Code Chain Announces LOI to Acquire Cryptocurrency Mining Center

Rhea-AI Summary

Code Chain New Continent Limited (NASDAQ: CCNC) has executed a Letter of Intent to acquire a 61% stake in Xiaojin Langlang Technology Co., Ltd., a prominent cryptocurrency mining center in China, for approximately USD 5.6 million. The acquisition structure involves 50% cash and 50% shares. Xiaojin Langlang's capabilities include managing a 7,000 square meter data center with a 62,000 kWH capacity, housing over 20,000 mining machines. Additional shares may be awarded based on net income performance targets for 2021, 2022, and 2023. The deal is subject to due diligence and board approvals.

Positive

• Strategic acquisition to enter and expand in cryptocurrency mining.
• Xiaojin Langlang's data center can accommodate over 20,000 mining machines, enhancing operational capacity.
• Potential for additional shares based on performance, aligning interests.

Negative

• Transaction completion is uncertain, pending due diligence and board approvals.
• Initial payment of $500,000 required could strain cash flow until final agreement.

NEW YORK, March 2, 2021 /PRNewswire/ -- Code Chain New Continent Limited (the "Company" or "Code Chain") (NASDAQ: CCNC), a leading eco-technology company, announced today the execution of a Letter of Intent ("LOI") to acquire 61% of Xiaojin Langlang Technology Co., Ltd. ("Xiaojin Langlang"). Founded in March 2020, Xiaojin Langlang is a leading cryptocurrency mining center in China. They engage in internet information management, big data resource services, server hosting, mechanical equipment leasing, computer and communication equipment operation, value-added telecommunications services, software and information technology, information System operation and maintenance, and socio-economic consulting, excluding investment and financing consulting services.

Under the terms of the LOI, the total consideration for 61% of Xiaojin Langlang's equity interest is expected to be RMB 36 million (approximately USD 5.6 million), subject to completion of a third-party valuation. Of this amount, 50% shall be paid in cash, and 50% shall be paid in the Company's shares of common stock. Code Chain is required to pay $500,000 within 7 business days from the signing date of the LOI, which will be applied to the final purchase price upon entry in to the material definitive purchase agreement.

The Company will award additional shares of common stock annually to Xiaojin Langlang based on the post-investment financial performance. The details are as follows:

i. If Xiaojin Langlang achieves a net income of RMB 40 million (approximately USD 6.2 million) or more in 2021 (the "2021 Net Income Goal"), the Company shall issue 300,000 shares of common stock to Xiaojin Langlang;

ii.  If Xiaojin Langlang achieves a net income of RMB 60 million (approximately USD 9.3 million) or more in 2022 (the "2022 Net Income Goal"), the Company shall issue 300,000 shares of common stock to Xiaojin Langlang;

iii. If Xiaojin Langlang achieves a net income of RMB 70 million (approximately USD 10.8 million) or more in 2023 (the "2023 Net Income Goal"), the Company shall issue 400,000 shares of common stock to Xiaojin Langlang.

With RMB 50 million invested into it, the data center covers 7,000 square meters and has 62,000 kWH capacity. This capacity allows the center to accommodate more than 20,000 mining machines. The center is dedicated in providing system hosting services for cryptocurrency mining including computer rooms, power facilities, broadband networks, security monitoring, heat dissipation and cooling, daily management, and related technical support. 

Mr. David (Weidong) Feng, Co-CEO of the Company, commented, "We are excited to announce the proposed acquisition of Xiaojin Langlang. Cryptocurrency mining has gone through rapid evolution with scalability and infrastructure. With Xiaojin Langlang's platform, the acquisition enables us to accelerate our move into crypto mining. We believe our combined efforts will bring growth opportunities and create long-term value for our respective."

The transaction remains subject to completion of due diligence reviews, customary definitive documentation and final approval by the board of both Code Chain and Xiaojin Langlang Financial Leasing. As a result, there is no assurance that the transaction will be consummated. 

About Code Chain New Continent Limited

Founded in 2009, Code Chain New Continent Limited engages in the research, development, and sale of solid waste recycling systems for the mining and industrial sectors, the wholesale and sale of fuel materials, harbor cargo handling services and production and sales of coating materials in the PRC. It provides end-users in these markets with a clean alternative to traditional waste disposal by significantly reducing solid waste discharge into the environment and enabling such users to extract value from valuable metals and other industrial waste materials. Upon completion of Sichuan Wuge Network Games Co., Ltd. ("Wuge"), the Company has also diversified its business. Wuge was established in 2019 and is still in this early developing stage. Wuge produced electronic tokens that combine the five-W elements (when, where, who, why, what), geographic location via the Beidou satellite system and identity information using Code Chain technology. The electronic tokens are unique, tradable, and inheritable digital assets and cannot be tampered. The electronic tokens are based on and stored in the Code Chain system and can be used to monitor and document all kinds of consumer behaviors that involve code-scanning.

Safe Harbor Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. These forward-looking statements may include, but are not limited to, statements containing words such as "may," "could," "would," "plan," "anticipate," "believe," "estimate," "predict," "potential," "expects," "intends", "future" and "guidance" or similar expressions. These forward-looking statements speak only as of the date of this press release and are subject to change at any time. These forward-looking statements are based upon management's current expectations and are subject to a number of risks, uncertainties and contingencies, many of which are beyond the Company's control that may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's public filings with the Securities and Exchange Commission, including the Company's annual report on 10-K. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable law.

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SOURCE Code Chain New Continent Limited

FAQ

What is the acquisition value for Xiaojin Langlang by Code Chain (CCNC)?

The acquisition value for a 61% stake in Xiaojin Langlang is approximately USD 5.6 million.

What is the significance of the Letter of Intent (LOI) signed by CCNC?

The LOI marks the first step towards Code Chain's entry into the cryptocurrency mining sector.

What are the performance targets set for Xiaojin Langlang in the coming years?

Performance targets are set at RMB 40 million in 2021, RMB 60 million in 2022, and RMB 70 million in 2023.

How will the payment be structured for the Xiaojin Langlang acquisition?

The payment will be 50% in cash and 50% in shares of common stock.

What are the next steps after the Letter of Intent for the CCNC acquisition?

The next steps include due diligence, drafting definitive documentation, and obtaining final approval from both boards.