UP Fintech Holding(US:TIGR)2023-04-25 16:00Financial Position - As of December 31, 2022, the company's cash and cash equivalents were US$277.7 million, up from US$269.1 million in 2021 and US$79.7 million in 2020[711]. - The company reported a net cash used in investing activities of US$3.6 million in 2022, compared to net cash provided of US$10.9 million in 2021 and US$43.6 million in 2020[720]. - Net cash provided by financing activities in 2022 was US$4.7 million, significantly lower than US$330.9 million in 2021, which included proceeds from a follow-on public offering and convertible bonds[721][723]. - The company experienced an increase of US$159.7 million in financial instruments held at fair value in 2022, contributing to the net cash provided by operating activities[717]. Operating Activities - Net cash provided by operating activities in 2022 was US$258.1 million, a decrease from US$413.2 million in 2021 and US$535.3 million in 2020[717][719]. Research and Development - Research and development expenses for 2022 amounted to US$60.1 million, an increase from US$47.8 million in 2021 and US$22.5 million in 2020[730]. Compliance and Regulations - The company maintained a minimum net capital requirement in compliance with SEC regulations, ensuring financial health against exposure risks[708]. - The minimum base capital requirement for Tiger Brokers SG is SGD 1 million, with additional capital requirements based on operational risk assessments[709]. - The company has not utilized any derivative financial instruments for hedging foreign currency risks, which may affect its financial condition due to fluctuations in exchange rates[707]. Shareholder Information - Major shareholders include Xiaomi Corporation with 10.40% of Class A shares and Tigerex Holding Limited with 8.90%[776]. - Tianhua Wu, a director, holds 23.04% of ADS and 21.15% of Class A shares, representing 56.44% of total voting power[776]. - Mr. Tianhua Wu controls 55.82% of the aggregate voting power of the company's total issued and outstanding share capital through Class B ordinary shares[785]. - Xiaomi Corporation beneficially owns 250,641,392 Class A Shares and invested US$30.0 million in convertible notes during a financing transaction[795]. Employee Information - As of December 31, 2022, the company had 1,040 employees, a decrease from 1,134 employees in 2021, with 872 based in mainland China and Hong Kong[770]. - The breakdown of employees by department shows that 42.0% are in Research and Development and Technology, 15.1% in Compliance, Legal and Finance, and 18.3% in Business and Customer Support[773]. Compensation and Benefits - In 2022, the company paid an aggregate of RMB2.4 million (US$0.3 million), HKD1.9 million (US$0.2 million), and US$0.4 million in cash to executive officers and directors[746]. - The company has not set aside or accrued any amount for pension or retirement benefits for directors and executive officers[746]. - The company recognizes compensation expense for all grants of share options and restricted share units, which involves subjective assumptions[735]. Taxation - The effective income tax rate is determined based on estimates regarding taxable and deductible items across various jurisdictions[733]. - The Cayman Islands imposes no taxes on profits, income, gains, or appreciation for individuals or corporations, benefiting the company's operations[815]. - The company has obtained a 30-year tax concession from the Cayman Islands government, ensuring no new taxes on profits or income will apply[818]. - The company does not intend to calculate earnings and profits according to U.S. federal income tax principles, affecting dividend reporting[825]. - Non-corporate U.S. Holders may benefit from a reduced capital gains tax rate on dividends if the company qualifies as a qualified foreign corporation[826]. - The company does not expect to be classified as a Passive Foreign Investment Company (PFIC) for the current taxable year or in the foreseeable future[833]. Risk Management - The board of directors is responsible for overseeing risk management activities, with senior management handling day-to-day processes[768]. - Margin financing is subject to various regulatory requirements, and risks associated with margin credit increase during periods of fast market movements[850]. - Credit exposure is mitigated by a policy of automatically evaluating accounts throughout the trading day and closing out positions that are under-margined[853]. Internal Controls - Management concluded that internal control over financial reporting was effective as of December 31, 2022[863]. - KPMG Huazhen LLP audited the effectiveness of internal control over financial reporting as of December 31, 2022[865]. - No changes in internal controls over financial reporting occurred during the reporting period that materially affected their effectiveness[866].