BEIJING, Nov. 27, 2020 /PRNewswire/ -- Mercurity Fintech
Holding Inc. (Nasdaq: MFH) today announced its unaudited financial
results for the third quarter ended September 30, 2020.
Third Quarter 2020 Financial and Operating Highlights
- Q3 2020 GAAP revenues of $41
thousand, compared to $580
thousand in Q3 2019.
- Q3 2020 GAAP gross profit of $11
thousand, compared to $464
thousand in Q3 2019.
- Q3 2020 GAAP net loss of $631
thousand, compared to a profit of $396 thousand in Q3 2019.
- Q3 2020 Non-GAAP net loss of $427
thousand, compared to $396 net
income in Q3 2019.
Commenting on the quarter, Ms. Alva
Zhou, Chairperson of the Board and Chief Executive Officer,
said, "As challenges of the
pandemic persist and due to our new focus on capturing the
opportunity of the digital assets industry, the Q3 2020 operating
results reflect the stage of our initial business transition. We
are building our team and products to execute this strategic
transition."
Mr. Erez Simha, Chief Financial
Officer and Interim President of the company, commented, "I joined the company in late
August this year because I believe in the tremendous opportunity
that the digital assets industry represents. Since I joined, I have
been working with our executive teams to analyze our potential
addressable markets, forming our business strategy, aligning our
product road map and building a team that is necessary to execute
it. We have launched and introduced our DeFi platform earlier this
month and plan to introduce additional products linked to our DeFi
platform in the next few months. We will invest majority of our
resources and focus on bringing a comprehensive DeFi offering to
the market."
FINANCIAL RESULTS
Summary of Third Quarter Results:
Revenues for the third quarter of 2020 were
$41 thousand compared to $580 thousand in the same period last year. The
revenues for the third quarter of 2020 consisted of software
development fees earned from a new client who entered into a
contract with the company in July
2020. The software development and maintenance contracts
signed in 2019 were completed in the second quarter of 2020.
Cost of revenues for the third quarter of
2020 were $30 thousand,
compared to $116 thousand in the same
period last year. The cost of revenues consisted primarily of the
direct cost related to the contract signed in July 2020.
Gross profit for the third quarter of 2020 was
$11 thousand, compared to
$464 thousand in the same period last
year.
General and administrative expenses for the third
quarter of 2020 were $644 thousand, compared to
$87 thousand in the same period last year. The general and
administrative expenses consisted primarily of employee's costs,
office expenses and professional fees. The increase in general and
administrative expenses primarily reflected increases in employees'
costs and office expenses as a result of our acquisition of NBpay
Investment Limited in March 2020. In the third quarter of
2020, share-based compensation of approximately $204 thousand was included in employees' costs
and professional fees.
Loss from operations for the third quarter of 2020
was $633 thousand compared to income
from operations of $377 thousand in
the same period last year.
Loss before provision for income taxes for the third
quarter of 2020 was $631 thousand
compared to an income before taxes of $396
thousand in the same period last year.
Non-GAAP net (loss)/income attributable to Mercurity Fintech
Holding Inc. is a non-GAAP measure which excludes
amortization of acquired intangible assets, impairment loss,
share-based compensation, and related provision for income tax
expenses. Non-GAAP net loss attributable to Mercurity Fintech
Holding Inc. for the third quarter of 2020 was $427 thousand compared to a net income of
$396 thousand in the same period of
last year.
Cash and cash equivalents as of September 30, 2020 were $187 thousand,
compared to $435 thousand as of
December 31, 2019.
Total shareholders' equity as of September 30, 2020 was $11.2 million, compared to total shareholders'
equity of $8.0 million as of December
31, 2019.
Non-GAAP Measures
To supplement the Company's consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles ("U.S.GAAP"), the Company uses non-GAAP financial
measures, including Non-GAAP (loss)/income from continuing
operations and Non-GAAP net (loss)/income attributable to the
Company, that are adjusted from results based on U.S. GAAP to
exclude amortization of acquired intangible assets, impairment
loss, share-based compensation and related provision for income tax
expenses. The non-GAAP financial information is provided as
additional information to help investors compare business trends
among different reporting periods on a consistent basis and to
enhance investors' overall understanding of the historical and
current financial performance of the Company's operations and
prospects for the future. The non-GAAP financial information should
be considered in addition to results prepared in accordance with
U.S. GAAP but should not be considered a substitute for or superior
to U.S. GAAP financial results. In addition, the Company's
calculation of this non-GAAP financial information may be different
from the calculation used by other companies, and therefore
comparability may be limited. A limitation of using these non-GAAP
financial measures is that amortization of acquired intangible
assets, impairment of goodwill, share-based compensation and
related provision for income tax benefits have been and may
continue to be for the foreseeable future significant recurring
expenses in the Company's results of operations. The Company
compensates for these limitations by providing reconciliations of
non-GAAP financial measures to U.S. GAAP financial measures. Please
see the reconciliation tables at the end of this earnings
release.
BUSINESS OUTLOOK
Due to uncertainty as a result of the continued global pandemic
and new product development, the Company will not provide a
financial forecast for Q4 2020.
SAFE HARBOR STATEMENT
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"aim," "anticipate," "believe," "estimate," "expect," "hope,"
"going forward," "intend, " "ought to, " "plan, " "project,"
"potential," "seek," "may," "might," "can," "could," "will,"
"would," "shall," "should," "is likely to" and the negative form of
these words and other similar expressions. Among other things,
statements that are not historical facts, including statements
about the Company's beliefs and expectations are or contain
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement. All information provided in this press
release is as of the date of this press release and is based on
assumptions that the Company believes to be reasonable as of this
date, and the Company does not undertake any obligation to update
any forward-looking statement, except as required under applicable
law.
CONTACTS
Xingyan
Gao
Mercurity Fintech Holding Inc.
ir@mercurity.com
Tel: +86 (10) 5360-6428
MERCURITY FINTECH
HOLDING INC
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(US dollars in
thousands, except for number of shares and per share (or ADS)
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
Sepetmber 30,
|
|
Nine months Ended
Sepetmber 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
|
|
|
|
|
|
|
|
Third
parties
|
|
$
41
|
|
$
580
|
|
$
1,433
|
|
$
610
|
Total
revenues
|
|
41
|
|
580
|
|
1,433
|
|
610
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
(30)
|
|
(116)
|
|
(109)
|
|
(153)
|
Gross
profit
|
|
$
11
|
|
$
464
|
|
$
1,324
|
|
$
457
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
(644)
|
|
(87)
|
|
(1,400)
|
|
(164)
|
Impairment
loss
|
|
-
|
|
-
|
|
(835)
|
|
-
|
Total operating
expenses
|
|
$
(644)
|
|
$
(87)
|
|
$
(2,235)
|
|
$
(164)
|
(Loss)/income from
operations
|
|
$
(633)
|
|
$
377
|
|
$
(911)
|
|
$
293
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
0
|
|
0
|
|
3
|
|
0
|
Other
income/(Expenses), net
|
|
2
|
|
19
|
|
(28)
|
|
19
|
(Loss)/income
before provision for income taxes
|
|
$
(631)
|
|
$
396
|
|
$
(936)
|
|
$
312
|
Income tax
benefits
|
|
-
|
|
-
|
|
-
|
|
-
|
(Loss)/Income from
continuing operations
|
|
$
(631)
|
|
$
396
|
|
$
(936)
|
|
$
312
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
Loss from
discontinued operations
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
(1,421)
|
Net
loss
|
|
$
(631)
|
|
$
396
|
|
$
(936)
|
|
$
(1,109)
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to holders of ordinary shares of
Mercurity Fintech Holding Inc.
|
|
$
(631)
|
|
$
396
|
|
$
(936)
|
|
$
(1,109)
|
|
|
|
|
|
|
|
|
|
Net loss per ordinary
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.00)
|
|
$
0.00
|
|
$
(0.00)
|
|
$
(0.00)
|
Diluted
|
|
$
(0.00)
|
|
$
0.00
|
|
$
(0.00)
|
|
$
(0.00)
|
Weighted average
shares used in calculating net loss
per ordinary share
|
|
|
|
|
|
|
|
|
Basic
|
|
2,388,513,555
|
|
1,619,027,948
|
|
2,388,513,555
|
|
1,619,027,948
|
Diluted
|
|
2,388,513,555
|
|
1,619,027,948
|
|
2,388,513,555
|
|
1,619,027,948
|
MERCURITY FINTECH
HOLDING INC
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
|
(US dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
Sepetmber 30,
|
|
Nine Months Ended
Sepetmber 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net
loss
|
|
$
(631)
|
|
$
396
|
|
$
(936)
|
|
$
(1,109)
|
|
|
|
|
|
|
|
|
|
Other comprehensive
(loss)/income, net of tax of $nil:
|
|
|
|
|
|
|
|
$
-
|
Change in cumulative
foreign currency translation adjustment
|
|
368
|
|
(125)
|
|
363
|
|
(165)
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
(263)
|
|
$
271
|
|
$
(573)
|
|
$
(1,274)
|
MERCURITY FINTECH
HOLDING INC
|
CONSOLIDATED
BALANCE SHEETS
|
(US dollars in
thousands)
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS:
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
187
|
|
$
435
|
Accounts
receivable
|
|
1,964
|
|
1,648
|
Prepaid expenses and
other current assets, net
|
|
114
|
|
8
|
Amounts due from
related parties
|
|
660
|
|
43
|
Total current
assets
|
|
2,925
|
|
2,134
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
Intangible assets,
net
|
|
373
|
|
1,208
|
Goodwill
|
|
8,455
|
|
5,529
|
Total non-current
assets
|
|
8,828
|
|
6,737
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
11,753
|
|
$
8,871
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDER'S EQUITY :
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accrued expenses and
other current liabilities
|
|
$
520
|
|
$
836
|
Amounts due to
related parties
|
|
30
|
|
-
|
Total current
liabilities
|
|
$
550
|
|
$
836
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
$
550
|
|
$
836
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Ordinary
shares
|
|
$
30
|
|
$
21
|
Additional paid-in
capital
|
|
649,063
|
|
645,331
|
Accumulated
deficits
|
|
(639,304)
|
|
(638,368)
|
Accumulated other
comprehensive (loss)/income
|
|
1,414
|
|
1,051
|
Total
shareholders' (deficit)/equity
|
|
$
11,203
|
|
$
8,035
|
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
$
11,753
|
|
$
8,871
|
MERCURITY FINTECH
HOLDING INC
|
Reconciliation of
Non-GAAP financial measures to comparable GAAP
measures
|
(US dollars in
thousands)
|
|
|
|
Three Months Ended
Sepetmber 30,
|
|
Nine Months Ended
Sepetmber 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Income/(Loss) from
continuing operations
|
|
$
(631)
|
|
$
396
|
|
$
(936)
|
|
$
312
|
Net loss attributable
to Mercurity Fintech Holding Inc.
|
|
(631)
|
|
396
|
|
(936)
|
|
(1,109)
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets (a)
|
|
-
|
|
-
|
|
-
|
|
-
|
Provision for income
tax expenses (b)
|
|
-
|
|
-
|
|
-
|
|
140
|
Share-based
compensation (c)
|
|
204
|
|
-
|
|
204
|
|
(293)
|
Impairment loss
(d)
|
|
-
|
|
-
|
|
835
|
|
-
|
|
|
|
|
|
|
|
|
|
Non-GAAP
(loss)/income from continuing operations (2019 periods (d), 2020
periods (c)(d))
|
$
(427)
|
|
$
396
|
|
$
103
|
|
$
312
|
Non-GAAP net
(loss)/income attributable to Mercurity Fintech Holding
Inc.(a)(b)(c)(d)
|
|
$
(427)
|
|
$
396
|
|
$
103
|
|
$
(1,262)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
(a) Adjustment to
exclude amortization of acquired intangible assets
|
|
|
|
|
|
|
|
|
(b) Adjustment to
exclude provision for income tax expenses
|
|
|
|
|
|
|
|
|
(c) Adjustment to
exclude share-based compensation
|
|
|
|
|
|
|
|
|
(d) Adjustment to
exclude impairment loss
|
|
|
|
|
|
|
|
|
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SOURCE Mercurity Fintech Holding Inc.