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Chaince Digital Holdings Inc.

Chaince Digital Holdings Inc.CD決算レポート

Nasdaq

What changed in Chaince Digital Holdings Inc.'s 20-F — 2023 vs 2024

Top changes in Chaince Digital Holdings Inc.'s 2024 20-F

860 paragraphs added · 568 removed · 341 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

79 edited+77 added−12 removed224 unchanged
The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on a number of factors, including: ● market conditions of, and overall sentiment towards, crypto assets and the cryptoeconomy, including, but not limited to, as a result of actions taken by or developments of other companies in the cryptoeconomy; ● changes in liquidity, market-making volume and trading activities; ● trading activities on other crypto platforms worldwide, many of which may be unregulated, and may include manipulative activities; ● investment and trading activities of highly active consumer and institutional users, speculators, miners and investors; ● the speed and rate at which crypto is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument or other financial assets worldwide, if at all; ● decreased user and investor confidence in crypto assets and crypto platforms; ● negative publicity and events relating to the cryptoeconomy; ● unpredictable social media coverage or “trending” of, or other rumors and market speculation regarding crypto assets; ● the ability for crypto assets to meet user and investor demands; 16 ● the functionality and utility of crypto assets and their associated ecosystems and networks, including crypto assets designed for use in various applications; ● consumer preferences and perceived value of crypto assets and crypto asset markets; ● increased competition from other payment services or other crypto assets that exhibit better speed, security, scalability or other characteristics; ● regulatory or legislative changes and updates affecting the cryptoeconomy; ● the characterization of crypto assets under the laws of various jurisdictions around the world; ● the adoption of unfavorable taxation policies on crypto asset investments by governmental entities; ● legal and regulatory changes affecting the operations of miners and validators of blockchain networks, including limitations and prohibitions on mining activities, or new legislative or regulatory requirements as a result of growing environmental concerns around the use of energy in bitcoin and other proof-of-work mining activities; ● ongoing technological viability and security of crypto assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; ● monetary policies of governments, trade restrictions and fiat currency devaluations; and ● national and international economic and political conditions.
The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on a number of factors, including: ● market conditions of, and overall sentiment towards, crypto assets and the cryptoeconomy, including, but not limited to, as a result of actions taken by or developments of other companies in the cryptoeconomy; ● changes in liquidity, market-making volume and trading activities; ● trading activities on other crypto platforms worldwide, many of which may be unregulated, and may include manipulative activities; ● investment and trading activities of highly active consumer and institutional users, speculators, miners and investors; ● the speed and rate at which crypto is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument or other financial assets worldwide, if at all; ● decreased user and investor confidence in crypto assets and crypto platforms; ● negative publicity and events relating to the cryptoeconomy; ● unpredictable social media coverage or “trending” of, or other rumors and market speculation regarding crypto assets; ● the ability for crypto assets to meet user and investor demands; 17 ● the functionality and utility of crypto assets and their associated ecosystems and networks, including crypto assets designed for use in various applications; ● consumer preferences and perceived value of crypto assets and crypto asset markets; ● increased competition from other payment services or other crypto assets that exhibit better speed, security, scalability or other characteristics; ● regulatory or legislative changes and updates affecting the cryptoeconomy; ● the characterization of crypto assets under the laws of various jurisdictions around the world; ● the adoption of unfavorable taxation policies on crypto asset investments by governmental entities; ● legal and regulatory changes affecting the operations of miners and validators of blockchain networks, including limitations and prohibitions on mining activities, or new legislative or regulatory requirements as a result of growing environmental concerns around the use of energy in bitcoin and other proof-of-work mining activities; ● ongoing technological viability and security of crypto assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; ● monetary policies of governments, trade restrictions and fiat currency devaluations; and ● national and international economic and political conditions.
Any such inabilities or inadequacies could have a material adverse effect on our business, operating results, or financial condition. We may be unable to competitively engage in further distributed storage and computing services, business consultation services, financial advisory services and securities brokerage services activities, if we cannot attract or retain employees and/or consultants who have expertise in these fields.
Any such inabilities or inadequacies could have a material adverse effect on our business, operating results, or financial condition. 12 We may be unable to competitively engage in further distributed storage and computing services, business consultation services, financial advisory services and securities brokerage services activities, if we cannot attract or retain employees and/or consultants who have expertise in these fields.
Our Cayman Islands counsel has advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States, a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment: ● is given by a foreign court of competent jurisdiction; 28 ● imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; ● is final and conclusive; ● is not in respect of taxes, a fine or a penalty; ● is not inconsistent with a Cayman Islands judgment in respect of the same matter; and ● is not impeachable on the grounds of fraud and was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands You should also read “Item 10.
Our Cayman Islands counsel has advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States, a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment: ● is given by a foreign court of competent jurisdiction; 32 ● imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; ● is final and conclusive; ● is not in respect of taxes, a fine or a penalty; ● is not inconsistent with a Cayman Islands judgment in respect of the same matter; and ● is not impeachable on the grounds of fraud and was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands You should also read “Item 10.
Any delisting from The Nasdaq Capital Market and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to stockholders caused by our issuing equity in financing or other transactions.
Any delisting from Nasdaq and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to stockholders caused by our issuing equity in financing or other transactions.
Pursuant to the Implementation Rules of the Administrative Measures on Individual Foreign Exchange, or the Individual Foreign Exchange Rules, promulgated by SAFE on January 5, 2007 and amended on May 2016, a relevant guidance issued by SAFE in March 2007 and Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or the Stock Option Rules, on February 15, 2012 that replaces the guidance issued in March 2007, PRC citizens who are granted shares or share options by an overseas-listed company according to its employee share option or share incentive plan are required, through the PRC subsidiary of such overseas-listed company or other qualified PRC agents selected by such PRC subsidiary, to register with SAFE and complete certain other procedures related to the share option or other share incentive plan.
Pursuant to the Implementation Rules of the Administrative Measures on Individual Foreign Exchange, or the Individual Foreign Exchange Rules, promulgated by SAFE on January 5, 2007 and amended on May 2016, a relevant guidance issued by SAFE in March 2007 and Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or the Stock Option Rules, on February 15, 2012 that replaces the guidance issued in March 2007, PRC citizens who are granted shares or share options by an overseas-listed company according to its employee share option or share incentive plan are required, through the PRC subsidiaries of such overseas-listed company or other qualified PRC agents selected by such PRC subsidiaries, to register with SAFE and complete certain other procedures related to the share option or other share incentive plan.
Our PRC subsidiaries generate essentially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiary to use their Renminbi revenues to pay dividends to us.
Our PRC subsidiaries generate essentially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use their Renminbi revenues to pay dividends to us.
Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. 13 The enactment of legislation imposing moratoriums on issuing permits for certain cryptocurrency mining operations that use carbon-based power sources and similar laws could adversely impact our business, operating results and financial condition.
Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. 14 The enactment of legislation imposing moratoriums on issuing permits for certain cryptocurrency mining operations that use carbon-based power sources and similar laws could adversely impact our business, operating results and financial condition.
Risks Relating to Our Ordinary Shares ● The trading price of our shares could be volatile, which would result in substantial losses to investors. ● Substantial future sales of our shares in the public market, or the perception that these sales could occur, could cause our share price to decline. ● If we fail to maintain the Nasdaq minimum market value of publicly held shares, minimum bid requirements or minimum stockholder equity standard, our shares could be delisted. ● We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies. ● As a foreign private issuer, we are permitted to, and we plan to, rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors.
Risks Relating to Our Ordinary Shares ● The trading price of our shares could be volatile, which would result in substantial losses to investors. ● Substantial future sales of our shares in the public market, or the perception that these sales could occur, could cause our ordinary share price to decline. ● If we fail to maintain the Nasdaq minimum market value of publicly held shares, minimum bid requirements or minimum stockholder equity standard, our shares could face the risk of being delisted. ● We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies. ● As a foreign private issuer, we are permitted to, and we plan to, rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors.
Any security incident resulting in a compromise of crypto assets could result in substantial costs to us, expose us to regulatory enforcement actions, limit our ability to provide services, subject us to litigation, significant financial losses, damage our reputation and adversely affect our business, operating results, financial condition, and cash flows. 18 The theft, loss or destruction of private keys required to access any crypto assets held in custody for our own account may be irreversible.
Any security incident resulting in a compromise of crypto assets could result in substantial costs to us, expose us to regulatory enforcement actions, limit our ability to provide services, subject us to litigation, significant financial losses, damage our reputation and adversely affect our business, operating results, financial condition, and cash flows. 19 The theft, loss or destruction of private keys required to access any crypto assets held in custody for our own account may be irreversible.
Due to our very limited customer base, any of the following events may cause a material decline in our revenue and have a material adverse effect on our results of operations: ● reductions, delays or cessation of purchases from the existing customers; 9 ● loss of any of our existing customers and our inability to find new customers that can generate the same volume of business; and ● Any of the existing customer’s failure to make timely payment for our services; and ● We are unable to offer services that attract new customers from existing customers.
Due to our very limited customer base, any of the following events may cause a material decline in our revenue and have a material adverse effect on our results of operations: ● reductions, delays or cessation of purchases from the existing customers; 11 ● loss of any of our existing customers and our inability to find new customers that can generate the same volume of business; and ● Any of the existing customer’s failure to make timely payment for our services; and ● We are unable to offer services that attract new customers from existing customers.
While detailed interpretation of or implementation rules under Article 177, the Article 26 and the Article 11 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. 24 It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
While detailed interpretation of or implementation rules under Article 177, the Article 26 and the Article 11 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. 28 It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
To the extent we have not complied with such laws, rules and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and services, reputational harm and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results and financial condition. 14 Our operating results may fluctuate and continue to fluctuate, including due to the highly volatile nature of crypto.
To the extent we have not complied with such laws, rules and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and services, reputational harm and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results and financial condition. 15 Our operating results may fluctuate and continue to fluctuate, including due to the highly volatile nature of crypto.
Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. 25 If we fail to maintain the Nasdaq minimum market value of publicly held shares, minimum bid requirements or minimum stockholder equity standard, our shares could face the risk of being delisted.
Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. 29 If we fail to maintain the Nasdaq minimum market value of publicly held shares, minimum bid requirements or minimum stockholder equity standard, our shares could face the risk of being delisted.
We have revised the number of ordinary shares amounts in the revised consolidated statements for the year ended December 31, 2022 and 2021, to retroactively present our 1-for-400 share consolidation in February 2023 back to the earliest period presented as stipulated in SAB 4C. 4 Consolidated Balance Sheet Data The following table presents our key financial data extracted from the consolidated balance sheet as of December 31, 2023 and 2022.
We have revised the number of ordinary shares amounts in the revised consolidated statements for the year ended December 31, 2022, to retroactively present our 1-for-400 share consolidation in February 2023 back to the earliest period presented as stipulated in SAB 4C. 4 Consolidated Balance Sheet Data The following table presents our key financial data extracted from the consolidated balance sheet as of December 31, 2024 and 2023.
As a result of these factors, it is difficult for us to forecast growth trends accurately and our business and future prospects are difficult to evaluate, particularly in the short term. 15 Fluctuations in Filecoin value might impact our operating results and add to our regulatory compliance obligations under applicable law and regulation, including the Investment Company Act of 1940.
As a result of these factors, it is difficult for us to forecast growth trends accurately and our business and future prospects are difficult to evaluate, particularly in the short term. 16 Fluctuations in Filecoin value might impact our operating results and add to our regulatory compliance obligations under applicable law and regulation, including the Investment Company Act of 1940.
Failure by such shareholders or beneficial owners to comply with SAFE Circular 37, or failure by us to amend the foreign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.
Failure by such shareholders or beneficial owners to comply with SAFE Circular 37, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.
Failure to comply with the registration procedures of Circular 37 could result in the penalties including the imposition of restrictions on the ability of SPV’s PRC subsidiaries to dividends to its overseas parent company. 23 It remains unclear how this regulation and any future related legislation will be interpreted, amended and implemented by the relevant PRC government authorities.
Failure to comply with the registration procedures of Circular 37 could result in the penalties including the imposition of restrictions on the ability of SPV’s PRC subsidiaries to dividends to its overseas parent company. 27 It remains unclear how this regulation and any future related legislation will be interpreted, amended and implemented by the relevant PRC government authorities.
We expect these rules and regulations to continue to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. Complying with these rules and requirements could be especially difficult and costly for us because we might have difficulty locating sufficient personnel in China with experience and expertise relating to U.S.
We expect these rules and regulations to continue to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. Complying with these rules and requirements could be especially difficult and costly for us because we might have difficulty locating sufficient personnel with experience and expertise relating to U.S.
If we were to lose any of our customers, or if the volume of business with such customers were to decrease, or if we are unable to offer services that attract new customers from existing customers, our business, financial condition and results of operations may be materially and adversely affected. ● Certain crypto assets and cryptocurrencies have been identified as a “security” in certain jurisdictions, and we may be subject to regulatory scrutiny, inquiries, investigations, fines and other penalties, which may adversely affect our business, operating results and financial condition. ● As we acquire, dispose of or restructure our businesses, product lines, and technologies, we may encounter unforeseen costs and difficulties that could adversely affect our financial performance. ● We may be unable to competitively engage in further distributed storage and computing services, Business consultation services, financial advisory services and securities brokerage services activities, if we cannot attract or retain employees and/or consultants who have expertise in these fields. ● Any harm to our Mercurity brand or reputation may materially and adversely affect our business and results of operations. ● We have a history of operating losses, and we may report additional operating losses in the future. ● If we are unable to conduct adequate and cost-effective marketing activities, our results of operations and financial condition may be materially and adversely affected. ● If our senior management is unable to work together effectively or efficiently or if we lose their services, our business may be severely disrupted. ● We have limited insurance coverage and could incur losses resulting from liability claims or business interruptions. ● We are subject to changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that may increase both our operating costs and the risk of non-compliance. ● We have failed to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may be adversely impacted. ● The enactment of legislation imposing moratoriums on issuing permits for certain cryptocurrency mining operations that use carbon-based power sources and similar laws could adversely impact our business, operating results and financial condition. 6 ● Blockchain mining activities are energy-intensive, which may restrict the geographic locations of miners and have a negative environmental impact. ● Environmental concerns associated with cryptocurrencies mining could have adverse impacts on our business, financial condition, and results of operations. ● We are subject to an extensive, highly evolving and uncertain regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. ● Our operating results may fluctuate and continue to fluctuate, including due to the highly volatile nature of crypto. ● Fluctuations in Filecoin value might impact our operating results and add to our regulatory compliance obligations under applicable law and regulation, including the Investment Company Act of 1940. ● Our revenue is partially dependent on the prices of crypto assets.
If we were to lose any of our customers, or if the volume of business with such customers were to decrease, or if we are unable to offer services that attract new customers from existing customers, our business, financial condition and results of operations may be materially and adversely affected. ● As we acquire, dispose of or restructure our businesses, product lines, and technologies, we may encounter unforeseen costs and difficulties that could adversely affect our financial performance. ● We may be unable to competitively engage in further distributed storage and computing services, Business consultation services, financial advisory services and securities brokerage services activities, if we cannot attract or retain employees and/or consultants who have expertise in these fields. ● Any harm to our Mercurity brand or reputation may materially and adversely affect our business and results of operations. ● We have a history of operating losses, and we may report additional operating losses in the future. ● If we are unable to conduct adequate and cost-effective marketing activities, our results of operations and financial condition may be materially and adversely affected. ● If our senior management is unable to work together effectively or efficiently or if we lose their services, our business may be severely disrupted. ● We have limited insurance coverage and could incur losses resulting from liability claims or business interruptions. ● We are subject to changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that may increase both our operating costs and the risk of non-compliance. ● We have failed to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may be adversely impacted. ● The enactment of legislation imposing moratoriums on issuing permits for certain cryptocurrency mining operations that use carbon-based power sources and similar laws could adversely impact our business, operating results and financial condition. 6 ● Blockchain mining activities are energy-intensive, which may restrict the geographic locations of miners and have a negative environmental impact. ● Environmental concerns associated with cryptocurrencies mining could have adverse impacts on our business, financial condition, and results of operations. ● We are subject to an extensive, highly evolving and uncertain regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. ● Our operating results may fluctuate and continue to fluctuate, including due to the highly volatile nature of crypto. ● Fluctuations in Filecoin value might impact our operating results and add to our regulatory compliance obligations under applicable law and regulation, including the Investment Company Act of 1940. ● Our revenue is partially dependent on the prices of crypto assets.
If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying crypto assets; 17 ● security issues, bugs and software errors have been identified with many crypto assets and their underlying blockchain networks, some of which have been exploited by malicious actors.
If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying crypto assets; 18 ● security issues, bugs and software errors have been identified with many crypto assets and their underlying blockchain networks, some of which have been exploited by malicious actors.
To access such assets, we rely on the technical platform provided by such third-party platforms and we are also subject to their terms of use. Recent high profile criminal investigations and bankruptcy cases in the U.S., such as those involving FTX and Celsius, highlight the risks of holding crypto assets on third party platforms.
To access such assets, we rely on the technical platform provided by such third-party platforms and we are also subject to their terms of use. Certain high profile criminal investigations and bankruptcy cases in the U.S., such as those involving FTX and Celsius, highlight the risks of holding crypto assets on third party platforms.
Failure to refine our existing marketing approaches or to introduce new marketing approaches cost-effectively could reduce our market share, cause our Revenue to decline and negatively impact our profitability. 12 If our senior management is unable to work together effectively or efficiently or if we lose their services, our business may be severely disrupted.
Failure to refine our existing marketing approaches or to introduce new marketing approaches cost-effectively could reduce our market share, cause our Revenue to decline and negatively impact our profitability. 13 If our senior management is unable to work together effectively or efficiently or if we lose their services, our business may be severely disrupted.
Any such incidents would likely have a material and adverse effect on our business, operating results, financial condition, and the price of our shares. 19 The assertion of jurisdiction by U.S. and foreign regulators and other government entities over crypto assets and crypto asset markets could adversely impact our business, operating results and financial condition.
Any such incidents would likely have a material and adverse effect on our business, operating results, financial condition, and the price of our shares. 20 The assertion of jurisdiction by U.S. and foreign regulators and other government entities over crypto assets and crypto asset markets could adversely impact our business, operating results and financial condition.
Currently, we rely on the expertise and experience of Mr. Shi Qiu, our chief executive officer, Ms. Qian Sun, our chief operating officer, and Mr. Yukuan Zhang, our chief financial officer, and our other executive team. If our senior management cannot work together effectively or efficiently, our business may be severely disrupted.
Currently, we rely on the expertise and experience of Mr. Shi Qiu, our chief executive officer, Ms. Qian Sun, our chief operating officer, and Mr. Yukuan Zhang, our chief financial officer, as well as our other executive team. If our senior management cannot work together effectively or efficiently, our business may be severely disrupted.
ITEM 3. KEY INFORMATION A. Selected Financial Data The following selected consolidated statements of operations data for the year ended December 31, 2021, 2022 and 2023, and selected consolidated balance sheet data as of December 31, 2022 and 2023, have been derived from our audited consolidated financial statements included elsewhere in this annual report.
ITEM 3. KEY INFORMATION A. Selected Financial Data The following selected consolidated statements of operations data for the year ended December 31, 2022, 2023 and 2024, and selected consolidated balance sheet data as of December 31, 2023 and 2024, have been derived from our audited consolidated financial statements included elsewhere in this annual report.
In addition, when a company meets the SEC’s criteria, an independent registered public accounting firm must report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting as of December 31, 2023 was not effective.
In addition, when a company meets the SEC’s criteria, an independent registered public accounting firm must report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting as of December 31, 2024 was not effective.
Shareholders of Cayman Islands exempted companies such as ourselves have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies (apart from our memorandum and articles of association, special resolutions of our shareholders and the register of mortgages and charges).
Shareholders of Cayman Islands exempted companies such as MFH Cayman have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies (apart from our memorandum and articles of association, special resolutions of our shareholders and the register of mortgages and charges).
The following summary consolidated financial statements for the years ended 2023, 2022, and 2021 are derived from our audited consolidated financial statements included elsewhere in this report. Our consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
The following summary consolidated financial statements for the years ended 2022, 2023, and 2024 are derived from our audited consolidated financial statements included elsewhere in this report. Our consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
We have informed Nasdaq that we will follow home country practice in place of all of the requirements of Rule 5600 other than those rules which we are required to follow pursuant to the provisions of Rule 5615(a)(3). ● Rule 5605(b), pursuant to which (i) a majority of the board of directors must be comprised of Independent Directors, and (ii) the Independent Directors must have regularly scheduled meetings at which only Independent Directors are present. ● Rule 5605(c) (other than those parts as to which the home country exemption is not applicable), pursuant to which each company must have, and certify that it has and will continue to have, an audit committee of at least three members, each of whom must meet criteria set forth in Rule 5605(c)(2)(A). ● Rule 5605(d), pursuant to which each company must (i) certify that it has adopted a formal written compensation committee charter and that the compensation committee will review and reassess the adequacy of the formal written charter on an annual basis, and (ii) have a compensation committee of at least two members, each of whom must be an Independent Director. ● Rule 5605(e), pursuant to which director nominees must be selected, or recommended for the Board’s selection, either by Independent Directors constituting a majority of the Board’s Independent Directors in a vote in which only Independent Directors participate, or a nominations committee comprised solely of Independent Directors. ● Rule 5610, pursuant to which each company shall adopt a code of conduct applicable to all directors, officers and employees. ● Rule 5620(a), pursuant to which each company listing common stock or voting preferred stock, or their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the issuer’s fiscal year-end. ● Rule 5620(b), pursuant to which each company shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to Nasdaq. ● Rule 5620(c), pursuant to which each company that is not a limited partnership shall provide for a quorum as specified in its by-laws for any meeting of the holders of common stock; provided, however, that in no case shall such quorum be less than 33% (1/3) of the outstanding shares of the company’s common voting stock. ● Rule 5630, pursuant to which each company that is not a limited partnership shall conduct an appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing basis by the company’s audit committee or another independent body of the board of directors. ● Rule 5635(a), pursuant to which shareholder approval is required in certain circumstances prior to an issuance of securities in connection with the acquisition of the stock or assets of another company. ● Rule 5635(b), pursuant to which shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the company. 27 ● Rule 5635(c), pursuant to which shareholder approval is required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants, subject to certain exceptions. ● Rule 5635(d), pursuant to which shareholder approval is required prior to the issuance of securities in connection with a transaction other than a public offering involving: ○ the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value which together with sales by officers, directors or Substantial Shareholders of the company equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance; or ○ the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
Certain requirements of Rule 5600 are set out below: ● Rule 5605(b), pursuant to which (i) a majority of the board of directors must be comprised of Independent Directors, and (ii) the Independent Directors must have regularly scheduled meetings at which only Independent Directors are present. ● Rule 5605(c) (other than those parts as to which the home country exemption is not applicable), pursuant to which each company must have, and certify that it has and will continue to have, an audit committee of at least three members, each of whom must meet criteria set forth in Rule 5605(c)(2)(A). ● Rule 5605(d), pursuant to which each company must (i) certify that it has adopted a formal written compensation committee charter and that the compensation committee will review and reassess the adequacy of the formal written charter on an annual basis, and (ii) have a compensation committee of at least two members, each of whom must be an Independent Director. ● Rule 5605(e), pursuant to which director nominees must be selected, or recommended for the Board’s selection, either by Independent Directors constituting a majority of the Board’s Independent Directors in a vote in which only Independent Directors participate, or a nominations committee comprised solely of Independent Directors. ● Rule 5610, pursuant to which each company shall adopt a code of conduct applicable to all directors, officers and employees. ● Rule 5620(a), pursuant to which each company listing common stock or voting preferred stock, or their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the issuer’s fiscal year-end. ● Rule 5620(b), pursuant to which each company shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to Nasdaq. ● Rule 5620(c), pursuant to which each company that is not a limited partnership shall provide for a quorum as specified in its by-laws for any meeting of the holders of common stock; provided, however, that in no case shall such quorum be less than 33% (1/3) of the outstanding shares of the company’s common voting stock. ● Rule 5630, pursuant to which each company that is not a limited partnership shall conduct an appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing basis by the company’s audit committee or another independent body of the board of directors. ● Rule 5635(a), pursuant to which shareholder approval is required in certain circumstances prior to an issuance of securities in connection with the acquisition of the stock or assets of another company. ● Rule 5635(b), pursuant to which shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the company. 31 ● Rule 5635(c), pursuant to which shareholder approval is required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants, subject to certain exceptions. ● Rule 5635(d), pursuant to which shareholder approval is required prior to the issuance of securities in connection with a transaction other than a public offering involving: ○ the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value which together with sales by officers, directors or Substantial Shareholders of the company equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance; or ○ the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
We have also incurred and will continue to incur costs associated with corporate governance requirements, including requirements of the Sarbanes-Oxley Act, as well as rules implemented by the SEC and Nasdaq Capital Market, has requirements in corporate governance practices of public companies.
We have also incurred and will continue to incur costs associated with corporate governance requirements, including requirements of the Sarbanes-Oxley Act, as well as rules implemented by the SEC and Nasdaq, has requirements in corporate governance practices of public companies.
Any limitation on the ability of our PRC subsidiary to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
Any limitation on the ability of our PRC subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
In addition, we will incur additional costs associated with our public company reporting requirements. We are evaluating and monitoring developments to these rules, and we cannot predict or estimate the amount of additional costs we might incur or the timing of such costs. 29
In addition, we will incur additional costs associated with our public company reporting requirements. We are evaluating and monitoring developments to these rules, and we cannot predict or estimate the amount of additional costs we might incur or the timing of such costs. 33
Investors in our securities are purchasing equity interest in MFH Cayman, a holding company incorporated in the Cayman Islands with business operations in China and the U.S. and therefore, investors may never hold equity interests in any of our Chinese operating entities. This operating structure may involve unique risks to investors.
Investors in our securities are purchasing equity interest in MFH Cayman, a holding company incorporated in the Cayman Islands with business operations in China and the U.S. and therefore, investors may never hold equity interests in any of our Chinese operating entity(ies). This operating structure may involve unique risks to investors.
As a result of the recent operational reorganization, the majority of our operations are currently based in the U.S. while part of our technical and back-office team in mainland China.
As a result of the recent operational reorganization, the majority of our operations are currently based in the U.S. while part of our back-office and accounting team in mainland China.
We expect that our loss of emerging growth company status will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.
Our loss of emerging growth company status will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.
As a result, it may be difficult for you to effect service of process upon us or our management named herein inside mainland China.
As a result, it may be difficult for you to effect service of process upon us or our management inside mainland China.
As of the date of this annual report, as advised by our PRC legal adviser, we do not believe that we are subject to: (i) the cybersecurity review with the Cyberspace Administration of China, or CAC, as our products and services are not offered to individual users but to our institutional customers, we do not possess a large amount of personal information in our business operations, and our business does not involve the collection of data that affects or may affect national security, implicates cybersecurity, or involves any type of restricted industry; or (ii) merger control review by China’s anti-monopoly enforcement agency due to the fact that we do not engage in monopolistic behaviors that are subject to these statements or regulatory actions.
As of the date of this report, as advised by Beijing Chuting Law Firm, our PRC legal adviser, we do not believe that MFH Cayman or our subsidiaries are subject to: (i) the cybersecurity review with the Cyberspace Administration of China, or CAC, as our products and services are not offered to individual users but to our institutional customers, we do not possess a large amount of personal information in our business operations, and our business does not involve the collection of data that affects or may affect national security, implicates cybersecurity, or involves any type of restricted industry; or (ii) merger control review by China’s anti-monopoly enforcement agency due to the fact that we do not engage in monopolistic behaviors that are subject to these statements or regulatory actions.
As of the date of this annual report, our two nodes on the Filecoin blockchain have exceeded storage capacity of 64PiB. 20 We intend to monitor our status in relation to the 40 percent test by implementing procedures to review, on a semi-annual basis, specifically on June 30 and December 31, the composition of our assets to ensure that our holdings of Filecoin and other investment securities, if any, do not breach the thresholds specified by the 1940 Act.
As of the date of this annual report, our six nodes on the Filecoin blockchain have exceeded storage capacity of 109PiB. 21 We intend to monitor our status in relation to the 40 percent test by implementing procedures to review, on a semi-annual basis, specifically on June 30 and December 31, the composition of our assets to ensure that our holdings of Filecoin and other investment securities, if any, do not breach the thresholds specified by the 1940 Act.
If the Company’s shares lose their listing status on The Nasdaq Capital Market, they would likely trade in the over-the-counter market, and selling such securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could be delayed, and security analysts’ coverage may be reduced.
If the Company’s shares lose their listing status on Nasdaq, they would likely trade in the over-the-counter market or may not be quoted on any market, and selling such securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could be delayed, and security analysts’ coverage may be reduced.
As advised by our PRC legal adviser, the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
As advised by Beijing Chuting Law Firm, our PRC legal adviser, the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
It may also be difficult for you to enforce in U.S. courts of the judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors as only a portion of them, Shi Qiu, Alan Curtis and Daniel Kelly Kennedy, currently resides in the United States.
It may also be difficult for you to enforce in U.S. courts of the judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors as only a portion of them, Shi Qiu, Qian Sun, Wilfred Daye and Alan Curtis, currently resides in the United States.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 26 We are required to file an annual report on Form 20-F within four months of the end of each fiscal year.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management, as judgments entered in the U.S. can be enforced in Hong Kong only at common law.
Based on the Company’s own risk assessment and research, you may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management, as judgments entered in the U.S. can be enforced in Hong Kong only at common law.
MFH Cayman is not a Chinese operating company but a Cayman Islands holding company with a portion of our operations conducted by our subsidiaries based in China. Prior to 2022, the majority of our operations were based in mainland China.
We are not a Chinese operating company but a Cayman Islands holding company with a portion of our operations conducted by our PRC subsidiaries. Prior to 2022, the majority of our operations were based in mainland China.
We ceased to be an “emerging growth company” on December 31, 2020, and are no longer eligible for reduced disclosure requirements and exemptions applicable to emerging growth companies.
We ceased to be an “emerging growth company” and are no longer eligible for reduced disclosure requirements and exemptions applicable to emerging growth companies.
Risks Relating to Doing Business in the PRC We conduct a portion of our business operations in China and are subject to the attendant risks of operating in China, including regulatory risks resulting from political and regulatory changes which may be swift and unexpected.
Risks Relating to Doing Business in the PRC We conduct a portion of our business operations in China and are subject to the attendant risks of operating in China, including risks arising from our corporate structure to investors, risks arising from the legal system in China, including the enforcement risks and regulatory risks resulting from political and regulatory changes which may be swift and unexpected.
In particular, three of our directors and officers, Qian Sun, Yukuan Zhang and Cong Huang are ordinarily resident in Mainland China, one of our directors, Hui Cheng, is ordinarily resident in Hong Kong, and the remaining three of our directors, Shi Qiu, Alan Curtis and Daniel Kelly Kennedy, are ordinarily resident in the United States.
In particular, two of our directors and officers, Yukuan Zhang and Cong Huang are ordinarily resident in Mainland China, one of our directors, Hui Cheng, is ordinarily resident in Hong Kong, and the remaining of our directors and officers, Shi Qiu, Qian Sun, Wilfred Daye and Alan Curtis, are ordinarily resident in the United States.
As of April 12, 2024, we had 60,819,897 ordinary shares issued and outstanding. If part or all of these shares are sold in the public market or if any other existing shareholders sell a substantial amount of their shares, the prevailing market price for our shares could be adversely affected.
As of April 15, 2025, we had 63,686,563 ordinary shares issued and outstanding. If part or all of these shares are sold in the public market or if any other existing shareholders sell a substantial amount of their shares, the prevailing market price for our shares could be adversely affected.
Section 5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent, and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination of directors.
This might afford less protection to holders of our ordinary shares. Section 5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent, and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination of directors.
That is to say, a foreign judgment itself may form the basis of a cause of action since the judgment may be regarded as creating a debt between the parties to it.
However, the common law permits an action to be brought upon a foreign judgment. That is to say, a foreign judgment itself may form the basis of a cause of action since the judgment may be regarded as creating a debt between the parties to it.
This might afford less protection to holders of our shares. ● Anti-takeover provisions in our charter documents could discourage a third-party from acquiring us, which could limit our shareholders’ opportunities to sell their shares at a premium. ● We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you could have less protection of your shareholder rights than you would under U.S. law. ● You will have limited ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, because we are incorporated in the Cayman Islands, because we conduct parts of our operations in the PRC and Hong Kong and because some of our directors and officers reside outside the United States. ● Compliance with rules and requirements applicable to public companies could cause us to incur increased costs, which could negatively affect our results of operations. 8 Risks Relating to Our Business and Industry We have a limited operating history in the evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
This might afford less protection to holders of our shares. ● Anti-takeover provisions in our charter documents could discourage a third-party from acquiring us, which could limit our shareholders’ opportunities to sell their shares at a premium. ● We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you could have less protection of your shareholder rights than you would under U.S. law. ● You will have limited ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, because we are incorporated in the Cayman Islands, because we conduct parts of our operations in the PRC and Hong Kong and because some of our directors and officers reside outside the United States. ● Compliance with rules and requirements applicable to public companies could cause us to incur increased costs, which could negatively affect our results of operations. 8 Risks Relating to Our Business and Industry Certain crypto assets and cryptocurrencies have been identified as a “security” in certain jurisdictions, and we may be subject to regulatory scrutiny, inquiries, investigations, fines and other penalties, which may adversely affect our business, operating results and financial condition.
The PRC government has initiated a series of regulatory actions and has made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement and data privacy protection.
These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results of operations. 22 The PRC government has initiated a series of regulatory actions and has made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement and data privacy protection.
Nonetheless, if any future gaps in our risk management processes and policies were to arise, such deficiencies could adversely impact our business, operating results and financial condition. In turn, such deficiencies would require our Board and management to make appropriate changes to our risk management processes and policies.
If any gaps in our risk management processes and policies were to arise, such deficiencies could adversely impact our business, operating results and financial condition.
Managing an acquired business, disposing of product technologies, or reducing personnel entails numerous operational and financial risks, including, among other things: ● difficulties in assimilating acquired operations and new personnel or separating existing business or product groups; ● diversion of management’s attention away from other business concerns; ● amortization of acquired intangible assets; ● adverse customer reaction to our decision to cease support for a product; and ● potential loss of key employees or customers of acquired or disposed operations. 11 There can be no assurance that we will be able to achieve and manage successfully any such integration of potential acquisitions, disposition of product lines or technologies, or reduction in personnel or that our management, personnel, or systems will be adequate to support continued operations.
Managing an acquired business, disposing of product technologies, or reducing personnel entails numerous operational and financial risks, including, among other things: ● difficulties in assimilating acquired operations and new personnel or separating existing business or product groups; ● diversion of management’s attention away from other business concerns; ● amortization of acquired intangible assets; ● adverse customer reaction to our decision to cease support for a product; and ● potential loss of key employees or customers of acquired or disposed operations.
Risks Relating to Doing Business in the PRC ● We conduct a portion of our business operations in China and are subject to the attendant risks of operating in China, including regulatory risks resulting from political and regulatory changes which may be swift and unexpected. ● You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management based on Hong Kong laws. ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in the PRC against us or our management based on foreign laws. 7 ● We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC and Hong Kong subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. ● Regulation and censorship of information disseminated over the internet in the PRC could adversely affect our business in China, and we may be liable for any such information displayed on, retrieved from or linked to our website. ● A failure by our shareholders or beneficial owners who are PRC citizens or residents in the PRC to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liability under PRC laws, which could adversely affect our business and financial condition. ● A failure to comply with PRC regulations regarding the registration of shares and share options held by our employees who are PRC citizens could subject such employees or us to fines and legal or administrative sanctions. ● It may be difficult for overseas regulators to conduct investigations or collect evidence within PRC. ● It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
The delisting or prohibition of trading of our ordinary shares, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the value of your investment. ● If we do not comply with PRC regulatory requirements with respect to our listing on Nasdaq, our future securities offerings and other securities offerings by our shareholders, we may be subject to regulatory penalties in China. 7 ● We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC and Hong Kong subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business. ● Regulation and censorship of information disseminated over the internet in the PRC could adversely affect our business in China, and we could be liable for information displayed on, retrieved from or linked to our website. ● A failure by our shareholders or beneficial owners who are PRC citizens or residents in the PRC to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liability under PRC laws, which could adversely affect our business and financial condition. ● A failure to comply with PRC regulations regarding the registration of shares and share options held by our employees who are PRC citizens could subject such employees or us to fines and legal or administrative sanctions. ● It may be difficult for overseas regulators to conduct investigations or collect evidence within China. ● It may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
However, due to resource restraints, we have ceased our development plans in digital payment business, including digital payment services and solution consulting, and applications for the required money transmit licenses since March 2024. As of December 31, 2023, we only have two customers of our business consultation services, one based in China and the other based in the U.S.
However, due to resource restraints, we have ceased our development plans in digital payment business, including digital payment services and solution consulting, and applications for the required money transmit licenses since March 2024.
Nevertheless, any breach of applicable US law will have a material adverse effect on our business operations, financial performance and the value of our shares. As we acquire, dispose of or restructure our businesses, product lines, and technologies, we may encounter unforeseen costs and difficulties that could impair our financial performance.
Any failure to do so could have a material adverse effect on our business, reputation, results of operations and financial condition. As we acquire, dispose of or restructure our businesses, product lines, and technologies, we may encounter unforeseen costs and difficulties that could impair our financial performance.
In addition, press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers.
However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers.
Our brand promotion and marketing activities may not be well received by customers and may not result in the levels of sales that we anticipate. The marketing of blockchain-based solutions services to customers is evolving. This further requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with customer preferences.
The marketing of blockchain-based solutions services to customers is evolving. This further requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with customer preferences.
Risk Factors Summary of Risk Factors Risks Relating to Our Business and Industry ● We have a limited operating history in the evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. ● We currently have a limited customer base for our Business consultation services.
Any disruption of our operations in response to the changed regulatory circumstances would likely have a material adverse effect on us and investors may lose their investment. ● We have a limited operating history in the evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. ● We currently have a limited customer base for our business consultation services.
December 31, 2023 December 31, 2022 US$ US$ Cash and cash equivalents 16,117,949 7,446,664 Security deposit 33,700 33,909 Short-term investments 2,319,247 — Interest receivable 12,594 — Prepaid expenses and other current assets, net 5,212,285 10,925 Amounts due from related parties — 25,000 Total current assets $ 23,695,775 $ 7,516,498 Operating right-of-use assets, net 556,104 873,878 Property and equipment, net 4,758,279 5,961,173 Intangible assets, net 705,309 4,233,228 Security deposit 57,300 57,300 Prepayments for long-term asset 120,000 — Long term equity investments 160,000 — Deferred tax assets 342,369 251,005 Total non-current assets $ 6,699,361 $ 11,376,584 TOTAL ASSETS $ 30,395,136 $ 18,893,082 Convertible Note 9,000,000 Interest payable 423,131 Accrued expenses and other current liabilities 1,588,562 236,490 Amounts due to related parties 916,219 923,596 Operating lease liabilities 352,178 269,675 Total current liabilities $ 12,280,090 $ 1,429,761 Operating lease liabilities 282,279 634,457 Total non-current liabilities $ 282,279 $ 634,457 TOTAL LIABILITIES $ 12,562,369 $ 2,064,218 Ordinary shares 243,298 140,716 Additional paid-in capital 693,093,915 682,848,997 Accumulated deficit (676,677,485 ) (667,320,289 ) Accumulated other comprehensive (loss)/income 1,173,039 1,159,440 Total shareholders’ equity $ 17,832,767 $ 16,828,864 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 30,395,136 $ 18,893,082 5 B.
December 31, 2024 December 31, 2023 US$ US$ Cash and cash equivalents 23,915,856 16,117,949 Security deposit 93,475 33,700 Short-term investments 957,729 2,319,247 Interest receivable 3,825 12,594 Prepaid expenses and other current assets, net 5,053,824 5,212,285 Amounts due from related parties — — Total current assets $ 30,024,709 $ 23,695,775 Operating right-of-use assets, net 238,330 556,104 Property and equipment, net 2,257,794 4,758,279 Intangible assets, net 3,139,896 705,309 Security deposit — 57,300 Prepayments for long-term asset — 120,000 Long term equity investments — 160,000 Deferred tax assets 30,584 342,369 Total non-current assets $ 5,666,604 $ 6,699,361 TOTAL ASSETS $ 35,691,313 $ 30,395,136 Convertible Note 7,500,000 9,000,000 Interest payable 419,005 423,131 Accrued expenses and other current liabilities 2,466,436 1,588,562 Amounts due to related parties 909,575 916,219 Operating lease liabilities 282,279 352,178 Total current liabilities $ 11,577,295 $ 12,280,090 Operating lease liabilities — 282,279 Deferred tax liabilities 25,200 — Total non-current liabilities $ 25,200 $ 282,279 TOTAL LIABILITIES $ 11,602,495 $ 12,562,369 Ordinary shares 249,218 243,298 Additional paid-in capital 703,098,695 693,093,915 Accumulated deficit (680,448,810 ) (676,677,485 ) Accumulated other comprehensive (loss)/income 1,189,715 1,173,039 Total shareholders’ equity $ 24,088,818 $ 17,832,767 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 35,691,313 $ 30,395,136 5 B.
Cryptocurrency mining operations constitute a portion of our business and regulatory developments in the characterization of such crypto assets will have an impact on our business, financial condition and results of operations.
Cryptocurrency mining operations constitute a portion of our business and regulatory developments in the characterization of such crypto assets will have an impact on our business, financial condition and results of operations. The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. Furthermore, class action lawsuits, which are available in the United States for investors to seek remedies, are generally uncommon in China.
As a result, certain crypto assets may be deemed to be a “security” under the laws of some jurisdictions but not others.
Several other foreign jurisdictions have taken a broad-based approach to classifying crypto assets as “securities,” while other foreign jurisdictions have adopted a narrower approach. As a result, certain crypto assets may be deemed to be a “security” under the laws of some jurisdictions but not others.
The PRC government has significant authority to exert influence on the ability of a company with operations in China to conduct business.
The PRC government has significant authority to exert influence on the ability of a company with operations in China to conduct business therein. Our operations in mainland China are governed by PRC laws and regulations. Our mainland China subsidiaries are subject to laws and regulations applicable to foreign investment in mainland China.
Furthermore, foreign judgments of the U.S. courts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the U.S. However, the common law permits an action to be brought upon a foreign judgment.
Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts. 24 Furthermore, foreign judgments of the U.S. courts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the U.S.
If we fail to maintain compliance with Nasdaq’s listing rules, we could be subject to suspension and delisting proceedings.
If we fail to maintain compliance with Nasdaq’s listing rules, such as the minimum bid price or minimum shareholder equity and other quantitative listing requirements, we could be subject to suspension and delisting proceedings.
Operating and Financial Review and Prospects” included elsewhere in this report. 3 For the year Ended December 31, 2023 2022 2021 (as restated) (as restated) (US$, except share and share related data) Revenue $ 445,928 $ 863,438 $ 670,171 Business consultation services 160,000 80,000 — Distributed storage and computing services 285,928 783,438 664,307 Technical services — — 5,864 Cost of Revenue $ (1,424,312 ) $ (1,380,600 ) $ (702,679 ) Business consultation services (138,092 ) (19,000 ) — Distributed storage and computing services (1,286,220 ) (1,361,600 ) (702,679 ) Gross profit $ (978,384 ) $ (517,162 ) $ (32,508 ) Sales and marketing (449,900 ) (35,000 ) — General and administrative (2,515,291 ) (2,156,063 ) (10,351,357 ) Provision for doubtful accounts — (3,138 ) (1,750,909 ) (Loss)/income on disposal of intangible assets — (29,968 ) 121,020 Impairment loss of property and equipment (307,733 ) — — Impairment loss of intangible assets (4,248,085 ) (3,144,053 ) (1,292,568 ) Impairment loss of goodwill — — — Operating loss from continuing operations $ (8,499,393 ) $ (5,885,384 ) $ (13,306,322 ) Interest (expenses)/income, net (196,055 ) 5,118 1,083 Financing costs (450,000 ) — — Other (expenses)/income, net 2,379 1,248 (143 ) Loss on market price of short-term investment (226,210 ) — — Loss from selling short-term investments (78,693 ) — — Loss from disposal of subsidiaries — (4,664 ) — Loss before provision for income taxes $ (9,447,972 ) $ (5,883,682 ) $ (13,305,382 ) Income tax benefits 90,776 248,711 — Loss from continuing operations $ (9,357,196 ) $ (5,634,971 ) $ (13,305,382 ) Loss from discontinued operations — — (8,360,322 ) Net loss $ (9,357,196 ) $ (5,634,971 ) $ (21,665,704 ) Net loss attributable to holders of ordinary shares of Mercurity Fintech Holding Inc. $ (9,357,196 ) $ (5,634,971 ) $ (21,665,704 ) Continuing operations (9,357,196 ) (5,634,971 ) (13,305,382 ) Discontinued operations — — (8,360,322 ) Weighted average shares used in calculating basic net loss per ordinary share 45,841,825 14,435,674 9,720,934 Weighted average shares used in calculating diluted net loss per ordinary share 45,841,825 14,435,674 9,720,934 Net Loss per ordinary share Basic (0.20 ) (0.39 ) (2.23 ) Diluted (0.20 ) (0.39 ) (2.23 ) Net Loss per ordinary share from continuing operation Basic (0.20 ) (0.39 ) (1.37 ) Diluted (0.20 ) (0.39 ) (1.37 ) Net Loss per ordinary share from discontinued operation Basic — — (0.86 ) Diluted — — (0.86 ) Note: (i) Due to the adverse regulatory measures taken by the PRC government in 2021 on digital currency production and transaction, the Company’s Board of Directors decided on December 10, 2021 to divest the PRC companies of the related business controlled through VIE agreements and the divestiture was completed on January 15, 2022.
Operating and Financial Review and Prospects” included elsewhere in this report. 3 For the year ended December 31, 2024 2023 2022 (as restated) (US$, except share and share related data) Revenue $ 1,007,430 $ 445,928 $ 863,438 Business consultation services 448,525 160,000 80,000 Distributed storage and computing services 513,405 285,928 783,438 Other services 45,500 — — Cost of Revenue $ (1,382,939 ) $ (1,424,312 ) $ (1,380,600 ) Business consultation services (259,593 ) (138,092 ) (19,000 ) Distributed storage and computing services (1,123,346 ) (1,286,220 ) (1,361,600 ) Gross loss $ (375,509 ) $ (978,384 ) $ (517,162 ) Operating expenses $ (4,2 41 ,32 5 ) $ (7,521,009 ) $ (5,368,222 ) Sales and marketing (100,426 ) (449,900 ) (35,000 ) General and administrative (2,086,677 ) (2,515,291 ) (2,156,063 ) Provision for doubtful accounts (11,452 ) — (3,138 ) Loss on disposal of intangible assets — — (29,968 ) Impairment loss of property and equipment (1,827,373 ) (307,733 ) — Impairment loss of intangible assets — (4,248,085 ) (3,144,053 ) Loss on market price of crypto assets (215,397 ) — — Operating loss from continuing operations $ (4,616,834 ) $ (8,499,393 ) $ (5,885,384 ) Interest (expenses)/income, net 204,071 (196,055 ) 5,118 Financing costs — (450,000 ) — Other (expenses)/income, net (32,846 ) 2,379 1,248 Loss on market price of short-term investment 212,426 (226,210 ) — Loss from selling short-term investments 35,771 (78,693 ) — Loss from disposal of subsidiaries — — (4,664 ) Loss before provision for income taxes $ (4,197,412 ) $ (9,447,972 ) $ (5,883,682 ) Income tax (expenses)/benefits (336,985 ) 90,776 248,711 Loss from continuing operations $ (4,534,397 ) $ (9,357,196 ) $ (5,634,971 ) Net loss $ (4,534,397 ) $ (9,357,196 ) $ (5,634,971 ) Net loss attributable to holders of ordinary shares of Mercurity Fintech Holding Inc. $ (4,534,397 ) $ (9,357,196 ) $ (5,634,971 ) Continuing operations (4,534,397 ) (9,357,196 ) (5,634,971 ) Discontinued operations — — Denominator Weighted average shares used in calculating basic net loss per ordinary share (i) 60,852,028 45,841,825 14,435,674 Weighted average shares used in calculating diluted net loss per ordinary share (i) 60,852,028 45,841,825 14,435,674 Net Loss per ordinary share Basic (0.07 ) (0.20 ) (0.39 ) Diluted (0.07 ) (0.20 ) (0.39 ) Net Loss per ordinary share from continuing operation Basic (0.07 ) (0.20 ) (0.39 ) Diluted (0.07 ) (0.20 ) (0.39 ) Net Loss per ordinary share from discontinued operation Basic — — — Diluted — — — Note: (i) On December 29, 2022, the Company’s Board of Directors approved the proposal on the share consolidation to the authorized share capital (the “Share Consolidation”) at a ratio of four hundred (400)-for-one (1) with the par value of each ordinary share changed to US$0.004 per ordinary share, which has been effective on February 28, 2023.
As a foreign private issuer, we are permitted to, and we plan to, rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors. This might afford less protection to holders of our ordinary shares.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. 30 As a foreign private issuer, we are permitted to, and we plan to, rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors.
Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless. 21 You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions in Hong Kong against us or our management based on Hong Kong laws.
Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
There are significant legal and operational risks associated with being based in or having a portion of business operations in China.
Investors may never hold equity interests in our Chinese operating subsidiaries. Chinese regulatory authorities could disallow this structure. There are significant legal and operational risks associated with being based in or having a portion of business operations in China.
In addition, changes in the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or U.S. regulations may materially and adversely affect our business, financial condition and results of operations.
If we fail to receive such registrations or approvals or complete such filings, our ability to provide loans or capital contributions to our PRC subsidiaries in a timely manner may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 23 In addition, changes in the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or U.S. regulations may materially and adversely affect our business, financial condition and results of operations.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws. We have one subsidiary in the PRC, being Lianji Future Technology Limited, and many of our managements and directors are PRC nationals.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws. We are an exempted company incorporated under the laws of the Cayman Islands. However, we conduct substantially all of our operations in China and substantially all of our assets are located in China.
We commenced cryptocurrency mining operations in 2021 and expanded this line of business in the U.S. in December 2022. We commenced business consultation services in August 2022.
We commenced cryptocurrency mining operations in 2021 and expanded this line of business in the U.S. in December 2022. We commenced business consultation services in August 2022, assisting global corporate clients in developing business in the United States, helping the clients improve operations and compliance, achieving market entry and expansion, as well as introducing and coordinating professional service institutions.
If we are unable to conduct adequate and cost-effective marketing activities, our results of operations and financial condition may be materially and adversely affected. We have a limited operating history of our current business and may need to make significant investments in sales and marketing to promote our brand recognition.
We have a limited operating history of our current business and may need to make significant investments in sales and marketing to promote our brand recognition. Our brand promotion and marketing activities may not be well received by customers and may not result in the levels of sales that we anticipate.
Furthermore, class action lawsuits, which are available in the United States for investors to seek remedies, are generally uncommon in China. 22 We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC and Hong Kong subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
Any failure to comply with the PRC regulatory requirements in this regard, our ability to conduct business, our ability to pay dividends outside of China, completion of a securities offering or future financing activities may be restricted, and our business, reputation, financial condition, and results of operations may be adversely affected. 26 We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC and Hong Kong subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
Our strategic initiative to achieve an effective storage capacity of 64PiB for Filecoin’s mining business by the end of June 2024, and utilize the remaining available storage capacity of the Web3 decentralized storage infrastructure to expand our Filecoin mining business, or engage in other cryptocurrency mining businesses, or provide cloud storage services to other distributed application product operators, could expose us to financial risks, particularly due to the volatile nature of Filecoin’s value.
Our strategic initiative to achieve an effective storage capacity of not less than 200PiB for Filecoin’s mining business by the end of 2025, and achieve an effective storage capacity of not less than 800PiB for Filecoin’s mining business by the end of 2027, could expose us to financial risks, particularly due to the volatile nature of Filecoin’s value.
Any failure to do so could have a material adverse effect on our business, reputation, results of operations and financial condition. Certain crypto assets and cryptocurrencies have been identified as a “security” in certain jurisdictions, and we may be subject to regulatory scrutiny, inquiries, investigations, fines and other penalties, which may adversely affect our business, operating results and financial condition.
Risk Factors Summary of Risk Factors Risks Relating to Our Business and Industry ● Certain crypto assets and cryptocurrencies have been identified as a “security” in certain jurisdictions, and we may be subject to regulatory scrutiny, inquiries, investigations, fines and other penalties, which may adversely affect our business, operating results and financial condition. ● Any gaps in our risk management processes and policies in respect of crypto asset could adversely impact our business, operating results, and financial condition. ● If we expand our crypto asset mining and related activities in the future, any increased holdings of crypto assets may cause us to become deemed as an investment company under the Investment Company Act of 1940. ● If regulatory changes or interpretations require the regulation of Bitcoins under the Securities Act and Investment Company Act by the Commission, we will be required to comply with such regulations.
Further, as part of our strategic growth plans, we have made capital investments in expanding and vertically integrating our mining operations, including the expansion of our mining machines and increased our employee base. However, future market prices of the cryptocurrency are difficult to predict, and we cannot guarantee that our future mining revenue will exceed our associated costs.
Further, as part of our strategic growth plans, we have made capital investments in expanding and vertically integrating our business consultation and investment banking services operations, including the expansion of our professional service team, as well as our marketing team and advertising budget.
Removed
The financial information related to the two divested VIEs have been reclassified in the accompanying audited consolidated financial statements as discontinued operations for the year ended December 31, 2021.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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On December 28, 2021, a total of thirteen governmental departments of the PRC, including the PRC State Internet Information Office issued the Measures of Cybersecurity Review, which will become effective on February 15, 2022. 42 We (1) are not required to obtain permissions from any PRC authorities to offer to sell or issue our ordinary shares to non-Chinese investors, (2) are not covered by the permission requirements from the China Securities Regulatory Commission (the “CSRC”) and Cyberspace Administration of China (the “CAC”) or any other entity that is required to approve of the operations of ours and our subsidiaries, and (3) have not received nor been denied such permissions by any PRC authorities.
On December 28, 2021, a total of thirteen governmental departments of the PRC, including the PRC State Internet Information Office issued the Measures of Cybersecurity Review, which will become effective on February 15, 2022. 66 We (1) are not required to obtain permissions from any PRC authorities to offer to sell or issue our ordinary shares to non-Chinese investors, (2) are not covered by the permission requirements from the China Securities Regulatory Commission (the “CSRC”) and Cyberspace Administration of China (the “CAC”) or any other entity that is required to approve of the operations of ours and our subsidiaries, and (3) have not received nor been denied such permissions by any PRC authorities.
See also “Risk Factors—Risks Relating to Our Business and Industry—Certain crypto assets and cryptocurrencies have been identified as a “security” in certain jurisdictions, and we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.” 37 In addition, due to recent developments in the regulations of cryptocurrencies, particularly in the U.S., such as the creation of subcommittees of the House Financial Services Committee, the approval of custodians for digital assets securities, and the Security and Exchange Commission’s crackdown on illegal trading platforms, we have seen increases of the price volatility of various cryptocurrency assets.
See also “Risk Factors — Risks Relating to Our Business and Industry — Certain crypto assets and cryptocurrencies have been identified as a “security” in certain jurisdictions, and we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.” 61 In addition, due to recent developments in the regulations of cryptocurrencies, particularly in the U.S., such as the creation of subcommittees of the House Financial Services Committee, the approval of custodians for digital assets securities, and the Security and Exchange Commission’s crackdown on illegal trading platforms, we have seen increases of the price volatility of various cryptocurrency assets.
Our principal executive offices are located at 1330 Avenue of Americas, Fl 33, New York, 10019, United States. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
Corporate Information Our principal executive offices are located at 1330 Avenue of Americas, Fl 33, New York, 10019, United States. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
We have not made adequate contributions to employee benefit plans, as required by applicable PRC laws and regulations. 44 Regulations Relating to Dividend Withholding Tax Pursuant to the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%.
We have not made adequate contributions to employee benefit plans, as required by applicable PRC laws and regulations. 68 Regulations Relating to Dividend Withholding Tax Pursuant to the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%.
We have duly obtained the approvals from the Ministry of Commerce or its local counterparts for our interest in our wholly owned PRC subsidiaries and completed the registration of these PRC subsidiaries with the competent industry and commerce bureau. 40 The Ministry of Commerce issued the Interim Measures for Record-filing Administration of the Establishment and Change of Foreign-invested Enterprises, as amended in June 2018, which was replaced by Measures on Reporting of Foreign Investment Information promulgated in December 2019.
We have duly obtained the approvals from the Ministry of Commerce or its local counterparts for our interest in our wholly owned PRC subsidiaries and completed the registration of these PRC subsidiaries with the competent industry and commerce bureau. 64 The Ministry of Commerce issued the Interim Measures for Record-filing Administration of the Establishment and Change of Foreign-invested Enterprises, as amended in June 2018, which was replaced by Measures on Reporting of Foreign Investment Information promulgated in December 2019.
Refusing to make corrections after being ordered by the regulatory authority to make corrective measures is subject to imprisonment of up to three years, detention or control and a fine. 41 In September 2021, ten PRC governmental authorities, including the People’s Bank of China (PBOC), jointly issued the “Notice on Further Preventing and Resolving the Risks of Virtual Currency Trading and Speculation” to clarify that cryptocurrency is not a legal tender in the PRC.
Refusing to make corrections after being ordered by the regulatory authority to make corrective measures is subject to imprisonment of up to three years, detention or control and a fine. 65 In September 2021, ten PRC governmental authorities, including the People’s Bank of China (PBOC), jointly issued the “Notice on Further Preventing and Resolving the Risks of Virtual Currency Trading and Speculation” to clarify that cryptocurrency is not a legal tender in the PRC.
This draft clarifies the basic requirements that mobile Internet applications should meet to collect personal information, which means that APP developers and operators who collect user’s personal information shall strictly comply with the requirement. 43 In December 2019, the Cyberspace Administration of China promulgated Provisions on the Ecological Governance of Network Information Contents, which took effect on March 1, 2020.
This draft clarifies the basic requirements that mobile Internet applications should meet to collect personal information, which means that APP developers and operators who collect user’s personal information shall strictly comply with the requirement. 67 In December 2019, the Cyberspace Administration of China promulgated Provisions on the Ecological Governance of Network Information Contents, which took effect on March 1, 2020.
The sixth article of SAFE Circular No.19 relating to the administration of the exchange settlement and use of the capital in the foreign exchange account under other direct investments has been abolished by SAFE Circular No.39 in 2019. 45 In November 2012, SAFE promulgated the Circular on Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, and amended it in May 2015, which substantially amends and simplifies the current foreign exchange procedure.
The sixth article of SAFE Circular No.19 relating to the administration of the exchange settlement and use of the capital in the foreign exchange account under other direct investments has been abolished by SAFE Circular No.39 in 2019. 69 In November 2012, SAFE promulgated the Circular on Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, and amended it in May 2015, which substantially amends and simplifies the current foreign exchange procedure.
SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov . You can also find information on our investor relationship website https://mercurityfintech.com/. The information on our website should not be deemed a part of this annual report. 32 B.
SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov . You can also find information on our investor relationship website https://mercurityfintech.com/. The information on our website should not be deemed a part of this annual report. 35 B.
See “Risk Factors— Risks Relating to Our Business and Industry—Environmental concerns associated with cryptocurrencies mining could have adverse impacts on our business, financial condition, and results of operations.” 38 Our clients Business consultation services Our business consultation services mainly serves clients from Greater China, Southeast Asia, and North America.
See “Risk Factors — Risks Relating to Our Business and Industry —Environmental concerns associated with cryptocurrencies mining could have adverse impacts on our business, financial condition, and results of operations.” 62 Our clients Business consultation services Our business consultation services mainly serves clients from Greater China, Southeast Asia, and North America.
We believe that the principal competitive factors in our industry are: ● brand recognition and reputation; 39 ● service quality; ● pricing; ● ecosystem integration; ● customer service. We believe that we are well-positioned to effectively compete on the basis of the factors listed above and that our Company benefits from many advantages over the competition.
We believe that the principal competitive factors in our industry are: ● brand recognition and reputation; 63 ● service quality; ● pricing; ● ecosystem integration; ● customer service. We believe that we are well-positioned to effectively compete on the basis of the factors listed above and that our Company benefits from many advantages over the competition.
Although our sources of revenue have been outside the Chinese mainland since 2021, we still have office and staff teams in China to seek more Chinese customers for our business consulting services, and we do not rule out the possibility of continuing to develop new business in China in the future.
Although our sources of revenue have been outside the Chinese mainland since 2021, we still maintain an office and staff teams in China to seek more Chinese customers for our business consulting services, and we do not rule out the possibility of continuing to develop new business in China in the future.
As of December 31, 2023, we have registered a generic top-level domain name. Our registered domain name is www.mercurityfintech.com. Regulations This section sets forth a summary of the most significant rules and regulations that affect our business activities in the PRC.
As of December 31, 2024 we have registered a generic top-level domain name. Our registered domain name is www.mercurityfintech.com. Regulations This section sets forth a summary of the most significant rules and regulations that affect our business activities in the PRC.
On February16, 2022, the former acting Chief Financial Officer Wei Zhu, who was also the Company’s former Co-Chief Executive Officer, and a former member and Co-Chairperson of the Board, was taken away from the Company’s office in Shenzhen, China for personal reasons to cooperate with the investigation from Sheyang County Public Security Bureau, Yancheng City, Jiangsu Province, People’s Republic of China.
On February 16, 2022, the former acting Chief Financial Officer Wei Zhu, who was also the Company’s former Co-Chief Executive Officer, and a former member and Co-Chairperson of the Board, was taken away from the Company’s office in Shenzhen, China for personal reasons to cooperate with the investigation from Sheyang County Public Security Bureau, Yancheng City, Jiangsu Province, People’s Republic of China.
As of December 31, 2023, we have obtained two clients, one from China and the other from the United States. We have plans to invest more into promotion and brand awareness to attract more clients in the future.
As of December 31, 2024, we have obtained two clients, one from China and the other from the United States. We have plans to invest more into promotion and brand awareness to attract more clients in the future.
For example, on August 23, 2022, we signed a Consulting Agreement with a Chinese media company, pursuant to which we served as a business consultant in order to: a) assist the client in establishing an operating entity in the United States and assist its operations; b) introduce American entertainment media industry related resources; c) introduce capital market related resources, including auditors, lawyers and investment banks, to assist the client in developing financing strategies and plans in the US capital markets.
For example, in August 2022, MFH Tech signed a Consulting Agreement with a Chinese media company, pursuant to which MFH Tech served as a business consultant in order to: a) assist the client in establishing an operating entity in the United States and assist its operations; b) introduce American entertainment media industry related resources; and c) introduce capital market related resources, including auditors, lawyers and investment banks, to assist the client in developing financing strategies and plans in the US capital markets.
In particular, the Company has obtained the approval of its board of directors on March 7, 2024 to terminate its “digital payment solutions” and “digital payment services” businesses, which did not generate any meaningful revenue in the past.
In particular, MFH Cayman has obtained the approval of its board of directors on March 7, 2024 to terminate its “digital payment solutions” and “digital payment services” businesses, which did not generate any meaningful revenue in the past.
Our Shenzhen office (the “Shenzhen Office”) is located at Room 1215, Xin’nan Block No.2, Yuehai Street, Nanshan District, Shenzhen City, 518000, Guangdong Province, People’s Republic of China. The Shenzhen Office has the office space of approximately 195 square meters (approximately 2,099 square feet), an 18-months lease, for an annual base rent of RMB360,000, approximately equal to $50,841 in 2023.
Our Shenzhen office (the “Shenzhen Office”) is located at Room 1215, Xin’nan Block No.2, Yuehai Street, Nanshan District, Shenzhen City, 518000, Guangdong Province, People’s Republic of China. The Shenzhen Office has the office space of approximately 195 square meters (approximately 2,099 square feet), an 18-months lease, for an annual base rent of RMB360,000, approximately equal to US$50,030.
Since significant reversals of cumulative revenue are possible given the nature of the assets, the consideration is constrained until the all the miners successfully places a block (by being the first to solve an algorithm) and we receive confirmation of the consideration it will receive, at which time revenue is recognized.
Since significant reversals of cumulative revenue are possible given the nature of the assets, the consideration is constrained until the all the miners successfully places a block (by being the first to solve an algorithm) and MFH Tech receives confirmation of the consideration it will receive, at which time revenue is recognized.
On December 15, 2022, we entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5,980,000, payable in our ordinary shares.
On December 15, 2022, MFH Cayman entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5,980,000, payable in MFH Cayman’s ordinary shares.
However, it is possible that these recent bankruptcies may have exacerbated the further pricing decline of certain cryptocurrencies, such as Bitcoin, in 2023 which may have imposed adverse impacts to our mining losses and/or value of the cryptocurrencies we hold.
However, it is possible that these recent bankruptcies may have exacerbated the further pricing decline of certain cryptocurrencies, such as Filecoin, in 2024 which may have imposed adverse impacts to our mining losses and/or value of the cryptocurrencies we hold.
Such categorization, as well as further regulatory developments, new legislations and regulations, and changes in regulatory policy, may have materially adverse impacts on our business, financial condition and results of operations, as well as the price of our shares. Our Filecoin assets constituted less than 2.4% of our consolidated total assets as of December 31, 2023.
Such categorization, as well as further regulatory developments, new legislations and regulations, and changes in regulatory policy, may have materially adverse impacts on our business, financial condition and results of operations, as well as the price of our shares. Our Filecoin assets constituted less than 9% of our consolidated total assets as of December 31, 2024.
We will decide whether to carry out other brokerage services, such as securities brokerage and asset management based on the Company’s future business development. Our brokerage services will mainly be located in our New York office, serving clients in Greater China, Southeast Asia, and North America.
We will decide whether to carry out other investment banking services, such as securities brokerage and asset management based on the Company’s future business development. Chaince Securities’ brokerage services will mainly be located in the New York office, serving clients in Greater China, Southeast Asia, and North America.
The provision of such computing power is the only performance obligation in the general terms of the mining pool website.
The provision of such computing power was the only performance obligation in the general terms of the mining pool website.
We also assist corporate clients in the Asia Pacific region in developing business in the United States, such as helping the clients improve operations and compliance, achieving market entry and expansion, introducing and coordinating professional service institutions. ● Target customers or clients: Our Business consultation services mainly serves clients from Greater China, Southeast Asia, and North America (Canada, the United States, Mexico). ● Fee structure: Our general fee structure is composed of cash payment and/or bonus shares upon reaching certain milestones or meeting certain performance requirements. ● Location: Our Business consultation services will be based in our offices in Shenzhen, Hong Kong and New York, covering Greater China, Southeast Asia and North America.
Chaince Securities, Inc., Ucon and Lianji Future also assist corporate clients in the Asia Pacific region in developing business in the United States, such as helping the clients improve operations and compliance, achieving market entry and expansion, introducing and coordinating professional service institutions. ● Target customers or clients: the business consultation services mainly serves clients from Greater China, Southeast Asia, and North America. ● Fee structure: the general fee structure for the business consultation services is composed of cash payment and/or bonus shares upon reaching certain milestones or meeting certain performance requirements. ● Location: the business consultation services will be based in the offices in Shenzhen, Hong Kong and New York, covering Greater China, Southeast Asia and North America.
The insurance maintained by Coinbase is shared among all of Coinbase’s customers, is not specific to our Company and may not be available or sufficient to protect our Company from all possible losses or sources of losses. Coinbase’s insurance may not cover the type of losses experienced by our Company.
The insurance maintained by Coinbase is shared among all of Coinbase’s customers, is not specific to MFH Tech or any specific Coinbase’s customers and may not be available or sufficient to protect MFH Tech from all possible losses or sources of losses. Coinbase’s insurance may not cover the type of losses experienced by MFH Tech .
However, due to resource restraints, we have ceased our development plans in digital payment business, including digital payment services and solution consulting, and applications for the required money transmit licenses since March 2024. On July 15, 2022, we incorporated Mercurity Fintech Technology Holding Inc.
However, due to resource restraints, we have ceased our development plans in digital payment business, including digital payment services and solution consulting, and applications for the required money transmit licenses since March 2024. Please refer to the section “ Digital payment solutions and services (Discontinued) ”. On July 15, 2022, MFH Cayman incorporated Mercurity Fintech Technology Holding Inc.
As such, the Company and Jinhe Capital Limited entered into an amendment (the “Amendment”) to the S19 Pro Purchase Agreement, pursuant to which the parties agreed to reduce the purchase order to no more than 2,000 Bitcoin miners for a total amount of no more than $3.6 million.
As such, MFH Cayman and Jinhe entered into an amendment (the “Amendment”) to the S19 Pro Purchase Agreement, pursuant to which the parties agreed to reduce the purchase order to no more than 2,000 Bitcoin miners for a total consideration of no more than $3.6 million.
In January 2023, we transferred all of the Web3 decentralized storage infrastructure to our US subsidiary MFH Tech, which serves as the operating entity for our business of Filecoin mining and cloud storage services for distributed application product operators.
In January 2023, MFH Cayman transferred all of the Web3 decentralized storage infrastructure to MFH Tech, which serves as the operating entity for Filecoin mining and cloud storage services for distributed application product operators.
Considering the increasing difficulty of crypto mining and the general losses by top crypto mining enterprises, we have decided to reduce the scale of procurement of Bitcoin miners and reduce the Company’s investment in the crypto mining field.
Considering the increasing difficulty of Bitcoin mining and the general losses by top Bitcoin mining enterprises, we had initially decided to reduce the scale of procurement of Bitcoin miners and reduce the Company’s investment in Bitcoin mining.
At the same time, Sheyang County Public Security Bureau forcibly removed the safe belonging to the Company that stored the digital asset hardware cold wallet, and forcibly destroyed the safe and seized the crypto asset hardware cold wallet and all crypto assets stored in it, and we verified that 95.23843 Bitcoins and 2005537.5 USD Coins stored in the out-of-control wallet had been transferred to another unknown wallet.
At the same time, Sheyang County Public Security Bureau forcibly removed the safe belonging to the Company that stored the digital asset hardware cold wallet, and forcibly destroyed the safe and seized the crypto asset hardware cold wallet and all crypto assets stored in it, and we verified that 95.23843 Bitcoins and 2005537.5 USD Coins with a book value as of December 31, 2022 of $3,469,762 stored in the out-of-control wallet had been transferred to another unknown wallet.
With the FINRA licenses, we will be able to provide more comprehensive professional services to corporate clients that want to become publicly traded in the United States, including financial advisory services and brokerage services. ● Target customers or clients: Our financial advisory services and brokerage services business mainly targets clients from Greater China, Southeast Asia, and North America (Canada, the United States, Mexico). ● Fee structure: Our fees are generally payable by the client by tranches upon reaching certain project milestones, such as upon first filing with the relevant regulator or upon completion of a project. ● Location: Financial advisory services and brokerage services will be based in our offices in Shenzhen, Hong Kong and New York, covering Greater China, Southeast Asia and North America, respectively. ● Milestones or Timetables: Our fees are generally payable by the client by tranches upon reaching certain project milestones, such as upon first filing with the relevant regulator or upon completion of a project.
Chaince Securities, Inc. and its subsidiary Chaince Securities, LLC will be able to provide more comprehensive professional services to corporate clients that wish to become publicly traded in the United States, including financial advisory services and brokerage services. ● Target customers or clients: The investment banking services business of Chaince Securities, LLC mainly target clients from Greater China, Southeast Asia, and North America. ● Fee structure: The fees of Chaince Securities, LLC are generally payable by the client by tranches upon reaching certain project milestones, such as upon first filing with the relevant regulator or upon completion of a project. ● Location: Investment banking services will be based in the offices in Shenzhen, Hong Kong and New York, covering Greater China, Southeast Asia and North America, respectively. ● Milestones or Timetables: The fees of Chaince Securities, LLC are generally payable by the client by tranches upon reaching certain project milestones, such as upon first filing with the relevant regulator or upon completion of a project.
Since significant reversals of cumulative revenue are possible given the nature of the assets, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and we receive confirmation of the consideration it will receive, at which time revenue is recognized.
Since significant reversals of cumulative revenue were possible given the nature of the assets, the consideration was constrained until the mining pool operator successfully placed a block (by being the first to solve an algorithm) and we received confirmation of the consideration it would receive, at which time revenue was recognized.
On January 10, 2023, we entered into an asset purchase agreement (the “Original Contract”) with Jinhe Capital Limited (“Jinhe”), providing for the purchase of 5,000 Antminer S19 PRO Bitcoin mining machines, for an aggregate consideration of $9 million.
On January 10, 2023, MFH Cayman entered into an asset purchase agreement (the “S19 Pro Purchase Agreement”) with Jinhe Capital Limited (“Jinhe”), providing for the purchase of 5,000 Antminer S19 PRO Bitcoin mining machines, for an aggregate consideration of USD$9,000,000.
As such, the Company and Jinhe Capital Limited entered into an amendment to the S19 Pro Purchase Agreement (the “Amendment”), pursuant to which the parties have agreed to reduce the purchase order to no more than 2,000 Bitcoin miners for a total amount of no more than $3.6 million.
On May 31, 2023, MFH Cayman and Jinhe Capital Limited entered into an amendment to the S19 Pro Purchase Agreement (the “Amendment”), pursuant to which the parties had agreed to reduce the purchase order to no more than 2,000 Bitcoin miners for a total amount of no more than $3.6 million.
We have been providing storage services to these end users and receiving Filecoin rewards as compensation for our services. Marketing We engage various marketing channels to promote our business to more business partners and individual customers.
Since December 2022, our clients for Filecoin mining business have been the end users (storage demanders) on the Filecoin Mainnet. We have been providing storage services to these end users and receiving Filecoin rewards as compensation for our services. Marketing We engage various marketing channels to promote our business to more business partners and individual customers.
Business Segment 1 – Business consultation services We provide comprehensive business consultation services and industry resource support to global corporate clients based on the resource advantages we have accumulated over the years.
Business Overview Business Segment 1 – Business consultation services Through Chaince Securities, Inc., Ucon and Lianji Future, we provide comprehensive business consultation services and industry resource support to global corporate clients based on the resource advantages we have accumulated over the years.
On December 15, 2022, we entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5.98 million, payable in our ordinary shares.
Going forward, we have no plans to resume any Bitcoin mining business. 2) Filecoin mining On December 15, 2022, MFH Cayman entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of $5.98 million, payable in our ordinary shares.
We have rented the Filecoin mining operating premises located in New Jersey, United States from Cologix US, Inc. and we have entered into the Filecoin mainnet as a miner by registering as a user on the Filecoin mainnet, complying with the general terms and conditions required to become a miner published on the Filecoin mainnet.
MFH Tech has leased its Filecoin mining operating premises located in New Jersey, United States from Cologix US, Inc. and entered into the Filecoin network as a storage provider or miner by registering as a user on the Filecoin network, complying with the general terms and conditions required to become a storage provider published on the Filecoin network.
In January 2023, we transferred all of the Web3 decentralized storage infrastructure to our US subsidiary MFH Tech, which serves as the operating entity for our business of Filecoin mining and cloud storage services for decentralized platform operators.
In January 2023, MFH Cayman transferred all of the Web3 decentralized storage infrastructure to MFH Tech, which serves as the operating entity for Filecoin mining and cloud storage services for distributed application product operators.
Our fractional share is relative to the proportion of computing power we contribute to the mining pool operator toward the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of our ordinary activities.
Ucon’s fractional share was commensurate to the proportion of computing power Ucon contributed to the mining pool operator as part of the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services was an output of part of the ordinary activities.
The transaction consideration we receive, if any, is noncash consideration, which we measure at fair value on the date received, which is not materially different than the fair value at contract inception or the time we have earned the award from the pools. These considerations are all variable.
The transaction consideration Ucon received, if any, was noncash, in the form of Bitcoins, which Ucon measured at fair value on the date received, which was not materially different than the fair value at contract inception or the time Ucon earned the award from the pools. These considerations are all variable.
In July 2019, we divested our B2B services to food-industry suppliers and customers by selling all the issued and outstanding shares of New Admiral Limited, or New Admiral, our former wholly-owned subsidiary, to Marvel Billion Development Limited, or Marvel Billion, in exchange for $1.0 million in cash.
On July 22, 2019, we divested our B2B services to food service suppliers and customers by selling all the issued and outstanding shares of New Admiral Limited, or New Admiral, our former wholly-owned subsidiary operating the B2B business, to Marvel Billion Development Limited, or Marvel Billion.
The transaction consideration we receive, if any, is noncash consideration, which we measure at fair value on the date received, which is not materially different than the fair value at contract inception or the time we have earned the award from the Filecoin mainnet. These considerations are all variable.
The transaction consideration MFH Tech receives , if any, is Filecoins, being noncash consideration, which MFH Tech measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time MFH Tech has earned the award from the Filecoin network. These considerations are all variable.
Pending the FINRA approval, we are building a professional team of 7-8 persons in New York to carry out financial advisory services and brokerage services, and we are also building a market promotion and customer service team of 3-4 persons in Hong Kong and Shenzhen to attract more potential clients. 1) Financial advisory services Our financial advisory services will focus on providing comprehensive financial services to corporate clients in emerging countries and regions planning to enter the US capital markets, such as providing capital operation plans, private equity financing services, investment consulting services, and mergers and acquisitions services to the clients.
Chaince Securities is building a professional team in New York to carry out financial advisory services and brokerage services, and is also building a market promotion and customer service team stationed in Hong Kong and Shenzhen to develop more clients. 1) Financial advisory services The financial advisory services undertaken through Chaince Securities, LLC will focus on providing comprehensive financial services to corporate clients in emerging countries and regions planning to enter the US capital markets, such as providing capital operation plans, private equity financing services, investment consulting services, and mergers and acquisitions services to the clients.
The agreement sets forth the terms and conditions pursuant to which the Coinbase entities will open and maintain the prime broker account for us and provide services relating to custody, trade execution, lending or post-trade credit (if applicable), and other services for certain digital assets. We do not currently own and/or hold crypto assets on behalf of third parties.
The agreement sets forth the terms and conditions pursuant to which the Coinbase Entities will open and maintain the prime broker account for MFH Tech and provide services relating to custody, trade execution, lending or post-trade credit (if applicable), and other services for certain digital assets.
On March 7, 2024, considering the uncertainties in the digital payment industry, the Company decided to suspend its development plan related to its digital payment solutions and digital payment services, as well as its application for an MSB (Money Service Business) license.
The Company currently does not mine Bitcoin and going forward, it has no plans to resume Bitcoin mining. 34 On March 7, 2024, considering the uncertainties in the digital payment industry, the Company decided to suspend its development plan related to its digital payment solutions and digital payment services, as well as its application for an MSB (Money Service Business) license.
Our headquarters occupy a total of 5,730 square feet. The lease of our headquarter office has a term of three calendar year, from November 1, 2022 to September 29, 2025, with an annual rent cost of $358,044 for the year ended December 31, 2023.
The lease of our headquarter office has a term of three calendar year, from November 1, 2022 to September 29, 2025, with an annual rent cost of $375,940 for the year ended December 31, 2024.
On August 1, 2023, the Company signed a supplementary comprehensive service agreement with the same Chinese media company, pursuant to which the Company continued to assist the client in providing management consulting services and introducing professional service agency resources. The Company expects to receive no less than $150,000 in revenue from this new agreement within the year 2024.
On August 1, 2023, MFH Tech signed a supplementary comprehensive service agreement with the same Chinese media company, pursuant to which MFH Tech continued to assist the client in providing management consulting services and introducing professional service agency resources.
However, due to the continued low market prices of Filecoin in 2023, as well as the average return on unit computing power of Filecoin mining business decreasing with the growth of the computing power of the whole network, as of the end of 2023, we had not opened enough nodes to achieve the initial goals of our Filecoin mining business.
However, due to the continued low market prices of Filecoin in 2023, as well as the declining average return on unit computing power of Filecoin mining, at the end of 2023, we had not opened enough compute nodes to achieve the initial target of 100PiB storage capacity.
Apart from the Filecoin mining business, we had not utilized the infrastructure for any other cryptocurrency mining business, nor had we provided cloud storage services to any other distributed application product operators. Therefore, the Web3 decentralized storage infrastructure was not fully utilized during fiscal year 2023.
Apart from the Filecoin mining business, we have not utilized the infrastructure for any other cryptocurrency mining business, and nor have we provided cloud storage services to any other distributed application product operators.
Our clients in the Bitcoin mining business we conducted from October 2021 to April 2022 were F2Pool mining pool operators. We provided computing power to the mining pool and received Bitcoin rewards as compensation for our services. Since December 2022, our clients for Filecoin mining business have been the end users (storage demanders) on the Filecoin Mainnet.
Distributed storage and computing services From 2021 to 2024, our distributed storage and computing business only includes cryptocurrency mining. Our clients in the Bitcoin mining business we conducted from October 2021 to April 2022 were F2Pool mining pool operators. We provided computing power to the mining pool and received Bitcoin rewards as compensation for our services.
Considering the increasing difficulty of mining in the mining industry and the general loss of the top mining enterprises, we have decided to reduce the procurement scale of Bitcoin miners and reduce the Company’s investment in the mining field.
Considering the increasing difficulty of Bitcoin mining in general and certain losses suffered by a number top Bitcoin mining enterprises, we initially decided to reduce the procurement scale of Bitcoin miners and reduce the Company’s investment in Bitcoin mining.
Coinbase Custody maintains, at its sole expense, insurance coverage in such types and amounts as commercially reasonable for the Custodial Services provided in the Coinbase Prime Broker Agreement.
Coinbase Custody shall also obtain and maintain, at its sole expense, insurance coverage in such types and amounts as shall be commercially reasonable for the custodial services provided to MFH Tech.
Starting on December 20, 2022, we use some of the storage capacity of these devices for Filecoin mining business. We have rented the Filecoin mining operating premises located in New Jersey, United States from Cologix US, Inc. for the storage of the Equipment. Our executive office is located at 1330 Avenue of Americas, Fl 33, New York, 10019, United States.
Starting on December 20, 2022, we use some of the storage capacity of these devices for Filecoin mining business. We have rented the Filecoin mining operating premises located in New Jersey, United States from Cologix US, Inc. for the storage of the Equipment. As of December 31, 2024, the book value of the Equipment was $2,248,195.
(“Chaince Securities”), which plans to develop financial advisory services, online and traditional brokerage services independently in the future. On May 3, 2023, Chaince Securities entered into a Purchase and Sale Agreement for the acquisition of all assets and liabilities of J.V. Delaney & Associates, an investment advisory firm and FINRA licensed broker dealer.
In May 2023, Chaince Securities, Inc. entered into a Purchase and Sale Agreement for the acquisition of all assets and liabilities of J.V. Delaney & Associates, an investment advisory firm and FINRA licensed broker dealer. In November 2024, Chaince Securities, Inc. received FINRA approval for the acquisition of J.V.
For the year ended December 31, 2023, we earned $285,928 in Filecoin mining revenue from physical mining operations. The Web3 decentralized storage infrastructure, which we acquired through a share offering in December 2022, is expected to achieve a maximum storage capacity of approximately 100PiB.
For the years ended December 31, 2022, 2023 and 2024, MFH Cayman and MFH Tech earned $348, $285,928 and $513,405 in revenue from Filecoin mining operations, respectively. 39 The Web3 decentralized storage infrastructure MFH Cayman acquired in December 2022 is expected to achieve a maximum original storage capacity (the “Raw Byte Power”) of approximately 100PiB.
Delaney & Associates, an investment advisory firm and FINRA licensed broker dealer. The FINRA review process for such acquisition is currently ongoing. From April to June 2023, our management reassessed the potential adverse effects of changes in the Company’s business environment, and readjusted the Company’s business structure and the future development plan.
From April to June 2023, our management reassessed the potential adverse effects of changes in the Company’s business environment, and readjusted the Company’s business structure and the future development plan.
There is no significant financing component related to these transactions. Fair value of the digital assets award received is determined using the quoted price of the related digital assets at the time of receipt. For the year ended December 31, 2022, we earned $348 in Filecoin mining revenue from physical mining operations.
There was no significant financing component related to these transactions. Fair value of the digital assets award received was determined using the quoted price of the related digital assets at the time of receipt.
The Hong Kong Office has a flexible monthly lease, subject to auto-renewal each month. The rent cost of the Hong Kong Office for the year ended December 31, 2023 was approximately $6,780. We believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans.
The rent cost of the Hong Kong Office for the year ended December 31, 2024 was approximately US$17,390. We believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans. We believe that our current property rights are sufficient for our current operations. 75
In exchange for providing computing power, we are entitled to a fractional share of the fixed digital asset awards the mining pool operator receives, for successfully adding blocks to the blockchain.
In exchange for providing computing power, Ucon was entitled to and received a fractional share of the fixed Bitcoin awards the mining pool operator received.
The investment was made with the aim to own mining machines capable of gathering, processing, and storing vast amounts of data, to advance the cryptocurrency mining business, and to advance the Web3 framework. We started using some of the storage capacity of these devices for Filecoin mining business from December 20, 2022.
The investment was made with an aim to own mining machines capable of gathering, processing, and storing vast amounts of data and to advance the Filecoin mining business. On December 20, 2022, MFH Cayman commenced Filecoin (“FIL”) mining operations.
On December 15, 2022, we entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5,980,000, payable in our ordinary shares.
Providing storage capacity to the Filecoin network requires a Filecoin miner to provide a number of FIL as collateral in accordance with the proof-of-stake protocols, which is proportional to the storage hardware committed by the miner. b) MFH Tech’s Filecoin mining operations On December 15, 2022, MFH Cayman entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5.98 million, payable in MFH Cayman’s ordinary shares.
The investment was made with an aim to own mining machines capable of gathering, processing, and storing vast amounts of data, to advance the cryptocurrency mining business, and to further solidify us as a pioneer in the creation of the Web3 framework.
The investment is made with an aim to own mining machines capable of gathering, processing and storing vast amounts of data, to advance the cryptocurrency mining business. The Web3 decentralized storage infrastructure is expected to achieve a maximum original storage capacity of approximately 100PiB.
Our total cryptocurrency asset (excluding the Bitcoins and USD Coins out of control, which have been fully recognized as impairment losses) holdings constituted less than 2.4% of our consolidated total assets as of December 31, 2023. As such, we believe that the immediate impact of such regulatory changes will be limited to us.
For instance, the price of Filecoins experienced sharp volatility in 2023 and 2024. Our total cryptocurrency asset holdings constituted less than 9% of our consolidated total assets as of December 31, 2024. As such, we believe that the immediate impact of such regulatory changes will be limited to us.
However, these Web3 decentralized storage infrastructures were recognized for depreciation costs on a straight-line basis, which resulted in significant losses for our business of providing distributed computing and storage services in 2023. 36 On December 5, 2023, the Company signed an Origin Storage Filecoin Mining Service Contract with Origin Storage PTE. LTD. (“Origin Storage”).
Therefore, the Web3 decentralized storage infrastructure was not fully utilized during fiscal year 2023 and 2024. However, these Web3 decentralized storage infrastructures were recognized for depreciation costs on a straight-line basis, which resulted in significant losses for our business of providing distributed computing and storage services in 2023 and 2024.
We are seeking to lease a new office in Shenzhen for our China operations and have identified certain office space, with the execution of the lease agreement pending as of the date of this report. 47 Our Hong Kong office (the “Hong Kong Office”) is located at Office Room 12, Smart-Space FinTech 1, Unit 617 - 620, Level 6, Core E, Cyberport 3, No. 100 Cyberport Road, Hong Kong.
We are seeking to lease a new office in Shenzhen for our China operations and have identified certain office space, with the execution of the lease agreement pending as of the date of this report.
For instance, the price of Bitcoins experienced sharp volatility in the first seven months of 2023, including a high price of more than $31,000 and a low price of less than $17,000, and the price of Filecoins also experienced sharp volatility in the first seven months of 2023, including a high price of more than $9 and a low price of less than $3.
For instance, the price of Filecoins also experienced sharp volatility in 2024, including a high price of more than $11 and a low price of less than $3. Our total cryptocurrency asset holdings constituted less than 9% of our consolidated total assets as of December 31, 2024.
The Company earned $783,090 in Bitcoin mining revenue from shared mining operations for the year ended December 31, 2022, and $664,307 for the year ended December 31, 2021. We have not operated any Bitcoin mining business since May 2022 and there were no related revenues in the year ended December 31, 2023.
Ucon earned $783,090 in Bitcoin mining revenue from the pooled mining operations for the year ended December 31, 2022, and $664,307 for the year ended December 31, 2021.
We recognized consultation services revenue of $80,000 for the year ended December 31, 2022 based on the percentage-of-completion.
MFH Tech recognized consultation services revenue of $140,000 and $301,975 for the years ended December 31, 2023 and 2024, respectively, based on the percentage-of-completion.
As of the date of this annual report, the effective storage capacity of our two new Filecoin mining nodes has reached 64PiB, exceeding our original target storage capacity of 60.4PiB, and it only take up 6.4PiB of the original storage capacity (the “Raw Byte Power”) of our Web3 decentralized storage infrastructure.
As of March 31, 2024, the effective storage capacity of Filecoin Nodes 3 and 4 had reached 70PiB, exceeding MFH Tech’s original target storage capacity of 60.4PiB, and it only took up 7PiB of the original storage capacity (the “Raw Byte Power”) of MFH Tech’s Web3 decentralized storage infrastructure.
On March 10, 2024, the Company and Jinhe entered into a Cancellation Agreement to cancel such purchase in its entirety. Going forward, we currently have no plans to resume Bitcoin mining business. On January 28, 2023, we decided to write off NBpay Investment Limited and its subsidiaries, which had no meaningful assets or business nor employees.
On January 28, 2023, we decided to write off NBpay Investment Limited and its subsidiaries, which had no meaningful assets or business nor employees.
The lease for the Shenzhen Office commenced in June 2022 and shall expire in the end of April 2024.
The lease for the Shenzhen Office commenced in June 2022 and had expired in the end of April 2024. The rent cost of the Shenzhen Office for the year ended December 31, 2024 was approximately US$16,677.
In this way, most of the original storage capacity (the “Raw Byte Power”) of the Company’s Web3 decentralized storage infrastructure will remain available for use, which we can utilize to expand our Filecoin mining business, or engage in other cryptocurrency mining businesses, or provide cloud storage services to other distributed application product operators operators.
As of the date of this report, most of the original storage capacity or the Raw Byte Power of the Company’s Web3 decentralized storage infrastructure will remain available for use, which MFH Tech can utilize to continue to expand its Filecoin mining.
Starting on December 20, 2022, we used some of the storage capacity of these devices for Filecoin mining business, and other storage capacity will be used to provide cloud storage services to distributed application product operators.
Starting on December 20, 2022, MFH Cayman had been using some of the storage capacity of these devices for Filecoin mining. In January 2023, MFH Cayman transferred all of the Web3 decentralized storage infrastructure to MFH Tech, which serves as the operating entity for Filecoin mining and cloud storage services for distributed application product operators.
In July 2022, we added consultation services to our business, providing business consultation services to international corporate clients, especially those in the blockchain industry. Meanwhile, we conducted viability studies about the business models, license requirements and operational costs of online and traditional brokerage services and digital payment business.
Meanwhile, we conducted viability studies about the business models, license requirements and operational costs of online and traditional brokerage services and digital payment business and have been expanding our business into those two sectors, such as building up client base and acquiring the necessary licenses.
We are establishing our Asia Business consultation services team in Hong Kong and Shenzhen, and we seek to acquire more new clients in the Asia Pacific region and provide better services to these clients. Presently, we are in advance negotiations with several Asian clients to provide them with comprehensive business consulting to enter the US market.
Presently, Ucon is in advance negotiations with several Asian clients to provide them with comprehensive business consulting to enter the US market.
The Company expects to receive $50,000 in revenue from this agreement within the next year. 33 On December 5, 2023, the Company signed an Origin Storage Filecoin Mining Service Contract with Origin Storage PTE. LTD. (“Origin Storage”).
On December 5, 2023, MFH Tech signed a Filecoin Mining Service Contract with Origin Storage PTE. LTD. (“Origin Storage”).
We entered into cryptocurrency mining pools by executing a business contract with a collective mining service provider on October 22, 2021 to provide computing power to the mining pool and derived USD$664,307 related revenue in 2021 and USD$783,089 related revenue in the first half of 2022.
On October 22, 2021, we entered into a business contract with a collective mining service provider to provide computing power to a Bitcoin mining pool from October 2021 to April 2022. However, since May 2022, we have not conducted any business related to Bitcoin mining services.
Financial advisory services and Brokerage services Our financial advisory services and brokerage services business mainly targets clients from Greater China, Southeast Asia, and North America. Our financial advisory services and brokerage services (securities underwriting and other brokerage services) can only be carried out after we have completed the acquisition of J.V.
Investment banking services Our investment banking services (such as financial advisory services, as well as mergers or initial public offering underwriting services) business mainly targets clients from Greater China, Southeast Asia, and North America. In November 2024, Chaince Securities, Inc. received FINRA approval for the acquisition of J.V.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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For the year Ended December 31, Variance in 2023 2022 Amount (US$, except share and share related data) Revenue $ 445,928 $ 863,438 $ (417,510 ) Business consultation services 160,000 80,000 80,000 Distributed storage and computing services 285,928 783,438 (497,510 ) Technical services — — — Cost of Revenue $ (1,424,312 ) $ (1,380,600 ) $ (43,712 ) Business consultation services (138,092 ) (19,000 ) (119,092 ) Distributed storage and computing services (1,286,220 ) (1,361,600 ) 75,380 Technical services — — — Gross profit $ (978,384 ) $ (517,162 ) $ (461,222 ) Sales and marketing (449,900 ) (35,000 ) (414,900 ) General and administrative (2,515,291 ) (2,156,063 ) (359,228 ) Provision for doubtful accounts — (3,138 ) 3,138 (Loss)/income on disposal of intangible assets — (29,968 ) 29,968 Impairment loss of property and equipment (307,733 ) — (307,733 ) Impairment loss of intangible assets (4,248,085 ) (3,144,053 ) (1,104,032 ) Operating loss from continuing operations $ (8,499,393 ) $ (5,885,384 ) $ (2,614,009 ) Interest (expenses)/income, net (196,055 ) 5,118 (201,173 ) Financing costs (450,000 ) — (450,000 ) Other (expenses)/income, net 2,379 1,248 1,131 Loss on market price of short-term investment (226,210 ) — (226,210 ) Loss from selling short-term investments (78,693 ) — (78,693 ) Loss from disposal of subsidiaries — (4,664 ) 4,664 Loss before provision for income taxes $ (9,447,972 ) $ (5,883,682 ) $ (3,564,290 ) Income tax benefits 90,776 248,711 (157,935 ) Loss from continuing operations $ (9,357,196 ) $ (5,634,971 ) $ (3,722,225 ) Loss from discontinued operations — — — Net loss $ (9,357,196 ) $ (5,634,971 ) $ (3,722,225 ) Revenue We generate revenues from business consultation services and distributed storage and computing services.
For the year Ended December 31, Variance in 2023 2022 Amount (US$, except share and share related data) Revenue $ 445,928 $ 863,438 $ (417,510 ) Business consultation services 160,000 80,000 80,000 Distributed storage and computing services 285,928 783,438 (497,510 ) Technical services - - - Cost of Revenue $ (1,424,312 ) $ (1,380,600 ) $ (43,712 ) Business consultation services (138,092 ) (19,000 ) (119,092 ) Distributed storage and computing services (1,286,220 ) (1,361,600 ) 75,380 Technical services - - - Gross profit $ (978,384 ) $ (517,162 ) $ (461,222 ) Sales and marketing (449,900 ) (35,000 ) (414,900 ) General and administrative (2,515,291 ) (2,156,063 ) (359,228 ) Provision for doubtful accounts - (3,138 ) 3,138 Loss on disposal of intangible assets - (29,968 ) 29,968 Impairment loss of property and equipment (307,733 ) - (307,733 ) Impairment loss of intangible assets (4,248,085 ) (3,144,053 ) (1,104,032 ) Operating loss from continuing operations $ (8,499,393 ) $ (5,885,384 ) $ (2,614,009 ) Interest (expenses)/income, net (196,055 ) 5,118 (201,173 ) Financing costs (450,000 ) - (450,000 ) Other (expenses)/income, net 2,379 1,248 1,131 Loss on market price of short-term investment (226,210 ) - (226,210 ) Loss from selling short-term investments (78,693 ) - (78,693 ) Loss from disposal of subsidiaries - (4,664 ) 4,664 Loss before provision for income taxes $ (9,447,972 ) $ (5,883,682 ) $ (3,564,290 ) Income tax benefits 90,776 248,711 (157,935 ) Loss from continuing operations $ (9,357,196 ) $ (5,634,971 ) $ (3,722,225 ) Loss from discontinued operations - - - Net loss $ (9,357,196 ) $ (5,634,971 ) $ (3,722,225 ) Revenue We generate revenues from business consultation services and distributed storage and computing services.
We estimated the fair values of the cryptocurrencies based on the intraday low price every day and recognized $3,144,053 impairment loss for the year ended December 31, 2022, including $3,111,232 impairment loss of Bitcoins, $26,957 impairment loss of Filecoins and $5,864 impairment loss of Tether USDs.
We estimated the fair values of the cryptocurrencies based on the intraday low price every day and recognized $3,144,053 impairment loss for the year ended December 31, 2022, including $3,111,232 impairment loss of Bitcoins, $26,957 impairment loss of Filecoins and $5,864 impairment loss of Tether USDs.
As of April 25, 2023, we had not been able to communicate effectively with the Sheyang County Public Security Bureau. The Sheyang County Public Security Bureau did not provide a written response to the appeal materials submitted by the Company in accordance with regulations.
As of April 25, 2023, we had not been able to communicate effectively with the Sheyang County Public Security Bureau. The Sheyang County Public Security Bureau did not provide a written response to the appeal materials submitted by the Company in accordance with regulations.
Capital Expenditures On January 10, 2023, the Company entered into an asset purchase agreement (the “Original Contract”) with Jinhe Capital Limited (“Jinhe”), providing for the purchase of 5,000 Antminer S19 PRO Bitcoin mining machines, for an aggregate consideration of $9 million.
On January 10, 2023, the Company entered into an asset purchase agreement (the “Original Contract”) with Jinhe Capital Limited (“Jinhe”), providing for the purchase of 5,000 Antminer S19 PRO Bitcoin mining machines, for an aggregate consideration of $9 million.
The intraday low price of cryptocurrencies to be utilized in calculating impairment of our cryptocurrencies held as that metric is the most accurate indicator of whether it is more likely than not that the asset is impaired.
Because the intraday low price of cryptocurrencies to be utilized in calculating impairment of our cryptocurrencies held as that metric is the most accurate indicator of whether it is more likely than not that the asset is impaired.
As of December 31, 2023, approximately 40% of the agreed services had been completed as scheduled, and the Company recognized consultation services revenue of $20,000 for the year ended December 31, 2023 based on the percentage-of-completion.
As of December 31, 2023, approximately 20% of the agreed services had been completed as scheduled, and the Company recognized consultation services revenue of $20,000 for the year ended December 31, 2023 based on the percentage-of-completion.
Net cash (used in)/provided by investing activities Net cash used in investing activities was $5,660,208 for the year ended December 31, 2023, which was primarily attributable to: Cash from selling short-term investments of $3,434,764, Received short-term investment interest and dividends of $48,089, Cash paid for short-term investments of $8,038,049, Cash paid for long-term equity investments of $160,000, Payments for purchasing fixed assets of $3,003,808, and Prepayments for acquisition of $120,000.
Net cash used in investing activities was $5,660,208 for the year ended December 31, 2023, which was primarily attributable to: Cash from selling short-term investments of $3,434,764, Received short-term investment interest and dividends of $48,089, Cash paid for short-term investments of $8,038,049, Cash paid for long-term equity investments of $160,000, Payments for purchasing fixed assets of $3,003,808, and Prepayments for acquisition of $120,000.
This growth is mainly due to an increase in the number of our business consultation service clients for the year ended December 31, 2023. 57 Our revenues from distributed storage and computing services, or cryptocurrency mining business decreased by $497,510, or 63.5%, to $285,928 for the year ended December 31, 2023 from $783,438 for the year ended December 31, 2022.
This growth is mainly due to an increase in the number of our business consultation service clients for the year ended December 31, 2023. 94 Our revenues from distributed storage and computing services, or cryptocurrency mining business decreased by $497,510, or 63.5%, to $285,928 for the year ended December 31, 2023 from $783,438 for the year ended December 31, 2022.
We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. 56 Recently Issued and Adopted Accounting Pronouncements The Company has evaluated all other recently issued accounting pronouncements and believes such pronouncements do not have a material effect on the Company’s financial statements.
We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. 88 Recently Issued and Adopted Accounting Pronouncements The Company has evaluated all other recently issued accounting pronouncements and believes such pronouncements do not have a material effect on the Company’s financial statements.
On June 12, 2023, the Company’s US subsidiary MFH Tech signed a Referral Agreement with Global Innovation Wisdom Consultant, Inc (the “Global Innovation Wisdom”), pursuant to which Global Innovation Wisdom will use its best efforts to introduce a bank to MFH Tech, and MFH Tech intended to carry out digital banking services by acquiring this bank.
On June 12, 2023, our US subsidiary MFH Tech signed a Referral Agreement with Global Innovation Wisdom Consultant, Inc (the “Global Innovation Wisdom”), pursuant to which Global Innovation Wisdom will use its best efforts to introduce a bank to MFH Tech, and MFH Tech intended to carry out digital banking services by acquiring this bank.
Since significant reversals of cumulative revenue were possible given the nature of the assets, the consideration was constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company received confirmation of the consideration it would receive, at which time revenue was recognized.
Since significant reversals of cumulative revenue were possible given the nature of the assets, the consideration was constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and Ucon received confirmation of the consideration it would receive, at which time revenue was recognized.
As of December 31, 2023, all the agreed services under this agreement have been completed, and the Company recognized consultation services revenue of $80,000 for the year ended December 31, 2023 based on the percentage-of-completion. On August 1, 2023, the Company signed a supplementary comprehensive service agreement with the Chinese media company.
As of December 31, 2023, all the agreed services under this agreement have been completed, and the Company recognized consultation services revenue of $80,000 for the year ended December 31, 2023 based on the percentage-of-completion. On August 1, 2023, MFH Tech signed a supplementary comprehensive service agreement with the Chinese media company.
Research and Development Please refer to “Item 4. Information on the Company — B. Business Overview — Intellectual Property.” D.
Research and Development Please refer to “Item 4. Information on the Company — B. Business Overview — Intellectual Property.” 100 D.
Therefore, in our consolidated financial statements as of December 31, 2022, we did not recognize any impairment losses related to the loss of control over these crypto assets. 70 We recognized $1,292,568 impairment loss of intangible assets for the year ended December 31, 2021 in the consolidated financial statements.
Therefore, in our consolidated financial statements as of December 31, 2022, we did not recognize any impairment losses related to the loss of control over these crypto assets. 104 We recognized $1,292,568 impairment loss of intangible assets for the year ended December 31, 2021 in the consolidated financial statements.
No related costs occurred in the year ended December 31, 2022 and 2021. Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S.
No related costs occurred in the year ended December 31, 2024 and 2022. Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S.
Income tax expense/(benefits) The reconciliations of tax computed by applying the statutory income tax rate of 21% applicable to the US operation, 16.5% applicable to the Hong Kong operation, and 25% applicable to the PRC operation to income tax benefit from continuing operations for the year ended December 31, 2023 and 2022 are as follows: For the year ended December 31, 2023 US$ US$ US$ US$ US$ US (MFH Tech) US (Chaince) Hong Kong PRC Consolidated Loss before income taxes (2,662,392 ) (45,346 ) (496,006 ) (121,212 ) (2,837,327 ) Income tax computed at applicable tax rates (559,102 ) (9,522 ) (81,841 ) (30,303 ) (680,768 ) Current losses unrecognized deferred income tax 559,102 — — 30,303 589,405 Prior income tax expense recognized in current period 587 — — — 587 Income tax expenses/(benefits) 587 (9,522 ) (81,841 ) — (90,776 ) For the year ended December 31, 2022 US$ US$ US$ US$ US Hong Kong PRC Consolidated Income/(Loss) before income taxes 8,776 (1,317,169 ) (177,053 ) (1,485,445 ) Income tax computed at applicable tax rates 1,843 (217,333 ) (44,263 ) (259,753 ) Effect of different tax rates in different jurisdictions 451 — — 451 Non-deductible expenses — — 785 785 Current losses unrecognized deferred income tax — — 43,478 43,478 Prior losses recognized deferred income tax in current period — (33,672 ) — (33,672 ) Income tax expenses/(benefits) 2,294 (251,005 ) — (248,711 ) Net loss Our net loss was $9,357,196 for the year ended December 31, 2023 compared to $5,634,971 for the year ended December 31, 2022.
Income tax expense/(benefits) The reconciliations of tax computed by applying the statutory income tax rate of 21% applicable to the US operation, 16.5% applicable to the Hong Kong operation, and 25% applicable to the PRC operation to income tax benefit from continuing operations for the year ended December 31, 2023 and 2022 are as follows: For the year ended December 31, 2023 US$ US$ US$ US$ US$ US (MFH Tech) US (Chaince) Hong Kong PRC Consolidated Loss before income taxes (2,662,392 ) (45,346 ) (496,006 ) (121,212 ) (3,324,956 ) Income tax computed at applicable tax rates (559,102 ) (9,522 ) (81,841 ) (30,303 ) (680,768 ) Current losses unrecognized deferred income tax 559,102 - - 30,303 589,405 Prior income tax expense recognized in current period 587 - - - 587 Income tax expenses/(benefits) 587 (9,522 ) (81,841 ) - (90,776 ) For the year ended December 31, 2022 US$ US$ US$ US$ US Hong Kong PRC Consolidated Income/(Loss) before income taxes 8,776 (1,317,169 ) (177,053 ) (1,485,446 ) Income tax computed at applicable tax rates 1,843 (217,333 ) (44,263 ) (259,753 ) Effect of different tax rates in different jurisdictions 451 - - 451 Non-deductible expenses - - 785 785 Current losses unrecognized deferred income tax - - 43,478 43,478 Prior losses recognized deferred income tax in current period - (33,672 ) - (33,672 ) Income tax expenses/(benefits) 2,294 (251,005 ) - (248,711 ) Net loss Our net loss was $9,357,196 for the year ended December 31, 2023 compared to $5,634,971 for the year ended December 31, 2022.
The transaction consideration the Company received, if any, was noncash consideration, which the Company measured at fair value on the date received, which was not materially different than the fair value at contract inception or the time the Company had earned the award from the pools. These considerations were all variable.
The transaction consideration Ucon received, if any, was noncash consideration, which Ucon measured at fair value on the date received, which was not materially different than the fair value at contract inception or the time Ucon had earned the award from the pools. These considerations were all variable.
No impairment loss of property and equipment was recognized for the year ended December 31, 2022. 58 We estimated the fair values of the Filecoins based on the intraday low price of the Coinbase platform every day and recognized $303,276 impairment loss of Filecoins for the year ended December 31, 2023.
No impairment loss of property and equipment was recognized for the year ended December 31, 2022. 95 We estimated the fair values of the Filecoins based on the intraday low price of the Coinbase platform every day and recognized $303,276 impairment loss of Filecoins for the year ended December 31, 2023.
However, due to our lack of sufficient Filecoins to meet the collateral requirements for conducting Filecoin mining business, we have not fully utilized our equipment, while the depreciation of the equipment was based on the expected useful life using the straight-line method, which resulted in depreciation costs far exceeding Filecoin mining revenue in 2023, causing our Filecoin mining business to suffer a great loss. 48 On December 5, 2023, the Company signed an Origin Storage Filecoin Mining Service Contract with Origin Storage PTE.
However, due to our lack of sufficient Filecoins to meet the collateral requirements for conducting Filecoin mining business, we have not fully utilized our equipment, while the depreciation of the equipment was based on the expected useful life using the straight-line method, which resulted in depreciation costs far exceeding Filecoin mining revenue in 2023 and 2024, causing our Filecoin mining business to suffer a great loss. 76 On December 5, 2023, the Company signed an Origin Storage Filecoin Mining Service Contract with Origin Storage PTE.
As of April 15, 2024, by adopting the new technology provided by Origin Storage, we have opened two new nodes (replacing the two old nodes we opened in 2023) with an effective storage capacity of 70 PiB, taking up only 7 PiB original storage capacity (the “Raw Byte Power”)of our Web3 decentralized storage infrastructure, which means that using the new technology provided by Origin Storage to occupy the same original storage capacity can achieve 10 times the effective storage capacity, and the Company is expected to achieve greater productivity of the cryptocurrency mining business in the future.
As of December 31, 2024, by adopting the new technology provided by Origin Storage, we have opened two new nodes (replacing the two old nodes we opened in 2023) with an effective storage capacity of 70 PiB, taking up only 7 PiB original storage capacity (the “Raw Byte Power”)of our Web3 decentralized storage infrastructure, which means that using the new technology provided by Origin Storage to occupy the same original storage capacity can achieve 10 times the effective storage capacity, and the Company is expected to achieve greater productivity of the cryptocurrency mining business in the future.
In exchange for providing computing power, the Company was entitled to a fractional share of the fixed digital asset awards the mining pool operator receives, for successfully adding blocks to the blockchain.
In exchange for providing computing power, Ucon was entitled to a fractional share of the fixed digital asset awards the mining pool operator receives, for successfully adding blocks to the blockchain.
Since significant reversals of cumulative revenue are possible given the nature of the assets, the consideration is constrained until the all the miners successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized.
Since significant reversals of cumulative revenue are possible given the nature of the assets, the consideration is constrained until the all the miners successfully places a block (by being the first to solve an algorithm) and MFH Tech receives confirmation of the consideration it will receive, at which time revenue is recognized.
The direct costs of the Company’s business consultation services included office space expenses, team salaries, travel expenses, printing fees, and the fees required to acquire clients. The cost of consultation services was recognized in the amount of $19,000 and $138,092 respectively for the year ended December 31, 2022 and 2023.
The direct costs of the Company’s business consultation services included office space expenses, team salaries, travel expenses, printing fees, and the fees required to acquire clients. The cost of business consultation services was recognized in the amount of $259,593, $138,092 and $19,000 for the year ended December 31, 2024, 2023 and 2022, respectively.
The Company has rented the Filecoin mining operating premises located in New Jersey, United States from Cologix US, Inc. and the Company has entered into the Filecoin mainnet as a miner by registering as a user on the Filecoin mainnet, complying with the general terms and conditions required to become a miner published on the Filecoin mainnet.
MFH Tech has rented the Filecoin mining operating premises located in New Jersey, United States from Cologix US, Inc. and MFH Tech has entered into the Filecoin mainnet as a miner by registering as a user on the Filecoin mainnet, complying with the general terms and conditions required to become a miner published on the Filecoin mainnet.
Among them, our loss from continuing operations was $9,357,196 for the year ended December 31, 2023 compared to $5,634,971 for the year ended December 31, 2022.
Among them, our loss from continuing operations was $9,357,196 for the year ended December 31, 2023 compared to $5,634,971 for the year ended December 31, 2022. 97 B.
Bureau of Labor Statistics, the year-over-year percent changes in the consumer price index for December 2021, 2022 and 2023 were increases of 7% and 6.4%, and 3.2%, respectively. Although we have not been materially affected by inflation in the past, we have experienced and expect to continue to experience upward pressure on our operating expenses. C.
Bureau of Labor Statistics, the year-over-year percent changes in the consumer price index for December 2022, 2023 and 2024 were increases of 6.4%, 3.2% and 2.9%, respectively. Although we have not been materially affected by inflation in the past, we have experienced and expect to continue to experience upward pressure on our operating expenses. C.
The Company’s fractional share is relative to the proportion of storage capacity we contribute to Filecoin mainnet toward the total storage capacity contributed by all the Filecoin mainnet’s participants in solving the current algorithm. Providing storage capacity in digital asset transaction verification services is an output of the Company’s ordinary activities.
MFH Tech’s fractional share is relative to the proportion of storage capacity we contribute to Filecoin mainnet toward the total storage capacity contributed by all the Filecoin mainnet’s participants in solving the current algorithm. Providing storage capacity in digital asset transaction verification services is an output of MFH Tech’s ordinary activities.
The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the Filecoin mainnet. These considerations are all variable.
The transaction consideration MFH Tech receives, if any, is noncash consideration, which MFH Tech measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time MFH Tech has earned the award from the Filecoin mainnet. These considerations are all variable.
On August 23, 2022, the Company signed a Consulting Agreement with a Chinese media company, pursuant to which the Company will serve as a business consultant in order to facilitate the client to establish its operating entity in the United States and related financing strategy, and the agreed amount of the immutable consideration portion of the agreement is $160,000.
Specifically, as follows: On August 23, 2022, MFH Tech signed a Consulting Agreement with a Chinese media company, pursuant to which the Company will serve as a business consultant in order to facilitate the client to establish its operating entity in the United States and related financing strategy, and the agreed amount of the immutable consideration portion of the agreement is $160,000.
See Note 3 of the consolidated financial statements as of December 31, 2023. Results of Operations Results of Operations for the Year Ended December 31, 2023 and 2022 The following table summarizes the results of our operations during the years ended December 31, 2023 and 2022, respectively, and provides information regarding the dollar increase or (decrease) during period.
See Note 3 of the consolidated financial statements as of December 31, 2024. Results of Operations Results of Operations for the Year Ended December 31, 2024 and 2023 The following table summarizes the results of our operations during the years ended December 31, 2024 and 2023, respectively, and provides information regarding the dollar increase or (decrease) during such period.
The Company’s computing power during this period was 35,000TH/s, the average daily output during this period was 0.17011136 BTC, and the revenue per unit of computing power was 0.000004860 BTC/TH/day. For this Bitcoin mining business, the Company essentially leased the Bitcoin mining machines instead of owning them, while the cost of renting the mining machines proved to be very high.
Ucon’s computing power during this period was 35,000TH/s, the average daily output during this period was 0.17011136 BTC, and the revenue per unit of computing power was 0.000004860 BTC/TH/day. For this Bitcoin mining business, Ucon essentially leased the Bitcoin mining machines instead of owning them, while the cost of renting the mining machines proved to be very high.
We started using some of the storage capacity of the equipment for Filecoin mining business from December 20, 2022. For the year ended December 31, 2022 and 2023, we earned $348 and $ $285,928 respectively in Filecoin mining revenue from physical mining operations.
We started using some of the storage capacity of the equipment for Filecoin mining business from December 20, 2022. For the year ended December 31, 2022, 2023 and 2024, we earned $348, $285,928 and $513,405 respectively in Filecoin mining revenue from physical mining operations.
Due to the price crash of Bitcoin in 2022, the Company, out of caution, decided to change the impairment test method of Bitcoin and other cryptocurrencies from testing once or twice a year by calculating the fair value based on the average daily closing price of the past 12 months to testing every day by calculating the fair value based on the intraday low price.
In 2022, as the price crash of Bitcoin, we, out of caution, decided to change the impairment test method of Bitcoin and other cryptocurrencies from testing once or twice a year by calculating the fair value based on the average daily closing price of the past 12 months to testing every day by calculating the fair value based on the intraday low price.
The essence of Filecoin mining business is that the Company utilizes its Web3 decentralized storage infrastructure and provide cloud storage services to the end customers through the Filecoin mainnet. In exchange for providing storage capacity, the Company is entitled to a fractional share of the fixed digital asset awards from the Filecoin mainnet, for successfully adding blocks to the blockchain.
The essence of Filecoin mining business is that MFH Tech utilizes the Web3 decentralized storage infrastructure and provide cloud storage services to the end customers through the Filecoin mainnet. In exchange for providing storage capacity, MFH Tech is entitled to a fractional share of the fixed digital asset awards from the Filecoin mainnet, for successfully adding blocks to the blockchain.
No related gains or losses occurred in the year ended December 31, 2022. 59 Loss from disposal of subsidiaries No loss or income from disposal of subsidiaries occurred in 2023.
No related gains or losses occurred in the year ended December 31, 2022. 96 Loss from disposal of subsidiaries No loss or income from disposal of subsidiaries occurred in 2023.
Trend Information In late February 2022, the former acting Chief Financial Officer Wei Zhu, who was also the Company’s former Co-Chief Executive Officer, and a former member and Co-Chairperson of the Board, was taken away from the Company’s office in Shenzhen, China for personal reasons to cooperate with the investigation conducted by Sheyang County Public Security Bureau, Yancheng City, Jiangsu Province, People’s Republic of China.
Trend Information On February 16, 2022, the former acting Chief Financial Officer Wei Zhu, who was also the Company’s former Co-Chief Executive Officer, and a former member and Co-Chairperson of the Board, was taken away from the Company’s office in Shenzhen, China for personal reasons to cooperate with the investigation from Sheyang County Public Security Bureau, Yancheng City, Jiangsu Province, People’s Republic of China.
The average daily operating cost (including the cost of renting the mining machines) of the Company’s Bitcoin mining was $110,80.51, so the Company would not make a profit until the average price of Bitcoin exceeds $65,137. However, back in October 2021, the management did not anticipate the Bitcoin market crash that would begin in December 2021.
The average daily operating cost (including the cost of renting the mining machines) of Ucon’s Bitcoin mining was $110,80.51, so Ucon would not make a profit until the average price of Bitcoin exceeds $65,137. However, back in October 2021, the management did not anticipate the Bitcoin market crash that would begin in December 2021.
The cost of Filecoin physical mining operations was recognized in the year ended December 31, 2023 in the amount of $1,286,220, including mining machine depreciation costs of $897,435, mine lease costs (including electricity) of $291,347, direct labor costs of $4,000, and software licensing costs of $93,438.
The cost of Filecoin physical mining operations was recognized in the year ended December 31, 2023 in the amount of $1,286,220, including mining machine depreciation costs of $897,435, mine lease costs (including electricity) of $291,347, direct labor costs of $4,000, and software deployment and technical service costs of $93,438.
Net cash provided by investing activities was nil for the year ended December 31, 2021. 66 Net cash provided by financing activities Net cash provided by financing activities was $19,300,000 for the year ended December 31, 2023, representing cash provided by private placement of $11 million, provided by convertible notes of $ 9 million, and used in paying related financial advisory fees of $700,000.
Net cash provided by financing activities was $19,300,000 for the year ended December 31, 2023, representing cash provided by private placement of $11 million, provided by convertible notes of $ 9 million, and used in paying related financial advisory fees of $700,000.
Sales and marketing expenses On January 13, 2023, the Company’s US subsidiary MFH Tech signed a Consulting Agreement with Dato Ai Technology Corporation (“Dato”), pursuant to which Dato will provide sales and marketing services as an independent contractor in order to search for and identify potential clients of the Company’s business consultation services.
The specific content is as follows: On January 13, 2023, the Company’s US subsidiary MFH Tech signed a Consulting Agreement with Dato Ai Technology Corporation (“Dato”), pursuant to which Dato will provide sales and marketing services as an independent contractor in order to search for and identify potential clients of the Company’s business consultation services.
The Company’s fractional share was relative to the proportion of computing power the Company contributed to the mining pool operator toward the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services was an output of the Company’s ordinary activities.
Ucon’s fractional share was relative to the proportion of computing power Ucon contributed to the mining pool operator toward the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services was an output of Ucon’s ordinary activities.
The cost of Filecoin physical mining operations was recognized in 2022 in the amount of $69,816, including mining machine depreciation costs of $28,950, mine lease costs (including electricity) of $22,075, direct labor costs of $4,000, and software licensing costs of $14,791.
The cost of Filecoin physical mining operations was recognized in 2022 in the amount of $69,816, including mining machine depreciation costs of $28,950, mine lease costs (including electricity) of $22,075, direct labor costs of $4,000, and software deployment and technical service costs of $14,791.
Distributed storage and computing services a) Bitcoin mining The cost of the Bitcoin shared mining operation includes the rental fee of the mining machine and the mine site, electricity and other possible operation and maintenance expenses. There were no Bitcoin mining operations in the year ended December 31, 2023.
Distributed storage and computing services a) Bitcoin mining The cost of the Bitcoin shared mining operation includes the rental fee of the mining machine and the mine site, electricity and other possible operation and maintenance expenses. There were no Bitcoin mining operations in the year 2023 and 2024.
Please refer to our consolidated statement of cash flows for the financial year ended December 31, 2022 at page F - 12 of this annual report, and Note 2 at page F-15 of this annual report. A.
Please refer to our consolidated statement of cash flows for the financial year ended December 31, 2022 at pages F-12 and F-14 of this annual report, and Note 2 at page F-16 of this annual report. A.
As of December 31, 2023, the Company has opened two nodes on the Filecoin blockchain with the total effective storage capacity of 19.04PiB. The operating costs of Filecoin mining business currently include depreciation costs of equipment, site fees, electricity fees, network fees and software deployment costs.
As of December 31, 2023, MFH Tech had opened two nodes on the Filecoin blockchain with the total effective storage capacity of 19.04PiB. The operating costs of Filecoin mining business currently include depreciation costs of equipment, site fees, electricity fees, network fees and software deployment costs.
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2021, 2022 and 2023 were increases of 0.9%, 3.7% and , respectively. From the second half of 2022, the United States becomes one of our main locations of operations. According to the U.S.
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2022, 2023 and 2024 were increases of 1.8%, -0.3% and 0.2%, respectively. From the second half of 2022, the United States becomes one of our main locations of operations. According to the U.S.
The cost of the Filecoin physical mining operation includes mining machine depreciation costs, mine site lease costs (including electricity), direct labor costs and software licensing costs.
The cost of the Filecoin physical mining operation includes mining machine depreciation costs, mine site lease costs (including electricity), direct labor costs and software deployment and technical service costs.
Also considering the enormous uncertainty brought by the cryptocurrency market turmoil in the past two years to the blockchain industry, as well as the regulatory uncertainties, although we have the ability to quickly reorganize the blockchain technical service team, we have decided not to continue conducting blockchain technology service business related to the asset trading platform, asset digitalization platform and decentralized finance (DeFi) platform in the next two years. 69 d) We have decided to increase the financial advisory services, online and traditional brokerage services as one of our future main businesses.
Also considering the enormous uncertainty brought by the cryptocurrency market turmoil in the past two years to the blockchain industry, as well as the regulatory uncertainties, although we have the ability to quickly reorganize the blockchain technical service team, we have decided not to continue conducting blockchain technology service business related to the asset trading platform, asset digitalization platform and decentralized finance (DeFi) platform in the next two years. 102 d) We have decided to increase our focus on investment banking services as one of our future main businesses.
In addition, the Company also received 104646.5806 filecoins from Huangtong International Co., Ltd. for free. On December 20, 2022, the assets began to be used for Filecoin mining operations. We did not have capital expenditures for the year ended December 31, 2021. Inflation Since our inception, inflation in the PRC has not materially affected our results of operations.
In addition, the Company also received 104646.5806 filecoins from Huangtong International Co., Ltd. for free. On December 20, 2022, the assets began to be used for Filecoin mining operations. Inflation Since our inception, inflation in the PRC has not materially affected our results of operations.
Going forward, we currently have no plan to continue our Bitcoin mining operation. 50 On December 15, 2022, the Company entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5.98 million, payable in the Company’s ordinary shares.
Going forward, we currently have no plan to continue our Bitcoin mining operation. 79 b) Filecoin mining On December 15, 2022, MFH Cayman entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5,980,000, payable in MFH Cayman’s ordinary shares.
If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer. 65 The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2023 2022 2021 (as restated) (in US$) Net cash used in operating activities (2,789,415 ) (1,551,357 ) (1,411,029 ) Net cash (used in)/provided by investing activities (7,839,004 ) 936,712 — Net cash provided by financing activities 19,300,000 7,720,425 1,676,203 Effect of exchange rate changes (505 ) (8,543 ) 3,356 Increase/(decrease) in cash and cash equivalents 8,671,076 7,097,237 268,530 Cash at the beginning of the period 7,537,873 440,636 174,783 Cash at the end of the period 16,208,949 7,537,873 443,313 Note: We have amended and restated our consolidated statement of cash flows for the financial year ended December 31, 2022, by reclassifying the net cash provided by disposal of digital assets from operating activities to investment activities.
If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer. 98 The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2024 2023 2022 (as restated) (US$) (US$) (US$) Net cash used in operating activities (3,574,217 ) (2,789,415 ) (1,551,357 ) Net cash (used in)/provided by investing activities 3,793,854 (7,839,004 ) 936,712 Net cash provided by financing activities 7,580,700 19,300,000 7,720,425 Effect of exchange rate changes 45 (505 ) (8,543 ) Increase/(decrease) in cash and cash equivalents 7,800,382 8,671,076 7,097,237 Cash at the beginning of the period 16,208,949 7,537,873 440,636 Cash at the end of the period 24,009,331 16,208,949 7,537,873 Note: We have amended and restated our consolidated statement of cash flows for the financial year ended December 31, 2022, by reclassifying the net cash provided by disposal of digital assets from operating activities to investment activities.
In December 2021, the price of Bitcoin suddenly plummeted from the price range of $60,000 per coin and during 2022 and 2023 such price lingered around the range of $15,000 to $49,000, causing our Bitcoin mining business to suffer a great loss.
In December 2021, the price of Bitcoin suddenly plummeted from the price range of $60,000 per coin and during 2022 and 2023 such price lingered around the range of $15,000 to $49,000, causing our Bitcoin mining business to suffer a great loss. Since May 2022, we have not carry out any business related to Bitcoin mining.
Liquidity and Capital Resources We had $440,636, $7,537,874 (including $91,000 security deposits frozen in our bank account) and $16,208,949 (including $91,000 security deposits frozen in our bank account) in cash and cash equivalents as of December 31, 2021, 2022 and 2023, respectively.
Liquidity and Capital Resources We had $7,537,874 (including $91,000 security deposits frozen in our bank account), $16,208,949 (including $91,000 security deposits frozen in our bank account), and $24,009,331 (including $93,475 security deposits frozen in our bank account) in cash and cash equivalents as of December 31, 2022, 2023 and 2024, respectively.
If the Purchaser does not elect to convert the Note, then the outstanding principal amount and all accrued but unpaid interest on the Note shall be due and payable upon the one-year anniversary of the Issuance Date of the Note (the “Maturity Date”).
If the Purchaser does not elect to convert the Note, then the outstanding principal amount and all accrued but unpaid interest on the Note shall be due and payable upon the one-year anniversary of the Issuance Date of the Note (the “Maturity Date”). For the year ended December 31, 2023, the Company recognized $410,548 interest expenses for the Note.
Loss from selling short-term investments The loss from selling short-term investments of $78,693 for the year ended December 31, 2023 consists primarily of the loss from selling common stocks held by the Company during the same period.
Gain/(Loss) from selling short-term investments The gain from selling short-term investments of $35,771 for the year ended December 31, 2024 consists primarily of the gain from selling common stocks held by the Company during the same period.
Going forward, we currently have no plans to resume Bitcoin mining business. b) Filecoin mining The cost of the Filecoin physical mining operation includes mining machine depreciation costs, mine site lease costs (including electricity), direct labor costs and software licensing costs.
Going forward, we currently have no plans to resume Bitcoin mining business. b) Filecoin mining The cost of the Filecoin physical mining operation includes mining machine depreciation costs, mine site lease costs (including electricity), direct labor costs, software deployment and technical service costs, and interest costs for Filecoin borrowed as initial pledge for Filecoin mining business.
Loss on market price of short-term investment The loss on market price of short-term investment of $226,210 for the year ended December 31, 2023 consists primarily of the loss on the market price changes of the ETFs held by the Company as of December 31, 2023. No related gains or losses occurred in the year ended December 31, 2022.
The loss on market price of short-term investment of $226,210 for the year ended December 31, 2023 consists primarily of the loss on the market price changes of the ETFs held by the Company as of December 31, 2023.
As of December 31, 2023, the Company’s net assets were $17,832,767, of which cash and cash equivalents accounted for 90%, and the Bitcoins and USD Coins out-of-control were fully recognized impairment losses to eliminate the potential significant uncertainty on the financial statements. 68 After the Wei Zhu incident, the Company’s board of directors and management underwent significant changes in 2022.
As of December 31, 2023, the Company’s net assets were $17,832,767, of which cash and cash equivalents accounted for 90%, and the Bitcoins and USD Coins out-of-control were fully recognized impairment losses to eliminate the potential significant uncertainty on the financial statements.
The cost of Filecoin physical mining operations was recognized in the year ended December 31, 2022 in the amount of $69,816, including mining machine depreciation costs of $$28,950, mine lease costs (including electricity) of $22,075, direct labor costs of $4,000, and software licensing costs of $14,791. 52 The Company carried out Filecoin mining business from December 2022.
The cost of Filecoin physical mining operations was recognized in the year ended December 31, 2022 in the amount of $69,816, including mining machine depreciation costs of $$28,950, mine lease costs (including electricity) of $22,075, direct labor costs of $4,000, and software deployment and technical service costs of $14,791. 81 Our US subsidiary MFH Tech carries out our Filecoin mining business from December 2022.
From October 2021 to April 2022, the Company obtained the usage rights of a certain number and specific models of Bitcoin mining machines and specific business premises by executing contracts with the sharing mining service provider, and registered as users on the mining pool website, complying with the general terms and conditions required to join the mining pool published on the mining pool website, to increase computing power to the mining pool.
Distributed storage and computing services The Company’s distributed storage and computing services business was focused on cryptocurrency mining for the years ended December 31, 2022, 2023 and 2024. a) Bitcoin mining From October 2021 to April 2022, Ucon obtained the usage rights of a certain number and specific models of Bitcoin mining machines and specific business premises by executing contracts with the sharing mining service provider, and registered as users on the mining pool website, complying with the general terms and conditions required to join the mining pool published on the mining pool website, to increase computing power to the mining pool.
As of December 31, 2023, the Company has paid the seller $3 million US dollars. On March 10, 2024, the Company and Jinhe entered into a Cancellation Agreement, which cancelled and terminated the Original Contract and the amendment in its entirety, the prepayment of $3 million US dollars from the Company to Jinhe will be refunded to the Company soon.
On March 10, 2024, the Company and Jinhe entered into a Cancellation Agreement, which cancelled and terminated the Original Contract and the amendment in its entirety, the prepayment of $3 million US dollars from the Company to Jinhe had been refunded to the Company in 2024.
The cost of Bitcoin shared mining operations was recognized in the year ended December 31, 2022 in the amount of $1,291,784, including $1,036,741 for mining machines and mine leases and $255,043 for electricity.
The cost of Bitcoin shared mining operations was recognized in the year ended December 31, 2022 in the amount of $1,291,784, including $1,036,741 for mining machines and mine leases and $255,043 for electricity. Our Hong Kong subsidiary Ucon carried out Bitcoin mining from October 2021 to April 2022.
We had not been informed of any information that may prevent the Company from recovering these crypto assets out of control. Therefore, in our consolidated financial statements as of December 31, 2022, we did not recognize any impairment losses related to the loss of control over these crypto assets.
Therefore, in our consolidated financial statements as of December 31, 2022, we did not recognize any impairment losses related to the loss of control over these crypto assets.
The Company will serve as a business consultant in order to facilitate introductions between the Company’s clients and esteemed third-party audit firms, legal representatives, and underwriting entities that are crucial for the clients’ fundraising endeavors within the U.S. capital market. The Company expects to receive $50,000 in revenue from this agreement within the next year.
Chaince Securities, Inc. will serve as a business consultant in order to facilitate introductions between the clients and esteemed third-party audit firms, legal representatives, and underwriting entities that are crucial for the clients’ fundraising endeavors within the U.S. capital market. The total consideration for this agreement is $100,000.
We restructured the board of directors in May 2022 and again in October 2022, and our management had undergone significant changes. The total salaries and benefits for employees for 2022 are $1,374,839, with $816,444 paid in cash and $558,395 in stock. The total professional expenses for 2022 are $581,557, including $367,524 legal expenses. The total other office expenses are $199,667.
The total salaries and benefits for employees for 2022 are $1,374,839, with $816,444 paid in cash and $558,395 in stock. The total professional expenses for 2022 are $581,557, including $367,524 legal expenses. The total other office expenses are $199,667.
The table below sets forth our interest (expenses)/income , net for the year ended December 31, 2023, 2022 and 2021: For the year Ended December 31, 2023 2022 2021 Interest (expenses)/income, net: Convertible note interest expenses (i) (410,548 ) — — Interest income from cash and short-term deposits 214,482 5,118 1,083 Interest expenses for Filecoin borrowed as initial pledge (12,583 ) — — Interest income from providing loans to external parties 12,594 — — Interest (expenses)/income, net $ (196,055 ) $ 5,118 $ 1,083 (i) Convertible note interest expenses The Company entered into a Securities Purchase Agreement (“SPA”) with a non-U.S. investor (the “Purchaser”).
Interest (expenses)/income, net Our interest (expenses)/income, net consists primarily of: 1) the interest income from cash and short-term deposits with banks, providing loans to external parties; 2) the interest expenses for our Convertible Promissory Note, and Filecoin borrowed as initial pledge for Filecoin mining business. 86 The table below sets forth our interest (expenses)/income, net for the year ended December 31, 2024, 2023 and 2022: For the year Ended December 31, 2024 2023 2022 Interest (expenses)/income, net: Convertible note interest expenses (i) (382,603 ) (410,548 ) — Interest income from cash and short-term investments (ii) 426,674 214,482 5,118 Interest expenses for Filecoin borrowed as initial pledge — (12,583 ) — Interest income from providing loans to external parties (iii) 160,000 12,594 — Interest (expenses)/income, net $ 204,071 $ (196,055 ) $ 5,118 (i) Convertible note interest expenses MFH Cayman entered into a Securities Purchase Agreement (“SPA”) with a non-U.S. investor (the “Purchaser”).
We estimated the fair values of the Filecoins based on the intraday low price of the Coinbase platform every day, and we recognized $303,276 impairment loss of intangible assets for the year ended December 31, 2023. As of December 31, 2023, the Company has not made positive progress in recovering its crypto assets out of control.
We estimated the fair values of the crypto assets based on the intraday low price of the Coinbase platform every day, and we recognized $303,276 impairment loss of intangible assets for the year ended December 31, 2023.
As of December 31, 2023, the Company has not made positive progress in recovering its crypto assets out of control. Although it is considered inappropriate from a legal perspective for the Sheyang County Public Security Bureau to implement seizure procedures on the Company’s crypto assets, the Company still cannot estimate the time it may take to recover those crypto assets.
Although it is considered inappropriate from a legal perspective for the Sheyang County Public Security Bureau to implement seizure procedures on the Company’s crypto assets, the Company still cannot estimate the time it may take to recover those crypto assets.
However, due to resource restraints, we have ceased our development plans in digital payment business, including digital payment services and solution consulting, and applications for the required money transmit licenses since March 2024.
Meanwhile, we conducted viability studies about the business models, license requirements and operational costs of online and traditional brokerage services and digital payment business. However, due to resource restraints, we have ceased our development plans in digital payment business, including digital payment services and solution consulting, and applications for the required money transmit licenses since March 2024.
Operating Expenses The table below sets forth our operating expenses from continuing operations for the three years: For the year Ended December 31, 2023 2022 2021 Operating expenses: Sales and marketing (449,900 ) (35,000 ) — General and administrative (2,515,291 ) (2,156,063 ) (10,351,357 ) Provision for doubtful accounts — (3,138 ) (1,750,909 ) (Loss)/income on disposal of intangible assets — (29,968 ) 121,020 Impairment loss of property and equipment (307,733 ) — — Impairment loss of intangible assets (4,248,085 ) (3,144,053 ) (1,292,568 ) Total operating expenses $ (7,521,009 ) $ (5,368,222 ) $ (13,273,814 ) Our operating expenses consist of sales and marketing expenses, general and administrative expenses, provision for doubtful accounts, (loss)/income on disposal of intangible assets and impairment loss of intangible assets.
Operating Expenses The table below sets forth our operating expenses from continuing operations for the three years: For the year Ended December 31, 2024 2023 2022 Operating expenses: Sales and marketing (100,426 ) (449,900 ) (35,000 ) General and administrative (2,086,677 ) (2,515,291 ) (2,156,063 ) Provision for doubtful accounts (11,452 ) — (3,138 ) Loss on disposal of intangible assets — — (29,968 ) Impairment loss of property and equipment (1,827,373 ) (307,733 ) — Impairment loss of intangible assets — (4,248,085 ) (3,144,053 ) Loss on market price of crypto assets (215,397 ) — — Total operating expenses (4,241,325 ) (7,521,009 ) (5,368,222 ) Our operating expenses consist of sales and marketing expenses, general and administrative expenses, provision for doubtful accounts, loss on disposal of intangible assets, impairment loss of intangible assets or loss on market price of crypto assets.
On May 3, 2023, Chaince Securities entered into a Purchase and Sale Agreement for the acquisition of all assets and liabilities of J.V. Delaney & Associates, an investment advisory firm and FINRA licensed broker dealer. The FINRA review procedure for such acquisition is currently still ongoing.
In May 2023, Chaince Securities, Inc. entered into a Purchase and Sale Agreement for the acquisition of all assets and liabilities of J.V. Delaney & Associates, an investment advisory firm and FINRA licensed broker dealer. In November 2024, Chaince Securities, Inc. received FINRA approval for the acquisition of J.V.
As of December 31, 2023, approximately 40% of the agreed services had been completed as scheduled, and the Company recognized consultation services revenue of $60,000 for the year ended December 31, 2023 based on the percentage-of-completion. On November 1, 2023, the Company signed a financial consulting agreement with an American logistics company.
As of December 31, 2023, approximately 40% of the agreed management consulting services had been completed as scheduled, and MFH Tech recognized consultation services revenue of $60,000 for the year ended December 31, 2023 based on the percentage-of-completion.
The Company earned $783,090 in Bitcoin mining revenue from shared mining operations for the year ended December 31, 2022, and $664,307 for the year ended December 31, 2021.
Ucon earned $783,090 in Bitcoin mining revenue from shared mining operations for the year ended December 31, 2022, and $664,307 for the year ended December 31, 2021. Since May 2022, the Company has not carry out any business related to Bitcoin mining.
The Company will continue to assist the client in providing management consulting services and introducing professional service agency resources.
The Company will continue to assist the client in providing management consulting services and introducing professional service agency resources. MFH Tech will continue to assist the client in providing management consulting services and introduce professional service agency resources to clients in the form of a general contractor.
As of now, the Company is still attempting to recover those lost crypto assets through administrative appeals. As of December 31, 2022, the Company’s net assets were $16,828,864, of which cash and cash equivalents accounted for 44% and the Bitcoins and USD Coins out-of-control accounted for 23%.
As of December 31, 2022, the Company’s net assets were $16,828,864, of which cash and cash equivalents accounted for 44% and the Bitcoins and USD Coins out-of-control accounted for 23%.
We paid $35,000 to a client’s referral agent for our consultation services business and we recognized it as sales and marketing expenses in the consolidated statements of operations for the year ended December 31, 2022. We did not generate any sales and marketing expenses directly for our main business in 2021.
MFH Tech paid $35,000 to the client’s referral agent and we recognized it as sales and marketing expenses in the consolidated statements of operations for the year ended December 31, 2022.
At the same time, Sheyang County Public Security Bureau forcibly took away the safe belonged to the Company that stored the digital asset hardware cold wallet, and forcibly opened the safe by destroying the lock thereto and seized the digital asset hardware cold wallet and all cryptocurrencies stored therein. 67 The book value of the Bitcoins and USD Coins stored in the out-of-control wallet was $3,944,808 on December 31, 2022, and we verified that Bitcoins and USD Coins with a book value of $3,469,762 as of December 31, 2022 stored in the out-of-control wallet had been transferred to another unknown wallet.
At the same time, Sheyang County Public Security Bureau forcibly removed the safe belonging to the Company that stored the digital asset hardware cold wallet, and forcibly destroyed the safe and seized the crypto asset hardware cold wallet and all crypto assets stored in it, and we verified that 95.23843 Bitcoins and 2005537.5 USD Coins with a book value as of December 31, 2022 of $3,469,762 stored in the out-of-control wallet had been transferred to another unknown wallet.
Therefore, the Company has decided to make a provision for impairment of all the crypto assets out of control, with the amount of $3,944,809, to eliminate the potential significant uncertainty on the financial statements.
Therefore, the Company has decided to make a provision for impairment of all the crypto assets out of control, with the amount of $3,944,809, to eliminate the potential significant uncertainty on the financial statements. As of April 25, 2023, we had not been able to communicate effectively with the Sheyang County Public Security Bureau.
The table below sets forth our interest (expenses)/income , net for the year ended December 31, 2023 and 2022: For the year Ended December 31, 2023 2022 Interest (expenses)/income, net: Convertible note interest expenses (410,548 ) — Interest income from cash and short-term deposits 214,482 5,118 Interest expenses for Filecoin borrowed as initial pledge (12,583 ) — Interest income from providing loans to external parties 12,594 — Interest (expenses)/income, net $ 196,055 $ 5,118 Other (expenses)/income, net Other income consists primarily of the gain generated from the government subsidies, rewards from banks.
Interest (expenses)/income, net Our interest (expenses)/income, net for the year ended December 31, 2023, amounted to $196,055, consists of: a) the interest expenses for our Convertible Promissory Note of $410,548; b) the interest income from cash and short-term investments of $214,482; c) the interest expenses for Filecoin borrowed as initial pledge of $12,583; and d) the interest income from providing loans to external parties of $12,594.
For the year ended December 31, 2022 and 2023, we earned $348 and $285,928 respectively in Filecoin mining revenue from physical mining operations, and did not receive any revenue from providing cloud storage services to decentralized platform operators. On December 5, 2023, the Company signed an Origin Storage Filecoin Mining Service Contract with Origin Storage PTE. LTD. (“Origin Storage”).
For the years ended December 31, 2024, 2023 and 2022, the Company totally earned $513,405, $285,928 and $348 respectively in Filecoin mining revenue from physical mining operations, and did not receive any revenue from providing cloud storage services to decentralized platform operators.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Our audit committee is responsible for, among other things: ● selecting the independent auditor; ● pre-approving auditing and non-auditing services permitted to be performed by the independent auditor; ● annually reviewing the independent auditor’s report describing the auditing firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditor and our company; 77 ● setting clear hiring policies for employees and former employees of the independent auditors; ● reviewing with the independent auditor any audit problems or difficulties and management’s response; ● reviewing and approving all related party transactions on an ongoing basis; ● reviewing and discussing the annual audited consolidated financial statements with management and the independent auditor; ● reviewing and discussing with management and the independent auditor’s major issues regarding accounting principles and financial statement presentations; ● reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; ● discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; ● reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our consolidated financial statements; ● discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; ● timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S.
Our audit committee is responsible for, among other things: ● selecting the independent auditor; ● pre-approving auditing and non-auditing services permitted to be performed by the independent auditor; ● annually reviewing the independent auditor’s report describing the auditing firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditor and our company; 109 ● setting clear hiring policies for employees and former employees of the independent auditors; ● reviewing with the independent auditor any audit problems or difficulties and management’s response; ● reviewing and approving all related party transactions on an ongoing basis; ● reviewing and discussing the annual audited consolidated financial statements with management and the independent auditor; ● reviewing and discussing with management and the independent auditor’s major issues regarding accounting principles and financial statement presentations; ● reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; ● discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; ● reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our consolidated financial statements; ● discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; ● timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S.
Our compensation committee is responsible for, among other things: ● reviewing and approving our overall compensation policies; ● reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of those goals and objectives, reporting the results of such evaluation to the board of directors, and determining our Chief Executive Officer’s compensation level based on this evaluation; 78 ● determining the compensation level of our other executive officers; ● making recommendations to the board of directors with respect to our incentive-compensation plan and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and ● such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.
Our compensation committee is responsible for, among other things: ● reviewing and approving our overall compensation policies; ● reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of those goals and objectives, reporting the results of such evaluation to the board of directors, and determining our Chief Executive Officer’s compensation level based on this evaluation; 110 ● determining the compensation level of our other executive officers; ● making recommendations to the board of directors with respect to our incentive-compensation plan and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and ● such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.
Awards granted under the 2020 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. Eligibility.
Awards granted under the 2025 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event that the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. Eligibility.
Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2020 Plan or the relevant award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution. Termination and Amendment of the 2020 Plan.
Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2025 Plan or the relevant award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution. Termination and Amendment of the 2025 Plan.
Qualification There is no requirement for our directors to own any shares in our company in order for them to qualify as a director. 79 Employment Agreements The Board appointed Mr. Shi Qiu as the CEO for the Company, effective May 7, 2022.
Qualification There is no requirement for our directors to own any shares in our company in order for them to qualify as a director. 111 Employment Agreements The Board appointed Mr. Shi Qiu as the CEO for the Company, effective May 7, 2022.
The powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● issuing authorized but unissued shares; ● declaring dividends and distributions; ● exercising the borrowing powers of our company and mortgaging the property of our company; ● approving the transfer of shares of our company, including the registering of such shares; and ● exercising any other powers conferred by the shareholders’ meetings or under our fifth amended and restated memorandum and articles of association. 76 Terms of Directors and Executive Officers We have six directors on our board, three of whom are independent directors.
The powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● issuing authorized but unissued shares; ● declaring dividends and distributions; ● exercising the borrowing powers of our company and mortgaging the property of our company; ● approving the transfer of shares of our company, including the registering of such shares; and ● exercising any other powers conferred by the shareholders’ meetings or under our fifth amended and restated memorandum and articles of association. 108 Terms of Directors and Executive Officers We have five directors on our board, three of whom are independent directors.
There were no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management. 72 B.
There were no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management. 106 B.
Persons eligible to participate in the 2020 Plan include employees, consultants and all directors of our company. Vesting Schedule. The vesting schedule of each award granted under 2020 Plan will be set forth in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the relevant award agreement.
Persons eligible to participate in the 2025 Plan include officers, employees, consultants and all directors of our company. Vesting Schedule. The vesting schedule of each award granted under 2025 Plan will be set forth in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the relevant award agreement.
Hui Cheng has served as a Director of the Company. Mr. Cong Huang, age 42, is a renowned researcher and entrepreneur in financial technology innovation. After receiving the PhD degree in Statistics from Yale University, he worked at Columbia University as an Assistant Professor in the Statistics Department, conducting research focused on algorithms and implementations in data mining.
Hui Cheng has served as a Director of the Company. Mr. Cong Huang, our Independent Director, is a renowned researcher and entrepreneur in financial technology innovation. After receiving the PhD degree in Statistics from Yale University, he worked at Columbia University as an Assistant Professor in the Statistics Department, conducting research focused on algorithms and implementations in data mining.
Qian Sun and the Company governs the terms and conditions of Ms. Qian Sun’s employment, which is substantially in the form filed herein as Exhibit 10.2. Pursuant to the COO Employment Agreement, we agreed to employ Ms. Qian Sun as the COO for an annual base salary of $30,000 with a three-month probationary period. During the employment, Ms.
Qian Sun and the Company governs the terms and conditions of Ms. Qian Sun’s employment, which is substantially in the form filed herein as Exhibit 4.14. Pursuant to the COO Employment Agreement, we agreed to employ Ms. Qian Sun as the COO for an annual base salary of $30,000 with a three-month probationary period. During the employment, Ms.
Sun holds a bachelor’s degree in Management from Beijing Normal University. Since November 2022, Ms. Qian Sun has served as a Director and Chief Operating Officer of the Company. Mr. Hui Cheng, age 32, is an entrepreneur in the Internet and financial technology industry. From 2016 to 2018, Mr.
Sun holds a bachelor’s degree in Management from Beijing Normal University. Since November 2022, Ms. Qian Sun has served as a Director and Chief Operating Officer of the Company. Mr. Hui Cheng, our Independent Director, is an entrepreneur in the Internet and financial technology industry. From 2016 to 2018, Mr.
Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares as of April 12, 2024 (unless otherwise indicated) by: ● each of our directors and executive officers; and ● each person known to us to own beneficially more than 5% of our ordinary shares. 80 Beneficial ownership is determined in accordance with the rules of the SEC and generally. includes voting power or investment power with respect to securities.
Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares as of April 15, 2025 (unless otherwise indicated) by: ● each of our directors and executive officers; and ● each person known to us to own beneficially more than 5% of our ordinary shares. 112 Beneficial ownership is determined in accordance with the rules of the SEC and generally. includes voting power or investment power with respect to securities.
The number of ordinary shares beneficially owned including ordinary shares such person has the right to acquire within 60 days of April 12, 2024, the latest practicable date. Such shares, however, are not deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other shareholder.
The number of ordinary shares beneficially owned including ordinary shares such person has the right to acquire within 60 days of April 15, 2025, the latest practicable date. Such shares, however, are not deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other shareholder.
Cong Huang has served as an Independent Director of the Company. Yukuan Zhang, age 36, has more than 10 years of experience in audit, consulting, investment, financing, and enterprise management. In 2012, Mr. Zhang worked as a settlement specialist in the Settlement Management Center of Suning Group (SZ002024). From January 2013 to August 2013, Mr.
Cong Huang has served as an Independent Director of the Company. Mr. Yukuan Zhang, our Chief Financial Officer, has more than 10 years of experience in audit, consulting, investment, financing, and enterprise management. In 2012, Mr. Zhang worked as a settlement specialist in the Settlement Management Center of Suning Group (SZ002024). From January 2013 to August 2013, Mr.
As of the date of this annual report, the current employment agreement (the “CEO Employment Agreement”) dated May 9, 2022 between Mr. Shi Qiu and the Company governs the terms and conditions of Shi’s employment, which is substantially in the form filed herein as Exhibit 10.1. Pursuant to the CEO Employment Agreement, we agreed to employ Mr.
As of the date of this annual report, the current employment agreement (the “CEO Employment Agreement”) dated May 9, 2022 between Mr. Shi Qiu and the Company governs the terms and conditions of Mr. Shi Qiu’s employment, which is substantially in the form filed herein as Exhibit 4.13. Pursuant to the CEO Employment Agreement, we agreed to employ Mr.
Each of our CEO, COO and CFO also agrees to comply with all material applicable laws and regulations related to his or her responsibilities at our company as well as all material corporate and business policies and procedures of our company. D.
Each of our CEO, COO and CFO also agrees to comply with all material applicable laws and regulations related to his or her responsibilities at our company as well as all material corporate and business policies and procedures of our company. The Board appointed Mr.
Directors and Senior Management The following table sets forth certain information relating to our directors and executive officers as of the date of this annual report Directors and Executive Officers Age Position/Title Shi Qiu 33 Chief Executive Officer and Director Alan Curtis 81 Chairperson of the Board of Directors and Independent Director Daniel Kelly Kennedy 40 Director Qian Sun 36 Chief Operating Officer and Director Hui Cheng 32 Independent Director Cong Huang 42 Independent Director Yukuan Zhang 36 Chief Financial Officer Mr.
Directors and Senior Management The following table sets forth certain information relating to our directors and executive officers as of the date of this annual report Directors and Executive Officers Age Position/Title Shi Qiu 33 Chief Executive Officer and Director Alan Curtis 81 Chairperson of the Board of Directors and Independent Director Qian Sun 36 Chief Operating Officer and Director Hui Cheng 32 Independent Director Cong Huang 42 Independent Director Yukuan Zhang 37 Chief Financial Officer Wilfred Daye 51 Chief Strategy Officer Mr.
Qiu then served as the Vice-General Manager of Ningbo Saimeinuo Supply Chain Management Ltd. from November 2018 until 2021. From November 2021 until November 2022, Mr. Qiu served as the Chief Technology Officer (the “CTO”) of Singularity Future Technology (NASDAQ:SGLY). Mr.
Qiu served as the Head of Blockchain Business of North Mining Limited. Mr. Qiu then served as the Vice-General Manager of Ningbo Saimeinuo Supply Chain Management Ltd. from November 2018 until 2021. From November 2021 until November 2022, Mr. Qiu served as the Chief Technology Officer (the “CTO”) of Singularity Future Technology (NASDAQ:SGLY). Mr.
The committee or the board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant. Award Agreement.
Our compensation committee will administer the 2025 Plan. The committee or the board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant. 107 Award Agreement.
Yukuan Zhang shall be entitled to the paid medical leave, holidays and vacations, and be subject to certain non-solicitation and non-disclosure provisions set forth therein. We or Mr. Yukuan Zhang may terminate the CFO Employment Agreement for cause, at any time, with one-month notice.
Yukuan Zhang as the CFO for a monthly base salary of $11,500. During the employment, Mr. Yukuan Zhang shall be entitled to the paid medical leave, holidays and vacations, and be subject to certain non-solicitation and non-disclosure provisions set forth therein. We or Mr. Yukuan Zhang may terminate the CFO Employment Agreement for cause, at any time, with one-month notice.
Qiu received a Bachelor’s Degree in Risk Management and Actuary from Zhejiang University and a Master’s Degree in Government Management and Public Policy from Tsinghua University. Since May 2022, Mr. Qiu has served as the Chief Executive Officer and Director of the Company. Mr. Alan Curtis, age 81, is an American public policy expert. Mr.
Qiu received a Bachelor’s Degree in Risk Management and Actuary from Zhejiang University and a Master’s Degree in Government Management and Public Policy from Tsinghua University. Since May 2022, Mr. Qiu has served as the Chief Executive Officer and Director of the Company. Mr.
As of the date of this annual report, the current employment agreement (the “CFO Employment Agreement”) dated November 13, 2022 between Mr. Yukuan Zhang and the Company governs the terms and conditions of Mr. Yukuan Zhang’s employment, which is substantially in the form filed herein as Exhibit 10.3. Pursuant to the CFO Employment Agreement, we agreed to employ Mr.
As of the date of this annual report, the current employment agreement (the “CFO Employment Agreement”) dated September 1, 2024 between Mr. Yukuan Zhang and the Company governs the terms and conditions of Mr. Yukuan Zhang’s employment, which is substantially in the form filed herein as Exhibit 4.15. Pursuant to the CFO Employment Agreement, we agreed to employ Mr.
Compensation Compensation of Directors and Executive Officers In 2023, we paid an aggregate of $167,000 in cash and shares of the Company as salaries and fees to our former and current independent directors and an aggregate of $185,776 in cash as salaries and fees to our current executives.
Compensation Compensation of Directors and Executive Officers In 2024, we paid an aggregate of $90,000 in cash and shares of the Company as salaries and fees to our former and current independent directors and an aggregate of $198,480 in cash as salaries and fees to our current executives.
None of our existing shareholders has voting rights that will differ from the voting rights of other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F. Disclosure of a registrant’s action to recover erroneously awarded compensation None.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F. Disclosure of a registrant’s action to recover erroneously awarded compensation None.
Johnson’s National Commission on the Causes and Prevention of Violence. Between 1977 and 1981, Mr. Curtis served as Executive Director of President Jimmy Carter’s Urban and Regional Policy Group and as an Urban Policy Advisor to the Secretary of Housing and Urban Development. In 1981, Mr. Curtis was named as Founding President and Chief Executive Officer of the Milton S.
Curtis was appointed as an Assistant Director of Crimes of Violence task force on President Lyndon B. Johnson’s National Commission on the Causes and Prevention of Violence. Between 1977 and 1981, Mr. Curtis served as Executive Director of President Jimmy Carter’s Urban and Regional Policy Group and as an Urban Policy Advisor to the Secretary of Housing and Urban Development.
Zhang obtained a Bachelor’s degree in Management with a major in Accounting from Harbin University of Commerce. Mr. Zhang was certified as a Certified Public Accountant in China in 2015. There are no family relationship between any of the persons named above.
Zhang obtained a Bachelor’s degree in Management with a major in Accounting from Harbin University of Commerce. Mr. Zhang was certified as a Certified Public Accountant in China in 2015. Mr.
(1) Restricted share units There are no outstanding options and restricted share units granted under the 2022 Plan. C. Board Practices Duties of Directors Under Cayman Islands law, our directors owe certain fiduciary duties to our company, including duties of loyalty, to act honestly, and to act in what they consider in good faith to be in our best interests.
Board Practices Duties of Directors Under Cayman Islands law, our directors owe certain fiduciary duties to our company, including duties of loyalty, to act honestly, and to act in what they consider in good faith to be in our best interests.
The mailing address of Hanqi Li is Flat 35/F Tower 9, Grand Yoho, Yuen Long, Hong Kong. 81 (2) Huangtong International Co., Ltd held 3,601,320 ordinary shares. The percentage of beneficial ownership is calculated based on a denominator of 60,819,897 shares issued and outstanding as of April 12, 2024.
(1) Hanqi Li held 5,229,579 ordinary shares. The percentage of beneficial ownership is calculated based on a denominator of 63,686,563 shares issued and outstanding as of April 15, 2025. The mailing address of Hanqi Li is Flat 35/F Tower 9, Grand Yoho, Yuen Long, Hong Kong. 113 (2) Huangtong International Co., Ltd held 3,584,296 ordinary shares.
Ordinary Shares Beneficially Owned Percentage Number (%) Directors and Executive Officers*: Shi Qiu — — Alan Curtis — — Daniel Kelly Kennedy — — Sun Qian — — Cheng Hui — — Cong Huang — — Yukuan Zhang — — Principal Shareholders Hanqi Li (1) 20,918,312 27.3 % Huangtong International Co., Ltd (2) 3,601,320 5.9 % Hexin Global Limited (3) 23,076,924 29.5 % Hailei Zhang (4) 9,120,000 13.5 % Hong Mei Zhou (5) 18,428,000 24.7 % Xin Rong Gan (6) 18,400,000 24.7 % Apollo Multi-Asset Growth Fund (7) 57,007,125 55.0 % Anyu International Limited (8) 8,000,000 12.0 % Quick Cash Technology Limited (9) 4,000,000 6.6 % * The business address of the directors and officers is 1330 Avenue of Americas, Fl 33, New York, 10019, United States.
Ordinary Shares Beneficially Owned Percentage Number (%) Directors and Executive Officers*: Shi Qiu — — Alan Curtis — — Sun Qian — — Cheng Hui — — Cong Huang — — Yukuan Zhang — — Wilfred Daye 16 ,666 0.026 % Principal Shareholders Hanqi Li (1) 5,229,579 8.2 % Huangtong International Co., Ltd (2) 3,584,296 5.6 % Hexin Global Limited (3) 5,769,231 9.1 % Hong Mei Zhou (4) 4,607,000 7.2 % Xin Rong Gan (5) 4,600,000 7.2 % Apollo Multi-Asset Growth Fund (6) 57,007,125 53.6 % Quick Cash Technology Limited (7) 3,955,052 6.2 % * The business address of our directors and officers is 1330 Avenue of Americas, Fl 33, New York, 10019, United States.
Curtis served as a public safety advisor to Presidents Lyndon B. Johnson and Jimmy Carter. Since 1968, Mr. Curtis has served on the National Advisory Commission on Civil Disorders, known as the Kerner Commission. In 1969, Mr. Curtis was appointed as an Assistant Director of Crimes of Violence task force on President Lyndon B.
Alan Curtis, our Chairperson of the Board of Directors and an Independent Director, is an American public policy expert. Mr. Curtis served as a public safety advisor to Presidents Lyndon B. Johnson and Jimmy Carter. Since 1968, Mr. Curtis has served on the National Advisory Commission on Civil Disorders, known as the Kerner Commission. In 1969, Mr.
The percentage of beneficial ownership is calculated based on a denominator of 103,575,241 ordinary shares, being the sum of 60,819,897 shares issued and outstanding as of April 12, 2024 and 42,755,344 ordinary shares issuable upon full exercise of warrants held.
The percentage of beneficial ownership is calculated based on a denominator of 106,441,907 ordinary shares, being the sum of 63,686,563 shares issued and outstanding as of April 15, 2025 and 42,755,344 ordinary shares issuable upon full exercise of warrants held.
Eisenhower Foundation, which identifies, funds, evaluates, and builds evidence-based programs for disadvantaged American youth and families. In 2018, Mr. Curtis published a book titled Healing Our Divided Society: Investing in America Fifty Years after the Kerner Report, and Mr. Curtis proposed evidence-based policies for employment, education, housing, community development, and criminal justice. Mr.
In 1981, Mr. Curtis was named as Founding President and Chief Executive Officer of the Milton S. Eisenhower Foundation, which identifies, funds, evaluates, and builds evidence-based programs for disadvantaged American youth and families. In 2018, Mr. Curtis published a book titled Healing Our Divided Society: Investing in America Fifty Years after the Kerner Report, and Mr.
Employees As of December 31, 2023, we had a total of 9 employees, consisting of three executives, three staff members in the business consultation services business, and three staff members in other functions. We had a total of 9 employees as of December 31, 2022 and 13 employees as of December 31, 2021.
As of December 31, 2023, we had a total of 9 employees, consisting of three executives, three staff members in the business consultation services business, and three staff members in other functions. The remuneration package for our employees includes salary, sales commissions and employee share option programs.
Newstyle Media Group produced a popular Asian TV series “The Untamed,” which is currently available worldwide on the online streaming platform Netflix. From June 2018 to October 2018, Mr. Qiu served as the Head of Blockchain Business of North Mining Limited. Mr.
Qiu co-founded and served as a Vice President of Newstyle Media Group, which received strategic investments from certain well-known technology companies in the PRC. Newstyle Media Group produced a popular Asian TV series “The Untamed,” which is currently available worldwide on the online streaming platform Netflix. From June 2018 to October 2018, Mr.
Curtis holds an A.B. in Economics from Harvard, a M.Sc. in Economics from the University of London and a Ph.D. in Criminology and Urban Policy from the University of Pennsylvania. Since November 2022, Mr. Alan Curtis has served as the Chairperson of the Board of Directors of the Company. Mr.
Curtis proposed evidence-based policies for employment, education, housing, community development, and criminal justice. Mr. Curtis holds an A.B. in Economics from Harvard, a M.Sc. in Economics from the University of London and a Ph.D. in Criminology and Urban Policy from the University of Pennsylvania. Since November 2022, Mr.
Daniel Kelly Kennedy has served as a Director of the Company. 71 Ms. Qian Sun, age 36, has more than 10 years of experience in corporate management and industrial investment. In 2010, Ms.
Alan Curtis has served as the Chairperson of the Board of Directors of the Company. 105 Ms. Qian Sun, our Chief Operating Officer and Director, has more than 10 years of experience in corporate management and industrial investment. In 2010, Ms.
The mailing address of Hong Mei Zhou is Building 6, State Veteran’s Institute, No. 26, Mengla Road, Jinghong, Xishuangbanna Dai Autonomous Prefecture, Yunnan Province, China. (6) Xin Rong Gan held 4,600,000 ordinary shares and warrants which can be exercised to purchase up to 13,800,000 ordinary shares.
The percentage of beneficial ownership is calculated based on a denominator of 63,686,563 shares issued and outstanding as of April 15, 2025. The mailing address of Hong Mei Zhou is Building 6, State Veteran’s Institute, No. 26, Mengla Road, Jinghong, Xishuangbanna Dai Autonomous Prefecture, Yunnan Province, China. (5) Xin Rong Gan held 4,600,000 ordinary shares.
The percentage of beneficial ownership is calculated based on a denominator of 78,127,590 ordinary shares, being the sum of 60,819,897 shares issued and outstanding as of April 12, 2024 and 17,307,693 ordinary shares issuable upon full exercise of warrants held. The mailing address of Hexin Global Limited is 7/F, 15 Shelter Street, Causeway Bay, Hong Kong.
The percentage of beneficial ownership is calculated based on a denominator of 63,686,563 shares issued and outstanding as of April 15, 2025. The mailing address of Hexin Global Limited is 7/F, 15 Shelter Street, Causeway Bay, Hong Kong. (4) Hong Mei Zhou held 4,607,000 ordinary shares.
As of April 12, 2024, the total number of ordinary shares issued and outstanding is 60,819,897.
As of April 15, 2025, the total number of ordinary shares issued and outstanding is 63,686,563.
Shi Qiu, age 33, is an entrepreneur with extensive experience in corporate management and business innovation in various industries, such as the media, fintech, and blockchain industries. From September 2015 to May 2018, Mr. Qiu co-founded and served as a Vice President of Newstyle Media Group, which received strategic investments from certain well-known technology companies in the PRC.
Shi Qiu, our Chief Executive Officer and Director, is an entrepreneur with extensive experience in corporate management and business innovation in various industries, such as the media, fintech, and blockchain industries. From September 2015 to May 2018, Mr.
The mailing address of Huangtong International Co., Ltd is Room 1603, Shui On Centre, Wan Chai, Hong Kong. (3) Hexin Global Limited held 5,769,231 ordinary shares and warrants which can be exercised to purchase up to 17,307,693 ordinary shares.
The percentage of beneficial ownership is calculated based on a denominator of 63,686,563 shares issued and outstanding as of April 15, 2025. The mailing address of Huangtong International Co., Ltd is Room 1603, Shui On Centre, Wan Chai, Hong Kong. (3) Hexin Global Limited held 5,769,231 ordinary shares.
The mailing address of Xin Rong Gan is Room 2-204, Building 7, Jindaotian Jinzhou Garden, Luohu District, Shenzhen, Guangdong Province, China. (7) Apollo Multi-Asset Growth Fund held 14,251,781 ordinary shares and warrants which can be exercised to purchase up to 42,755,344 ordinary shares.
(6) Apollo Multi-Asset Growth Fund held 14,251,781 ordinary shares and warrants which can be exercised to purchase up to 42,755,344 ordinary shares.
The mailing address of Apollo Multi-Asset Growth Fund is Unit 1603, 16/F Tung Ning Building, 125-126 Connaught Road Central, Sheung Wan, Hong Kong. (8) Anyu International Limited held 2,000,000 ordinary shares and warrants which can be exercised to purchase up to 6,000,000 ordinary shares.
The mailing address of Apollo Multi-Asset Growth Fund is Unit 1603, 16/F Tung Ning Building, 125-126 Connaught Road Central, Sheung Wan, Hong Kong. (7) Quick Cash Technology Limited held 3,955,052 ordinary shares. The percentage of beneficial ownership is calculated based on a denominator of 63,686,563 shares issued and outstanding as of April 15, 2025.
Share Incentive Plans We adopted our share incentive plan in 2011, amended it in 2015 (the “2011 Plan”), and new incentive plans in 2020, 2021 and 2022 (the “2020 Plan”, “2021 Plan” and “2022 Plan”), to attract and retain the best available personnel, provide additional incentives to our employees, directors and consultants, and promote the success of our business.
Share Incentive Plan We adopted an share incentive plan in March 2025 (the “2025 Plan”), under which a maximum of 6,300,000 Ordinary Shares may be awarded to attract and retain the best available personnel, provide additional incentives to our employees, directors and consultants, and promote the success of our business. There are no outstanding options granted under the 2025 Plan.
(9) Quick Cash Technology Limited held 4,000,000 ordinary shares. The percentage of beneficial ownership is calculated based on a denominator of 60,819,897 shares issued and outstanding as of April 12, 2024. The mailing address of Quick Cash Technology Limited is Rm 4, 16/F, Ho King Comm Ctr, 2-16 Fayuen St, Mongkok Kowloon, Hong Kong.
The mailing address of Quick Cash Technology Limited is Rm 4, 16/F, Ho King Comm Ctr, 2-16 Fayuen St, Mongkok Kowloon, Hong Kong. None of our existing shareholders has voting rights that will differ from the voting rights of other shareholders.
Removed
Daniel Kelly Kennedy, age 40, is an educator, writer and inspirational leader in international business and entrepreneurship. From August 2015 to August 2016, Mr. Kennedy was an Academic English Professor at Moraine Park Technical College in Beaver Dam, Wisconsin. From August 2016 to August 2017, Mr. Kennedy was an International Business/Social Media Coordinator at Mozaik Education in Szeged, Hungary.
Added
Wilfred Daye, our Chief Strategy Officer, is the CEO and Co-Founder of Samara Alpha Management and Sylvanus Technologies, Inc., an alternative asset manager and a FinTech platform specializing in trading, portfolio, and risk management systems, roles he has held since January 2023 and April 2024, respectively.
Removed
From September 2017 to May 2018, Mr. Kennedy worked as a Yoga/Meditation teacher at the Lodge at Woodloch in Hawley, Pennsylvania. From August 2020 to July 2022, Mr. Kennedy worked as an Academic English Professor at Campus Education in New York City. From June 2021 to the present, Mr.
Added
From October 2021 to December 2022, he served as the CEO of Securitize Capital, the asset management arm of Securitize, a trailblazer in Real-World Asset (RWA) tokenization, and a recognized leader in blockchain-enabled financial solutions. Prior to that, Mr. Daye served as the CEO of Enigma Securities Ltd., a crypto broker and liquidity provider, from February 2020 to October 2021.
Removed
Kennedy has been a Columnist for “Entrepreneur Magazine” in New York City. Mr. Kennedy has been writing and publishing articles on various subject ranging from finance to life style. From June 2022 to October 2022, Mr.
Added
From June 2018 to January 2020, he served as the CEO of OK Securities LLC and Head of Financial Markets at OKCoin, a major cryptocurrency exchange. Mr.
Removed
Kennedy worked at BIT Mining, a leading publicly traded cryptocurrency mining company, as a Marketing Manager responsible for managing social media, public relations, investor relations and maintaining a professional and intelligent public image. Mr. Kennedy holds a bachelor’s degree in history and a Master’s degree in Education from King’s College in Pennsylvania. Since November 2022, Mr.
Added
Daye earned a B.S. in Biochemistry from the University of California, Riverside, an ABD in Molecular Pathology from the USC School of Medicine, an M.S. in Financial Engineering from Claremont Graduate University, and a diploma in Private Equity from the Saïd Business School at the University of Oxford. There are no family relationship between any of the persons named above.
Removed
The amended and restated 2011 share incentive plan provides for the grant of options, restricted shares and other share-based awards, collectively referred to as “awards.” In respect of the share incentive plan 2011, amended in 2015, our board of directors has authorized the issuance of ordinary shares of up to 15% of the issued and outstanding share capital of our company from time to time.
Added
As of April 15, 2025, awards constituting a total of 16,666 Ordinary Shares have been awarded under the 2025 Plan. A copy of the 2025 Plan is appended to this report as Exhibit 4.21. The following paragraphs summarize the principal terms of our 2025 Plan. Type of Awards.
Removed
The maximum aggregate number of shares which may be issued under the 2020 Plan is 150,000,000 shares (pre-mandatory exchange and share consolidation). The maximum aggregate number of shares which may be issued under the 2021 Plan is 400,000,000 shares (pre-mandatory exchange and share consolidation).
Added
The 2025 Plan permits the awards of share options, share appreciation rights, stock bonuses, restricted stock, performance stock, stock units, phantom stock or similar rights to purchase or acquire shares, cash award or any similar securities with a value derived from the value of or related to the Ordinary Shares and/or returns thereon. Plan Administration.
Removed
The maximum aggregate number of shares which may be issued under the 2022 Plan is 1,100,000,000 shares (pre-mandatory exchange and share consolidation). 2011 Plan Plan Administration . Our compensation committee will administer the amended and restated 2011 share incentive plan.
Added
The 2025 Plan is effective as of March 28, 2025, the date of its approval by the Board (the “Effective Date”). Unless earlier terminated by the Board, the 2025 Plan shall terminate at the close of business on the day before the tenth anniversary of the Effective Date.
Removed
The committee determines the participants to receive awards, the type and number of awards to be granted, and the terms and conditions of each award grant. Award Agreements .
Added
After the termination of the 2025 Plan either upon such stated termination date or its earlier termination by the Board, no additional awards may be granted under the 2025 Plan, but previously granted awards (and the authority of the administrator with respect thereto, including the authority to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the 2025 Plan.
Removed
Awards granted under our amended and restated 2011 share incentive plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant, which may include the term of the award, the provisions applicable in the event that the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Added
The Board may, at any time, terminate or, from time to time, amend, modify or suspend the 2025 Plan, in whole or in part. No awards may be granted during any period that the Board suspends the 2025 Plan. C.
Removed
Unless specifically approved by our board of directors, the purchase price per share of an option shall not be less than 100% of the fair market value of the shares on the date of grant. Transfer Restrictions .
Added
Wilfred Daye as the Chief Strategy Officer for the Company, effective January 30, 2025, with an employment agreement governing the terms and conditions of Mr. Wilfred Daye’s employment. Pursuant to such employment agreement with Mr. Wilfred Daye, Mr.
Removed
The right of a grantee in an award granted under our amended and restated 2011 share incentive plan may not be transferred in any manner by the grantee other than by will or the laws of descent and, with limited exceptions, may be exercised during the lifetime of the grantee only by the grantee. Option Exercise .
Added
Daye’s employment commenced on February 1, 2025 and remains in effect for a term of one year, and will automatically renew for additional one year terms unless either party provides written notice of non-renewal at least thirty days prior to the expiration. As compensation, Mr.
Removed
The term of options granted under the amended and restated 2011 share incentive plan may not exceed ten years from the date of grant.
Added
Daye shall receive 100,000 shares of MFH Cayman’s restricted ordinary shares to be vested over a one-year period, issued and received in equal monthly installments. D. Employees As of December 31, 2024, we had a total of 11 employees, consisting of four executives, four staff members in the business consultation services business, and three staff members in other functions.
Removed
The consideration to be paid for our ordinary shares upon exercise of an option or purchase of ordinary shares underlying the option may include cash, check or other cash-equivalent, ordinary shares, consideration received by us in a cashless exercise, or any combination of the foregoing methods of payment. Acceleration upon a Change of Control .
Added
The percentage of beneficial ownership is calculated based on a denominator of 63,686,563 shares issued and outstanding as of April 15, 2025. The mailing address of Xin Rong Gan is Room 2-204, Building 7, Jindaotian Jinzhou Garden, Luohu District, Shenzhen, Guangdong Province, China.
Removed
If a change of control of our company occurs, (i) the compensation committee may determine that any outstanding unexercisable, unvested or lapsable awards shall automatically be deemed exercisable, vested and not subject to lapse immediately prior to the event triggering the change of control and (ii) the compensation committee may cancel such awards for fair value, provide for the issuance of substitute awards or provide that for a period of at least 15 days prior to the event triggering the change of control, such options shall be exercisable and that upon the occurrence of the change of control, such options shall terminate and be of no further force and effect.
Removed
Termination and Amendment . Our board of directors has the authority to amend or terminate our share incentive plan subject to shareholder approval to the extent necessary to comply with applicable laws.
Removed
Shareholders’ approval is required for any amendment to the amended and restated 2011 share incentive plan that increases the number of ordinary shares available under the amended and restated 2011 share incentive plan or changes the maximum number of shares for which awards may be granted to any participant.
Removed
Additionally, a participant’s consent is required to diminish any of the rights of the participant under any award previously granted to such participant. 73 2020 Plan The following paragraphs summarize the principal terms of our 2020 Plan. Type of Awards.
Removed
The 2020 Plan permits the awards of options, restricted shares, restricted share units or other types of awards approved by compensation committee of the board. Plan Administration. Our board of directors or compensation committee will administer the 2020 Plan.
Removed
With the approval of the board, our compensation committee has the authority to terminate, amend, suspend or modify the 2020 Plan.
Removed
However, without the prior written consent of the participant, no such action may adversely affect in any material way any award previously granted pursuant to the plan. 2021 Plan The following paragraphs summarize the principal terms of our 2021 Plan. Type of Awards.
Removed
The 2021 Plan permits the awards of options, restricted shares, restricted share units or other types of awards approved by compensation committee of the board. Plan Administration. Our board of directors or compensation committee will administer the 2021 Plan.
Removed
The committee or the board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant. Award Agreement.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

6 edited+0 added−3 removed3 unchanged
As of December 31, 2023, the Company has not yet repaid the loan due to the affiliated relationship between Ying Wang and Wei Zhu. The Company may not repay the debt until the Company recovers the digital assets wrongly seized by the Sheyang County Public Security Bureau. C. Interests of Experts and Counsel Not applicable.
As of December 31, 2024, the Company has not yet repaid the loan due to the affiliated relationship between Ying Wang and Wei Zhu. The Company may not repay the debt until the Company recovers the digital assets wrongly seized by the Sheyang County Public Security Bureau. 115 C. Interests of Experts and Counsel Not applicable.
As of December 31, 2023, the Company has not yet repaid the loan due to the affiliated relationship between Radiance Holding (HK) Limited and Wei Zhu. The Company may not repay the debt until the Company recovers the digital assets wrongly seized by the Sheyang County Public Security Bureau. 83 iii.
As of December 31, 2024, the Company has not yet repaid the loan due to the affiliated relationship between Radiance Holding (HK) Limited and Wei Zhu. The Company may not repay the debt until the Company recovers the digital assets wrongly seized by the Sheyang County Public Security Bureau. iii.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” 82 B.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees — E. Share Ownership.” 114 B.
The amounts represent the payables of $243,219 due to Zhiyou Wang related to the Company’s borrowing from shareholders because of a temporary shortage of RMB funds. As of December 31, 2023, the Company has not yet repaid the loan due to the affiliated relationship between Zhiyou Wang and Wei Zhu.
The amounts represent the payables of $236,575 due to Zhiyou Wang related to the Company’s PRC subsidiary Lianji Future borrowing from shareholders because of a temporary shortage of RMB funds. As of December 31, 2024, the Company has not yet repaid the loan due to the affiliated relationship between Zhiyou Wang and Wei Zhu.
Related Party Transactions Nature of the relationships with related parties: Name Relationship with the Company Kaiming Hu Previous owner of NBpay group, former shareholder of MFH Zhiyou Wang Former director of MFH’s affiliated companies, former shareholder of MFH Radiance Holding (HK) Limited Former shareholder of MFH Wei Zheng Director of MFH Tech Ying Wang Associated with Zhiyou Wang a) As of December 31, 2023 and 2022, the following balance was due from the related party: Net Amount due from the related party As of December 31, As of December 31, 2023 2022 US$ US$ Kaiming Hu (i) — — Wei Zheng (ii) — 25,000 i.
Related Party Transactions Nature of the relationships with related parties: Name Relationship with the Company Zhiyou Wang Former director of MFH’s affiliated companies, former shareholder of MFH Radiance Holding (HK) Limited Former shareholder of MFH Ying Wang Associated with Zhiyou Wang As of December 31, 2024 and 2023, the amount due from the related party was nil.
As of December 31, 2023, Mr Wei Zheng had offset the reserve fund balance with the Company’s business expenses advanced by him. b) As of December 31, 2023 and 2022, the following balance was due to the related party: Net Amount due to the related party As of December 31, 2023 As of December 31, 2022 US$ US$ Zhiyou Wang (i) 243,219 238,168 Radiance Holding (HK) Limited (ii) 273,000 273,000 Ying Wang (iii) 400,000 400,000 i.
As of December 31, 2024 and 2023, the following balance was due to the related party below: Net Amount due to the related party As of December 31, 2024 As of December 31, 2023 US$ US$ Zhiyou Wang (i) 236,575 243,219 Radiance Holding (HK) Limited (ii) 273,000 273,000 Ying Wang (iii) 400,000 400,000 i.
Removed
The receivable due from Mr. Kaiming Hu is $556,083 at the end of December 31, 2021, related to capital contribution. Due to the changes of the Company’s management and business team in the second half of 2021, the Company failed to collect the receivable from Mr. Kaiming Hu in a timely manner.
Removed
The Company made full provision for doubtful accounts for this receivable at the end of 2021. ii. On September 10, 2022, Mercurity Fintech Technology Holding Inc. (“MFH Tech”), a subsidiary of the Company, provided a loan of US $25,000 to Mr. Wei Zheng with a term of one year. Mr.
Removed
Wei Zheng serves as a director of our US subsidiary MFH Tech, and during 2023, this loan was converted into a reserve fund for the Company’s new business. Mr Wei Zheng had the right to continue holding and using the reserve fund.

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