UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of December
Commission File Number: 001-38309
(Translation of registrant’s name into English)
c/o Creative Consultants (Hong Kong) Limited
Room 1502-3 15/F., Connuaght Commercial Building, 185 Wanchai Road
Wanchai, Hong Kong
+86-010-65020507 – telephone
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
INCORPORATION BY REFERENCE
This report on Form 6-K shall be deemed to be incorporated by reference into the registration statement of AGM Group Holdings Inc. (the “Company”) on Form F-3 filed on March 5, 2020 (File No. 333-236897), as amended, and the registration statement of the Company on Form F-3 filed on January 11, 2022 (File No. 333-262107) , as amended, and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months ended June 30, 2022 and 2021 | |
| 99.2 | Unaudited Interim Consolidated Financial Statements for the Six Months ended June 30, 2022 and 2021 | |
| 99.3 | ||
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: December 19, 2022 | AGM GROUP HOLDINGS INC. | |
| By: | /s/ Wenjie Tang | |
| Name: | Wenjie Tang | |
| Title: | Co-Chief Executive Officer and Director | |
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Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the related notes included in Form 6-K for the six months ended June 30, 2022. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors.
Overview
We derive revenue from the sales of cryptocurrency mining machine and standardized computing equipment. Revenue is recognized when the promised goods are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. We recognize product revenues on a gross basis as we are responsible to fulfill the promise to provide specified goods. Revenue is recognized at a point in time upon the transfer of control of products to customers.
Costs and Expenses
We primarily incur the following costs and expenses:
Costs of revenues. Cost of revenues primarily consist of cost of product revenue, which includes direct costs of cryptocurrency mining machine, standardized computing equipment and software products; labor costs and employee benefits for software development, data testing, bug fixes and hacker prevention;
Selling, general and administrative expenses. Selling, general and administrative expenses consist primarily of compensation expense for our corporate staff and personnel supporting our corporate staff, marketing costs, office supplies, welfare expenses, training expenses, professional fees (including consulting, auditing and legal fees), travel and business hospitality expenses. Selling, general and administrative expenses also include depreciation and amortization expenses. We record property and equipment at cost and calculate depreciation using the straight-line method over the estimated useful lives of our assets, which generally range from three to five years.
Research and development expenses. Research and development costs are expensed as incurred. The costs primarily consist of the wage expenses incurred to continuously improve and upgrade our services.
Results of Operations
| For The Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | $ | 113,528,876 | $ | - | ||||
| Cost of Revenues | 91,924,102 | - | ||||||
| Gross profit | 21,604,774 | - | ||||||
| Operating expenses | ||||||||
| Selling, general & administrative expenses | 1,675,355 | 480,495 | ||||||
| Research and development expenses | - | 22,505 | ||||||
| Total operating expenses | 1,675,355 | 503,000 | ||||||
| Income/(Loss) from operations | 19,929,419 | (503,000 | ) | |||||
| Other income/(expenses) | ||||||||
| Other income | 22,983 | 177 | ||||||
| Other expenses | (252,974 | ) | (5,002 | ) | ||||
| Total other expense | (229,991 | ) | (4,825 | ) | ||||
| Income/(Loss) before provision of income taxes | 19,699,428 | (507,825 | ) | |||||
| Provision for income taxes expenses | (5,132,394 | ) | - | |||||
| Net Income/(Loss) | $ | 14,567,034 | $ | (507,825 | ) | |||
Revenues
Our total revenues increased by $113.5 million or 100%, from $nil for the six months ended June 30, 2021 to $113.5 million for the six months ended June 30, 2022. All of our total revenues for the six months ended June 30, 2022 generated from third parties and no revenues incurred from related party. The increase was primarily due to the surging sales revenues from cryptocurrency mining machine and standardized computing equipment sales during 2022.
Cost of Revenues and Gross Margin
Cost of revenues increased by $91.9 million or 100%, from $nil for the six months ended June 30, 2021 to $91.9 million for the six months ended June 30, 2022. The increase was primarily due to the increase in procurement costs of cryptocurrency mining machines and standardized computing equipment for the six months ended June 30, 2022. Gross margin for the six months ended June 30, 2022 was 19%. The business of sales of cryptocurrency mining machine and standardized computing equipment started after June 30, 2021.
Selling, General and Administrative expenses
Selling, general and administrative expenses consist primarily of sales and administrative employee-related expenses, professional fees, travel costs, research and development costs, and other corporate expenses. Selling, general and administrative expenses were $1.7 million for the six months ended June 30, 2022, an increase of $1.2 million, or 249% from June 30, 2021 to June 30, 2022. The increase was primarily due to expenses related to an establishment of a new wholly foreign-owned enterprise after June 30, 2021.
Research and Development Expenses
We incurred $22,505 and $nil in research and development for the six months ended June 30, 2021 and the six months ended June 30, 2022 respectively. Research and development expenses decreased by $22,505, or 100%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The decrease was primarily due to the decrease in researching and developing in cryptocurrency mining machine R&D.
Income/(Loss) from operations
As a result of the factors described above, operating income was $19.9 million for the six months ended June 30, 2022, compared to operation loss was $0.5 for the six months ended June 30, 2021.
Other expenses
For the six months ended June 30, 2022, other expenses, net of other income, were $229,991, while that were $4,825 for the six months ended June 30, 2021. The increase of other expenses of $225,166 was primarily attributable to foreign exchange loss.
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Income Tax
For the six months ended June 30, 2022, we had provision for income tax of $5.1 million, an increase of $5.1 million, or 100%, as compared to expense for income tax of $nil for the six months ended June 30, 2021. The increase is primarily due to increase income before provision of income taxes.
Net Income/(Loss)
As a result of the factors described above, our net income for the six months ended June 30, 2022 was $14.6 million, compared to net loss of $0.5 million for the six months ended June 30, 2021.
Foreign currency translation
The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of us. The functional currency of AGM Group Holdings, Inc., AGM Technology Limited, AGM Defi Tech Ltd., our subsidiaries established pursuant to the laws of Hong Kong, AGM DEFI LAB PTE. Ltd., our subsidiary established pursuant to the laws of Singapore, and AGM Software Services Ltd, our subsidiary established pursuant to the laws of the British Virgin Islands are United States dollar. The functional currency of AGM Tianjin Construction Development Co., Ltd., Beijing AnGaoMeng Technology Service Co., Ltd., Nanjing Lucun Semiconductor Co. Ltd., our indirect subsidiaries established pursuant to the laws of China, are Renminbi (“RMB”). For the subsidiaries whose functional currencies are RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates.
The Consolidated Balance Sheets balances, with the exception of equity at June 30, 2022 and December 31, 2021, were translated at RMB6.7114 and RMB6.3757 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to the Consolidated Statements of Operations and Comprehensive Income and the Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 were RMB6.4835 and RMB6.4682 to $1.00, respectively.
Net gains and losses resulting from foreign exchange translations are included in the Comprehensive income on the consolidated statements of operations. As a result of foreign currency translations, which are a non-cash adjustment, we reported a foreign currency translation loss of $4.2 million and $92,173 for the six months ended June 30, 2022 and 2021. This non-cash loss had the effect of decreasing our reported comprehensive income.
B. Liquidity and Capital Resources.
Liquidity
Liquidity is the ability of a company to generate funds to support our current and future operations, satisfy our obligations and otherwise operate on an ongoing basis. As of June 30, 2022 and December 31, 2021, we had working capital of $34.5 million and $24.5 million, including cash and cash equivalents of $9.7 million and $18.4 million, respectively. As a result, we believe that our current cash and cash to be generated from our operations will be sufficient to meet our working capital needs for at least the next twelve months. We are not dependent upon the access to borrow loans from our related parties. We plan to expand our business to implement our growth strategies to broaden our service and strengthen our position in the marketplace.
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The following table sets forth a summary of changes in our working capital from December 31, 2021 to June 30, 2022:
| June 30, 2022 | December 31, 2021 | Change | Percentage Change | |||||||||||||
| Working capital: | ||||||||||||||||
| Total current assets | $ | 136,341,969 | $ | 87,319,271 | $ | 49,022,698 | 56 | % | ||||||||
| Total current liabilities | 101,835,199 | 62,819,301 | 39,015,898 | 62 | % | |||||||||||
| Working capital | $ | 34,506,770 | $ | 24,499,970 | $ | 10,006,800 | 41 | % | ||||||||
Because the exchange rate conversion is different for the consolidated balance sheets and the consolidated statements of cash flows, the changes in assets and liabilities reflected on the consolidated statements of cash flows are not necessarily identical with the comparable changes reflected on the consolidated balance sheets.
Cash Flow Summary
The following table sets forth certain items in our consolidated statements of cash flows for the six months ended June 30, 2022 and 2021.
| For The Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (10,119,271 | ) | $ | (348,187 | ) | ||
| Net cash used in investing activities | (480,380 | ) | - | |||||
Net cash provided by financing activities | 6,429,459 | 142,747 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (4,604,284 | ) | 1,845 | |||||
| Net change in cash and cash equivalents | (8,774,476 | ) | (203,595 | ) | ||||
| Cash and cash equivalents, beginning of the year | 18,426,622 | 664,605 | ||||||
| Cash and cash equivalents, end of the period | $ | 9,652,146 | $ | 461,010 | ||||
We have cash and cash equivalents held in financial institutions in the following countries (regions):
| June 30, 2022 | December 31, 2021 | |||||||
| Country (Region) | ||||||||
| China (Mainland) | $ | 575,790 | $ | 16,566,953 | ||||
| China (Hong Kong) | 8,827,315 | 1,599,983 | ||||||
| Singapore | 249,041 | 259,686 | ||||||
| Total cash and cash equivalents | $ | 9,652,146 | $ | 18,426,622 | ||||
Operating Activities:
Net cash used in operating activities of continuing operations was $10.1 million for the six months ended June 30, 2022, primarily due to a net income of $14.6 million. The adjustments for changes in assets and liabilities primarily included (i) an increase of accounts payable of $28.1 million, offset by an increase of advances to suppliers of $22.8 million; (ii) a decrease of inventories of $18.9 million, (iii) an increase of accrued expenses and other payables of $8.5 million due to the increase of income tax payable, and (iv) an increase of accounts receivable of $52.4 million. The increase of accounts receivable, accounts payable, accrued expenses, other payables and advance to customers, and the decrease of inventories were all due to the surging sales from cryptocurrency mining machine and standardized computing equipment sales during 2022.
Net cash used in operating activities of continuing operations was $0.3 million for the six months ended June 30, 2021, primarily due to a net loss of $0.5 million. The adjustments for changes in assets and liabilities primarily included (i) an increase of accrued expenses and other payables of $0.2 million.
Investing Activities:
Net cash used in investing activities was $0.4 million for the construction in progress and $0.1 million for the property and equipment for the six months ended June 30, 2022.
Net cash used in investing activities was $nil for the six months ended June 30, 2021.
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Financing Activities:
Net cash used in financing activities was $6.4 million for the six months ended June 30, 2022. It was mainly attributable to proceeds borrowings from related parties of $8.0 million, offset by repayment of related party loans of $2,086 and repayment of short-term borrowings of $1.6 million.
Net cash provided by financing activities was $0.1 million for the six months ended June 30, 2021. It was attributable to proceeds borrowings from related parties of $0.2 million, offset by repayment of related party loans of $9,707.
Capital Resources
As of June 30, 2022 and December 31, 2021
The following table provides certain selected balance sheets comparisons as of June 30, 2022 and December 31, 2021:
| June 30, | December 31, | Increase | ||||||||||||||
| 2022 | 2021 | (Decrease) | % | |||||||||||||
| Cash and cash equivalents | $ | 9,652,146 | $ | 18,426,622 | $ | (8,774,476 | ) | (48 | )% | |||||||
| Accounts receivable | 54,988,661 | 2,608,325 | 52,380,336 | >100 | % | |||||||||||
| Inventories | 3,565,417 | 22,433,140 | (18,867,723 | ) | (84 | )% | ||||||||||
| Advances to suppliers | 63,262,135 | 40,485,521 | 22,776,614 | 56 | % | |||||||||||
| Prepayment and other current assets | 3,117,680 | 2,926,425 | 191,255 | 7 | % | |||||||||||
| Loan receivable from third parties | 1,580,000 | 400,000 | 1,180,000 | >100 | % | |||||||||||
| Due from related parties | 175,930 | 39,238 | 136,692 | >100 | % | |||||||||||
| Total current assets | 136,341,969 | 87,319,271 | 49,022,698 | 56 | % | |||||||||||
| Property and equipment, net | 188,305 | 322,397 | (134,092 | ) | (42 | )% | ||||||||||
| Construction in progress | 394,805 | - | ||||||||||||||
| Intangible assets, net | 7,893 | 8,633 | (740 | ) | (9 | )% | ||||||||||
| Operating lease right-of-use assets | 187,800 | 241,554 | (53,754 | ) | (22 | )% | ||||||||||
| Deferred tax asset | 221,195 | 129,034 | 92,161 | 71 | % | |||||||||||
| Total non-current assets | 999,998 | 701,618 | (96,425 | ) | (14 | )% | ||||||||||
| Total assets | $ | 137,341,967 | $ | 88,020,889 | $ | 49,321,078 | 56 | % | ||||||||
| Short-term borrowings | $ | - | $ | 1,568,455 | $ | (1,568,455 | ) | <(100) | % | |||||||
| Accounts payable | 42,169,789 | 14,116,569 | 28,053,220 | >100 | % | |||||||||||
| Accrued expenses and other payables | 12,062,493 | 3,597,440 | 8,465,053 | >100 | % | |||||||||||
| Advance from customers | 38,568,323 | 42,231,914 | (3,663,591 | ) | (9 | )% | ||||||||||
| Due to related parties | 8,972,893 | 1,215,573 | 7,757,320 | 638 | % | |||||||||||
| Deferred revenue - current | 37,046 | 38,111 | - | - | % | |||||||||||
| Operating lease liabilities, current | 24,655 | 51,239 | (26,584 | ) | (52 | )% | ||||||||||
| Total current liabilities | 101,835,199 | 62,819,301 | 39,015,898 | 62 | % | |||||||||||
| Deferred government grant - non current | 121,927 | 147,812 | (25,885 | ) | (18 | )% | ||||||||||
| Total liabilities | $ | 101,957,126 | $ | 62,967,113 | $ | 38,990,013 | 62 | % | ||||||||
Cash
As of June 30, 2022, we have a total of $9.7 million in cash and cash equivalents, among which $0.6 million was held inside China (Mainland), and $9.1 million was held outside of China (Mainland). As of December 31, 2021, we have a total of $18.4 million in cash and cash equivalents, among which $16.6 million was held inside China (Mainland), and $1.8 million was held outside of China (Mainland). We have not transferred and do not plan to transfer our cash in RMB outside of China (Mainland) in order to avoid unnecessary currency exchange cost. Our subsidiaries in China (Mainland) incur expenses from time to time, and we have spent and plan to spend our cash in RMB to cover those expenses.
5
Prepaid expenses and other current assets, net
As of June 30, 2022, balances of prepayment and other current assets were $3.1 million, an increase of $0.2 million, compared to $2.9 million as of December 31, 2021. The increase was primarily due to prepaid input VAT , as shown in the following table.
| June 30, 2022 | December 31, 2021 | |||||||
| Prepaid input VAT | $ | 3,023,964 | $ | 2,848,547 | ||||
| Prepaid expenses | - | 51,301 | ||||||
| Deposits and others | 93,716 | 26,577 | ||||||
| Total prepayment and other current assets | $ | 3,117,680 | $ | 2,926,425 | ||||
Current assets
Current assets as of June 30, 2022 totaled $136.3 million, an increase of $49.0 million from our December 31, 2021 balance. The increase was primarily resulted from a $52.4 million increase in accounts receivable, a $22.8 million increase in advances to suppliers, offset by a $18.9 million decrease in inventories, and a $8.8 million decrease in cash and cash equivalents.
Accrued liabilities and other payables
Accrued liabilities and other payables mainly included wages payable, VAT payable, income tax payable, deposit payables and other payables. Accrued liabilities and other payables as of June 30, 2022 were $12.1 million, an increase of $8.5 million, compared to $3.6 million as of December 31, 2021, primarily due to the increase of income tax payable, which was resulted from the increase of the profit before tax for the six months ended June 30, 2022.
Credit Facility
We mainly finance our operations through proceeds borrowed from related parties. As of June 30, 2022, due to related parties were $9.0 million, an increase of $7.8 million, compared to $1,2million as of December 31, 2021. Due to related parties as of June 30, 2022 and December 31, 2021 include:
| June 30, 2022 | December 31, 2021 | |||||||
| HongKong Kisen Co., Limited | $ | 8,000,000 | $ | - | ||||
| Zhentao Jiang | 881,593 | 1,119,465 | ||||||
| Yufeng Mi | 1,900 | 2,000 | ||||||
| Yang Cao | 89,400 | 94,108 | ||||||
| Total due to related parties | $ | 8,972,893 | $ | 1,215,573 | ||||
The balance of due to related parties represents expenses incurred by related parties in the ordinary course of business and expenses related parties paid on behalf of us. These loans are interest free, unsecured and repayable on demand.
From time to time, we borrowed $8.0 million from related parties and repaid $2,086 to related parties in the six months ended June 30, 2022. We borrowed $0.2 million from related parties and repaid $9,707 to related parties in the six months ended June 30, 2021.
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Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these audited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.
The critical accounting policies summarized in this section are discussed in further detail in the notes to the audited consolidated financial statements appearing elsewhere in this annual report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.
Revenue Recognition
We adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration to which We expect to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by us in determination of revenue recognition:
| ● | Step 1: Identify the contract(s) with the customer; | |
| ● | Step 2: Identify the performance obligations in the contract; | |
| ● | Step 3: Determine the transaction price; | |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and | |
| ● | Step 5: Recognize revenue when or as we satisfy a performance obligation. |
We are a mining machine developer, engaging in research, development and sales of cryptocurrency mining machine and standardized computing equipment.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
We derive revenue from the sale of cryptocurrency mining machine and standardized computing equipment for the six months ended June 30, 2022 and 2021. Revenue is recognized when the promised goods are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. We recorded and recognized revenues from products, which we present as revenues and revenues from related parties in the accompanying consolidated statements of operations and comprehensive income.
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Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, income taxes including the valuation allowance for deferred tax assets. While we believe that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
Fair Value of Financial Instruments
We follow the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, advance to suppliers, prepayment and other current assets, short-term borrowings, accounts payable, accrued expenses and other payables and due to related parties approximate their fair value based on the short-term maturity of these instruments.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2020-02 to provide additional guidance on the credit losses standard. The ASU is effective for public company for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019. For all other entities including emerging growth companies, the ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early application is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We have adopted ASU 2016-13 since January 1, 2021, the impact of which on our consolidated financial statements was immaterial.
Recently issued ASUs by the FASB, except for the ones mentioned above, are not expected to have a significant impact on our consolidated results of operations or financial position. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to our consolidated financial condition, results of operations, cash flows, or disclosures.
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Exhibit 99.2
AGM GROUP HOLDINGS INC.
TABLE OF CONTENTS
F-1
AGM GROUP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2022 (UNAUDITED) AND DECEMBER 31, 2021
(Amounts in US$, except for number of shares)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Advances to suppliers | ||||||||
| Prepayment and other current assets | ||||||||
| Loan receivable from third parties | ||||||||
| Due from related party | ||||||||
| Total current assets | ||||||||
| NON - CURRENT ASSETS: | ||||||||
| Property and equipment, net | ||||||||
| Construction in progress | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred tax assets | ||||||||
| Total non - current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term borrowings | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses and other payables | ||||||||
| Advances from customers | ||||||||
| Due to related parties | ||||||||
| Deferred government grant - current | ||||||||
| Operating lease liabilities - current | ||||||||
| Total current liabilities | ||||||||
| NON - CURRENT LIABILITIES: | ||||||||
| Deferred government grant - non current | ||||||||
| Total non - current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Class A Ordinary Shares ( | $ | $ | ||||||
| Class B Ordinary Shares ( | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Retained earnings/(Accumulated deficit) | ( | ) | ||||||
| Accumulated other comprehensive (loss)/income | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-2
AGM GROUP HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPEATIONS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Amounts in US$, except for number of shares)
| For the Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | $ | $ | ||||||
| Total Revenues | ||||||||
| Cost of revenues | ( | ) | ||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Selling, general & administrative expenses | ||||||||
| Research and development expenses | - | |||||||
| Total operating expenses | ||||||||
| Income/(Loss) from operations | ( | ) | ||||||
| Other income/(expenses) | ||||||||
| Other income | ||||||||
| Other expenses | ( | ) | ( | ) | ||||
| Total other expenses | ( | ) | ( | ) | ||||
| Income/(Loss) before provision of income taxes | ( | ) | ||||||
| Provision for income taxes expenses | ( | ) | ||||||
| Net income/(loss) | ( | ) | ||||||
| Comprehensive income/(loss) | ||||||||
| Net income/(loss) | $ | $ | ( | ) | ||||
| Other comprehensive loss | ||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Total comprehensive income/(loss) | $ | $ | ( | ) | ||||
| Income/(Loss) earnings per common share | ||||||||
| Net income/(loss) per common share - basic | $ | $ | ( | ) | ||||
| Net income/(loss) per common share - diluted | $ | $ | ( | ) | ||||
| Weighted average Class A ordinary shares outstanding, basic | ||||||||
| Weighted average Class A ordinary shares outstanding, diluted | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-3
AGM GROUP HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Amounts in US$)
| For the Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities | ||||||||
| Net income/(loss) | $ | $ | ( | ) | ||||
| Adjustment to reconcile net income to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Other income | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Advances to suppliers | ( | ) | ||||||
| Prepayment and other current assets | ( | ) | ||||||
| Loan receivable from third parties | ( | ) | ||||||
| Inventories | ||||||||
| Deferred tax assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other payables | ||||||||
| Advances from customers | ( | ) | ||||||
| Deferred government grant | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Purchase of construction in progress | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from related parties | ||||||||
| Repayment of short-term borrowings | ( | ) | ||||||
| Repayments to related parties | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of the year | ||||||||
| Cash and cash equivalents, end of the year | ||||||||
| Supplemental cash flow information | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Expense paid by related party | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-4
AGM GROUP HOLDINGS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Amounts in US$, except for number of shares)
For the six months ended June 30, 2021
| Number of Class A Ordinary Share | Number of Class B Ordinary Share | Class A Ordinary Share | Class B Ordinary Share | Additional paid-in capital | Statutory Reserves | (Accumulated Deficit) /Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total | ||||||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
For the six months ended June 30, 2022
| Number of Class A Ordinary Share | Number of Class B Ordinary Share | Class A Ordinary Share | Class B Ordinary Share | Additional paid-in capital | Statutory Reserves | (Accumulated Deficit) /Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total | ||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Appropriation to statutory reserve | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-5
AGM GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES
AGM Group Holdings Inc. (“AGM Holdings”) was incorporated on April 27, 2015 under the laws of the British Virgin Islands. AGM Holdings is a holding company and do not own any material assets or liabilities other than holding equity interest of multiple entities and certain cash and cash equivalents.
On May 21, 2015, AGM Holdings incorporated a wholly owned subsidiary, AGM Technology Limited (“AGM Technology”) in Hong Kong. AGM Technology provides advanced online trading service for financial institutions in Asian areas.
On October 13, 2015, AGM Technology incorporated a Chinese limited liability subsidiary, AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) formerly known as Shenzhen AnGaoMeng Financial Technology Service Co., Ltd., for the purpose of being a holding company for the equity interests in China. On October 19, 2020, AGM Holdings also incorporated a wholly owned subsidiary, AGM Tianjin International Financial Leasing Co. Ltd. (“AGM Leasing”) was in China under the laws of PRC.
On November 13, 2015 and September 28, 2016, AGM Tianjin incorporated two wholly owned Chinese limited liability subsidiaries, Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”), and Nanjing Xingaomeng Software Technology Co., Ltd. (“AGM Nanjing”), respectively. AGM Nanjing was dissolved under the laws of China on May 19, 2020.
On June 14, 2017, AGM Software Service LTD (“AGM Software”) was incorporated under the laws of BVI. AGM Software is a wholly-owned subsidiary of AGM Holdings and its principal activity will be assisting AGM Technology in providing core technology services to customers.
On July 26, 2019, AGM Holdings acquired
On May 19, 2020, Nanjing Xingaomeng Software Technology Co., Ltd. (“AGM Nanjing”) was dissolved.
On December 14, 2020, AGM Holdings sold all the equity
interest of Anyi Network by entering into a share purchase agreement with certain buyers, pursuant to which the Company sold to the buyers
F-6
On June 17, 2021, AGM Technology incorporated a wholly owned Chinese limited liability subsidiary, Nanjing Lucun Semiconductor Co. Ltd. (“Nanjing Lucun”) in China under the laws of PRC.
On July 30, 2021 AGM Holdings incorporated a wholly owned limited liability subsidiary, AGM Defi Lab Ptd Limited (“AGM Defi Lab”) under the laws of Singapore.
On August 8, 2021 AGM Holdings incorporated a wholly owned limited liability subsidiary, AGM Defi Tech Limited (“AGM Defi Tech”) in Hong Kong.
On October 21, 2021, AGM Defi Tech incorporated a wholly owned subsidiary, Beijing Keen Sense Technology Service Co., Ltd (“Beijing Keen Sense”) in China under the laws of PRC.
AGM Holdings’ subsidiaries are as follows:
| Name | Date of Incorporation | Place of Incorporation | Percentage of Effective Ownership | Principal Activities | ||||||
| AGM Technology Limited (“AGM Technology “) | % | |||||||||
| AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) formerly Shenzhen AnGaoMeng Financial Technology Service Co., Ltd. | % | |||||||||
| Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”) | % | |||||||||
| AGM Software Service LTD (“AGM Software”) | % | |||||||||
| Nanjing Lucun Semiconductor Co., Ltd. (“Nanjing Lucun”) | % | |||||||||
| AGM Defi Lab Ptd Limited (“AGM Defi Lab”) | % | |||||||||
| AGM Defi Tech Limited (“AGM Defi Tech”) | % | |||||||||
| Beijing Keen Sense Technology Service Co., Ltd (“Beijing Keen Sense”) | % | |||||||||
AGM Technology, AGM Tianjin, AGM Beijing, AGM Software, Nanjing Lucun, AGM Defi Lab, AGM Defi Tech, and Beijing Keen Sense, are referred to as subsidiaries. AGM Holdings and its consolidated subsidiaries are collectively referred to herein as the “Company” unless specific reference is made to an entity.
F-7
Note 2 - SUMMARY OF SIGNIFICANT POLICIES
Basis of Presentation
The accompanying consolidated financial statements are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The Company included all adjustments that are necessary for the fair presentation of its financial position, results of operations, and cash flows for the periods presented. This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in China (“China GAAP”), the accounting standards used in the places of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company to present them in conformity with U.S. GAAP.
These unaudited consolidated interim financial statements should be read in conjunction with the financial statements and footnotes for the year ended December 31, 2021 included in the Form 20-F as filed with the SEC. The results of operations and cash flows for the six months ended June 30, 2022 are not necessarily indicative of the results of operations or cash flows which may be reported for future periods or the full fiscal year.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts for AGM Holdings and all its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. For the subsidiaries whose functional currencies are Renminbi (“RMB”), results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of income.
The consolidated balance sheet balances, with the exception of equity at June 30, 2022 and December 31, 2021 were translated at RMB6.7114 and RMB6.3757 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to consolidated statements of income and cash flows for the six months ended June 30, 2022 and 2021 were RMB6.4835 and RMB6.4682 to $1.00, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
F-8
Cash and cash equivalents
Cash and cash equivalents are financial assets that
are either cash or highly liquid investments with an original maturity term of
Inventories
Inventories, primarily consisting of cryptocurrency mining machines and standardized computing equipment, which are finished goods from manufacturers. Inventories are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand. No inventory write-down was recorded for the six months ended June 30, 2022 and 2021.
Advances to suppliers
Advances to suppliers primarily consists of prepayments for purchase of inventories of cryptocurrency mining machines and standardized computing equipment. The Company maintains an allowance for doubtful accounts to state prepayments at their estimated realizable value based on a variety of factors, including the possibility of applying the prepayments to products, significant one-time events, and historical experience.
Fair Value of Financial Instruments
The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, advance to suppliers, prepayment and other current assets, short-term borrowings, accounts payable and other payables, due to related parties and income tax payable approximate their fair value based on the short-term maturity of these instruments.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists principally of amounts due from trade customers. Credit is extended based on an evaluation of the customer’s financial condition and collateral is not generally required.
The Company maintains allowances for doubtful accounts for estimated losses from the receivable amount that cannot be collected. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. In determining these estimates, the Company examines historical write-offs of its receivables and reviews each client’s account to identify any specific customer collection issues.
F-9
Management believes that the accounts receivable are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its accounts receivable at June 30, 2022 and December 31, 2021. The Company historically has not experienced uncollectible accounts from customers granted with credit sales.
Factoring Arrangements
The Company uses a factoring arrangement with a third party financial institution to manage working capital and cash flows (See Note 3). Under these programs, the Company transferred receivables to a financial institution. Available capacity under these programs is dependent on the level of the trade accounts receivable eligible to be sold and the financial institutions’ willingness to purchase such receivables. As such, the factoring arrangement can be reduced or eliminated at any time due to market conditions and changes in the credit worthiness of our customers, which would negatively impact our liquidity.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Identifiable significant improvements are capitalized and expenditures for maintenance, repairs, and betterments, including replacement of minor items, are charged to expense.
Depreciation is computed based on cost, less the estimated residual value, if any, using the straight-line method over the estimated useful life. The residual value rate and useful life of property and equipment are summarized as follows:
| Property and Equipment | Residual value rate | Useful life | ||||
| Electronic equipment | % | |||||
| Office equipment | % | |||||
Intangible Assets
Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Intangible assets mainly represent the domain name at cost, less accumulated amortization on a straight-line basis over an estimated life of ten years.
| Intangible Asset | Residual value rate | Useful life | ||||
| AGM domain name | % | |||||
Lease Commitments
On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
The Company determined if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and short and long-term lease liabilities in the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets.
F-10
Revenue Recognition
The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by the Company in its determination of revenue recognition:
| ● | Step 1: Identify the contract(s) with the customer; |
| ● | Step 2: Identify the performance obligations in the contract; |
| ● | Step 3: Determine the transaction price; |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and |
| ● | Step 5: Recognize revenue when or as the Company satisfies a performance obligation. |
The Company is a server and software developer, engaging in research, development and sale of server and enterprise application software, including ASIC miner, accounting software and ERP software, and the software-related after sales services.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
The Company derives revenue from the sales of cryptocurrency mining machines and standardized computing equipment. The Company acts as a principal as it takes control of the merchandises, is primarily obligated for the merchandise sold to the consumers, bears inventory risks and has the latitude in establishing prices. Revenue is recognized at a point in time when the promised goods are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. The Company recognizes product revenues on a gross basis as the Company is responsible to fulfill the promise to provide specified goods.
Contract liability
The contract liabilities consist of advances from customers, which relate to unsatisfied performance obligations at the end of each reporting period and consists of cash payments received in advance from customers in sales of server products. As of June 30, 2022 and December 31, 2021, the Company’s advances from customers amounted to 38,568,323 and $42,231,914, respectively.
The Company reports revenues net of applicable sales taxes and related surcharges.
Costs of Revenues
Cost of revenues primarily contains cost of product revenue, which includes direct costs of cryptocurrency mining machines, standardized computing equipment and software products; labor costs and employee benefits for software development, data testing, bug fixes and hacker prevention; research and development expenses.
F-11
Operating Leases
The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. Upon adoption of ASU 2016-02 and related standards, operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company includes options to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. The Company also takes into considerations when certain lease contains fair value purchase and termination options with an associated penalty.
The Company reviews all leases for capital or operating classification at their inception. The Company conducts its operations primarily under operating leases as of adoption of ASC 842 on January 1, 2021.
Research and Development Expenses
Research and development costs are expensed as incurred. The costs primarily consist of the wage expenses incurred to continuously improve and upgrade the Company’s services.
Government grants
Government grant is recognized when there is reasonable
assurance that the Company will comply with the conditions attach to it and the grant will be received. From June 15, 2021, Nanjing Pukou
Economic Development Zone Management Committee (the “Committee”) provided an office to the Company for free for 5 years to
attract the enterprise for the development of the integrated circuit industry in Nanjing. As of June 30, 2022 and December 31,2021, $
Income Taxes
The Company is governed by the Income Tax Law of China,
Inland Revenue Ordinance of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. Based on a review of surrounding facts and
circumstances, the revenue generated from AGM Technology belongs to offshore revenue as its operation is outside Hong Kong. Therefore,
the Company considers AGM Technology is not subject to tax at
The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act.
F-12
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30, 2022 and December 31, 2021, the Company had uncertain tax positions accrued, and will continue to evaluate for uncertain positions in the future.
Value Added Tax
The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of software service provided. The Company reports revenue net of China’s VAT for all the periods presented in the accompanying consolidated statements of operations.
Comprehensive Income
ASC 220 “Comprehensive Income” established standards for reporting and display of comprehensive income, its components and accumulated balances. Components of comprehensive income include net income and foreign currency translation adjustments. For the six months ended June 30, 2022 and 2021, the only component of accumulated other comprehensive income was foreign currency translation adjustments.
Related Party Transactions
A related party is generally defined as (i) any person
and or their immediate family hold
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
Concentration and Risks
| a) | Concentration of credit risk |
Financial instruments that potentially subject the Company to concentration of credit risk are cash and cash equivalents, and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions or trading platforms. The Company routinely assesses the financial strength of the customer and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, consequently, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
| b) | Foreign currency exchange rate risk |
The functional currency and the reporting currency of the Company are RMB and U.S. dollars, respectively. The Company’s exposure to foreign currency exchange rate risk primarily relates to cash and cash equivalents, accounts receivable and accounts payable. Any significant fluctuation of RMB against U.S. dollars may materially and adversely affect the Company’s cash flows, revenues, earnings and financial positions.
F-13
| c) | Currency convertibility risk |
The Company transacts some of its business in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
Reclassification
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings and financial position.
Net Income/(Loss) per Common Share
Basic earnings/(loss) per ordinary share is computed by dividing net earnings/(loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings/(loss) per share is computed by dividing net income/(loss) attributable to ordinary shareholders by the sum of the weighted-average number of ordinary shares outstanding and dilutive potential ordinary shares during the period.
Segment Reporting
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, as part of its Simplification Initiative to reduce the cost and complexity in accounting for income taxes. This standard removes certain exceptions related to the approach for intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning October 1, 2022. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements.
Recently issued ASUs by the FASB, except for the ones mentioned above, are not expected to have a significant impact on the Company’s consolidated results of operations or financial position. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures.
F-14
Note 3 - ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Accounts receivable | $ | $ | ||||||
bad debt allowance was recorded for the six months ended June 30, 2022 and 2021.
On July 29, 2021, the Company entered into an accounts
receivable factoring agreement (the “Factoring Agreement”) with Zhongyuan Bank Co.,Ltd (“Zhongyuan Bank”). The
Factoring Agreement allows for up to RMB
In January 2022, the Company has repaid $
Note 4 - INVENTORIES
Inventories, primarily consisted of cryptocurrency mining machines and standardized computing equipment, which are finished goods from manufactures. As of June 30, 2022 and December 31, 2021, inventories consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Finished goods | $ | $ | ||||||
No inventory write-down was recorded for the six months ended June 30, 2022 and 2021.
Note 5 - Prepayment and OTHER CURRENT ASSETS
Prepayment and other current assets consist of prepaid expenses, other receivables, and deposits.
As of June 30, 2022 and December 31, 2021, prepayment and other current assets consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Prepaid input VAT | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Deposits and others | ||||||||
| Total prepayment and other current assets | $ | $ | ||||||
Note 6 - LOAN RECEIVABLE FROM THIRD PARTIES
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Loan receivable (1) | $ | $ | ||||||
| (1) |
| On April 10, 2022, the Company entered into a loan agreement with a third party, Muliang Agriculture Limited, to lend $ |
F-15
Note 7 - PROPERTY AND EQUIPMENT, NET
As of June 30, 2022 and December 31, 2021, property and equipment, net consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Electronic equipment | $ | $ | ||||||
| Office equipment | ||||||||
| Leasehold improvement | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Leasehold amortization expenses for the six months
ended June 30, 2022 and 2021 were $
Note 8 - INTANGIBLE ASSETS, NET
As of June 30, 2022 and December 31, 2021, intangible assets, net consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| AGM domain name | $ | $ | ||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | ||||||||
For the six months
ended June 30, 2022 and 2021, amortization expenses amounted to $
| Remainder of 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total | $ |
Note 9 - RELATED PARTY TRANSACTIONS
As of June 30, 2022, related parties of the Company consisted of the following:
| Name of Related Party | Nature of Relationship | |
| Zhentao Jiang | ||
| Wenjie Tang | ||
| Yufeng Mi | ||
| Yang Cao | ||
| HongKong Kisen Co., Limited |
F-16
Due from related party
As of June 30, 2022 and December 31, 2021, due from related party consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Wenjie Tang | ||||||||
| Total due from related party | $ | $ | ||||||
Amounts due from related party are interest free, unsecured and could be settled on demand.
Due to related parties
The Company mainly finances its operations through proceeds borrowed from related parties. As of June 30, 2022 and December 31, 2021, due to related parties consisted of the following:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| HongKong Kisen Co., Limited | $ | $ | - | |||||
| Zhentao Jiang | ||||||||
| Yufeng Mi | ||||||||
| Yang Cao | ||||||||
| Total due to related parties | $ | $ | ||||||
The balance of due to related parties represents expenses incurred by related parties in the ordinary course of business. These amounts are interest free, unsecured and could be settled on demand.
From time to time, the Company borrowed $
Note 10 – SHORT-TERM BORROWINGS
As of December 31, 2021, the short-term borrowings were for working capital and capital expenditure purposes. Short-term borrowings include an accounts receivable factoring arrangement with a third-party financial institution of Zhongyuan Bank Co., Ltd consist of the following:
| Annual Interest Rate | Maturity (Months) | Principal | June 30, 2022 | December 31, 2021 | ||||||||||||||
| US$ | US$ | US$ | ||||||||||||||||
| Short-term borrowings: | ||||||||||||||||||
| ZHONGYUAN BANK CO., LTD (1) | ||||||||||||||||||
| Total | ||||||||||||||||||
The interest expenses were $
| (1) |
F-17
Note 11 - OPERATING LEASE
On February 1, 2021, the Company entered into a lease
agreement to lease an office in Beijing with a term of
On June 15, 2021, in order to attract enterprises
for the development of the integrated circuit industry in Nanjing, Nanjing Pukou Economic Development Zone Management Committee (the “Committee”)
entered into an investment agreement with Nanjing Lucun. Pursuant to the investment agreement, the Company leased an office from the Commitment
with rental consideration for
As mentioned above, the estimated effect of lease renewal and termination options, as applicable, was included in the consolidated financial statements in current period.
As of June 30, 2022, the Company recognized operating
lease liabilities, including both current and noncurrent portions, in the amount of $
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liabilities - current | $ | $ | ||||||
| Operating lease liabilities - non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Supplemental information related to operating leases for the six months ended June 30, 2022:
| For the Six Months Ended June 30, 2022 | ||||
| Weighted-average remaining lease term of operating leases | ||||
| Weighted-average discount rate of operating leases | % | |||
The following table summarizes the maturity of the operating lease liabilities as of June 30, 2022:
| Operating | ||||
| Lease Liabilities | ||||
| Year of 2022 | $ | |||
| Thereafter | ||||
| Total lease payments | $ | |||
| Less: imputed interest | ||||
| Present value of operating lease liabilities | ||||
| Less: current obligation | ||||
| Long-term obligation on June 30, 2022 | $ | |||
F-18
Note 12 – SHAREHOLDERS’ EQUITY
On July 26, 2019, the Company entered into Acquisition
Agreement with Anyi Network and the shareholders of Anyi. In connection with the Acquisition Agreement, the Company acquired
On December 14, 2020, the Company cancelled an aggregate
of
In July 2020, the Company issued an aggregated of
In August 2021, Firebull Holding Limited, holder of
On December 14, 2021, the Company issued
Additionally, the Company has retained FT Global Capital,
Inc. (the “Placement Agent”) to act as exclusive placement agent in connection with this offering. The Company agreed to issue
to the Placement Agent or its designees warrants to purchase up to
As of June 30, 2022,
Note 13 - INCOME TAX
British Virgin Islands (“BVI”)
Under the tax laws of BVI, AGM Holdings and AGM Software are not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the BVI.
Hong Kong
Cayman Islands
Under the tax laws of Cayman Islands, Anyi Network are not subject to tax on income or capital gain. In addition, payments of dividends by such entities to their shareholders are not subject to withholding tax in Cayman Islands.
Singapore
Under the tax laws of Singapore, AGM Defi Lab are subject to tax at
F-19
China
On March 16, 2007, the National People’s Congress passed the Enterprise
Income Tax Law (“the China EIT Law”), which was effective as of January 1, 2008. Companies incorporated in China are allowed
to offset future tax taxable income with taxable operating losses carried forward in a
The China EIT Law also provides that an enterprise
established under the laws of foreign countries or regions but whose “de facto management body” is located in China be treated
as a resident enterprise for PRC tax purpose and consequently be subject to China income tax at the rate of
The China EIT Law also imposes a withholding income
tax of
AGM Beijing, AGM Tianjin, Nanjing Lucun, and Beijing Keen Sense are subject
to
AGM Beijing, AGM Tianjin, Beijing Keen Sense and AGM Defi Lab incurred net loss for the six months ended June 30, 2022.
The provision for income taxes consisted of the following:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Current | $ | ( | ) | $ | ||||
| Deferred | ||||||||
| Total | $ | ( | ) | $ | ||||
The reconciliations of the statutory income tax rate and the Company’s effective income tax rate are as follows:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Statutory income tax rate | % | % | ||||||
| Tax effect of different tax rates in other jurisdictions | % | ( | )% | |||||
| Changes in valuation allowance | % | ( | )% | |||||
| Effective tax rate | % | % | ||||||
F-20
The summary of cumulative net operating losses carried forward for the Company’s subsidiaries in different regions is as follows:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| PRC Region | $ | $ | ||||||
| HK Region | ||||||||
| Total cumulative net operating loss carry-forward from continuing operation | $ | $ | ||||||
Components of the Company’s net deferred tax assets are set forth below:
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry-forwards | $ | $ | ||||||
| Total of deferred tax assets | ||||||||
| Less: valuation allowance | ||||||||
| Net deferred assets | $ | $ | ||||||
As of June 30, 2022 and December 31, 2021, deferred
tax assets of the Company were of $
Accounting for Uncertainty in Income Taxes
The Company and certain subsidiaries are established in various foreign countries with significant operations located in China. The Company might not be subject to PRC income tax and did not pay any income tax to PRC however it is uncertain as to whether China tax authority may take different views about the Company’s tax positions which may lead to additional tax liabilities.
The tax authority of China Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in China after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether China tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities.
ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the company’s tax position and recognized liabilities for uncertain tax positions for the six months ended June 30, 2022 and 2021, and the period from inception (April 27, 2015) to December 31, 2015. The Company recognized liabilities for uncertain tax positions, which was included in accrued expenses and other current liabilities on the Consolidated Balance Sheets for the six months ended June 30, 2022 and 2021.
The activity of the unrecognized tax benefits related to the Company’s uncertain tax positions is summarized as follows:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Gross beginning balance | $ | $ | ||||||
| Gross increase to tax positions in the current period | ||||||||
| Gross increase to tax position in the prior period | ||||||||
| Gross decrease to tax position in the prior period | ||||||||
| Lapse of statute limitations | ||||||||
| Gross ending balance | $ | $ | ||||||
There were no interests and penalties in relation to the Company uncertain tax positions for the six months ended June 30, 2022 and 2021.
F-21
Note 14 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. As of June 30, 2022 and December 31, 2021, substantially all of the Company’s cash were placed with high credit quality financial institutions. The Company have not experienced any losses in such accounts during the six months ended June 30, 2022. As for accounts receivable, almost all of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, the Company believe that the concentration of credit risk with respect to trade accounts receivable is limited due to generally short payment terms. The Company also perform ongoing credit evaluations of customers to help further reduce potential credit risk.
Customers
For the six months ended June 30, 2022,
As of June 30, 2022, the Company had accounts receivable
of $
Suppliers
For the six months ended June 30, 2022,
As of June 30, 2022, the Company had accounts payable
balance of $
Note 15 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 19, 2022, the date on which the consolidated financial statements were issued and noted that there are no other subsequent events.
F-22
Exhibit 99.3
AGM Group Announces First Half 2022 Unaudited Financial Results
with Record Revenue and Profitability
1H2022 Revenue of $113.6 million, up 209.5% sequentially
1H2022 Net Income of $14.4 million, up 313.6% sequentially
BEIJING, China, December 19, 2022 /PRNewswire/ —AGM Group Holdings Inc. (“AGMH” or the “Company”) (NASDAQ: AGMH), an integrated technology company focusing on providing fintech software services and producing high-performance hardware and computing equipment, today announced its unaudited financial results for the first half year ended June 30, 2022.
First Half 2022 Operating and Financial Highlights
| ● | Total computing power delivered was approximately 985,688 TH/S, compared to 440,000 TH/S in the second half of 2021. |
| ● | Total revenues were $113.6 million, up 209.5% from $36.7 million in the second half of 2021. |
| ● | Gross profit was $21.6 million, up 227.3% from $6.6 million in the second half of 2021. |
| ● | Net income was $14.6 million, up 313.6% from $3.5 million in the second half of 2021. |
Mr. Chenjun Li, Chairman and Co-Chief Executive Officer of the Company, commented, “We have experienced challenging time and market volatility in the first half of 2022, under the combined adverse effects of the Bitcoin price downward trajectory and the COVID-19 lockdown in China. These disruptions are also forcing customers to be more selective of competitive technology in boosting their innovation and productivity, which is the driving momentum in the continued sales of our advanced mining machines, resulting in total revenue more than tripled from US$36.7 million in the second half of 2021 to US$113.6 million in the first half of 2022. These results demonstrate the success and the sustainability of our business strategy and execution, as we continue to expand our customer base and improve supply chain capabilities. Looking into the future, we will focus on expansion opportunities, technological innovation, and product portfolio. We remain confident that our endeavors in broadening business scope and responsive adaption to advanced technologies will sustain our growth trajectory in the ever-evolving cryptocurrency mining market.”
Mr. Steven Sim, Chief Financial Officer of the Company, stated, “During the first half of 2022, despite the COVID-19 containment lockdown in China and the overall significant price drop within the Bitcoin market, we delivered a record total revenue of US$113.6 million and net profitability of US$14.6 million, representing sequential growths of 209.5% and 313.6% respectively, as well as a profit margin of 19%, which is the highest we have ever achieved in the history of AGMH. These results are strong testament to our capabilities in technology development and rapid business transformation. Moving forward, we will continue focusing on delivering mining machines, acquiring sound customers, and improving supply chain while expanding additional growth avenues.”
First Half 2022 Financial Results
Revenues
Total revenues were $113.6 million, representing an increase of 209.5% from $36.7 million in the second half of 2021. The increase was primarily due to the increased volume of cryptocurrency mining machines and computing equipment sold.
Cost of Revenues
Cost of revenues was $91.9 million, representing an increase of 205.2% from $30.1 million in the second half of 2021. The increase was mainly attributable to the increase in procurement costs for cryptocurrency mining machines and computing equipment.
Gross Profit
Gross profit was $21.6 million, compared to $6.6 million in the second half of 2021. The increase was primarily due to the substantial increase in revenues.
Operating expenses
Total operating expenses were $1.7 million, remain flat from $1.7 million in the second half of 2021.
| ● | Selling, general, and administrative expenses were $1.7 million, an increase of 4.3% from $1.6 million in the second half of 2021. The increase was primarily due to the higher professional service fees related to being a public-traded company. |
| ● | Research and development expenses were nil, compared with $36,317 in the second half of 2021. The decrease was mainly due to the decrease in FinTech R&D. The Company has not invested in cryptocurrency mining machine R&D yet. |
Income from operations
Income from operations was $19.9 million, compared to $4.9 million in the second half of 2021.
Other expenses
Total other expenses, net of other income was $0.2 million, compared to total other expenses, net of other income, of $3,996 in the second half of 2021.
Net income
Net income was $14.6 million, compared to net income of $3.5 million in the same half of 2021.
Earnings per share
Basic and diluted net income per common share were both $0.68.
Cash and cash equivalents
Cash and cash equivalent were $9.7 million as of June 30, 2022, compared to $18.4 million as of December 31, 2021.
2
About AGM Group Holdings Inc.
Incorporated in April 2015 and headquartered in Beijing, China, AGM Group Holdings Inc. (NASDAQ: AGMH) is an integrated technology company focusing on providing fintech software services and producing high-performance hardware and computing equipment. AGMH’s mission is to become one of the key participants and contributors in the global fintech and blockchain ecosystem. For more information, please visit www.agmprime.com.
Forward Looking Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties, Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.
For more information, please contact:
In China:
At the Company:
Email: ir@agmprime.com
Seaquant Consulting
Mr. Roye Zhang
Email: roye@sea-quant.com
3
AGM GROUP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in US$, except for number of shares)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 9,652,146 | $ | 18,426,622 | ||||
| Accounts receivable, net | 54,988,661 | 2,608,325 | ||||||
| Inventories | 3,565,417 | 22,433,140 | ||||||
| Advances to suppliers | 63,262,135 | 40,485,521 | ||||||
| Prepayment and other current assets | 3,117,680 | 2,926,425 | ||||||
| Loan receivable from third parties | 1,580,000 | 400,000 | ||||||
| Due from related party | 175,930 | 39,238 | ||||||
| Total current assets | 136,341,969 | 87,319,271 | ||||||
| NON - CURRENT ASSETS: | ||||||||
| Property and equipment, net | 188,305 | 322,397 | ||||||
| Construction in progress | 394,805 | - | ||||||
| Intangible assets, net | 7,893 | 8,633 | ||||||
| Operating lease right-of-use assets | 187,800 | 241,554 | ||||||
| Deferred tax assets | 221,195 | 129,034 | ||||||
| Total non - current assets | 999,998 | 701,618 | ||||||
| TOTAL ASSETS | $ | 137,341,967 | $ | 88,020,889 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term borrowings | $ | - | $ | 1,568,455 | ||||
| Accounts payable | 42,169,789 | 14,116,569 | ||||||
| Accrued expenses and other payables | 12,062,493 | 3,597,440 | ||||||
| Advances from customers | 38,568,323 | 42,231,914 | ||||||
| Due to related parties | 8,972,893 | 1,215,573 | ||||||
| Deferred government grant - current | 37,046 | 38,111 | ||||||
| Operating lease liabilities - current | 24,655 | 51,239 | ||||||
| Total current liabilities | 101,835,199 | 62,819,301 | ||||||
| NON - CURRENT LIABILITIES: | ||||||||
| Deferred government grant - non current | 121,927 | 147,812 | ||||||
| Total non - current liabilities | 121,927 | 147,812 | ||||||
| TOTAL LIABILITIES | $ | 101,957,126 | $ | 62,967,113 | ||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Class A Ordinary Shares (200,000,000 shares authorized with par value of $0.001, 24,254,842 and 24,254,842 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) | $ | 24,255 | $ | 24,255 | ||||
| Class B Ordinary Shares (200,000,000 shares authorized with par value of $0.001, 2,100,000 and 2,100,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) | 2,100 | 2,100 | ||||||
| Additional paid-in capital | 26,010,366 | 26,010,366 | ||||||
| Statutory reserves | 348,131 | 63,659 | ||||||
| Retained earnings/(Accumulated deficit) | 12,822,783 | (1,459,779 | ) | |||||
| Accumulated other comprehensive (loss)/income | (3,822,794 | ) | 413,175 | |||||
| Total shareholders’ equity | 35,384,841 | 25,053,776 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 137,341,967 | $ | 88,020,889 | ||||
4
AGM GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPEATIONS AND COMPREHENSIVE INCOME
(Amounts in US$, except for number of shares)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | ||||||||
| Revenues | $ | 113,528,876 | $ | - | ||||
| Total Revenues | 113,528,876 | - | ||||||
| Cost of Revenues | ||||||||
| Cost of revenues | (91,924,102 | ) | - | |||||
| Gross profit | 21,604,774 | - | ||||||
| Operating expenses | ||||||||
| Selling, general & administrative expenses | 1,675,355 | 480,495 | ||||||
| Research and development expenses | - | 22,505 | ||||||
| Total operating expenses | 1,675,355 | 503,000 | ||||||
| Income/(Loss) from operations | 19,929,419 | (503,000 | ) | |||||
| Other income/(expenses) | ||||||||
| Other income | 22,983 | 177 | ||||||
| Other expenses | (252,974 | ) | (5,002 | ) | ||||
| Total other expenses | (229,991 | ) | (4,825 | ) | ||||
| Income/(Loss) before provision of income taxes | 19,699,428 | (507,825 | ) | |||||
| Provision for income taxes expenses | (5,132,394 | ) | - | |||||
| Net income/(loss) | 14,567,034 | (507,825 | ) | |||||
| Comprehensive income/(loss) | ||||||||
| Net income/(loss) | $ | 14,567,034 | $ | (507,825 | ) | |||
| Other comprehensive loss | - | - | ||||||
| Foreign currency translation adjustment | (4,235,969 | ) | (92,173 | ) | ||||
| Total comprehensive income/(loss) | $ | 10,331,065 | $ | (599,998 | ) | |||
| Income/(Loss) earnings per common share | ||||||||
| Net income/(loss) per common share - basic | $ | 0.68 | $ | (0.02 | ) | |||
| Net income/(loss) per common share - diluted | $ | 0.68 | $ | (0.02 | ) | |||
| Weighted average Class A ordinary shares outstanding, basic | 21,491,291 | 21,356,290 | ||||||
| Weighted average Class A ordinary shares outstanding, diluted | 21,491,291 | 21,356,290 | ||||||
5
AGM GROUP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in US$)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities | ||||||||
| Net income/(loss) | $ | 14,567,034 | $ | (507,825 | ) | |||
| Adjustment to reconcile net income to net cash used in operating activities | ||||||||
| Depreciation and amortization | 211,435 | 8,283 | ||||||
| Amortization of operating lease right-of-use asset | 53,754 | - | ||||||
| Other income | (22,009 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (52,380,336 | ) | - | |||||
| Advances to suppliers | (22,776,614 | ) | - | |||||
| Prepayment and other current assets | (191,255 | ) | 2,498 | |||||
| Loan receivable from third parties | (1,180,000 | ) | - | |||||
| Inventories | 18,867,723 | - | ||||||
| Deferred tax assets | (92,161 | ) | - | |||||
| Accounts payable | 28,053,220 | (3,376 | ) | |||||
| Accrued expenses and other payables | 8,465,054 | 152,233 | ||||||
| Advances from customers | (3,663,591 | ) | - | |||||
| Deferred government grant | (4,941 | ) | - | |||||
| Operating lease liabilities | (26,584 | ) | - | |||||
| Net cash used in operating activities | (10,119,271 | ) | (348,187 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (85,575 | ) | - | |||||
| Purchase of construction in progress | (394,805 | ) | - | |||||
| Net cash used in investing activities | (480,380 | ) | - | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from related parties | 8,000,000 | 152,454 | ||||||
| Repayment of short-term borrowings | (1,568,455 | ) | - | |||||
| Repayments to related parties | (2,086 | ) | (9,707 | ) | ||||
| Net cash (used in)/provided by financing activities | 6,429,459 | 142,747 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (4,604,284 | ) | 1,845 | |||||
| Net change in cash and cash equivalents | (8,774,476 | ) | (203,595 | ) | ||||
| Cash and cash equivalents, beginning of the year | 18,426,622 | 664,605 | ||||||
| Cash and cash equivalents, end of the year | $ | 9,652,146 | $ | 461,010 | ||||
| Supplemental cash flow information | ||||||||
| Interest paid | $ | 7,198 | $ | - | ||||
| Income taxes paid | $ | 29,900 | $ | - | ||||
| Non-cash investing and financing activities | ||||||||
| Expense paid by related party | $ | - | $ | 3,092 | ||||
6
Document And Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Document Information Line Items | |
| Entity Registrant Name | AGM GROUP HOLDINGS INC. |
| Document Type | 6-K |
| Current Fiscal Year End Date | --12-31 |
| Amendment Flag | false |
| Entity Central Index Key | 0001705402 |
| Document Period End Date | Jun. 30, 2022 |
| Document Fiscal Year Focus | 2022 |
| Document Fiscal Period Focus | Q2 |
Consolidated Balance sheets (Unaudited) (Parentheticals) - $ / shares |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Class A Ordinary Shares | ||
| Ordinary shares, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Ordinary shares, authorized | 200,000,000 | 200,000,000 |
| Ordinary shares, issued | 24,254,842 | 24,254,842 |
| Ordinary shares, outstanding | 24,254,842 | 24,254,842 |
| Class B Ordinary Shares | ||
| Ordinary shares, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Ordinary shares, authorized | 200,000,000 | 200,000,000 |
| Ordinary shares, issued | 2,100,000 | 2,100,000 |
| Ordinary shares, outstanding | 2,100,000 | 2,100,000 |
Unaudited Consolidated Statements of Changes in Shareholders’ Equity - USD ($) |
Number of Class A Ordinary Share |
Number of Class B Ordinary Share |
Class A
Ordinary Share
|
Class B
Ordinary Share
|
Additional paid-in capital |
Statutory Reserves |
(Accumulated Deficit) /Retained Earnings |
Accumulated Other Comprehensive Income/(Loss) |
Total |
|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2020 | $ 8,368,266 | $ (4,947,815) | $ 243,703 | $ 3,692,610 | |||||
| Balance (in Shares) at Dec. 31, 2020 | 21,356,290 | 7,100,000 | 21,356 | 7,100 | |||||
| Net income (loss) | (507,825) | (507,825) | |||||||
| Foreign currency translation adjustment | (92,173) | (92,173) | |||||||
| Balance at Jun. 30, 2021 | 8,368,266 | (5,455,640) | 151,530 | 3,092,612 | |||||
| Balance (in Shares) at Jun. 30, 2021 | 21,356,290 | 7,100,000 | 21,356 | 7,100 | |||||
| Balance at Dec. 31, 2021 | 26,010,366 | 63,659 | (1,459,779) | 413,175 | 25,053,776 | ||||
| Balance (in Shares) at Dec. 31, 2021 | 24,254,842 | 2,100,000 | 24,255 | 2,100 | |||||
| Net income (loss) | 14,567,034 | 14,567,034 | |||||||
| Appropriation to statutory reserve | 284,472 | (284,472) | |||||||
| Appropriation to statutory reserve (in Shares) | |||||||||
| Foreign currency translation adjustment | (4,235,969) | (4,235,969) | |||||||
| Balance at Jun. 30, 2022 | $ 26,010,366 | $ 348,131 | $ 12,822,783 | $ (3,822,794) | $ 35,384,841 | ||||
| Balance (in Shares) at Jun. 30, 2022 | 24,254,842 | 2,100,000 | 24,255 | 2,100 |
Organization and Principal Activities |
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| Organization and Principal Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ORGANIZATION AND PRINCIPAL ACTIVITIES | Note 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES
AGM Group Holdings Inc. (“AGM Holdings”) was incorporated on April 27, 2015 under the laws of the British Virgin Islands. AGM Holdings is a holding company and do not own any material assets or liabilities other than holding equity interest of multiple entities and certain cash and cash equivalents.
On May 21, 2015, AGM Holdings incorporated a wholly owned subsidiary, AGM Technology Limited (“AGM Technology”) in Hong Kong. AGM Technology provides advanced online trading service for financial institutions in Asian areas.
On October 13, 2015, AGM Technology incorporated a Chinese limited liability subsidiary, AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) formerly known as Shenzhen AnGaoMeng Financial Technology Service Co., Ltd., for the purpose of being a holding company for the equity interests in China. On October 19, 2020, AGM Holdings also incorporated a wholly owned subsidiary, AGM Tianjin International Financial Leasing Co. Ltd. (“AGM Leasing”) was in China under the laws of PRC.
On November 13, 2015 and September 28, 2016, AGM Tianjin incorporated two wholly owned Chinese limited liability subsidiaries, Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”), and Nanjing Xingaomeng Software Technology Co., Ltd. (“AGM Nanjing”), respectively. AGM Nanjing was dissolved under the laws of China on May 19, 2020.
On June 14, 2017, AGM Software Service LTD (“AGM Software”) was incorporated under the laws of BVI. AGM Software is a wholly-owned subsidiary of AGM Holdings and its principal activity will be assisting AGM Technology in providing core technology services to customers.
On July 26, 2019, AGM Holdings acquired 100% of Anyi Network Inc. (“Anyi Network”) and its subsidiaries (collectively “Anyi”) and paid $400,000 in cash and issued an aggregate of 475,000 duly authorized, fully paid and nonassessable Class A ordinary shares of the Company, valued at $16.00 per share to the shareholders of Anyi. The total consideration underlying the Share Exchange was $8,000,000. Anyi Network was incorporated on September 29, 2017 under the laws of the Cayman Islands. Anyi provided information accounting software technology and services for small and medium enterprises in China.
On May 19, 2020, Nanjing Xingaomeng Software Technology Co., Ltd. (“AGM Nanjing”) was dissolved.
On December 14, 2020, AGM Holdings sold all the equity interest of Anyi Network by entering into a share purchase agreement with certain buyers, pursuant to which the Company sold to the buyers 100% equity interest in Anyi Network in exchange for a total consideration of $8,000,000, payable in the form of canceling 475,000 ordinary shares of AGM Holdings held by the buyers, valued at $16.00 per share, and payment of $400,000 in cash. The disposition of Anyi Network includes the disposition of the subsidiaries of Anyi Network.
On June 17, 2021, AGM Technology incorporated a wholly owned Chinese limited liability subsidiary, Nanjing Lucun Semiconductor Co. Ltd. (“Nanjing Lucun”) in China under the laws of PRC.
On July 30, 2021 AGM Holdings incorporated a wholly owned limited liability subsidiary, AGM Defi Lab Ptd Limited (“AGM Defi Lab”) under the laws of Singapore.
On August 8, 2021 AGM Holdings incorporated a wholly owned limited liability subsidiary, AGM Defi Tech Limited (“AGM Defi Tech”) in Hong Kong.
On October 21, 2021, AGM Defi Tech incorporated a wholly owned subsidiary, Beijing Keen Sense Technology Service Co., Ltd (“Beijing Keen Sense”) in China under the laws of PRC.
AGM Holdings’ subsidiaries are as follows:
AGM Technology, AGM Tianjin, AGM Beijing, AGM Software, Nanjing Lucun, AGM Defi Lab, AGM Defi Tech, and Beijing Keen Sense, are referred to as subsidiaries. AGM Holdings and its consolidated subsidiaries are collectively referred to herein as the “Company” unless specific reference is made to an entity. |
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Summary of Significant Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT POLICIES | Note 2 - SUMMARY OF SIGNIFICANT POLICIES
Basis of Presentation
The accompanying consolidated financial statements are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The Company included all adjustments that are necessary for the fair presentation of its financial position, results of operations, and cash flows for the periods presented. This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in China (“China GAAP”), the accounting standards used in the places of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company to present them in conformity with U.S. GAAP.
These unaudited consolidated interim financial statements should be read in conjunction with the financial statements and footnotes for the year ended December 31, 2021 included in the Form 20-F as filed with the SEC. The results of operations and cash flows for the six months ended June 30, 2022 are not necessarily indicative of the results of operations or cash flows which may be reported for future periods or the full fiscal year.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts for AGM Holdings and all its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. For the subsidiaries whose functional currencies are Renminbi (“RMB”), results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of income.
The consolidated balance sheet balances, with the exception of equity at June 30, 2022 and December 31, 2021 were translated at RMB6.7114 and RMB6.3757 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to consolidated statements of income and cash flows for the six months ended June 30, 2022 and 2021 were RMB6.4835 and RMB6.4682 to $1.00, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
Cash and cash equivalents
Cash and cash equivalents are financial assets that are either cash or highly liquid investments with an original maturity term of 90 days or less. At June 30, 2022 and December 31, 2021, the Company’s cash equivalents primarily consist cash in various financial institutions.
Inventories
Inventories, primarily consisting of cryptocurrency mining machines and standardized computing equipment, which are finished goods from manufacturers. Inventories are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand. No inventory write-down was recorded for the six months ended June 30, 2022 and 2021.
Advances to suppliers
Advances to suppliers primarily consists of prepayments for purchase of inventories of cryptocurrency mining machines and standardized computing equipment. The Company maintains an allowance for doubtful accounts to state prepayments at their estimated realizable value based on a variety of factors, including the possibility of applying the prepayments to products, significant one-time events, and historical experience.
Fair Value of Financial Instruments
The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, advance to suppliers, prepayment and other current assets, short-term borrowings, accounts payable and other payables, due to related parties and income tax payable approximate their fair value based on the short-term maturity of these instruments.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists principally of amounts due from trade customers. Credit is extended based on an evaluation of the customer’s financial condition and collateral is not generally required.
The Company maintains allowances for doubtful accounts for estimated losses from the receivable amount that cannot be collected. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. In determining these estimates, the Company examines historical write-offs of its receivables and reviews each client’s account to identify any specific customer collection issues.
Management believes that the accounts receivable are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its accounts receivable at June 30, 2022 and December 31, 2021. The Company historically has not experienced uncollectible accounts from customers granted with credit sales.
Factoring Arrangements
The Company uses a factoring arrangement with a third party financial institution to manage working capital and cash flows (See Note 3). Under these programs, the Company transferred receivables to a financial institution. Available capacity under these programs is dependent on the level of the trade accounts receivable eligible to be sold and the financial institutions’ willingness to purchase such receivables. As such, the factoring arrangement can be reduced or eliminated at any time due to market conditions and changes in the credit worthiness of our customers, which would negatively impact our liquidity.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Identifiable significant improvements are capitalized and expenditures for maintenance, repairs, and betterments, including replacement of minor items, are charged to expense.
Depreciation is computed based on cost, less the estimated residual value, if any, using the straight-line method over the estimated useful life. The residual value rate and useful life of property and equipment are summarized as follows:
Intangible Assets
Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Intangible assets mainly represent the domain name at cost, less accumulated amortization on a straight-line basis over an estimated life of ten years.
Lease Commitments
On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
The Company determined if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and short and long-term lease liabilities in the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets.
Revenue Recognition
The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by the Company in its determination of revenue recognition:
The Company is a server and software developer, engaging in research, development and sale of server and enterprise application software, including ASIC miner, accounting software and ERP software, and the software-related after sales services.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
The Company derives revenue from the sales of cryptocurrency mining machines and standardized computing equipment. The Company acts as a principal as it takes control of the merchandises, is primarily obligated for the merchandise sold to the consumers, bears inventory risks and has the latitude in establishing prices. Revenue is recognized at a point in time when the promised goods are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. The Company recognizes product revenues on a gross basis as the Company is responsible to fulfill the promise to provide specified goods.
Contract liability
The contract liabilities consist of advances from customers, which relate to unsatisfied performance obligations at the end of each reporting period and consists of cash payments received in advance from customers in sales of server products. As of June 30, 2022 and December 31, 2021, the Company’s advances from customers amounted to 38,568,323 and $42,231,914, respectively.
The Company reports revenues net of applicable sales taxes and related surcharges.
Costs of Revenues
Cost of revenues primarily contains cost of product revenue, which includes direct costs of cryptocurrency mining machines, standardized computing equipment and software products; labor costs and employee benefits for software development, data testing, bug fixes and hacker prevention; research and development expenses.
Operating Leases
The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. Upon adoption of ASU 2016-02 and related standards, operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company includes options to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. The Company also takes into considerations when certain lease contains fair value purchase and termination options with an associated penalty.
The Company reviews all leases for capital or operating classification at their inception. The Company conducts its operations primarily under operating leases as of adoption of ASC 842 on January 1, 2021.
Research and Development Expenses
Research and development costs are expensed as incurred. The costs primarily consist of the wage expenses incurred to continuously improve and upgrade the Company’s services.
Government grants
Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attach to it and the grant will be received. From June 15, 2021, Nanjing Pukou Economic Development Zone Management Committee (the “Committee”) provided an office to the Company for free for 5 years to attract the enterprise for the development of the integrated circuit industry in Nanjing. As of June 30, 2022 and December 31,2021, $158,973 and $185,923 deferred government grant was recorded, respectively. The amount of other income for the government grant recognized during the six months ended June 30, 2022 and 2021 was $22,009 and , respectively.
Income Taxes
The Company is governed by the Income Tax Law of China, Inland Revenue Ordinance of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. Based on a review of surrounding facts and circumstances, the revenue generated from AGM Technology belongs to offshore revenue as its operation is outside Hong Kong. Therefore, the Company considers AGM Technology is not subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong or 8.25% if the net profit under $2,000,000 for 2019 and beyond under Inland Revenue Ordinance of Hong Kong.
The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act.
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30, 2022 and December 31, 2021, the Company had uncertain tax positions accrued, and will continue to evaluate for uncertain positions in the future.
Value Added Tax
The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of software service provided. The Company reports revenue net of China’s VAT for all the periods presented in the accompanying consolidated statements of operations.
Comprehensive Income
ASC 220 “Comprehensive Income” established standards for reporting and display of comprehensive income, its components and accumulated balances. Components of comprehensive income include net income and foreign currency translation adjustments. For the six months ended June 30, 2022 and 2021, the only component of accumulated other comprehensive income was foreign currency translation adjustments.
Related Party Transactions
A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. Related parties may be individuals or corporate entities.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
Concentration and Risks
Financial instruments that potentially subject the Company to concentration of credit risk are cash and cash equivalents, and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions or trading platforms. The Company routinely assesses the financial strength of the customer and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, consequently, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
The functional currency and the reporting currency of the Company are RMB and U.S. dollars, respectively. The Company’s exposure to foreign currency exchange rate risk primarily relates to cash and cash equivalents, accounts receivable and accounts payable. Any significant fluctuation of RMB against U.S. dollars may materially and adversely affect the Company’s cash flows, revenues, earnings and financial positions.
The Company transacts some of its business in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
Reclassification
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings and financial position.
Net Income/(Loss) per Common Share
Basic earnings/(loss) per ordinary share is computed by dividing net earnings/(loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings/(loss) per share is computed by dividing net income/(loss) attributable to ordinary shareholders by the sum of the weighted-average number of ordinary shares outstanding and dilutive potential ordinary shares during the period.
Segment Reporting
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, as part of its Simplification Initiative to reduce the cost and complexity in accounting for income taxes. This standard removes certain exceptions related to the approach for intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning October 1, 2022. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements.
Recently issued ASUs by the FASB, except for the ones mentioned above, are not expected to have a significant impact on the Company’s consolidated results of operations or financial position. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures. |
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Accounts Receivable, Net |
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| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE, NET | Note 3 - ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
bad debt allowance was recorded for the six months ended June 30, 2022 and 2021.
On July 29, 2021, the Company entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Zhongyuan Bank Co.,Ltd (“Zhongyuan Bank”). The Factoring Agreement allows for up to RMB10 million in advances, which are collateralized by assigned eligible accounts receivable and are subject to funds usage, no discount, and other fees, as well as service charges. The Factoring Agreement has a scheduled term of 160 days and is subject to automatic one year extension unless written notice of intention to terminate is obtained from the Company or unapproved by both parties. The current Factoring Agreement has a maturity date on January 9, 2022. The annual interest rate of factoring is 5.60%.
In January 2022, the Company has repaid $1,568,455 (RMB10,000,000) to Zhongyuan Bank. The total interest of $41,747 (RMB 270,667) accrued and all interests were paid under the Factoring Agreement as of June 30, 2022. |
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Inventories |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||
| INVENTORIES | Note 4 - INVENTORIES
Inventories, primarily consisted of cryptocurrency mining machines and standardized computing equipment, which are finished goods from manufactures. As of June 30, 2022 and December 31, 2021, inventories consisted of the following:
No inventory write-down was recorded for the six months ended June 30, 2022 and 2021. |
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Prepayment and Other Current Assets |
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| Prepayment and Other Current Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAYMENT AND OTHER CURRENT ASSETS | Note 5 - Prepayment and OTHER CURRENT ASSETS
Prepayment and other current assets consist of prepaid expenses, other receivables, and deposits.
As of June 30, 2022 and December 31, 2021, prepayment and other current assets consisted of the following:
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Loan Receivable from Third Parties |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||
| LOAN RECEIVABLE FROM THIRD PARTIES | Note 6 - LOAN RECEIVABLE FROM THIRD PARTIES
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Property and Equipment, Net |
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| PROPERTY AND EQUIPMENT, NET | Note 7 - PROPERTY AND EQUIPMENT, NET
As of June 30, 2022 and December 31, 2021, property and equipment, net consisted of the following:
Leasehold amortization expenses for the six months ended June 30, 2022 and 2021 were $209,391 and . Depreciation expenses for the six months ended June 30, 2022 and 2021 were $1,304 and $6,803, respectively. There were no disposals or impairment recorded for property and equipment for the six months ended June 30, 2022 and 2021. |
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Intangible Assets, Net |
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| Intangible Assets, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS, NET | Note 8 - INTANGIBLE ASSETS, NET
As of June 30, 2022 and December 31, 2021, intangible assets, net consisted of the following:
For the six months ended June 30, 2022 and 2021, amortization expenses amounted to $740 and $740, respectively. The following is a schedule, by fiscal years, of amortization amount of intangible asset:
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Related Party Transactions |
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| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | Note 9 - RELATED PARTY TRANSACTIONS
As of June 30, 2022, related parties of the Company consisted of the following:
Due from related party
As of June 30, 2022 and December 31, 2021, due from related party consisted of the following:
Amounts due from related party are interest free, unsecured and could be settled on demand.
Due to related parties
The Company mainly finances its operations through proceeds borrowed from related parties. As of June 30, 2022 and December 31, 2021, due to related parties consisted of the following:
The balance of due to related parties represents expenses incurred by related parties in the ordinary course of business. These amounts are interest free, unsecured and could be settled on demand.
From time to time, the Company borrowed $8.0 million from related parties and repaid $2,086 to related parties during the six months ended June 30, 2022. The Company borrowed $152,454 from related parties and repaid $9,707 to related parties during the six months ended June 30, 2021. |
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Short-Term Borrowings |
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| Short-Term Borrowings [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHORT-TERM BORROWINGS | Note 10 – SHORT-TERM BORROWINGS
As of December 31, 2021, the short-term borrowings were for working capital and capital expenditure purposes. Short-term borrowings include an accounts receivable factoring arrangement with a third-party financial institution of Zhongyuan Bank Co., Ltd consist of the following:
The interest expenses were $252,970 and $4,798 for the six months ended June 30, 2022 and 2021, respectively.
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Operating Lease |
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| Operating Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPERATING LEASE | Note 11 - OPERATING LEASE
On February 1, 2021, the Company entered into a lease agreement to lease an office in Beijing with a term of two years under a lease fee of $4,392 per month.
On June 15, 2021, in order to attract enterprises for the development of the integrated circuit industry in Nanjing, Nanjing Pukou Economic Development Zone Management Committee (the “Committee”) entered into an investment agreement with Nanjing Lucun. Pursuant to the investment agreement, the Company leased an office from the Commitment with rental consideration for 5 years.
As mentioned above, the estimated effect of lease renewal and termination options, as applicable, was included in the consolidated financial statements in current period.
As of June 30, 2022, the Company recognized operating lease liabilities, including both current and noncurrent portions, in the amount of $24,655 and , and the corresponding net operating lease right-of-use assets of $187,800.
Supplemental information related to operating leases for the six months ended June 30, 2022:
The following table summarizes the maturity of the operating lease liabilities as of June 30, 2022:
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Shareholders’ Equity |
6 Months Ended |
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Jun. 30, 2022 | |
| Stockholders' Equity Note [Abstract] | |
| SHAREHOLDERS’ EQUITY | Note 12 – SHAREHOLDERS’ EQUITY
On July 26, 2019, the Company entered into Acquisition Agreement with Anyi Network and the shareholders of Anyi. In connection with the Acquisition Agreement, the Company acquired 100% of the equity of Anyi and pay $400,000 in cash and issue an aggregate of 475,000 duly authorized, fully paid and nonassessable Class A ordinary shares of the Company, valued at $16.00 per share to the shareholders of Anyi .
On December 14, 2020, the Company cancelled an aggregate of 475,000 ordinary shares of the Company held by Haiyan Huang, Feng Zhi and Yinglu Gao, who purchased back 100% of the equity of Anyi Network, valued at $16.00 per share.
In July 2020, the Company issued an aggregated of 40,235 Class A ordinary shares of the Company to a total of 106 non- affiliate individual investors, valued at 16.00 per share, and the Company received proceeds in a total amount of $667,901.
In August 2021, Firebull Holding Limited, holder of 5,000,000 Class A ordinary shares and 5,000,000 Class B ordinary shares of the Company sold and transferred 5,000,000 Class A ordinary shares to Firebull Tech Limited. Pursuant to section 11 of the Company’s memorandum and articles of association, the 5,000,000 Class B ordinary shares held by Firebull Holding was cancelled accordingly.
On December 14, 2021, the Company issued 2,898,552 Class A ordinary shares to investors. For each Class A ordinary share purchased, an investor received from the Company one-half unregistered warrant, for an aggregate of 1,449,276 warrants. The 3.5-year warrants are exercisable immediately from the date of issuance and have an exercise price of US$8.3. The purchase price for one ordinary share and one-half corresponding warrant is US$6.90.
Additionally, the Company has retained FT Global Capital, Inc. (the “Placement Agent”) to act as exclusive placement agent in connection with this offering. The Company agreed to issue to the Placement Agent or its designees warrants to purchase up to 202,899 Class A ordinary shares (“Placement Agent’s Warrants”). Such Placement Agent’s Warrants will be exercisable commencing on the date of issuance at a per share price of $8.30, subject to certain adjustments, and will expire three and a half (3.5) years from the date of issuance.
As of June 30, 2022, 24,254,842 shares of class A ordinary share and 2,100,000 shares of Class B ordinary shares were issued and outstanding. As for Class B ordinary shares, each Class B ordinary share holder in the Company owns the right to vote, but shall not (i) receive the right to any dividend paid by the Company; and (ii) receive the right to any distribution of the surplus assets of the Company on its liquidation. |
Income Tax |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAX | Note 13 - INCOME TAX
British Virgin Islands (“BVI”)
Under the tax laws of BVI, AGM Holdings and AGM Software are not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the BVI.
Hong Kong
Under the tax laws of Hong Kong, AGM Technology and AGM Defi Tech is subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong or 8.25% if the net profit under $2,000,000 for 2019 and beyond, and allowed to offset their future tax taxable income with taxable operating losses with carried forward indefinitely. Based on a review of surrounding facts and circumstances, the revenue generated from AGM Technology belongs to offshore revenue as its operation is in mainland China instead of in Hong Kong, and therefore AGM Technology was considered as a PRC resident enterprise.
Cayman Islands
Under the tax laws of Cayman Islands, Anyi Network are not subject to tax on income or capital gain. In addition, payments of dividends by such entities to their shareholders are not subject to withholding tax in Cayman Islands.
Singapore
Under the tax laws of Singapore, AGM Defi Lab are subject to tax at 10% on income or capital gain.
China
On March 16, 2007, the National People’s Congress passed the Enterprise Income Tax Law (“the China EIT Law”), which was effective as of January 1, 2008. Companies incorporated in China are allowed to offset future tax taxable income with taxable operating losses carried forward in a 5-year period.
The China EIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” is located in China be treated as a resident enterprise for PRC tax purpose and consequently be subject to China income tax at the rate of 25% for its worldwide income. The Implementing Rules of the China EIT Law merely defines the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” On April 22, 2009, China State Administration of Taxation further issued a notice entitled “Notice regarding Recognizing Offshore-Established Enterprises Controlled by PRC Shareholders as Resident Enterprises Based on Their place of Effective Management.” Under this notice, a foreign company controlled by a PRC company or a group of PRC companies shall be deemed as a PRC resident enterprise, if (i) the senior management and the core management departments in charge of its daily operations mainly function in China; (ii) its financial decisions and human resource decisions are subject to decisions or approvals of persons or institutions in China; (iii) its major assets, accounting books, company sales, minutes and files of board meetings and shareholders’ meetings are located or kept in China; and (iv) more than half of the directors or senior management personnel with voting rights reside in China. Based on a review of surrounding facts and circumstances, the Company believe that there is an uncertain tax position as to whether its operations outside of China will be considered a resident enterprise for PRC tax purposes due to limited guidance and implementation history of the China EIT Law. Should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC tax on worldwide income at a uniform tax rate of 25%.
The China EIT Law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the previous income tax regulations. British Virgin Islands, where the Company is incorporated, did not have such tax treaty with China.
AGM Beijing, AGM Tianjin, Nanjing Lucun, and Beijing Keen Sense are subject to 25% China statutory tax rate.
AGM Beijing, AGM Tianjin, Beijing Keen Sense and AGM Defi Lab incurred net loss for the six months ended June 30, 2022.
The provision for income taxes consisted of the following:
The reconciliations of the statutory income tax rate and the Company’s effective income tax rate are as follows:
The summary of cumulative net operating losses carried forward for the Company’s subsidiaries in different regions is as follows:
Components of the Company’s net deferred tax assets are set forth below:
As of June 30, 2022 and December 31, 2021, deferred tax assets of the Company were of $221,195 and $129,034, respectively, which was consisted of net operating loss carry-forwards. As of June 30, 2022, the Management believes that the Company’s cumulative losses arising from recurring business of subsidiaries constituted significant strong evidence that most of the deferred tax assets would be realizable, and therefore, no valuation allowance was accrued accordingly.
Accounting for Uncertainty in Income Taxes
The Company and certain subsidiaries are established in various foreign countries with significant operations located in China. The Company might not be subject to PRC income tax and did not pay any income tax to PRC however it is uncertain as to whether China tax authority may take different views about the Company’s tax positions which may lead to additional tax liabilities.
The tax authority of China Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in China after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether China tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities.
ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the company’s tax position and recognized liabilities for uncertain tax positions for the six months ended June 30, 2022 and 2021, and the period from inception (April 27, 2015) to December 31, 2015. The Company recognized liabilities for uncertain tax positions, which was included in accrued expenses and other current liabilities on the Consolidated Balance Sheets for the six months ended June 30, 2022 and 2021.
The activity of the unrecognized tax benefits related to the Company’s uncertain tax positions is summarized as follows:
There were no interests and penalties in relation to the Company uncertain tax positions for the six months ended June 30, 2022 and 2021. |
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Concentrations of Credit Risk and Major Customers |
6 Months Ended |
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Jun. 30, 2022 | |
| Concentrations of Credit Risk and Major Customers [Abstract] | |
| CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS | Note 14 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. As of June 30, 2022 and December 31, 2021, substantially all of the Company’s cash were placed with high credit quality financial institutions. The Company have not experienced any losses in such accounts during the six months ended June 30, 2022. As for accounts receivable, almost all of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, the Company believe that the concentration of credit risk with respect to trade accounts receivable is limited due to generally short payment terms. The Company also perform ongoing credit evaluations of customers to help further reduce potential credit risk.
Customers
For the six months ended June 30, 2022, five customers accounted for 32%, 15%, 15%, 13% and 12% of the Company’s revenues, respectively. For the six months ended June 30, 2021, no customers accounted for more than 10% of the Company’s revenues.
As of June 30, 2022, the Company had accounts receivable of $54,988,661, and three customers accounted for 72%, 16%, 11% of the Company’s accounts receivable, respectively. As of December 31, 2021, the Company had accounts receivable of $2,608,325, and two customers accounted for 60% and 40% of the Company’s accounts receivable, respectively.
Suppliers
For the six months ended June 30, 2022, four suppliers accounted for 49%, 13%, 13% and 11% of the Company’s cost of revenues, respectively. For the six months ended June 30, 2021, no supplier accounted for more than 10% of the Company’s cost of revenues.
As of June 30, 2022, the Company had accounts payable balance of $42,169,789, and three suppliers accounted for 28%, 24% and 25% of the Company’s accounts payable, respectively. As of December 31, 2021, the Company had accounts payable of $14,116,569, and three suppliers accounted for 37%, 31%, 31% of the Company’s accounts payable, respectively. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | Note 15 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 19, 2022, the date on which the consolidated financial statements were issued and noted that there are no other subsequent events. |
Accounting Policies, by Policy (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
The accompanying consolidated financial statements are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The Company included all adjustments that are necessary for the fair presentation of its financial position, results of operations, and cash flows for the periods presented. This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in China (“China GAAP”), the accounting standards used in the places of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company to present them in conformity with U.S. GAAP.
These unaudited consolidated interim financial statements should be read in conjunction with the financial statements and footnotes for the year ended December 31, 2021 included in the Form 20-F as filed with the SEC. The results of operations and cash flows for the six months ended June 30, 2022 are not necessarily indicative of the results of operations or cash flows which may be reported for future periods or the full fiscal year.
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| Principles of Consolidation | Principles of Consolidation
The accompanying consolidated financial statements include the accounts for AGM Holdings and all its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
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| Foreign Currency Translation | Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. For the subsidiaries whose functional currencies are Renminbi (“RMB”), results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of income.
The consolidated balance sheet balances, with the exception of equity at June 30, 2022 and December 31, 2021 were translated at RMB6.7114 and RMB6.3757 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to consolidated statements of income and cash flows for the six months ended June 30, 2022 and 2021 were RMB6.4835 and RMB6.4682 to $1.00, respectively.
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| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
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| Cash and cash equivalents | Cash and cash equivalents
Cash and cash equivalents are financial assets that are either cash or highly liquid investments with an original maturity term of 90 days or less. At June 30, 2022 and December 31, 2021, the Company’s cash equivalents primarily consist cash in various financial institutions.
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| Inventories | Inventories
Inventories, primarily consisting of cryptocurrency mining machines and standardized computing equipment, which are finished goods from manufacturers. Inventories are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand. No inventory write-down was recorded for the six months ended June 30, 2022 and 2021.
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| Advances to suppliers | Advances to suppliers
Advances to suppliers primarily consists of prepayments for purchase of inventories of cryptocurrency mining machines and standardized computing equipment. The Company maintains an allowance for doubtful accounts to state prepayments at their estimated realizable value based on a variety of factors, including the possibility of applying the prepayments to products, significant one-time events, and historical experience.
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments
The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, advance to suppliers, prepayment and other current assets, short-term borrowings, accounts payable and other payables, due to related parties and income tax payable approximate their fair value based on the short-term maturity of these instruments.
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| Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists principally of amounts due from trade customers. Credit is extended based on an evaluation of the customer’s financial condition and collateral is not generally required.
The Company maintains allowances for doubtful accounts for estimated losses from the receivable amount that cannot be collected. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. In determining these estimates, the Company examines historical write-offs of its receivables and reviews each client’s account to identify any specific customer collection issues.
Management believes that the accounts receivable are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its accounts receivable at June 30, 2022 and December 31, 2021. The Company historically has not experienced uncollectible accounts from customers granted with credit sales.
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| Factoring Arrangements | Factoring Arrangements
The Company uses a factoring arrangement with a third party financial institution to manage working capital and cash flows (See Note 3). Under these programs, the Company transferred receivables to a financial institution. Available capacity under these programs is dependent on the level of the trade accounts receivable eligible to be sold and the financial institutions’ willingness to purchase such receivables. As such, the factoring arrangement can be reduced or eliminated at any time due to market conditions and changes in the credit worthiness of our customers, which would negatively impact our liquidity.
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| Property and Equipment | Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Identifiable significant improvements are capitalized and expenditures for maintenance, repairs, and betterments, including replacement of minor items, are charged to expense.
Depreciation is computed based on cost, less the estimated residual value, if any, using the straight-line method over the estimated useful life. The residual value rate and useful life of property and equipment are summarized as follows:
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| Intangible Assets | Intangible Assets
Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Intangible assets mainly represent the domain name at cost, less accumulated amortization on a straight-line basis over an estimated life of ten years.
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| Lease Commitments | Lease Commitments
On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
The Company determined if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and short and long-term lease liabilities in the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets.
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| Revenue Recognition | Revenue Recognition
The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by the Company in its determination of revenue recognition:
The Company is a server and software developer, engaging in research, development and sale of server and enterprise application software, including ASIC miner, accounting software and ERP software, and the software-related after sales services.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
The Company derives revenue from the sales of cryptocurrency mining machines and standardized computing equipment. The Company acts as a principal as it takes control of the merchandises, is primarily obligated for the merchandise sold to the consumers, bears inventory risks and has the latitude in establishing prices. Revenue is recognized at a point in time when the promised goods are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. The Company recognizes product revenues on a gross basis as the Company is responsible to fulfill the promise to provide specified goods.
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| Contract liability | Contract liability
The contract liabilities consist of advances from customers, which relate to unsatisfied performance obligations at the end of each reporting period and consists of cash payments received in advance from customers in sales of server products. As of June 30, 2022 and December 31, 2021, the Company’s advances from customers amounted to 38,568,323 and $42,231,914, respectively.
The Company reports revenues net of applicable sales taxes and related surcharges.
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| Costs of Revenues | Costs of Revenues
Cost of revenues primarily contains cost of product revenue, which includes direct costs of cryptocurrency mining machines, standardized computing equipment and software products; labor costs and employee benefits for software development, data testing, bug fixes and hacker prevention; research and development expenses.
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| Operating Leases | Operating Leases
The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. Upon adoption of ASU 2016-02 and related standards, operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company includes options to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. The Company also takes into considerations when certain lease contains fair value purchase and termination options with an associated penalty.
The Company reviews all leases for capital or operating classification at their inception. The Company conducts its operations primarily under operating leases as of adoption of ASC 842 on January 1, 2021.
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| Research and Development Expenses | Research and Development Expenses
Research and development costs are expensed as incurred. The costs primarily consist of the wage expenses incurred to continuously improve and upgrade the Company’s services.
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| Government grants | Government grants
Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attach to it and the grant will be received. From June 15, 2021, Nanjing Pukou Economic Development Zone Management Committee (the “Committee”) provided an office to the Company for free for 5 years to attract the enterprise for the development of the integrated circuit industry in Nanjing. As of June 30, 2022 and December 31,2021, $158,973 and $185,923 deferred government grant was recorded, respectively. The amount of other income for the government grant recognized during the six months ended June 30, 2022 and 2021 was $22,009 and , respectively.
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| Income Taxes | Income Taxes
The Company is governed by the Income Tax Law of China, Inland Revenue Ordinance of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. Based on a review of surrounding facts and circumstances, the revenue generated from AGM Technology belongs to offshore revenue as its operation is outside Hong Kong. Therefore, the Company considers AGM Technology is not subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong or 8.25% if the net profit under $2,000,000 for 2019 and beyond under Inland Revenue Ordinance of Hong Kong.
The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act.
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30, 2022 and December 31, 2021, the Company had uncertain tax positions accrued, and will continue to evaluate for uncertain positions in the future.
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| Value Added Tax | Value Added Tax
The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of software service provided. The Company reports revenue net of China’s VAT for all the periods presented in the accompanying consolidated statements of operations.
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| Comprehensive Income | Comprehensive Income
ASC 220 “Comprehensive Income” established standards for reporting and display of comprehensive income, its components and accumulated balances. Components of comprehensive income include net income and foreign currency translation adjustments. For the six months ended June 30, 2022 and 2021, the only component of accumulated other comprehensive income was foreign currency translation adjustments.
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| Related Party Transactions | Related Party Transactions
A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company’s securities (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. Related parties may be individuals or corporate entities.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
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| Concentration and Risks | Concentration and Risks
Financial instruments that potentially subject the Company to concentration of credit risk are cash and cash equivalents, and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions or trading platforms. The Company routinely assesses the financial strength of the customer and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, consequently, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
The functional currency and the reporting currency of the Company are RMB and U.S. dollars, respectively. The Company’s exposure to foreign currency exchange rate risk primarily relates to cash and cash equivalents, accounts receivable and accounts payable. Any significant fluctuation of RMB against U.S. dollars may materially and adversely affect the Company’s cash flows, revenues, earnings and financial positions.
The Company transacts some of its business in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.
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| Reclassification | Reclassification
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings and financial position.
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| Net Income/(Loss) per Common Share | Net Income/(Loss) per Common Share
Basic earnings/(loss) per ordinary share is computed by dividing net earnings/(loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings/(loss) per share is computed by dividing net income/(loss) attributable to ordinary shareholders by the sum of the weighted-average number of ordinary shares outstanding and dilutive potential ordinary shares during the period.
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| Segment Reporting | Segment Reporting
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, as part of its Simplification Initiative to reduce the cost and complexity in accounting for income taxes. This standard removes certain exceptions related to the approach for intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning October 1, 2022. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements.
Recently issued ASUs by the FASB, except for the ones mentioned above, are not expected to have a significant impact on the Company’s consolidated results of operations or financial position. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures. |
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Organization and Principal Activities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Principal Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of agm holdings' subsidiaries |
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Summary of Significant Policies (Tables) |
6 Months Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||
| Schedule of residual value rate and useful life of property and equipment |
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| Schedule of intangible assets |
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Accounts Receivable, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||
| Schedule of accounts receivable, net |
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Inventories (Tables) |
6 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||
| Schedule of finished goods from manufactures |
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Prepayment and Other Current Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayment and Other Current Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepayment and other current assets |
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Loan Receivable from Third Parties (Tables) |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||
| Schedule of loan receivable from third parties |
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Property and Equipment, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment, net |
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Intangible Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets, Net Table [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of intangible assets |
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| Schedule of amortization amount of intangible asset |
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Related Party Transactions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of related parties |
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| Schedule of operations through proceeds borrowed from related parties |
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Short-Term Borrowings (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-Term Borrowings Table [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of short-term borrowings |
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Operating Lease (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of recognized operating lease liabilities, including both current and noncurrent portions |
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| Schedule of related to operating leases |
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| Schedule of maturity of the operating lease liabilities |
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Income Tax (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of income taxes |
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| Schedule of statutory income tax rate and the company’s effective income tax rate |
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| Schedule of net operating losses carried forward for the company’s subsidiaries |
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| Schedule of company’s net deferred tax assets |
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| Schedule of unrecognized tax benefits related to the Company’s uncertain tax positions |
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Organization and Principal Activities (Details) - USD ($) |
1 Months Ended | |
|---|---|---|
Dec. 14, 2020 |
Jul. 26, 2019 |
|
| Organization and Principal Activities (Details) [Line Items] | ||
| Cash | $ 400,000 | |
| Ordinary share price (in Dollars per share) | $ 16 | |
| Cancellation of ordinary shares (in Shares) | 475,000 | |
| Payment of cash consideration | $ 400,000 | |
| Business Consideration [Member] | ||
| Organization and Principal Activities (Details) [Line Items] | ||
| Percentage of acquisition | 100.00% | 100.00% |
| Total consideration | $ 8,000,000 | $ 8,000,000 |
| Class A Ordinary Shares [Member] | ||
| Organization and Principal Activities (Details) [Line Items] | ||
| Aggregate of authorized shares (in Shares) | 475,000 | |
| Ordinary share price (in Dollars per share) | $ 16 |
Summary of Significant Policies (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Accounting Policies [Abstract] | |||
| Translation rates, description | The consolidated balance sheet balances, with the exception of equity at June 30, 2022 and December 31, 2021 were translated at RMB6.7114 and RMB6.3757 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to consolidated statements of income and cash flows for the six months ended June 30, 2022 and 2021 were RMB6.4835 and RMB6.4682 to $1.00, respectively. | ||
| Maturity term | 90 days | ||
| Deferred government grant | $ 158,973 | $ 185,923 | |
| Other income for the government grant | $ 22,009 | ||
| Assessable profits percentage | 16.50% | ||
| Net profit percentage | 8.25% | ||
| Net profit | $ 2,000,000 | ||
| Securities, percentage | 10.00% | ||
Summary of Significant Policies (Details) - Schedule of residual value rate and useful life of property and equipment |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Electronic equipment [Member] | |
| Summary of Significant Policies (Details) - Schedule of residual value rate and useful life of property and equipment [Line Items] | |
| Residual value rate | 5.00% |
| Useful life | 3 years |
| Office equipment [Member] | |
| Summary of Significant Policies (Details) - Schedule of residual value rate and useful life of property and equipment [Line Items] | |
| Residual value rate | 5.00% |
| Useful life | 5 years |
Summary of Significant Policies (Details) - Schedule of intangible assets - AGM domain name [Member] |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Summary of Significant Policies (Details) - Schedule of intangible assets [Line Items] | |
| Residual value rate | 0.00% |
| Useful life | 10 years |
Accounts Receivable, Net (Details) |
6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Jan. 09, 2022 |
Jun. 30, 2022
USD ($)
|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2022
CNY (¥)
|
Jan. 31, 2022
USD ($)
|
Jan. 31, 2022
CNY (¥)
|
Jul. 29, 2021
CNY (¥)
|
|
| Accounts Receivable, Net (Details) [Line Items] | |||||||
| Bad debt allowance | $ | |||||||
| Factoring Agreement [Member] | |||||||
| Accounts Receivable, Net (Details) [Line Items] | |||||||
| Eligible accounts receivable (in Yuan Renminbi) | ¥ | ¥ 10,000,000 | ||||||
| Maturity date | Jan. 09, 2022 | ||||||
| Interest rate | 5.60% | 5.60% | |||||
| Zhongyuan Bank Co.,Ltd [Member] | |||||||
| Accounts Receivable, Net (Details) [Line Items] | |||||||
| Company repaid | $ 1,568,455 | ¥ 10,000,000 | |||||
| Total interest | $ 41,747 | ¥ 270,667 | |||||
Accounts Receivable, Net (Details) - Schedule of accounts receivable, net - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Schedule Of Accounts Receivable Net [Abstract] | ||
| Total loss from discontinued operations | $ 54,988,661 | $ 2,608,325 |
Inventories (Details) - Schedule of finished goods from manufactures - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of Finished Goods from Manufactures [Abstract] | ||
| Finished goods | $ 3,565,417 | $ 22,433,140 |
Prepayment and Other Current Assets (Details) - Schedule of prepayment and other current assets - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of Prepayment and Other Current Assets [Abstract] | ||
| Prepaid input VAT | $ 3,023,964 | $ 2,848,547 |
| Prepaid expenses | 51,301 | |
| Deposits and others | 93,716 | 26,577 |
| Total prepayment and other current assets | $ 3,117,680 | $ 2,926,425 |
Loan Receivable from Third Parties (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Apr. 10, 2022 |
Dec. 31, 2021 |
|
| Receivables [Abstract] | ||
| Loan agreement | $ 280,000 | |
| Interest rate | 1.00% | |
| Term of working capital support | 1 year | |
| Loan agreement | the Company entered into a loan agreement to lend $400,000 loan to AGM Group Ltd., who is the shareholder of the Company holding 20 class A shares. As AGM Group Ltd. (i) held less than 10% of the Company’s securities shares, (ii) was not the company’s management, (iii) could not directly or indirectly control the Company, (iv) could not significantly influence the financial and operating decisions of the Company, the Company is not regarded it as a related party. On April 5, 2022, the Company extended a $900,000 loan to AGM Group Ltd. at the interest rate of 1% for one year as working capital support. |
Loan Receivable from Third Parties (Details) - Schedule of loan receivable from third parties - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
||
|---|---|---|---|---|
| Schedule Of Loan Receivable From Third Parties Abstract | ||||
| Loan receivable | [1] | $ 1,580,000 | $ 400,000 | |
| ||||
Property and Equipment, Net (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Property and Equipment, Net [Abstract] | ||
| Leasehold amortization expenses | $ 209,391 | |
| Depreciation expenses | $ 1,304 | $ 6,803 |
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total property and equipment | $ 554,684 | $ 522,356 |
| Less: accumulated depreciation | (366,379) | (199,959) |
| Total property and equipment, net | 188,305 | 322,397 |
| Electronic equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property and equipment | 167,572 | 168,308 |
| Office equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property and equipment | 13,671 | 14,391 |
| Leasehold improvement [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property and equipment | $ 373,441 | $ 339,657 |
Intangible Assets, Net (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Amortization expenses | $ 740 | $ 740 |
Intangible Assets, Net (Details) - Schedule of intangible assets - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of Intangible Assets [Abstract] | ||
| AGM domain name | $ 14,800 | $ 14,800 |
| Total intangible assets | 14,800 | 14,800 |
| Less: accumulated amortization | (6,907) | (6,167) |
| Total intangible assets, net | $ 7,893 | $ 8,633 |
Intangible Assets, Net (Details) - Schedule of amortization amount of intangible asset |
Jun. 30, 2022
USD ($)
|
|---|---|
| Schedule of Amortization Amount of Intangible Asset [Abstract] | |
| Remainder of 2022 | $ 740 |
| 2023 | 1,480 |
| 2024 | 1,480 |
| 2025 | 1,480 |
| 2026 | 1,480 |
| Thereafter | 1,233 |
| Total | $ 7,893 |
Related Party Transactions (Details) - USD ($) |
Jun. 30, 2022 |
Jun. 30, 2021 |
|---|---|---|
| Related Party Transactions [Abstract] | ||
| Borrowed from related parties | $ 8,000,000 | $ 152,454 |
| Repiad amount | $ 2,086 | $ 9,707 |
Related Party Transactions (Details) - Schedule of related parties |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Zhentao Jiang [Member] | |
| Related Party Transaction [Line Items] | |
| Nature of Relationship | Former Director and principal shareholder |
| Wenjie Tang [Member] | |
| Related Party Transaction [Line Items] | |
| Nature of Relationship | Chief Executive Officer (“CEO”), Director, and shareholder |
| Yufeng Mi [Member] | |
| Related Party Transaction [Line Items] | |
| Nature of Relationship | Chief Technical Officer (“CTO”) and shareholder |
| Yang Cao [Member] | |
| Related Party Transaction [Line Items] | |
| Nature of Relationship | Director of Nanjing Lucun |
| HongKong Kisen Co., Limited [Member] | |
| Related Party Transaction [Line Items] | |
| Nature of Relationship | Company ultimately controlled by Chief Strategy Officer (“CSO”) |
Short-Term Borrowings (Details) |
1 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Jan. 31, 2022
USD ($)
|
Jan. 31, 2022
CNY (¥)
|
Jul. 29, 2021
USD ($)
|
Jul. 29, 2021
CNY (¥)
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2021
USD ($)
|
|
| Short-Term Borrowings (Details) [Line Items] | ||||||
| Interest expenses | $ 252,970 | $ 4,798 | ||||
| Accounts receivable | $ 1,568,455 | ¥ 10,000,000 | ||||
| Repayment | $ 1,568,455 | ¥ 10,000,000 | ||||
| Zhongyuan Bank [Member] | ||||||
| Short-Term Borrowings (Details) [Line Items] | ||||||
| Maturity date | Jan. 09, 2022 | Jan. 09, 2022 | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings - Short-term borrowings [Member] - USD ($) |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|||
| Short-Term Debt [Line Items] | ||||
| Short-term borrowings | $ 1,568,455 | |||
| ZHONGYUAN BANK CO., LTD [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Annual Interest rate | [1] | 5.60% | ||
| Maturity (Months) | [1] | January, 2022 | ||
| Principal | [1] | $ 1,568,455 | ||
| Short-term borrowings | [1] | $ 1,568,455 | ||
| ||||
Operating Lease (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 15, 2021 |
Feb. 01, 2021 |
Jun. 30, 2022 |
|
| Operating Lease [Abstract] | |||
| Lease term | 5 years | 2 years | |
| Lease fee | $ 4,392 | ||
| Lease amount | |||
| Current | $ 24,655 | ||
| Non current portions | |||
| Net operating lease right-of-use assets | $ 187,800 |
Operating Lease (Details) - Schedule of recognized operating lease liabilities, including both current and noncurrent portions - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of Recognized Operating Lease Liabilities, Including Both Current and Noncurrent Portions [Abstract] | ||
| Right-of-use assets | $ 187,800 | $ 241,554 |
| Operating lease liabilities - current | 24,655 | 51,239 |
| Operating lease liabilities - non-current | ||
| Total operating lease liabilities | $ 24,655 | $ 51,239 |
Operating Lease (Details) - Schedule of related to operating leases |
Jun. 30, 2022 |
|---|---|
| Schedule of Related to Operating Leases [Abstract] | |
| Weighted-average remaining lease term of operating leases | 3 years 4 months 24 days |
| Weighted-average discount rate of operating leases | 4.74% |
Operating Lease (Details) - Schedule of maturity of the operating lease liabilities |
Jun. 30, 2022
USD ($)
|
|---|---|
| Schedule of Maturity of the Operating Lease Liabilities [Abstract] | |
| Year of 2022 | $ 25,032 |
| Thereafter | |
| Total lease payments | 25,032 |
| Less: imputed interest | 377 |
| Present value of operating lease liabilities | 24,655 |
| Less: current obligation | 24,655 |
| Long-term obligation on June 30, 2022 |
Income Tax (Details) - Schedule of income taxes - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Schedule of Income Taxes [Abstract] | ||
| Current | $ (5,234,457) | |
| Deferred | 102,063 | |
| Total | $ (5,132,394) | |
Income Tax (Details) - Schedule of statutory income tax rate and the company’s effective income tax rate |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Schedule of Statutory Income Tax Rate and the Company’s Effective Income Tax Rate [Abstract] | ||
| Statutory income tax rate | 25.00% | 25.00% |
| Tax effect of different tax rates in other jurisdictions | 1.00% | (14.00%) |
| Changes in valuation allowance | 0.00% | (11.00%) |
| Effective tax rate | 26.00% | 0.00% |
Income Tax (Details) - Schedule of net operating losses carried forward for the company’s subsidiaries - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Schedule of Net Operating Losses Carried Forward for the Company’s Subsidiaries [Abstract] | ||
| PRC Region | $ 408,253 | $ 202,363 |
| HK Region | 289,233 | |
| Total cumulative net operating loss carry-forward from continuing operation | $ 408,253 | $ 491,597 |
Income Tax (Details) - Schedule of company’s net deferred tax assets - USD ($) |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Deferred tax assets: | ||
| Net operating loss carry-forwards | $ 221,195 | $ 129,034 |
| Total of deferred tax assets | 221,195 | 129,034 |
| Less: valuation allowance | ||
| Net deferred assets | $ 221,195 | $ 129,034 |
Income Tax (Details) - Schedule of unrecognized tax benefits related to the company’s uncertain tax positions - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Schedule of Unrecognized Tax Benefits Related to the Company’s Uncertain Tax Positions [Abstract] | ||
| Gross beginning balance | $ 2,960,155 | $ 1,638,673 |
| Gross increase to tax positions in the current period | 4,252,847 | |
| Gross increase to tax position in the prior period | ||
| Gross decrease to tax position in the prior period | ||
| Lapse of statute limitations | ||
| Gross ending balance | $ 7,213,002 | $ 1,638,673 |