Business Context and Reporting Period
This Form 6-K filing by The9 Limited (NASDAQ: NCTY) covers the month of September 2011. The9 is an online game developer and operator based in China, operating licensed MMORPGs and proprietary titles in mainland China and overseas.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on a corporate transaction rather than financial performance results.
Material Changes and Transactions
The primary material event is a series of agreements between The9, its subsidiary Red 5 Singapore Pte. Ltd., and Webzen, Inc. regarding the game "Firefall":
- License Assignment: Webzen will assign the license of "Firefall" to Red 5 Singapore.
- Role Substitution: Upon closing, Red 5 Singapore will substitute Webzen as the party under the Game Development and License Agreement for all territories except the United States, Canada, and European countries.
- Webzen Exit: Webzen will no longer be involved in marketing or publishing "Firefall" in any territory.
- Compensation: Webzen will receive compensation for prior development fees paid to Red 5, guaranteed by The9, and will share in future revenue for a certain period.
Guidance, Outlook, and Risks
Conditions Precedent: The transaction is contingent upon the withdrawal of claims made by Red 5 and Webzen in the United States and Korea.
Forward-Looking Statements: The filing includes a Safe Harbor statement noting that actual results may differ due to risks including Chinese government policies, industry regulations, internet content regulations, player retention, and competitive market conditions.
Management Commentary: The9 continues to develop proprietary games including "ShenXianZhuan" and "Firefall," and operates a Mobile Business Unit established in 2010.
Investor Verification Checklist
- Verify the status of the legal claims in the United States and Korea that must be withdrawn for the transaction to close.
- Confirm the specific terms of the future revenue sharing arrangement between The9/Red 5 Singapore and Webzen.
- Monitor the impact of the "Firefall" license transfer on The9's future revenue projections.
- Review subsequent filings for any updates on the withdrawal of claims or closing of the transaction.