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NFT (MI) - 2023 Q2 - Quarterly Report
NFT NFT (US:MI)2023-08-14 20:06

PART I. FINANCIAL INFORMATION This section details the company's financial performance and position, management's analysis, market risk, and internal controls Item 1. Financial Statements 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 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 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 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 losses15 Condensed Consolidated Statements of Cash Flows 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 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 $6,869,80922108110 - 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, 20233185 - 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%9192 - Subsequent to the quarter end, on July 10, 2023, CFO Jianguang Qian resigned and was replaced by Yaobin Wang114115 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 2022120 - 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 advertising127 Results of Operations 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 2023168 Liquidity and Capital Resources 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 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 applicable182183 Item 4. Controls and Procedures 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, 2023182 - 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 controls183 PART II. OTHER INFORMATION This section provides updates on legal proceedings, risk factors, and other miscellaneous information not covered in the financial statements Item 1. Legal Proceedings 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 date184 Item 1A. Risk Factors 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, 2023185 Other Part II Items 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