What changed in Chaince Digital Holdings Inc.'s 10-K — 2024 vs 2025

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.

Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this selected financial data section together with our consolidated financial statements and the related notes and “Item 5.

Operating and Financial Review and Prospects” included elsewhere in this annual report. Consolidated Statements of Operations The following summary consolidated financial statements should be read in conjunction with our consolidated financial statements, the notes thereto and other information, included elsewhere in this report.

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.

Our historical results for any period are not necessarily indicative of results to be expected for any future period. You should read the following summary financial information in conjunction with the consolidated financial statements and related notes and the information under “ITEM 5.

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 SAB 4C, changes to a stock dividend, stock split or reverse split in the capital structure must be given retroactive effect in the balance sheet. An appropriately cross-referenced note should disclose the retroactive treatment, explain the change made and state the date the change became effective.

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.

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.

Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D.

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.

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.

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 such price or volume declines, our business, operating results and financial condition would be adversely affected. ● The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate.

If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected. ● Any failure to safeguard and manage our crypto assets could adversely impact our business, operating results and financial condition. ● The theft, loss or destruction of private keys required to access any crypto assets held in custody for our own account may be irreversible.

If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny, reputational harm and other losses. ● Any gaps in our risk management processes and policies in respect of crypto asset could adversely impact our business, operating results and financial condition. ● Crypto assets deposited with third party custodians are subject to risks attendant with such custody arrangements.

If such custodians were to become insolvent, or suffer from hacking or cybersecurity or other technical failures, or if our assets were to be misused or lost, we may lose ownership or control of our crypto assets, and we may not be able to recover our losses through legal or other channels. ● 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. ● If we were deemed an investment company under the Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

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. ● 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. ● 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. ● Our ordinary shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely our auditor if such auditor is located in China.

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.

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.

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.

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.

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.

Various foreign jurisdictions may, in the future, adopt additional laws, regulations or directives that affect the characterization of crypto assets as “securities.” The classification of a crypto asset as a security under applicable law has wide-ranging implications for businesses engaged in operations relating to crypto assets.

For example, a crypto asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration.

Persons that effect transactions in crypto assets that are securities in the United States may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade crypto assets that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an automated trading system (“ATS”) in compliance with rules for ATSs.

Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency. Foreign jurisdictions may have similar licensing, registration and qualification requirements.

Further, if Bitcoin, Ethereum, stablecoins or any other crypto asset is deemed to be a security under any U.S. federal, state or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such crypto asset.

For instance, all transactions in such crypto asset would have to be registered with the SEC or other foreign authority, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability and transactability.

Moreover, the networks on which such crypto assets are utilized may be required to be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of the crypto asset.

Also, it may make it difficult for such crypto asset to be traded, cleared and custodied as compared to other crypto assets that are not considered to be securities.

As such, our holdings of cryptocurrencies from our mining operations, as well as our storage and trading of such cryptocurrencies on third party service provider platforms, may be adversely affected by any fall in value of cryptocurrencies and any increased restrictions on their trading and liquidity.

Whether our activities require registration or the crypto assets we hold would be considered securities is a risk-based assessment, and not a legal standard binding on a regulatory body or court, and does not preclude legal or regulatory action.

Any gaps in our risk management processes and policies in respect of crypto asset could adversely impact our business, operating results, and financial condition.

In late February 2022, Wei Zhu, our former acting Chief Financial Officer, former Co-Chief Executive Officer, and a former member and Co-Chairperson of the Board, and Minghao Li, a former member of the Board, were suspected of certain criminal offenses unrelated to our Company’s operations and were detained by the Economic Crime Investigation Detachment of Sheyang County Public Security Bureau, Yancheng City, Jiangsu Province, People’s Republic of China.

At the same time, Sheyang Public Security Bureau wrongly seized the digital assets hardware cold wallet belonging to the Company, along with the cryptocurrencies stored in the hardware cold wallet. Our Company has since undergone major management personnel changes.

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.

In turn, such deficiencies would require our Board and management to make appropriate changes to our risk management processes and policies. 9 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.

The Company currently does not have plans to mine, transact or invest in any type of cryptocurrency other than mining Filecoins and transacting in Filecoins and disposing of Bitcoins it already holds.

We may from time to time reassess our business plans and it is possible that we may determine to increase our efforts, resources or investments into Filecoin mining and/or transactions.

Whether we determine to do so depends on a cost-benefit analysis, where we will take into account the expected costs and expenses associated with us mining activities, the mining return rate, the market prices and price trends of such crypto assets, as well as the characterization of such crypto assets pursuant to SEC guidance and U.S. court rulings.

We shall strictly abide by all applicable SEC guidance and U.S. court rulings, and we have no intention to challenge any such decisions and guidance through the court process.

We will at all times act in the best interests of shareholders as a whole, and we will only undertake any business ventures in a manner which is beneficial to our shareholders as a whole.

If we determine to mine, invest in or transact in cryptocurrencies, it would only be because our management has determined that such endeavor is likely to bring economic benefits to our shareholders as a whole.

If in the event that we decide to mine, invest in or transact in cryptocurrencies that constitute “securities” pursuant to SEC guidance or U.S. court rulings, we will expect to incur substantially more compliance costs with respect to such activities and therefore the financial performance of the Company will likely suffer from such decision.

However, as of the date of this report, we currently do not have plans to mine, transact or invest in any type of cryptocurrency, other than mining and transacting in Filecoins or disposing of Bitcoins held.

Regardless, if our holding of securities exceed 40 percent of the value of our total assets, we may become regarded as an “investment company” under the Investment Company Act of 1940 (the “1940 Act”) and we may have to cease our operations due to the prohibitively high costs associated with being an investment company.

We intend to monitor our holdings of Filecoin and other securities to ensure that we do not become regarded as an “investment company.” See also “ Risk Factors — If we were deemed an investment company under the Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business. ” 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.

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. Current and future legislation and the Commission rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which bitcoins are treated for classification and clearing purposes.

As of the date of this report, we are not aware of any rules that have been proposed to regulate bitcoins as securities. We cannot be certain as to how future regulatory developments will impact the treatment of bitcoins under the law.

Such regulatory changes as to the classification of Bitcoin may result in extraordinary, non-recurring expenses to us, thereby materially and adversely impacting our financial performance and your investment in us.

If we determine not to comply with such additional regulatory and registration requirements, we may have to modify or cease certain aspects of our operations, resulting in negative impacts on our financial results.

To the extent that digital assets including bitcoins and other digital assets we may own are deemed by the Commission to fall within the definition of a security in the future, we may be required to register and comply with additional regulations under the 1940 Act, including additional periodic reporting and disclosure standards and requirements and the registration of our Company as an investment company.

Additionally, one or more states may conclude bitcoins and other digital assets we may own are a security under state securities laws which would require registration under state laws including merit review laws which would adversely impact us since we would likely not comply.

Such additional registrations may result in extraordinary, non-recurring expenses of our Company, thereby materially and adversely impacting our Company’s financial performance. Because we may not have the resources to comply with such additional regulatory and registration requirements under the 1940 Act, we may seek to modify or cease all or certain parts of our operations.

Any such action would likely adversely affect an investment in us and investors may suffer a complete loss of their investment in our Company. 10 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 disposed of our business of providing integrated B2B services to food service suppliers and customers in July 2019. We started to provide blockchain technical services in May 2019.

Due to the extremely adverse regulatory measures taken by the Chinese government in 2021 in the field of digital currency production and transaction, we disposed of the Chinese companies of the blockchain technical services business controlled through VIE agreements in January 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.

We completed the acquisition of a US broker dealer firm in December 2024, and successfully received approval for its Continuing Membership Application (“CMA”) from the Financial Industry Regulatory Authority (“FINRA”) in March 2025, which qualifies us to provide investment banking services, such as financial advisory services, as well as mergers or initial public offering underwriting services.

The limited history of our current operations may make it difficult for you to evaluate our business, financial performance and prospects, and our historical growth rate might not be indicative of our future performance. We cannot assure you that our current business will grow as rapidly as we expect or achieve the critical mass needed for long-term success.

Given the limited history of our business model and the rapid developments in the related industry, it may be difficult to predict if our expected business growth can be achieved in the future, and that the market might evolve in ways that are difficult to anticipate.

You should consider our prospects considering risks and uncertainties that companies in a rapidly evolving market might encounter.

These risks and difficulties include, but are not limited to: ● a new and relatively unproven business model; ● our ability to anticipate and adapt to a fast developing market and industry; ● market acceptance of our products and services; ● high expenditures associated with our technology upgrading, brand promotion and marketing activities; ● our ability to attract customers and business partners to generate sufficient cash flows; ● Complexities in managing rapid expansion of personnel and operations; and ● our ability to compete in the fast-changing marketplace.

We cannot be certain that our business strategy will be successful or that we will successfully address these risks. Failure to address any of the risks described above could have an adverse effect on our business, financial condition and results of operations. We currently have a limited customer base for our business consultation services.

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.

In July 2022, we added consultation services to our business, providing business consultation services to global 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 and have been expanding our business into the online and traditional brokerage services, such as building up client base and acquiring the necessary licenses.

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.

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.

We cannot assure you that our relationships with these customers will continue to develop or that these customers will continue to generate material revenue for us in the future, or we will acquire more new customers. We need to invest significant resources in selling and marketing efforts.

We take targeted business development approaches to reach out to our potential customers and provide them with our company profile through various means, such as emails and social network media. We also attend offline marketing activities to promote our presence and brand recognition in the blockchain and digital asset industry.

To continue to reach potential customers and grow our current business, we must identify and devote more of our marketing expenditures to new and evolving marketing channels, which may include mobile and virtual channels.

The opportunities in and sophistication of newer marketing channels generally are relatively undeveloped and unproven, making it difficult to assess returns on investment associated with such channels, and there can be no assurance that we will be able to continue to appropriately manage and fine-tune our marketing efforts in response to these and other trends in the industry.

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.

We actively explore acquisition prospects that would complement our existing services, augment our market coverage and distribution ability, or enhance our capabilities. As a result, we may seek to acquire certain companies, products, or technologies, or we may reduce or dispose of certain product lines or technologies that no longer fit our business strategies.

For regulatory or other reasons, we may not be successful in our attempts to acquire or dispose of businesses, products, or technologies, resulting in significant financial costs, reduced or lost opportunities, and diversion of management’s attention.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties.

Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” and elsewhere in this annual report on Form 20-F. Explanatory 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.

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.

Operating Results Overview After making the adjustments of our business strategies in the past couple of years, the current focus of our operating subsidiaries are as follows: (i) MFH Tech acting as the operating entity of distributed computing and storage services; (ii) Chaince Securities, Inc. acting as the operating entity of business consultation services in North America, and with Chaince Securities, LLC focusing on providing investment banking services (such as financial advisory services, as well as mergers or initial public offering underwriting services) in the U.S., and (iii) Ucon and Lianji Future acting as the operating entities of the business consultation services in the Asia-Pacific region.

Distributed storage and computing services In August 2021, we added cryptocurrency mining as one of our main businesses going forward.

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.

However, the management did not anticipate the Bitcoin market crash that would begin in December 2021, causing our Bitcoin mining business to suffer a great loss. From May 2022, we have not engaged in any Bitcoin mining business.

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 (the “equipment”), including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5,980,000, payable in our ordinary shares.

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.

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.

LTD. (“Origin Storage”). The Company will use Origin Storage’s technology to re package the Web3 decentralized storage infrastructure and conduct Filecoin mining business through Origin Storage’s network platform. The Filecoin mining services provided by Origin Storage include but are not limited to storage server services, computing encapsulation server services, and technical services.

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.

Starting from December 2024, MFH Tech achieved a collaborative partnership with HDP Capital Management Limited (“HDP”), a company established by members of the Filecoin Foundation. This partnership will provide us sufficient additional Filecoins, enabling MFH Tech to meet the staking requirements for expanding our Filecoin nodes.

As a mutually beneficial arrangement, we will remit approximately 50% of the Filecoin reward received by the cooperative node to our partner. In this way, the remaining storage capacity of MFH Tech’s Web3 decentralized storage infrastructure will have the opportunity to be fully utilized. By increasing the number of nodes, we anticipate a corresponding enhancement in revenue generation.

Business consultation services In July 2022, we added consultation services to our business, providing business consultation services to global corporate clients, such as assisting the 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.

On July 15, 2022, MFH Cayman incorporated Mercurity Fintech Technology Holding Inc. (“MFH Tech”) to develop distributed computing and storage services (mainly Filecoin mining) and consultation services.

After the formation of Chaince Securities, Inc. in 2023, MFH Tech has gradually transferred its business consultation services to Chaince Securities, Inc. and is currently concentrating on providing distributed computing and storage services (mainly Filecoin mining). The Company’s business consultation service revenue for the year ended December 31, 2024 was $448,525, sourced from two Chinese clients and one American client.

The Company’s business consultation service revenue for the year ended December 31, 2023 was $160,000, sourced from one Chinese client and one American client. The Company’s business consultation service revenue for the year ended December 31, 2022 was $80,000, sourced from one Chinese client.

Investment banking services On April 12, 2023, MFH Cayman completed the incorporation of another U.S. subsidiary, Chaince Securities, Inc., which is developing business consultation services and investment banking services (such as financial advisory services, as well as mergers or initial public offering underwriting services).

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.

Delaney & Associates, which was completed in December 2024 through Chaince Securities, Inc.’s acquisition of Chaince Securities, LLC, previously known as JVDA, LLC. In March 2025, Chaince Securities, LLC successfully received approval for its Continuing Membership Application (“CMA”) from the Financial Industry Regulatory Authority (“FINRA”).

For the year ended December 31, 2024, the Company did not generate any revenue related to our investment banking services. 77 Key Components of Results of Operations Revenue The table below sets forth our Revenue in aggregate and by service type therein for the three years: For the year Ended December 31, 2024 2023 2022 US$ US$ US$ Revenue: Business consultation services 448,525 160,000 80,000 Distributed storage and computing services 513,405 285,928 783,438 Others 45,500 — — Total Revenue $ 1,007,430 $ 445,928 $ 863,438 Business consultation services The Company’s business consultation service revenue for the year ended December 31, 2024 was $448,525, sourced from two Chinese clients and one American client.

The Company’s business consultation service revenue for the year ended December 31, 2023 was $160,000, sourced from one Chinese client and one American client. The Company’s business consultation service revenue for the year ended December 31, 2022 was $80,000, sourced from one Chinese client.

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.

As of December 31, 2022, approximately 50% of the agreed services had been completed as scheduled, and the Company recognized consultation services revenue of $80,000 for the year ended December 31, 2022 based on the percentage-of-completion.

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.

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.

MFH Tech collected $500,000 from the client in a lump sum, of which $150,000 was a fixed consulting service fee and $350,000 was the total contract fee for introducing professional service agencies. MFH Tech can recognize the difference between this $350,000 and the service fees paid to other professional agencies as additional income.

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.

As of December 31, 2024, 100% of the agreed management consulting services had been completed as scheduled, and MFH Tech recognized consultation services revenue of $90,000 for the year ended December 31, 2024 based on the percentage-of-completion.

In addition, as of December 31, 2024, MFH Tech had completed the introduction of professional service agency resources as agreed in the supplementary agreement, and recognized the difference of $211,975 after deducting service fees paid to other professional agencies from the $350,000 received from the client as additional consulting service revenue for the year ended December 31, 2024. 78 On November 1, 2023, Chaince Securities, Inc. signed a financial consulting agreement with an American logistics company.

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.

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.

As of December 31, 2024, approximately 70% of the agreed services had been completed as scheduled, and Chaince Securities, Inc. recognized consultation services revenue of $50,000 for the year ended December 31, 2024 based on the percentage-of-completion. On March 11, 2024, Chaince Securities, Inc. signed a Project Consultation Agreement with a Chinese manufacturing company.

Chaince Securities, Inc. will serve as a business consultant in order to introduce and facilitate the integration of local industry guidance funds for the client, refer and apply on behalf of the client for domestic and international investment attraction and accompanying preferential policies, introduce the client to key domestic and international customers within the industry chain, and facilitate the Client’s collaboration with essential third-party institutions necessary for initial public offerings and subsequent financing activities.

The total consideration for this agreement is $100,000. As of December 31, 2024, as the client successfully completed its IPO process, 100% of the agreed services also had been completed as scheduled, and Chaince Securities, Inc. recognized consultation services revenue of $100,000 for the year ended December 31, 2024 based on the percentage-of-completion.

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.

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.

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 provision of such computing power was the only performance obligation in the general terms of the mining pool website.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 provision of such storage capacity is the only performance obligation in the general terms of the Filecoin mainnet.

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.

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.

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. MFH Cayman established our first node account (f01997159) (“Filecoin Node 1”) on the Filecoin network in December 2022.

MFH Tech established our second node account (f02096915) (“Filecoin Node 2”) on the Filecoin network in March 2023. As of December 31, 2024, Node 1 and Node 2 had ceased their operations due to their low effective storage capacity.

In December 2023, MFH Tech decided to adopt the new Filecoin mining method “Filecoin Plus” to expand its Filecoin mining business and gradually replace Filecoin Nodes 1 and 2 by opening new ones operating with Filecoin Plus. The new Filecoin mining method of Filecoin Plus is open-source information available on the Filecoin network.

With the technical guidance and support of Origin Storage, MFH Tech has become capable of using and operating the open-sourced codes of Filecoin Plus to mine Filecoin and have been running two new Filecoin mining nodes (f02843151 and f02886019) (“Filecoin Node 3” and “Filecoin Node 4” respectively) since January 2024.

Under the Filecoin Plus mining method, MFH Tech can identify, store, search and retrieve commercial grade information for clients and as a result, MFH Tech has received ten times (also called “quality adjusted power” in the setting of Filecoin mining) of the mining rewards in Filecoin for the same amount mining work we do using the regular Filecoin mining method.

Origin Storage has been providing technical services to MFH Tech’s mining team for Filecoin mining operations to meet the standards of Filecoin Plus and receive the quality adjusted power and increased amount of Filecoin rewards. The original storage capacity is the actual storage capacity taken up by MFH Tech’s Web3 decentralized storage infrastructure.

The effective storage capacity refers to the rate or ability of Filecoin rewards each unit of storage can generate.

Because of the 10x quality adjusted power the Filecoin network is providing to miners using Filecoin Plus method, MFH Tech currently can use one unit of original storage to earn the same amount of Filecoin rewards that ten original storage units used to earn in the past before MFH Tech adopted Filecoin Plus.

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.

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, 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.

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.

The Company may not repay the debt until the Company recovers the digital assets wrongly seized by the Sheyang County Public Security Bureau. ii. The amounts represent the payables of $273,000 due to Radiance Holding (HK) Limited related to the Company’s borrowing shares from shareholders to pay agency fees with 100,000 ADSs of the Company.

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.

On June 13, 2022, the Company issued a promissory note to Ying Wang, a Singapore resident associated with Zhiyou Wang, in the principal amount of up to USD$5,000,000 to provide for the Company’s working capital.

The Note has a term of one year with the maturity date on June 1, 2023 and bears no interest other than any applicable imputed interest charged by the appropriate government authority. The balance of the Note may be prepaid at any time before the Maturity Date.

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.