Transition-Policy risks

Assessment: The state is continuously introducing policies related to environmental protection. Regulators are requiring companies to enhance their disclosure of sustainability information, including climate change, and improve their capacity for sustainability management. This may lead to higher compliance costs for the Company.

Our responses: Follow the trend of policies and laws and regulations in the operation areas, and continuously optimize the development of climate change management system; Engage professional consulting firms to interpret policies and provide guidance on disclosure, thus improving the quality of climate change information disclosure.

Acute physical risks

Assessment: Extreme weather such as typhoons, droughts, floods, temperature extremes caused by climate change may threaten our normal operation, resulting in higher energy consumption and operating expenses.

Our responses: Pay close attention to the early warning of extreme weather events, formulate the Typhoon Emergency Plan and other safety-related plans, and equip all workplaces with anti-typhoon and flood control facilities and equipment to minimize the Company’s risk of fixed asset damage; Establish mechanisms for rapid and effective disaster relief, rescue and emergency response. Organize all employees to conduct fire drills, typhoon emergency drills and other activities organized by the Company. Engage external professional institutions to assist the Company in on-site safety management and safety record management at least once a year in an effort to ensure the safety of people and IT infrastructures and minimize the losses caused by accidents.

Chronic physical risk

Assessment: Rising sea levels could result in the inundation of our office spaces in coastal zones like Xiamen and Shenzhen, potentially flooding our office buildings, IT equipment and other fixed assets. This situation may necessitate repairs to the office building structures, as well as the maintenance, restoration, or substitution of our IT equipment and other fixed assets, which could in turn elevate our capital spending.

Our responses: Regularly inspect the use of equipment, and deploy and maintain facilities to grapple with extreme weather, such as backup power supply; Increase the proportion of cloud services, and protect important data through off-site backup and cross-device backup; Add flood control design of building structures, such as use of waterproof boxes, barriers, coating and other means.

Energy opportunity

Assessment: The application of energy-saving measures/technologies enables the Company to lower energy consumption in the course of operation, thus reducing operating expenses.

Our responses: The Company will plan to increase the proportion of renewable energy use if the purchase cost of energy-consuming equipment is controllable in the course of operation. The Company has already transitioned its entire fleet of commuter vehicles to electric vehicles. Moving forward, we will explore the possibility of deploying distributed energy projects and other initiatives to expand the use of renewable energy, while also ramp up our investment in the R&D of clean energy.

The Company will further invest in upgrading servers and office equipment if the purchasing cost of green electronic equipment is controllable. This includes incorporating more energy-efficient hardware, such as high-efficiency CPUs and low-power graphics cards, to reduce energy consumption during equipment operation.

Reducing energy consumption

· Energy conservation awareness campaigns: The Company guides employees to reduce energy waste by monitoring electricity consumption data, posting energy-saving slogans and providing information reminders (such as reminders to shut down office computers).

· Enhancing equipment energy efficiency: The Company optimized the layout of the computer room and virtualization technology to improve cooling efficiency; we adopted an intelligent temperature control system to achieve precise control of air conditioning. At the same time, we cooperated with cloud service providers to promote green technology innovation.

· Energy-saving inspections: Patrol office areas regularly to check whether air conditioners and lighting are turned off and reduce unnecessary electricity use.

· Promoting green procurement: Prioritize low-energy consumption equipment, energy efficiency certified cloud services, and office supplies and recycled material furniture that meet Energy Star, FSC/PEFC certifications.

· Low-carbon office:

(1)Promote the online approval platform, which will handle 462,171 orders in total by 2024, covering 1.06 million people, and significantly reduce paper consumption.

(2)Promote online meetings to reduce carbon emissions from business trips.

(3)Use electric vehicles as shuttle buses and dynamically adjust the number of buses to improve energy efficiency.

Strengthening water resource management

The Company has actively adopted a series of effective water resource management measures.

· The Company has established a strict inspection system, which requires regular inspection of sanitary ware and valves in areas such as restrooms and pantries. By doing so, leaky water equipment can be found and repaired in time, avoiding water resource waste.

· The Company conducts internal training and awareness campaigns to encourage them to develop water-saving habits in their daily work.

· The wastewater generated by the Company is discharged into the municipal sewage network and is properly treated by relevant departments in compliance with regulations. The Company faces no issues with water intake, as it is primarily supplied by the municipal government.

Environmental key performance indicators

The Company’s GHG emissions and resource consumption for 2024 are presented below:

Waste management

The Company adopts refined waste management practices, strictly controlling waste generation and ensuring that all types of non-hazardous and hazardous waste can be properly disposed of.

· Garbage classification: The Company places sorting bins to encourage employees to classify non-hazardous waste. Sorted waste will be collected and handed over to the municipal waste disposal departments by the property management for recycling and disposal.

· Office waste disposal: Hazardous waste such as discarded toner cartridges and ink cartridges generated by the Company's office printing equipment are uniformly handed over to qualified recyclers for recycling and disposal; the company cooperates with professional electronic waste recycling suppliers to hand over scrapped hard drives and electronic components to third parties for proper disposal.

Ecosystems and biodiversity conservation

In June 2024, G-bits partnered with the China Green Carbon Foundation to launch the “Protect the Yangtze Finless Porpoise” public welfare campaign, and donated RMB 200 thousand to the fund for the purchase of a brand-new patrol boat, supporting the protection of the Yangtze finless porpoise in Poyang Lake, Jiangxi. In 2024, the funds and the patrol boat donated by the Company have effectively assisted the patrol team in protecting the 1,667 Yangtze finless porpoises in Poyang Lake.

The yacht and related honorary certificates donated by G-bits to Poyang Lake patrol team

The Company’s licensed games Funny Fighters: Battle Royale and Lost Castle carried out joint public welfare activities for finless porpoise protection to convey the importance of protecting the ecology to players. The cumulative number of players participating in the porpoise protection public welfare campaign in the two games exceeded 440 thousand, and more than 310 thousand players claimed the highest task reward, “China Green Carbon Foundation Cooperative Commemorative Porpoise Props”. This project was selected as one of the “2024 Typical Cases of Game Public Welfare” by People’s Daily.

Poster of the Lost Castle for the public welfare joint activity of finless porpoise protection

Measures Related to Circular Economy

· Promoting reusable tableware: in 2024, the cumulative reuse of melamine and stainless-steel tableware amounted to 412.9 thousand times.

· Shared stationery by setting up a public stationery station;

· Encouraging double-sided printing and paper reuse;

· Repurposing idle items.

Measures Related to Recycling of Waste Materials

· Organize regular in-house sales of idle furniture to provide benefits for employees in need;

· Establish the Company’s online group of used-items trade to fully circulate and utilize idle goods;

· Set up a free-sharing area where excess goods/food are shared among employees to avoid waste.

The Company held the “Recycle for Green” Philanthropy and Environmental Protection Festival in October 2024, inviting all employees to participate. The activities mainly include idle book recycling and used-items exchange, and awarded the “Aurora” virtual medals to all employees who completed all activities.

In 2024, the Company had invested a total of RMB 998.5 thousand in the field of rural revitalization, benefiting nearly 51 thousand people.

Supporting rural infrastructure construction

In September 2024, the Company donated 173 street lights worth a total of RMB 300 thousand to Fuquan Town, Yantan District, Zigong City, Sichuan Province. The project has effectively improved local street lighting conditions, benefiting community residents in several villages.

Street lights donated to Fuquan Town, Yantan District, ZigongCity, Sichuan Province

Contributing Assisting rural revitalization

In June 2024, the Company participated in the “Pomegranate Seed Project” Public Welfare Donation, and donated 69 steel-wood doors and 4 Canon photocopiers to Qiaoda Township Primary School and Bashlak Village Primary School in Pishan County, Hotan Region, Xinjiang Uygur Autonomous Region, with a total donation of RMB 98 thousand. These facilities provide a safer and more comfortable learning and teaching environment for local teachers and students.

Facilities donated during the "Pomegranate Seed Project" student support event

In October 2024, the Company donated 6 sets of multimedia teaching equipment, valued at RMB 88.8 thousand, to 208 students across 6 classes of Kalong Township Primary School in Tibetan Autonomous Prefecture of Garzê, Sichuan Province. The donation effectively enhanced the digital teaching standard of the school, providing students with a better learning environment.

Multimedia teaching equipment donated to Kalong Township Primary School

in Tibetan Autonomous Prefecture of Garze, Sichuan Province

Supporting rural education

For years, the Company has consistently provided One-on-one financial support to primary and secondary school students who demonstrate strong academic performance but come from financially disadvantaged families, helping them complete their studies. By the end of 2024, the Company has cumulatively sponsored 9 students from Fushun County and Rongxian County of Zigong City, Sichuan Province, with funding allocated for purchasing school supplies, covering tuition fees, and supporting daily living expenses, effectively alleviating the financial burden on beneficiary families. The Company arranges regular visits to track the students' learning and progress, ensuring that the funds provided are truly impactful.

Caring for vulnerable groups

In September 2024, the Company donated RMB 88 thousand to the Beijing Ihearu Charity Fund to support the construction of 4 cognitive learning centers, which provide hearing-impaired children with teaching aids such as picture books and audio materials for speaking and reading.

In 2024, the Company donated RMB 74 thousand of welfare supplies to the “Food Bank of Love” at Jialian Street, Xiamen City, aimed at providing support for the disadvantaged groups.

Supporting children’s growth

In 2024, the Company collaborated with the Beijing All in One Foundation to promote the girl protection project, with a total investment of RMB 88.8 thousand. The project reached 75 primary schools in Henan, Shandong, Shaanxi, Guangdong, Guizhou and Xinjiang, and established the “Spring Bud Program” with Girl Protection courses. As of the end of the Reporting Period, a total of 618 courses had been delivered, benefiting 29,353 students.

"Spring Bud Program" with Girl Protection courses

In 2024, the Company joined hands with the Blue Letter Care Center for Left-behind Children to launch the “Village Children’s Pen Pal Program”. By donating RMB 100 thousand and calling on employees to participate in volunteer services, it supported 371 rural children in Guangdong Province, Sichuan Province and other places to receive letter psychological companionship services, caring for the mental health of rural children.

Promotional activities of the "Blue Letter Pen Pal Progranm"

On the occasion of Children's Day in 2024, the company donated RMB 100 thousand for the "Children's Book Donation Plan", sending a total of 5,500 new books for primary school students to 10 township schools and 1 community public library; the Company's employees also went to Dongyao Primary School in Dongcheng Town, Xinxing County, Yunfu City, Guangdong Province as volunteers to participate in the reading experience day activities with all the teachers and students of the school and share the joy of reading with the children. The project was selected as one of the “2024 Typical Cases of Game Public Welfare” by People's Daily.

Children's book donation and reading experience day

Natural disaster relief

In 2024, many places in the south continued to experience heavy rainfall, floods and geological disasters. The Company closely followed the progress of the disaster and donated materials with a total value of RMB 710,000 for rescue work in Meizhou, Guangdong, Wuping, Fujian, Zhenyuan, Guizhou, Pingjiang, Hunan, Dianjiang, Chongqing, etc. Among them, RMB 210,000 worth of desks and chairs were donated to the disaster-stricken schools in Zhenyuan, Guizhou to support the school's post-disaster reconstruction.

Delivery of relief supplies

Enhancing the protection mechanism for minors in online games

The Company takes proactive steps to establish and continuously refine the protection mechanism for minors in online games, improving the efficiency of both machine and manual identification. Strict measures are implemented to address issues such as online bullying and internet addiction, preventing the dissemination of content that may be harmful to the physical and mental well-being of minors, including vulgar and violent material.

During key periods such as student vacations in 2024, the Company has carried out 6 special campaigns to combat improper online language, illegal external links to unlawful information, and grandstanding behaviors of online content creators.

Optimize the real-name authentication and anti-addiction system of the operation platform

Enhancing the parental guardian platform

The Company continues to enhance development of the parental guardian platform, ensuring the supervision of minors’ game behavior.

The parental guardian platform

Clear channels for minor complaints and reports

The Company consistently intensifies efforts in safeguarding minors, further refining the development of user service areas, and the mechanisms for complaints and reports. Dedicated channels have been established to facilitate minors’ complaints and reports. The Company has made public a specific email address for complaints and reports related to minors (gmweicn@leiting.com) on the game website. Additionally, a designated “Reports Involving Minors” page/menu option has been set up on the official account of the Leiting Game Service Center on WeChat. This underscores our unwavering commitment to a “zero-tolerance” stance against issues that compromise the legitimate rights and interests of minors.

Guidelines for minors-related reporting on the official website of Leiting Games

“E-Protection for Minors: Building a Safer Digital Future” initiative by Cyberspace Administration of Shenzhen

In November 2024, the Company was invited to participate in the “E-Protection for Minors: Building a Safer Digital Future” - the 2024 Fair on Online Protection for Minors in Shenzhen, jointly organized by Cyberspace Administration of Shenzhen, Shenzhen Women’s Federation, and Shenzhen Commission of Spiritual Civilization.

As a corporate representative, the Company delivered a speech introducing the minors protection framework and related public welfare initiatives, which was recognized by Cyberspace Administration of Shenzhen.

The 2024 Fair on Online Protection for Minors in Shenzhen

G-bits Game Developer Contest

The Company has organized the G-bits Game Developer Contest for six consecutive years. With a global perspective and professional guidance, this contest invited core game developers as team leader and provided opportunities for offline game trial opportunities, providing a platform for university developers to show their talents and exchange their ideas.

In 2024, over 2,000 developers from over 600 universities worldwide participated in the contest, with more than 300 creative game works submitted. Among them, 143 participants were from international locations, covering 13 countries, including top international institutions such as New York University and University of Southern California.

G-bits Game Developer Contest

G-bits & University Game Development Alliance

Since 2021, G-bits has established the G-bits & University Game Development Alliance, an organization for learning and exchanging among college game development enthusiasts. It provides students with systematic learning resources and professional guidance, helping young developers enhance their skills and industry knowledge. The alliance regularly organizes activities such as live course broadcasts, summer game development practical training, University Game Jam challenge, and invited industry experts and experienced producers to exchange and share views. In addition, the alliance provides resource support for university game culture ecosystem by sponsoring 14 game societies from universities such as Huazhong University of Science and Technology, Shenzhen University and Northeastern University.

In 2024, the alliance organized over 40 live course broadcasts, with members exceeding 6,000, covering nearly 600 universities and involving 120 university societies.

Student work from practical training under G-bits & University Game

Development Alliance Game Education Campaign

College Game Developer Salons

In 2024, the Company has organized a series of college game developer salons in Wuhan, Beijing, Shenzhen, Xiamen and Chengdu. These events were designed to build an offline interactive platform, offering college game developers opportunities to showcase their works, conduct games trial, and engage in industry exchanges. The events invited the Company's frontline producers, senior R&D experts, executives and school recruiters to share insights on game development, industry trends and career planning, helping young developers improve their professional abilities and drive game innovation.

College Game Developer Salons

Enterprise Open Day

In 2024, the Company held a corporate open day event, inviting college teachers and students interested in the game industry to G-bits and get a deeper understanding of the ecology of the game industry. The event included professional sharing sessions and interactive game trials, providing young groups with industry insight and practice opportunities, thereby helping to build the industry talent pipeline.

Enterprise open day visiting activity in Guangdong University off Technology and Harbin Institute of Technology

The Company abides by the requirements of the Rules of Procedure of the Board of Directors and the Working Rules of the Strategy Committee of the Board of Directors. On this basis, the Company has clearly stipulated that the Strategy Committee of the Board of Directors is responsible for overseeing and inspecting the implementation of the Company's ESG Working Group, providing guidance when necessary, reviewing the Company's ESG report, ESG-related policies and other major ESG-related matters, conducting research on ESG governance and providing decision-making advice to the Board of Directors, including ESG governance vision, goals and policies. The ESG Working Group is primarily responsible for developing the ESG work implementation plan and coordinating the assessment and management of ESG risks and opportunities.

G-bits strictly adheres to the Interim Provisions on Banning Commercial Bribery and relevant laws and regulations. In addition, the Company has established internal policies such as the Code of Ethical Business Conduct(hereinafter referred to as "Code of Ethical Business Conduct"), the Anti-Fraud Regulations, the Code of Integrity, and the Gift Acceptance Policy. With these regulations, the Company is committed to upholding business ethics in its daily operations and external collaborations, strictly prohibits bribery, corruption, and fraudulent activities, and effectively control risks to foster a culture of integrity, ensuring the Company’s stable, healthy, and sustainable development.

To prevent business ethics risks such as bribery and corruption, G-bits has established a three-tier defense system comprising the Audit Committee of the Board of Directors, the Audit Department, and relevant business units. The system ensures the full implementation of the Company’s business ethics compliance and the effective enforcement of the Code of Ethical Business Conduct. The Audit Department regularly assesses and reviews compliance operations and fulfilment of the Code of Ethical Business Conduct under the guidance of the Audit Committee of the Board of Directors, and performs business ethics audits of the Company and all its subsidiaries. The Company ensures that the audit of the Code of Ethical Business Conduct covers all business areas of the Company and all its holding subsidiaries every three years.

Development of data security system

The Company has established a dedicated cybersecurity leadership team led by the Chairman and General Manager. This team is responsible for overseeing and making strategic decisions on the Company's data security and privacy protection, ensuring that all operational practices comply with domestic and international regulatory requirements. The Company adopts a tiered management model. Team members hold authoritative certifications in the security field, such as Certified Information Security Professional (CISP), Certified Information Security Assurance Worker (CISAW), Certified for Information System Security Professional (CISSP), Certified Cyber Security Response Professional (CCSRP), Certified Information Security Professional - Penetration Test Engineer (CISP - PTE), and ISO 27001 Information Security Management System Auditor.

Under this model, departments such as the Security Department, the Technology Platform Department, and the Information Technology Center perform their respective duties, and the safety and quality center, customer service team and legal team work in close collaboration to build a full-chain security management system. This ensures that the Company operates in a legal and compliant manner. The Company strengthens the implementation of data security responsibilities of the team through a performance appraisal mechanism, promoting standardized security management. The Company possesses extensive industry background and professional qualifications in data security and customer privacy protection. The Chairman and General Manager has been deeply engaged in the game industry for many years, ensuring a systematic approach to security management from strategic decision-making to execution.

Building a holistic data security framework

The Company classifies and manages data based on its type and importance, developing dedicated security strategies to ensure data security throughout its lifecycle.

Data Collection

The Company rigorously adheres to the Information Security Technology - Basic Requirements for Collecting Personal Information in Mobile Internet Applications (Apps) (GB/T 41391-2022) to ensure compliant and transparent data collection. In addition, any unnecessary data collection is strictly prohibited. Before collecting user privacy data, clear notification shall be provided, specifying the data type, purpose, and destruction method. Additionally, users are granted the right to independently access, modify, or delete their personal information. Adhering to the principle of collecting user information on a legal, open and minimal basis, the Company minimizes the data collection and storage.

Data Transmission

The Company has deployed anti-DDos servers, WAF (Web Application Firewall) and traffic monitoring system to identify and intercept abnormal traffic and prevent hacking in real time. The Company ensures data safety, intactness and confidentiality by encrypting the transmission channels and restricting accesses.

Data Processing

The Company always desensitizes users' personal information, strictly limits the usage of users’ information, and collectively archives it after use. To better ensure the security of data processing, the Company has set up role-based limits according to the actual business, maximizing the security of private data. For instance, the R&D personnel in charge of coding encryption and decryption programs are denied direct access to the encrypted database, the key to which is kept by the O&M personnel.

Data Storage

Taking seriously the encrypted storage of sensitive personal information and access control, the Company adopts different storage strategies for different information based on types and privacy levels, continuously enhancing its capabilities in encrypted storage, data backup and recovery. To better encrypt and store user data, the Company has adopted the secure encryption algorithm and the key mechanism. The encryption algorithm and keys are managed separately by different departments to ensure that the data cannot be decrypted and analyzed by any single party.

Data Usage and Sharing

The Company discloses the purpose and method of the using user’s personal information in the user privacy policy, limits the use to the scope necessary for the operation of the product, and obtains the consent of the player. At the same time, the internal personnel of the Company must comply with the relevant rules when accessing data, as follows:

Data Destruction

The Company has established a strict data destruction process in line with regulations. We conduct regular checks and destroy, or anonymize expired data, securing the holistic approach for data security management, and effectively eliminating residual risks.

Protection of employee rights and  interests

Fair recruitment：The Company always upholds the principle of fair and just employment when recruiting talent. In particular, the Company does not tolerate any form of discrimination in employment, and is committed to creating an inclusive and fair workplace for employees regardless of gender, nationality, age, race, ethnicity, religion, sexual orientation, family status and disability.

Anti-discrimination and unfair competition: Following a zero-tolerance attitude for discrimination and unfair competition in any form, G-bits is committed to creating a safe, equal and diversified working environment for all employees.

Anti-harassment: The Company maintains  a zero-tolerance policy towards workplace harassment in any form, including but not limited to offenses, abuse, gender-based or race-based disparagement and sexual harassment.

Maintenance of smooth communication channels

G-bits strives to establish diverse communication channels for employees. Any employee can give feedback on management opinions and suggestions at any time, which will be followed up and resolved by the human resources and corporate culture management personnel in time.

"Founder Meetup" events：All employeescan ask questions, provide opinions, or make suggestions at any time. In 2024, the Company held a total of 5 “Founder Meetup” activities, with 334 questions collected and addressed.

"Little G Listening" cultural interview activities：The Company regularly invites employees to participate in “Little G Listening” interview activities. By listening to the employees’ voices, the Company understands their opinions and concerns, and strives to develop an open and free culture for employees. We adopt the “active + passive” approach to build a communication platform through multiple channels at different levels and in all aspects, encouraging employees to communicate sincerely with the Company, and to put forward reasonable suggestions for the Company's management and development. In 2024, the Company conducted a total of 5 batches of “Little G Listening” cultural interviews, with 50 participants.

Corporate culture group meetings：The Company regularly holds group meetings to convey the connotation of corporate culture and help employees have a clearer understanding of the values of the corporate culture through the display and discussion of typical cases. In 2024, the Company organized a total of 5 corporate culture group meetings, with 103 participants.

Employee welfare

The company provides all employees with benefits and care in respect of health, life and financial support to help them better maintain work-life balance.

Talent cultivation

G-bits places significant emphasis on the development of each employee, continually refining its training mechanisms. We have different types of training for employees like professional competence training, graduate training, leadership training, among others. Such training may take various forms, such as a combination of “Internal + External” and “Online + Offline” courses. In 2024, we organized a total of 94 employee training sessions, with a total duration of 334 hours. The cumulative number of participants reached 4,927, covering 100% of the employees.