Q4 2021 AGM Group Holdings Inc Earnings Call
Good day, ladies and gentlemen.
Good day, ladies and gentlemen. Thank you for staying by. Welcome to AGM Group Holdings Corporation's 4th quarter and full-year 2021 earnings conference call.
Thank you for standby and welcome to AGM Group Holdings, Incorporations fourth quarter and full year 2021 earnings conference call.
Currently, all participants are in listen-only mode. Later, we will conduct the question and answer session. Instructions will follow at that time. Please note this...
All participants are in listen only mode.
We will conduct a question and answer session.
Instructions will follow at that time.
Please note this call is being recorded.
If you have any objections you may disconnect at this time.
If you have any objections, you may disconnect at this time. Now I will tentacle the-
Now I will turn the call over to Tracy Gal.
Investor Relations director for EG <unk>.
investor relations director of EGM Group. put forward after
Mr. <unk>. Please proceed.
Thank you operator.
Thank you, operator. Hello everyone. Welcome to AJM Group's fourth quarter and the four-year 2021 earnings conference call. Joining us today are Mr. Wenxie Tang, AJM Group's co-CEO, Mr. Chen Jinli, the company's co-CEO, and Mr. Stephen Simms, the company's chief financial officer.
Hello, and welcome to the.
Fourth quarter and the full year 'twenty.
On to our earnings conference call.
With us today Mr.
Lindsey, Okay I'm groups as co CEO .
We're changing the culture of co CEO and Mr. Stevenson, the Companys Chief Financial Officer.
Living needs to resolve all of that today with our press release available some of the news newswire services.
We released the results earlier today with the press release available from the Newswatch This program has been recorded and is currently in existence.
A replay of this call will also be available.
Everything of this course will also be available in a few hours on our website.
Oh well.
Our website first Paul.
First, Mr. Tang and Mr. Lee will brief you on the company's key highlights and then Mr. Sim while we review the company's financial results.
Dave I agree with you on the Companys key highlights and then Mr. Sue will review the Companys financial results.
Before we continue, please note that today's discussion will concern forward-looking state
And so all they continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
made under the civil harbor provisions of the U.S. Private Security Litigation Reform Act of 1995.
forward-looking statements involve inherent risk and uncertainty.
Forward looking statements involve inherent risks and uncertainties.
The search the company's actual results may be materially different from the expectations that you trust today.
As such, the Communist's actual result may be materially different from the expectations expressed today.
Further information regarding those and other risks and circumstances is included in the company's public filings with the SEC.
Further information regarding those and other risks and circumstances is included in the Companys public filings with the SEC.
The company doesn't assume any obligation to update any forward-looking statement.
The company doesn't assume any obligation to update any forward looking statement.
Except as required under applicable law and also please note that unless otherwise stated I'll take as mentioned during the conference call or in the U S.
except as required under applicable law. And also please note that, unless otherwise stated, all figures mentioned during the conference call are in the US dollars.
Dollars.
With that let me now turn the call over to our co CEO . Mr. Lindsay accounts go ahead. This is Tom.
With that, let me now turn the call over to our co-CEO, Mr. Wenjie Tang. Go ahead, Mr. Tang.
Thank you operator, thank you Tracy and good morning, everyone welcome to our fourth quarter and the full year quantity what earnings conference call today.
Thank you, operator. Thank you, Tracy. And good morning, everyone. Welcome to our fourth quarter and four-year 2021 earliest conference call today.
2021 was a unique year for HMH as we smoothly transitioned our business into a technology company.
2021 was a unique year for AGMH as we smoothly transitioned our business into a technology company that develops and produces blockchain-oriented asset chips and advanced cryptocurrency mining machines.
That helps in the produce production.
Oriented ASIC chip and advanced crypto currency mining.
We are happy with our progress in the second half of 2021 from developing strategic plans, cultivating key customer relationships,
We are happy with our progress.
Second half of 2021 slumped.
Swamp developing strategic plans cultivating key customer relationships.
establishing critical cooperation partnerships and to scaling up sales and production.
But are you seeing critical cooperation partnerships.
Two scaling up sales and production.
We are very delighted to announce that 2021's four-year revenues were $36.71 million, out of which $31.37 million was from the fourth quarter.
We are very delighted to announce that 2021 full year revenues was 36 point $71 million, all of which $31 37 billion from the fourth quarter.
We achieved a strong delivery of.
We achieved a strong delivery of cryptocurrency mining equipment.
Great.
Cryptocurrency mining equipment.
a demonstration of our solid execution capabilities in navigating worldwide logistics, congestion, and semiconductor shortage.
A demonstration of our solid execution.
Ability navigating worldwide.
Logistics congestion and semiconductor shortage.
The delivery of mining machines work.
4,896 in the last three months.
4896 in the last three months.
And it's still the delivery of a small part of a purchase order from our Asia cryptocurrency mining machines.
And still, the delivery is a small part of a purchase order from our ASIC cryptocurrency mining machine.
with our industry-leading technology and a superior performance, receiving excellent feedback across a growing client base.
Our industry, leading technology and the superior performance, receiving excellent feedback across our growing client base.
As we continue to upscale our efforts to meet a considerable number of outstanding orders, more shipments will be recognized.
As we continue to upscale.
Scale, our efforts to meet.
We're both number of outstanding orders more shipments most shipments will be recognized the revenues.
2021 performance laid out a great foundation for our future development towards.
2021's performance laid out a great foundation for our future development towards a leading integrated technology company that emphasizes blockchain-oriented ASIC chip R&D, advanced crypto mining machine production, and a FinTech software service.
Leaving.
Integrated technology company emphasized blockchain oriented AC chip RMB advanced Crypto mining machine production and the Fintech software services for US 2021, with just a beginning of a new journey.
For us, 2021 was just the beginning of a new journey. With our cutting-edge technologies and a team of industry veterans, we will further increase our supplies and strengthen our presence in the global blockchain ecosystem while creating long-term and lasting value for our shareholders. With that, I will turn the call over to our chairman and co-CEO, Mr. Chunjun Li, who will provide more details on our strategic initiatives.
Our cutting edge technologies, and a team of industry veterans.
We will further increase our supply is going to strengthen our presents in the global blockchain ecosystem, while creating long term and lasting value for our shareholders.
I'll turn the call over to our chairman and co CEO , Mr. <unk>, who will provide more details.
Strategic initiatives.
Okay.
Thanks, Wenjie. Good morning, everyone, and thank you all for joining us today.
Thank you Andrea good morning, everyone and thank you all for joining us today.
This was a strong year and a strong quarter for our business, although the prices of Korean and other digital assets are likely to remain for a little over the near term the significant amount of Humira and the financial capital has put into this industry over recent years the increases.
This was a strong year and a strong quarter for our business. Although the prices of Bitcoin and other digital assets are likely to remain delightful over the near term, the significant amount of human and financial capital has poured into this industry over recent years, and increasing institutional participation should support sentiments and reduce the loss and magnitude of any potential bear markets.
Institutional participation should assert policy sentiment tend to reduce the loss and the magnitude of any potential bear market.
We have seen growth in participants and market demands in crypto mining.
We haven't seen growth in participants in the market two months in crypto mining.
It has also been encouraging to see increasing efficiency.
It has also been encouraging to see increasing efficiency in delivering our cryptocurrency mining machines, which follows the vigorous demands. The results are a testament to the triumph of our shift into designing ACH chips and manufacturing cryptocurrency mining equipment.
Liver, our two retail currency mining machines, we suppose to vigorous demand.
The results.
Cement to the Trump of our shift to into designing ASIC chips and the manufacturing troops still currency in mining equipment.
The accumulated delivers.
The accumulated deliveries of mining machines were 4,896 in 2021, representing computer power of 440,000 kHz per second.
Mining machines were 4800, and the 96 in 2021.
Presenting computer power of 400, and a <unk> <unk> per second.
The solid performance was within our expectation as we have been enhancing supply chain capabilities and investing in advanced products as well as leaning towards a strategy to move to North America. Next, please allow me to go deeper into this aspect.
The solid performance was within our expectation as we have been enhancing supply chain capabilities and the investing of advanced products as well as the leaning towards.
Stretch the move to North America next please allow me to go deeper into this FX.
in order to establish the best-in-class technical know-how and supply chain.
In order to establish the best in class technical Knowhow and our supply chain, we have fostered closer strategy partnership with <unk>.
We have fostered closer strategic partnership with the blockchain ecosystem. For instance, we are deepening the cooperation with strategic partner Hyshop Electronic Technology Company, which ensures successful deliveries by optimizing the integrated raw material purchase system, mining equipment production, and assembly along with logistics and transportation.
Blockchain ecosystem for instance, we are.
Deepening cooperation with steady primer high Sharpe electronics technology company, which ensures a successful deliveries by optimizing the integrity to the raw material appreciates. This term mining prepayment the production and assembly, along with logistics and transportation.
Such a relationship is extremely critical as global logistics and supply disruptions have made it tougher to purchase and process raw materials, such as semiconductor wafers and other mining machine components.
Such a relationship is.
Extremely critical as global logistics, and a supply disruption maybe to tougher to appreciate it.
Process of raw materials, such as semiconductor wafers and other mining machine components.
Additionally, we are planning to set a joint venture with HySharp in the U.S.
Additionally, we are planning to join.
Joint venture with high shop in the U S before setting up the JV.
Before setting up the JV, AGM Ash has effectively developed a global client base and met a respective precondition of gaining US$100 million mining equipment orders ahead of the March 22 deadline.
Jim hedge has effectively developed a global client base and met our respective precondition of gaining 100, meaning U S. Dollar mining equipment orders ahead of our March 2000, 2022 deadline.
The remarkable progress has significantly magnified our position and the brand influence in the space.
The remarkable progress has significantly revenue prior to our position and the brand influence in the space.
With that, we will follow our plans for establishing the JV, which will aim to fully integrate Hiveshop's experience and assets, including all our capability, personnel, past and future chip design capabilities, and the future Bitcoin mining machine patents into AGMH.
With that we will follow our plans for east have reaching the JV reach we aim to fully integrity to high sharps experience and assets, including or our capability personnel continent, future chip design capabilities and the future <unk> mining machine.
Turns into AGM Mitch.
This JV will enable us to lock in high-strength current and historical value in their R&D capabilities as well as supply chain outsourcing, which will be a significant step forward from the original strategy partnership and allow us to leapfrog our peers.
This JV with <unk>.
To lock in prices.
Current historical values.
And the deep visibility as well.
Our sourcing.
<unk> will be a significant step forward from.
Our regional partnership.
All of us to leapfrog our peers.
Although the best week of terms and conditions that youre in discussion.
Although specific terms and conditions are still in discussion, we expect 60% of the JV will be owned by HMH and 40% by HESHA.
We expect 60% of the JV will be owned by HMH and that 40% where I shop.
with a potential full integration up for future consideration.
With the potential for integration.
For future consideration.
Once the JV is in place we have brought in production in the design capabilities could take more others, which will be significantly your future boosting our competitive advantages.
Once the JV is in place, we will broaden production and design capabilities to take more orders, which will be significant in the future, boosting our competitive advantage.
In the coming quarters.
In the coming quarters, we expect to upgrade our advanced cryptocurrency mining equipment to raise its hashing rate as we believe.
We expect to upgrade to our advanced the cryptocurrency mining equipment to raise.
How should reach as we believe.
Crush power is the core element driving the entire industry. The H rate of our come minor C hundred 16 is 100 and the 13 T cascies per seconds among the highest in the industry by leaging the first class technologies. We are very optimistic about the demands for up grad the product.
Power is the core element to driving the entire industry.
How should we make of our chlorine minor <unk> is 113 P conscious per second among the highest.
Industry.
By leveraging their first in class technologies, we are very optimistic about the demand for the upgrade to the product.
Next let me share some updates on our strategic move into the North America.
Next, let me share some updates on our strategic move into North America.
We are in the planning stage of relocating our headquarters, research center, and manufacturing facilities into North America. We have identified several local manufacturers that are willing to cooperate with us and have asked them to make the best-fit components so that we can evaluate the capability and the quality of the product.
We are in the planning stage.
Locating our headquarters research center and the manufacturing facilities into.
North America, we have identified several local manufacturers, that's how willing to cooperate with us and have asked them to make us the best fleet. The components. So that we can evaluate the capability and the quality of our progress.
Meanwhile.
Meanwhile, we are also considering a possibility of building our own factory, for which we will make a full evaluation process, spanning from site selection, factory construction, production equipment purchase, local government policy and environment protection requirements.
We are also considering the possibility of building our own factory for which we will make a full evaluation process spanning from.
Thanks, her election factory construction production equipment depreciates local government policy in the environment protection requirements.
We are expecting to complete cost and benefit analysis in Q2 2022 and choose the best option that can get us closer to our customers on the cryptocurrency mining sites with the most reasonable labor and production costs, while elevating possible external impacts on business operations.
We are expecting to complete kosta and the benefit that <unk> seen in Q2, 2022, and they choose the best option that could get us closer to our customers and the cryptocurrency mining sites with the most reasonable labor and the production cost.
And debating plus several external impacts on business operation.
In terms of our research and development, we began shifting our focus on North America as well. We will assess the cost of hiring talents and the relevant policies in the region.
In terms of our research and development.
We began shifting our focus on North America as well, we were SaaS proof of hiring talents and the relevant policies in the region.
Thanks to the talents at HMH and the dedicated support from our partners, we are able to accelerate the process of our business transformation. 2022 is the next chapter for our company. In the first quarter, our first and foremost task remains on delivering mining machines.
Thanks to the trailers at HMH and dedicated support from our partners. We are able to accelerate the process of <unk> business of transformation 2022 is the next chapter for our company in the first two kroeker, our first and foremost the task remains deliver remaining machines.
As we continue to acquire new customers and receive new orders, we will actively source more sizable clients for our top-tier partners who can pay for larger orders or have recurring demands.
As we continue to acquire new customers and received new orders, we will actively source more cyclical trends.
Talk to your partners, who can pay for larger orders or recurring demand.
we will provide a degree of customization for their specific needs. Looking ahead towards the rest of 2022.
We will provide a degree of customization for their specific needs.
Looking ahead towards the rest of 2022.
We will also continue to do that supply chain capability, while seeking new growth Avenue.
We will also continue to build up supply chain capability while seeking new growth avenues.
in the cryptocurrency ecosystem with our endeavors to expand business and swift response and adaption to new technologies. We are very positive over the emergence of more advanced products and more diversified offerings, which will help us thrive in this dynamic market.
In the crypto currency ecosystem with our in Denver's to expand the business and this week the response and the redemption to new technologies. We are very positive over the emergence of more advanced products and a more diversified offerings, which will help.
Right.
It's a fragmented market now I will turn the call over to our CFO , Mr. <unk>, who will review and the comment on our financial results.
Now, I will turn the call over to our CFO , Mr. Sim Sim, who will review and comment on our financial results.
Thank you Jane and thanks to everyone for being on the call.
Thank you, Sun Jin, and thanks everyone for being on the call.
Summarize some key financial results for the fourth quarter and full year 2021.
Summarize some key financial results for the fourth quarter and full year 2021. In my comments on the quarterly results, I'll refer to the fourth quarter 2021 as the three months that ended on December 31, 2021.
In my comments on the quarterly results I'll refer to the fourth quarter 2021 at the three months that ended on December 31 2021.
All comparisons are to the same period of the prior year unless otherwise stated.
All comparisons are to the same period of the prior year unless otherwise stated.
we delivered stellar results in the fourth quarter, ending a strong year for our business as 2021 total revenues reached an all-time high.
We delivered stellar results in the fourth quarter.
Ending a strong year for our business as.
2021 for the revenues reached an all time high.
Fueled by our new growth strategy, full-year revenues were $36.71 million, an increase of about $36.66 million from 2020.
Fueled by our new growth strategy.
<unk> revenues were $36 seven 1 million.
An increase of about $36 six 6 million from 2020.
We also turned to profitability with net income of $3.53 million in 2021 compared to net loss of $1.07 million in 2020.
We also turn to profitability with net income of $3 five 3 million in 2021 compared to a net loss of $1 $7 million in 2020.
In the fourth quarter.
In the fourth quarter, our revenues increased by $31.36 million year-over-year to $31.37 million.
Revenues increased by 30 136 million year over year to 31 307 units.
primarily driven by the increase in sales of cryptocurrency mining machines and standardized computing.
Primarily driven by the increase in sales of cryptocurrency mining machine and standardized computing equipment.
Our total computing power delivered total 440,000 terahash per second in the fourth quarter compared to new in the same period of 2020.
Our total computing power deliver cohort 440000 tower.
<unk> per second in the fourth quarter compared to new in the same period of 2020.
So far.
So far, we still have substantial number of orders outstanding, which will be reflected on future revenues as we deliver the machine.
We still have substantial number of orders outstanding which will be reflected on future revenues.
As we deliver.
We deliver the machine.
Along with the increase in procurement cost of the equipment.
cost of revenues was $25.49 million in the fourth quarter, compared with.
Cost of revenues was $25 9 million in the fourth quarter compared with.
At <unk> $662 in the same period of 2000.
$8,662 in the same period of 2020.
Gross profit surged to $5.88 million from $4,933 in the prior year due to substantial increase in revenue.
Loss period gross profit search to a $5 8 million from $4 $933 in the prior year due to the substantial increase in revenue.
Our gross margin was 18.8% in the fourth quarter, up 5.4 percentage points from the prior quarter.
Our gross margin was 18, 8% in the fourth quarter up five four percentage points from the prior quarter.
Total operating expenses was 0.8 $2 million more than triple the previous year.
Total operating expenses was $0.82 million, more than triple the previous year.
specifically selling general and administrative expenses quadruple to about 0.82 million in the fourth quarter of 2021, mainly due to the expenses related to increased business activity.
Specifically selling general and administrative expenses quadruplet to about 0.8 2 million in the fourth quarter of 2021, mainly due to the expenses related to increased business activity.
Due to the increase in revenues income from operation was $5 6 million in the fourth quarter.
Due to the increase in revenues, income from operations was $5.06 million in the fourth quarter, compared with loss from operations of $0.21 million in the same period of 2020. Net income was $3.84 million in the last three months, compared to net loss of $92,664 in the same period of 2020.
Compared with loss from operations of zero point to $1 million.
Of 2020.
Net income was $3 4 million in the last three months compared to a net loss of 92664 in the same payout claims.
Yes.
Meanwhile, we closed a registered direct offering and concurrent private placement, we set of investors raising $20 million in gross proceeds in December .
Meanwhile, we closed the registered direct offering and concurrent private placement with certain investors, raising $20 million in gross profits in December .
This will supplement our cash flow and liquidity, which supports our business development.
This will supplement our cash flow and liquidity, we supposedly all business development.
As of December 31, 2021, and September 32021, we had working capital of $24 4 million and $3 3 million.
As of December 31st, 2021 and September 30th, 2021, we have working capital of $24.48 million and $3.23 million, including cash and cash equivalents of $18.41 million and $1.4 million respectively.
Including cash and cash equivalents of $18 1 million and $1 4 million respectively.
Next let me share some upcoming plan regarding our business.
Next, let me share some upcoming plans regarding our business.
As 2022 evolves, we will streamline our management over procurement and deliveries for Q4 further growth.
As 2022 evolves, we will streamline our management over procurement and deliveries for further growth.
We are aiming to build a joint venture with HySharp, where we will leverage HySharp's R&D and supply chain strengths to support this group.
We are aiming to build a joint venture with pressure.
Where we will leverage high shops, R&D and supply chain strengths to support this growth.
Importantly by leveraging our experience in the blockchain ecosystem and the company's additional financing. The management team is currently actively focusing on exploring new areas in this space, we're accompanying spending too.
Importantly, by leveraging our experience in the blockchain ecosystem and the company's additional financing, the management team is currently actively focusing on exploring new areas in the space where the company can expand into.
We believe these efforts can help us unleash new opportunities to drive the company's next phase of growth.
We believe these efforts can help us unleash new opportunities to drive the company's next phase of growth.
That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead. Thank you, management. So ladies and gentlemen, if you like
That concludes our prepared remarks.
Let's now open the call for questions.
Operator, Please go ahead.
Yes.
Thank you management.
So ladies and gentlemen.
If you would like to ask any questions.
Please press zero one.
Client telephone keypad.
To cancel please press two.
So once again, ladies and gentlemen, if you'd like to ask a question to the management, please press 01 on your telephone keypad.
So once again, ladies and gentlemen, if you would like to ask a question to the management. Please press zero one telephone keypad.
Hi, guys acquisition correct.
Okay, once again, if you have any questions, you can press 01 on the phone, cancel the text and press 02.
Thank you.
<unk> earnings.
Tree shelf oven on they are.
To ask a question, please press 01 on the telephone keypad. To cancel, please press 02.
To ask a question. Please press <unk> one on the telephone keypad to cancel please press <unk> two.
Thank you. Our first question is from home view at three months kept from please go ahead.
Okay, our first question is from Hong Yu at TreeMaster Capture Farm. Please go ahead.
Hi, Nathan Clientele Hall.
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The first one is that the company mentioned in the financial report that it is moving the headquarters and R&D team to North America. Will this affect the company's current business progress? Here, the difference between Garland and Bitmain, where is the company's diversification?
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Hello, Hongyu. We are currently planning to move the headquarters and the R&D team to North America. This has a positive impact on the company's business. Because, as you all know, the world's virtual currency mining industry is now more concentrated in the North American region.
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So moving the headquarters and the R&D team to North America will make us closer to our customers, closer to the mining sites, and better understand the needs of our customers. This will have a positive impact on the current business and the R&D and market positioning of our next-generation products.
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Compared to the same industry, Jianan Technology and Bitmain, we believe that as a technology company, a greater difference may be reflected in the technical level. For the companies that have already submitted mass production,
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In terms of Bitcoin mining, our CoinMiner C16 is currently one of the most profitable mining machines for delivery mass production. We believe that the difference in this technical indicator will also allow us to get better results from our customers when we face industry competition.
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That's it. Thank you, Mr. Guan. Thank you, Mr. Guan, for your answer. My second question is that the company's transition period is relatively short. But in this industry, other companies have already had a long-term settlement. Where is the company's confidence in making money? What are your technical advantages?
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Thank you for the question, Hongyu. It's true that the time to transition to the crypto mining industry is quite short, but our way of transitioning is through cooperation.
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HiSharp Electronics Company to carry out strategic cooperation and establish a JV to transform. HiSharp Electronics was established in 2013.
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Thank you, Hongyu. I am Steven. I would like to remind the participants about the translation. To all the participants, we will not do a direct translation of the question and answer, but after the call, a transcripted translation will be provided online and will be provided to the participants as well, to make it easier and smoother to save time. Operator, please open up for the next question.
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So operator, please open up with the next question.
From management.
Our next question is from Xiaoming at Fumi Securities, please go ahead.
Our next question is from Xiaomi App for me Securities. Please go ahead.
Okay.
Okay.
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Alright.
I'm a researcher at Fujifilm. I'd like to ask if a global shortage will affect the company's production and will it affect the order of Fujifilm?
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Hello, Xiaomi. I am Manager Chen. The current shortage on the supply chain has indeed affected the company's production, and the number of orders we have placed is indeed lower than our previous expectations.
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not only because of the shortage of nuclear weapons in the entire electronic industry, but also because of the impact of the pandemic on the production of nuclear weapons in mainland China.
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So we are facing a challenge in the supply chain. And we are also cooperating with the supply chain and strategic partners through the various solutions and partners that they already have rich industry experience and accumulated in this industry, all of which will jointly help us to solve the current shortage problem on the supply chain.
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Thank you, Xiaomi. Our order for now is...
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Well, thank you and wish him the actual indenture.
and we are also continuing to get bigger and more orders, so we remain optimistic about the continued growth of future sales.
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We've actually heard US, we'll make sure partial gland or May you price your Africa with Google's jump right there.
We will set up a joint venture with HiSharp in the near future. We do not have a set income target for the joint venture company. However, as we transition from strategic partnership to joint venture JV, we will completely...
We'll move to you guys <unk> should ensure the mobile.
So Asia womens.
Your question, Greg Schenkel concurrently JV women gentlemen, Brian Chen.
T here kdoforband yfar hunit villateror Hun milliam Josh the moment CU cine.
That's all for Ben.
If you could delay some formula.
Joshua.
To answer your question.
to HMH, so that we can have a complete R&D, a complete technology, and a complete patent. All of these will have a positive impact on the company's future value and sales growth. Thank you.
Turning towards Sean AGM edge right Ryan.
<unk> will resume your window.
<unk> <unk> currently.
So John do you concur with the charterer to need to grow short order. So he is on the powertrain.
Uhm.
Sure.
Thank you Melanie.
Netherlands.
Okay.
Yes.
Thank you. Our next question is from Carl Birkenfield from American Trust Investment. Please go ahead.
Thank you. Our next question is from Carl Bergenfield from American Trust investments. Please go ahead.
Thank you very much.
Okay three questions.
questions I have. One is for the United States and Venezuela.
One is.
United States investors.
How does the China lockdown affect your business in 2022?
How does the China lockdown affect your business.
In 2022.
What's your projection of revenue for 2022.
Thank you, Carl. This is Steven. I'll take your question. As the media has already widely reported the lockdown situation in China, and realistically, it's difficult for us from a supply chain and manufacturing perspective to really forecast what's going to happen next.
Thank you call. This is Steven I'll take your question.
Yes.
<unk> media has already widely reported the lockdown situation in China.
And.
Realistically.
It's difficult for us.
From a supply chain and.
Manufacturing perspective too.
Really forecast, what's going to happen next.
And in the environment and context, it's nearly impossible to really plan on a going forward basis.
And in the environment in context is nearly impossible.
To really plan.
On a going forward basis.
Having said that, because the COVID-19 situation has been ongoing for the past two to three years,
Having said that we had because the COVID-19 situation has been ongoing for the past two to three years.
We have already made sufficient contingency plans.
We have already made sufficient contingency plans.
including moving part of the operations to the U.S., and potentially, as we mentioned in our prepared remarks, opening factories in the U.S. to essentially alleviate this type of situation in the future.
Including moving part of the operations to the U S.
And potentially as we mentioned in our prepared remarks.
Opening factories in the U S to essentially alleviate this.
This type of situation in the future.
In terms of.
the short-term effects, I think unfortunately we just have to deal with
The short term effects I think unfortunately, we just have to deal with.
uh how the you know not not just the lockdown in specific cities
Sure.
How the knot.
Just the lockdown in specific cities.
but also the supply chain being massively disrupted. And these are completely out of the company's control.
But also the supply chain being massively disrupted.
And these are completely out of control.
Take, for example, when we fulfill a certain order, our upstream suppliers are facing the same issues in terms of manufacturing, gathering of raw material, having sufficient workers in the factories, and resolving logistics issues.
Take for example.
When we fulfill that order.
Our upstream suppliers are facing the same issues.
In terms of manufacturing.
Gathering of raw material having.
Having sufficient workers in the factories.
Resulting in logistics issue. So so in a nutshell is not just.
So, so in a nutshell, it's not just, you know, what we can or we cannot control. Essentially, we also cannot control, you know, our, our upstream supply.
What we cannot we cannot control essentially we also cannot control.
Our our.
Upstream suppliers.
In that context, we will do our best to diversify our solutions, including the above-mentioned moving into North America, and we are also seeking other solutions.
In that context.
We will do our best to diversify.
Solutions, including the above mentioned moving into North America, and also seeking other solutions.
And Carl, for the projection of revenue, I think, you know, in that backdrop, it's almost impossible to project.
And culp for the projection of revenue.
Thank you.
In that backdrop is almost impossible to project.
um what we're gonna do um for the whole year uh but on a quarter to quarter basis
What we're going to do.
The whole year, but on a quarter to quarter basis.
we are still largely positive because we believe that we are transitioning well into the new business as evidenced by the fourth quarter.
We are still lastly, also because we believe that.
We are transitioning well into the new business.
Evidenced by the fourth quarter.
and even though I can't really provide any guidance.
And even though I cant really provide any guidance, but we think that as we move towards Q Q1 Q2.
But we think that as we move towards Q1, Q2, we should more or less be able to come up with a solution.
We should more or less be able to come up with.
a steadily improving and growing business, presenting that to the market. Thank you. Thanks.
Our stadium.
Improving and growing business presenting that to the market. Thank you.
Thank you. My second question is who are your peers in China and the U S.
Who are your peers in China and the U.S.?
And what is your technical advantage versus your key competitors?
What is your technical advantage versus your key competitors.
It has been mentioned from the previous Q&A by our CEO , and let me repeat that, because his answer was in Chinese.
It has been mentioned.
From the previous.
Q&A by our CEO and let me.
Pete that because his answer was in Chinese.
So, our peers, specifically, are well known in the market, Canon, which is a fellow listed company in the U.S., and also
So our peers, particularly.
Well known in the market Ken.
Canon, which is a listed company in the U S.
And also a beat me.
um and having um our having high shop as our jv partner and strategic partner um and high shop having been in the industry um
And then.
Having.
Or having high shop saw a JV partner and strategic partner.
And I shall having been in the industry.
at the same time as our key peers in the same industry, it's highly beneficial to us because of the high sharps experience and ability and R&D capability throughout the years.
At the same time.
Our key.
Yes.
In the same industry is highly beneficial to us because of the.
So hi shops.
Experience and ability and R&D capability.
Throughout the years on a going forward basis.
On a going forward basis, I think Mr. Lee has also mentioned that we are one of the first to mass-produce our C16 machine, which at 113 terahash per second, is one of the machines with the highest specs.
Mr. Li has also mentioned that we are one of the first to mass produce.
Our <unk> machine, which at $100 that entire Mahesh per second.
Is one of the machine with the highest spec.
And we feel that as we go forward, we are continuing to improve the specs.
And we feel that as we go forward.
We are continuing to improve the specs.
of this machine as well as, you know, investing in the next generation of chips.
This machine.
So I'll ask.
Investing in the next generation of chips now.
In terms of comparing with our peers and what is our technical advantage, I feel that we each have our own key customers and also we feel that we are able to come up
In terms of.
Comparing with our peers and Wassa technical advantage.
Sure.
I feel that we each have our own.
Key customers.
And also we feel that we are able to come up.
with continuously improving products on the cutting edge of this industry.
With continuously improving products on the cutting edge of this industry.
Plus, I think being in such an uncertain environment, we are a very nimble team. We do not have...
Plus I think being in such an uncertain environment.
We are very nimble team, we do not have.
you know, for example, a huge cost on manufacturing base, we rely a lot on our partners to fulfill the manufacturing. And holding on to the key value proposition of the supply chain, of the value chain, we believe we can be nimble and act accordingly to the changes in the market. Thank you. Now, my third question.
For example, a huge costs, while manufacturing base, we rely a lot on our partners to appeal that.
Manufacturing.
And holding onto the key value proposition.
Of the supply chain of the value chain, we believe we can be nimble and egg accordingly to the changes in the market.
Thank you.
Now my third question.
Final.
What's your view of the other miners that use clean energy or produce energy efficient ships any plan of producing energy efficient ships yourselves.
clean energy or produce energy-efficient chips. Any plan of producing energy-efficient chips?
Carl, let me put this question to Mr. Lee, and then I will do a translation.
Carl Let me put this question to.
Mr. Lee and then our.
Translation.
Okay.
Thank you Carl.
We have an optimistic and positive attitude towards the use of clean energy in production. We also encourage and support our customers to use a larger proportion of clean energy. This will have a positive impact on the environment and our entire ecosystem.
Women.
Actually you answered in the mirror.
Sure.
Did you retire to women.
Future warm in the cohort.
<unk> sure.
Sure John we do quite in June .
Q woman to progression kind of talks with <unk>.
Our views on miners using clean energy is very positive and optimistic. We fully support our mining customers to use clean energy.
Our views on minus using clean energy is very positive.
And optimistic we fully support.
Our mining customers to use clean energy.
Production of energy-saving chips is the common goal of all mining manufacturers. We are also working hard to produce lower-power mining chips.
Sure Jim Keane share shifts soil corn futures are shown.
When you get to 10 will be sometime to equal out.
<unk> in.
In terms of producing energy-efficient chips, this is a common goal that is shared by ourselves and our peers. At the moment, we are actively investing and finding ways to come up with the best optimized energy-efficient chips.
In terms of producing energy efficient chip this is a.
A common goal that is shipped by ourselves and our peers.
At the moment.
Actively.
Investing and finding ways to come up with.
And actually the best.
Optimize energy efficient chips.
At the same time, our current CoinMiner C16 power consumption can be reduced to 30J per T which is the lowest power consumption among all the mining machines that have been handed over to mass production.
Use of ownership or amend Morten.
Very minor <unk> co how deeply are essentially a.
J.
Pretty sure <unk> fully on track the soil June CGM treat your corn harvest and Kim.
At the same time, our claim minus <unk> 100, 100, but the entire hedge per second with 30 Jay.
At the same time, our coin miner C16 at 130 TeraHash per second with 30 J per TeraHash is one of the most energy efficient machines out there that is mass produced in the market right now. And we believe that in the future, this will be continuously improved.
Taro hedge is one of the most energy efficient machines out there that is Mexico is in the market right now.
And we believe that in the future this will be continuously improve.
In the mining industry, in terms of using clean and efficient energy should be a common goal, and it should be something that should be pursued by ourselves and our peers, and it's a goal we strive to achieve.
One of the year.
Your question Paul.
<unk>, Okay, yes sure <unk>.
Alex Clinton discussion three sort of mobile.
In the mining industry.
In terms of.
Using clean and efficient energy should be a common goal and it should be something that should be pursued.
By ourselves and our peer and it is our goal we strive to achieve.
Okay.
Thank you.
Thank you for answering my questions. It seems like you have a great company here and you guys are on top of the of the of the chain. Thank you.
Okay. Thank you for answering my questions. It seems like you have a great company here and you guys were unprofitable.
Of the chain.
Thank you very much.
Thank you Carl.
Thank you, our next question is from Cam Shkrew at HC Wingrite, please go ahead.
Thank you. Our next question is from Kam <unk> at H C. Wainwright. Please go ahead.
Good morning, everyone.
I wanted to ask how do you think the shift to North America is going to affect.
How do you think the shift to North America is going to affect current supply chain concerns and or...
Current supply chain concerns and order fulfillment.
Yeah.
Ken do you mind repeating the question.
Want to North America.
tour. How do you think the shift to North America is going to affect current supply chain concerns and order fulfillment?
Sure.
Or do you think the shift to North America is going to affect current supply chain concerns in order fulfillment.
Okay.
Yes.
The current shipment to North America affecting our delivery, is that the question? No, so you guys announced a shift of operations to North America. I'm just curious how you think that's going to affect.
The current shipment to North America affecting our delivery is that the question.
So you guys announced a shift of operation to North America.
Sorry, do you think thats going to affect supply chain right.
Right. Okay. Sorry. Apologies. So the ship.
Right, Okay. So im sorry, I apologize so the shift.
essentially is to bring ourselves closer to our key customers.
Essentially.
Is to bring ourselves closer to our key customers.
And I think from a strategic level, we view the different options on a worldwide basis for mining companies, and consistently when we speak to our customers, North America comes up tops in terms of the best destination for mining companies.
And I think from a strategic level.
We view the different options on a worldwide basis for mining.
Mining companies.
And consistently when we speak to our customers.
North America comes up.
Comps in terms of.
The best destination for mining companies.
One of the many reasons is the relatively...
One of the one of the many reasons.
The relatively.
Sure.
Efficient and clean energy available and obviously a very stable political and regulated environment and is closer obviously to also the the capital markets there, which a lot of the mining companies are listed in the U S.
Efficient and clean energy available.
And.
Obviously, a very stable political and.
Later environment.
And it is closer obviously to also the capital markets.
That which a lot of the mining companies.
At least in the U S. So from that perspective.
So from that perspective, shifting to the U.S., being closer to the customers is a no-brainer. It will resolve a lot of logistics issue, and then you obviously bring the complexity to the upstream in terms of having to shift raw materials there to be assembled, or pre-semi-assembled machines to be finished in the factories. And those various options are being considered at the moment.
Shifting to the U S being closer to the customers.
<unk> is a no brainer.
Resolved a lot of logistics issue.
And then obviously bring the complexity to the upstream in terms of having to ship raw materials to be assembled.
Sam I understand but machines to be finished in the factories and those various options are being considered at the moment.
Um, the, the, the relative, uh,
B.
The relative.
consideration is that there might be a somewhat increase in cost, which we think, you know, looking at all the potential benefits, can be largely offset. And I think that in the long run has to be the right reason for us.
The consideration is that there might be somewhat increase.
In cost.
We think looking.
Looking at other potential benefits.
Can be largely offset.
And I think that in the long run has to be the right.
These are for us.
Excellent. Thank you. And do you expect a similar amount of?
Excellent. Thank you and do you expect a similar amount of.
R&D costs in 2022, or do you expect that number to increase?
R&D costs.
In 2022, or do you expect that number to increase over time.
So from AGM company level.
So from AGM company level.
The actual R&D cost is not reflected at the AGM company level, because our strategic partnership with... Oh, this is a great question, by the way. Our strategic partnership with HyShop is such that we license their technology.
The actual R&D cost is not reflected.
At the AGM company level, because our strategic partnership.
With our this is a great question by the way our strategic partnership with.
<unk>.
Hi, Sean.
<unk> is such that we licensed <unk> technology, but in the long run as we mentioned.
But in the long run, as we mentioned, the idea is to integrate ourselves with PySharp. And such integration will allow us to tap into their historical expertise, which also means that future development and R&D will then increase in tandem with such an action.
The idea is to integrate ourselves with high shop, and such integration will allow us to tap into their historical expertise.
Which also means that future development.
And RMB.
We will then increase.
In tandem.
We have such an action.
Meaning to say all R&D activity will take place in the future, and maybe it's not comparable to previous levels, but we feel that this is positive in light of how the value chain is further optimized by the JV. We will then, you know, we invest this increase in profit margin into R&D to further invest into future iterations of our product.
Meaning to say R&D activity will take place in future.
And maybe is not comparable to previous levels, but.
We feel that this is positive in light of how the.
The value of <unk>.
<unk> is a spudder optimized by the JV, we will Dan.
We invest this increase in profit.
Profit margin into RMB to further invest into future iterations of our products.
Great, thank you for answering my questions this morning. We're very excited about the growth of the company.
Great. Thank you for answering my questions. This morning, we're very excited about the growth of the company.
Thank you Tim.
Thank you seeing no more questions in the queue, Let me turn the call back to Mr. Changing names for the closing remarks. Please go ahead.
Thank you. Seeing no more questions in the queue, let me turn the call back to Mr. Chen Junli for the closing remarks. Please go ahead.
Thank you, operator, and thank you all for participating on today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.
Thank you operator, and thank you all for participating on today's call and for your support we appreciate your interest and I look forward to reporting to you again next quarter our progress. Thank you.
Thank you again and this concludes the call you may now disconnect.
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