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.”
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