GLORY STAR NEW MEDIA GROUP HOLDINGS Ltd (Form: 8-K, Received: 02/21/2020 17:30:19)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 14, 2020

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

(Exact name of registrant as specified in our charter)

Cayman Islands

001-38631

N/A

(State or Other Jurisdiction
of Incorporation)

(Commission
File Number)

(IRS Employer

Identification No.)

22F, Block B, Xinhua Technology Building, No. 8 Tuofangying South Road, Jiuxianqiao, Chaoyang District, Beijing, China		100016
(Address of Principal Executive Offices)		(Zip Code)

+86-138-1035-5988

(Registrant’s telephone number, including area code)

TKK Symphony Acquisition Corporation

c/o Texas Kang Kai Capital Management (Hong Kong) Limited

2039, 2/F United Center,

95 Queensway Admiralty, Hong Kong

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, par value $0.0001 per share	GSMG	The NASDAQ Stock Market LLC
Warrants, each exercisable for one-half of one Ordinary Share	GSMGW	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our 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:

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future operating or financial results;

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

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future acquisitions, business strategy and expected capital spending;

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assumptions regarding interest rates and inflation;

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

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ability to manage our growth;

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fluctuations in general economic and business conditions;

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

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estimated future capital expenditures needed to preserve our capital base;

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the ability to meet the Nasdaq listing standards, including having the requisite number of shareholders, and the potential delisting of our securities from Nasdaq;

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potential changes in the legislative and regulatory environments;

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a lower return on investment;

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potential volatility in the market price of our securities; and

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other factors discussed in “Risk Factors.”

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and file as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

USE OF CERTAIN DEFINITIONS

Except where the context otherwise requires and for the purposes of this report only:

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“we,” “us,” “our,” or the “Company,” means the combined business of GS Holdings and the Glory Star Group;

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“Memorandum and Articles of Association” means GS Holdings Second Amended and Restated Memorandum and Articles of Association, as further amended and in effect on the date hereof;

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

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

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

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

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“Glory Star Group” means Glory Star together with our consolidated subsidiaries and VIEs;

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

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

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

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“Nasdaq” means the Nasdaq Capital Market;

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

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

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

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

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

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

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“Sellers” means the shareholders of Glory Star;

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“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 TKK, Glory Star, WFOE, Xing Cui Can, Horgos, each of the Sellers, the Purchaser Representative, and the Seller Representative.

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

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“TKK” means our predecessor TKK Symphony Acquisition Corporation;

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“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 benefit 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;

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“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);

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“VIEs” means Xing Cui Can and Horgos, our variable interest entities;

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“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

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

Item 1.01

Entry into a Material Definitive Agreement.

The disclosure in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.

In connection with the Business Combination, on February 14, 2020, we entered into a Business Combination Marketing Agreement Fee Amendment (“Fee Amendment”) EarlyBirdCapital, Inc. (“EBC”) whereby EBC agreed to amend the fees payable under the Business Combination Marketing Agreement, dated August 15, 2018, by and between EBC and TKK (“Original Marketing Agreement”). Under the Original Marketing Agreement, EBC agreed to assist TKK in connection with TKK’s business combination with one or more businesses or entities in exchange for a cash fee equal to 3.5% of the gross proceeds received in the IPO. In addition, TKK agreed to reimburse EBC for up to $20,000 of its reasonable costs and expenses incurred by it. Under the Fee Amendment, EBC agreed to reduce its fee of $8.8 million due under the Original Agreement and forgo reimbursement of expenses in exchange for a convertible promissory note in the amount of $4.0 million without interest (“EBC Note”). The EBC Note is for a period of one year and is convertible, at EBC’s option, into our ordinary shares at the conversion price equal to the volume-weighted average price of our ordinary shares on Nasdaq or such other securities exchange or securities market on which our ordinary shares are then listed or quoted, for the ten trading days prior to such conversion date; provided, however, the conversion price shall not be less than $5.00 (the “Floor Price”). The EBC Note automatically converts into our ordinary shares on the maturity date.

The EBC Note includes a covenant that we will use our best efforts to register the shares issuable under the EBC Note pursuant to a registration statement with the SEC as soon as practicable, and obtain effectiveness of such registration statement with 180 calendar days from the date of the EBC Note (“Effectiveness Deadline”). In the event such registration statement is not effective by the Effectiveness Deadline, the Floor Price shall automatically decrease to $4.00, and by one dollar ($1.00) for every 30-day period thereafter; provided, however, the Floor Price shall not be less than $1.00.

On February 14, 2020, we entered into an amended and restated promissory note with the Sponsor (the “Amended Sponsor Note”) to extend the maturity date from the closing of the Business Combination to a date that is one year from the closing of the Business Combination. In addition, under the Amended Sponsor Note, we granted the Sponsor the right to convert the $1.4 million Amended Sponsor Note to our ordinary shares at the conversion price equal to the volume-weighted average price of our ordinary shares on Nasdaq or such other securities exchange or securities market on which our ordinary shares are then listed or quoted, for the ten trading days prior to such conversion date; provided, however, the conversion price shall not be less than $5.00. The Amended Sponsor Note automatically converts into our ordinary shares on the maturity date.

The foregoing description of the terms of the Fee Amendment, EBC Note, and Amended Sponsor Note do not purport to be complete and are qualified in their entirety by reference to the full text of the respective agreements, copies of which are file hereto as Exhibits 10.6, 10.7, and 10.8.

Item 2.01.

Completion of Acquisition or Disposition of Assets.

On February 14, 2020, our predecessor, TKK Symphony Acquisition Corporation (“TKK”) consummated the transaction (the “Business Combination”) contemplated by the Share Exchange Agreement dated as of September 6, 2019, as amended ( “Share Exchange Agreement”), by and among TKK, Glory Star New Media Group Limited, a Cayman Islands exempted company (“Glory Star”), Glory Star New Media (Beijing) Technology Co., Ltd., a wholly foreign-owned enterprise limited liability company (“WFOE”) incorporated in the People’s Republic of China (“PRC”) and indirectly wholly-owned by Glory Star, Xing Cui Can International Media (Beijing) Co., Ltd., a limited liability company incorporated in the PRC (“Xing Cui Can”), Horgos Glory Star Media Co., Ltd., a limited liability company incorporated in the PRC (“Horgos”), each of Glory Star’s shareholders (collectively, the “Sellers”), TKK Symphony Sponsor 1, TKK’s sponsor (the “Sponsor”), in the capacity as the representative from and after the closing of the Business Combination for TKK’s shareholders other than the Sellers, and Bing Zhang, in the capacity as the representative for the Sellers thereunder, pursuant to which Glory Star New Media Group Holdings Limited (“GS Holdings”) acquired 100% of the equity interests of Glory Star from the Sellers.

Upon closing of the Business Combination (the “Closing”), we acquired all of the issued and outstanding securities of Glory Star in exchange for (i) approximately 41,204,025 of our ordinary shares (“Closing Payment Shares”), or one ordinary share for approximately 0.04854 outstanding shares of Glory Star, of which 2,060,201 of the Closing Payment Shares (the “Escrow Shares”) shall be deposited into escrow to secure certain indemnification obligations of the Sellers, plus (ii) earnout payments consisting of up to an additional 5,000,000 of our ordinary shares if we meet certain financial performance targets for the 2019 fiscal year and an additional 5,000,000 of our ordinary shares if we meet certain financial performance targets for the 2020 fiscal year (the “Earnout Shares”). In the event that a financial performance target is not met for the 2019 fiscal year and/or 2020 fiscal year but we meet certain financial performance targets for the 2019 fiscal year and 2020 fiscal year combined, the Sellers will be entitled to receive any Earnout Shares that they otherwise did not receive (the “Alternative Earnout”).

In connection with the Share Exchange Agreement:

TKK entered into a Registration Rights Agreement (“Registration Rights Agreement”) with the Sponsor and the Sellers pursuant to which TKK will grant certain registration rights to the Sellers with respect to the registration of the Closing Payment Shares and Earnout Shares.

TKK entered into a Lock-Up Agreement (“Lock-Up Agreement”) with certain Sellers that directly or indirectly own in excess of 10% of Glory Star Group equity prior to the Closing pursuant to which each Seller party thereto agreed that such Seller will not, during the period from the Closing and ending on the earlier of (i) with respect to 50% of the Closing Payment Shares (including Escrow Shares) and Earnout Shares (“Restricted Securities”), (x) the six month anniversary of the date of the Closing, (y) the date on which the Closing sale price of our ordinary shares equals or exceeds $12.50 per share for any 20 trading days within any 30 trading day period commencing after the Closing, and (z) the date after the Closing on which we consummate a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party (a “Subsequent Transaction”), and (ii) with respect to the remaining 50% of the Restricted Securities, (x) the one year anniversary of the date of the Closing and (y) the date after the Closing on which we consummate a Subsequent Transaction, sell, transfer, assign, pledge, hypothecate or otherwise dispose of, directly or indirectly, the Restricted Securities, or publicly disclose the intention to do any of the 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 our Restricted Securities (other than the Escrow Shares while they are held in the escrow account) by gift, will or intestate succession or to any affiliate, shareholder, members, party or trust beneficiary, provided in each such case that the transferee thereof agrees to be bound by the restrictions set forth in the applicable Lock-Up Agreement.

TKK entered into a Non-Competition and Non-Solicitation Agreement (“Non-Competition Agreement”) with certain Sellers that directly or indirectly own in excess of 30% of Glory Star’s equity prior to the Closing (including Glory Star Group’s chairman) and their principal shareholders (together with the applicable Seller, the “Subject Parties”). Under the Non-Competition Agreements, for a period of three (3) years after the Closing, each Subject Party and our affiliates will not, without our prior written consent, anywhere in the PRC or any other markets directly or indirectly engage in which we are engaged, or are actively contemplating to become engaged, in the Business (as defined below) (or own, manage, finance or control, or become engaged or serve as an officer, director, employee, member, partner, agent, consultant, advisor or representative of, an entity that engages in) of online media and entertainment services (collectively, the “Business”). However, the Subject Parties and their respective affiliates may own passive investments of no more than 3% of any class of outstanding equity interests in a competitor that is publicly traded, so long as the Subject Parties and their affiliates and their respective directors, officers, managers and employees who were involved with the our business, and the immediate family members of the Subject Parties or their respective affiliates, are not involved in the management or control of such competitor. Under the Non-Competition Agreements, during such restricted period, the Subject Parties also will not, without our prior written consent, (i) solicit or hire our employees, consultants or independent contractors as of the Closing (or during the year prior to the Closing) or otherwise interfere with our relationships with such persons, (ii) solicit or divert the our customers as of the Closing (or during the year prior to the Closing) relating to the Business or otherwise interfere with our contractual relationships with such persons, or (iii) interfere with or disrupt any of our vendors, suppliers, distributors, agents or other service providers for a purpose competitive with us as it relates to the Business. The Subject Parties will also agree in each Non-Competition Agreement to not disparage us and to keep confidential and not use our confidential information.

Immediately after the Business Combination, our public shareholders own approximately 5.05% of GS Holdings, TKK’s former directors, officers and initial shareholders, including the Sponsor, and EBC own approximately 12.16% of GS Holdings, and the Sellers own approximately 82.79% of GS Holdings.

After given effect to the Business Combination transaction and the issuance of the Closing Payment Shares described above, there are 49,767,866 of our ordinary shares issued and outstanding.

The Share Exchange Agreement is described more fully in the sections entitled “The Business Combination” and “The Share Exchange Agreement” beginning on pages 87 and 98, respectively, of the Company’s Second Amended and Restated Offer to Purchase (the “Offer to Purchase”), filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 99.(A)(1)(D) to its Schedule TO (Amendment No. 7) dated January 3, 2020. The foregoing description of the terms of the Share Exchange Agreement is qualified in our entirety by reference to the provisions of the Share Exchange Agreement, Registration Rights Agreement, Lock-Up Agreement, and Non-Competition Agreement filed as Exhibits10.2, 10.3, 10.4 and 10.5 to this Current Report on Form 8-K, which are incorporated herein by reference.

FORM 10 INFORMATION

Pursuant to Item 2.01(f) of Form 8-K, if the registrant was a shell company, as we were immediately before the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing registration statement on Form 10. Therefore, we are providing below the information that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the acquisition of Glory Star pursuant to the Business Combination, except that information relating to periods prior to the date of the Closing only relate to Glory Star unless otherwise specifically indicated or the context otherwise requires. Reference to dollar amounts in this Form 8-K shall mean United States Dollars.

BUSINESS

The business of the Company is described in the Offer to Purchase in the section entitled “Information about the TKK and Glory Star Group – Information about Glory Star Group ,” beginning on page 52, “Organization Structure,” beginning on page 64, and “Government Regulations,” beginning on page 68, each of which is incorporated herein by reference.

In addition, on October 26, 2018, Messrs. Bing Zhang, Ran Zhang and Jia Lu, management of Horgos, acquired 51% of the equity interest from Lead Eastern Investment Co., Ltd. (“Dangdai Dongfang”) in a management buy-out for RMB39.4 million ($6.0 million) based on the then net asset value of Horgos (“MBO”). Prior to the MBO, Dangdai Dongfang was the largest shareholder of Horgos, and wanted Horgos to focus on traditional advertising and the production of content for the cable TV networks, the business of Horgos at that time. However, the management of Horgos wanted to expand and transform Horgos into an online media and e-commerce company which is what the Glory Star Group is today. However, at that time, Dangdai Dongfang did not wish to make the additional investments into Horgos’ new business and was in fact looking to liquidate its holdings in Horgos because of its own financial troubles at that time. Immediately following the closing of the MBO, Dangdai Dongfang ceased to be a shareholder of Horgos and Mr. Bing Zhang, directly and indirectly through Xing Cui Can, became the controlling shareholders of Horgos, holding 72.58% of the equity interest in Horgos.

RISK FACTORS

The risks associated with the business of the Offer to Purchase in the section entitled “Risk Factors,” beginning on page 13, which is incorporated herein by reference.

We face risks related to the Coronarvirus and health epidemics and other outbreaks, which could significantly disrupt our operations.

Our business could be adversely affected by the effects of the Coronavirus and other epidemics that may hit China. In response to the highly contagious and sometimes fatal Coronavirus inflicting thousands of people in China, the Chinese government has imposed travel restrictions and quarantines to help control the spread of the Coronavirusa. Our corporate headquarters and operations are located in China where an outbreak of the Coronavirus has caused a disruption to our businesses. In addition, substantially all of our users and third-party merchants for our e-Mall platform are located in China. If the Coronavirus continues to spread, the Chinese government may impose additional measures further restricting travel within and outside of China and expanding the regions under quarantine, which could have an impact on our business and results of operations.

The Coronavirus outbreak has caused delays in the review of our unaudited financial statements.

Due to the widespread travel restrictions and government imposed quarantines to help control the spread of the Coronavirus, we were unable to complete a review of our unaudited financial statements for the interim period ending September 30, 2019. Consequently, although our interim financial statement for the period ending September 30, 2019, included in this Form 8-K are not required to be reviewed by our independent accountants because they are not being filed on Form 10-Q, we have included them in this Form 8-K without a completed review by our independent accountants.

FINANCIAL INFORMATION

Reference is made to the disclosure set forth in Section 9.01 of this Current Report on Form 8-K.

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations Of Glory Star Group

The management’s discussion and analysis of financial conditions and results of operations for Glory Star Group for the years ended December 31, 2018 and 2017 is described in the Offer to Purchase in the section entitled “Management’s Discussion and Analysis of Financial Condition And Results of Operations of Glory Star Group” beginning on page 127, which is incorporated herein by reference.

Recent Developments

On October 31, 2019, Leshare Star (Beijing) Technology Co, Ltd. (“Leshare Beijing”) entered into an Annual Framework Contract for Video Production with Guangxi JD Xinjie E-commerce Co., Ltd. (“JD”) where Leshare Beijing will provide creative video shooting and production services for JD. The contract will start from October 31, 2019 to October 30, 2020.

Results of Operations

Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2018 and 2019 (unaudited)

The following table summarizes our historical unaudited consolidated statements of operations data:

(in thousands, except for percentages)
	For the nine months ended September 30,
	2018				2019						Change
	USD		%		USD			%			Amount			%
	(unaudited)
Revenues:		38,698		100		51,083			100			12,385			32.00
Operating expenses:
Cost of Revenue		26,213		67.74		28,301			55.40			2,088			7.97
Selling and marketing		2,290		5.92		2,053			4.02			(237	)		(10.35	)
General and administrative		1,333		3.44		1,225			2.40			(108	)		(8.10	)
Research and development expense		447		1.16		225			0.44			(222	)		(49.66	)
Total operating expense		30,283		78.25		31,804			62.26			1,521			5.02

Income from operations		8,415		21.75		19,279			37.74			10,864			129.10

Total other expenses, net		294		0.76		338			0.66			44			14.97
Income before income taxes		8,121		20.99		18,941			37.08			10,820			133.23
Income tax benefit (expense)		113		0.29		(316	)		(0.62	)		(429	)		(379.65	)
Net income		8,234		21.28		18,625			36.46			10,391			126.20
Net income attributable to Glory Star New Media Group Limited’s shareholders		7,983		20.63		18,915			37.03			10,932			136.94

Revenues

Glory Star Group primarily has four broad categories of revenues: copyright licensing, advertising, customized content production and CHEERS e-Mall market service.

Glory Star Group’s revenues for the nine months ended September 30, 2018 and 2019 were $38,698 thousand and $51,083 thousand, respectively. The primary increase in revenues were driven by following factors: (1) successful development of self-owned mobile CHEERS that allows its users to access its online video content, live shows, online games and shopping. Benefiting from the explosive growth of live shows, it attracts numerous active users to provide a platform for more advertisers; (2) outspread short video production. Glory Star Group enhanced the production ability to provide flexible content tailored to various customers’ demands, as well as implanting advertisements suitable for the video scenarios; (3) more premium network drama. Glory Star Group cooperated with experienced producers to develop network dramas which were greatly recognized by the audience, gaining wide popularity.

Operating expenses

Operating expenses consists of cost or revenues, selling and marketing, general and administrative and research and development expense.

Cost of revenues consists primarily of production cost of TV series, short stream video and network drama, labour cost and related benefits and payments to various channel owners for broadcast. Glory Star Group’s cost of revenues increased by $2,088 thousand, or 7.97%, to $28,301 thousand for the nine months ended September 30, 2019 from $26,213 thousand for nine months ended September 30, 2018, mainly attributed by the increase of production cost offset by the decrease of expenditure on the payments to various channel owners for broadcast, as it significantly invest efforts to enhanced its production of live shows, short videos and network dramas which in turn inherently provide its platform to publish advertisements.

Glory Star Group’s sales and marketing expenses primarily consist of salaries and benefits of sales department, advertising fee travelling expense and incentive expense. Glory Star Group’s sales and marketing expenses decreased by $237 thousand, or 10.35% to $2,053 thousand for the nine months ended September 30, 2019 from $2,290 thousand for the nine months ended September 30, 2018. Such decrease was primarily due to the lower advertising fee as Glory Star Group could promote and maintain its brand name by self-owned platform or content and reduced dependency on other advertisement, offset by the increased incentive expense used in the coupons provided for CHEERS e-mall’s promotion.

Glory Star Group’s general and administrative expenses consist primarily of salaries and benefits of members of its management and bad debt provision expense for accounts receivable and professional service fees. Glory Star Group’s general and administrative expenses decreased by $108 thousand, or 8.10%, to $1,225 thousand for the nine months ended September 30, 2019 from $1,333 thousand for the nine months ended September 30, 2018. Such decrease mainly consists of the decrease of allowance for doubtful accounts, which due to the collection of accounts receivable that has been provided allowance in prior years, and partially offset by the increase of professional service.

Glory Star Group’s research and development expenses consist primarily of salaries and benefits for its research and development department. Research and development expenses decreased by $222 thousand, or 49.66%, to $225 thousand for the nine months ended September 30, 2019 from $447 thousand for the nine months ended September 30, 2018. Such decrease was mainly due to a software developing expense which only occurred during the nine months ended September 30, 2018.

Other expense, net

Other net expenses primarily consist of interest expense, net of $294 thousand and $338 thousand for the nine months ended September 30, 2018 and 2019, respectively.

Net Income

Net income for the nine months ended September 30, 2018 and 2019, were $8,234 thousand and $18,625 thousand. Glory Star Group’s increase rate of net income exceeded its increase rate of revenue as it raised its gross profit margin of advertising service by making use of its own platform and decreasing payments to various channel owners for broadcasting.

Liquidity and Capital Resources

As of September 30, 2019, Glory Star Group’s principal sources of liquidity were cash of approximately $3,969 thousand. Working capital at September 30, 2019 was $35,478 thousand. Glory Star Group believes its existing cash and working capital will be sufficient to meet its working capital and capital expenditures needs over at least the next 12 months.

All of Glory Star Group’s cash and cash equivalents as of September 30, 2019 were held in China, of which all denominated in Renminbi. In addition, Glory Star is a holding company with no material operations of its own. Glory Star conducts its operations primarily through its subsidiaries and VIEs in China. As a result, Glory Star’s ability to pay dividends depends upon dividends paid by Glory Star’s wholly-owned subsidiaries. In addition, Glory Star’s WFOE is permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, Glory Star’s WFOE and each of its consolidated entities is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the SAFE. Glory Star currently plans to reinvest all earnings from its WFOE to business development and does not plan to request dividend distributions from the WFOE.

Glory Star believes that its working capital is at a positive position and is sufficient to meet its operation requirement in the next 12 months. It is primarily contributed from (1) Glory Star Group’s current position of cash and cash equivalents, (2) cash flows provided by operating activities, and (3) net proceeds from this business combination.

If Glory Star experiences an adverse operating environment or incurred anticipated capital expenditure requirement, or if Glory Star accelerate its growth, then additional financing may be required. No assurance can be given, however, that the additional financing, if required, would be on favourable terms or available at all. Such financing may include the use of additional debt or the sale or additional securities. Any financing, which involves the sale of equity securities or instruments that are convertible into equity securities, could result in immediate and possibly significant dilutions to Glory Star’s existing shareholders.

Cash Flows

The following table summarizes Glory Star Group’s cash flows for the periods indicated:

	Nine months Ended September 30, (unaudited)
	2018			2019
	(USD in the thousands)
Net cash (used in) provided by operating activities		(11,125	)		6,553
Net cash used in investing activities		(104	)		(40	)
Net cash provided by (used in) financing activities		8,157			(4,809	)
Effect of foreign exchange rates		(103	)		(172	)
Net (decrease) increase in cash and cash equivalents		(3,175	)		1,532

Glory Star Group primarily funded its operations from its net revenues, and for the nine months ended September 30, 2019, it has funded its operations from net revenues and contribution from its shareholders. During the past two fiscal years, Glory Star Group’s account receivables have increased and it has had to supplement its cash flow through short-term borrowing. Glory Star Group intends to focus on more timely collections of account receivable which should enhance its cash flows. Glory Star Group does not anticipate any major purchases in the future. To enhance its proposed growth, Glory Star Group anticipates raising capital through the issuance of equity.

Operating Activities

Net cash used in operating activities was $11,125 thousand for the nine months ended September 30, 2018 (unaudited). This consisted primarily of net income of $8,234 thousand, a decrease of long-term accounts receivable of $4,204 thousand, an increase of accounts payable of $6,171 thousand and an increase of accrued liabilities and other payables of $1,124 thousand; offset an increase of accounts receivable in the amount of $27,010 thousand and an increase of unamortized produced content in the amount of $3,943 thousand.

Net cash provided by operating activities was $6,553 thousand for the nine months ended September 30, 2019 (unaudited). This consisted primarily of net income of $18,625 thousand, and a decrease of prepaid expense of $3,254 thousand, a decrease of long-term accounts receivable of $3,715 thousand, a decrease of unamortized produced content of $2,919 thousand and an increase of accounts payable of $3,976 thousand; partially offset by an increase of accounts receivable in the amount of $10,310 thousand, and an increase of long-term prepayment in the amount of $15,470 thousand paid to a third-party software developer to develop and maintain CHEERS APP.

Investing Activities

Net cash used in investing activities was $104 thousand and $40 thousand for the nine months ended September 30, 2018 and 2019(unaudited) respectively, which was derived from the purchases of equipment.

Financing Activities

Net cash provided by financing activities was $8,157 thousand for the nine months ended September 30, 2018 (unaudited), consisted of $9,257 thousand from short-term bank loans and $265 thousand from Glory Star Group non-controlling shareholders’ contribution, offset by the repayment to related parties of $1,365 thousand.

Net cash used in financing activities was $4,809 thousand for the nine months ended September 30, 2019 (unaudited), consisted of the repayments of bank loans of $7,342 thousand and the repayment of amount due to a former shareholder of $294 thousand; offset by the capital contribution of $2,973 thousand from Glory Star Group controlling shareholder, Mr. Bing Zhang, and proceeds from a related party of $734 thousand.

Off-Balance Sheet Arrangements

Glory Star Group did not have during the periods presented, and it does not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

PROPERTIES

The facilities of the Company is described in the Offer to Purchase in the section entitled “Information about the TKK and Glory Star Group - Facilities,” beginning on page 61, which is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 18, 2020:

●

each person known to us to own beneficially more than 5% of our ordinary shares;

●

each of our current executive officers and directors; and

●

each of our directors and executive officers as a group.

As of February 18, 2020, we had a total of 49,767,866 ordinary shares outstanding.

Name and Address⁽¹⁾	Number of Shares Beneficially Owned		Percentage of Ownership
Bing Zhang⁽²⁾		15,219,963		30.58	%
Jia Lu⁽³⁾		5,274,116		10.60	%
Ran Zhang⁽⁴⁾		1,648,161		3.31	%
Joanne Ng		75,000		*
Ming Shu Leung		0		*
Yong Li		0		*
Ian Lee		35,000		*
Happy Starlight Limited⁽²⁾		15,219,963		30.58	%
Sing Wang⁽⁵⁾		5,583,255		11.19	%
TKK Symphony Sponsor⁽⁵⁾		5,583,255		11.19	%
Enjoy Starlight Limited⁽³⁾		5,274,116		10.60	%
Fashion Starlight Limited⁽⁴⁾		1,648,161		3.31	%
Australia Eastern Investment PTY LTD		3,535,305		7.10	%
Rich Starlight Limited		2,998,644		6.23	%
Wealth Starlight Limited		2,936,158		5.90	%
All directors and executive officers as a group (6 individuals)		22,252,240		44.71	%

Less than 1%

(1)

Unless otherwise indicated, the business address of each of the individuals is 22nd Floor, Block B, Xinhua Technology Building, No. 8 Tuofangying Road, Chaoyang District, Beijing, China.

(2)

Mr. Bing Zhang is the director and chief executive officer of Glory Star. Mr. Zhang is sole shareholder and director of Happy Starlight Limited, which holds 30.58% of our ordinary shares.

(3)

Mr. Jia Lu is the director and senior vice president of Glory Star Media (Beijing) Co., Ltd. Mr. Lu is the sole shareholder and a director of Enjoy Starlight Limited, which holds 10.60% of our ordinary shares.

(4)

Ms. Ran Zhang is the director and Supervisor of Glory Star Media (Beijing) Co., Ltd., the director of Horgos Glory Star Media Co., Ltd., vice president (in charge of distribution/channels/publicity/chief editor’s office) of Glory Star Media (Beijing) Co., Ltd, and the supervisor of Xing Cui Can and Leshare Star (Beijing) Technology Co., Ltd. Ms. Zhang is the sole shareholder and a director of Fashion Starlight Limited, which holds 3.58% of our ordinary shares.

(5)

Includes 137,255 ordinary shares that are issuable upon conversion of the Amended Sponsor Note assuming the 10 days volume weighted average price of $10.20. Sing Wang indirectly owns 100% of the equity interest of the Sponsor. He is the sole owner of China Capital Advisors Corporation, which is the sole owner of Texas Kang Kai Capital Partners. Texas Kang Kai Capital Partners owns 100% of the equity interest of TKK Capital Holding, the sole member of the Sponsor. Consequently, Sing Wang may be deemed the beneficial owner of the shares held by the Sponsor and has sole voting and dispositive control over such securities. Mr. Wang disclaims beneficial ownership of any shares other than to the extent he may have an interest therein, directly or indirectly. The business address is c/o Texas Kang Kai Capital Management (Hong Kong) Limited, 2039, 2/F United Center, 95 Queensway, Admiralty, Hong Kong.

DIRECTORS AND EXECUTIVE OFFICERS

Identification of Directors, Executive Officers and Significant Employees

The following table set forth the names and ages as of our current directors, executive officers and significant employees immediately after the closing of the Business Combination. There are no family relationships among directors and executive officers.

Name	Age	Position
Bing Zhang	52	Director (Chairman) and Chief Executive Officer
Jia Lu	39	Director and Senior Vice President of Glory Star Media (Beijing) Co., Ltd.
Joanne Ng	31	Director
Ming Shu Leung	45	Director
Yong Li	50	Director
Ian Lee	49	Chief Financial Officer
Ran Zhang	39	Director and Vice President (in charge of distribution/channels/publicity/chief editor’s office), Supervisor of Glory Star Media (Beijing) Co., Ltd.

The address and telephone number of each director and executive officer of the Company is: 22F, Block B, Xinhua Technology Building, No. 8 Tuofangying South Road, Jiuxianqiao, Chaoyang District, Beijing, China 100016 (Tel: +86-138-1035-5988).

Business Experience

Mr. Bing Zhang became our chairman, director and chief executive officer in February 2020. Mr. Zhang is the sole director and chairman of GS Holdings since 2019. 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”, “Moring 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.

Mr. Jia Lu became our director in February 2020. Mr. Lu is a director and senior vice president 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.

Ms. Joanne Ng Director became our independent director in February 2020. Prior to serving as our independent director, Ms. Ng served as TKK’s senior director of business development since inception. Since January 2013, Ms. Ng has served as a Director of Investments at Omer Capital, her own single family office based in Hong Kong, where she manages an auxiliary early-stage fund specializing in technology and financial technology, with investments across China, Taiwan, the United Kingdom, and North America. She has also served as advisor to numerous privately-held Chinese technology ventures. From March 2010 to November 2012, Ms. Ng was with the Investment Banking Department of Bank of America Merrill Lynch. She has a wealth of transaction experience in the financial institutions sector, including, most notably, DBS Bank’s $4.9 billion acquisition of Bank Danamon, the largest ever Indonesia FIG M&A at the time; Tokyo Stock Exchange’s $1.1 billion merger with Osaka Securities Exchange; and Bank Mandiri’s $1.3 billion rights offering, awarded by The Asset as “Asia Pacific’s Best Secondary Offering” in 2011. Ms. Ng holds a Bachelor degree in International Business and Global Management from the University of Hong Kong.

Mr. Ming Shu Leung became our independent director in February 2020. Mr. Leung founded internet private equity fund Harmony Capital as the founding partner on January 2018. Mr. Leung has been the company secretary of China ITS (Holdings) Co., Ltd. (中國智能交通系統(控股)有限公司) (a company listed on the Hong Kong Stock Exchange, with stock code: 1900) since January 2008 and the chief financial officer of this company from January 2008 to January 2018. He has also been an independent non-executive director of Comtec Solar Systems Group Limited (卡姆丹克太陽能系統集團有限公司) (a company listed on the Hong Kong Stock Exchange, with stock code: 712) since June 2008, an independent non-executive director of Sun.King Power Electronics Group Limited (a company listed on the Hong Kong Stock Exchange, with stock code: 580) since March 2017, and an independent non-executive director of Cabbeen Fashion Limited (卡賓服飾有限公司) (a company listed on the Hong Kong Stock Exchange, with stock code: 2030) since February 2013.Mr. Leung has over 15 years of experience in the areas of corporate finance and accounting. Mr. Leung started his professional career at PricewaterhouseCoopers in Hong Kong as an auditor in 1998, where he was responsible for performing statutory audit work on listed companies in Hong Kong. He then worked at the global corporate finance division of Arthur Andersen & Co. in Hong Kong, which subsequently merged with PricewaterhouseCoopers, until December 2000, where he was responsible for conducting financial advisory services for government bodies and corporate clients. Mr. Leung then spent approximately three years from February 2003 to January 2006 at CDC Corporation, a NASDAQ listed company, as a senior manager in the mergers and acquisitions department, and as the chief financial officer of China.com Inc. (a company listed on the Hong Kong Stock Exchange, where he was responsible for overseeing the entire finance operations, mergers & acquisitions, investors relationship, and other capital market activities of that company.Mr. Leung obtained his bachelor degree in arts with first class honors in accountancy from the City University of Hong Kong in November 1998 and a master degree in accountancy from the Chinese University of Hong Kong in November 2001. He was admitted as a fellow member of the Association of Chartered Certified Accountants in February 2007 and a fellow member of the Hong Kong Institute of Certified Public Accountants in June 2010.

Mr. Yong Li became our independent director in February 2020. Mr. Li is the deputy director of Intelligent Communication Commission of China TV Artists Association (CTAA), Partner of Chengmei Capital and Chairman of Guyuan Culture since June 2019. From 2014 to 2018, Mr. Li served as Chief Inspector/General Manager of Dragon TV Center, Oriental Entertainment Media Group Co., Ltd. From 2011 to 2014, Mr. Li served as the general manager of Shanghai New Media & Entertainment Co. LTD. In addition, Mr. Li was the first to launch “independent producer system” in Shanghai, which has significantly promoted the development of China’s entertainment and media industry. Mr. Li holds a master degree in business from China Europe International Business School in 2006 and a Bachelor of Art in Journalism from Communication University of China in 1991.

Mr. Ian Lee became our chief financial officer in February 2020. Prior to serving as our chief financial officer, Mr. Li served as TKK’s chief financial officer since inception and a TKK’s director since August 15, 2018. Since January 2018, Mr. Lee has been serving as the Chief Financial Officer of TKK Capital. Mr. Lee was Chief Financial Officer and Operating Partner of Evolution Media China from May 2016 to January 2018. During his tenure at Evolution Media China, Mr. Lee worked closely with and reported directly to Mr. Sing Wang, who served as Executive Chairman of Evolution Media China. From August 2014 to April 2016, Mr. Lee was Chief Financial Officer of TPG’s two RMB funds, Shanghai and Chongqing. From February 2013 to December 2013, he served as Chief Operating Officer of DMG (SZSE: 2143), a Chinese entertainment and communication company. From February 2012 to February 2013, Mr. Lee was a Consultant for 3R Group, an advertising and marketing company in China. From April 2005 to January 2012, Mr. Lee was with Omnicom Media Group, part of Omnicom Group (NYSE: OMC), a global advertising, marketing and corporate communications company, serving as Finance Director, Chief Financial Officer and President & Chief Operating Officer of China. From 1998 to 2004, Mr. Lee was with News Corp/21st Century Fox, where he spent seven years in the Sydney, Beijing, Shanghai and Hong Kong offices in various positions, including Vice President of STAR China, News Corp’s China Operation, and Finance Director of ChinaByte, a joint venture between People’s Daily and News Corp. Mr. Lee holds a Master of Management from University of Technology, Sydney, Australia and a Bachelor degree in Genetics from Sichuan University, China. We believe Mr. Lee is well-qualified to serve as a member of the Board because of his significant leadership experience and extensive knowledge and experience in the U.S. and China capital markets.

Ms. Ran 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.

Corporate Governance

Number and Terms of Office of Officers and Directors

Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of shareholders) serving a three-year term. The term of office for Class A directors, consisting of Ms. Ng will expire at our 2020 annual meeting of shareholders. The term of office of the Class B directors, consisting of Messrs. Jia Lu and Yong Li, will expire at the 2021 annual meeting of shareholders and the term of office of the Class C directors, consisting of Messrs. Bing and Leung, will expire at the 2022 annual meeting of shareholders.

Our officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our memorandum and articles of association as it deems appropriate. Our memorandum and articles of association provide that our officers may consist of a Chief Executive Officer, President, Chief Financial Officer, Vice Presidents, Secretary, Assistant Secretaries, Treasurer and such other offices as may be determined by the board of directors.

Director Independence

Currently, each of Messrs. Ming Shu Leung and Yong Li, and Ms. Joanne Ng would be considered an “independent director” under the NASDAQ listing rules, which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our independent directors will have regularly scheduled meetings at which only independent directors are present.

Committees of the Board of Directors

Our board of directors has three standing committees: an audit committee, a nominating committee and a compensation committee. Subject to phase-in rules and certain limited exceptions, the rules of NASDAQ and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of NASDAQ require that the compensation committee and nominating committee of a listed company be comprised solely of independent directors.

Audit Committee

We have established an audit committee of the board of directors, which consists of Messrs. Ming Shu Leung and Yong Li, and Ms. Joanne Ng, each of whom is an independent director under NASDAQ’s listing standards. Mr. Leung is the Chairperson of the audit committee.

The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:

●

reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our annual report;

●

discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;

●

discussing with management major risk assessment and risk management policies;

●

monitoring the independence of the independent auditor;

●

verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;

●

reviewing and approving all related-party transactions;

●

inquiring and discussing with management our compliance with applicable laws and regulations;

●

pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;

●

appointing or replacing the independent auditor;

●

determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;

●

establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and

●

approving reimbursement of expenses incurred by our management team in identifying potential target businesses.

Financial Experts on Audit Committee

The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under NASDAQ listing standards. NASDAQ listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.

In addition, we must certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that Messrs. Ming Shu Leung and Yong Li, and Ms. Joanne Ng each qualify as an “audit committee financial expert,” as defined under rules and regulations of the SEC.

Nominating Committee

We have established a nominating committee of the board of directors, which consists of Messrs. Ming Shu Leung and Yong Li, and Ms. Joanne Ng, each of whom is an independent director under NASDAQ’s listing standards. Ms. Ng is the Chairperson of the nominating committee. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others.

Guidelines for Selecting Director Nominees

The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that persons to be nominated:

●

should have demonstrated notable or significant achievements in business, education or public service;

●

should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and

●

should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.

The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.

Compensation Committee

We have established a compensation committee of the board of directors, which consists of Messrs. Ming Shu Leung and Yong Li, and Ms. Joanne Ng, each of whom is an independent director under NASDAQ’s listing standards. Mr. Li is the Chairperson of the compensation committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:

●

reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation;

●

reviewing and approving the compensation of all of our other executive officers;

●

reviewing our executive compensation policies and plans;

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implementing and administering our incentive compensation equity-based remuneration plans;

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assisting management in complying with our proxy statement and annual report disclosure requirements;

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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;

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if required, producing a report on executive compensation to be included in our annual proxy statement; and

●

reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

Board Leadership Structure and Role in Risk Oversight

No policy exists requiring combination or separation of leadership roles and our governing documents do not mandate a particular structure. This has allowed our Board the flexibility to establish the most appropriate structure for the Company at any given time.

The Board is actively involved in overseeing our risk management processes. The Board focuses on our general risk management strategy and ensures that appropriate risk mitigation strategies are implemented by management. Further, operational and strategic presentations by management to the Board include consideration of the challenges and risks of our businesses, and the Board and management actively engage in discussion on these topics. In addition, each of the Board’s committees considers risk within its area of responsibility.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten years, none of our 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.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors and persons who beneficially own more than ten percent of our common stock to file reports of ownership and changes in ownership with the SEC. These reporting persons are also required to furnish us with copies of all Section 16(a) forms they file. Based solely upon a review of such forms, we believe that during the year ended December 31, 2019 there were no delinquent filers.

Compensation committee Interlocks and Insider Participation

None of our officers currently serves, or in the past year has served, as a member of the compensation committee of any entity that has one or more officers serving on our Board of Directors.

Code of Ethics

We have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our Audit Committee Charter, Nominating Committee Charter and Compensation Committee Charter with the SEC and have made it available on our website at wwwr.yaoshixinghui.com. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. Requests for a copy of the Code of Ethics may be made by writing to the Company at Glory Star New Media Group Holdings Limited, 22F, Block B, Xinhua Technology Building, No. 8 Tuofangying South Road, Jiuxianqiao, Chaoyang District, Beijing, China 100016.

EXECUTIVE COMPENSATION

The executive compensation of the Company is described in the Offer to Purchase in the section entitled “Executive Compensation,” beginning on page 82, and “Management of TKK - Executive Compensation,” beginning on page 146, each of which is incorporated herein by reference.

On February 14, 2020, our board of directors approved our 2019 Equity Incentive Plan (“2019 Plan”), which was approved by our shareholders on December 23, 2019. No options have been granted under 2019 Plan.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The certain relationships and related party transactions of the Offer to Purchase in the section entitled “Organization Structure,” beginning on page 64, and in “Certain Relationships and Related Party Transactions,” beginning on page 159, each of which is incorporated herein by reference.

LEGAL PROCEEDINGS

The legal proceeding is described in the Offer to Purchase in the section entitled “Information about TKK and Glory Star Group - Legal Proceedings,” beginning on page 61, which is incorporated herein by reference.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S

COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our ordinary shares and warrants are each listed on the Nasdaq Capital Market under the symbols “TKKS,” and “TKKSW,” respectively. On February 19, 2020, our symbols were changed to “GSMG,” and “GSMGW.” Following the closing of the Business Combination, the Company’s units and rights are no longer traded on the Nasdaq Capital Market under the symbols “TKKSU,” and “TKKSR.”

The table below sets forth the high and low bid prices of our ordinary shares and warrants as reported on the Nasdaq Capital Market for the period from September 12, 2018 (the date on which our ordinary shares and warrants were first quoted on the Nasdaq Capital Market) through December 31, 2019.

	Ordinary Shares				Warrants
	High		Low		High		Low
For the period from January 1, 2020 through February 18, 2020	10.58		9.20		0.09		0.05

Quarter Ended		High		Low		High		Low
December 31, 2019	$	10.30	$	5.50	$	0.09	$	0.03
September 30, 2019	$	10.24	$	10.01	$	0.12	$	0.06
June 30, 2019	$	10.04	$	9.91	$	0.18	$	0.08
March 31, 2019	$	9.92	$	9.81	$	0.20	$	0.12
December 31, 2018	$	9.97	$	9.55	$	0.24	$	0.15
September 30, 2018	$	9.55	$	9.50	$	0.32	$	0.16

Shareholders

The approximate number of record holders of our ordinary shares as of February 18, 2020 was 34.

Dividend Policy

We presently do not expect to declare or pay such dividends in the foreseeable future and expect to reinvest all undistributed earnings to expand our operations, which the management believes would be of the most benefit to our shareholders. The declaration of dividends, if any, will be subject to the discretion of our Board of Directors, which may consider such factors as our results of operations, financial condition, capital needs and acquisition strategy, among others.

DESCRIPTION OF SECURITIES

The information under the heading “Description of Securities” in the Company’s registration statement on Form 8-A, filed with the SEC on August 14, 2018, and as amended on August 15, 2018, is hereby incorporated by reference.

RECENT SALES OF UNREGISTERED SECURITIES

Reference is made to the disclosure set forth under Item 3.02 of this Report, which is incorporated herein by reference.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

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. Our 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.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable.

CHANGES IN CERTIFYING ACCOUNTANT

(a)

Previous Independent Registered Public Accounting Firm

On February 21, 2020, the Board of Directors of Glory Star approved the dismissal of Marcum Bernstein & Pinchuk LLP (“MBP”) as Glory Star’s independent registered public accounting firm. Glory Star does not have a separate audit committee.

The reports of MBP on the Company’s consolidated financial statements for the years ended December 31, 2017 and December 31, 2018 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2017 and December 31, 2018, and through February 21, 2020, there have been no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with MBP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of MBP would have caused MBP to make reference thereto in its reports on the consolidated financial statements for such years. During the years ended December 31, 2017 and December 31, 2018 and through February 21, 2020, there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K) except for the following material weakness which can be found in our discussion in the “Risk Factors”: (i) Glory Star does not currently have a chief financial officer (although currently GS Holdings has now recruited a chief financial officer with US GAAP and SEC reporting experience), (ii) 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 (although 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).

On February 21, 2020, we provided MBP with a copy of this Form 8-K, and requested that MBP furnish us with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements within ten (10) business days of the filing of this Form 8-K. We will file an amendment to this Form 8-K within two days of receipt of MBP’s letter and attach it as an exhibit.

(b)

Newly Engaged Independent Registered Public Accounting Firm

On February 21, 2020, the Board of Directors of Glory Star approved the appointment of Friedman LLP (“Friedman”) as Glory Star’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the year ending December 31, 2019. During the fiscal years ended December 31, 2017 and December 31, 2018 and through February 21, 2020, neither Glory Star, nor anyone on its behalf, consulted Friedman regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of Glory Star, and no written report or oral advice was provided to Glory Star by Friedman that was an important factor considered by Glory Star in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

Item 3.02.

Unregistered Sales of Equity Securities.

Reference is made to the disclosure set forth under Items 1.01 and 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference. The EBC Note, Amended Sponsor Note, Closing Payment Shares, Earnout Shares, and the ordinary shares underlying the EBC Note and Amended Sponsor Note were issued pursuant to Section 4(a)(2) and/or Regulation S of the Securities Act, as the transactions did not involve a public offering.

Item 4.01.

Changes in Registrant’s Certifying Accountant.

(a)

Previous Independent Registered Public Accounting Firm

On February 21, 2020, the Board of Directors of the GS Holdings approved the dismissal of Marcum LLP (“Marcum”) as GS Holding’s independent registered public accounting firm. The decision to change accounting firms was approved by the Company’s audit committee.

The reports of Marcum on the TKK’s balance sheet as of December 31, 2018, the related statements of operations, changes in shareholders’ equity and cash flows for the period from February 5, 2018 (inception) through December 31, 2018, and the related notes did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

On February 21, 2020, we provided Marcum with a copy of this Form 8-K, and requested that Marcum furnish us with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements within ten (10) business days of the filing of this Form 8-K. We will file an amendment to this Form 8-K within two days of receipt of Marcum’s letter and attach it as an exhibit.

(b)

Newly Engaged Independent Registered Public Accounting Firm

On February 21, 2020, the audit committee and the Board of Directors of the Company approved the appointment of Friedman LLP (“Friedman”) as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the year ending December 31, 2019. During the fiscal years ended December 31, 2017 and December 31, 2018 and through February 21, 2020, neither the Company, nor anyone on its behalf, consulted Friedman regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by Friedman that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

Item 5.01.

Changes in Control of Registrant.

Reference is made to the sections entitled “The Share Exchange – Management and Board of Directors Following the Business Combination,” “Management of TKK,” and “Management of the Combined Company,” beginning on pages 105, 140, and 147, respectively, of the Offer to Purchase, and that information is incorporated herein by reference.

Item 5.02.

Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Item 5.03.

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Amendments to the Company’s Amended and Restated Memorandum of Association are described in the Company’s Proxy Statement with Respect to the Special Meeting, filed with the Securities and Exchange Commission as Exhibit 99.2 to its Current Report on Form 8-K dated December 12, 2019, in the sections entitled “Proposal No. 2 – Approval of Amendment to TKK’s Amended and Restated Memorandum and Articles of Association to Change TKK’s Name,” beginning on page 34, and “Proposal No. 3 – Approval of Amendment to TKK’s Amended and Restated Memorandum and Articles of Association to Remove Certain Provisions Relating to TKK’s Status as a Blank Check Company” beginning on page 35, each of which is incorporated herein by reference. Each of these proposals was approved at the December 23, 2019 Extraordinary General Meeting of the Company. The Company’s Second Amended and Restated Memorandum of Association became effective on February 14, 2020.

Item 5.06.

Change in Shell Company Status.

As a result of the Business Combination, the Company ceased being a shell company. Reference is made to the Item 2.01 of this Current Report on Form 8-K, which is incorporated herein by reference.

Item 9.01.

Financial Statement and Exhibits.

(a)

Financial Statement of business acquired

(i)

Audited Financial Statements as at December 31, 2017 and 2018 and for the two years then ended December 31, 2018 for Glory Star New Media Group Limited (incorporation by reference to pages F-33 to F-85 contain in Exhibit 99.1.(a)(1)(a) to Schedule TO, as amended);

(ii)

Unaudited Interim Condensed Consolidated Financial Statements as September 30, 2019 and for the three and nine months ended September 30, 2018 and 2019 for Glory Star Glory Star New Media Group Limited attached hereto as Exhibit 99.2. In accordance with SEC Rule 10-01(d) of Regulation S-X, Glory Star Media Group Limited’s unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2019, have not been reviewed by an independent public accountant.

(b)

Pro forma financial information

(i)

Unaudited pro forma condensed combined financial information as of December 31, 2018 (incorporation by reference to Exhibit 99.1.(a)(1)(D) to Schedule TO, as amended, beginning on page 152);

(ii)

Unaudited pro forma condensed combined financial information for the nine months ended September 30, 2019, attached hereto as Exhibit 99.4

(c)

See Item 9.01 (a) and (b).

(d)

Exhibits. The following exhibits have been filed as part of this Current Report on Form 8-K:

Exhibit No.		Description
3.1		Second Amended and Restated Memorandum of Association
3.2		Certificate of Incorporation on Change of Name
10.1		Offer To Purchase for Cash by TKK Symphony Acquisition Corporation (incorporation by reference to Exhibit 99.1.(a)(1)(D) to Schedule TO, as amended)
10.2		Share Exchange Agreement, dated as of September 6, 2019 (incorporation by reference to Exhibit 10.1 to Form 8-K filed with Commission on September 12, 2019)
10.3		Registration Rights Agreement dated as of September 6, 2019 (incorporation by reference to Exhibit 10.2 with the Commission on September 12, 2019)
10.4		Form of Lock-Up Agreement dated September 6, 2019 (incorporation by reference to Exhibit 10.3 file with the Commission on September 12, 2019)
10.5		Form of Non-Competition Agreement dated September 6, 2019 (incorporation by reference to Exhibit 10.4 to Form 8-K filed with the Commission on September 12, 2019)
10.6		Business Combination Marketing Agreement Fee Amendment, dated February 14, 2020, with EarlyBirdCapital, Inc.
10.7		Promissory Note, dated February 14, 2020, with EarlyBirdCapital, Inc.
10.8		Amended and Restated Promissory Note, dated February 14, 2020, with TKK Symphony Sponsor 1
10.9		Technical Service Contract, dated January 2019, by and between Leshare Star (Beijing) Technology Co., Ltd. and Beijing Xiaomi [Little Bee] Technology Co., Ltd.
10.10		Annual Framework Contract for Video Production, dated October 31, 2019, by and between Guangxi JD Xinjie E-commerce Co., Ltd. and Leshare Star (Beijing) Technology Co., Ltd.
99.1		Audited Financial Statements as at December 31, 2017 and 2018 and for the two years then ended December 31, 2018 for Glory Star New Media Group Limited (incorporation by reference to Exhibit 99.1.(a)(1)(D) to Schedule TO, as amended, beginning on page F-50)
99.2		Unaudited Interim Condensed Consolidated Financial Statements as September 30, 2019 and for the three and nine months ended September 30, 2018 and 2019 for Glory Star New Media Group Limited attached hereto as Exhibit 99.1. In accordance with SEC Rule 10-01(d) of Regulation S-X, Glory Star New Media Group Limited’s unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2019, have not been reviewed by an independent public accountant
99.3		Unaudited pro forma condensed combined financial information as of December 31, 2018 (incorporation by reference to Exhibit 99.1.(a)(1)(D) to Schedule TO, as amended, beginning on page 152)
99.4		Unaudited pro forma condensed combined financial information for the nine months ended September 30, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned hereunto duly authorized.

	Glory Star New Media Group Holdings Limited

	By:	/s/ Bing Zhang
		Bing Zhang
		Chief Executive Officer

Dated: February 21, 2020

Exhibit 3.1

THE COMPANIES LAW (AS REVISED) OF THE CAYMAN ISLANDS

EXEMPTED COMPANY LIMITED BY SHARES

SECOND AMENDED AND RESTATED

MEMORANDUM AND ARTICLES OF ASSOCIATION

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

(ADOPTED BY SPECIAL RESOLUTION DATED 23 DECEMBER 2019 AND EFFECTIVE ON 14 FEBRUARY 2020)

THE COMPANIES LAW (AS REVISED) OF THE CAYMAN ISLANDS
EXEMPTED COMPANY LIMITED BY SHARES

sECOND AMENDED AND RESTATED

MEMORANDUM OF ASSOCIATION

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

(ADOPTED BY SPECIAL RESOLUTION DATED 23 DECEMBER 2019 AND EFFECTIVE ON 14 FEBRUARY 2020)

The name of the Company is Glory Star New Media Group Holdings Limited.

The registered office of the Company shall be at the offices of Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other place as the Directors may from time to time decide.

The objects for which the Company is established are unrestricted and the Company shall have full power and authority to exercise all the functions of a natural person of full capacity.

The liability of each Member is limited to the amount from time to time unpaid on such Member’s Shares.

The share capital of the Company is US$20,200 divided into 200,000,000 ordinary shares of a par value of US$0.0001 each and 2,000,000 preferred shares of a par value of US$0.0001 each.

The Company has the power to register by way of continuation outside of the Cayman Islands in accordance with the Companies Law and to de-register as an exempted company in the Cayman Islands.

Capitalised terms that are not defined in this Memorandum of Association have the same meaning as those given in the Articles of Association of the Company.

THE COMPANIES LAW (AS REVISED) OF THE CAYMAN ISLANDS
EXEMPTED COMPANY LIMITED BY SHARES

SECOND AMENDED AND RESTATED

ARTICLES OF ASSOCIATION

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

(ADOPTED BY SPECIAL RESOLUTION DATED 23 DECEMBER 2019 AND EFFECTIVE ON 14 FEBRUARY 2020)

PRELIMINARY

1.1

Table A not to apply

The regulations contained or incorporated in Table A in the First Schedule to the Companies Law shall not apply to the Company and these Articles shall apply in place thereof.

1.2

Definitions

“Articles”		means these articles of association of the Company, as amended or substituted from time to time;

“Auditor”		means the person (if any) for the time being performing the duties of auditor of the Company;

“Beneficial Ownership”		means, with respect to a security, sole or shared voting power (which includes the power to vote, or to direct the voting of, such security) and/or investment power (which includes the power to acquire (or an obligation to acquire) or dispose, or to direct the acquisition or disposal of, such security) and/or a long economic exposure, whether absolute or conditional, to changes in the price of such security, in each case, whether direct or indirect, and whether though any contract, arrangement, understanding, relationship, or otherwise and “beneficial owner” shall mean a person entitled to such Interest;

“business day”		means any day on which the Exchange is open for the business of dealing in securities;

“certificated”		means, in relation to a Share, a Share which is recorded in the Register of Members as being held in certificated form;

“Class” or “Classes”		means any class or classes of Shares as may from time to time be issued by the Company;

“clear days”		in relation to the period of a notice means that period excluding the day when the notice is served or deemed to be served and the day for which it is given or on which it is to take effect;

“Clearing House”		means a clearing house recognised by the laws of the jurisdiction in which the Shares (or any Interests in Shares) are listed or quoted on an Exchange.

“Companies Law”		means the Companies Law (as revised) of the Cayman Islands, as amended or revised from time to time;

“Company”		means the above-named company;

“Depository”		means any person who is a Member by virtue of its holding Shares as trustee or otherwise on behalf of those who have elected to hold Shares in dematerialised form through a Depository Interest.

“Depository Interest”		means a dematerialised depository receipt representing the underlying Share in the capital of the Company to be issued by a Depository nominated by the Company.

“Directors”		means the directors for the time being of the Company or as the case may be, the Directors assembled as a board or as a committee thereof;

“Dollar” or “US$”		means the lawful currency of the United States of America;

“Electronic Record”		has the same meaning as in the Electronic Transactions Law;

“Electronic Transactions Law”		means the Electronic Transactions Law (as revised) of the Cayman Islands, as amended or revised from time to time;

“Exchange”		means the Nasdaq Stock Market for so long as any Shares or Interests in Shares are there listed or quoted and any other recognised securities exchange(s) on which any Shares or Interests in Shares are listed or quoted for trading from time to time;

“Exchange Rules”		means NASDAQ Listing Rules and any other relevant code, rules and regulations, as amended, from time to time, applicable as a result of the original and continued listing or quotation of any Shares (or any Interests in Shares) on an Exchange;

“Group”		means the group comprising the Company and its subsidiary undertakings (not including any parent undertaking of the Company);

“Group Undertaking”		means any undertaking in the Group, including the Company;

“Interest”		in securities or in a person means any form of Beneficial Ownership (including, for the avoidance of doubt, any derivative, contractual or economic right or contract for difference) of securities of such person;

“Listed Share”		means a Share that is listed or admitted to trading on an Exchange;

“Listed Share Register”		means the register of members which registers the holdings of Listed Shares;

“Member”		means any person from time to time entered in the Register of Members as a holder of one or more Shares and includes the Subscriber pending its entry therein;

“Memorandum”		means the memorandum of association of the Company, as amended or substituted from time to time;

“Ordinary Resolution”		means a resolution: (a) passed by a simple majority of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Member is entitled by the Articles; or (b) approved in writing by all of the Members entitled to vote at a general meeting of the Company, passed in accordance with these Articles;

“Register of Members”		means the Listed Share Register, the Unlisted Share Register and any branch register(s) in each case as the context requires;

“Registered Office”		means the registered office for the time being of the Company in the Cayman Islands;

“Relevant System”		means any computer-based system and procedures permitted by the Exchange Rules, which enable title to Interests in a security to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters;

“Seal”		means the common seal of the Company (if any) and includes every duplicate seal;

“Secretary”		means any person or persons appointed by the Directors to perform any of the duties of the secretary of the Company;

“Share”		means a share in the capital of the Company and includes a fraction of a Share;

“Special Resolution”		means a special resolution passed in accordance with the Companies Law, being a resolution: (a) passed by a majority of not less than two-third of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a Special Resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Member is entitled; or (b) approved in writing by all of the Members entitled to vote at a general meeting of the Company, passed in accordance with these Articles;

“Subscriber”		means the subscriber to the Memorandum;

“Subscriber Share”		means any Share which the Subscriber has agreed to take pursuant to the Memorandum;

“subsidiary undertaking”		a company or undertaking is a subsidiary of a parent undertaking if the parent undertaking (i) holds a majority of the voting rights in it, or (ii) is a member of it and has the right to appoint or remove a majority of its board of directors, or (iii) is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it;

“Treasury Shares”		means Shares held in treasury pursuant to the Companies Law and these Articles;

“uncertificated”		means, in relation to a Share, a Share to which title is recorded in the Register of Members as being in uncertificated form and title to which may be transferred by means of a Relevant System;

“Uncertificated Proxy Instruction”		means a properly authenticated dematerialised instruction and/or other instruction or notification, which is sent by means of the Relevant System concerned and received by such participant in that system acting on behalf of the Company as the Directors may prescribe, in such form and subject to such terms and conditions as may from time to time be prescribed by the Directors (subject always to the facilities and requirements of the Relevant System concerned);

“Unlisted Share Register”		means the register of members that registers the holdings of Unlisted Shares and which, for the purposes of the Companies Law, constitutes the Company’s “principal register”; and

“Unlisted Shares”		means a Share that is not listed or admitted to trading on an Exchange.

1.3

Interpretation

Unless the contrary intention appears, in these Articles

(a)

singular words include the plural and vice versa;

(b)

a word of any gender includes the corresponding words of any other gender;

(c)

references to “persons” include natural persons, companies, partnerships, firms, joint ventures, associations or other bodies of persons (whether or not incorporated);

(d)

a reference to a person includes that person’s successors and legal personal representatives;

(e)

“writing” and “written” includes any method of representing or reproducing words in a visible form, including in the form of an Electronic Record;

(f)

a reference to “shall” shall be construed as imperative and a reference to “may” shall be construed as permissive;

(g)

in relation to determinations to be made by the Directors and all powers, authorities and discretions exercisable by the Directors under these Articles, the Directors may make those determinations and exercise those powers, authorities and discretions in their sole and absolute discretion, either generally or in a particular case, subject to any qualifications or limitations expressed in these Articles or imposed by law;

(h)

any reference to the powers of the Directors shall include, when the context admits, the service providers or any other person to whom the Directors may, from time to time, delegate their powers;

(i)

the term “and/or” is used in these Articles to mean both “and” as well as “or”. The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others. “Or” shall not be interpreted to be exclusive, and “and” shall not be interpreted to require the conjunctive, in each case unless the context requires otherwise;

(j)

any phrase introduced by the terms “including”, “includes”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;

(k)

headings are inserted for reference only and shall not affect construction;

(l)

a reference to a law includes regulations and instruments made under that law;

(m)

a reference to a law or a provision of law includes amendments, re-enactments, consolidations or replacements of that law or the provision;

(n)

“fully paid” and “paid up” means paid up as to the par value and any premium payable in respect of the issue or re-designation of any Shares and includes credited as fully paid;

(o)

where an Ordinary Resolution is expressed to be required for any purpose, a Special Resolution is also effective for that purpose; and

(p)

sections 8 and 19(3) of the Electronic Transactions Law are hereby excluded.

COMMENCEMENT OF BUSINESS

2.1

The business of the Company may be commenced as soon after incorporation as the Directors shall see fit.

2.2

The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in connection with the formation and operation of the Company, including the expenses of registration and any expenses relating to the offer of, subscription for, or issuance of Shares.

2.3

Expenses may be amortised over such period as the Directors may determine.

REGISTERED OFFICE and OTHER OFFICES

3.1

Subject to the provisions of the Companies Law, the Company may by resolution of the Directors change the location of its Registered Office.

3.2

The Directors, in addition to the Registered Office, may in their discretion establish and maintain such other offices, places of business and agencies whether within or outside of the Cayman Islands.

SERVICE PROVIDERS

The Directors may appoint any person to act as a service provider to the Company and may delegate to any such service provider any of the functions, duties, powers and discretions available to them as Directors, upon such terms and conditions (including as to the remuneration payable by the Company) and with such powers of sub-delegation, but subject to such restrictions, as they think fit.

ISSUE OF SHARES

5.1

Power of Directors to issue Shares

5.1.1

The issue of Shares is under the control of the Directors who may:

(a)

offer, issue, allot or otherwise dispose of them to such persons, in such manner, on such terms and having such rights and being subject to such restrictions, as they may from time to time determine; and

(b)

grant options over such Shares and issue warrants, convertible securities or similar instruments with respect thereto,

subject to the Companies Law, the Memorandum, these Articles, the Exchange Rules (where applicable), any resolution that may be passed by the Company in general meeting and any rights attached to any Shares or Class of Shares.

5.1.2

The Directors may authorise the division of Shares into any number of Classes and the different Classes shall be authorised, established and designated (or re-designated as the case may be) and the variations in the relative rights (including, without limitation, voting, dividend, return of capital and redemption rights), restrictions, preferences, privileges and payment obligations as between the different Classes (if any) shall be fixed and determined by the Directors.

5.1.3

The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason.

5.2

Power of Subscriber to issue and transfer or repurchase Subscriber Shares

5.2.1

Notwithstanding the preceding Article, the Subscriber shall have the power to:

(a)

issue any Subscriber Share to itself at par following the incorporation of the Company;

(b)

transfer such Subscriber Share to any person by execution of a share transfer instrument or provide for the repurchase at par value of such Subscriber Share upon the first issue of additional Shares by the Company; and

(c)

update the Register of Members in respect of the issue and transfer or repurchase of the Subscriber Share.

5.3

Payment of commission or brokerage

Subject to the provisions of the Companies Law, the Company may pay a commission or brokerage in connection with the subscription for or issue of any Shares. The Company may pay the commission or brokerage in cash or by issuing fully or partly paid Shares or by a combination of both.

5.4

No Shares to bearer

The Company shall not issue Shares to bearer.

5.5

Fractional Shares

The Directors may issue fractions of a Share of any Class, and, if so issued, a fraction of a Share (calculated to such decimal points as the Directors may determine) shall be subject to and carry the corresponding fraction of liabilities (whether with respect to any unpaid amount thereon, contribution, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without limitation, voting and participation rights) and other attributes of a whole Share of the same Class.

5.6

Treasury Shares

5.6.1

Shares that the Company purchases, redeems or acquires by way of surrender in accordance with the Companies Law shall be held as Treasury Shares and not treated as cancelled if:

(a)

the Directors so determine prior to the purchase, redemption or surrender of those shares; and

(b)

the relevant provisions of the Memorandum and Articles, the Companies Law and the Exchange Rules are otherwise complied with.

5.6.2

No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be made to the Company in respect of a Treasury Share.

5.6.3

The Company shall be entered in the Register of Members as the holder of the Treasury Shares. However:

(a)

the Company shall not be treated as a Member for any purpose and shall not exercise any right in respect of the Treasury Shares, and any purported exercise of such a right shall be void; and

(b)

a Treasury Share shall not be voted, directly or indirectly, at any general meeting of the Company and shall not be counted in determining the total number of issued Shares at any given time, whether for the purposes of these Articles or the Companies Law.

5.6.4

Nothing in paragraph 0 above prevents an allotment of Shares as fully paid up bonus Shares in respect of a Treasury Share and Shares allotted as fully paid up bonus Shares in respect of a Treasury Share shall be treated as Treasury Shares.

5.6.5

Treasury Shares may be disposed of by the Company in accordance with the Companies Law and otherwise on such terms and conditions as the Directors determine.

6.1

Duty to establish and maintain a Register of Members

6.1.1

The Directors shall cause the Company to keep at its Registered Office, or at any other place within or outside the Cayman Islands they think fit, the Register of Members (which, for the avoidance of doubt, comprises the Listed Share Register, the Unlisted Share Register and any branch register(s) maintained from time to time) in which shall be entered:

(a)

the particulars of the Members;

(b)

the particulars of the Shares issued to each of them; and

(c)

other particulars required under the Companies Law and the Exchange Rules (as appropriate).

6.1.2

If the recording complies with the Companies Law, the Exchange Rules and any other applicable law, the Listed Share Register may be kept by recording the particulars required under the Companies Law in a form otherwise than in a physically written form. However, to the extent the Listed Share Register is kept in a form otherwise than in a physically written form, it must be capable of being reproduced in a legible form.

6.2

Power to establish and maintain branch registers

6.2.1

Subject to the Exchange Rules, the rules and regulations of the Relevant System and any other applicable laws, if the Directors consider it necessary or desirable, whether for administrative purposes or otherwise, they may cause the Company to establish and maintain a branch register or registers of members of such category or categories and at such location or locations within or outside the Cayman Islands as they think fit.

6.2.2

The Company shall cause to be kept at the place where the Unlisted Share Register is kept, a duplicate of any branch register duly entered up from time to time. Subject to this Article, with respect to a duplicate of any branch register:

(a)

the Unlisted Shares registered in the branch register shall be distinguished from those registered in the Unlisted Share Register; and

(b)

no transaction with respect to any Unlisted Shares registered in a branch register shall, during the continuance of that registration, be registered in any other register.

6.2.3

The Company may discontinue keeping any branch register and thereupon all entries in such branch register shall be transferred to another branch register kept by the Company or to the Unlisted Share Register.

CLOSing REGISTER OF MEMBERS AND FIXING RECORD DATE

7.1

Power of Directors to close the Register of Members

For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment of a meeting, or Members entitled to receive payment of any dividend or distribution, or in order to make a determination of Members for any other proper purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed thirty (30) days.

7.2

Power of Directors to fix a record date

In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrear a date as the record date for any such determination of Members entitled to notice of or to vote at a meeting of the Members, and for the purpose of determining the Members entitled to receive payment of any dividend or distribution, or in order to make a determination of Members for any other purpose.

7.3

Circumstances where Register of Members is not closed and no fixed record date

If the Register of Members is not closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a dividend or distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment of that meeting.

CERTIFICATED SHARES

8.1

Right to certificates

Subject to the Companies Law, the requirements of (to the extent applicable) the Exchange Rules and/or the Exchange, and these Articles, every person, upon becoming the holder of a certificated Share is entitled, without charge, to one certificate for all the certificated Shares of a Class in his name, or in the case of certificated Shares of more than one Class being registered in his name, to a separate certificate for each Class of Shares, unless the terms of issue of the Shares provide otherwise.

8.2

Form of share certificates

Share certificates, if any, shall be in such form as the Directors may determine and shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise share certificates to be issued with the authorised signature(s) affixed by mechanical process. All share certificates shall be consecutively numbered or otherwise identified and shall specify the number and Class of Shares to which they relate and the amount paid up thereon or the fact that they are fully paid, as the case may be. All share certificates surrendered to the Company for transfer shall be cancelled and subject to these Articles no new certificate shall be issued until the former certificate evidencing a like number of relevant Shares shall have been surrendered and cancelled. Where only some of the certificated Shares evidenced by a share certificate are transferred, the old certificate shall be surrendered and cancelled and a new certificate for the balance of the certificated Shares shall be issued in lieu without charge.

8.3

Certificates for jointly-held Shares

If the Company issues a share certificate in respect of certificated Shares held jointly by more than one person, delivery of a single share certificate to one joint holder shall be a sufficient delivery to all of them.

8.4

Replacement of share certificates

If a share certificate is defaced, worn-out or alleged to have been lost, stolen or destroyed, a new share certificate shall be issued on the payment of such expenses reasonably incurred by the Company and the person requiring the new share certificate shall first surrender the defaced or worn-out share certificate or give such evidence of the loss, theft or destruction of the share certificate and such indemnity to the Company as the Directors may require.

UNCERTIFICATED SHARES

9.1

Uncertificated Shares held by means of a Relevant System

The Directors may permit Shares to be held in uncertificated form and shall have power to implement such arrangements as they may, in their absolute discretion, think fit in order for any Class of Shares to be transferred by means of a Relevant System of holding and transferring Shares (subject always to any applicable law and the requirements of the Relevant System concerned).

(For the purpose of this Article 9, the expression “Shares”, where the context permits, also includes Interests in such Shares).

9.2

Disapplication of inconsistent Articles

9.2.1

Where the arrangements described in this Article 9 are implemented, no provision of these Articles shall apply or have effect to the extent that it is in any respect inconsistent with:

(a)

the holding of Shares of that Class in uncertificated form; and

(b)

the facilities and requirements of the Relevant System.

9.3

Arrangements for uncertificated Shares

9.3.1

Notwithstanding anything contained in these Articles (but subject always to the Companies Law, any other applicable laws and regulations and the facilities and requirements of any Relevant System):

(a)

unless the Directors otherwise determine, Shares held by the same holder or joint holder in certificated form and uncertificated form shall be treated as separate holdings;

(b)

conversion of Shares held in certificated form into Shares held in uncertificated form, and vice versa, may be made in such a manner as the Directors may in their absolute discretion think fit and in accordance with applicable regulations;

(c)

Shares may be changed from uncertificated to certificated form, and from certificated to uncertificated form, in such manner as the Directors may in their absolute discretion, think fit;

(d)

Article 13.2 shall not apply in respect of Shares recorded on the Register of Members as being held in uncertificated form to the extent that Article 13.2 requires or contemplates the effecting of a transfer by an instrument in writing and the production of a certificate for the Share to be transferred;

(e)

a Class of Share shall not be treated as two Classes by virtue only of that Class comprising both certificated and uncertificated Shares or as a result of any provision of these Articles or any other applicable law or regulation which applies only in respect of certificated and uncertificated Shares;

(f)

where the Company is entitled under applicable law or these Articles to sell, transfer or otherwise dispose of, redeem, repurchase, re-allot, accept the surrender of, forfeit or enforce a lien over, a Share in the Company, the Directors shall, subject to such applicable laws, these Articles and the facilities and requirements of the Relevant System be entitled (without limitation):

(i)

to require the holder of that Share by notice to convert that Share into certificated form within the period specified in the notice and to hold that Share in certificated form so long as required by the Company;

(ii)

to require the operator of the Relevant System to convert that Share into certificated form;

(iii)

to require the holder of that Share by notice to give any instructions necessary to transfer title to that Share by means of the Relevant System within the period specified in the notice;

(iv)

to require the holder of that Share by notice to appoint any person to take any step, including without limitation the giving of any instructions by means of the Relevant System, necessary to transfer that Share within the period specified in the notice;

(v)

to take any other action that the Directors consider necessary or expedient to achieve the sale, transfer, disposal, re-allotment, forfeiture or surrender of that Share or otherwise to enforce a lien in respect of that Share;

(vi)

to require the deletion of any entries in the Relevant System reflecting the holding of such Share in uncertificated form; and

(vii)

to require the operator of the Relevant System to alter the entries in the Relevant System so as to divest the holder of the relevant Share of the power to transfer such Share other than to a person selected or approved by the Directors for the purposes of such transfer.

9.3.2

Article 8 shall not apply so as to require the Company to issue a certificate to any person holding Shares in uncertificated form.

10.

DEPOSITORY INTERESTS

10.1

Depository Interests held by means of a Relevant System

The Directors may permit Shares of any Class to be represented by Depository Interests and to be transferred or otherwise dealt with by means of a Relevant System and may revoke any such permission.

10.2

Disapplication of inconsistent Articles

10.2.1

Where the arrangements described in this Article 10 are implemented, no provision of these Articles shall apply or have effect to the extent that it is in any respect inconsistent with:

(a)

the holding of Depository Interests; and

(b)

the facilities and requirements of the Relevant System.

10.3

Arrangements for Depository Interests

10.3.1

The Directors may make such arrangements or regulations (if any) as they may from time to time in their absolute discretion think fit in relation to the evidencing, issue and transfer of Depository Interests and otherwise for the purpose of implementing and/or supplementing the provisions of this Article 10 and the Exchange Rules and the facilities and requirements of the Relevant System.

10.3.2

The Company may use the Relevant System in which any Depository Interests are held to the fullest extent available from time to time in the exercise of any of its powers or functions under the Companies Law, the Exchange Rules or these Articles or otherwise in effecting any actions.

10.3.3

For the purpose of effecting any action by the Company, the Directors may determine that Depository Interests held by a person shall be treated as a separate holding from certificated Shares held by that person.

10.4

Not separate Class

Shares in a particular Class shall not form a separate Class of Shares from other Shares in that Class because they are dealt with as Depository Interests.

10.5

Power of sale

10.5.1

Where the Company is entitled under applicable law or these Articles to sell, transfer or otherwise dispose of, redeem, repurchase, re-allot, accept the surrender of, forfeit or enforce a lien over, any Share represented by a Depository Interest, the Directors shall, subject to such applicable laws, these Articles and the facilities and requirements of the Relevant System be entitled (without limitation):

(a)

to require the holder of that Depository Interest by notice to convert that Share represented by the Depository Interest into certificated form within the period specified in the notice and to hold that Share in certificated form so long as required by the Company;

(b)

to require the holder of that Depository Interest by notice to give any instructions necessary to transfer title to that Share by means of the Relevant System within the period specified in the notice;

(c)

to require the holder of that Depository Interest by notice to appoint any person to take any step, including without limitation the giving of any instructions by means of the Relevant System, necessary to transfer that Share within the period specified in the notice; and

(d)

11.

CALLS ON SHARES

11.1

Calls, how made

11.1.1

Subject to the terms on which Shares are allotted, the Directors may make calls on the Members (and any persons entitled by transmission) in respect of any amounts unpaid on their Shares (whether in respect of nominal value or premium or otherwise) and not payable on a date fixed by or in accordance with the allotment terms. Each such Member or other person shall pay to the Company the amount called, subject to receiving at least fourteen (14) clear days’ notice specifying when and where the payment is to be made, as required by such notice.

11.1.2

A call may be made payable by instalments. A call shall be deemed to have been made when the resolution of the Directors authorising it is passed. A call may, before the Company’s receipt of any amount due under it, be revoked or postponed in whole or in part as the Directors may decide. A person upon whom a call is made will remain liable for calls made on him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.

11.2

Liability of joint holders

The joint holders of a Share shall be jointly and severally liable to pay all calls in respect of it.

11.3

lnterest

lf the whole of the sum payable in respect of any call is not paid by the day it becomes due and payable, the person from whom it is due shall pay all costs, charges and expenses that the Company may have incurred by reason of such non-payment, together with interest on the unpaid amount from the day it became due and payable until it is paid at the rate fixed by the terms of the allotment of the Share or in the notice of the call or, if no rate is fixed, at such rate, not exceeding eight percent (8%) per annum (compounded on a six monthly basis), as the Directors shall determine. The Directors may waive payment of such costs, charges, expenses or interest in whole or in part.

11.4

Differentiation

Subject to the allotment terms, the Directors may make arrangements on or before the issue of Shares to differentiate between the holders of Shares in the amounts and times of payment of calls on their Shares.

11.5

Payment in advance of calls

11.5.1

The Directors may receive from any Member (or any person entitled by transmission) all or any part of the amount uncalled and unpaid on the Shares held by him (or to which he is entitled). The liability of each such Member or other person on the Shares to which such payment relates shall be reduced by such amount. The Company may pay interest on such amount from the time of receipt until the time when such amount would, but for such advance, have become due and payable at such rate not exceeding eight percent (8%) per annum (compounded on a six monthly basis) as the Directors may decide.

11.5.2

No sum paid up on a Share in advance of a call shall entitle the holder to any portion of a dividend subsequently declared or paid in respect of any period prior to the date on which such sum would, but for such payment, become due and payable.

11.6

Restrictions if calls unpaid

Unless the Directors decide otherwise, no Member shall be entitled to receive any dividend or to be present or vote at any meeting or to exercise any right or privilege as a Member until he has paid all calls due and payable on every Share held by him, whether alone or jointly with any other person, together with interest and expenses (if any) to the Company.

11.7

Sums due on allotment treated as calls

Any sum payable in respect of a Share on allotment or at any fixed date, whether in respect of the nominal value of the Share or by way of premium or otherwise or as an instalment of a call, shall be deemed to be a call. lf such sum is not paid, these Articles shall apply as if it had become due and payable by virtue of a call.

12.

FORFEITURE OF SHARES

12.1

Forfeiture after notice of unpaid call

12.1.1

lf a call or an instalment of a call remains unpaid after it has become due and payable, the Directors may give to the person from whom it is due not less than fourteen (14) clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any costs, charges and expenses that the Company may have incurred by reason of such non-payment. The notice shall state the place where payment is to be made and that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited. lf the notice is not complied with, any Shares in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. The forfeiture will include all dividends and other amounts payable in respect of the forfeited Shares which have not been paid before the forfeiture.

12.1.2

The Directors may accept the surrender of a Share which is liable to be forfeited in accordance with these Articles. All provisions in these Articles which apply to the forfeiture of a Share also apply to the surrender of a Share.

12.2

Notice after forfeiture

When a Share has been forfeited, the Company shall give notice of the forfeiture to the person who was before forfeiture the holder of the Share or the person entitled by transmission to the Share. An entry that such notice has been given and of the fact and date of forfeiture shall be made in the Register of Members. Notwithstanding the above, no forfeiture will be invalidated by any omission to give such notice or make such entry.

12.3

Consequences of forfeiture

12.3.1

A Share shall, on its forfeiture, become the property of the Company.

12.3.2

All interest in and all claims and demands against the Company in respect of a Share and all other rights and liabilities incidental to the Share as between its holder and the Company shall, on its forfeiture, be extinguished and terminate except as otherwise stated in these Articles.

12.3.3

The holder of a Share (or the person entitled to it by transmission) which is forfeited shall:

(a)

on its forfeiture cease to be a Member (or a person entitled) in respect of it;

(b)

if a certificated Share, surrender to the Company for cancellation the share certificate for the Share;

(c)

remain liable to pay to the Company all monies payable in respect of the Share at the time of forfeiture, with interest from such time of forfeiture until the time of payment, in the same manner in all respects as if the Share had not been forfeited; and

(d)

remain liable to satisfy all (if any) claims and demands which the Company might have enforced in respect of the Share at the time of forfeiture without any deduction or allowance for the value of the Share at the time of forfeiture or for any consideration received on its disposal.

12.4

Disposal of forfeited Share

12.4.1

A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors may decide either to the person who was before the forfeiture the holder or to any other person. At any time before the disposal, the forfeiture may be cancelled on such terms as the Directors may decide. Where for the purpose of its disposal a forfeited Share is to be transferred to any transferee, the Directors may:

(a)

in the case of certificated Shares, authorise a person to execute an instrument of transfer of Shares in the name and on behalf of their holder to the purchaser or as the purchaser may direct;

(b)

in the case of uncertificated Shares, exercise any power conferred on them by Article 13 to effect a transfer of the Shares; and

(c)

if the Share is represented by a Depository Interest, exercise any of the Company’s powers under Article 10.5 to effect the sale of the Share to, or in accordance with the directions of, the buyer.

12.4.2

The purchaser will not be bound to see to the application of the purchase monies in respect of any such sale. The title of the transferee to the Shares will not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to at paragraph (a) of this Article shall be effective as if it had been executed or exercised by the holder of, or the person entitled by transmission to, the Shares to which it relates.

12.5

Proof of forfeiture

A statutory declaration by a Director or any other officer that a Share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it against all persons claiming to be entitled to the Share. The declaration shall (subject to the execution of any necessary instrument of transfer) constitute good title to the Share. The person to whom the Share is disposed of shall not be bound to see to the application of the consideration (if any) given for it on such disposal. His title to the Share will not be affected by any irregularity in, or invalidity of, the proceedings connected with the forfeiture or disposal.

13.

TRANSFER OF SHARES

13.1

Form of transfer

13.1.1

Subject to these Articles, a Member may transfer all or any of his Shares:

(a)

in the case of certificated Shares, by an instrument of transfer in writing in any usual form or in another form approved by the Directors or prescribed by the Exchange, which must be executed by or on behalf of the transferor and (in the case of a transfer of a Share which is not fully paid) by or on behalf of the transferee; or

(b)

in the case of uncertificated Shares, without a written instrument in accordance with the rules or regulations of any Relevant System in which the Shares are held.

13.2

Registration of a certificated Share transfer

13.2.1

Subject to these Articles, the Directors may, in their absolute discretion and without giving a reason, refuse to register the transfer of a certificated Share unless it is:

(a)

in respect of a Share which is fully paid;

(b)

in respect of a Share on which the Company has no lien;

(c)

in respect of only one Class of Shares;

(d)

in favour of a single transferee or not more than four joint transferees;

(e)

duly stamped (if required); and

(f)

delivered for registration to the Registered Office or such other place as the Directors may decide, accompanied by the certificate for the Shares to which it relates and any other evidence as the Directors may reasonably require to prove the title to such Share of the transferor and the due execution by him of the transfer or, if the transfer is executed by some other person on his behalf, the authority of such person to do so, provided that the Directors shall not refuse to register any transfer of any certificated Shares listed on the Exchange on the ground that they are partly paid in circumstances where such refusal would prevent dealings in such Shares from taking place on an open and proper basis.

13.2.2

lf the Directors refuse to register a transfer pursuant to this Article, they shall, within two (2) months after the date on which the transfer was delivered to the Company, send notice of the refusal to the transferee. An instrument of transfer which the Directors refuse to register shall (except in the case of suspected fraud) be returned to the person delivering it. All instruments of transfer which are registered may, subject to these Articles, be retained by the Company.

13.3

Registration of an uncertificated Share transfer

13.3.1

The Directors shall register a transfer of title to any uncertificated Share which is held in uncertificated form in accordance with the rules or regulations of any Relevant System in which the Shares are held, except that the Directors may refuse (subject to any relevant requirements of (to the extent applicable) the Exchange Rules and/or the Exchange) to register any such transfer which is in favour of more than four persons jointly or in any other circumstance permitted by the rules or regulations of any Relevant System in which the Shares are held.

13.3.2

lf the Directors refuse to register any such transfer the Company shall, within two months after the date on which the instruction relating to such transfer was received by the Company, send notice of the refusal to the transferee.

13.4

Transfers of Depository Interests

13.4.1

The Company shall register the transfer of any Shares represented by Depository Interests in accordance with the rules or regulations of the Relevant System and any other applicable laws and regulations.

13.4.2

Where permitted by the rules or regulations of the Relevant System and any other applicable laws and regulations, the Directors may, in their absolute discretion and without giving any reason for their decision, refuse to register any transfer of any Share represented by a Depository Interest.

13.5

No fee on registration

No fee shall be charged for the registration of a transfer of a Share or other document relating to or affecting the title to any Share.

13.6

Renunciations of Shares

Nothing in these Articles shall preclude the Directors from recognising the renunciation of any Share by the allottee thereof in favour of some other person.

13.7

Enforceability of and interpretation/administration of this Article

13.7.1

If any provision of this Article 13 or any part of such provision is held under any circumstances to be invalid or unenforceable in any jurisdiction, then:

(a)

the invalidity of unenforceability of such provision shall not affect the validity or enforceability of such provision or part thereof under any other circumstances or in any other jurisdiction; and

(b)

the invalidity or unenforceability of such provision or part thereof shall not affect the validity or enforceability of the remainder of such provision or the validity or enforceability of any other provision of these Articles.

13.7.2

The Directors shall have the exclusive power and authority to administer and interpret the provisions of this Article 13 and to exercise all rights and powers specifically granted the Directors and the Company or as may be necessary or advisable in the administration of this Article 13. All such actions, calculations, determinations and interpretations which are done or made by the Directors in good faith shall be final, conclusive, and binding on the Company and the beneficial and registered owners of the Shares and shall not subject the Directors to any liability.

13.8

No transfers to an infant etc

No transfer shall be made to an infant or to a person of whom an order has been made by competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs or under other legal disability.

13.9

Effect of registration

The transferor shall be deemed to remain the holder of the Share transferred until the name of the transferee is entered in the Register of Members in respect of that Share.

14.

TRANSMISSION OF SHARES

14.1

Transmission of Shares

14.1.1

If a Member dies, becomes bankrupt, commences liquidation or is dissolved, the only person that the Company will recognise as having any title to, or interest in, that Member’s Share (other than the Member) are:

(a)

if the deceased Member was a joint holder, the survivor;

(b)

if the deceased Member was a sole or the only surviving holder, the personal representative of that Member; or

(c)

any trustee in bankruptcy or other person succeeding to the Member’s interest by operation of law,

but nothing in these Articles releases the estate of a deceased Member, or any other successor by operation of law, from any liability in respect of any Share held by that Member solely or jointly.

14.2

Election by persons entitled on transmission

14.2.1

Any person becoming entitled to a Share as a result of the death, bankruptcy, liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may from time to time be required by the Directors, elect either to become registered as the holder of the Share or nominate another person to be registered as the holder of that Share.

14.2.2

If he elects to be registered as the holder of the Share himself, he shall give written notice to the Company to that effect. If he elects to have some other person registered as the holder of the Share, he shall:

(a)

in the case of a certificated Share, execute an instrument of transfer of such Share to such person;

(b)

in the case of an uncertificated Share, either:

(i)

procure that all the appropriate instructions are given by means of the Relevant System to effect the transfer of such Share to such person; or

(ii)

change the uncertificated Share to certified form and then execute a transfer of such Share to such person; and

(c)

in the case of a Share represented by a Depository Interest, take any action the Directors may require (including, without limitation, the execution of any document and the giving of any instruction by means of the Relevant System) to effect the transfer of the Share to that person.

14.3

Rights of persons entitled by transmission

A person becoming entitled to a Share by reason of the death, bankruptcy, liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends and other rights to which he would be entitled if he were the registered holder of the Share. However, the person shall not, before being registered as a Member in respect of the Share, be entitled in respect of it to attend or vote at any meeting of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered himself or to have some person nominated by him registered as the holder (and the Directors shall, in either case, have the same right to refuse registration as they would have had in the case of a transfer of the Share by that Member before his death, bankruptcy, liquidation or dissolution, as the case may be). If the notice is not complied with within ninety (90) days the Directors may withhold payment of all Dividends, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.

15.

REDEMPTION, PURCHASE AND SURRENDER OF SHARES

15.1

Subject to the Companies Law, the Memorandum, these Articles, the Exchange Rules (where applicable) and any rights conferred on the holders of any Shares or attaching to any Class of Shares, the Company may:

15.1.1

issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of one or both of the Company or the Member on such terms and in such manner as the Directors may determine before the issue of the Shares;

15.1.2

purchase, or enter into a contract under which it will or may repurchase, any of its own Shares of any Class (including any redeemable Shares) on such terms and in such manner as the Directors may determine or agree with the Member;

15.1.3

make a payment in respect of the redemption or purchase of its own Shares in any manner authorised by the Companies Law, including out of capital; and

15.1.4

accept the surrender for no consideration of any paid up Share (including any redeemable Share) on such terms and in such manner as the Directors may determine.

15.2

Any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption.

15.3

The redemption or purchase of any Share shall not be deemed to give rise to the redemption or purchase of any other Share.

15.4

The Directors may when making payments in respect of the redemption or purchase of Shares, if authorised by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie.

15.5

The Directors may hold any repurchased, redeemed or surrendered Shares as Treasury Shares in accordance with the provisions of the Companies Law and these Articles.

16.

FINANCIAL ASSISTANCE

Any financial assistance given by the Company in connection with a purchase made or to be made by any person of any Shares or Interests in Shares in the Company shall only be made in accordance with the Companies Law, applicable law and the Exchange Rules (where applicable).

17.

Class RIGHTS AND CLASS MEETINGS

17.1

Variation of class rights

17.1.1

Subject to the Companies Law, if at any time the share capital of the Company is divided into different Classes of Shares, all or any of the rights attached to any Class of Shares may be varied in such manner as those rights may provide or, if no such provision is made, either:

(a)

with the consent in writing of holders of not less than two-thirds of the issued Shares of that Class; or

(b)

with the sanction of a resolution passed at a separate meeting of the holders of the Shares of that Class by a two-thirds majority of the holders of the Shares of that Class present and voting at such meeting (whether in person or by proxy).

17.2

Treatment of classes of Shares by Directors

The Directors may treat two or more or all of the Classes of Shares as forming one class of Shares if the Directors consider that such Classes of Shares would be affected by the proposed variation in the same way.

17.3

Effect of Share issue on class rights

17.3.1

The rights attached to any Class of Shares are not taken to be varied by:

(a)

the creation or issue of further Shares ranking equally with them unless expressly provided by the terms of the issue of the Shares of that Class; or

(b)

the reduction of capital paid up on such Shares or by the repurchase, redemption or surrender of any Shares in accordance with the Companies Law and these Articles.

17.4

Class meetings

The provisions of these Articles relating to general meetings of the Company shall apply mutatis mutandis to any Class meeting, except that the quorum shall be one or more Members that together hold at least one-third of the Shares of that Class.

18.

No recognition of trusts or third party interests

18.1.1

Except as otherwise expressly provided by these Articles or as required by law or as ordered by a court of competent jurisdiction, the Company:

(a)

is not required to recognise a person as holding any Share on any trust, even if the Company has notice of the trust; and

(b)

is not required to recognise, and is not bound by, any interest in or claim to any Share, except for the registered holder’s absolute legal ownership of the Share, even if the Company has notice of that interest or claim.

19.

LIEN ON SHARES

19.1

Lien on Shares generally

The Company shall have a first and paramount lien on all Shares registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or amounts payable to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time determine any Share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a Share is released if a transfer of that Share is registered.

19.2

Enforcement of lien by sale

The Company may sell, on such terms and in such manner as the Directors think fit, any Share on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen (14) clear days after notice has been given by the Company to the holder of the Share (or to any other person entitled by transmission to the Shares) demanding payment of that amount and giving notice of intention to sell the Share if such payment is not made.

19.3

Completion of sale under lien

19.3.1

To give effect to a sale of Shares under a lien the Directors may:

(a)

in the case of certificated Shares, authorise any person to execute an instrument of transfer in respect of the Shares to be sold to, or in accordance with the directions of, the relevant purchaser;

(b)

in the case of uncertificated Shares, exercise any power conferred on them by Article 13 to effect a transfer of Shares; and

(c)

if the Shares are represented by a Depository Interest, exercise any of the Company’s powers under Article 10.5 to effect the sale of such Shares to, or in accordance with the directions of the purchaser.

19.3.2

The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of any consideration provided for the Shares, nor will the purchaser’s title to the Shares be affected by any irregularity or invalidity in connection with the sale or the exercise of the Company’s power of sale under these Articles.

19.4

Application of proceeds of sale

The net proceeds of a sale made under a lien after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person who was entitled to the Shares immediately prior to the sale.

20.

UNTRACED MEMBERS

20.1

Sale of Shares

20.1.1

The Company may sell at the best price reasonably obtainable any Share of a Member, or any Share to which a person is entitled by transmission, if:

(a)

during the period of six (6) years prior to the date of the publication of the advertisements referred to in this paragraph (a) (or, if published on different dates, the earlier or earliest of them):

(i)

no cheque, warrant or money order in respect of such Share sent by or on behalf of the Company to the Member or to the person entitled by transmission to the Share, at his address in the Register of Members or other address last known to the Company has been cashed; and

(ii)

no cash dividend payable on the Shares has been satisfied by the transfer of funds to a bank account of the Member (or person entitled by transmission to the share) or by transfer of funds by means of the Relevant System, and the Company has received no communication (whether in writing or otherwise) in respect of such Share from such Member or person, provided that during such six year period the Company has paid at least three cash dividends (whether interim or final) in respect of Shares of the Class in question and no such dividend has been claimed by the person entitled to such Share;

(b)

on or after the expiry of such six year period the Company has given notice of its intention to sell such Share by advertisements in a national newspaper published in the country in which the Registered Office is located and in a newspaper circulating in the area in which the address in the Register of Members or other last known address of the member or the person entitled by transmission to the Share or the address for the service of notices on such member or person notified to the Company in accordance with these Articles is located;

(c)

such advertisements, if not published on the same day, are published within thirty (30) days of each other;

(d)

during a further period of three months following the date of publication of such advertisements (or, if published on different dates, the date on which the requirements of this paragraph (a) concerning the publication of newspaper advertisements are met) and prior to the sale the Company has not received any communication (whether in writing or otherwise) in respect of such Share from the Member or person entitled by transmission.

20.1.2

lf during such six year period, or during any subsequent period ending on the date when all the requirements of paragraph (a) of this Article have been met in respect of any Shares, any additional Shares have been issued in respect of those held at the beginning of, or previously so issued during, any such subsequent period and all the requirements of paragraph (a) of this Article have been satisfied with regard to such additional Shares, the Company may also sell the additional Shares.

20.1.3

To give effect to a sale pursuant to paragraph (a) or paragraph (b) of this Article, the Directors may:

(a)

in the case of certificated Shares, authorise a person to execute an instrument of transfer of Shares in the name and on behalf of the holder of, or the person entitled by transmission to, them to the purchaser or as the purchaser may direct;

(b)

in the case of uncertificated Shares, exercise any power conferred on them by Article 13 to effect a transfer of the Shares; and

(c)

if the Share is represented by a Depository Interest, exercise any of the Company’s powers under Article 10.5 to effect the sale of the Share to, or in accordance with the directions of, the purchaser.

20.1.4

The purchaser will not be bound to see to the application of the purchase monies in respect of any such sale. The title of the transferee to the Shares will not be affected by any irregularity in or invalidity of the proceedings connected with the sale or transfer. Any instrument or exercise referred to at paragraph (c) of this Article shall be effective as if it had been executed or exercised by the holder of, or the person entitled by transmission to, the Shares to which it relates.

20.2

Application of sale proceeds

The Company shall account to the Member or other person entitled to such Share for the net proceeds of such sale by carrying all monies in respect of the sale to a separate account. The Company shall be deemed to be a debtor to, and not a trustee for, such Member or other person in respect of such monies. Monies carried to such separate account may either be employed in the business of the Company or invested as the Directors may think fit. No interest shall be payable to such Member or other person in respect of such monies and the Company shall not be required to account for any money earned on them.

21.

ALTERATION OF SHARE CAPITAL

21.1

Increase, consolidation, subdivision and cancellation

21.1.1

The Company may by Ordinary Resolution:

(a)

increase its share capital by such sum, to be divided into Shares of such Classes and amounts as the resolution shall prescribe;

(b)

consolidate, or consolidate and divide all or any of its share capital into Shares of a larger amount than its existing Shares;

(c)

subdivide its Shares, or any of them, into Shares of a smaller amount than is fixed by the Memorandum; and

(d)

cancel 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.

21.1.2

All new Shares created in accordance with the provisions of this Article shall be subject to the same provisions of these Articles with reference to liens, transfer, transmission and otherwise as the Shares in the original share capital.

21.2

Dealing with fractions resulting from consolidation or subdivision of Shares

21.2.1

Whenever, as a result of a consolidation or subdivision of Shares, any Members would become entitled to fractions of a Share the Directors may on behalf of those Members deal with the fractions as they think fit, including (without limitation):

(a)

selling the Shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Companies Law, the Company); and

(b)

distributing the net proceeds in due proportion among those Members (except that if the amount due to a person is less than US$5.00, or such other sum as the Directors may decide, the Company may retain such sum for its own benefit).

21.2.2

For the purposes of this Article, the Directors may:

(a)

in the case of certificated Shares, authorise some person to execute an instrument of transfer of the Shares to, or in accordance with the directions of, the purchaser;

(b)

in the case of uncertificated Shares, exercise any power conferred on it by Article 13 to effect a transfer of the Shares; and

(c)

21.2.3

The transferee shall not be bound to see to the application of the purchase money nor shall the transferee’s title to the Shares be affected by any irregularity in, or invalidity of, the proceedings in respect of any sale undertaken pursuant to this Article.

21.3

Reduction of Share Capital

Subject to the provisions of the Companies Law and to any rights attached to any Shares, the Company may by Special Resolution reduce its share capital, any capital redemption reserve, any share premium account or any other undistributable reserve in any way.

22.

GENERAL MEETINGS

22.1

Annual general meetings and general meetings

22.1.1

The Company shall hold an annual general meeting in each calendar year, which shall be convened by the Directors, in accordance with these Articles, but so that the maximum period between such annual general meetings shall not exceed fifteen (15) months.

22.1.2

All general meetings other than annual general meetings shall be called general meetings.

22.2

Convening of general meetings

The Directors may convene a general meeting of the Company whenever the Directors think fit, and must do so if required to do so pursuant to a valid Members’ requisition.

22.3

Members’ requisition

A Members’ requisition is a requisition of Members of the Company holding at the date of deposit of the requisition at the Registered Office not less than one-third in par value of the issued Shares which as at that date carry the right to vote at general meetings of the Company.

22.4

Requirements of Members’ requisition

22.4.1

The requisition must state the objects of the general meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.

22.4.2

If the Directors do not within twenty-one (21) days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further 21 days, the requisitionists, or any of them representing a majority of the total voting rights of all of them, may themselves convene a general meeting of the Company, but any meeting so convened shall not be held after the expiration of three months after the expiration of such 21 day period.

22.4.3

A general meeting convened in accordance with this Article by requisitionists shall be convened (insofar as is possible) in the same manner as that in which general meetings are to be convened by Directors and the Directors shall, upon demand, provide the names and addresses of each Member to the requisitionists for the purpose of convening such meeting.

23.

NOTICE OF GENERAL MEETINGS

23.1

Length and form of notice and persons to whom notice must be given

23.1.1

At least seven (7) clear days’ notice shall be given of any annual general meeting or general meeting of the Company.

23.1.2

Subject to the Companies Law and notwithstanding that it is convened by shorter notice than that specified in paragraph 23.1.1 of this Article, (i) an annual general meeting shall be deemed to have been duly convened if it is so agreed in the case of by all the Members entitled to attend and vote at the meeting thereat, and (ii) a general meeting shall be deemed to have been duly convened if it is so agreed in the case of by a majority in number of the Members entitled to attend and vote at the meeting thereat.

23.1.3

The notice of meeting shall specify:

(a)

whether the meeting is an annual general meeting or a general meeting;

(b)

the place, the day and the time of the meeting;

(c)

subject to the requirements of (to the extent applicable) the Exchange Rules and/or the Exchange, the general nature of the business to be transacted;

(d)

if the meeting is convened to consider a Special Resolution, the intention to propose the resolution as such; and

(e)

with reasonable prominence, that a Member entitled to attend and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him and that a proxy need not also be a Member.

23.1.4

The notice of meeting:

(a)

shall be given to the Members (other than a Member who, under these Articles or any restrictions imposed on any Shares, is not entitled to receive notice from the Company), to each Director and alternate Director, to the Auditor and to such other persons as may be required by the Exchange Rules and/or the Exchange; and

(b)

may specify a time by which a person must be entered on the Register of Members in order for such person to have the right to attend or vote at the meeting.

23.1.5

The Directors may determine that the Members entitled to receive notice of a meeting are those persons entered on the Register of Members at the close of business on a day determined by the Directors.

23.2

Omission or non-receipt of notice or instrument of proxy

The accidental omission to send or give notice of meeting or, in cases where it is intended that it be sent out or given with the notice, an instrument of proxy or other document to, or the non-receipt of any such item by, any person entitled to receive such notice shall not invalidate the proceedings at that meeting.

24.

PROCEEDINGS AT GENERAL MEETINGS

24.1

Requirement and number for a quorum

No business may be transacted at a general meeting unless a quorum is present. A quorum is two Members present in person or by proxy or by a duly authorised representative and entitled to vote on the business to be transacted, unless the Company has only one Member in which case that Member alone constitutes a quorum The absence of a quorum will not prevent the appointment of a chairman of the meeting. Such appointment shall not be treated as being part of the business of the meeting.

24.2

General meetings by telephone or other communications device

A general meeting may be held by means of any telephone, electronic or other communications facilities that permit all persons in the meeting to communicate with each other simultaneously and instantaneously and participation in such a meeting shall constitute presence in person at such meeting. Unless otherwise determined by resolution of the Members present, the meeting shall be deemed to be held at the place where the chairman is physically present.

24.3

Adjournment if quorum not present

24.3.1

If within thirty (30) minutes after the time appointed for a general meeting a quorum is not present (or if during such a meeting a quorum ceases to be present), the meeting:

(a)

if convened upon the requisition of Members, shall be dissolved; and

(b)

in any other case, stands adjourned to the same day in the next week at the same time and place or to such other day, time and place as the Directors may determine, and if at the adjourned meeting a quorum is not present within thirty (30) minutes from the time appointed for the meeting the Members present shall be a quorum.

24.4

Appointment of chairman of general meeting

24.4.1

If the Directors have elected one of their number as chairman of their meetings that person shall preside as chairman at every general meeting of the Company. If there is no such chairman, or if the elected chairman is not present within fifteen (15) minutes after the time appointed for the holding of the meeting, or is unable or unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.

24.4.2

If no Director is willing to act as chairman or if no Director is present within fifteen (15) minutes after the time appointed for holding the meeting, the Members present shall choose one of their number to be chairman of the meeting.

24.5

Orderly conduct

The chairman shall take such action or give directions for such action to be taken as he thinks fit to promote the orderly conduct of the business of the meeting. The chairman’s decision on points of order, matters of procedure or arising incidentally from the business of the meeting shall be final as shall be his determination as to whether any point or matter is of such a nature.

24.6

Entitlement to attend and speak

Each Director shall be entitled to attend and speak at any general meeting of the Company. The chairman may invite any person to attend and speak at any general meeting of the Company where he considers that this will assist in the deliberations of the meeting.

24.7

Adjournment of general meeting

The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a general meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice.

24.8

Voting on a show of hands

24.8.1

At any general meeting a resolution put to the vote of the meeting must be decided on a show of hands unless a poll is demanded.

24.8.2

Unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the Company’s book containing the minutes of proceedings of the Company, is conclusive evidence of the fact. Neither the chairman nor the minutes need state, and it is not necessary to prove, the number or proportion of the votes recorded in favour of or against the resolution.

24.9

When a poll may be demanded

24.9.1

A poll may only be demanded:

(a)

before the show of hands on that resolution is taken;

(b)

before the result of the show of hands on that resolution is declared; or

(c)

immediately after the result of the show of hands on that resolution is declared.

24.10

Demand for poll

24.10.1

A poll may be demanded by either:

(a)

the chairman of the meeting;

(b)

at least five (5) Members entitled to vote at the meeting;

(c)

a Member or Members representing in aggregate not less than ten percent (10%) of the total voting rights of all the Members having the right to vote at the meeting; or

(d)

a Member or Members holding Shares conferring a right to vote on the resolution on which an aggregate sum has been paid up equal to not less than ten percent (10%) of the total sum paid up on all the Shares conferring that right.

24.10.2

A demand for a poll does not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

24.11

Voting on a poll

24.11.1

If a poll is properly demanded:

(a)

it must be taken in the manner and at the date and time directed by the chairman;

(b)

on the election of a chairman or on a question of adjournment, it must be taken immediately;

(c)

the result of the poll is a resolution of the meeting at which the poll was demanded; and

(d)

the demand may be withdrawn.

24.12

Casting vote for chairman

If there is an equality of votes either on a show of hands or on a poll, the chairman is entitled to a second or casting vote in addition to any other vote he may have or be entitled to exercise.

25.

VOTES OF MEMBERS

25.1

Written resolutions of Members

A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all Members for the time being entitled to receive notice of and to attend and vote at general meetings of the Company shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held. A resolution in writing is adopted when all Members entitled to do so have signed it.

25.2

Registered Members to vote

No person shall be entitled to vote at any general meeting unless he is registered as a Member in the Register of Members on the record date for such meeting.

25.3

Voting rights

25.3.1

Subject to these Articles and to any rights or restrictions for the time being attached to any Class or Classes of Shares:

(a)

on a show of hands, each Member present in person and each other person present as a proxy or duly authorised representative of a Member has one vote; and

(b)

on a poll, each Member present in person has one vote for each Share held by the Member and each person present as a proxy or duly authorised representative of a Member has one vote for each Share held by the Member that the person represents. Each fractional Share shall carry the applicable fraction of one vote.

25.4

Voting rights of joint holders

If a Share is held jointly and more than one of the joint holders votes in respect of that Share, only the vote of the joint holder whose name appears first in the Register of Members in respect of that Share counts.

25.5

Voting rights of Members incapable of managing their affairs

A Member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in matters concerning mental disorder, may vote whether on a show of hands or on a poll by his receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such receiver, curator bonis or other person may vote by proxy.

25.6

Voting restriction on an outstanding call

Unless the Directors decide otherwise, no Member shall be entitled to be present or vote at any general meeting either personally or by proxy until he has paid all calls due and payable on every Share held by him whether alone or jointly with any other person together with interest and expenses (if any) to the Company.

25.7

Objection to error in voting

25.7.1

An objection to the right of a person to attend or vote at a general meeting or adjourned general meeting:

(a)

may not be raised except at that meeting or adjourned meeting; and

(b)

must be referred to the chairman of the meeting whose decision is final.

25.7.2

If any objection is raised to the right of a person to vote and the chairman disallows the objection then the vote cast by that person is valid for all purposes.

26.

REPRESENTATION OF MEMBERS AT GENERAL MEETINGS

26.1

How Members may attend and vote

26.1.1

Subject to these Articles, each Member entitled to vote at a general meeting may attend and vote at the general meeting:

(a)

in person, or where a Member is a company or non-natural person, by a duly authorised representative; or

(b)

by one or more proxies.

26.1.2

A proxy or a duly authorised representative may, but not need be, a Member of the Company.

26.2

Appointment of proxies

26.2.1

The instrument appointing a proxy shall be in writing and be executed by or on behalf of the Member appointing the proxy.

26.2.2

A corporation may execute an instrument appointing a proxy either under its common seal (or in any other manner permitted by law and having the same effect as if executed under seal) or under the hand of a duly authorised officer, attorney or other person.

26.2.3

A Member may appoint more than one proxy to attend on the same occasion, but only one proxy may be appointed in respect of any one Share.

26.2.4

The appointment of a proxy shall not preclude a Member from attending and voting at the meeting or any adjournment of it.

26.3

Form of instrument of proxy

The instrument appointing a proxy may be in any usual or common form (or in any other form approved by the Directors or prescribed by the Exchange) and may be expressed to be for a particular general meeting (or any adjournment of a general meeting) or generally until revoked.

26.4

Authority under instrument of proxy

The instrument appointing a proxy shall be deemed (unless the contrary is stated in it) to confer authority to demand or join in demanding a poll and to vote, on a poll, on a resolution as a motion or an amendment of a resolution put to, or other business which may properly come before, the meeting or meetings for which it is given or any adjournment of any such meeting, as the proxy thinks fit.

26.5

Receipt of proxy appointment

The instrument appointing a proxy and any authority under which it is executed shall be deposited at the Registered Office or at such other place as is specified in the notice convening the meeting (or in any instrument of proxy sent out by the Company) prior to the time set out in such notice or instrument (or if no such time is specified, no later than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting). Notwithstanding the foregoing, the chairman may, in any event, at his discretion, direct that an instrument of proxy shall be deemed to have been duly deposited.

26.6

Uncertificated Proxy Instruction

In relation to any Shares which are held by means of a Relevant System, the Directors may from time to time permit appointments of a proxy to be made by means of an electronic communication in the form of an Uncertificated Proxy Instruction. The Directors may in a similar manner permit supplements to, or amendments or revocations of, any such Uncertificated Proxy Instruction to be made by like means. The Directors may in addition prescribe the method of determining the time at which any such properly authenticated dematerialised instruction (and/or other instruction or notification) is to be treated as received by the Company or such participant. Notwithstanding any other provision in these Articles, the Directors may treat any such Uncertificated Proxy Instruction which purports to be or is expressed to be sent on behalf of a holder of a Share as sufficient evidence of the authority of the persons sending that instruction to send it on behalf of the holder.

26.7

Validity of votes cast by proxy

Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy or of the authority under which the instrument of proxy was executed, or the transfer of the Share in respect of which the proxy is appointed unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which the proxy voted.

26.8

Corporate representatives

A corporation which is a Member may, by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or at any separate meeting of the holders of any Class of Shares. Any person so authorised shall be entitled to exercise the same powers on behalf of the corporation (in respect of that part of the corporation’s holdings to which the authority relates) as the corporation could exercise if it were an individual Member. The corporation shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorised is present at it. All references in these Articles to attendance and voting in person shall be construed accordingly. A Director, the Secretary or some other person authorised for the purpose by a Director may require the representative to produce a certified copy of the resolution so authorising him or such other evidence of his authority reasonably satisfactory to such person before permitting him to exercise his powers.

26.9

Clearing Houses and Depositories

If a Clearing House or a Depository (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it thinks fit to act as its representatives at any meeting of the Company or at any separate meeting of the holders of any Class of Shares provided that, if more than one person is so authorised, the authorisation shall specify the number and Class of Shares in respect of which each such representative is so authorised. Each person so authorised under the provisions of this Article shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the Clearing House or the Depository (or its nominee(s)) as if such person was the registered holder of the Shares of the Company held by the Clearing House or the Depository (or its nominee(s)).

26.10

Termination of proxy or corporate authority

A vote given or poll demanded by proxy or by the duly authorised representative of a corporation shall be valid notwithstanding the previous termination of the authority of the person voting or demanding a poll, unless notice of the termination was received by the Company at the Registered Office, or at such other place at which the instrument of proxy was duly deposited, or, where the appointment of proxy was contained in an electronic communication, at the address at which such appointment was duly received, at least one hour before the commencement of the meeting or adjourned meeting at which the vote is given or the poll demanded or (in the case of a poll not taken on the same day as the meeting or adjourned meeting) at least one hour before the time appointed for taking the poll.

26.11

Amendment to resolution

26.11.1

If an amendment shall be proposed to any resolution but shall in good faith be ruled out of order by the chairman of the meeting, any error in such ruling shall not invalidate the proceedings on the substantive resolution.

26.11.2

ln the case of a resolution duly proposed as a Special Resolution, no amendment to it (other than an amendment to correct a patent error) may be considered or voted on and in the case of a resolution duly proposed as an Ordinary Resolution no amendment to it (other than an amendment to correct a patent error) may be considered or voted on unless either at least forty-eight (48) hours hours prior to the time appointed for holding the meeting or adjourned meeting at which such Ordinary Resolution is to be proposed notice in writing of the terms of the amendment and intention to move it has been lodged at the Registered Office or the chairman of the meeting in his absolute discretion decides that it may be considered or voted on.

26.12

Shares that may not be voted

Shares that are beneficially owned by the Company shall not be voted, directly or indirectly, at any general meeting or Class meeting (as applicable) and shall not be counted in determining the total number of outstanding Shares at any given time.

27.

APPOINTMENT, RETIREMENT AND REMOVAL OF DIRECTORS

27.1

Number of Directors

The Company may from time to time by Ordinary Resolution establish or vary a maximum and/or minimum number of Directors. Unless otherwise determined by the Company by Ordinary Resolution the number of Directors (other than alternate Directors) shall be not less than two and there shall be no maximum number of Directors.

27.2

No shareholding qualification

The Company may by Ordinary Resolution fix a minimum shareholding required to be held by a Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.

27.3

Appointment of Directors

27.3.1

The Company may by Ordinary Resolution appoint a person who is willing to act to be a Director either to fill a vacancy or as an addition to the existing Directors, subject to the total number of Directors not exceeding any maximum number fixed by or in accordance with these Articles. The first Director(s) shall be determined in writing by, or appointed by a resolution of, the Subscriber.

27.3.2

Without prejudice to the Company’s power to appoint a person to be a Director pursuant to these Articles, the Directors shall have power at any time to appoint any person who is willing to act as a Director, either to fill a vacancy or as an addition to the existing Directors, subject to the total number of Directors not exceeding any maximum number fixed by or in accordance with these Articles.

27.3.3

Any Director so appointed shall, if still a Director, retire at the next annual general meeting after his appointment and be eligible to stand for election as a Director at such meeting. Such person shall not be taken into account in determining the number or identity of Directors who are to retire by rotation at such meeting.

27.4

Appointment of executive Directors

The Directors may appoint one or more of its members to an executive office or other position of employment with the Company for such term and on any other conditions the Directors think fit. The Directors may revoke, terminate or vary the terms of any such appointment, without prejudice to a claim for damages for breach of contract between the Director and the Company.

27.5

Rotational retirement at annual general meeting

27.5.1

Each Director is subject to retirement by rotation in accordance with these Articles, subject to Article 27.3.2.

27.5.2

At each annual general meeting one-third of the Directors who are subject to retirement by rotation or, if their number is not three nor a multiple of three, the number nearest to but not exceeding one-third, shall retire from office. lf there are fewer than three Directors who are subject to retirement by rotation, one of them shall retire from office at the annual general meeting.

27.5.3

Subject to these Articles, the Directors to retire by rotation at each annual general meeting shall be, so far as necessary to obtain the number required, first, any Director who wishes to retire and not offer himself for re-election and secondly, those Directors who have been longest in office since their last appointment or re-appointment. As between two or more Directors who have been in office an equal length of time, the Director to retire shall, in default of agreement between them, be determined by lot. The Directors to retire on each occasion (both as to number and identity) shall be determined by the composition of the Directors at the start of business seven (7) days before the date of the notice convening the annual general meeting notwithstanding any change in the number or identity of the Directors after that time but before the close of the meeting.

27.5.4

lf the Directors so decide, one or more other Directors selected by the Directors may also retire at an annual general meeting as if any such other Director was also retiring by rotation at that meeting in accordance with these Articles.

27.6

Position of retiring Director

27.6.1

A Director who retires at an annual general meeting (whether by rotation or otherwise) may, if willing to act, be re-appointed. lf he is not re-appointed or deemed to have been reappointed, he shall retain office until the meeting appoints someone in his place or, if it does not do so, until the end of the meeting.

27.6.2

At any general meeting at which a Director retires by rotation the Company may fill the vacancy and, if it does not do so, the retiring Director shall, if willing, be deemed to have been re-appointed unless it is expressly resolved not to fill the vacancy or a resolution for the re-appointment of the Director is put to the meeting and lost.

27.7

No age limit

27.7.1

No person shall be disqualified from being appointed or re-appointed as a Director and no Director shall be requested to vacate that office by reason of his attaining the age of seventy or any other age.

27.7.2

It shall not be necessary to give special notice of any resolution appointing, re-appointing or approving the appointment of a Director by reason of his age.

27.8

Removal of Directors by Ordinary Resolution

27.8.1

The Company may:

(a)

by Ordinary Resolution remove any Director before the expiration of his period of office, but without prejudice to any claim for damages which he may have for breach of any contract of service between him and the Company; and

(b)

by Ordinary Resolution appoint another person who is willing to act to be a Director in his place (subject to these Articles).

27.8.2

Any person so appointed shall be treated, for the purposes of determining the time at which he or any other Director is to retire, as if he had become a Director on the day on which the person in whose place he is appointed was last appointed or re-appointed a Director.

27.9

Other circumstances in which a Director ceases to hold office

27.9.1

Without prejudice to the provisions in these Articles for retirement (by rotation or otherwise) a Director ceases to hold office as a Director if:

(a)

he resigns as Director by notice in writing delivered to the Directors or to the Registered Office or tendered at a meeting of Directors;

(b)

he is not present personally or by proxy or represented by an alternate Director at meetings of the Directors for a continuous period of 6 months without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office;

(c)

he only held office as a Director for a fixed term and such term expires;

(d)

he dies, becomes bankrupt or makes any arrangement or composition with his creditors generally;

(e)

he is removed from office pursuant to these Articles or the Companies Law or becomes prohibited by law from being a Director;

(f)

an order is made by any court of competent jurisdiction on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or receiver or other person to exercise powers with respect to his property or affairs or he is admitted to hospital in pursuance of an application for admission for treatment under any legislation relating to mental health and the Directors resolve that his office be vacated;

(g)

he is removed from office by notice in writing addressed to him at his address as shown in the Company’s register of directors and signed by not less than three-fourths of all the Directors in number (without prejudice to any claim for damages which he may have for breach of contract against the Company); or

(h)

in the case of a Director who holds executive office, his appointment to such office is terminated or expires and the Directors resolve that his office be vacated.

27.9.2

A Resolution of the Directors declaring a Director to have vacated office pursuant to this Article shall be conclusive as to the fact and grounds of vacation stated in the resolution.

28.

ALTERNATE DIRECTORS

28.1

Appointment

28.1.1

A Director (other than an alternate Director) may appoint any other Director or any person approved for that purpose by the Directors and willing to act, to be his alternate by notice in writing delivered to the Directors or to the Registered Office, or in any other manner approved by the Directors.

28.1.2

The appointment of an alternate Director who is not already a Director shall require the approval of either a majority of the Directors or the Directors by way of a Directors’ resolution.

28.1.3

An alternate Director need not hold a Share qualification and shall not be counted in reckoning any maximum or minimum number of Directors allowed by these Articles.

28.2

Responsibility

Every person acting as an alternate Director shall be an officer of the Company, shall alone be responsible to the Company for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.

28.3

Participation at Directors’ meetings

An alternate Director shall (subject to his giving to the Company an address at which notices may be served on him) be entitled to receive notice of all meetings of the Directors and all committees of the Directors of which his appointor is a member and, in the absence from such meetings of his appointor, to attend and vote at such meetings and to exercise all the powers, rights, duties and authorities of his appointor (other than the power to appoint an alternate Director). A Director acting as alternate Director shall have a separate vote at Directors’ meetings for each Director for whom he acts as alternate Director, but he shall count as only one for the purpose of determining whether a quorum is present.

28.4

lnterests

An alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements with the Company and to be repaid expenses and to be indemnified in the same way and to the same extent as a Director. However, he shall not be entitled to receive from the Company any fees for his services as alternate, except only such part (if any) of the fee payable to his appointor as such appointor may by notice in writing to the Company direct. Subject to this Article, the Company shall pay to an alternate Director such expenses as might properly have been paid to him if he had been a Director.

28.5

Termination of appointment

28.5.1

An alternate Director shall cease to be an alternate Director:

(a)

if his appointor revokes his appointment by notice delivered to the Directors or to the Registered Office or in any other manner approved by the Directors;

(b)

if his appointor ceases for any reason to be a Director, provided that if any Director retires but is re-appointed or deemed to be re-appointed at the same meeting, any valid appointment of the alternate Director which was in force immediately before his retirement shall remain in force; or

(c)

if any event happens in relation to him which, if he were a Director, would cause his office as Director to be vacated.

29.

POWERS OF DIRECTORS

29.1

General powers to manage the Company’s business

29.1.1

Subject to the provisions of the Companies Law, the Memorandum and these Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors, who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given.

29.1.2

The powers given by this Article shall not be limited by any special power given to the Directors by these Articles and a duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.

29.2

Signing of cheques

All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine.

29.3

Retirement payments and other benefits

The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

29.4

Borrowing powers of Directors

The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking and property and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.

30.

PROCEEDINGS OF DIRECTORS

30.1

Directors’ meetings

Subject to the provisions of these Articles, the Directors may regulate their proceedings as they think fit.

30.2

Voting

Questions arising at any Directors’ meeting shall be decided by a simple majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote.

30.3

Notice of a Directors’ meeting

A Director or an alternate Director may, or any other officer of the Company at the request of a Director or alternate Director shall, call a meeting of the Directors by not less than twenty-four (24) hours’ notice. Notice of a meeting of the Directors must specify the time and place of the meeting and the general nature of the business to be considered, and shall be deemed to be given to a Director if it is given to him personally or by word of mouth or sent in writing to his last known address given to the Company by him for such purpose or given by electronic communications to an address for the time being notified to the Company by the Director. A Director may waive the requirement that notice of any Directors’ meeting be given to him, either at, before or after the meeting.

30.4

Failure to give notice

A Director or alternate Director who attends any Directors’ meeting waives any objection that he or she may have to any failure to give notice of that meeting. The accidental failure to give notice of a Directors’ meeting to, or the non-receipt of notice by, any person entitled to receive notice of that meeting does not invalidate the proceedings at that meeting or any resolution passed at that meeting.

30.5

Quorum

No business shall be transacted at any meeting of the Directors unless a quorum is present. The quorum may be fixed by the Directors, and unless so fixed shall be two (2) if there are two or more Directors, and shall be one if there is only one Director. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum.

30.6

Power to act notwithstanding vacancies

The continuing Directors or sole continuing Director may act notwithstanding any vacancies in their number, but if the number of Directors is less than the number fixed as the quorum, the continuing Directors or Director may act only for the purpose of filling vacancies in that number, or for calling a general meeting of the Company.

30.7

Chairman to preside

The Directors may elect a chairman of their board and determine the period for which he is to hold office, but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting, the Directors present may appoint one of their number to be chairman of the meeting.

30.8

Validity of acts of Directors in spite of a formal defect

All acts done by a meeting of the Directors or of a committee of Directors (including any person acting as an alternate Director) shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Director or alternate Director, or that they or any of them were disqualified from holding office (or had vacated office) or were not entitled to vote, be as valid as if every such person had been duly appointed and qualified to be a Director or alternate Director as the case may be and had been entitled to vote.

30.9

Directors’ meetings by telephone or other communication device

A meeting of the Directors (or committee of Directors) may be held by means of any telephone, electronic or such other communications facilities that permit all persons in the meeting to communicate with each other simultaneously and instantaneously and participation in such a meeting shall constitute presence in person at such meeting. Unless otherwise determined by the Directors the meeting shall be deemed to be held at the place where the chairman is physically present.

30.10

Written resolutions of Directors

A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of Directors (an alternate Director being entitled to sign such a resolution on behalf of his appointor) shall be as valid and effective as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held. A resolution in writing is adopted when all the Directors (whether personally, by an alternate Director or by a proxy) have signed it.

30.11

Appointment of a proxy

A Director but not an alternate Director may be represented at any meeting of the Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director. The authority of any such proxy shall be deemed unlimited unless expressly limited in the written instrument appointing him.

30.12

Presumption of assent

A Director (or alternate Director) present at a meeting of Directors is taken to have cast a vote in favour of a resolution of the Directors unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the chairman or secretary of the meeting before the adjournment of the meeting or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of a resolution of the Directors.

30.13

Directors’ interests

30.13.1

Subject to the provisions of the Companies Law and provided that he has declared to the Directors the nature and extent of any personal interest of his in a matter, transaction or arrangement, a Director or alternate Director notwithstanding his office may:

(a)

hold any office or place of profit in the Company, except that of Auditor;

(b)

hold any office or place of profit in any other company or entity promoted by the Company or in which it has an interest of any kind;

(c)

enter into any contract, transaction or arrangement with the Company or in which the Company is otherwise interested;

(d)

act in a professional capacity (or be a member of a firm which acts in a professional capacity) for the Company, except as Auditor;

(e)

sign or participate in the execution of any document in connection with matters related to that interest;

(f)

participate in, vote on and be counted in the quorum at any meeting of the Directors that considers matters relating to that interest; and

(g)

do any of the above despite the fiduciary relationship of the Director’s office:

(i)

without any liability to account to the Company for any direct or indirect benefit accruing to the Director; and

(ii)

without affecting the validity of any contract, transaction or arrangement.

30.13.2

For the purposes of this Article, a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any matter, transaction or arrangement for which a specified person or class of persons is interested shall be deemed to be a disclosure that the Director has an interest in any such matter, transaction or arrangement of the nature and extent so specified.

30.14

Minutes of meetings to be kept

The Directors shall cause minutes to be made in books kept for the purpose of all appointments of officers made by the Directors, all proceedings at general and Class meetings of the Company and meetings of the Directors or committees of the Directors, including the names of the Directors or alternate Directors present at each meeting.

31.

DELEGATION OF DIRECTORS’ POWERS

31.1

Power of Directors to delegate

31.1.1

The Directors may:

(a)

delegate any of their powers, authorities and discretions to any committee of the Directors consisting of one or more Directors and (if the Directors think fit) to one or more other persons in each case to such extent, by such means (including by power of attorney) and on such terms and conditions as the Directors think fit;

(b)

authorise any person to whom powers, authorities and discretions are delegated under this Article by the Directors to further delegate some or all of those powers, authorities and discretions;

(c)

delegate their powers, authorities and discretions under this Article either collaterally with or to the exclusion of their own powers, authorities and discretions; and

(d)

at any time revoke any delegation made under this Article by the Directors in whole or in part or vary its terms and conditions.

31.2

Delegation to Committees

A committee to which any powers, authorities and discretions have been delegated under the preceding Article must exercise those powers, authorities and discretions in accordance with the terms of delegation and any other regulations that may be imposed by the Directors on that committee. The proceedings of a committee of the Directors must be conducted in accordance with any regulations imposed by the Directors, and, subject to any such regulations, to the provisions of these Articles dealing with proceedings of Directors insofar as they are capable of applying.

31.3

Delegation to executive Directors

The Directors may delegate to a Director holding executive office any of its powers, authorities and discretions for such time and on such terms and conditions as it shall think fit. The Directors may grant to a Director the power to sub-delegate, and may retain or exclude the right of the Directors to exercise the delegated powers, authorities or discretions collaterally with the Director. The Directors may at any time revoke the delegation or alter its terms and conditions.

31.4

Delegation to local boards

31.4.1

The Directors may establish any local or divisional board or agency for managing any of the affairs of the Company whether in the Cayman Islands or elsewhere and may appoint any persons to be members of a local or divisional board, or to be managers or agents, and may fix their remuneration.

31.4.2

The Directors may delegate to any local or divisional board, manager or agent any of its powers and authorities (with power to sub-delegate) and may authorise the members of any local or divisional board or any of them to fill any vacancies and to act notwithstanding vacancies.

31.4.3

Any appointment or delegation under this Article may be made on such terms and subject to such conditions as the Directors think fit and the Directors may remove any person so appointed, and may revoke or vary any delegation.

31.5

Appointing an attorney, agent or authorised signatory of the Company

31.5.1

The Directors may by power of attorney or otherwise appoint any person to be the attorney, agent or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they think fit.

31.5.2

Any such power of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney, agent or authorised signatory as the Directors think fit and may also authorise any such attorney, agent or authorised signatory to delegate all or any of the powers, authorities and discretions vested in such person.

31.6

Officers

The Directors may appoint such officers (including a Secretary) as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors think fit. Unless otherwise specified in the terms of his appointment, an officer may be removed from that office by resolution of the Directors or by Ordinary Resolution.

32.

DIRECTORS’ RENUMERATION, EXPENSES AND BENEFITS

32.1

Fees

The Company shall pay to the Directors (but not alternate Directors) for their services as Directors such aggregate amount of fees as the Directors may decide. The aggregate fees shall be divided among the Directors in such proportions as the Directors may decide or, if no decision is made, equally. A fee payable to a Director pursuant to this Article shall be distinct from any salary, remuneration or other amount payable to him pursuant to other provisions of these Articles and accrues from day to day.

32.2

Expenses

A Director may also be paid all travelling, hotel and other expenses properly incurred by him in connection with his attendance at meetings of the Directors or of committees of the Directors or general meetings or separate meetings of the holders of any Class of Shares or otherwise in connection with the discharge of his duties as a Director, including (without limitation) any professional fees incurred by him (with the approval of the Directors or in accordance with any procedures stipulated by the Directors) in taking independent professional advice in connection with the discharge of such duties.

32.3

Remuneration of executive Directors

The salary or remuneration of a Director appointed to hold employment or executive office in accordance with the Articles may be a fixed sum of money, or wholly or in part governed by business done or profits made, or as otherwise decided by the Directors (including, for the avoidance of doubt, by the Directors acting through a duly authorised Directors’ committee), and may be in addition to or instead of a fee payable to him for his services as Director pursuant to these Articles.

32.4

Special remuneration

A Director who, at the request of the Directors, goes or resides abroad, makes a special journey or performs a special service on behalf of or for the Company (including, without limitation, services as a chairman of the board of Directors, services as a member of any committee of the Directors and services which the Directors consider to be outside the scope of the ordinary duties of a Director) may be paid such reasonable additional remuneration (whether by way of salary, bonus, commission, percentage of profits or otherwise) and expenses as the Directors (including, for the avoidance of doubt, the Directors acting through a duly authorised Directors’ committee) may decide.

32.5

Pensions and other benefits

The Directors may exercise all the powers of the Company to provide pensions or other retirement or superannuation benefits and to provide death or disability benefits or other allowances or gratuities (by insurance or otherwise) for a person who is or has at any time been a Director, an officer or a director or an employee of a company which is or was a Group Undertaking, a company which is or was allied to or associated with the Company or with a Group Undertaking or a predecessor in business of the Company or of a Group Undertaking (and for any member of his family, including a spouse or former spouse, or a person who is or was dependent on him). For this purpose the Directors may establish, maintain, subscribe and contribute to any scheme, trust or fund and pay premiums. The Directors may arrange for this to be done by the Company alone or in conjunction with another person. A Director or former Director is entitled to receive and retain for his own benefit any pension or other benefit provided in accordance with this Article and is not obliged to account for it to the Company.

33.

SEAL

33.1

Directors to determine use of Seal

The Company may, if the Directors so determine, have a Seal. The Seal shall only be used with the authority of the Directors or a committee of the Directors established for such purpose. Every document to which the Seal is affixed shall be signed by at least one person who shall be either a Director or some officer or other person appointed by the Directors for that purpose unless the Directors decide that, either general or in a particular case, that a signature may be dispensed with or affixed by mechanical means.

33.2

Duplicate Seal

The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.

34.

DIVIDENDS, DISTRIBUTIONS AND RESERVES

34.1

Declaration

Subject to the Companies Law and these Articles, the Directors may declare dividends and distributions on any one or more Classes of Shares in issue and authorise payment of the dividends or distributions out of the funds of the Company lawfully available therefor. No dividend or distribution shall be paid except out of the realised or unrealised profits of the Company, or out of the share premium account, or as otherwise permitted by the Companies Law.

34.2

lnterim dividends

Subject to the Companies Law, the Directors may pay such interim dividends (including any dividend payable at a fixed rate) as appears to the Directors to be available for distribution. lf at any time the share capital of the Company is divided into different Classes, the Directors may pay such interim dividends on Shares which rank after Shares conferring preferential rights with regard to dividend as well as on Shares conferring preferential rights, unless at the time of payment any preferential dividend is in arrears. lf the Directors act in good faith, they shall not incur any liability to the holders of Shares conferring preferential rights for any loss that they may suffer by the lawful payment of an interim dividend on any Shares ranking after those with preferential rights.

34.3

Entitlement to dividends

34.3.1

Except as otherwise provided by these Articles or the rights attached to Shares:

(a)

a dividend shall be declared and paid according to the amounts paid up (otherwise than in advance of calls) on the nominal value of the Shares on which the dividend is paid; and

(b)

dividends shall be apportioned and paid proportionately to the amounts paid up on the nominal value of the Shares during any portion or portions of the period in respect of which the dividend is paid, but if any Share is issued on terms that it shall rank for dividend as from a particular date, it shall rank for dividend accordingly.

34.3.2

Except as otherwise provided by these Articles or the rights attached to Shares:

(a)

a dividend may be paid in any currency or currencies decided by the Directors; and

(b)

the Company may agree with a Member that any dividend declared or which may become due in one currency will be paid to the Member in another currency, for which purpose the Directors may use any relevant exchange rate current at any time as the Directors may select for the purpose of calculating the amount of any Member’s entitlement to the dividend.

34.4

Payment methods

34.4.1

The Company may pay a dividend, interest or other amount payable in respect of a Share in cash or by cheque, warrant or money order or by a bank or other funds transfer system or (in respect of any uncertificated Share or any Share represented by a Depository Interest) through the Relevant System in accordance with any authority given to the Company to do so (whether in writing, through the Relevant System or otherwise) by or on behalf of the Member in a form or in a manner satisfactory to the Directors. Any joint holder or other person jointly entitled to a Share may give an effective receipt for a dividend, interest or other amount paid in respect of such Share.

34.4.2

The Company may send a cheque, warrant or money order by post:

(a)

in the case of a sole holder, to his registered address;

(b)

in the case of joint holders, to the registered address of the person whose name stands first in the Register of Members;

(c)

in the case of a person or persons entitled by transmission to a Share, as if it were a notice given in accordance with Article 14; or

(d)

in any case, to a person and address that the person or persons entitled to the payment may in writing direct.

34.4.3

Every cheque, warrant or money order shall be sent at the risk of the person or persons entitled to the payment and shall be made payable to the order of the person or persons entitled or to such other person or persons as the person or persons entitled may in writing direct. The payment of the cheque, warrant or money order shall be a good discharge to the Company. lf payment is made by a bank or other funds transfer or through the Relevant System, the Company shall not be responsible for amounts lost or delayed in the course of transfer. lf payment is made by or on behalf of the Company through the Relevant System:

(a)

the Company shall not be responsible for any default in accounting for such payment to the Member or other person entitled to such payment by a bank or other financial intermediary of which the Member or other person is a customer for settlement purposes in connection with the Relevant System; and

(b)

the making of such payment in accordance with any relevant authority referred to in paragraph (a) above shall be a good discharge to the Company.

34.4.4

The Directors may:

(a)

lay down procedures for making any payments in respect of uncertificated Shares through the Relevant System;

(b)

allow any holder of uncertificated Shares to elect to receive or not to receive any such payment through the Relevant System; and

(c)

lay down procedures to enable any such holder to make, vary or revoke any such election.

34.4.5

The Directors may withhold payment of a dividend (or part of a dividend) payable to a person entitled by transmission to a Share until he has provided any evidence of his entitlement that the Directors may reasonably require.

34.5

Deductions

The Directors may deduct from any dividend or other amounts payable to any person in respect of a Share all such sums as may be due from him to the Company on account of calls or otherwise in relation to any Shares.

34.6

Interest

No dividend or other money payable in respect of a Share shall bear interest against the Company, unless otherwise provided by the rights attached to the Share.

34.7

Unclaimed dividends

All unclaimed dividends or other monies payable by the Company in respect of a Share may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed. The payment of any unclaimed dividend or other amount payable by the Company in respect of a Share into a separate account shall not constitute the Company a trustee in respect of it. Any dividend unclaimed after a period of three (3) years from the date the dividend became due for payment shall be forfeited and shall revert to the Company.

34.8

Uncashed dividends

34.8.1

lf, in respect of a dividend or other amount payable in respect of a Share:

(a)

a cheque, warrant or money order is returned undelivered or left uncashed; or

(b)

a transfer made by or through a bank transfer system and/or other funds transfer system(s) (including, without limitation, the Relevant System in relation to any uncertificated Shares) fails or is not accepted, on two consecutive occasions, or one occasion and reasonable enquiries have failed to establish another address or account of the person entitled to the payment, the Company shall not be obliged to send or transfer a dividend or other amount payable in respect of such Share to such person until he notifies the Company of an address or account to be used for such purpose.

34.9

Dividends in kind

34.9.1

The Directors may direct that any dividend or distribution shall be satisfied wholly or partly by the distribution of assets (including, without limitation, paid up Shares or securities of any other body corporate). Where any difficulty arises concerning such distribution, the Directors may settle it as it thinks fit. ln particular (without limitation), the Directors may:

(a)

issue fractional certificates or ignore fractions;

(b)

fix the value for distribution of any assets, and may determine that cash shall be paid to any Member on the footing of the value so fixed in order to adjust the rights of Members; and

(c)

vest any assets in trustees on trust for the persons entitled to the dividend.

34.10

Scrip dividends

34.10.1

The Directors may offer any holders of ordinary Shares the right to elect to receive ordinary Shares, credited as fully paid, instead of cash in respect of the whole (or some part, to be determined by the Directors) of any dividend specified by the Ordinary Resolution, subject to the Companies Law and to the provisions of this Article.

34.10.2

The Directors may make any provision they consider appropriate in relation to an allotment made or to be made pursuant to this Article (whether before or after the passing or the Ordinary Resolution referred to in paragraph (a) of this Article), including (without limitation):

(a)

the giving of notice to holders of the right of election offered to them;

(b)

the provision of forms of election and/or a facility and a procedure for making elections through the Relevant System (whether in respect of a particular dividend or dividends generally);

(c)

determination of the procedure for making and revoking elections;

(d)

the place at which, and the latest time by which, forms of election and other relevant documents must be lodged in order to be effective;

(e)

the disregarding or rounding up or down or carrying forward of fractional entitlements, in whole or in part, or the accrual of the benefit of fractional entitlements to the Company (rather than to the holders concerned); and

(f)

the exclusion from any offer of any holders of ordinary Shares where the Directors consider that the making of the offer to them would or might involve the contravention of the laws of any territory or that for any other reason the offer should not be made to them.

34.10.3

The dividend (or that part of the dividend in respect of which a right of election has been offered) shall not be payable on ordinary Shares in respect of which a valid election has been made (“the elected ordinary Shares”). Instead additional ordinary Shares shall be allotted to the holders of the elected ordinary Shares on the basis of allotment determined under this Article. For such purpose, the Directors may capitalise out of any amount for the time being standing to the credit of any reserve or fund of the Company (including any share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution, a sum equal to the aggregate nominal amount of the additional ordinary Shares to be allotted on that basis and apply it in paying up in full the appropriate number of unissued ordinary Shares for allotment and distribution to the holders of the elected ordinary Shares on that basis.

34.10.4

The additional ordinary Shares when allotted shall rank equally in all respects with the fully paid ordinary Shares in issue on the record date for the dividend in respect of which the right of election has been offered, except that they will not rank for any dividend or other entitlement which has been declared, paid or made by reference to such record date.

34.10.5

The Directors may:

(a)

do all acts and things which it considers necessary or expedient to give effect to any such capitalisation, and may authorise any person to enter on behalf of all the Members interested into an agreement with the Company providing for such capitalisation and incidental matters and any agreement so made shall be binding on all concerned;

(b)

establish and vary a procedure for election mandates in respect of future rights of election and determine that every duly effected election in respect of any ordinary Shares shall be binding on every successor in title to the holder of such Shares; and

(c)

terminate, suspend or amend any offer of the right to elect to receive ordinary Shares in lieu of any cash dividend at any time and generally implement any scheme in relation to any such offer on such terms and conditions as the Directors may from time to time determine and take such other action as the Directors may deem necessary or desirable from time to time in respect of any such scheme.

34.11

Reserves

The Directors may set aside out of the profits of the Company and carry to reserve such sums as it thinks fit. Such sums standing to reserve may be applied, at the Directors’ discretion, for any purpose to which the profits of the Company may properly be applied and, pending such application, may either be employed in the business of the Company or be invested in such investments as the Directors thinks fit. The Directors may divide the reserve into such special funds as it thinks fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided as it thinks fit. The Directors may also carry forward any profits without placing them to reserve.

34.12

Capitalisation of profits and reserves

34.12.1

The Directors may, with the authority of an Ordinary Resolution:

(a)

subject to this Article, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not available for distribution) or any sum standing to the credit of any reserve or fund of the Company (including any share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution;

(b)

appropriate the sum resolved to be capitalised to the holders of ordinary Shares in proportion to the nominal amounts of the Shares (whether or not fully paid) held by them respectively which would entitle them to participate in a distribution of that sum if the Shares were fully paid and the sum were then distributable and were distributed by way of dividend and apply such sum on their behalf either in or towards paying up the amounts, if any, unpaid on any Shares held by them respectively, or in paying up in full unissued Shares or debentures of the Company of a nominal amount equal to that sum, and allot the Shares or debentures credited as fully paid to those holders of ordinary Shares or as the Directors may direct, in those proportions, or partly in one way and partly in the other, but so that the share premium account, the capital redemption reserve and any profits or reserves which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Members credited as fully paid;

(c)

resolve that any Shares so allotted to any Member in respect of a holding by him of any partly paid Shares shall, so long as such Shares remain partly paid, rank for dividend only to the extent that such partly paid Shares rank for dividend;

(d)

make such provision by the issue of fractional certificates (or by ignoring fractions or by accruing the benefit of fractions to the Company rather than to the holders concerned) or by payment in cash or otherwise as the Directors may determine in the case of Shares or debentures becoming distributable in fractions;

(e)

authorise any person to enter on behalf of all the Members concerned into an agreement with the Company providing for either:

(i)

the allotment to them respectively, credited as fully paid, of any further Shares or debentures to which they are entitled upon such capitalisation; or

(ii)

the payment up by the Company on behalf of such Members by the application thereto of their respective proportions of the reserves or profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing Shares, and so that any such agreement shall be binding on all such Members; and

(f)

generally do all acts and things required to give effect to such resolution.

35.

SHARE PREMIUM ACCOUNT

35.1

Directors to maintain share premium account

The Directors shall establish a share premium account in accordance with the Companies Law. They shall carry to the credit of that account from time to time an amount equal to the amount or value of the premium paid on the issue of any Share or capital contributed or such other amounts required by the Companies Law.

35.2

Debits to share premium account

35.2.1

The following amounts shall be debited to any share premium account:

(a)

on the redemption or purchase of a Share, the difference between the nominal value of that Share and the redemption or purchase price; and

(b)

any other amount paid out of a share premium account as permitted by the Companies Law.

35.2.2

Notwithstanding paragraph (a) above, on the redemption or purchase of a Share, the Directors may pay the difference between the nominal value of that Share and the redemption purchase price out of the profits of the Company or, as permitted by the Companies Law, out of capital.

36.

DISTRIBUTION PAYMENT RESTRICTIONS

Notwithstanding any other provision of these Articles, the Company shall not be obliged to make any payment to a Member in respect of a dividend, repurchase, redemption or other distribution if the Directors suspect that such payment may result in the breach or violation of any applicable laws or regulations (including, without limitation, any anti-money laundering laws or regulations) or such refusal is required by the laws and regulations governing the Company or its service providers.

37.

BOOKS OF ACCOUNT

37.1

Books of account to be kept

The Directors shall cause proper books of account to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the affairs of the Company and to explain its transactions.

37.2

Inspection by Members

The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them will be open to the inspection of Members (not being Directors). No Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by the Companies Law by order of the court or authorised by the Directors or by Ordinary Resolution.

37.3

Accounts required by law

The Directors shall cause to be prepared and to be laid before the Company at each annual general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.

37.4

Retention of records

All books of account maintained by the Company shall be retained for a period of at least five years, or such longer period required by any applicable law or regulation from time to time.

38.

AUDIT

38.1

Appointment of Auditor

The Directors may appoint an Auditor who shall hold office until removed from office by a resolution of the Directors, and may fix the Auditor’s remuneration.

38.2

Rights of Auditor

The Auditor shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor.

38.3

Reporting requirements of Auditor

Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next general meeting following their appointment, and at any other time during their term of office, upon request of the Directors or any general meeting of the Company.

39.

NOTICES

39.1

Forms of notices

Any notice to be given to or by any person pursuant to these Articles (other than a notice calling a meeting of the Directors) shall be in writing or shall be given using electronic communications to an address for the time being notified for that purpose to the person giving the notice, except that a notice to a holder of any uncertificated Shares or given in respect of any such Shares may be given electronically through the Relevant System (if permitted by, and subject to, the facilities and requirements of the Relevant System and subject to compliance with any relevant requirements of the Exchange Rules and/or the Exchange).

(ln this Article “address”, in relation to electronic communications, includes any number or address used for the purposes of such communications).

39.2

Service on Members

39.2.1

A notice or other document may be given by the Company to any Member either personally or by sending it by post in a pre-paid envelope addressed to such Member at his registered address or by leaving it at that address or by giving it using electronic communications to an address for the time being notified to the Company by the Member, or by any other means authorised in writing by the Member concerned or (in the case of a notice to a Member holding uncertificated Shares) by transmitting the notice through the Relevant System.

39.2.2

ln the case of joint holders of a Share, all notices and documents shall be given to the person whose name stands first in the Register of Members in respect of that Share. Notice so given shall be sufficient notice to all the joint holders.

39.2.3

Any notice or other document to be given to a Member may be given by reference to the Register of Members as it stands at any time within the period of 21 days before the day that the notice is given or (where and as applicable) within any other period permitted by, or in accordance with the requirements of, (to the extent applicable) the Exchange Rules and/or the Exchange. No change in the Register of Members after that time shall invalidate the giving of such notice or document or require the Company to give such item to any other person.

39.2.4

lf on three consecutive occasions notices or other documents have been sent through the post to any Member at his registered address or his address for the service of notices but have been returned undelivered, such Member shall not be entitled to receive notices or other documents from the Company until he shall have communicated with the Company and supplied in writing a new registered address for the service of notices.

39.2.5

lf on three consecutive occasions notices or other documents have been sent using electronic communications to an address for the time being notified to the Company by the Member and the Company becomes aware that there has been a failure of transmission, the Company shall revert to giving notices and other documents to the Member by post or by any other means authorised in writing by the Member concerned. Such Member shall not be entitled to receive notices or other documents from the Company using electronic communications until he shall have communicated with the Company and supplied in writing a new address to which notices or other documents may be sent using electronic communications.

39.3

Evidence of giving notice

39.3.1

A notice or other document addressed to a Member at his registered address shall be, if sent by post or airmail, deemed to have been given at the time forty-eight (48) hours after posting if pre-paid as first class post and at the time 48 hours after posting if pre-paid as second class post. ln proving that notice has been given it shall be sufficient to prove that the envelope containing the notice or document was properly addressed, pre-paid and posted.

39.3.2

A notice or other document address to a Member at an address to which notices may be sent using electronic communications shall be, if sent by electronic communications, deemed to have been given at the expiration of forty-eight (48) hours after the time it was sent.

39.3.3

A notice or document not sent by post but:

(a)

left at a registered address or address for giving notice in People’s Republic of China shall be deemed to be given on the day it is left; and

(b)

given through the Relevant System shall be deemed to be given when the Company or other relevant person acting on the Company’s behalf sends the relevant instruction or other relevant message in respect of such notice.

39.3.4

A Member present either in person or by proxy, or in the case of a corporate Member by a duly authorised representative, at any meeting of the Company or of the holders of any Class of Shares shall be deemed to have received due notice of such meeting and, where required, of the purposes for which it was called.

39.4

Notice binding on transferees

A person who becomes entitled to a Share by transfer, transmission or otherwise shall be bound by any notice in respect of that Share which, before his name is entered in the Register of Members, has been given to the person from whom he derives his title.

39.5

Notice to persons entitled by transmission

A notice or other document may be given by the Company to a person entitled by transmission to a Share in consequence of the death or bankruptcy of a Member or otherwise by sending or delivering it in any manner authorised by these Articles for the giving of notice to a Member, addressed to that person by name, or by the title of representative of the deceased or trustee of the bankrupt or by any similar or equivalent description, to the address to which notices have been requested to be sent for that purpose by the person claiming to be so entitled. Until such an address has been supplied, a notice or other document may be given in any manner in which it might have been given if the event giving rise to the transmission had not occurred. The giving of notice in accordance with this Article shall be sufficient notice to all other persons interested in the Share.

40.

WINDING UP

40.1

Method of winding up

40.1.1

If the Company shall be wound up, and the assets available for distribution amongst the Members shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them.

40.1.2

If in a winding up the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company.

40.1.3

This Article is without prejudice to the rights of the holders of Shares issued upon special terms and conditions.

40.2

Distribution of assets in a winding up

40.2.1

Subject to any rights or restrictions for the time being attached to any Class of Shares, on a winding up of the Company the liquidator may, with the sanction of a Special Resolution of the Company and any other sanction required by the Companies Law, distribute among the Members the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose:

(a)

decide how the assets are to be distributed as between the Members or different Classes of Members;

(b)

value the assets to be distributed in such manner as the liquidator thinks fit; and

(c)

vest the whole or any part of any assets in such trustees and on such trusts for the benefit of the Members entitled to the distribution of those assets as the liquidator sees fit, but so that no Member shall be obliged to accept any assets in respect of which there is any liability.

41.

INDEMNITY AND INSURANCE

41.1

Indemnity and limitation of liability of Directors and officers

41.1.1

To the maximum extent permitted by law, every current and former Director and officer of the Company (excluding an Auditor) (each an “Indemnified Person”), shall be entitled to be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses (each a “Liability”), which such Indemnified Person may incur in that capacity unless such Liability arose as a result of the actual fraud or wilful default of such person.

41.1.2

No Indemnified Person shall be liable to the Company for any loss or damage resulting (directly or indirectly) from such Indemnified Person carrying out his or her duties unless that liability arises through the actual fraud or wilful default of such Indemnified Person.

41.1.3

For the purpose of these Articles, no Indemnified Person shall be deemed to have committed “actual fraud” or “wilful default” until a court of competent jurisdiction has made a final, non-appealable finding to that effect.

41.2

Advance of legal fees

The Company shall advance to each Indemnified Person reasonable legal fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any such advance of expenses, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it is determined that the Indemnified Person was not entitled to indemnification under these Articles.

41.3

Indemnification to form part of contract

The indemnification and exculpation provisions of these Articles are deemed to form part of the employment contract or terms of appointment entered into by each Indemnified Person with the Company and accordingly are enforceable by such persons against the Company.

41.4

Insurance

The Directors may purchase and maintain insurance for or for the benefit of any Indemnified Person including (without prejudice to the generality of the foregoing) insurance against any Liability incurred by such persons in respect of any act or omission in the actual or purported execution or discharge of their duties or the exercise or purported exercise of their powers or otherwise in relation to or in connection with their duties, powers or offices in relation to the Company.

42.

REQUIRED DISCLOSURE

If required to do so under the laws of any jurisdiction to which the Company (or any of its service providers) is subject, or in compliance with Exchange Rules of any Exchange, or to ensure the compliance by any person with any anti-money laundering legislation in any relevant jurisdiction, any Director, officer or service provider (acting on behalf of the Company) shall be entitled to release or disclose any information in its possession regarding the affairs of the Company or a Member, including, without limitation, any information contained in the Register of Members or subscription documentation of the Company relating to any Member.

43.

FINANCIAL YEAR

Unless the Directors resolve otherwise, the financial year of the Company shall end on 31 December in each year and, following the year of incorporation, shall begin on 1 January in each year.

44.

TRANSFER BY WAY OF CONTINUATION

The Company shall, with the approval of a Special Resolution, have the power to register by way of continuation to a jurisdiction outside of the Cayman Islands in accordance with the Companies Law.

45.

MERGERS AND CONSOLIDATIONS

The Company shall, with the approval of a Special Resolution, have the power to merge or consolidate with one or more constituent companies (as defined in the Companies Law), upon such terms as the Directors may determine.

46.

AMENDMENT OF MEMORANDUM AND ARTICLES

46.1

Power to change name or amend Memorandum

46.1.1

Subject to the Companies Law, the Company may, by Special Resolution:

(a)

change its name; or

(b)

change the provisions of its Memorandum with respect to its objects, powers or any other matter specified in the Memorandum.

46.2

Power to amend these Articles

Subject to the Companies Law and as provided in these Articles, the Company may, by Special Resolution, amend these Articles in whole or in part.

Exhibit 3.2

Exhibit 10.6

Business Combination Marketing Agreement Fee Amendment

This Business Combination Marketing Agreement Fee Amendment (this “Amendment”) is entered into as of February 14, 2020, by and between EarlyBirdCapital, Inc. (“Advisor”) and TKK Symphony Acquisition Corporation, a Cayman Islands exempted company (the “Company).

WHEREAS, the Advisor and the Company entered into that certain Business Combination Marketing Agreement, dated August 15, 2018 whereby the Advisor agreed to assist the Company in connection with the Company’s business combination with one or more businesses or entities as described in the Company’s Registration Statement on Form S-1 (File No. 333-226263);

WHEREAS, on September 6, 2019, (i) the Company, (ii) Glory Star New Media Group Limited, a Cayman Islands exempted company (“Glory Star”), (iii) TKK Symphony Sponsor 1, a Cayman Islands exempted company, in the capacity as the Purchaser Representative thereunder, (iii) Glory Star New Media (Beijing) Technology Co., Ltd., a Wholly Foreign-Owned Enterprise limited liability company incorporated in the People’s Republic of China (“PRC”) and indirectly wholly-owned by Glory Star, (v) Xing Cui Can International Media (Beijing) Co., Ltd., a limited liability company incorporated in the PRC, (vi) Horgos Glory Star Media Co., Ltd., a limited liability company incorporated in the PRC, (vii) each of the shareholders of Glory Star named as sellers therein (“Sellers”), and (viii) Zhang Bing, in the capacity as the Seller Representative thereunder, entered into that certain Share Exchange Agreement (as amended from time to time, including without limitation by that certain Joinder to Share Exchange Agreement, dated as of November 1, 2019, the “Share Exchange Agreement”), pursuant to which, subject to the terms and conditions thereof, upon the consummation of the transactions contemplated thereby (the “Closing”), among other matters, the Company will acquire all of the issued and outstanding ordinary shares of Glory Star from the Sellers in exchange for newly issued shares of the Company, subject to the withholding of the escrow shares being deposited in the escrow account in accordance with the terms and conditions of the Share Exchange Agreement and the escrow agreement;

WHEREAS, a condition to the obligations of Glory Star and Sellers is the receipt by Glory Star of a copy of a Business Combination Marketing Agreement Fee Amendment to reduce the $8.8 million fee payable to the Advisor thereunder by an amount as mutually reasonably determined by Glory Star and the Company; and

WHEREAS, the Company, Glory Star and the Advisor have agreed to amend the fee payable to the Advisor under the Business Combination Marketing Agreement to provide that the Advisor shall receive, in full satisfaction of any and all fees and expenses owed to it under the Business Combination Marketing Agreement, a $4,000,000 promissory note of the Company, in substantially the form attached hereto as Exhibit A, to be paid on the one year anniversary of the Closing (the “Note”).

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

1. Fees.

1.1 Advisor and Company hereby agree that no portion of the Fee (defined below) will be paid to any other advisor pursuant to the Business Combination Marketing Agreement for assisting the Company in consummating the Business Combination.

1.2 Section 1(b) of the Business Combination Marketing Agreement is hereby amended to delete such section in its entirety and replace it with the following:

“(b) As compensation for the foregoing services, the Company will deliver the Note in the amount of $4,000,000 in substantially the form attached hereto as Exhibit A, payable on the one year anniversary of the Closing (the “Fee”).”

1.3 Sections 1(c), 1(d) and 1(e) of the Business Combination Agreement shall be amended to delete such sections in their entirety and replace them with the following: “[reserved]”

1.4 Section 2 of the Business Combination Marketing Agreement is hereby amended to delete such section in its entirety.

2. Effectiveness. This Amendment shall be binding upon each party upon such party’s execution and delivery of this Amendment, but this Amendment shall only become effective upon the Closing. In the event that the Share Exchange Agreement is validly terminated in accordance with its terms prior to the Closing, this Amendment and all rights and obligations of the parties hereunder shall automatically terminate and become null and void, and the parties shall have no obligations hereunder.

3. Miscellaneous. Except as expressly provided in this Amendment, all of the terms and provisions in the Business Combination Marketing Agreement are and shall remain in full force and effect, on the terms and subject to the conditions set forth therein. This Amendment does not constitute, directly or by implication, an amendment or waiver of any provision of the Business Combination Marketing Agreement, or any other right, remedy, power or privilege of any party thereto, except as expressly set forth herein. This Amendment may be executed in any number of original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, each party hereto has caused this Business Combination Marketing Agreement Fee Amendment to be signed and delivered by its respective duly authorized officer as of the date first above written.

	The Company:

	TKK SYMPHONY ACQUISITION CORP.

	By:	/s/ Steven Levine
		Name: Steven Levine
		Title: CEO

	The Advisor:

	EARLYBIRDCAPITAL, INC.

	By:	/s/ Sing Wang
		Name: Sing Wang
		Title: Chairman and CEO

EXHIBIT A

Exhibit 10.7

THIS PROMISSORY NOTE (“NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

PROMISSORY NOTE

Principal Amount: $4,000,000.00

February 14, 2020

Glory Star New Media Group Holdings Limited, a Cayman Islands exempted company (“Maker”), promises to pay to the order of EarlyBirdCapital, Inc. or its registered assigns or successors in interest or order (“Payee”), the principal sum of Four Million Dollars ($4,000,000.00) in lawful money of the United States of America, on the terms and conditions described below. All payments on this Note shall be made by check or wire transfer of immediately available funds to such account as Payee may from time to time designate by written notice in accordance with the provisions of this Note.

1. Repayment. The principal balance of this Note shall be payable on the first anniversary of the closing of Maker’s business combination with Glory Star New Media Group Limited (such date, the “Maturity Date”). The principal balance may be prepaid at any time, at the election of Maker.

2. Interest. This Note shall be non-interest bearing.

3. Events of Default. The following shall constitute an event of default (“Event of Default”):

(a)

Failure to Make Required Payments. Failure by Maker to pay the principal amount due pursuant to this Note within five (5) business days of the Maturity Date.

(b)

Voluntary Bankruptcy, etc. The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.

(c)

Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.

4. Remedies.

(a)

Upon the occurrence of an Event of Default specified in Section 3(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note and all other amounts payable hereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

(b)

Upon the occurrence of an Event of Default specified in Sections 3(b) and 3(c) hereof, the unpaid principal balance of this Note and all other amounts payable hereunder, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.

5. Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to this Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real or personal property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.

6. Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without affecting Maker’s liability hereunder.

7. Notices; Agent for Service. All notices, statements or other documents which are required or contemplated by this Note shall be: (i) in writing and delivered personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number as may be designated in writing by such party and (iii) by electronic mail, to the electronic mail address most recently provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery to an overnight courier service or five (5) days after mailing if sent by mail. Maker hereby appoints Lewis Brisbois Bisgaard & Smith LLP, at the address of 77 Water Street, Suite 2100, New York, New York 10005, as its agent for service of process in New York and agrees to execute any documents and agreements as necessary to effectuate same. If service of process is effected pursuant to the above sentence, such service will be deemed sufficient under New York law and Maker shall not assert otherwise.

8. Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

9. Arbitration. Any and all disputes, controversies and claims (other than applications for a temporary restraining order, preliminary injunction, permanent injunction or other equitable relief or application for enforcement of a resolution under this Section 9) arising out of, related to, or in connection with this Note (a “Dispute”) shall be governed by this Section 9. A party must, in the first instance, provide written notice of any Disputes to the other party subject to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. The parties shall seek to resolve the Dispute on an amicable basis within ten (10) business days of the notice of such Dispute being received by the other party subject to such Dispute (the “Resolution Period”); provided, that if any Dispute would reasonably be expected to have become moot or otherwise irrelevant if not decided within sixty (60) days after the occurrence of such Dispute, then there shall be no Resolution Period with respect to such Dispute. Any Dispute that is not resolved during the Resolution Period may immediately be referred to and finally resolved by arbitration pursuant to the then-existing rules and procedures (including any expedited procedures) of the International Arbitration Rules of the American Arbitration Association (“AAA”). In the event the dispute is brought before the AAA, the arbitration shall be brought before the AAA International Center for Dispute Resolution’s offices in New York City, New York, will be conducted in English and will be decided by a panel of three arbitrators selected from the AAA Commercial Disputes Panel. Each of the parties agrees that the decision and/or award made by the arbitrators shall be final and enforceable by any court having jurisdiction over the party from whom enforcement is sought. Furthermore, the parties to any such arbitration shall be entitled to make one motion for summary judgment within 60 days of the commencement of the arbitration, which shall be decided by the arbitrators prior to the commencement of the hearings.

10. WAIVER OF TRIAL BY JURY. WITHOUT DEROGATING FROM THE AGREEMENT TO ARBITRATE IN SECTION 10. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS NOTE, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

11. Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

12. Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of Maker and Payee.

13. Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.

14. Conversion.

(a)

At Payee’s option, at any time prior to payment in full of the principal balance of this Note, Payee may elect to convert all or any portion of the unpaid principal balance of this Note into that number of ordinary shares of Maker (“Ordinary Shares”) equal to: (x) the portion of the principal amount of this Note being converted pursuant to this Section 14, divided by (y) the Conversion Price, rounded up to the nearest whole number of shares (the “Conversion Shares”). The Conversion Price shall be equal to the volume-weighted average price of the Ordinary Shares on the Nasdaq Capital Market or such other securities exchange or securities market on which the Ordinary Shares are then listed or quoted, for the ten trading days prior to such conversion date; provided, that, subject to Section 15, the Conversion Price shall not be less than $5.00 (the “Floor Price”). The Conversion Shares, and any other equity security of Maker issued or issuable with respect to the foregoing by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, amalgamation, consolidation or reorganization, shall be entitled to the registration rights set forth in Section 15 hereof.

(b)

At the Maturity Date, the unpaid principal balance of this Note shall automatically convert into Ordinary Shares at the Conversion Price.

(c)

Upon any complete or partial conversion of the principal amount of this Note, (i) such principal amount shall be so converted and such converted portion of this Note shall become fully paid and satisfied, (ii) Payee shall surrender and deliver this Note, duly endorsed, to Maker or such other address which Maker shall designate against delivery of the Conversion Shares, (iii) Maker shall promptly deliver a new duly executed Note to Payee in the principal amount that remains outstanding, if any, after any such conversion and (iv) in exchange for all or any portion of the surrendered Note, Maker shall, at the direction of Payee, deliver to Payee (or its directors, officers or shareholders or their respective affiliates) (Payee or such other persons, the “Holders”) the Conversion Shares, which shall bear such legends as are required, in the opinion of counsel to Maker or by any other agreement between Maker and Payee and applicable state and federal securities laws.

(d)

The Holders shall pay any and all issue and other taxes that may be payable with respect to any issue or delivery of the Conversion Shares upon conversion of this Note pursuant hereto; provided, however, that the Holders shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holders in connection with any such conversion.

15. Registration Rights.

(a)

Maker shall use its best efforts to: (i) file a registration statement on Form S-1 or F-1with the United States Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended, with respect to the resale of all the Conversion Shares as soon as practicable after the date hereof, and (ii) obtain effectiveness of such registration statement within 180 calendar days from the date hereof (the “Effectiveness Deadline”).

(b)

In the event such registration statement is not declared effective by the Effectiveness Deadline, the Floor Price shall automatically decrease to $4.00. The Floor Price shall automatically decrease by $1.00 for every 30-day period following the Effectiveness Deadline in which such registration statement has not been declared effective; provided, however, that the Floor Price shall not be less than $1.00. Notwithstanding the foregoing, the Floor Price shall not decrease if the failure to include all of the Conversion Shares in such registration statement prior to the Effectiveness Deadline is due to the occurrence of a Reduction Event (as defined in Section 15(c)).

(c)

In the event the staff of the Commission advises Maker (the “SEC Guidance”) that the number of Conversion Shares which may be included in such registration statement should be limited pursuant to Section 612.09 of the Commission’s Compliance and Disclosure Interpretations, Maker shall promptly notify Payee of the SEC Guidance and Payee and its counsel shall be permitted to review and comment on Maker’s response to the Commission. If Maker is subsequently required pursuant to SEC Guidance to reduce the number of Conversion Shares to be registered on such registration statement (a “Reduction Event”), all Ordinary Shares held by other persons shall be subject to cutback from such registration statement prior to the cutback of any Conversion Shares. In the event any Conversion Shares are cut back from such registration statement, Maker shall use its best efforts to register such shares in a subsequent registration statement promptly thereafter.

(d)

The Holders shall also be entitled to include the Conversion Shares in any registration statement to be filed by Maker; provided, however, that in the event that an underwriter advises Maker that the maximum number of securities has been exceeded with respect to a piggyback registration, all Ordinary Shares held by other persons shall be subject to cutback from such registration statement prior to the cutback of any Conversion Shares.

[Signature Page Follows]

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by the undersigned as of the day and year first above written.

	GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

	By:	/s/ Bing Zhang
		Name: Bing Zhang
		Title: Director

Exhibit 10.8

PROMISSORY NOTE

Principal Amount: Up to $500,000.00

February 17, 2020

Glory Star New Media Group Holdings Limited, a Cayman Islands exempted company (“Maker”), promises to pay to the order of TKK Capital Holdings, a Cayman Islands exempted company, or its registered assigns or successors in interest or order (“Payee”), the principal sum of up to Five Hundred Thousand Dollars ($500,000.00) in lawful money of the United States of America, on the terms and conditions described below.

All payments on this Note shall be made by check or wire transfer of immediately available funds to such account as Payee may from time to time designate by written notice in accordance with the provisions of this Note.

Repayment. The principal balance of this Note shall be payable on the first anniversary of the closing of Maker’s business combination with Glory Star New Media Group Limited (such date, the “Maturity Date”). The principal balance may be prepaid at any time, at the election of Maker, in whole or in part, without any prepayment penalty or premium.

Interest. This Note shall not bear interest.

Application of Payments. All payments received by Payee pursuant to this Note shall be applied first to the payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorney’s fees, and then to the reduction of the unpaid principal balance of this Note.

Events of Default. The following shall constitute an event of default (“Event of Default”):

(a) Failure to Make Required Payments. Failure by Maker to pay the principal amount due pursuant to this Note within five (5) business days of the Maturity Date.

(b) Voluntary Bankruptcy, Etc. The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.

(c) Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.

Remedies.

(a) Upon the occurrence of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note and all other amounts payable hereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

(b) Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c) hereof, the unpaid principal balance of this Note and all other amounts payable hereunder, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.

Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to this Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real or personal property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.

Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.

Notices. All notices, statements or other documents which are required or contemplated by this Note shall be: (i) in writing and delivered personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number as may be designated in writing by such party and (iii) by electronic mail, to the electronic mail address most recently provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery to an overnight courier service or five (5) days after mailing if sent by mail.

Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

10.

Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11.

Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of Maker and Payee.

12.

Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void; provided, however, that the foregoing shall not apply to an affiliate of Payee who agrees to be bound to the terms of this Note.

[Signature Page Follows]

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by the undersigned as of the day and year first above written.

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

By:	/s/ Bing Zhang
	Name:	Bing Zhang
	Title:	Director

Exhibit 10.9

Technical Service Contract

Party A: Leshare Star (Beijing) Technology Co., Ltd.

Party B: Beijing Xiaomi Technology Co., Ltd.

In this Contract, Party A hereby entrusts Party B to provide network activities related to technical services and pay corresponding service fees. Through friendly consultation on an equal footing and on the basis of truly and fully expressing their respective wishes, and in accordance with the Contract Law of the People’s Republic of China, both parties hereby enter into the following agreement and jointly abide by it.

Article 1 Contents of technical services entrusted by Party A to Party B

Party B shall provide Party A with the project of online game battle platform, the project of blockchain shopping mall with accumulated reward points, the construction of video media resources library, social e-commerce V3.0, AI intelligent recommendation engine and data warehouse. Except as expressly indicated in this Contract, all relevant parameters of the service shall be subject to those mutually confirmed by both parties in the process of the purchase and provision of the service.

Article 2 Party B shall complete the technical services in accordance with the following requirements

Service location: Beijing;

Service progress: It shall be performed according to the provisions in the project proposal.

Article 3 Technical service fees and method of payment

Technical service fees: 191 million yuan

Method of payment: Payment shall be made according to the progress of project proposal

Payment account information:

Account name: Beijing Xiaomi Technology Co., Ltd.

Bank of deposit: China Construction Bank Co., Ltd. Beijing Baofusi Branch

Account number: 11001141300052507840

Article 4 Rights and obligations of both parties

Party A:

Party A shall have the right to receive relevant technical support and services provided by Party B to meet Party A’s needs within the time limit agreed upon by both parties.

Party A shall abide by the Measures for the Security Protection and Management of International Networking of Computer Information Networks, the Interim Provisions of the People’s Republic of China on the Administration of International Networking of Computer Information Networks, the Regulations of the People’s Republic of China on the Security Protection of Computer Information Systems, the Telecommunications Regulations of the People’s Republic of China and the Measures for the Administration of Internet information services as well as other relevant laws, regulations and provisions of the state, and shall not engage in any illegal business activities. Party A shall be solely liable for any political liability and legal liability arising from its operating behaviors and information released and meetings held through the service platform in violation of the above provisions;

Party A shall have the right to require Party B to deliver the service achievements of each stage according to the service progress and conduct acceptance inspection as agreed;

Party B:

Party B shall provide Party A with technical services which meet Party A’s requirements as agreed in this Contract, and shall be obliged to carry out daily development and maintenance of each system as planned, and ensure the normal implementation of the service progress. If the technical services are interrupted or delayed due to reasons not attributable to Party A, Party B shall give a timely notice to Party A. In case of any interruption caused by an emergency or unexpected event beyond Party B’s ability to foresee or control it, Party B shall communicate with Party A within one (1) day after the occurrence of such circumstance, make negotiation for settlement, and both parties shall cooperate with each other to resume normal operation as soon as possible;

Party B shall ensure the accuracy and rapidity of data analysis and processing in accordance with the standards required by Party A.

Party B shall deliver the service achievements of each stage according to the technical service progress and cooperate with Party A for acceptance inspection. If it fails to pass the acceptance inspection, Party B shall make modifications as required by Party A until the acceptance inspection is passed.

Party B and its staff shall not use the relevant contents related to Party A for any commercial purposes or disclose them to any third party, so as to ensure that no damage will be done to Party A’s business interests. Party B shall keep all kinds of data and business data of Party A confidential in accordance with relevant documents and work requirements of Party A.

Article 5 The modifications of this Contract shall be agreed by both parties through consultation and determined in written form.

Article 6 Confidentiality clause: The business information and customer data of Party A exposed to Party B in the performance of this Contract are proprietary to Party A, and Party B shall be strictly responsible for the confidentiality of the business information and customer data of Party A obtained in the process of the performance of the cooperation contract. Party B shall ensure the security of its systems and software, and shall not disclose or transfer such information to any third party (including but not limited to its affiliated companies or group companies) or permit any third party to use such information without the prior written consent of Party A, except as otherwise mandatory by law. If Party B or its employees violate the provisions in this article, Party A shall have the right to immediately terminate this cooperation contract and require Party B to compensate Party A and Party A’s customers for all direct losses incurred thereby. This clause shall not become invalid due to the dissolution, termination or modification of this cooperation contract.

Article 7 Intellectual property rights

All intellectual property rights arising out of Party B’s technical services shall be owned by Party A.

Unless otherwise provided in this Contract, the existing trademarks, service marks, trade names and logos of both parties shall remain the respective property of each party. Except for matters in connection with the project, neither party shall use the above materials for any purpose other than as agreed in this Contract without the written consent of the other party to this Contract.

Article 8 Dissolution of this Contract

If this Contract is dissolved under the following circumstances, the party requesting such dissolution shall notify the other party in written form seven (7) days in advance:

Both parties agree to dissolve this Contract through consultation;

Both parties fail to renew this Contract upon expiration of the contract term;

If one party loses its subject qualification, such as being cancelled or going into bankruptcy or liquidation procedure, the other party shall have the right to dissolve this Contract, except for reorganization, name change, division or merger with a third party;

If either party fails to perform or violates its obligations under this contract and still fails to perform the obligations or fails to take remedial measures after a certain time limit is given by the other party, which makes it impossible for the other party to realize the expected benefits under this Contract or makes it unnecessary to continue to perform this Contract, the other party shall have the right to dissolve this Contract;

If either party commits fraud, coercion or violence or other means in the execution or performance of this Contract, the other party may dissolve this Contract and have the right to claim damages from the other party;

Either party may require the dissolution of this Contract due to force majeure or accidents that render the continuous performance of this Contract impossible or unnecessary.

Upon dissolution of this Contract, both parties shall terminate their rights and obligations under this Contract, provided that the obligations to be performed by either party prior to the dissolution of this Contract shall still be performed. Except in the case where the dissolution of this Contract is caused by force majeure or accidents, the party causing the dissolution of this Contract shall compensate the other party for the losses caused by the dissolution of this Contract.

Article 9 Liabilities for breach of contract

If Party A is unable to obtain the corresponding services due to the reasons attributable to Party B, Party A shall have the right to request Party B to pay the liquidated damages equal to 20% of the total contract amount. If Party A suffers economic losses due to the reasons attributable to Party B, both parties shall make consultation for settlement, and Party B shall compensate Party A for the actual losses incurred thereby;

If Party A fails to pay Party B the technical service fees on time, Party B shall have the right to claim the overdue fine from Party A. Such overdue fine shall be calculated on a daily basis according to the deposit interest of the bank for the corresponding period;

If Party A violates its obligations under this Contract and causes losses to Party B, Party A shall compensate Party B for the actual losses incurred thereby, including but not limited to the damage to Party B’s system. In addition, Party B shall have the right, as the case may be, to suspend the service provided to Party A according to the provisions of this Contract until the problem is solved, and Party A shall be liable for any loss incurred thereby on its own.

Article 10 Disclaimer

If the normal operation of the network is affected by either party due to the government ban, strike, and the changes in the current effective applicable laws or regulations, flood, fire, explosion, lightning, earthquake, storm, power failure, communications line interruption, vandalism, hacker attack, computer virus invasion or attack, telecom department technology, policy, government regulation, etc as well as other unforeseeable, unavoidable and insurmountable and uncontrollable force majeure events, neither party shall be liable for failure to perform this Contract in whole or in part or delay in the performance of this Contract. However, the party affected by the force majeure event shall, within three days from the date of the occurrence of the force majeure event, notify the other party of the event in writing and, within five days from the date of the occurrence of the event, submit to the other party a certificate of its failure to perform this Contract in whole or in part or delay in the performance of this Contract. The party suffering from force majeure shall take all necessary measures to reduce the loss and, after the event is eliminated, make consultation to resume the performance of this Contract, unless such performance becomes impossible or unnecessary;

During the performance of this Contract, Party B shall not be liable for any loss caused to Party A or other parties due to the fault or delay of a third party. Party B shall be fully liable for the losses of any third party indirectly receiving Party B’s services through Party A.

Article 11 Any dispute arising from the performance of this Contract by both parties shall be settled through negotiation or mediation.

If consultation or mediation fails, the second method as follows shall be adopted for disposal:

It shall be submitted to Beijing Arbitration Commission for arbitration;

A lawsuit shall be brought to the people’s court where this Contract is signed.

Article 12 Both parties agree that other matters related to this Contract shall include (If not, “None” shall be filled in):

None

Article 13 Appendix

Both parties agree that during the validity period of this Contract, if there are any matters not covered herein, supplementary explanations can be made in the form of appendix, which shall have the same legal effect as this Contract after both parties affix signature and seal it.

Article 14 This contract is signed in Chaoyang District, Beijing, China.

Article 15 This Contract is made in duplicate, with each party holding one copy. It shall come into force upon being signed and sealed by both parties and have the same legal effect.

Party A: Leshare Star (Beijing) Technology Co., Ltd.

(Seal)

Special seal of Leshare Star (Beijing) Technology Co., Ltd. for contractual uses

Legal representative / Entrusted agent:

(Signature)

Date:___Month _Day __Year

Party B: Beijing Xiaomi Technology Co., Ltd.

(Seal)

Beijing Xiaomi Technology Co., Ltd.

Legal representative / Entrusted agent:

(Signature)

Date: _Month _Day _Year

Exhibit 10.10

Contract No.:________

Annual Framework Contract for Video Production

Party A: Guangxi JD Xinjie E-commerce Co. Ltd.

Party B: Leshare Star (Beijing) Technology Co., Ltd.

In accordance with the Contract Law of the People’s Republic of China as well as other relevant laws and regulations, Party A and Party B, through friendly consultation, enter into this contract on [October] [31], [2019], in [Daxing] District, [Beijing], and hereby abide by it.

Definition

1.1

JD: Party A and its subsidiaries, branch companies and branch offices or the companies that Party A considers to be associated with Party A are collectively referred to as “JD”. The rights and obligations mentioned in this agreement to be exercised and performed by Party A or “JD” shall be performed separately by the companies responsible for the corresponding region and business scope within “JD”, and such companies shall not be jointly and severally liable to each other. This agreement shall be signed by Party A as the representative of “JD” with Party B. Party A agrees to assume all rights and obligations set forth herein to Party A or “JD” and settle accounts with Party A or “JD” separately; Meanwhile, Party B shall provide services for to Party A or “JD” and issue invoices in accordance with this contract and the attachments.

1.2

Affiliated company: It refers to a legal entity that controls a party, is controlled by a party, or is controlled by the same company as such party. “Company” here means any one-person company, limited liability company or joint stock limited company; “Control” refers to the ability, directly or indirectly, to affect the management of the company in question, whether through ownership, voting shares, agreements or other means determined by the people’s court.

1.3.

Intellectual property rights: It refers to the rights owned focusing on any of the following items: Inventions, discoveries, improvements, utility models, appearance design, copyrighted works, industrial design or curing molds, algorithms, data structures, trade secrets or proprietary technologies, confidential information, or ideas of commercial value. Intellectual property rights also include trademarks, decorations, trade names, domain names, and other marks that indicate or highlight that certain goods or service originates from an entity or is controlled by an entity. Intellectual property rights include all rights of any nature focusing on computer software and data and all intangible rights or privileges similar in nature to such rights in any part of the world under any circumstances, as well as the right to apply for and to register such rights.

Cooperation contents

2.1

Party A hereby entrusts Party B to provide creative video shooting and production services, and Party B accepts the entrustment and carries out the work.

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2.2

This contract is a framework contract, and the term of cooperation starts from [October] [31], [2019] and ends on [October] [30], [2020].

2.3

Place of delivery: Party B shall send the original video to Party A’s office or other place designated by Party A according to Party A’s requirements upon completion of the video production results.

2.4

Service contents: Party B shall provide services in accordance with the provisions hereof and the attachments, as detailed in the attached Service Contents and Assessment Criteria.

2.5

Detailed requirements for progress nodes: Please refer to the attached Service Contents and Assessment Criteria.

2.6

Acceptance criteria of service results: Please refer to the attached Service Contents and Assessment Criteria for details. If relevant service contents need to be recorded or approved by government departments or industry institutions, the obtained relevant records or approval documents shall prevail.

Price and payment method

3.1

Form of contract price: Fixed unit price contract (fixed unit price contract/fixed total price contract); The prices and expenses stated in the attached Fee Details and Payment Method to this contract are all closed prices including tax, including but not limited to video shooting costs, video post-editing costs, labor costs, guest costs, venue and equipment rental costs, sample costs, taxes, commission fees, packaging costs, transportation costs, installation and debugging related costs, insurance expenses, maintenance fees, profits, acceptance inspection fees, all kinds of risk expenses and all tax-inclusive expenses of spare parts during the warranty period, and it also includes all the costs of ancillary services (such as training, debugging, testing, etc.) and after-sales services that Party B shall provide to fulfill its obligations hereunder.

3.2

If the state adjusts the VAT rate in this contract, Party A shall have the right to adjust the tax rate in the amount payable. The specific adjustment method is: The tax-inclusive amount payable = [the tax-inclusive amount in the original contract/(1+ the VAT rate of the contract)]x (1+ the VAT rate adjusted by the state). At the time of settlement, the settlement amount shall be adjusted in accordance with the aforementioned adjustment method for the amount paid after the date of implementation of the national policy of adjusting tax rate. Party B shall not require Party A to change the contract price on the basis of tax policy adjustment.

3.3

The type of invoice provided by Party B is: _A_;

A. Special VAT invoice; B. General VAT invoice

3.4

Payment period: Party A shall make the payment within 45 natural days after meeting the payment terms stipulated in this contract and the attached Fee Details and Payment Method.

3.5

Proportion of advance payment: 0 %

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3.6

Proportion of quality assurance deposit: 0%

3.7

Other agreements on contract price & payment method: Please refer to the attached Fee Details and Payment Method for details.

Warranty liability

4.1

Party B shall undertake the following obligations for performance guarantee to Party A: C

Party B shall submit to Party A performance bond in the amount of [ ] within 15 days after the signing of this contract by both parties. Upon termination of this contract and Party B’s fulfillment of all rights and obligations as agreed herein, Party A shall refund the performance bond (balance) without interest within fifteen business days upon receipt of party B’s refund application and official financial receipt.

Party B shall submit to Party A performance guarantee in the amount of [ ] within 15 days after the signing of this contract by both parties. The performance guarantee shall be terminated upon termination of the cooperation between both parties and fulfillment of all rights and obligations agreed herein.

Not applicable

4.2

The performance guarantee submitted by Party B shall be an irrevocable demand guarantee issued by a bank approved by Party A in accordance with Party A’s requirements (the form of the performance guarantee shall be subject to the text provided by Party A). The performance guarantee is one of the prerequisites for the payment of the contract price.

Party A’s rights and obligations

5.1

Party A shall appoint a specially assigned person (subject to single item) to be responsible for communicating with Party B during the production process, coordinate shooting, provide production materials and written suggestions, and take responsibility for following up the project progress, project quality, project acceptance, etc.

5.2

Party A shall have the right to make suggestions on the modification of the sample provided by Party B, and Party B shall make modification according to the suggestions made by Party A until Party A is satisfied. Party A shall, on the basis of respecting the results of Party B’s labor, provide Party B with modification suggestions in a centralized way, so that Party B can make unified modification.

5.3

Party A shall have the right to adjust the service contents, delivery time and place before Party B submits the service results. If Party A issues a written notice to Party B prior to the adjustment, Party A shall not bear the cost.

5.4

Party A owns all intellectual property rights generated by Party B during the execution of the video project. Except for the purpose of performance of this project, Party B shall not use them or authorize others to use them in any form, otherwise Party A shall have the right to make Party B held legally liable for this, and Party B shall bear all losses caused thereby.

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5.5

Party A shall be entitled to the copyright of outdoor scenes, indoor scenes, clips of image publicity film and other materials shot during the execution of this project. After the completion of this project, Party B’s material library shall be emptied and no materials or information related to this project shall be retained.

5.6

After the video passes the acceptance inspection, Party A shall sign and receive the Video Acceptance Confirmation Form. Both parties agree to take the Video Acceptance Confirmation Form as the basis for settlement. If the whole video fails to pass the acceptance inspection, Party A shall have the right to request Party B to make adjustment, rework, reduce the price and conduct other rectification work.

Party B’s rights and obligations

6.1

Party B shall not refuse the service requirements assigned by Party A without justified reasons and shall perform relevant obligations as agreed herein. Within seven days prior to the actual implementation of the service, Party A shall have the right to request Party B to change the service contents or cancel this project by notice in writing, Party b shall not refuse it without justified reasons, and Party A shall not bear any responsibility and expense for this. If Party A cancels this project after the implementation of Party B’s services, both parties shall settle the accounts according to the actual performance.

6.2

Party B shall not subcontract the entire or any part of this contract to any third party in any name without the prior written permission of Party A (Party A may decide whether to grant such license at its own discretion). For subcontracting agreed by Party A, Party B shall ensure that the subcontractor shall not conduct subcontracting again; for any subcontracting, Party B shall be still directly and solely responsible for the subcontracting, even with the consent of Party A.

6.3

In order to provide better services for Party A, Party B shall have a service team dedicated to Party A’s video production project, and the service team shall have at least [7] people: [1] project leader, and Party B shall ensure that additional personnel can be sent at any time upon the request of large-scale video shooting. Party B shall consult Party A in advance and obtain Party A’s approval before replacing its service team members. Meanwhile, Party B shall ensure the participation of its management in the entrusted service in due course. All matters related to this contract handled by Party B’s team members shall be deemed to have been authorized by Party B, and Party B shall assume full responsibility for the behaviors of its service personnel.

6.4

Party A shall have the right to propose adjustments to the personnel structure of Party B’s service team, and Party B shall make corresponding adjustments to the service team as required by Party A.

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6.5

Party B shall establish a corresponding regular meeting system to communicate and negotiate with Party A’s personnel in terms of the creation and production of relevant videos on a regular basis. For Party A’s requirements for video creation, shooting execution, design and production and other related services, Party B shall complete the corresponding operations with quality and quantity guaranteed within the agreed time limit, otherwise, Party A shall have the right to deduct the corresponding fees according to the quality of the services provided by Party B. If any loss is caused to Party A, Party A reserves the right to claim compensation from Party B according to law, and Party B shall bear relevant legal liabilities and losses.

6.6

Party B shall make a good summary of each item and submit a written summary report in the format prescribed by Party A within 3 working days after each item is completed. Party B shall collect and sort out competitors’ advertising information, make timely analysis and give suggestions on the countermeasures for planning.

6.7

Any third-party individual or organization (including but not limited to photographers, illustrators, models, speakers and singers) hired by Party B in connection with the performance hereof shall obtain prior written consent of Party A, otherwise, Party A shall have the right to refuse to pay the corresponding fees.

6.8

Party B shall be responsible for the planning and execution of this project, and shall strictly comply with the requirements of the planning scheme agreed upon by both parties, and shall not modify or cut the production content without permission.

6.9

Party B shall guarantee the confidentiality of all information and various materials provided by Party A during the project and video production period, and Party B shall properly keep them and shall not disclose them in any form.

6.10

Party B warrants that it has all the qualifications and rights necessary to perform this agreement. If Party B fails to perform this agreement due to the above mentioned problems, party B shall refund all payments received by it to Party A, and Party A shall not have to pay any fees to Party B, and Party B shall also bear all losses caused to Party A thereby.

6.11

Party B shall guarantee the legality of the use of the materials adopted in the video project. Any copyright dispute arising from the use of materials by a third party other than Party A and Party B shall be borne and solved by Party B, and Party B shall compensate Party A for all losses incurred thereby.

6.12

All personnel of Party B shall keep strictly confidential the planning ideas, project promotion, costs, information of Party A’s participants, Party A’s trade secrets and other contents involved in this project.

6.13

Party B shall comply with the Advertising Law of the People’s Republic of China, the Interim Measures for the Administration of Internet Advertising as well as relevant laws and regulations in providing JD brand image and/or event promotion, video production, online communication and other promotional services.

6.14

In the process of brand promotion, Party B shall earnestly maintain the brand image of Party A and JD, comply with advertising law/e-commerce law and other relevant laws and regulations, and strictly avoid infringement, wrong values guidance, pornographic and political contents and other creativity red line and rough creativity.

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6.15

Party B shall abide by JD brand management standards (including but not limited to brand VI specification, Joy image specification, etc., details can be found at https://brand. jd.com/WorkFlow/rule/rule. html), and shall earnestly carry out the promotion in accordance with the standards to avoid the basic errors in brand application.

6.16

In the process of cooperation between Party A and Party B, if Party B needs to use the brands and sub-brands of Party A, it must be authorized by Party A or JD on the basis of meeting the requirements of relevant national laws and regulations, and strictly follow the relevant specifications published on JD brand management platform during the use. If it is found that it fails to meet the requirements of JD during the use and causes damage to the brand image and interests of JD, Party A shall have the right to immediately revoke the authorization and make Party B held legally liable for this.

6.17

Party B shall set up a full-time or part-time Social/ creative content audit position to ensure the audit of Social/ creative content. Party B warrants that the creative content provided to Party A complies with the basic review standards for online short video content, and the short video programs played on the Internet, including their titles, names, comments, bullet screens and emoticons, its language, performance, subtitles and background shall comply with relevant laws and regulations on the Internet, as well as the policies and requirements of the national government on Internet security management.

6.18

When Party B provides Party A with specific promotion services hereunder, considering that Party B expects to establish/have established good long-term cooperative relationship with JD, under the full trust of both parties, the information exchanged during the cooperation or the relevant information provided by Party A to Party B may involve relevant business models, market development plans, publicity schemes, public relations strategies and other trade secrets of JD, the abovementioned trade secrets are crucial to JD to maintain its competitive advantages; Given the fierce competition pattern in the e-commerce industry, if the aforementioned trade secrets are disclosed, the competition environment of JD may be greatly deteriorated in a short period of time, and the losses caused to JD will be hard to make up and be irreversible. Based on the foregoing and other provisions hereof, Party B agrees to make the following commitments for closer cooperation between both parties:

At present, there is no subject that has competitive relations with Party A (including but not limited to Tmall, Taobao, Juhuasuan, Idlefish, Suning, Gome, Vipshop, Amazon, Dangdang, NetEase Kaola, Mogu Street, Mia Baby and Little Red Book, Party A may add competitive products in due time, but it shall notify Party B one month in advance) participating in or holding shares;

At present, there is no circumstance that it is controlled by a subject who has competitive relations with Party A through contractual relationship and other non-equity means;

The working team offering service for Party A shall do a good job in information security isolation from the team that may undertake business of a subject that has competitive relations with Party A to ensure that Party A’s information will not be disclosed within Party B.

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6.19

Party B and its representatives shall not conduct any act in violation of the laws, regulations and policies of China, which may cause significant damage to JD (including damage to its goodwill), or it shall be deemed as a serious breach of contract by Party B, Party A shall have the right to terminate this agreement immediately upon written notice and require Party B to return to Party A all the prices (if any) paid by Party A pursuant to this agreement, and Party A shall not assume any liability. If Party B causes losses to Party A due to this, Party B shall be liable for compensation.

For the purposes of this article, “representative” refers to the affiliated parties of Party B, the directors, officers and employees of Party B and its affiliated parties, and the external consultants or agents employed by Party B and its affiliated parties. “Affiliated party” refers to, for a party, an entity or person that it directly or indirectly controls, that it is directly or indirectly controlled, or under the direct or indirect control of the same third party through shares, equity or any other arrangement, where “control” means that it directly or indirectly owns more than 50% equity, interests or voting rights in the entity, or has the power to appoint or elect a majority of the directors of the entity, or otherwise has the ability to directly or indirectly influence the operations and policies of the entity.

Acceptance inspection

7.1

The service results and quality delivered by Party B shall meet the requirements in this contract, including but not limited to the subject matter hereof, acceptance standards, drawings and relevant national and industrial standards. If the standards and conditions agreed herein are not met, Party B shall take remedial measures such as free rectification and price adjustment, and shall bear the losses caused to Party A thereby.

7.2

If Party B’s deliverables are not up to standard or Party A puts forward suggestions for modification, Party B shall complete the modification or rectification within five working days after receiving notice from Party A.

7.3

After the formal acceptance, Party A shall sign the Video Acceptance Confirmation Form, and Party B shall hand over all the information related to the service to Party A within three days after the acceptance by Party A.

7.4

If Party B shall provide training, Party B shall provide free training in accordance with the training plan approved by Party A.

7.5

No matter whether the products have actually been delivered or have passed the acceptance inspection, Party B shall not be entitled to the real rights and intellectual property rights of the service results.

Intellectual property guarantee

8.1

Party A authorizes Party B to use its trademark and enterprise name for the purposes set forth herein, and Party B warrants that it shall use Party A’s trademark and enterprise name in a correct and reasonable manner, shall not alter or distort its overall image or its part thereof without authorization, and shall get written consent of Party A prior to use.

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8.2

For the information provided by Party A to Party B under this contract as well as the creative ideas, design, graphics, pictures, text, etc. contained in the information and works resulting from this contract (including but not limited to any pattern, image, dubbing, music, text, feature films, cartoon image, FLASH, etc., no matter whether it is finally selected by Party A), all the intellectual property rights and/or other rights and interests shall be owned by Party A. Without Party A’s prior written permission, Party B shall not use or license any third party to use them for any purpose other than those in this contract. Upon the termination of a single item or the expiration, termination or dissolution of this agreement, Party B shall immediately stop using Party A’s trademark and trade name.

8.3

The intellectual property rights of all design schemes and materials shall be owned by Party A. and without Party A’s written permission, Party B shall not reproduce or divulge such intellectual property rights.

8.4

Party B warrants that the service deliverables submitted by it do not and will not infringe the intellectual property rights, proprietary technologies or trade secrets of any third party within or outside China, and Party A is exempted from any and all liabilities arising out of or in connection with the alleged infringement of such rights; In case of any of the aforementioned situations in the service deliverables submitted by Party B, Party B shall immediately correct such breach and shall be responsible for handling such breach at its own expense and shall indemnify Party A for any and all costs, expenses and losses incurred thereby, including but not limited to attorney fees, investigation fees, and all other direct and indirect losses, etc.

After-sales service

9.1

After the service results have been delivered and accepted by Party A, Party B agrees to provide free service support within one year after the end of the cooperation due to the business needs of Party A, and if part of the content subsequently involved needs to be adjusted or improved, and the content involved in the adjustment does not exceed 5%.

Confidentiality clause

10.1

Party B shall perform the obligation of confidentiality under this contract. Without the prior written consent of Party A, Party B shall not publish or disclose this contract or any of its details in any business activities, technical documents or other places, nor shall Party B reproduce all or part of the information related to this contract to the outside world.

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10.2

Party B shall not store any direct or indirect information obtained from Party A during the cooperation on cloud or third-party servers outside both parties; If it is necessary to use the data storage service provided by the third party, it shall voluntarily report to Party A and obtain written consent of Party A. Otherwise, Party A shall be deemed to have violated the confidentiality agreement signed by both parties, and Party A shall have the right to choose to dissolve this contract or continue to perform this contract; If Party A chooses to dissolve this contract, Party B shall be liable for breach of contract in accordance with the confidentiality agreement; If Party A chooses to continue to perform this contract, both parties shall renegotiate the terms hereof.

10.3

For other confidentiality requirements, please refer to the attached Confidentiality Agreement.

Liability for breach of contract

11.1

If Party B breaches any provision hereof, Party A shall have the right to terminate this contract unless otherwise agreed herein. In addition, Party A shall still have the right to claim indemnity against Party B and other claims permitted by law.

11.2

If Party B fails to perform its obligations hereunder, Party A may perform such obligations by itself or entrust others to do so, and all expenses incurred thereby shall be borne by Party B. Meanwhile, Party A shall charge corresponding management fee equal to 20% of the expenses incurred.

11.3

If Party B subcontracts any part or all of this contract without prior written consent of Party A, Party A shall have the right to terminate this contract and require Party B to pay 30% of the purchase amount as liquidated damages, and Party A shall have the right to suspend all payments due until such unauthorized subcontracting behavior is fully corrected.

11.4

If Party B breaches its obligations under the clause “intellectual property rights” in this contract, Party A shall have the right to immediately dissolve this contract and require Party B to compensate for all losses.

11.5

In case of any property loss or personal injury caused by Party B or its employees, Party B’s suppliers or subcontractors (if any), Party B shall be fully liable for compensation and ensure that Party A is not subject to any claim or penalty in any form, otherwise, Party A shall have the right to claim compensation from Party B.

11.6

Party B shall not refuse the project requirements proposed by Party A. If Party B refuses it, it shall bear the relevant liability for breach of contract. Party B shall compensate Party A a penalty of 100,000 yuan for rejecting one single item. If Party B is unable to undertake the single item of Party A under special circumstances, it shall communicate with Party A. Upon confirmation by Party A, Party B may not be liable for the relevant breach of contract.

11.7

For a single item of Party A, after Party B has confirmed in writing to undertake it, if Party B quits it unilaterally, it shall be confirmed in writing by Party A. If Party B unilaterally quits it without Party A’s confirmation and affects the implementation of Party A’s item, Party B shall bear all losses incurred in the item, and Party A shall require Party B to pay 200,000 yuan as liquidated damages.

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11.8

Party B shall provide the scheme based on Party A’s requirements and expected effect, and shall make implementation in accordance with the planning scheme confirmed in writing by both parties, and shall accept Party A’s supervision and guidance, and shall not alter the plan without Party A’s written permission.

11.9

If Party B breaches this contract and Party A assumes the liability for compensation due to this, Party A may suspend the payment to Party B or directly deduct the compensation from the amount payable to Party B, provided that Party A shall give a timely notice to Party B. If the amount payable is insufficient to compensate for the relevant injury or loss, Party A shall have the right to require Party B to continue to make up for it.

11.10

If Party B breaches this contract and still fails to meet Party A’s requirements within 5 days upon Party A’s written notice to Party B for rectification, Party A shall have the right to immediately dissolve this contract, and shall have the right to require Party B to refund the corresponding amount which has been paid, and bear no less than 30% of the cost of the single item or require Party B to pay liquidated damages of 200,000 yuan as liquidated damages (whichever is higher).

11.11

If the subject matter delivered by Party B fails to meet the standards agreed herein, Party A shall have the right to reject it and/or request for rectification and/or termination of this contract, and Party B shall still be liable for Party A’s losses and assume 30% of the contract amount for breach of contract. Upon receipt of the liquidated damages, Party A shall issue a financial receipt to Party B. Within the period in which Party B is responsible for the quality, if there is any quality problem with the subject matter, Party B shall be responsible for repairing, replacing or returning the product within a reasonable period. Any loss caused to Party A due to the quality problem of the subject matter shall be borne by Party B.

11.12

Party B shall deliver the relevant documents, materials and final products to Party A in accordance with the requirements and time specified in this contract and the Statement of Account (Attachment 7), otherwise, Party B shall pay liquidated damages equal to 1% of the total amount in the Statement of Account to Party A on daily basis. If Party B delays delivery for more than 10 days, Party A shall have the right to dissolve this contract, and Party B shall pay liquidated damages equal to 20% of the total amount in the Statement of Account to Party A.

11.13

In order to avoid any conflict of interest, Party B shall notify Party A 60 days prior to the date of occurrence of any of such circumstances if Party B has been involved with the circumstances mentioned in Item 18 of Article 6 or will be involved with it in the future, and obtain written consent of Party A. At that time, Party A shall have the right to dissolve this contract or choose to continue to perform this contract; If Party A chooses to dissolve this contract, Party B shall pay Party A [500,000] yuan as liquidated damages. If Party B refuses to make the payment, Party A shall have the right to deduct it directly from any payables of Party A or Party A’s affiliated companies to Party B; If Party A chooses to continue to perform this contract, Party B shall set up a firewall (including but not limited to distinguishing team members, data classification management and other means) to ensure that Party A’s trade secrets will not be disclosed, meanwhile, both parties shall renegotiate the contract terms, etc.

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Termination and dissolution of this contract

12.1

During the performance of this contract, Party A shall have the right to terminate or dissolve this contract 15 natural days in advance, and Party A shall not be liable for breach of contract.

12.2

The termination of this contract shall not affect the service guarantee, after-sales service, liability for breach of contract, confidentiality obligation, anti-commercial bribery and other obligations of both parties according to law and agreement.

Force majeure

13.1

Force majeure described in this contract refers to any event whose occurrence and consequences are unpreventable, unavoidable, unforeseeable and insurmountable, such as but not limited to earthquake, typhoon, flood, fire, embargo, riot or war, etc.

13.2

If either party is affected by war, severe fire, typhoon, earthquake, flood or other unforeseeable, unavoidable or insurmountable events in its performance of obligations under this contract, it shall notify the other party by fax within 48 hours after the occurrence of the force majeure event, submit the documents issued by the competent certifying institution to the other party by express mail within 14 days after the occurrence of the event.

13.3

If either party is unable to perform this contract in part or in whole due to force majeure events, it shall be exempted from the liability for breach of contract. However, if force majeure occurs after one party delays in performing this contract, it shall not be exempted from liability.

13.4

The party affected by force majeure shall take effective measures to prevent the loss from being expanded. If the loss is made to be expanded since the party fails to take effective measures, it shall be liable for compensation to the other party against the expanded part.

13.5

The party affected by the force majeure event shall continue to perform its obligations under this contract immediately after the end of the force majeure event or the elimination of the effect, and the term of performance of the contract shall be extended accordingly. If the force majeure event lasts for more than 120 days, either party shall have the right to terminate this contract by giving a written notice to the other party, and Party A shall pay Party B the contract amount for the part confirmed by Party A.

Applicable law and dispute resolution

14.1

The performance of this contract and the settlement of disputes shall be governed by the laws and regulations of the People’s Republic of China.

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14.2

All disputes arising from or in connection with this contract or its performance shall be settled by both parties through friendly consultation; if consultation fails, either party may file a lawsuit with the people’s court having jurisdiction over the place where this contract is signed. Any reasonable expenses incurred in the settlement of the dispute, including but not limited to: legal costs, notarization and witness costs, verification costs, attorney’s fees and travel expenses of relevant personnel, shall be borne by the party liable for the fault according to the circumstances of the fault. In the course of consultation, mediation and litigation, both parties shall continue to perform their respective obligations under this contract to ensure the normal progress of this project.

15	Notice and delivery

15.1	During the performance of this contract, both parties shall standardize the delivery mode of documents. Unless otherwise agreed by both parties, the documents exchanged between both parties shall be deemed to have been delivered if it meets the following circumstances:

15.1.1

If the documents are signed in person by the contact persons designated by both parties in writing, the time of signing in person shall be taken as the time of service:

15.1.2

In the form of E-mail notifications, through the system confirmation, the time when it has been successfully delivered to the contact person’s email address designated by both parties in writing shall be taken as the time of service;

15.1.3

In the form of EMS and other forms of express delivery in which the status of real-time delivery can be confirmed, the contact person specified in writing by both parties must be specified, and the delivery date confirmed by the party sending express delivery shall be taken as the date of service;

15.1.4

If either party rejects the document, the time of rejection shall be taken as the time of service.

15.2

Either party shall notify the other party in writing fifteen (15) days in advance of the change of domicile address or the determination of another place of service; If any notice or any other written document of the other party fails to be served due to the failure of timely notification, all legal liabilities arising therefrom shall be borne by the notifying party.

16	Other agreements

16.1

If any provision of this contract is wholly or partially invalid or unenforceable, such invalid or unenforceable provision shall be superseded by a valid and enforceable provision closest to the intent of the original provision, and the remaining provisions of this contract shall remain valid and binding.

16.2	This contract shall come into force on the date of execution hereof upon being affixed with seals by both parties and shall become null and void automatically upon the proper and full performance of respective duties by both parties.

16.3	The attachments to this contract is the integral part of this contract and has the same legal effect as this contract.

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16.4	Both parties agree that all terms of this contract are entered into by both parties through equal consultation, and there is no standard contract and standard term.

16.5

This contract is made in quadruplicate, with each party holding two copies. Both copies have the same legal effect. If both parties sign the electronic contract with the electronic signature and seal provided by the third-party electronic authentication service company, both parties can download and save the electronic contract document, which cannot be tampered with and is legally binding.

16.	6 Attachment details:

Attachment 1: Letter of Authorization of Party B’s Handler

Attachment 2: Confidentiality Agreement

Attachment 3: Anti-commercial Bribery Agreement

Attachment 4: Service Contents and Assessment Criteria

Attachment 5: Fee Details and Payment Method

Attachment 6: Video Acceptance Confirmation Form

Attachment 7: Statement of Account

(There is no text below)

Party A’s seal:		Party B’s seal:

	Special seal of Guangxi JD Xinjie E-commerce Co. Ltd. for contractual use		Special seal of Leshare Star (Beijing) Technology Co., Ltd. for contractual use

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Exhibit 99.2

INDEX TO FINANCIAL STATEMENTS

GLORY STAR NEW MEDIA GROUP LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEETS AS OF DECEMBER 31, 2018 AND SEPTEMBER 30, 2019		F-2
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019 AND FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019		F-3
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019		F-4
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2019		F-5
NOTES TO UNAUDTED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		F-6

F-1

GLORY STAR NEW MEDIA GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars in thousands, except share and per share data)

	December 31, 2018			September 30, 2019
				(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,437		$	3,969
Accounts receivable, net		35,507			44,900
Prepaid expenses		6,899			3,561
Other current assets		212			422
Total current assets		45,055			52,852
Property and equipment, net		538			346
Intangible assets, net		18			10
Deferred tax assets		544			260
Unamortized produced content, net		4,680			1,731
Long-term accounts receivable, net		3,493			-
Long-term prepayment		-			14,896
TOTAL ASSETS	$	54,328		$	70,095

Liabilities, Mezzanine and Stockholders’ Equity
Current liabilities:
Short-term bank loans	$	10,199		$	2,828
Accounts payable		806			4,610
Advances from customers		245			904
Accrued liabilities and other payables		7,551			4,731
Other taxes payable		1,195			2,664
Due to related parties		1,255			1,501
Total current liabilities		21,251			17,238
Total liabilities		21,251			17,238

Commitments and contingencies (see note 16)

Mezzanine equity	$	9,031		$	-

Stockholders’ equity
Ordinary shares (par value of $0.01 per share; 5,000,000 shares authorized as of December 31, 2018 and September 30, 2019; 2,000,000 shares issued and outstanding as of December 31, 2018 and September 30, 2019, respectively;)*		20			20
Subscription receivable		(20	)		(20	)
Additional paid-in capital		599			12,933
Statutory reserve		412			412
Retained earnings		23,254			41,557
Accumulated other comprehensive loss		(607	)		(2,039	)
Total Glory Star New Media Group Limited stockholders’ equity		23,658			52,863
Non-controlling interest		388			(6	)
Total equity		24,046			52,857

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY	$	54,328		$	70,095

The shares and per share data are presented on a retroactive basis to reflect the reorganization.

The accompanying notes are an integral part of these consolidated financial statements.

F-2

GLORY STAR NEW MEDIA GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollars in thousands, except share and per share data)

	For the three months ended September 30,						For the nine months ended September 30,
	2018			2019			2018			2019
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	14,041		$	17,916		$	38,698		$	51,083

Operating expenses:
Cost of revenues		11,181			8,983			26,213			28,301
Selling and marketing		635			1,227			2,290			2,053
General and administrative		407			445			1,333			1,225
Research and development expense		43			65			447			225
Total operating expenses		12,266			10,720			30,283			31,804

Income from operations		1,775			7,196			8,415			19,279
Other income (expenses):
Interest expense, net		(89	)		(141	)		(298	)		(354	)
Other income (expense), net		3			24			4			16
Total other expense		(86	)		(117	)		(294	)		(338	)

Income before income tax		1,689			7,079			8,121			18,941
Income tax (expense) benefit		(280	)		(321	)		113			(316	)
Net income		1,409			6,758			8,234			18,625
Less: Net gain (loss) attributable to non-controlling interests		267			(80	)		251			(290	)
Net income attributable to Glory Star New Media Group Limited’s shareholders	$	1,142		$	6,838		$	7,983		$	18,915

Other comprehensive loss
Unrealized foreign currency translation loss		(953	)		(1,293	)		(1,047	)		(1,536	)
Comprehensive income		456			5,465			7,187			17,089
Less: Comprehensive gain (loss) attributable to non-controlling interests		21			(378	)		(2	)		(394	)
Comprehensive income attributable to Glory Star New Media Group Limited’s shareholders	$	435		$	5,843		$	7,189		$	17,483

Net profit per ordinary share
Basic and diluted	$	0.57		$	3.42		$	3.99		$	9.46

Weighted average shares used in calculating net loss per ordinary share
Basic and diluted *		2,000,000			2,000,000			2,000,000			2,000,000

The shares and per share data are presented on a retroactive basis to reflect the reorganization.

The accompanying notes are an integral part of these consolidated financial statements.

F-3

GLORY STAR NEW MEDIA GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In U.S. dollars in thousands, except share and per share data)

	Ordinary shares				Subscription			Additional paid-in		Retain			Statutory		Accumulated other comprehensive (loss)			Total stockholders’			Non- controlling			Total
	Shares*		Amount		receivable			capital		earnings			reserve		income			equity			interests			Equity
Balance as of December 31, 2017		2,000,000	$	20	$	(20	)	$	271	$	10,677		$	384	$	405		$	11,737		$	—		$	11,737
Capital contribution from non-controlling interest		—		—		—			—		—			—		—			—			232			232
Net income		—		—		—			—		7,983			—		—			7,983			251			8,234
Foreign currency translation adjustment		—		—		—			—		—			—		(794	)		(794	)		(253	)		(1,047	)
Balance as of September 30, 2018 (unaudited)		2,000,000	$	20	$	(20	)		271		18,660			384		(389	)		18,926			230			19,157

Balance as of December 31, 2018		2,000,000	$	20	$	(20	)	$	599	$	23,254		$	412	$	(607	)	$	23,658		$	388		$	24,046
Capital contribution from shareholders		—		—		—			2,973		—			—		—			2,973			—			2,973
Accretion of mezzanine equity		—		—		—			—		(612	)		—		—			(612	)		—			(612	)
Conversion of mezzanine equity		—		—		—			9,361		—			—		—			9,361			—			9,361
Net income (loss)		—		—		—			—		18,915			—		—			18,915			(290	)		18,625
Foreign currency translation adjustment		—		—		—			—		—			—		(1,432	)		(1,432	)		(104	)		(1,536	)
Balance as of September 30, 2019 (unaudited)		2,000,000	$	20	$	(20	)	$	12,933	$	41,557		$	412	$	(2,039	)	$	52,863		$	(6	)	$	52,857

The shares and per share data are presented on a retroactive basis to reflect the reorganization.

The accompanying notes are an integral part of these consolidated financial statements.

F-4

GLORY STAR NEW MEDIA GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars in thousands)

	For the nine months ended September 30,
	2018			2019
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,234		$	18,625

Adjustments to reconcile net income to net cash used in operating activities:
Allowance for doubtful accounts		234			(731	)
Depreciation and amortization		222			230
Deferred Tax Asset		(5	)		278
Changes in assets and liabilities
Accounts receivable, net		(27,010	)		(10,310	)
Prepaid expenses		43			3,254
Other current assets		(621	)		(225	)
Long-term accounts receivable		4,204			3,715
Unamortized produced content		(3,943	)		2,919
Long-term prepayment		-			(15,470	)
Notes payable		(463	)		-
Accounts payable		6,171			3,976
Advances from customers		511			692
Accrued liabilities and other payables		1,124			(1,962	)
Other taxes payable		201			1,562
Due to related parties		(27	)		-
Net cash (used in) provided by operating activities		(11,125	)		6,553

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(104	)		(40	)
Net cash used in investing activities		(104	)		(40	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings		9,257			-
Repayments of short-term borrowings		-			(7,342	)
Proceeds from a related party		-			294
Repayments to related parties		(1,365	)		-
Repayment of amount due to a former shareholder		-			(734	)
Contribution from a shareholder		-			2,973
Contribution from non-controlling interest		265			-
Net cash provided by (used in) financing activities		8,157			(4,809	)

Effect of exchange rate changes		(103	)		(172	)

Net (decrease) increase in cash, cash equivalents and restricted cash		(3,175	)		1,532
Cash, cash equivalents and restricted cash, at beginning of year		5,645			2,437
Cash, cash equivalents and restricted cash, at end of period	$	2,470		$	3,969

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interests paid	$	233		$	265

F-5

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

On November 30, 2018, Glory Star New Media Group Limited (“Glory Star”) was incorporated as an exempted company with limited liability under the laws of the Cayman Islands.

On December 18, 2018, Glory Star New Media Group HK Limited (“Glory Star HK”) was established as a wholly-owned subsidiary formed in accordance with laws and regulations of Hong Kong. Glory Star HK is a holding company and holds all the equity interests of Glory Star New Media (Beijing) Technology Co., Ltd. (“WFOE”), which was established in the PRC on March 13, 2019.

Xing Cui Can International Media (Beijing) Co., Ltd (“Xing Cui Can”) was incorporated in Beijing on September 7, 2016 under the laws of the People’s Republic of China (“PRC” or “China”). It is a holding company with no business operation.

Horgos Glory Star Media Co., Ltd. (“Horgos”) was incorporated in Horgos Economic District, Xinjiang province, China on November 1, 2016 under the laws of the People’s Republic of China (“PRC” or “China”). Horgos is a leading provider and operator of premium lifestyle contents through mobile internet in China.

Horgos formed some subsidiaries in PRC at the following dates:

●

Glory Star Media (Beijing) Co., Ltd. (“Glory Star Beijing”), a company incorporated on December 9, 2016 in Beijing is wholly owned by Horgos.

●

Leshare Star (Beijing) Technology Co., Ltd. (“Beijing Leshare”), a company incorporated on March 28, 2016 in Beijing is wholly owned by Horgos.

●

Horgos Glary Prosperity Culture Co., Ltd. (“Glary Prosperity”), was incorporated on December 14, 2017 in Horgos Economic District, Xinjiang province and 51% of its shareholding was acquired by Horgos. Horgos Glary Wisdom formed a branch of Horgos Glary Prosperity Culture Co., Ltd. Beijing Branch (“Glary Prosperity Beijing Branchy”) on May 8, 2018.

●

Shenzhen Leshare Investment Co., Ltd. (“Shenzhen Leshare”), a company incorporated on June 27, 2018 in ShenZhen, Guangdong province is wholly owned by Horgos. Shenzhen Leshare is dormant as of December 31, 2018.

●

Horgos Glary Wisdom Marketing Planning Co., Ltd. (“Horgos Glary Wisdom”) was incorporated on June 13, 2018 in Horgos Economic District, Xinjiang province and 51% of its shareholding was acquired by Horgos. Horgos Glary Wisdom formed a subsidiary as Glary Wisdom (Beijing) Marketing Planning Co., Ltd. (“Beijing Glary Wisdom”) on September 10, 2018.

As described below, Glory Star, through a restructuring which is accounted for as a reorganization of entities under common control (the “Reorganization”), became the ultimate parent entity of its subsidiaries and its variable interest entities (“VIEs”), Xing Cui Can and Horgos. Accordingly, Glory Star consolidates Xing Cui Can and Horgos’ operations, assets and liabilities. Glory Star, its subsidiaries, VIEs and VIEs’ subsidiaries, are collectively hereinafter referred as the “Company”.

Reorganization

In September 2019, WFOE has entered into a series of contractual arrangements with (i) Xing Cui Can and its shareholders, and (ii) Horgos and its shareholders, which allow Glory Star to exercise effective control over Xing Cui Can and Horgos and receive substantially all the economic benefits of Xing Cui Can and Horgos. These contractual agreements include Business Cooperation Agreement, Exclusive Option Agreement, Share Pledge Agreement, Proxy Agreement and Power of Attorney and Master Exclusive Service Agreement (collectively “VIEs Agreements”). Glory Star together with its wholly-owned subsidiary Glory Star HK and WFOE and its VIEs and VIEs’ subsidiaries were effectively controlled by the same shareholders after the reorganization.

F-6

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

On October 26, 2018, the 47.94% ownership interest of Horgos was transferred to Mr. Zhang Bing from Lead Eastern Investment Co., Ltd. Combined with his indirect 24.64% interest in Horgos through his 53.50% equity shares in Xing Cui Can, who was a shareholder of Horgos holding 46.06% equity, Mr. Zhang Bing directly and indirectly held 72.58% ownership interest of Horgos in aggregate. Hence, as a result, Mr. Zhang Bing became the controlling shareholder of Horgos on the same day. To give a retrospective effect to the reorganization transaction, the consolidated financial statement from January 1, 2017 through December 31, 2017 as of and for the years ended December 31, 2017 and consolidated financial statement from January 1, 2018 through October 25, 2018 were retrospectively presented, including all shares and per share data.

The VIE contractual arrangements

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 Beijing is considered a foreign-invested enterprise. To comply with PRC laws and regulations, Glory Star primarily conducts its business in China through Xing Cui Can and Horgos and its subsidiaries, based on a series of contractual arrangements. The following is a summary of the contractual arrangements that provide Glory Star with effective control of Glory Star’s VIEs and VIEs’ subsidiaries and that enables it to receive substantially all the economic benefits from its operations.

Each of the VIEs Agreements is described in detail below:

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 agrees 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, (ii) or issue any dividends or other distribution with respect to the shares of the VIE held by the VIE shareholders. The term of each of these business cooperation agreements are 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 a separate exclusive option agreement 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).

F-7

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

Share Pledge Agreement

WFOE entered into a separate share pledge agreement 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) Master Exclusive Service Agreement, (ii) Business Cooperation Agreement, and (iii) the Exclusive Option Agreement (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 pledges on the VIE’s equity interests are in the process of being registered with the Market Supervision Administration Authority in China. 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 Agreement and Power of Attorney

WFOE entered into a separate Proxy Agreement and Power of Attorney with Xing Cui Can and Horgos, and their respective shareholders in September 2019. Pursuant to the proxy agreement and power of attorney, each VIE shareholders 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 has 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) to make shareholder’s decision on any matters of the VIE, including without limitations, the sale, transfer, mortgage, pledge or disposal of any or all of the assets of the VIE, (iii) to sell, transfer, pledge or dispose of any or all shares in the VIE, (iv) to nominate, appoint, or remove the directors, supervisors and senior management members of the VIE when necessary, (v) to oversee the business performance of the VIE, (vi) to have full access to the financial information of the VIE, (vii) to file any shareholder lawsuits or to take other legal actions against the VIE’s directors or senior management members, (viii) to approve annual budget or declare dividends, (ix) to manage and dispose of the assets of the VIE, (x) to have the full rights to control and manage the VIE’s finance, accounting and daily operations, (xi) to 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 agreement and power of attorney shall remain in effect during the term of the Exclusive Service Agreement.

Confirmation and Guarantee Letter

Each of the VIE shareholders signed a confirmation and guarantee letter in September 2019, pursuant to which each VIE equity holder agreed that to fully implement the arrangements set forth in the Principal Agreements, Share Pledge Agreement, and the Proxy Agreement and Power of Attorney, and agrees to not carry out any act which may be contrary to the purpose or intent of such agreements.

Master Exclusive Service Agreement

WFOE entered into separate exclusive service agreement with Xing Cui Can and Horgos in September 2019, pursuant to which WFOE provides exclusive technology support and services, staff training and consultation services, public relation services, market development, planning and consultation services, human resource management services, licensing of intellectual property, and other services as determined by the parties. In exchange, the VIEs pay service fees to WFOE equal to the pre-tax profits of the VIEs less (i) accumulated losses of the VIEs and their subsidiaries in the previous financial year, (ii) operating costs, expenses, and taxes, and (iii) reasonable operating profit under applicable PRC tax law and practices. During the term of these agreements, WFOE has the right to adjust the amount and time of payment of the service fees at its sole discretion without the consent of the VIEs. WFOE (or its service provider) will own any intellectual property arising from the performance of these agreements. The term of each of these exclusive service agreements are perpetual unless terminated by WFOE upon thirty (30) advance notice, or upon the transfer of all shares of the respective VIEs to WFOE (or its designee) 10 years under the Option Agreement.

F-8

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

Risks in relation to the VIE structure

Glory Star believes that the contractual arrangements with its VIEs and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the GIP’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:

●

revoke the business and operating licenses of the Company’s PRC subsidiary and VIEs;

●

discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIEs;

●

limit the Company’s business expansion in China by way of entering into contractual arrangements;

●

impose fines or other requirements with which the Company’s PRC subsidiary and VIEs may not be able to comply;

●

require the Company or the Company’s PRC subsidiary and VIEs to restructure the relevant ownership structure or operations; or

●

restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance.

Total assets and liabilities presented on the Company’s Consolidated Balance Sheets and revenue, expense, net income presented on Consolidated Statements of Operations as well as the cash flow from operating, investing and financing activities presented on the Consolidated Statements of Cash Flows are substantially the financial position, operation and cash flow of the Glory Star’s VIEs and subsidiaries of VIEs. Glory Star has not provided any financial support to VIEs for the year ended December 31, 2018 and nine months ended September 30, 2019. The following financial statements amounts and balances of the VIEs and VIEs’ subsidiaries were included in the consolidated financial statements as of December 31, 2018 and September 30, 2019 and for the nine months ended September 30, 2018 and 2019:

	December 31, 2018		September 30, 2019
			(Unaudited)
Total assets	$	54,328	$	70,095
Total liabilities and mezzanine equity	$	30,282	$	17,238

	For the nine months ended September 30,
	2018			2019
	(Unaudited)			(Unaudited)
Total revenues	$	38,698		$	51,083
Net income	$	8,234		$	18,625

Net cash (used in) provided by operating activities	$	(11,125	)	$	6,553
Net cash used in investing activities	$	(104	)	$	(40	)
Net cash provided by (used in) financing activities	$	8,157		$	(4,809	)

The Company believes that there are no assets in the VIEs that can be used only to settle specific obligations of the VIEs, except for the registered capital of the VIEs and non-distributable statutory reserves. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. There are no terms in any arrangements, explicitly or implicitly, requiring the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Company may, at its option and subject to statutory limits and restrictions, provide financial support to its VIEs through loans.

F-9

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

The unaudited condensed consolidated financial statements as of September 30, 2019 and for the nine months ended September 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 the Company, its subsidiaries, its VIEs and its VIEs’ subsidiaries. All inter-company transactions and balances have been eliminated upon consolidation.

(b) Use of estimates

The preparation of financial statements in conformity with US GAAP requires 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) 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.

The Company maintains allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyses 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.

(d) 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.

The Company 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 nine months ended September 30, 2018 and 2019, $9,893 and $14,814 were amortized to the cost of sales and as of September 30, 2018 and 2019, impairment allowance of $nil and $653 were recorded.

(e) Long-term prepayment

Long-term prepayment represents advances to a third-party software developer to develop and maintain a Company’s self-owned platform, CHEERS APP, which includes CHEERS e-commerce shopping mall (“CHEERS E-mall”). The balance of long-term prepayment as of December 31, 2018 and September 30, 2019 were $nil and $14,896, respectively.

F-10

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(f) Revenue Recognition

The Company early adopted the new revenue standard 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 the Company’ 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

The Company 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:

Copyright revenue.

The Company self produces or coproduces TV series featuring lifestyle, culture and fashion, and licenses the copyright of the TV series on an episode basis to the customer for broadcast over a period of time. Generally, the Company signs a contract with a customer which requires the Company to deliver a series of episodes that are substantially the same and that have the same pattern of transfer to the customer. Accordingly, the delivery of the series of episodes is defined as the only performance obligation in the contract.

For the TV series produced solely by the Company, the Company satisfies its performance obligation over time by measuring the progress toward the delivery of the entire series of episodes which is made available to the licensee for exhibition after the license period has begun. Therefore, the copyright revenue in a contract is recognized over time based on the progress of the number of episodes delivered.

The Company also coproduces TV series with other producers and licenses the copyright to third-party video broadcast platforms for broadcast. For TV series produced by Glory Star Group with co-producers, the Company satisfies its performance obligations over time by the delivery of the entire series of episodes to the customer, and requires the customer to pay consideration based on the number and the unit price of valid subsequent views of the TV series that occur on a broadcast platform. Therefore, the copyright revenue is recognized when the later of the valid subsequent view occurs or the performance obligation relating to the delivery of a number of episodes has been satisfied.

Advertising revenue

The Company generates revenue from sales of various forms of advertising on its TV series and streaming content by way of 1) advertisement displays, or 2) the integration of promotion activities in TV series and content to be broadcast. Advertising contracts are signed to establish the different contract prices for different advertising scenarios, consistent with the advertising period. The Company enters into advertising contracts directly with the advertisers or the third-party advertising agencies that represent advertisers.

For the contracts that involve the third-party advertising agencies, the Company is principal as the Company is responsible for fulfilling the promise of providing advertising services and has the discretion in establishing the price for the specified advertisement. Under a framework contract, the Company receives separate purchase orders from advertising agencies before the broadcast. Accordingly, each purchase order is identified as a separate performance obligation, containing a bundle of advertisements that are substantially the same and that have the same pattern of transfer to the customer. Where collectability is reasonably assured, revenue is recognized monthly over the service period of the purchase order.

F-11

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

For contracts signed directly with the advertisers, the Company commits to display a series of advertisements which are substantially the same or similar in content and transfer pattern, and the display of the whole series of advertisements is identified as the single performance obligation under the contract. The Company satisfies its performance obligations over time by measuring the progress toward the display of the whole series of advertisements in a contract, and advertising revenue is recognized over time based on the number of advertisements displayed.

Payment terms and conditions vary by contract types, and terms typically include a requirement for payment within a period 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, the Company 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 full contract price. Both direct advertisers and third-party advertising agencies are generally billed at the end of the display period and require the Company to issue VAT invoices in order to make their payments.

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, the Company 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.

Customized content production revenue

The Company 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.

CHEERS E-mall marketplace service revenue

The Company through CHEERS E-mall, an online e-commerce platform, enables third-party merchants to sell their products to consumers in China. The Company charges fees for platform services to merchants for sales transactions completed on the Cheer E-Mall including but not limited to products displaying, promotion and transaction settlement services. The Company does not take control of the products provided by the merchants at any point in the time during the transactions and does not have latitude over pricing of the merchandise. Transaction services fee is determined as the difference between the platform sales price and the settlement price with the merchants. CHEERS E-mall marketplace service revenue is recognized at a point of time when the Company’s performance obligation to provide marketplace services to the merchants are determined to have been completed under each sales transaction upon the consumers confirming the receipts of goods. Payments for services are generally received before deliveries.

The Company provides coupons at our own discretion as incentives to promote CHEERS E-mall marketplace with validity usually less than two months, which can only be used in future purchases of eligible merchandise offered on CHEERS E-mall to reduce purchase price that are not specific to any merchant. Consumers are not customers of the Company, therefore incentives offered to consumers are not considered consideration payable to customers. As the consumers are required to make future purchases of the merchants’ merchandise to redeem these coupons, the Company does not accrue any expense for coupons when granted and recognizes the amounts of redeemed coupons as marketing expenses when future purchases are made.

Other Revenues

Other revenue primarily consists of copyrights trading of purchased TV-series and the sales of products on Taobao platform. For copyright licensing of purchased TV-series, the Company recognize revenue on net basis at a point of time upon the delivery of master tape and authorization of broadcasting right. For sales of product, the company recognize revenue upon the transfer of products according to the fixed price and production amount in sales orders.

The following table identifies the disaggregation of our revenue for the nine months ended September 30, 2018 and 2019, respectively:

	For the nine months ended September 30,
	2018		2019
	(Unaudited)		(Unaudited)
Revenues from operations:
Advertising revenue	$	20,018	$	33,872
Copyrights revenue		11,453		10,342
Customized content production revenue		7,035		6,488
CHEERS E-Mall marketplace service revenue		-		203
Other revenue		192		178
Total	$	38,698	$	51,083

F-12

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company does not have any significant incremental costs of obtaining contracts with customers incurred and/or costs incurred in fulfilling contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.

(g) Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar (“USD”). The functional currency of subsidiaries, VIEs and VIEs’ subsidiaries located in China is the Chinese Renminbi (“RMB”). For the entities whose functional currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income/loss. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue and expense transactions are transacted in the functional currency of the operating subsidiaries. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

The consolidated balance sheet amounts, with the exception of equity, at December 31, 2018 and September 30, 2019 were translated at RMB 6.8632 to $1.00 and at RMB 7.0729 to $1.00, respectively. Equity accounts were stated at their historical rates. The average translation rates applied to consolidated statements of operations and cash flows for the nine months ended September 30, 2018 and 2019 were RMB 6.4819 to $1.00 and RMB 6.8105 to $1.00, respectively.

(h) Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public companies, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In July 2018, ASU 2016-02 was updated with ASU 2018-11, Targeted Improvements to ASC 842, which provides entities with relief from the costs of implementing certain aspects of the new leasing standard. Specifically, under the amendments in ASU 2018-11, (1) entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and (2) lessors may elect not to separate lease and nonlease components when certain conditions are met. The Company is in the process of completing its evaluation of the effect of the adoption of this ASU and expects the adoption will result in an increase in the assets and liabilities on the consolidated balance sheets for the operating leases and will have an insignificant impact on the consolidated statements of operations and cash flows.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. The Company is currently evaluating the potential impact of this new guidance.

F-13

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

In March 2019, the FASB issued ASU No. 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The objective of ASU 2019-02 is to better reflect the economics of an episodic television series, align the accounting with films, and provide more relevant financial reporting information to users of financial statements. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period. The Company is currently evaluating the potential impact of this new guidance.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

3. CURRENT AND LONG-TERM ACCOUNTS RECEIVABLE, NET

As of December 31, 2018 and September 30, 2019, accounts receivable consisted of the following:

	December 31, 2018									September 30, 2019
	Undue			Due			Total			Undue			Due			Total
Accounts receivable – gross	$	17,715			23,285			41,000		$	17,508			28,627			44,135
Allowance for doubtful accounts	$	(642	)		(1,358	)		(2,000	)	$	(469	)		(766	)		(1,235	)
	$	17,073			21,927			39,000		$	17,039			27,861			44,900
Less:
Long term accounts receivable	$	3,060			626			3,686		$	—			—			—
Allowance for doubtful accounts – long term	$	(120	)		(73	)		(193	)	$	—			—			—
Long term accounts receivable, net	$	2,940			553			3,493		$	—			—			—
Current accounts receivable	$	14,655			22,659			37,314		$	17,508			28,627			44,135
Allowances for doubtful accounts – current	$	(522	)		(1,285	)		(1,807	)	$	(469	)		(766	)		(1,235	)
Accounts receivables, net	$	14,133			21,374			35,507		$	17,039			27,861			44,900

The movement of allowance for doubtful accounts for the nine months ended September 30, 2019 is as the following:

	Amount
Balance as of December 31, 2018	$	2,000
Addition		-
Reverse		(733	)
Exchange difference		(32	)
Balance as of September 30, 2019	$	1,235

The Company recorded bad debt expense of $229 and reverse bad debt provision of $733 for the nine months ended September 30, 2018 and 2019, respectively.

For receivable balances as of September 30, 2019, $6,564, representing 15% of total balance, was collected in the subsequent period. The unbilled accounts receivables were amounted to $37,314 and $44,135, respectively, as of December 31, 2018 and September 30, 2019.

F-14

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

4. PREPAID EXPENSES

As of December 31, 2018 and September 30, 2019, prepaid expenses consisted of the following:

	December 31, 2018		September 30, 2019
			(Unaudited)
Prepaid production fee	$	6,632	$	3,151
Prepaid guarantee fee for bank borrowings		98		11
Other prepaid expense		169		399
	$	6,899	$	3,561

5. OTHER CURRENT ASSETS

As of December 31, 2018 and September 30, 2019, other current assets consisted of the following:

	December 31, 2018			September 30, 2019
				(Unaudited)
Staff advance	$	135		$	328
VAT input		51			61
Others		37			46
		223			435
Less: allowance for doubtful accounts		(11	)		(13	)
	$	212		$	422

6. PROPERTY AND EQUIPMENT

As of December 31, 2018 and September 30, 2019, property and equipment consisted of the following:

	December 31, 2018			September 30, 2019
				(Unaudited)
Electric equipment	$	684		$	694
Office equipment and furniture		72			71
Leasehold improvement		220			220
		976			985
Less: accumulated depreciation		(438	)		(639	)
	$	538		$	346

For the nine months ended September 30, 2018 and 2019, depreciation expense amounted to $222 and $230, respectively.

F-15

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

7. ACCRUED LIABILITIES AND OTHER PAYABLES

As of December 31, 2018 and September 30, 2019, accrued liabilities and other payables consisted of the following:

	December 31, 2018		September 30, 2019
			(Unaudited)
Borrowing from former shareholder ⁽¹⁾	$	3,438	$	2,629
Co-invest online series production fund received ⁽²⁾		2,557		990
Payroll payables		886		755
Other payables		670		357
	$	7,551	$	4,731

(1)

Borrowing from former shareholder represented the loan from Lead Eastern Investment Co., Ltd, who was the related party of the Company until October 26, 2018.

(2)

Co-invest online series fund was the investment received from two parties to cooperate with the Company to produce a online series and the earnings of the online series net of cost were distributed to the Company and those two cooperative partners in accordance with the agreed proportions.

8. OTHER TAXES PAYABLE

As of December 31, 2018 and September 30, 2019, other taxes payable consisted of the following:

	December 31, 2018		September 30, 2019
			(Unaudited)
VAT payable	$	972	$	2,519
Other		223		145
	$	1,195	$	2,664

9. SHORT-TERM BANK LOANS

Short-term bank loans represent the amounts due to various banks that are due within one year. At December 31, 2018 and September 30, 2019, short-term bank loans consisted of the following:

	December 31, 2018		September 30, 2019
			(Unaudited)
Loan from Bank of Communications	$	2,914	$	—
Loan from Bank of Beijing		2,914		—
Loan from Huaxia Bank		1,457		—
Loan from China Merchants Bank		2,914		2,828
	$	10,199	$	2,828

The weighted average interest rate for short-term bank loans was approximately 5.64% and 5.57% for the nine months ended September 30, 2018 and 2019, respectively. For the nine months ended September 30, 2018 and 2019, interest expense related to bank loans amounted to $243 and $267 respectively.

F-16

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

10. RELATED PARTY TRANSACTIONS

Amounts due to Related Parties

As of December 31, 2018 and September 30, 2019, amounts due to related parties consisted of the following:

	December 31, 2018		September 30, 2019
			(Unaudited)
Mr. Zhang Bing⁽¹⁾	$	444	$	714
Mr. Lu Jia⁽²⁾		811		787
	$	1,255	$	1,501

(1)

Chairman of the board and general manager of Horgos, owning 43.34% shares of Horgos

(2)

Board member and vice president of Horgos.

The balances of $1,255 and $1,501 as of December 31, 2018 and September 30, 2019, respectively, were borrowed from related parties for the Company’s working capital needs. The balances are short-term in nature, non-interest bearing, unsecured and repayable on demand.

Related party transactions

	For the nine months ended September 30,
	2018		2019
	(Unaudited)		(Unaudited)
Copyright revenue from Hebei Satellite TV⁽³⁾	$	2,021	$	—
Time-slot fee to Hebei Satellite TV⁽³⁾		1,347		—

(3)

Lead Eastern had 49% equity shares of Hebei Satellite TV Media Co., Ltd., thus it was a related party of the Company before October 26, 2018. As Lead Eastern was no longer a related party of the Company since October 26, 2018, this entity was not a related party of the Company since then.

11. INCOME TAXES

Cayman Islands

The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

Hong Kong

On March 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) which introduces the two-tiered profits tax rates regime. The Bill was signed into law on March 28, 2018 and was gazette on the following day. Under the two-tiered profits tax rates regime, the first 2 million Hong Kong Dollar (“HKD”) of profits of the qualifying group entity will be taxed at 8.25%, and profits above HKD2 million will be taxed at 16.5%.

PRC

WFOE, Horgos, Glory Star Beijing, Beijing Leshare, Horgos Glory Prosperity, Shenzhen Leshare, Horgos Glary Wisdom, Beijing Glory Wisdom and Xing Cui Can were incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises. In the nine months ended September 30, 2018 and 2019, Beijing Leshare and Beijing Glary Wisdom were recognized as small low-profit enterprise and received a preferential income tax rate of 10%. Horgos, Horgos Glory Prosperity, and Horgos Glary Wisdom are subject to a preferential income tax rate of 0% for a period of about 4 years since their inception until the year of 2020, as they are incorporated in the Horgos Economic District, Xinjiang province.

F-17

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

11. INCOME TAXES (cont.)

The reconciliations of the statutory income tax rate and the Company’s effective income tax rate are as follows:

	For the nine months ended September 30,
	2018			2019
	(Unaudited)			(Unaudited)
Net income before provision for income taxes	$	8,121		$	18,941
PRC statutory tax rate		25	%		25	%
Income tax at statutory tax rate		2,030			4,735

Expenses not deductible for tax purpose		10			6
Changes in valuation allowance		52			133
Effect of preferential tax rates granted to the PRC entities		(2,205	)		(4,558	)
Income tax (benefit) expense	$	(113	)	$	316
Effective tax rates		(1.39	)%		1.67	%

The current PRC EIT Law imposes a 10% withholding income tax for dividends distributed by foreign invested enterprises to their immediate holding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy certain requirements specified by the PRC tax authorities, for example, will be subject to a 5% withholding tax rate.

As of December 31, 2018 and September 30, 2019, the Company had not recorded any withholding tax on the retained earnings of its foreign invested enterprises in the PRC, since the Company intends to reinvest its earnings to further expand its business in mainland China, and its foreign invested enterprises do not intend to declare dividends to their immediate foreign holding companies.

The tax effect of temporary difference under ASC 740 “Accounting for Income Taxes” that give rise to deferred tax asset and liability as of December 31, 2018 and September 30, 2019 was as follows:

	December 31, 2018			September 30, 2019
				(Unaudited)
Deferred tax assets:
Allowance for doubtful accounts	$	32		$	23
Net operating loss carry forwards		502			312
Excess marketing and advertising expense		115			131
Unamortized produced content		77			107
Total deferred tax assets, gross		726			573
Valuation allowance		(182	)		(313	)
Total deferred tax assets, net	$	544		$	260

F-18

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

11. INCOME TAXES (cont.)

Based upon a review of four sources of income identified within ASC 740, the Company determined that the negative evidence outweighed the positive evidence and that a valuation allowance will be maintain against its net deferred tax assets. The movement of valuation allowance provision for deferred tax assets is as follows:

	Valuation allowance provision for Deferred tax assets
Balance as of December 31, 2018	$	182
Addition		131
Balance as of September 30, 2019 (Unaudited)	$	313

As of December 31, 2018, the net operating loss carrying forward was $5,422, among which $3,651 and $1,772 which will begin to expire in 2023 and 2024, respectively.

As of September 30, 2019, the net operating loss carrying forward was $4,205, among which $2,484 and $1,721 which will begin to expire in 2023 and 2024, respectively.

Accounting for uncertainty tax position

The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. It is uncertain as to whether the PRC tax authority may take different views about the Company’s PRC entities’ tax filings during their reviews, which may lead to additional tax liabilities. Therefore, the Company’s PRC entities’ tax filings results are subject to uncertainty.

In accordance with PRC Tax Administration Law on the Levying and Collection of Taxes, the PRC tax authorities generally have up to five years to assess underpaid tax plus penalties and interest for PRC entities’ tax filings. In the case of tax evasion, which is not clearly defined in the law, there is no limitation on the tax years open for investigation. Accordingly, the PRC entities remain subject to examination by the tax authorities based on the above.

Tax years that remain subject to examination are the years ended December 31, 2016, 2017 and 2018. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in liabilities which could be materially different from these estimates. In such an event, the Company will record additional tax expense in the period in which such resolution occurs.

For the nine months ended September 30, 2018 and 2019, the Company identified an uncertain tax position (“UTP”) that the cost allocation between Horgos and Glory Star Beijing, which are taxed currently at 0% and 25% respectively, might not be properly supported. The related impact of such UTP was amounting to $242 and $99 for the nine months ended September 30, 2018 and 2019, respectively, and have been deducted from accumulated loss when calculating deferred tax assets. The Company did not identify other UTPs such as transfer pricing, as inter-company transactions were all reasonably priced.

12. MEZZANINE EQUITY

In April 2018, Horgos entered into a redeemable preferred stock purchase agreement with two investors. Pursuant to the agreement, the Company is required to redeem the preferred stocks when any of the following three events occurs: (1) Horgos fails to be successfully acquired by a domestic or overseas listed company before December 31, 2020, or fails to complete the IPO process within 2 years after it commences the IPO process before December 31, 2020; (2) at any time before December 31, 2020, Mr. Zhang Bing, core management of Horgos, resigns from the Company, or directly or indirectly operates the same or similar business as the Company’s; or (3) the net profit for any of the fiscal years of 2018, 2019 and 2020 is less than the profit of the preceding year. Whenever any of above events occurs, the investors have the option to request Horgos to redeem the equity interests, and the price would be determined as the original investment principals plus a 12% annualized return.

F-19

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

12. MEZZANINE EQUITY (cont.)

The redeemable preferred stocks are classified in the mezzanine equity between the liabilities and the equity on the consolidated balance sheets due to the conditional redemption provision upon the occurrence of three above situations which are beyond of the Company’s control.

The Company recognizes the change in the redemption value of the preferred stocks rateably over the redemption period. Increases in the carrying amount of the redeemable preferred stocks are recorded by charges against retained earnings, or in the absence of retained earnings, by charges as reduction of additional paid-in capital.

Per the effectiveness of Exclusive Option Agreement, the two investors agreed that all rights and obligations arising out of from any the agreement or arrangement, (including the redeemable preferred stocks purchase agreement) which was reached before the execution of this Exclusive Option Agreement on the restriction on transfer of shares of Horgos, the pre-emptive right for increasing capital or transfer of shares of Horgos, and any rights relating to the disposal of shares of Glory Star (if any) would eliminate. Therefore, those two shareholders shall no longer claim for the redeemable right and the mezzanine equity along with its accretion was classified to additional paid-in capital.

The change in the balance of redeemable preferred stocks included in mezzanine equity for the nine months ended September 30, 2019 is as follows:

Opening balance as of December 31, 2018	$	9,031
Accretion		610
Appropriation to additional paid-in capital		(9,361	)
Effect of exchange rate changes		(280	)
Ending balance as of September 30, 2019 (Unaudited)	$	-

13. STATUTORY RESERVE

Horgos, Beijing Glory Star, Beijing Leshare, Shenzhen Leshare, Horgos Glary Wisdom, Beijing Glary Wisdom, Glary Prosperity, and Xing Cui Can operate in the PRC, are required to reserve 10% of their net profit after income tax, as determined in accordance with the PRC accounting rules and regulations. Appropriation to the statutory reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends.

Beijing Glory Star, Beijing Leshare and Horgos Glary Wisdom had sustained losses since their establishments, therefore no appropriation to statutory reserves was required as they incurred recurring net losses. Shenzhen Leshare is dormant as of December 31, 2018, therefore no appropriation was required for it as well.

For the nine months ended September 30, 2019, Horgos and Xing Cui Can provided statutory reserve as follows:

	Horgos Glory Star		Xing Cui Can		Total
Balance – December 31, 2018	$	412	$	—	$	412
Appropriation to statutory reserve		—		—		—
Balance – September 30, 2019 (Unaudited)	$	412	$	—	$	412

14. NON-CONTROLLING INTEREST

As of September 30, 2019, the Company’s non-controlling interest represented 49% equity interest of Horgos Glary Wisdom and 49% equity interest of Glary Prosperity respectively.

The following is a summary of noncontrolling interest activities for the nine months ended September 30, 2019.

	Amount
Non-controlling interest as of December 31, and 2018	$	388
Net loss attributable to non-controlling shareholders		(290	)
Foreign currency translation adjustment		(104	)
Non-controlling interest as of September 30, 2019 (Unaudited)	$	(6	)

F-20

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

15. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company is a party to lease office space. Rent and related utilities expense under all operating leases, included in operating expenses in the accompanying consolidated statements of operations and comprehensive income, amounted to approximately $336 and $372 for the nine months ended September 30, 2018 and 2019, respectively.

The following table presents future minimum rental payments required under operating leases as of September 30, 2019:

Year ended December 31:	Amount
Remaining in 2019	$	121
2020		476
2021		467
2022		467
2023		514
2024 and thereafter		515
	$	2,560

16. CONCENTRATIONS

Concentrations of Credit Risk

As of December 31, 2018 and September 30, 2019, cash, cash equivalents and restricted cash balances in the PRC are approximately $2,437 and $3,969, respectively, are uninsured. The Company has not experienced any losses in PRC bank accounts and believes it is not exposed to any risks on its cash in PRC bank accounts.

Customers

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenue for the nine months ended September 30, 2018 and 2019.

Customer	Nine months Ended September 30, 2018			Nine months Ended September 30, 2019
	(Unaudited)			(Unaudited)
A		*			14	%
B		11	%		12	%
C		11	%		*
D		11	%		*
E		12	%		*
F		11	%		*

Less than 10%

As of September 30, 2018, 2 customers, whose individual outstanding receivable balance accounted for 10% or more of the Company’s total accounts receivable, accounted for 39% of the Company’s total accounts receivable.

As of September 30, 2019, 4 customers, whose individual outstanding receivable balance accounted for 10% or more of the Company’s total accounts receivable, accounted for 64% of the Company’s total accounts receivable.

F-21

GLORY STAR NEW MEDIA GROUP LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)

16. CONCENTRATIONS (cont.)

Vendors

The following table sets forth information as to each vendor that accounted for 10% or more of the Company’s inventory purchase for the nine months ended September 30, 2018 and 2019.

Vendor	Nine months Ended September 30, 2018			Nine months Ended September 30, 2019
	(Unaudited)			(Unaudited)
A		20	%		19	%
B		12	%		17	%
C		23	%		15	%
D		11	%		15	%

As of September 30, 2018, 2 vendors, whose individual outstanding payable balance accounted for 10% or more of the Company’s total accounts payable, accounted for 79% of the Company’s total accounts payable.

As of September 30, 2019, 3 vendors, whose individual outstanding payable balance accounted for 10% or more of the Company’s total accounts payable, accounted for 76% of the Company’s total accounts payable.

17. SUBSEQUENT EVENTS

The Company has not identified any events that would have required adjustment or disclosure in the consolidated financial statements.

F-22

Exhibit 99.4

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

Introduction

TKK Symphony Acquisition Corporation (“TKK”), the predecessor of Glory Star New Media Group Holdings Limited, is providing the following unaudited pro forma combined financial information to aid you in your analysis of the financial aspects of the Business Combination with Glory Star New Media Group Limited (“Glory Star”), which was consummated on February 14, 2020.

The unaudited pro forma combined balance sheet as of September 30, 2019 gives pro forma effect to the Business Combination as if it had been consummated as of that date. The unaudited pro forma combined statement of operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 give pro forma effect to the Business Combination as if it had occurred as of the earliest period presented. This information should be read together with Glory Star’s and TKK’s respective unaudited and audited financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Glory Star,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of TKK” and other financial information included elsewhere in this Form 8-K and in the Company’s Second Amended and Restated Offer to Purchase (the “Offer to Purchase”), filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 99.(A)(1)(D) to its Schedule TO (Amendment No. 7) dated January 3, 2020.

The unaudited pro forma combined balance sheet as of September 30, 2019 has been prepared using the following:

●

Glory Star’s unaudited historical consolidated balance sheet as of September 30, 2019, as included as an Exhibit in this Form 8-K; and

●

TKK’s unaudited historical balance sheet as of September 30, 2019, as included as an Exhibit in the Offer to Purchase.

The unaudited pro forma combined statement of operations for the nine months ended September 30, 2019 has been prepared using the following:

●

Glory Star’s unaudited historical consolidated statement of income and comprehensive income for the nine months ended September 30, 2019, as included as an Exhibit in this Form 8-K; and

●

TKK’s unaudited historical statement of operations for the nine months ended September 30, 2019, as included as an Exhibit in the Offer to Purchase.

The unaudited pro forma combined statement of operations for the year ended December 31, 2018 has been prepared using the following:

●

Glory Star’s audited historical consolidated statement of income and comprehensive income for the year ended December 31, 2018, as included as an Exhibit in the Offer to Purchase; and

●

TKK’s audited historical statement of operations for the period from February 5, 2018 (inception) through December 31, 2018, as included as an Exhibit in the Offer to Purchase.

Description of the Transaction

Upon closing of the Business Combination (the “Closing”), TKK acquired all of the issued and outstanding securities of Glory Star in exchange for (i) approximately 41,204,025 of TKK’s ordinary shares (“Closing Payment Shares”), or one ordinary share for approximately 0.04854 outstanding shares of Glory Star, of which 2,060,201 of the Closing Payment Shares (the “Escrow Shares”) shall be deposited into escrow to secure certain indemnification obligations of the Sellers, plus (ii) earnout payments consisting of up to an additional 5,000,000 ordinary shares if the combined company meets certain financial performance targets for the 2019 fiscal year and an additional 5,000,000 ordinary shares if the combined company meets certain financial performance targets for the 2020 fiscal year (the “Earnout Shares”). In the event that a financial performance target is not met for the 2019 fiscal year and/or 2020 fiscal year but the combined company meets certain financial performance targets for the 2019 fiscal year and 2020 fiscal year combined, the Sellers will be entitled to receive any Earnout Shares that they otherwise did not receive (the “Alternative Earnout”).

Accounting for the Transaction

The Business Combination will be accounted for as a reverse merger, accompanied by a recapitalization, in accordance with U.S. GAAP. Under this method of accounting, TKK will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Glory Star controlling the majority of the relative voting rights, Glory Star being expected to have the largest interest of the combined company, Glory Star’s senior management comprising the senior management of the combined company, the relative size of Glory Star compared to TKK, and Glory Star’s operations comprising the ongoing operations of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Glory Star issuing stock for the net assets of TKK, accompanied by a recapitalization. The net assets of TKK will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Glory Star.

Basis of Pro Forma Presentation

The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination, are factually supportable, and as it relates to the unaudited pro forma combined statements of operations, are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation 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.

Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma combined financial statements are 41,204,025 TKK ordinary shares issued to Glory Star.

PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2019
(UNAUDITED)

	(A) Glory Star			(B) TKK		Pro Forma Adjustments			Pro Forma Balance Sheet
Assets
Current assets:
Cash and cash equivalents	$	3,969		$	47	$	257,863	(2)
							500	(3)
							(142)	(4)
							(257,720	)(5)	$	4,517
Accounts receivable, net		44,900			-		-			44,900
Prepaid expenses and other current assets		3,983			76		-			4,059
Total Current Assets		52,852			123		501			53,476
Marketable securities held in Trust Account		-			256,286		1,577	(1)
							(257,863	)(2)		-
Property and equipment, net		346			-		-			346
Intangible assets		10			-		-			10
Deferred tax assets		260			-		-			260
Unamortized produced content, net		1,731			-		-			1,731
Long-term accounts receivable, net		-			-		-			-
Long-term prepayment		14,896			-		-			14,896
Total Assets	$	70,095		$	256,409	$	(255,785	)	$	70,719

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	9,341		$	204	$	3,002	(4)	$	12,547
Short-term bank loans		2,828			-		-			2,828
Advance from customers		904			-		-			904
Taxes payable		2,664			-		-			2,664
Convertible promissory note		-			-		4,000	(4)		4,000
Advances and loans from related party		-			850		500	(3)		1,350
Due to related parties		1,501			-		-			1,501
Total Liabilities		17,238			1,054		7,502			25,794

Mezzanine equity		-			-		-			-
Ordinary shares subject to redemption		-			250,355		(250,355	)(5)		-
		-			250,355		(250,355	)		-

Commitments and Contingencies

Shareholders’ Equity
Ordinary shares		-			1		-
							4	(6)		5
Additional paid in capital		12,933			424		(7,365	)(5)
							4,571	(6)		10,563
Statutory reserve		412			-		-			412
Accumulated other comprehensive loss		(2,039	)		-		-			(2,039	)
Retained earnings (Accumulated deficit)		41,557			4,575		1,577	(1)
							(7,144	)(4)
							(4,575	)(6)		35,990
Total Shareholders' Equity		52,863			5,000		(12,932	)		44,931
Non-Controlling Interest		(6	)		-		-			(6	)
Total Liabilities and Equity	$	70,095		$	256,409	$	(255,785	)	$	70,719

Pro Forma Adjustments to the Unaudited Combined Balance Sheet

(A)	Derived from the unaudited consolidated balance sheet of Glory Star as of September 30, 2019.

(B)	Derived from the unaudited balance sheet of TKK as of September 30, 2019.

(1)	Reflects additional interest earned on the Trust Account.

(2)	Reflects the release of cash from marketable securities held in the Trust Account.

(3)	Reflects additional loans and advances in the aggregate amount of $.5 million made by related parties.

(4)	Reflects the payment and accrual of fees and expenses related to the Business Combination, including legal, financial advisory, accounting and other professional fees.

(5)	Reflects the redemption of 24,986,159 TKK shares for shareholders who elected cash redemptions for cash payment of $257.7 million.

(6)	Reflects recapitalization of Glory Star through (a) the contribution of all the share capital in Glory Star to TKK, (b) the issuance of 41,204,025 TKK shares and (c) the elimination of the historical accumulated deficit of TKK, the accounting acquiree.

Upon consummation of the Business Combination, 25,000,000 rights converted into 2,500,000 TKK shares and 400,000 TKK shares were cancelled by the Sponsor.

PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2019
(UNAUDITED)

	(A) Glory Star			(B) TKK			Pro Forma Adjustments			Pro Forma Income Statement

Net revenues	$	51,083		$	-		$	-		$	51,083

Cost of revenues		28,301			-			-			28,301
Selling and marketing		2,053			-			-			2,053
General and administrative		1,225			1,434			(2,023	)(1)		636
Research and development		225			-			-			225
Operating income (loss)		19,279			(1,434	)		2,023			19,868

Other income (expense):
Interest income		-			4,423			(4,423	)(2)		-
Unrealized loss on marketable securities		-			(23	)		23	(2)		-
Interest expense		(354	)		-			-			(354	)
Other income, net		16			-			-			16
Income before income taxes		18,941			2,966			(2,377	)		19,530
Benefit (provision) for income taxes		(316	)		-			(594	)(3)		(910	)
Net income		18,625			2,966			(2,971	)		18,620
Less: net loss attributable to non-controlling interests		(290	)		-			-			(290	)
Net income attributable to Company	$	18,915		$	2,966		$	(2,971	)	$	18,910

Weighted average shares outstanding, basic and diluted					6,926,708			42,841,158	(4)		49,767,866
Basic and diluted net (loss) income per share				$	(0.19	)				$	0.38

PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)

	(C) Glory Star			(D) TKK			Pro Forma Adjustments			Pro Forma Income Statement

Net revenues	$	57,801		$	-		$	-		$	57,801

Cost of revenues		37,352			-			-			37,352
Selling and marketing		3,250			-			-			3,250
General and administrative		3,214			277			(14	)(1)		3,477
Reseacrh and development		502			-			-			502
Operating income (loss)		13,483			(277	)		14			13,220

Other income (expense):
Interest income		-			1,947			(1,947	)(2)		-
Unrealized loss on marketable securities		-			(61	)		61	(2)		-
Interest expense		(497	)		-			-			(497	)
Other income, net		301			-			-			301
Income before income taxes		13,287			1,609			(1,872	)		13,024
Provision for income taxes		(241	)		-			(468	)(3)		(709	)
Net income		13,046			1,609			(2,340	)		12,315
Less: net income attributable to non-controlling interests		143			-			-			143
Net income attributable to Company	$	12,903		$	1,609		$	(2,340	)	$	12,172

Weighted average shares outstanding, basic and diluted					6,592,952			43,174,914	(4)		49,767,866
Basic and diluted net (loss) income per share				$	(0.04	)				$	0.24

Pro Forma Adjustments to the Unaudited Combined Statements of Operations

(A)	Derived from the unaudited consolidated statement of income and comprehensive income of Glory Star for the nine months ended September 30, 2019.

(B)	Derived from the unaudited statement of operations of TKK for the nine months ended September 30, 2019.

(C)	Derived from the audited consolidated statement of income and comprehensive income of Glory Star for the year ended December 31, 2018.

(D)	Derived from the audited statement of operations of TKK for the period from February 5, 2018 (inception) through December 31, 2018.

(1)	Represents an adjustment to eliminate direct, incremental costs of the Business Combination which are reflected in the historical financial statements of Glory Star in the amount of $0.4 million and $0.015 million for the nine months ended September 30, 2019 and for the year ended December 31, 2018, respectively, and in the historical consolidated financial statements of TKK in the amount of $1.6 million and $0 million for the nine months ended September 30, 2019 and for the year ended December 31, 2018, respectively.

(2)	Represents an adjustment to eliminate interest income and unrealized loss on marketable securities held in the Trust Account as of the beginning of the period.

(3)	To record the tax effect of the pro forma adjustments applied at Glory Star’s normalized blended statutory income tax rate of 25.0%.

(4)	The calculation of weighted average shares outstanding for basic and diluted net income (loss) per share assumes that the initial public offering occurred as of the earliest period presented. In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net income (loss) per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combinations for the entire period.

The following presents the calculation of basic and diluted weighted average shares outstanding. The computation of diluted income (loss) per share excludes the effect of warrants to purchase 19,000,000 TKK shares, because the inclusion of these securities would be anti-dilutive.

Weighted average shares calculation, basic and diluted
TKK Public Shares ⁽¹⁾	2,513,841
TKK Shares held by Sponsor	6,050,000
TKK Shares issued to Glory Star in Business Combination	41,204,025
Weighted average shares outstanding	49,767,866
Percent of shares owned by Glory Star holders	82.8	%
Percent of shares owned by holders of TKK shares	17.2	%

(1)

Includes shares received upon the conversion of rights.