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What changed in SAIHEAT Ltd's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of SAIHEAT Ltd's 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+679 added−657 removedSource: 20-F (2024-04-23) vs 20-F (2023-04-19)

Top changes in SAIHEAT Ltd's 2023 20-F

679 paragraphs added · 657 removed · 511 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

282 edited+24 added−55 removed576 unchanged
Biggest changeIf the situation in Kazakhstan deteriorates, it may cause adverse impact on our operations and financial results. • As a result of our plans to expand operations, including to jurisdictions in which the tax laws may not be favorable, our tax rate may fluctuate, our tax obligations may become significantly more complex and subject to greater risk of examination by taxing authorities or we may be subject to future changes in tax law, the impacts of which could adversely affect our after -tax profitability and financial results. • Unfavorable global economic, business or political conditions, such as the global COVID -19 pandemic and the disruption caused by various countermeasures to reduce its spread, could adversely affect our business, prospects, financial condition, and operating results. • We are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in the Company and, as a result, the value of our Ordinary Shares..
Biggest changeIf the PRC government at any time substantially intervenes, influences, or establishes new policies, regulations, rules, or laws in a business’s industry, such substantial intervention or influence may result in adverse impact on such business’s operations and the value of such business’s securities, including causing the value of such securities to decline. ● PRC regulations relating to offshore investment activities by PRC residents may expose us or our PRC resident beneficial owners to liability and penalties under PRC law. ● As a result of our plans to expand operations, including to jurisdictions in which the tax laws may not be favorable, our tax rate may fluctuate, our tax obligations may become significantly more complex and subject to greater risk of examination by taxing authorities or we may be subject to future changes in tax law, the impacts of which could adversely affect our after-tax profitability and financial results. ● Unfavorable global economic, business or political conditions, such as the global COVID-19 pandemic and the disruption caused by various countermeasures to reduce its spread, could adversely affect our business, prospects, financial condition, and operating results. ● We are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in the Company and, as a result, the value of our Ordinary Shares.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
Our subsidiary, which is located in China, engages in activities that are not part of our profit -making operations, such as supply chain activities, heating equipment research, and other developmental activities that are completely compliant with PRC regulations.
Our subsidiary, which is located in China, engages in activities that are not part of our profit-making operations, such as supply chain activities, heating equipment research, and other developmental activities that are completely compliant with PRC regulations.
On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”) and relevant supporting guidelines (collectively, the “New Administrative Rules Regarding Overseas Listings”), which came into force since March 31, 2023.
On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”) and relevant supporting guidelines (collectively, the “New Administrative Rules Regarding Overseas Listings”), which came into force since March 31, 2023.
The New Administrative Rules Regarding Overseas Listings refine the regulatory system for domestic company’s overseas offering and listing by subjecting both direct and indirect overseas offering and listing activities to the filing -based administration, and clearly defines the circumstances where provisions for direct and indirect overseas offering and listing apply and relevant regulatory requirements.
The New Administrative Rules Regarding Overseas Listings refine the regulatory system for domestic company’s overseas offering and listing by subjecting both direct and indirect overseas offering and listing activities to the filing-based administration, and clearly defines the circumstances where provisions for direct and indirect overseas offering and listing apply and relevant regulatory requirements.
According to the New Administrative Rules Regarding Overseas Listings, among other things, a domestic company in the PRC that seeks to offer and list securities in overseas markets shall fulfill the filing procedure with the CSRC as per requirement of the Trial Administrative Measures.
According to the New Administrative Rules Regarding Overseas Listings, among other things, a domestic company in the PRC that seeks to offer and list securities in overseas markets shall fulfill the filing procedure with the CSRC as per requirement of the Trial Administrative Measures.
Initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas.
Initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas.
The required filing materials with the CSRC include (without limitation): (i) record -filing reports and related undertakings, (ii) compliance certificates, filing or approval documents from the primary regulators of applicants’ businesses (if applicable), (iii) security assessment opinions issued by related departments (if applicable), (iv) PRC legal opinions issued by domestic law firms (with related undertakings), and (v) prospectus or listing documents.
The required filing materials with the CSRC include (without limitation): (i) record-filing reports and related undertakings, (ii) compliance certificates, filing or approval documents from the primary regulators of applicants’ businesses (if applicable), (iii) security assessment opinions issued by related departments (if applicable), (iv) PRC legal opinions issued by domestic law firms (with related undertakings), and (v) prospectus or listing documents.
If an issuer offers securities in the same overseas market where it has previously offered and listed securities subsequently, filings shall be made with the CSRC within 3 working days after the offering is completed.
If an issuer offers securities in the same overseas market where it has previously offered and listed securities subsequently, filings shall be made with the CSRC within 3 working days after the offering is completed.
Upon occurrence of any material event, such as change of control, investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, or voluntary or mandatory delisting, after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC within 3 working days after the occurrence and public disclosure of such event.
Upon occurrence of any material event, such as change of control, investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, or voluntary or mandatory delisting, after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC within 3 working days after the occurrence and public disclosure of such event.
Further, an overseas securities company that serves as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies shall file with the CSRC within 10 working days after signing its first engagement agreement for such business, and submit to the CSRC, no later than January 31 each year, an annual report on its business activities in the previous year associated with overseas securities offering and listing by domestic companies.
Further, an overseas securities company that serves as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies shall file with the CSRC within 10 working days after signing its first engagement agreement for such business, and submit to the CSRC, no later than January 31 each year, an annual report on its business activities in the previous year associated with overseas securities offering and listing by domestic companies.
Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.
The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.
Also, our PRC subsidiaries do not constitute a main part of our business activity, since they only engage in activities such as supply chain activities and heating equipment research, which are not part of our profit -making operations.
Also, our PRC subsidiaries do not constitute a main part of our business activity, since they only engage in activities such as supply chain activities and heating equipment research, which are not part of our profit-making operations.
However, if the CSRC or other applicable PRC authorities deemed otherwise, we may be required to complete such filing requirements before any offering of securities, which would materially affect our ability to offer securities and cause significantly decreases on the price of our securities.
However, if the CSRC or other applicable PRC authorities deemed otherwise, we may be required to complete such filing requirements before any offering of securities, which would materially affect our ability to offer securities and cause significantly decreases on the price of our securities.
Our operating results may fluctuate as a result of a variety of factors, many of which are unpredictable and in certain instances are outside of our control, including: • changes in the legislative or regulatory environment, or actions by governments or regulators that impact the cryptocurrency industry generally, or our operations specifically; • difficulty in obtaining new hardware and related installation costs; • access to cost -effective sources of electrical power; • adverse legal proceedings or regulatory enforcement actions, judgments, settlements or other legal proceeding and enforcement -related costs; • increases in operating expenses that we expect to incur to grow and expand our operations and to remain competitive; • system errors, failures, outages and computer viruses, which could disrupt our ability to continue operating; • power outages and certain other events beyond our control, including natural disasters and telecommunication failures; • breaches of security or privacy; • macroeconomic conditions; • our ability to attract and retain talent; and • our ability to compete with our existing and new competitors.
Our operating results may fluctuate as a result of a variety of factors, many of which are unpredictable and in certain instances are outside of our control, including: ● changes in the legislative or regulatory environment, or actions by governments or regulators that impact the cryptocurrency industry generally, or our operations specifically; ● difficulty in obtaining new hardware and related installation costs; ● access to cost-effective sources of electrical power; ● adverse legal proceedings or regulatory enforcement actions, judgments, settlements or other legal proceeding and enforcement-related costs; ● increases in operating expenses that we expect to incur to grow and expand our operations and to remain competitive; ● system errors, failures, outages and computer viruses, which could disrupt our ability to continue operating; 4 ● power outages and certain other events beyond our control, including natural disasters and telecommunication failures; ● breaches of security or privacy; ● macroeconomic conditions; ● our ability to attract and retain talent; and ● our ability to compete with our existing and new competitors.
If the award of new bitcoin for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending processing power, or hash rate, to solve blocks and confirmations of transactions on the bitcoin blockchain could be slowed. • Bitcoin and any other cryptocurrencies that could be held by us are not insured and not subject to FDIC or SIPC protections. • As a company with operations and opportunities outside of the U.S., we may face additional burdens and be subject to a variety of additional risks or considerations associated with companies operating in an international setting that may negatively impact our operations. • If relations between the United States and foreign governments deteriorate, they could affect our operations and cause our goods and services to become less attractive. • Though we have a Singapore -based auditor and a U.S. based predecessor auditor that are registered with the PCAOB and currently subject to PCAOB inspection, if it is later determined that the PCAOB is unable to inspect or investigate completely the company’s auditors because of a position taken by an authority in a foreign jurisdiction, trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act and as a result an exchange may determine to delist our securities. 2 Table of Contents • The PRC government may exert, at any time, with little to no notice, substantial interventions and influences over the manner in which a business must conduct its business operations that cannot always be expected nor anticipated, if such business has some presence/operations in China.
If the award of new bitcoin for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending processing power, or hash rate, to solve blocks and confirmations of transactions on the bitcoin blockchain could be slowed. ● Bitcoin and any other cryptocurrencies that could be held by us are not insured and not subject to FDIC or SIPC protections. ● As a company with operations and opportunities outside of the U.S., we may face additional burdens and be subject to a variety of additional risks or considerations associated with companies operating in an international setting that may negatively impact our operations. ● If relations between the United States and foreign governments deteriorate, they could affect our operations and cause our goods and services to become less attractive. ● Though we have a Singapore-based auditor and a U.S. based predecessor auditor that are registered with the PCAOB and currently subject to PCAOB inspection, if it is later determined that the PCAOB is unable to inspect or investigate completely the company’s auditors because of a position taken by an authority in a foreign jurisdiction, trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act and as a result an exchange may determine to delist our securities. 2 ● The PRC government may exert, at any time, with little to no notice, substantial interventions and influences over the manner in which a business must conduct its business operations that cannot always be expected nor anticipated, if such business has some presence/operations in China.
Specifically, those can be triggered by certain adverse weather conditions or natural disasters, see “ Risk Factors — Risks Related to Our Business, Industry, and Operations — We will be vulnerable to severe weather conditions and natural disasters, including earthquakes, fires, floods, hurricanes, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations. ” Furthermore, if cryptocurrency mining becomes more widespread, government scrutiny related to restrictions on cryptocurrency mining facilities and their energy consumption may significantly increase.
Specifically, those can be triggered by certain adverse weather conditions or natural disasters, see “ Risk Factors — Risks Related to Our Business, Industry, and Operations — We will be vulnerable to severe weather conditions and natural disasters, including earthquakes, fires, floods, hurricanes, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations. ” 5 Furthermore, if cryptocurrency mining becomes more widespread, government scrutiny related to restrictions on cryptocurrency mining facilities and their energy consumption may significantly increase.
For further details on how our operating results may be directly impacted by changes in the value of bitcoin, see “ — Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to bitcoin holdings.” Furthermore, in our operations we intend to use application -specific integrated circuit (“ASIC”) chips and machines (which we refer to as “mining machines”), which are principally utilized for mining bitcoin.
For further details on how our operating results may be directly impacted by changes in the value of bitcoin, see “ — Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to bitcoin holdings.” 27 Furthermore, in our operations we intend to use application-specific integrated circuit (“ASIC”) chips and machines (which we refer to as “mining machines”), which are principally utilized for mining bitcoin.
If we are unable to access our private keys (whether due to loss, destruction, security incident or otherwise), it could cause direct financial loss, regulatory scrutiny and reputational harm. • Distributing digital assets in connection with our mining pool business involves risks, which could result in loss of customer assets, customer disputes and other liabilities, adversely impact our business, results of operations and/or financial condition. • If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed. • Significant contributors to all or a network for any particular digital asset, such as bitcoin, could propose amendments to the respective network’s protocols and software that, if accepted and authorized by such network, could adversely affect our business. • The supply of bitcoin is limited, and production of bitcoin is negatively impacted by the bitcoin halving protocol expected every four years. • Any periodic adjustments to the digital asset networks, such as bitcoin, regarding the difficulty for block solutions, with reductions in the aggregate hash rate or otherwise, could have a material adverse effect on our business, prospects, financial condition, and operating results.
If we are unable to access our private keys (whether due to loss, destruction, security incident or otherwise), it could cause direct financial loss, regulatory scrutiny and reputational harm. ● Distributing crypto assets in connection with our mining pool business involves risks, which could result in loss of customer assets, customer disputes and other liabilities, adversely impact our business, results of operations and/or financial condition. ● If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed. ● Significant contributors to all or a network for any particular crypto asset, such as bitcoin, could propose amendments to the respective network’s protocols and software that, if accepted and authorized by such network, could adversely affect our business. ● The supply of bitcoin is limited, and production of bitcoin is negatively impacted by the bitcoin halving protocol expected every four years. ● Any periodic adjustments to the crypto asset networks, such as bitcoin, regarding the difficulty for block solutions, with reductions in the aggregate hash rate or otherwise, could have a material adverse effect on our business, prospects, financial condition, and operating results.
Our business may be adversely affected if the markets for bitcoin deteriorate or if its prices decline, including as a result of the following factors: • the reduction in mining rewards of bitcoin, including block reward halving events, which are events that occur after a specific period of time which reduces the block reward earned by miners; • disruptions, hacks, “forks”, 51% attacks, or other similar incidents affecting the bitcoin blockchain network; • hard “forks” resulting in the creation of and divergence into multiple separate networks; 28 Table of Contents • informal governance led by bitcoin’s core developers that lead to revisions to the underlying source code or inactions that prevent network scaling, and which evolve over time largely based on self -determined participation, which may result in new changes or updates that affect their speed, security, usability, or value; • the ability for bitcoin blockchain network to resolve significant scaling challenges and increase the volume and speed of transactions; • the ability to attract and retain developers and customers to use bitcoin for payment, store of value, unit of accounting, and other intended uses; • transaction congestion and fees associated with processing transactions on the bitcoin network; • the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed bitcoin, or the transfer of Satoshi’s bitcoin assets; • negative public perception of bitcoin; • development in mathematics, technology, including in digital computing, algebraic geometry, and quantum computing that could result in the cryptography being used by bitcoin becoming insecure or ineffective; and • laws and regulations affecting the bitcoin network or access to this network, including a determination that bitcoin constitutes a security or other regulated financial instrument under the laws of any jurisdiction.
Our business may be adversely affected if the markets for bitcoin deteriorate or if its prices decline, including as a result of the following factors: ● the reduction in mining rewards of bitcoin, including block reward halving events, which are events that occur after a specific period of time which reduces the block reward earned by miners; ● disruptions, hacks, “forks”, 51% attacks, or other similar incidents affecting the bitcoin blockchain network; ● hard “forks” resulting in the creation of and divergence into multiple separate networks; ● informal governance led by bitcoin’s core developers that lead to revisions to the underlying source code or inactions that prevent network scaling, and which evolve over time largely based on self-determined participation, which may result in new changes or updates that affect their speed, security, usability, or value; ● the ability for bitcoin blockchain network to resolve significant scaling challenges and increase the volume and speed of transactions; ● the ability to attract and retain developers and customers to use bitcoin for payment, store of value, unit of accounting, and other intended uses; ● transaction congestion and fees associated with processing transactions on the bitcoin network; ● the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed bitcoin, or the transfer of Satoshi’s bitcoin assets; ● negative public perception of bitcoin; ● development in mathematics, technology, including in digital computing, algebraic geometry, and quantum computing that could result in the cryptography being used by bitcoin becoming insecure or ineffective; and ● laws and regulations affecting the bitcoin network or access to this network, including a determination that bitcoin constitutes a security or other regulated financial instrument under the laws of any jurisdiction.
The risk applies to securities firms, clearance and settlement firms, national stock and commodities exchanges, the over -the-counter market and the Depository Trust Company. Such factors would have a material adverse effect on our business, prospects, financial condition, and operating results. Cryptocurrencies, including bitcoin, face significant scaling obstacles that can lead to high fees or slow transaction settlement times.
The risk applies to securities firms, clearance and settlement firms, national stock and commodities exchanges, the over-the-counter market and the Depository Trust Company. Such factors would have a material adverse effect on our business, prospects, financial condition, and operating results. 24 Cryptocurrencies, including bitcoin, face significant scaling obstacles that can lead to high fees or slow transaction settlement times.
Additionally, if the relevant central and local authorities find us to be in violation of any existing or future laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation: • levying fines; • revoking our business and other licenses; • requiring that we restructure our ownership or operations; and • requiring that we discontinue any portion or all of our business.
Additionally, if the relevant central and local authorities find us to be in violation of any existing or future laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation: ● levying fines; ● revoking our business and other licenses; 34 ● requiring that we restructure our ownership or operations; and ● requiring that we discontinue any portion or all of our business.
However, we cannot assure you that the government authorities will not impose fines on us due to our failure to register any of our lease agreements, which may negatively impact our financial condition. In addition, some of the ownership certificates or other similar proof of certain leased properties have not been provided to us by the relevant lessors.
However, we cannot assure you that the government authorities will not impose fines on us due to our failure to register any of our lease agreements, which may negatively impact our financial condition. 35 In addition, some of the ownership certificates or other similar proof of certain leased properties have not been provided to us by the relevant lessors.
Importantly, these functions have no way of identifying their anonymous users. Indeed, bitcoin’s blockchain was designed for anonymity. This reporting requirement went into effect on January 1, 2023 and will impact tax returns filed in 2024. The implementation of these requirements will require further guidance from the federal government.
Importantly, these functions have no way of identifying their anonymous users. Indeed, bitcoin’s blockchain was designed for anonymity. 19 This reporting requirement went into effect on January 1, 2023 and will impact tax returns filed in 2024. The implementation of these requirements will require further guidance from the federal government.
In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult to perform period -to period comparisons of our reported results of operations. We primarily conduct our business in Singapore and have re -signed business contracts with current customers and will sign future contracts with customers denominated in U.S. dollar.
In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult to perform period-to period comparisons of our reported results of operations. 43 We primarily conduct our business in Singapore and have re-signed business contracts with current customers and will sign future contracts with customers denominated in U.S. dollar.
For example, if regulatory changes or interpretations require the regulation of bitcoin or other digital assets under certain laws and regulatory regimes in the United States such as those administered by the SEC, the CFTC, the IRS, Department of Treasury or other agencies or authorities or similar laws and regulations of other jurisdictions, including if our digital asset activities cause us to be deemed a “money transmitter,” “money services business” or equivalent designation under U.S. federal law, the law of any U.S. state, or foreign jurisdiction in which we operate, we may be required to register, seek licensure and comply with such regulations, including at a federal, state or local level, and implement an anti -money laundering program, reporting and recordkeeping regimes, consumer protective safeguards, and other operational requirements.
For example, if regulatory changes or interpretations require the regulation of bitcoin or other crypto assets under certain laws and regulatory regimes in the United States such as those administered by the SEC, the CFTC, the IRS, Department of Treasury or other agencies or authorities or similar laws and regulations of other jurisdictions, including if our crypto asset activities cause us to be deemed a “money transmitter,” “money services business” or equivalent designation under U.S. federal law, the law of any U.S. state, or foreign jurisdiction in which we operate, we may be required to register, seek licensure and comply with such regulations, including at a federal, state or local level, and implement an anti-money laundering program, reporting and recordkeeping regimes, consumer protective safeguards, and other operational requirements.
Regulatory changes or actions in one or more countries may alter the nature of an investment in us or restrict the use of digital assets, such as cryptocurrencies, in a manner that adversely affects our business, prospects or operations. • The loss or destruction of any private keys required to access our digital wallet may be irreversible.
Regulatory changes or actions in one or more countries may alter the nature of an investment in us or restrict the use of crypto assets, such as cryptocurrencies, in a manner that adversely affects our business, prospects or operations. ● The loss or destruction of any private keys required to access our digital wallet may be irreversible.
Such incidents could result in customer disputes, damage to our brand and reputation, legal claims against us, and financial liabilities, any of which could adversely affect our business, results of operations and/or financial condition. Incorrect or fraudulent cryptocurrency transactions may be irreversible. Cryptocurrency transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies may be irretrievable.
Such incidents could result in customer disputes, damage to our brand and reputation, legal claims against us, and financial liabilities, any of which could adversely affect our business, results of operations and/or financial condition. 21 Incorrect or fraudulent cryptocurrency transactions may be irreversible. Cryptocurrency transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies may be irretrievable.
Distributing digital assets in connection with our mining pool business involves risks, which could result in loss of customer assets, customer disputes and other liabilities, adversely impact our business, results of operations and/or financial condition. Each digital wallet is associated with a unique “public key” and “private key” pair, each of which is a string of alphanumerical characters.
Distributing crypto assets in connection with our mining pool business involves risks, which could result in loss of customer assets, customer disputes and other liabilities, adversely impact our business, results of operations and/or financial condition. Each digital wallet is associated with a unique “public key” and “private key” pair, each of which is a string of alphanumerical characters.
To the extent that any of the private keys relating to any digital wallets containing our digital assets is lost, destroyed, or otherwise compromised or unavailable, and no backup of the private key is accessible, we will be unable to access the digital assets held in the related wallet and, in most cases, the private key will not be capable of being restored.
To the extent that any of the private keys relating to any digital wallets containing our crypto assets is lost, destroyed, or otherwise compromised or unavailable, and no backup of the private key is accessible, we will be unable to access the crypto assets held in the related wallet and, in most cases, the private key will not be capable of being restored.
In addition to the risk of a private key loss to our digital wallet, see “ Risk Factors — Risks Related to Cryptocurrency — The loss or destruction of any private keys required to access our digital wallet may be irreversible. ”, the storage and custody of our digital assets could also be subject to cybersecurity breaches and adverse software events.
In addition to the risk of a private key loss to our digital wallet, see “ Risk Factors — Risks Related to Cryptocurrency — The loss or destruction of any private keys required to access our digital wallet may be irreversible. ”, the storage and custody of our crypto assets could also be subject to cybersecurity breaches and adverse software events.
You may not be able to resell your shares at an attractive price due to a number of factors such as the following: • results of operations that vary from the expectations of securities analysts and investors; • results of operations that vary from those of our competitors; • the impact of the COVID -19 pandemic and its effect on our business and financial conditions; • changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; • declines in the market prices of stocks generally; • strategic actions by us or our competitors; • announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; • any significant change in our management; • changes in general economic or market conditions or trends in our industry or markets, such as recessions, interest rates, local and national elections, international currency fluctuations, corruption, political instability and acts of war or terrorism; • changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • future sales of our Class A Ordinary Shares or other securities; • investor perceptions or the investment opportunity associated with our Class A Ordinary Shares relative to other investment alternatives; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; 53 Table of Contents • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; • the development and sustainability of an active trading market for our Class A Ordinary Shares; • actions by institutional or activist shareholders; • changes in accounting standards, policies, guidelines, interpretations or principles; and • other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.
You may not be able to resell your shares at an attractive price due to a number of factors such as the following: ● results of operations that vary from the expectations of securities analysts and investors; ● results of operations that vary from those of our competitors; 52 ● the impact of the COVID-19 pandemic and its effect on our business and financial conditions; ● changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; ● declines in the market prices of stocks generally; ● strategic actions by us or our competitors; ● announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; ● any significant change in our management; ● changes in general economic or market conditions or trends in our industry or markets, such as recessions, interest rates, local and national elections, international currency fluctuations, corruption, political instability and acts of war or terrorism; ● changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● future sales of our Class A Ordinary Shares or other securities; ● investor perceptions or the investment opportunity associated with our Class A Ordinary Shares relative to other investment alternatives; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; ● litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; ● the development and sustainability of an active trading market for our Class A Ordinary Shares; ● actions by institutional or activist shareholders; ● changes in accounting standards, policies, guidelines, interpretations or principles; and ● other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.
Our business may be or may become subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance in the markets in which we operate, including those typically applied to financial services and banking, securities, commodities, the exchange, and transfer of digital assets, cross -border and domestic money and digital asset transmission businesses, as well as those governing data privacy, data governance, data protection, cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, antitrust and competition, bankruptcy, tax, anti -bribery , economic and trade sanctions, anti -money laundering, and counter -terrorist financing.
Our business may be or may become subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance in the markets in which we operate, including those typically applied to financial services and banking, securities, commodities, the exchange, and transfer of crypto assets, cross-border and domestic money and crypto asset transmission businesses, as well as those governing data privacy, data governance, data protection, cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing.
Such events could have a material adverse effect on our business, prospects, financial condition, and operating results, including our ability to continue as a going concern. We may not adequately respond to price fluctuations and rapidly changing technology, which may negatively affect our business.
Such events could have a material adverse effect on our business, prospects, financial condition, and operating results, including our ability to continue as a going concern. 30 We may not adequately respond to price fluctuations and rapidly changing technology, which may negatively affect our business.
Digital assets, such as cryptocurrencies, are stored in a so -called “digital wallet”, which may be accessed to exchange a holder’s digital assets and is controllable by the processor of both the public key and the private key relating to this digital wallet in which the digital assets are held, both of which are unique.
Crypto assets, such as cryptocurrencies, are stored in a so-called “digital wallet”, which may be accessed to exchange a holder’s crypto assets and is controllable by the processor of both the public key and the private key relating to this digital wallet in which the crypto assets are held, both of which are unique.
We may not be able to attract customers to our hosting capabilities for a number of reasons, including if: • there is a reduction in the demand for our services due to macroeconomic factors in the markets in which we operate; • we fail to provide competitive pricing terms or effectively market them to potential customers; • we provide hosting services that are deemed by existing and potential customers or suppliers to be inferior to those of our competitors, or that fail to meet customers’ or suppliers’ ongoing and evolving program qualification standards, based on a range of factors, including available power, preferred design features, security considerations and connectivity; • businesses decide to host internally as an alternative to the use of our services; • we fail to successfully communicate the benefits of our services to potential customers; • we are unable to strengthen awareness of our brand; • we are unable to provide services that our existing and potential customers’ desire; or • our customers are unable to secure an adequate supply of new generation digital asset mining equipment to host with us.
We may not be able to attract customers to our hosting capabilities for a number of reasons, including if: ● there is a reduction in the demand for our services due to macroeconomic factors in the markets in which we operate; ● we fail to provide competitive pricing terms or effectively market them to potential customers; 7 ● we provide hosting services that are deemed by existing and potential customers or suppliers to be inferior to those of our competitors, or that fail to meet customers’ or suppliers’ ongoing and evolving program qualification standards, based on a range of factors, including available power, preferred design features, security considerations and connectivity; ● businesses decide to host internally as an alternative to the use of our services; ● we fail to successfully communicate the benefits of our services to potential customers; ● we are unable to strengthen awareness of our brand; ● we are unable to provide services that our existing and potential customers’ desire; or ● our customers are unable to secure an adequate supply of new generation crypto asset mining equipment to host with us.
In the first quarter of 2022, our legal counsel in Kazakhstan advised us that the Kazakhstan government partially supports a few amendments to the existing tax code applying to digital asset mining companies in the country, including improving the fee rate based on electricity consumption per kWh that the government charges digital asset miners from the current 1 tenge (about $0.0023 US dollar) per kWh to a higher rate, based on different types of electricity they consume and/or different level of total power consumption scale they consume.
In the first quarter of 2022, our legal counsel in Kazakhstan advised us that the Kazakhstan government partially supports a few amendments to the existing tax code applying to crypto asset mining companies in the country, including improving the fee rate based on electricity consumption per kWh that the government charges crypto asset miners from the current 1 tenge (about $0.0023 US dollar) per kWh to a higher rate, based on different types of electricity they consume and/or different level of total power consumption scale they consume.
According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day -to-day operational management is 42 Table of Contents in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
Although, since we do not intend to be engaged in the offer or sale of securities in the form of ICO offerings, and we do not believe our planned mining activities would require registration for us to conduct such activities and accumulate digital assets the SEC, CFTC, Nasdaq or other governmental or quasi -governmental agency or organization may conclude that our activities involve the offer or sale of “securities”, or ownership of “investment securities”, and we may face regulation under the Securities Act or the 1940 Act.
Although, since we do not intend to be engaged in the offer or sale of securities in the form of ICO offerings, and we do not believe our planned mining activities would require registration for us to conduct such activities and accumulate crypto assets the SEC, CFTC, Nasdaq or other governmental or quasi-governmental agency or organization may conclude that our activities involve the offer or sale of “securities”, or ownership of “investment securities”, and we may face regulation under the Securities Act or the 1940 Act.
To the extent that the cryptocurrency ecosystem does not act to ensure greater decentralization of cryptocurrency mining processing power, the feasibility of a malicious actor obtaining in excess of 50% of the processing power on any digital asset network (e.g., through control of a large mining pool or through hacking such a mining pool) will increase, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
To the extent that the cryptocurrency ecosystem does not act to ensure greater decentralization of cryptocurrency mining processing power, the feasibility of a malicious actor obtaining in excess of 50% of the processing power on any crypto asset network (e.g., through control of a large mining pool or through hacking such a mining pool) will increase, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
As an early stage company with operations focused in the digital asset transaction processing industry, we have in the past experienced, and may in the future experience, difficulties in establishing relationships with banks, leasing companies, insurance companies and other financial institutions that are willing to provide us with customary leasing and financial products and services, such as bank accounts, lines of credit, insurance and other related services, which are necessary for our operations.
As an early stage company with operations focused in the crypto asset transaction processing industry, we have in the past experienced, and may in the future experience, difficulties in establishing relationships with banks, leasing companies, insurance companies and other financial institutions that are willing to provide us with customary leasing and financial products and services, such as bank accounts, lines of credit, insurance and other related services, which are necessary for our operations.
As such, any loss or misappropriation of the private keys used to control our digital assets due to a hack, employee or service provider misconduct or error, or other compromise by third parties could result in significant losses, hurt our brand and reputation and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account, and adversely impact our business.
As such, any loss or misappropriation of the private keys used to control our crypto assets due to a hack, employee or service provider misconduct or error, or other compromise by third parties could result in significant losses, hurt our brand and reputation and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account, and adversely impact our business.
We have the ability to redeem the outstanding IPO Warrant at any time after they become exercisable and prior to their expiration, at a price of $0.01 per IPO Warrant, provided that the closing price of our Class A Ordinary Shares equals or exceeds $16.50 per share (including adjustments to the number of shares issuable upon exercise or the exercise price of an IPO Warrant as described under the heading “ Description of Securities — IPO Warrants — Anti -Dilution Adjustments ”) for any 20 trading days within a 30 trading -day period ending on the third trading day prior to proper 52 Table of Contents notice of such redemption and provided that certain other conditions are met.
We have the ability to redeem the outstanding IPO Warrant at any time after they become exercisable and prior to their expiration, at a price of $0.01 per IPO Warrant, provided that the closing price of our Class A Ordinary Shares equals or exceeds $16.50 per share (including adjustments to the number of shares issuable upon exercise or the exercise price of an IPO Warrant as described under the heading “ Description of Securities — IPO Warrants — Anti-Dilution Adjustments ”) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met.
You may be unable to sell your securities unless a market can be established or sustained. We cannot assure you that our securities will continue to be listed on Nasdaq.
You may be unable to sell your securities unless a market can be established or sustained. 51 We cannot assure you that our securities will continue to be listed on Nasdaq.
If a digital asset obtains significant market share (either in market capitalization, mining power or use as a payment technology), this could reduce bitcoin’s market share as well as other digital assets we may become involved in and have a negative impact on the demand for, and price of, such digital assets and could have a material adverse effect on our business, prospects, financial condition, and operating results.
If a crypto asset obtains significant market share (either in market capitalization, mining power or use as a payment technology), this could reduce bitcoin’s market share as well as other crypto assets we may become involved in and have a negative impact on the demand for, and price of, such crypto assets and could have a material adverse effect on our business, prospects, financial condition, and operating results.
There are no assurances that digital asset mining equipment suppliers, such as Bitmain, will be able to keep pace with any surge in demand for mining equipment. Further, manufacturing mining machine purchase contracts are not favorable to purchasers, and we may have little or no recourse in the event a mining machine manufacturer defaults on its mining machine delivery commitments.
There are no assurances that crypto asset mining equipment suppliers, such as Bitmain, will be able to keep pace with any surge in demand for mining equipment. Further, manufacturing mining machine purchase contracts are not favorable to purchasers, and we may have little or no recourse in the event a mining machine manufacturer defaults on its mining machine delivery commitments.
Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations, such as ours. 1 Table of Contents • If bitcoin or other cryptocurrencies are determined to be investment securities, and we hold a significant portion of its assets in such cryptocurrency, investment securities or non -controlling equity interests of other entities, we may inadvertently violate the Investment Company Act.
Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations, such as ours. 1 ● If bitcoin or other cryptocurrencies are determined to be investment securities, and we hold a significant portion of its assets in such cryptocurrency, investment securities or non-controlling equity interests of other entities, we may inadvertently violate the Investment Company Act.
Also, it may make it difficult for such cryptocurrency to be traded, cleared, and custodied as compared to other cryptocurrencies that are not considered to be securities. Any change in the interpretive positions of the SEC or its staff with respect to cryptocurrencies or digital asset mining firms could have a material adverse effect on us.
Also, it may make it difficult for such cryptocurrency to be traded, cleared, and custodied as compared to other cryptocurrencies that are not considered to be securities. Any change in the interpretive positions of the SEC or its staff with respect to cryptocurrencies or crypto asset mining firms could have a material adverse effect on us.
Section 80603 defines “broker” as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” That could potentially include miners, validators, and developers of decentralized applications. These functions play a critical role in our business and in the functioning of the blockchain ecosystem.
Section 80603 defines “broker” as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of crypto assets on behalf of another person.” That could potentially include miners, validators, and developers of decentralized applications. These functions play a critical role in our business and in the functioning of the blockchain ecosystem.
As a company with operations and opportunities outside of the U.S., we may face additional burdens and be subject to a variety of additional risks or considerations associated with companies operating in an international setting, that may negatively impact our operations, including any of the following: • higher costs and difficulties inherent in managing cross -border business operations and complying with different commercial and legal requirements of overseas markets; • rules and regulations regarding currency redemption; • laws governing the manner in which future business combinations may be effected; • tariffs and trade barriers; • regulations related to customs and import/export matters; • local or regional economic policies and market conditions; • unexpected changes in regulatory requirements; • longer payment cycles; • tax issues, such as tax law changes and variations in tax laws as compared to the U.S.; • complex corporate withholding taxes on individuals; • currency fluctuations and exchange controls; • exchange listing and/or delisting requirements; • challenges in managing and staffing international operations; • rates of inflation; • challenges in collecting accounts receivable; • cultural and language differences; 33 Table of Contents • employment regulations; • underdeveloped or unpredictable legal or regulatory systems; • corruption; • protection of intellectual property; • social unrest, crime, strikes, riots, civil disturbances, regime changes, political upheaval, terrorist attacks, natural disasters and wars; • deterioration of political relations with the U.S.; and • government appropriation of assets.
As a company with operations and opportunities outside of the U.S., we may face additional burdens and be subject to a variety of additional risks or considerations associated with companies operating in an international setting, that may negatively impact our operations, including any of the following: ● higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets; 32 ● rules and regulations regarding currency redemption; ● laws governing the manner in which future business combinations may be affected; ● tariffs and trade barriers; ● regulations related to customs and import/export matters; ● local or regional economic policies and market conditions; ● unexpected changes in regulatory requirements; ● longer payment cycles; ● tax issues, such as tax law changes and variations in tax laws as compared to the U.S.; ● complex corporate withholding taxes on individuals; ● currency fluctuations and exchange controls; ● exchange listing and/or delisting requirements; ● challenges in managing and staffing international operations; ● rates of inflation; ● challenges in collecting accounts receivable; ● cultural and language differences; ● employment regulations; ● underdeveloped or unpredictable legal or regulatory systems; ● corruption; ● protection of intellectual property; ● social unrest, crime, strikes, riots, civil disturbances, regime changes, political upheaval, terrorist attacks, natural disasters and wars; ● deterioration of political relations with the U.S.; and ● government appropriation of assets.
For instance, all transactions in such supported cryptocurrency 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. Further, it could draw negative publicity and a decline in the general acceptance of the digital asset.
For instance, all transactions in such supported cryptocurrency 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. Further, it could draw negative publicity and a decline in the general acceptance of the crypto asset.
A resulting perception that our measures do not adequately protect our digital assets could have a material adverse effect on our business, prospects, financial condition, and operating results. Our bitcoin assets and other cryptocurrencies we may potentially acquire or hold in the future may be subject to loss, theft, hacking, fraud risks and restriction on access.
A resulting perception that our measures do not adequately protect our crypto assets could have a material adverse effect on our business, prospects, financial condition, and operating results. Our bitcoin assets and other cryptocurrencies we may potentially acquire or hold in the future may be subject to loss, theft, hacking, fraud risks and restriction on access.
Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, digital assets, and related technologies. As a result, they often do not contemplate or address unique issues associated with digital assets, are subject to significant uncertainty, and vary widely across U.S. federal, state, and local jurisdictions.
Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, crypto assets, and related technologies. As a result, they often do not contemplate or address unique issues associated with crypto assets, are subject to significant uncertainty, and vary widely across U.S. federal, state, and local jurisdictions.
Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding the demand for our hosting services and the adoption of bitcoin and other digital assets. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations in any given quarter or fiscal year.
Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding the demand for our hosting services and the adoption of bitcoin and other crypto assets. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations in any given quarter or fiscal year.
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently, with certain governments deeming cryptocurrencies illegal, and others allowing their use and trade without restriction. In some jurisdictions, such as in the U.S., digital assets, like cryptocurrencies, are subject to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently, with certain governments deeming cryptocurrencies illegal, and others allowing their use and trade without restriction. In some jurisdictions, such as in the U.S., crypto assets, like cryptocurrencies, are subject to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
It is possible that digital assets, other than bitcoin, could have features that make them more desirable to a material portion of the digital asset user base, resulting in a reduction in demand for bitcoin, which could have a negative impact on the price of bitcoin and have a material adverse effect on our business, prospects, financial condition, and operating results.
It is possible that crypto assets, other than bitcoin, could have features that make them more desirable to a material portion of the crypto asset user base, resulting in a reduction in demand for bitcoin, which could have a negative impact on the price of bitcoin and have a material adverse effect on our business, prospects, financial condition, and operating results.
Similarly, our assumptions and expectations with respect to margins and the pricing of our hosting services and market price of bitcoin or other digital assets we mine may not prove to be accurate. This may result in decreased revenue, and we may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in revenue.
Similarly, our assumptions and expectations with respect to margins and the pricing of our hosting services and market price of bitcoin or other crypto assets we mine may not prove to be accurate. This may result in decreased revenue, and we may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in revenue.
Bitcoin and other digital assets are viewed differently by different regulatory and standards setting organizations globally as well as in the United States on the federal and state levels. For example, the Financial Action Task Force (“FATF”) and the Internal Revenue Service (“IRS”) consider a cryptocurrency as currency or an asset or property.
Bitcoin and other crypto assets are viewed differently by different regulatory and standards setting organizations globally as well as in the United States on the federal and state levels. For example, the Financial Action Task Force (“FATF”) and the Internal Revenue Service (“IRS”) consider a cryptocurrency as currency or an asset or property.
Additionally, if this happens, we may not be able to mine digital assets as efficiently or in similar amounts as our competition and, as a result, our business and financial results could suffer. Our success depends in large part on our ability to mine digital assets profitably in the future and to attract customers for our hosting capabilities.
Additionally, if this happens, we may not be able to mine crypto assets as efficiently or in similar amounts as our competition and, as a result, our business and financial results could suffer. Our success depends in large part on our ability to mine crypto assets profitably in the future and to attract customers for our hosting capabilities.
Increases in power costs or our inability to mine digital assets efficiently and to sell digital assets at favorable prices will reduce our operating margins, impact our ability to attract customers for our services and harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations.
Increases in power costs or our inability to mine crypto assets efficiently and to sell crypto assets at favorable prices will reduce our operating margins, impact our ability to attract customers for our services and harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations.
We operate in a rapidly changing and competitive industry and our projections are subject to the risks and assumptions made by management with respect to our industry. Operating results are difficult to forecast as they generally depend on our assessment of the timing of adoption and use of bitcoin and other digital assets, which is uncertain.
We operate in a rapidly changing and competitive industry and our projections are subject to the risks and assumptions made by management with respect to our industry. Operating results are difficult to forecast as they generally depend on our assessment of the timing of adoption and use of bitcoin and other crypto assets, which is uncertain.
To the extent that a significant portion of our business consists of digital asset transaction mining, processing or hosting, we may in the future continue to experience difficulty obtaining additional financial products and services on customary terms, which could have a material adverse effect on our business, financial condition and results of operations.
To the extent that a significant portion of our business consists of crypto asset transaction mining, processing or hosting, we may in the future continue to experience difficulty obtaining additional financial products and services on customary terms, which could have a material adverse effect on our business, financial condition and results of operations.
Following South Korean -based exchange Coinrail’s announcement in early June 2018 about a hacking incident, the price of bitcoin and Ethereum dropped more than 10%. In September 2018, Japan -based exchange Zaif also announced that approximately $60 million worth of digital assets, including bitcoin, was stolen due to hacking activities.
Following South Korean-based exchange Coinrail’s announcement in early June 2018 about a hacking incident, the price of bitcoin and Ethereum dropped more than 10%. In September 2018, Japan-based exchange Zaif also announced that approximately $60 million worth of crypto assets, including bitcoin, was stolen due to hacking activities.
We rely on the information provided by customers to distribute cryptocurrencies to them, and we do not have access to our customers’ private key. A number of errors can occur in the process of distributing digital assets to customers’ wallets, such as typos, mistakes, or the failure to include the information required by the blockchain network.
We rely on the information provided by customers to distribute cryptocurrencies to them, and we do not have access to our customers’ private key. A number of errors can occur in the process of distributing crypto assets to customers’ wallets, such as typos, mistakes, or the failure to include the information required by the blockchain network.
If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including the bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that may adversely affect our business, prospects, financial condition, and operating results.
If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any crypto asset network, including the bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that may adversely affect our business, prospects, financial condition, and operating results.
If all of our IPO Warrants were exercised in full for cash, we would receive an aggregate of approximately $25,811,669.50. We do not expect warrant holders to exercise their IPO Warrants and, therefore, we do not expect to receive cash proceeds from any such exercise, for so long as the IPO Warrants remain out -of-the money.
If all of our IPO Warrants were exercised in full for cash, we would receive an aggregate of approximately $25,811,577.50. We do not expect warrant holders to exercise their IPO Warrants and, therefore, we do not expect to receive cash proceeds from any such exercise, for so long as the IPO Warrants remain out-of-the money.
Such restrictions, including the members of TradeUP initial shareholders, the SAI Founder and management of Old SAI, will expire on April 29, 2023, which is the first anniversary of closing of the Business Combination, with such Ordinary Shares being subject to earlier release on the date on which the volume weighted average trading price of our Class A Ordinary Shares exceeds $14.00 per share (with respect to 50% of our Ordinary Shares) and $17.50 per share (with respect to the remaining 50% of our Ordinary Shares) for any 20 trading days within any 30 -trading day period commencing on the date that is 180 days after the closing of the Business Combination.
Such restrictions, including the members of TradeUP initial shareholders, the SAI Founder and management of Old SAI, expired on April 29, 2023, which is the first anniversary of closing of the Business Combination, with such Ordinary Shares being subject to earlier release on the date on which the volume weighted average trading price of our Class A Ordinary Shares exceeds $14.00 per share (with respect to 50% of our Ordinary Shares) and $17.50 per share (with respect to the remaining 50% of our Ordinary Shares) for any 20 trading days within any 30-trading day period commencing on the date that is 180 days after the closing of the Business Combination.
Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our business model at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies or digital assets we plan to hold or expect to acquire for our own account.
Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our business model at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies or crypto assets we plan to hold or expect to acquire for our own account.
We may purchase and hold stablecoins as an intermediary means of settlement with vendors, or means of exchange prior to purchase and hold of other cryptocurrencies, such as Bitcoin. A stablecoin is a digital asset that seeks to maintain a stable value and is backed by an asset or portfolio of assets, such as fiat currency like U.S. dollars.
We may purchase and hold stablecoins as an intermediary means of settlement with vendors or means of exchange prior to purchase and hold of other cryptocurrencies, such as Bitcoin. A stablecoin is a crypto asset that seeks to maintain a stable value and is backed by an asset or portfolio of assets, such as fiat currency like U.S. dollars.
We believe that from time to time there may be further considerations and adjustments to the networks, such as bitcoin and Ethereum, regarding the difficulty for block solutions. More significant reductions in the aggregate hash rate on digital asset networks could result in material, though temporary, delays in block solution confirmation time.
We believe that from time to time there may be further considerations and adjustments to the networks, such as bitcoin and Ethereum, regarding the difficulty for block solutions. More significant reductions in the aggregate hash rate on crypto asset networks could result in material, though temporary, delays in block solution confirmation time.
The growth in our business is directly related to increased demand for hosting services and digital assets such as bitcoin which is dependent in large part on the availability of new generation mining machines offered for sale at a price conducive to profitable digital asset mining, as well as the trading price of digital assets such as bitcoin.
The growth in our business is directly related to increased demand for hosting services and crypto assets such as bitcoin which is dependent in large part on the availability of new generation mining machines offered for sale at a price conducive to profitable crypto asset mining, as well as the trading price of crypto assets such as bitcoin.
In January 2018, Japan -based exchange Coincheck reported that over $500 million worth of the digital asset NEM had been lost due to hacking attacks, resulting in significant decreases in the prices of bitcoin, Ethereum and other digital assets as the market grew increasingly concerned about the security of digital assets.
In January 2018, Japan-based exchange Coincheck reported that over $500 million worth of the crypto asset NEM had been lost due to hacking attacks, resulting in significant decreases in the prices of bitcoin, Ethereum and other crypto assets as the market grew increasingly concerned about the security of crypto assets.
Outstanding IPO Warrants to purchase an aggregate of 2,244,493 our Class A Ordinary Shares have become exercisable. Each IPO Warrant entitles the holder thereof to purchase one of our Class A Ordinary Shares at a price of $11.50 per whole share, subject to adjustment. IPO Warrants may be exercised only for a whole number of our Class A Ordinary Shares.
Outstanding IPO Warrants to purchase an aggregate of 2,244,485 our Class A Ordinary Shares have become exercisable. Each IPO Warrant entitles the holder thereof to purchase one of our Class A Ordinary Shares at a price of $11.50 per whole share, subject to adjustment. IPO Warrants may be exercised only for a whole number of our Class A Ordinary Shares.
The amendments proposal also includes enhancing regulation to digital asset mining activities and control of the power supply. As the date of this Annual Report, the government is still in discussion and drafting of the final amendments to the Tax Code and any laws related to digital asset mining activities and have not brought any of such amendments into enforcement.
The amendments proposal also includes enhancing regulation to crypto asset mining activities and control of the power supply. As the date of this Annual Report, the government is still in discussion and drafting of the final amendments to the Tax Code and any laws related to crypto asset mining activities and have not brought any of such amendments into enforcement.
On November 15, 2021, President Joseph R. Biden signed the Infrastructure Act. Section 80603 of the Infrastructure Act modifies and amends the Internal Revenue Code of 1986 (the “Code”) by requiring brokers of digital asset transactions to report their customers to the IRS. This provision was included to enforce the taxability of digital asset transactions.
On November 15, 2021, President Joseph R. Biden signed the Infrastructure Act. Section 80603 of the Infrastructure Act modifies and amends the Internal Revenue Code of 1986 (the “Code”) by requiring brokers of crypto asset transactions to report their customers to the IRS. This provision was included to enforce the taxability of crypto asset transactions.
Any systemic delays in the recording and confirmation of transactions on the blockchain could result in greater exposure to double -spending transactions and a loss of confidence in certain or all digital asset networks, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
Any systemic delays in the recording and confirmation of transactions on the blockchain could result in greater exposure to double-spending transactions and a loss of confidence in certain or all crypto asset networks, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
The factors affecting the further development of the digital asset industry, as well as the digital asset networks, include: • continued worldwide growth in the adoption and use of bitcoin and other digital assets; • government and quasi -government regulation of bitcoin and other digital assets and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar digital assets systems; 24 Table of Contents • the maintenance and development of the open -source software protocol of the Bitcoin network and Ethereum network; • changes in user demographics and public tastes and preferences; • the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; • general economic conditions and the regulatory environment relating to digital assets; and • the impact of regulators focusing on digital assets and digital securities and the costs associated with such regulatory oversight.
The factors affecting the further development of the crypto asset industry, as well as the crypto asset networks, include: ● continued worldwide growth in the adoption and use of bitcoin and other crypto assets; ● government and quasi-government regulation of bitcoin and other crypto assets and their use, or restrictions on or regulation of access to and operation of the crypto asset network or similar crypto assets systems; ● the maintenance and development of the open-source software protocol of the Bitcoin network and Ethereum network; ● changes in user demographics and public tastes and preferences; ● the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; ● general economic conditions and the regulatory environment relating to crypto assets; and ● the impact of regulators focusing on crypto assets and digital securities and the costs associated with such regulatory oversight.
Moreover, the relative novelty and evolving nature of our business and the significant uncertainty surrounding the regulation of digital assets requires us to exercise our judgement as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions.
Moreover, the relative novelty and evolving nature of our business and the significant uncertainty surrounding the regulation of crypto assets requires us to exercise our judgement as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions.
For example, when the Bitcoin Cash and Bitcoin Cash SV network split in November 2018, “replay” attacks, in which transactions from one network were rebroadcast on the other network to achieve “double -spending ,” plagued platforms that traded bitcoin, resulting in significant losses to some digital asset trading platforms.
For example, when the Bitcoin Cash and Bitcoin Cash SV network split in November 2018, “replay” attacks, in which transactions from one network were rebroadcast on the other network to achieve “double-spending,” plagued platforms that traded bitcoin, resulting in significant losses to some crypto asset trading platforms.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeDuring the fourth quarter of 2021 and the first quarter of 2022, we approached and studied various hosting facilities in preparation of developing our self -owned mining operation, and potential heating partners for deploy our SAIHUB CAB in international countries other than Kazakhstan, including Finland, Mexico, Canada and the United States. 63 Table of Contents On August 1, with the consideration of our power partners and hosting customers’ intention to suspend the service offerings under the originally agreed Service Agreement and Bitcoin Mining Hosting Service Agreement, we terminated our Service Agreement, dated as of July 18, 2021, with Better Tech Limited (“Better Tech”) relating to the Phase II 90 MW power supply cooperation in Kazakhstan, and our Bitcoin Mining Hosting Service Agreement, dated as of July 16, 2021, with E2M Technology Limited (“E2M”) relating to the rendering of Phase II 90 MW hosting services in Kazakhstan, which had already been delayed due to the national riots in Kazakhstan, which commenced on January 2022.
Biggest changeOn August 1, with the consideration of our power partners and hosting customers’ intention to suspend the service offerings under the originally agreed Service Agreement and Bitcoin Mining Hosting Service Agreement, we terminated our Service Agreement, dated as of July 18, 2021, with Better Tech Limited (“Better Tech”) relating to the Phase II 90 MW power supply cooperation in Kazakhstan, and our Bitcoin Mining Hosting Service Agreement, dated as of July 16, 2021, with E2M Technology Limited (“E2M”) relating to the rendering of Phase II 90 MW hosting services in Kazakhstan, which had already been delayed due to the national riots in Kazakhstan, which commenced on January 2022.
We have reached a mutual understanding with Better Tech and E2M on the force majeure events that occurred during the first half of 2022 and agreed to a waiver of liabilities.
We have reached a mutual understanding with Better Tech and E2M on the force majeure events that occurred during the first half of 2022 and agreed to a waiver of liabilities.
All parties agreed to continue the execution of the Phase I 15 MW cryptocurrency mining operation, which started on August 2021, based on the terms of the Service Agreement and Bitcoin Mining Hosting Service Agreement.
All parties agreed to continue the execution of the Phase I 15 MW cryptocurrency mining operation, which started on August 2021, based on the terms of the Service Agreement and Bitcoin Mining Hosting Service Agreement.
We are required to obtain environmental permits from governmental authorities for certain operations. Government Regulations We operate and plan to operate in a complex and rapid evolving regulatory environment and expects to be subject to a wide range of laws and regulations enacted by Kazakhstan as well as similar entities in other countries.
We are required to obtain environmental permits from governmental authorities for certain operations. 76 Government Regulations We operate and plan to operate in a complex and rapid evolving regulatory environment and expects to be subject to a wide range of laws and regulations enacted by Kazakhstan as well as similar entities in other countries.
Besides, Europe has introduced policies to encourage research on improving the efficiency of coal power generation, expanding utility of geothermal power, growing heat supply from cogeneration, etc. Both primary and secondary energy could be applied for heat generation, while currently, fossil fuel dominates the global heat supply.
Besides, Europe has introduced policies to encourage research on improving the efficiency of coal power generation, expanding utility of geothermal power, growing heat supply from cogeneration, etc. 70 Both primary and secondary energy could be applied for heat generation, while currently, fossil fuel dominates the global heat supply.
Such key definitions as “digital asset”, or cryptocurrency, and “digital mining” were also introduced into the law “On Informatization.” Regulations may substantially change in the future, and we cannot predict how future regulations will apply to our business, or when they will be effective.
Such key definitions as “crypto asset”, or cryptocurrency, and “digital mining” were also introduced into the law “On Informatization.” Regulations may substantially change in the future, and we cannot predict how future regulations will apply to our business, or when they will be effective.
A copy of our Business Combination Agreement, and the amendments thereto, is attached as exhibits 4.1 – 4.4 to this Annual Report. SAI.TECH Global Corporation is subject to certain of the informational filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
A copy of our Business Combination Agreement, and the amendments thereto, is attached as exhibits 4.1 – 4.4 to this Annual Report. 60 SAI.TECH Global Corporation is subject to certain of the informational filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Cryptocurrency Market The market for digital assets has grown exponentially. In 2017, there were an estimated 2.7 million users of digital assets, whereas based on estimates provided by blockchain service provider TripleA, estimated global crypto users will reach 420 million in the year of 2023.
Cryptocurrency Market The market for crypto assets has grown exponentially. In 2017, there were an estimated 2.7 million users of crypto assets, whereas based on estimates provided by blockchain service provider TripleA, estimated global crypto users will reach 420 million in the year of 2023.
We have also successfully integrated traditional bitcoin mining machines with waste heat recovery units to provide large -scale heating supply to various heating application scenarios including residential and commercial buildings as well as agricultural greenhouses. • New entrants generally have to go through three phases to independently develop an innovative heating system for purpose of commercialization, including: • development of a prototype mining machine with an adaptive cooling solution applied; • small -scale trial run of the machine for both mining and heating performance; and • large -scale heating supply test to see if the machine can operate steadily, meet the requirements for both healthy bitcoin mining operation and different heating scenarios.
We have also successfully integrated traditional bitcoin mining machines with waste heat recovery technology to provide large-scale heating supply to various heating application scenarios including residential and commercial buildings as well as agricultural greenhouses. ● New entrants generally have to go through three phases to independently develop an innovative heating system for purpose of commercialization, including: ● development of a prototype mining machine with an adaptive cooling solution applied; ● small-scale trial run of the machine for both mining and heating performance; and ● large-scale heating supply test to see if the machine can operate steadily, meet the requirements for both healthy bitcoin mining operation and different heating scenarios.
Each new block requires a method of consensus between nodes of the network in order for the block to post to the ledger and become permanent. There are various methods being developed for executing a consensus. Currently, the most popular application of blockchain is cryptocurrency.
Each new block requires a method of consensus between nodes of the network in order for the block to post to the ledger and become permanent. There are various methods being developed for executing a consensus. 67 Currently, the most popular application of blockchain is cryptocurrency.
The electricity input power of the SAIHUB CAB is 237 KW, and it can supply the equivalent heat of 213 KW with 90% thermal efficiency, competing with most existing fossil fuel boilers thermal efficiency with a lower maintenance cost and no additional capital expenditure of replacement.
The input power of the SAIHUB CAB is 237 KW, and it can supply the equivalent heat of 213 KW with 90% thermal efficiency, competing with most existing fossil fuel boilers thermal efficiency with a lower maintenance cost and no additional capital expenditure of replacement.
Large -scale stable heating systems are complex engineering projects that integrate many piping components, and waste heat recovery technology with liquid cooling system in data centers is in early development stage especially in digital assets mining industry. Chips can only operate healthily in a relatively cool environment through appropriate cooling system design.
Large-scale stable heating systems are complex engineering projects that integrate many piping components, and waste heat recovery technology with liquid cooling system in data centers is in early development stage especially in crypto assets mining industry. Chips can only operate healthily in a relatively cool environment through appropriate cooling system design.
Our products and solutions also apply to the global heating industry, and we expect to generate waste heat resales or technology -related types of revenue when our products are put into operation in the global market subject to the commercial terms with our heat user collocation partners. Blockchain, Cryptocurrencies and Digital Assets A blockchain is a decentralized, distributed ledger.
Our products and solutions also apply to the global heating industry, and we expect to generate waste heat resales or technology-related types of revenue when our products are put into operation in the global market subject to the commercial terms with our heat user collocation partners. Blockchain, Cryptocurrencies and Crypto assets A blockchain is a decentralized, distributed ledger.
Fees payable to the operator of the pool vary but are typically as much as 2% of the reward earned and are deducted from the amounts earned by each pool participant. Mining pools are subject to various risks including connection issues, outages and other disruptions which can impact the quantity of digital assets earned by participants.
Fees payable to the operator of the pool vary but are typically as much as 2% of the reward earned and are deducted from the amounts earned by each pool participant. Mining pools are subject to various risks including connection issues, outages and other disruptions which can impact the quantity of crypto assets earned by participants.
We are dedicated to maximizing the value of waste heat generated from high -performance computing process including but not limited to bitcoin and other digital assets mining, Artificial Intelligence and Machine Learning computing etc. which represents a significant amount of and fast -growing type of waste energy.
We are dedicated to maximizing the value of waste heat generated from high-performance computing process including but not limited to bitcoin and other crypto assets mining, Artificial Intelligence and Machine Learning computing etc. which represents a significant amount of and fast-growing type of waste energy.
Because SAI.TECH Global Corporation is a “foreign private issuer”, it is exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and the officers, directors and principal shareholders of SAI.TECH Global Corporation are exempt from the reporting and “short -swing ” profit recovery provisions contained in Section 16 of the Exchange Act with respect to their purchase and sale of common shares.
Because SAI.TECH Global Corporation is a “foreign private issuer”, it is exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and the officers, directors and principal shareholders of SAI.TECH Global Corporation are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act with respect to their purchase and sale of common shares.
In order to reach the maximum cooling and waste heat recovery efficiency of the mining machines’ PCB, which are essentially heating units, we reorganize the layout of bitcoin mining machine’s PCB in independently designed SAIHUB CAB and enables the system to collect waste heat.
To reach the maximum cooling and waste heat recovery efficiency of the mining machines’ PCB, which are essentially heating units, we are able reorganize the layout of bitcoin mining machine’s PCB in independently designed SAIHUB CAB and enables the system to collect waste heat.
In combination of the disruptive political environment, increasing uncertainties of power supply in Kazakhstan since beginning of 2022, and the foreseeable increasing power cost due to a potential enforcement of the final amendments to the tax code and laws regulating digital asset mining in the country.
In combination of the disruptive political environment, increasing uncertainties of power supply in Kazakhstan since beginning of 2022, and the foreseeable increasing power cost due to a potential enforcement of the final amendments to the tax code and laws regulating crypto asset mining in the country.
Cryptocurrency — Advantages Digital assets have been viewed by the community to offer several advantages over traditional (also known as ‘fiat’) currency, including: • Acting as a fraud deterrent, as digital assets recorded on a blockchain are virtually impossible to counterfeit, reverse, or modify; • Immediate settlement; • Elimination of counterparty risk; • No requirement for a trusted intermediary; • Lower transaction costs; • Identity theft prevention; 65 Table of Contents • Universal accessibility; • Transaction verification and confirmation processes that prevent double spending; • Decentralized transaction processing at any time of day without any central authority (governments or financial institutions); and • Universal value free from currency exchange rates.
Cryptocurrency — Advantages Crypto assets have been viewed by the community to offer several advantages over traditional (also known as ‘fiat’) currency, including: ● Acting as a fraud deterrent, as crypto assets recorded on a blockchain are virtually impossible to counterfeit, reverse, or modify; ● Immediate settlement; ● Elimination of counterparty risk; ● No requirement for a trusted intermediary; ● Lower transaction costs; ● Identity theft prevention; ● Universal accessibility; ● Transaction verification and confirmation processes that prevent double spending; ● Decentralized transaction processing at any time of day without any central authority (governments or financial institutions); and ● Universal value free from currency exchange rates.
In the first quarter of 2022, our legal counsel in Kazakhstan advised us that the Kazakhstan government partially supports a few amendments to the existing tax code applying to digital asset mining companies in the country, including improving 74 Table of Contents the fee rate based on electricity consumption per kWh that the government charges digital asset miners from the current 1 tenge (about $0.0023 US dollar) per kWh to a higher rate, based on different types of electricity they consume and/or different level of total power consumption scale they consume.
In the first quarter of 2022, our legal counsel in Kazakhstan advised us that the Kazakhstan government partially supports a few amendments to the existing tax code applying to crypto asset mining companies in the country, including improving the fee rate based on electricity consumption per kWh that the government charges crypto asset miners from the current 1 tenge (about $0.0023 US dollar) per kWh to a higher rate, based on different types of electricity they consume and/or different level of total power consumption scale they consume.
From January 24, 2022 to January 31, 2022, the state -run Kazakhstan Electricity Grid Operating Company additionally cut off the nation’s electricity to bitcoin and cryptocurrency mining companies. As a result, during this time period, bitcoin and cryptocurrency miners will not have access to power for bitcoin and cryptocurrency mining purposes and will be required to halt their operations.
From January 24, 2022 to January 31, 2022, the state-run Kazakhstan Electricity Grid Operating Company additionally cut off the nation’s electricity to bitcoin and cryptocurrency mining companies. As a result, during this time period, bitcoin and cryptocurrency miners did not have access to power for bitcoin and cryptocurrency mining purposes and were required to halt their operations.
As of December 31, 2022, we own 14 patents in connection with our existing and planned blockchain and cryptocurrency related operations. We expect to rely upon trade secrets, trademarks, service marks, trade names, copyrights and other intellectual property rights and expect to license the use of intellectual property rights owned and controlled by others.
As of December 31, 2023, we own 8 patents in connection with our existing and planned blockchain and cryptocurrency related operations. We expect to rely upon trade secrets, trademarks, service marks, trade names, copyrights and other intellectual property rights and expect to license the use of intellectual property rights owned and controlled by others.
As of August 28, 2021, we handled shipping on behalf of our third -party hosting customers of 4,234 bitcoin mining machines to the site to commence operations (including 2,864 units of Whatsminer M20S, 1,115 units of Whatsminer M21S, and 255 of Bitmain T19) and the machines have all started operation since then.
As of August 28, 2021, we handled shipping on behalf of our third-party hosting customers of 4,234 bitcoin mining machines to the site to commence operations (including 2,864 units of Whatsminer M20S, 1,115 units of Whatsminer M21S, and 255 of Bitmain T19) and the machines have all started operation since then. In August 2021, we acquired Nanjing SuannengWuxian Technology Co.
The cut -off of power to our and others bitcoin mining company operations during January 2022 is expected to negatively impact our operations for the period, as our hosting services are directly correlated with our customers mining abilities.
The cut-off of power to our and others bitcoin mining company operations during January 2022 negatively impacted our operations for the period, as our hosting services are directly correlated with our customers mining abilities.
Since liquid’s thermal conductivity is significantly higher than air as proven widely by scientists and validated in our pilot programs, liquid cooling is a more efficient thermal management approach compared to traditional air -cooling system installed in most data centers. Overheating of PCB (Printed Circuit Boards) is a major reason for equipment malfunction.
Since liquid’s thermal conductivity is significantly higher than air as proven widely by scientists, it is a more efficient thermal management approach compared to traditional air-cooling system installed in most data centers. Overheating of PCB (Printed Circuit Boards) is a major reason for equipment malfunction.
Unique liquid cooling and waste heat recovery technology that can turn bitcoin mining machines into energy-efficient boilers for large-scale heating, proven by successful pilot programs As an innovator in the bitcoin mining industry, we have the opportunity to harness the power of technology in order to create a more sustainable future for bitcoin mining to address the industry’s energy and environmental challenges.
Our Competitive Strengths Unique liquid cooling and waste heat recovery technology that can turn bitcoin mining machines into energy-efficient boilers for large-scale heating As an innovator in the bitcoin mining industry, we have the opportunity to harness the power of technology in order to create a more sustainable future for bitcoin mining to address the industry’s energy and environmental challenges.
Our target customers include both large -scale miners and institutional investors. Target institutional investors include entities that are diversifying their portfolios by adopting digital asset -mining assets, which can be a more economic approach to acquire digital assets as compared to buying such assets on secondary markets. Starting from 2022, we began to develop our self -owned mining operations.
Target institutional investors include entities that are diversifying their portfolios by adopting crypto asset-mining assets, which can be a more economic approach to acquire crypto assets as compared to buying such assets on secondary markets. Starting from 2022, we began to develop our self-mining operations.
By collocating our products along with large -scale heating users, we can reduce these heat users’ capital expenditure transferring their fossil fuel boilers to electric boilers.
By collocating our products along with large-scale heat users, we can reduce these their heating cost, while transferring their fossil fuel boilers to electric boilers.
We currently maintain physical offices in Singapore and mainland China as our regional operation centers designated for our business development in Middle Asia, Middle and North America and the integration of our supply chain and research and development capabilities.
Accordingly, we have not designated any specific office as our headquarters. We currently maintain physical offices in Singapore and mainland China as our regional operation centers designated for business development in Middle Asia, Middle and North America and the integration of supply chain and research and development capabilities.
Bitcoin’s daily exchange volume has grown from $92 million in January 2017 to more than $30 billion in February 2023. The initial exchange rate recorded on October 5, 2009 was one bitcoin equaled $0.000764. Bitcoin remains the leading digital asset in terms of market capitalization, which, based on data sourced from coinmarketcap.com, exceeded $450 billion as of February 28, 2023.
Bitcoin’s daily exchange volume has grown from $92 million in January 2017 to more than $30 billion in February 2023. The initial exchange rate recorded on October 5, 2009 was one bitcoin equaled $0.000764. Bitcoin remains the leading crypto asset in terms of market capitalization, which, based on data sourced from ycharts.com, exceeded $1.216 trillion as of February 29, 2024.
Sales and marketing have not been a significant component of our business and have been immaterial to our financial condition and results of operations; however, as we expand into global markets, such activities may become more significant in the future. Facilities We are a remote -only company. Accordingly, we have not designated any specific office as our headquarters.
We have been upgrading our official website to adapt to our global transition. Sales and marketing have not been a significant component of our business and have been immaterial to our financial condition and results of operations; however, as we expand into global markets, such activities may become more significant in the future. Facilities We are a remote-only company.
Our 72 Table of Contents latest generation SAIHUB CAB integrates 72 units common type mining machines such as Whatsminer M21S at a size of 2.5 cm x 1.5 cm x 1.9 cm.
For example, SAIHUB CAB integrates 72 units common type mining machines such as Whatsminer M21S at a size of 2.5 cm x 1.5 cm x 1.9 cm.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company SAI.TECH Global Corporation is a global energy -saving Bitcoin mining operator and a clean -tech company with a mission to promote the clean transition of the bitcoin mining, power and heating industries. The Company was incorporated on February 2, 2021.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company SAI.TECH Global Corporation is a sustainable distributed Bitcoin mining operator and a clean-tech company with a mission to promote the clean transition of the bitcoin mining, power and heating industries.
Strategically, we focus on deploying our CAB and BOX products in our mining operation globally, which are series of cabinets and containers that applies our proprietary chip liquid cooling and waste heat recovery technologies, reutilize excessive heat generated by bitcoin mining ASIC chips and provide steady hot water for agricultural, commercial, residential and industrial large -scale heating applications.
Strategically, we focus on deploying our self-developed infrastructure products in our mining operation globally, which are series of containerized datacenters that applies our proprietary liquid cooling and waste heat recovery technologies, reutilize excessive heat generated by bitcoin mining machines and provide steady hot water for agricultural, commercial, residential and industrial large-scale heating applications scenarios.
Specifically, we focus on improving our products’ waste heat recovery efficiency through new engineering design and material innovation; extending our products’ adaptability to more latest generation high -performance computing chips, printed circuit boards, bitcoin mining machines and different heating applications; we are also developing our self -patented printed circuit board that adapts to liquid cooling with higher chip density and easy waste heat recovery chips layout design; and immersion cooling system for mining equipment and power boxes.
Specifically, we focus on improving our products’ waste heat recovery efficiency through new engineering design and material innovation; extending our products’ adaptability to more latest generation high-performance computing chips, printed circuit boards, bitcoin mining machines and different heating applications; and immersion cooling system for mining equipment and power boxes.
This technology takes advantage of the highly mobile nature of bitcoin mining activity and assets, and the ability to deploy operations in commercial and residential buildings and greenhouses. Intellectual Property Our ability to protect our material intellectual property is important to our business.
Our products provide the heating industry with an innovative and low-cost “electric boiler”. This technology takes advantage of the highly mobile nature of bitcoin mining activity and assets, and the ability to deploy operations in commercial and residential buildings and greenhouses. Intellectual Property Our ability to protect our material intellectual property is important to our business.
Subsequently, the Bitcoin Network hash rate peaked over 300 EH/s in January 2023. 66 Table of Contents For bitcoin, miners’ computers or machines, called nodes, constantly collect and bundle individual transactions from the past ten minutes (the fixed “block time” of bitcoin) into blocks, and compete to solve the hashing puzzle to be the first to validate the new block for the blockchain, which is called Proof of Work (“PoW”).
For bitcoin, miners’ computers or machines, called nodes, constantly collect and bundle individual transactions from the past ten minutes (the fixed “block time” of bitcoin) into blocks, and compete to solve the hashing puzzle to be the first to validate the new block for the blockchain, which is called Proof of Work (“PoW”).
After our review of global bitcoin mining industry and changing regulatory framework in different countries, we are currently focusing on expansion opportunities primarily in North American countries.
Considering our review of global bitcoin mining industry and changing regulatory framework in different countries, we are currently focusing on expansion opportunities primarily in North American countries. See “ Business Overview — Transition and Expansion into Global Market ”.
Together with cryptocurrencies, these other assets, which also include virtual currencies, digital coins and tokens, and other blockchain assets, make up a class of assets called “Digital Assets.” Digital assets offer fast, low -cost peer -to-peer payment options without the need to provide personal details.
Together with cryptocurrencies, these other assets, which also include virtual currencies, digital coins and tokens, and other blockchain assets, make up a class of assets called “Crypto assets.” Crypto assets offer fast, low-cost peer-to-peer payment options without the need to provide personal details. Every transaction is recorded in the blockchain, which effectively contains a record of all account balances.
Our research and development team, coupled with our proprietary technology and field application experience, have created opportunities for continuous improvements in our technology capabilities, empowering reliability, scalability and flexibility of our comprehensive bitcoin mining energy -saving solutions.
Our Technology Our technology systems are a critical component of our success and are designed to enhance operational performance and energy efficiency. Our research and development team, coupled with our proprietary technology and field application experience, have created opportunities for continuous improvements in our technology capabilities, empowering reliability, scalability and flexibility of our comprehensive bitcoin mining energy-saving solutions.
As of December 31, 2022, based on data sourced from coinbase.com, the trading price of one bitcoin was $16,600. By April 18, 2023, the price of one bitcoin increased to $30,202, highlighting the extremely volatile nature of bitcoin. Currently, mining and purchasing from the secondary market are the major ways of acquiring crypto.
As of December 31, 2023, based on data sourced from coinbase.com, the trading price of one bitcoin was $42,288.58. By April 10, 2024, the price of one bitcoin increased to $70,588 according to coinmarketcap.com, highlighting the extremely volatile nature of bitcoin. Currently, mining and purchasing from the secondary market are the major ways of acquiring crypto.
LTD (Singapore) — General headquarter, responsible for business coordination. • Hangzhou Dareruohan Technology Co.,Ltd.(WOFE) — Global R&D and supply chain center. • SAI US INC. (USA) — Develops and manages projects and business in North American market. • Sustainable Available Innovative Asia Limited (Kazakhstan) — Develops and manages projects in Central Asia market. D.
Below is a description of our major operating entities: ● Sustainable Available Innovative PTE. LTD (Singapore) — General headquarter, responsible for business coordination. ● Hangzhou Dareruohan Technology Co., Ltd. (WOFE) — Global R&D and supply chain center. ● SAI US INC. (USA) — Develops and manages projects and business in North American market. D.
Chips have to operate healthily and steadily to guarantee computing efficiency in a relatively low temperate and clean environment, and major bitcoin mining machine manufacturers develop and design different cooling systems to provide such environment. Though most mining machines manufacturers are still adapting traditional air -cooling systems, some have been developing liquid cooling systems.
Chips have to operate healthily and steadily to guarantee computing efficiency in a relatively low temperate and clean environment, and major bitcoin mining machine manufacturers develop and design different cooling systems to provide such environment.
Our registered office in the Cayman Islands is located at the offices of 3 -212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1 -1203 , Cayman Islands. We maintain our website at https://sai.tech/.
Our registered office in the Cayman Islands is located at the offices of 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands. We maintain our website at https://sai.tech/. The information contained on the website does not form a part of, and is not incorporated by reference into, this Annual Report.
The uniqueness of our solutions is that we use proprietary liquid cooling and waste heat recovery technology for bitcoin mining machines, which utilizes waste heat generated from bitcoin mining ASIC chips at 90% thermal efficiency to provide recycled energy in form of steady 60 -70 °C hot water to potential heating customers while lowering mining operating costs.
The uniqueness of our solutions is that we use proprietary liquid cooling and waste heat recovery technology for bitcoin mining activities, which utilizes waste heat generated from bitcoin mining operation at up to 97% thermal efficiency to provide recycled energy in form of hot water to potential heating demand customers.
Research and Development Our research and development efforts are focused primarily on developing technologies and solutions to reduce the major cost factors of digital asset mining datacenter operations and other types of high -performance computing datacenter operations, including but not limited to electricity, cooling, chip supply and services.
In addition, we may in the future develop certain proprietary software applications for purposes of our cryptocurrency mining operation. 75 Research and Development Our research and development efforts are focused primarily on developing technologies and solutions to reduce the major cost factors of crypto asset mining datacenter operations and other types of high-performance computing datacenter operations, including but not limited to electricity, cooling, chip supply and services.
Heating is the largest energy end -use , accounting for around 50% of global final energy consumption and 40% of global CO2 emissions. Industrial processes and buildings are the largest heat consumers in 2019, followed by agriculture mainly for greenhouse heating.
Heating is the largest energy end-use, accounting for around 50% of global final energy consumption and 40% of global CO2 emissions. Industrial processes and buildings are the largest heat consumers in 2019, followed by agriculture mainly for greenhouse heating. Cogeneration and boilers are major methods for providing heat but they produce considerable carbon emissions because they rely on fossil fuels.
Due to compliance and strategic concerns, we terminated all of our hosting service agreements with existing customers in China, revoked our pilot programs testing our SAIHUB CAB equipment, and began strategic global transition starting from establishing hosting operations in Kazakhstan.
Due to compliance and strategic concerns, we terminated all of our hosting service agreements with existing customers in China, revoked our pilot programs testing our SAIHUB CAB equipment, and began strategic global transition starting from establishing hosting operations in Kazakhstan. 65 On July 18, 2021, we entered into a service agreement with Better Tech (the “Power Service Agreement”) for Phase I cooperation in Kazakhstan.
The pool uses software that coordinates the pool members’ hashing power, identifies new block rewards, records how much work all the participants are doing, and assigns block rewards in -proportion to the participants’ efforts. 67 Table of Contents To maximize the opportunities to receive a reward, most large -scale miners have joined with other miners in “mining pools” where the computing power of each pool participant is coordinated to complete the block on the blockchain, and mining rewards are distributed to participants in accordance with the rules of the mining pool.
To maximize the opportunities to receive a reward, most large-scale miners have joined with other miners in “mining pools” where the computing power of each pool participant is coordinated to complete the block on the blockchain, and mining rewards are distributed to participants in accordance with the rules of the mining pool.
Other regulatory bodies, governmental or semi -governmental , have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency business. Kazakhstan started to develop the cryptocurrency industry and promote both blockchain operations and cryptocurrency markets in 2017.
Other regulatory bodies, governmental or semi-governmental, have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency business. Kazakhstan started to develop the cryptocurrency industry and promote both blockchain operations and cryptocurrency markets in 2017. On June 25, 2020, the president signed a law that introduced amendments to the regulation of digital technologies and legitimized mining.
We further developed waste heat recovery engineering capabilities to enable the electricity consumed in process of ASIC chips computing to be reutilized at 90% efficiency for heating purposes in most low to medium temperature heating applications esp. in greenhouses hot water heating systems and district heating projects’ hot water heating systems.
Liquid cooling technology improves the energy efficiency and bitcoin mining operation efficiency. We further developed waste heat recovery capabilities to enable the electricity consumed in process of computing to be reutilized at up to 97% thermal efficiency for heating purposes, in most low to medium temperature heating applications like hot water heating systems or district heating systems.
On the other side, though we didn’t officially collect heating service fee in these pilot projects, we expect to be able to charge certain heating service fee through providing 24*7 steady 60 -70 ° C hot water when commercial projects are commenced and rolled out in other countries globally and thus to effectively subsidize our electricity cost on mining operations.
Though we have not collected heating service fee in our current operations, we expect to be able to charge heating service fee through providing 24*7 steady hot water when commercial projects are commenced, and thus to effectively subsidize electricity cost on self-mining operations.
For bitcoin networks, mining is the process of providing a stable settlement mechanism to validate transaction. A number of proposed transactions are bundled in a block and be mined and propagated for verification The reward mechanism attracts miners to participate and improve the robustness and security by raising the difficulties for 51% attack.
A number of proposed transactions are bundled in a block and be mined and propagated for verification The reward mechanism attracts miners to participate and improve the robustness and security by raising the difficulties for 51% attack. 69 Bitcoin Distribution Bitcoin is finite in its supply of a total number of 21 million, with 19.65 million currently in circulation.
By 2025, bitcoin is expected to surpass gold’s stock -to-flow ratio, forming a significant monetary store of value. Transaction Fees When a user decides to send bitcoin to a recipient, the transaction is first broadcasted to a memory pool before being included in a block.
Transaction Fees When a user decides to send bitcoin to a recipient, the transaction is first broadcasted to a memory pool before being included in a block.
Rich field experience and unique liquid cooling know-how gives us first-mover advantages Our founding team is comprised of highly experienced mining operators, heating ventilation air conditioning (“HVAC”) engineers, and power infrastructure constructors in China.
These tools and resources provide support for measuring and reporting our emissions, developing climate strategy, reducing our own emissions and the emissions in our value chain and contributing to climate action by us. 72 Rich field experience and unique liquid cooling know-how gives us first-mover advantages Our founding team is comprised of highly experienced mining operators, heating ventilation air conditioning (“HVAC”) engineers, and power infrastructure constructors.
It requires strong engineering design capability, strong supply chain support and repeatedly tests to guarantee the optimized efficiency of both mining and heating operation.
It requires strong engineering design capability, strong supply chain support and repeatedly tests to guarantee the optimized efficiency of both mining and heating operation. Therefore, we believe it is challenging for a new entrant to replicate our technology and operating model in the industry.
We engage local staff through our local partners and send our own onsite 73 Table of Contents maintenance supervisors to ensure the status of our operations.
We have also developed a datacenter, SAI NODE Marietta, in the United States. We engage local staff through our local partners and send our own onsite maintenance supervisors to ensure the status of our operations.
Typical boiler (thermal) efficiencies are approximately 90% according to EN 12952 -15 and old boilers’ efficiency are typically lower than 90%. The SAIHUB CAB has an average of thermal efficiency of almost 89 -90 %, providing 60 -70 °C hot water steadily through the liquid cooling systems integrated with waste heat recovery capability.
The 1 st generation SAIHUB CAB has an average thermal efficiency of around 89-90%, providing 60-70°C hot water steadily through the liquid cooling systems integrated with waste heat recovery capability.
Heat exchange equipment is applied to transfer waste heat while maintaining the form of waste heat energy. Heat conversion with the use of waste heat boiler is the most common method for industrial waste heat utilization. The conversion process can improve the quality of waste heat.
Major approaches for waste heat utilization includes heat exchange, heat conversion and heat pump. Heat exchange is the most direct and efficient method for industrial waste heat utilization. Heat exchange equipment is applied to transfer waste heat while maintaining the form of waste heat energy.
The value of digital assets is determined by the value that various market participants place on them through their transactions, for example, via peer -to-peer transactions, e -commerce or exchanges.
Each account on the blockchain is identified solely by its unique public key, which renders it anonymous, and is secured with its associated passcode. The value of crypto assets is determined by the value that various market participants place on them through their transactions, for example, via peer-to-peer transactions, e-commerce or exchanges.
The amendments proposal also includes enhancing regulation to digital asset mining activities and control of the power supply. As the date of this report, the government is still in discussion and drafting of the final amendments to the Tax Code and any laws related to digital asset mining activities and have not brought any of such amendments into enforcement.
The amendments proposal also includes enhancing regulation to crypto asset mining activities and control of the power supply. As the date of this report, we are not aware of any updates to the Tax Code, and the underlying enforcement of such applicable amendments.
Since waste heat is a byproduct of industrial process, it can be considered that no extra energy consumption or carbon emission is incurred.
Since waste heat is a byproduct of industrial process, it can be considered that no extra energy consumption or carbon emission is incurred. As a result, we believe that by replacing traditional heat generation with waste heat recovery, one is able to reduce increased energy consumption efficiency and reduce carbon emission.
Bitcoin Distribution Bitcoin is finite in its supply of a total number of 21 million, with 19.3million currently in circulation. Thus, it is a scarce asset that can potentially serve to hedge various forms of inflation. Compared with high storage and transport costs of gold, bitcoin requires no transport costs and has a transparent and diminishing supply schedule.
Thus, it is a scarce asset that can potentially serve to hedge various forms of inflation. Compared with high storage and transport costs of gold, bitcoin requires no transport costs and has a transparent and diminishing supply schedule. By 2025, bitcoin is expected to surpass gold’s stock-to-flow ratio, forming a significant monetary store of value.
Sales and Marketing Our primary marketing and communication efforts are focused on social media channels to keep our customers, investors and other stakeholders informed and up -to-date regarding our business developments. We have been upgrading our official website to adapt to our global transition.
As of the date of this Annual Report, we identified no dependency on patents that is material to our business. Sales and Marketing Our primary marketing and communication efforts are focused on social media channels to keep our customers, investors and other stakeholders informed and up-to-date regarding our business developments.
We intent to switch to renewable power source gradually with our datacenter operation to enable the electrification of these heat user’s fossil fuel boilers, which is also promoting the decarbonization of traditional heating industry, creating a huge environmental benefit to the global carbon neutrality goal and social benefits.
We intent to switch to renewable power source gradually with our datacenter operation to enable the electrification of these heat user’s fossil fuel boilers, which also promotes the decarbonization of traditional heating industry, creating a huge environmental benefit to the global carbon neutrality goal and social benefits. 71 The exponential growth of computing power demand, such as bitcoin mining, GPU computing, and others, brings many challenges to computing center operators, including potential rise of electricity price, increase of carbon footprint when power is sourced from unsustainable power, and demand for increasing power generation and grid infrastructure investment.
Since our founding in 2019, we have been committed to developing comprehensive energy -saving solutions that can optimize the major costs of bitcoin mining and promote clean energy transition.
Self-mining operation, sales of product, hosting service and mining pool service account for 19.19%, 70.87%, 5.40% and 4.56% of our revenue, respectively, for the fiscal year ended December 31, 2023. Since our founding in 2019, we have been committed to developing comprehensive energy-saving bitcoin mining solutions that can optimize the major costs of the operation and promote clean energy transition.
Bitcoin Bitcoin is a digital commodity, a type of cryptocurrency, created in January 2009 by a mysterious and pseudonymous person named Satoshi Nakamoto. Bitcoin offers lower transaction fees than traditional online payment mechanisms and, unlike government -issued currencies, it is operated by a decentralized authority, with only balances kept on a public ledger to which everyone has transparent access.
Bitcoin offers lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority, with only balances kept on a public ledger to which everyone has transparent access. 68 Bitcoin Mining The process of maintaining and developing the blockchain ledger with crypto tokens as reward is called mining, which is an important scenario of encryption computing.
Through this acquisition, we intend to discover business opportunities in the SMR industry with a mission of promoting a wider use of stable, carbon -neutral and readily available SMR products. On March 28, 2023, we established Boltbit Limited, a Cayman Islands exempted company, as our wholly owned subsidiary and our initiative in the area of cryptocurrency exchange.
On March 28, 2023, we established Boltbit Limited, a Cayman Islands exempted company, as our wholly owned subsidiary and our initiative in the area of cryptocurrency exchange. By establishing Boltbit Limited, we intend to discover business opportunities related to decentralized transaction system services based on blockchain and lightning network technology.
Organizational Structure The following diagram illustrates our company’s organizational structure, and the place of formation, ownership interest and affiliation of each of our principal subsidiaries and affiliated entities as of the date of this Annual Report. Below is a description of our major operating entities: • Sustainable Available Innovative PTE.
We have incurred, and expect to continue to incur, additional annual expenses as a result of becoming a public company. 78 C. Organizational Structure The following diagram illustrates our company’s organizational structure, and the place of formation, ownership interest and affiliation of each of our principal subsidiaries and affiliated entities as of the date of this Annual Report.
On one side, heating user partners i.e. agriculture greenhouses saved energy cost and carbon emissions through paying less (free in our pilot programs) for the 24*7 steady 60 -70 ° C hot water we provided compared to their traditional cost on purchasing and burning coal or natural gas.
Heating users have saved energy cost through paying less (free in our pilot programs) for 24*7 hot water generated from SAIHUB CAB, compared to their traditional cost on purchasing electricity, or purchasing coal and natural gas to produce hot water.
This acquisition enabled us to meet increased demand by investors for crypto asset allocation, while also providing increased security and diversified services to our hosting customers as we expand our global operation. We are currently building this business, including the domain name sai.plus, into a leading bitcoin mining cloud management and comprehensive services platform.
Ltd. (“Nanjing SuannengWuxian”), a private mining pool business and an entity under common control by one of our principal shareholders. This acquisition enabled us to meet increased demand by investors for crypto asset allocation, while also providing increased security and diversified services to our hosting customers as we expand our global operation.
Our products and solutions can reduce aggregate carbon emissions compared to traditional stand -alone heating and bitcoin mining, while also reducing the mining operation costs by potentially selling the waste heat. 61 Table of Contents Since formation in 2019, we have been developing advanced liquid cooling technologies for digital assets, specifically, bitcoin mining machines.
Our products and solutions can reduce aggregate carbon emissions compared to traditional stand-alone heating and bitcoin mining, while also reducing the mining operation costs by potentially selling the recovered heat. Our Operations and Services Self-mining Operation We engage in cryptocurrency mining operation, primarily Bitcoins, for our own account.
Our business strategy and leading technology were well -recognized by the private capital market at a very early stage. Endorsed by strong shareholders’ backgrounds, we established long -term and close business relations with many industrial leading companies, including upstream energy suppliers, hardware manufacturers, and software providers.
Endorsed by strong shareholders’ backgrounds, we established long-term and close business relations with many industrial leading companies, including upstream energy suppliers, hardware manufacturers, and software providers. We have also accumulated a large base of potential institutional investors and high net worth individuals as our targeted customers.
Heat pump is another way to reuse waste heat, which is more suitable for industrial and civil low -temperature waste heat utilization. Our SAIHUB CAB currently provides 60 -70 °C hot water steadily and is an innovative waste heat utilization method and equipment that collects waste heat from semiconductors or chips especially ASIC chips for bitcoin mining.
Our products provides 40-70°C hot water steadily and is an innovative waste heat utilization method and equipment that collects waste heat from semiconductors or chips.
It also installed two SAIHUB -025M cabinets to provide hot water heating services for the entire facility. We also constructed vertical agricultural block box and fish farming pond pools which will be heated by the hot water generated from SAIHUB CAB cabinets, representing a live demo of our technology and equipment.
We also constructed vertical agricultural block box and fish farming pond pools which will be heated by the hot water generated from SAIHUB CAB cabinets, representing a live demo of our technology and equipment. 66 On February 2, 2023, we purchased 420 Whatsminer M30s++ bitcoin mining machines for $633,360, or approximately $14.50 per terahash for self-mining utility, through our indirect wholly owned subsidiary.
Our pilot projects operation statistics supported the feasibility of our heating capability and this estimation model’s conclusion. 70 Table of Contents Based on the success of the pilot programs, we published a carbon footprint report and ESG report in early 2021, and participated in global carbon neutrality focused organizations, including: • We are the first crypto mining and supercomputing company worldwide to join the UNFCCC Climate Neutral Now (CNNow) initiative.
We have also participated in global carbon neutrality focused organizations, including: ● We are the first crypto mining and supercomputing company worldwide to join the UNFCCC Climate Neutral Now (CNNow) initiative.
The mining pool operator provides a service that coordinates the workers. Fees are paid to the mining pool operator to cover the costs of maintaining the pool.
The mining pool operator provides a service that coordinates the workers. Fees are paid to the mining pool operator to cover the costs of maintaining the pool. The pool uses software that coordinates the pool members’ hashing power, identifies new block rewards, records how much work all the participants are doing, and assigns block rewards in-proportion to the participants’ efforts.
Besides our experienced founding team from the digital asset mining industry, our team includes professionals from various fields, including investment and financing, ESG, marketing, and energy. We have accumulated industrial resources and is constantly expanding our business landscape. Bitmain, the largest mining machine manufacturer globally, and other famous venture capital firms, has invested in us.
We have accumulated industrial resources and is constantly expanding our business landscape. Bitmain, the largest mining machine manufacturer globally, and other famous venture capital firms, have invested in us. Our business strategy and leading technology were well-recognized by the private capital market at a very early stage.
We developed and integrated waste heat recovery technology into liquid cooling systems that applies to bitcoin mining machines, effectively turning traditional mining machines into “electric boilers” with 90% thermal efficiency. This product is called SAIHUB CAB, and we registered various patents with the related engineering designs globally.
Our Products Overview Since formation in 2019, we have been developing advanced liquid cooling technologies for crypto assets, specifically, bitcoin mining machines. We developed and integrated waste heat recovery technology into liquid cooling systems that applies to bitcoin mining machines, effectively turning traditional mining machines into “electric boilers” with up to 97% thermal efficiency.
Our mission is to globally become the most energy -efficient digital asset mining operation company, while simultaneously promote the clean transition of the bitcoin mining, power and heating industries. We provide a full suite of specialized services, including mining machines purchase, hosting, mining pool service, energy -saving technologies and solutions, to digital asset mining customers.
B. Business Overview We are a sustainable distributed Bitcoin mining operator and a clean-tech company that integrates the bitcoin mining, power and heating industries. We engage in cryptocurrency mining operations, primarily Bitcoin, for our own account, and provide a full suite of specialized services to crypto asset mining customers, including purchase of mining machines, hosting service, and mining pool service.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

90 edited+62 added−29 removed89 unchanged
Biggest changeWe rely primarily on such Consolidated Financial Statements to understand, manage, and evaluate our business performance and use the non -GAAP financial measure only supplementally. 79 Table of Contents The following is a reconciliation of our non -GAAP net (loss) income for the years ended December 31, 2022, 2021 and 2020 respectively, which excludes the impact of (i) share -based compensation expense, (ii) loss from disposal of property and equipment, (iii) impairment of digital assets and (iv) depreciation of fixed assets and amortization of intangible assets (dollars in thousands): For the year ended December 31, 2020 2021 2022 Reconciliation of non-GAAP net (loss) income: Net (loss) income $ 403 $ (16,704 ) $ (8,845 ) Share-based Compensation Expense — 14,457 1,060 Loss from disposal of property and equipment — — 718 Impairment of digital assets — — 64 Depreciation and amortization expenses — — 1,662 Non-GAAP net (loss) income $ 403 $ (2,247 ) $ (5,341 ) Results of Operations For the year ended December 31, 2021, and 2022 The following table shows key components of our results of operations for the years ended December 31, 2021, and 2022, in dollars and as a percentage of fluctuations (dollars in thousands).
Biggest changeThe following is a reconciliation of our non-GAAP net (loss) income for the years ended December 31, 2023, 2022 and 2021 respectively, which excludes the impact of (i) share-based compensation expense, (ii) loss from disposal of property and equipment, (iii) depreciation of fixed assets and amortization of intangible assets (dollars in thousands): For the year ended December 31, 2021 2022 2023 Reconciliation of non-GAAP net (loss) income: Net (loss) income $ (16,704 ) $ (8,845 ) $ (6,120 ) Share-based Compensation Expense 14,457 1,060 2,641 Loss from disposal of property and equipment — 718 402 Depreciation and amortization expenses — 1,662 1,347 Non-GAAP net (loss) income $ (2,247 ) $ (5,405 ) $ (1,730 ) Results of Operations For the year ended December 31, 2022, and 2023 The following table shows key components of our results of operations for the years ended December 31, 2022, and 2023, in dollars and as a percentage of fluctuations (dollars in thousands).
There are three levels of inputs that may be used to measure fair value: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
There are three levels of inputs that may be used to measure fair value: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. 92 ● Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Management uses this non -GAAP financial measure internally to help understand, manage, and evaluate our business performance and to help make operating decisions. We believe that this non -GAAP financial measure is also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis.
Management uses this non-GAAP financial measure internally to help understand, manage, and evaluate our business performance and to help make operating decisions. 82 We believe that this non-GAAP financial measure is also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Business” and our consolidated financial statements and the related notes included elsewhere in this registration statement.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 79 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Business” and our consolidated financial statements and the related notes included elsewhere in this registration statement.
For the year ended December 31, Change 2021 2022 Amount % Revenues Sales of products $ 6,958 $ 8,626 $ 1,668 24 Hosting service 2,600 1,303 (1,297 ) (50 ) Mining pool 7,480 676 (6,804 ) (91 ) Mining — 33 33 — Total revenues 17,038 10,638 (6,400 ) (38 ) Cost of revenues Sales of products 5,948 7,748 1,800 30 Cost of services 2,434 1,054 (1,380 ) (57 ) Mining pool 7,392 676 (6,716 ) (91 ) Mining — 20 20 — Total cost of revenues 15,774 9,498 (6,276 ) (40 ) Gross (loss)/profit 1,264 1,140 (124 ) (10 ) Sales and marketing expenses 14,779 1,098 (13,681 ) (93 ) General and administrative expenses 2,383 6,080 3,697 155 Research and development expenses 419 476 57 14 Impairment of long-lived assets 135 951 816 604 Total operating expenses 17,716 8,605 (9,111 ) (51 ) Profit (Loss) from operations (16,452 ) (7,465 ) 8,987 (55 ) Other income(expense), net (228 ) (1,380 ) (1,152 ) 505 Profit(loss) before income tax expense (16,680 ) (8,845 ) 7,835 (47 ) Income tax expenses (24 ) — 24 (100 ) Net Profit (Loss) (16,704 ) (8,845 ) 7,859 (47 ) Foreign currency translation gain 57 (544 ) (601 ) (1054 ) Total comprehensive loss $ (16,647 ) $ (9,389 ) $ 7,258 (44 ) 80 Table of Contents Revenues Sales of products.
For the year ended December 31, Change 2021 2022 Amount % Revenues Sales of products $ 6,958 $ 8,626 $ 1,668 24 Hosting service 2,600 1,303 (1,297 ) (50 ) Mining pool 7,480 676 (6,804 ) (91 ) Mining — 33 33 100 Total revenues 17,038 10,638 (6,400 ) (38 ) Cost of revenues Sales of products 5,948 7,748 1,800 30 Cost of services 2,434 1,054 (1,380 ) (57 ) Mining pool 7,392 676 (6,716 ) (91 ) Mining — 20 20 100 Total cost of revenues 15,774 9,498 (6,276 ) (40 ) Gross (loss)/profit 1,264 1,140 (124 ) (10 ) Sales and marketing expenses 14,779 1,098 (13,681 ) (93 ) General and administrative expenses 2,383 6,080 3,697 155 Research and development expenses 419 476 57 14 Impairment of long-lived assets 135 951 816 604 Total operating expenses 17,716 8,605 (9,111 ) (51 ) Profit (Loss) from operations (16,452 ) (7,465 ) 8,987 (55 ) Other income(expense), net (228 ) (1,380 ) (1,152 ) 505 Profit(loss) before income tax expense (16,680 ) (8,845 ) 7,835 (47 ) Income tax expenses (24 ) — 24 (100 ) Net Loss (16,704 ) (8,845 ) 7,859 (47 ) Foreign currency translation gain 57 (544 ) (601 ) (1054 ) Total comprehensive loss $ (16,647 ) $ (9,389 ) $ 7,258 (44 ) 85 Revenues Sales of products.
In 2021, our hosting customer in PRC participated our sai.plus mining pool for bitcoin mining, however in 2022, our hosting customer switched to other mining pool suppliers, resulting the decrease in our mining pool revenue. Mining revenue. Mining revenue represents mining rewards generated from the company’s self -owned mining machines.
In 2021, our hosting customer in PRC participated our sai.plus mining pool for bitcoin mining, however in 2022, our hosting customer switched to other mining pool suppliers, resulting the decrease in our mining pool revenue. Minning revenue. Mining revenue represents mining rewards generated from the company’s self-owned mining machines.
We also made impairment test of our miners and equipment regarding the situation, please refer to Impairment of long -lived assets for more information. Research and development expenses Our research and development expenses mainly represented the cost related to our new product research and development.
We also made impairment test of our miners and equipment regarding the situation, please refer to Impairment of long-lived assets for more information. 86 Research and development expenses Our research and development expenses mainly represented the cost related to our new product research and development.
Principles of Consolidation The accompanying consolidated financial statements include the accounts of us and our subsidiaries, of which we are the primary beneficiary, from the dates they were acquired or incorporated. All inter -company transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of financial statements in conformity with U.S.
GAAP”). Principles of Consolidation The accompanying consolidated financial statements include the accounts of us and our subsidiaries, of which we are the primary beneficiary, from the dates they were acquired or incorporated. All inter-company transactions and balances have been eliminated upon consolidation. 91 Use of Estimates The preparation of financial statements in conformity with U.S.
For the year ended December 31, 2020, 2021 and 2022, we did not have any material interest or penalties associated with tax positions. We did not have any significant unrecognized uncertain tax positions as of December 31, 2021 and 2022. We do not expect that our assessment regarding unrecognized tax positions will materially change over the next 12 months.
For the year ended December 31, 2023, 2022 and 2021, we did not have any material interest or penalties associated with tax positions. We did not have any significant unrecognized uncertain tax positions as of December 31, 2022 and 2023. We do not expect that our assessment regarding unrecognized tax positions will materially change over the next 12 months.
In exchange for providing computing power, we are entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue), for successfully adding a block to the blockchain.
In exchange for providing computing power, we are entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less crypto asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue), for successfully adding a block to the blockchain.
In connection with the preparation and external audit of our consolidated financial statements, We and our independent registered public accounting firms identified two material weakness in our internal control over financial reporting as of December 31, 2022, 2021 and 2020. As defined in the standards established by the U.S.
In connection with the preparation and external audit of our consolidated financial statements, We and our independent registered public accounting firms identified two material weakness in our internal control over financial reporting as of December 31, 2023, 2022 and 2021. As defined in the standards established by the U.S.
We made a share -based payment of $14.5 million in 2021 as a result of awarded restricted shares to a consultant for his service of introducing digital asset mining resources providers outside China in 2021, and share -based payment in 2022 was $0.2 million, decreased by $14.3 million.
We made a share-based payment of $14.5 million in 2021 as a result of awarded restricted shares to a consultant for his service of introducing crypto asset mining resources providers outside China in 2021, and share-based payment in 2022 was $0.2 million, decreased by $14.3 million.
We assess our revenue arrangements against specific criteria in order to determine if we are acting as principal or agent. Sales of products. Revenues are generated from sales of products when we act as principal for the sales of high -performance digital asset mining machines to end customers.
We assess our revenue arrangements against specific criteria in order to determine if we are acting as principal or agent. Sales of products. Revenues are generated from sales of products when we act as principal for the sales of high-performance crypto asset mining machines to end customers.
In the case of fraud and wilful evasion, the investigation is extended to cover ten years of assessment. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent.
In the case of fraud and willful evasion, the investigation is extended to cover ten years of assessment. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent.
Non-GAAP Financial Measures We are providing supplemental financial measures for non -GAAP net income from operations that excludes the impact of share -based compensation expense, loss from disposal of property and equipment, impairment losses on digital assets, depreciation of fixed assets and amortization of intangible assets.
Non-GAAP Financial Measures We are providing supplemental financial measures for non-GAAP net income from operations that excludes the impact of share-based compensation expense, loss from disposal of property and equipment, impairment losses on crypto assets, depreciation of fixed assets and amortization of intangible assets.
Sales of products represents the sales of high -performance digital asset mining machines to end customers. The revenue of sales of products was $6.9 million and $8.6 million for the years ended December 31, 2021, and 2022, respectively, increasing by $1.7 million, or 24%.
Sales of products represents the sales of high-performance crypto asset mining machines to end customers. The revenue of sales of products was $6.9 million and $8.6 million for the years ended December 31, 2021, and 2022, respectively, increasing by $1.7 million, or 24%.
We believe our current cash on hand is sufficient to meet our operating and capital requirement for at least the next twelve months from the date these financial statements are issued. We continue to explore opportunities to grow our business.
We believe our current cash and crypto assets on hand is sufficient to meet our operating and capital requirement for at least the next twelve months from the date these financial statements are issued. We continue to explore opportunities to grow our business.
Our operating activities are denominated in U.S. dollar for our operations outside of China and in Renminbi (“RMB”) for our research and development activities in China. Our agreements regarding hosting operations in Kazakhstan are denominated in U.S. dollars and settled with both the customer and power supplier in U.S. dollars, not in Kazakhstani tenge.
Our operating activities are denominated in U.S. dollar for our operations outside of China and in Renminbi (“RMB”) for our research and development activities in China. Our agreements regarding hosting operations in Kazakhstan and Mexico are denominated in U.S. dollars and settled with both the customer and power supplier in U.S. dollars, not in Kazakhstani tenge and in Mexico peso.
Cost of revenues Cost of revenues primarily included the cost for the purchase of high -performance digital asset mining machines and the direct costs incurred for the provision of hosting service and mining rewards allocated to each provider of pool participant in exchange for their computing power contributed to the mining pool.
Cost of revenues Cost of revenues primarily included the cost for the purchase of high-performance crypto asset mining machines and the direct costs incurred for the provision of hosting service and mining rewards allocated to each provider of pool participant in exchange for their computing power contributed to the mining pool.
As of December 31, 2021, and December 31, 2022, all of our cash and cash equivalents were held by major financial institutions located in mainland China, United States, Singapore and Hong Kong. We believe that these financial institutions are of high credit quality.
As of December 31, 2022, and December 31, 2023, all of our cash and cash equivalents were held by major financial institutions located in Mainland China, United States, Singapore and Hong Kong. We believe that these financial institutions are of high credit quality.
We also will exclude impairment losses on digital assets from the non -GAAP financial measure, which may occur in future periods as a result of our continued holdings of significant amounts of bitcoin.
We also will exclude impairment losses on crypto assets from the non-GAAP financial measure, which may occur in future periods as a result of our continued holdings of significant amounts of bitcoin.
The drop in the bitcoin price also had significant impacts on our profitability and capital expansion plan, since the price fall renders the costs of electricity fees, which is the major mining cost component and remains relatively fixed, as a percentage of bitcoin price exceedingly high to the extent that bitcoin mining becomes a loss -making activity.
The substantial volatility in the bitcoin price also had significant impacts on our profitability and capital expansion plan, since the price fall renders the costs of electricity fees, which is the major mining cost component and remains relatively fixed, as a percentage of bitcoin price exceedingly high to the extent that bitcoin mining becomes a loss-making activity.
We expect our future revenue will include bitcoin transaction fee, earned for verifying transactions in support of the blockchain, resales of waste heat from our products and operations to be deployed and any technology -related types of charge based on our intellectual property. 77 Table of Contents Factors affecting our sales of digital mining machines and hosting service fee Availability of Secure and Sustainable Power Supply Following the ban on digital asset mining by the Chinese government in May 2021, the bitcoin mining industry has come to realize that the availability of secure and sustainable power supply has been the paramount factor in conducting bitcoin mining operations.
We expect our future revenue will include bitcoin transaction fee, earned for verifying transactions in support of the blockchain, resales of waste heat from our products and operations to be deployed and any technology-related types of charge based on our intellectual property. 80 Factors affecting our sales of digital mining machines and hosting service fee Availability of Secure and Sustainable Power Supply Following the ban on crypto asset mining by the Chinese government in May 2021, the bitcoin mining industry has come to realize that the availability of secure and sustainable power supply has been the paramount factor in conducting bitcoin mining operations.
Our products and solutions can reduce aggregate carbon emissions compared to traditional stand -alone heating and bitcoin mining, while also reducing the mining operation costs by potentially selling the waste heat.
Our products and solutions can reduce aggregate carbon emissions compared to traditional stand-alone heating and bitcoin mining, while also reducing the mining operation costs by potentially selling the recovered heat.
Impairment of digital assets was $0.06 million for the year ended December 31, 2022, which was recorded to reflect our cryptocurrencies at the lower of carrying value or fair value as of December 31, 2022.
Impairment of crypto assets was $0.06 million for the year ended December 31, 2022, which was recorded to reflect our cryptocurrencies at the lower of carrying value or fair value as of December 31, 2022.
Quantitative and Qualitative Disclosures about Market Risk Credit Risk Our credit risk arises from cash and cash equivalents, accounts receivable, other receivables in deposits, prepayments and other current assets, net and amount due from related parties.
Quantitative and Qualitative Disclosures about Market Risk Credit Risk Our credit risk arises from cash and cash equivalents, accounts receivable, other receivables in deposits, prepayments and other current assets, net and amount due from related parties, stablecoin asset.
Public Company Accounting Oversight Board, a “material weakness” is a 91 Table of Contents deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Although the outcomes of these legal proceedings cannot be predicted, we do not believe these actions, in the aggregate, will have a material adverse impact on our financial position, results of operations or liquidity. We are not aware of any material pending or threatened claims and litigation since January 1, 2020, and through December 31, 2022.
Although the outcomes of these legal proceedings cannot be predicted, we do not believe these actions, in the aggregate, will have a material adverse impact on our financial position, results of operations or liquidity. We are not aware of any material pending or threatened claims and litigation since January 1, 2021, and through December 31, 2023.
Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the 90 Table of Contents differences are expected to reverse.
Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these consolidated financial statements, and the reported amounts of revenue and expenses 88 Table of Contents during the reporting period.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: As of December 31, 2021 As of December 31, 2022 Balance sheet items, except for equity accounts 6.3726 6.9646 For the Year Ended December 31, 2020 2021 2022 Items in the consolidated statements of operations and comprehensive (loss)/income, and cash flows 6.9042 6.4000 6.7190 No representation is intended to imply that the RMB amounts could have been, or could be, realized or settled into US$ at that rate stated above, or at any other rate.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: As of December 31, 2022 As of December 31, 2023 Balance sheet items, except for equity accounts 6.9646 7.0827 For the Year Ended December 31, 2021 2022 2023 Items in the consolidated statements of operations and comprehensive (loss)/income, and cash flows 6.4000 6.7190 7.0422 No representation is intended to imply that the RMB amounts could have been, or could be, realized or settled into US$ at that rate stated above, or at any other rate.
Based on substantially all of our operations in foreign subsidiaries, including Kazakhstan, our ability to pay future dividends will be primarily dependent on receiving distributions of funds from our subsidiaries.
Based on substantially all of our operations in foreign subsidiaries, including United States, our ability to pay future dividends will be primarily dependent on receiving distributions of funds from our subsidiaries.
As of December 31, 2022, one customer accounted for 96% of the total balance of our accounts receivable. As of December 31, 2021, one customer accounted for 100% of the total balance of our accounts receivable. No other customer accounted for more than 10% of our accounts receivable as of December 31, 2022 and 2021.
As of December 31, 2022, one customer accounted for 96% of the total balance of our accounts receivable. No other customer accounted for more than 10% of our accounts receivable as of December 31, 2023 and 2022.
For the year ended December 31, 2020, the cash inflow reflected the proceeds from issuance of preferred shares of $2.9 million. Capital Expenditures We made capital expenditures of $1.9 million, $4.0 million and $0.8 million for the year ended December 31, 2022, 2021 and 2020, respectively.
For the year ended December 31, 2021, the cash inflow reflected the proceeds from issuance of preferred shares of $8.1 million. Capital Expenditures We made capital expenditures of $5 million, $1.9 million and $4.0 million for the year ended December 31, 2023, 2022 and 2021, respectively.
As a company with less than $1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
As a company with less than $6.78 million in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies.
As a result, we are primarily responsible for fulfilling the promise to provide the specified service. Further, under existing sharing mechanisms, we are exposed to the risk that actual block rewards may differ from expected rewards, therefore, bear the inventory risk before the specified service has been transferred to a customer. We provide mining pool services under Sai.plus. Mining revenue.
As a result, we are primarily responsible for fulfilling the promise to provide the specified service. Further, under existing sharing mechanisms, we are exposed to the risk that actual block rewards may differ from expected rewards, therefore, bear the inventory risk before the specified service has been transferred to a customer.
General and administrative expenses increased by $3.70 million, or 155%, from $2.38 million for the year ended December 31, 2021, to $6.08 million for the 81 Table of Contents year ended December 31, 2022.
General and administrative expenses increased by $3.70 million, or 155%, from $2.38 million for the year ended December 31, 2021, to $6.08 million for the year ended December 31, 2022.
We evaluate our hierarchy disclosures each quarter. 89 Table of Contents Revenue Recognition In accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Revenue Recognition In accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
To remediate the material weakness identified in internal control over financial reporting, we have begun, and will continue to : (a) continuing our efforts to set up the internal audit department, and enhance the effectiveness of the internal control system; (b) continuing our efforts to implement necessary review and controls at related levels and all important documents and contracts (including all of its subsidiaries) will be submitted to the office of its Chief Administrative Officer and Chief Financial Officer for retention and review, and (c) hire qualified consultant to assess Sarbanes -Oxley Act compliance readiness, to assess where we can improve our overall internal control over financial reporting function, and to assist us in implementing improvements where necessary.
Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional material weaknesses may have been identified. 96 To remediate the material weakness identified in internal control over financial reporting, we have begun, and will continue to : (a) continuing our efforts to set up the internal audit department, and enhance the effectiveness of the internal control system; (b) continuing our efforts to implement necessary review and controls at related levels and all important documents and contracts (including all of its subsidiaries) will be submitted to the office of its Chief Administrative Officer and Chief Financial Officer for retention and review, and (c) hire qualified consultant to assess Sarbanes-Oxley Act compliance readiness, to assess where we can improve our overall internal control over financial reporting function, and to assist us in implementing improvements where necessary.
Our target customers include both large -scale miners and institutional investors. Target institutional investors include entities that are diversifying their portfolios by adopting digital asset -mining assets, which can be a more economic approach to acquire digital assets as compared to buying such assets on secondary markets. Starting from 2022, we began to develop our self -owned mining operations.
Target institutional investors include entities that are diversifying their portfolios by adopting crypto asset-mining assets, which can be a more economic approach to acquire crypto assets as compared to buying such assets on secondary markets. Starting from 2022, we began to develop our self-mining operations.
We continually evaluate these estimates and assumptions based on the most recently available information, historical experience and various other assumptions that we believe to be reasonable under the circumstances.
The Company continually evaluates these estimates and assumptions based on the most recently available information, historical experience and various other assumptions that the Company believes to be reasonable under the circumstances.
For the year ended December 2022, the cash outflow mainly reflected net loss of $8.8 million with an add -back of loss on disposal of property and equipment of $1.6 million, share -based payment of $1 million, depreciation and amortization expense of $1.7 million, impairment of long -lived asset of $1 million, partially offset by an increase in accounts payable of $1.1 million. 85 Table of Contents Net cash used in operating activities for the year ended December 31, 2021 was $1 million, as compared to $1 million for the year ended December, 2020.
For the year ended December 2022, the cash outflow mainly reflected net loss of $8.8 million with an add-back of loss on disposal of property and equipment of $1.6 million, share-based payment of $1 million, depreciation and amortization expense of $1.7 million, impairment of long-lived asset of $1 million, partially offset by an increase in accounts payable of $1.1 million.
Strategically, we focus on deploying our CAB and BOX products in our mining operation globally, which are series of cabinets and containers that applies our proprietary chip liquid cooling and waste heat recovery technologies, reutilize excessive heat generated by bitcoin mining ASIC chips and provide steady hot water for agricultural, commercial, residential and industrial large -scale heating applications.
Strategically, we focus on deploying our self-developed infrastructure products in our mining operation globally, which are series of containerized datacenters that applies our proprietary liquid cooling and waste heat recovery technologies, reutilize excessive heat generated by bitcoin mining machines and provide steady hot water for agricultural, commercial, residential and industrial large-scale heating applications scenarios.
Foreign currency exchange net losses of $0.54 million, foreign currency exchange net gain of $0.06 million, and $0.03 million were recognized in 2022, 2021, and 2020, respectively. Inflation risk Since January 1, 2020, inflation in China has not materially affected our results of operations.
Foreign currency exchange net losses of $0.06 million, and $0.54 million, foreign currency exchange net gain of $0.06 million were recognized in 2023, 2022, and 2021, respectively. Inflation risk Inflation has not materially affected our results of operations in the past.
Our future sales and marketing efforts will include those related to customer acquisition and retention, and general marketing. We intend to continue to dedicate significant resources to our clean energy solutions, proprietary waste heat recovery technology and constantly seek to minimize the total cost of mining operation, in particular with regard to cost of electricity and cost of heat.
We intend to continue to dedicate significant resources to our clean energy solutions, proprietary waste heat recovery technology and constantly seek to minimize the total cost of mining operation, in particular with regard to cost of electricity and cost of heat.
Liquidity and Capital Resources For the year ended December 31, 2022, we had a net loss of $8.85 million and net cash outflow in operating activities of $4.96 million.
Liquidity and Capital Resources For the year ended December 31, 2023, we had a net loss of $6.1 million and net cash outflow in operating activities of $3.1 million.
Significant accounting estimates reflected in our consolidated financial statements include but are not limited to estimates and judgments applied in the determination of allowance for doubtful receivables, impairment losses for long -lived assets including intangible assets, impairment loss for cryptocurrencies, valuation allowance for deferred tax assets, provision for inventory, estimated forfeiture rate in calculation of share -based payment, the incremental borrowing rate used to calculate right of use assets and lease liabilities, useful lives of intangible assets and property, plant and equipment and revenue recognition.
Significant accounting estimates reflected in the Company’s consolidated financial statements include but are not limited to estimates and judgments applied in determination of allowance for doubtful receivables, impairment losses for long-lived assets including intangible assets, impairment loss for cryptocurrencies, valuation allowance for deferred tax assets, provision for inventory, estimated forfeiture rate in calculation of share-based payment, estimated interest rate on calculation of operating lease.
Cash outflow for the year ended December 31, 2021 mainly reflected the purchase of bitcoin mining machine and mining foldbox for the hosting service of $4 million. For the year ended December 31, 2020, the cash outflow reflected the purchase of property and equipment of $0.3 million and purchase of intangible assets of $0.4 million.
Cash outflow for the year ended December 31, 2022 mainly reflected the purchase of stablecoin of $4.6 million, purchase of property and equipment of $1.9 million. Cash outflow for the year ended December 31, 2021 mainly reflected the purchase of bitcoin mining machine and mining foldbox for the hosting service of $4 million.
The amendments in this ASU replace the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.
The amendments in this ASU require the measurement and recognition of expected credit losses for financial assets held at amortized cost. The amendments in this ASU replace the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.
Determining which category an asset or liability falls within the hierarchy requires significant judgment.
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.
Gross (loss)/profit and gross margin Our gross profit increased by $0.36 million, from $0.9 million for the year ended December 31, 2020, to gross profit of $1.26 million for year ended December 31, 2021. Gross profit as a percentage of revenue (“gross margin”) was 7.42% and 46% for the year ended December 31, 2021 and 2020, respectively.
Gross (loss)/profit and gross margin Our gross profit decreased by $0.68 million, from $1.14 million for the year ended December 31, 2022, to gross profit of $0.46 million for year ended December 31, 2023. Gross profit as a percentage of revenue (“gross margin”) was 11 % and 7% for the year ended December 31, 2022, and 2023, respectively.
According to the National Bureau of Statistics of China, the year -over-year percent changes in the consumer price index for December 31, 2022, 2021 and 2020 were increases of 2%, 3.13% and 2.5%, respectively.
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 31, 2023, 2022, and 2021 were increases of 0.2%, 2%, and 3.13%, respectively. According to US Inflation Calculator, the annual inflation rate of the United States for 2023, 2022 and 2021 were 3.4%, 6.5%, and 7%, respectively.
We have entered into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and our enforceable right to compensation only begins when we provide computing power to the mining pool operator.
The contracts are terminable at any time by either party and our enforceable right to compensation only begins when we provide computing power to the mining pool operator.
Cash outflow for the year ended December 31, 2022 mainly reflected the purchase of stablecoin of $4.6 million, purchase of property and equipment of $1.9 million. Net cash used in investing activities for the year ended December 31, 2021 was $4.0 million, as compared to $0.8 million for the year ended December 31, 2020.
Cash outflow for the year ended December 31, 2023 mainly reflected the purchase of property and equipment of $5 million for our new mining site in Marietta Ohio. 88 Net cash used in investing activities for the year ended December 31, 2022 was $6.4 million, as compared to $4.0 million for the year ended December 31, 2021.
We did not have any significant capital or other commitments, or guarantees as of December 31, 2022. 86 Table of Contents Below is a table setting forth all our contractual obligations as of December 31, 2022, which consists of operating lease obligations for our operation in Kazakhstan and office lease: Payment Due by Period Total Less than 1 year 1 – 3 years Contractual Obligations Operating lease obligations $ 419,621 $ 188,169 $ 231,452 Total $ 419,621 $ 188,169 $ 231,452 Off-Balance Sheet Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.
Below is a table setting forth all our contractual obligations as of December 31, 2023, which consists of operating lease obligations for our operation in United States, Kazakhstan and office lease: Payment Due by Period Total Less than 1 year More than 1 year Contractual Obligations Operating lease obligations $ 809,650 $ 274,408 $ 535,241 Total $ 809,650 $ 274,408 $ 535,241 89 Off-Balance Sheet Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.
Our non -GAAP financial measure is not meant to be considered in isolation and should be read only in conjunction with our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
Our non-GAAP financial measure is not meant to be considered in isolation and should be read only in conjunction with our Consolidated Financial Statements, which have been prepared in accordance with GAAP. We rely primarily on such Consolidated Financial Statements to understand, manage, and evaluate our business performance and use the non-GAAP financial measure only supplementally.
Cash Generating Ability Our cash flows were summarized below (in thousands): For the year ended December 31, 2020 For the year ended December 31, 2021 For the year ended December 31, 2022 Net cash used in operating activities $ (1,035 ) $ (983 ) $ (4,962 ) Net cash used in investing activities (759 ) (3,970 ) (6,424 ) Net cash provided by financing activities 2,892 8,191 18,533 Effect of exchange rate changes on cash and cash equivalents 72 (61 ) (409 ) Net increase in cash and cash equivalents $ 1,170 $ 3,177 $ 6,738 Cash and cash equivalents at the beginning of the period $ 130 $ 1,300 $ 4,477 Cash and cash equivalents at the end of the period $ 1,300 $ 4,477 $ 11,215 Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $5.0 million, as compared to $1 million for the year ended December, 2021.
However, we will continue to be dependent on access to distributions of cash from our other subsidiaries. 87 Cash Generating Ability Our cash flows were summarized below (in thousands): For the year ended December 31, 2021 For the year ended December 31, 2022 For the year ended December 31, 2023 Net cash used in operating activities $ (983 ) $ (4,933 ) $ (3,125 ) Net cash used in investing activities (3,970 ) (6,424 ) (4,897 ) Net cash provided by financing activities 8,191 18,533 9 Effect of exchange rate changes on cash and cash equivalents (61 ) (438 ) (26 ) Net increase in cash and cash equivalents $ 3,177 $ 6,738 $ (8,039 ) Cash and cash equivalents at the beginning of the period $ 1,300 $ 4,477 $ 11,215 Cash and cash equivalents at the end of the period $ 4,477 $ 11,215 $ 3,176 Operating Activities Net cash used in operating activities for the year ended December 31, 2023 was $3.1 million, as compared to $5 million used in operating activities for the year ended December, 2022.
Net (loss)/income As a result of the foregoing, we had net loss of $8.85 million for the year ended December 31, 2022, and net loss of $16.7 million for the year ended December 31, 2021. 82 Table of Contents For the year ended December 31, 2020, and 2021 The following table shows key components of our results of operations for the years ended December 31, 2020, and 2021, in dollars and as a percentage of fluctuations (dollars in thousands).
For the year ended December 31, 2021, and 2022 The following table shows key components of our results of operations for the years ended December 31, 2021, and 2022, in dollars and as a percentage of fluctuations (dollars in thousands).
We anticipate funding our future capital expenditures primarily with net cash flows from operating activities and financing activities. Contractual Obligations and Contingencies From time to time, we may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business.
Contractual Obligations and Contingencies From time to time, we may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business.
For stablecoin asset, we monitor the market closely, to ensure the credit risk of stablecoin can be detected when occurred, and adequate impairment is made when necessary.
For stablecoin asset, we monitor the market closely, to ensure the credit risk of stablecoin can be detected when occurred, and adequate impairment is made when necessary. The credit risk is mitigated by ongoing monitoring process of outstanding balance and timely collection when there is no immediate need for such advances.
For the year ended December 31, 2021, four customers accounted for 20%, 14%, 36% and 11% of Our total revenues. For the year ended December 31, 2020, two customers accounted for 37% and 35% of our total revenues. No other customer accounted for more than 10% of our revenues for the years ended December 31, 2022, 2021 and 2020.
For the year ended December 31, 2021, four customers accounted for 20%, 14%, 36%, and 11% of our total revenues.
The other expense was $0.2 million for the year ended December 31, 2021, mainly relates to the disposal of certain plants and equipment.
The other expense was $0.2 million for the year ended December 31, 2021, mainly relates to the disposal of certain plants and equipment. Net profit/(loss) As a result of the foregoing, we had net loss of $8.85 million for the year ended December 31, 2022, and net loss of $16.7 million for the year ended December 31, 2021.
Our capital expenditures have been used primarily to purchase of electronic equipment and intangible assets, such as purchased software. We estimate that our capital expenditures will increase moderately in the following two or three years to support the expected growth of its business.
Our capital expenditures have been used primarily to purchase of electronic equipment and mining site investment. We estimate that our capital expenditures will increase moderately in the following two or three years to support the expected growth of its business. We anticipate funding our future capital expenditures primarily with net cash flows from operating activities and financing activities.
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 “Risk Factors” and elsewhere in this registration statement. 76 Table of Contents Overview We are a global energy -saving Bitcoin mining operator and a clean -tech company that integrates the bitcoin mining, power and heating industries.
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 “Risk Factors” and elsewhere in this registration statement.
The Company allocates mining rewards to each pool participant, mainly our hosting clients, net of the pool operator fees based on the sharing mechanism predetermined and records as cost of mining pool revenue. 83 Table of Contents Cost of revenues Cost of revenues primarily included the cost for the purchase of high -performance digital asset mining machines and the direct costs incurred for the provision of hosting service and mining rewards allocated to each provider of pool participant in exchange for their computing power contributed to the mining pool.
Cost of revenues Cost of revenues primarily included the cost for the purchase of high-performance crypto asset mining machines, energy and the direct costs incurred for the provision of hosting service and mining rewards allocated to each provider of pool participant in exchange for their computing power contributed to the mining pool.
As of December 31, 2022, our consolidated current assets exceeded our consolidated current liabilities by $18.14 million, we had cash and cash equivalents of $11.22 million, and accumulated deficit of $25.26 million.
As of December 31, 2023, our consolidated current assets exceeded our consolidated current liabilities by $11.6 million, we had cash and cash equivalents of $3.2 million, crypto assets and stablecoins assets of $6.8 million, and accumulated deficit of $31.4million.
Bitcoin (as well as other cryptocurrencies) may have value based on various factors, including their acceptance as a means of exchange by consumers and producers, scarcity, and market demand.
Bitcoin (as well as other cryptocurrencies) may have value based on various factors, including their acceptance as a means of exchange by consumers and producers, scarcity, and market demand. As of December 31, 2023, we held 65.98 bitcoins, which does not represent a significant increase compared to 3.05 bitcoins as of December 31, 2022.
Ability to Acquire Customers Effectively Our ability to increase the hosting clients and sales of digital asset mining machines largely depends on our ability to attract potential clients through sales and marketing efforts.
Ability to Acquire Customers Effectively Our ability to increase the hosting clients and sales of crypto asset mining machines largely depends on our ability to attract potential clients through sales and marketing efforts. Presently, we owne d and operate Bitcoin Mining Operations in North American located in Marietta, state of Ohio in the United States.
Thus, Our operations are currently not exposed to the fluctuations of the Kazakhstani tenge. Investing Activities Net cash used in investing activities for the year ended December 31, 2022 was $6.4 million, as compared to $4.0 million for the year ended December 31, 2021.
Investing Activities Net cash used in investing activities for the year ended December 31, 2023 was $4.9 million, as compared to $6.4 million for the year ended December 31, 2022.
Factors affecting block rewards and bitcoin transaction fees Block rewards are fixed, and the bitcoin network is designed to periodically reduce them through halving. Currently the block rewards are fixed at 6.25 bitcoin per block, and it is estimated that it will halve again to 3.125 bitcoin in April 2024.
Currently the block rewards are fixed at 6.25 bitcoin per block, and it is estimated that it will halve again to 3.125 bitcoin in April 2024. 81 Market Price of Bitcoin Our business is heavily dependent on the spot price of bitcoin.
Major Factors Affecting Our Results of Operations Our revenue comprises a combination of sales of high -performance digital asset mining machines, hosting service fee, block rewards and income from our mining pool.
Our net loss were $6.12 million, $8.85 million, and $ 16.68 million for the years ended December 31, 2023 ,2022 and 2021, respectively. Major Factors Affecting Our Results of Operations Our revenue comprises a combination of sales of high-performance crypto asset mining machines, hosting service fee, block rewards and income from our mining pool.
Critical Accounting Policies Basis of Presentation The accompanying consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
Although we have not been materially affected by inflation in the past, we may be affected if jurisdictions where we conduct our business experiences higher rates of inflation in the future. Critical Accounting Policies Basis of Presentation The accompanying consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States of America (“U.S.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was $18.5 million, as compared to $8.2 million for the year ended December 31, 2021. For the year ended December 31, 2022, the cash inflow reflected the proceeds from reverse recapitalization.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $0.009 million, as compared to $18.5 million for the year ended December 31, 2022. In 2022 we completed the de-spac and received $18.5 million.
Sales of products represented the sales of high -performance digital asset mining machines to end customers. The revenue of sales of products was $1.5 million and $6.9 million for the years ended December 31, 2020, and 2021, respectively, increasing by $5.4 million, or 379%. The sales of products business were started in the second half of 2020. Hosting service.
Sales of products represents the sales of high-performance crypto asset mining machines to end customers. The revenue of sales of products was $8.6 million and $4.8 million for the years ended December 31, 2022, and 2023, respectively, decreased by $3.8 million, or 44%.
Selling and marketing expenses increased by $14.78 million from 0.001 million for the year ended December 31, 2020, to $14.78 million for the year ended December 31, 2021.
Salary and benefits expenses increased by $0.1 million, from $0.13 million for the year ended December 31, 2022 to $0.23 million for the year ended December 31, 2023.
Net cash provided by financing activities for the year ended December 31, 2021 was $8.2 million, as compared to $2.9 million for the year ended December 31, 2020. For the year ended December 31, 2021, the cash inflow reflected the proceeds from issuance of preferred shares of $8.1 million.
Net cash used in operating activities for the year ended December 31, 2021 was $1 million, as compared to $1 million for the year ended December, 2020.
The cost of revenues increased by $14.72 million or 1,395%, from $1.06 million for the year ended December 31, 2020, to $15.77 million for the year ended December 31, 2021. The increase in cost of revenues was basically in line with the increase in revenue.
The cost of revenues decreased by $3.18 million or 33%, from $9.5 million for the year ended December 31, 2022, to $6.3 million for the year ended December 31, 2023. The decrease in cost of revenues was basically in line with the decrease in revenue.
The increase was mainly due to expansion of our hosting capacity and the increase in customer demand as well as driven by higher average bitcoin price. Mining Pool. Mining pool income represents revenues from the company’s self -owned sai.plus mining pool which was started in 2021, representing mining rewards from sai.plus mining pool.
Mining pool income represents revenues from the company’s self-owned sai.plus mining pool which was started in 2021, representing mining rewards from sai.plus mining pool. The Company allocates mining rewards to each pool participant, mainly our hosting clients, net of the pool operator fees based on the sharing mechanism predetermined and records as cost of mining pool revenue.
Our mission is to globally become the most energy -efficient digital asset mining operation company, while simultaneously promote the clean transition of the bitcoin mining, power and heating industries. We provide a full suite of specialized services, including mining machines purchase, hosting, mining pool service, energy -saving technologies and solutions, to digital asset mining customers.
Overview We are a sustainable distributed Bitcoin mining operator and a clean-tech company that integrates the bitcoin mining, power and heating industries. We engage in cryptocurrency mining operations, primarily Bitcoin, for our own account, and provide a full suite of specialized services to crypto asset mining customers, including purchase of mining machines, hosting service, and mining pool service.
The material weaknesses that have been identified relate to: lack of the key monitoring mechanisms such as internal audit department to oversee and monitor Company’s risk management, business strategies and financial reporting procedures. we also lack adequately designed and documented management review controls to properly detect and prevent certain accounting errors and omitted disclosures in the footnotes to the consolidated financial statements.
The material weaknesses that have been identified relate to: (i) lack of the key monitoring mechanisms such as internal audit department to oversee and monitor Company’s risk management, business strategies and financial reporting procedures. (ii) lack of formal financial closing policies and effective control over periodic financial closing procedures which resulted into management’s late adjustments at period ends.

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

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Biggest changeSubstitute awards will not count against the Share Reserve, except that Class A Ordinary Shares acquired by exercise of substitute incentive stock options will count against the maximum number of Class A Ordinary Shares that may be issued pursuant to the exercise of incentive share options (as set forth above). 94 Table of Contents The maximum grant date fair value of all compensation granted or paid, as applicable, to any individual for service as a non -employee director with respect to any calendar year is (i) US$750,000 total in value or (ii) in the event such non -employee director is first appointed or elected to the Board during such calendar year, US$1,000,000 in total value.
Biggest changeThe maximum grant date fair value of all compensation granted or paid, as applicable, to any individual for service as a non-employee director with respect to any calendar year is (i) US$750,000 total in value or (ii) in the event such non-employee director is first appointed or elected to the Board during such calendar year, US$1,000,000 in total value.
The terms of our Class I directors, Class II directors, and Class III directors will expire as follows: (1) 2024, (2) 2025, and (3) 2026. • the Class I directors includes Jinlong Zhu and Yusen Chen; • the Class II directors includes Hao Ge and Yao Shi; and • the Class III directors includes Risheng Li.
The terms of our Class I directors, Class II directors, and Class III directors will expire as follows: (1) 2026, (2) 2024, and (3) 2025. ● the Class I directors includes Risheng Li; ● the Class II directors includes Yusen Chen and Yao Shi; and ● the Class III directors includes Hao Ge and Jinlong Zhu.
Our compensation committee is appointed by the Board of Directors of SAI.TECH Global Corporation to assist the Board in overseeing the Company’s employee compensation policies and practices, The following responsibilities are set forth as a guide for fulfilling the Committee’s purposes in such manner as the Committee determines is appropriate: (a) Establish and review the objectives of the Company’s management compensation programs and its basic compensation policies; (b) Review and approve corporate goals and objectives relevant to the compensation of the CEO and other executive officers, including annual and long -term performance goals and objectives; (c) Review and approve, subject to such further action of the Board as the Board shall determine, any employment, compensation, benefit or severance agreement with any executive officer; (d) Evaluate the performance of the CEO and other executive officers against corporate goals and objectives including the annual performance objectives; (e) Determine and approve the compensation level for other members of senior management of the Company as the Committee or the Board may from time to time determine to be appropriate; (f) Review at least annually the compensation of other employees as the Committee determines to be appropriate; (g) Review on a periodic basis the Company’s management compensation programs, and recommend to the Board any appropriate modifications or new plans, programs or policies; (h) Review, approve and recommend to the Board the adoption of any equity -based compensation plan for employees of or consultants to the Company and any modification of any such plan; (i) Administer the Company’s equity -based compensation plans for employees of and consultants to the Company as provided by the terms of such plans, including authorizing all awards made pursuant to such plans; (j) Review, approve and recommend to the Board the adoption of any non -equity-based incentive compensation plan for employees of or consultants to the Company and any material modification of any such plan and review at least annually the awards made pursuant to such plans; (k) Review, approve and recommend to the Board the adoption of any employee retirement plan, and other material employee benefit plan, and any material modification of any such plan; (l) Review (a) the Company’s compensation policies and practices for executives, management employees and employees generally to assess whether such policies and practices could lead to excessive risk taking behavior and (b) the manner in which any risks arising out of the Company’s compensation policies and practices are monitored and mitigated and adjustments necessary to address changes in the Company’s risk profile; (m) With respect to any compensation consultant who has been engaged to make determinations or recommendations on the amount or form of executive or director compensation: (a) annually, or from time to time as the Committee deems appropriate, assess whether the work of any such compensation consultant (whether retained by the compensation committee or management) has raised any conflicts of interest; and (b) review the engagement and the nature of any additional services provided by such compensation consultant to the Committee or to management, as well as all remuneration provided to such consultant; (n) Annually, or from time to time as the Committee deems appropriate and prior to retention of any advisers to the Committee, assess the independence of compensation consultants, legal and other advisers to the Committee, taking into consideration all relevant factors the Committee deems appropriate to such adviser’s independence, including factors specified in the listing standards of Nasdaq; 99 Table of Contents (o) Review the form and amount of director compensation at least annually, and make recommendations thereon to the Board; (p) Oversee and monitor other compensation related policies and practices of the Company, including: (i) compliance by management with rules regarding equity -based compensation plans for employees and consultants pursuant to the terms of such plans, and the guidelines for issuance of awards as the Board or Committee may establish; and (ii) the Company’s recoupment policy and procedures; (q) Oversee stockholder communications relating to executive compensation and review and make recommendations with respect to stockholder proposals related to compensation matters; and (r) Undertake such other responsibilities or tasks as the Board may delegate or assign to the Committee from time to time.
Our compensation committee is appointed by the Board of Directors of SAI.TECH Global Corporation to assist the Board in overseeing the Company’s employee compensation policies and practices, The following responsibilities are set forth as a guide for fulfilling the Committee’s purposes in such manner as the Committee determines is appropriate: (a) Establish and review the objectives of the Company’s management compensation programs and its basic compensation policies; (b) Review and approve corporate goals and objectives relevant to the compensation of the CEO and other executive officers, including annual and long-term performance goals and objectives; (c) Review and approve, subject to such further action of the Board as the Board shall determine, any employment, compensation, benefit or severance agreement with any executive officer; (d) Evaluate the performance of the CEO and other executive officers against corporate goals and objectives including the annual performance objectives; (e) Determine and approve the compensation level for other members of senior management of the Company as the Committee or the Board may from time to time determine to be appropriate; (f) Review at least annually the compensation of other employees as the Committee determines to be appropriate; 104 (g) Review on a periodic basis the Company’s management compensation programs, and recommend to the Board any appropriate modifications or new plans, programs or policies; (h) Review, approve and recommend to the Board the adoption of any equity-based compensation plan for employees of or consultants to the Company and any modification of any such plan; (i) Administer the Company’s equity-based compensation plans for employees of and consultants to the Company as provided by the terms of such plans, including authorizing all awards made pursuant to such plans; (j) Review, approve and recommend to the Board the adoption of any non-equity-based incentive compensation plan for employees of or consultants to the Company and any material modification of any such plan and review at least annually the awards made pursuant to such plans; (k) Review, approve and recommend to the Board the adoption of any employee retirement plan, and other material employee benefit plan, and any material modification of any such plan; (l) Review (a) the Company’s compensation policies and practices for executives, management employees and employees generally to assess whether such policies and practices could lead to excessive risk taking behavior and (b) the manner in which any risks arising out of the Company’s compensation policies and practices are monitored and mitigated and adjustments necessary to address changes in the Company’s risk profile; (m) With respect to any compensation consultant who has been engaged to make determinations or recommendations on the amount or form of executive or director compensation: (a) annually, or from time to time as the Committee deems appropriate, assess whether the work of any such compensation consultant (whether retained by the compensation committee or management) has raised any conflicts of interest; and (b) review the engagement and the nature of any additional services provided by such compensation consultant to the Committee or to management, as well as all remuneration provided to such consultant; (n) Annually, or from time to time as the Committee deems appropriate and prior to retention of any advisers to the Committee, assess the independence of compensation consultants, legal and other advisers to the Committee, taking into consideration all relevant factors the Committee deems appropriate to such adviser’s independence, including factors specified in the listing standards of Nasdaq; (o) Review the form and amount of director compensation at least annually, and make recommendations thereon to the Board; (p) Oversee and monitor other compensation related policies and practices of the Company, including: (i) compliance by management with rules regarding equity-based compensation plans for employees and consultants pursuant to the terms of such plans, and the guidelines for issuance of awards as the Board or Committee may establish; and (ii) the Company’s recoupment policy and procedures; (q) Oversee stockholder communications relating to executive compensation and review and make recommendations with respect to stockholder proposals related to compensation matters; and (r) Undertake such other responsibilities or tasks as the Board may delegate or assign to the Committee from time to time.
Ian holds a master’s degree from Jiangxi University of Finance and Economics. Directors Hao Ge serves as a non -executive director. Mr. Ge was the co -founder of KuaiYouHuYu, a mobile gaming company since April 2018. He also serves as the investment advisor to Zhencheng Capital, a venture capital firm specializing in early -stage technology investments since May 2016.
Ian holds a master’s degree from Jiangxi University of Finance and Economics. 97 Directors Hao Ge serves as a non-executive director. Mr. Ge was the co-founder of KuaiYouHuYu, a mobile gaming company since April 2018. He also serves as the investment advisor to Zhencheng Capital, a venture capital firm specializing in early-stage technology investments since May 2016.
Any additional Class A Ordinary Shares credited to the RSU award by reason of any dividend equivalents will be subject to all of the same terms and conditions of the underlying RSU award. Dividend equivalents distributed under the Plan will not be counted against the shares available for issuance under the SAI Incentive Plan. • Other Awards.
Any additional Class A Ordinary Shares credited to the RSU award by reason of any dividend equivalents will be subject to all of the same terms and conditions of the underlying RSU award. Dividend equivalents distributed under the Plan will not be counted against the shares available for issuance under the SAI Incentive Plan. 100 ● Other Awards.
In addition, a participant may be required to repay to SAI certain previously paid compensation, whether provided under the SAI Incentive Plan or an award agreement or otherwise, in accordance with SAI claw -back policies. Plan Termination The Board may suspend or terminate the SAI Incentive Plan at any time.
In addition, a participant may be required to repay to SAI certain previously paid compensation, whether provided under the SAI Incentive Plan or an award agreement or otherwise, in accordance with SAI claw-back policies. 101 Plan Termination The Board may suspend or terminate the SAI Incentive Plan at any time.
The SAI Incentive Plan provides for the grant of various types of awards, including options, (ii) share appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other awards.
The 2023 SAI Incentive Plan provides for the grant of various types of awards, including options, (ii) share appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other awards.
Insofar as indemnification of liabilities arising under the Securities Act may be permitted to our board, executive officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 97 Table of Contents C.
Insofar as indemnification of liabilities arising under the Securities Act may be permitted to our board, executive officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. C.
Under the Nasdaq listing standards and applicable SEC rules, we have three members of the compensation committee, all of whom must be independent. Yusen Chen, Yao Shi and Jinlong Zhu is deemed to be independent by our board of directors. Yusen Chen serves as chair of the compensation committee.
Compensation Committee Yusen Chen, Yao Shi and Jinlong Zhu serve as members of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we have three members of the compensation committee, all of whom must be independent. Yusen Chen, Yao Shi and Jinlong Zhu is deemed to be independent by our board of directors.
We have not experienced any material labor disputes or disputes with the labor department of the PRC government since our inception. 101 Table of Contents E. Share Ownership See “ Item 7. Major Shareholders and Related Party Transactions — A. Major Shareholders ” of this Annual Report.
We have not experienced any material labor disputes or disputes with the labor department of the PRC government since our inception. E. Share Ownership See “ Item 7. Major Shareholders and Related Party Transactions — A. Major Shareholders ” of this Annual Report.
Administration Our Board will (i) determine from time to time (a) which of the persons eligible under the plan will be granted awards; (b) when and how each award will be granted; (c) what type or combination of types of award will be granted; (d) the provisions of each award granted (which need not be identical or comparable), including the time or times when a person will be permitted to exercise or otherwise receive an issuance of Class A Ordinary Shares or other payment pursuant to an award; (e) the number of Class A Ordinary Shares or cash equivalent with respect to which an award will be granted to each such person; and (f) the fair market value applicable to an award; (ii) construe and interpret the SAI Incentive Plan and awards granted under it, and to establish, amend and revoke rules and regulations for administration of the plan and awards; (iii) settle all controversies regarding the SAI Incentive Plan and awards granted under it; (iv) amend the SAI Incentive Plan in any respect the Board deems necessary or advisable; and (v) exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the plan or awards.
The SAI Incentive Plan will initially be administered by the board of directors of SAI unless and until the board delegates administration of the plan to a committee. 98 Administration Our Board will (i) determine from time to time (a) which of the persons eligible under the plan will be granted awards; (b) when and how each award will be granted; (c) what type or combination of types of award will be granted; (d) the provisions of each award granted (which need not be identical or comparable), including the time or times when a person will be permitted to exercise or otherwise receive an issuance of Class A Ordinary Shares or other payment pursuant to an award; (e) the number of Class A Ordinary Shares or cash equivalent with respect to which an award will be granted to each such person; and (f) the fair market value applicable to an award; (ii) construe and interpret the SAI Incentive Plan and awards granted under it, and to establish, amend and revoke rules and regulations for administration of the plan and awards; (iii) settle all controversies regarding the SAI Incentive Plan and awards granted under it; (iv) amend the SAI Incentive Plan in any respect the Board deems necessary or advisable; and (v) exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the plan or awards.
Unless otherwise determined by the Board, a participant will have 95 Table of Contents voting and other rights as a shareholder of SAI with respect to any Class A Ordinary Shares subject to a restricted share award.
Unless otherwise determined by the Board, a participant will have voting and other rights as a shareholder of SAI with respect to any Class A Ordinary Shares subject to a restricted share award.
The purpose of the Nominating and Corporate Governance Committee is to identify individuals qualified to become members of the Board of Directors of SAI.TECH Global Corporation consistent with criteria approved by the Board, to recommend that the Board select the director nominees for the next annual meeting of shareholders, to review and recommend proposed changes to the Company’s Corporate Governance Guidelines, as applicable, and to oversee the evaluation of the Board.
Jinlong Zhu is the chairman of our nominating and corporate governance committee. 105 The purpose of the Nominating and Corporate Governance Committee is to identify individuals qualified to become members of the Board of Directors of SAI.TECH Global Corporation consistent with criteria approved by the Board, to recommend that the Board select the director nominees for the next annual meeting of shareholders, to review and recommend proposed changes to the Company’s Corporate Governance Guidelines, as applicable, and to oversee the evaluation of the Board.
Directors and Executive Officers Age Position/Title Arthur Lee 29 Chief Executive Officer/Executive Director Ian Chow 44 Chief Financial Officer Hao Ge 32 Non -executive Director Yao Shi (2)(5)(6) 52 Independent Director Yusen Chen (1)(4)(6) 31 Independent Director Jinlong Zhu (3)(4)(5) 41 Independent Director ____________ (1) Chairman of Compensation Committee (2) Chairman of the Audit Committee (3) Chairman of Nominating & Corporate Governance Committee (4) Member of the Audit Committee (5) Member of the Compensation Committee (6) Member of the Nominating & Corporate Governance Committee Executive Officers Arthur Lee (also referred to as Risheng Li) is our Founder and serves as our Chief Executive Officer and a member of the board of directors of SAI.TECH Global Corporation.
Directors and Executive Officers Age Position/Title Arthur Lee 30 Chief Executive Officer/Executive Director Ian Chow 44 Chief Financial Officer Hao Ge 33 Non-executive Director Yao Shi (2)(5)(6) 53 Independent Director Yusen Chen (1)(4)(6) 32 Independent Director Jinlong Zhu (3)(4)(5) 42 Independent Director (1) Chairman of Compensation Committee (2) Chairman of the Audit Committee (3) Chairman of Nominating & Corporate Governance Committee (4) Member of the Audit Committee (5) Member of the Compensation Committee (6) Member of the Nominating & Corporate Governance Committee Executive Officers Arthur Lee (also referred to as Risheng Li) is our Founder and serves as our Chief Executive Officer and a member of the board of directors of SAI.TECH Global Corporation.
With an in -depth understanding of energy and computing, he published his first book Computing: The Future of Computing and Energy at 2021; and his second book Energism 92 Table of Contents is published at 2022.
With an in-depth understanding of energy and computing, he published his first book Computing: The Future of Computing and Energy at 2021; and his second book Energism is published in 2022.
Each person agrees that he or she will: (a) Engage in honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (b) Produce full, fair, accurate, timely and understandable disclosure in reports and documents that we file with or submit to the Securities and Exchange Commission and in other public communications we make; (c) Comply with applicable governmental laws, rules and regulations; (d) Promptly report any violations of this Code of Business Ethics to our Chief Legal Officer or Audit Committee; (e) Adhere to the Code of Business Ethics, including fair process by which to determine violations; and (f) Protect the Company’s legitimate business interests, including its assets and corporate opportunities.
Each person agrees that he or she will: (a) Engage in honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (b) Produce full, fair, accurate, timely and understandable disclosure in reports and documents that we file with or submit to the Securities and Exchange Commission and in other public communications we make; (c) Comply with applicable governmental laws, rules and regulations; (d) Promptly report any violations of this Code of Business Ethics to our Chief Legal Officer or Audit Committee; (e) Adhere to the Code of Business Ethics, including fair process by which to determine violations; and (f) Protect the Company’s legitimate business interests, including its assets and corporate opportunities. 106 Corporate Governance Guidelines Our board of directors has adopted corporate governance guidelines in accordance with the corporate governance rules of Nasdaq that serve as a flexible framework within which our board of directors and its committees operate.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Yao Shi, Yusen Chen and Jinlong Zhu. Jinlong Zhu is the chairman of our nominating and corporate governance committee.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Yao Shi, Yusen Chen and Jinlong Zhu.
The table below sets forth the number of employees categorized by function as of December 31, 2022. Function Number of employees General management and Administration 17 Sales, Marketing and Operating 3 Technology and Product Development 8 Total 28 The remuneration package of our employees includes salary, bonus, stock options and other cash benefits.
The table below sets forth the number of employees categorized by function as of December 31, 2023. Function Number of employees General management and Administration 24 Sales, Marketing and Operating 8 Technology and Product Development 5 Total 37 The remuneration package of our employees includes salary, bonus, stock options and other cash benefits.
We do not have a standing risk management committee, but rather administer this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight.
We do not have a standing risk management committee, but rather administer this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. 103 Committees of the Board of Directors We currently have five directors, including three independent directors, on our board of directors.
To assist the Board in fulfilling its responsibilities, the Committee shall oversee: (a) Audits of the financial statements of the Company; (b) The integrity of the Company’s financial statements; (c) The Company’s processes relating to risk management and the conduct and systems of internal control over financial reporting and disclosure controls and procedures; (d) The qualifications, engagement, compensation, independence and performance of the Company’s independent auditor, and the auditor’s conduct of the annual audit of the Company’s financial statements and any other services provided to the Company; (e) The performance of the Company’s internal audit function, if any. 98 Table of Contents Compensation Committee Yusen Chen, Yao Shi and Jinlong Zhu serve as members of our compensation committee.
To assist the Board in fulfilling its responsibilities, the Committee shall oversee: (a) Audits of the financial statements of the Company; (b) The integrity of the Company’s financial statements; (c) The Company’s processes relating to risk management and the conduct and systems of internal control over financial reporting and disclosure controls and procedures; (d) The qualifications, engagement, compensation, independence and performance of the Company’s independent auditor, and the auditor’s conduct of the annual audit of the Company’s financial statements and any other services provided to the Company; (e) The performance of the Company’s internal audit function, if any.
The Board may take different actions with respect to the vested and unvested portions of an award. 96 Table of Contents In addition, upon a Change in Control (as defined in the SAI Incentive Plan), an award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in an award agreement or any other written agreement between SAI or an affiliate and the participant, but in the absence of such provision, no such acceleration will occur without Board action.
In addition, upon a Change in Control (as defined in the SAI Incentive Plan), an award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in an award agreement or any other written agreement between SAI or an affiliate and the participant, but in the absence of such provision, no such acceleration will occur without Board action.
The Audit Committee is appointed by the Board of Directors of SAI.TECH Global Corporation to assist the Board in its oversight of the accounting and financial reporting processes of the Company and the Company’s compliance with legal and regulatory requirements.
All of the members of the Audit Committee currently satisfy the independence requirements and other established criteria of Nasdaq. The Audit Committee is appointed by the Board of Directors of SAI.TECH Global Corporation to assist the Board in its oversight of the accounting and financial reporting processes of the Company and the Company’s compliance with legal and regulatory requirements.
(g) Oversee the annual self -evaluations of the Board, its committees, and management. (h) Make recommendations to the Board regarding other Corporate Governance Matters. (i) Report regularly to the Board of Directors regarding the activities of the committee. (j) Committee Self -Evaluation .
(g) Oversee the annual self-evaluations of the Board, its committees, and management. (h) Make recommendations to the Board regarding other Corporate Governance Matters. (i) Report regularly to the Board of Directors regarding the activities of the committee. (j) Committee Self-Evaluation. (k) Periodically review and reassess Committee Charters and submit any recommended changes to the Board for its consideration.
The Board need not take the same action or actions with respect to all awards or portions thereof or with respect to all participants.
The Board need not take the same action or actions with respect to all awards or portions thereof or with respect to all participants. The Board may take different actions with respect to the vested and unvested portions of an award.
(k) Periodically review and reassess Committee Charters and submit any recommended changes to the Board for its consideration. Director Nominations Our nominating and corporate governance committee will screen and recommend to the board of director candidates for nomination for election at the annual meeting of the shareholders.
Director Nominations Our nominating and corporate governance committee will screen and recommend to the board of director candidates for nomination for election at the annual meeting of the shareholders.
DOE (United States Department of Energy) and National Nuclear Security Administration at the University of Nevada Las Vegas, where he worked on functional materials, nature clathrates, and battery materials by using large facilities, like neutron source, and synchrotron radiation.
DOE (United States Department of Energy) and National Nuclear Security Administration at the University of Nevada Las Vegas, where he worked on functional materials, nature clathrates, and battery materials by using large facilities, like neutron source, and synchrotron radiation. He received funding in connection with an ARPA-E project (Advanced Research Projects Agency-Energy — a project supported by the U.S.
The SAI Incentive Plan will initially be administered by the board of directors of SAI unless and until the board delegates administration of the plan to a committee.
The 2023 SAI Incentive Plan will initially be administered by the board of directors of SAI unless and until the board delegates administration of the plan to a committee. The 2023 SAI Incentive Plan is substantially similar to the SAI Incentive Plan, except for primarily the Shares Reserve section.
Our shareholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our amended and restated memorandum and articles of association. 100 Table of Contents In general, in identifying and evaluating nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, character, and the ability to exercise sound judgement, and relevant skills and experience, including financial literacy, and experience in the context of the needs of the board of directors.
In general, in identifying and evaluating nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, character, and the ability to exercise sound judgement, and relevant skills and experience, including financial literacy, and experience in the context of the needs of the board of directors.
Committees of the Board of Directors We currently have five directors, including three independent directors, on our board of directors. Our board of directors consists of an audit committee, a compensation committee, a nominating and corporate governance committee, and adopted a charter for each of the committees, which comply with the applicable requirements of current Nasdaq rules.
Our board of directors consists of an audit committee, a compensation committee, a nominating and corporate governance committee, and adopted a charter for each of the committees, which comply with the applicable requirements of current Nasdaq rules. The charter of each committee is available on our website. Each committee’s members and functions are described below.
Awards The SAI Incentive Plan provides for the grant of various types of awards, including options, (ii) share appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other awards.
B. Compensation 2021 Equity Incentive Plan Our board of directors and shareholders approved the adoption of the SAI Incentive Plan, effective as of April 29, 2022. The SAI Incentive Plan provides for the grant of various types of awards, including options, (ii) share appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other awards.
Insurance and Indemnification To the extent permitted under Cayman law, we are empowered to indemnify our directors against any liability they incur by reason of their directorship. We intend to obtain directors’ and officers’ insurance to insure such persons against certain liabilities in the near future.
Employment Agreements We have entered into written employment agreements with our executive officers and certain directors describing their terms of employment. Insurance and Indemnification To the extent permitted under Cayman law, we are empowered to indemnify our directors against any liability they incur by reason of their directorship.
RSUs Granted under 2021 Equity Incentive Plan Directors and Executive Officers Position Class A Ordinary Shares underlying outstanding RSUs Date of grant Ian Chow Chief Financial Officer * December 5, 2022 ____________ (1) Less than 1% of our outstanding shares. Non-Executive Director Compensation Our board of directors expects to adopt a non -employee director compensation policy in the near future.
RSUs Granted under 2021 Equity Incentive Plan Directors and Executive Officers Position Class A Ordinary Shares underlying outstanding RSUs Date of grant Ian Chow Chief Financial Officer * December 5, 2022 Ian Chow Chief Financial Officer * June 16, 2023 Ian Chow Chief Financial Officer * February 14, 2024 (1) Less than 1% of our outstanding shares. 2023 Equity Incentive Plan Our board of directors and shareholders approved the adoption of the SAI.TECH Global Corporation 2023 Equity Incentive Plan (the “2023 SAI Incentive Plan”), effective as of September 6, 2023.
Yao Shi satisfies the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC. All of the members of the Audit Committee currently satisfy the independence requirements and other established criteria of Nasdaq.
Audit Committee Our audit committee consists of Yao Shi, Yusen Chen and Jinlong Zhu. Yao Shi is the chairman of our audit committee. Yao Shi satisfies the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
The terms of each award granted under the plan will be set out in an award agreement. Eligibility Employees of SAI and its affiliates, members of the Board, consultants and other non -employee service providers of SAI and its affiliates are eligible to receive awards under the SAI Incentive Plan.
The terms of each award granted under the plan will be set out in an award agreement. Non-Executive Director Compensation Our board of directors expects to adopt a non-employee director compensation policy in the near future. Members of our board of directors who are not employees will be eligible for awards pursuant to such policy.
He received funding in connection with an ARPA -E project (Advanced Research Projects Agency -Energy — a project supported by the U.S. DOE and in which Professor Goodenough is a team member) and as a Nobel Prize winner. Dr. Zhu holds a Ph.D. degree in physics: Condensed Matter Physics from the Institute of Physics CAS. Dr.
DOE and in which Professor Goodenough is a team member) and as a Nobel Prize winner. Dr. Zhu holds a Ph.D. degree in physics: Condensed Matter Physics from the Institute of Physics CAS. Dr. Zhu holds a bachelor’s degree in engineering and Materials Science from Zhejiang University. Family Relationships There are no familial relationships among our directors and executive officers.
Removed
Zhu holds a Bachelor’s degree in Engineering and Materials Science from Zhejiang University. 93 Table of Contents Family Relationships There are no familial relationships among our directors and executive officers. B. Compensation 2021 Equity Incentive Plan Our board of directors and shareholders approved the adoption of the SAI Incentive Plan, effective as of April 29, 2022.
Added
Substitute awards will not count against the Share Reserve, except that Class A Ordinary Shares acquired by exercise of substitute incentive stock options will count against the maximum number of Class A Ordinary Shares that may be issued pursuant to the exercise of incentive share options (as set forth above).
Removed
Members of our board of directors who are not employees will be eligible for awards pursuant to such policy. Employment Agreements We have entered into written employment agreements with our executive officers and certain directors describing their terms of employment.
Added
The terms of each award granted under the plan will be set out in an award agreement.
Removed
The charter of each committee is available on our website. Each committee’s members and functions are described below. Audit Committee Our audit committee consists of Yao Shi, Yusen Chen and Jinlong Zhu. Yao Shi is the chairman of our audit committee.
Added
Eligibility Employees of SAI and its affiliates, members of the Board, consultants and other non-employee service providers of SAI and its affiliates are eligible to receive awards under the SAI Incentive Plan. 99 Awards The SAI Incentive Plan provides for the grant of various types of awards, including options, (ii) share appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other awards.
Removed
Corporate Governance Guidelines Our board of directors has adopted corporate governance guidelines in accordance with the corporate governance rules of Nasdaq that serve as a flexible framework within which our board of directors and its committees operate.
Added
The 2023 SAI Incentive Plan, through the granting of awards, is intended to help SAI to secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of SAI and any affiliate (as defined under Rule 144), and provide means by which the eligible recipients may benefit from increases in value of the Class A Ordinary Shares.
Added
Share Reserves Subject to adjustment as described in the plan, the maximum number of Class A Ordinary Shares that may be delivered in satisfaction of awards under the 2023 SAI Incentive Plan (the “2023 Share Reserve”) is an initial 1,376,792 Class A Ordinary Shares, and subject to such adjustments in the plan, the then-applicable 2023 Share Reserve number will automatically increase (but not decrease) on January 1 st of each year commencing on January 1, 2024 and ending on (and including) January 1, 2033, in an amount equal to six percent (6%) of the total number of Capital Shares (on a fully-diluted basis) outstanding on December 31st of the preceding year; provided, however that the Board or any Committee may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of Ordinary Shares. 102 In connection with an entity’s merger or consolidation with SAI or SAI’s acquisition of an entity’s property or stock, the Board may grant awards in substitution for any options or other share or share-based awards granted before the merger or consolidation by the acquired entity or its affiliate.
Added
Substitute awards will not count against the 2023 Share Reserve, except that Class A Ordinary Shares acquired by exercise of substitute incentive stock options will count against the maximum number of Class A Ordinary Shares that may be issued pursuant to the exercise of incentive share options (as set forth above).
Added
The maximum grant date fair value of all compensation granted or paid, as applicable, to any individual for service as a non-employee director with respect to any calendar year is (i) US$750,000 total in value or (ii) in the event such non-employee director is first appointed or elected to the Board during such calendar year, US$1,000,000 in total value.
Added
We intend to obtain directors’ and officers’ insurance to insure such persons against certain liabilities in the near future.
Added
Yusen Chen serves as chair of the compensation committee.
Added
Our shareholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our amended and restated memorandum and articles of association.

Item 7. Management's Discussion & Analysis

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

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Biggest changeClass A Shares % of Class Class B Shares % of Class Voting Power Executive Officers and Directors (1) : Risheng Li (2) — — 9,630,634 100 % 87.9 % Yao Shi — — — — — Yusen Chen — — — — — Jinlong Zhu — — — — — Ian Chow — — — — — Hao Ge — — — — — All directors and executive officers as a group (6 individuals) — — 9,630,634 100 % 87.9 % Five Percent or More Holders: TradeUp Global Sponsor LLC (3) 1,287,027 9.7 % — — 1.2 % Eternal Selead Technology Holding Limited (4) 668,902 5.0 % — — 0.6 % Haonan Technology Holding Limited (5) 668,902 5.0 % — — 0.6 % Tospring Technology Limited (6) 974,919 7.3 % — — 0.9 % Fan Yinliang (7) 1,201,101 9.0 % — — 1.1 % ZenGolden L.P.
Biggest changeClass A Ordinary Shares % of Class Class B Ordinary Shares % of Class Voting Power Executive Officers and Directors (1) : Risheng Li (2) — — 9,630,634 100 % 86.6 % Yao Shi — — — — — Yusen Chen — — — — — Jinlong Zhu — — — — — Ian Chow — — — — — Hao Ge — — — — — All directors and executive officers as a group (6 individuals) — — 9,630,634 100 % 86.6 % Five Percent or More Holders: Tao Huang (3) 1,310,542 8.76 % — — 1.2 % * Less than 1%.
The Sponsor may not transfer, assign or sell the remaining 50% of TradeUP Class B Ordinary Shares until six months after the Closing. Upon the effective date of Business Combination, all TradeUP Class B Ordinary shares were effectively converted into Class A Ordinary Shares, subject to lock -up agreement described below as “TradeUP Lock -Up Agreement” .
The Sponsor may not transfer, assign or sell the remaining 50% of TradeUP Class B Ordinary Shares until six months after the Closing. 108 Upon the effective date of Business Combination, all TradeUP Class B Ordinary shares were effectively converted into Class A Ordinary Shares, subject to lock-up agreement described below as “TradeUP Lock-Up Agreement” .
Immediately following the consummation of the Business Combination, approximately 22,564,287 Ordinary Shares (including both Class A and Class B Ordinary Shares), or approximately 83.3% of the outstanding Ordinary Shares, are subject to the lock -up arrangements described below.
Immediately following the consummation of the Business Combination, approximately 22,564,287 Ordinary Shares (including both Class A and Class B Ordinary Shares), or approximately 83.3% of the outstanding Ordinary Shares, were subject to the lock-up arrangements described below.
As of December 31, 2022, all outstanding balances under the working capital loans have been repaid. Certain Agreements Related to the Business Combination In connection with the Business Combination, certain agreements were entered into pursuant to the Business Combination Agreement.
As of December 31, 2023, all outstanding balances under the working capital loans have been repaid. Certain Agreements Related to the Business Combination In connection with the Business Combination, certain agreements were entered into pursuant to the Business Combination Agreement.
Specifically, pursuant to its audit committee charter, the audit committee have the responsibility to review related party transactions. 106 Table of Contents C. Interests of Experts and Counsel Not applicable.
Specifically, pursuant to its audit committee charter, the audit committee have the responsibility to review related party transactions. C. Interests of Experts and Counsel Not applicable.
The percentages of shares beneficially owned is computed, respectively, on the bases of 13,315,903 Class A Ordinary Shares and 9,630,634 Class B Ordinary Shares currently outstanding and does not include 2,244,493 Class A Ordinary Shares issuable upon the exercise of the IPO Warrants.
The percentages of shares beneficially owned is computed, respectively, on the bases of 14,960,566 Class A Ordinary Shares and 9,630,634 Class B Ordinary Shares currently outstanding and does not include 2,244,493 Class A Ordinary Shares issuable upon the exercise of the IPO Warrants.
Dahan Bao — — — Related Person Transactions Policy Following the Business Combination Indemnification Agreements On the Closing Date, the Company entered into indemnity agreements with each of its directors and officers (the “Indemnity Agreements”), undertaking to indemnify them to the fullest extent permitted by law on the terms set forth therein.
Dahan Bao — — — Sale of subsidiar y Energy Science Artist Holding Limited — — — Related Person Transactions Policy Following the Business Combination Indemnification Agreements On the Closing Date, the Company entered into indemnity agreements with each of its directors and officers (the “Indemnity Agreements”), undertaking to indemnify them to the fullest extent permitted by law on the terms set forth therein.
Under the SAI Support Agreement, the Old SAI shareholders, among other things, agreed to: (1) appear at any meeting of Old SAI shareholders for purposes of determining a quorum; (2) vote their respective Ordinary Shares in favor of the Business Combination Agreement and the transactions contemplated thereby, including the merger; (3) not to transfer their respective TradeUP Class A Ordinary Shares prior to the termination of the SAI Support Agreement; and (4) waive dissenter’s rights under Section 238 of the Companies Act.
Under the SAI Support Agreement, the Old SAI shareholders, among other things, agreed to: (1) appear at any meeting of Old SAI shareholders for purposes of determining a quorum; (2) vote their respective Ordinary Shares in favor of the Business Combination Agreement and the transactions contemplated thereby, including the merger; (3) not to transfer their respective TradeUP Class A Ordinary Shares prior to the termination of the SAI Support Agreement; and (4) waive dissenter’s rights under Section 238 of the Companies Act. 109 New Registration Rights Agreement In connection with the Business Combination, concurrently with Closing, Old SAI, the Sponsor and certain Old SAI shareholders entered into the New Registration Rights Agreement.
Other Relationships Except as otherwise disclosed in this Annual Report, no compensation of any kind, including finder’s and consulting fees, were paid by TradeUP to the Sponsor, TradeUP’s directors, officers or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination.
As of October 29, 2023, the restrictions on transfers, as specified in the SAI Shareholder Lock-Up Agreement, expired. 110 Other Relationships Except as otherwise disclosed in this Annual Report, no compensation of any kind, including finder’s and consulting fees, were paid by TradeUP to the Sponsor, TradeUP’s directors, officers or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination.
This loan was non -interest bearing, unsecured and was due at the earlier of (1) June 30, 2021 or (2) the closing of the TradeUP IPO.
This loan was non-interest bearing, unsecured and was due at the earlier of (1) June 30, 2021 or (2) the closing of the TradeUP IPO. The outstanding balance under the loan was repaid at the closing of the TradeUP IPO on May 3, 2021.
The outstanding balance under the loan was repaid at the closing of the TradeUP IPO on May 3, 2021. 103 Table of Contents Working Capital Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor, or an affiliate of the Sponsor or certain of TradeUP’s directors and officers may, but are not obligated to, lend TradeUP funds as may be required.
Working Capital Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor, or an affiliate of the Sponsor or certain of TradeUP’s directors and officers may, but are not obligated to, lend TradeUP funds as may be required.
SAI Affiliate Lock-Up Agreement The SAI Affiliate Lock -Up Agreement contains certain restrictions on transfer with respect any Class A Ordinary Shares received pursuant to the Business Combination Agreement.
As of April 29, 2023, the restrictions on transfers, as specified in the TradeUP Lock-Up Agreement, expired. SAI Affiliate Lock-Up Agreement The SAI Affiliate Lock-Up Agreement contains certain restrictions on transfer with respect any Class A Ordinary Shares received pursuant to the Business Combination Agreement.
Major Shareholders The following table shows the beneficial ownership of the Company’s Ordinary Shares as of the date of this Annual Report by: • each person known to us who will beneficially own more than 5% of the common shares and Ordinary Shares; • each of our executive officers and directors; and • all of the executive officers and directors of as a group.
Major Shareholders The following table shows the beneficial ownership of the Company’s Ordinary Shares as of the date of this Annual Report by: ● each person known to us who will beneficially own more than 5% of the common shares and Ordinary Shares; ● each of our executive officers and directors; and ● all of the executive officers and directors of as a group. 107 The SEC has defined “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security.
(1) The business address of the directors and executive officers of SAI is #01 -05 Pearl’s Hill Terrace Singapore, 168976. 102 Table of Contents (2) Represents shares beneficially owned indirectly by Risheng Li, and owned directly by Energy Science Artist Holding Limited.
(1) The business address of the directors and executive officers of SAI is #01-05 Pearl’s Hill Terrace Singapore, 168976. (2) Represents shares beneficially owned indirectly by Risheng Li, and owned directly by Energy Science Artist Holding Limited. (3) The address of Tao Huang is No.1 Lanqing Road, Haidian District, Beijing, China, 100097. B.
The foregoing summary of the Indemnity Agreements does not purport to be complete and is subject to and qualified in its entirety by reference to the form of Indemnity Agreement, a copy of which is filed as Exhibit 4.13 of this Report and is incorporated herein by reference.
The foregoing summary of the Indemnity Agreements does not purport to be complete and is subject to and qualified in its entirety by reference to the form of Indemnity Agreement, a copy of which is filed as Exhibit 4.13 of this Report and is incorporated herein by reference. 111 Policies and Procedures for Related Person Transactions Effective upon the closing date, the board of directors of SAI adopted a written related person transaction policy that set forth the following policies and procedures for the review and approval or ratification of related person transactions.
Currently, members of TradeUP’s management team who remained with TradeUP (currently SAI) may be paid consulting, management or other fees from us with any and all amounts being fully disclosed to shareholders, to the extent then known. 105 Table of Contents SAI Related Party Transactions The related party transactions summarized by different natures are as follows: For the year ended December 31, 2020 2021 2022 US$ US$ US$ Settlement of advance to related parties for daily operation Mr.
Currently, members of TradeUP’s management team who remained with TradeUP (currently SAI) may be paid consulting, management or other fees from us with any and all amounts being fully disclosed to shareholders, to the extent then known.
The New Registration Rights Agreement also (1) provided the holders of registrable securities with “piggy -back ” registration rights, subject to certain requirements and customary conditions and (2) terminated the Registration Rights Agreement. 104 Table of Contents Lock-Up Agreements At Closing, (1) the TradeUP initial shareholders entered into the TradeUP Lock -Up Agreement, (2) the SAI Founder and management of Old SAI, and certain other Old SAI shareholders, entered into the SAI Affiliate Lock -Up Agreement and (3) the other Old SAI shareholders entered into the SAI Shareholder Lock -Up Agreement.
Lock-Up Agreements At Closing, (1) the TradeUP initial shareholders entered into the TradeUP Lock-Up Agreement, (2) the SAI Founder and management of Old SAI, and certain other Old SAI shareholders, entered into the SAI Affiliate Lock-Up Agreement and (3) the other Old SAI shareholders entered into the SAI Shareholder Lock-Up Agreement.
Removed
The SEC has defined “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security.
Added
The New Registration Rights Agreement also (1) provided the holders of registrable securities with “piggy-back” registration rights, subject to certain requirements and customary conditions and (2) terminated the Registration Rights Agreement.
Removed
(8) 1,606,838 12.1 % — — 1.5 % Energy Science Artist Holding Limited (9) — — 9,630,634 100 % 87.9 % LilOrange Holding Limited (10) 1,070,017 8.0 % — — 1.0 % Tao Huang 1,310,542 9.84 % 1.2 % ____________ * Less than 1%.
Added
As of April 29, 2023, the restrictions on transfers, as specified in the SAI Affiliate Lock-Up Agreement, expired.
Removed
(3) The address of TradeUp Global Sponsor LLC is 437 Madison Avenue, 27 th Floor, New York, New York 10022. (4) The address of Eternal Selead Technology Holding Limited is Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin Islands. (5) The address of Haonan Technology Holding Limited is Sea Meadow House, P.O.
Added
SAI Related Party Transactions The related party transactions summarized by different natures are as follows: For the year ended December 31, 2021 2022 2023 US$ US$ US$ Settlement of advance to related parties for daily operation Mr. Risheng Li 235 — — Mr. Liedong Wang 415 — — Mr. Dahan Bao 30 — — Repayment from related parties Mr.
Removed
Box 116, Road Town, Tortola, British Virgin Islands. (6) The address of Tospring Technology Limited is Vistra Corporate Services Center, Suite 23, 1 st Floor, Eden Plaza, Eden Island, Mahe, Republic of Seychelles. (7) Represents shares beneficially owned indirectly by Fan Yinliang, and owned directly by Make World Better Limited.
Added
Risheng Li 36 — — Mr. Liedong Wang 14 — — Mr.
Removed
The address of Make World Better Limited is 2/F, Palm GroveHouse, P.O. Box 3340, Road Town, Tortola, British Virgin Islands. (8) The address of ZenGolden L.P. is 3 -212 Governors Square, 23 Lime Tree Bay Avenue, Seven Mile Beach, Grand Cayman, Cayman Islands, KY1 -1203 . (9) The address of Energy Science Artist Holding Limited is Sea Meadow House, P.O.
Removed
Box 116, Road Town, Tortola, British Virgin Islands. (10) The address of LilOrange Holding Limited is Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin Islands. B.
Removed
New Registration Rights Agreement In connection with the Business Combination, concurrently with Closing, Old SAI, the Sponsor and certain Old SAI shareholders entered into the New Registration Rights Agreement.
Removed
Risheng Li 406 235 — Mr. Liedong Wang 396 415 — Mr. Dahan Bao 31 30 — Repayment from related parties Mr. Risheng Li 203 36 — Mr. Liedong Wang 22 14 — Mr.
Removed
Policies and Procedures for Related Person Transactions Effective upon the closing date, the board of directors of SAI adopted a written related person transaction policy that set forth the following policies and procedures for the review and approval or ratification of related person transactions.

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