UP Fintech Holding(US:TIGR)2024-04-22 13:14Financial Position - As of December 31, 2023, the company's cash and cash equivalents were US$322.6 million, up from US$277.7 million in 2022[616]. - Net cash used in operating activities in 2023 was US$6.6 million, compared to net income of US$33.0 million, primarily due to an increase in financial instruments held at fair value by US$249.2 million[620]. - The company reported net cash provided by financing activities of US$1.8 million in 2023, a decrease from US$4.7 million in 2022 and US$330.9 million in 2021[626]. - The net cash provided by operating activities in 2022 was US$258.1 million, contrasting with a net loss of US$2.3 million for that year[621]. - The total cash flow from investing activities in 2023 was a net outflow of US$7.8 million, primarily due to purchases of term deposits and property[625]. Research and Development - Research and development expenses for 2023 amounted to US$63.5 million, an increase from US$60.1 million in 2022 and US$47.8 million in 2021[632]. Capital Expenditures - Capital expenditures were US$2.8 million in 2023, down from US$4.9 million in 2022 and US$5.0 million in 2021, indicating a trend of reduced investment in physical assets[627]. Financial Instruments and Risks - The company has not utilized any derivative financial instruments to hedge foreign currency risks, which may impact financial results due to exchange rate fluctuations[613]. - The company maintained a minimum net capital requirement in compliance with SEC regulations, ensuring financial health against exposure risks[614]. Shareholder Information - Major shareholders include Xiaomi Corporation with 10.40% of Class A shares and Tigerex Holding Limited with 8.88%[674]. - Tianhua Wu, a director, holds 11.79% of ADS and 19.41% of Class A shares, representing a total voting power of 55.48%[674]. - Mr. Wu controls 55.48% of the aggregate voting power of the company through Class B ordinary shares, allowing him to influence shareholder decisions[682]. Employee Information - As of December 31, 2023, the company had 1,109 employees, a decrease from 1,134 in 2021 and an increase from 1,040 in 2022[670]. - The employee distribution by department shows that 44.7% (495 employees) are in research and development and technology, while 15.1% (168 employees) are in business and customer support[672]. Compensation and Benefits - The company recorded an aggregate compensation of RMB2.1 million (US$0.3 million), HKD2.0 million (US$0.2 million), and US$0.4 million in cash to executive officers and directors in 2023[648]. - The company has not set aside or accrued any amount for pension or retirement benefits for directors and executive officers[648]. - Share-based compensation expense is subject to significant estimation uncertainties, which may lead to material differences in recorded amounts[638]. Governance and Compliance - The company does not meet the diversity objectives of Nasdaq Rule 5605(f)(2) due to the resignation of a board member in 2022[658]. - The audit committee is responsible for overseeing accounting and financial reporting processes, including appointing independent auditors[660]. - The compensation committee reviews and approves compensation structures for directors and executive officers[661]. - The nominating and corporate governance committee is tasked with selecting qualified individuals for board positions and ensuring board diversity[662]. - There are no familial relationships among the company's directors or senior managers, ensuring independence in governance[647]. Plans and Agreements - The 2018 Share Incentive Plan allows for the issuance of up to 254,697,314 Class A ordinary shares, increased from the original 187,697,314 shares[649]. - The 2019 Performance Incentive Plan permits the grant of a maximum of 52,000,000 ordinary shares, with an additional 10,429,305 shares added in December 2020[650]. - The 2019 Plan has a term of ten years, with the board of directors authorized to amend or terminate the plan[653]. - The company has entered into individual employment contracts with selected employees covering non-competition and confidentiality arrangements[672]. Related Party Transactions - Amounts due from directors and executive officers as of December 31, 2023, were US$7.0 million, while amounts due to them were US$10.1 million[692]. - Revenue from brokerage services and margin loans to directors and executive officers for the year ended 2023 was US$1.5 million[692]. - As of December 31, 2023, the total amount due from Alphalion Group was US$1.0 million, with IT service fees paid amounting to US$0.15 million[691]. - The company converted US$3.1 million in short-term loans into a 25% equity interest in Alphalion Technology Holding Limited in February 2019[690]. Taxation - The effective income tax rate is determined based on estimates regarding taxable and deductible items across various jurisdictions[636]. - The company maintains a valuation allowance for deferred tax assets, requiring significant judgment regarding future taxable income projections[637]. Risk Management - The board of directors is responsible for risk management oversight, with senior management handling day-to-day risk management processes[668]. - Mr. Tianhua Wu intends to sell up to 10 million ADSs under a Rule 10b5-1 plan, with none exercised as of March 31, 2024, due to deep out-of-the-money strike prices[680]. Operational Structure - The company operates in China through contractual arrangements with Beijing Rongke and Beijing Yiyi to comply with foreign ownership restrictions[684].