Hong Kong, July 11, 2025 (GLOBE NEWSWIRE) -- NFT Limited (“MI” or the “Company”) (NYSE: MI) today announced that on April 30, 2025, the Company filed its annual report on Form 20-F for the year ended December 31, 2024 (the “Form 20-F”) with the U.S. Securities and Exchange Commission (the “SEC”). In compliance with the New York Stock Exchange rules, the Form 20-F is available on the Company’s website at www.nftoeo.com. In addition, all shareholders of the Company may request, free of charge, a hard copy of ...

Group 1 - The Conservative Income Portfolio targets high-value stocks with significant margins of safety and aims to reduce volatility through well-priced options [1][3] - The Enhanced Equity Income Solutions Portfolio is designed to generate yields of 7-9% while minimizing volatility [1] - Trapping Value offers Covered Calls and Preferred Stock Trader focuses on Fixed Income, emphasizing capital preservation and high income potential [2][3] Group 2 - Trapping Value consists of a team of analysts with over 40 years of combined experience in generating options income and capital preservation [3] - The investing group features two income-generating portfolios and a bond ladder, catering to different investment strategies [3]

Professional Background - Eric works at RBC Insurance on their investment team and holds a Master's degree in Financial Economics from the University of Western Ontario [1] - Eric has completed all three levels of the CFA program and is accumulating the work experience required to obtain the CFA charter [1] - His professional interests include real assets, financials, and insurance [1] Analyst's Position - The analyst holds a beneficial long position in the shares of MI UN CA through stock ownership, options, or other derivatives [2] - The article expresses the analyst's own opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section details the company's financial performance and position, management's analysis, market risk, and internal controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements reflect a significant strategic shift and a turnaround to net profit, primarily driven by the disposal of legacy art trading subsidiaries [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects an increase in total assets and shareholders' equity, alongside a significant reduction in liabilities, primarily due to discontinued operations Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$69,099,466** | **$67,751,063** | | Cash and cash equivalents | $63,642,594 | $63,655,877 | | Assets – discontinued operations | $0 | $1,383,879 | | **Total Liabilities** | **$9,935,569** | **$15,344,281** | | Liabilities - discontinued operations | $0 | $8,700,835 | | **Total Shareholders' Equity** | **$59,163,897** | **$52,406,782** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The statements show a significant turnaround from a net loss to a net profit, primarily driven by a substantial gain from the disposal of subsidiaries and increased revenue from continuing operations Six Months Ended June 30, Performance Summary (Unaudited) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue - Continuing Operations | $1,274,518 | $694,175 | | Net Loss - Continuing Operations | $(80,890) | $(7,326,278) | | Net Profit/(Loss) - Discontinued Operations | $6,847,863 | $(622,831) | | Gain on disposal of subsidiaries | $6,869,809 | $0 | | **Total Net Profit/(Loss)** | **$6,766,973** | **$(7,949,109)** | | Basic EPS (Continuing) | $(0.002) | $(0.391) | | Basic EPS (Discontinued) | $0.196 | $(0.033) | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Shareholders' equity increased significantly, primarily driven by the period's net profit, which included a substantial gain from the disposal of subsidiaries - The increase in total equity to **$59,163,897** was mainly due to a net profit of **$6,766,973**, which was significantly impacted by a **$6,869,809** gain from the disposal of subsidiaries, offsetting operational losses[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities reversed to a net use, while financing activities provided cash, resulting in a strong ending cash and restricted cash balance Six Months Ended June 30, Cash Flow Summary (Unaudited) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $(926,378) | $5,360,203 | | Net Cash from Investing Activities | $61,376 | $(1,656) | | Net Cash from Financing Activities | $500,000 | $30,300,007 | | **Ending Cash, Cash Equivalents & Restricted Cash** | **$67,202,504** | **$37,306,462** | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the strategic shift through subsidiary disposal, a significant investment impairment, and key financial and management changes post-quarter end - On May 23, 2023, stockholders approved the sale of subsidiaries Hong Kong Takung and Hong Kong MQ for **$1.5 million**, shifting the company's focus to its NFT business. The disposal resulted in a gain of **$6,869,809**[22](index=22&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) - The company's investment in Cultural Objects Provenance Holdings Limited, with an initial value of **$10,630,120**, was fully impaired as of June 30, 2023[31](index=31&type=chunk)[85](index=85&type=chunk) - The company has outstanding short-term borrowings of **$2,050,000** from a third party, Guohui Li, with a weighted average interest rate of **0%**[91](index=91&type=chunk)[92](index=92&type=chunk) - Subsequent to the quarter end, on July 10, 2023, CFO Jianguang Qian resigned and was replaced by Yaobin Wang[114](index=114&type=chunk)[115](index=115&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic pivot to the NFT market, highlighting significant revenue growth, a major profitability turnaround, and a strong liquidity position - The company has shifted its business model to focus on the NFT market, operating an online platform for artists and investors at https://www.nftoeo.com/, which was launched in May 2022[120](index=120&type=chunk) - The new strategic direction is to create a digital ecological platform for various assets including games, art, and collectibles, with revenue streams from consulting, transaction services, and advertising[127](index=127&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Revenue from continuing operations significantly increased, leading to a net profit turnaround primarily driven by the gain on subsidiary disposal and the absence of prior-year impairment losses Comparison of Six Months Ended June 30 (2023 vs 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue (Continuing Operations) | $1,274,518 | $694,175 | | Gross Profit (Continuing Operations) | $973,258 | $543,245 | | G&A Expenses (Continuing Operations) | $1,386,055 | $7,811,719 | | Gain on disposal of subsidiaries | $6,869,809 | $0 | | **Net Profit/(Loss)** | **$6,766,973** | **$(7,949,109)** | - The significant decrease in General & Administrative expenses for continuing operations was mainly because the 2022 period included a **$6,265,686** impairment loss, which did not recur in 2023[168](index=168&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial cash and working capital, which management deems adequate to fund future operations and growth Liquidity Position as of June 30, 2023 | Metric | Amount | | :--- | :--- | | Cash, restricted cash and cash equivalents | $67,202,504 | | Working capital | $59,163,897 | | Total current liabilities | $9,935,569 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is marked as not applicable, indicating the company has no material market risk disclosures to report for the period - The company has indicated that this item is not applicable[182](index=182&type=chunk)[183](index=183&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Company management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures and concluded they were effective as of June 30, 2023. No material changes to internal controls over financial reporting were identified during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2023[182](index=182&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[183](index=183&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides updates on legal proceedings, risk factors, and other miscellaneous information not covered in the financial statements [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company reports an ongoing issue where its PRC subsidiary, Tianjin Takung, had its trading platform suspended by local authorities in November 2021 for an investigation. The company is cooperating, but there have been no new developments as of the filing date - The artwork unit trading platform of the PRC subsidiary, Tianjin Takung, was suspended by local authorities on or around November 8, 2021, to facilitate an investigation. There has been no development regarding this investigation as of the report date[184](index=184&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors disclosed in the company's annual report on Form 10-K filed on April 17, 2023[185](index=185&type=chunk) [Other Part II Items](index=44&type=section&id=Other%20Part%20II%20Items) The company reports no unregistered sales of equity securities (Item 2) and no defaults upon senior securities (Item 3). Mine safety disclosures (Item 4) are not applicable. No other information was reported under Item 5. Item 6 lists the exhibits filed with the report - The company reported no information for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[185](index=185&type=chunk)

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2023 financial statements reflect a strategic pivot to NFT and blockchain businesses, showing initial revenue generation and a reduced net loss Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 65,439,927 | 64,794,688 | | Restricted Cash | 3,395,595 | 2,705,750 | | Total current assets | 69,024,396 | 67,689,687 | | Total assets | 69,076,162 | 67,751,063 | | **Liabilities & Equity** | | | | Total current liabilities | 16,722,235 | 15,344,281 | | Total stockholders' equity | 52,353,927 | 52,406,782 | Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | | Revenue | 699,741 | 0 | | Gross profit | 548,811 | 0 | | Loss from continuing operations | (108,532) | (611,475) | | Net loss | (50,602) | (791,339) | | Loss per share – basic (continuing) | 0.001 | (0.043) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Activity | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | 1,135,168 | 1,560,096 | | Net cash used in investing activities | 0 | (1,153) | | Net cash provided by financing activities | 200,000 | 300,000 | | Net change in cash and restricted cash | 1,334,400 | 1,845,274 | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's strategic pivot to blockchain and NFT ventures, classifying its legacy art business as discontinued, recording a significant impairment, and securing substantial funding for new operations - The company is shifting its business focus to **blockchain** and **non-fungible tokens (NFTs)** through subsidiaries like Hong Kong MQ Group Limited, NFT Digital Technology Limited, and NFT Exchange Limited[21](index=21&type=chunk)[22](index=22&type=chunk) - Hong Kong Takung's operations are classified as discontinued, with plans for disposal to focus on blockchain and NFT business, following the suspension of its PRC subsidiary, Tianjin Takung, by local authorities[33](index=33&type=chunk) - Management concluded substantial doubt exists about the company's ability to continue as a going concern due to PRC operations suspension, with mitigation plans including financing and new NFT business focus[83](index=83&type=chunk) - The company raised approximately **$60 million** in gross proceeds from two securities purchase agreements in April and June 2022 to fund new business model operations[87](index=87&type=chunk) - The company's non-marketable investment in Cultural Objects Provenance Holdings Limited, with an initial cost of **$10,630,120**, has been fully impaired to a carrying value of **$0** as of March 31, 2023[27](index=27&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Subsequent to the quarter, on November 1, 2022, the company agreed to sell its legacy subsidiaries, Hong Kong Takung and Hong Kong MQ, for a cash consideration of **$1,500,000**[139](index=139&type=chunk) - The company entered a Merger Agreement on November 1, 2022, to redomicile from Delaware to the Cayman Islands by merging with its wholly-owned subsidiary, NFT Limited[146](index=146&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic shift to an NFT trading platform, which launched in May 2022, resulting in initial revenue generation and improved financial performance for Q1 2023 - The company launched its **blockchain NFT online platform** at www.nftoeo.com in May 2022, shifting its focus to the NFT market[154](index=154&type=chunk) - The new business model focuses on providing **NFT consulting services**, **NFT trading services** (art, music, collectibles, etc.), and future advertising services[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) Results of Operations Comparison (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (Unaudited) ($) | Q1 2022 (Unaudited) ($) | Change ($) | | :--- | :--- | :--- | :--- | | Revenue | 699,741 | 0 | +699,741 | | Gross Profit | 548,811 | 0 | +548,811 | | General & administrative expenses | (657,343) | (611,475) | +45,868 | | Net loss from continuing operations | (41,619) | (611,574) | +569,955 | | Total Net Loss | (50,602) | (791,339) | +740,737 | - Revenue of **$699,741** in Q1 2023 was entirely from commission fees, as the legacy business generated no revenue and is classified as discontinued[174](index=174&type=chunk)[180](index=180&type=chunk) - As of March 31, 2023, the company's continuing operations had cash and restricted cash of **$68.8 million** and a working capital of **$60.9 million**[198](index=198&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company - As a smaller reporting company, Takung Art Co., Ltd is not required to provide quantitative and qualitative disclosures about market risk[206](index=206&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[207](index=207&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2023[208](index=208&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company's PRC subsidiary, Tianjin Takung, had its artwork unit trading platform suspended by local authorities for investigation, with no new developments reported as of the filing date - The artwork unit trading platform of the PRC subsidiary, Tianjin Takung, was suspended by local authorities on or around November 8, 2021, for an investigation, with no new developments as of the filing date[210](index=210&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Takung Art Co., Ltd is not required to provide risk factor disclosures - The company is not required to provide risk factor disclosures as it is a smaller reporting company[211](index=211&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered securities during the reporting period, other than those previously disclosed in Form 8-K filings - No unregistered securities were sold during the reporting period, aside from any previously reported on Form 8-K[211](index=211&type=chunk) [Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[211](index=211&type=chunk) [Mine Safety Disclosure](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - Not applicable[211](index=211&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[211](index=211&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including corporate documents, agreements, and certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _________________________ Commission file number 001-38036 TAKUNG ART CO., LTD (Exact name of registrant as specified in its charter) | --- | ...

PART I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements reflect a strategic shift to NFT operations, showing substantial increases in cash and total assets from $60 million in PIPE financing, alongside a $7.1 million net loss primarily due to a $6.27 million impairment [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets surged to **$70.5 million**, primarily driven by a **$62.8 million** increase in cash from financing activities, with total shareholders' equity growing to **$55.7 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $62,764,182 | $1,503,153 | | Non-marketable investment, net | $3,030,928 | $9,296,614 | | Total current assets | $67,332,839 | $2,166,540 | | **Total assets** | **$70,469,113** | **$11,653,736** | | **Liabilities & Equity** | | | | Total current liabilities | $14,816,618 | $8,877,053 | | **Total liabilities** | **$14,816,618** | **$8,877,053** | | **Total shareholders' equity** | **$55,652,495** | **$2,776,683** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the nine months ended September 30, 2022, continuing operations generated **$2.33 million** in commission revenue, resulting in a net loss of **$7.1 million**, primarily due to an **$8.14 million** general and administrative expense including an impairment charge Statement of Operations Summary (Nine Months Ended Sep 30) | Metric | 2022 (Unaudited, $) | 2021 (Unaudited, $) | | :--- | :--- | :--- | | Revenue-Continuing operations | $2,329,135 | $0 | | Revenue-Discontinued operations | $0 | $4,531,280 | | Gross profit-continuing operations | $1,961,275 | $0 | | Net Profit/(loss) from continuing operations | $(6,421,188) | $(8,234,124) | | Net Loss from discontinued operations | $(683,540) | $(1,556,975) | | **Net profit/(loss)** | **$(7,104,728)** | **$(9,791,099)** | | Profit/(Loss) from continuing operations per share - basic ($) | $(0.30) | $(0.69) | | Profit/(Loss) from continuing operations per share - diluted ($) | $(0.15) | $(0.69) | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Shareholders' equity significantly increased from **$2.8 million** to **$55.7 million**, primarily driven by approximately **$60 million** from private placement and restricted stock awards, partially offset by a **$7.1 million** net loss - The company executed a private placement raising **$30 million** in the third quarter of 2022[11](index=11&type=chunk) - Issued **10,238,910 shares** for restricted stock awards, valued at approximately **$30 million**, in the second quarter of 2022[11](index=11&type=chunk) Changes in Equity (Dec 31, 2021 to Sep 30, 2022) | Account | Balance, Dec 31, 2021 ($) | Balance, Sep 30, 2022 ($) | | :--- | :--- | :--- | | Common Stock | $14,372 | $34,992 | | Additional Paid-in capital | $32,547,585 | $92,526,972 | | Accumulated deficit | $(29,444,185) | $(36,548,913) | | **Total Equity** | **$2,776,683** | **$55,652,495** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash from operating activities was **$5.0 million**, while financing activities provided **$60.3 million**, primarily from PIPE financings, leading to an ending cash balance of **$66.0 million** for continuing operations Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2022 (Unaudited, $) | 2021 (Unaudited, $) | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,030,729 | $43,471,227 | | Net cash provided by/(used in) investing activities | $85,236 | $(111,771) | | Net cash provided by financing activities | $60,300,007 | $5,180,485 | | **Ending Cash (Continuing Operations)** | **$66,003,706** | **$679,555** | - Net cash from financing activities for continuing operations was **$60,000,007** in the first nine months of 2022, compared to zero in the same period of 2021[13](index=13&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's transformation, classifying the legacy art trading platform as discontinued operations, focusing on the new NFT business, and noting a **$6.27 million** impairment on a non-marketable investment and subsequent plans for redomicile and sale of discontinued operations for **$1 million** - The company's business has shifted to an online platform for NFT trading (www.nftoeo.com) and related services, operated through new subsidiaries like NFT Exchange Limited[15](index=15&type=chunk)[22](index=22&type=chunk)[61](index=61&type=chunk) - The legacy artwork trading business (Hong Kong Takung) was classified as a discontinued operation due to the suspension of its Tianjin Takung subsidiary by local authorities and the company's plan to dispose of it[33](index=33&type=chunk) - A non-marketable investment in Cultural Objects Provenance Holdings Limited was further impaired by **$6,265,686** during the first nine months of 2022, reducing its carrying value to **$3,030,928**[26](index=26&type=chunk)[85](index=85&type=chunk) - Subsequent to the quarter end, on November 1, 2022, the company entered into an agreement to sell its discontinued operations (TKTJ, TKHK, TKMQ) for **$1 million** and also planned a redomicile merger into a Cayman Islands entity[116](index=116&type=chunk)[117](index=117&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic pivot to the NFT market, with continuing operations generating **$2.3 million** in revenue but a **$6.4 million** net loss, primarily due to a **$6.27 million** impairment, while liquidity significantly improved with **$60 million** from PIPE financings - The company launched its new blockchain NFT online trading platform at www.nftoeo.com in May 2022, marking a strategic shift towards digital assets[122](index=122&type=chunk)[123](index=123&type=chunk) Results of Operations (Nine Months Ended Sep 30) | Metric | 2022 (Continuing Ops, $) | 2021 (Continuing Ops, $) | | :--- | :--- | :--- | | Revenue | $2,329,135 | $0 | | Cost of Revenue | $(367,860) | $0 | | Gross Profit | $1,961,275 | $0 | | General & Admin Expenses | $(8,142,254) | $(8,453,469) | | **Net Loss** | **$(6,421,188)** | **$(8,234,124)** | - General and administrative expenses for continuing operations in the first nine months of 2022 included a **$6,265,686** impairment loss on a non-marketable investment[165](index=165&type=chunk) - The company's liquidity was significantly improved by two PIPE financing events, raising a total of **$60 million**, which is intended to fund the new NFT business[173](index=173&type=chunk)[176](index=176&type=chunk) - Management acknowledges risks related to PRC capital controls, which may limit the ability to transfer funds from its PRC subsidiaries to the parent company[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company indicates this item is not applicable - Not applicable[184](index=184&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter - The Company's management concluded that disclosure controls and procedures were effective as of September 30, 2022[184](index=184&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[185](index=185&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company reports its PRC subsidiary, Tianjin Takung, operating an artwork unit trading platform, was suspended by local authorities around November 8, 2021, for investigation, with no new developments as of the report date - The artwork unit trading platform operated by the PRC subsidiary, Tianjin Takung, was suspended by local PRC authorities around November 8, 2021, to facilitate an investigation[187](index=187&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the annual report on Form 10-K filed on April 15, 2022 - No material changes to the risk factors disclosed in the annual report on Form 10-K filed on April 15, 2022[188](index=188&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for this item - None[188](index=188&type=chunk) [Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[188](index=188&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[188](index=188&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This item is not applicable - Not applicable[189](index=189&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed, including securities purchase agreements, warrants, officer certifications, and Inline XBRL data files - Exhibits filed include Securities Purchase Agreements, Warrants, Sarbanes-Oxley Certifications, and Inline XBRL documents[190](index=190&type=chunk) Signatures

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Delaware 26-4731758 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock TKAT NYSE American FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15( ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited interim statements show the company's shift to an NFT business and the discontinuation of its legacy art trading platform [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased due to customer advances for the new NFT business, while equity declined from the net loss Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$13,382,043** | **$11,653,736** | | Cash and cash equivalents | $1,533,468 | $1,503,153 | | Restricted Cash | $2,028,416 | $0 | | Non-marketable investment, net | $9,296,614 | $9,296,614 | | **Total Liabilities** | **$11,375,640** | **$8,877,053** | | Advance from customers | $2,028,416 | $0 | | Short-term borrowing from a third party | $300,000 | $0 | | Current liabilities – discontinued operations | $8,671,980 | $8,733,624 | | **Total Stockholders' Equity** | **$2,006,403** | **$2,776,683** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported zero revenue from continuing operations and a widened net loss due to higher G&A expenses for the new NFT venture Q1 2022 vs Q1 2021 Statement of Operations (Unaudited) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue (Continuing Operations) | $0 | $0 | | General and administrative expenses | ($611,475) | ($359,990) | | **Net loss from continuing operations** | **($611,574)** | **($360,042)** | | **Net loss from discontinued operations** | **($179,765)** | **($212,546)** | | **Net loss** | **($791,339)** | **($572,588)** | | Comprehensive Loss | ($770,280) | ($610,351) | | Loss per share (Continuing - Basic) | ($0.043) | ($0.032) | | Loss per share (Discontinued - Basic) | ($0.013) | ($0.019) | [Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Stockholders' equity decreased by approximately $0.77 million during the quarter, primarily driven by the period's total net loss - Stockholders' equity fell by approximately **$0.77 million** during Q1 2022, moving from $2.78 million to $2.01 million[8](index=8&type=chunk) - The primary drivers of the equity decrease were the **net loss from continuing operations ($611,574)** and **discontinued operations ($179,765)**[8](index=8&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations was positive due to customer advances, and a new loan boosted financing cash flow, increasing total cash Q1 2022 vs Q1 2021 Cash Flow Highlights (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $1,560,096 | $1,651,695 | | Net cash from investing activities | ($1,153) | $389,171 | | Net cash from financing activities | $300,000 | $0 | | **Net increase in cash** | **$1,845,274** | **$2,019,423** | | **Cash at end of period** | **$3,686,969** | **$15,862,168** | [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the strategic pivot to NFTs, the discontinuation of legacy operations, and a going concern warning mitigated by post-quarter financing - The company is shifting its focus to blockchain and non-fungible tokens (NFT) businesses, including developing an NFT marketplace and blockchain-based games[16](index=16&type=chunk)[89](index=89&type=chunk) - Due to the suspension of Tianjin Takung's operations by local authorities, the company has classified its legacy art trading subsidiary, Hong Kong Takung, as a **discontinued operation** and is seeking a buyer[29](index=29&type=chunk)[83](index=83&type=chunk) - Management has concluded there is **substantial doubt about the company's ability to continue as a going concern**, addressed by a **$30 million PIPE transaction** in April 2022[84](index=84&type=chunk)[88](index=88&type=chunk)[150](index=150&type=chunk) - The company holds a non-marketable investment in Cultural Objects Provenance Holdings Limited with a carrying value of **$9,296,614**[22](index=22&type=chunk)[98](index=98&type=chunk)[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to the NFT market, the financial impact of this transition, and the company's liquidity position [Overview](index=33&type=section&id=Overview) The company is transitioning to an NFT business model, launching its platform in May 2022 with a focus on consulting and trading services - The company launched its blockchain NFT online platform at **www.nftoeo.com in May 2022**[156](index=156&type=chunk) - The new business model includes three main revenue streams: **consulting services, NFT trading services, and advertising services**[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - The company expects to generate revenue from **member fees, trading commissions, and advertising fees** on its new NFT platform[169](index=169&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) The Q1 net loss widened year-over-year due to increased G&A expenses for the new NFT business and zero revenue from discontinued operations - Continuing operations generated **no revenue** in Q1 2022 or Q1 2021 as the NFT platform launched in May 2022[171](index=171&type=chunk) - General and administrative expenses for continuing operations **increased by $251,485** year-over-year, mainly due to higher consultancy fees and salaries for NFT platform development[194](index=194&type=chunk) - The net loss from continuing operations grew to **$611,574** in Q1 2022 from $360,042 in Q1 2021[204](index=204&type=chunk) Discontinued Operations Revenue Breakdown (Unaudited) | Revenue Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Listing fee revenue | $0 | $273,792 | | Commission revenue | $0 | $358,086 | | Management fee revenue | $0 | $147,230 | | **Total** | **$0** | **$779,108** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company secured $30 million in post-quarter financing to address a working capital deficit in discontinued operations and fund its new venture - As of March 31, 2022, continuing operations had **cash and restricted cash of $3,561,884** and working capital of $1,808,968[218](index=218&type=chunk) - The discontinued operations had a **working deficit of $8,528,910** as of March 31, 2022[218](index=218&type=chunk) - In April 2022, the company raised approximately **$30 million in gross proceeds** from a securities purchase agreement to fund operations[218](index=218&type=chunk) - The company acknowledges risks related to **PRC capital controls**, which may limit its ability to transfer funds from its PRC subsidiaries[221](index=221&type=chunk) [Critical Accounting Policies](index=46&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies are detailed in Note 2 of the consolidated financial statements - The discussion of critical accounting policies is incorporated by reference from **Note 2, "Summary of Significant Accounting Policies"**[226](index=226&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has indicated that this item is not applicable - Not applicable[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were **effective as of March 31, 2022**[228](index=228&type=chunk) - **No changes in internal control** over financial reporting occurred during the fiscal quarter that materially affected the company's internal controls[229](index=229&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) A legal case was settled favorably, while a PRC subsidiary's platform remains suspended pending a local authority investigation - A legal claim against Hong Kong Takung in Shanghai was **settled and closed in the company's favor**[231](index=231&type=chunk) - The trading platform of the PRC subsidiary, Tianjin Takung, was **suspended by local authorities** around November 8, 2021, for an investigation[232](index=232&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the company's last Annual Report filing - **No material changes** to risk factors from the annual report on Form 10-K filed on April 15, 2022[233](index=233&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[233](index=233&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities - None[233](index=233&type=chunk) [Item 4. Mine Safety Disclosure](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This disclosure requirement is not applicable to the company's operations - Not applicable[233](index=233&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) The company has indicated that this item is not applicable - Not applicable[233](index=233&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including corporate documents and officer certifications - Lists various exhibits filed with the Form 10-Q, including corporate governance documents, agreements, and certifications[236](index=236&type=chunk)

PART I [Business](index=5&type=section&id=Item%201.%20Business) Takung Art Co., Ltd. is a holding company transitioning its business focus to non-fungible tokens (NFTs), operating an online trading platform and providing related consulting services, following the suspension of its PRC artwork unit trading platform [Overview and Corporate History](index=5&type=section&id=1.1%20Overview%20and%20Corporate%20History) The company operates an online NFT artwork trading platform and provides consulting services, having evolved its corporate structure to support its new focus on the NFT market - The company operates an electronic online platform for artists, art dealers, and investors to offer and trade ownership of valuable artwork in the form of non-fungible tokens (NFTs)[14](index=14&type=chunk) - The company is expanding its business model to include NFT consulting, NFT gaming, sales of in-game character NFTs, and membership packs[14](index=14&type=chunk) - In late 2021 and early 2022, the company established new subsidiaries in the U.S. and Hong Kong, including NFT Digital Technology Limited, NFT Exchange Limited, and Metaverse Digital Payment Co., Limited, to support its NFT and digital payment business initiatives[28](index=28&type=chunk)[29](index=29&type=chunk) [Recent Regulatory Developments and Risks](index=8&type=section&id=1.2%20Recent%20Regulatory%20Developments%20and%20Risks) The company faces significant legal and operational risks from its China operations, including the suspension of its Tianjin Takung platform and uncertainties regarding PRC laws and overseas listing approvals - The artwork unit trading platform operated by the PRC subsidiary, Tianjin Takung, was suspended by local authorities around November 8, 2021, to facilitate an investigation, the purpose of which has not been announced[31](index=31&type=chunk) - The company believes it is not currently required to obtain permission from the CSRC or CAC for its overseas listing but acknowledges uncertainty regarding future regulations, which could hinder its ability to offer securities[30](index=30&type=chunk) - The company's auditor, WWC, P.C., is a U.S.-based firm inspected by the PCAOB and is not subject to the HFCAA determination that prevents inspection of firms in mainland China and Hong Kong, though the report acknowledges the risk if this changes, trading could be prohibited[32](index=32&type=chunk)[33](index=33&type=chunk) [Business Operations and Revenue Model](index=11&type=section&id=1.3%20Business%20Operations%20and%20Revenue%20Model) The company's business revolves around its nftoeo.com platform for artwork unit trading, generating revenue primarily from listing fees, trading commissions, and management fees - The company's main revenue sources are listing fees, trading commissions, and management fees, also earning fees from premium services and authorized agent subscriptions[52](index=52&type=chunk) - Listing fees generally range from **22.5% to 48.5%** of the total offering price for the major types of artwork listed[64](index=64&type=chunk) - Trading commissions are typically **0.2%** of the transaction value for both the buyer and seller, totaling **0.4%**, while management fees are charged at **$0.0013 (HK$0.01)** per 100 artwork units per day[80](index=80&type=chunk)[81](index=81&type=chunk) Artwork Listed as of December 31, 2021 | Artwork Category | Number of Sets/Pieces | Total Listing Value (USD) | | :--- | :--- | :--- | | Paintings and Calligraphies | 85 | $33,334,620 | | Jewelry | 35 | $9,384,103 | | Precious Stones | 134 | $16,987,662 | | Amber | 29 | $12,222,265 | | Other (Ivory, Porcelain, etc.) | 27 | $4,647,270 | [Regulation and Compliance](index=21&type=section&id=1.4%20Regulation%20and%20Compliance) The company navigates complex regulatory frameworks in the U.S., Hong Kong, and the PRC, covering tax, securities, data protection, and foreign investment, despite the suspension of its PRC operations - In the U.S., the company is subject to tax laws such as the Tax Cuts and Jobs Act (**21% corporate rate**) and the CARES Act[103](index=103&type=chunk)[104](index=104&type=chunk)[107](index=107&type=chunk) - In Hong Kong, the business is not currently classified as dealing in securities under the SFO, but is subject to regulations on Sale of Goods, Supply of Services, Fair Trading, and Personal Data Protection[111](index=111&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk)[119](index=119&type=chunk)[124](index=124&type=chunk) - PRC subsidiaries are subject to a **25%** enterprise income tax rate, with dividends paid to foreign investors subject to a **10%** withholding tax, and subsidiaries must set aside at least **10%** of after-tax profits into a statutory reserve until it reaches **50%** of registered capital[141](index=141&type=chunk)[152](index=152&type=chunk) - China's central bank has suspended all transactions of digital currencies in the mainland, but this does not apply to Hong Kong under the 'One Country, Two Systems' policy, and Hong Kong is planning to make licensing for crypto exchanges mandatory[136](index=136&type=chunk)[137](index=137&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks from its early-stage NFT business transition, the deconsolidation of its PRC subsidiary, evolving NFT regulations, cybersecurity threats, and geopolitical uncertainties in Hong Kong and the PRC [Risks Related to Business and Financial Condition](index=31&type=section&id=1A.1%20Risks%20Related%20to%20Business%20and%20Financial%20Condition) Primary business risks include the early-stage NFT transition, financial impact from Tianjin Takung's deconsolidation, and inherent legal, regulatory, and cybersecurity challenges in the nascent NFT market - The company is in an early stage of transitioning its business to focus on NFT and blockchain technologies, and may not achieve profitability[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - The deconsolidation of Tianjin Takung has materially impacted the consolidated financial statements, with restricted cash of **$52.2 million** (as of Dec 31, 2021) removed from the balance sheet and a **$16.3 million** asset impairment recorded in 2021[165](index=165&type=chunk) - The recently launched NFT platform is subject to significant and evolving risks, including uncertain regulations regarding intellectual property, cybersecurity, anti-money laundering (AML), and whether NFTs will be classified as securities or commodities[179](index=179&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk) - The company's success is dependent on its ability to attract and retain key personnel, including its CEO, CFO, and directors, as well as a trained workforce[197](index=197&type=chunk)[199](index=199&type=chunk) [Risks Related to Doing Business in Hong Kong and the PRC](index=44&type=section&id=1A.2%20Risks%20Related%20to%20Doing%20Business%20in%20Hong%20Kong%20and%20the%20PRC) Operating in Hong Kong and the PRC exposes the company to significant geopolitical and regulatory risks, including uncertain legal autonomy, unpredictable government oversight, data security laws, HFCAA delisting threats, and currency controls - The Hong Kong legal system's autonomy under the 'one country, two systems' policy faces uncertainty, which could limit legal protections and contract enforcement[225](index=225&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk) - The PRC government may intervene in or influence operations at any time, and there is significant uncertainty regarding the need for approvals from authorities like the CSRC and CAC for overseas listings, which could hinder the ability to offer securities[236](index=236&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - The company is subject to evolving PRC laws on cybersecurity and data protection, such as the Cybersecurity Review Measures and the Personal Information Protection Law (PIPL), which could impose significant compliance costs and penalties[241](index=241&type=chunk)[243](index=243&type=chunk)[248](index=248&type=chunk) - If the PCAOB is unable to inspect the company's auditor for two consecutive years, trading of its securities may be prohibited under the HFCAA, potentially leading to delisting from the NYSE American[250](index=250&type=chunk)[254](index=254&type=chunk) - PRC regulations on currency exchange may limit the ability to transfer revenue generated in Renminbi to fund offshore business activities or pay dividends to shareholders[284](index=284&type=chunk) [Unresolved Staff Comments](index=57&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company reports that it has no unresolved staff comments - Not applicable[294](index=294&type=chunk) [Properties](index=57&type=section&id=Item%202.%20Properties.) The company leases several properties for office and storage space, including locations in Admiralty, Hong Kong, Tsuen Wan, Hong Kong, and Tianjin, China, with an additional office lease in Tianjin expiring in February 2022 Leased Properties | Location | Type | Size (sq. ft.) | Lease Expiry | | :--- | :--- | :--- | :--- | | Admiralty, Hong Kong | Office | ~885 | Dec 14, 2022 | | Tsuen Wan, Hong Kong | Storage | ~236 | Jan 31, 2022 (auto-renewable) | | Tianjin, China | Storage | ~2,153 | Jul 14, 2025 | | Beijing, China | Storage | ~538 | Feb 14, 2022 (auto-renewable) | | Tianjin, China | Office | ~22,503 | Feb 2, 2022 | [Legal Proceedings](index=58&type=section&id=Item%203.%20Legal%20Proceedings.) The company reports two main legal matters: a settled contract breach claim against Hong Kong Takung and the ongoing suspension of Tianjin Takung's artwork unit trading platform by local authorities - A claim filed against Hong Kong Takung in July 2020 for alleged breach of contract has been settled and closed in the company's favor as of June 9, 2021[300](index=300&type=chunk) - The trading platform of the PRC subsidiary, Tianjin Takung, was suspended by local authorities around November 8, 2021, for an investigation, with no further developments as of the report date[301](index=301&type=chunk) [Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company's business - Not applicable[302](index=302&type=chunk) PART II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=59&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) The company's common stock trades on NYSE American under 'TKAT', with 198 shareholders as of April 2022, and no dividends planned, while recent unregistered sales include a **$5 million** private placement - The company's common stock began trading on the NYSE American on March 22, 2017, under the symbol 'TKAT'[305](index=305&type=chunk) - As of April 13, 2022, there were **198** registered shareholders of common stock[306](index=306&type=chunk) - The company has not paid dividends and does not anticipate paying them in the foreseeable future, citing reliance on funds from its Hong Kong and China entities, which are subject to distribution limitations[307](index=307&type=chunk) - On July 12, 2021, the company sold **571,429** shares of common stock to an institutional investor for gross proceeds of **$5,000,000**[311](index=311&type=chunk) - On September 9, 2021, the company issued **1,558,480** restricted shares as part of an equity investment in a BVI entity, valued at **$10,630,120**[310](index=310&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The MD&A details the company's strategic shift to NFT businesses, reporting a **$30.1 million** net loss in 2021 due to discontinued operations and share-based compensation, with going concern doubts mitigated by a recent **$30 million** PIPE financing [Results of Operations](index=65&type=section&id=7.1%20Results%20of%20Operations) For 2021, the company reported a **$30.1 million** net loss, driven by a **$16.6 million** loss from discontinued operations (including a **$16.4 million** impairment) and a **$13.4 million** loss from continuing NFT consultancy services Consolidated Statement of Operations Summary (2021 vs 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenue (Continuing Ops) | $120,000 | $0 | | Net Loss from Continuing Operations | $(13,447,956) | $(770,073) | | Net (Loss)/Income from Discontinued Operations | $(16,625,555) | $157,435 | | **Total Net Loss** | **$(30,073,511)** | **$(612,638)** | - General and administrative expenses for continuing operations surged to **$13.6 million** in 2021 from **$0.8 million** in 2020, primarily due to a **$10.8 million** increase in share-based compensation[360](index=360&type=chunk) - Discontinued operations in 2021 included impairment charges of **$16.4 million** against receivables from and investment in Tianjin Takung following its deconsolidation[368](index=368&type=chunk)[506](index=506&type=chunk) - Revenue from continuing operations in 2021 was entirely from a new consultancy service related to NFT projects[339](index=339&type=chunk)[359](index=359&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) As of December 31, 2021, continuing operations had **$1.5 million** cash and **$1.6 million** working capital, while discontinued operations had an **$8.4 million** working deficit, with a **$30 million** PIPE financing secured post-year-end to address going concern doubts Cash and Working Capital as of Dec 31, 2021 | Category | Continuing Operations | Discontinued Operations | | :--- | :--- | :--- | | Cash and Cash Equivalents | $1,503,153 | $338,542 | | Working Capital/(Deficit) | $1,649,632 | $(8,360,145) | - Net cash used in operating activities was **$16.1 million** in 2021, a significant increase from **$7.8 million** in 2020[415](index=415&type=chunk) - Management has concluded there is substantial doubt about the company's ability to continue as a going concern[490](index=490&type=chunk) - Subsequent to year-end, the company closed a private investment in public equity (PIPE) transaction in April 2022, raising gross proceeds of approximately **$30 million** to fund operations[491](index=491&type=chunk)[492](index=492&type=chunk)[493](index=493&type=chunk) [Financial Statements and Supplementary Data](index=76&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents the audited consolidated financial statements for 2021 and 2020, with auditor notes highlighting going concern doubts due to the deconsolidation of the PRC subsidiary and reclassification of legacy operations [Report of Independent Registered Public Accounting Firm](index=77&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's report expresses substantial doubt about the company's going concern ability due to PRC subsidiary suspension and identifies 'Investments' as a Critical Audit Matter - The auditor's report contains a 'Going Concern' paragraph, indicating substantial doubt about the company's ability to continue operations due to the suspension of its PRC subsidiary[402](index=402&type=chunk) - The Critical Audit Matter identified was 'Investments', specifically the valuation of a non-marketable investment in a privately held company, which required significant management judgment and extended audit procedures[406](index=406&type=chunk)[407](index=407&type=chunk) [Consolidated Financial Statements](index=79&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show a significant deterioration in 2021, with total assets decreasing to **$11.7 million** and a net loss of **$30.1 million**, largely due to Tianjin subsidiary deconsolidation Consolidated Balance Sheet Highlights (As of Dec 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Assets | $11,653,736 | $24,413,148 | | Total Liabilities | $8,877,053 | $18,598,103 | | Total Stockholders' Equity | $2,776,683 | $5,815,045 | Consolidated Operations Highlights (Year Ended Dec 31) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenue (Continuing Ops) | $120,000 | $0 | | Net Loss | $(30,073,511) | $(612,638) | | Comprehensive Loss | $(30,086,570) | $(667,639) | | Loss Per Share (Continuing Ops) | $(1.09) | $(0.07) | [Notes to Consolidated Financial Statements](index=85&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the NFT business transition, deconsolidation of Tianjin Takung, going concern doubts, asset impairments, related party transactions, and significant share issuances in 2021 - Note 3 (Going Concern): Management acknowledges substantial doubt about the company's ability to continue as a going concern due to the suspension of the Tianjin Takung platform, with mitigation plans including a PIPE transaction and developing the new NFT business model[487](index=487&type=chunk)[490](index=490&type=chunk)[491](index=491&type=chunk) - Note 5 (Asset Impairments): The company recorded asset impairment charges of **$16,538,781** in 2021, primarily from writing off receivables from and its investment in the deconsolidated Tianjin Takung[506](index=506&type=chunk)[509](index=509&type=chunk) - Note 19 (Stockholders' Equity): In 2021, the company issued **3,039,909** restricted shares, including awards for services and **1,558,480** shares for an investment in Cultural Objects Provenance Holdings Limited, with share-based compensation expense of **$10.9 million** in 2021[413](index=413&type=chunk)[574](index=574&type=chunk)[575](index=575&type=chunk)[583](index=583&type=chunk) - Note 2 (Discontinued Operations & Deconsolidation): Due to the suspension of Tianjin Takung's operation and loss of control, its financial information was deconsolidated in Q4 2021, and the operations of Hong Kong Takung have been classified as discontinued[433](index=433&type=chunk)[434](index=434&type=chunk)[435](index=435&type=chunk) [Controls and Procedures](index=129&type=section&id=Item%209A.%20Controls%20and%20Procedures.) As of December 31, 2020, management concluded that disclosure controls and internal control over financial reporting were effective, with no auditor attestation report required - Management concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective[601](index=601&type=chunk) - Based on an assessment using the COSO 2013 framework, management determined that internal control over financial reporting was effective as of December 31, 2020[602](index=602&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=130&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) This section provides biographical information for executive officers and directors, detailing the Board's structure, its three independent committees, and the company's Code of Business Conduct and Ethics Executive Officers and Directors (as of March 31, 2022) | Name | Age | Position | | :--- | :--- | :--- | | Kwok Leung Paul Li | 36 | Chief Executive Officer | | Kuangtao Wang | 44 | Co-Chief Executive Officer | | Jianguang Qian | 38 | Chief Financial Officer | | Tak Ching (Anthony) Poon | 40 | Director | | Ronggang (Jonathan) Zhang | 61 | Director | - The Board of Directors has three committees: Audit, Compensation, and Governance and Nominating, all composed of independent directors Tak Ching (Anthony) Poon, Ronggang (Jonathan) Zhang, and Doug Buerger[635](index=635&type=chunk) - The Board has determined that Tak Ching (Anthony) Poon qualifies as an audit committee financial expert[636](index=636&type=chunk) [Executive Compensation](index=137&type=section&id=Item%2011.%20Executive%20Compensation.) This section details executive and director compensation for 2021 and 2020, including CEO Kwok Leung Paul Li's **$820,452** total compensation, with no new share options granted or pension plans offered Summary Compensation Table for Named Executive Officers (2021) | Name & Principal Position | Salary ($) | Share Award ($) | Total Annual ($) | | :--- | :--- | :--- | :--- | | Kwok Leung Paul Li (CEO) | 55,452 | 765,000 | 820,452 | | Zhihua Yang (Former CEO) | 43,947 | — | 43,947 | | Jing Wang (Former CFO) | 21,915 | — | 21,915 | - In 2021, **61,065** stock options were exercised, and the remaining **39,825** unexercised options expired, with no new options granted[573](index=573&type=chunk)[671](index=671&type=chunk) - The company does not offer pension or retirement benefits, other than legally required contributions to the PRC's social security fund for its employees there[672](index=672&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=143&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) This section outlines equity compensation plans, including the 2015 Incentive Stock Plan with **41,832** shares available, and beneficial ownership, with Jian Xiao and CEDE & CO as major holders - The company's 2015 Incentive Stock Plan was amended to authorize **2,703,745** shares, and as of the report date, **41,832** shares were available for future issuance[684](index=684&type=chunk) Security Ownership of Major Beneficial Owners (as of March 29, 2022) | Beneficial Owner | Number of Shares Beneficially Owned | Percentage Ownership | | :--- | :--- | :--- | | Jian Xiao | 3,000,000 | 20.873% | | CEDE & CO | 9,088,682 | 63.237% | | Kwok leung (Paul) Li (CEO) | 150,000 | 1.044% | | All Officers and Directors (as a group) | <1% | * | [Certain Relationships and Related Transactions, and Director Independence](index=148&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) The company discloses several related party transactions, including reciprocal interest-free loans, with the Board of Directors, comprising three independent directors, responsible for their review and approval - The Board of Directors has determined that Doug Buerger, Tak Ching (Anthony) Poon, and Ronggang (Jonathan) Zhang are independent directors under NYSE and SEC rules[696](index=696&type=chunk) - Hong Kong Takung had an interest-free loan payable of **~$6.4 million**, while Tianjin Takung had an interest-free loan receivable of **~$6.2 million** with the same related party (Jing Wang, former CFO), structured to be repaid simultaneously[697](index=697&type=chunk)[698](index=698&type=chunk)[699](index=699&type=chunk) [Principal Accountant Fees and Services](index=149&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) The company changed its independent auditor to WWC, P.C. on March 1, 2021, with audit fees detailed for both 2020 and 2021, and all services pre-approved by the Board Audit Fees | Fiscal Year | Auditor | Fees Incurred | | :--- | :--- | :--- | | 2021 | WWC, P.C. | ~$230,000 | | 2020 | WWC, P.C. | ~$150,000 | | 2020 | Marcum BP (Former) | ~$99,000 | - The company appointed WWC, P.C. as its new independent auditor on March 1, 2021, replacing Marcum Bernstein & Pinchuk LLP[704](index=704&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=150&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, the 2015 Incentive Share Plan, and CEO/CFO certifications - Key exhibits filed include the Certificate of Incorporation (3.1), Bylaws (3.2), 2015 Incentive Share Plan (4.1), various Securities Purchase Agreements related to recent financing and investments (10.19, 10.20, 10.24, 10.25), a list of subsidiaries (21.1), consent of the auditor (23.1), and CEO/CFO certifications (31.1, 31.2, 32.1)[711](index=711&type=chunk)[712](index=712&type=chunk)