and regulations, Glory Star primarily conducts its 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 its financial statements under U.S. GAAP. The following is a summary of the VIE Contracts that provide Glory Star with effective control of the VIEs and that enables it to receive substantially all of the economic benefits from its operations.

Contracts that give Glory Star effective control of the VIEs

Business 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 its designee).

Exclusive 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 its 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 its 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 its designee).

Share 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 its 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.

Proxy 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 its 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.

GOVERNMENT REGULATIONS

Regulations of Glory Star Group’s Industry

The 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 lines of business of Glory Star Group.

Regulations on Foreign Investment

Guidance Catalogue of Industries for Foreign Investment

On June 28, 2017, the National Development and Reform Commission (the “NDRC”), and 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. The list 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.

On 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 its local counterparts is still required.

Foreign Direct Investment in Value-Added Telecommunications Companies

Pursuant 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.

MIIT 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 its shareholders. In addition, such company’s operation premises and equipment must comply with its approved ICP License, and such company should improve its internal internet and information security standards and emergency management procedures.

On 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 e-commerce). 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 Glory Star Group or other PRC internet companies with similar corporate and contractual structures.

In view of these restrictions on foreign direct investment in value-added telecommunications services and certain other types of businesses under which Glory Star Group’s business may fall, including internet culture services and radio/television programs production and operation business, Glory Star may rely on contractual arrangements with its VIEs to operate such business in China. For more information, please see “Glory Star’s 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 Glory Star’s corporate structure and contractual arrangements to constitute foreign ownership of a value-added telecommunications business.

Foreign Investment Law

The National People’s Congress, or the NPC, Standing Committee promulgated the Foreign Investment Law on March 15, 2019, which will come 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.

The 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. In addition, 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’ authorities at various levels and their relevant departments shall comply with the provisions of laws and regulations, including Foreign Investment Law. 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.

Due 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 the business Glory Star may be able to conduct in the PRC and accordingly on the results of its operations and financial condition.”

Regulations Related to E-Commerce

In 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.

According 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.

Implementing 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.

In 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” in the field 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.

In 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; (c) establish and improve a report and complaint handling mechanism and responsively 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 its 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. Glory Star believes that it is currently in material compliance with the guidance provided by the opinions.

Filing by Third-Party Platform Providers for Online Food Trading

In July 2016, the State Food and Drug Administration, or SFDA, 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, Xing Hui Beijing has completed the required filing formalities with the competent food and drug administration.

Regulations Relating to Product Quality and Consumer Rights Protection

Based 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.

The 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 its 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 damages.

As an e-commerce platform service provider, Glory Star is subject to the PRC Consumer Rights and Interests Protection Law, the Online Trading Measures and the Tort Liability Law of the PRC and believes that it is currently in compliance with these regulations in all material aspects.

Regulations on the Media Industry

Programme Content

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 its provincial branches for license. Horgos and Xing Hui Beijing have obtained the required approvals accordingly.

Regulations on the Advertising Industry

Regulations Relating to Advertising Law

The 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.

PRC 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 its 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.

Regulations Relating to Internet Advertising

On 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 media. 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.

Regulations Related to Internet Information Security and Privacy Protection

PRC 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; (iv) spread 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 its 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.

An 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.

In 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.

Furthermore, 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; (iii) any 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.

In 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.

To comply with these PRC laws and regulations, Glory Star has adopted internal procedures to monitor content displayed on its website and application. However, due to the large amount of data Glory Star generates and processes, it may not be able to properly protect customers’ personal information and safeguard its networks. See “Risk Factors — Risks Relating to Glory Star Group’s Business and Industry- Glory Star Group’s business generates and processes a large amount of data, and the improper use or disclosure of such data could harm its reputation as well as have a material adverse effect on its business and prospects.”

Regulations Related to Intellectual Property Rights

Regulations on Copyright

Under the Copyright Law, issued in 1990 and most recently amended in 2010, or the Copyright Law, and its 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 benefits 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.

The 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.

On 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.

In 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. As of August 30, 2019, Glory Star Group had 20 registered software copyrights.

Regulations 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 its registered trademarks to another party by entering into trademark license agreements, which must be filed with the Trademark Office for its 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” through such party’s use. As of August 30, 2019, Glory Star Group had 36 registered trademarks and 23 trademarks registration applications in PRC.

Regulations on Domain Names

The 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. The applicants will become the holder of such domain names upon the completion of the registration procedure. As of August 30, 2019, Glory Star Group had 3 domain names in PRC.

LABOR REGULATIONS

Labor Contract Law

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 its 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 to the employees wages that are no lower than local standards on minimum wages. The entity 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.

Regulations on Social Insurance and Housing Provident Fund

According 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.

According 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.

Regulations 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’ legally 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 its ability to contribute additional capital into its PRC subsidiary. Furthermore, 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 its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

Regulations on Foreign Currency Exchange

The 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 obtained.

Under 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. They 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 its 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 its 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 its branches.

On 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 its actual business needs, settle with a bank the portion of the foreign exchange capital in its 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 its capital for its 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.

The 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 No. 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 in the PRC.

Regulation on PRC Tax

PRC 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 its actual administration institution in China, pay enterprise income tax originating both within and outside China at the tax rate of 25%. Non-resident 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. Non-resident 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.

Regulation on PRC Value-added Tax

According 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 with law. 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; unless 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 its annexes, pursuant to which entities and individuals that sell services, intangible assets, or immovables pay VAT instead of business tax since May 1, 2016.

According 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.

According 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.

Dividend Distribution

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 accordingly.

On February 3, 2018, the SAT promulgated Announcement of the State Administration of Taxation on Issues Relating to “Beneficial Owner” 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] No. 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 owner” 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.

Regulations 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 income tax. 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 assets; (ii) whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income is mainly derived from China; and (iii) whether the offshore enterprise and its 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. The 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 its offshore transactions or sale of its shares or those of its offshore subsidiaries where non-resident enterprises, being the transferors, were involved.

Provisions 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 its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CSRC approval procedures require the filing of an application and supporting documents with the CSRC.

Glory Star does not currently have a chief financial officer and is in the process of recruiting a chief financial officer for the combined company.

Business Experience

Bing Zhang, Director (Chairman and Chief Executive Officer).    Mr. Zhang is the sole director and chairman of Glory Star. Mr. Zhang also serves as a director of Glory Star New Media Group HK Limited, executive director of Glory Star New Media (Beijing) Technology Co., Ltd., and chairman of Horgos Glary Wisdom Marketing Planning Co., Ltd., and Glary Wisdom (Beijing) Marketing Planning Co., Ltd. since 2018, executive director of Xing Cui Can, chairman of Horgos Glory Star Media Co., Ltd., Glory Star Media (Beijing) Co., Ltd., and Horgos Glary Prosperity Culture Co., Ltd. since 2017, and an executive director of Leshare Star (Beijing) Technology Co., Ltd. since 2016. From 2011 to 2019, Mr. Zhang was the Vice President of Fashion Group as well as Chairman of Board of Directors and General Manager of Fashion Starlight (Beijing) Media Co., Ltd. During that time, he helped expand the high-end fashion magazine into a series of fashion TV shows, and helped developed a number of nationally renowned TV programs, films and documentaries including but not limited to “New Youth”, “Morning Light in Xiaoxiang”, “Golden Eagle Star”, “China Entertainment Reports”, “ Muse Dress”, “Muse Dress S2”, “On The Way”, “Detective Chinatown”, “The Three-Body Problem”, “The Rise of a Tomboy”, “Yuanzhang Zhu”, “The Censors of Qing Dynasty”, and “Fashion”. Mr. Bing Zhang holds an EMBA Degree of Tsinghua SEM and a Bachelor Degree of Hunan University.

Jia Lu, Director and Senior Vice President of Glory Star Media (Beijing) Co., Ltd.    Mr. Lu is a director of Glory Star Media (Beijing) Co., Ltd., and a director of Horgos Glory Star Media Co., Ltd., Horgos Glary Wisdom Marketing Planning Co., Ltd., Glary Wisdom (Beijing) Marketing Planning Co., Ltd. since 2018, and director of Horgos Glary Prosperity Culture Co., Ltd. since 2017, and senior vice president of Glory Star Media (Beijing) Co., Ltd. Since 2016. From 2011 to 2016, Mr. Lu served as Vice General Manager at Trends Star (Beijing) Cultural Media Co., Ltd. Mr. Lu holds a Bachelor degree of Beijing film academy.

Ran Zhang, Director, Vice President (in charge of distribution/channels/publicity/chief editor’s office), and Supervisor of Glory Star Media (Beijing) Co., Ltd.    Mrs. Zhang is the director and Supervisor of Glory Star Media (Beijing) Co., Ltd. and a director of Horgos Glory Star Media Co., Ltd. Since 2018, and vice president (in charge of distribution/channels/publicity/chief editor’s office) of Glory Star Media (Beijing) Co., Ltd, and supervisor of Xing Cui Can and Leshare Star (Beijing) Technology Co., Ltd. since 2016. From October 2010 to December 2016, she served as Issuance Director at Fashion Starlight (Beijing) Media Co., Ltd. Mrs. Ran Zhang holds a Bachelor degree of Jingshi College of Science and Technology, Beijing Normal University.

There are no arrangements or understandings between our directors and executive officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Glory Star’s Board of Directors is not paid for services as directors.

Involvement in Certain Legal Proceedings

To the best of Glory Star’s knowledge, during the past ten years, none of Glory Star Group’s directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and

(4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Board Composition and Committees

Glory Star’s Board of Directors currently consists of one director. Glory Star does not have any board committees or independent directors on our board of directors. Glory Star is not required under the Companies Law to have independent directors.

Terms of Directors and Executive Officers

Glory Star’s directors are not subject to a term of office and hold office until such times as they resign or are removed from office by ordinary resolution or as otherwise described below. Any director can be removed from office by ordinary resolution. A director will be removed from office automatically if, among other things, the director becomes bankrupt or has become of unsound mind. Glory Star’s officers are appointed by and serve at the discretion of the Board of Directors.

Indemnification Matters

Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences or committing a crime. Glory Star’s memorandum and articles of association provide for indemnification of directors and officers for all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings incurred in their capacities as such, except by reasons of their own willful default or fraud.

*        Glory Star Media (Beijing) Co., Ltd.

As required by PRC regulations, Glory Star Group participates 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. Glory Star Group is required under PRC law to contribute to social security plans at specified percentages of the salaries, bonuses and certain allowances of its employees up to a maximum amount specified by the local government from time to time. Other than the above-mentioned statutory contributions mandated by applicable PRC law, Glory Star Group has not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.

Incentive Plans and Benefit Plans

Glory Star Group does not have any incentive plans, profit sharing plan or similar plans for the benefit of its officers, directors or employees.

Pension Benefits

None of Glory Star Group’s named executive officers participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by it.

Nonqualified Deferred Compensation

None of Glory Star Group’s named executive officers participate in or have account balances in nonqualified defined contribution plans or other deferred compensation plans maintained by it.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF GLORY STAR GROUP

The following table sets forth selected historical financial information derived from Glory Star Group’s unaudited interim consolidated financial statements as of and for the six months ended June 30, 2019 and the audited consolidated financial statements as of and for the years ended December 31, 2018 and 2017, each of which is included elsewhere in this Offer to Purchase. Glory Star Group’s unaudited interim consolidated financial statements were prepared on a basis consistent with its audited consolidated financial statements and include, in management’s opinion, all adjustments, consisting only of normal recurring adjustments, that Glory Star considers necessary for a fair presentation of the financial information set forth in those statements included elsewhere in this Offer to Purchase. Such financial information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Offer to Purchase.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should carefully read the following selected financial information in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Glory Star Group” and Glory Star Group’s consolidated financial statements and the related notes appearing elsewhere in this Offer to Purchase.

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The selected unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information included elsewhere in this Offer to Purchase.

The following selected unaudited pro forma condensed combined balance sheet as of June 30, 2019 combines the historical balance sheet of TKK as of June 30, 2019 and the historical consolidated balance sheet of Glory Star as of June 30, 2019, giving effect to the Business Combination as described below on a pro forma basis as if it had been completed on June 30, 2019. The following selected unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2019 and the year ended December 31, 2018 combines the historical statement of operations of TKK for the six months ended June 30, 2019 and for the period from February 5, 2018 (inception) through December 31, 2018 with the historical consolidated statement of income and comprehensive income of Glory Star for the six months ended June 30, 2019 and the year ended December 31, 2018, giving effect to the Business Combination as described on a pro forma basis as if it had been completed as of the earliest period presented.

The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of TKK,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Glory Star” and the following historical financial statements and accompanying notes of TKK and Glory Star, which are included elsewhere in this Offer to Purchase:

•        TKK’s unaudited financial statements as of and for the six months ended June 30, 2019 and the related notes;

•        TKK’s audited financial statements as of December 31, 2018 and for the period from February 5, 2018 (inception) through December 31, 2018 and the related notes;

•        Glory Star’s unaudited consolidated financial statements as of and for the six months ended June 30, 2019 and the related notes; and

•        Glory Star’s audited consolidated financial statements as of and for the year ended December 31, 2018 and the related notes.

The historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are related and/or directly attributable to the Business Combination, are factually supportable and are expected to have a continuing impact on the Company’s operating results. The adjustments presented in the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the Company upon completion of the Business Combination.

The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical financial position and results that would have been achieved had the companies always been combined or the future financial position and results that the combined company will experience. Glory Star and TKK have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The unaudited pro forma combined financial information has been prepared assuming two alternative levels of redemption into cash of TKK shares:

•        Scenario 1 — Assuming no Redemptions for cash:    This presentation assumes that no TKK shareholders exercise redemption rights with respect to their public shares upon consummation of the Business Combination; and

•        Scenario 2 — Assuming Redemptions of 23,824,290 Public Shares for cash:    This presentation assumes that TKK shareholders exercise their redemption rights with respect to a maximum of 23,824,290 public shares upon consummation of the Business Combination at a redemption price of approximately $10.20 per share. The maximum redemption amount is derived from a minimum net tangible asset requirement of $5,000,001 required pursuant to the Share Exchange Agreement, after giving effect to the payments of estimated transaction expenses and payments to redeeming shareholders. Scenario 2 includes all adjustments contained in Scenario 1 and presents additional adjustments to reflect the effect of the maximum redemptions.

The Offer

Under the terms of its Memorandum and Articles of Association, TKK is conducting the Offer, in connection with the consummation of the Business Combination, to provide the shareholders with the opportunity to redeem their ordinary shares for cash equal to $10.26 per ordinary share, upon and subject to the consummation of the Business Combination. The Sponsor and the initial shareholders of TKK have agreed to waive their redemption rights with respect to any of their founder shares or public shares, if any, in connection with the consummation of the Business Combination. See “The Offer.”

Shareholder Approvals

TKK is not required to hold a shareholder vote to approve a proposed initial business combination and will not do so for the Business Combination. However, it expects to hold a meeting of shareholders to seek shareholder approval of proposed amendments to its Memorandum and Articles of Association, and will separately distribute materials to its shareholders in connection therewith. No appraisal rights will be available to TKK shareholders in connection with the Offer or the Business Combination.

The Sellers approved the Business Combination, the Share Exchange Agreement, and the transactions contemplated thereby.

Additional Agreements

At or prior to the closing of the Business Combination, the following Additional Agreements have been or will be executed, as contemplated by the Share Exchange Agreement:

•        Registration Rights Agreement.    TKK has agreed to enter into a Registration Rights Agreement with the Purchaser Representative and the Sellers pursuant to which TKK shall grant each Seller certain registration rights with respect to the registration of the Closing Payment Shares and Earnout Shares.

•        Escrow Agreement.    TKK and the Seller Representative will enter into an agreement to deposit 5% of the Closing Payment Shares into escrow to be set aside to secure certain indemnification obligations of Glory Star and the Sellers pursuant to the Share Exchange Agreement.

•        Lock-Up Agreements.    TKK, the Purchaser Representative and certain Sellers that directly or indirectly own in excess of 10% of Glory Star’s equity prior to the consummation of the Business Combination also entered into Lock-Up Agreements with respect to their Exchange Shares (including Escrow Shares) and Earnout Shares.

•        Non-Competition and Non-Solicitation Agreements.    TKK, the Purchaser Representative, Glory Star and certain Sellers that directly or indirectly own in excess of 30% of Glory Star’s equity prior to the Closing (including Glory Star’s chairman) and their principal also entered into Non-Competition and Non- Solicitation Agreements in favor of TKK, Glory Star and their respective successors, affiliates and subsidiaries and variable interest entities relating to the post-Closing company’s business.

Background of the Business Combination

The terms of the Share Exchange Agreement are the result of negotiations between the representatives of TKK and Glory Star. The following is a brief description of the background of these negotiations and the related transactions.

TKK is a blank check company formed on February 5, 2018 under the laws of the Cayman Islands for the purpose of acquiring, through a merger, capital share exchange, asset acquisition, debt acquisition, share purchase, reorganization or other similar business combination, assets or one or more operating businesses. TKK’s efforts to identify a prospective target business were not limited to any particular industry or geographic region.

A registration statement for TKK’s IPO was declared effective by the SEC on August 15, 2018. On August 20, 2018, we consummated an IPO of 22,000,000 Units, generating total gross proceeds of $220,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of an aggregate of 11,800,000 private placement warrants at a price of $0.50 per warrant in a private placement to Symphony, generating total gross proceeds of $5,900,000. Following the closing of our IPO on August 20, 2018, $220,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the initial public offering and the sale of the private placement warrants was placed in the Trust Account pending our completion of an initial business combination. On August 22, 2018, in connection with the underwriters’ partial exercise of their over-allotment option, we consummated the sale of an additional 3,000,000 Units at $10.00 per Unit and the sale of an additional 1,200,000 private placement warrants at $0.50 per private placement warrant, generating total gross proceeds of $30,600,000. A total of $30,000,000 of the net proceeds was deposited in the Trust Account, bringing the aggregate proceeds held in the Trust Account to $250,000,000.

Subsequent to the consummation of the IPO, TKK’s officers and directors contacted a wide range of investment bankers, private equity firms, consulting firms and brokerage firms. Through these efforts, TKK’s officers and directors evaluated numerous potential target companies with the objective of consummating an initial business combination and:

•        participated in in-person or telephonic discussions with respect to over 30 potential acquisition targets from a wide range of industry segments including, among others, consumer retail, financial, technology, biotechnology, marketing, manufacturing and aviation; and

•        executed letters of intent and entered into advanced discussions with 2 potential acquisition targets (other than Glory Star), including an Asia Pacific low-cost carrier and an online financial technology platform in China.

TKK did not proceed with discussing a business combination with the other targets for one or more of the following reasons:

•        The inability to prepare accounts audited to PCAOB standards in a timely manner;

•        Growth projections that TKK management considered to be unrealistic;

•        Proposed deal terms that TKK management considered to be unacceptable or that would not be in the best interests of TKK shareholders;

•        Risk of regulatory changes that could directly or indirectly affect business operations and financial condition;

•        Competing financial offers on terms that TKK management determined would not be reasonable to match; and

•        Concerns that certain targets were at too early a stage financially or operationally to justify a public listing.

Glory Star was first brought to TKK’s attention in August 2018 soon after TKK’s IPO. However, TKK did not take the initiative to explore the opportunity due to market rumors of potential mergers in discussion at the time. It was TKK’s view that uncertainties surrounding ongoing merger talks might result in complications that create an overhang on the transaction. We were also of the opinion that a discussion would only be fruitful upon reviewing a target’s 2019 earnings estimates, which was unavailable for Glory Star at the time.

On February 11, 2019, Robin Yang, Managing Director of ICR Inc., reached out to Sing Wang, Chairman and Chief Executive Officer of TKK, to reintroduce Bing Zhang, Founder and Chief Executive Officer of Glory Star. Upon further discussion, Bing Zhang indicated Glory Star’s potential interest in consummating a SPAC business combination. However, upon discussing the merits and considerations of a proposed transaction, Glory Star reflected its intention to explore and evaluate the deal mechanics further. During the time, TKK was also engaged in advanced negotiations with another target in the Asia Pacific aviation sector. The discussion was thus put on hold despite mutual interests in exploring a transaction should the opportunity arise in the future.

On June 4, 2019, having thoroughly considered the prospect of a business combination, Bing Zhang and Sing Wang had a telephonic discussion to determine the viability of the proposed transaction. Bing Zhang also gave Sing Wang a full update on Glory Star’s recent business development. On the same day, Glory Star furnished TKK with a corporate presentation to provide details and insight into its business.

On June 5, 2019, Sing Wang met with Bing Zhang in Beijing to discuss transaction structure and deal process.

On June 7, 2019, Sing Wang met with Bing Zhang together with Ian Lee, TKK’s Chief Financial Officer and Director, to evaluate Glory Star’s business model and operations, leveraging Ian Lee’s extensive experience in the media sector.

On June 18, 2019, Sing Wang and Ian Lee met with Bing Zhang in Beijing for an extensive discussion on valuation and growth projections.

On June 19, 2019, TKK shared an indicative term sheet with Glory Star. Sing Wang and Ian Lee met with Bing Zhang again to discuss key terms and transaction timetable.

From June 26, 2019 to July 15, 2019, Sing Wang met in New York with various fund managers as well as investment bankers and other advisors, to discuss several merger candidates, including Glory Star, to gauge investor appetite, valuation and potential concerns. Sing Wang also met with Bin Liu, Glory Star’s Head of Investor Relations based in New York, to discuss a potential transaction with TKK. During the trip, Sing Wang met with EarlyBirdCapital, on multiple occasions to discuss Glory Star as a possible merger candidate. EarlyBirdCapital acted as lead book-runner in TKK’s initial public offering.

On July 24, 2019, Sing Wang, Ian Lee and Joanne Ng, TKK’s Senior Director of Business Development, met with Bing Zhang and Qingfei Tang, Glory Star’s Board Secretary, to discuss the results of the New York trip. Upon reaching a high level agreement on valuation, TKK circulated a preliminary draft of the term sheet to Glory Star.

On July 26, 2019, Sing Wang and Joanne Ng held further discussions with Bing Zhang to explain and illustrate the pro forma ownership structure under various redemption scenarios. Sing Wang also made arrangements for Bing to fly to New York to meet with Ellenoff Grossman & Schole LLP (“EGS”), TKK’s legal counsel, and EarlyBirdCapital.

During the weeks of July 29 to that of August 12, 2019, TKK and Glory Star flew to New York to meet with EGS, Lewis Brisbois Bisgaard & Smith LLP (“LBBS”), Glory Star’s US counsel, and EarlyBirdCapital to discuss the proposed transaction, valuation considerations, timing and strategy of the business combination.

On August 1, 2019, the TKK Board of Directors held a telephonic conference to provide a deal update with respect to the Glory Star transaction, in comparison with another target — a China-based online lending and financial technology platform. The Board determined that compared to Glory Star, the alternative target exhibited certain characteristics that lessened the likelihood of a successful business combination being consummated. In particular, regulatory uncertainties in China’s peer-to-peer industry as well as a recent scandal of one of its publicly traded comparables might dampen investor confidence in the online lending sector. The Board further determined that Glory Star’s innovative business model, solid financial performance and growth potential surpassed the attributes of the alternative target presented at the time. The Board decided that Glory Star was a preferable target and hence authorized, empowered and directed the officers of TKK to execute a letter of intent with Glory Star.

From August 1, 2019 to August 6, 2019, Sing Wang and the TKK team, together with EGS, continued to negotiate the terms of a letter of intent with Bing Zhang and LBBS.

On August 6, 2019, Sing Wang executed a letter of intent on behalf of TKK with Glory Star. The letter of intent provided for the sale of 100% of Glory Star’s outstanding equity interests to TKK in exchange for TKK shares valued at $425,000,000. The transaction has an incentive earnout mechanism under which Glory Star’s shareholders as of the closing shall be entitled to:

(i)     receive an additional 5,000,000 ordinary shares of the Company in the event that its net income for the full fiscal year of 2019 is equal to or greater than RMB180,000,000, and

(ii)    receive an additional 5,000,000 ordinary shares of the Company in the event that its net income for the full fiscal year of 2020 is equal to or greater than RMB315,000,000.

However, should Glory Star Group fail to meet the earnout target for any earnout year, Glory Star’s shareholders shall not be entitled to receive any Earnout Shares for that earnout year; provided that, if the aggregate net income for both earnout years combined is at least RMB495,000,000, Glory Star’s shareholders shall be entitled to receive any Earnout Shares that they otherwise did not receive.

On August 6, 2019, Sing Wang, on behalf of TKK, engaged Goodwin Procter (Hong Kong) LLP as offshore counsel for the purpose of legal due diligence of Glory Star. The TKK team also commenced due diligence work on Glory Star’s financials, operations and businesses.

On August 12, 2019, TKK and Goodwin Procter (Hong Kong) LLP initiated conversations with Grandall Law Firm (“Grandall”), Glory Star’s PRC counsel, for due diligence purposes. A first draft of Glory Star’s legal due diligence report was also circulated to TKK by Grandall.

From mid-August to early September, multiple telephone conferences between the parties and their respective counsels were conducted as negotiations for the terms of the definitive agreements continued.

On August 20, 2019, TKK, EGS and Goodwin Procter (Hong Kong) LLP circulated the first draft of the Share Exchange Agreement for the review of Glory Star, LBBS and Grandall.

From August 29 to August 30, 2019, Bing Zhang and Hui Lin, a minority shareholder of Glory Star, flew to Hong Kong to meet with Sing Wang and Joanne Ng as well as Goodwin Procter (Hong Kong) LLP to finalize the transaction timetable and discuss outstanding items of the definitive agreements. During the meetings, Glory Star provided more details on its VIE ownership structure as well as an update on the latest draft of the audited financial results.

On August 30, 2019, the TKK Board of Directors held a telephonic meeting, at which the Board approved the Share Exchange Agreement, related agreements and transactions contemplated thereby.

On September 6, 2019, the Share Exchange Agreement was signed by both parties. The aggregate consideration to be provided by TKK to the Sellers pursuant to the Share Exchange Agreement will consist of: (i) an aggregate number of ordinary shares equal to $425,000,000 divided by the redemption price (or 41,423,002 ordinary shares assuming a redemption price of $10.26 per share), plus (ii) earnout payments consisting of up to an additional 10,000,000 ordinary shares if certain targets were met, which are described in detail below under “The Share Exchange Agreement.” Also, on the same day, the execution of the Share Exchange Agreement by TKK and Glory Star was announced to the public. TKK subsequently filed a Current Report on Form 8-K including the press release and a copy of the Share Exchange Agreement.

TKK’s Board of Directors’ Reasons for the Approval of the Business Combinationi

After a series of discussions, the board of directors of TKK held two formal meetings to discuss and evaluate the potential business combination with Glory Star. On August 30, 2019, the board approved the Share Exchange Agreement and the Business Combination with Glory Star. The board concluded that the Business Combination and the related transactions were in the best interests of TKK and that the consideration to be paid in the Business Combination was fair to TKK.

TKK was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

____________

i         Unless otherwise indicated, all market and industry information in this section is derived from a report by iResearch

In considering the proposed Business Combination, TKK’s board and management team reviewed due diligence findings of advisors as well as publicly available industry-specific research published by third parties while simultaneously analysing data and material provided by Glory Star, including but not limited to, Glory Star’s existing business model, historical and projected financial statements, valuation analyses, material agreements and other due diligence material.

Since TKK’s IPO in August of 2018, our management team and board of directors have been conducting a search for potential business combination partners. TKK’s management and board of directors considered a wide variety of factors in connection with its evaluation but did not find it appropriate to quantify or assign weights to specific factors in reaching its final decision. In considering the Business Combination with Glory Star, our management and board determined that Glory Star met, in some fashion, all of the criteria we set for our target company screening:

•        High-Growth Market Poised to Benefit from the Launch of 5G Technology

Glory Star’s addressable market is promising. As a video-driven e-commerce platform, Glory Star is positioned at the crossroads of two massive and fast-growing segments, including (i) online and mobile video advertising and (ii) e-commerce, which covers approximately 590 million online video users and 610 million e-commerce consumers in China as of December 2018, respectively.

China’s advertising sector is projected to grow at a steady CAGR of 14.3% from 2018 to 2021, reaching a total market size of RMB1.2 trillion (US$168 billion) by 2021. However, within this stable growth trajectory, notable upswing is expected in the digital advertising segment, which will account for 81.2% of the market by 2021, according to iResearch, up from merely 60.6% in 2018. In particular, short-video and live-streaming advertising segments are poised to create significant disruptions, with a projected CAGR of 100.1% and 151.8% respectively during the same period, reaching a combined market size of RMB61.3 billion (US$7.9 billion) by 2021.

A similar disruption is foreseen in China’s e-commerce sector. Total e-commerce market sales in China reached RMB15.2 trillion (US$2.1 trillion) in 2018. Within this relatively mature market, the burgeoning social and content-based segment represents a strong growth catalyst. By 2021, social e-commerce is expected to reach RMB2.9 trillion (US$409.2 billion), with an implied CAGR of 65.9% from 2018 to 2021.

It is also of the board’s opinion that both sectors are well-positioned to benefit from the mass deployment of 5G technology in China. According to GSMA Intelligence, 5G connections in China are expected to reach 428 million by 2025ii. By ushering in high-speed, low-latency and secure connectivity, 5G creates an inflection point for both mobile video and e-commerce applications. Enhanced mobile broadband drives the fast delivery of ultra-HD video contents, amongst other new mobile usage scenarios that will likely result in a surge in video viewership nationwide. On the other hand, rapid rollout of 5G is expected to stimulate penetration of smartphones in suburban and lower tier cities in China, unleashing market potential in currently unconnected demographics. Glory Star’s ability to produce proprietary video content prolifically allows it to tap such potentials on a mass scale.

•        Innovative Business Model with Leading Market Position

Glory Star is a leading mobile and online digital media and entertainment company in China, with a strong track record both in terms of viewership and production capabilities. As of June 30, 2019, Glory Star had distributed nearly 70,000 minutes of proprietary video content, which achieved more than 4.2 billion views cumulatively. As of August 30, 2019, downloads of Glory Star Group’s mobile app exceeded 50 million.

Glory Star is a pioneer in integrating e-commerce services with premium video content. Within five months of the launch of its e-commerce platform, Glory Star’s e-Mall has been selling over 5,300 SKUs, recording over RMB25.1 million (US$3.5 million) in GMV to date, achieving an impressive monthly GMV of RMB12.6 million (US$1.8 million) in August 2019, up from only RMB1.3 million (US$0.2 million) in April 2019. According to iResearch, having only launched its e-commerce business in April 2019, Glory Star is already amongst the top five largest video content-driven e-commerce platforms in China by monthly GMV as of August 2019, tracking behind multinational leaders such as Alibaba’s Taobao.

The innovative integration of video content with e-commerce testified to Glory Star’s ability to monetize its massive viewership by expanding vertically and into adjacencies.

____________

ii        According to GSMA Intelligence

•        Strong Core Team of Industry Veterans

Glory Star is led by Co-Founder and CEO, Bing Zhang, an award-winning industry veteran with over 30 years of experience. Mr. Zhang was awarded Annual Figure of China Radio & TV industry for 2015, 2016 and 2017 consecutively and was subsequently named Annual Figure of TV Landmark in 2017. He was also “The most influential person of Radio, TV, Film in Asia-Pacific Area” in 2016 and 2017. Mr. Zhang is supported by an experienced team of technical experts and professionals, over 60% of whom have been working together for more than 8 years.

•        Solid financial performance

Glory Star is profitable and growing rapidly. As a young company, Glory Star achieved profitability in its debut year of 2017, generating US$33.2 million in net revenues for its first year. Growth momentum and profitability remained robust in most recent fiscal year. Net revenues grew by 73.9% to USD$57.8 million in 2018 while attributable net profit increased by 17.1% to US$12.9 million during the same period. Running at full steam in its third year of operations in 2019, the company expects to reach an estimated net profit of US$25.4 million for the full year. The company is on track to delivering on its financial target, having achieved an attributable net profit of US$12.1 million by 1H2019, despite the sharp depreciation of RMB as of late.

In making its consideration, the TKK Board also considered, amongst other things, the following potential concerns of the Business Combination:

•        The risks associated with the e-commerce and media content industry in general;

•        The risks associated with the relatively short operating history of Glory Star;

•        The risk of competition in the industry, including strong multinational incumbents as well as the potential for new entrants;

•        The risk that the announcement of the transaction and potential diversion of Glory Star’s management and employee attention may adversely affect Glory Star’s operations;

•        The risk that certain key employees of Glory Star might not choose to remain with the company post-closing;

•        The risk that the Business Combination might not be consummated in a timely manner or that the closing of the Business Combination might not occur despite the companies’ efforts;

•        Foreign exchange risk given that the Company’s operating currency was in RMB; and

•        The other risks described in the section entitled “Risk Factors.”

The TKK board concluded that these risk factors did not diminish or outweigh the benefits of pursuing the Business Combination.

TKK’s board of directors did not assign relative weights to the specific factors it considered, but instead evaluated the transaction as a whole and found it to be overall favorable to its shareholders. TKK’s board of directors approved the Business Combination. TKK’s board did not, and was not required to, obtain a fairness opinion in connection with the proposed Business Combination and did not independently verify (or cause such verification of) the source of all information received from Glory Star.

The initial equity value of Glory Star on a standalone basis was estimated at approximately $425 million, which, as compared to the projected net profit of the business, represented a discount to public market comparables. Because of the uncertainty of the projections, enhanced by the nascent history of Glory Star, an earnout for additional shares was established based on the achievement of certain projected earnings thresholds. In the event Glory Star realizes such financial performance targets, it would receive up to 10 million additional shares (additional $102.6 million at an assumed price of $10.26 per share). The aggregate merger consideration was finalized upon negotiations with Glory Star pursuant to which the parties agreed on a $527.6 million valuation including earnout (at an assumed price of $10.26 per share). Taking into account the issuance of the Earnout Shares and assuming no redemptions from the trust at the closing of the Business Combination, the Company’s equity value for 2020 will include approximately 85.2 million total shares outstanding, with a resulting equity value of $874.5 million.

It was determined in consultation with our board and advisors that the best methodology for determine the valuation of Glory Star was the market comparable method, specifically by comparing projected equity value as multiples of earnings (P/E) against publicly listed video, media content and e-commerce businesses in China that are deemed similar in scope to Glory Star. The fairness of the transaction consideration was determined primarily based on an implied standalone equity value of Glory Star, as multiples of the Earnout Earnings for the fiscal years 2019 and 2020, respectively (“Earnout Earnings” assumes the maximum earnout financial targets are realized and all eligible Earnout Shares are released).

TKK evaluated over 40 US-listed technology companies, and further narrowed the universe of comparables down to video content and/or e-commerce businesses based in China. We believe such companies are most directly relevant to Glory Star in terms of business model, market segment and growth drivers. These companies include but are not limited to such mobile live streaming and entertainment platforms as YY Inc. (NASDAQ: YY), DouYu International Holdings Limited (NASDAQ: DOYU) and Qutoutiao Inc. (NASDAQ: QTT); as well as such e-commerce businesses as Alibaba Group Holding Limited (NYSE: BABA), JD.com, Inc. (NASDAQ: JD), Pinduoduo Inc. (NASDAQ: PDD), Baozun (NASDAQ: BZUN), Yunji Inc. (NASDAQ: JY) and MOGU Inc. (NYSE: MOGU).

However, within the basket of selected comparable companies, QTT, PDD and MOGU are projected to have negative net income in both 2019 and 2020 despite longer history of operations than Glory Star, thereby rendering their Price-to-Earnings multiples meaningless. In the exercise of its professional judgment and based on relevant sector expertise, TKK determined that the valuation of Glory Star is most aptly benchmarked against YY, DOYU, BABA, YJ and BZUN.

The tables below set forth the financial data and Price-to-Earnings multiples of Glory Star’s publicly traded comparable companies (All figures in US$ mm, otherwise noted).

Source: Capital IQ

The Price-to-Earnings multiples of similar publicly listed companies were compared to that of Glory Star pre-transaction. The comparable public companies traded at an average Projected 2019 and 2020 P/E of 33.1x and 26.1x, respectively. These represented significant premiums to the consideration being paid (including Earnout Shares) in the Glory Star transaction, which translates into merely 20.7x and 11.8x in Projected 2019 and 2020 Price to Earnout Earnings, respectively.

Furthermore, amongst the five selected comparable public companies, DOYU and YJ, being recently listed in 2019, were both trading at a depressed level at the time of analysis compared to their IPO pricings. DOYU’s stock price was at $9.08/share as of the date of the analysis, representing an approximately 21.0% discount from its IPO price of $11.5/share in July 2019. Similarly, YJ, at $7.75/share as of the date of the analysis, had traded down by 29.5% from its IPO price of $11.0/share in May 2019. Glory Star’s aggregate consideration is at an even steeper discount when compared to the IPO prices of the two aforementioned comparable companies.

Also, upon a market analysis of the various segments in which Glory Star operated, the Board determined that, on average, Chinese e-commerce players traded at a premium to video/media content providers that monetize purely through advertizing revenues. Given the launch of Glory Star’s proprietary e-commerce platform in 2019 and its growing contribution to the overall business mix, the board expected Glory Star to trade upwards and gradually align with the higher average trading multiples of its Chinese e-commerce counterparts.

Our executive team and the board also consulted with our advisors about the consideration being paid to acquire Glory Star and about the strength of the company on a Price-to-Earnings valuation and growth basis, in comparison to the publicly listed similar businesses reviewed.

Based on the foregoing, TKK’s board of directors believes that the consideration of the Company is fair and reasonable.

Glory Star’s projected Earnout Earnings are forward-looking statements, which are subject to risks as described under “Forward-Looking Statements.”

Other Considerations

In coming to its decision, the board of directors also weighted the Business Combination and its likeliness to generate a return for its stockholders against the potential liquidation of the trust. Our board of directors unanimously concluded that the Share Exchange Agreement with Glory Star is in the best interests of the TKK stockholders. The board of directors did not obtain a fairness opinion on which to base its assessment. Because of the financial skills and background of its members, the board of directors believes it was qualified to perform the analysis discussed in this section.

iResearch Report on Content-Driven E-commerce Platforms in China

iResearch Consulting was hired by Glory Star to conduct market research on the Content-driven E-commerce Platforms in China. Glory Star considered several service providers concurrently and concluded that iResearch’s track record in transaction services and the experience of its consulting team was the preferred choice. The research conducted by iResearch included an overview and history of China’s E-commerce market, value-chain and segmentation of content-driven e-commerce platforms, size and competitive landscape, growth drivers for Professional Generated Content (“PGC”) video content-driven segment, and an assessment of Glory Star’s market positioning in its respective segment.

The research involved interviewing Glory Star’ management team and employees of Glory Star’s partners as well as other market participants, building a market sizing model, researching key competitors, reviewing Glory Star’ business model and analyzing Glory Star’s business segments.

Below is a summary of key findings of the market research:

•        Steady population growth of e-commerce consumers, especially online video users in China;

•        Rapid market growth of social e-commerce and advertising in China, particularly short video and live streaming advertising;

•        The benefits from integrating e-commerce and content platforms into content-driven e-commerce platform includes lowering customer acquisition cost, improving user loyalty and empowering content creators to monetize;

•        The exercise of TKK’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in the best interests of TKK’s shareholders.

Anticipated Accounting Treatment

The Business Combination will be accounted for under the purchase method of accounting, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

THE SHARE EXCHANGE AGREEMENT

This section describes the material provisions of the Share Exchange Agreement but does not purport to describe all of the terms of the Share Exchange Agreement. The following summary is qualified in its entirety by reference to the complete text of the Share Exchange Agreement, which is incorporated herein by reference. Shareholders and other interested parties are urged to read the Share Exchange Agreement, a copy of which is attached as Annex A hereto, in its entirety because it is the primary legal document that governs the Business Combination. Capitalized terms used herein and not otherwise defined have the meanings set forth in the Share Exchange Agreement.

General Description of the Share Exchange Agreement

On September 6, 2019, TKK Symphony Acquisition Corporation, a Cayman Islands exempted company (“TKK”), entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with 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,” and collectively with Xing Cui Can, the “VIEs”, and the VIEs, the WFOE and Glory Star, collectively, the “Glory Star Parties”, and the Glory Star Parties collectively with their respective subsidiaries, the “Glory Star Group”), each of Glory Star’s shareholders (collectively, the “Sellers”), TKK’s sponsor, TKK Symphony Sponsor 1 (the “Sponsor”), in the capacity as the representative from and after the closing of the Transactions (as defined below) (the “Closing”) for TKK’s shareholders other than the Sellers (the “Purchaser Representative”), and Bing Zhang, in the capacity as the representative for the Sellers thereunder (the “Seller Representative”). Pursuant to the Share Exchange Agreement, among other things and subject to the terms and conditions contained therein, TKK will effect an acquisition of the Glory Star Group, which primary conducts its business through the WFOE and the VIEs, by acquiring from the Sellers all of the issued and outstanding equity interests of Glory Star (together with the other transactions contemplated by the Share Exchange Agreement, the “Transactions”).

Acquisition of Glory Star

Upon the closing of the transactions contemplated in the Share Exchange Agreement, TKK will acquire all the issued and outstanding shares of Glory Star and Glory Star will become a wholly owned subsidiary of TKK. Upon the closing, TKK will change its name to “Glory Star New Media Group Holdings Limited.”

Terms of the Share Exchange Agreement

Share Exchange Agreement

General Terms, Effects, and Consideration

Pursuant to the Share Exchange Agreement, in exchange for all of the outstanding shares of Glory Star, TKK will issue to the Sellers a number of the Exchange Shares equal in value to US$425 million, with the TKK ordinary shares valued at a price per share equal to the price per share at which each TKK ordinary share is redeemed or converted pursuant to the redemption by TKK of its public shareholders in connection with TKK’s initial business combination, as required by its amended and restated memorandum and articles of association, with the Escrow Shares being deposited in escrow at the Closing and subject to forfeiture (along with dividends and other earnings otherwise payable with respect to such Escrow Shares) in the event that the Purchaser Representative successfully brings an indemnification claim under the Share Exchange Agreement against the Sellers. The Exchange Shares, including the Escrow Shares, and any Earnout Shares will be allocated among the Sellers pro-rata based on each Seller’s ownership of Glory Star immediately prior to the Closing. Certain Sellers will have their portion of the Exchange Shares be subject to a lock-up as set forth in the Lock-Up Agreements as described below under the heading “Lock-Up Agreement.”

The Escrow Shares will be held in an escrow account to be maintained by Continental Stock Transfer & Trust Company, in its capacity as the escrow agent, or such other escrow agent as agreed by TKK and Glory Star prior to the Closing. While the Escrow Shares are held in escrow, any dividends and other distributions otherwise payable with respect to the Escrow Shares will be held back by TKK and not paid until the Escrow Shares are released from escrow to the Sellers, but the Sellers will be entitled to vote the Escrow Shares.

After the Closing, the Sellers will have the contingent right to receive additional consideration from TKK based on the performance of TKK and its subsidiaries (including the Glory Star Group) for the 2019 Earnout Year and the 2020 Earnout Year. In the event that the adjusted net income for the 2019 Earnout Year is equal to or greater than RMB180,000,000, then the Sellers shall be entitled to receive from TKK an additional 5,000,000 2019 Earnout Shares. In the event that the adjusted net income for the 2020 Earnout Year is equal to or greater than RMB315,000,000, then the Sellers shall be entitled to receive an additional 5,000,000 2020 Earnout Shares. In the event that the aggregate adjusted net income for both the 2019 Earnout Year and the 2020 Earnout Year combined is at least RMB495,000,000, the Sellers shall be entitled to receive any Earnout Shares that they otherwise did not receive.

Representations and Warranties

The Share Exchange Agreement contains a number of representations and warranties made by TKK, on the one hand, and Glory Star Parties and the Sellers on the other hand, made solely for the benefit of the other, which in certain cases are subject to specified exceptions and qualifications contained in the Share Exchange Agreement or in information provided pursuant to certain disclosure schedules to the Share Exchange Agreement. The representations and warranties are customary for transactions similar to the Transactions.

In the Share Exchange Agreement, the Glory Star Parties made certain customary representations and warranties to TKK, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Share Exchange Agreement and other ancillary agreements; (3) capitalization; (4) subsidiaries; (5) governmental approvals; (6) non-contravention; (7) financial statements; (8) absence of certain changes; (9) compliance with laws; (10) permits and licenses; (11) litigation; (12) material contracts; (13) intellectual property; (14) taxes and tax returns; (15) real property; (16) personal property; (17) title to and sufficiency of assets; (18) employee matters; (19) benefit plans; (20) environmental matters; (21) transactions with related persons; (22) insurance; (23) top customers and vendors; (24) books and records; (25) accounts receivable; (26) ethical business practices; (27) PRC compliance; (28) Investment Company Act of 1940; (29) finders and brokers; (30) independent investigation; (31) VIE contracts; (32) information supplied; and (33) disclosure. The Sellers also jointly and severally made certain customary representations and warranties to TKK, including representations and warranties related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Share Exchange Agreement and other ancillary agreements; (3) ownership of the Glory Star shares to be purchased by TKK; (4) governmental approvals; (5) non-contravention; (6) litigation; (7) investment representations; (8) finders and investment bankers; (9) independent investigation; and (10) information supplied.

In the Share Exchange Agreement, TKK made certain customary representations and warranties to Glory Star, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Share Exchange Agreement and other ancillary agreements; (3) governmental approvals; (4) non-contravention; (5) capitalization; (6) SEC filings and financial statements; (7) absence of certain changes; (8) compliance with laws; (9) litigation, orders and permits and licenses; (10) taxes and returns; (11) employees and employee benefit plans; (12) properties; (13) material contracts; (14) transactions with related persons; (15) Investment Company Act of 1940; (16) finders and investment bankers; (17) ownership of the Exchange Shares; (18) ethical business practices; (19) insurance; and (20) independent investigation.

Certain of the representations and warranties are qualified by materiality or material adverse effect. For the purposes of the Share Exchange Agreement, material adverse effect means, with respect to any specified person, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities, results of operations, prospects or condition (financial or otherwise) of such Person and its Subsidiaries, taken as a whole, or (b) the ability of such person or any of its subsidiaries on a timely basis to consummate the transactions contemplated by the Share Exchange Agreement or the ancillary documents to which it is a party or bound or to perform its obligations hereunder or thereunder; provided, however, that for purposes of clause (a) above, any changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would or could have occurred a material adverse effect: (i) general changes in the financial or securities markets or general economic or political conditions in the country or region in which such person or any of its subsidiaries do business; (ii) changes, conditions or effects that generally affect the industries in which such person or any of its subsidiaries

principally operate; (iii) changes in GAAP or other applicable accounting principles or mandatory changes in the regulatory accounting requirements applicable to any industry in which such person and its subsidiaries principally operate; (iv) conditions caused by acts of God, terrorism, war (whether or not declared) or natural disaster; (v) any failure in and of itself by such person and its subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (provided that the underlying cause of any such failure may be considered in determining whether a material adverse effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein) and (vi), with respect to TKK, the consummation and effects of any redemption; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) – (iv) immediately above shall be taken into account in determining whether a material adverse effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on such person or any of its subsidiaries compared to other participants in the industries in which such person or any of its subsidiaries primarily conducts its businesses. Notwithstanding the foregoing, with respect to TKK, the amount of any redemption or the failure to obtain the required shareholder vote or, if sought by TKK, an extension shall not be deemed to be a material adverse effect on or with respect to TKK.

Covenants

Each party agreed in the Share Exchange Agreement to use its commercially reasonable efforts to effect the Closing. The Share Exchange Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Share Exchange Agreement and the earlier of the Closing or the termination of the Share Exchange Agreement in accordance with its terms (the “Interim Period”), including covenants regarding: (1) the provision of access to their properties, books and personnel; (2) the operation of their respective businesses in the ordinary course of business; (3) Glory Star’s interim financial statements; (4) TKK’s public filings and requirement to use commercially reasonable efforts to maintain the listing of its securities on the Nasdaq Capital Market (“Nasdaq”); (5) no solicitation of, or entering into, any alternative competing transactions; (6) no insider trading; (7) notifications of certain breaches, consent requirements or other matters; (8) efforts to consummate the Closing and obtain third party and regulatory approvals; (9) further assurances; (10) public announcements; (11) confidentiality; (12) indemnification of directors and officers; (13) adoption of new corporate and operational policies; (14) tax matters; and (15) efforts to support a private placement or backstop arrangements, if sought. The Share Exchange Agreement also contains certain post-closing covenants by the parties, including covenants regarding (1) litigation support; (2) retention of documents; (3) indemnification of directors and officers; and (4) use of trust proceeds after the Closing.

The parties also agreed to take all necessary actions to cause TKK’s board of directors immediately after the Closing to consist of 5 directors, 1 person designated by TKK prior to the Closing who qualifies as an independent director under Nasdaq rules and 4 persons designed by Glory Star prior to the Closing, at least two of whom qualify as independent directors under Nasdaq rules. The parties also agreed that the individuals serving as the executive officers of Glory Star will serve as the executive officers of TKK immediately after the Closing.

Glory Star agreed to deliver to TKK on or prior to September 16, 2019 draft unsigned copies of the Glory Star Group’s audited financial statements, audited in accordance with PCAOB standards. Glory Star also agreed to deliver to TKK as soon as practicable after the date of the Share Exchange Agreement, but in any event on or prior to September 16, 2019, certain contracts (the “VIE Contracts”) between the VIE’s, the WFOE and the shareholders of the VIE’s as necessary to implement a variable interest entity structure in the PRC, giving the WFOE full control over the VIEs and enjoyment of all of the economic benefit from the operations of the VIEs and their subsidiaries, which agreements were not in effect at the time of the signing of the Share Exchange Agreement. As of the date of this Offer, Glory Star has delivered the required documents.

TKK also agreed to prepare, with the assistance of the Glory Star Parties and the Sellers, and use their commercially reasonable efforts to file with the SEC a proxy statement and/or tender offer statement as promptly as practicable after the signing of the Share Exchange Agreement to seek, if required, (1) approval of the Share Exchange Agreement and the transactions contemplated by the Share Exchange Agreement, (2) approval of a Second Memorandum and Articles of Association of TKK, and (3) approval of the adoption of a new omnibus equity incentive plan providing for the grant to employees and other representatives of a total number of shares in the range of between 5% to 7.5% of the number of shares issued and outstanding immediately after the Closing, and providing TKK’s shareholders an opportunity to participate in the Redemption. The Sponsor and the initial shareholders of TKK have agreed to waive their redemption rights with respect to any of their founder shares or public shares, if any, in connection with the consummation of the Business Combination.

Conditions to Closing

The obligations of the parties to consummate the Transactions are subject to various conditions, including the following mutual conditions of the parties unless waived: (i) the approval of the Share Exchange Agreement and the transactions contemplated thereby and related matters by the requisite vote of TKK’s shareholders, if required; (ii) expiration of any waiting period under applicable antitrust laws; (iii) receipt of requisite consents from governmental authorities and other third parties to consummate the Transactions; (iv) no law or order preventing or prohibiting the Transactions; (v) no pending litigation to enjoin or restrict the consummation of the Closing; (vi) the election or appointment of members to TKK’s board of directors as described above; (vii) TKK (together with the Glory Star Group) having at least $5,000,001 in net tangible assets upon consummation of a Business Combination, after giving effect to the completion of the Redemption and any private placement financing; and (viii) that TKK’s ordinary shares continue to be listed on Nasdaq immediately following the Closing, and TKK shall have at least 300 round-lot shareholders.

In addition, unless waived by Glory Star, the obligations of Glory Star and the Sellers to consummate the Transactions are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of TKK being true and correct as of the date of the Share Exchange Agreement and as of the Closing (subject to Material Adverse Effect); (ii) TKK having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Share Exchange Agreement required to be performed or complied with by it on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to TKK since the date of the Share Exchange Agreement which is continuing and uncured; (iv) receipt by Glory Star of the Escrow Agreement, duly executed by TKK, the Purchaser Representative and the Escrow Agent; and (v) the Registration Rights Agreement (as defined below) being in full force and effect in accordance with its terms as of the Closing.

Unless waived by TKK, the obligations of TKK, to consummate the Transactions are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of the Glory Star Parties and the Sellers being true and correct as of the date of the Share Exchange Agreement and as of the Closing (subject to Material Adverse Effect); (ii) the Glory Star Parties and the Sellers having performed in all material respects their respective obligations and complied in all material respects with their respective covenants and agreements under the Share Exchange Agreement required to be performed or complied with on or prior to the date of the Closing; (iii) absence of any Material Adverse Effect with respect to any company in the Glory Star Group since the date of the Share Exchange Agreement which is continuing and uncured; (iv) receipt by TKK of employment agreements, effective as of the Closing, in form and substance reasonably acceptable to TKK and Glory Star between certain individuals and either TKK or a Glory Star Group company, executed by the parties thereto; (v) receipt by TKK of the Escrow Agreement; (vi) receipt by TKK of the duly executed VIE Contracts; (vii) receipt by TKK of evidence that certain contracts involving Glory Star Group companies and/or any of the Sellers or other related persons have been terminated with no further liability of Glory Star Group thereunder; and (viii) each of the Non-Competition Agreement (as defined below), the Lock-Up Agreement (as defined below) and the Registration Rights Agreement being in full force and effect in accordance with its terms as of the Closing.

Survival, Indemnification and Escrow

The representations and warranties made by Glory Star and the Sellers in the Share Exchange Agreement generally survive for a period of 12 months after the Closing, with certain representations (the “Special Reps”) relating to taxes, benefit plans, environmental matters and information supplied surviving until 60 days after the expiration of the applicable statute of limitations and certain fundamental representations relating to due organization and good standing, authorization and binding effect, capitalization and ownership of Glory Star shares, subsidiaries, finders and investment bankers, independent investigation and investment representations surviving indefinitely. Claims against Glory Star or the Sellers based on fraud, willful misconduct or intentional misrepresentation also survive indefinitely. The covenants and agreements of Glory Star and the Sellers survive until fully performed. TKK’s representations and warranties, as well as its covenants and agreements to be performed prior to the Closing, do not survive the Closing and after the Closing TKK has no obligations with respect thereto. TKK’s covenants and agreements to be performed after the Closing survive until fully performed.

From and after the Closing, the Sellers and their respective successors and assigns are required to jointly and severally indemnify TKK and its affiliates and their respective officers, directors, managers, employees, successors and permitted assigns (each referred to with respect to claims as an indemnified party) from and against any losses from (a) the breach of any representations or warranties of a Glory Star Party or a Seller in the Share Exchange Agreement or any certificate to be delivered pursuant thereto, (b) the breach of any covenants of a Glory Star Party or Seller or, after the Closing TKK, in the Share Exchange Agreement or any certificate to be delivered pursuant thereto, (c) any and all pre-Closing tax liabilities, or (d) any actions by persons who were holders of equity securities (including options, warrants, convertible securities or other rights) of any Glory Star Group entity prior to the Closing arising out of the sale, purchase, termination, cancellation, expiration, redemption or conversion of any such securities. In any indemnification claims, the Purchaser Representative will represent the indemnified parties and the Seller Representative will represent the Sellers.

Other than claims based on fraud, willful misconduct or intentional misrepresentation, or with respect to claims for breaches of the Special Reps, the indemnification claims for breaches of representations and warranties will be limited to the property in the Escrow Account and any Earnout Shares.

To support the indemnification obligations of Glory Star and Sellers, at the Closing, the Escrow Shares will be deposited in the escrow account to be established by the Escrow Agent, and any future accrued dividends and distributions will be retained in such escrow account. Any Escrow Shares released to TKK as an indemnification payment shall be promptly cancelled.

Purchaser Representative and Seller Representative

The Sponsor is serving as the Purchaser Representative under the Share Exchange Agreement and in such capacity will represent the interests of TKK’s shareholders (other than the Sellers) with respect to certain matters under the Share Exchange Agreement, including the determination of any indemnification claims made against the Sellers after the Closing. Bing Zhang is serving as the Seller Representative under the Share Exchange Agreement and in such capacity will represent the interests of the Sellers with respect to certain matters under the Share Exchange Agreement, including the defense of any indemnification claims made against the Sellers after the Closing.

Trust Account Waiver and Seller Release

The Glory Star Parties and the Sellers agreed that they will not have any right, title, interest or claim of any kind in or to any monies in TKK’s Trust Account, and will not make any claim against TKK’s Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, any proposed or actual business relationship between TKK and a Glory Star Party or Seller, the Share Exchange Agreement or any other matter.

Each Seller, on behalf of itself and its affiliates and any of its shareholders that are also shareholders in Glory Star, also provided a general release of Glory Star Group, effective as of the Closing, other than its rights under the Share Exchange Agreement and ancillary documents and certain other specified agreements.

Termination

The Share Exchange Agreement may be terminated under certain customary and limited circumstances at any time prior the Closing, including, among other reasons: (i) by mutual written consent of TKK and Glory Star; (ii) by either TKK or Glory Star if the Closing has not occurred on or prior to December 31, 2019 (the “Outside Date”) and the failure of the Closing to occur by such date was not caused by or the result of a breach of the Share Exchange Agreement by such terminating party or its affiliate (or with respect to Glory Star, any other Glory Star Party or the Sellers), (iii) by either TKK or Glory Star if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions, and such order or other action has become final and non-appealable; (iv) by Glory Star for TKK’s uncured breach of the Share Exchange Agreement, such that the related Closing condition would not be met; (v) by TKK for the uncured breach of the Share Exchange Agreement by any Glory Star Party or any Seller, such that the related Closing condition would not be met; (vi) by TKK if there has been a Material Adverse Effect with respect to any Glory Star Group company since the date of the Share Exchange Agreement which is uncured and continuing; (vii) by either TKK or Glory Star if TKK holds a shareholder meeting to approve the Share Exchange Agreement and the Transactions and such approval is not obtained; (viii) by Glory Star if TKK does not have sufficient funds

available at the Closing to pay its initial public offering underwriters’ fees under TKK’s Business Combination Marketing Agreement; (ix) by TKK if the VIE Contracts were not signed and registered by September 16, 2019 or not in full force and effect; or (x) by TKK if Glory Star has not delivered its draft audited financial statements on or prior to September 16, 2019 or if the final audited financial statements are materially different from the draft audited financial statements in an adverse manner. TKK does not expect to hold a shareholders’ meeting to approve the Share Exchange Agreement and the Transactions, but does expect to solicit redemptions of ordinary shares of TKK by means of a tender offer. However, it expects to hold a meeting of shareholders to seek shareholder approval of proposed amendments to its Memorandum and Articles of Association, and will separately distribute materials to its shareholders in connection therewith.

If the Share Exchange Agreement is terminated, all further obligations of the parties under the Share Exchange Agreement will terminate and will be of no further force and effect and no party will have any further liability thereunder to any other party, except that certain obligations related to public announcements, confidentiality, termination and termination fees, waiver against trust and general provisions will continue in effect, and no party shall be relieved of liability for any fraud claims or willful breach of the Share Exchange Agreement prior to such termination.

In the event that TKK terminates the Share Exchange Agreement for a breach by a Glory Star Party or a Seller, the Glory Star Parties will be required to pay to TKK as liquidated damages a termination fee equal to $639,000, plus transaction expenses incurred by TKK and its affiliates, provided that the Glory Star Parties and the Sellers will not be relieved of liability for any fraud claims or willful breach of the Share Exchange Agreement prior to such termination.

Governing Law and Dispute Resolution

The Share Exchange Agreement is governed by New York law. Any disputes under the Share Exchange Agreement, other than claims for injunctive or equitable relief (including specific performance to strictly enforce the terms of the Share Exchange Agreement), and certain disputes relating to the earn-out provisions, will be subject to arbitration by the American Arbitration Association to be held in Manhattan, New York. Any claims that are brought before a court will be subject to the exclusive jurisdiction of the state and federal courts in New York, New York (and appeals courts), and each party waived its rights to a jury trial in connection therewith. The parties are entitled to an injunction, specific performance and other equitable relief to prevent breaches of the Share Exchange Agreement in addition to any other remedy to which they are entitled at law or in equity.

A copy of the Share Exchange Agreement is filed with TKK’s Current Report on Form 8-K dated September 12, 2019 as Exhibit 10.1 and is incorporated herein by reference, and the foregoing description of the Share Exchange Agreement is qualified in its entirety by reference thereto.

Registration Rights Agreement

Simultaneously with the execution of the Share Exchange Agreement on September 6, 2019, TKK, the Purchaser Representative and the Sellers also entered into a Registration Rights Agreement, to become effective upon the Closing. Under the Registration Rights Agreement, the Sellers hold registration rights that obligate TKK to register for resale under the Securities Act, all or any portion of the Exchange Shares and Earnout Shares so long as such shares are not then restricted under the Lock-Up Agreement. Sellers holding a majority-in-interest of all Registrable Securities then issued and outstanding are entitled under the Registration Rights Agreement to make a written demand for registration under the Securities Act of all or part of their Registrable Securities, so long as such shares are not then restricted under the Lock-Up Agreement (including share held in escrow under the Escrow Agreement). Subject to certain exceptions, if any time after the Closing of the Transactions, TKK proposes to file a registration statement under the Securities Act with respect to its securities, under the Registration Rights Agreement, TKK shall give notice to the Sellers as to the proposed filing and offer the Sellers holding Registrable Securities an opportunity to register the sale of such number of Registrable Securities as requested by the Sellers in writing. In addition, subject to certain exceptions, Sellers holding Registrable Securities are entitled under the Registration Rights Agreement to request in writing that TKK register the resale of any or all of such Registrable Securities on Form S-3 or F-3 and any similar short-form registration that may be available at such time.

Under the Registration Rights Agreement, TKK agreed to indemnify the Sellers and certain persons or entities related to the Sellers such as their officers, directors, employees, agents and representatives against any losses or damages resulting from any untrue statement or omission of a material fact in any registration statement or prospectus pursuant to which they sell Registrable Securities, unless such liability arose from their misstatement or omission, and

the Sellers including Registrable Securities in any registration statement or prospectus agreed to indemnify TKK and certain persons or entities related to TKK such as its officers and directors and underwriters against all losses caused by their misstatements or omissions in those documents.

A copy of the Registration Rights Agreement is filed with TKK’s Current Report on Form 8-K dated September 12, 2019 as Exhibit 10.2, and the foregoing description of the Registration Rights Agreement is qualified in its entirety by reference thereto.

Lock-Up Agreements

Simultaneously with the execution of the Share Exchange Agreement on September 6, 2019, TKK, the Purchaser Representative and certain Sellers that directly or indirectly own in excess of 10% of Glory Star’s equity prior to the Closing also entered into Lock-Up Agreements with respect to their Exchange Shares (including Escrow Shares) and Earnout Shares, to become effective upon the Closing. In such Lock-Up Agreements, 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 each type of the Restricted Securities (including Escrow Shares), (x) the six month anniversary of the date of the Closing, (y) the date on which the Closing sale price of the TKK 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 TKK consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party, 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 TKK consummates 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 foregoing. 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 its 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.

The form of the Lock-Up Agreement is filed with TKK’s Current Report on Form 8-K dated September 12, 2019 as Exhibit 10.3, and the foregoing description of the Lock-Up Agreement is qualified in its entirety by reference thereto.

Non-Competition and Non-Solicitation Agreement

Simultaneously with the execution of the Share Exchange Agreement on September 6, 2019, TKK, the Purchaser Representative, Glory Star and certain Sellers that directly or indirectly own in excess of 30% of Glory Star’s equity prior to the Closing (including Glory Star’s chairman) and their principal also entered into Non-Competition and Non-Solicitation Agreements to become effective upon the Closing., in favor of TKK, Glory Star and their respective successors, affiliates and subsidiaries and variable interest entities relating to the post-Closing company’s business. Under the Non-Competition Agreements, for a period of three (3) years after the Closing, each Subject Party and its affiliates will not, without TKK’s prior written consent, anywhere in the PRC or any other markets directly or indirectly engage in which the Covered Parties are engaged, or are actively contemplating to become engaged, in the Business 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. 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 business of TKK or its subsidiaries, 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 TKK’s prior written consent, (i) solicit or hire the Covered Parties’ employees, consultants or independent contractors as of the Closing (or during the year prior to the Closing) or otherwise interfere with the Covered Parties’ relationships with such persons, (ii) solicit or divert the Covered Parties’ customers as of the Closing (or during the year prior to the Closing) relating to the Business or otherwise interfere with the Covered Parties’ contractual relationships with such persons, or (iii) interfere with or disrupt any Covered Parties’

vendors, suppliers, distributors, agents or other service providers for a purpose competitive with a Covered Party as it relates to the Business. The Subject Parties will also agree in each Non-Competition Agreement to not disparage the Covered Parties and to keep confidential and not use the confidential information of the Covered Parties.

A form of the Non-Competition Agreement is filed with TKK’s Current Report on Form 8-K dated September 12, 2019 as Exhibit 10.4 and is incorporated herein by reference, and the foregoing description of the Non-Competition Agreement is qualified in its entirety by reference thereto.

Minimum Net Tangible Assets Requirement

To consummate the Business Combination, there must be at least $5,000,001 in net tangible assets upon consummation of a Business Combination, after giving effect to the completion of the Redemption and any private placement financing and including the consolidated net tangible assets of Glory Star Group.

Business Combination Marketing Agreement

TKK engaged EarlyBirdCapital to assist it in connection with its initial business combination. This arrangement provided for EarlyBirdCapital to assist TKK in locating target businesses, holding meetings with its shareholders to discuss the potential business combination and the target business’s attributes, introduce TKK to potential investors that may be interested in purchasing our securities in connection with TKK’s proposed business combination, assist TKK in obtaining shareholder approval for the business combination and assist TKK with its press releases and certain public filings in connection with the business combination. Pursuant to this arrangement, TKK will pay EarlyBirdCapital a cash fee equal to 3.5% of the gross proceeds received in the IPO for such services upon the consummation of its initial business combination. TKK will also reimburse EarlyBirdCapital for up to $20,000 of its reasonable costs and expenses incurred by it (including reasonable fees and disbursements of counsel) in connection with the performance of its services pursuant to the agreement; provided, however, all expenses in excess of $5,000 in the aggregate shall be subject to TKK’s prior written approval, which approval will not be unreasonably withheld. Additionally, TKK will pay EarlyBirdCapital a cash fee equal to 1.0% of the total consideration payable in the proposed business combination if EarlyBirdCapital introduces TKK to the target business with which it completes a business combination.

Fees and Expenses

The costs and expenses in connection with the Share Exchange Agreement and the transactions contemplated hereby shall be paid by TKK after the consummation of the Business Combination. If the Business Combination is not completed, each party shall be responsible for its own expenses.

Management and Board of Directors Following the Business Combination

Effective as of the closing of the Business Combination, TKK’s pre-Business Combination executive officers and directors have agreed to resign from their respective positions; provided, however, Mr. Sing Wang will remain as a director following the Business Combination. Upon closing of the Business Combination, the board of directors of TKK is expected to consist of five members, of which Mr. Bing Zhang, will serve as Chairman of the board and chief executive officer of the combined company along with Mr. Sing Wang as a director. Of the five directors, we plan to appoint three “independent” directors, of which Mr. Sing Wang will be one of them.

In addition, following the Business Combination, it is anticipated that the current officers of Glory Star Group will continue as officers of the combined company. See “Management Of The Combined Company.”

Tender Offer

Prior to Closing TKK is obligated by its Memorandum and Articles of Association to undertake a tender offer pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act. Through the Offer, shareholders of TKK will be provided with the opportunity to redeem their ordinary shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the consummation of the Business Combination. The Sponsor and the initial shareholders of TKK have agreed to waive their redemption rights with respect to any of their founder shares or public shares, if any, in connection with the consummation of the Business Combination.

Additional Agreements

At or prior to the closing of the Business Combination, as contemplated by the Share Exchange Agreement, TKK and the Seller Representative will enter into an agreement to deposit the Escrow Shares into escrow to secure certain indemnification obligations of the Sellers pursuant to the Share Exchange Agreement.

TKK’s Reasons to Enter into the Business Combination

TKK is a blank check company, also commonly referred to as a Special Purpose Acquisition Company, or SPAC, incorporated for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, debt acquisition, stock purchase, reorganization or other similar business combination, assets or one or more operating businesses.

TKK then broadened its search for a company that would be appropriate for a business combination. In so doing, the principals at TKK identified Glory Star, an e-commerce and media company, as a target for a business combination. As discussed above under “General Description of the Share Exchange Agreement,” after evaluating the Glory Star portfolio companies, TKK determined that Glory Star would be the best target for the Business Combination.

At a board meeting held on August 30, 2019, the board of directors of TKK voted to enter into the Share Exchange Agreement and complete the Business Combination with Glory Star. The board of directors of TKK concluded that the Business Combination and the related transactions are in the best interests of TKK.

The board of directors of TKK considered many factors in making its decision, including those described under the heading “TKK’s Board of Directors’ Reasons for the Approval of the Business Combination.”

Glory Star Group’s Reasons to Enter into the Transaction

Glory Star Group provides advertisement and content production services and operates a leading mobile and online advertising, digital media, and entertainment business in China. After launching its CHEERS App in 2018, it is fast becoming one of the leading e-commerce platforms in China by allowing its users to access its online store (e-Mall), video content, live streaming, and online games. Glory Star Group focuses on creating original a professionally-produced content featuring lifestyle, culture and fashion to monetize its advertising and e-commerce platform. Glory Star Group’s vision is to become a world leading mobile media and entertainment company.

To accomplish its goal, Glory Star Group needed to grow quickly and to differentiate itself from its competitors. Glory Star Group’s potential access to capital market would significantly help accelerate its ability to grow its business. Glory Star Group considered going public in China, however, China’s domestic capital market has been under enormous pressure and it will be a very lengthy process to go public in China. Because many Chinese companies, including some of Glory Star Group’s competitors, have listed their securities with the U.S. stock market, such as Douyu (Nasdaq: DOYU) and Qu Toutiao (Nasdaq: QTT), Glory Star Group decided to go public in the U.S. to gain access to the U.S. capital market and increase its international presence.

Glory Star Group evaluated different methods of going public in the U.S., including an initial public offering or a combination with a Special Purpose Acquisition Company, or SPAC. Glory Star’s board carefully considered the benefits and detriments of conducting an initial public offering and business combination and decided to pursue a combination with a SPAC. Starting in January 2019, Glory Star reached out to a total of five (5) SPACs in the market. A couple of SPACs were too small while others were focused in different industries. Glory Star Group engaged in in-depth discussions and preliminary due diligence with two SPACs, one of which was TKK. After several rounds of discussions, Glory Star elected to pursue negotiations with TKK. By unanimous written consent on September 5, 2019, the board of Glory Star voted to enter into the Share Exchange Agreement and complete the Business Combination with TKK.

Background to the Business Transaction

In August 2018, Glory Star Group decided to go public in the U.S. Its chairman, Bing Zhang, and a shareholder representative, Hui Lin, a capital market veteran, traveled to the U.S. and met with several underwriters, including Maxim, Oppenheimer, and China International Capital Corporation (CICC) to learn and gain familiarity with the U.S. capital market.

Source and Amount of Funds

We expect that up to approximately $256.5 million will be required to purchase the ordinary shares tendered pursuant to the Offer if the Offer is fully subscribed. The purchase of ordinary shares tendered in the Offer will be funded by Glory Star from the amounts held in our Trust Account, which will be released to us in connection with the consummation of the Business Combination, but the fees and expenses specifically related to the Offer will either be paid with the funds available to us outside of the Trust Account, by loans from our officers and directors or their affiliates or upon the consummation of an initial business combination.

Ordinary shares that we acquire pursuant to the Offer will be retired and cancelled.

Scheduled Expiration of the Offer

The Offer is scheduled to expire at 5:00 p.m., New York City time, on November 15, 2019 unless we extend the Offer to allow us time to respond to comments, if any, from the SEC relating to the Offer or otherwise in connection with the effectuation of this Offer (the “Expiration Date”).

Procedures for Tendering Ordinary Shares

Valid Tender of Ordinary Shares

For a shareholder to make a valid tender of ordinary shares under the Offer, the Depositary must receive, at its address set forth on the back cover of this Offer to Purchase, and prior to the Expiration Date, the certificates for the ordinary shares you wish to tender, or confirmation of receipt of the ordinary shares pursuant to the procedure for book-entry transfer described below, together with a validly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an Agent’s Message (as defined below) in the case of a book-entry transfer, and any other required documents.

If a broker, dealer, commercial bank, trust company or other nominee holds your ordinary shares, you must contact your broker or nominee to tender your ordinary shares. It is likely they have an earlier deadline for you to act to instruct them to tender shares on your behalf. We urge shareholders who hold ordinary shares through nominees to consult their nominees to determine whether transaction costs may apply if shareholders tender shares through the nominees and not directly to the Depositary.

Election to Participate in Offer

In the Letter of Transmittal holders of ordinary shares will need to indicate their election to participate in the Offer. An election to participate in the Offer shall be a binding agreement to comply with the terms of the Offer, subject to the Withdrawal Rights. Tendering shareholders must make an election to participate in the Offer, and any Letter of Transmittal that fails to indicate this election will be incomplete and will not be accepted in the Offer.

Separation of Units

Only your ordinary shares can be tendered in the Offer. If any or all of your ordinary shares are held as part of Units, you will need to separate the Units into ordinary shares and warrants prior to tendering such ordinary shares pursuant to the Offer and undertake all actions necessary to allow for tender of the separated ordinary shares. For specific instructions regarding separation of Units, please see the letter from your broker/nominee, which includes an instruction form for your completion which provides a box to check to request separation of the Units. The voluntary separation of the Units occurs through the facilities of The Depository Trust Company and is subject to the procedures of DTC and the various broker/nominees who hold their positions through DTC. Accordingly, while we believe that such separation of the Units can typically be accomplished within three business days, no assurance can be given regarding how quickly Units can be separated and Unit holders are urged to promptly contact their broker/nominee if they wish to tender the ordinary shares underlying their Units.

Signature Guarantees

No signature guarantee will be required on a Letter of Transmittal if:

•        the registered holder of the ordinary shares (including, for purposes hereof, any participant in DTC whose name appears on a security position listing as the owner of the ordinary shares) tendered in the Offer and the holder has not completed either the box entitled “Special Delivery Instructions” or the box entitled “Special Payment Instructions” on the Letter of Transmittal; or

•        ordinary shares are tendered in the Offer for the account of a bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion Program or an “eligible guarantor institution,” as the term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing constituting an “eligible institution”). See Instruction 1 to the Letter of Transmittal applicable to the ordinary shares.

Except as described above, all signatures on any Letter of Transmittal for securities tendered in the Offer must be guaranteed by an eligible institution. If a certificate is registered in the name of a person other than the person executing a Letter of Transmittal, or if payment is to be made, or securities not purchased or tendered are to be issued and returned, to a person other than the registered holder, then the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder or owner appears on the certificate, with the signatures on the certificate guaranteed by an eligible institution.

In all cases, payment for securities tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for the ordinary shares tendered (or a timely confirmation of the book-entry transfer of the securities into the Depositary’s account at DTC, as described above), a properly completed and duly executed Letter of Transmittal including any required signature guarantees, or an Agent’s Message (as defined below) in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal.

Method of Delivery

The method of delivery of all documents, including certificates for ordinary shares, the Letter of Transmittal and any other required documents, is at the sole election and risk of the tendering shareholder. Ordinary shares will be deemed delivered only when actually received by the Depositary (including, in the case of a book-entry transfer, by book-entry confirmation). If delivery is by mail, we recommend registered mail with return receipt requested, properly insured. In all cases, sufficient time should be allowed to ensure timely delivery.

Book-Entry Delivery

For purposes of the Offer, the Depositary will establish an account with respect to the ordinary shares at DTC within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in DTC’s system may make book-entry delivery of securities by causing DTC to transfer those securities into the Depositary’s account in accordance with DTC’s procedures for that transfer. Although delivery of securities may be effected through a book-entry transfer into the Depositary’s account at DTC, a properly completed and duly executed Letter of Transmittal with any required signature guarantees, or an Agent’s Message, and any other required documents must be transmitted to and received by the Depositary at its address on the back cover of this Offer to Purchase before the Expiration Date.

The confirmation of a book-entry transfer of shares into the Depositary’s account at DTC is referred to herein as “book-entry confirmation.” Delivery of documents to DTC in accordance with DTC’s procedures will not constitute delivery to the Depositary.

The term “Agent’s Message” means a message transmitted by DTC to, and received by, the Depositary and forming a part of a book-entry confirmation, stating that DTC has received an express acknowledgement from the DTC participant tendering shares that such DTC participant has received and agrees to be bound by the terms of the Letter of Transmittal and that we may enforce such agreement against the DTC participant.

Return of Unpurchased Ordinary Shares

If any tendered ordinary shares are not purchased pursuant to the Offer, or if less than all ordinary shares evidenced by a shareholder’s certificates are tendered, certificates representing the unpurchased ordinary shares will be returned promptly after the expiration or termination of the Offer or, in the case of ordinary shares tendered by book-entry transfer at DTC, the ordinary shares will be credited to the appropriate account maintained by the tendering shareholder at DTC, in each case without expense to the shareholder.

Tendering Shareholders’ Representations and Warranties; Tender Constitutes an Agreement

It is a violation of Rule 14e-4 promulgated under the Exchange Act for a person acting alone or in concert with others, directly or indirectly, to tender securities for such person’s own account unless at the time of tender and at the Expiration Date such person has a “net long position” within the meaning of Rule 14e-4 promulgated under the Exchange Act, in the securities or equivalent securities at least equal to the securities being tendered and will deliver or cause to be delivered such securities for the purpose of tendering to us within the period specified in the Offer. A tender of securities made pursuant to any method of delivery set forth herein will constitute the tendering shareholder’s acceptance of the terms and conditions of the Offer, as well as the tendering shareholder’s representation and warranty to us that (i) such shareholder has a “net long position” in securities or the equivalent securities at least equal to the securities being tendered within the meaning of Rule 14e-4 and (ii) such tender of securities complies with Rule 14e-4.

A tender of securities in the Offer made pursuant to any method of delivery set forth herein will also constitute a representation and warranty to us that the tendering shareholder has full power and authority to tender, sell, assign and transfer the securities so tendered, and that, when the same are accepted for purchase by us, we will acquire good, marketable and unencumbered title thereto, free and clear of all security interests, liens, restrictions, claims, encumbrances and other obligations relating to the sale or transfer of the securities, and the same will not be subject to any adverse claim or right.

Any tendering shareholder will, on request by the Depositary or us, execute and deliver any additional documents deemed by the Depositary or us to be necessary or desirable to complete the sale, assignment and transfer of the securities tendered, all in accordance with the terms of the Offer.

All authority conferred or agreed to be conferred by delivery of the Letter of Transmittal shall be binding on the successors, assigns, heirs, personal representatives, executors, administrators and other legal representatives of the tendering shareholder and shall not be affected by, and shall survive, the death or incapacity of such tendering shareholder.

A tender of securities made pursuant to any method of delivery set forth herein will also constitute an acknowledgement by the tendering shareholder that: (i) the offer is discretionary and may be extended, modified, or terminated by us as provided herein; (ii) such shareholder is voluntarily participating in the Offer; (iii) the future value of the ordinary shares is unknown and cannot be predicted with certainty; (iv) such shareholder has been advised to read this entire Offer to Purchase including the Appendix thereto; (v) such shareholder has been advised to consult his, her or its tax and financial advisors with regard to how the Offer will impact the tendering shareholder’s specific situation; (vi) any foreign exchange obligations triggered by such shareholder’s tender of ordinary shares or receipt of proceeds are solely his, her or its responsibility; and (vii) regardless of any action that we take with respect to any or all income tax, withholding tax, transfer tax or other tax-related items (“Tax Items”) related to the Offer and the disposition of ordinary shares, such shareholder acknowledges that the ultimate liability for all Tax Items is and remains his, her or its sole responsibility. In that regard, a tender of ordinary shares shall authorize us to withhold all applicable Tax Items from any amounts payable to a tendering shareholder. Our acceptance for payment of securities tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and us upon the terms and subject to certain conditions of the Offer.

Determination of Validity; Rejection of Ordinary Shares; Waiver of Defects; No Obligation to Give Notice of Defects

All questions as to the number of ordinary shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of ordinary shares will be determined by us, in our sole discretion, and our determination will be final and binding on all parties. We reserve the absolute right to reject any or all tenders we determine not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of

our counsel, be unlawful. We also reserve the absolute right to waive any conditions of the Offer with respect to all tendered ordinary shares or waive any defect or irregularity in any tender with respect to any particular ordinary shares or any particular shareholder whether or not we waive similar defects or irregularities in the case of other shareholders. No tender of securities will be deemed to have been validly made until all defects or irregularities have been cured or waived. We will not be liable for failure to waive any condition of the Offer, or any defect or irregularity in any tender of ordinary shares. None of Glory Star, the Information Agent, the Depositary or any other person will be obligated to give notification of defects or irregularities in tenders or incur any liability for failure to give notification. Our interpretation of the terms of and conditions to the Offer, including the Letter of Transmittal and the instructions thereto, will be final and binding on all parties. By tendering ordinary shares, you agree to accept all decisions we make concerning these matters and waive any rights you might otherwise have to challenge those decisions.

Lost or Destroyed Certificates

If any certificate representing ordinary shares has been lost, destroyed or stolen, the shareholder should complete the Letter of Transmittal, indicate the certificate(s) representing ordinary shares is lost and return it to the Depositary. The shareholder will then be instructed as to the steps that must be taken in order to replace the certificate. The Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been completed. Shareholders are requested to contact the Depositary immediately in order to permit timely processing of this documentation.

Withdrawal Rights

You may withdraw securities that you have previously tendered pursuant to the Offer at any time prior to the Expiration Date, namely 5:00 p.m. on November 15, 2019 or the date to which the Offer has been extended. You may also withdraw your previously tendered securities at any time after 5:00 p.m., New York City time, on November 15, 2019 if not accepted prior to such time. Except as this section otherwise provides, tenders of ordinary shares are irrevocable.

For a withdrawal to be effective, a valid written notice of withdrawal must (i) be received in a timely manner by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and (ii) specify the name of the person having tendered the ordinary shares to be withdrawn, the number of ordinary shares to be withdrawn and the name of the registered holder of the ordinary shares to be withdrawn, if different from the name of the person who tendered the shares. To be effective, a notice of withdrawal must be in writing.

If a shareholder has used more than one Letter of Transmittal or has otherwise tendered ordinary shares in more than one group of ordinary shares, the shareholder may withdraw ordinary shares using either separate notices of withdrawal or a combined notice of withdrawal, so long as the information specified above is included.

If certificates for ordinary shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of those certificates, the shareholder must submit the serial numbers shown on those certificates to the Depositary and, unless an eligible institution has tendered those ordinary shares, an eligible institution must guarantee the signatures on the notice of withdrawal. If ordinary shares have been delivered in accordance with the procedures for book-entry transfer described in “— Procedures for Tendering Ordinary Shares” above, any notice of withdrawal must also specify the name and number of the account at DTC to be credited with the withdrawn shares and must otherwise comply with DTC’s procedures.

Withdrawals of tenders of securities may not be rescinded, and any securities properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. Withdrawn securities may be retendered at any time prior to the Expiration Date by again following one of the procedures described in this section.

All questions as to the form and validity, including the time of receipt, of notices of withdrawal, will be determined by us, in our sole discretion, and our determination will be final and binding on all parties. We reserve the absolute right to waive any defect or irregularity in the withdrawal of securities by any shareholder, whether we waive similar defects or irregularities in the case of other shareholders. None of Glory Star, the Information Agent, the Depositary or any other person will be obligated to give notice of any defects or irregularities in any notice of withdrawal, nor will any of them incur liability for failure to give any notice.

If we extend the Offer, are delayed in our purchase of securities or are unable to purchase securities under the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may, subject to applicable

law, retain tendered ordinary shares on our behalf. Such ordinary shares may not be withdrawn except to the extent tendering shareholders are entitled to withdrawal rights as described in this section. Our reservation of the right to delay payment for ordinary shares which we have accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that we must pay the consideration offered or return the securities tendered promptly after termination or withdrawal of a tender offer.

Purchase of Ordinary Shares and Payment of Purchase Price

Upon the terms and subject to the conditions of the Offer, which conditions shall be satisfied or waived prior to the expiration of the Offer, promptly following the Expiration Date (but in no event later than three business days after the Expiration Date), we will accept for payment and pay for (and thereby purchase) up to 25,000,000 of our ordinary shares validity tendered in the Offer and not properly withdrawn on or before the Expiration Date. If the Closing Condition has not been satisfied, we will either extend the Offer or terminate the Offer and will promptly return all ordinary shares tendered at our expense. Our Sponsor and the members of our management team have agreed not to tender their ordinary shares in the Offer.

For purposes of the Offer, we will be deemed to have accepted for payment (and therefore purchased), subject to the terms and conditions of the Offer, ordinary shares that are validly tendered in the Offer and not properly withdrawn only when, as and if we give oral or written notice to the Depositary of our acceptance of the ordinary shares for payment pursuant to the Offer.

In all cases, payment for ordinary shares tendered and accepted for payment in the Offer will be made promptly, but only after timely receipt by the Depositary of certificates for shares, or a timely book-entry confirmation of ordinary shares into the Depositary’s account at the DTC, a properly completed and duly executed Letter of Transmittal, or an Agent’s Message in the case of a book-entry transfer, and any other required documents. In no event shall payment for ordinary shares tendered be made unless the conditions to the Offer, including the Closing Condition, have been satisfied. We will make prompt payment upon satisfaction of the offer conditions, but in no event later than three business days after the Expiration Date.

We will pay for ordinary shares purchased in the Offer by depositing the aggregate Purchase Price with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from us and transmitting payment to tendering shareholders.

Certificates for all ordinary shares tendered in the Offer and not purchased will be returned or, in the case of ordinary shares tendered by book-entry transfer, will be credited to the account maintained with DTC by the broker/dealer participant who delivered the securities, to the tendering shareholder at our expense promptly after the Expiration Date or termination of the Offer, without expense to the tendering shareholders.

Under no circumstances will we pay interest on the Purchase Price, including, but not limited to, by reason of any delay in making payment. In addition, if certain events occur, we may not be obligated to purchase ordinary shares pursuant to the Offer. See “— Conditions of the Offer” below.

We will not pay any transfer taxes, if any, payable on the transfer to us, of ordinary shares purchased pursuant to the Offer. If payment of the Purchase Price is to be made to, or (in the circumstances permitted by the Offer) unpurchased ordinary shares are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person, will be deducted from the Purchase Price unless satisfactory evidence of the payment of the transfer taxes, or exemption from payment of the transfer taxes, is submitted.

We urge shareholders who hold ordinary shares through a broker, dealer, commercial bank, trust company or other nominee to consult their nominee to determine whether transaction costs are applicable if they tender securities through their nominee and not directly to the Depositary.

Conditions of the Offer

Notwithstanding any other provision of the Offer, and in addition to (and not in limitation of) our rights to extend and/or amend the Offer at any time, we will not be required to accept securities tendered and we may terminate or amend the Offer, or postpone our acceptance of the securities that you elect to tender, subject to the rules under

the Exchange Act, including Rule 13e-4(f)(5), at the then-scheduled Expiration Date (as it may be extended) if the following event has occurred, or has been determined by us to have occurred, and, in our reasonable judgment in any case, the occurrence of such event makes it inadvisable for us to proceed with the Offer:

•        the Business Combination, in our reasonable judgment, to be determined immediately prior to the Expiration Date, being capable of being consummated substantially contemporaneously with this Offer, but in no event later than three business days after the Expiration Date (we refer to this condition, which is not waivable, as the “Closing Condition”).

We will not accept for payment, purchase or pay for any securities tendered, and may terminate, or amend the Offer or may postpone, in accordance with Rule 13e-4(f)(5) under the Exchange Act, the acceptance for payment of, or the purchase of and the payment for securities tendered until the SEC has advised us that they have no further comment with respect to the Offer and its related documents. We have agreed to extend the term of the Offer until such time, and intend to provide interim amendments to the Offer electronically via filings with the SEC to our shareholders, as we receive notification from the SEC that it has no further comment regarding this Offer. At that time, we will redistribute the Offer, as amended or supplemented, and its related Letter of Transmittal to our shareholders, setting forth a final Expiration Date. We will, however, not extend the Offer past December 31, 2019.

In addition, notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) the rights and obligations of Glory Star to extend, terminate and/or modify the Offers, we will not be required to accept for payment, purchase or, subject to the applicable rules and regulations of the SEC, pay for any securities tendered, and may terminate or amend the Offer or may postpone, in accordance with Rule 13e-4(f)(5) under the Exchange Act, the acceptance for payment of, or the purchase of and the payment for securities tendered, subject to the rules under the Exchange Act, if any of the following shall have occurred:

•        any governmental authority shall have enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) or order that is then in effect and has the effect of making the Business Combination illegal or otherwise preventing or prohibiting the Business Combination; or

•        a material adverse effect with respect to Glory Star shall have occurred since the date of this Offer to Purchase.

The conditions referred to above are for our sole benefit and may be asserted by us regardless of the circumstances (other than any action or omission to act by us) giving rise to any condition, and may be waived by us, in whole or in part, at any time and from time to time in our reasonable discretion, subject to applicable law. Our failure at any time to exercise the foregoing rights will not be deemed a waiver of any right, and each such right will be deemed an ongoing right that may be asserted at any time prior to the Expiration Date and from time to time, subject to applicable law. However, once the Offer has expired, then all of the conditions to the Offer must have been satisfied or waived. In certain circumstances, if we waive the conditions described above, we may be required to extend the Expiration Date. Only a court of competent jurisdiction can make a determination concerning the events described above that will be final and binding on all parties. Shareholders may challenge any determination that we make with respect to such matters.

Promptly following the scheduled Expiration Date, we will publicly announce whether the offer conditions have been satisfied or waived (as applicable) and whether the Offer has been extended, terminated or delayed. If such offer conditions are satisfied, promptly after the Expiration Date, and in any event concurrently with the consummation of the Business Combination, we will purchase and pay the Purchase Price for each ordinary shares validly tendered and not properly withdrawn. Public shareholders who have redeemed their shares will also be entitled to receive a pro rata portion of the additional accrued interest, if any, remaining in the Trust Account, which we expect to be nominal. In the event the Offer is terminated, we will promptly return any ordinary shares, at our expense, that were delivered pursuant to the Offer.

You should evaluate current market quotes of our ordinary shares, among other factors, before deciding whether or not to accept the Offer. See “Market Information and Dividends” and “Risk Factors.”

Certain Information Concerning Glory Star and the Business Combination

Set forth elsewhere in this Offer to Purchase is information concerning Glory Star and the Business Combination. Shareholders are urged to review such information, including the information set forth in “Risk Factors,” prior to making a decision whether to tender their ordinary shares. See “Summary Term Sheet” and “The Business Combination.”

Interests of Directors and Executive Officers

See “Summary Term Sheet,” “The Business Combination” and “Risk Factors” herein for information related to the interests of our officers and directors in the Offer and the Business Combination and information related to certain transactions and arrangements concerning our securities.

Our Sponsor and the members of our management team have agreed not to participate in the Offer with respect to shares they have acquired. Based on our records and on information provided to us by our directors, executive officers and affiliates, neither we nor any of our directors, executive officers, and affiliates, including our Sponsor, have effected any transactions involving our ordinary shares during the 60 days prior to the commencement of the Offer. See “Description of TKK’s Securities and Material Differences in the Rights of Shareholders Following the Business Combination — Description of Securities” and “Risk Factors — Certain obligations of our Sponsor are memorialized in agreements between our Sponsor, the underwriters of our IPO and us, and these agreements may be amended to change these obligations or eliminate them entirely.”

Certain Legal Matters; Regulatory Approvals

The Offer and the transaction contemplated by this Offer to Purchase are subject to the Tender Offer Rules under Securities Exchange Act of 1934, as amended.

There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.

In addition, except as otherwise discussed herein, we are not aware of any license or regulatory permit that is material to our businesses that might be adversely affected by our acquisition of ordinary shares pursuant to the Offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for our acquisition or ownership of ordinary shares pursuant to the Offer. Should any approval or other action be required, we presently contemplate that we will seek that approval or other action. We are unable to predict whether we will be required to delay the acceptance for payment of or payment for ordinary shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any approval or other action, if needed, would be obtained or would be obtained without substantial cost or conditions or that the failure to obtain the approval or other action might not result in adverse consequences to our business and financial condition.

Extension of the Offer; Termination; Amendment

We expressly reserve the right, at any time and from time to time prior to the scheduled Expiration Date, and regardless of whether any of the events set forth in “— Conditions of the Offer” shall have occurred or are deemed by us to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any ordinary shares. We will affect any such extension by giving oral or written notice of such extension to the Depositary and making a public announcement of the extension. We also expressly reserve the right, in our sole discretion, to terminate the Offer and reject for payment and not pay for any securities not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for securities upon the occurrence of any of the conditions specified in “— Conditions of the Offer” by giving oral or written notice of the termination or postponement to the Depositary and making a public announcement of the termination or postponement. Our reservation of the right to delay payment for securities which we have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that we must pay the consideration offered or return the securities tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law (including Rule 13e-4 under the Exchange Act), we further reserve the right, in our sole discretion, and regardless of whether any of the events set forth in “— Conditions of the Offer” have occurred or are deemed by us to have occurred, to amend the Offer prior to the Expiration Date to increase the consideration offered in the Offer, or otherwise if we determine such other amendments are required by applicable law or regulation. Amendments to the Offer may be made at any

time and from time to time by public announcement. In the case of an extension of the Offer, such amendment must be issued no later than 9:00 a.m., New York City time, on the next business day after the last previously scheduled or announced Expiration Date. Any public announcement made pursuant to the Offer will be disseminated promptly to shareholders in a manner reasonably designed to inform shareholders of the change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law or regulation (including Rule 13e-4 under the Exchange Act), we shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release through PR Newswire or another comparable service.

If we materially change the terms of the Offer or the information concerning the Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2), 13e-4(e)(3), and 13e-4(f)(1) promulgated under the Exchange Act. These rules and certain related releases and interpretations of the SEC provide that the minimum period during which a tender offer must remain open following material changes in the terms of the Offer or information concerning the Offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of the terms or information; however, in no event will the Offer remain open for fewer than five business days following such a material change in the terms of, or information concerning, the Offer. If (i) we make any change to increase the price to be paid for ordinary shares, or if we increase or decrease the number of ordinary shares sought in the Offer, and (ii) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of an increase or decrease is first published, sent or given to shareholders in the manner specified in this section, the Offer will be extended until the expiration of such period of ten business days. For purposes of the Offer, a “business day” means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time.

In accordance with the rules of the SEC, we may, and we expressly reserve our right to, notwithstanding any other statement contained herein, accept for payment an additional amount of ordinary shares not to exceed 2% of our issued and outstanding ordinary shares without amending the Offer or extending the Expiration Date.

Fees and Expenses

We have retained Continental Stock Transfer & Trust Company to act as Depositary and Morrow Sodali LLC to act as Information Agent in connection with the Offer. The Information Agent may contact holders of ordinary shares by mail, facsimile and personal interviews and may request brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners. The Information Agent and Depositary will receive reasonable and customary compensation for their respective services, will be reimbursed by Glory Star for reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws.

We have not agreed to pay any fees or commissions to brokers, dealers or other persons (other than fees to the Information Agent and Depositary as described above) for soliciting tenders of ordinary shares pursuant to the Offer. Shareholders holding securities through brokers, dealers and other nominee shareholders are urged to consult the brokers, dealers and other nominee shareholders to determine whether transaction costs may apply if shareholders tender ordinary shares through the brokers, dealers and other nominee shareholders and not directly to the Depositary. We will, however, upon request, reimburse brokers, dealers and commercial banks for customary mailing and handling expenses incurred by them in forwarding the Offer and related materials to the beneficial owners of ordinary shares held by them as a nominee or in a fiduciary capacity. No broker, dealer, commercial bank or trust company has been authorized to act as our agent or the agent of the Information Agent or the Depositary for purposes of the Offer. We will not pay or cause to be paid any stock transfer taxes, if any, on our purchase of securities.

In addition, we will incur and pay reasonable and customary fees and expenses for financial printing services.

Appraisal Rights

No appraisal rights are available under the Cayman Islands Companies Law to shareholders in connection with the Offer.

Material U.S. Federal Income Tax Consequences

The receipt of cash for your tendered ordinary shares will generally be treated for U.S. federal income tax purposes either as a sale or exchange transaction or as a distribution. See “Material U.S. Federal Income Tax Consequences.”

Miscellaneous

We are not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the Offer or the acceptance of ordinary shares pursuant to the Offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with the applicable law. If, after such good faith effort, we cannot comply with the applicable law, the Offer will not be made to the holders of shares residing in such jurisdiction.

You should only rely on the information contained in this document or to which we have referred you. We have not authorized any person to provide you with information or make any representation in connection with the Offer other than those contained in this Offer to Purchase, the Letter of Transmittal or in the other documents that constitute a part of the Offer. If given or made, any recommendation or any such information or representation must not be relied upon as having been authorized by us, our board of directors, the Depositary or the Information Agent.

DESCRIPTION OF TKK’S SECURITIES AND MATERIAL DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS FOLLOWING THE BUSINESS COMBINATION

Description of Securities

The information under the heading “Description of Securities” in TKK’s registration statement on Form S-1 (File Nos. 333-226423), declared effective on August 15, 2018, is hereby incorporated by reference.

Material Differences in the Rights of Shareholders Following the Consummation of the Business Combination

Following the consummation of the Business Combination, the combined company intends to adopt a new Memorandum of Articles of Association that would omit certain provisions of Article 48 of TKK’s Memorandum and Articles of Association, which relate to certain repurchase and redemption rights of holders of TKK’s ordinary shares in connection with an initial business combinations since those provisions will no longer be applicable.

Immediately after consummation of the Business Combination, our Board of Directors will consist of five members who will include Messrs. Zhang and Wang. In addition, three of such directors must satisfy applicable independent director requirements. Please see “Management of the Combined Company.”

DESCRIPTION OF THE COMBINED COMPANY FOLLOWING THE BUSINESS COMBINATION

Following the consummation of the Business Combination, the combined company’s business and operations will be that of Glory Star Group. Please see “Information about TKK and Glory Star Group — Information about Glory Star Group.”

MARKET INFORMATION AND DIVIDENDS

Our ordinary shares, Units, warrants and rights are traded on the Nasdaq Capital Market, under the symbols “TKK,” “TKKU”, “TKKW” and “TKKR,” respectively. Each of TKK’s Units consists of one ordinary share, one warrant and one right. Each warrant entitles the holder thereof to purchase one-half of one ordinary share and each right will automatically convert into one-tenth (1/10) of an ordinary share upon the consummation of the Business Combination. Our Units commenced trading on Nasdaq on August 16, 2018. On September 12, 2018, the ordinary shares, warrants and rights underlying the Units sold in the IPO began to trade separately from the Units. As of October 14, 2019, the closing price of the ordinary shares was $10.16 per share.

Our ordinary shares may be delisted if we fail to maintain certain Nasdaq listing requirements. There can be no assurance that we will be able to maintain compliance with the Nasdaq continued listing requirements or that our securities will continue to be listed on Nasdaq. See “Risk Factors — Nasdaq could delist our ordinary shares, which could limit investors’ ability to transact in our securities and subject us to additional trading restrictions.”

Dividends

We have not paid any cash dividends on our ordinary shares to date and our board of directors does not anticipate declaring any dividends on our ordinary shares prior to the completion of an initial business combination.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF TKK

The following discussion and analysis should be read in conjunction with the “Selected Historical Financial Information of TKK” and the accompanying combined financial statements and related notes included elsewhere in this Offer to Purchase. The following discussion contains forward-looking statements that reflect TKK’s future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside TKK’s control. TKK’s actual results could differ materially from those discussed in these forward-looking statements. Please read “Risk Factors” and “Forward-Looking Statements.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

References in this section to “TKK,” “us” or “we” refer to TKK Symphony Acquisition Corp.

Overview

We are a blank check company incorporated on February 5, 2018 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar Business Combination with one or more businesses. We intend to utilize cash derived from the proceeds of the initial public offering, our securities, debt or a combination of cash, securities and debt in effecting a Business Combination.

The issuance of additional shares in a Business Combination:

•        may significantly reduce the equity interest of our shareholders;

•        may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares;

•        will likely cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and

•        may adversely affect prevailing market prices for our securities.

Similarly, if we issue debt securities, it could result in:

•        default and foreclosure on our assets if our operating revenues after a Business Combination are insufficient to pay our debt obligations;

•        acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;

•        our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

•        our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete a Business Combination will be successful.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from February 5, 2018 (inception) through June 30, 2019 were organizational activities, those necessary to consummate the initial public offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended June 30, 2019, we had net income of $1,156,951, which consists of interest income on marketable securities held in the Trust Account of $1,502,321 and an unrealized gain on marketable securities held in our Trust Account of $137,467, offset by operating costs of $482,837.

For the six months ended June 30, 2019, we had net income of $2,413,793, which consists of interest income on marketable securities held in the Trust Account of $3,057,527 and an unrealized gain on marketable securities held in our Trust Account of $99,852, offset by operating costs of $743,586.

For the three months ended June 30, 2018 and for the period from February 5, 2018 (inception) through June 30, 2018, we had net loss $9,344 and $39,859, which consists of operating costs of $9,344 and $39,859, respectively.

Liquidity and Capital Resources

On August 20 and 22, 2018, we consummated the initial public offering of 22,000,000 Units and the sale of an additional 3,000,000 Units pursuant to the underwriters’ partial exercise of their over-allotment option at a price of $10.00 per Unit, generating aggregate gross proceeds of $250,000,000. Simultaneously with the closings of the initial public offering and the sale of the additional Units, we consummated the sales of an aggregate of 13,000,000 private placement warrants to Symphony at a price of $0.50 per warrant, generating gross proceeds of $6,500,000.

In connection with the initial public offering and the private placement, a total of $250,000,000 was placed in the Trust Account. We incurred $5,744,938 in initial public offering related costs, including $5,000,000 of underwriting fees and $744,938 of other costs.

For the six months ended June 30, 2019, cash used in operating activities was $615,925. Net income of $2,413,793 was offset by interest earned on marketable securities held in the Trust Account of $3,057,527, an unrealized gain on marketable securities held in our Trust Account of $99,852 and changes in our operating assets and liabilities, which provided $127,661 of cash from operating activities.

For the period from February 5, 2018 (inception) through June 30, 2018, cash used in operating activities was $35,898. Net loss of $39,859 was offset by changes in our operating assets and liabilities, which provided $3,961 of cash from operating activities.

As of June 30, 2019, we had marketable securities held in the Trust Account of $255,043,484 (including approximately $5,043,000 of interest income and unrealized gains) consisting of U.S. treasury bills with a maturity of 180 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through June 30, 2019, we did not withdraw any funds from the interest earned on the Trust Account.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to acquire a target business or businesses and to pay our expenses relating thereto, including a cash fee equal to 3.5% of the gross proceeds of the initial public offering payable to EarlyBirdCapital upon consummation of our Business Combination for assisting us in connection with such Business Combination. To the extent that our ordinary shares are used in whole or in part as consideration to affect our Business Combination, the remaining proceeds held in the Trust Account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our Business Combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses.

As of June 30, 2019, we had cash of $141,069 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate prospective acquisition candidates, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses, review corporate documents and material agreements of prospective target businesses, select the target business to acquire and structure, negotiate and consummate a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the initial shareholders, TKK’s officers and directors or their affiliates may, but are not obligated to (except as described herein), loan us funds as may be required. In the event that our Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts

but no proceeds from our Trust Account would be used for such repayment. Up to $1,000,000 of such loans may be convertible into warrants at a price of $0.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to Symphony. We do not expect to seek loans from parties other than the initial shareholders, TKK’s officers and directors or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. In February 2019, the Sponsor committed to provide us an aggregate of $300,000 in loans and in April 2019, the Sponsor committed to provide us an additional aggregate amount of $300,000 in loans, bringing the total commitment to an aggregate amount of $600,000. The loans, as well as any future loans that may be made by the Sponsor (or its affiliates), will be evidenced by notes and would either be repaid upon the consummation of a Business Combination or up to $1,000,000 of the notes may be converted into warrants at a price of $0.50 per warrant at the option of the lender. As of June 30, 2019, we had $350,000 outstanding under the loans.

We have principally financed our operations from inception using proceeds from the sale of our equity securities to our shareholders prior to the initial public offering and such amount of proceeds from the initial public offering that were placed in an account outside of the Trust Account for working capital purposes. As of June 30, 2019, we had $141,069 in our operating bank accounts, $255,043,484 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem our shares in connection therewith and a working capital deficit of $240,490. In addition, in February 2019, our Sponsor committed to provide us an aggregate of $300,000 in loans and in April 2019, the Sponsor committed to provide us an additional aggregate amount of $300,000 in loans, bringing the total commitment to an aggregate amount of $600,000. The loans, as well as any future loans that may be made by our Sponsor (or its affiliates), will be evidenced by notes and would either be repaid upon the consummation of a Business Combination or up to $1,000,000 of the notes may be converted into warrants. As of June 30, 2019, we had $350,000 outstanding under the loans. Based on the foregoing, we believe we will have sufficient cash to meet our needs through February 20, 2020, our scheduled liquidation date.

Off-balance sheet financing arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2019. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of our Chief Executive Officer a monthly fee of $15,000 for general and administrative services, including office space, utilities and administrative services provided to Glory Star. We began incurring these fees on August 15, 2018 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Ordinary shares subject to possible redemption

We account for our ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature

certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our condensed balance sheets.

Net loss per ordinary share

We apply the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.

Recent accounting pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF GLORY STAR GROUP

You should read the following discussion and analysis of Glory Star Group’s financial condition and results of operations in conjunction with its consolidated financial statements and the related notes included elsewhere in this Offer to Purchase. This discussion contains forward-looking statements that involve risks and uncertainties. Glory Star Group’s actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Offer to Purchase.

Overview

Glory Star Group provides advertisement and content production services and operates a leading mobile and online digital advertising, media and entertainment business in China. After launching its CHEERS App in 2018, it is fast becoming one of the leading e-commerce platforms in China by allowing its users to access its online store (e-Mall), video content, live streaming, and online games. Glory Star Group focuses on creating original professionally-produced content featuring lifestyle, culture and fashion to monetize its advertising and e-commerce platform. Glory Star Group mainly offers and generates revenue from the copyright licensing of self-produced content, advertising and customized content production and others. Glory Star Group intends to capitalize on the immense growth potential of China’s live streaming and e-commerce markets while cultivating new, innovative monetization opportunities.

Currently, Glory Star Group generates a substantial part of its revenues from advertising placed within its mobile and online video content and on its e-commerce platform. However, with the launch of its e-Mall in 2019, Glory Star Group anticipates that its mobile and online advertising revenue as a percentage of its total revenues will decrease due to the fast growth in revenues generated in its e-Mall; its mobile and online advertising business will still grow and remain one of its largest sources of revenue.

Critical Accounting Policies

(a) Basis of presentation.    The accompanying consolidated financial statements as of December 31, 2017 and 2018 and for the years then ended are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The unaudited condensed consolidated financial statements as of June 30, 2019 and for the six months ended June 30, 2018 and 2019 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and disclosures, which are normally included in financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted pursuant to such rules and regulations, although the management believes that the disclosures made are adequate to provide for fair presentation. The interim financial information should be read in conjunction with the Financial Statements and the notes thereto included in the consolidated financial statements as of December 31, 2017 and 2018 and for the years then ended. The consolidated financial statements include the financial statements of Glory Star Group, its subsidiaries, its VIEs and its VIEs’ subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

(b) Use of estimate.    The preparation of financial statements in conformity with U.S. GAAP requires Glory Star Group to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and accompanying notes, including allowance for doubtful accounts, the useful lives of property and equipment, impairment of long-lived assets and valuation allowance for deferred tax assets. Actual results could differ from those estimates.

(c) Fair Value Measurement.    Glory Star Group applies ASC Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements.

ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability.

ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect Glory Star Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Management of Glory Star Group is responsible for considering the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, other current assets, short-term bank loans, notes payable, accounts payable, advances from customers, accrued liabilities and other payables and income tax payable based on the short-term maturity of these instruments to approximate their fair values because of their short-term nature.

(d) Cash and cash equivalents.    Cash consists of cash on hand and cash in banks. Glory Star Group maintains cash with various financial institutions in China. As of December 31, 2017 and 2018, and June 30, 2019 (unaudited), cash balances were $5,186 thousand, $2,437 thousand, and $1,290 thousand, respectively, and were uninsured. Glory Star Group has not experienced any losses in its bank accounts and believes it is not exposed to any risks on its cash in its bank accounts.

(e) Restricted cash.    Restricted cash consists of cash deposits held by a bank to secure bank acceptance notes payable. As of December 31, 2017 and 2018 and June 30, 2019 (unaudited), restricted cash amounted to $459 thousand, $nil and $nil, respectively.

(f) Accounts Receivable, net.    Accounts receivable represent the amounts that the Company has an unconditional right to consideration when the Company has satisfied its performance obligation. The balance of accounts receivable expected to be collected in 12 months is classified as current assets, while the balance of accounts receivable expected to be collected over 12 months is classified as long-term accounts receivable, net. The Company does not have any contract assets since revenue is recognized when control of the promised goods or services is transferred and the payment from customers is not contingent on a future event. Due to the quota system set by the local government tax authority to manage Value Added Tax (“VAT”), a proportion of accounts receivable are unbilled as of balance sheet date.

Glory Star Group maintains allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debt, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to estimate the allowance. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted and the potential for recovery is considered remote.

(g) Unamortized produced content.    Produced content includes direct production costs, production overhead and acquisition costs and is stated at the lower of unamortized cost or estimated fair value. Produced content also includes cash expenditures made to enter into arrangements with third parties to co-produce certain of its productions.

Glory Star Group uses the individual-film-forecast-computation method and amortizes the produced content based on the ratio of current period actual revenue (numerator) to estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year (denominator) in accordance with ASC 926. Ultimate revenue estimates for the produced content are periodically reviewed and adjustments, if any, will result in prospective changes to amortization rates. When estimates of total revenues and other events or changes in circumstances indicate that a film or television series has a fair value that is less than its unamortized cost, a loss is recognized currently for the amount by which the unamortized cost exceeds the film or television series’ fair value. For the years ended December 31, 2017 and 2018, $5,063 thousand and $16,269 thousand were amortized to the cost of sales, and for the six months ended June 30, 2018 and 2019 (unaudited), $4,847 thousand and $11,123 thousand were amortized to the cost of sales. As of December 31, 2017 and 2018, no impairment allowance was recorded, and as of June 30, 2018 and 2019 (unaudited), $nil and $653 thousand impairment allowance was recorded.

(h) Property and equipment, net.    Property and equipment are stated at cost less accumulated depreciation and depreciated on a straight-line basis over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income/loss in the year of disposition. Estimated useful lives are as follows:

(i) Impairment of Long-lived Assets.    In accordance with ASC Topic 360, Glory Star Group reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. Glory Star Group recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Glory Star Group did not record any impairment charge for the years ended December 31, 2017 and 2018, and six months ended June 30, 2019 (unaudited).

(j) Notes Payable.    Bank acceptance notes payable represents amount due to a bank which is collateralized. The bank acceptance notes payable is secured by Glory Star Group’s restricted cash which is on deposit with the lender. At December 31, 2017 and 2018, and June 30, 2019 (unaudited), Glory Star Group’s bank acceptance notes payable amounted to $459 thousand, $nil and $nil.

(k) Advances from customers.    Advances from customers amounted to $996 thousand, $245 thousand and $437 thousand at December 31, 2017 and 2018, and June 30, 2019 (unaudited), respectively, which represent advance payment received from our customers for merchandise that had not yet been shipped or services that had not yet been provided.

Glory Star Group will recognize the advances as revenue when customers take delivery of the goods and title to the assets is transferred to customers in accordance with Glory Star Group’s revenue recognition policy. When the services are performed, the amounts recorded as advances from customers are recognized as revenue.

(l) Value Added Tax.    Horgos and its China subsidiaries are subject to VAT for providing services and sales of products. The amount of VAT liability is determined by applying the applicable tax rates to the invoiced amount of services provided and sales of products (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Glory Star Group reports revenue net of PRC’s VAT for all of the periods presented in the consolidated statements of operations.

(m) Revenue Recognition.    Glory Star Group early adopted the new revenue standard under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, starting January 1, 2017 using the modified retrospective method for contracts that were not completed as of December 31, 2016. The adoption of this ASC 606 did not have a material impact on Glory Star Group’s consolidated financial statements.

The core principle of this new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

•        Step 1: Identify the contract with the customer

•        Step 2: Identify the performance obligations in the contract

•        Step 3: Determine the transaction price

•        Step 4: Allocate the transaction price to the performance obligations in the contract

•        Step 5: Recognize revenue when the company satisfies a performance obligation

Glory Star Group mainly offers and generates revenue from the copyright licensing of self-produced content, advertising and customized content production and others. Revenue recognition policies are discussed as follows:

(1) Copyright revenue.    Glory Star Group produces TV series featuring lifestyle, culture and fashion, and licenses the copyright of the TV series on an episode basis to the customer for broadcast in a period of time. The series of episode are substantially the same and have the same pattern of transfer to the customer. For the TV series produced by Glory Star Group, the copyright revenue is recognized based on the number of episodes delivered and made available for use by the licensee over the service period. For the TV series produced by Glory Star Group and the co-producers, Glory Star Group requires the customer to pay a variable consideration base on the number and the unit price of valid subsequent broadcasts in the TV series. The copyright revenue is recognized when the valid subsequent broadcasts occurs. The customers are usually required to pay the consideration quarterly after the Company fulfills its performance obligations.

(2) Advertising.    Glory Star Group generates revenue from sales of various forms of advertising on its TV series and streaming content by way of 1) advertisement display, or 2) integration of promotional activities in TV series and content to be broadcasted. Advertising contracts are signed to establish the different contract prices for different advertising scenarios, and advertising period. Glory Star Group receives purchase orders from the customers before the broadcast, which specifies the advertising contents in different scenarios. After broadcast, Glory Star Group would agree the services monthly with its customers through an execution sheet. Where collectability is reasonably assured, revenue is recognized based on the execution sheet on a monthly basis.

Glory Star Group enters into advertising contracts directly with advertisers or third-party advertising agencies that represent advertisers. Payment terms and conditions vary by contract type, and terms include a requirement of payment from 3 to 13 months. In instances where the time length between the transfer of service and the collection of consideration is more than 12 months, Glory Star Group has determined that the advertising contracts generally do not include a significant financing component as the time value of the portion of service with long credit term is insignificant to the whole contract price. Both direct advertisers and third-party advertising agencies are generally billed at the end of the display period and they need Glory Star Group to issue VAT invoices to make their payment.

However, because the local government tax authority uses a quota system to manage the VAT tax, it normally either delays the VAT invoices issued or does not issue sufficient VAT invoices. As such, Glory Star Group is not able to provide sufficient VAT invoices on a timely manner and piles in increased account receivables. The accounts receivable unexpected to be collected in 12 months are classified as long-term.

(3) Customized content production revenue.    Glory Star Group produces customized short streaming videos according to its customers’ requirement, and earns fixed fees based on delivery. Revenue is recognized upon the delivery of short streaming videos.

(4) Other Revenues.    Other revenue primarily consists of copyrights trading of purchased TV-series and the sales of products on the Taobao platform. For copyright licensing of purchased TV-series, Glory Star Group recognizes revenue on a net basis at a point of time upon the delivery of master tape and authorization of broadcasting rights. For sales of product, Glory Star Group recognizes revenue upon the transfer of products according to the fixed price and production amount in sales orders.

The following table identifies the disaggregation of Glory Star Group’s revenue for the years ended December 31, 2017 and 2018, respectfully, and for the six months ended June 30, 2018 and 2019 (unaudited), respectively: