As filed with the Securities and Exchange Commission
on May 30, 2023
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form F-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
MERCURITY FINTECH HOLDING INC.
(Exact name of registrant as specified in its
charter)
Cayman
Islands |
|
6199 |
|
Not
Applicable |
(State or other jurisdiction
of
incorporation or organization) |
|
(Primary Standard Industrial
Classification Code Number) |
|
(I.R.S. Employer
Identification Number) |
Shi Qiu
Chief Executive Officer
1330 Avenue of the Americas, Fl 33,
New York, NY 10019
Tel: +1(949)-678-9653
|
(Address, including zip
code, and telephone number, |
including area code,
of registrant’s principal executive offices) |
Copies to:
Huan
Lou, Esq. |
Sichenzia Ross Ference LLP
1185 Avenue of the America, 31st Fl
New York, NY 10036
Telephone: +1-212-930-9700 |
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof.
If any of the securities
being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. x
If this form is
filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this form is
a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this form is
a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth
company ¨
If an emerging
growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant
to Section 7(a)(2)(B) of the Securities Act. ¨
† |
The
term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012. |
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS |
SUBJECT
TO COMPLETION |
DATED
MAY 30, 2023 |
32,087,130 ordinary shares
Mercurity Fintech Holding Inc.
This prospectus relates to
the resale by the selling shareholders identified in this prospectus of up to 32,087,130 ordinary shares, par value US$0.004 per share,
as further described below under “Prospectus Summary—Private Placements.”
The selling shareholders
are identified in the table commencing on page 13. No ordinary shares are being registered hereunder for sale by us. We will not
receive any proceeds from the sale of the ordinary shares by the selling shareholders. All net proceeds from the sale of the ordinary
shares covered by this prospectus will go to the selling shareholders (see “Use of Proceeds”). The selling shareholders
are offering their securities in order to create a public trading market for our equity securities in the United States. Unlike an initial
public offering, any sale by the selling shareholders of the ordinary shares is not being underwritten by any investment bank. The selling
shareholders may sell all or a portion of the ordinary shares from time to time in market transactions through any market on which our
ordinary shares are then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then
prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a
combination of such methods of sale (see “Plan of Distribution”).
Our ordinary shares currently
trade on the Nasdaq Capital Market, or NASDAQ, under the symbol “MFH.” The last reported closing price of our ordinary shares
on May 24, 2023 was $1.78.
We are a “foreign private
issuer”, as defined in Rule 405 under the U.S. Securities Act of 1933, as amended, or the Securities Act, and are eligible
for reduced public company reporting requirements.
Mercurity Fintech Holding
Inc. or “MFH Cayman” is not a Chinese operating company but a Cayman Islands holding company with our operations conducted
through our U.S., Hong Kong and PRC subsidiaries. Under this holding company structure, investors are purchasing equity interests in
MFH Cayman, a Cayman Islands holding company, and obtaining indirect ownership interests in our U.S., Hong Kong and Chinese operating
companies. PRC regulatory authorities could decide to limit foreign ownership in our industry in the future, in which case there could
be a risk that we would be unable to do business in China as we are currently structured. In such event, despite our efforts to restructure
to comply with the then applicable PRC laws and regulations in order to continue our operations in China, we may experience material
changes in our business and results of operations, our attempts may prove to be futile due to factors beyond our control, and the value
of the ordinary shares you invest in may significantly decline or become worthless.
We are subject to legal and
operational risks associated with having a significant portion of our operations in mainland China, including risks related to the legal,
political and economic policies of the Chinese government, the relations between China and the United States, and changes in Chinese
laws and regulations. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on
the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities
market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity
reviews, and expanding efforts in anti-monopoly enforcement. On December 28, 2021, thirteen governmental departments of the PRC,
including the Cyberspace Administration of China (the “CAC”), issued the Cybersecurity Review Measures, which became effective
on February 15, 2022. The Cybersecurity Review Measures provide that an online platform operator, which possesses personal information
of at least one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. We do
not believe that we are subject to the cybersecurity review by the CAC. In addition, as of the date of this prospectus, we have not been
involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have we received any inquiry, notice,
or sanction related to cybersecurity review under the Cybersecurity Review Measures. As of the date of this prospectus, no relevant laws
or regulations in the PRC explicitly require us to seek approval from the China Securities Regulatory Commission (the “CSRC”)
or any other PRC governmental authorities for our overseas listing or securities offering plan, nor have we (including any of our subsidiaries)
received any inquiry, notice, warning or sanctions regarding our planned offering of securities from the CSRC or any other PRC governmental
authorities. Also, as of the date of this prospectus, we do not believe we are in a monopolistic position in the industry in which we
operate. However, since these statements and regulatory actions by the PRC government are newly published and official guidance and related
implementation rules have not been issued, it remains uncertain what the potential impact such modified or new laws and regulations
will have on our daily business operations. The Standing Committee of the National People’s Congress (the “SCNPC”)
or other PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that would require our
Chinese subsidiaries to obtain regulatory approval from Chinese authorities before future offerings of securities in the U.S. These risks
could result in a material change in our operations in China and potentially the value of our securities being registered herein for
sale. The CSRC regulatory risks could significantly limit or completely hinder our ability to offer or continue to offer securities to
investors and cause the value of such securities to significantly decline or be worthless.
In addition, our Ordinary
Shares may be prohibited from trading on a national exchange or over-the-counter market under the Holding Foreign Companies Accountable
Act (the “HFCA Act”) if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable
to inspect our auditors for three consecutive years. In addition, on June 22, 2021, the U.S. Senate passed the Accelerating Holding
Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022, reducing the period
of time for foreign companies to comply with the PCAOB audits to two consecutive years instead of three, thus reducing the time period
for triggering the prohibition on trading. Pursuant to the HFCA Act, the PCAOB issued a Determination Report on December 16, 2021
which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) Mainland
China of the PRC, and (ii) Hong Kong; and such report identified the specific registered public accounting firms which are subject
to these determinations. On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and China’s Ministry of
Finance (the “PRC MOF”) in respect of cooperation on the oversight of PCAOB-registered public accounting firms based in Mainland
China and Hong Kong. Pursuant to the Statement of Protocol, the PCAOB conducted inspections on select registered public accounting firms
subject to the Determination Report in Hong Kong between September 2022 and November 2022. On December 15, 2022, the PCAOB
issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions
where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether
it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines
in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong
and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed
with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for
the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future
fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the
HFCAA. Our auditor, Onestop Assurance PAC, is headquartered in Singapore, and has been inspected by the PCAOB on a regular basis. Our
auditor is not headquartered in Mainland China or Hong Kong and was not identified in the Determination Report as a firm subject to the
PCAOB’s determinations.
Remittance of dividends by
a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiary has not paid
dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve
funds. For PRC and United States federal income tax considerations in connection with an investment in our shares, see “Taxation.”
Under our current corporate
structure, to fund any liquidity requirements an entity in our corporate group may have, a subsidiary may rely on loans or payments from
MFH Cayman and MFH Cayman may receive distributions or cash transfers from our subsidiaries. Additionally, the transfer of funds and
assets between MFH Cayman and its subsidiaries is not subject to any Chinese currency exchange restrictions. As of the date of this prospectus,
during the past two completed fiscal years, none of our subsidiaries has made any dividends or distributions to MFH Cayman and neither
has MFH Cayman made any dividends or distributions to its shareholders or subsidiaries. We intend to keep any future earnings to finance
the expansion of our business, and we do not anticipate any cash dividends will be paid in the foreseeable future. If MFH Cayman determines
to pay dividends on any of its ordinary shares in the future, as a holding company, it may derive funds for such distribution from its
own cash position or contributions from its subsidiaries. As of the date of this prospectus, during the past three completed fiscal years,
no transfer of non-cash assets has occurred between MFH Cayman and any of its subsidiaries. As of the date of this prospectus, neither
MFH Cayman nor its subsidiaries has a cash management policy. See “The Company–Cash Distribution” on page 9.
Investing
in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors”
starting on page 11 to read about the factors you should consider before buying the Ordinary Shares.
Neither the Securities
and Exchange Commission, or the SEC, nor any state or other foreign securities commission has approved nor disapproved these securities
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2023
TABLE OF CONTENTS
You should rely only on
the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred
you. Neither we nor any of the selling shareholders have authorized anyone to provide you with different information. Neither we nor
any of the selling shareholders are making an offer of these securities in any jurisdiction where the offer is not permitted. You should
not assume that the information in this prospectus or any applicable prospectus supplement is accurate as of any date other than the
date of the applicable document. Since the date of this prospectus, our business, financial condition, results of operations and prospects
may have changed.
For investors outside of
the United States: Neither we nor any of the selling shareholders have done anything that would permit this offering or possession or
distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are
required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.
In this prospectus, “we,”
“us,” “our,” and the “Company” refer to Mercurity Fintech Holding Inc. and its wholly owned subsidiaries,
Mercurity Fintech Technology Holding Inc., Mercurity Limited, Ucon Capital (HK) Limited, Beijing Lianji Future Technology Co., Ltd.
and Chaince Securities, Inc.
Our reporting currency is
the U.S. dollar. Unless otherwise expressly stated or the context otherwise requires, references in this prospectus to “dollars”
or “$” are to U.S. dollars.
This prospectus includes
statistical, market and industry data and forecasts which we obtained from publicly available information and independent industry publications
and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they
obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the
information. Although we believe that these sources are reliable, we have not independently verified the information contained in such
publications.
Our
consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United
States of America, or U.S. GAAP.
The
number of ordinary shares currently issued and outstanding is 46,538,116 as of May 9, 2023. No new shares are being issued
by the Company pursuant to this offering.
ABOUT THIS PROSPECTUS
This prospectus describes
the general manner in which the selling shareholders identified in this prospectus may offer from time to time up to 32,087,130 ordinary
shares. If necessary, the specific manner in which the ordinary shares may be offered and sold will be described in a supplement to this
prospectus, which supplement may also add, update or change any of the information contained in this prospectus. To the extent there
is a conflict between the information contained in this prospectus and the prospectus supplement, you should rely on the information
in the prospectus supplement, provided that if any statement in one of these documents is inconsistent with a statement in another document
having a later date—for example, any prospectus supplement—the statement in the document having the later date modifies or
supersedes the earlier statement.
GLOSSARY OF DEFINED TERMS
In this prospectus, unless otherwise indicated or the context otherwise
requires, references to:
| · | “we,”
“us,”, “company”, “our company,” or “our”
refers to Mercurity Fintech Holding Inc. and its consolidated subsidiaries, including Mercurity
Fintech Technology Holding Inc., Mercurity Limited, Ucon Capital (HK) Limited, Beijing Lianji
Future Technology Co., Ltd. and Chaince Securities, Inc.; |
| · | “MFH
Cayman” refers to Mercurity Fintech Holding Inc., the holding company of our group. |
| · | “MFH
Tech” refers to Mercurity Fintech Technology Holding Inc., a wholly-owned subsidiary
of MFH Cayman; |
| · | “Ucon”
refers to Ucon Capital (HK) Limited, a subsidiary of the Company; |
| · | “ordinary
shares” refer to our ordinary shares, par value US$0.004 per share; |
| · | “ADS”
refers to our American depositary shares, each of which represented 360 ordinary shares before
the mandatory exchange of the ADS for ordinary shares and removal of the ADR facility, effective
February 28, 2023; |
| · | “ADR”
refers to American depositary receipt, which was cancelled on February 28, 2023 upon
termination of the ADR facility; |
| · | “VIEs”
refers to (i) Mercurity (Beijing) Technology Co., Ltd, or Mercurity Beijing, and (ii) Beijing
Lianji Technology Co., Ltd., or Lianji, which, together with Mercurity Beijing, were
consolidated by us solely for accounting purposes as variable interest entities, and which
have ceased to be our consolidated entities, following the termination of our VIE structure
on January 15, 2022; |
| · | “Our
WFOE” or “Lianji Future” refers to Beijing Lianji Future Technology Co., Ltd.,
our subsidiary in China that is a wholly foreign-owned enterprise; |
| · | “China”
or “PRC” are to the People’s Republic of China, including Hong Kong and
Macau; however the only time such jurisdictions are not included in the definition of PRC
and China is when we reference to the specific laws that have been adopted by the PRC. The
same legal and operational risks associated with operations in China also apply to operations
in Hong Kong. The term “Chinese” has a correlative meaning for the purpose of
this prospectus; |
| · | “Renminbi”
or “RMB” refers to the legal currency of China; and |
| · | “$,”
“US$,” “dollar” or “U.S. dollar” refers to the legal
currency of the United States. |
PROSPECTUS SUMMARY
This summary highlights
information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing
in our securities. Before you decide to invest in our securities, you should read the entire prospectus carefully, including the “Risk
Factors” section and the financial statements and related notes appearing at the end of this prospectus.
Overview
Prior to July 2019,
we provided integrated B2B services to food service suppliers and customers in China. In May 2019, we acquired Mercurity Limited
and its subsidiaries and variable interest entity (“VIE”) to start blockchain technical services including developing digital
asset transaction platforms and other solutions based on blockchain technologies.
On July 22, 2019, we
divested our B2B services to food service suppliers and customers by selling all the issued and outstanding shares of New Admiral Limited,
or New Admiral, our former wholly-owned subsidiary operating the B2B business, to Marvel Billion Development Limited, or Marvel Billion.
After this divestment, we are no longer engaged in B2B services and our current principal business is focused on providing blockchain
technical services. We design and develop digital asset transaction platforms based on blockchain technologies for customers to facilitate
crypto asset trading and asset digitalization and provide supplemental services for such platforms, such as customized software development
services, maintenance services and compliance support services.
In March 2020, we acquired
NBpay Investment Limited and its subsidiaries and variable interest entity(“VIE”), a developer of asset transaction platform
products based on blockchain technologies, to advance the blockchain technical services business.
In August 2021, we added
cryptocurrency mining as one of our main businesses going forward. We entered into cryptocurrency mining pools by executing a business
contract with a collective mining service provider on October 22, 2021 to provide computing power to the mining pool and derived
USD$664,307 related revenue in 2021 and USD$783,089 related revenue in the first half of 2022.
Due to the extremely adverse
regulatory measures taken by the Chinese government in 2021 in the field of digital currency production and transaction, our board of
Directors decided on December 10, 2021 to divest the VIEs, which were the Chinese operating companies of the related business controlled
through VIE agreements, and the divestiture of such VIEs was completed on January 15, 2022.
In late February 2022,
Wei Zhu, our former acting Chief Financial Officer, former Co-Chief Executive Officer, and a former member and Co-Chairperson of the
Board, and Minghao Li, a former member of the Board, were suspected of certain criminal offenses unrelated to our company’s operations
and had been detained by the Economic Crime Investigation Detachment of Sheyang County Public Security Bureau, Yancheng City, Jiangsu
Province, People’s Republic of China, leading to that our hardware cold wallet and all cryptocurrencies held by Wei Zhu were seized
and impounded by the Public Security Bureau.
Due to the dismantling of
the VIEs and the cessation of all business related to the digital asset transaction platforms, as well as the temporary difficulties
brought to us by the incident that our cryptocurrencies were out of control, the original Chinese technical team also left in the first
half of 2022, and we failed to rebuild the technical service team in the second half of 2022. As a result, our blockchain technical services
business did not generate any revenue in 2022.
In July 2022, we added
digital consultation services as one of our main businesses going forward, providing digital payment solutions, asset management, and
a continued expansion into online and traditional brokerage services.
On July 15, 2022, we
incorporated Mercurity Fintech Technology Holding Inc.(“MFH Tech”) to develop distributed computing and storage services
and digital consultation services. On August 23, 2022, MFH Tech signed a Consulting Agreement with a Chinese media company, pursuant
to which MFH Tech will serve as an independent contractor in order to facilitate the Client to conduct its initial public offering, and
derived USD$80,000 related revenue in 2022.
On December 15, 2022,
we entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of
Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate
consideration of USD$5,980,000, payable in our ordinary shares. The investment is made with an aim to own mining machines capable of
gathering, processing, and storing vast amounts of data, to advance the cryptocurrency mining business, and to further solidify us as
a pioneer in the creation of the Web3 framework. On December 20, 2022, the assets began to be used for Filecoin mining operations
and derived USD$348 related revenue in 2022.
On January 10, 2023,
we entered into an asset purchase agreement with Jinhe Capital Limited, providing for the purchase of 5,000 Antminer S19 PRO Bitcoin
mining machines, for an aggregate consideration of USD$9,000,000. We expect these machines will be delivered by July 10, 2023, and
will be used for physical Bitcoin mining business. The S19 Pro offers cutting-edge technology and are the highest quality machines currently
available on the market with increased speed, computing power and efficiency. The decision to purchase these machines was made with the
intention of providing our Company with a competitive edge in the cryptocurrency mining sector, and an increase in revenue relative to
cost, due to their efficiency and overall cost-effectiveness.
On January 28, 2023,
we decided to write off NBpay Investment Limited and its subsidiaries, which had no meaningful assets or business nor employees. After
the adjustment of the above corporate structure, we will utilize MFH Tech, the US subsidiary, as the operating entity of distributed
computing and storage services (including cryptocurrency mining) and digital consultation services business, and will our Hong Kong and
China subsidiaries as the operating entities of the blockchain technical services and digital consultation services business in the Asia-Pacific
region, and we will establish a new technical services team in China.
On April 12, 2023, the
Company completed the incorporation of another U.S. subsidiary, Chaince Securities, Inc., which plans to develop online and traditional
brokerage services independently in the future. On May 3, 2023, Chaince Securities, Inc. entered into a Purchase and Sale Agreement
for the acquisition of all assets and liabilities of J.V. Delaney & Associates, an investment advisory firm and licensed broker
dealer.
Blockchain technical services
We provide digital asset
trading infrastructure solutions based on internet and blockchain technologies to our customers. These services include, among others,
(i) comprehensive solutions in connection with digital asset transactions, (ii) platform-based products, such as transaction
facilitation systems, trading systems, account management systems, operation management systems and mobile applications, and (iii) a
variety of supplemental services, such as customized software development services, maintenance services and compliance support services.
We launched Version 2.0 of our asset trading platform in 2019 which has included enhancements to the functionality of Version 1.0 as
well as new offerings of services and products for our customer on this platform. Our target customers for such trading platforms are
mainly cryptocurrency traders, blockchain-based virtual communities, and liquidity providers. In 2019, we generated substantially all
of our Revenue from selling our cryptocurrency asset trading platform and providing supplemental services to one customer who purchased
this platform. However, due to changes in management and business team in 2021, we did not conclude any additional sales from this trading
platform product in 2021. Due to the dismantling of the VIEs and the cessation of all business related to the digital asset transaction
platforms, as well as the temporary difficulties brought to us by the incident that our cryptocurrencies were out of control, we did
not conclude any related revenue in 2022.
We have developed an asset
digitalization platform, which can provide blockchain-based digitalization solutions for traditional assets, such as fiat currencies,
bonds and precious metals. These solutions include, among others, (i) standard process of white label asset tokenization, such as
onboarding, compliance certification, asset custody and token issuance and asset redemption by token holders, (ii) comprehensive
and customized solutions for asset tokenization, and (iii) blockchain-enabled smart contract management system, KYC and anti-money
laundering compliance management system, trust audit management system and other products that can be purchased and used separately,
as well as mobile applications. We launched Version 1.0 of our asset digitalization platform in 2019 to provide institutional customers
with customized services and products. We are currently developing Version 2.0 of our asset digitalization platform. The core offerings
of Version 2.0 will be SaaS platform products and application program interface or “API” services. The revenue from this
product was US$122,343 during the year of 2021, generated by one of the VIEs which have been divested in 2022, and therefore these Revenue
are classified under loss/income from discontinued operations in our audited consolidated financial statements for the year ended December 31,
2021. Due to the dismantling of the VIEs and the cessation of all business related to the digital asset transaction platforms, as well
as the temporary difficulties brought to us by the incident that our cryptocurrencies were out of control, we did not conclude any related
revenue in 2022.
In November 2020, we
launched an open, decentralized finance (DeFi) platform that designed to solve retail traders’ global problems of low liquidity
and capital utilization, poor governance, token growth incentive deficiencies, and slow transaction speeds. However, due to changes of
the business focus in 2021, the revenue from this DeFi platform was immaterial and we discontinued the development of such DeFi platform.
Cryptocurrency Mining
In August 2021, we added
cryptocurrency mining as one of our main businesses going forward. Cryptocurrency mining is part of our distributed computing and storage
services business.
We have entered into cryptocurrency
mining pools by executing contracts with the mining pool operators or executing contracts with the sharing mining service providers to
increase computing power or storage capacity 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 or storage capacity to the mining pool operator. In exchange for providing
computing power or storage capacity, we are entitled to a fractional share of the fixed digital asset awards the mining pool operator
receives, for successfully adding blocks to the blockchain. Our fractional share is relative to the proportion of computing power or
storage capacity we contribute to the mining pool operator toward the total computing power or storage capacity contributed by all mining
pool participants in solving the current algorithm.
Providing computing power
or storage capacity in digital asset transaction verification services is an output of our ordinary activities. The provision of such
computing power or storage capacity is the only performance obligation in our contracts with mining pool operators or contracts with
the sharing mining service providers. The transaction consideration we receive, if any, is noncash consideration, which we measures at
fair value on the date received, which is not materially different than the fair value at contract inception or the time we have earned
the award from the pools. These considerations are all variable. Since significant reversals of cumulative revenue are possible given
the nature of the assets, , the consideration is constrained until the mining pool operator successfully places a block (by being the
first to solve an algorithm) and we receive confirmation of the consideration it will receive, at which time revenue is recognized. There
is no significant financing component related to these transactions.
Fair value of the digital
assets award received is determined using the quoted price of the related digital assets at the time of receipt. There is currently no
specific definitive guidance under U.S. GAAP or alternative accounting framework for the accounting of digital assets either held or
recognized as revenue, and management has exercised significant judgment in determining the appropriate accounting treatment. In the
event authoritative guidance is enacted by the FASB, we may be required to change related policies, which could have an effect on our
consolidated financial position and results from operations.
For the year ended December 31,
2022, we earned $783,090 in Bitcoin mining revenue from shared mining operations and $348 in Filecoin mining revenue from physical mining
operations.
Consultation services
In July 2022, we added
digital consultation services as one of our main businesses going forward, providing digital payment solutions, asset management, and
a continued expansion into online and traditional brokerage services.
Considering that the contents
of different projects of our consultation service business varies greatly, we adopt the percentage-of-completion method to measure and
recognize revenue for each consultation service project. The percentage-of-completion method recognizes income as work on a contract’s
(or group of closely related contracts) progress. The recognition of Revenue and profits is generally related to costs incurred in providing
the services required under the contract.
On August 23, 2022,
we signed a Consulting Agreement with a Chinese media company, pursuant to which we will serve as an independent contractor in order
to facilitate the Client to conduct its initial public offering. As of December 31, 2022, the project was approximately 50% on schedule
and we recognized consultation service revenue of $80,000 for the year ended December 31, 2022 in line with the completion schedule
and have plans to expand upon this business in the near future.
Private Placements
Our Company has entered into
certain transactions with investors involving the issuance of our ordinary shares as consideration (the “Private Placements”).
Private Placement to Hexin Global Limited
and others
Pursuant to a securities
purchase agreement dated November 11, 2022, our Company closed a private investment in public equity (“PIPE”) financing
with certain non-U.S. investors for gross proceeds of $3.15 million. Net proceeds from the PIPE financing are expected to be used to
advance the Company’s business development activities for working capital and other general corporate purposes. Among other purposes,
the Company intends to use part of the Proceeds to grow its cryptocurrency consultation services in the U.S., including obtaining the
“BitLicense” from New York State Department of Financial Services for digital currency related activities, although the Company
cannot provide any assurance on actually obtaining the “BitLicense” in the near future or at all. Pursuant to the securities
purchase agreement and the warrants, our Company issued an aggregate of 2,423,076,922 units at a purchase price of $0.0013 per unit (pre-reverse
split). Each unit shall consist of one ordinary share and three warrants, with each warrant entitling the investor to purchase one ordinary
share at the exercise price of USD$ 1/180th per ordinary share subject to certain adjustments and conditions set forth therein. The warrants
shall have a term of three years from the issuance date.
Following the completion
of the above financing and at the date hereof, Hexin Global Limited has a beneficial interest in 5,769,231 of our ordinary shares, which
are being registered for resale pursuant to this prospectus.
Private Placement to Ms. Hanqi Li and
others
On November 30, 2022,
our Company entered into a securities purchase agreement with two investors to offer and sell the Company’s units, each consisting
of one ordinary share and three warrants for total gross proceeds of $5 million.
Among other purposes, our
Company intends to use part of the proceeds to grow its cryptocurrency consultation services in the U.S., including obtaining the “BitLicense”
from New York State Department of Financial Services for digital currency related activities although the Company cannot provide any
assurance on actually obtaining the “BitLicense” in the near future or at all.
Pursuant to the agreement,
our Company issued an aggregate of 3,676,470,589 units at a purchase price of $0.00136 per unit (pre-reverse split) for a total of approximately
$5,000,000. Each unit shall consist of one ordinary share and three warrants, with each warrant entitling the investor to purchase one
ordinary share at the exercise price of $1/360th per ordinary share subject to certain adjustments and conditions set forth therein.
The warrants shall have a term of three years from the issuance date.
Further, on December 23,
2022, our Company entered into a securities purchase agreement with an accredited non-U.S. investor to offer and sell the Company’s
units, each consisting of one ordinary share and three warrants for total gross proceeds of $5 million. The Company expects to use the
net proceeds from the three rounds of PIPE financing to develop its Web3 and blockchain infrastructure, expand its consultation services,
and pursue the licensure for cryptocurrency from New York State Department of Financial Services. Pursuant to this securities purchase
agreement, our Company issued an aggregate of 4,545,454,546 units at a purchase price of $0.00110 per unit (pre-reverse split) for total
gross proceeds of approximately $5,000,000. Each unit shall consist of one ordinary share and three warrants, with each warrant entitling
the investor to purchase one ordinary share at the exercise price of $1/360th per ordinary share subject to certain adjustments and conditions
set forth therein. The warrants shall have a term of three years from the issuance date.
Following completion of the
financings set out above and as at the date of this prospectus, as well as certain private sales undertaken by Ms. Hanqi Li to three
separate buyers, Xin Rong Gan, Hailei Zhang and Hong Mei Zhou, Ms. Li has a beneficial interest in 7,229,579 of our ordinary shares,
which are being registered for resale pursuant to this prospectus.
Private Placement to Huangtong International
Co., Ltd.
On December 15, 2022,
our Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Huangtong International Co., Ltd.
(the “Huangtong International”), providing for the Company’s acquisition and purchase of Web3 decentralized storage
infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of $5,980,000,
payable in the Company’s ordinary shares. The investment is made with an aim to own mining machines capable of gathering, processing,
and storing vast amounts of data, and to further solidify the Company as a pioneer in the creation of the Web3 framework.
Pursuant to the Agreement,
our Company would make the payment for the aforementioned equipment in the form of its ordinary shares, at a stipulated price of $0.0022
per share, in the aggregate amount of 2,718,181,818 shares (pre-reverse split). Following the completion of our share consolidation in
2023 and as at the date of this prospectus, Huangtong International now has a beneficial interest in 7,601,320 of our ordinary shares,
which are being registered for resale pursuant to this prospectus. The ownership of the crypto-mining equipment has been passed to MFH
after the Company successfully issued the Purchase Price Shares to Huangtong International. Huangtong International was responsible for
the installation of all mining equipment at sites designated by the Company and will also undertake routine maintenance of the devices
for one year.
Recent Regulatory Developments
We
are subject to a wide variety of complex laws and regulations in the United States, PRC and other jurisdictions in which we operate.
The laws and regulations govern many issues related to our business practices, including those regarding cryptocurrencies, cybersecurity,
offering and listing of securities, monopolistic behaviours, consumer protection, intellectual property, product liability and disclosures,
employee benefits, taxation and other matters.
These
laws and regulations are constantly evolving and may be interpreted, applied, created, superseded, or amended in a manner that could
harm our business. These changes may occur immediately or develop over time through judicial decisions or as new guidance or interpretations
are provided by regulatory and governing bodies, such as federal, state and local administrative agencies. As we expand our business
into new markets or introduce new features or offerings into existing markets, regulatory bodies or courts may claim that we are subject
to additional requirements, or that we are prohibited from conducting business in certain jurisdictions. This section summarizes the
certain regulations applicable to our business.
Recently,
the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations
in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over
China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly
enforcement. As of the date of this prospectus, we are not directly subject to these
regulatory actions or statements, as we have not implemented any monopolistic behavior and our business does not involve the large-scale
collection of user data, implicate cybersecurity, or involve any other type of restricted industry.
As
of the date of this prospectus, we believe that none of our subsidiaries is currently
required to obtain regulatory approvals or permissions from the CSRC, the CAC, or any other relevant PRC regulatory authorities for their
business operations, our offering (including the sales of securities to foreign investors) and our listing in the U.S. under any existing
PRC law, regulations or rules, nor have we received any inquiry, notice, warning, sanctions or regulatory objection to our business operations,
our offering and listing in the U.S. from the CSRC, the CAC, or other PRC regulatory authorities.
On
November 14, 2021, CAC released the Regulations on Network Data Security (draft for public comments) and accepted public comments
until December 13, 2021. The draft Regulations on Network Data Security provide that data processors refer to individuals or organizations
that autonomously determine the purpose and the manner of processing data. If a data processor that processes personal data of more than
one million users intends to list overseas, it shall apply for a cybersecurity review. In addition, data processors that process important
data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution,
and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department
before January 31 of each year. On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated
and took effect on February 15, 2022, which iterates that any “online platform operator” controlling personal information
of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. We are not an “operator of critical information infrastructure” or “large-scale
data processor” as mentioned above. However, PRC regulations relating to personal information protection and data protection,
it has been clarified in the relevant provision that the processing of PRC individual’s personal information outside China will
also under the jurisdiction of the PRC Personal Information Protection Law and if data processing outside China harms the national security,
public interests or the rights and interests of citizens or organizations of the PRC, legal responsibilities will also be investigated.
In addition, neither the Company nor its subsidiaries is an operator of any “critical information infrastructure” as defined
under the PRC Cybersecurity Law and the Security Protection Measures on Critical Information Infrastructure. However, Measures for Cybersecurity
Review (2021 version) was recently adopted and the Network Internet Data Protection Draft Regulations (draft for comments) is in the
process of being formulated and the Opinions remain unclear on how it will be interpreted, amended and implemented by the relevant PRC
governmental authorities.
There
remains uncertainties as to when the final measures will be issued and take effect, how they will be enacted, interpreted or implemented,
and whether they will affect us. If we inadvertently conclude that the Measures for Cybersecurity Review (2021 version) do not apply
to us, or applicable laws, regulations, or interpretations change and it is determined in the future that the Measures for Cybersecurity
Review (2021 version) become applicable to us, we may be subject to review when conducting data processing activities, and may face challenges
in addressing its requirements and make necessary changes to our internal policies and practices. We may incur substantial costs in complying
with the Measures for Cybersecurity Review (2021 version), which could result in material adverse changes in our business operations
and financial position. If we are not able to fully comply with the Measures for Cybersecurity Review (2021 version), our ability to
offer or continue to offer securities to investors may be significantly limited or completely hindered, and our securities may significantly
decline in value or become worthless.
On
December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing
of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the
Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures,”
collectively with the Draft Administrative Provisions, the “Draft Rules Regarding Overseas Listing”). The Draft Rules Regarding
Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination
criteria for indirect overseas listing in overseas markets. Among other things, if a domestic enterprise intends to conduct any follow-on
offering in an overseas market, the record-filing obligation is with a major operating entity incorporated in the PRC and such filing
obligation shall be completed within three working days after the completion of the offering. The required filing materials shall include
but not limited to: filing report and relevant commitments and domestic legal opinions. The Draft Rules Regarding Overseas Listing,
if enacted, may subject us to additional compliance requirement in the future. Any failure of us to fully comply with new regulatory
requirements may significantly limit or completely hinder our ability to offer or continue to offer our ordinary shares, cause significant
disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial
condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless.
As further advised by our
PRC counsel, as of the date of the registration statement, no effective laws or regulations in the PRC explicitly require us to seek
approval from the CSRC or any other PRC governmental authorities for our overseas listing or securities offering plans, nor has our Company
or any of our subsidiaries received any inquiry, notice, warning or sanctions regarding our overseas listing and offering of securities
from the CSRC or any other PRC governmental authorities. We have filed the legal opinion of our PRC counsel as part of our SEC filing
on Form F-1 as exhibit 5.2. However, since these statements and regulatory actions by the PRC government are newly published and official
guidance and related implementation rules have not been issued, it is highly uncertain what the potential impact such modified or
new laws and regulations will have on us. The Standing Committee of the National People’s Congress (the “SCNPC”) or
other PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that requires our Company,
or any of our subsidiaries to obtain regulatory approval from Chinese authorities before conducting securities offerings in the U.S.
It is possible that formal regulation will require companies listed outside the PRC which have/had PRC interests to submit registration
or filings to CSRC retrospectively. If any of our subsidiaries or the holding company were required to obtain approval in the future
and were denied permission from PRC authorities to conduct securities offerings in the U.S., our ability to conduct our business may
be materially impacted, we will not be able to continue listing on any U.S. exchange, continue to offer securities to investors, the
interest of the investors may be materially adversely affected and our ordinary shares may significantly decrease in value or become
worthless.
In addition, our Ordinary
Shares may be prohibited from trading on a national exchange or over-the-counter market under the Holding Foreign Companies Accountable
Act (the “HFCA Act”) if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) is unable
to inspect our auditors for three consecutive years. In addition, on June 22, 2021, the U.S. Senate passed the Accelerating Holding
Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022, reducing the period
of time for foreign companies to comply with the PCAOB audits to two consecutive years instead of three, thus reducing the time period
for triggering the prohibition on trading. Pursuant to the HFCA Act, the PCAOB issued a Determination Report on December 16, 2021
which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) Mainland
China of the PRC, and (ii) Hong Kong; and such report identified the specific registered public accounting firms which are subject
to these determinations. On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and China’s Ministry of
Finance (the “PRC MOF”) in respect of cooperation on the oversight of PCAOB-registered public accounting firms based in Mainland
China and Hong Kong. Pursuant to the Statement of Protocol, the PCAOB conducted inspections on select registered public accounting firms
subject to the Determination Report in Hong Kong between September 2022 and November 2022. On December 15, 2022, the PCAOB
issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions
where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether
it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines
in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong
and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed
with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for
the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future
fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the
HFCAA. Our auditor, Onestop Assurance PAC, is headquartered in Singapore, and has been inspected by the PCAOB on a regular basis. Our
auditor is not headquartered in Mainland China or Hong Kong and was not identified in the Determination Report as a firm subject to the
PCAOB’s determinations.
Corporate Information
We
were incorporated in incorporated in Cayman Islands on July 13, 2011. On December 28, 2016, the Company changed its name from
Wowo Limited to JMU Limited. On April 30, 2020, the Company changed its name from JMU Limited to Mercurity Fintech Holding Inc.
Our principal executive offices are located at 1330 Avenue of Americas, Fl 33, New York, 10019, United States and the telephone number
at that address is +1(949)-678-9653. Information contained on, or that can be accessed through, our website does not constitute
a part of this prospectus and is not incorporated by reference herein or therein. We have included our website address in this prospectus
solely for informational purposes and you should not consider any information contained on, or that can be accessed through, our website
as part of this prospectus or in deciding whether to purchase our securities.
The
following diagram illustrates our corporate structure as of the date of this prospectus:
Cash Distribution
Under
our current corporate structure, to fund any liquidity requirements an entity in our corporate group may have, our subsidiaries may rely
on loans or payments from MFH Cayman and MFH Cayman may receive distributions or cash transfers from our subsidiaries. As of the date
of this prospectus, there are no currency exchange restrictions or limitations imposed on the transfer of capital within our corporate
structure, except that the transfers are subject to money laundering and anti-corruption rules and regulations. However, there is
no guarantee that the applicable government will not promulgate new laws or regulations that may impose such restrictions on currency
exchanges in the future. As of the date of this prospectus, during the past three completed fiscal years, some transfers of non-cash
assets occurred between MFH Cayman and its subsidiaries, in which MFH Cayman repaid the debts of its PRC subsidiary, MFH Cayman advanced
expenses for Ucon, MFH Cayman transferred fixed assets to MFH Tech and MFH Cayman collected money on behalf of its other subsidiaries.
The following table illustrates the breakdown of the cash transfer within our organization for the year ended December 31, 2022:
Lender | |
Borrower | |
Amount
Due | |
Mercurity Fintech Holding Inc. | |
Mercurity Fintech Technology Holding Inc. | |
$ | 50,000 | |
The
following table illustrates the breakdown of our outstanding loans within our group as of December 31, 2022 (including the non-cash
transfers of claims and obligations):
Lender | |
Borrower | |
Amount
Due | |
Mercurity Fintech Holding Inc. | |
Mercurity Fintech Technology Holding Inc. | |
$ | 62,000 | |
Mercurity Fintech Holding Inc. | |
Ucon Capital (HK) Limited | |
$ | 2,093,608 | |
Mercurity Fintech Holding Inc. | |
Beijing Lianji Future Technology Co., Ltd | |
$ | 743,855 | |
Mercurity Limited | |
Mercurity Fintech Holding Inc. | |
$ | 1,100,240 | |
As
of the date of this prospectus, neither MFH Cayman nor its subsidiaries has a cash management policy. During the past three completed
fiscal years, none of MFH Cayman’s subsidiaries has paid dividends, made distributions, transferred cash or other assets by kind
to MFH Cayman or its shareholders directly or indirectly. The current laws and regulations of the PRC on currency exchange requires registration
with or approval from the SAFE for conversion of RMB into foreign currency and remission out of mainland China to pay capital expenses,
such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the
future to foreign currencies for current account transactions. However, there is no assurance that the Chinese government will not, in
the future, intervene or impose restrictions or limitations on the Company’s ability to generate income out of mainland China and
Hong Kong.
As
of the date of this prospectus, during the past two completed fiscal years, none of our subsidiaries has made any dividends or
distributions to MFH Cayman, nor has MFH Cayman made any dividends or distributions to its shareholders. We intend to keep any future
earnings to re-invest in and finance the expansion of our business. If MFH Cayman determines to pay dividends on any of its ordinary
shares in the future, as a holding company, it may derive funds for such distribution from its own cash position or contributions from
its subsidiaries.
Implications of being a “Foreign Private
Issuer”
We are subject to the information
reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements,
we file reports with the SEC. As a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic
issuers by the SEC. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and
less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly reports, proxy statements
that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that
is as detailed as that required of U.S. domestic reporting companies. We also have four months after the end of each fiscal year to file
our annual report with the SEC and are not required to file current reports as frequently or promptly as U.S. domestic reporting companies.
Our officers, directors, and principal shareholders are exempt from the requirements to report transactions in our equity securities
and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we
are not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. In addition, as a foreign
private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under
the Nasdaq Stock Market rules for domestic U.S. issuers and are not required to be compliant with all Nasdaq Stock Market rules as
of the date of our initial listing on Nasdaq as would domestic U.S. issuers. These exemptions and leniencies will reduce the frequency
and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting company. We
intend to take advantage of the exemptions available to us as a foreign private issuer during and after the period we qualify as an “emerging
growth company.”
THE OFFERING
This prospectus relates to
the resale by the selling shareholders identified in this prospectus of up to 32,087,130 ordinary shares. All of the ordinary shares,
when sold, will be sold by these selling shareholders. The selling shareholders may sell their ordinary shares from time to time at prevailing
market prices. We will not receive any proceeds from the sale of the ordinary shares by the selling shareholders.
Ordinary shares currently issued and outstanding |
|
46,538,116
ordinary shares |
Ordinary shares that will be issued and outstanding immediately after this offering |
|
46,538,116
ordinary shares |
Ordinary shares offered by the selling shareholders |
|
Up
to 32,087,130 ordinary shares |
Use of proceeds
|
|
We will not receive any proceeds from the sale
of the ordinary shares by the selling shareholders. All net proceeds from the sale of the ordinary shares covered by this prospectus
will go to the selling shareholders (see “Use of Proceeds”). |
Risk
factors |
|
You should read the “Risk
Factors” section starting on page 11 of this prospectus for a discussion of factors to consider carefully before deciding
to invest in our securities. |
NASDAQ
symbol |
|
“MFH” |
The
number of ordinary shares currently issued and outstanding is 46,538,116 as of May 9, 2023. No new ordinary shares will be
issued by our Company under this offering.
RISK
FACTORS
Investing in our ordinary
shares involves a high degree of risk. You should carefully consider the risks described in Part I, Item 3, D. Risk Factors
in our most recent Annual Report on Form 20-F, together with the other information set forth in this prospectus, and in
the other documents that we include or incorporate by reference into this prospectus, as updated by our Current Reports on Form 6-K and other
filings we make with the SEC, the risk factors described under the caption “Risk Factors” in any applicable prospectus supplement
and any risk factors set forth in our other filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, before making a decision about investing in our ordinary shares. The risks
and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that
we currently deem immaterial may also affect our operations. If any risks actually occur, our business, financial condition and results
of operations may be materially and adversely affected. In such an event, the trading price of our ordinary shares could decline and
you could lose part or all of your investment.
For more information about
our SEC filings, please see “Where You Can Find More Information” and “Incorporation by Reference.”
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Some of the statements made
under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” “Business” and elsewhere in this prospectus constitute forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential” “intends” or “continue,” or the negative of these terms or other comparable terminology.
These forward-looking statements
may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections
of results of operations or of financial condition, expected capital needs, and expenses, statements relating to the research, development,
completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or
developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements
are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on
assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions,
expected future developments, and other factors they believe to be appropriate
Important factors that could
cause actual results, developments, and business decisions to differ materially from those anticipated in these forward-looking statements
include, among other things:
| · | our
planned level of revenues and capital expenditures; |
| · | our
ability to market and sell our products and services; |
| · | our
plans to continue to invest in research and development to develop technology for both existing
and new products; |
| · | our
ability to maintain our relationships with suppliers, manufacturers, and other partners; |
| · | our
ability to maintain or protect the validity of our intellectual property and know-how; |
| · | our
ability to retain key executive members; |
| · | our
ability to internally develop and protect new inventions and intellectual property; |
| · | our
ability to expose and educate the industry about the use of our services and products; |
| · | our
expectations regarding our tax classifications; |
| · | interpretations
of current laws and the passages of future laws; and |
| · | the
impact of the COVID-19 pandemic and resulting government actions on us, our manufacturers,
suppliers, and facilities. |
These statements are only
current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s
actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward-looking
statements. We discuss many of these risks in this prospectus in greater detail under the heading “Risk Factors” and elsewhere
in this prospectus. You should not rely upon forward-looking statements as predictions of future events.
Although we believe that
the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,
performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements,
whether as a result of new information, future events, or otherwise, after the date of this prospectus.
LISTING DETAILS
Our ordinary shares currently
trade on NASDAQ under the symbol “MFH”. As of the date of this prospectus, our only listed class of securities are our ordinary
shares. All of our ordinary shares, including those to be offered by the selling shareholders pursuant to this prospectus, have the same
rights and privileges. For more information, see “Description of Share Capital and Governing Documents—Our Articles of
Association—Ordinary shares”.
USE OF PROCEEDS
We will not receive any proceeds
from the sale of the ordinary shares by the selling shareholders. All net proceeds from the sale of the ordinary shares will go to the
selling shareholders.
DIVIDEND POLICY
Since our inception, we have
not declared or paid any dividends on our ordinary shares. We have no present plan to pay any dividends on our ordinary shares in the
foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.
Any future determination
to pay dividends will be made at the discretion of our board of directors subject to certain restrictions under Cayman Islands law, namely
that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend
be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. In addition,
our shareholders may by ordinary resolution declare a dividend at a general meeting of our company, but no dividend may exceed the amount
recommended by our board of directors. Our board of directors’ decision to declare and pay dividends may be based on a number of
factors, including our future operations and earnings, capital requirements and surplus, the amount of distributions, if any, received
by us from our U.S., Hong Kong and PRC subsidiaries, our general financial condition, contractual restrictions and other factors that
the board of directors may deem relevant. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.
We are a holding company
incorporated in the Cayman Islands. In order for us to distribute any dividends to our shareholders, we will rely on dividends distributed
by our US, Hong Kong and PRC subsidiaries. Certain payments from our PRC subsidiary to us are subject to PRC taxes, such as withholding
income tax. In addition, regulations in China currently permit payment of dividends of a PRC company only out of accumulated distributable
after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations in China.
Our PRC subsidiary is required to set aside at least 10% of its after-tax profit based on PRC accounting standards every year to a statutory
common reserve fund until the aggregate amount of such reserve fund reaches 50% of the registered capital of such subsidiary. Such statutory
reserves are not distributable as loans, advances or cash dividends. Our PRC subsidiary may set aside a certain amount of its after-tax
profits to other funds at its discretion. These reserve funds can only be used for specific purposes and are not transferable to the
company’s parent in the form of loans, advances or dividends. See our annual report filed on Form 20-F with the SEC on April 25,
2023, “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the PRC—Governmental control
of currency conversion could affect the value of our shares. We rely principally on dividends and other distributions on equity paid
by our US, Hong Kong and PRC subsidiaries to fund any cash and financing requirements we might have. Any limitation on the ability of
our US, Hong Kong and PRC subsidiaries to pay dividends to us could have an adverse effect on our ability to conduct our business.”
SELLING SHAREHOLDERS
The 32,087,130 ordinary shares
being offered by the selling shareholders are the aggregate of ordinary shares previously issued to the selling shareholders in the closing
of the Private Placements. For additional information regarding the Private Placements, see “Prospectus Summary—Private
Placements”. We are registering the ordinary shares in order to permit the selling shareholders to offer the ordinary shares
for resale from time to time.
Other than the relationships
described herein, to our knowledge, the selling shareholders have not had any material relationship with us within the past three years.
Any selling shareholders
that are affiliates of broker-dealers and any participating broker-dealers would be deemed to be “underwriters” within the
meaning of the Securities Act, and any commissions or discounts given to any such selling shareholders or broker-dealer may be regarded
as underwriting commissions or discounts under the Securities Act. To our knowledge, none of the selling shareholders listed below are
broker-dealers or affiliates of broker-dealers.
The table below lists the
selling shareholders and other information regarding the beneficial ownership of the ordinary shares by each of the selling shareholders.
The second column lists the number of ordinary shares beneficially owned by each selling shareholder, based on its ownership of the ordinary
shares, as of May 9, 2023.
The third column lists the
ordinary shares being offered by this prospectus by the selling shareholders.
Because the number of ordinary
shares may be adjusted for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions, the
number of ordinary shares that will actually be issued may be more or less than the number of ordinary shares being offered by this prospectus.
The fourth column assumes the sale of all of the ordinary shares offered by the selling shareholders pursuant to this prospectus.
As explained below under
“Plan of Distribution,” we have agreed with the selling shareholders to bear certain expenses (other than broker discounts
and commissions, if any) in connection with the registration statement, which includes this prospectus.
Name of Selling Shareholders | |
Ordinary
Shares Beneficially Owned Prior to Offering(1) | | |
Percentage
of Existing Ordinary Shares Prior to Offering(2) | | |
Maximum
Number of Ordinary Shares to be Sold Pursuant to this Prospectus | | |
Ordinary
Shares Beneficially Owned Immediately After Sale of Maximum Number of Shares in this Offering(1) | | |
Percentage
of Equity Capital Immediately After Sale of Maximum Number of Shares in this Offering(2) | |
Hanqi
Li(3) | |
| 28,918,312 | | |
| 42.4 | % | |
| 7,229,579 | | |
| 21,688,733 | | |
| 31.8 | % |
Huangtong
International Co., Ltd(4) | |
| 15,202,640 | | |
| 28.1 | % | |
| 7,601,320 | | |
| 7,601,320 | | |
| 14.0 | % |
Hexin
Global Limited(5) | |
| 23,076,924 | | |
| 36.1 | % | |
| 5,769,231 | | |
| 17,307,693 | | |
| 27.1 | % |
Hailei
Zhang(6) | |
| 9,120,000 | | |
| 17.1 | % | |
| 2,280,000 | | |
| 6,840,000 | | |
| 12.8 | % |
Hong
Mei Zhou(7) | |
| 18,428,000 | | |
| 30.5 | % | |
| 4,607,000 | | |
| 13,821,000 | | |
| 22.9 | % |
Xin
Rong Gan(8) | |
| 18,400,000 | | |
| 30.5 | % | |
| 4,600,000 | | |
| 13,800,000 | | |
| 22.9 | % |
(1) |
Beneficial
ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities.
Ordinary shares subject to options or warrants currently exercisable, or exercisable within 60 days of May 9, 2023, are
counted as outstanding for computing the percentage of the selling shareholder holding such options or warrants but are not counted
as outstanding for computing the percentage of any other selling shareholder. |
|
|
(2) |
The applicable percentage
of beneficial ownership is calculated based on the total number of ordinary shares issued and outstanding, being 46,538,116 shares,
as of May 9, 2023, together with the additional ordinary shares to be issued to the relevant selling shareholder upon exercise
of warrants held. |
|
|
(3) |
Hanqi Li holds 7,229,579
ordinary shares and warrants which can be exercised to purchase up to 21,688,733 ordinary shares. The mailing address of Hanqi Li
is Flat 35/F Tower 9, Grand Yoho, Yuen Long, Hong Kong. |
|
|
(4) |
Huangtong International
Co., Ltd holds 7,601,320 ordinary shares and warrants held which can be exercised to purchase up to 7,601,320 ordinary shares. The
mailing address of Huangtong International Co., Ltd is Room 1603, Shui On Centre, Wan Chai, Hong Kong. |
|
|
(5) |
Hexin Global Limited holds
5,769,231 ordinary shares and warrants which can be exercised to purchase up to 17,307,693 ordinary shares. The mailing address of
Hexin Global Limited is 7/F, 15 Shelter Street, Causeway Bay, Hong Kong. |
|
|
(6) |
Hailei Zhang holds 2,280,000
ordinary shares and warrants which can be exercised to purchase up to 6,840,000 ordinary shares. The mailing address of Hailei Zhang
is Room 1410, Unit 2, New Inter First Block, Zhongxing Fifth Road, Daya Bay, Huizhou City, Guangdong Province, China. |
|
|
(7) |
Hong Mei Zhou holds 4,607,000
ordinary shares and warrants which can be exercised to purchase up to 13,821,000 ordinary shares. The mailing address of Hong Mei
Zhou is Building 6, State Veteran's Institute, No. 26, Mengla Road, Jinghong, Xishuangbanna Dai Autonomous Prefecture, Yunnan
Province, China. |
|
|
(8) |
Xin Rong Gan holds 4,600,000
ordinary shares and warrants which can be exercised to purchase up to 13,800,000 ordinary shares. The mailing address of Xin Rong
Gan is Room 2-204, Building 7, Jindaotian Jinzhou Garden, Luohu District, Shenzhen, Guangdong Province, China. |
PLAN OF DISTRIBUTION
We are registering the ordinary
shares previously issued, to permit the resale of these ordinary shares by the holders of these securities from time to time after the
date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the ordinary shares. Unlike
an initial public offering, any resale by the selling shareholders of the ordinary shares is not being underwritten by any investment
bank. We will bear all fees and expenses incident to our obligation to register the selling shareholders’ ordinary shares.
The selling shareholders
may sell all or a portion of the ordinary shares beneficially owned by them and offered hereby from time to time directly or through
one or more underwriters, broker-dealers or agents. If the ordinary shares are sold through underwriters or broker-dealers, the selling
shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The ordinary shares may be sold
in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the
time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,
| · | on
any national securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale; |
| · | in
the over-the-counter market; |
| · | in
transactions other than on these exchanges or systems or the over-the-counter market; |
| · | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block
trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction; |
| · | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an
exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately
negotiated transactions; |
| · | sales
pursuant to Rule 144 under the Securities Act; |
| · | broker-dealers
may agree with the selling securityholders to sell a specified number of such shares at a
stipulated price per share; |
| · | a
combination of any such methods of sale; and |
| · | any
other method permitted pursuant to applicable law. |
If the selling shareholders
affect such transactions by selling ordinary shares to or through underwriters, broker-dealers, or agents, such underwriters, broker-dealers
or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from
purchasers of the ordinary shares for whom they may act as an agent or to whom they may sell as principal (which discounts, concessions
or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions
involved).
The selling shareholders
may pledge or grant a security interest in some or all of the ordinary shares owned by them and, if they default in the performance of
their secured obligations, the pledgees or secured parties may offer and sell the ordinary shares from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending,
if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling shareholders also may transfer and donate the ordinary shares in other circumstances in which case
the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The selling shareholders and any broker-dealer participating in the distribution of the shares may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer
may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares is
made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of ordinary shares being offered
and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under the securities laws
of some states, the ordinary shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in
some states, the ordinary shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
There can be no assurance
that any selling shareholder will sell any or all of the ordinary shares registered pursuant to the registration statement, of which
this prospectus forms a part.
The selling shareholders
and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange, and the
rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares by the selling shareholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the ordinary shares to engage in market-making activities with respect to the
shares. All of the foregoing may affect the marketability of the ordinary shares and the ability of any person or entity to engage in
market-making activities with respect to the ordinary shares.
We will pay all expenses
of the registration of the ordinary shares pursuant to the Private Placements, estimated to be $125,566 in total, including, without
limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that
a selling shareholder will pay all underwriting discounts and selling commissions if any. We will indemnify the selling shareholders
against liabilities, including some liabilities under the Securities Act, in accordance with the Private Placements, or the selling shareholders
will be entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities
under the Securities Act, that may arise from any written information furnished to us by the selling shareholders specifically for use
in this prospectus, in accordance with the related Private Placements, or we may be entitled to contribution.
Once sold under the registration
statement, of which this prospectus forms a part, the ordinary shares will be freely tradable in the hands of persons other than our
affiliates.
DESCRIPTION OF SECURITIES
TO BE REGISTERED
Ordinary shares
General
As of April 5, 2023,
our authorized share capital consisted of US$250,000 divided into 62,500,000 ordinary shares of US$0.004 each, of which
46,538,116 ordinary shares were issued and outstanding. All of our outstanding ordinary shares have been, or at the time of the Closing,
will be, validly issued, fully paid, and non-assessable. Our ordinary shares are not redeemable and are not subject to any preemptive
right.
All of our issued and outstanding
ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in registered form and are issued when registered in
our register of members. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares.
Our fourth amended and restated memorandum and articles of association do not permit us to issue bearer shares.
Dividends
The holders of our ordinary
shares are entitled to such dividends as may be declared by our shareholders or board of directors subject to the Companies Act (As Revised)
of the Cayman Islands, or the Companies Act, and to the fourth amended and restated articles of association. Under Cayman Islands law,
dividends may be declared and paid only out of funds legally available therefor, namely out of either profit or our share premium account,
and provided further that a dividend may not be paid if this would result in our company being unable to pay its debts as they fall due
in the ordinary course of business.
Voting Rights
Each ordinary share is entitled
to one vote on all matters upon which the ordinary shares are entitled to vote. Voting at any meeting of shareholders is by show of hands
unless a poll is demanded before or on the declaration of the result of the show of hands.
A poll may be demanded by
the chairman of such meeting or any one shareholder present in person or by proxy.
An ordinary resolution to
be passed by the shareholders requires the affirmative vote of a simple majority of votes attached to the ordinary shares cast in a general
meeting, while a special resolution requires the affirmative vote of at least two-thirds of votes cast attached to the ordinary shares
in a meeting. A special resolution will be required for important matters such as a change of name or making changes to our memorandum
and articles of association.
Transfer of ordinary shares
Subject to the restrictions
contained in our fourth amended and restated articles of association, as applicable, any of our shareholders may transfer all or any
of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may,
in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up to a person of whom it
does not approve, or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby
still subsists. Our board of directors may also decline to register any transfer of any ordinary share unless:
|
· |
the instrument of transfer
is lodged with us or such other place at which the register of members is kept in accordance with Cayman Islands law, accompanied
by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require
to show the right of the transferor to make the transfer; |
|
· |
the instrument of transfer is in respect of only one
class of shares; |
|
· |
the instrument of transfer is properly stamped, if
required; |
|
· |
the ordinary shares transferred are fully paid and
free of any lien in favor of us; |
|
· |
a fee of such maximum sum
as the Nasdaq Global Market may determine to be payable or such lesser sum as the board may from time to time require is paid to
us in respect thereof; and |
|
· |
the transfer is not to more than four joint holders. |
If our directors refuse to
register a transfer they are required, within three months after the date on which the instrument of transfer was lodged, to send to
each of the transferor and the transferee notice of such refusal.
The registration of transfers
may, after compliance with any notice requirement of the Nasdaq Global Market, be suspended and the register closed at such times and
for such periods as our directors may from time to time determine; provided, however, that the registration of transfers shall not be
suspended nor the register closed for more than 30 days in any year as our directors may determine.
Restructuring
A company may present a petition
to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company:
(a) is or is likely
to become unable to pay its debts; and
(b) intends to present a compromise
or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of a foreign country or by way of
a consensual restructuring.
The Grand Court may, among
other things, make an order appointing a restructuring officer upon hearing of such petition, with such powers and to carry out such
functions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer
but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of
a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings)
shall be proceeded with or commenced against the company, no resolution to wind up the company shall be passed, and no winding up petition
may be presented against the company, except with the leave of the court. However, notwithstanding the presentation of a petition for
the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole
or part of the assets of the company is entitled to enforce the security without the leave of the court and without reference to the
restructuring officer appointed.
Liquidation
On a return of capital on
winding up or otherwise (other than on redemption or purchase of ordinary shares), assets available for distribution among the holders
of ordinary shares will be distributed among the holders of the ordinary shares on a pro rata basis. If our assets available for distribution
are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders
proportionately.
Calls on ordinary shares and
Forfeiture of ordinary shares
Our board of directors may
from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders
at least 14 clear days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are subject
to forfeiture.
Share Repurchases
We are empowered under our
fourth amended and restated memorandum of association to purchase our shares subject to the Companies Act and our fourth amended and
restated articles of association. Our fourth amended and restated articles of association provide that this power is exercisable by our
board of directors in such manner, upon such terms and subject to such conditions as it in its absolute discretion thinks fit subject
to the Companies Act and, where applicable, the rules of the Nasdaq Global Market and the applicable regulatory authority.
Variation of Rights of Shares
If at any time, our share
capital is divided into different classes of shares, all or any of the special rights attached to any class of shares may, subject to
the provisions of the Companies Act, be varied with the sanction of a special resolution passed at a separate general meeting of the
holders of the shares of that class. Consequently, the rights of any class of shares cannot be detrimentally altered without a majority
of two-thirds of the vote of all of the shares in that class. The rights conferred upon the holders of the shares of any class issued
with preferred or other rights will not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed
to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.
General Meetings of Shareholders
Shareholders' meetings may
be convened by our board of directors. Cayman Islands law provides shareholders with only limited rights to requisition a general meeting,
and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided
in a company's articles of association. Our fourth amended and restated articles of association allow our shareholders holding shares
representing in aggregate not less than 30% of our voting share capital in issue, to requisition an extraordinary general meeting of
our shareholders, in which case our directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote
at such meeting; however, our fourth amended and restated articles of association do not provide our shareholders with any right to put
any proposals before annual general meetings or extraordinary general meetings not called by such shareholders. Advance notice of at
least ten clear days is required for the convening of our annual general shareholders' meeting and any other general meeting of our shareholders.
A quorum required for a meeting of shareholders consists of at least two shareholders present or by proxy, representing not less than
one-third in nominal value of the total issued voting shares in our company.
Retirement, Election and Removal
of Directors
Unless otherwise determined
by the members in the general meeting, our fourth amended and restated articles of association provide that our board will consist of
not less than three directors. There are no provisions relating to retirement of directors upon reaching any age limit.
Any director on our board
may be removed by way of an ordinary resolution of shareholders. Any vacancies on our board of directors or additions to the existing
board of directors can be filled by the affirmative vote of a majority of the remaining directors. The shareholders may also by ordinary
resolution elect any person to be a director either to fill a casual vacancy or as an addition to the existing board of directors.
Any director appointed by
the board of directors to fill a casual vacancy shall hold office for the remaining term of the director in whose place he is appointed
and shall be eligible for re-election at the expiry of the said term.
Grounds for vacating
a director
The office of a director
shall be vacated if the director:
|
· |
resigns his office by notice
in writing delivered to us or tendered at a meeting of the board of directors; |
|
· |
becomes of unsound mind or dies; |
|
· |
without special leave of
absence from the board of directors, is absent from meetings of the board of directors for six consecutive months and the board of
directors resolves that his office be vacated; |
|
· |
becomes bankrupt or has
a receiving order made against him or suspends payment or compounds with his creditors; |
|
· |
is prohibited by law from being a director; or |
|
· |
ceases to be a director
by virtue of any provisions of Cayman Islands law or is removed from office pursuant to the fourth amended and restated articles
of association. |
Proceedings of Board of Directors
Our fourth amended and restated
articles of association provide that our business is to be managed and conducted by our board of directors. The quorum necessary for
the board meeting may be fixed by the board and, unless so fixed at another number, will be two directors.
Inspection of Books and Records
Holders of our ordinary shares
will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records
(except for our memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders).
However, we will in our fourth amended and restated articles of association provide our shareholders with the right to inspect our list
of shareholders and to receive annual audited financial statements. See "Where You Can Find More Information".
Changes in Capital
We may from time to time
by ordinary resolution:
|
· |
increase the share capital
by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; |
|
· |
consolidate and divide
all or any of our share capital into shares of a larger amount than our existing shares; |
|
· |
without prejudice to the
powers of the board of directors under our articles of association, divide our shares into several classes and without prejudice
to any special rights previously conferred on the holders of existing shares attach thereto respectively and preferential, deferred,
qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination by the Company
in general meeting, as the board of directors may determine; |
|
· |
sub-divide our existing shares, or any of them into
shares of a smaller amount; or |
|
· |
cancel any shares which,
at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of
our share capital by the amount of the shares so cancelled. |
We may by special resolution
reduce our share capital or any capital redemption reserve in any manner permitted by law.
Register of Members
Under Cayman Islands law,
we must keep a register of members and there should be entered therein
|
(a) |
the names and addresses
of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) the amount
paid or agreed to be considered as paid, on the shares of each member; (ii) the number and category of shares held by each member,
and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association
of the company, and if so, whether such voting rights are conditional; |
|
(b) |
the date on which the name
of any person was entered on the register as a member; and |
|
(c) |
the date on which any person
ceased to be a member. |
Under Cayman Islands law,
the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise
a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members should be
deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Once our
register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the
shares set against their name.
If the name of any person
is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay in entering on the
register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any member of our company
or our company itself) may apply to the Cayman Islands Grand Court for an order that the register be rectified, and the Court may either
refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
Differences in Corporate Law
The Companies Act is derived,
to a large extent, from the Older Companies Acts of England but does not follow recent statutory enactments in England. In addition,
the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of
the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated
in the United States.
Mergers and Similar Arrangements
The Companies Act permits
mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For
these purposes, (a) "merger" means the merging of two or more constituent companies and the vesting of their undertaking,
property and liabilities in one of such companies as the surviving company and (b) a "consolidation" means the combination
of two or more constituent companies into a combined company and the vesting of the undertaking, property and liabilities of such companies
to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve
a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each
constituent company, and (b) such other authorization, if any, as may be specified in such constituent company's articles of association.
The written plan of merger
or consolidation must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or
surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate
of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger
or consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of
their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures,
subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these
statutory procedures.
In addition, there are statutory
provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by (a) 75%
in value of the shareholders or class of shareholders, as the case may be, or (b) a majority in number representing 75% in value
of the creditors or each class of creditors, as the case may be, with whom the arrangement is to be made, that are, in each case, present
and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently
the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express
to the court the view that the transaction ought not to be approved, the Grand Court of the Cayman Islands can be expected to approve
the arrangement if it determines that:
|
· |
the statutory provisions as to the required majority
vote have been met; |
|
· |
the shareholders have been fairly represented at the
meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse
to those of the class; |
|
· |
the arrangement is such that may be reasonably approved
by an intelligent and honest man of that class acting in respect of his interest; and |
|
· |
the arrangement is not one that would more properly
be sanctioned under some other provision of the Companies Act. |
When a takeover offer is
made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing
on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the
offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which
has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction
is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be
available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined
value of the shares.
Shareholders' Suits
In principle, we will normally
be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on
English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing
principle, including when:
|
· |
a company acts or proposes to act illegally or ultra
vires; |
|
· |
the act complained of,
although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained;
and |
|
· |
those who control the company are perpetrating a "fraud
on the minority". |
Indemnification of Directors
and Executive Officers and Limitation of Liability
Cayman Islands law does not
limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the
extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification
against civil fraud or the consequences of committing a crime. Our fourth amended and restated memorandum and articles of association
permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless
such losses or damages arise from dishonesty or fraud which may attach to such directors or officers. This standard of conduct is generally
the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification
agreements with our directors and senior executive officers that will provide such persons with additional indemnification beyond that
provided in our third amended and restated memorandum and articles of association.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under 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.
Anti-Takeover Provisions in
the Memorandum and Articles of Association
Some provisions of our fourth
amended and restated memorandum and articles of association may discourage, delay or prevent a change in control of our company or management
that shareholders may consider favorable, including provisions that authorize our board of directors to issue preference shares in one
or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further
vote or action by our shareholders.
However, under Cayman Islands
law, our directors may only exercise the rights and powers granted to them under our memorandum and articles of association, as amended
and restated from time to time, for what they believe in good faith to be in the best interests of our company.
Directors' Fiduciary Duties
As a matter of Cayman Islands
law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered
that he owes the following duties to the company—a duty to act bona fide in the best interests of the company, a duty not to make
a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position
where the interests of the company conflict with his or her personal interest or his or her duty to a third party. A director of a Cayman
Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit
in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge
and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and
care and these authorities are likely to be followed in the Cayman Islands.
In addition, directors of
a Cayman Islands company must not place themselves in a position in which there is a conflict between their duty to the company and their
personal interests. However, this obligation may be varied by the company's articles of association, which may permit a director to vote
on a matter in which he has a personal interest provided that he has disclosed that nature of his interest to the board. Our fourth amended
and restated memorandum and articles of association provides that a director with an interest (direct or indirect) in a contract or arrangement
or proposed contract or arrangement with the company must declare the nature of his interest at the meeting of the board of directors
at which the question of entering into the contract or arrangement is first considered, if he knows his interest then exists, or in any
other case at the first meeting of the board of directors after he is or has become so interested.
A general notice may be given
at a meeting of the board of directors to the effect that (i) the director is a member/officer of a specified company or firm and
is to be regarded as interested in any contract or arrangement which may after the date of the notice in writing be made with that company
or firm; or (ii) he is to be regarded as interested in any contract or arrangement which may after the date of the notice in writing
to the board of directors be made with a specified person who is connected with him, will be deemed sufficient declaration of interest.
Following the disclosure being made pursuant to our fourth amended and restated memorandum and articles of association and subject to
any separate requirement for Audit Committee approval under applicable law or the listing rules of Nasdaq, and unless disqualified
by the chairman of the relevant board meeting, a director may vote in respect of any contract or arrangement in which such director is
interested and may be counted in the quorum at such meeting. However, even if a director discloses his interest and is therefore permitted
to vote, he must still comply with his duty to act bona fide in the best interest of our company.
In comparison, under Delaware
corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components:
the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily
prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders,
all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in
a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position
for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation
and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by
the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and
in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by
evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director
must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
Shareholder Proposals
Under the Delaware General
Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with
the notice provisions in the governing documents. The Delaware General Corporation Law does not provide shareholders an express right
to put any proposal before the annual meeting of shareholders, but in keeping with common law, Delaware corporations generally afford
shareholders an opportunity to make proposals and nominations provided that they comply with the notice provisions in the certificate
of incorporation or bylaws. A special meeting may be called by the board of directors or any other person authorized to do so in the
governing documents, but shareholders may be precluded from calling special meetings.
There are no statutory requirements
under Cayman Islands law allowing our shareholders to requisition a shareholders' meeting. However, under our fourth amended and restated
articles of association, on the requisition of shareholders representing not less than 30% of the voting rights entitled to vote at general
meetings, the board shall convene an extraordinary general meeting. As an exempted Cayman Islands company, we are not obliged by law
to call shareholders' annual general meetings. Our fourth amended and restated articles of association provides that we may (but shall
not be obliged to) in each calendar year hold a general meeting as our annual general meeting.
Cumulative Voting
Under the Delaware General
Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate of incorporation
specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors
since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases
the shareholder's voting power with respect to electing such director. As permitted under Cayman Islands law, our fourth amended and
restated articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections
or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors
Under the Delaware General
Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of
the issued and outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our fourth amended
and restated articles of association, directors may be removed by an ordinary resolution of shareholders.
Transactions with Interested
Shareholders
The Delaware General Corporation
Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically
elected not to be governed by such statute by amendment to its certificate of incorporation or bylaws that is approved by its shareholders,
it is prohibited from engaging in certain business combinations with an "interested shareholder" for three years following
the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which
owns or owned 15% or more of the target's outstanding voting stock or who or which is an affiliate or associate of the corporation and
owned 15% or more of the corporation's outstanding voting stock within the past three years. This has the effect of limiting the ability
of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does
not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors
approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages
any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target's board of directors.
Cayman Islands law has no
comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination
statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does
provide that such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose
and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding Up
Under the Delaware General
Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding
100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved
by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to include in its certificate
of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law,
a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the
company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding
up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Under the Companies Act and
our fourth amended and restated articles of association, our company may be dissolved, liquidated or wound up by a special resolution
of our shareholders. The court has authority to order winding up in a number of specified circumstances including where it is, in the
opinion of the court, just and equitable to do so.
Variation of Rights of Shares
Under the Delaware General
Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of
such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our fourth amended and restated
articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class
only with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class.
Amendment of Governing Documents
Under the Delaware General
Corporation Law, a corporation's certificate of incorporation may be amended only if adopted and declared advisable by the board of directors
and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority
of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board
of directors. Under Cayman Islands law, our fourth amended and restated memorandum and articles of association may only be amended by
a special resolution of our shareholders.
Rights of Non-Resident or Foreign
Shareholders
There are no limitations
imposed by our fourth amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders
to hold or exercise voting rights on our shares. In addition, there are no provisions in our fourth amended and restated memorandum and
articles of association that require our company to disclose shareholder ownership above any particular ownership threshold.
Directors' Power to Issue Shares
Subject to applicable law,
our board of directors is empowered to issue or allot shares or grant options and warrants with or without preferred, deferred, qualified
or other special rights or restrictions.
Preemptive Rights
The shareholders of our company
do not have preemptive right.
Other Rights
Not applicable.
TAXATION
The
following is a general summary of the material Cayman Islands, People’s Republic of China and U.S. federal income tax consequences
relevant to an investment in our ordinary shares. The discussion is not intended to be, nor should it be construed as, legal or tax advice
to any particular prospective purchaser. The discussion is based on laws and relevant interpretations thereof as of the date of this
annual report, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does
not address U.S. state or local tax laws, or tax laws of jurisdictions other than the Cayman Islands, the People’s Republic of
China and the United States. You should consult your own tax advisors with respect to the consequences of acquisition, ownership and
disposition of our ordinary shares.
Cayman Islands Taxation
The
Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government
of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution, brought within
the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments
made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments
of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required
on the payment of a dividend or capital to any holder of the Shares, nor will gains derived from the disposal of the shares be subject
to Cayman Islands income or corporation tax.
People’s Republic of China Taxation
Under
the Enterprise Income Tax Law and the Regulations on the Implementation of the Enterprise Income Tax Law of the People’s Republic
of China, enterprises established outside of China but whose “de facto management body” is located in China are considered
“resident enterprises” for PRC tax purposes. Under the applicable implementation regulations, “de facto management
body” is defined as the organizational body that effectively exercises overall management and control over production and business
operations, personnel, finance and accounting, and properties of the enterprise. Substantially all of our management is currently based
in China, and may remain in China in the future. If we are treated as a “resident enterprise” for PRC tax purposes, foreign
enterprise holders of our ordinary shares may be subject to a 10% PRC income tax upon dividends payable by us and on gains realized on
their sales or other dispositions of our ordinary shares. See “Item 3. Key Information—D. Risk Factors—Risks Relating
to Doing Business in China—Under the PRC enterprise income tax law, we could be classified as a ‘resident enterprise’
of China. Such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.” In addition, gains
derived by our non-PRC individual shareholders from the sale of our shares may be subject to a 20% PRC withholding tax. It is unclear
whether our non-PRC individual shareholders (including our ADS holders) would be subject to any PRC tax on dividends obtained by such
non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to dividends
realized by non-PRC individuals, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax
treaty. However, it is unclear either whether our non-PRC shareholders would be able to claim the benefits of any tax treaties between
their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise.
Material United States Federal Income
Tax Considerations
The
following summary describes the material U.S. federal income tax consequences generally applicable to U.S. Holders (as defined below)
of the ownership of our ordinary shares as of the date hereof. Except where noted, this summary deals only with ordinary shares held
as capital assets for U.S. federal income tax purposes. As used herein, the term “United States Holder” or “U.S. Holders”
means a beneficial owner of our ordinary share or ADS that is for United States federal income tax purposes:
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an individual citizen or resident of the United States; |
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a corporation (or other
entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States,
any state thereof or the District of Columbia; |
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an estate the income of
which is subject to United States federal income taxation regardless of its source; or |
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a trust if it (1) is
subject to the primary supervision of a court within the United States and one or more United States persons have the authority to
control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury
regulations to be treated as a United States person. |
This
summary does not represent a detailed description of all of the U.S. federal income tax consequences, including those that may be applicable
to U.S. Holders if you are subject to special treatment under the United States federal income tax laws, such as:
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a broker-dealer in securities or currencies; |
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a bank or other financial institution; |
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a regulated investment company; |
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a real estate investment trust; |
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a tax-exempt organization
(including a private foundation); |
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Certain former U.S. citizens
or long-term residents; |
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a person holding our ordinary
shares as part of a hedging, integrated or conversion transaction, a constructive or wash sale or a straddle; |
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a dealer or trader in securities
that use the mark-to-market method of accounting; |
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a person who owns or is
deemed to own 10% or more of our stock (by voter or value); |
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a partnership or other
pass-through entity for U.S. federal income tax purposes (or an investor therein); |
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a person whose “functional
currency” for U.S. federal income tax purposes is not the United States dollar; |
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a person who acquires our
ordinary shares through the exercise of an employee share option or otherwise as compensation; or |
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persons holding our ordinary
shares in connection with a trade or business, permanent establishment, or fixed place of business outside the United States. |
In
addition, this discussion does not address any state, local, estate, gift, alternative minimum or non-United States tax considerations,
special accounting rules under Section 451(b) of the Code or the Medicare contribution tax on net investment income. Each
U.S. Holder is urged to consult its tax advisor regarding the U.S. federal, state, local and non-United States income and other tax considerations
of an investment in our ordinary shares.
The
discussion below is based upon the provisions of the Code, final, temporary and proposed Treasury regulations promulgated thereunder,
rulings, administrative pronouncements and judicial decisions as of the date hereof. Such authorities may be interpreted differently,
replaced, revoked or modified, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from
those discussed below. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any U.S. federal income
tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. In addition,
this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreement, and all other
related agreements, will be performed in accordance with their terms.
If
a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our ordinary shares, the tax treatment
of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Such partnership
or their partners should consult their tax advisors regarding an investment in our ordinary shares.
Taxation of Dividends and Other Distributions
on our ordinary shares
Subject
to the discussion under “—Passive Foreign Investment Company” below, the gross amount of any distributions on our ordinary
shares (including any amounts withheld to reflect PRC withholding taxes) will be taxable as dividends, to the extent paid out of our
current or accumulated earnings and profits, as determined under United States federal income tax principles. Such income (including
withheld taxes) will be includable in a U.S Holder’s gross income as ordinary income on the day actually or constructively received
by the U.S Holder, in the case of the ordinary shares. Such dividends will not be eligible for the dividends received-deduction allowed
to corporations under the Code.
Dividends
paid to certain non-corporate United States Holders may be taxable at preferential rates applicable to long-term capital gain if we are
treated as a “qualified foreign corporation,” provided certain holding period requirements are met (as discussed below).A
foreign corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on ordinary
shares that are readily tradable on an established securities market in the United States. Our ordinary shares are listed on the Nasdaq
Capital Market, and thus, pursuant to the United States Treasury Department guidance, our ordinary shares are treated as readily tradable
on an established securities market in the United States. Thus, we believe that dividends we pay on our ordinary shares will meet the
conditions required for the reduced tax rate.
A
qualified foreign corporation also includes a foreign corporation that is eligible for the benefits of certain income tax treaties with
the United States. In the event that we are deemed to be a PRC resident enterprise under the PRC tax law, we believe that we would be
eligible for the benefits of the income tax treaty between the United States and the PRC (including any protocol thereunder), or the
Treaty, and if we are eligible for such benefits, dividends we pay on our ordinary shares, regardless of whether such shares are readily
tradable on an established securities market in the United States, would be eligible for the reduced tax rates. For a discussion regarding
whether we may be classified as a PRC resident enterprise, see “Item 10. Additional Information—E. Taxation—People’s
Republic of China Taxation.”
Even
if dividends we pay on our ordinary shares would be treated as paid by a qualified foreign corporation, non-corporate U.S. Holders will
not be eligible for the reduced tax rates if they do not hold our ordinary shares for more than 60 days during the 121-day period beginning
60 days before the ex-dividend date or to the extent that such U.S. Holders elect to treat the dividend income as “investment income”
under the Code. In addition, the tax rate reduction will not apply if the recipient of a dividend is obligated to make related payments
with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period
has been met. The U.S Holders should consult their tax advisors regarding the application of these rules in their particular circumstances.
Non-corporate
U.S. Holders will not be eligible for the reduced tax rate on any dividends received from us if we are a PFIC for the taxable year in
which such dividends are paid or for the preceding taxable year.
In
the event that we are deemed to be a PRC resident enterprise under the PRC tax law, a U.S. Holder may be subject to PRC withholding taxes
on dividends paid to the U.S. Holder with respect to our ordinary shares. See “Item 10. Additional Information—E. Taxation—People’s
Republic of China Taxation.” In that case, PRC withholding taxes on dividends (limited, in the case of a U.S. holder who qualifies
for the benefits of the Treaty, to the extent not exceeding the applicable dividend withholding rate under the Treaty) generally will
be treated as foreign taxes eligible for credit against the U.S. Holder’s United States federal income tax liability. For purposes
of calculating the foreign tax credit, dividends paid on the ordinary shares will be treated as foreign-source income and generally will
constitute passive category income. The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their
tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
To
the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined
under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a
reduction in the adjusted basis of the ordinary shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be
recognized by a U.S. Holder on a subsequent disposition of the ordinary shares), and the balance in excess of adjusted basis will be
taxed as capital gain recognized on a sale or exchange. However, we do not expect to calculate our earnings and profits in accordance
with United States federal income tax principles. Therefore, U.S. Holders should expect that a distribution generally will be treated
as a dividend (as discussed above).
Passive Foreign Investment Company
If
we are a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, the U.S. Holder will generally be subject to
the special tax rules discussed below, regardless of whether we remain a PFIC, except if the U.S. Holder makes a timely mark-to-market
election discussed below.
These
special tax rules generally apply to any “excess distribution” (generally any distribution paid during a taxable year
to a U.S. Holder which is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter,
the U.S. Holder’s holding period for the ordinary shares) we make to the U.S. Holder and any gain realized from a sale or other
disposition of our ordinary shares. Distributions received in a taxable year that are greater than 125% of the average annual distributions
received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be treated as excess
distributions. Under these special tax rules:
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the excess distribution
or gain will be allocated ratably over the U.S Holder’s holding period for the ordinary shares, |
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the amount allocated to
the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC with respect to the U.S. Holder
(each, a “pre-PFIC year”), will be treated as ordinary income, and |
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the amount allocated to
each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or
corporations, as appropriate, for that taxable year; and. |
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the interest charge generally
applicable to underpayments of tax will be imposed on the resulting tax attributable to each prior taxable year, other than a pre-PFIC
year. |
If
we are a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares and any of our non-United States subsidiaries,
including our VIEs, is also a PFIC, the U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the
lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application
of the PFIC rules to any of our subsidiaries.
As
an alternative to the excess distribution rules discussed above, a U.S. Holder of “marketable stock” in a PFIC may make
a mark-to-market election with respect to such stock. “Marketable stock” is generally stock that is regularly traded on a
qualified exchange.
If
the U.S. Holder makes an effective mark-to-market election, which is generally effective for the taxable year for which the election
is made and all subsequent taxable years, the U.S. Holder will generally (i) include as ordinary income for each taxable year that
we are a PFIC the excess, if any, of the fair market value of the ordinary shares held at the end of the taxable year over the adjusted
tax basis in the ordinary shares, and (ii) deduct as an ordinary loss in each such taxable year the excess, if any, of the adjusted
tax basis in the ordinary shares over their fair market value at the end of the taxable year, but only to the extent of the net amount
previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ordinary
shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. Any gain the U.S. Holder recognizes
upon the sale or other disposition of its ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss
will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market
election. If we cease to be a PFIC, the U.S. Holder will not be required to take into account the gain or loss described above during
any period that we are not a PFIC. Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may
own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any
investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. U.S. Holders are urged
to consult their tax advisors about the availability of the mark-to-market election, and whether making the election would be advisable
in their particular circumstances.
Instead
of making a mark-to-market election, a U.S. investor in a PFIC may generally mitigate the adverse consequences of the excess distribution
rules described above by electing to treat the PFIC as a “qualified electing fund” under the Code. However, we do not
intend to provide the information necessary for U.S. Holders to make such an election.
We
expect to file annual reports on Form 20-F with the U.S. Securities and Exchange Commission in which we will indicate whether we
believe we were a PFIC for the relevant taxable year. We do not intend to make any other annual determination or otherwise notify U.S.
Holders regarding our status as a PFIC for any taxable year. U.S. Holders are urged to consult their tax advisors regarding the U.S.
federal income tax consequences of holding our ordinary shares if we are a PFIC in any taxable year.
If a U.S. Holder
owns (or is deemed to own) our ordinary shares during any taxable year that we are a PFIC, the U.S. Holder must generally file an annual
IRS Form 8621 or such other form as is required by the United States Treasury Department with respect to us. Taxation of Capital
Gains
For
U.S. federal income tax purposes, a U.S. Holder will generally recognize gain or loss on any sale or exchange of our ordinary shares
in an amount equal to the difference between the amount realized for the ordinary shares and the U.S. Holder’s adjusted tax basis
in the ordinary shares. Subject to the discussion under “—Passive Foreign Investment Company” above, such gain or loss
will generally be capital gain or loss. Any capital gain or loss will be long-term if the ordinary shares have been held for more than
one year. The deductibility of capital losses may be subject to limitations.
Any
such gain or loss the U.S. Holder recognizes will generally be treated as United States source income or loss for foreign tax credit
limitation purposes, which will generally limit the availability of foreign tax credits. However, if we are treated as a PRC resident
enterprise for PRC tax purposes and PRC tax were imposed on any gain, and if the U.S. Holder is eligible for the benefits of the Treaty,
the U.S. Holder may elect to treat such gain as PRC source gain under the Treaty and, accordingly, the U.S. Holder may be able to credit
the PRC tax against the U.S. Holder’s United States federal income tax liability. If the U.S. Holder is not eligible for the benefits
of the Treaty or fails to make the election to treat any gain as PRC source, then the U.S. Holder generally would not be able to use
the foreign tax credit arising from any PRC tax imposed on the disposition of our ordinary shares unless such credit can be applied (subject
to applicable limitations) against tax due on other income treated as derived from foreign sources. The U.S. Holder will be eligible
for the benefits of the Treaty if, for purposes of the Treaty, the U.S. Holder is a resident of the United States, and the U.S. Holder
meets other factual requirements specified in the Treaty. Because qualification for the benefits of the Treaty is a fact-intensive inquiry
which depends upon the particular circumstances of each investor, U.S. Holders are specifically urged to consult their tax advisors regarding
their eligibility for the benefits of the Treaty and the availability of the foreign tax credit and the election to treat any gain as
PRC source under their particular circumstances.
Information Reporting and Backup Withholding
Payments
of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally
are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other
exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and
certifies that it is not subject to backup withholding.
Backup
withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit
against the U.S. holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information
is timely furnished to the IRS.
Foreign Asset Reporting
Certain U.S. Holders who
are individuals (and under proposed regulations, certain entities) may be required to report information relating to an interest in our
ordinary shares, subject to certain exceptions (including an exception for shares held in accounts maintained by U.S. financial institutions)
on IRS Form 8938. U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any,
with respect to their ownership and disposition of our ordinary shares.
This summary does not contain a detailed description
of all the United States federal income tax consequences that may be applicable to you in light of your particular circumstances and,
except as set forth below with respect to PRC tax considerations, does not address the effects of any state, local or non-United States
tax laws. If you are considering the purchase, ownership or disposition of our ordinary shares, you should consult your own tax advisors
concerning the United States federal income tax consequences to you in light of your particular situation as well as any consequences
arising under the laws of any other taxing jurisdiction.
LEGAL MATTERS
Certain legal matters as
to U.S. federal securities law concerning this offering will be passed upon for us by Sichenzia Ross Ference LLP, New York, New York.
Certain legal matters as to Cayman Islands law will be passed upon for us by Maples and Calder (Hong Kong) LLP. Certain legal matters
as to PRC law will be passed upon for us by Deheng Law Offices. Sichenzia Ross Ference LLP may rely upon Maples and Calder (Hong Kong)
LLP with respect to matters governed by Cayman Islands law and Deheng Law Offices with respect to matters governed by PRC law.
EXPERTS
The financial statements
as of December 31, 2022 and 2021 and for the years then ended included in this prospectus have been so included in reliance on the
report of Onestop Assurance PAC and Shanghai Perfect C.P.A. Partnership respectively, each an independent registered public accounting
firm, given on the authority of said firms as experts in auditing and accounting.
EXPENSES
The following are the estimated
expenses of the issuance and distribution of the securities being registered under the registration statement of which this prospectus
forms a part, all of which will be paid by us. With the exception of the SEC registration fee, all amounts are estimates and may change:
SEC registration fee | |
$ | 10,066 | |
Printer fees and expenses | |
$ | 35,000 | |
Legal fees and expenses | |
$ | 65,000 | |
Accounting
fees and expenses(1) | |
$ | 10,500 | |
Miscellaneous | |
$ | 5,000 | |
Total | |
$ | 125,566 | |
(1) |
Including fees associated
with incremental audit procedures for 2019-2021 required to comply with PCAOB standards. |
ENFORCEABILITY OF CIVIL
LIABILITIES
We are incorporated under
the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands to take advantage
of certain benefits associated with being a Cayman Islands exempted company, such as:
| · | political
and economic stability; |
| · | an
effective judicial system; |
| · | a
favorable tax system; |
| · | the
absence of exchange control or currency restrictions; and |
| · | the
availability of professional and support services. |
However, certain disadvantages
accompany incorporation in the Cayman Islands. These disadvantages include but are not limited to:
| · | the
Cayman Islands has a less developed body of securities laws as compared to the United States
and these securities laws provide significantly less protection to investors as compared
to the United States; and |
| · | Cayman
Islands companies may not have standing to sue before the federal courts of the United States. |
Our memorandum and articles
of association does not contain provisions requiring that disputes, including those arising under the securities laws of the United States,
between us, our officers, directors and shareholders, be arbitrated.
A substantial portion of
our operations are conducted through our PRC subsidiary in China. A substantial portion of our directors and executive officers are nationals
or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States.
As a result, it may be difficult for a shareholder to effect service of process within the United States upon these individuals, or to
bring an action against us or these individuals in the United States, or to enforce against us or them judgments obtained in United States
courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in
the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions
of the U.S. federal securities laws against us and our officers and directors.
There is uncertainty as to
whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors
or officers that are predicated upon the civil liability provisions of the securities laws of the United States or any state in the United
States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated
upon the securities laws of the United States or any state in the United States. Although there is no statutory enforcement in the Cayman
Islands of judgments obtained in a U.S. court (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement
or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign monetary judgment
of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle
that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay a liquidated sum for which such judgment
has been given, provided such judgment (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment
debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final and conclusive, (iv) is not
in respect of taxes, a fine or a penalty, (v) is not inconsistent with a Cayman Islands judgment in respect of the same matter,
and (vi) is not impeachable on the grounds of fraud and was not obtained in a manner and is not of a kind the enforcement of which
is contrary to natural justice or the public policy of the Cayman Islands.
However, the Cayman Islands
courts are unlikely to enforce a judgment obtained from the United States courts under civil liability provisions of the securities laws
if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive
in nature. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
There is uncertainty as to
whether the courts of China would:
| · | recognize
or enforce judgments of United States courts obtained against us or our directors or officers
predicated upon the civil liability provisions of the securities laws of the United States
or any state in the United States; or |
| · | entertain
original actions brought in each respective jurisdiction against us or our directors or officers
predicated upon the securities laws of the United States or any state in the United States. |
The recognition and enforcement
of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance
with the requirements of the PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between China
and the country where the judgment is made or on principles of reciprocity between jurisdictions. There exists no treaty and few other
forms of reciprocity between China and the United States or the Cayman Islands governing the recognition and enforcement of foreign judgments
as of the date of this prospectus. In addition, according to the PRC Civil Procedures Law, courts in China will not enforce a foreign
judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national
sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment
rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law and PRC Law on the Application
of Laws to Foreign-related Civil Relations, foreign shareholders may originate actions based on PRC law before a PRC court against a
company for disputes relating to contracts or other property interests, and the PRC court may accept a cause of action based on the laws
or the parties’ express mutual agreement in contracts choosing PRC courts for dispute resolution if such foreign shareholders can
establish sufficient nexus to the PRC for a PRC court to have jurisdiction and meet other procedural requirements, including, among others,
that the plaintiff must have a direct interest in the case and that there must be a concrete claim, a factual basis and a cause for the
case. The PRC court will determine whether to accept the complaint in accordance with the PRC Civil Procedures Law and PRC Law on the
Application of Laws to Foreign-related Civil Relations. The shareholder may participate in the action by itself or entrust any other
person or PRC legal counsel to participate on behalf of such shareholder. Foreign citizens and companies will have the same rights as
PRC citizens and companies in an action unless the home jurisdiction of such foreign citizens or companies restricts the rights of PRC
citizens and companies.
There is uncertainty as to
whether the judgment of United States courts will be directly enforced in Hong Kong, as the United States and Hong Kong do not have a
treaty or other arrangements providing for reciprocal recognition and enforcement of judgments of courts of the United States in civil
and commercial matters. However, a foreign judgment may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court
since the judgment may be regarded as creating a debt between the parties to it, provided that the foreign judgment, among other things,
is a final judgment conclusive upon the merits of the claim and is for a liquidated amount in a civil matter and not in respect of taxes,
fines, penalties, or similar charges. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained
by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition
would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the
judgment was in conflict with a prior Hong Kong judgment.
In addition, it will be difficult
for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the laws
of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our ordinary shares, to establish a connection
to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
We have filed with the SEC
a registration statement on Form F-1 under the Securities Act relating to this registration of the ordinary shares to be sold by
the selling shareholders, or the Registration Statement. This prospectus, which is part of the Registration Statement, does not contain
all of the information contained in the Registration Statement. The rules and regulations of the SEC allow us to omit certain information
from this prospectus that is included in the Registration Statement. Statements made in this prospectus concerning the contents of any
contract, agreement or other document are summaries of all material information about the documents summarized, but are not complete
descriptions of all terms of these documents. If we filed any of these documents as an exhibit to the Registration Statement, you may
read the document itself for a complete description of its terms.
The SEC also maintains an
Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with
the SEC are also available to the public through the SEC’s website at http://www.sec.gov.
We are not currently subject
to the information reporting requirements of the Exchange Act. In connection with when the Registration Statement is declared effective
by the SEC, we will become subject to the information reporting requirements of the Exchange Act that are applicable to foreign private
issuers. Accordingly, we will be required to file or furnish reports and other information with the SEC. Those other reports or other
information may be inspected without charge at the locations described above. As a foreign private issuer, we are exempt from the rules under
the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are
exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we
are not required under the Exchange Act to file annual, quarterly, and current reports and financial statements with the SEC as frequently
or as promptly as United States companies whose securities are registered under the Exchange Act. However, we will file with the SEC,
within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F
containing financial statements audited by an independent registered public accounting firm, and intend to submit to the SEC, on Form 6-K,
unaudited interim financial information.
We
maintain a corporate website at https://mercurityfintech.com/. Information contained on, or that can be accessed through,
our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive
textual reference. We will post on our website any materials required to be so posted on such website under applicable corporate or securities
laws and regulations, including, posting any XBRL interactive financial data required to be filed with the SEC and any notices of general
meetings of our shareholders.
MATERIAL CHANGES
Except as otherwise described
in our Annual Report on Form 20-F
for the fiscal year ended December 31, 2022, and our Reports on Form 6-K filed or submitted under the Exchange Act and
incorporated by reference herein and as disclosed in this prospectus, no reportable material changes have occurred since December 31,
2022.
INCORPORATION BY REFERENCE
The
SEC allows us to incorporate by reference much of the information that we file with the SEC, which means that we can disclose important
information to you by referring you to those publicly available documents. The information that we incorporate by reference in this prospectus
is considered to be part of this prospectus. This prospectus incorporates by reference the documents listed below (other than any portions
of such documents that are not deemed “filed” under the Exchange Act in accordance with the Exchange Act and applicable SEC
rules):
Any
information contained in this prospectus or in any document incorporated by reference in this prospectus will be deemed to be modified
or superseded to the extent that a statement contained in any prospectus supplement or free writing prospectus provided to you by us
modifies or supersedes the original statement.
The
reports and documents incorporated by reference into this prospectus are available to the public free of charge on the investor relations
portion of our website located at https://mercurityfintech.com/. You may also request a copy of these filings, at no cost, by writing
to us at the following addresses:
Mercurity Fintech Holding
Inc.
1330 Avenue of Americas,
Fl 33,
New York, 10019, United
State
Attention: Chief Financial
Officer, Yukuan Zhang
Email: mike@mercurityfintech.com
32,087,130 ordinary shares
Mercurity Fintech Holding Inc.
PROSPECTUS
,
2023
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification of Directors, Officers
and Employees
Indemnification
Cayman Islands law does not
limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except
to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification
against civil fraud or the consequences of committing a crime. Our fourth amended and restated memorandum and articles of association
permit indemnification of officers and directors for the time being of the Company for all actions, costs, charges, losses, damages and
expenses incurred or sustained by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed
duty, in their capacities as such unless such losses or damages arise from dishonesty or fraud which may attach to such directors or
officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, we intend to enter into indemnification agreements with our directors and senior executive officers that will provide such
persons with additional indemnification beyond that provided in our fourth amended and restated memorandum and articles of association.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under 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.
Item 7. Recent Sales of Unregistered Securities
Set forth below are the sales
of all securities by the Company since January 1, 2022, which were not registered under the Securities Act. The Company believes
that each of such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities
Act, Rule 701 and/or Regulation S under the Securities Act.
On November 11, 2022,
we entered into a Securities Purchase Agreement in connection with a private investment in public equity (the “PIPE”) financing
with certain non-U.S. investors to offer and sell our units, each consisting of one ordinary share and three warrants for total gross
proceeds of USD$3.15 million (the “First PIPE Proceeds”).
On November 30, 2022,
we entered into a Securities Purchase Agreement with two investors to offer and sell our units, each consisting of one ordinary share
and three warrants for total gross proceeds of USD$5 million (the “Second PIPE Proceeds”).
On December 15, 2022,
we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Huangtong International Co., Ltd.
(the “Vendor” or “Huangtong International”), providing for the acquisition of certain assets, for an aggregate
consideration of USD$5,980,000, payable in our ordinary shares. Pursuant to the Asset Purchase Agreement, we completed payment for the
acquired assets in the form of our ordinary shares (the “Purchase Price Shares”), at a stipulated price of USD$0.0022 per
share, in the aggregate amount of 2,718,181,818 shares. We also issued Huangtong International certain amount of warrants, with an exercise
price of USD$0.00167 per ordinary share, subject to certain conditions.
On December 23, 2022,
we entered into a Securities Purchase Agreement in connection with a private investment in public equity (the “PIPE”) financing
with an accredited non-U.S. investor to offer and sell our units, each consisting of one ordinary share and three warrants for total
gross proceeds of USD$5 million.
On February 6, 2023,
we entered into a Securities Purchase Agreement (“SPA”) with a non-U.S. investor (the “Purchaser”). Pursuant
to the SPA, we issued the Purchaser an Unsecured Convertible Promissory Note with a face value of $9 million upon receiving the proceeds
from the Purchaser on February 2, 2023. The Note shall bear non-compounding interest at a rate per annum equal to 5% from the date
of issuance until repayment of the Note unless the Purchaser elects to convert the Note into ordinary shares. If the Purchaser does not
elect to convert the Note, then the outstanding principal amount and all accrued but unpaid interest on the Note shall be due and payable
upon the one-year anniversary of the Issuance Date of the Note (the “Maturity Date”). The Purchaser has the right to convert
the outstanding balance under the Note into the Company’s ordinary shares (the “Conversion Shares”) at a per share
price equal to $0.00172 (the “Conversion Share Price”) according to the terms and conditions of the Note. In addition, upon
conversion of the Note, the Purchaser shall receive 100% warrant coverage equal to the number of Conversion Shares with the exercise
price at the Conversion Share Price.
Item 8. Exhibits and Financial Statement Schedules
Exhibit
Number |
|
Exhibit Description |
3.1 |
|
Fourth
Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to exhibit 1.1 of our annual
report on Form 20-F filed with the SEC on June 12, 2020) |
4.1 |
|
Description
of Securities (incorporated by reference to exhibit 2.3 of our annual report on Form 20-F filed with the SEC on June 12,
2020) |
4.2 |
|
Specimen
Certificate for ordinary shares (incorporated by reference to exhibit 4.2 to our F-1 registration statement (File No. 333-201413)
initially filed with the SEC on January 9, 2015) |
5.1* |
|
Legal opinion of Maples and Calder (Hong Kong) LLP |
5.2* |
|
Legal opinion of Deheng Law Offices |
10.1+ |
|
Amended
and Restated 2011 Share Incentive Plan (incorporated by reference to exhibit 10.1 to our S- 8 registration statement (File No. 333-206466)
filed with the SEC on August 19, 2015) |
10.2+ |
|
2020
Share Incentive Plan (incorporated by reference to Exhibit 4.2 of the annual report on Form 20-F filed with the SEC on
June 15, 2022) |
10.3+ |
|
2021
Share Incentive Plan (incorporated by reference to exhibit 10.1 to our S- 8 registration statement (File No. 333-259774) filed
with the SEC on September 24, 2021) |
10.4+ |
|
2022
Share Incentive Plan (incorporated by reference to Exhibit 4.4 of the annual report on Form 20-F filed with the SEC on
April 25, 2023) |
10.5 |
|
Share
Purchase Agreement, dated as of September 2, 2021, by and between the Registrant and TEAO TECHNOLOGY CO., LIMITED, GUANRUI TECHNOLOGY
CO., LIMITED and Xuan Ying Co., Ltd (incorporated by reference to Exhibit 4.7 of the annual report on Form 20-F filed with
the SEC on June 15, 2022) |
10.6 |
|
Share
Purchase Agreement, dated as of September 27, 2021, by and between the Registrant and Newlight X Ltd. (incorporated by reference
to Exhibit 4.9 of the annual report on Form 20-F filed with the SEC on June 15, 2022) |
10.7 |
|
Share
Purchase Agreement, dated as of September 27, 2021, by and between the Registrant and Castlewood Fintech Ltd. (incorporated
by reference to Exhibit 4.10 of the annual report on Form 20-F filed with the SEC on June 15, 2022) |
10.8 |
|
Share
Purchase Agreement, dated as of September 27, 2021, by and between the Registrant and Brighton Fintech Ltd. (incorporated by
reference to Exhibit 4.11 of the annual report on Form 20-F filed with the SEC on June 15, 2022) |
10.9 |
|
English
translation of Termination Agreement Re Existing Control Documents, dated as of January 15, 2022, by and among Beijing Lianji
Future Technology Co., Ltd., Beijing Lianji Technology Co., Ltd. and the shareholders of Beijing Lianji Technology Co., Ltd.
(incorporated by reference to exhibit 10.1 to current report on Form 6-K filed with the SEC on February 7, 2022) |
10.10 |
|
English
translation of Termination Agreement Re Existing Control Documents, dated as of January 15, 2022, by and among Beijing Lianji
Future Technology Co., Ltd., Mercurity (Beijing) Technology Co., Ltd. and the shareholders of Mercurity (Beijing) Technology
Co., Ltd. (incorporated by reference to exhibit 10.2 to current report on Form 6-K filed with the SEC on February 7,
2022) |
10.11 |
|
Promissory
note in the principal amount of up to USD$5,000,000 dated June 13, 2022 (incorporated by reference to exhibit 4.1 to current
report on Form 6-K filed with the SEC on June 17, 2022) |
10.12 |
|
Share
Purchase Agreement, dated as of November 11, 2022 (incorporated by reference to Exhibit 4.12 of the annual report on Form 20-F
filed with the SEC on April 25, 2023) |
10.13 |
|
Share
Purchase Agreement, dated as of November 30, 2022 (incorporated by reference to Exhibit 4.13 of the annual report on Form 20-F
filed with the SEC on April 25, 2023) |
10.14 |
|
Asset
Purchase Agreement, dated as of December 15, 2022 (incorporated by reference to Exhibit 4.14 of the annual report on Form 20-F
filed with the SEC on April 25, 2023) |
10.15 |
|
Share
Purchase Agreement, dated as of December 23, 2022 (incorporated by reference to Exhibit 4.15 of the annual report on Form 20-F
filed with the SEC on April 25, 2023) |
10.16 |
|
Securities
Purchase Agreement dated as of January 31, 2023, for the issuance of an Unsecured Convertible Promissory Note (incorporated
by reference to Exhibit 4.16 of the annual report on Form 20-F filed with the SEC on April 25, 2023) |
10.17 |
|
The
Chief Executive Officer Employment Agreement with Mercurity Fintech Holding Inc. (incorporated by reference to Exhibit 4.17
of the annual report on Form 20-F filed with the SEC on June 15, 2022) |
10.18 |
|
The
Chief Operating Officer Employment Agreement with Mercurity Fintech Holding Inc. (incorporated by reference to Exhibit 10.1
of Form 6-K filed with the SEC on October 18, 2022) |
21.1 |
|
List
of Subsidiaries (incorporated by reference to Exhibit 8.1 of the annual report on Form 20-F filed with the SEC on April 25, 2023). |
23.1* |
|
Consent of Onestop Assurance PAC, independent registered public accounting
firm. |
23.2* |
|
Consent of Shanghai Perfect C.P.A. Partnership |
24.1* |
|
Power of Attorney (included on signature page to the Registration Statement
on Form F-1). |
107* |
|
Filing Fee Table |
* |
Filed herewith. |
|
|
^ |
Certain schedules and exhibits
have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the SEC upon request. |
|
|
+ |
Management contract or
compensatory plan or arrangement. |
Financial Statement Schedules:
All financial statement schedules
have been omitted because either they are not required, are not applicable or the information required therein is otherwise set forth
in the Company’s financial statements and related notes thereto.
Item 9. Undertakings
(a) |
The undersigned Registrant
hereby undertakes: |
(1) |
To file, during any period
in which offers or sales are being made, a post-effective amendment to this registration statement: |
i. |
To include any prospectus
required by section 10(a)(3) of the Securities Act of 1933; |
ii. |
To reflect in the prospectus
any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective registration statement; |
iii. |
To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change
to such information in the registration statement. |
(2) |
That, for the purpose of
determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. |
(3) |
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) |
To file a post-effective
amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start
of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of
the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required
by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained
in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3. |
(5) |
That for purposes of determining
any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective. |
(6) |
That for the purpose of
determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. |
(b) |
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration
statement on Form F-1 to be signed on its behalf by the undersigned, thereunto duly authorized, on May 30, 2023.
MERCURITY FINTECH HOLDING INC. |
|
|
|
|
By: |
/s/
Shi Qiu |
|
|
Shi Qiu |
|
|
Chief Executive Officer |
|
POWER OF ATTORNEY
The undersigned officers
and directors of Mercurity Fintech Holding Inc. hereby constitute and appoint Shi Qiu with full power of substitution our true and lawful
attorney-in-fact and agents to take any actions to enable the Company to comply with the Securities Act, and any rules, regulations and
requirements of the SEC, in connection with this registration statement on Form F-1, including the power and authority to sign for
us in our names in the capacities indicated below any and all further amendments to this registration statement and any other registration
statement filed pursuant to the provisions of Rule 462 under the Securities Act.
Pursuant to the requirements
of the Securities Act of 1933, this amendment to the registration statement on Form F-1 has been signed by the following persons
in the capacities and on the dates indicated.
Signature |
|
Title |
|
Date |
/s/ Shi Qiu |
|
Chief Executive Officer and Director, |
|
May 30, 2023 |
Shi Qiu |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Lynn Alan Curtis |
|
Chairperson of the Board of Directors |
|
May 30, 2023 |
Lynn Alan Curtis |
|
|
|
|
|
|
|
|
|
/s/ Daniel Kelly Kennedy |
|
Director |
|
May 30, 2023 |
Daniel Kelly Kennedy |
|
|
|
|
|
|
|
|
|
/s/ Zheng Cui |
|
Independent Director |
|
May 30, 2023 |
Zheng Cui |
|
|
|
|
|
|
|
|
|
/s/ Qian Sun |
|
Chief Operating Officer and Director |
|
May 30, 2023 |
Qian Sun |
|
|
|
|
|
|
|
|
|
/s/ Hui Cheng |
|
Independent Director |
|
May 30, 2023 |
Hui Cheng |
|
|
|
|
|
|
|
|
|
/s/ Xiang Qu |
|
Independent Director |
|
May 30, 2023 |
Xiang Qu |
|
|
|
|
|
|
|
|
|
/s/ Er-Yi Toh |
|
Independent Director |
|
May 30, 2023 |
Er-Yi Toh |
|
|
|
|
|
|
|
|
|
/s/ Cong Huang |
|
Independent Director |
|
May 30, 2023 |
Cong Huang |
|
|
|
|
|
|
|
|
|
/s/ Keith Tan Jun Jie |
|
Director |
|
May 30, 2023 |
Keith Tan Jun Jie |
|
|
|
|
|
|
|
|
|
/s/ Yukuan Zhang |
|
Chief Financial Officer |
|
May 30, 2023 |
Yukuan Zhang |
|
|
|
|
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE
UNITED STATES
Pursuant to the Securities
Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of America of Mercurity Fintech Holding
Inc., has signed this registration statement in New York, NY on May 30, 2023.
|
COGENCY
GLOBAL INC. |
|
|
|
By: |
/s/
Colleen A. De Vries |
|
Name: |
Colleen A. De Vries |
|
Title: |
Senior Vice President on behalf of Cogency Global Inc. |
Mercurity Fintech (NASDAQ:MFH)
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From Apr 2024 to May 2024
Mercurity Fintech (NASDAQ:MFH)
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From May 2023 to May 2024