Future Fintech Announces Framework Agreement to Acquire Cryptocurrency Mining Farm

Rhea-AI Summary

Future FinTech Group (NASDAQ: FTFT) announced a non-binding equity acquisition framework agreement to acquire a 51% stake in Mingtang Network Technology for RMB 45.9 million (approximately US$ 7.0 million). Mingtang operates a cryptocurrency mining farm in China's Xinjiang region, with a fully operational data center capable of supporting 50,000 mining machines. The deal includes a commitment from sellers to cover any shortfall in Mingtang's 2021 EBIT, projected at RMB 40 million (approximately US$ 6.1 million). Future investments in a second data center are also planned.

Positive

• Acquisition of a 51% stake in a fully operational cryptocurrency mining farm.
• Mingtang Network's Phase I data center supports a capacity of 50,000 mining machines.
• Sellers guarantee 2021 EBIT of at least RMB 40 million, ensuring financial security.
• Potential for expansion with a planned Phase II data center investment of RMB 600 million.

Negative

• None.

NEW YORK, April 14, 2021 /PRNewswire/ -- Future FinTech Group Inc. (NASDAQ: FTFT) ("hereinafter referred to as "Future FinTech", "FTFT" or "the Company"), a leading blockchain-based e-commerce business and a fintech service provider, announced today that the Company has signed an equity acquisition framework agreement (the "Framework Agreement") to acquire a 51% equity interest in Mingtang Network Technology Co., Ltd. (the "Mingtang Network") from its shareholders (the "Sellers"). Mingtang Network is located in the Changji Zhundong Economic and Development Zone in the Xinjiang Autonomous Region of China. The Framework Agreement is non-binding except for the 'Confidentiality and Exclusivity' and 'Applicable Law and Dispute Resolution' sections of the agreement.

Mingtang Network operates a cryptocurrency mining farm that integrates big data collection, cloud storage and advanced computer software and hardware operations into an industrial system of data analysis and information storage. Phase I of Mingtang Network's data center has a 50,000 capacity load for cryptocurrency mining machines, the ability to run big data mining applications and is fully operational. It also has 300,000 sets of mechanical and electrical equipment on site such as standby or outsourcing cryptocurrency mainframes, mining machine power supply modules, etc., which are either owned by Mingtang Network or its clients using the mining farm. Mingtang Network's cryptocurrency mining farm has been granted all necessary governmental approvals in China.

According to the Frame Agreement, the Company will acquire 51% of the equity of Mingtang Network at a purchase price of RMB 45.9 million (approximately US$ 7.0 million) based on a valuation of 100% of the equity of Mingtang Network of RMB 90 million (approximately US$ 13.8 million). However, the final purchase price will be determined by both parties and will be based on completion of a financial audit of Mingtang Network and pending the Company's due diligence and a definitive agreement by the parties. The Sellers promise that 2021 audited earnings before interest and taxes ("EBIT") of Mingtang Network will be at least RMB 40 million (approximately US$ 6.1 million), and if this does not occur, the Sellers agree to bear any shortfall attributable to this figure and make the Company whole as to the projected EBIT with a cash payment.

In addition, the Company and the Sellers agree to invest in the construction of a Phase II data center of a 500,000 capacity load for cryptocurrency mining machines within a time frame to be agreed to by both parties. The total investment in the Phase II project is expected to be about RMB 600 million (approximately US$ 91.7 million), which will be funded according to the ownership percentage of Mingtang Network, i.e. 51% by the Company and 49% by the Sellers.

Shanchun Huang, Chief Executive of Future FinTech, commented, "We are excited about the cryptocurrency mining farm sector and believe that it will continue to achieve further growth and real-world economic viability. We intend continue to purchase cryptocurrency mining machines, make additional acquisitions of cryptocurrency mining farms and promote the development of secure and evolutionary cryptocurrency applications. Our goal is to become one of the world's leading cryptocurrency mining enterprise."

Xiang Lin, Chairman of Mingtang Network, said, "Mingtang Network's data center has approvals for land planning, environmental assessment, land occupation assessment and state grid power access. Importantly, the partner supplying the electricity for our data center is a branch of the China state grid, which has the advantage of providing an ample power supply at a low cost. We believe that Mingtang Network's currently operational Phase I data center represents an elite standard of encrypted cryptocurrency digital mining in terms of scale, engineering qualifications and construction standards. We will continue to work closely with FTFT to increase our computing power, expand our market share and seek the maximum return for our shareholders."

About Future FinTech Group Inc.

Future FinTech Group Inc. ("Future FinTech", "FTFT" or the "Company") is a leading blockchain e-commerce company and a service provider for financial technology incorporated in Florida. The Company's operations include a blockchain-based online shopping mall platform, Chain Cloud Mall ("CCM"), a cross-border e-commerce platform (NONOGIRL), an incubator for blockchain based application projects. The Company is also engaged in the development of blockchain based e-Commerce technology as well as financial technology. For more information, please visit http://ftft.com/.

Safe Harbor Statement

Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2019 and otherwise in our SEC reports and filings, including the final prospectus for our offering. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.

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SOURCE Future FinTech Group Inc.

FAQ

What is the purpose of Future FinTech's acquisition of Mingtang Network?

Future FinTech aims to expand its presence in the cryptocurrency mining sector through acquiring a controlling stake in Mingtang Network.

What is the financial value of the acquisition framework agreement?

The acquisition framework agreement values Mingtang Network at approximately RMB 90 million (US$ 13.8 million), with FTFT paying RMB 45.9 million (US$ 7.0 million) for a 51% stake.

What are the expected earnings from Mingtang Network in 2021?

The sellers of Mingtang Network guarantee a minimum EBIT of RMB 40 million (approximately US$ 6.1 million) for 2021.

What is the capacity of Mingtang Network's mining data center?

Mingtang Network's Phase I data center has a capacity load for 50,000 mining machines.

What future investments are planned for Mingtang Network?

There are plans to invest about RMB 600 million (approximately US$ 91.7 million) in a Phase II data center to increase mining capacity.