NFT (MI) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements 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 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][22] - 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] - 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] - 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] - 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][93][94] - 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 $1,500,000[139] - The company entered a Merger Agreement on November 1, 2022, to redomicile from Delaware to the Cayman Islands by merging with its wholly-owned subsidiary, NFT Limited[146] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic shift to an NFT trading platform, which launched in May 2022, resulting in initial revenue generation and improved financial performance for Q1 2023 - The company launched its blockchain NFT online platform at www.nftoeo.com in May 2022, shifting its focus to the NFT market[154] - The new business model focuses on providing NFT consulting services, NFT trading services (art, music, collectibles, etc.), and future advertising services[158][159][160] Results of Operations Comparison (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (Unaudited) ($) | 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][180] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - No material changes occurred in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2023[208] PART II. OTHER INFORMATION Legal Proceedings 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[211] Mine Safety Disclosure This item is not applicable to the company - Not applicable[211] Other Information The company reports no other information for this item - None[211] Exhibits This section lists the exhibits filed with the report, including corporate documents, agreements, and certifications