{"url_path":"/sec/cik-0001734262/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 EXHIBITS","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1734262/0001104659-26-048866-index.html","accession_number":"0001104659-26-048866","cik":"0001734262","ticker":null,"issuer_name":"CooTek(Cayman)Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1734262/0001104659-26-048866-index.html","primary_entity_key":"0001734262","primary_entity_name":"CooTek(Cayman)Inc."},"word_count":21967,"has_tables":true,"body_markdown":"ITEM 19. EXHIBITS\n\n​\n\n**Exhibit**\n**Number**\n\n**  ​ ​ ​ ​**\n\n**Description of Document**\n\n​\n\n​\n\n​\n\n1.1\n\n​\n\n[Seventh Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2 from our registration statement on Form F-1, as amended, initially filed on August 16, 2018 (File No. 333-226867))](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-3_2.htm)\n\n2.1\n\n​\n\n[Specimen American Depositary Receipt of the Registrant (included in Exhibit 2.4) (incorporated by reference to Exhibit 2.1 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 26, 2023)](https://www.sec.gov/Archives/edgar/data/1734262/000110465923049828/ctkyy-20221231xex2d4.htm)\n\n2.2\n\n​\n\n[Specimen Certificate for Class A Ordinary Shares of the Registrant (incorporated by reference to Exhibit 4.2 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918006290/a2236512zex-4_2.htm)\n\n2.3\n\n​\n\n[Deposit Agreement among the Registrant, the depositary and holders and beneficial holders of the American Depositary Shares dated September 27, 2018 (incorporated by reference to Exhibit 2.3 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 29, 2022)](https://www.sec.gov/Archives/edgar/data/1734262/000110465922052730/ctk-20211231xex2d3.htm)\n\n2.4\n\n​\n\n[Amendment No. 1 to the Deposit Agreement among the Registrant, the depositary and holders and beneficial holders of the American Depositary Shares dated May 9, 2022 (incorporated by reference to Exhibit 2.4 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 26, 2023)](https://www.sec.gov/Archives/edgar/data/1734262/000110465923049828/ctkyy-20221231xex2d4.htm)\n\n2.5\n\n​\n\n[Fifth Amended and Restated Shareholders Agreement between the Registrant and other parties therein dated January 10, 2017 (incorporated by reference to Exhibit 4.4 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-4_4.htm)\n\n2.6\n\n​\n\n[Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 2.6 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 26, 2023)](https://www.sec.gov/Archives/edgar/data/1734262/000110465923049828/ctkyy-20221231xex2d6.htm)\n\n4.1\n\n​\n\n[Amended and Restated 2012 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 26, 2023)](https://www.sec.gov/Archives/edgar/data/1734262/000110465923049828/ctkyy-20221231xex4d1.htm)\n\n4.2\n\n​\n\n[2018 Share Incentive Plan(incorporated by reference to Exhibit 10.2 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_2.htm)\n\n4.3\n\n​\n\n[Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.3 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_3.htm)\n\n4.4\n\n​\n\n[Form of Employment Agreement between the Registrant and executive officers of the Registrant (incorporated by reference to Exhibit 10.4 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_4.htm)\n\n4.5\n\n​\n\n[Executed form of exclusive business cooperation agreement between Shanghai Chule (CooTek) Information Technology Co., Ltd. and a VIE, as currently in effect, and a schedule of all executed exclusive business cooperation agreements adopting the same form in respect of each of the VIEs (incorporated by reference to Exhibit 4.5 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 20, 2020)](https://www.sec.gov/Archives/edgar/data/1734262/000110465920048703/a20-5664_1ex4d5.htm)\n\n4.6\n\n​\n\n[Executed form of exclusive purchase option agreements among Shanghai Chule (CooTek) Information Technology Co., Ltd. and each shareholder of the VIEs, as currently in effect, and a schedule of all executed exclusive purchase option agreements adopting the same form in respect of each of the VIEs (incorporated by reference to Exhibit 4.6 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 20, 2020)](https://www.sec.gov/Archives/edgar/data/1734262/000110465920048703/a20-5664_1ex4d6.htm)\n\n155\n\n[Table of Contents](#TOC)\n\n**Exhibit**\n**Number**\n\n**  ​ ​ ​ ​**\n\n**Description of Document**\n\n​\n\n​\n\n​\n\n4.7\n\n​\n\n[Executed form of equity pledge agreements among Shanghai Chule (CooTek) Information Technology Co., Ltd. and each shareholder of the VIEs, as currently in effect, and a schedule of all equity pledge agreement adopting the same form in respect of each of the VIEs (incorporated by reference to Exhibit 4.7 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 20, 2020)](https://www.sec.gov/Archives/edgar/data/1734262/000110465920048703/a20-5664_1ex4d7.htm)\n\n4.8\n\n​\n\n[Executed form of powers of attorney granted by each shareholder of the VIEs, as currently in effect, and a schedule of all powers of attorney adopting the same form in respect of each of the VIEs (incorporated by reference to Exhibit 4.8 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 20, 2020)](https://www.sec.gov/Archives/edgar/data/1734262/000110465920048703/a20-5664_1ex4d8.htm)\n\n \n\n​\n\n4.9\n\n​\n\n[Executed form of loan agreement between Shanghai Chule (CooTek) Information Technology Co., Ltd. and each shareholder of the VIEs, as currently in effect, and a schedule of all executed loan agreements adopting the same form in respect of each of the VIEs (incorporated by reference to Exhibit 4.9 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 20, 2020)](https://www.sec.gov/Archives/edgar/data/1734262/000110465920048703/a20-5664_1ex4d9.htm)\n\n4.10\n\n​\n\n[The form spouse consent letter signed by each spouse of the shareholders of the VIEs, as currently in effect (incorporated by reference to Exhibit 4.10 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 20, 2020)](https://www.sec.gov/Archives/edgar/data/1734262/000110465920048703/a20-5664_1ex4d10.htm)\n\n4.11\n\n​\n\n[Series D-1 Preferred Share Purchase Agreement between the Registrant and other parties dated January 10, 2017 (incorporated by reference to Exhibit 10.11 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_11.htm)\n\n4.12\n\n​\n\n[The form of audience network terms between Facebook, Inc. and Facebook Ireland Limited and us (incorporated by reference to Exhibit 10.12 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_12.htm)\n\n4.13\n\n​\n\n[The form of Google DoubleClick Platform Services Terms and Conditions between Google Inc. and us (incorporated by reference to Exhibit 10.13 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_13.htm)\n\n4.14\n\n​\n\n[The form of Google AdSense Online Terms of Service between Google Inc. and us (incorporated by reference to Exhibit 10.15 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-10_15.htm)\n\n4.15\n\n​\n\n[The form of Chuan Shan Jia Distribution Cooperation Agreement signed by certain VIEs and a schedule of all executed Chuan Shan Jia Distribution Cooperation Agreements adopting the same form in respect of each of these VIEs (incorporated by reference to Exhibit 4.17 from our annual report on Form 20-F (File No. 001-38665), filed with the SEC on April 26, 2021)](https://www.sec.gov/Archives/edgar/data/1734262/000110465921054897/ctk-20201231xex4d17.htm)\n\n4.16\n\n​\n\n[Securities Purchase Agreement between the Registrant and Mercer Street Global Opportunity Fund LLC, dated August 16, 2021 (incorporated by reference to Exhibit 10.1 from our Form 6-K (File No. 001-38665), filed on August 16, 2021)](https://www.sec.gov/Archives/edgar/data/1734262/000110465921106281/tm2120723d2_ex10-1.htm)\n\n4.17\n\n​\n\n[The form of AppLovin Terms of Use Agreement between AppLovin Corporation and the Registrant (incorporated by reference to Exhibit 4.17 from our annual report on Form 20-F (File No. 001-38665), filed with the SEC on April 30, 2024)](https://www.sec.gov/Archives/edgar/data/1734262/000110465924054360/ctkyy-20231231xex4d17.htm)\n\n8.1*\n\n​\n\n[List of Principal Subsidiaries and Variable Interest Entities of the Registrant](ctkyy-20251231xex8d1.htm)\n\n11.1\n\n​\n\n[Code of Business Conduct and Ethics of Registrant (incorporated by reference to Exhibit 99.1 from our registration statement on Form F-1 (File No. 333-226867), as amended, initially filed with the SEC on August 16, 2018)](https://www.sec.gov/Archives/edgar/data/1734262/000104746918005651/a2236299zex-99_1.htm)\n\n11.2\n\n​\n\n[Amended and Restated Statement of Policies Governing Material Non-Public Information and The Prevention Of Insider Trading of the Registrant (incorporated by reference to Exhibit 11.2 from our annual report on Form 20-F (File No. 001-38665) filed with the SEC on April 30, 2025)](https://www.sec.gov/Archives/edgar/data/1734262/000141057825001019/ctkyy-20241231xex11d2.htm)\n\n12.1*\n\n​\n\n[Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ctkyy-20251231xex12d1.htm)\n\n12.2*\n\n​\n\n[Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ctkyy-20251231xex12d2.htm)\n\n156\n\n[Table of Contents](#TOC)\n\n**Exhibit**\n**Number**\n\n**  ​ ​ ​ ​**\n\n**Description of Document**\n\n​\n\n​\n\n​\n\n13.1**\n\n​\n\n[Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ctkyy-20251231xex13d1.htm)\n\n13.2**\n\n​\n\n[Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ctkyy-20251231xex13d2.htm)\n\n15.1*\n\n​\n\n[Consent of Shandong Haoxin Certified Public Accountants Co., Ltd., an independent registered public accounting firm](ctkyy-20251231xex15d1.htm)\n\n15.2*\n\n​\n\n[Consent of JunHe LLP](ctkyy-20251231xex15d2.htm)\n\n15.3*\n\n​\n\n[Consent of Maples and Calder (Hong Kong) LLP](ctkyy-20251231xex15d3.htm)\n\n101.INS*\n\n​\n\nInline XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document\n\n101.SCH*\n\n​\n\nInline XBRL Taxonomy Extension Schema Document\n\n101.CAL*\n\n​\n\nInline XBRL Taxonomy Extension Calculation Linkbase Document\n\n101.DEF*\n\n​\n\nInline XBRL Taxonomy Extension Definition Linkbase Document\n\n101.LAB*\n\n​\n\nInline XBRL Taxonomy Extension Label Linkbase Document\n\n101.PRE*\n\n​\n\nInline XBRL Taxonomy Extension Presentation Linkbase Document\n\n104*\n\n​\n\nCover Page Interactive Data File (embedded within the Inline XBRL document)\n\n*     Filed with this Annual Report on Form 20-F.\n\n**   Furnished with Annual Report on Form 20-F.\n\n​\n\n157\n\n[Table of Contents](#TOC)\n\n**SIGNATURES**\n\nThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.\n\n​\n\n​\n\n**CooTek (Cayman) Inc.**\n\n​\n\n​\n\n​\n\nBy:\n\n/s/ Karl Kan Zhang\n\n​\n\n​\n\nName: Karl Kan Zhang\n\n​\n\n​\n\nTitle: Chairman of the Board of Directors, Chief Technology\nOfficer and Acting Chief Financial Officer\n\n​\n\nDate: April 27, 2026\n\n​\n\n​\n\n​\n\n158\n\n[Table of Contents](#TOC)\n\n**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n​\n\n**Page**\n\n[Report of Independent Registered Public Accounting Firm](#REPORTOFINDEPENDENT_601635) (PCAOB ID: 5035)\n\nF-2\n\n[Consolidated Balance Sheets as of December 31, 2024 and 2025](#CONSOLIDATEDBALANCESHEETS_359862)\n\nF-4\n\n[Consolidated Statements of Operations for the years ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFOPERATIONS_44318)\n\nF-5\n\n[Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVE_79)\n\nF-6\n\n[Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the years ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFCHANGESINSHARE_3)\n\nF-7\n\n[Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2024 and 2025](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_150394)\n\nF-8\n\n[Notes to the Consolidated Financial Statements](#NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENT)\n\nF-9\n\n[Schedule I—Additional Financial Information of Parent Company](#SCHEDULEIADDITIONALFINANCIALINFORMATIONO)\n\nF-40\n\n​\n\n​\n\n​\n\nF-1\n\n[Table of Contents](#TOC)\n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\nTo the Board of Directors and shareholders of CooTek (Cayman) Inc.\n\nOpinion on the Consolidated Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of CooTek (Cayman) Inc., its subsidiaries and its consolidated variable interest entities (the “Company”) as of December 31, 2024 and 2025, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.\n\nBasis for Opinion\n\nThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\nOur audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nExplanatory Paragraph—Going Concern\n\nThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2(a) to the financial statements, facts and circumstances include accumulated losses from operations, negative cash flows from operating activities and negative working capital as of December 31, 2025. These adverse conditions indicate that there is substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2(a). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nF-2\n\n[Table of Contents](#TOC)\n\n◾Estimate of Consumption Rate of Consumable Virtual Items for Recognition of In-App Purchase Revenue\n\n​\n\n​\n\n*Description of the Matter*\n\nAs described in Note 2(n) to the consolidated financial statements, revenue for consumable virtual items purchased by users is recognized as such items are consumed. Management estimates the consumption rate of virtual items for each application based on an analysis of users’ historical purchasing and consumption behavior.\n\nThe principal considerations for our determination that the estimated consumption rate of consumable virtual items for recognition of in-app purchase revenue is a critical audit matter are the significant judgment made by management in estimating the consumption period of paying users. This, in turn, led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the reasonableness of the significant assumptions used by management.\n\n*How We Addressed the Matter in Our Audit*\n\nAddressing this matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others: (i) with the assistance of IT specialists, obtaining an understanding of internal controls over the recognition of in-app purchase revenue; (ii) evaluating the appropriateness of the methodologies used by management; (iii) performing analysis of user recharge and consumption trends to assess the reasonableness of the estimated consumption rates; (iv) testing the completeness and accuracy of underlying data used in management’s development of the estimates; and (v) testing the mathematical accuracy of the calculations.\n\n​\n\n/s/ Shandong Haoxin Certified Public Accountants Co., Ltd.\n\nWe have served as the Company’s auditor since 2022.\n\nWeifang, the People’s Republic of China\n\nApril 27, 2026\n\n​\n\nF-3\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nCONSOLIDATED BALANCE SHEETS\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**Note**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n**ASSETS**\n\n​\n\n​\n\n​\n\n  ​\n\n​\n\n  ​\n\n**Current assets:**\n\n \n\n​\n\n​\n\n  ​\n\n \n\n  ​\n\nCash and cash equivalents\n\n \n\n​\n\n​\n\n4,119,090\n\n \n\n3,492,812\n\nRestricted cash\n\n \n\n2(f)\n\n​\n\n40,200\n\n \n\n93,972\n\nAccounts receivable, net of allowance for credit losses of US$89,130 and US$49,916 as of December 31, 2024 and 2025, respectively\n\n \n\n3\n\n​\n\n2,860,537\n\n \n\n1,802,899\n\nPrepaid expenses and other current assets\n\n \n\n4\n\n​\n\n1,449,369\n\n \n\n712,696\n\nTotal current assets\n\n** **\n\n​\n\n​\n\n8,469,196\n\n** **\n\n6,102,379\n\nProperty and equipment, net\n\n \n\n5\n\n​\n\n50,152\n\n \n\n78,954\n\nOperating lease right-of-use assets\n\n​\n\n2(r)\n\n​\n\n176,718\n\n​\n\n292,070\n\nLong-term investments\n\n​\n\n7\n\n​\n\n253,443\n\n​\n\n259,197\n\nOther non-current assets\n\n \n\n​\n\n​\n\n35,534\n\n \n\n123,223\n\n**TOTAL ASSETS**\n\n \n\n​\n\n​\n\n**8,985,043**\n\n** **\n\n**6,855,823**\n\n**LIABILITIES AND SHAREHOLDERS’ DEFICIT**\n\n \n\n​\n\n​\n\n  ​\n\n \n\n​\n\n**Current liabilities (including amounts of the consolidated VIEs without recourse to the Company. See Note 2(b)):**\n\n \n\n​\n\n​\n\n  ​\n\n \n\n​\n\nAccounts payable\n\n \n\n​\n\n​\n\n3,460,424\n\n \n\n2,186,068\n\nShort-term borrowings\n\n \n\n8\n\n​\n\n2,504,034\n\n \n\n2,062,941\n\nAccrued salary and benefits\n\n \n\n​\n\n​\n\n776,118\n\n \n\n585,898\n\nOperating lease liabilities, current\n\n​\n\n2(r)\n\n​\n\n162,589\n\n​\n\n137,339\n\nAccrued expenses and other current liabilities\n\n \n\n9\n\n​\n\n1,196,334\n\n \n\n1,177,992\n\nDeferred revenue\n\n \n\n​\n\n​\n\n1,002,579\n\n \n\n697,666\n\n**Total current liabilities**\n\n \n\n​\n\n​\n\n9,102,078\n\n \n\n6,847,904\n\nOperating lease liabilities, non-current\n\n​\n\n2(r)\n\n​\n\n—\n\n​\n\n156,108\n\n**TOTAL LIABILITIES**\n\n \n\n​\n\n​\n\n**9,102,078**\n\n \n\n**7,004,012**\n\n**Commitments and contingencies**\n\n​\n\n18\n\n​\n\n  ​\n\n \n\n​\n\n**Shareholders’ deficit:**\n\n \n\n​\n\n​\n\n  ​\n\n \n\n​\n\nClass A ordinary shares (US$0.00001 par value; 13,750,000,000 shares authorized as of December 31, 2024 and 2025; 4,591,030,991 shares issued and outstanding as of December 31, 2024 and 2025, respectively)\n\n​\n\n13\n\n​\n\n45,910\n\n​\n\n45,910\n\nClass B ordinary shares (US$0.00001 par value; 250,000,000 shares authorized; 246,224,465 shares issued and outstanding as of December 31, 2024 and 2025)\n\n​\n\n13\n\n​\n\n2,462\n\n​\n\n2,462\n\nAdditional paid-in capital\n\n \n\n​\n\n​\n\n218,379,858\n\n \n\n218,417,583\n\nAccumulated deficit\n\n \n\n​\n\n​\n\n(216,859,796)\n\n \n\n(216,937,975)\n\nAccumulated other comprehensive loss\n\n \n\n​\n\n​\n\n(1,685,469)\n\n \n\n(1,676,169)\n\n**Total shareholders’ deficit**\n\n \n\n​\n\n​\n\n**(117,035)**\n\n \n\n**(148,189)**\n\n**TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT**\n\n \n\n​\n\n​\n\n**8,985,043**\n\n \n\n**6,855,823**\n\n​\n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n​\n\n​\n\nF-4\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nCONSOLIDATED STATEMENTS OF OPERATIONS\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended**\n\n​\n\n​\n\n​\n\n​\n\n**December 31, **\n\n​\n\n  ​ ​ ​\n\n**Note**\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n \n\n​\n\n​\n\n**US$**\n\n \n\n**US$**\n\n​\n\n**US$**\n\n**Net revenues**\n\n​\n\n2(n)\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nIn-app purchase revenues\n\n​\n\n​\n\n​\n\n6,470,995\n\n​\n\n19,510,797\n\n​\n\n14,064,545\n\nAdvertising revenue\n\n​\n\n​\n\n​\n\n22,822,094\n\n​\n\n8,760,291\n\n​\n\n6,605,671\n\nOther revenues\n\n​\n\n​\n\n​\n\n2,683,179\n\n​\n\n2,047,728\n\n​\n\n1,042,504\n\n**Total net revenues**\n\n​\n\n​\n\n​\n\n31,976,268\n\n​\n\n30,318,816\n\n​\n\n21,712,720\n\nCost of revenues (including share-based compensation expense of US$21,434, US$20,456 and US$8,160 in 2023, 2024 and 2025, respectively)\n\n \n\n​\n\n​\n\n(6,035,768)\n\n​\n\n(8,762,910)\n\n​\n\n(6,472,133)\n\n**Gross profit**\n\n \n\n​\n\n​\n\n25,940,500\n\n​\n\n21,555,906\n\n​\n\n15,240,587\n\n**Operating expenses:**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nGeneral and administrative expenses (including share-based compensation expense of US$512,837, US$53,290 and US$5,532 in 2023, 2024 and 2025, respectively)\n\n \n\n​\n\n​\n\n(4,384,720)\n\n​\n\n(2,990,392)\n\n​\n\n(2,253,979)\n\nResearch and development expenses (including share-based compensation expense of US$180,355, US$60,297 and US$24,033 in 2023, 2024 and 2025, respectively)\n\n \n\n​\n\n​\n\n(7,210,687)\n\n​\n\n(3,818,394)\n\n​\n\n(3,530,046)\n\nSales and marketing expenses (including share-based compensation expense of US$(10,061), US$517 and nil in 2023, 2024 and 2025, respectively)\n\n \n\n​\n\n​\n\n(17,674,610)\n\n​\n\n(15,056,063)\n\n​\n\n(9,778,603)\n\nOther operating income, net\n\n \n\n11\n\n​\n\n793,685\n\n​\n\n462,284\n\n​\n\n283,252\n\n**Total operating expenses**\n\n \n\n​\n\n​\n\n(28,476,332)\n\n​\n\n(21,402,565)\n\n​\n\n(15,279,376)\n\n**(Loss) income from operations**\n\n \n\n​\n\n​\n\n(2,535,832)\n\n​\n\n153,341\n\n​\n\n(38,789)\n\nInterest (expenses) income, net\n\n \n\n​\n\n​\n\n(28,443)\n\n​\n\n(65,742)\n\n​\n\n(30,911)\n\nForeign exchange (loss) gain, net\n\n \n\n​\n\n​\n\n(10,829)\n\n​\n\n(15,034)\n\n​\n\n(5,628)\n\n**Income (loss) before income taxes**\n\n \n\n​\n\n​\n\n(2,575,104)\n\n​\n\n72,565\n\n​\n\n(75,328)\n\nIncome tax expenses\n\n \n\n12\n\n​\n\n(20,837)\n\n​\n\n(8,996)\n\n​\n\n(2,851)\n\n**Net (loss) income**\n\n​\n\n​\n\n​\n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\n**Net (loss) income attributable to ordinary shareholders**\n\n \n\n​\n\n​\n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\n**Net (loss) income per ordinary share:**\n\n \n\n16\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nBasic\n\n \n\n​\n\n​\n\n(0.0005)\n\n​\n\n0.00001\n\n​\n\n(0.00002)\n\nDiluted\n\n \n\n​\n\n​\n\n(0.0005)\n\n​\n\n0.00001\n\n​\n\n(0.00002)\n\n**Net (loss) income per American Depositary Shares (“ADS”) (each of ADS represents****650****Class A ordinary shares):**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nBasic\n\n​\n\n​\n\n​\n\n(0.35)\n\n​\n\n0.01\n\n​\n\n(0.01)\n\nDiluted\n\n​\n\n​\n\n​\n\n(0.35)\n\n​\n\n0.01\n\n​\n\n(0.01)\n\n**Weighted average shares used in calculating net loss per ordinary share:**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nBasic\n\n \n\n​\n\n​\n\n4,837,255,456\n\n​\n\n4,837,255,456\n\n​\n\n4,837,255,456\n\nDiluted\n\n​\n\n​\n\n​\n\n4,837,255,456\n\n​\n\n4,858,518,429\n\n​\n\n4,837,255,456\n\n​\n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n​\n\n​\n\nF-5\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended**\n\n​\n\n​\n\n**December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n \n\n**US$**\n\n \n\n**US$**\n\n​\n\n**US$**\n\nNet (loss) income\n\n​\n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\n**Other comprehensive (loss) income**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nForeign currency translation adjustments, net of tax of nil\n\n \n\n370,885\n\n​\n\n74,491\n\n​\n\n9,300\n\n**Comprehensive (loss) income attributable to CooTek (Cayman) Inc.**\n\n \n\n(2,225,056)\n\n​\n\n138,060\n\n​\n\n(68,879)\n\nDeemed dividend in relation to convertible note (see Note 10)\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n**Total comprehensive (loss) income attributable to ordinary shares of CooTek (Cayman) Inc.**\n\n​\n\n(2,225,056)\n\n​\n\n138,060\n\n​\n\n(68,879)\n\n​\n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n​\n\nF-6\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Accumulated**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Additional**\n\n​\n\n​\n\n​\n\n**other**\n\n​\n\n**Total**\n\n​\n\n​\n\n**Class A**\n\n​\n\n**Class B**\n\n​\n\n​\n\n​\n\n​\n\n \n\n**paid-in**\n\n​\n\n**Accumulated**\n\n \n\n**comprehensive**\n\n \n\n**shareholders’**\n\n​\n\n​\n\n**Ordinary shares**\n\n​\n\n**Ordinary shares**\n\n  ​ ​ ​\n\n**Treasury Shares**\n\n​\n\n**capital**\n\n​\n\n**deficit**\n\n​\n\n**(loss) income **\n\n  ​ ​ ​\n\n**equity (deficit)**\n\n​\n\n  ​ ​ ​\n\n**Shares**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**Shares**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**Shares**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nBalance at January 1, 2023\n\n​\n\n4,591,030,991\n\n​\n\n45,910\n\n​\n\n246,224,465\n\n​\n\n2,462\n\n​\n\n—\n\n​\n\n—\n\n \n\n217,540,733\n\n \n\n(214,327,424)\n\n \n\n(2,130,845)\n\n \n\n1,130,836\n\nNet Loss\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n(2,595,941)\n\n​\n\n—\n\n​\n\n(2,595,941)\n\nShare-based compensation\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n704,565\n\n​\n\n—\n\n​\n\n—\n\n​\n\n704,565\n\nForeign currency translation adjustments\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n370,885\n\n​\n\n370,885\n\n**Balance at December 31, 2023**\n\n​\n\n**4,591,030,991**\n\n​\n\n**45,910**\n\n​\n\n**246,224,465**\n\n​\n\n**2,462**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**218,245,298**\n\n​\n\n**(216,923,365)**\n\n​\n\n**(1,759,960)**\n\n​\n\n**(389,655)**\n\nNet Income\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n63,569\n\n​\n\n—\n\n​\n\n63,569\n\nShare-based compensation\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n134,560\n\n​\n\n—\n\n​\n\n—\n\n​\n\n134,560\n\nForeign currency translation adjustments\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n74,491\n\n​\n\n74,491\n\n**Balance at December 31, 2024**\n\n​\n\n**4,591,030,991**\n\n​\n\n**45,910**\n\n​\n\n**246,224,465**\n\n​\n\n**2,462**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**218,379,858**\n\n​\n\n**(216,859,796)**\n\n​\n\n**(1,685,469)**\n\n​\n\n**(117,035)**\n\nNet Loss\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n**—**\n\n​\n\n(78,179)\n\n​\n\n**—**\n\n​\n\n(78,179)\n\nShare-based compensation\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n37,725\n\n​\n\n—\n\n​\n\n—\n\n​\n\n37,725\n\nForeign currency translation adjustments\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n9,300\n\n \n\n9,300\n\n**Balance at December 31, 2025**\n\n​\n\n**4,591,030,991**\n\n​\n\n**45,910**\n\n​\n\n**246,224,465**\n\n​\n\n**2,462**\n\n​\n\n**—**\n\n​\n\n**—**\n\n \n\n**218,417,583**\n\n \n\n**(216,937,975)**\n\n \n\n**(1,676,169)**\n\n \n\n**(148,189)**\n\n​\n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n​\n\n​\n\nF-7\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n \n\n**US$**\n\n \n\n**US$**\n\n​\n\n**US$**\n\n**Cash flows from operating activities:**\n\n​\n\n  ​\n\n​\n\n  ​\n\n​\n\n​\n\nNet (loss) income\n\n \n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\nAdjustments to reconcile net loss to net cash used in operating activities:\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nDepreciation and amortization\n\n \n\n379,539\n\n​\n\n50,635\n\n​\n\n22,321\n\nProvision (reversal) for credit losses\n\n \n\n(90,526)\n\n​\n\n47,801\n\n​\n\n294,579\n\nShare-based compensation expense\n\n \n\n704,565\n\n​\n\n134,560\n\n​\n\n37,725\n\nAmortization of issuance cost and debt discounts related to convertible notes\n\n​\n\n51,797\n\n​\n\n—\n\n​\n\n—\n\nGain on disposal of property and equipment\n\n \n\n(386,915)\n\n​\n\n(24,985)\n\n​\n\n(14,421)\n\nNoncash lease expense\n\n​\n\n298,002\n\n​\n\n288,393\n\n​\n\n259,375\n\nChanges in assets and liabilities:\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nAccounts receivable\n\n \n\n2,687,831\n\n​\n\n(575,624)\n\n​\n\n1,097,577\n\nPrepaid expenses and other current assets\n\n \n\n1,090,622\n\n​\n\n1,909,177\n\n​\n\n439,898\n\nOther non-current assets\n\n \n\n(106,459)\n\n​\n\n163,909\n\n​\n\n(87,515)\n\nAccounts payable\n\n \n\n(3,613,124)\n\n​\n\n(1,046,189)\n\n​\n\n(1,209,937)\n\nAccrued salary and benefits\n\n \n\n(2,831,392)\n\n​\n\n(357,485)\n\n​\n\n(201,368)\n\nAccrued expenses and other current liabilities\n\n \n\n(2,175,269)\n\n​\n\n(914,964)\n\n​\n\n(88,473)\n\nOperating lease liabilities\n\n​\n\n(322,991)\n\n​\n\n(311,306)\n\n​\n\n(243,548)\n\nDeferred revenue\n\n \n\n485,700\n\n​\n\n359,042\n\n​\n\n(305,323)\n\nOther non-current liabilities\n\n​\n\n(136,118)\n\n​\n\n(73,319)\n\n​\n\n—\n\nNet cash used in operating activities\n\n \n\n**(6,560,679)**\n\n​\n\n**(286,786)**\n\n​\n\n**(77,289)**\n\n**Cash flows from investing activities:**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nPurchases of property and equipment and intangible assets\n\n​\n\n(76,458)\n\n​\n\n—\n\n​\n\n(60,280)\n\nProceeds from disposal of property and equipment\n\n​\n\n1,022,200\n\n​\n\n30,002\n\n​\n\n15,138\n\nProceeds from reclaim of short-term investments\n\n​\n\n—\n\n​\n\n50,074\n\n​\n\n—\n\nProceeds from reclaim of long-term investments\n\n​\n\n14,314\n\n​\n\n809\n\n​\n\n—\n\nNet cash provided by (used in) investing activities\n\n​\n\n**960,056**\n\n​\n\n**80,885**\n\n​\n\n**(45,142)**\n\n**Cash flows from financing activities:**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nProceeds from short-term borrowings\n\n​\n\n1,422,613\n\n​\n\n2,536,290\n\n​\n\n2,017,682\n\nRepayment of short-term borrowings\n\n​\n\n(1,573,396)\n\n​\n\n(704,220)\n\n​\n\n(2,507,365)\n\nProceeds from issuance of ordinary shares upon exercise of options\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\nRepayment of convertible notes\n\n​\n\n(1,806,453)\n\n​\n\n—\n\n​\n\n—\n\nNet cash (used in) provided by financing activities\n\n​\n\n**(1,957,236)**\n\n​\n\n**1,832,070**\n\n​\n\n**(489,683)**\n\nNet (decrease) increase in cash, cash equivalents, and restricted cash\n\n​\n\n(7,557,859)\n\n​\n\n1,626,169\n\n​\n\n(612,114)\n\nCash, cash equivalents, and restricted cash at beginning of year\n\n​\n\n9,785,131\n\n​\n\n2,476,571\n\n​\n\n4,159,290\n\nEffect of exchange rate changes on cash, cash equivalents and restricted cash\n\n​\n\n249,299\n\n​\n\n56,550\n\n​\n\n39,608\n\nCash, cash equivalents, and restricted cash at end of year\n\n​\n\n**2,476,571**\n\n​\n\n**4,159,290**\n\n​\n\n**3,586,784**\n\n**Supplemental disclosure of cash flow information:**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nIncome taxes paid\n\n​\n\n26,736\n\n​\n\n8,996\n\n​\n\n2,851\n\nInterest paid\n\n​\n\n86,893\n\n​\n\n73,295\n\n​\n\n46,910\n\nCash paid for amounts included in the measurement of operating lease liabilities\n\n​\n\n409,100\n\n​\n\n351,581\n\n​\n\n289,201\n\nOperating lease right-of-use assets obtained in exchange for operating lease liabilities\n\n​\n\n—\n\n​\n\n—\n\n​\n\n370,715\n\n**Supplemental disclosure of noncash investing and financing activities:**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nPurchases of property and equipment included in payables\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\n**Reconciliation in amounts on consolidated balance sheets:**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nCash and cash equivalents\n\n​\n\n2,436,369\n\n​\n\n4,119,090\n\n​\n\n3,492,812\n\nRestricted cash\n\n​\n\n40,202\n\n​\n\n40,200\n\n​\n\n93,972\n\n**Total cash, cash equivalents, and restricted cash**\n\n****​\n\n**2,476,571**\n\n​\n\n**4,159,290**\n\n​\n\n**3,586,784**\n\n​\n\n​\n\n​\n\nF-8\n\n[Table of Contents](#TOC)\n\n**COOTEK (CAYMAN) INC.**\n\n​\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n​\n\n**1.**Organization and Principal Activities\n\nCooTek (Cayman) Inc. (the “Company”) was incorporated in the Cayman Islands on March 5, 2012. The Company, its subsidiaries, its consolidated variable interest entities (“VIEs”) and VIEs’ subsidiaries (collectively referred to as the “Group”) are a mobile internet company with a global vision, offering mobile applications.\n\nHistory of the Group and reorganization\n\nThe Group’s history began in August 2008 with the commencement of operations of Shanghai Han Xiang (CooTek) Information Technology Co., Ltd (“Han Xiang”), a limited liability company incorporated in the People’s Republic of China (“PRC”) by certain individuals. In October 2010, three outside investors acquired an aggregate of 24.24% equity interest of Han Xiang. In 2012, Han Xiang and its shareholders undertook a reorganization which was conducted to establish a Cayman holding company for the existing business to obtain investment from outside investors and in preparation of an overseas initial public offering. The Group has recognized the net assets of Han Xiang on a historical cost with no change in basis in the consolidated financial statements upon the completion of the reorganization. The shareholders’ rights and obligations remained the same after the reorganization.\n\nOn October 2, 2018 the Group completed its initial public offering (“IPO”) in the United States and issued 4,350,000 American depositary shares representing 217,500,000 of the Group’s ordinary shares. Net proceeds from the IPO after deducting underwriting discount and offering costs were US$45.1 million.\n\n​\n\n**2.**Summary of Significant Accounting Policies\n\n(a)          Basis of Presentation\n\nThe consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).\n\nEffective as of May 9, 2022, the Company changed the ratio of ADSs to its Class A ordinary shares from the current ADS Ratio of one ADS to 50 Class A ordinary share to a new ADS Ratio of one ADS to 650 Class A ordinary shares (the “ADS Ratio change”). The per ADS data as disclosed elsewhere in these consolidated financial statements and notes thereto are presented on a basis after taking into account the effects of the ADS Ratio change and have been retrospectively adjusted, where applicable.\n\nThe accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements, including the renewal or rollover of its bank borrowings, to support its working capital requirements.\n\nThe Group’s revenue declined from US$32.0 million in 2023 to US$30.3 million in 2024 and further to US$21.7 million in 2025. The Group incurred negative cash flows from operating activities of US$0.1 million in 2025. The Group incurred a deficit in working capital of US$0.7 million and an accumulated deficit of US$216.9 million as of December 31, 2025.\n\nThese adverse conditions and events indicate substantial doubt about the Group’s ability to continue as a going concern. The Group’s ability to continue as a going concern is dependent on management’s ability to execute its business plan covering the next twelve months to enhance its operating cash flow, obtain capital financing from investors and borrowings from commercial banks to fund its general operations including its marketing activities. The Group’s ability to continue as a going concern is dependent on the following factors:\n\nF-9\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(a)          Basis of Presentation (Continued)\n\n●The successful implementation of a balanced development approach between growth and profitability. The Group plans to continue to implement its cost-control initiative so as to improve cost and expense efficiency.\n\n●In February 2025, the Group entered into a credit facility agreement with a commercial bank, secured by the founder’s assets, with a credit facility of US$2.0 million, which will expire by January 2028. Each drawdown under the facility has a loan term of 12 months from the date of disbursement. The Group plans to renew its short-term bank borrowings if needed. However, there is no assurance that the Group will be successful in renewing this short-term credit facility.\n\n●The Group will continue to seek external financing to improve its liquidity position to fund continuing operations, though there is no assurance that the Group will be successful in obtaining sufficient funding on terms acceptable to the Group.\n\nManagement has concluded, after giving consideration to its plans as noted above, that the Group has sufficient cash and liquidity to fund its operations for one year from the date of the issuance of the consolidated financial statements. Accordingly, the consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. However, there is a material uncertainty relating the Group’s successful implementation of management’s business plans which lacks of sufficient historical data for evidence and there is no assurance the Group will be able to obtain additional financing or renew its current bank borrowings to fund its operations. These adverse condition and events and material uncertainties relating to management’s plan give rise to substantial doubt as to whether the Group will continue as a going concern and therefore whether it will realize its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial statements. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.\n\n(b)          Principles of Consolidation\n\nThe consolidated financial statements include the financial information of the Company, its wholly owned subsidiaries, its consolidated VIEs and VIEs’ subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.\n\nApplicable PRC laws and regulations currently limit foreign ownership of companies that provide internet content distribution services and any other restrictions. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are not eligible to engage in provisions of internet content or online services. The Group therefore conducts its online business through the following major consolidated VIEs:\n\n●Molihong (Shenzhen) Internet Technology Co., Ltd. (“Molihong”)\n\n●Shanghai Lingdian Internet Technology Co., Ltd. (“Lingdian”)\n\nTo provide the Group effective control over the VIEs and receive substantially all of the economic benefits of the VIEs, the Company’s wholly owned subsidiary, Shanghai ChuLe (CooTek) Information Technology Co., Ltd. (“Chu Le” or “WFOE”) entered into a series of contractual arrangements, described below, with The VIEs and their respective shareholders.\n\nF-10\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(b)         Principles of Consolidation (Continued)\n\nAgreements that provide the Company effective control over the VIEs include:\n\nVoting Rights Proxy Agreements & Irrevocable Power of Attorney\n\nPursuant to which each of the shareholders of VIEs has executed voting rights proxy agreements, appointing the WFOE, or any person designated by the WFOE, as their attorney-in-fact to (i) call and attend shareholders’ meetings of VIEs and execute relevant shareholders’ resolutions; (ii) exercise on their behalf all his rights as a shareholder of VIEs, including those rights under PRC laws and regulations and the articles of association of VIEs, such as voting, appointing, replacing or removing directors, (iii) submit all documents as required by governmental authorities on behalf of VIEs, and (iv) assign the shareholding rights of VIEs, including receiving dividends, disposing of equity interest and enjoying the rights and interests during and after liquidation.\n\nExclusive Purchase Option Agreements\n\nPursuant to which each the VIE shareholders unconditionally and irrevocably granted the WFOE or its designee exclusive options to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interests in the VIEs. The WFOE has the sole discretion to decide when to exercise the options, and whether to exercise the options in part or in full. Without the WFOE’s written consent, the VIE shareholders may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of VIEs’ assets or equity interests.\n\nEquity Pledge Agreements\n\nThe VIE shareholders agreed to pledge their equity interests in VIEs to the WFOE to secure the performance of the VIEs’ obligations under the series of contractual agreements and any such agreements to be entered into in the future. Without prior written consent of the WFOE, the VIEs’ shareholders shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. If any economic interests were received by means of their equity interests in the VIEs, such interests belong to the WFOE.\n\nAgreements that transfer economic benefits of VIEs to the Group include:\n\nExclusive Business Cooperation Agreements\n\nUnder the exclusive services agreement, the Company and the WFOE have the exclusive right to provide comprehensive technical and business support services to the VIEs. In exchange, the VIEs pay monthly service fees to the WFOE in the amount equivalent to all of their net income as confirmed by the WFOE. The WFOE has the right to adjust the service fee rates at its sole discretion. The agreement can be early terminated by the WFOE by giving a 30-day prior notice, but not by the VIEs or VIE shareholders.\n\nLoan Agreements\n\nThe WFOE entered into loan agreements with each shareholder of the VIEs. Pursuant to the terms of these loan agreements, the WFOE granted an interest-free loan to each shareholder of the VIEs for the explicit purpose of making a capital contribution to the VIEs. The term of the loans are 10 years and shall be renewed automatically every 3 years for an additional 3 years unless the WFOE terminates the agreement (which option is at the WFOE’s sole discretion) at which point the loans are payable on demand. The shareholders of the VIEs may not prepay all or any portion of the loans without the WFOE’s consent.\n\nF-11\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(b)          Principles of Consolidation (Continued)\n\nVoting Rights Proxy Agreements & Irrevocable Powers of Attorney and Exclusive Purchase Option Agreements provide the Company effective control over the VIEs and its subsidiaries, while the Exclusive Business Cooperation Agreements and Equity Pledge Agreements secure the obligations of the shareholders of the VIEs under the relevant agreements. Because the Company, through the WFOE, has (i) the power to direct the activities of the VIEs that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from the VIEs, the Company is deemed the primary beneficiary of the VIEs. Accordingly, the Company has consolidated the VIEs’ financial results of operations, assets and liabilities in the Group’s consolidated financial statements. The aforementioned agreements are effective agreements between a parent and consolidated subsidiaries, neither of which is accounted for in the consolidated financial statements or are ultimately eliminated upon consolidation (i.e. service fees under the Exclusive Business Cooperation Agreement).\n\nThe Group believes that the contractual arrangements with the VIEs are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’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:\n\n●Revoke the business and operating licenses of the Company’s PRC subsidiaries and VIEs;\n\n●Discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiaries and VIEs;\n\n●Limit the Group’s business expansion in China by way of entering into contractual arrangements;\n\n●Impose fines or other requirements with which the Company’s PRC subsidiaries and VIEs may not be able to comply;\n\n●Require the Company or the Company’s PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations; or\n\n●Restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China.\n\nF-12\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(b)          Principles of Consolidation (Continued)\n\nThe following consolidated financial statement balances and amounts of the Group’s VIEs were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n**ASSETS**\n\n​\n\n​\n\n​\n\n​\n\nCash and cash equivalents\n\n​\n\n947,586\n\n​\n\n582,328\n\nRestricted cash\n\n​\n\n200\n\n​\n\n205\n\nAccounts receivable, net\n\n​\n\n63,482\n\n​\n\n64,899\n\nPrepaid expense and other assets\n\n​\n\n1,001,666\n\n​\n\n658,004\n\nLong-term investments\n\n​\n\n—\n\n​\n\n—\n\nProperty and equipment, net\n\n​\n\n—\n\n​\n\n45,220\n\nOperating lease right-of-use assets\n\n​\n\n49,446\n\n​\n\n165,651\n\nOther non-current assets\n\n​\n\n—\n\n​\n\n39,592\n\n**Total Assets**\n\n****​\n\n**2,062,380**\n\n****​\n\n**1,555,899**\n\n**LIABILITIES**\n\n​\n\n​\n\n​\n\n​\n\nAccounts payable\n\n​\n\n769,037\n\n​\n\n82,242\n\nShort-term borrowings\n\n \n\n—\n\n \n\n2,062,941\n\nAccrued salary and benefits\n\n​\n\n49,609\n\n​\n\n37,169\n\nAccrued expenses and other current liabilities\n\n​\n\n416,983\n\n​\n\n226,214\n\nDeferred revenue\n\n​\n\n9,013\n\n​\n\n1,700\n\nOperating lease liabilities, current\n\n​\n\n45,492\n\n​\n\n77,893\n\nOperating lease liabilities, non-current\n\n​\n\n—\n\n​\n\n88,538\n\n**Total Liabilities**\n\n****​\n\n**1,290,134**\n\n****​\n\n**2,576,697**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended**\n\n​\n\n​\n\n**December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n \n\n**US$**\n\n \n\n**US$**\n\n​\n\n**US$**\n\nNet revenues\n\n​\n\n5,752,574\n\n​\n\n1,865,207\n\n​\n\n813,477\n\nIncome from operations\n\n​\n\n93,144\n\n​\n\n417,363\n\n​\n\n355,195\n\nNet income\n\n​\n\n59,026\n\n​\n\n417,850\n\n​\n\n313,806\n\nNet cash (used in) provided by operating activities\n\n​\n\n(2,990,648)\n\n​\n\n(3,549,178)\n\n​\n\n104,283\n\nNet cash provided by (used in) investing activities\n\n​\n\n273,659\n\n​\n\n—\n\n​\n\n(55,524)\n\nNet cash (used in) provided by financing activities\n\n​\n\n(1,948,205)\n\n​\n\n2,727,532\n\n​\n\n1,449,141\n\n​\n\nThe VIEs’ assets are comprised of recognized and unrecognized revenue-producing assets. The recognized revenue producing assets mainly include purchased servers, which are presented in the account of “Property and equipment, net”. The unrecognized revenue-producing assets mainly consist of the Internet Content Provider license (“ICP” license), trademarks, copyrights and registered patents, which are not recognized in the consolidated balance sheets.\n\nRevenues of VIEs included in the consolidated financial statements mainly include revenue through licensing of online literature works and advertising services. The VIEs contributed 18%, 6% and 4% of the Group’s consolidated net revenues for the years ended December 31, 2023, 2024 and 2025, respectively. As of December 31, 2024 and 2025, the VIEs accounted for an aggregate of 23% and 23% respectively, of the consolidated total assets, and 14% and 37% respectively, of the consolidated total liabilities.\n\nF-13\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(b)          Principles of Consolidation (Continued)\n\nThere are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Group may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIEs.\n\nThe Group believes that there are no assets held in the VIEs that can be used only to settle obligations of the VIEs, except for registered capital and the PRC 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. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 21 for disclosure of restricted net assets.\n\n(c)          Use of Estimates\n\nThe preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements including but not limited to estimated consumption rates at which consumable virtual items is consumed, allowance for credit losses, accruals for user incentive programs, valuation allowances of deferred tax assets, valuation of share-based compensation, and valuation of embedded derivative liabilities. Actual results may differ materially from those estimates.\n\n(d)          Fair Value\n\nFair value reflects the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the assets or liabilities.\n\nThe Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This guidance specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:\n\n●Level 1—Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.\n\n●Level 2—Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.\n\nF-14\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.**Summary of Significant Accounting Policies (Continued)\n\n(d)          Fair Value (Continued)\n\n●Level 3—Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.\n\nThe fair value guidance describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.\n\nWhen available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.\n\nBeginning January 1, 2019, the Group’s equity investments without readily determinable fair values, which do not qualify for Net Asset Value (“NAV”) practical expedient and over which the Group does not have the ability to exercise significant influence through the investments in common stock or in substance common stock, are accounted for under the measurement alternative upon the adoption of Accounting Standards Update (“ASU”) 2016-01 Recognition and Measurement of Financial Assets and Liabilities (the “Measurement Alternative”). Under the Measurement Alternative, the carrying value is measured at cost, less any impairment, plus and minus changes resulting from observable price changes in orderly transactions for identical or similar investments. After management’s assessment of each of the long-term investments, management concluded that investments do not have readily determinable fair values, and elects the measurement alternative.\n\nThe Group measures equity method investments at fair value on a nonrecurring basis when they are deemed to be impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include future performance projections, discount rate and other assumptions that are significant to the measurements of fair value. An impairment charge to these investments is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. During the years ended December 31, 2023, 2024 and 2025, the Group did not recognize any impairment loss of equity method investments.\n\nFinancial instruments not reported at fair value include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable, other current liabilities, short-term borrowings, and convertible note payable (see Note 10). The embedded monthly redemption right of the convertible note was measured at fair value and the Group determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy because the absence of observable inputs used in Monte Carlo simulation. The significant inputs applied in Monte Carlo simulation include expected volatility, dividend yield and present value discount rate. The carrying amounts of other financial instruments as of December 31, 2023 and December 31, 2024 were considered representative of their fair values due to their short-term nature.\n\n​\n\n(e)           Foreign Currency Translation\n\nThe functional currency of the Company is the United States Dollar (“US$”). The functional currency of the VIEs and the VIEs’ subsidiaries in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$.\n\nForeign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses are recorded in the statements of operations.\n\nF-15\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.**Summary of Significant Accounting Policies (Continued)\n\n(e)           Foreign Currency Translation (Continued)\n\nThe Group has chosen the US$ as its reporting currency. Assets and liabilities have been translated using exchange rates prevailing on the balance sheet date. Equity accounts are translated at historical exchange rates. Income statement items have been translated using the average exchange rate for the year. Translation adjustments have been reported as cumulative translation adjustments and are shown as a component of other comprehensive (loss) income in the consolidated statements of comprehensive loss and consolidated statements of changes in shareholders’ equity (deficit).\n\n(f)          Cash, Cash Equivalents and Restricted cash\n\nCash and cash equivalents consist of cash on hand, demand deposits and floating rate financial instruments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased.\n\n(g)          Short-term Investments\n\nShort-term investments primarily consist of the time deposits with maturities between three months and one year. The Group classifies the short-term investments as “held-to-maturity” securities and stated at amortized cost within Level 2.\n\nFor investments classified as held-to-maturity securities, the Group evaluates whether a decline in fair value below the amortized cost basis is other-than-temporary in accordance with the Group’s policy and ASC 320. The other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the investment’s amortized cost basis over its fair value at the balance sheet date of the reporting period for which the assessment is made. No impairment losses in relation to its short-term investments were recorded for the years ended December 31, 2023, 2024 and 2025.\n\n(h)           Accounts Receivable, net\n\nAccounts receivable, net represents those receivables derived from the ordinary course of business and are recorded net of allowance that reflects the Group’s best estimate of the amounts that will not be collected. In determining collectability of the accounts receivables, the Group considers factors in assessing the expected credit losses, including historical credit loss experience, credit quality of customers, aging of the receivables, financial condition of the customers and market trends, and specific facts and circumstances.\n\nOn January 1, 2023, the Group adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective method. Expected credit losses are recorded as general and administrative expenses on the consolidated statements of operations.\n\n(i)*          *Long-term Investments\n\nInvestments represent equity-method investments and equity investments without readily determinable fair value.\n\nThe Group accounts for equity investment in entities with significant influence but holds no controlling interest under equity-method accounting. Under this method, the Group’s pro rata share of income (loss) from investment is recognized in the consolidated statements of operation. When the Group’s share of loss in an equity-method investee equals or exceeds its carrying value of the investment in that entity, the Group continues to report its share of equity method losses in the statements of operation to the extent and as an adjustment to the carrying amount of its other investments in the investee. Equity-method investment is reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other-than-temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized. These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized in impairment losses of investment when a decline in value is deemed to be other-than- temporary.\n\nF-16\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.**Summary of Significant Accounting Policies (Continued)\n\n(i)           Long-term Investments (Continued)\n\nInvestments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. An impairment loss is recognized in the consolidated statements of operation equal to the amount by which the carrying value exceeds the fair value of the investment.\n\nDuring the years ended December 31, 2023, 2024 and 2025, the Group did not recognize any impairment loss to write down the long-term investments.\n\n(j)           Property and Equipment, net\n\nProperty and equipment is recorded at cost less accumulated depreciation and impairment. Depreciation expense of long-lived assets is recorded as either cost of revenue or operating expenses, as appropriate. Depreciation is computed using the straight-line method over the following estimated useful lives by major asset category:\n\n​\n\n​\n\n​\n\n​\n\nElectronic equipment\n\n  ​ ​ ​\n\n3 years\n\nOffice equipment and furniture\n\n \n\n3 - 5 years\n\nMotor vehicles\n\n \n\n5 years\n\nLeasehold improvements\n\n \n\nShorter of the lease term or expected useful life\n\n​\n\nRepair and maintenance costs are charged directly to expense as incurred, whereas the cost of renewals and improvement that extend the useful lives of property and equipment are capitalized as additions to the related assets.\n\n(k)          Intangible Assets\n\nIntangible assets mainly consist of externally purchased software and other intangible assets which are amortized over an estimated useful life of 3-10 years on a straight-line basis.\n\n(l)           Impairment of Long-lived Assets\n\nLong-lived assets, including property and equipment and intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment review include, but are not limited to, significant under-performance relative to historical or planned operating results, significant changes in the manner of use or expected life of the assets or significant changes in business strategies. An impairment analysis is performed at the lowest level of identifiable cash flows for an asset or asset group based on valuation techniques such as discounted cash flow analysis. An impairment charge is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less than the carrying value of the asset net of other liabilities. The estimation of future cash flows requires significant management judgment and actual results may differ from estimated amounts. No impairment was recognized for the years ended December 31, 2023, 2024 and 2025.\n\n(m)         Treasury Shares\n\nTreasury shares represents ordinary shares repurchased by the Company that are no longer outstanding and are held by the Group. Treasury shares are accounted for under the cost method. Under this method, repurchased ordinary shares were recorded as treasury shares at historical purchase price. At retirement, the ordinary shares account is charged only for the aggregate par value of the shares. The excess of the acquisition cost of treasury shares over the aggregate par value is allocated between additional paid-in capital (up to the amount credited to the additional paid-in capital upon original issuance of the shares) and retained earnings.\n\nF-17\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.**Summary of Significant Accounting Policies (Continued)\n\n(n)         Revenue Recognition\n\nIn-app purchase\n\nThe Group operates applications that allow users to download for free and also offer in-app purchases to users. In-app purchase revenue is primarily derived in the form of subscriptions and sale of in-app virtual currency to obtain virtual goods in mobile games or extra content in our online literature products (together, defined as “virtual items” or a “virtual item”).\n\nPayments from users are non-refundable and relate to non-cancellable contracts for a fixed price that specify the Group’s obligations. The Group is primarily responsible for providing the service and virtual items, have control over the content and operation of applications, and have the discretion to establish the in-app purchases’ prices. Therefore, the Group is the principal and, accordingly revenues are recorded on a gross basis. The platform such as Apple App Store and Google Play collect proceeds from the users and remit the proceeds to us after deducting their respective platform fees. Payment processing fees paid to platform are recorded within cost of revenues.\n\nIn-app purchase revenue derived in the form of subscription is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period.\n\nFor in-app purchase revenue derived from sale of in-app virtual currency, the satisfaction of the Group’s performance obligation is dependent on the nature of the virtual item purchased which is categorized as either consumable or durable.\n\n●*Consumable:* Consumable virtual items represent items that can be consumed by a specific user action. Consumable virtual items do not provide the user any continuing benefit after a short period of time following consumption. For the sale of consumable virtual items, the Group recognize revenue as the items are consumed which approximates in 60 days. The Group has determined through a review of user behavior that users generally do not purchase additional virtual currency until their existing virtual currency balances have been substantially consumed. This review, performed on an app-by-app basis, includes an analysis of users’ historical purchase behavior and consume behavior. Based upon this analysis, the Group has estimated the rate at which virtual items is consumed within each application. Accordingly, revenues are recognized using these estimated consumption rates. The Group monitors analysis of user behavior on a quarterly basis.\n\n●*Durable:* Durable virtual items represent items that are accessible to the user over an extended period of time. The Group recognizes revenue from the sale of durable virtual items ratably over the estimated service period for the applicable applications, which represents our best estimate of the average life of the durable virtual item.\n\nThe substantial majority of virtual items in the Group’s applications are consumable virtual items. The Group expects that in future periods, there will not be significant changes in the mix of consumable and durable virtual items offered and sold.\n\nFor the years ended December 31, 2023, 2024 and 2025, the Company recognized in-app purchase revenue of US$6.5 million, US$19.5 million and US$14.1 million, respectively. Online literature contributed approximately 75.8%, 96.9% and 95.0% of in-app purchase revenue in 2023, 2024 and 2025 respectively. Meanwhile, mobile games contributed approximately 24.2%, 3.1% and 5.0% of in-app purchase revenue in 2023, 2024 and 2025 respectively.\n\nF-18\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(n)         Revenue Recognition (Continued)\n\nMobile Advertising\n\nThe Group generates a significant portion of its revenue through mobile advertising and recognizes the revenue according to ASC Topic 606. The Group provides advertising services to customers for promotion of their brands and products through its pan-entertainment mobile applications, including online literature applications and mobile games. Online literature contributed approximately 47.3%, 63.2% and 62.3% of its advertising revenue in 2023, 2024 and 2025 respectively. Meanwhile, mobile games contributed approximately 48.6%, 31.2% and 35.7% of its advertising revenue in 2023, 2024 and 2025 respectively.\n\nThe Group has two general pricing models for its advertising products: cost over a time period and cost for performance basis including per impression basis. For advertising contracts over a time period, the Group generally recognizes revenue ratably over time, because the customer simultaneously receives and consumes the benefits as the Group performs throughout a fixed contract term. For contracts that are charged on the cost for performance basis, the Group charges an agreed-upon fee to its customers determined based on the effectiveness of advertising links, which is typically measured by clicks, transactions, installations, user registrations, and other actions originating from the Group’s mobile applications. Revenue is recognized at a point in time when there is an effective click, transaction, installations, user registrations, and other actions originating from the Group’s mobile applications. For contracts that are charged on the cost per impression basis, the Group recognizes the revenue at a point in time when the impressions are delivered. Revenue for performance-based advertising services is recognized at a point in time when all the revenue recognition criteria are met.\n\nFor certain of the Group’s advertising service arrangements, customers are required to pay a deposit before using Group’s services. Deposits received are recorded as deferred revenue on the consolidated balance sheets. Service fees due to the Group are deducted from the deposited amounts when performance criteria have been satisfied.\n\nOthers\n\nThe Group also generates other revenues mainly through licensing of online literature works and licensing of TouchPal Smart Input to certain device manufacturers. The revenue is recognized at the point of time that the licensing performance delivered.\n\nSales Incentives\n\nThe Group provides sales incentives to certain customers in the form of sales rebates which entitle them to receive reductions in the price. The Group accounts for these incentives granted to customers as variable consideration and records it as reduction of revenue. The amount of variable consideration is measured based on the most likely amount of incentives to be. The Group recorded no rebates for the years ended December 31, 2023, 2024, and 2025.\n\nDisaggregation of Revenue\n\nIn the following table, revenue is disaggregated by revenue streams and geographic location of customers’ headquarters.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n​\n\n**2023**\n\n​\n\n**2024**\n\n​\n\n**2025**\n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\nRevenue:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nIn-app purchase revenues\n\n \n\n6,470,995\n\n​\n\n19,510,797\n\n​\n\n14,064,545\n\nAdvertising revenue\n\n​\n\n22,822,094\n\n​\n\n8,760,291\n\n​\n\n6,605,671\n\nOther revenues\n\n \n\n2,683,179\n\n​\n\n2,047,728\n\n​\n\n1,042,504\n\nTotal\n\n \n\n**31,976,268**\n\n​\n\n**30,318,816**\n\n​\n\n**21,712,720**\n\n​\n\n​\n\nF-19\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(n)         Revenue Recognition (Continued)\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n​\n\n**2023**\n\n​\n\n**2024**\n\n​\n\n**2025**\n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\nPRC\n\n \n\n11,656,321\n\n​\n\n3,171,639\n\n​\n\n1,161,572\n\nUSA\n\n \n\n17,373,071\n\n​\n\n26,038,523\n\n​\n\n19,841,872\n\nOthers\n\n \n\n2,946,876\n\n​\n\n1,108,654\n\n​\n\n709,276\n\nTotal\n\n \n\n**31,976,268**\n\n​\n\n**30,318,816**\n\n​\n\n**21,712,720**\n\n​\n\nContract Balances\n\nTiming of revenue recognition may differ from the timing of invoicing to customers.\n\nFor advertising and licensing arrangements, accounts receivable represents the amount to be collected from customers for which service has been delivered. Contract liabilities include payments received in advance of performance under the contract or for differences between the amount billed to a customer and the revenue recognized for the completed performance obligation which is presented as deferred revenue on the consolidated balance sheets.\n\nPayments for in-app purchase revenue are required at time of purchase, are non-refundable and relate to non-cancellable contracts. Such payments are initially recorded to deferred revenue and are recognized into revenue as the Group satisfies performance obligations. Further, payments made by users of applications are collected by platform such as Google Play and Apple App Store, and remitted to the Group generally within 18 to 45 days of the last day of the fiscal month in which the purchase was completed. The Group’s right to the payments collected on its behalf is unconditional and therefore recorded as accounts receivable, net of the associated payment processing fees.\n\nDue to the generally short-term duration of the Group’s contracts, majority of the performance obligations are satisfied in one year. The movements of the Group’s accounts receivable and deferred revenue are as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Accounts Receivable**\n\n**  ​ ​ ​**\n\n**Deferred Revenue**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nOpening Balance as of January 1, 2024\n\n \n\n2,334,607\n\n​\n\n643,997\n\n(Decrease) increase, net\n\n \n\n525,930\n\n​\n\n358,582\n\nEnding Balance as of December 31, 2024\n\n \n\n2,860,537\n\n​\n\n1,002,579\n\n(Decrease) increase, net\n\n \n\n(1,057,638)\n\n​\n\n(304,913)\n\nEnding Balance as of December 31, 2025\n\n** **\n\n**1,802,899**\n\n​\n\n**697,666**\n\n​\n\nRevenue amounted US$0.6 million and US$1.0 million were recognized in the years ended December 31, 2024 and 2025, respectively, which were included in the balance of deferred revenue at the beginning of each year.\n\nTransaction Price Allocated to the Remaining Performance Obligations\n\nRevenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.\n\nF-20\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(n)         Revenue Recognition (Continued)\n\nPractical Expedients and Exemptions\n\nThe Group elects not to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less (ii) contracts for which the Group recognizes revenues at the amount to which it has the right to invoice for services performed and (iii) contracts with variable consideration related to wholly unsatisfied performance obligations.\n\n(o)          Cost of Revenue\n\nCost of revenue consists of direct costs primarily relating to generating revenue, which includes payment processing fees paid to platform such as Apple App Store and Google Play, bandwidth costs and cloud service costs, content costs paid to signed authors and third-party content providers for the publishing and licensing of relevant online literature works, third-party outsourcing fees, depreciation expenses and service fees for internet data center, and salary and benefits expenses of operation and maintenance department.\n\n(p)          Research and Development Expenses\n\nResearch and development expenses primarily consist of (1) salary and benefits expenses incurred in the research and development of new products and new functionality, and (2) general expenses and depreciation expenses associated with the research and development activities.\n\nExpenditures incurred during the research phase are expensed as incurred and no research and development expenses were capitalized as of December 31, 2023, 2024 and 2025.\n\n(q)          Sales and Marketing Expenses\n\nSales and marketing expenses primarily consist of advertising and promotion expenses, expenses incurred for the user incentive programs, and salaries and benefits of sales and marketing personnel. Advertising and promotion expenses which mainly include user acquisition costs that represent payment to the third parties for online user acquisition of the Group’s products via social media and demand-side platforms amounted to US$17.4 million, US$15.0 million and US$9.6 million for the years ended December 31, 2023, 2024 and 2025, respectively.\n\n(r)           Leases\n\nThe Group leases office space in different cities in PRC and USA under non-cancellable operating lease agreements that expire at various dates through the year of 2025. Before January 1, 2021, the Group applied the ASC 840, Leases, under which each lease is classified at the inception date as either a capital lease or an operating lease. All the Group’s leases were classified as operating lease under ASC 840.\n\nEffective January 1, 2021, the Group adopted ASU No. 2016-02 “*Leases*” (ASC 842) using the modified retrospective approach. The Group elected the transition package of practical expedients permitted within the standard, which allowed it not to reassess initial direct costs, lease classification, or whether the contracts contain or are leases for any leases that existed prior to January 1, 2021. The Group also elected the short-term lease exemption for all contracts with an original lease term of 12 months or less. Upon the adoption, the Group recognized operating lease right of use (“ROU”) assets of US$2,563,151 with corresponding lease liabilities of US$2,470,968 on the consolidated balance sheets. The operating lease ROU assets include adjustments for prepayments. The adoption did not impact the Group’s beginning retained earnings as of January 1, 2021, or the Group’s prior years’ financial statements.\n\n​\n\nF-21\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(r)          Leases (Continued)\n\nUnder ASC 842, the Group determines whether an arrangement constitutes a lease and records lease liabilities and ROU assets on its consolidated balance sheets at the lease commencement. The Group measures the operating lease liabilities at the commencement date based on the present value of remaining lease payments over the lease term, which is computed using the Group’s incremental borrowing rate, an estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the lease term. The Group measures the operating lease ROU assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing operating lease expense based on lease payments on a straight-line basis over the lease term after the lessor makes the underlying asset available to the Group. Some of the Group’s lease contracts include options to extend the leases for an additional period which has to be agreed with the lessors based on mutual negotiation. After considering the factors that create an economic incentive, the Group does not include renewal option periods in the lease term for which it is not reasonably certain to exercise.\n\nThe Group incurred operating lease costs amounting to US$307,026 and US$271,257 (excluding US$22,338 and US$33,770 for short-term leases not capitalized as ROU assets for the year ended December 31, 2024 and 2025) for the years ended December 31 2024 and 2025, respectively. Cash payments against operating lease liabilities were US$351,581 and US$289,201 for the year ended December 31, 2024 and 2025.\n\nAs of December 31, 2025, Group’s operating leases had a weighted average remaining lease term of 2.4 years and a weighted average discount rate of 4.75%. Future lease payments under operating leases as of December 31, 2025 were as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**As of December 31, **\n\n​\n\n​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n2025\n\n \n\n309,699\n\nTotal lease payment\n\n \n\n309,699\n\nLess: imputed interest\n\n \n\n(16,252)\n\nTotal lease liability balance\n\n \n\n**293,447**\n\nLess: Operating lease liabilities, current\n\n \n\n(137,339)\n\nLong-term operating lease liabilities\n\n \n\n**156,108**\n\n​\n\nAs of December 31, 2025, the future minimum lease payments under the Group’s non-cancelable operating lease agreements based on ASC 840 are as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**As of December 31, **\n\n​\n\n​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n2026\n\n​\n\n170,114\n\n2027\n\n \n\n148,655\n\n2028\n\n \n\n12,388\n\nTotal lease commitment\n\n \n\n**331,157**\n\n​\n\nF-22\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(s)          Convertible Notes, Beneficial Conversion Feature (“BCF”) and Redemption Feature\n\nThe Group issued convertible notes in January and March 2021. The Group has evaluated whether the conversion feature of the notes is considered an embedded derivative instrument subject to bifurcation in accordance with Topic 815, *Derivatives and Hedging* (“ASC 815”), Accounting for Derivative Instruments and Hedging Activities. Based on the Group’s evaluation, the conversion feature is not considered an embedded derivative instrument subject to bifurcation as conversion option does not provide the holder of the notes with means to net settle the contracts. Convertible notes, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the value of the BCF is determined as the intrinsic value of the conversion feature is recorded as deduction to the carrying amount of the notes and credited to additional paid-in-capital. The value of the BCF is recorded in the financial statements as a debt discount from the face amount of the notes, which is then accreted to interest expense over the life of the related debt using the effective interest method. The Group presents the occurred debt issuance costs as a direct deduction from the convertible note rather than as an asset. Amortization of the costs is reported as interest expense. At the date of above conversion, the remaining amount has been fully amortized to interest expense.\n\nThe convertible notes issued in March 2021 also include a monthly redemption feature which trigger a mandatory monthly redemption of a portion of the principal amount plus an 8% redemption premium and accrued and unpaid interest to be redeem in cash, the shares of the Group or a combination of both at the option of the Group if certain conditions relating to trading prices of the Group’s shares are not met (“Monthly Redemption”). The Group has evaluated whether the Monthly Redemption feature is considered an embedded derivative instrument subject to bifurcation in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities. Based on the Group’s evaluation, the monthly redemption has an underlying based on the fair value of the Group’s shares. An underlying that is based on common stock is not considered to be clearly and closely related to a debt host instrument, therefore, the Monthly Redemption feature should be separately accounted for as a standalone derivative under ASC 815. This derivative is presented at fair value with change in fair value recognized in earnings. For the convertible note issued with this derivative, a portion of the note’s proceed is allocated to the derivative based on the fair value at the date of the issuance. The allocated fair value for the derivative is recorded as a debt discount from the face amount of the notes, which is then accredited to interest expense over the life of the related debt using the effective interest method.\n\n(t)          Income Taxes\n\nCurrent income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Group follows the asset and liability method of accounting for income taxes.\n\nIn accordance with the provisions of ASC 740, *Income Taxes*, the Group recognizes in the financial statements the benefit of a tax position if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. The Group estimates liability for unrecognized tax benefits which are periodically assessed and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in some cases, appeal or litigation process.\n\nUnder this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statements carrying amounts and tax bases of assets and liabilities by applying enacted statutory tax rates that will be in effect in the period in which the temporary differences are expected to reverse. The Group considers positive and negative evidence when determining whether some portion or all of the deferred tax assets will not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, historical results of operations, and tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.\n\nF-23\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(t)           Income Taxes (Continued)\n\nThe actual benefits that are ultimately realized may differ from estimates. As each audit is concluded, adjustments, if any, are recorded in the financial statements in the period in which the audit is concluded. Additionally, in future periods, changes in facts, circumstances and new information may require us to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur. As of December 31, 2023,2024 and 2025, the Group did not have any significant unrecognized uncertain tax positions.\n\n(u)          Employee Contribution Plan\n\nPursuant to the relevant labor rules and regulations in the PRC, the Group participates in defined contribution retirement schemes (the “Schemes”) organized by the relevant local government authorities for its eligible employees whereby the Group is required to make contributions to the Schemes at certain percentages of the deemed salary rate announced annually by the local government authorities. Contributions to the defined contribution plan are expensed as incurred.\n\nThe Group has no other material obligation for payment of pension benefits except for the annual contributions described above.\n\n(v)          Share-based Compensation\n\nFair value recognition provisions according to ASC718, Compensation—Stock Compensation: Overall, is applied to share-based compensation, which requires the Group to recognize expense for the fair value of its share-based compensation awards. Compensation expense adjusted for forfeiture effect on a straight-line basis over the requisite service period, with a corresponding impact reflected in additional paid-in capital.\n\nEmployees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required, or b) using grade vesting method, net of actual forfeitures, over the requisite service, which is the vesting period.\n\nThe Group determines fair value of share options as of the grant date using binomial option pricing model and the fair value of restricted share units as of the grant date based on the fair market value of the underlying ordinary shares.\n\nThe expected term represents the period that share-based awards are expected to be outstanding, giving consideration to the contractual terms of the share-based awards, vesting schedules and expectations of future employee exercise behavior. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group accounts for forfeitures of the share-based awards when they occur. Previously recognized compensation cost for the awards is reversed in the period that the award is forfeited. Amortization of share-based compensation is presented in the same line item in the consolidated statements of operations as the cash compensation of those employees receiving the award.\n\n(w)         Comprehensive Income (Loss)\n\nComprehensive Income (Loss) includes all changes in equity except those resulting from investments by owners and distributions to owners. For the years presented, the Group’s total comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments.\n\n​\n\nF-24\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.****Summary of Significant Accounting Policies (Continued)**\n\n(x)         Income (loss) per Share\n\nBasic income (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.\n\nDiluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, which consists of the ordinary shares issuable upon the conversion of the convertible notes (using the if-converted method), ordinary shares issuable upon the exercise of share options and vest of non-vested restricted share units (using the treasury stock method).\n\n(y)          Concentration and risks\n\n*Concentration of Customers*\n\nFinancial instruments that potentially expose the Group to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, accounts receivable and prepayments. The Group places its cash and cash equivalents and short-term investments with financial institutions with high-credit ratings and quality. The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establishes an allowance for credit losses primarily based upon the historical credit loss experience of the receivables and factors surrounding the credit risk of customers. With respect to prepayments, the Group performs on-going credit evaluations of the financial condition of these suppliers and has noted no significant credit risk.\n\nThe following customers accounted for 10% or more of revenue:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended**\n\n \n\n​\n\n​\n\n**December 31, **\n\n \n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n \n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n​\n\nCompany A\n\n​\n\n4,862,217\n\n​\n\n15.21\n\n%\n\n*\n\n​\n\n*\n\n​\n\n2,876,424\n\n​\n\n13.25\n\n%\n\nCompany B\n\n \n\n4,453,331\n\n​\n\n13.93\n\n%\n\n12,626,521\n\n​\n\n41.65\n\n%\n\n8,959,954\n\n​\n\n41.27\n\n%\n\nCompany C\n\n​\n\n3,628,882\n\n​\n\n11.35\n\n%\n\n*\n\n​\n\n*\n\n​\n\n*\n\n​\n\n*\n\n​\n\nCompany D\n\n​\n\n*\n\n​\n\n*\n\n​\n\n6,801,056\n\n​\n\n22.43\n\n%\n\n5,076,916\n\n​\n\n23.38\n\n%\n\n*   Less than 10%.\n\nThe following customers accounted for 10% or more of accounts receivable:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n \n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n \n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n \n\nCompany A\n\n  ​ ​ ​\n\n*\n\n  ​ ​ ​\n\n*\n\n​\n\n192,954\n\n​\n\n10.70\n\n%\n\nCompany B\n\n \n\n1,311,926\n\n​\n\n45.86\n\n%  \n\n866,305\n\n \n\n48.05\n\n%\n\nCompany D\n\n​\n\n393,620\n\n​\n\n13.76\n\n%\n\n339,680\n\n​\n\n18.84\n\n%\n\nCompany E\n\n​\n\n307,987\n\n​\n\n10.77\n\n%\n\n*\n\n​\n\n*\n\n​\n\n*   Less than 10%.\n\n​\n\nF-25\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.**Summary of Significant Accounting Policies (Continued)\n\n(y)          Concentration and risks (Continued)\n\n*Concentration of Vendors*\n\nThe Group uses certain vendors to acquire users and those cost are recorded as sales and marketing expenses. Vendors accounted for 10% or more are listed as below:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n \n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n \n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n \n\nCompany A\n\n​\n\n8,345,027\n\n​\n\n47.21\n\n%\n\n4,993,977\n\n​\n\n33.17\n\n%\n\n5,799,815\n\n​\n\n59.31\n\n%\n\nCompany F\n\n​\n\n3,349,826\n\n​\n\n18.95\n\n%\n\n8,497,678\n\n​\n\n56.44\n\n%\n\n2,763,155\n\n​\n\n28.26\n\n%\n\nCompany G\n\n​\n\n2,098,906\n\n​\n\n11.88\n\n%\n\n*\n\n​\n\n*\n\n​\n\n*\n\n​\n\n*\n\n​\n\n*   Less than 10%.\n\nThe following vendors accounted for 10% or more of accounts payable:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n \n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n \n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n \n\nCompany A\n\n​\n\n859,102\n\n​\n\n24.83\n\n%\n\n703,870\n\n​\n\n32.20\n\n%\n\nCompany F\n\n​\n\n1,370,430\n\n​\n\n39.60\n\n%\n\n562,871\n\n​\n\n25.75\n\n%\n\nCompany H\n\n​\n\n390,553\n\n​\n\n11.29\n\n%\n\n399,421\n\n​\n\n18.27\n\n%\n\n*   Less than 10%.\n\n​\n\n*Business and Economic Risks*\n\nThe Group participates in the dynamic and competitive high technology industry and believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations and cash flows: changes in the overall demand for services and products; competitive pressures due to existing and new entrants; advances and new trends in new technologies and industry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; copyright regulations; brand maintenance and enhancement; and risks associated with the Group’s ability to attract and retain employees necessary to support its growth.\n\nThe Group’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC.\n\n*Foreign Currency Risk*\n\nThe RMB is not a freely convertible currency. The State Administration for Foreign Exchange in the PRC, under the authority of the Peoples Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents and restricted cash denominated in RMB amounted to RMB8,440,580 (amounted to US$1,174,195) and RMB5,977,061 (amounted to US$850,367) as of December 31, 2024 and 2025, respectively.\n\n​\n\nF-26\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**2.**Summary of Significant Accounting Policies (Continued)\n\n(z)          Recent Accounting Pronouncements\n\nNew accounting pronouncements recently adopted\n\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topics 740): Improvements to Income Tax Disclosures, which requires to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Group’s adoption of this standard did not have a material impact on its consolidated financial statements.\n\nNew accounting pronouncements not yet adopted\n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. This ASU should be applied prospectively with the option to apply the standard retrospectively. The Group is currently evaluating the potential effect that the updated standard will have on financial statement disclosures.\n\nFinancial Instruments - Credit Losses (Topic 326). In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326). ASU No. 2025-05 provides all entities with a practical expedient and entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact of adopting this standard on its consolidated financial statements\n\n​\n\n**3.**Accounts Receivable, net\n\nAccounts receivable, net, consisted of the following:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nAccounts receivable\n\n​\n\n2,378,341\n\n​\n\n2,949,667\n\n​\n\n1,852,815\n\nAllowance for credit losses:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nBalance at beginning of the year\n\n​\n\n(159,414)\n\n​\n\n(43,734)\n\n​\n\n(89,130)\n\n(Additions) reversal provisions\n\n​\n\n90,526\n\n​\n\n(47,801)\n\n​\n\n39,476\n\nWrite-off\n\n​\n\n22,922\n\n​\n\n2,249\n\n​\n\n—\n\nForeign exchange effect\n\n​\n\n2,232\n\n​\n\n156\n\n​\n\n(262)\n\nBalance at end of the year\n\n​\n\n(43,734)\n\n​\n\n(89,130)\n\n​\n\n(49,916)\n\n**Accounts receivable, net**\n\n****​\n\n**2,334,607**\n\n****​\n\n**2,860,537**\n\n****​\n\n**1,802,899**\n\n​\n\n​\n\nF-27\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**4.**Prepaid Expenses and Other Current Assets\n\nPrepaid expenses and other current assets consisted of the followings:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nValue added tax recoverable\n\n​\n\n981,320\n\n​\n\n663,734\n\nOther receivables\n\n​\n\n389,098\n\n​\n\n23,892\n\nAdvance to suppliers\n\n​\n\n24,731\n\n​\n\n12,677\n\nOthers\n\n​\n\n54,220\n\n​\n\n12,393\n\n**Prepaid expenses and other current assets**\n\n****​\n\n**1,449,369**\n\n****​\n\n**712,696**\n\n​\n\n​\n\n**5****.**Property and Equipment, net\n\nProperty and equipment, net, consisted of the followings:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nElectronic equipment\n\n​\n\n4,059,521\n\n​\n\n1,755,974\n\nOffice equipment and furniture\n\n​\n\n78,333\n\n​\n\n84,294\n\nMotor vehicles\n\n​\n\n60,039\n\n​\n\n61,403\n\nLeasehold improvements\n\n​\n\n802,537\n\n​\n\n51,397\n\nTotal\n\n​\n\n5,000,430\n\n​\n\n1,953,068\n\nLess: Accumulated depreciation\n\n​\n\n(4,950,278)\n\n​\n\n(1,874,114)\n\n**Property and equipment, net**\n\n​\n\n**50,152**\n\n​\n\n**78,954**\n\n​\n\nFor the years ended December 31, 2023, 2024 and 2025, depreciation expenses were US$306,388, US$35,046 and US$22,321, respectively.\n\n​\n\n**6.****Intangible Assets, net**\n\nIntangible assets, net consisted of the following:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n****​\n\n​\n\n**As of December 31, **\n\n****​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nPurchased software\n\n​\n\n534,428\n\n​\n\n461,269\n\nLess: Accumulated amortization\n\n​\n\n(534,428)\n\n​\n\n(461,269)\n\n**Intangible Assets, net**\n\n​\n\n**—**\n\n****​\n\n**—**\n\n​\n\nAmortization expense of intangible assets for the years ended December 31, 2023, 2024 and 2025 amounted to US$73,151, US$15,589 and nil, respectively. Estimated amortization expenses of the existing intangible assets for each of the five years ending December 31, 2030, and thereafter are expected to be nil.\n\n​\n\nF-28\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**7.****Long-term Investments**\n\nIn April 2020, the Group partnered with an unrelated third-party investor to form a privately-held investing company in limited partnership, of which the Group holds 4% equity interest. The business is to invest enterprises in high-tech industries. The Group measures its equity securities without a readily determinable fair value at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Group reclaimed US$0.01 million and US$0.001 million from this investment for the years ended December 31, 2023 and 2024, respectively. No impairment was recognized for the years ended December 31, 2024 and 2025.\n\nIn January 2022, the Group acquired 17.6% equity interests in a privately-held company for cash consideration of US$0.06 million, which the Group plans to hold for long term investment purpose. The Group accounts for equity investment in entities with significant influence but does not own a majority equity interest or otherwise control under equity-method accounting. The Group records equity method adjustments in share of profits and losses and continually reviews equity method investments to determine whether a decline in fair value to below the carrying value is other-than-temporary. The Group recognized a share of loss in equity method investment of US$0.06 million for the year ended December 31, 2022. In 2023, the Group fully withdrew the investment due to the invested company’s reduction of capital.\n\n​\n\n**8.**Short-term Borrowings\n\nIn September 2022, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw down up to US$0.9 million by February 2024. The interest rate for the agreement is the LPR minus 0.35%. The Group has drawn down the credit facility of US$0.9 million in 2022 and fully repaid the amount in March 2023. In June 2023, the Group entered into a six-month credit facility agreement with this commercial bank under which the Group can draw down up to US$0.7 million with interest rate of 3.65%. In 2023, the Group has drawn down the credit facility of US$0.7 million in June and fully repaid the amount in December.\n\nIn April 2023, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw down up to US$0.7 million by April 2024 with interest rate of 4.15%. Shanghai Administration Center of Policy Financing Guarantee Funds for Small and Medium-sized Enterprises and Karl Kan Zhang provided joint and several guarantees. In 2023, the Group has drawn down the credit facility of US$0.7 million and and fully repaid the amount by the end of December 2024.\n\nIn January 2024, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw down up to US$2.5 million guaranteed by founder’s assets. The interest rate for the agreement is LPR minus 0.25%. In 2024, the Group has drawn down the credit facility of US$2.5 million and fully repaid the amount in January 2025.\n\nIn February 2025, the Group entered into a credit facility agreement with a commercial bank under which the Group can draw down up to US$2.0 million by January 2028, with interest rate of 2.88%. Each draw down under the facility has a loan term of 12 months from the date of disbursement. In 2025, the Group has drawn down the credit facility of US$2.0 million and has made no repayment as of December 31, 2025.\n\nF-29\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**9.**Accrued Expenses and Other Current Liabilities\n\nAccrued expenses and other current liabilities consisted of the following:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nOther tax payables (Note 1)\n\n​\n\n28,957\n\n​\n\n4,582\n\nAccruals for user incentive programs\n\n​\n\n140,806\n\n​\n\n62,930\n\nAccrued expenses (Note 2)\n\n​\n\n643,389\n\n​\n\n749,750\n\nAccrued loss contingencies relating litigation and asserted claims\n\n​\n\n258,619\n\n​\n\n309,013\n\nOthers\n\n​\n\n124,563\n\n​\n\n51,717\n\nTotal\n\n​\n\n**1,196,334**\n\n​\n\n**1,177,992**\n\nNote 1: Other tax payables mainly consisted of value-added tax payable and other taxes such as individual income tax and stamp duty tax.\n\nNote 2: Accrued expenses mainly consisted of accrued professional service fees and other miscellaneous expenses related to marketing and operation activities.\n\n​\n\n**10.****Convertible notes and Standby Equity Distribution Agreement**\n\n*March 2021 Note*\n\nOn March 19, 2021, the Group issued a convertible note for a principle amount of US$20.0 million with a 2% discount, an annual interest of 5% per year, a floor price of US$0.015 per ordinary share and a fixed conversion price of US$0.1 per ordinary share, refer to as the “March 2021 Note”. The maturity date of the March 2021 Note is March 19, 2022. The Group received a cash proceed of US$18.2 million from this issuance. In the subsequent years, the Group engaged in multiple negotiations with investor, ultimately agreeing to set the maturity date as April 1, 2023.\n\nThe March 2021 Note also includes provision which require the Group to pay the note holders a commitment fee of 3,750,000 ordinary shares at the date of closing which is considered to be further discount on the note provided to the debt holders. The Group settled this commitment fee by issuing 3,750,000 ordinary shares out of treasury shares to the convertible note holders. The Group has recognized this commitment fees amounted to US$0.2 million determined based on the fair value of shares issued at the date of closing as a part of debt discount.\n\nBeginning from June 1, 2021 and continuing on the first day of each calendar month thereafter through January 2022 as set forth on the redemption schedule, a portion of the principal amount plus an 8% redemption premium and plus accrued and unpaid interest will be subject to redemption in cash, ADSs through conversion of the note or a combination of both at the Group’s option in the event that the daily VWAP on each of the five consecutive trading days immediately prior to the redemption date does not exceed a price equal to 108% of the fixed conversion price (the “Monthly Redemption”). In the event that the daily VWAP on each of the five consecutive trading days immediately prior to the scheduled redemption date exceeds a price equal to 108% of the fixed conversion price, then no Monthly Redemption shall be due on such scheduled redemption date. If the daily VWAP is less than the floor price for a period of 5 consecutive trading days, then the interest rate shall increase to an annual rate of 15%.\n\nF-30\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**10.****Convertible notes and Standby Equity Distribution Agreement (Continued)**\n\nIn accordance with ASC 815, the Group determined that the Monthly Redemption feature is an embedded financial instrument which requires bifurcation from the host debt instrument. The Group performs a valuation with the assistance of a third-party appraiser to evaluate fair value of the embedded derivative associated with this note at the date of issuance and subsequently at each reporting date. Initially, the Group recorded a derivative liability of US$1,662,355 relating to the Monthly Redemption feature based on its fair value at the date of issuance. A portion of the note’s proceed is allocated to the derivative based on the fair value at the date of the issuance. The allocated fair value for the derivative is recorded as a debt discount from the face amount of the notes, which is then accredited to interest expense over the life of the related debt using the effective interest method. This derivative liability is revalued at each reporting date and immediately prior to conversion with changes in fair value recorded to fair value change at derivative liabilities in the statement of operations. As of December 31, 2021 and 2022, the fair value of the derivative liability is determined to be US$553,707 and nil, and the gain of US$553,707 representing the change in fair value has been recorded in earnings for the year ended December 31, 2022. Total discount of US$2 million and issuance costs of US$1.6 million relating to the March 2021 Notes are being amortized to interest expense using effective interest method.\n\nAs of December 31, 2021, the Group redeemed the loan principle, redemption premium and unpaid interests total amounted to US$7.4 million through issuance of 347,620,500 ordinary shares with a weighted average conversion price of US$0.0214 per ordinary shares and US$4.2 million through cash payments. During the year ended December 31, 2022, the Group redeemed the loan principle, redemption premium and unpaid interests total amounted to US$8.8 million through issuance of 1,195,980,950 ordinary shares with a weighted average conversion price of US$ $0.0042 per ordinary shares and US$3.7 million through cash payments. During the year ended December 31, 2023, the Group redeemed the loan principle, redemption premium and unpaid interests total amounted to US$1.8 million in the form of cash. The March 2021 Note has been fully redeemed as of March 31, 2023.\n\n​\n\n**11.**Other Operating Income (Loss), net\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the year ended December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**US$**\n\nGovernment subsidies\n\n \n\n418,717\n\n​\n\n331,484\n\n​\n\n74,643\n\nProvision of contingent losses\n\n \n\n(35,228)\n\n​\n\n(14,078)\n\n​\n\n(42,830)\n\nGain on disposal of property and equipment\n\n​\n\n386,915\n\n​\n\n24,985\n\n​\n\n14,421\n\nReversal of previously accrued expenses\n\n​\n\n—\n\n​\n\n91,317\n\n​\n\n218,673\n\nOthers\n\n \n\n23,281\n\n​\n\n28,576\n\n​\n\n18,345\n\nTotal\n\n \n\n**793,685**\n\n​\n\n**462,284**\n\n​\n\n**283,252**\n\n​\n\nOther operating income, net for the year ended December 31, 2025, primarily consisted of reversal of previously accrued expenses and government subsidies.\n\n​\n\n**12.**Income Taxes Expenses\n\nFor the years ended December 31, 2023, 2024 and 2025, income tax expenses were US$20,837, US$8,996 and US$2,851, respectively.\n\nCayman Islands\n\nCooTek (Cayman) Inc. is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, CooTek (Cayman) Inc. is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.\n\nF-31\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**12.****Income Taxes Expenses (Continued)**\n\nUSA\n\nThe Group’s subsidiaries incorporated in U.S. are subject to U.S. federal corporate income tax at a rate of 21%, and also subject to state income tax in California.\n\nHong Kong\n\nUnder the current Hong Kong Inland Revenue Ordinance, the Group’s subsidiaries domiciled in Hong Kong have introduced a two-tiered profits tax rate regime which is applicable to any year of assessment commencing on or after April 1, 2018. The profits tax rate for the first HK$2 million of profits of corporations will be lowered to 8.25%, while profits above that amount will continue to be subject to the tax rate of 16.5%. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Group are not subject to any Hong Kong withholding tax.\n\nPRC\n\nUnder the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), the Group’s subsidiaries and VIEs incorporated in the PRC are subject to statutory rate of 25% with the exception of Chu Le. Chu Le is a foreign-invested enterprise established in June, 2012 located in Shanghai, China. Chu Le obtained the High and New Technology Enterprise (“HNTE”) certificate in 2020, valid for a period of 3 years from 2020 to 2022. Chu Le renewed the HNTE certificate in 2023, valid for a period of 3 years from 2023 to 2025. For the years ended December 31, 2024 and 2025, Chu Le was eligible for a preferential tax rate of 15%.\n\nIncome (loss) before income taxes consisted of:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n****​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n****​\n\n \n\n**US$**\n\n \n\n**US$**\n\n \n\n**US$**\n\nPRC\n\n​\n\n(1,557,411)\n\n​\n\n(983,763)\n\n​\n\n181,485\n\nHK\n\n \n\n1,720,901\n\n​\n\n4,417,801\n\n​\n\n(1,405,910)\n\nUS\n\n \n\n(651,647)\n\n​\n\n(2,950,451)\n\n​\n\n(307,432)\n\nCayman\n\n \n\n(2,086,947)\n\n​\n\n(411,022)\n\n​\n\n1,456,529\n\nTotal\n\n \n\n**(2,575,104)**\n\n​\n\n**72,565**\n\n​\n\n**(75,328)**\n\n​\n\nDeferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Group has no deferred tax liabilities. The Group’s deferred tax assets were as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nDeferred tax assets:\n\n​\n\n  ​\n\n​\n\n  ​\n\n​\n\n​\n\nNet operating loss carry-forward\n\n \n\n28,450,558\n\n​\n\n29,352,277\n\n​\n\n30,577,279\n\nAccrued expenses\n\n \n\n255,809\n\n​\n\n515,210\n\n​\n\n109,816\n\nAdvertising fees\n\n \n\n16,846,785\n\n​\n\n16,187,234\n\n​\n\n16,179,063\n\nDeferred subsidies and revenue\n\n \n\n62,009\n\n​\n\n289,263\n\n​\n\n289,712\n\nProvision for doubtful accounts\n\n \n\n347,903\n\n​\n\n478,170\n\n​\n\n566,200\n\nDepreciation difference of property, plant and equipment\n\n​\n\n514,635\n\n​\n\n504,667\n\n​\n\n494,698\n\nImpairment loss\n\n​\n\n155,953\n\n​\n\n153,436\n\n​\n\n153,546\n\nTotal deferred tax assets\n\n \n\n46,633,652\n\n​\n\n47,480,257\n\n​\n\n48,370,314\n\nValuation allowance on deferred tax assets\n\n \n\n(46,633,652)\n\n​\n\n(47,480,257)\n\n​\n\n(48,370,314)\n\nNet deferred tax assets\n\n \n\n—\n\n​\n\n—\n\n​\n\n—\n\n​\n\nF-32\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**12.****Income Taxes Expenses (Continued)**\n\nAs of December 31, 2025, the PRC companies had tax loss carry forwards amounted to US$55,490,670, of which US$9,788,037, US$10,819,024, US$5,494,757, US$1,180,190, US$1,253,457 and US$26,955,205 will expire in 2026, 2027, 2028,2029, 2030 and thereafter, respectively. As of December 31, 2025, the companies incorporated in Hong Kong and USA had tax loss carry forwards of US$33,546,621 and US$40,167,909, which can be offset taxable loss in the future without any time restriction.\n\nThe Group operates its business through its subsidiaries and VIEs. The Group does not file consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs may not be used to offset other subsidiaries’ or VIEs’ earnings within the Group.\n\nThe Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more likely than not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying businesses. Valuation allowances are established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry forward periods provided for in the tax law. The Group has provided a full valuation allowance for the deferred tax assets as of December 31, 2023, 2024 and 2025, as management is not able to conclude that the future realization of those net operating loss carry forwards and other deferred tax assets are more likely than not.\n\nThe changes in valuation allowance were as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nBalance at the beginning of the year\n\n​\n\n40,330,804\n\n​\n\n46,633,652\n\n​\n\n47,480,257\n\nMovement\n\n \n\n6,305,253\n\n​\n\n1,233,292\n\n​\n\n1,123,504\n\nTax loss carry forwards expired\n\n \n\n(2,405)\n\n​\n\n(386,687)\n\n​\n\n(233,447)\n\nBalance at the end of the year\n\n \n\n46,633,652\n\n​\n\n47,480,257\n\n​\n\n48,370,314\n\n​\n\nUncertainties exist with respect to how the current income tax law in the PRC applies to the Group’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC, will be considered residents for Chinese Income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting and properties, occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that the Group and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Group and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a statutory income tax rate of 25%. The Group is not subject to any other uncertain tax position.\n\nAccording to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million, equivalent to US$ 13,700, is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. From inception to the calendar year of 2025, the Group is subject to examination of the PRC tax authorities.\n\nIn accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under the tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Group has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely.\n\nF-33\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**12.**Income Taxes Expenses (Continued)\n\nAggregate accumulated deficit of the Group’s subsidiaries and VIEs located in the PRC was approximately US$95,168,175, US$96,155,284 and US$95,973,799 as of December 31, 2023, 2024 and 2025, respectively. Aggregate accumulated deficit of the Group’s subsidiaries located in Hong Kong was approximately US$22,043,369, US$18,334,776 and US$19,329,913 as of December 31, 2023, 2024 and 2025, respectively. Accordingly, no deferred tax liability has been accrued for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to the Group as of December 31, 2023, 2024 and 2025.\n\nReconciliations of the differences between PRC statutory income tax rate and the Group’s effective income tax rate for the years ended December 31, 2023, 2024 and 2025 were as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\nStatutory income tax rate\n\n​\n\n25\n\n%\n\n25\n\n%\n\nValuation allowance\n\n \n\n(96)\n\n%\n\n2,508\n\n%\n\nAdditional tax deduction\n\n \n\n47\n\n%\n\n(1,099)\n\n%\n\nEffect of different tax rate of subsidiary operation in other jurisdiction\n\n \n\n(12)\n\n%\n\n(1,401)\n\n%\n\nNon-Deductible expense\n\n​\n\n36\n\n%\n\n(21)\n\n%\n\nEffective tax rate\n\n \n\n—\n\n​\n\n12\n\n%\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31,**\n\n \n\n​\n\n​\n\n**2025**\n\n \n\n​\n\n  ​ ​ ​\n\n**US$**\n\n  ​ ​ ​\n\n**%**\n\n \n\n**Income tax expense at PRC statutory rate**\n\n​\n\n(18,832)\n\n​\n\n25\n\n%\n\n**Foreign Tax Effects**\n\n​\n\n  ​\n\n​\n\n  ​\n\n \n\n*Cayman Islands*\n\n \n\n  ​\n\n \n\n  ​\n\n​\n\nStatutory tax rate difference between PRC and other jurisdiction\n\n \n\n(364,132)\n\n \n\n484\n\n%\n\n*Hong Kong*\n\n \n\n  ​\n\n \n\n  ​\n\n​\n\nStatutory tax rate difference between PRC and other jurisdiction\n\n \n\n(7,070)\n\n \n\n9\n\n%\n\nNon-taxable income\n\n \n\n(126,572)\n\n \n\n168\n\n%\n\n*USA*\n\n \n\n  ​\n\n \n\n  ​\n\n​\n\nStatutory tax rate difference between PRC and other jurisdiction\n\n \n\n5,187\n\n \n\n(7)\n\n%\n\n**Valuation allowance**\n\n \n\n846,506\n\n \n\n(1,124)\n\n%\n\n**Additional tax deduction**\n\n \n\n(679,494)\n\n \n\n902\n\n%\n\n**Non-Deductible expense**\n\n \n\n347,258\n\n \n\n(461)\n\n%\n\n**Income tax expense**\n\n \n\n2,851\n\n \n\n(4)\n\n%\n\n​\n\n​\n\n**13.**Ordinary Shares\n\nDuring the year ended December 31, 2022, the Group issued 1,195,980,950 Class A ordinary shares with a weighted average conversion price of US$0.0042 per share upon conversion of March 2021 convertible notes.\n\nEffective May 9, 2022, the Company changed the ratio of ADSs to its Class A ordinary shares (the “ADS Ratio”) from the current ADS Ratio of one (1) ADS to fifty (50) Class A ordinary shares to a new ADS Ratio of one (1) ADS to six hundred and fifty (650) Class A ordinary shares.\n\nNo Class A ordinary shares were issued during the years ended December 31, 2024 and 2025.\n\n**14.****Treasury Shares**\n\nTreasury shares represent shares repurchased by the Group that are no longer outstanding and are held by the Group. No shares were repurchased during the years ended December 31, 2023, 2024 and 2025.\n\nF-34\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**15.**Share-based Compensation\n\nIn August 2012, the Group’s board of directors adopted the share incentive plan (“2012 Option Plan”). Under the 2012 Option Plan, the Group’s shareholders have authorized the issuance of up to 75,268,817 ordinary shares underlying all options (including incentive share options, or ISOs), restricted shares and restricted share units granted to a participant under the plan, or the awards. The 2012 Option Plan was amended in October 2012 to increase the maximum aggregate number of ordinary shares to 155,631,013 Shares. The 2012 Option Plan was amended in July 2014 to increase the maximum aggregate number of ordinary shares to 266,153,637 Shares.\n\nIn August 2018, the Group’s board of directors adopted the 2018 Share Incentive Plan (“2018 Plan”). The maximum aggregate number of shares which may be issued under the 2018 Plan shall initially be 2.0% of the total number of shares issued and outstanding immediately following the completion of IPO, plus an annual increase on the first day of each of the first five (5) complete fiscal years after the completion of IPO and during the term of this plan commencing with the fiscal year beginning January 1, 2019, by an amount equal to 2.0% of the total number of shares issued and outstanding on the last day of the immediately preceding fiscal year (excluding issued shares reserved for future option exercise and restricted share unit vesting).\n\nShare Options\n\nThe options have a contractual term of ten years. The vesting date starts on the grant date or the commencement date of a participant’s employment agreement. The options vest 20% or 25% on each of the four or five anniversary dates of the vesting date and upon continued employment. In the event of termination of a participant’s employment, the unvested options shall be terminated immediately. The participant’s right to exercise the vested options shall be terminated 2 or 3 months after the termination of the employment.\n\nThe Group uses the binomial option pricing model and the following assumptions to estimate the fair value of the options at the date of granted. No options were granted during the years ended December 31, 2024 and 2025.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year ended December 31**\n\n​\n\n  ​ ​ ​\n\n**2022**\n\nAverage risk-free rate of interest\n\n​\n\n1.88%\n\nExpected volatility\n\n \n\n41.6%\n\nDividend yield\n\n \n\n0%\n\nContractual term\n\n \n\n10 years\n\nFair value of the underlying shares on the date of option grants\n\n \n\n0.0071\n\n​\n\nThe risk-free rate of interest is based on the US Treasury yield curve as of valuation date. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future.\n\nA summary of the aggregate option activity and information regarding options outstanding as of December 31, 2025 is as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Weighted**\n\n​\n\n​\n\n** **\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Weighted**\n\n​\n\n**average**\n\n​\n\n​\n\n** **\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**average**\n\n​\n\n**remaining**\n\n​\n\n**Aggregate**\n\n** **\n\n**Weighted**\n\n​\n\n​\n\n**Number of**\n\n​\n\n**exercise**\n\n​\n\n**contractual**\n\n​\n\n**intrinsic**\n\n** **\n\n**average grant**\n\n​\n\n  ​ ​ ​\n\n**options**\n\n  ​ ​ ​\n\n**price**\n\n  ​ ​ ​\n\n**term**\n\n  ​ ​ ​\n\n**value**\n\n  ​ ​ ​\n\n**date fair value**\n\n​\n\n​\n\n​\n\n​\n\n**US$**\n\n​\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nOutstanding on January 1, 2025\n\n \n\n223,648,753\n\n​\n\n​\n\n0.03\n\n​\n\n2.64\n\n​\n\n—\n\n​\n\n0.05\n\nGranted\n\n​\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nForfeited\n\n​\n\n(125,000)\n\n​\n\n​\n\n0.0002\n\n​\n\n​\n\n​\n\n​\n\n​\n\n0.03\n\nExercised\n\n​\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nOutstanding on December 31, 2025\n\n​\n\n223,523,753\n\n​\n\n​\n\n0.03\n\n​\n\n2.02\n\n​\n\n—\n\n​\n\n0.05\n\nOptions exercisable on December 31, 2025\n\n​\n\n223,523,753\n\n​\n\n​\n\n0.03\n\n​\n\n2.02\n\n​\n\n—\n\n​\n\n0.05\n\nVested or expected to vest as of December 31, 2025\n\n​\n\n223,523,753\n\n​\n\n​\n\n0.03\n\n​\n\n2.02\n\n​\n\n—\n\n​\n\n0.05\n\n​\n\nF-35\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**15.****Share-based Compensation (Continued)**\n\nShare Options (Continued)\n\nThe weighted average grant date fair values of options granted during the year ended December 31, 2022 were US$0.01, respectively. No options were granted during the years ended December 31, 2024 and 2025.\n\nFor the year ended December 31, 2022, 2,097,750 of options were exercised with an aggregate intrinsic value of US$145. For the years ended December 31, 2024 and 2025, no options were exercised.\n\nFor the years ended December 31, 2023, 2024 and 2025, the Group recognized share-based compensation expense of US$704,462, US$134,560 and US$37,725, respectively. As of December 31, 2025, there was no unrecognized compensation cost related to non-vested stock options.\n\nRestricted Share Units\n\nIn 2023, 2024 and 2025, the Group granted no Restricted Share Units (“RSUs”). The RSUs have a contractual term of ten years and vest 25% on each anniversary over four years from the grant date. The vesting of these RSUs is conditioned on continued employment. Compensation expense based on fair value is amortized over the requisite service period of award using the straight line vesting attribution method.\n\nA summary of the RSUs activity for the year ended December 31, 2025 is as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Number of restricted**\n\n​\n\n**Weighted average grant date**\n\n​\n\n  ​ ​ ​\n\n**shares**\n\n  ​ ​ ​\n\n**fair value**\n\n​\n\n​\n\n**  ​**\n\n​\n\n**US$**\n\nUnvested restricted shares outstanding at January 1, 2025\n\n \n\n21,262,973\n\n​\n\n0.21\n\nGranted\n\n \n\n—\n\n​\n\n—\n\nVested\n\n \n\n—\n\n​\n\n—\n\nForfeited\n\n \n\n—\n\n​\n\n—\n\nUnvested restricted shares outstanding at December 31, 2025\n\n​\n\n21,262,973\n\n​\n\n0.21\n\nExpected to vest at December 31, 2025\n\n \n\n21,262,973\n\n​\n\n0.21\n\n​\n\nThe share-based compensation expense related to RSUs of US$103, nil and nil were recognized by the Group for the years ended December 31, 2023, 2024 and 2025, respectively.\n\nAs of December 31, 2025, there was no unrecognized compensation costs, net of actual forfeitures, related to unvested restricted shares.\n\n​\n\nF-36\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**16.**Net (loss) income per Ordinary Share\n\nNet (loss) income per ordinary share was computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the years ended December 31, 2023, 2024 and 2025:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended**\n\n​\n\n​\n\n**December 31, **\n\n​\n\n**  ​ ​ ​**\n\n**2023**\n\n**  ​ ​ ​**\n\n**2024**\n\n**  ​ ​ ​**\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n**Numerator:**\n\n​\n\n  ​\n\n​\n\n  ​\n\n​\n\n  ​\n\nNet income (loss) — basic and diluted\n\n \n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\nDeemed dividend in relation to the convertible note\n\n \n\n—\n\n​\n\n—\n\n​\n\n—\n\nNet income (loss) attributable to ordinary shareholders\n\n \n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\n**Shares (Denominator):**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nWeighted average number of ordinary shares outstanding\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nBasic\n\n​\n\n4,837,255,456\n\n​\n\n4,837,255,456\n\n​\n\n4,837,255,456\n\nDiluted\n\n​\n\n4,837,255,456\n\n​\n\n4,858,518,429\n\n​\n\n4,837,255,456\n\nNet income (loss) per share—basic and diluted\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nBasic\n\n​\n\n(0.0005)\n\n​\n\n0.00001\n\n​\n\n(0.00002)\n\nDiluted\n\n​\n\n(0.0005)\n\n​\n\n0.00001\n\n​\n\n(0.00002)\n\n​\n\nAs of December 31, 2023, 2024 and 2025, diluted net income (loss) per share does not include the following instruments as their inclusion would be antidilutive:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\nShare options\n\n \n\n223,932,653\n\n​\n\n223,648,753\n\n​\n\n223,523,753\n\nRestricted shares units\n\n​\n\n21,262,973\n\n​\n\n—\n\n​\n\n21,262,973\n\nTotal\n\n​\n\n**245,195,626**\n\n​\n\n**223,648,753**\n\n​\n\n**244,786,726**\n\n​\n\n​\n\n**17.****Related Party Balances and Transactions**\n\nDuring the years ended December 31, 2024 and 2025, a related party who is a shareholder and director of the Group provided unsecured, interest-free loans to the Group to support its working capital needs. These loans were approved by the board of directors and were made on terms and conditions no less favorable to the Group than those available from unrelated third parties. The outstanding balances of such loans were US$0.2 million and US$0.4 million as of December 31, 2024 and 2025, respectively.\n\nThe Group holds a 4% partnership interest in a privately held investment limited partnership through an equity nominee arrangement with the same related party. As of December 31, 2025, the carrying amount of the long-term investment was US$0.3 million. The related party does not have any economic interest in the partnership interest and holds such interest solely as a nominee for the benefit of the Group. The Group retains all rights to the economic benefits associated with such interest, including rights to profit distributions and proceeds from any disposition.\n\n​\n\nF-37\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**18.**Commitments and contingencies\n\nCommitments\n\nThe Group did not have other significant capital commitments or significant guarantees as of December 31, 2024 and 2025, respectively.\n\nContingencies\n\nManagement records and discloses legal contingencies in accordance with ASC Topic 450, *Contingencies*. The Group establishes reserves for these contingencies at the best estimate, or if no one number within the range of possible losses is more probable than any other, the Group records a liability at the low end of the range of losses. Contingencies affecting the Group primarily relate to legal and regulatory matters, which are inherently difficult to evaluate and are subject to significant changes. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Group monitors the stage of progress of its litigation matters to determine if any adjustments are required. As of December 31, 2025, the Group is a defendant in a lawsuit initiated by a cloud service provider, which seeks the return related to preferential discounts under certain service arrangements, together with any applicable interest and costs. Based on currently available information, management believes the claims lack merit and is unable to reasonably estimate any potential loss, if any. Accordingly, no provision has been recorded in the accompanying consolidated financial statements. While the ultimate outcome cannot be predicted with certainty, management believes that any reasonably possible loss would not be material to the Group’s consolidated financial position, results of operations, or cash flows.\n\n​\n\n**19.**Segment Information\n\nBased on the criteria established by ASC 280 “Segment Reporting”, the Group’s chief operating decision maker (“CODM”) has been identified as the Chairman of the Board of Directors and Chief Technology Officer and Acting Chief Financial Officer, assesses performance and determines resource allocation for the one operating segment based on the consolidated income from operations. The consolidated results regularly provided to the CODM include revenues, significant segment expenses and consolidated income from operations, which are consistent with those reported on the consolidated statements of comprehensive income.\n\nInformation about the Group’s non-current assets is presented based on the geographical location of the assets as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nPRC\n\n​\n\n480,089\n\n​\n\n700,028\n\nUSA\n\n \n\n35,758\n\n​\n\n53,416\n\nTotal\n\n \n\n515,847\n\n​\n\n753,444\n\n​\n\n​\n\nF-38\n\n[Table of Contents](#TOC)\n\nCOOTEK (CAYMAN) INC.\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)\n\n​\n\n**20.****Mainland China Contribution Plan**\n\nFull time employees of the Group in the PRC participate in a government-mandated defined contribution plan, pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The PRC labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions for such employee benefits were US$2,148,785, US$1,394,608 and US$1,035,776 for the years ended December 31, 2023, 2024 and 2025, respectively.\n\n​\n\n**21.**Restricted Net Assets\n\nAs a result of the PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Group. Amounts restricted include paid-in capital, additional paid-in capital and the statutory reserves of the Group’s PRC subsidiaries, affiliates and VIEs. As of December 31, 2025, the total restricted net assets were US$90,992,700.\n\n​\n\n**22.****Subsequent Event**\n\nThe American Depositary Share (“ADS”) program was terminated on January 5, 2026. Following the termination, The Group’s securities are no longer traded in the form of ADSs on a U.S. exchange. The Group continues to evaluate capital markets alternatives and does not expect the termination to have a material adverse impact on its operations or financial position.\n\n​\n\n​\n\nF-39\n\n[Table of Contents](#TOC)\n\nSCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY\n\nCOOTEK (CAYMAN) INC.\n\nCONDENSED BALANCE SHEETS\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of December 31, **\n\n​\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n**ASSETS**\n\n​\n\n  ​\n\n​\n\n  ​\n\n**Current assets:**\n\n \n\n  ​\n\n \n\n  ​\n\nCash and cash equivalents\n\n \n\n245,740\n\n​\n\n1,006\n\nPrepaid expenses and other current assets\n\n \n\n1,670\n\n​\n\n—\n\n**Total current assets**\n\n \n\n247,410\n\n​\n\n1,006\n\nAdvances to subsidiaries and VIEs\n\n \n\n21,908\n\n​\n\n121,376\n\n**TOTAL ASSETS**\n\n \n\n269,318\n\n​\n\n122,382\n\n**LIABILITIES AND SHAREHOLDERS’ DEFICIT**\n\n \n\n  ​\n\n \n\n  ​\n\n**Current liabilities:**\n\n \n\n  ​\n\n \n\n  ​\n\nAccrued expenses and other current liabilities\n\n​\n\n136,353\n\n​\n\n100,571\n\nAccrued salary and benefits\n\n​\n\n250,000\n\n​\n\n170,000\n\nOther current liabilities\n\n \n\n—\n\n​\n\n—\n\n**Total current liabilities**\n\n \n\n386,353\n\n​\n\n270,571\n\nAdvances from subsidiaries and VIEs\n\n​\n\n—\n\n​\n\n—\n\nOther non-current liabilities\n\n​\n\n—\n\n​\n\n—\n\n**TOTAL LIABILITIES**\n\n \n\n386,353\n\n​\n\n270,571\n\n**SHAREHOLDERS’ DEFICIT:**\n\n \n\n  ​\n\n \n\n  ​\n\nOrdinary shares\n\n \n\n48,372\n\n​\n\n48,372\n\nAdditional paid-in capital\n\n \n\n218,379,858\n\n​\n\n218,417,583\n\nAccumulated deficit\n\n \n\n(216,859,796)\n\n​\n\n(216,937,975)\n\nAccumulated other comprehensive loss\n\n \n\n(1,685,469)\n\n​\n\n(1,676,169)\n\nTotal shareholders’ deficit\n\n \n\n(117,035)\n\n​\n\n(148,189)\n\n**TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/ EQUITY**\n\n \n\n269,318\n\n​\n\n122,382\n\n​\n\n​\n\n​\n\nF-40\n\n[Table of Contents](#TOC)\n\nSCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY\n\nCOOTEK (CAYMAN) INC.\n\nCONDENSED STATEMENTS OF OPERATIONS\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n​\n\n**US$**\n\nNet revenues\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\nCost of revenues\n\n \n\n—\n\n​\n\n—\n\n​\n\n—\n\nGross loss\n\n \n\n—\n\n​\n\n—\n\n​\n\n—\n\n**Operating expenses:**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nGeneral and administrative expenses\n\n \n\n(1,468,711)\n\n​\n\n(438,071)\n\n​\n\n(374,879)\n\nResearch and development expenses\n\n \n\n(39,909)\n\n​\n\n(60,297)\n\n​\n\n(24,033)\n\nSales and marketing expenses\n\n \n\n—\n\n​\n\n—\n\n​\n\n—\n\nOther operating income, net\n\n​\n\n136,129\n\n​\n\n136,129\n\n​\n\n40,585\n\nTotal operating expenses\n\n \n\n(1,372,491)\n\n​\n\n(362,239)\n\n​\n\n(358,327)\n\nLoss from operations\n\n \n\n(1,372,491)\n\n​\n\n(362,239)\n\n​\n\n(358,327)\n\nInterest expenses, net\n\n​\n\n(7,490)\n\n​\n\n1,652\n\n​\n\n4,740\n\nFair value change of derivatives\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\nForeign exchange gains (losses), net\n\n \n\n(1)\n\n​\n\n(3)\n\n​\n\n—\n\n**Loss before income taxes and equity in earnings of subsidiaries**\n\n \n\n(1,379,982)\n\n​\n\n(360,590)\n\n​\n\n(353,587)\n\n**Net loss before equity in earnings of subsidiaries**\n\n \n\n(1,379,982)\n\n​\n\n(360,590)\n\n​\n\n(353,587)\n\nEquity in (loss) income of subsidiaries and share of (loss) income from VIEs\n\n \n\n(1,215,959)\n\n​\n\n424,159\n\n​\n\n275,408\n\n**Net (loss) income attributed to CooTek (Cayman) Inc.**\n\n \n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\n​\n\n​\n\n​\n\nF-41\n\n[Table of Contents](#TOC)\n\nSCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY\n\nCOOTEK (CAYMAN) INC.\n\nCONDENSED STATEMENTS OF CASH FLOWS\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**For the years ended December 31, **\n\n​\n\n  ​ ​ ​\n\n**2023**\n\n  ​ ​ ​\n\n**2024**\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n​\n\n**US$**\n\n​\n\n**US$**\n\n \n\n**US$**\n\n**Operating activities:**\n\n​\n\n  ​\n\n​\n\n  ​\n\n​\n\n  ​\n\nNet (loss) income\n\n \n\n(2,595,941)\n\n​\n\n63,569\n\n​\n\n(78,179)\n\nEquity in (income) loss of subsidiaries, VIEs and VIEs’ subsidiaries\n\n \n\n1,215,959\n\n​\n\n(424,159)\n\n​\n\n(275,408)\n\nAdjustment to reconcile net loss to net cash provided by (used in) operating activities:\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nShare-based compensation\n\n \n\n704,565\n\n​\n\n134,560\n\n​\n\n37,725\n\nAmortization of issuance cost and debt discounts related to convertible notes\n\n​\n\n51,797\n\n​\n\n—\n\n​\n\n—\n\nChange in fair value of derivatives\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\nChanges in assets and liabilities:\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nAccrued expenses and other current liabilities\n\n \n\n292,842\n\n​\n\n(741,434)\n\n​\n\n(35,784)\n\nOther receivables, deposits and other assets\n\n​\n\n—\n\n​\n\n1,692\n\n​\n\n1,670\n\nAccrued salary and benefits\n\n​\n\n(138,975)\n\n​\n\n(33,000)\n\n​\n\n(80,000)\n\nOther non-current liabilities\n\n​\n\n(136,129)\n\n​\n\n(35,783)\n\n​\n\n—\n\n**Net cash used in operating activities**\n\n \n\n(605,882)\n\n​\n\n(1,034,555)\n\n​\n\n(429,976)\n\n**Investing activities:**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nAdvances to subsidiaries and VIEs\n\n \n\n(4,819,580)\n\n​\n\n(974,894)\n\n​\n\n(2,136,760)\n\nRepayment of advances to subsidiary\n\n​\n\n6,607,179\n\n​\n\n2,250,000\n\n​\n\n2,322,002\n\n**Net cash provided by investing activities**\n\n \n\n1,787,599\n\n​\n\n1,275,106\n\n​\n\n185,242\n\n**Financing activities:**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\nProceeds from issuance of ordinary shares upon exercise of options\n\n​\n\n—\n\n​\n\n—\n\n​\n\n—\n\nRepayment of convertible notes\n\n​\n\n(1,806,453)\n\n​\n\n—\n\n​\n\n—\n\n**Net cash (used in) provided by financing activities**\n\n \n\n(1,806,453)\n\n​\n\n—\n\n​\n\n—\n\nNet (decrease) increase in cash, cash equivalents and restricted cash\n\n \n\n(624,736)\n\n​\n\n240,551\n\n​\n\n(244,734)\n\nCash, cash equivalents and restricted cash at beginning of year\n\n \n\n629,925\n\n​\n\n5,189\n\n​\n\n245,740\n\nCash, cash equivalents and restricted cash at end of year\n\n \n\n5,189\n\n​\n\n245,740\n\n​\n\n1,006\n\n​\n\n​\n\n​\n\nF-42\n\n[Table of Contents](#TOC)\n\nSCHEDULE I—COOTEK (CAYMAN) INC CONDENSED FINANCIAL STATEMENTS\n\n**Notes to Schedule I**\n\n1. Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.\n\n2. The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries and VIEs and VIEs’ subsidiaries. For the parent company, the Company records its investments in subsidiaries VIEs and VIEs subsidiaries under the equity method of accounting as prescribed in ASC 323, Investments—Equity Method and Joint Ventures.\n\n3. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The footnote disclosures provide certain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements.\n\n4. As of December 31, 2024 and 2025, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company.\n\n​\n\nF-43"}